What is UGG?
One of the strongest trends in gaming is UGG or user-generated gaming. UGG is a category of gaming where players create content and leverage tools provided by the platform to build unique experiences that others can enjoy.
Today, one of the most popular UGG platforms is Roblox, often referred to as the “YouTube of Gaming.” Roblox is so prolific that over 50% of kids in the US are playing it. ¹
Why is UGG so powerful?
Roblox and other platforms that have adopted UGG models are reshaping game development. These platforms are successful because of three key attributes.
- Content volume: Consumer demand for content is more significant than ever, and creative talent is one of the gaming industry’s biggest bottlenecks. UGG allows content to scale exponentially by enabling users to create.
- Product market fit: UGG allows game developers to skip the guesswork of developing games that players might enjoy. Players know what they want; UGG gives players the tools to build what they will enjoy.
- Improved engagement: A passive audience is shifted to a contributing community where players can share their unique experiences and, in some cases, monetize.
Growth in UGG
The number of individual creators developing premium assets on UGG platforms will likely continue to increase over time and not just on Roblox. “Minecraft Marketplace” launched four years ago and allowed creators to monetize games and skins. Microsoft announced on its April 2021 earnings call that the marketplace has already generated more than $350M of revenue to date, $175M of which is estimated to have been paid out to creators.
Moreover, “Fortnite Creative” was launched in 2018 and allows players to create custom maps in Fortnite. In late 2021, Epic’s CEO announced that the game would be releasing its actual scripting language to players in 2022. This will allow players to take their maps to the next level.
It’s also rumored that Epic will begin paying creators for Fortnite-based content, meaning Fortnite’s billions of dollars in revenue will increasingly be up for grabs for creators. Don’t be surprised when some of the largest video game companies in the world adopt a user-generated approach to content.
What does this mean for internet consolidation?
Many solid, profitable assets will be built on UGG platforms, and many developers will have difficulty identifying an exit path. This will create an attractive opportunity for gaming-focused internet consolidation companies like Voldex, GameFam, and Infinite Canvas, which aspire to build large, professionalized portfolios of best-in-class UGG assets.
Volition has experience investing in numerous internet consolidation businesses across multiple categories, including e-commerce, mobile apps, and social media. We’re excited to partner with companies that have identified the next internet platform ripe for a consolidation strategy.