AAA’s Future / Epic Layoffs / Winners, Losers & Hidden Gems

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guys doing today awesome excited to be here yeah doing great awesome awesome well we got a lot of a lot of news to cover but uh hopefully fairly briefly a lot of updates including everyone's favorite topic hopefully this is the season finale of the unity Saga we'll see I guess whether it continues from here but we've got an update on that with some compromises potentially uh Jim Ryan with a retirement unfortunately from Sony uh Capcom with some interesting comments coming out of the president Phil Spencer also with some Unearthed comments from the the uh gift that keeps on giving the trial that likes to leak things uh and then epic unfortunately was a bad news which we'll get into and then just some some good discussion on some some winners and losers in the market and uh some hidden gems to pay attention to so why don't we just start right off the bat with uh Unity of course the topic everyone's waiting to hear about yeah so you're right the Saga is kind of never ending and I'm not sure we'll have an end to it this month or even the next month but um essentially the stock is down over 20% since the

announcement was first made two weeks ago and it kind of just keeps going down it seems like the trade off for monetization just fell completely flat on its face because now almost everything was backpedal and they lost Good Will from their Community um just some examples that have recently hit the news and it keeps coming in but um the first official Unity group ever created Boston Unity group kind of a organization of Developers on the Boston area that assembled in 2010 uh dissolved on Tuesday they're rebranding themselves to like the Boston Development Group or something so they're basically going to start exploring uh other engines uh out of protest for unity's uh changes and loss of trust um again even though they rolled back most of these changes it seems like some of the damages are reparable and then you had an indie developer uh neag nasus um site shattered trust as the reason

why their switch Port of their combat racing game ballistic NG was cancelled um the developer basically said you know if they can change the terms of service on us at any time we don't feel comfortable creating a game with this software because it can essentially us financially if you know they just wake up on the wrong side of the bed one day um and then another indie game vampire survivors the dev kind of came out and said you know I used this for um my game and that game was pretty big I think there's even a Wikipedia article about it but he's like I'll never use Unity again um and uh a lot of these issues were addressed by the create uh segment president and create as their engine business uh Mark whidden in a fireside chat last Friday um he was saying Unity is trying to build a sustainable business that scales with users Revenue somewhat similar to what uh Unreal Engine does with their revenue share model but you know this begs the qu and it's evident through unity's financials that having a profitability

problem but it begs the question why didn't they just introduce a revenue sharing agreement in the first place like now they have a 2 and a half% cap on Two and a half% revenue cap on revenues above uh 1 million but before it was a runtime per install model which infuriated everyone um and he said that the per install model was lower fee in the aggregate than Revenue sharing I I mean I I just don't buy that for one second uh and then only games the only games that are affected now have made more than a million or more in annual revenue and have 1 million or more quote unquote engage engagements with new users the problem with this metric is that it's again vague and there is no clarity as to what an engagement is it's the same problem with installs essentially with installs you can have someone uninstalling and reinstalling the game installing the game on multiple devices you know if the developer is being charged every single time for that especially in the era of ballooning install sizes where people are constantly reinstalling games on Steam um to manage their Hardware space

you know it it just doesn't seem like a wellth thought out system um and I guess my question for you guys is do you think it would make a difference um if Unity said in the to that [Music] um these types of changes can never be made again and uh so you can't be like kind of rug pulled mid development like is there anything they could do at this point at all to build back Trust I don't think they would put that in their to the the any company would probably want to maintain flexibility because you never know how the world is going to change um I mean I think the the way they build back trust is just a long road um and um not saying it it can't be done I mean I think that like this change in it of itself is a very positive step and a lot of people who were bothered they're just going be like okay this is fine and move on like the the not every like the loud voices that you hear is still

probably like a loud vocal minority of the people going crazy compared to a more silent majority that will just kind of roll with it um so I think it's a good step but the question for me is just more like it was just very poorly executed and you know thought out in some ways and so to me it's more like an organizational and Leadership question of like well are they going to continue are they going to execute better in the future are they going to make better decisions next time and that kind of starts at the top as we kind of talked about in the last round table um so so I don't know um but yeah it definitely hurt trust with developers but you know as you mentioned Mario of the stock falling down even for people who investors who aren't as steeped in like the inner workings of gaming and how all these individual game developers are thinking everyone from the outside too is just like what the heck are you doing and so it's going to take time for everyone uh to have that trust built back up and for developers it'll just have to show like commitment to being

better for them in the ways they want to be served and for investors it's just going to have to come from results but it just takes time I mean it sounds like obviously the people who have a game in development right that aren't willing to cancel it which is probably going to be most of them will just like well at least let's wrap up this project in right because now we're not going to be hit super hard hopefully um but then it's just the question of like future projects right where you go okay like they fix this now but like you don't have much faith in them to make good decisions the future right because they clearly aren't capable of making really great ones uh at least recently and so you got to imagine like people that are I don't know like I mean I guess the point about the TOs thing was just like if they could change it at any point to include retroactive stuff to include anything from now on to include people who are already mid development like if you're you're you're a hobbyist or whatever and you could drop the the engine at any time no big deal whatever you just drop the engine if you don't like it but that's the the problem was you're doing this to people that can't do that mid thing right where it's like it needs to be at least version locked

and and I'm glad they went with that because that was like at least the reasonable compromise to say hey we're going to version lock this where it's like you don't agree to the new to unless you update which seems like the most reasonable compromise to say like hey like if we're not doing any more work for you essentially by shipping new updates then you don't have to agree new terms of service like that seems like a fair compromise I I would just hope that they would at least do something that would enable some level of trust in terms of future TOS changes maybe not a lock in but saying like you know if we change them it'll only be on versions meaning like it maybe minor version maybe major version but some something to say that that version lock to some extent still applies if they want to carve out an exception for it that's like a specific exception I think that would be the like at least the transparent way to do it right I mean they already had the issue where like I don't know if we covered this before where they like somehow uh got rid of the repo for uh the to changes uh because it was getting too low of views just before all this happened and so they just they have all this kind of

sketchy coincidental behavior that that really undermines a lot of the trust and it's like oh if they fixed it now but it's like but it feels like one of those kind of things like the government will do where they like go to pass a bad law and then backpedal and then pass pretty much the same thing slightly compromised under different name and you worry about that with unity now it's like they haven't shown a pattern of great decisions especially the reputation of the the current CEO is not good in general so I mean at least there there's going to be some people right who who gave gdo a peak and like maybe they'll finish their current Project Unity but they'll be like let me consider gdo or something else for the next project uh or at least you know maybe unreal it's it's definitely only going to help the other companies but it does beg the question why they didn't just basically copy what unreal was doing and adjust the numbers to what they thought was reasonable maybe I mean ideally better than unreal's numbers so they could be competitive but obviously they got to make money but that's like a fair way to do it where everyone understands okay I use in real or I use unity and here's the numbers like no confusion no magic mystical install metrics that somehow

can't actually reasonably be tracked like I don't know they just seem like the reasonable compromise and the fact that they're making some reasonable decisions is good but the fact that they don't seem capable of doing that consistently like personally when when I go to develop stuff I'm definitely going to be looking at uh gdo or probably unreal because really unreal is just amazing at this point like the quality uh and what you get for that but uh yeah like I definitely lost a lot of trust personally in in unity in terms of like just their capacity to make the right decisions doesn't bod well even at a technical level U because they could make poor decisions around the technical stuff too that just creeps in and they have had a history occasionally doing that even under the better leadership so I don't know I guess that's my two cents on it but uh I think we're gonna kind of have to see like over a long period of time so like Aaron said like you know it might be you know a period of time before we even see any effect from this because it's going to be the silent people that do or don't not necessarily like the vocal people so proba probably won't they probably won't feel this except for maybe in their stock in the

short term so they they probably won't even be that like that butur they'll move on from this like a week and just be like all right that's good enough let's move on to regular business now but we'll see uh we we do have some bad news though around I mean I guess bad news around Sony and a retirement Jim Ryan yeah so Jim Ryan um who's headed Sony interactive entertainment for years been at the company since 1994 which is just crazy three decades um is Calling it Quits he's retiring um the reason given for his retirement was he's from the UK he wants to spend more time with his family and his house and in his house there um you know I guess the man is just homesick uh but the timing is questionable given some of the tumult resulting from Microsoft's AC acquisition of Activision Blizzard you know Sony has clearly lost their case they along with the FTC failed to persuade uh the courts that uh

the acquisition would be uh anti-competitive um in the meantime heroki toi who's has a million titles he's the president CFO coo and representative executive officer which is a position unique to Japanese companies of Sony group and now he'll also be the CEO of Sony interactive entertainment um until uh a successor is found um I think the timeline they gave was about a year to find someone um It's Curious whether they'll H hire internally or externally um as well um and I I guess there's something else to note is um the last fiscal quarter we had from Sony um the 90 days ending June 30th um PlayStation sales were below expectations the company said they had to start discounting and offering promotions uh particularly in the west um for a Playstation so you know on the one hand pretty much everything points to this

being a planned retirement but on the other hand the timing is just a bit suspect you know there's certainly people you know working into their 60s um in these companies and yeah I mean that that's basically just it nice um I mean I think my view is maybe a little less critical um I mean for one like what an epic run by by this dude um Jim Ryan 30 years at Sony you know and made it all the way up to the very stop and put Sony in like the dominant position in the industry like micros Microsoft won that FTC suit in part because Sony is so like is the big dog now and in part that's because of um Jim Ryan's leadership and ensuring especially this recent console Generation Um just knocked it out of the park um so I mean major props to him um also I think that when you're a CEO of like a massive entity like this there never is a good time to step aside right there's always

something going on um something in your strategy that needs fixing something in the market that's a new threat um what have you and so um I think now when Sony is on top is probably as good of a time as any after all the lawsuits uh the regulatory stuff is done and honestly when you have to deal with that kind of stuff anyways your job probably is not as fun anymore I would guess um but but yeah I'm curious to see who um take over um heroi has his hands more than full uh they're they're overflowing with with what's on his his plate so yeah I'm curious who will step up to to lead Sony next but my guess is the company's course is pretty set and so whoever whoever steps in I doubt is really going to shake things up in a big way it's going to be more um continuation and even though um I think in the west Sony has done some like bundling stuff which is I think kind of what you mean with the discount but I think I think that's more like B all

that bundling is zero marginal cost and just ensures that they're taking as much market share as they can and the demand is still um you know the long-term demand's still pretty good so yeah I'm curious what's next but I don't think this is anything I'm too concerned about maybe there's more to the story but uh what an epic run yeah I mean the man is definitely um a legend I I just thought it was I guess from Sony's perspective as a business from the top down it felt like they put a of emphasis on the court case now like I definitely didn't think it was like as life or death as um they were making it seem but you know just from the business itself at least from the testimony may maybe it's natural for Testimony to be like that emotional or like sweeping just so they can get their point across but it just seemed like they made it seem like if Microsoft went through with the acquisition like it would be the end of their business which again is an overdramatization given they've won the console Wars like handily like 2x 2.5x outsold Xbox over

the last 15 20 years um to the point where Phil Spencer even said you know we lost the console Wars um and yeah Jim Ryan when he joined um Sony it was when the PlayStation project was still under wraps um PS1 came out December 1994 he joined earlier in '94 so he was literally there from the very beginning um and yeah you can't discount as run it's just incredible what the guy has done yeah I don't know maybe it's a conspiracy theorist to me but I feel like whenever I hear health or family as the reason uh especially in politics it just it it usually screams dishonorable discharge essentially but I think it's probably most likely he was planning to retire and maybe they did it a little earlier like because the thing that makes me think that is that they didn't already have kind of a successor teed up and when you've already been at the company that long I feel like if you're G to plan your retirement you you give yourself a decent like wind down Runway but I mean it could be wrong like everyone does business differently like

could be nothing there at all I just feel like there's like that that's what it seems like to me is like hey I'm going to retire and they were like you know what now's a good time for you to step out Jim and he's like all right well I guess I'll peace out then go spend time with my family like he was probably fine with it but it was probably slightly you know timed differently as you said kind of coincidentally with some other things going on but who knows as long as the company ends up in good hands though that's that's really what matters right it's like as long as whoever takes over does a good job I mean it sounds like we've got like an interim one at least uh who's experienced but it is it does kind of uh stri Curious that like someone who's been there that long hadn't at least groomed uh someone to potentially be a can like it makes think of like Steve Jobs like grooming Tim Cook for so long right to make sure that the company was in good hands so it is a I mean maybe just disappointing that he didn't already have someone kind of like that he was mentoring to take over the role because he's got like such a breadth of experience he's bringing to the job that his mentoring would have I think made a huge difference in the successor coming in and actually really understanding like the storied history

of PlayStation's involvement there and what's worked and what hasn't uh hopefully there's enough people around whoever comes in to kind of fill that Gap but I guess we'll see right like it's one of those things where uh Sony's been doing well enough that uh as long as I could kind of keep it going and don't lose to like other weird plays like Game Pass and stuff then think they'll be fine we also have some other uh leaders doing all kinds of stuff here at these companies Capcom president uh you know I'm not even trying to pronounce his name I'm terrible pronouncing Japanese names uh he says game prices are too low something I'm sure we've heard plenty of times before but it was kind of funny coming out of them as they uh you know doing quite well as a company in terms of games and also oddly enough released their game at a I guess a discount technically compared to most of the games now that are at the $70 mark it came out at 60 uh Mortal Kombat one came out at 70 and I don't know just kind of interesting what do you guys think in terms of uh what this means or you know whether you agree yeah I mean it's a super interesting discussion um um before the podcast I actually went ahead and looked at

nominal and inflation adjusted video game prices like since video games were a thing in uh 1985 now in 1985 a video game cost $40 and in 19950 1996 60 and then you had a long period where video games went back to the $50 price point and like that's kind of when I grew up um remembering that price point um and then $60 from 2005 like all the way up until recently were at $70 when you look at an inflation adjusted perspective video game prices have actually plummeted um they peaked at 130 during the SNES era um and you know now uh are are what they are um so I agree with him in principle like I do think video game prices are too low but only if you look aart like you have to consider the fact that all these video games now have monetization within them they all have like digital Deluxe Editions that boosts the base price even further um you know just look

at Starfield for example like there's $70 for the base game but there's all these tiers above that you can also purchase um so I guess like in principle if there weren't all of these um additions layered on top of the base game you know he would be right but you know RP is just way higher um than what the base um games price uh imply yeah I'll just say game prices have risen over time um I mean what Mario said inflation adjusted that's true but nominally they have and they will continue to also this is one of those things where I'm like okay if you think it then do it right like Capcom has been like hasn't raised their prices from 60 to 70 for recent games I'm like well if you think they should be then just do it and be like everyone else I don't know what you're complaining about um I I mean there there is like the you know of course like the big picture

thought of like oh or should games be more like $100 or something and I'm sure in time they will be but um uh I think obviously there are consumer expectations and everyone kind of has to move in sync to some degree um and so if you want to unlock more Revenue it's not just like the base price right it's like how else are you going to build around it um or make the game special or sure if you want to try testing higher base prices maybe you can it'll just people won't like you for it but if they they can already raise their prices $10 would be in a totally fine position so stop talking about it and just do it is my view yeah and I mean video game prices also kind of follow a step function like they're not they're not going to go to $63 right like the jump between 50 and 60 was 20% and then the jump between 60 and 70 is 17% and those are like really high jumps actually but I I think the reassuring thing for the industry is you know Starfield sold like 10 million units in in like just a few weeks um at the $70

price point um it's clear that uh demand you know is uh on the more inelastic side so you know good for good for Publishers and developers I guess when I did some some research on the numbers too this this is the part that kind of concerned me about the the just the conversation overall when it comes to like players kind of rejecting price raises is if you look at so yeah $60 you know just for inflation that's like 120 right now right um from like if you look at 1995 numbers to now um it's a pretty big jump uh but obviously like we're creeping up towards that slowly the big problem for me isn't necessarily the retail price so much as the production cost combined with that so the production cost what I was looking at like a Playstation One game around 95 was about a million dollars or so which is two million adjusted for inflation um production budgets now like 60 million I feel like is like cheap for a AAA game now and you're like getting up to 200 plus million for a lot of these bigger bigger games like cyber Punk adjusted for just the the three-year difference was like over 300 million uh to make it

and so like these games like production budget wise and that's not counting marketing or anything else right that's just production budget uh it's just so over and we we've had that conversation before but I think it's relative to the price we're charging for games is you start to look at okay it cost us so much to make this and it's not like you're not necessarily multiplying the number of people buying the game by the same number now there's definitely a bigger audience now right like obviously there are more copy shipping and stuff like that and so like that helps like accommodate for some extent but it just seems like that's a big problem for AAA in general to try and keep up that pace because production budgets seem to go up much faster than the amount of like sales are making on most of them obviously there's exceptions right there's games that just come out and do Gang Busters but I feel like those are like the number of games doing that is smaller uh I mean I don't have numbers to necessarily back that up but that's just seems like to be the case to some extent and I feel like it's there's also the secondary problem of like if they they can't raise the retail prices you know they're going to go for more

free-to-play type tactics and pressure so like the example I like to use is Mortal komat one right when I just used of like yeah I was at $70 but the thing that's like not being considered there is and it is in the reviews if you read some of the the reviews especially like steam stuff like that besides complaining about the bad PC ports that we get now for all these console games to save money but also like the the the amount of stuff they started sticking into it compar to Mortal Kombat 11 all these gotas now like they really changed the monetization round to be a bit more aggressive and a bit more like trying to get people to spend more money like I mean obviously that's the goal of a business right get people to spend more money but it's starting to bleed into the stuff that people who are buying premium games upfront hate because they start quoting hey I spent you know 60 70 bucks for this and I'm having to spend all this on top I see that frequently in the Diablo 4 discussions like that's becoming I wouldn't say like a boiling point yet where people are gonna like throw their hands up quit playing but it's causing a lot of dissatisfaction that's like really reflecting on the game developers in terms of just like people just not being happy with the way

Publishers are like acting towards the consumers and it's kind of one of those things where you can't really have your cake and eat it too for the consumers right like if you're not going to raise the amount you're going to spend what do you expect them to do they either got to stop making the games or like find some of way to make money or just scale games way the hell back and sell them in pieces it's I don't know it's just and you talk like cyberpunk right where they spent like that much money they still spent years fixing it since like so just take that 300 plus million essentially they spent and add much more to it like just to like make up for the the loss time just to help sell the the Phantom Liberty DEC which I'm sure cost a fair bit as well and they're probably technically undercharging for that too so this just seems like yeah we're not to ahead yet but like triaa games are going to struggle with this for a while uh I think it's just I mean we're just G to see less triaa games and the other part of it too that kind of came out here in another like uh the another one of the court case email leaks from Phil Spencer that's kind of tied to this is him basically saying saying that like uh and this I believe this was an email and

not like you know a memo or anything necessarily but he he pretty much was saying that straight up trip games are kind of in a bad spot uh because they used to have distribution Advantage where they could be kind of like Bully out the Shelf space uh at retail right if retail was the key and they could dominate that they could make sure that they were getting those eyeballs getting those sales obviously a smaller demographic back then right but they could command like a bigger portion of it and then once things move the digital especially with steam pushing that and then everyone else kind of joining in it became kind of a situation where they like they don't really have that sort of dominance anymore outside of Mind share and it seems like and Phil was was hitting at this a lot talking about IP that that's why we're seeing squel itis and franchises now because if you can't dominate like physical distribution the only way you can guarantee people are interested in buying your game is it being a brand they recognize or if you're lucky like a game designer like Kido coima or like you know myamoto or you know someone that they could recognize like some brand association with it they could go I'm already interested in this game because it's X

and without that like they just kind of bleed in you know we've we've seen a lot of failures of of new IP attempts uh like well anthem's a good example right but that had its own problems but it's just uh redfall even like had its own problems but it just I don't know people are willing to give a little bit more benefit of the doubt sometimes when it's a when it's a known IP and I feel like this has been a big problem and the other thing you mentioned just say real quick before going over to you guys is around uh subscription gaming models um kind of being the fallback now and helping a bit because it kind of guarantees potentially some some profit there uh without having to necessarily make all the upfront sales and we are seeing a lot of Publishers tried to go to that model EA had their EA play uh which has kind of been back and forth they've had to make some deals with that ubisoft's been pushing their Ubisoft plus you mentioned that earlier about Ubisoft trying to like like really thinking that the future is kind of in streaming and so uh I don't know if that's really like a good long-term solution but it does seem like they're kind of trying to find footing alongside all those funding issues so I mean what

do you guys think man there's lots of unpack in that I'm not even really sure where to start I mean I guess maybe one place to start is just by acknowledging that like tripa gaming as like a bucket uh or a basket like not everything is equal like within that like there are going to be so many games that just absolutely crush it and that people are going to going to love and they'll flock to and then there are others that are going to underperform and I think like having a mix is natural like in any entertainment category you're going to have like hits and misses um uh and of course like the the threshold is getting pushed higher um by those that can unlock more upside than ever before and they're pushing the barriers that everyone else has to keep up with and so for for them competing um they're they're kind of creating their own advantages and being able to do that that puts others who cannot compete as much more at a disadvantage and so

that's just kind of the way markets work um but that said uh you know I think there is a bare case in that that just like yeah maybe there should be fewer triaa shots however you categorize triaa if fewer of them are going to hit especially like new IPS new attempts than in the past and that that kind of sucks um but on the other hand maybe like the bull case and this is like well also maybe the creation of games doesn't have to stay static and one of the exciting upcoming Trends you know kind of the rise of AI oriented tooling and such is that actually maybe like games can in some ways be made more efficiently at a lower cost and so you can do more with a similar budget um uh and I think that there is some Merit to that although we'll have to see how exactly it shakes out um in different places but um yeah part of this too like I think it's the market and Phil Spencer he's coming from his own point of view right where he's like well you're at a

disadvantage uh and you know one way that you can get a potential advantages to work with us and that's not exactly what he's saying like in these quotes but um you know there still is like some some truth to that that that he's he's getting at um and I just don't think that's going to work super well for Triple A because tripa is all about like unlocking as much upside as you can to get to get that that profit margin uh as wide as you can on the games that do hit so you can fund everything else and the problem with subscription is that it caps your upside for for these big Publishers and so that's not actually a great fit for that so so I don't know I think um if if there is any like narrative around here it's probably over said a bit the market will adapt there's going to be awesome winners of course some people are going to flop people are going to continue taking shots the market will change business models will change and that's all all normal but games are going to continue getting better and people are going to continue

to spend a lot of money on the best games um so that's my my my view on it yeah I mean you know I think in general um you know we've just seen the removal of like intermediaries from a lot of different you know markets like you know in terms of banking blockchain has to some extent displaced some of the financial intermediaries the rise of e-commerce platforms like you know Amazon and Walmart's e-commerce has kind of displaced the need for suppliers to have a lot of bargaining power um and then in terms of Publishers like you know I agree that it's happening gradually but that's only because of these Acquisitions like I don't think it would have happened organically that Publishers um importance would have been diminished so much but in so far as Xbox games pass and ps+ um and even Apple arcade you know continue to grow um you

know it is going to become a lot more about relationships with the developers rather than necessarily Publishers now Publishers will always be needed especially for indie games like if you're an indie studio with a really small budget you do need someone to pound the table for you to give you shelf space even on these digital distribution platforms like steam like it's really hard to just do it yourself if you're a team of like eight people and your competencies are in development and Design um and yeah to Aaron's point I also think it is somewhat idealistic um you know the reason it came out during this court case like the only reason it's relevant is because of Phil Spencer's dream to have everyone flock to Xbox games pass like if it was just a comment about the industry it would have had no relevance in the ftc's case but you know clearly they saw it as relevant due to perceived uh monopolistic comments the the last thing I'll I'll say say on this um I guess in the comment it's sort of putting into question the value of

Publishers um as Mario is saying like well one of the value of Publishers historically was um you know providing working with all the outlets to provide shelf space and such and that isn't as true as needle moving as it used to be but like the value of Publishers first and foremost for for development teams is funding um and so maybe what happens here is just that like the negotiation leverage shifts a little bit um but Publishers are still super important as like financers um and of course you know you could say that like well again Xbox you know looking at themselves to come like ah you don't have to always work with Publishers you could just work with us and even though that's basically just saying we're we'll publish it instead um which actually like it doesn't make a single difference other than it might again in a certain model cap your upside in some kind of way I don't actually think this is like these comments really change much of anything at all um teams still need still need

funding maybe with how it changes like how teams have gone about funding um it changes especially with Venture funding uh what it is now and that like bypassing Publishers and some ways or even others like epic um coming in with their own like publishing models that they're testing that are much more developer friendly um so you you could see tables turn a little bit but yeah a lot of this commentary um I don't think it's like defining the future in some radically different different way at all yeah I guess the the thing that that I'm thinking might happen is we we've had a history over time it's not like a new thing of aaa's like acquiring smaller developers and then adding them as Studios or whatever and maybe that shifts a little bit but it seems like that could be the way that they just look at new IP as like Hey we're going to publish our known franchises because we we own them we shepher them we have the money to keep them up to player expectations potentially uh but new IPS we're going to take lower risks with smaller stuff like Fox Search light kind of mentality right where they're just going to like you know hey we have our

kind of Indie sort of label or we just do it as part of like whatever we're trying to do for smaller stuff because it's it's going to be lower cost for them in general less risky but they could also pick up ones that they're already seeing some success with right where there's already huge amount of Interest like and like you know remember when when Kickstarter was like I was like yeah no I don't need Publishers anymore so I've got Kickstarter and I feel like it turned into well I'm going to use Kickstarter to prove out the interest in my game and then a publisher will come along and be like oh I see the G game's interesting so I feel like we kind of we get that Dynamic shift right where just the power for new IPS goes over to those and also to to be clear as well like Phil spenzer was saying like this was fine as well like this was kind of normal in the industry he wasn't like being a chicken little kind of thing or it was like this is just like actually probably a good thing that tripa need to kind of pair down the one part I am a little concerned about is like so let's say we take the parallel of movies which are in a kind of similar situation in a lot of ways right where they're just kind of like uh movie theaters aren't doing so so great uh they're kind of really relying on heavy franchising to

try and pull everything but some of the downside of that we're starting to see especially on the Disney side of things with burnout on these so some of these franchises that they're kind of relying on can really burn people out I remember Activision basically doing that with rockband for example because they will take certain games and just franchise them to death uh obviously Call of Duty somehow manages to survive that but there is definitely like a fatigue that could come from over relying on these so I do hope this just means that they diversify better amongst Indie Studios or doublea's stuff like that there's some money out there and into your point Aon I do think like Publishers obviously can help with marketing and all kinds of expertise that Indies just don't have that like absolutely like they don't just have to be per strings they could definitely bring a lot of things like when people look at like VCS is more than just the money bag where they bring experience or knowledge or network connections like there's a lot that could be brought there not always relevant but definitely like some potential there but unfortunately one of uh a bigger Publishers had to make some cutbacks epic the one who also got off some court cases recently and I think is trying to get back into some potentially

yeah so um really unfortunate time obviously for the gaming industry from a hiring perspective and epic is kind of just you know rubbing salt on the wound with their layoffs um terminating 830 people about 16% of the workforce and making some divestitures of some Acquisitions they made over the last few years um they're divesting uh band camp um the music storefront that kind of competes with bport and other um music marketplaces um which honestly just never made a lot of sense for me um like what they're doing with that asset um I guess it was part of their broader vision of having music uh in the metaverse but it didn't seem like you had to hire acquire an entire store to do that um and then super awesome which is uh a company focused on creating safe online experiences for kids I actually think they'll be able to fetch uh quite a bit for that um for reasons you know we spoken about a lot in um the digest you know these safe experiences for kids

are becoming super important and there's tons of money being put into um ensuring like a non-toxic uh environment um for you know children and young and enes um those cuts are going to result in about 250 departures uh the other 600 departures um are mostly focused outside of core development um according to Sweeney but that does mean that there are a lot of people being laid off from core development teams which include you know fortnite um epic game store and notably Unreal Engine um and for me it just seems kind of curious because um you know Unity has messed up in such a grand way it now almost seems like the time for epic to be doubling down and like increasing investment in Unreal Engine uh espe especially the engine since the engine just came out with its 5.3 release which is like you know

lauded everywhere you know why not you know continue to spend money refine the engine and win market share from from Unity um but it does not seem like that is the case they are interested in Shoring up profitability um people have also been saying epic is going to go public for like three three years now I'm wondering if these cost cutting efforts are um aimed at um an IPO as soon as it's here the IPO Market um so far has been pretty good you know you've seen the IPO of arm for example um you know went went as well as it could have um but yeah it's uh it's a tough time for the industry um luckily those Terminator are going to be getting six month Severance and insurance benefits which is you know pretty generous um and I just hope they're all able to find the employment as the industry stabilizes yeah I don't really have much to to add other than it sucks and I feel bad for everyone who got laid off um obviously as a private

company we don't really know much of epic's inner workings from a financial perspective um but uh I guess maybe it makes sense that they're feeling a lot of the similar pressures as others in the industry from a profitability lens um and are looking to reset especially as Mario said if they're looking to go to go public the the divestment angle of this um is interesting um and I you know wasn't really expecting epic to have a couple spin-offs um this year but if anything in kind of shows maybe they're kind of focusing into core areas where they have advantages and kind of view more as their their future and focus is is good um so yeah I don't really have much to add about this um curious to learn more about epic over time especially if they do think about going going public and what this business really really looks like but yeah tough day yeah I I mean I hope the cas is that they aren't necessarily like laying off people short up profitability but more

to short up Focus where they're like you know hey we've we've gotten a lot of stuff going and this this bandap thing isn't really doing what we need to do we have a lot of stuff we need to focus on to maintain Market lead right now and really like capitalize on unity's goof capitalize on uh ufn all the stuff that they they are doing well and just double down on that focus on that better so I mean I hope that's the case my big concern is like if they're going to like do this more I I would really hate to see harmonics and bad situation because that was one of the companies like I mean good for them but I was also really sad to see them get acquired because uh first off it meant shutting down a lot of games uh like uh drop mix which I own was like a physical one like that that got pulled off the stores and lack of support and now people like treating it like this thing that's hard to hunt down now and it's like only because harmonics is gone like basically and if they're starting to get rid of Music stuff like I just hope they're not on on the chopping block or if they are that like it's in a way that actually benefits them because uh you hate see like companies get Acquired and then just kind of disassembled uh essentially like

because there's really talented people there doing really Innovative stuff uh that I would love to just see you go to fortnite and I also hope this isn't just a case of like fortnite starting to just do worse you know because it's maybe past the say day and then uh people just be like well we're making less money now we can't start throwing just tons and tons of money at these side ideas but we'll see I do hope it doesn't go public though to be honest because I like the way you know Tim Sweeney and stuff runs the company and I would hate to see it be a bunch of shareholders that might not run it so well um because he's been kind of one of the heroes in a way at least pr- wise uh perceptively around just gaming in general like is seemed like he's been doing like a lot of good stuff and I would hate to see that change but yeah I mean the the public thing you know in February 2021 epic hired a investor Relations Specialist and the only reason you do that is to go public but like two and a half years later nothing has happened I'm wondering if that person is still even working there honestly um but I uh I Echo your sentiment on har mons like you know it's been what eight years since a rock band game like I would have loved to see rock

band five like be virtual or something like you put a VR headset on and you know you jam out in the metaverse um but I guess you know that's probably not going to happen given this news um yeah it's just from a gamer perspective it's sad to see like Guitar Hero and rock band kind of Fall by the way that as people don't want bulky peripherals anymore you know it's become a very lean uh IND in terms of the hardware side yeah I mean they also had other great games that were like before the rock band stuff that they did uh like amplitude and frequency and stuff fantastic early Innovative music games their last game the DJing game as well didn't require any peripherals of any kind it was like I don't think it did as well as they hoped and maybe that was part of the reason why they were kind of like accepting of the acquisition but uh yeah I would very very Innovative people uh sometimes are rare in this industry in terms of like successfully doing it multiple times so either way hope they end up doing something good and and maybe the case with the investor relations they they they looked at the numbers and everything and just like n not worth it right now and so maybe they

just backed off on it for now we'll see but uh I mean on kind of the same note as harmonics and stuff like that we just wanted to take some time to kind of do some high level stuff here and uh dig into some hidden gems and uh starting with also some winners and losers uh just people that are that are doing it or not doing it so well in the market yeah uh so we'll see we'll see where this segment goes uh really it's just a light news week and so we were looking for things to talk about um but one of the things I thought would be interesting just to kind of take a pause on and reflect back is just looking at some of like the top winners and losers of the Year from a market standpoint um so Mario maintains for navic a really great um air table database of all of the the games industry companies worldwide that have a larger than $500 million do uh market cap so all of the larger games public companies um and you know many of them are the companies we all know some of them are you know others we don't really talk about as much but um the the air table which

shows up every week in novic digest in our top um movers segment which everyone should should check out if they're interested in seeing it um um it it tracks the performance long-term and short-term performance and everything in between and so I thought it'd be interesting today to just kind of look at like well what are like the top three to five like winners and losers for the year and is there anything like surprising and there and so maybe we can just start on like the winter front um and uh get your guys thoughts on on any of this and so the top winners year to date um are international game systems Roo and app Loven um so you know who would have thought that that that list would be be the list of 2023 is biggest games industry um winners roio is simple they got they got acquired right so like big premium boost out of nowhere but for app Loven um and which was the biggest

winner it's it's more than doubled um year to date and then International game systems being like the other two winners like probably a lot of people didn't even recognize what that is so just very quickly on a couple of these I then I want to get your thoughts so first of all app Loven you know this is one of those companies I think the market just hasn't even like known how to make sense of it because it's been been hit by at uh it's unity and iron Source merg where does that leave applovin applen kind of had a weird strategy of both adte and its like apps games business that it's been making divestments from and that's been shrinking and people just been wondering like what really is the future of like the adte side of the business like where are they taking it what are they they building um I guess the good news is that like even though the app Business this year has like kind of continued to whittle away and again they've been like divesting pieces of it and and it's profitable uh but the the

adtec business it really kind of it's been like a u curve um and so it looked pretty bad for a while which probably explained why the stock got crushed but you know it started to like show signs of growth again and so people are like oh maybe this isn't as bad as what we think it's not like the business is 150% better it's just it's just wow this isn't absolutely God awful terrible um like you know as much as people thought so maybe not even like the biggest winner from like a business standpoint as much as a winner from a wow this isn't as bad as we once thought standpoint um so so that's app Loven um and then quickly on International game systems I I had to even look up what the heck this company was um what they did is like I feel like I recognize the name but it's a Taiwan based company um mainly they they make online games and arcade games um for for the Asian region and uh at first I was like I don't I don't even fully understand why this company is is doing so well um because

Co a lot of their arcade games that they sold to China in particular like that got hit but I guess they're moving past that but then I zoomed out and I'm like this company has like 10x in the past five years no one even knows what what it is um and on one hand it's understandable because I was looking on the investor relations page and half of everything you download is in Chinese I guess I'm like well that's that's challenging um but anyways that was the other big big winner and I wish I had more insights into them other than them just being put on my radar maybe embarrassingly for the first time after they've done so well but those are 2023 is biggest winners any thoughts or Reflections on that yeah so uh I had to unashamedly Google what they do as well despite maintaining this table um I got them confused for international game technology which is a slot machine manufacturer like a really big one actually huge company um no but what these guys do is that they create arcade

cabinets um almost exclusively off of licensed uh IP or Partnerships with um you know these uh these developers and uh you know one of their cabinets for example is like asphalt which I didn't even know is an arcade cabinet but that's like the popular uh you know uh iOS and Google Play game that I'm sure everyone's played at one point um apparently on its ninth iteration which is really cool but these are like extremely profitable you know for a company that produces arcade Hardware like their margins like their ebit margins are like over 50% um which is just incredible and they're doing like 400 million in Revenue a year 200 million in ebit um and despite 10 Xing their earnings multiple is still only like 16x so yeah they're just they're just crushing it um and I think what they benefited from is the the rise of some of these arcade centers um you know band damco for example is doubling down on um their arcade segment um you have the rise of

like round one for example in the west um so yeah they're just they're just doing really well in writing this uh this Tailwind um I don't have much to add on App 11 I think the industry is just rebounding from last year which was you know just a Confluence of things super weak macro environment um post idfa environment where mobile advertising was just getting CR and then questionable decisions to acquire you know unity and a stock swap deal that would see John richello as a CEO so they were saying like like we're g like we want to merge but after the merger um your your guys CEO is going to be in charge so it was just kind of weird but I I think a lot of that risk has now been priced out um and they're just rebounding from what was a terrible 20122 the stock was down like 80% or something um and then on roio you know uh in January they were uh in talks to merge with uh pla um those talks fell

apart the stock never cratered really because people realized that something was a foot this company's going to get Acquired and then you know a month or so later Sega comes out U makes a 70070 million uh offer which is like 60% premium to when before the deal talks were even announced and then a further 20% premium to like after the pla um talks were ongoing so um yeah like that's the reason why why why they've done well and I suspect next year when we have this discussion um a lot of the top winners as well will be ones that have gotten acquired just given the consolidation going on in the industry yeah we'll see um but anyways I'm I'm even curious to check this out in three months and see what changes because I don't even know if I have like the highest confidence that like this top three will stay the top three I bet one or two um change places but let's quickly move to the the loser side and so the three biggest losers on our list um are caca embracer

and NC soft and you know we've kind of beaten the embracer horse to death um you know over the past many months so maybe we don't need to spend as much time on on that one that's just growth by acquisition strategy that fell apart and poor Capital allocation um cacao also like isn't really a games company like they have a big gaming component of their business which is why we include them but but like for those who don't know caca is basically like the dominant messaging app in um South Korea and um like 90% of the country uses it and they've just kind of taken that foothold to expand into other areas um gaming Comics music Ride sharing um you name it and that strategy um you know was really exciting and was you know at Peak Interest really at Peak coid um right where everyone's like online more leveraging all these Services more and they just haven't been able to really find their footing um since a lot of that pullback um began and of course you

know mobile gaming being a challenging environment too from the from the game side um but yeah now that company is just kind of doing weird stuff their the revenue is eing up but like every quarter lately their profits are going down they just bought like a K-Pop group that's trying to fuel um International expansion they're also investing heavily in AI so I don't even I don't I don't even know like this isn't even really like true gaming story but it's one of the games industry's biggest winners if you want to view it from that LEDs um but the other company is n seesoft which is also a South Korean company um sad year for these South Korean companies on on our big losers list um but this is like much more of a clear um gaming story and NC soft has had an amazing 25e run is just that lately they've had a bit of a blip um and this is a company that focuses of course on mainly MMO RPGs like the line engine Guild Wars franchises um and it doesn't take rocket

science to figure out why this company is down a lot you look at the last quarter um their sales are down about 30% operating profits are down a lot too um this is because the game Lineage W which this time last year was like their largest mobile game um uh and represented a majority of Mobile sales and this is you know like very much like a mobile the the this company has mobile games and um you know console or I guess more PC games really with M RPGs but you know Mobile's a big part of the business and the biggest game uh of that uh you know it has seen its sales fall over half um from last year which has just dragged the entire company down and that's just a tough place to be in I'm not I'm not an expert on lineage W to tell you exactly why or how to turn that thing around but um that's why it's it's fallen so much it n coft just management hasn't been able to figure it out yet they've had to do layoffs and so a much Clear sad near-term gaming story but

again the long-term trajectory of this business has been awesome and I wouldn't necessarily project what's going out right now you know into like a long-term view but a bit of a reset for NC soft but anyways those are the the three losers any Reflections on that Mario or Devon um yeah I mean we've beaten embracer to death like my one sentence comment there is their acquisition strategy during a zero interest rate environment has backfired um and I'll just leave it at that and then uh in terms of uh caca you know they just they're more than games obviously they have this internet business but from the game gaming perspective you know they publish Black Desert online which is like this huge um MMO um mainly catering um to Korean audiences and they handed back the publishing rights to the developer pribus in 2021 so they lost that Revenue stream they uh

publish uh pubg um in uh in uh South Korea uh and pubg has obviously declined in popularity um which is evidenced in crafton's performance as well which has not been great it's kind of all these South Korean companies have been riding the Tailwind of Crafton which is like you know the biggest video game company in the country um and uh yeah and then in terms of NC soft um Guild Wars 2 has now been out for 11 years um I think they recently changed the strategy for expansion packs they used to release them like every few years at like you know a higher price point it's just struggled as the game has aged and MMOs have kind of waned in popularity and now they're switching to a more like frequent release strategy with lower cost dlc's um so so you know they're just struggling there and then regarding lineage I know um that franchise was

supposed to um debut in the west but since lineage W was launched they just haven't had the traction to be able to release it outside of um Asia so yeah just uh not a not a fun time for them there's a couple things I picked up while I was in South Korea that I think kind of I live it uh uh NC soft and and the whole thing with lineage one of the things I found talking to a lot of the game developers and stuff like that there is South Korea could be like very Trend driven where they'll like play something for a while as like a whole in the country and then like move on to another game like everyone kind of does it's like this this kind of move from game and like I was even asking like how are you guys surviving as a game company when like you just have to move from game to game and just like hope that your game is one of the next ones and like you're talking about two old franchises then lineage and and Guild Wars and if Guild Wars isn't relevant in the west anymore like it used to be like that's a big part of the audience loss right and then if lineage can't make the Journey to the West as well then it's really dependent on South Korea and with the fad driven kind of nature like it sounds like it did it hit really well at

first right but then died off really quick too and it sounds like just trouble sustaining especially with so many MMO RPGs in South Korea like that's a very competitive market like in general like it if something else just comes along takes everyone's attention especially an MMO like requires a lot of player base like if they just move over like the game's just dead and so it's interesting and it's also interesting that they kind of let peariso like I I I remember see Black Desert doing pretty well and I I think they just uh are releasing another I don't know if it's an expansion or another game cut in the series uh either like relatively soon I think I saw uh so they seem to be doing okay as a company it's kind of a bummer that they don't have that Revenue stream anymore and the other thing I picked up related to caca that I thought was kind of funny is uh you you can't do Google Maps down there really for the most part like for walking directions or driving directions or anything like you have to do caca for it and they are oddly not super English friendly it's uh so you have to kind of use it and it was it was very difficult to use but as I'm using the app like they just have so many like in the maps app alone like just so many other social feeds and all these other things like they really are trying to be

that kind of like everything sort of thing down there and you can kind of see it like and maybe like that's you know kind of waning a little bit where people are not as interested in kind of having the everything app I don't know tell Eon I guess as well but uh I just I don't know I thought it was kind of interesting seeing like what they were trying to do there uh and it kind of maybe just not being as interesting to the audiences out there anymore and this could be all temporary stuff but just a couple things I were interesting from the the time in Korea blockchain week yeah anyways I just find this this General topic um interesting um and I One Hill I will die on is that the best game there is is the stock market and so so following this stuff um is super super fascinating to me and of course however you slice and dice this data too you get you get different answers whether you're looking back over the past year the past three years or something so it could be fun to revisit the segment from from different lenses um from time to time uh but uh anyways we're kind of at the end one thing I

kind of want to quickly hit on we mentioned that we'll talk about hidden gems um and we can we can do this quickly but maybe each of us can throw out one one Hidden Gem it could be a company it could be a game could be a trend um I'll go last uh Mario I'll throw this to you first all right so my com my gem is a company uh and that company is devolver digital um these guys have just been absolutely crushed since um iping um on London Stock exchange's secondary Market a couple years ago you know at the time it was like the biggest IPO for that market it was like yeah $950 million now their market cap is closer to like 150 million so like just down significantly and I think the reason is that they followed a very similar strategy to embracer I'll be on on a much smaller scale during Co um well they published Fall Guys obviously and made a lot of money from

that and then um those rights were sold um when epic acquired a developer media tonic and then they just needed to reorient the business so they made a ton of Acquisitions they acquired Good Shepherd entertainment um Nal Firefly Studios um Dodge roll um who they published their game enter the gungeon which was another success for them um and yeah it's just they've had trouble finding their footing there's been tons of game delays they've even went as far as creating like a game delay showcase like like being proud of the game delays many of them of which are going out into 2024 but their pipeline is actually looking pretty good um and I think the company has just been like crushed to the point where people think they're going to go bankrupt but like they have no debt on their balance sheet um they are releasing a ton of games next year

uh and yeah I mean I'm just um I guess more optimistic on them than a lot of investors I guess let's be honest the real problem is lack of Hotline Miami 3 that's that's the big weakness right there no huge huge hit like that to really like uh push things forward but I love them as a company like they're the like just the most self-effacing humor like The the delay thing as an example if you ever want to see like just the weirdest craziest press releases they're like sort of e3 kind of events that they do like they obviously there was no E3 this year so they did their other thing that was just they're wacky man they're just crazy crazy and you can find them on YouTube I just I don't they're good time I enjoy them as a company though they're kind of like this Punk Indie kind of feel and I don't I don't feel like we have enough of that in this industry it feels like it's pretty much just them uh they're like the closest thing to like maybe like a doublea uh you know really good solid Indie publisher with with like really good marketing and relations so I hope they do really well my uh my hidden gems everyone's going to hate me

for it because everyone hates cloud gaming but uh GeForce now uh you know it kind of like stadi where like kind of not not so great at first right like it was you know had a lot of problems was kind of weak selection wasn't great uh but you know I've tried it again lately and I have to say it's come a long way uh to the point where it's definitely competitive with xcloud in terms of performance and possibly even getting up there in terms of stadius level performance which was uh like by far the best class uh you know I tried like you know really the games that latency really matters I was playing like Battlefield 2042 just kind of running around trying to play Crazy uh I mean Rainbow Six Siege is still the hard one to really kind of like do because it's so so twitch driven and tactical that it like peers advantage and stuff matters so I don't know if it's like I feel like that's kind of litus test and like probably formed maybe just slightly below Sadia but the thing is like their selections really good now to the point where like I was actually thinking about canceling my game pass because like selection wise uh the thing that I think is really cool about this is like obviously it's like yeah you know you have to buy the games right like that was part of what people were confused

about with stadia but this is your steam library and I think much in the same way the steam deck was a huge like success in a lot of ways because it leveraged your existing Library I think this does the same kind of thing like it's it's surprisingly good at that uh because I went through you know I have a huge steam library and it had obviously doesn't have all of them but it had a pretty good portion of games both new and old uh just good selection around it also had like free-to-play games just as their own section that you play like which is I I wish I would have noticed at first cuz I was going to try Destiny 2 and I'm like oh I guess I could have picked it from that instead of just picking it from my steam library but it's just it's really nice in a lot of ways if you don't have a high-end gaming PC and there's a lot of people out there that you know would be interested in in PC games that just don't have a high-end gaming PC and obviously you know that's where cloud gaming steps in but uh I just thought it was really nice and uh it it's just it works with a lot of stuff and like you think about steam library is like you can get a lot of games on sale you know a lot of cheap and now they work across multiple platforms you could play this thing on like a Chromebook I don't know I just thought it was really nice to see and I think if uh if you if it's been a while

since you've checked it out I was playing on the free tier and it was for as well like I I recommend people like give it another Peak because I I was very impressed with it and I will definitely be playing with it more uh because you know I'm I'm the one remaining champion of Ste of of cloud gaming I guess interesting those are both those are both good answers that I wasn't expecting um I'll close out mine mine is a company too um and it is Enad Global 7 or eg7 for for short and I have to give credit to um a novic reader and listener I believe um in the hedge fund space for for pointing this out to me I'd heard of the company but I had never really given given it a moment of thought um and it's a very small company um it trades in Sweden and is I think if you convert it it's only like a $200 million company something like that so it's very much a small cap um but we all uh we all know about you know the boom and bust of the growth by acquisition games companies we've talked about embracer dismantling

stillfront has you know been going through a reset too um and eg7 was another one of those companies uh that was making Acquisitions and similarly when the market changed it got crushed too um and now it's you know a very small business but there are a few things that make this company different from the rest of the pack um one is that its portfolio is largely online and MMO leaning um you know which are you know sticky and cash flow uh machines they're just like better businesses than you know bloated Studios or you know just really like a portfolio of of like old mobile games um and so you know this is games like DC Universe Online EverQuest Dungeons and Dragons online magic the Gathering online I think they own like H1Z1 um it's just like a a bunch of just like those kinds of games so it's a really like unique portfolio and I think they do some cod development work too um second old management left and new management is in um and so the people

that pursued the growth by acquisition strategy are no longer running the company and instead um this guy new CEO Gham I think is how you pronounce his name he's ex private Equity ex Investment Banking and he was the CEO of Daybreak uh which was eg7 largest acquisition um and now he's running the the full show and um he from what I've seen he just shows like really strong intuitive Capital allocation sense he's like redirected the company's strategy he's made divestments to make them more focused on what they do best um and I haven't really seen like great like Capital allocator type CEOs in the games industry and it kind of makes sense in a creative industry but may maybe maybe he's about you know on that path to being like a good Capital allocator we'll see um and lastly you know like most growth by acquisition companies the financials went through a reset but the team has a very clear growth plan for establishing its next era as a business

so they're actually targeting pretty Swift growth um over the next three years like mid teens Revenue growth and then like double that if not more for like profitability and eida growth but this is a company that's really freaking cheap because it's tucked away in Sweden and no one pays attention to it um and so uh for example fiscal 2026 they're projecting about 1 billion SEK uh which is the Swedish currency in eida their current market cap is 1.8 billion and so if they get anywhere close to that like this is a company that is probably going to multiply and I I need to spend more time in it to see what I think about all the games and just all the the details of the business but if they if they do anything close to what they say they're going to do holy crap this is a this is a Hidden Gem from an inv standpoint so shout out to navic hedge fund friend don't know if you want to be named so I won't name you but um yeah anyways I was

I always enjoy stumbling across these kinds of companies but I'll I'll close with that yeah and I mean embracer is kind of in the same boat like they're Enterprise Value is like 45 billion Kona right now I think like it's literally like lower every single day so I can't keep up but they're projecting to do like uh 10 this year so like 4.5 5x um earnings if they can get anywhere close to it and like they've already had a quarter quarters earnings released and reiterated that they're on track um to meet that so it's you know with these businesses that are this cheap like I feel like it's a very um bifurcated outcome tree it's like either they fail and like go under or they go up substantially because a company can't be valued at that valuation for a prolonged period of time like with without some Catalyst are getting acquired so yeah I mean I'm like as much as embracer are

screwed up I'm also optimistic on them as well well I'm not yet on embracer I think these companies are pretty night and day I think maybe if we check back with embracer like a year or two from now after they've reset and if they have new leadership that has a completely different mentality I'd kind of view them more similarly but yeah uh what's interesting to about eg7 is they used to be something like an embracer but they're really just like something completely now um which is new and exciting but I don't know we'll see I'm excited to learn more I think uh we definitely going to have to revisit the hidden gems like more frequently just because it's like there's a lot of these silent companies like in terms of like our perception you just like wow I didn't I didn't even think about that company uh like IGT or I mean IG you mentioned earlier like just you or you know when we we brought up keywords that one time just a lot of these companies are just off the radar of people's you know knowledge base I think would be uh really worth pulling out defin definitely good stuff uh also something I I forgot to mention this is one final note on the the GeForce now thing that I forgot to mention that I thought was really cool is support Steam Workshop

because it's essentially using your Steam account so uh because I tested it out with tabletop simulator and it just started just downloading huge mounds of mods that I had essentially in there uh so only cloud service for games that supports mods thought that was kind of neat but anyways moving on from there uh of course uh thank you for the panels great great conversation lots of cool topics uh some better news than others but that's how it always goes also thank you to the listeners I want to make sure everyone again remembers to send us feedback podcast at nov. and also a shout out to Friend of novic Eric crest for some feedback I got from him recently uh and Miss speaking in a previous episode where I was talking about uh the Rainbow 6 servers going from uh you know Azure to playfab what I actually meant was playfab was what they were on and they were going over to game lift although it sounds like from what I did some reading afterwards that maybe it was only certain regions that switched in other it was kind of a mixed bag but anyway any thanks to Eric crest for catching that uh am my misspeaking there so I appreciate that but again thank you everyone for tuning in and of

course you know have a great weekend and we'll catch you guys next week 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 novic has to offer make sure to check out our website www.nic.edu and advisory Services again that is www.nic.edu [Music]