Every now and then, it happens. A small studio creates a game that becomes a monster hit overnight. Recently, we Swedes might think of Valheim. With over 10 million games sold in a short time, the Skövde-based "Iron Gate" made a splash. In recent days, a new star has been lit in the gaming sky. Palworld has become a sensation. With over 10 million copies sold within a few days of its launch, Palworld has not only established itself as a monster-catching adventure; it will affect the entire industry.
With a game that immediately brings to mind the world's largest franchise, Nintendo's brand Pokémon, and unofficially goes by the nickname "Pokemon with Guns," Palworld has appealed to players around the world. The game's addictive nature, where players can catch and evolve their own "Pals," is both simple and ingenious. Add survival aspects, and players have what people have focused on for years. Survive and collect.
What the game means for investors: The game shows the latent potential within gaming companies with extensive portfolios of titles. A single successful 'moon shot' can make a substantial difference for any studio. For a small or medium-sized studio, the significance of a hit is transformative. The image below shows that Palworld has had 2.1 million players concurrently. This makes the game the second most popular on Steam ever, and the most popular paid game ever.
The trickle-down effect: Successes like Palworld have a significant impact on platforms like Steam, and developers selling games there. Hit games act as locomotives for players to the platform and generate trickle-down effects for other titles. Some will buy a new computer or console to play Palworld. Perhaps they'll encounter an expansion to a Paradox game like Hearts of Iron a few weeks later and be reminded of how their heart once beat for the original?
The dominance of graphics engines: Palworld, built on Unreal Engine 5, clearly exemplifies the significant role graphics engines play within the industry. Both Unreal Engine and Unity are leading and offer significant economic and time-saving advantages for game developers compared to building the engine from scratch.
Nintendo's response: Lawsuit threats or new Pokémon games? An interesting question that arises is how Nintendo will react to Palworld. Will they be inspired by the game's success and develop similar concepts like Pokémon Legends: Arceus, or will they activate their lawyers and sue Palworld?
The journey that Palworld has made in just a few days interests us both as players and investors. Game developers can also take inspiration from Palworld to be next in line to move the industry further.