What changed in this filing

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Item 1. Business

2023-03-10 compared with 2022-03-03 · 85 added, 54 removed, 289 unchanged (32% of the section changed)

Acies was incorporated on August 14, 2020 as a Cayman Islands exempted company and incorporated for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses.

Acies was incorporated on August 14, 2020 as a Cayman Islands exempted company for the purpose of effecting a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses.

Acies completed its initial public offering in October 2020 (the “IPO”).

On June 21, 2021, Acies consummated the Business Combination with Old PLAYSTUDIOS, pursuant to the Merger Agreement.

In connection with the closing of the Business Combination, we changed our name from Acies to PLAYSTUDIOS, Inc.

On June 21, 2021, Acies consummated the Acies Merger with Old PLAYSTUDIOS, pursuant to the Merger Agreement.

In connection with the closing of the Acies Merger , we changed our name from Acies to PLAYSTUDIOS, Inc.

PLAYSTUDIOS continues the existing business operations of Old PLAYSTUDIOS as a publicly traded company.

Our website address is https://playstudios.com .

Our Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act are made available free of charge on our website as soon as reasonably practicable after we have electronically filed the material with, or furnished it to, the SEC.

The Power of Play

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Our games, which include myVEGAS Slots , myVEGAS Blackjack , my KONAMI Slots , POP!

Slots , myVEGAS Bingo , MGM Slots Live , and Tetris have been downloaded over 100 million times and were played by 4.1 million monthly active users for the year ended December 31, 2021.

Slots , myVEGAS Bingo , MGM Slots Live , Tetris®, Solitaire, Spider Solitaire, Sudoku, and Mahjong, have been downloaded over 100 million times and were played by 7.9 million monthly active users for the year ended December 31, 2022.

From social casino to casual games, each game has been thoughtfully crafted for the people who play it.

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And that is what makes PLAYSTUDIOS so much more than a game company.

From our portfolio of games, to our loyalty program, to our growing network of awards partners, we continue to demonstrate the true power of play, achieving an annual consolidated revenue growth rate of 6.5%, from $269.9 million for the year ended December 31, 2020 to $287.4 million for the year ended December 31, 2021.

For the same periods, as a result of additional investments in our portfolio of games, our net income decreased from $12.8 million to $10.7 million and our Adjusted EBITDA decreased from $58.0 million to $39.5 million.

The Loyalty Lift

Successful games, just like most forms of creative content, move through a predictable life cycle — from development and launch to maturity and late-stage contraction.

At each stage, they are met with unique challenges, from driving discovery and amassing a community of engaged players, to retaining players, and converting non-paying players to payers.

Our games are free-to-play, and we have primarily generated our revenue from the sale of virtual currency, which players can choose to purchase at any time to enhance their playing experience.

The key to any game’s success is the ability to hold onto its players long enough to realize their economic value.

And therein lies the true benefit of our playAWARDS program.

At each stage, they are met with unique challenges, from driving discovery

and amassing a community of engaged players, to retaining players, and converting non-paying players to payers.

Our games are free-to-play, and we have primarily generated our revenue from the sale of in-game virtual currency, which players can choose to purchase at any time to enhance their playing experience.

The key to any game’s success is the ability to hold onto its players long enough to realize their economic value, and therein lies the true benefit of our playAWARDS program.

By incorporating loyalty mechanics into each of our games, we believe we have changed the profile of the typical game life cycle — scaling quickly, driving deeper engagement, and realizing greater life-time value from our players.

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Earn Real Rewards.”

Each of our games incorporate loyalty points that are earned by players as they engage with our games.

Each of our legacy social casino games and our Tetris®-branded mobile game incorporate loyalty points that are earned by players as they engage with our games.

Like miles in a frequent-flyer program, our players accumulate more loyalty points as they demonstrate their ongoing commitment to our games.

These loyalty points can then be exchanged for a vast library of real-world rewards.

Each of our games features an integrated rewards lobby, enabling our players to easily browse and acquire benefits from a curated collection of rewards.

Loyalty points are aggregated across all of our games, allowing our players to accumulate loyalty points more rapidly by engaging with more of our games.

Each of these games features an integrated rewards lobby, enabling our players to easily browse and acquire benefits from a curated collection of rewards.

Loyalty points are aggregated across the games, allowing our players to accumulate loyalty points more rapidly by engaging with more of our games.

This drives traffic across our entire portfolio of games.

It is our view that the playAWARDS program enriches the overall value proposition of our games.

By complementing inherently great games with a compelling collection of rewards, we’ve been able to distinguish ourselves from our competition and drive market-leading metrics.

And it’s these results that have enabled us to expand our loyalty program to comprise over 95 awards partners who represent more than 265 brands during the year ended December 31, 2021 across the United States (U.S.), Canada, the United Kingdom (UK), Europe, Australia, and Asia.

By complementing inherently great games with a compelling collection of rewards, we’ve been able to distinguish ourselves from our competition.

Our awards partners are able to reach new audiences and optimize marketing dollars through playAWARDS.

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As we have amassed a diverse collection of awards partners, the scale of our network has become a competitive edge that delivers benefits to both our players and awards partners.

During the year ended December 31, 2021, our catalog of rewards offerings included 95 partners who represent more than 265 entertainment, retail, travel, leisure, and gaming brands across 17 countries and 4 continents, and our players have used their loyalty points to acquire over 13 million rewards with a retail value of more than $600 million.

During the year ended December 31, 2022, our catalog of rewards offerings included 96 partners who represent more than 210 entertainment, retail, travel, leisure, and gaming brands across

105 countries and 6 continents, and our players have used their loyalty points to acquire over 15 million rewards with a retail value of more than $725 million.

Our loyalty program extends the engagement and retention of our players and mitigates the impact of the “Creator’s Dilemma.”

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We believe that the benefits of our loyalty program are best illustrated by our retention, engagement, and monetization metrics.

In each of these key measures of performance, we see meaningful increases as players become aware of, and ultimately take advantage of the loyalty program.

In each of these key measures of performance, we see meaningful increases that we believe are attributable to players becoming aware of, and ultimately taking advantage of, our loyalty program.

We grow our network of players and awards partners.

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We have a proprietary loyalty platform with a global network of awards partners.

During the year ended December 31, 2021, we have developed and scaled our proprietary loyalty platform to over 95 partners who represent more than 265 brands across 17 countries and 4 continents.

During the year ended December 31, 2022, we continued to develop and scale our proprietary loyalty platform to over 96 partners who represent more than 210 brands across 105 countries and 6 continents.

We have amassed a global, diverse collection of awards partners across entertainment, retail, technology, travel, leisure, and gaming.

Our loyalty platform allows us to provide an engaging enhancement to the primary gaming experience of our 7.9 million monthly active users for the year ended December 31, 2022.

We believe the combination of our ten years of development investments, operational experience, integration of our loyalty platform within our awards partners’ marketing and operating practices, and the breadth of our corporate relationships are significant competitive advantages, and to replicate our systems would require competitors to invest substantial time and incur significant expense.

We believe the combination of our more than ten years of development investments, operational experience, integration of our loyalty platform within our awards partners’ marketing and operating practices, and the breadth of our corporate relationships are significant competitive advantages, and to replicate our systems would require competitors to invest substantial time and incur significant expense.

We are experts in live operations.

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When done well, the overall experience, level of difficulty, rate of progress, and breadth of features, can be fine-tuned to the expectations and desires of individual player cohorts.

By delivering content, offers, and features to our players at the optimal times during their gameplay, we can drive paying player conversion, continued monetization, and long-term paying player retention.

Our live operations teams closely analyze player data in order to design and deliver content, offers, and features to our players at the optimal times during their gameplay.

We believe thorough effective live operations, we can drive paying player conversion, continued monetization, and long-term paying player retention.

We are committed to adding value to our player experience through rewards, service, and community.

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We will continue to optimize the performance of our existing portfolio of games, attracting, engaging, and monetizing more players.

In parallel, we expect to diversify our business model as we introduce and scale advertising within each of our games.

We also plan to

introduce new playAWARDS features that will enable our players to transact directly with us, which we expect will improve our gross margins.

In addition, we intend to broaden our focus and act on acquisition opportunities that will allow us to complement our existing franchises by integrating new products and players into our playAWARDS program, as we have done with our acquisition of the mobile rights to Tetris® in 2021, and our acquisition of Brainium Studios in 2022.

parallel, we will continue to diversify our business model as we scale advertising within each of our games.

We also plan to introduce new playAWARDS features that will enable our players to transact directly with us, which we expect will improve our gross margins.

Lastly, we’ll continue to evolve our playAWARDS platform and tools such that we can make them available to strategic partners and third parties under a SaaS model, or in our case, Loyalty-as-a-Service.

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Targeted Strategic Acquisitions

To date, while we have generally grown our business organically by assembling every team, building every product, and acquiring every player ourselves, we continually seek, evaluate, and pursue strategic transactions which we believe will enhance our business as further described below.

Our intention is to apply the resources obtained from becoming a public company and accelerate our growth through strategic acquisitions.

During the company's first ten years, we generally grew our business organically by assembling every team, building every product, and acquiring every player ourselves.

We continually seek, evaluate, and pursue strategic transactions which we believe will enhance our business as further described below.

In November of 2021, we acquired the rights to Tetris® on mobile devices, and in October of 2022 we acquired Brainium Studios LLC.

Our intention is to continue to apply the resources obtained from becoming a public company and accelerate our growth through strategic acquisitions.

We believe prospective game companies will find us to be a more attractive acquirer, given the uniqueness of our playAWARDS program and our overall operating framework.

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Our prior, current, and future acquisition strategy is to expand into new genres, acquire proven games and brands with franchise value, assimilate talented teams, scale our audience, and leverage our playAWARDS platform to create value and improve operating performance.

The genres and related games we are currently focused on are casual (match, bubble, word, card), niche (racing, sport), midcore (Idle RPG, card battler) and casino (poker, bingo, slots).

The genres and related games we are currently focused on include casual (match, bubble, word, card), niche (racing, sport), midcore (Idle RPG, card battler) and casino (poker, bingo, slots).

Ad Monetization

While nearly all of our revenue is derived from in-game purchases, we introduced ad monetization mechanics as as limited pilot program and expanded it throughout 2021 into three of our apps.

We intend to continue to qualify the potential of in-game advertising as a source of revenue.

While most of our revenue is derived from in-game purchases, we introduced ad monetization mechanics as a limited pilot program and expanded it throughout 2021 and 2022 into our apps.

In addition, we acquired the rights to Tetris® on mobile devices in November of 2021 and Brainium Studios in October of 2022.

The Tetris® mobile game and all ten Brainium games generate most of their revenue through ad monetization.

We intend to continue to qualify and scale in-game advertising as a source of revenue.

Direct Purchase

In 2020, we developed and trialed a new collection of web-based VIP features.

The service was extended to select players, who were invited to engage with us through a customized player portal.

In 2022, the service was extended to all players, who were invited to engage with us through a customized player portal.

Each portal is tailored to the player, with a curated collection of unique benefits, rewards, and real-world events.

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It’s important to highlight that these players are given preferential access to unique rewards, along with virtual currency packages that are not available within the game.

The VIP player portal is available to VIP players of a certain tier level and above and we are evaluating expending access to additional tiers.

The VIP player portal is available to all VIP players at any tier level.

Continued Conversion of Non-Paying Players into Paying Players

We believe we can generate revenue growth by converting more non-paying players into payers.

We have increased the average daily conversion rate of non-payers to payers to 2.7% for the year ended December 31, 2021 from 2.3% for the year ended December 31, 2020.

Our average daily conversion rate of non-payers to payers was 1.5% for the year ended December 31, 2022, down from 2.7% for the year ended

December 31, 2021.

We continually assess the data about our players to develop insights that we can use to improve conversion.

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These opportunities enable us to glean additional insights from our players that inform our ongoing product refinements.

We intend to continue to explore new strategies to improve our conversion of non-paying players into paying

players, including continued game enhancements, player outreach, live operations offerings, and data-driven player management strategies.

We intend to continue to explore new strategies to improve our conversion of non-paying players into paying players, including continued game enhancements, player outreach, live operations offerings, and data-driven player management strategies.

Increasing the Monetization of Our Paying Players

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Our portfolio includes both casual and casino-themed games as follows:

• myVEGAS Facebook provides our players with the opportunity to build their own virtual Las Vegas Strip while enjoying free-to-play slots and table games inspired by their favorite desert destination.

• myVEGAS Classic provides our players with the opportunity to build their own virtual Las Vegas Strip while enjoying free-to-play slots and table games inspired by their favorite desert destination.

• myVEGAS Slots offers our players a growing library of new slots, game content, daily challenges, and special offers.

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• Tetris® Beat offers our players a unique twist on the classic puzzle game by fusing its hit gameplay with exclusive music and rhythm mechanics.

During 2021, we also operated Kingdom Boss, a game that allows players to be immersed in an epic role-playing game as they build their empire, forge alliances, command an army of epic heroes, and rescue their subjects from the shadowlands of exiled kingdoms.

We plan to suspend development of Kingdom Boss in the the first quarter of 2022 while we evaluate our options with this game.

The following games were added to our portfolio following the acquisition of Brainium Studios LLC in October of 2022:

• Mahjong by Brainium has elevated the relaxing tile match game with clean, modern design, smooth animations, and calming sounds.

• Brainium Solitaire is a modern take on the classic card game.

• Sudoku by Brainium has updated the classic puzzle with a clean, modern design, calming backdrops, and intuitive controls with a user-friendly and complete mobile Sudoku learning system.

• Spider Solitaire by Brainium pairs the relaxing gameplay with a fresh, modern take on a classic, clear, easy-to-read cards, subtle animations and soothing sound effects enhance the playing experience.

• FreeCell by Brainium combines the fun, challenging, classic gameplay with crisp, clear, easy-to-read cards, smooth animations, tap or drag controls, and subtle sounds;

a user-friendly and visually stunning FreeCell.

• Pyramid by Brainium, has elevated the classic Pyramid Solitaire card game, with a focus on beautiful design, smooth animations, and fast, fun gameplay.

• Blackjack by Brainium, captures what makes the original casino game exhilarating, while making the experience easy, beautiful, and fun to play.

• Jumbline 2 by Brainium is an engaging word game, the object of which is to make words from jumbled lines of letter by rearranging the scrambled letters into words and underlining them with your finger to score points.

• Word Search by Brainium is a fun, charming, and user-friendly word finding puzzle on mobile with dozens of categories ranging from foods to astronomy.

• ilu by Brainium is a puzzle game solved with light, set in the boundless void of space with countless forgotten worlds adrift in the dark without the ability to warm their dark and frozen features, where players bring light and life to these abandoned landscapes.

During 2022, we also operated Kingdom Boss, a game that allowed players to be immersed in an epic role-playing game as they built their empire, forge alliances, command an army of epic heroes, and rescued their subjects from the shadowlands of exiled kingdoms.

We suspended development of Kingdom Boss in the first quarter of 2022.

Integration of Loyalty Program

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We believe our ability to attract new players and retain existing players depends in part on our ability to evolve and expand our content library by continually developing differentiated games, systems technology and functionality to enhance player entertainment and user profitability.

We have a diverse pool of talent located in game development hubs, including in Israel, Serbia, Hong Kong and Vietnam.

We have a diverse pool of talent located in game development hubs, including in Israel, Serbia, Hong Kong, Singapore, and Vietnam.

This provides us with a funnel of new, internally developed game concepts, ideas for improvements to our systems, and close relationships with those local game-development communities.

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We believe that we can compete favorably in our market.

Successful execution of our strategy depends on our ability to attract and retain players, expand the market for our games, convert non-paying players into payers, attract and retain awards

partners, and offer unique and compelling experiences to players.

Successful execution of our strategy depends on our ability to attract and retain players, expand the market for our games, convert non-paying players into payers, attract and retain awards partners, and offer unique and compelling experiences to players.

In some cases, we compete against gaming operators who could expand their product lines to include games that could directly compete with ours.

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There is a risk that existing or future laws may be interpreted in a manner that is not consistent with our current practices and could have an adverse effect on our business.

It is also likely that as our business grows and evolves and our games are played in a greater number of countries, we will become subject to laws and regulations in additional jurisdictions or other jurisdictions may claim that we are required to comply with their laws and regulations.

It is also likely that as our business grows and evolves and our games are played in a greater

number of countries, we will become subject to laws and regulations in additional jurisdictions or other jurisdictions may claim that we are required to comply with their laws and regulations.

There are ongoing academic, political and regulatory discussions in the U.S., Europe, Australia, and other jurisdictions regarding whether social casino games should be subject to a higher level or different type of regulation than other social games to protect consumers, in particular minors and persons susceptible to addiction to social casino games, and, if so, what this regulation should include.

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we are subject to the California Consumer Privacy Act, which was enacted by the State of California and effective on January 1, 2020, and establishes additional data privacy rights for California residents, with corresponding obligations on businesses relating to transparency, deletion rights, and opting-out of the selling of personal information, and grants a private right of action for individuals in the event of certain security breaches.

Similar laws relating to data privacy and security have been proposed in other states and at the federal level, and, if passed, such laws may have potentially conflicting requirements.

In November 2020, California voters passed the California Privacy Rights Act, or CPRA.

The CPRA significantly expands the CCPA, including by introducing additional obligations such as data minimization and storage limitations, granting additional rights to consumers, such as correction of personal information and additional opt-out rights, and creates a new entity, the California

Privacy Protection Agency, to implement and enforce the law.

The CCPA and CPRA could subject us to additional compliance costs as well as potential fines, individual claims and commercial liabilities.

Similar laws relating to data privacy and security have been adopted in Virginia and Colorado, and proposed in other states and at the federal level, and, if passed, such laws may have potentially conflicting requirements.

In Europe, we are subject to the General Data Protection Regulation 2016/679 or GDPR, a regulation on data protection and data privacy applicable to companies processing personal data of users in the European Union (EU) and the European Economic Area that became effective May 25, 2018.

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We strive to comply with our privacy policy and respond to requests from our players to exercise such rights.

However, it is possible that these obligations may be

interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules and regulations to which we are subject.

However, it is possible that these obligations may be interpreted and applied in a manner that is inconsistent from one jurisdiction to another and may conflict with other rules and regulations to which we are subject.

See “Risk Factors — We are subject to laws and regulations concerning data privacy, information security, data protection, and consumer protection, and these laws and regulations are continually evolving.

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Human Capital

We had 504 full-time and seven part-time employees in our principal office and six studios located in five countries as of December 31, 2021.

None of our employees are represented by a labor organization or are a party to any collective bargaining agreement with respect to their employment by us.

We had 752 full-time and twelve part-time employees in our principal office and ten studios located in seven countries as of December 31, 2022.

None of our employees are represented by a labor organization or are a party to any collective bargaining agreement with respect to their employment by us, except for certain employees in Vietnam where local law requires those employees to be represented by a trade union.

We have never experienced a material interruption of operations due to labor disagreements.

We believe that our people are the reason for our success, and we have organized ourselves to maximize productivity and performance.

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Our principal business operations are located in Las Vegas, Nevada.

We lease space in Burlingame, California, Austin, Texas, Tel-Aviv, Israel, Hong Kong, Belgrade, Serbia and Hanoi, Vietnam for our game development and operation functions.

We lease space in San Francisco, California, Austin, Texas, Portland, Oregon, Tel-Aviv, Israel, Hong Kong, Belgrade, Serbia, Hanoi, Vietnam and Singapore for our game development and operation functions.

We believe our facilities are adequate and suitable for our current needs and that should it be needed, suitable additional or alternative space will be available to accommodate our operations.

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Regardless of the outcome, litigation can have an adverse impact on us because of defense and settlement costs, diversion of management resources and other factors.

On April 6, 2022, a class action lawsuit was filed in the United States District Court, Northern District of California, by a purported Company shareholder in connection with alleged federal securities violations:

PLAYSTUDIOS, Inc.

(the “Felipe Complaint”).

On July 15, 2022, the Felipe Complaint was transferred to the United States District Court for the District of Nevada, Southern Division.

On October 4, 2022, the plaintiffs filed an amendment to the Felipe Complaint.

The Felipe Complaint names the Company, several current and former board members of the Company, board members and officers of Acies Acquisition Corp., and Andrew Pascal, the Company’s Chairman and CEO, as defendants.

The Felipe Complaint alleges misrepresentations and omissions regarding the state of the Company’s development of the Kingdom Boss game and its financial projections and future prospects in the S-4 Registration Statement filed by Acies that was declared effective on May 25, 2021, the Proxy Statement filed by Acies on May 25, 2021, and other public statements that touted Old PLAYSTUDIOS’ and the Company’s financial performance and operations, including statements made on earnings calls and the Amended S-1 Registration Statement filed by the Company that was declared effective on July 30, 2021.

The Felipe Complaint alleges that the misrepresentations and omissions resulted in stock price drops of 13% on August 12, 2021, and 5% on February 25, 2022, following (i) the Company’s release of financial results for the second quarter of 2021, ended on June 30, 2021, and (ii) the filing of the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 and issuance of a press release summarizing financial results for the fourth quarter and year ended December 31, 2021, respectively.

The Felipe Complaint seeks an award of damages for an unspecified amount.

The Company believes that the claims are without merit and the Company intends to vigorously defend against them;

however, there can be no assurance that the Company will be successful in the defense of this litigation.

The Company is not able to reasonably estimate the probability or amount of loss and therefore has not made any accruals.

We are a party to a pending litigation matter brought by TeamSava d.o.o.

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Our range of possible loss could be up to 27.3 million NIS based on the claim amount of the litigation, but we are not able to reasonably estimate the probability or amount of loss and therefore have not made any accruals.

On March 2, 2021, a lawsuit was filed in the Superior Court of California, Los Angeles County, by a purported Acies shareholder in connection with the Business Combination:

On March 2, 2021, a lawsuit was filed in the Superior Court of California, Los Angeles County, by a purported Acies shareholder in connection with the Acies Merger:

Acies Acquisition Corp., et al.

County) (the “Complaint”).

The Complaint names Acies and members of Acies’ board of directors as defendants.

The Complaint alleges breaches of fiduciary duties against members of Acies’ board of directors and aiding and abetting the board of directors’ alleged breaches of fiduciary duties against Acies.

The Complaint also alleges that the registration statement for the Business Combination was materially deficient and omitted and/or misrepresented material information including, among other things, certain financial information, certain details regarding Acies’ financial advisors, and other information relating to the background of the Business Combination.

The Complaint generally seeks to recover damages related to the Business Combination.

County) (the “McCart Complaint”).

The McCart Complaint names Acies and members of Acies’ board of directors as defendants.

The McCart Complaint alleges breaches of fiduciary duties against members of Acies’ board of directors and aiding and abetting the board of directors’ alleged breaches of fiduciary duties against Acies.

The McCart Complaint also alleges that the registration statement for the Acies Merger was materially deficient and omitted and/or misrepresented material information including, among other things, certain financial information, certain details regarding Acies’ financial advisors, and other information relating to the background of the Acies Merger.

The McCart Complaint generally sought to recover damages related to the Acies Merger.

The lawsuit was voluntarily dismissed by the plaintiff on August 6, 2021.

Another purported Acies shareholder sent a demand letter on February 19, 2021, making similar allegations as those made in the Complaint and demanding additional disclosure regarding the Business Combination.

Another purported Acies shareholder sent a demand letter on February 19, 2021, making similar allegations as those made in the McCart Complaint and demanding additional disclosure regarding the Acies Merger.

We have not received any further correspondence from such shareholder.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1. Business