Investments in issuers using the platform present risks, including, but not limited to:
- Hit-driven business & UA uncertainty. Game revenue depends on acquiring and retaining players efficiently. If game user acquisition (UA) campaigns underperform or player lifetime value (LTV) is lower than expected, games may not recover their marketing spend and could incur losses.
- Ad market volatility & measurement limits. Advertising costs (CPIs) and auction dynamics can change quickly, and privacy/attribution limits reduce targeting and measurement accuracy. These shifts can make formerly profitable campaigns unprofitable without notice.
- Platform dependence & fees. Many games rely on distribution and payment platforms (e.g., Apple, Google, Steam/console) that can change terms, policies, featuring, or fees, or remove de-list the game. Changes to platform fees (often 15–30%) may also affect profitability and investor returns.
- Live-ops & content cadence risk. Some business models assumes regular content updates, events, and balancing. Missing updates, mis-tuning the game economy, or failing to ship fresh content may damage retention and monetization.
- Technology and scalability risk. Server outages, latency, or higher-than-expected infrastructure costs can degrade reviews and retention. Changes in third-party engines or SDKs (e.g., Unity/Unreal, ad/analytics providers) may increase costs.
- Monetization and regulatory scrutiny. Certain mechanics (e.g., loot boxes, chance-based rewards) face evolving regulation and store policies in some regions. Compliance changes could limit features, require redesign, or restrict marketing and age targeting.
- Fraud, chargebacks, and security. Ad fraud, payment fraud, cheating, and botting can raise costs, reduce net revenue, and harm player trust.
- Competition and fast imitation. Games compete with many titles and larger publishers. Winning features and creatives are often copied quickly, which can raise CPIs and compress margins.
- Key-person and team capacity. Game performance depends on the team’s expertise in UA, data science, live-ops, and economy design. Loss of key personnel or hiring delays could impair execution.
- Working capital & follow-on funding. Marketing spend is paid upfront, while platform payouts are delayed and cohorts repay over time. If payback is slower than expected, this may impact investor returns.