A New Frontier: Where Transmedia Meets UGC

[Music] welcome to the novic gaming podcast where it is our mission to explore the business and future of video games we bring together the industry's brightest Builders investors and thinkers to keep a pulse on current events dissect emerging Trends and games share Lessons Learned and have a great time this podcast is also part of novic growing ecosystem which ranges from free and premium research to Consulting and adice advisory services for more information visit [Music] www.nic.edu means either building complex infrastructure yourself or choosing among Legacy providers who inexperienced in games or questionable reputations

pose real risk to your business luckily there's neon the dtoc platform built for games as a merchant of record with customizable web shops optimized for conversion and modern apis that let you use your existing liveops tools neon is trusted by some of the biggest names in gaming to help you sell direct without the typical overhead to start selling direct and finally take control over your full player experience simp head to Neon pay.com or check out the link in the show notes and with that let's jump into the episode hello everyone and welcome to the novic gaming podcast I'm your host Aaron Bush everyone listening has almost definitely been informed of or benefited from some of the emerging Trends we'll talk about today for instance trans media has been discussed for years and we're living in a golden age of video game adaptations as top gaming IPS take over Hollywood and and

as Hollywood IPS regularly become the backbone of games similarly modding has been around for decades but as we've regularly discussed over the past couple years modding is not just making a comeback but is soaring to new heights as new technologies and economic models incentivize new Creator behaviors much of this has been discussed in previous episodes and around the industry but what has been less discussed is how trans media has actually impacted the games industry how these Trends converge and impact each other and lastly how new technologies like all things AI may impact the trajectory of these Trends going forward so joining me today to discuss all of this in detail are two amazing guests I'm here with Shahar s the CMO of overwolf which has been a longtime novic partner and also Nick Testo co-founder of Griffin gaming partners and more recently good game advisers so we have a lot to dig into here and we'll kick things off briefly

with some intros and I'll start with you uh Shahar U could you just tell us about your games industry Journey how you came to overwolf and what you're up to as CMO right now sure thank you um so generally speaking I have as a kid I had two passions one was martial arts which I practiced daily and was a national five-time National CH champion and I was a gamer before that word even was a word um and then I had following that a career in the ENT mment industry and then I founded my own game Studio I was a founder and CEO of a game Studio before I moved to overwolf and currently serving as the chief marketing and investor relation officer at overwolf which is the world's leading horizontal ugc ecosystem and one followup Shahar remind our audience all what overwolf does and uh whether there are any big updates in the few months since we last hosted URI what what's new at overwolf well there's a lot of new things Happ happening um so like I said overwolf is

the largest horizontal ugc ecosystem and overwolf stands apart by partnering with over 1500 IPS enabling diverse content creation beyond a single IP ecosystem like a Roblox or a Minecraft or an epic and and within that we serve Three core H Target audiences first of all in-game creators which range from Mod authors and app developers to private servers owners and small game studios to game studios uh which we're helping Studios explore and adapt with the ugc landscape and of course Gamers which consume the vast array of ugc content that we produce awesome well I look forward to digging into more detail of all of that um today but Nick um similarly tell us about your journey with Griffin and what all you're up to you right now I also started Life as a gamer and uh I'm fortunate to be able to make the career of uh working in the video game Space today I've been a career investment Bank

advised on some of the largest transactions in the video game space I helped 10cent acquire supercell more recently I helped take two by Zinga those are some of the Marquee advisory assignments and also started Griffin gaming partners with um two other gentlemen back in 2019 we've now grown to one of the largest sources of capital and one of the fastest growing Venture funds of all time but our thesis is to be exclusively focused on games it's our passion and it's what we love doing awesome well super excited to have both of you here with me today um and let's go ahead and and kick this off by talking about trans media and get your perspectives on a couple unique angles going on here so obviously trans media isn't new a lot has been said about it over the years there's good and bad examples um but you know in terms of gaming IP extending to other mediums I'm curious what you think

the actual impact has been on the games industry like is there just changing consumer preference at play or is trans media growing the size of the overall gaming Market or just put another way like how should we even be viewing the overall impact of trans media on games right now Nick I'll start with you on this one I think it's absolutely growing the size of the pie when you look back 10 15 years ago there were very few examples of successful media adaptations uh lur coft Tomb Raider was one example but very few of the IPS that were game native actually worked in other forms of media and if you flash forward to today I mean you just have to watch The Last of Us to see what's possible to see something that leverages the passion of a community the just deep expertise that the team that built that game had and translated to a mass market and different audience it just works so synergistically you're selling more game copies in catalog but more importantly

you're reaching audiences and you're telling a story to deepen their relationship with the intellectual property I think this is a trend you're going to see a lot more of the Five Nights at Freddy's type of examples where an entire generation of kids now know this media as trans media and all of its capacities that's what we're excited about from an investment perspective and on the hunt for deals of that rabing yeah and I'd like to dig into a little bit more Nuance here because you know as I've been following the industry from from my vantage point of you know also working with a bunch of teams studying a lot of businesses and just looking at the high level data um like one thing that has been pretty clear is that like even as trans media has been hitting these highs like you know we just think about last year with The Last of Us TV show that you mentioned the Super Mario Bros movie which broke records for like a video game um movie adaptation um you know it was a massive um year for trans media um

but if we look at player Trends you know since Co and I I saw this data from cir recently the percentage of um of the population who plays game has actually been going down and so you know as I've been thinking about trans media I'm not entirely sure if it's necessarily growing the player pie and these um you know primary markets but it's obviously doing something and it seems like at least from what I've seen what it's doing is that it just puts more importance on the IPS themselves on great IPS on great storytelling and then whoever has these awesome IPS whether they're going to you know to video games from traditional Media or whether they're going from gaming you know the other way around um that you know what what seems to matter most is just building audience around these IPS whether it's on games whether it's on the big screen whether it's somewhere else I'm curious Shar like how do you

think about like where these Trends are going and what matters most here from from your seat yes so I'd like to pull for for a second to for the macro overview of everything just to give a sense of how we see the world and how trans media play plays a a pretty significant role so from our standpoint the world of games uh in primarily as we see it from the ugc uh perspective evolved in three stages where we could say game one is was solo gameplay which was defined by linear closed experiences right single player driven games like Zelda Super Mario Final Fantasy these games were developer driven with no mechanisms for players influence or modification that's game one game two was around multiplayer and initial and started to be an initial player content creation uh uh engine in game two through modding and custom content creation the experiences became semi- participatory here we have Doom halflife Warcraft 3 in game three where

we are right now we have the first ugc platforms Minecraft Roblox overw fortnite in game three games are designed as open participatory worlds here players are provided with tools to create their own game worlds asset experiences and this is where we're starting to see the impact of trans media following kind of what Nick said to start to take effect currently we see it with very particular verticals primarily between film and TV business so we have the Mario Brothers is The Last of Us my personal favorite Fallout but we're going to move slowly into game four in game four so if game one was solo and game two was multiplayer and game three was ugc first platforms game four is about trans media ecosystems and co-creative digital societies and there are four drivers that are going to usher in game four one of them is the player demands and behaviors right the the the Gen Alpha gen Z of today plays in in in in a malleable content environment

that's one thing that's going to drive a lot of demand for content in general there's a rise in user acquisition cost and it's very noisy to get your game or piece of content noticed there's standardization platforms like Roblox and overwolf and others that are going to come out that are going to kind of tie and and build a blueprint for Brands IPS in and out of games to start speaking with each other and naturally of course the fourth one is AI which is going to put everything on hyperdrive so what's going to happen is Big IPS are going to change how they behave today one thing that is important to note is that if we look at what happened in the film industry so the film industry had kind of a boom in the 70s and 80s where a generation of of of young kids grew up consuming that as their primary source of entertainment 20 years later those consumers and viewers ERS became Movie

Makers also because digital they be cameras editing Tools YouTube came there was a convergence of player consuming movies movie goers consuming movies and having the tools to really explode content creation the kids that are consuming today a primarily ugc uh um experiences are going to be the makers of tomorrow and it's important to state that not only makers and in terms of content creators but today if you look at a big at a big IP holder the people that are running the IP are of the old generation they're used to making deals in a very particular way the new kids that are going to come are going to be ugc experienced dealmakers so people like Nick and myself are going to our experiences won't be solo game experiences or multiplayer they're going to be ugc gamed and that's going to allow for the arena of trans media to change completely I mean I love the the

framing of that Shahar I think it it makes a lot of sense you know both from ugc being a discovery mechanism to being like this new composability layer that um everyone especially a younger generation sort of takes part in in the stories themselves in a sense um Nick what do you think about what Shahar just said is there anything that you especially agree with or anything that you disagree with or want to add any Nuance to I think it's a really smart framework um it's part of the reason we invested in overwolf we see the world very similarly as indust we're really looking for the next leg of growth these step functions higher in the industry uh I saw the same report in terms of player counts that I don't actually read too much into that I if you zoom out and look on a 30-year time frame you've got an exponential curve at play with gaming and you see these new form factors come online you know obviously PC is one of the oldest but it's actually growing right you know player counts on Steam are are um

happening you're seeing new content explode and succeed on Steam one of the oldest platforms and new platforms are still emerging you know Roblox uh released its daily active user account a few days ago 90 million people play on Roblox every day and that number is growing between 20 and 30% consistently year-over-year and it's new content that's driving that but it's also this participatory ecosystem where creators and players overlap many of the people who are most engaged as consumers are also creators and there's a sense that you're part of something and that's what we love about the overwolf business model when we think about the next leg of growth as mobile has sort of hit its its uh you know point of um I wouldn't say saturation but you're not seeing that same exponential growth just by virtue of the mobile platform coming online out sort of outside of developing geographies we do think that this AI Revolution is going to substantially lower the barriers to Creation I mean if you think about kids playing with Legos

my son's 10 he doesn't need any sort of incentive he wants to create this is part of having fun and if you make the tools simple enough where you can take text and translate that to code I think you're going to see exponential growth on the side of the the creators and it's a two-sided Network where more content drives a lot more uh consumption on the user part but there'll also be another side to that coin which is a lot more noise in the ecosystem a lot more junk for consumers to wait through and we saw that with mobile with tens of thousands of apps launched every year and so this is why we're particularly attracted to the role of Ip plus user generated content because there's so much fandom around these Marquee franchises like Star Wars if you look at how much fanfiction has been created around the Star Wars ecosystem or if you look at Harry Potter and you just think about how much time and energy people spend there's a an intense passion around these big intellectual properties so when Harry Potter Hogwarts Legacy launches it's no surprise that an open world where people can wander around and dive into that ecosystem has just

tremendous full from players but they need the tools to be able to create content gaming content around that and Roblox is chipping away at that but we think overwolf has a really unique angle to attack that same phenomenon I I want to respond to what Nick said and say two things uh that one of them is more relevant than the other I think trans media will go both ways right because right now we're seeing primarily we're seeing big IP games go out into movies and we see some big movies come into games I think we're going to see variations of content that's doing really well but isn't necessarily a big IP from the gaming side also come out so it's going to be a twoo a two door way where where uh you know for instance there was a mod called the Stanley parabol which is a Half-Life 2 mod that became a standalone game that sold around you know a million copies in 2018 and that's sort of an existential philosophical mod that could take out so many forms outside out outside the world of gaming but currently there are no you

know appropos standardization there's no ways and there's no dealmakers and there's no technology to make that work I think I think we're going to see all that on hyperdrive and and a lot of that is going to be due to Ai and Nick touched a little bit about AI I wanted to say that what's going to happen with AI is is AI acts both as a creative partner and a procedural generator so AI is going to be a co-creative cretive partner that will put players in ongoing dialogue it's the ultimate partner in any really gameplay companionship and also in creation so gaming companions for playing and creation but it's also a procedural generator transforming which will transform the game world in real time based on players choices and fostering emerging co-creative narratives so this will support a self-sustaining Loop of content emergence so interject and you know an IP on this future tool building um kind

of AI incentivized uh uh infrastructure and this will this will just change the way entertainment is going to be done in general I love it um and I since we're talking about AI maybe we can poke into a question or two about it right now before we kind of get back to more of the the details around IPS and and and modding specifically but you know you talked a little bit about your thoughts on how AI might impact modding specifically um what is is overwolf doing anything about that or like how are you setting the the company up to succeed in a world where these co-creator tools are just going to become so much more powerful so so I want to I want to get real on this point we are of course having AI run through our company in various touch points but AI this game fortrans media Vision that I was talking about is not here yet there's a few things that need to be built in order to allow for these types

of tools to take effect so the key thing that will concern Brands and justifiably so is brand safety integrity and holding up just the Fidelity of their brand so you need to be able to facilitate facilitate an infrastructure that can uphold that before anything and that includes moderation curation how you know we'll talk maybe about Cloud cooking and how the various platforms interact with mods today so all that that needs to be set in place AI does Take A Part in that but a very small a very small part once that is set then the kind of visionary AI uh uh companion and procedural engines are going to be able to take place when it comes to ugc and trans media got it and in my last episode I was talking to Sebastian bark who runs a company called Infinite Canvas which you know is working with all sorts of new technologies and new forms in one point in that episode he made essentially is

just that like the Baseline for making games you know kind of wherever you you are and the the industry as a maker is going to increase and this is just the way it's always been with technology right like as new tools progress like what you have to incorporate into how you build your games just evolves over time and you know as a whole the industry gets uh you know more complex and better and it's output um Nick I'm curious from from your end from the investment side too just as you think about Ai and the Baseline increasing and understanding that this still is very much a work in progress that takes years to to unfold um like what is exciting to you like in this landscape in terms of you know backing and supporting teams that are helping increase that that Baseline of development I actually disagree with with that assertion I think that's true

in certain respects like I think if you were to ask you know what's the impact of AI on on Rockstar as business I think it's obviously going to be that they're going to do more they're going to use those tools to step up the bar to create you know the world's best content that's that's their standard and that's how they'll use the technology I think but when you think about just with broad brush Strokes it's very hard to paint this industry with with one stroke I think there'll also be a lot of really you know superficial shallow experiences which delightful there's going to be a lot of innovation in core loops and gameplay and that's part of the magic of Roblox there are some experiences that are really fun for half an hour or an hour but don't necessarily you know work for hundreds of hours the way that the Rockstar attempts to create content that'll engage people for you know that type of amount of time and I think that AI is creating a lot more potential to bring more creators into the ecosystem by having it be less of a burden to code and especially complex coding I mean building games on unreal historically

has taken a lot of sophistication and today you're seeing a lot more people dive into the creation side of this two-sided network but what I really like about you know overwolf and Roblox and now uef is there's business model Innovation as well I mean if you go back 15 20 years ago there was a lot of appetite from the most engaged players of Quake let's say to go create a level because they wanted to participate in this ecosystem that they were so immersed in and it was part of their lives but they didn't have any sort of economic incentive to do so so when you saw were people dabbling in the creation side of the ecosystem and today there are people making millions tens of millions of dollars creating games on other people's platforms and that's part of what needed to happen to see the industry evolved so that people could build real businesses could spend two three years potentially building a game that was expected to be monetized over time and create real Enterprise Value that a venture capitalist like us could actually invest in and we are starting to see that watershed moment where there

are you know very strong incentives now economically to make big swings and big Investments and I like the fact that generative AI allows creation at every level of creation you know it could be the most shallow and superficial experience which could be very fun and the next big thing and sometimes those core Loops by the way they turn into franchises it just takes that breakthrough moment of something really fun and delightful that goes viral and gets discovered for then the resources to go double down on that idea and so that's where being an equity investor with a very long-term orientation is a lot of fun around this ecosystem because it could be 15 years until you see the fruits really truly start to ripen even Roblox today I think is still in the early Innings at it's 15 years later but these two sided Network effects if you pull back and look at the value creation history in games these are the most powerful business models and those that accrete value over very long times would done right yeah I think that's that's really well said and I think we actually um agree with each other and what I sort

of meant by increase the Baseline is just no matter where you are in the ecosystem like these tools Propel you to make something better than you could have with the resources or talent that you had before so as you said with Rockstar that has you know one of the the biggest budgets around like you know they'll be able to create things even more awesome or if you're like an indie studio and you know you have a set budget that can only support three to five people what you're going to be able to create with this new generation of tools is going to be better than what you could have made 10 years ago and it's such the Baseline increases for being competitive in the market and similarly with the democratizing angle with individual creators who might just do be doing it for fun and all of these different platforms they're going to be able to create things that they haven't been able to do um in the past and you know what gets discovered and and wins Big will you know blow people's minds you know who you know think of modding or you know user generated games of of you know a previous era so I totally

agree with you on that and Shara I want to get your thoughts on the the business model side of this too because obviously you know te changing Technologies they don't live in a vacuum they have an impact on the way that that people create on the incentives that exist in the ecosystem so so how do you think you know from the overwolf perspective about you know changing business models and incentive models here first of on I want to say plus one to what Nick said in a way that building and facilitating a a business environment for Content creation is a must for various points that's our view that's the overwolf view point so so first of all we envision a world in which Gamers spend most of their game time on user generated content that's one and we are also our mission is to build a world where in-game creation which is the mod the modding and the apping and and the private servers and

the Indie Studios and the studios is a profession so going and creating something on the game is the equivalent of being a streamer on YouTube you know for for for to make things simple and this is what drives us because we found out that when you introduce and you you you construct a fairly monetary ecosystem you can enforce many rules that if you don't have a monetary system are a little harder to enforce I want to I want to be clear that a lot of the ugc is in will always be free but there are professionals that are coming now and evolving in their level of doing ugc and they deserve to be compensated because they're doing it all the time so our Northstar at overwolf is how much did we pay out to creators per given year last year it was $21 million this year it's going to be more but that's what drives us because we know that first of all brand safety that guards brand safety especially in high Lev DLC level context like we're doing with Arc so about business models and again The Innovation comes there this year on uh on June 17th

we launched on Arc survival ascended uh the Power Rangers mod right we teamed up with Studio wildcard Hasbro and Luke North world to bring Power Rangers into Arc um which is an example of a new business model take an IP take a small game studio and construct a premium mod yeah for premium into an existing game the game becomes a Content engine which is part of how we envision the future we envision a future in which game developers the game is an engine of content and many small game developers are indie game developers can interact and create if they have the skill premium level uh mods to be sold on on inside the game now basically what that meant for the Power Rangers is that players could skin their characters the original Mighty Morphin Power Rangers and equip their weapons and Zords and first and foremost again goal is to create a brand safe moderate space where players can interact with an IP

Nick mentioned that word before and and and and I love that word participating so I said game one game two game three game four in each of them level of participation intensifies which causes many many many many different effects on the the engagement and what gaming does for a person now our in inside Arc we unlock this new business model by introducing premium word premium mods we also introd produced a Creator category new Creator category with luk North World which is a small studio now for the existing IP for Power Rangers this was a new type of brand experience it's it's not building a storefront it's a branded premium mod that enables Gamers to interact with their IP through gameplay which is a much higher valued interaction uh uh process right and and business-wise it did really really well and I I would expect we we we would continue to announce more deals of this

fashion in the future so so again this is all kind of the game three building the ugc platforms that allows the brands and the IPS and the content creators and the game studios to to talk with each other I mean going back a decade or two who would have thought that a Indie modder from you know England could be working with a major studio in in the US I mean there's no no way that would have happened in today that becomes becomes more and more a reality yeah and and just so our our listeners know about six months ago I hosted a conversation on the podcast with URI of overwolf but also you know leaders from the teams of Studio wildcard and look North world so if you're interested in learning more about like what these relationships are shaping into and how like the composability of platforms and Builders are stacking on top of each other in interesting ways and how you know that business is is working in the early stages and you know want more thoughts from different people um in in the stack

of where it's going I definitely recommend um checking out that that episode it was a really good one but Shahar I want to follow up on this just by asking you like in a bit more detail where do you see this going like three to five years from now um in terms of like the games and the IPS that are going to be built on overwolf like what is this ecosystem going to turn into and in the same way that like with modding in the past I know some Publishers have had hesitations about like like what are users going to build and they just have to get comfortable with a new tool set a new way of thinking about it I assume IPS also have you know similar hesitations about how their IPs are going to be used so what are the like the I don't even necessarily want to call them challenges but like the mindset shifts and like tool shifts that like still need to happen to to make

this become a much bigger thing than it is right now yes so first of all I'll share with you some numbers which I can do now when we talked when you got together with URI and Luke North with Alex I guess cool um and we didn't have stats now we have stats some of them I can share so in Arc survival ascended in the time we've been working with them up until now we have a little over 300 million mod downloads altogether um around 3,000 mods um 300 million downloads and and a staggering stat stat is that 74% of Arc players play mods yeah let let that sync in 74% of Arc players play mods and modded content increases on average Play Time by 42% now that alone is kind of like an endgame for any any publisher to consider why to engage in ugc now given there are valid deep concerns and and depending on the

game and the popularity and the complexity these you know game Publishers will always be worried and of course big IP owners but the numbers are overwhelming and they're just growing because of the consumption habits of younger Generations right 1% of these 3,000 mods a little over is premium sold at a price $2 $5 $10 and I could you know happily state that with Arc we sold and we paid over we pay to creators over $500,000 which is life-changing to some of them so when you look at these numbers and and you look at what the future look like looks like you say well it's going to look more like this and everything and the trends we're seeing here are going to be intensified because the consu the players are just going to want that So eventually it's going to be you know a codc moment for Brands Publishers and IP owners you're either going to fold into what the consumer wants and are getting on all these platforms or you are just going to not

exist and it's going to be very competitive because buying traffic in three four five years from now is not what driving buying traffic is today it's still very expensive it's going to get more noisy Nick talked about a lot of these you know experiences that are going to be AI based or what not AI based it's going to be a noisy heavy world you want to make sure that your ugc uh uh ecosystem is well built to to handle that noise and that you can create business relations with with IPS with IPS it's a it's a different story and I'll reiterate the point because they're a bit more old schooled the game Publishers a bit more on the front line because they're seeing the numbers and they're actually they're hurting um with with IPS it's it's a bit different a bit old school but I think that once they start seeing some of these deals come through and the impact it's going to have on their business and how their how their players and and fans are going to engage and expand their IP they're going to find a way got it I would just add that like when I

take stock of where we are in the market today there is just this tremendous opportunity in in my view looking at you know the big franchisees getting bigger um obviously you've got EA football club at sort of record player numbers record engagement you see Call of Duty at its peak lots of these big franchises they're known Commodities they can justify huge amounts of investment and the companies behind them deliver these products are at their their peak in my opinion so while you've got the big Fran franchises getting biggest and the biggest Publishers redoubling their efforts to focus on that sort of low risk of deployment of capital into these franchises they already know work on the other side you've got a player community that's just desperate for Innovation for something new and you'll see you know an unknown brand new developer launch a game like black myth Wukong and you see just tremendous appetite for something that feels Innovative and new and when I look back at sort of the hit rate relative to um user generated or modding content you know an ecosystem that's evolved based on lots of user generator

or content creator sort of steps forward in a franchise you look at Counterstrike pubg Dota 2 League of Legends these all started as mods these iconic huge and new franchises built on what was out there and they were a function of that participatory Instinct that people who are deeply engaged in products who see angles for something new can do but they lack the tools a to really dive in and sort of mass Market create in those ecosystems and then B they lack the economic incentive to leverage existing platforms to do so with little friction so most of those companies either had to raise venture capital or leverage you know their ability to fund those projects to build something new and there's a huge amount of effort to launch an entirely new franchise versus launching on a a platform like Roblox ufn or overwolf and so as I think forward you know the most excitement I have is around these mods that can take existing ideas and Concepts forward in a

way that feels really Innovative to meet that player demand for something new I like it uh makes a lot of sense um especially how um it it almost seems like the pendulum is swinging back because if you look at the the history of the industry maybe 20 years ago you know a bit before I was paying attention but as I understand it like when modding was coming into to full force and people were trying to you know the people who are most excited about making games many of them just wanted to build on top of the big franchises the games that they love but there wasn't really a way to do that um you know at the time economically uh where it could you know sustain their living and so you know many of those developers turned into the Indie developers of you know the past many years but now with some larger franchises the ones that everyone loves today um you know kind of going into direction of enabling people to build on top of them and not just you know

individual you know casual creators but increasingly the professionals as Shahar as you were saying before it almost seems like a full circle moment in in a sense where um yeah we really could see some of like these biggest platforms support like an ecosystem of creators in a way that people maybe dreamed of 2030 years ago but is finally going to be happening now and I think that's really really exting I'm curious to hear your guys thoughts on like any best practices that are starting to form um both kind of from the publisher side and the brand side maybe you can give a little bit of advice here to to anyone who's listening so um on the publisher side maybe Nick you can speak to this like what should like more Publishers be thinking about in terms of of leveraging this trend you mentioned that um with companies like a ea or an Activision

they increasingly have refocused around their biggest IPS and you know the the growth engine of their businesses in part has been making these IPS the fifas or the FC's now and the the call of du's bigger as an ecosystem but not all big IPS have like been able to make that step how should they be thinking about like this wave and this technology as a means to do that and for them to do it successfully I think there's really two schools of thought here one is to deeply invest in your own systems of technology and tools the way that epic has obviously started with the Unreal Engine and then leveraging that um it requires huge amounts of investment hundreds of millions of dollars spent on engineering over time to build those sort of internal capabilities which then they uh leverage to create uh fortnite and sustain fortnite which is just a incredible Leap Forward in the industry in terms of what it can deliver with an

always on live service that's one one way the other way would be to leverage third-party tools allow the technology companies to really focus deeply on building those capabilities and then the big Publishers partner the way that EA did with overwolf on the Sims I think this concept of ugc as a service is really intriguing because the core expertise of some of these Publishers isn't going to be to deeply invest in technology tools and they won't be able to leverage those in such a way to rationalize the investment for a roadblox it's worked after 15 years of very deep investment in building their platform but I think a lot of the biggest Publishers they really need the path of lease resistance to unlock that fan engagement there are so many people who are willing to dive into franchises like um the biggest franchises you know in the world and those those people they need tools to be able to do that and they need the safety on the publisher side to understand that their brand will be respected there'll be restrictions kill switches to prevent things that

border on cheating or anything objectionable to the player community and that's what overwolf has built is to take that burden off of the shoulder of the publisher to create those tools and ensure the outcome that the publisher is looking for which is a trusted place a Sandbox if you will for the community to participate in these big intellectual properties and on the other side of that to see the Sparks that come from that creation the next big franchise shipped from a user generated contribution the Publishers own those intellectual properties so to the extent the player community expands and you've got incredible leaps forward and engagement and the publisher didn't have to take that creative burden on itself that's a huge leap forward in the business as a whole so we think this is just the very early Innings of the publisher buyin which we're seeing with examples like The Sims but jar can talk obviously in a lot more detail on that um great answer nick uh loved it um I I think I think that what um Publishers need to be

extremely aware of is that if you're not a ugc first based company I would advise for you not to touch ugc because games specialize in in in the in creating a core experience and that's what they should spend their efforts on and there are a few things that come with ugc that aren't evident at first until you have a successful game and and and I I would say you know the technology to create ugc is is complex but there there there there will be others doing that and offering that as a as a service but what's tricky about ugc specifically As you move into big titles and IPS is that moderation curation and safety become the main show and nobody wants to take responsibility on an IP that's worth billions that you know if if you're I'll take a a fictional example if you're running a you know a GTA 6 and it's open for ugc and suddenly somebody body puts a Marvel character in it that's just just

unacceptable and if you're a big publisher and you want to run your own ugc Department the ugc department is on nails because it doesn't have any experience in moderation and curation it hasn't built the safeguards and the rails and it doesn't have the teams if I would say what is our you know main differentiator as as a service provider and that's where I think the big Brands and IPS need to think about is first of all brand safety as a first second you know an economic Marketplace that makes sense for IPs that they can actually also benefit from this in in in various forms not only premium mods and a moderation team that has been doing 10 years of day in day out moderation across 1500 titles with the Staggering success uh um just the results and the way we work here so that's that's that's a more complex layer it it it's not as sexy as saying an an an AI or whatnot but this is what it takes to build the kind of the basr ground for Trans media

to really happen for a massive IP now to come in and say we want to you know engage in games and open it up to the to the community I would say that given the safeguards and moderation curation safety goto Market activities we also have a massive team of creators we have close to 200,000 creators on our platform on many games we can cross reference cross collaborate with these creators all this creates an ecosystem system that that you can grow so it's everything Nick said plus moderation creation safety and monetization really yeah the Nuance is is definitely appreciated on that and I mean I guess it goes even even deeper and maybe one other layer of nuance to this is just that you know historically best practices for different platforms have required different um skill sets different capabilities uh users look for for different things and um one thing you didn't mention before too just about

like what the the arc example unlocked is is and what much of what you do with mods in general is the cross-platform nature of them which which I think is is really interesting and and very powerful for you know enabling creators to be seen and accessed in more places but you know you know beyond even PC and console you know mobile Still Remains like one of the largest um pillars of the industry and there have been you know some interesting ugc oriented projects out there that uh you know have you know found interesting niches and created some best practices but Shar I'm curious to get your sense of like kind of the continued crossplatform Trend here how is overwolf thinking about mobile and kind of like what we've talked about so far like is there any other nuance you want to share about you know how to think about this across platforms so

first of first of all double down on Cross crossplatform because that's a new thing that happened mods on Xbox and PS5 is a new thing and it's it's not trivial because there's still more knowledge for the platforms to gain and for us to work with to to enhance the experience and to better the experience for both the game Studio the modder and the platform saying that on Arc as an example 69% of mods are on consoles so it's it's huge and we have crossplatform crossplay so I can download a mod on PC they can download it on Xbox you on PS5 and we'll play the same instance to play the same mod you also have things like you know dynamic blueprints where I can try a mod that's going to come out soon try a mod before I buy it and all sorts of things so there's so much Innovation that that's going to happen there per mobile the the I don't have anything in particular or interesting to say about mobile because

the the type of Engagement currently that exists on mobile doesn't isn't conducive to the type of ugc we're working on that doesn't mean that we won't and we had dabbled with mobile from time to time but we we felt it hadn't ripened to a place where we're like let's go all in on mobile because the players are different and the core audience is very very different than you know the World of Warcraft Minecraft League of Legends and uh The Sims players right it's it's it's it's casual hyper casual which constitutes the majority of the audience and I I do think that when you talk about crossplatform modding there will be a time where that's going to be available on mobile I do and that time might not be so far but we're still not there yet and because we're doing so many things we have to be extremely focused um and and as overwolf we're trying to be as disciplined and focused as we can uh so mobile is still not in the star for us just yet yeah well let me flip this over to you neck because I know

even at um Griffin the team has been you know still like pretty bullish and interested in all things mobile and and ugc at large still is a a trend that that touches on that platform in bigger and bigger ways how do you think about um kind of the role of of mobile and crossplatform you know with ugc trans media and everything we've discussed so far Mobile's a bit tricky to find investment opportunities around this theme of The Creator economy um the closed ecosystem on iOS just makes it very difficult technologically to see robust Creator ecosystems be able to contribute and iterate on existing franchises so what we've seen is much more of a tendency to take really talented teams that have done it before or are inspired by an existing product the way that the team that built stumble guys was inspired by Fall Guys right these these fast follow examples are really all over the place in Mobile many of the biggest franchises were inspired

by another franchise and then a team that was highly capable on a Define budget was able to ship a product that was a big step forward but it doesn't leverage the tools and Technologies the way that PC modding has for for decades actually um there are exceptions to that Roblox has really run away with a you know Creator economy-driven business model in Mobile but that's because of that cross-platform Fusion they've got creators on PC building games that then work inside of the Roblox Master app on mobile and they've been able to do that in a way that um very few have you know Facebook's attempts to launch an app store within the App Store on iOS were were refused um and Roblox has experiences and it's quite different than what Facebook attempted to do but it does create this white space for Roblox to leverage that Community participation in Mobile the platform where most of their Their audience spends most its time so they've got a unique competitive position there that is great for them but it's awfully hard to find new upstarts that have a chance of competing in that ecosystem now 3 to

5 years from now as there's regulatory relief starting in Europe and other places we'll see how the the mobile ecosystem evolves and as investors in this category we just try to study the data to see what trends are happening in real time and this is a space we're super curious about continue to interview uh companies that are building creatively around this and looking for Investments actively got it well we shall see uh we need to start wrapping up soon but one more question about this for you Shahar uh we we talked about best practices for Publishers and how Publishers should think about this growing space but um I think we should also talk a little bit about uh like Brands themselves and how they should be thinking about thinking about and approaching this industry um clearly there has been a lot of interest from Brands and ugc in general you see a lot of Buzz in Roblox you see you know IP branded worlds uh which you know Mak

sense to some degree maybe doesn't make perfect sense in other in other places you increasingly see uh more IP embedded in you know Rob Roblox worlds or um you know potentially in the future ufn to Greater extents as well with skins and such um but when it comes to to modding and you know building a presence on other people's games how should brands thinking about getting involved in this like what would the the steps be to take you know both in terms of like knowing where to begin but also in thinking about like how to approach it well okay a few a few a few thoughts on it one there's a huge uh uh shift in budgets in in media budgets altogether going from traditional media into games because the brands understand that people are where the games are not only playing but also socializing and they really want to get into the game which is a huge conundrum

because especially as you move on the High Fidelity games not only the games but the gamers do not want any ads interfering in their games um you know at overwolf we are kind of uh a trojan horse in that sense that actually knows how to settle this per per perplexion because our our our creators are Gamers and they're making Creations that are played with the biggest games in the world and those Creations the way we helped creators make money is that we run ad unit within those Creations so what you have is Gamers playing the world's biggest games as they com as they're consuming companions that they love and help them to game and in those companions they see ads but they know also these ads are going to their fellow Gamers that created this content and everything is free for them so there's sort of a palatable excuse and reasoning for everybody it's a win-win win for everybody for the brands for the game

studios for the gamers and for the creators and that's kind of our secret sauce when it comes to how do we Infuse this Marketplace I would say that any brand needs to get into the world of gaming now it's too late now you need to get into it and you need to get to it by doing small bites work with overwolf work with whomever you want the issue with the Roblox is or the challenge more more to say with the Roblox as in the big IPS it's a one-off thing it's a very big what you're seeing are is very big from a media buying budget it's a huge huge uh um it's a huge initiative that costs sometimes millions of dollars it comes and goes and there's no consistency so you need to come to platforms like ours that allow you to engage you don't need to spend big budgets you can if you want but you can consistently engage with the audience learn how can you track how can you reach what what what works for you here the gaming world is complex there are many genr there are many devices the audience is fragmented you need to map make it so you need to team up with a

team that can map make map make it know how to spend your budgets and and show you like return on and show return on your investment when it comes to to Media so move into games find platforms like us to work with and and figure out a strategy here and I I just think these brands are fighting for survival you look at these iconic intellectual properties like Monopoly it's not clear my son would know what Monopoly even is today if it weren't for a scop Le's game you know a game like that reaches tens of millions of players it builds a a massive economic franchise like3 billion do of aggregate Revenue in a new game I mean it's not only proof that new games can still break through but the power of that intellectual property to reduce the cost to acquire consumers to create a gameplay that follows on for people who do know what Monopoly is just naturally with what people know of as Monopoly and allows that intellectual property to evolve and Thrive and for the biggest companies in the world like Hasbro they've got very active licensing teams

they can go find Partners like scopely I would say the same is true you know with epic they've got just this robust ecosystem of intellectual properties feeding into fortnite and that's you know again how my son knows who Snoop Doug is as an artist it's because of the live event activation it's how he knows who Jason Vorhees is these characters that many of us from a older generation knew because of film and because we used to talk about it or from comic books but the new generation the younger kids are all interacting digitally with IPS and if these IPS aren't naturally finding their footing on Tik Tok they've got to find deliberate strategies to get in front of the consumers where they are and so working with a platform like overwolf is our bet as to how these big IPS in Mass can find their way to Consumers who are spending their time playing games and the results on the other side can be electric when you marry an intellectual property like we saw with Pokemon and Pokémon go the right game mechanic with the right intellectual property could just be explosive and you end up with a piece of

software with your IP and a direct to Consumer relationship with a billion users right and that's something Pokemon would have struggled to do without that type of game on the other side so B wolf seeding that ecosystem with the community creations and being able to forge those relationships with the intellectual property owners for us is the next leg of growth for overwolf and one of the reasons we're long-term very excited investors behind the company well said um I have one or two quick questions for both of you as we wrap up um first of all Shahar um what else is exciting at overwolf right now or what else should people be looking forward to in your ecosystem as this year wraps up and 2025 hits off soon you know look later in the month or the later in the quarter we're announcing a very big partnership uh that's going to be quite impactful um that's one thing we're very excited about that we're kind of all around the

clock around that um and second we have more IP deals coming uh next year into Arc uh and that's very exciting uh to see that take shape and form and also scale so these are kind of the things that are on our radar right now there's a bunch of other things but these are the most exciting in context to this to this type of conversation awesome and where should listeners go to to learn more or stay tuned or get involved with overwolf and you know stay tuned basically LinkedIn is a good place we push a lot of stuff on LinkedIn also the the senior leadership of overwolf is present there and in general blogs uh social accounts uh if you're a modder or if you're a gamer that consumes mod the quitter that the kurts forge Twitter X is a wonderful uh place to hang out also Tik Tok and Instagram just look us uh look out for us awesome and similarly Nick back to you uh you know we talked a

lot about modding ugc trans media today but you know what's another area of the gaming landscape that's exciting you right now from an investment perspective that you would like to highlight or you know if you don't want to dig into that you know is there anything else you want to share about what your teams are building at Griffin or good game right now we're really passionate actually about the Indie ecosystem the hit risk is very high and it's very hard to predict success but we're intrigued by the Breakthrough evidences of um hits like Manor Lords for example which was largely driven by one one person's contributions to the game and obviously it's grown a bit since then but to see the power of individual creators in this world where AI can really amplify those creative capacities that's extremely exciting for us takes a lot of work there aren't you know VC uh sort of formulas to look at someone's LinkedIn and predict whether or not they'll be able to come up with a A New You Know sort of creative Endeavor that um is

unpredictable Innovative and exciting to Consumers and that for us is thrilling I mean to be on the hunt and talking to people of all varieties um we're also active on on LinkedIn and social channels so if you got an interesting idea feel free to reach out uh pitch at Griffin gp.com we'll respond to everybody who sends us uh what they're working on awesome well let's go ahead and wrap up here guys it was a real pleasure to chat with you both today uh I learned a lot and to all of our listeners thank you as always for tuning in we'll catch you in the next one if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a fstar review and if you want to reach out or provide feedback shoot us a note at podcast nov. or find us on Twitter and Linkedin plus if you want to learn more about what has to offer make sure to check out our website

www.nic.edu and advisory Services again that is www.nic.edu [Music]