Letter to Shareholders and Friends of Animoca Brands (ASX:AB1)

Yat Siu
6 min readSep 2, 2019

On 3 September 1995, a little-known online auction service was launched. The very first item it sold was a broken laser pointer. Astonished, the founder of the company contacted the buyer to alert him that the item was, in fact, broken, to which the buyer replied, “I’m a collector of broken laser pointers.

That company eventually became eBay.

Many of the product categories that eBay declared for its IPO in 1998 were related to the art of collecting:

eBay product categories collectibles, coins & stamps, books, antiques
eBay product categories 1998

The hugely popular Beanie Babies stuffed toys collectibles were mentioned multiple times in eBay’s prospectus. Yes: collection of Beanie Babies helped to drive user adoption for one of the world’s most important and influential technology titans.

In 1995, the year that eBay launched, there were roughly 16 million Internet users. In 1998, the year that eBay went public, there were around 147 million Internet users. Today, we stand at well over 4.5 billion users, which is nearly 60% of the world’s population. That’s quite a market for broken laser pointers or stuffed toys.

Thanks to the global availability of the Internet, today anyone is able to collect items that range from the absurd to highly useful. And it’s a serious business segment: the worldwide collectibles market has been estimated to be worth US$370 billion (Forbes).

Unlike the well-established field of physical collectibles, digital collecting is still in its infancy. This is because, traditionally, digital collectibles have not been permanent, unique, or scarce, and therefore struggled to accrue value. That is changing thanks to the advent of blockchain, the distributed digital ledger technology that can enable true digital ownership, scarcity, provenance, and similar characteristics that comprise the value of a collectible.

We believe that digital collectibles will do for blockchain adoption what physical collectibles did for companies like eBay and Amazon as well as Internet adoption back in the 1990s, and we see video games as the ideal vehicle to kick off the consumer blockchain revolution.

Animoca Brands Games and Blockchain Game Titles with NFT’s

Today, Animoca Brands is leading the way in digital collectibles and collectible-powered blockchain gaming. This year we have secured a partnership with F1, considered the pinnacle of motorsport, and auctioned the first Formula 1 digital collectible, breaking a number of records. We have distribution licenses for Major League Baseball, RollerCoaster Tycoon, and Star Trek digital blockchain items and we successful raised funding for The Sandbox. Our announced acquisition of Quidd means that we will add over 325 major intellectual properties to our stable, including those of Disney, Marvel, CBS, HBO, and the NBA, among others.

Over a year ago, when we first articulated our vision for blockchain, gaming, and collectibles, we were one of very few voices making the case for digital ownership inside games. Today, there is a growing chorus of media, industry experts, and general users talking about the importance and significance of the ownership of virtual objects inside and outside of games.

That’s why here at Animoca Brands we have been working to create our own Beanie Babies success by using the power of famous brands and gaming (gaming, as you probably know, is a fast-growing industry that was worth US$138 billion in 2018).

Over the last one and a half years, we have been laying the foundations for this new future. We have established powerful relationships for blockchain projects (Harmony, Wax, OST, Dapper etc.) with famous industry names such as Atari and Formula 1. We are a significant contributor to the new open token standard ERC-1155, which greatly improves users’ ability to handle digital tokens, especially in blockchain games. We are working closely with legal and finance experts as we challenge paradigms and explore waters thus far uncharted by most ASX-listed companies.

Our partnerships and relationships not only include some of the biggest brands in the world, but also some of the most respected names in technology, including DEEPCORE (a subsidiary of SoftBank), Hashed, and Kakao. Our already strong team has been bolstered even further by a series of high-profile appointments, including an internationally acclaimed artist (Kevin Abosch), the co-founder of the Xbox (Ed Fries), the former managing director of Sony Computer Entertainment ANZ (Michael Ephraim), and a veteran of ASX-listed companies with over 30 years of experience in financial reporting (John Madden).

Our mission is to offer more value to gamers and collectors through true digital ownership. We are working to build a world in which billions of gamers will have the option to generate (and own) meaningful value via games and digital collectibles. Yes, billions of gamers: around 2.4 billion today, and expected to grow to 2.7 billion by 2021.

2019 is an important year for Animoca Brands. We will continue to pursue deals and investments that will strengthen our position in the nascent areas of blockchain gaming and collectibles. I would like to briefly describe the primary elements of our approach over the coming months.

Distribution — we will continue to grow our distribution infrastructure and capabilities to ensure that we can serve our customers in new and innovative ways. For example, our proposed acquisition of Gamma, or our partnership with iClick.

Brands — the brands in our business will continue to be key as we leverage powerful brand partnerships to develop our reputation, grow our revenues and build relationships with customers and partners. For example, the very first F1 digital collectible auction, the “1–1–1”, fetched the equivalent of US$113,000 (~A$165,000) at time of sale and brought a terrific level of attention to Animoca Brands and our work.

Products — as we work to establish a leadership position in digital collectibles and virtual assets, we will continue to grow and enhance our portfolio of games, which serves as a strong core for our business and provides valuable information about the gamer audience. For example, in the month of June we had over 40 million gameplay sessions, with an average time per device of 18.1 minutes.

Team strength and processes — we have expanded our business dramatically with new products, services, markets, acquisitions, and refinements to our business model. We will invest in growing these teams and processes in a scalable and sustainable manner. Although this is one of the more challenging elements of our plan, this aggressive approach is how we are able to accelerate our growth ahead of the competition. To help us, we have secured deep experience and knowledge for our team in the form of strong global leaders such as Ed Fries, Wilhelm Taht, and, most recently, John Madden.

In closing, I extend a sincere and heartfelt thank you to all our customers, shareholders, and team players — all the people whose trust, dedication, and passion are helping us to build an important company with a big vision: to deliver true and lasting value to games, gamers, and the collector inside all of us. We would not have made it this far without you.


Yat Siu


Animoca Brands Games and Blockchain Game Titles with NFT’s

Operating revenue of $8.3 million increased by 47%, year-on-year, due to the strong performance of the Company’s core mobile games business, as well as incremental contributions from the developing blockchain game segment. This revenue does not include an additional $2.9 million in cash received that was reclassified largely as unearned revenue which was recorded as contract liabilities.

$16.6 million in cash, digital and financial current assets, up 177% year-on-year, due to an increase in cash generation and an increase in the value of digital assets.

Raised $5.7 million in new capital during the first half of this year at a 4.2% premium to the 30-day VWAP. A further $2.0 million in new capital was issued to vendors of assets and suppliers of services.

Subsidiaries TSB Gaming (makers of The Sandbox), and OliveX raise a total of $5.71 million in new capital from strategic investors.

Appendix 4D and Half Yearly Report for Animoca Brands (AB1) https://www.asx.com.au/asxpdf/20190902/pdf/4484qvhzs1plh2.pdf



Yat Siu

Entrepreneur and Founder of Outblaze, Animoca Brands, Dalton Learning Lab and others. Tech guy, Investor, geek and Father of 3 Fun Kids