Building a Creator-Focused 3D Engine with Hiber

[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 AD advisory services for more information visit [Music] www.nic.edu from frauders is crucial and that's where insure AI this episode sponsor comes in insure AI provides payment fraud prevention that's effective and tailored to your needs the team's adaptive AI creates a dedicated model based on your data focusing on behavioral patterns to catch even the

most sophisticated fraud attempts with decisions made in under half a second and up to 98% approval rates insure AI ensures more legitimate transactions get approved delivering a seamless experience for players plus with a chargeback guarantee you can focus on growing your business while the risk is handled for you key players in the game and turn payment fraud into a profit center with insure AI to learn more simply head to ins. a/ gaming or check out the link in the show notes now let's jump into the episode hello and welcome to the Nava gaming podcast I'm your host Nick oori today we are entering into the hot hot hot world of user generated content and the metaverse we're talking to the chief strategy officer of hyber a platform that's empowering anyone to build and share their own 3D worlds if you've ever heard of Roblox then you'll have pretty good idea what hyber is all about but it has a Twist of course

and if you haven't heard specifically of hyber yet you likely will hiber world hbr's metaverse has already achieved some impressive Milestones reaching 1 million worlds in 2021 and quintupling to 5 million in 2023 underlying everything is hiber 3D which is hr's web engine and it's trying to make it as easy as possible for anyone to build their own hyber worlds so without further Ado today I'm excited to welcome Sean ginan Chief strategy officer at hyber to the show Sean welcome to the Pod thank you and and thanks for the proper finish pronunciation of my last name I'm us born but my my father's family is finition out of the four potential last names I could have gotten I got the one that made it hard going through school oh of course yeah yeah um but you know what it's okay it's all good once you work in Sweden quite a bit of the time right so you should be okay there I do I've I've been uh traveling back and forth for the last five years every couple weeks so it's been quite the journey well that's kind of that's home territory with a name like that so

you're all good there okay well with that out of the way let's get into the episode and Sean I do always like to start with the background of our guests uh so tell us more about who you are and your journey through the games industry yeah started out in 1995 when I got out of school with a a film degree uh which of course it's hard to get into the film industry back then because everything was unionized I found that I couldn't get in uh and ended up working in a mail room at an relations firm and started working my way up and uh went to companies like 3fx when they were putting out some of the first 3D graphic stuff I worked for ble which was an emulator company that Sony did not like because you could play Playstation games on your PC and eventually your s a Dreamcast and then did some time at Ubisoft and third party publishing uh Sony Online in international product PR and then did some agency things and ultimately ended up becoming a consultant of my own with Studios all

around the world helping them go from their formation through their exits and and all the things that come in between been the CEO of a couple companies along the way was early in in-game advertising back in like ' 06 early in Progressive download in 2008 pretty much early to most things but a lot of experience in in freeo play in those types of business models and when I saw hiber I looked at this I said wow this is an incredible way for any one to access something that is like Roblox and saw that the model would ultimately evolve into something with a user economy so that ug GC really really uh it hit home and I think we're we're probably even a little bit early on that too so okay so a lot of experience in the industry I've seen a lot um done a lot and that's always the best kind of guest that we like um who have kind of that perspective on the industry and and you know have seen some of these Cycles uh happen before and I appreciate that you're even cons considering that maybe

we're even a bit early to the ugc revolution there especially as as part of the ingame economy um okay so let's talk a little bit about hiber then um what is hiber what does it do and uh I know you have a hiber world which is where all of these experiences happen like like in Roblox um how do you experience that so founded seven years ago hyber is a company it's were based in Sweden and Matias Johansson and Michel forche the the two people who came together with this crazy idea of wow things are getting easy to to put stuff on the web and what if everybody could use some kind of web tools to create worlds and 3D spaces and Maus is kind of a a Visionary thinker I think of kind of like a Willy Wonka and you know you could say no that's that's too early that's crazy H but his brain would go to it and eventually the Market's going to hit where where his brain goes so the the idea was take the web and utilize it

as a tool to give everyone the opportunity to participate in creation because everybody has that creativity whether it be you know they want to paint they want to write they want to make music and the new the current generation they want to make games but they do find it kind of daunting if I mean Roblox is absolutely the most amazing platform out there for for people to actually play and participate it's it's a different kind of social experience these days where kids are experiencing everything there but it's impossible for the average person to create because you have to learn luup and there's so many people that come to our platform saying I wish I could make a game and when I found IW world I can go in with no code and start clicking things and placing items and adding gameplay elements I think that's that's where really starts to to hit home like okay if Roblox ever gets to the point where could do what

we're doing I think they're going to be even bigger because you know that's that's an opportunity yeah yeah absolutely it's actually interesting to say the the difficulty of building we had uh Joe Franks from gamef um on the Pod just uh last year I think not that long ago and I mean they've built a pretty compelling business essentially being the experts uh in building those experiences and those games specifically for brands of course but uh it just goes to show that even big brands with big big budget they don't really have the resources to go and do this and so the average person who wants to build one of these experiences it's it's going to be daunting it's going to be difficult um and so so that's your that's your 3D that's hyber 3D right is what you're describing so H how how exactly is it easier how how is it better how is it smoother how is it more streamlined what what I'm really describing there is is the hyber world part of it so hyber world is the application of the hybrid 3B stuff and and a quick shout out to to Joe and the the game found people over there we actually share an investor in

Convoy Ventures who got got a a pretty good view of where the Market's going so they've put some nice Investments out there backed us and backed them so that Sonic the Hedgehog game that they built for uh for Roblox is pretty awesome it's killer it's amazing and then the Barbie stuff they did with the Dreamhouse and tied tied to the movie release like that's really hard to do with big Brands and like having to work with release uh dates and schedules like they they're doing some nice work and what do they do really well yeah I I'm I'm super impressed with how they've been building stuff and I think there's a lot of companies starting to to pop up and do stuff for ufn right so the unity yeah people out there the one challenge is the Discovery because here's my 28 digigit code type this in and you'll come to the world there's no real logical way to do that search stuff but somebody's going to solve that and build a new distribution but Channel out there and have some Some solid money coming in

yeah absolutely all right well so let's talk a little bit then about what what makes hyber you know what's the like how do you differentiate from Roblox you started seven years ago obvious Roblox was already pretty mature by that point yeah um so you're obviously looking at ROBLOX and saying hey we can do this we see this where it's going and we can do something that's different and that's going to differentiate us and that's going to make it easier easy seems to be the thing that you guys are leaning on how is it easier uh easier because it doesn't involve a few things one it doesn't have to have a big download right we have a the hybrid 3D engine is under five megabytes it runs in a web browser it's a C++ engine and it can reach people anywhere so if you're talking about Emerging Markets if you're in in Africa if you're in in parts of Asia parts of Latin America and you would love to be a Creator this is an opportunity to get in and start doing that without downloading hundreds of megabytes or gigs or having to even use apps because in a lot of places especially like India a family might share a phone and that

install storage space is really at a premium when you're sharing it with a five to seven member family and you know you want to be able to just access stuff very quickly that's probably one of the things that we our our time to fund our ttf as we say is somewhere between five and seven seconds and it almost mirrors exactly the attention span of gen Alpha so how true is that I got I got two kids as well so yeah I know I know what that is but yeah I mean the hyber World Experience so you can go to hiberworld oncom you can see the 6.5 million games now oh wow okay all right my numbers are out of date well that's good yeah 1.2 million creators so far um and we haven't really done a ton of promotion so I think that's that's the key kept that kind of lean but the the true thing about hiberworld is it's an example of what anybody could do with with Hyper 3D

you can take any you can take the engine and you could build a world and you can embed it on any website because it's it runs on the existing HTML rails of the internet which is absolutely awesome if you're a brand uh think about you have the Tommy Hilfiger site and you want to actually have an experience and you can build and put a Tommy Hilfiger experience right on the website right next to the things you're selling but also because it's web you can actually within those worlds do connections to both uh 3D virtual and real world items so you could actually go and make a purchase or get a digital item now the whole figal thing right get the digital item and then Amazon delivers the the actual physical thing in the mail tomorrow or later today yeah that's wild that's wild okay uh so those are really compelling things we're dig into some some uh of the components in in a little bit um but let's talk a little bit about do you have any big hit games or

experiences uh on hiber or in hiber world are there any kind of trends that you're seeing in terms of what's resonating what's working I think the probably one of the biggest things that we've had on there is we did a a partnership with uh roio and uh Ready Player me and we built some avatars out and experience around Angry Birds so you can go in and it's it's not the actual Angry Birds experience but you can actually fire one of the birds at some things and it's more of a platform so I think what we find is that our audience loves to go in and experience the brand it was like oh my God they have Angry Birds this is so cool um that one is pretty big we've got some variety in there we've got racing games we've got games where you can fly like like Superman there's a battle royale mode there's all sorts of things even Sid scrollers that are starting to to pop up but the real opportunity here is professional game developers at some point starting to look at this and and

we see some huge Trends in the market that I think uh are going to attract some people to what we have to offer because we have this incredible showcase piece with Hyper World U but there's also going to be some larger games that are coming out in the next year yeah I mean once you get the audience it's the the flywheel starts going right so it's hard to build that initial audience but once you've got it then it starts to kind of feed on itself so we'll get into that in a in a little bit as well um okay so who is the audience who are these uh developers and then who are the users the players the people who are experiencing yeah the I would say that there's there's very few professional developers on the platform today um and they're mostly the people who are exploring hyber 3D to use as a transition for either Unity projects or unreal or something that they've built um where they want to kind of open it up and do some ugc stuff with the community and then the majority are people who just have this creative streak and they're like I want to build

a game I want to build an experience and they just went to start building I think one of the one of the coolest stories which comes out of a horrible tragedy when Kobe Bryant passed away we had 25 30 different worlds that people had built as memorials to to Kobe and and his daughter and I I thought that was just amazing that people could take a 3D space and not make it a game but almost you know it's a tribute space where they could go and they could talk about it and that's that's I think what some of the true power is within ugc it's it's being in the moment and it doesn't have to be the greatest quality content but it's relevant in in the moment and that time and that people can have that discussion and then they can kind of move on to the other things that that are in their life but maybe it gives them some some closure or some opportunity to express that and and share with others in a way that you can't do on Snapchat or Instagram or Facebook even though it is permanent

that it's there uh it doesn't have to be permanent right could be the thing that you kind of put out there and you switch it back to private and nobody sees it again so yeah so that's interesting actually it's almost like you can have an instant creation I mean because you're so fast that's your that's your angle you can react more quickly and do these kinds of things it would be very difficult to do that on Roblox or certainly on any other game engine um so uh does that then mean that these experiences are int ended to be short-lived uh or is it more of a case of people are trying to build things for the long term but it's it's just not quite the same experience as it might be on Ro but even on Roblox they don't last forever these experiences so curious to hear kind of like how long do people play for how long do these worlds last for uh what's the kind of churn if you will I don't know if you use that term internally but what's the churn through these worlds ah I would say when you have a world that gets popular like if you go to Roblox rob the bank Obby is a

huge uh world that they have it's got tens of millions of plays might actually be the hundreds of millions at this point somebody who goes and builds something like that on our platform and it'll get millions of plays and it'll stay pretty relevant um one of the fun things is everything on the platform is multiplayer so as long as somebody's playing it it'll keep that session open and it stays for a few minutes after even they've jumped out so the top games tend to kind of not turn over as fast so if it really is a hit you'll see 20 30 50 people playing every minute of every hour of every day and that's that's something that I think Angry Bird stayed on the top of our chart for like 10 months wow okay okay so people are playing for for real amounts of time yeah um okay the developers let's talk about that side are they you know this there's 6.5 million worlds I'm presuming it's not 6.5 million developers I'm sure

there's some developers who are building multiple worlds what kind of behavior do you see there on the developer side do they make one world and then they're they're done they're just experimenting or is it a case of like oh wow this they made one and it was fun to do and now they make a second one it's even better and then you they're like serial entrepreneurs air quotes if you will inside the uh inside the hyber world so so the user journey is usually like people come in and they'll play a game and they'll wow this is really cool and then they'll see that little crate button up at the top like what is this and they click on that and you don't actually have to be registered as a user on the platform to play or even to create you do to publish um so once people go through and they they play around the first time and they'll publish something if they get a positive reaction from other people in the community hey this is really awesome really loved what you did here that feedback really feeds into the cycle and they'll go and they build something with a little more effort and start building some friendships on the platform and then helping promote other people where

they like their games or saying hey can you check out what I built I really love that you did this and you have some creators out there that have built hundreds of of games and you have other people who build one and it's you know a 3 second experience you go in you hit the goal you're done um but it is it's pretty empowering to be able to go in and build something and then say look what I built so we know a lot of people sent sent those worlds as like a Mother's Day card on like Mom look I built you a world it's a game and I know you love that I'm playing games all the time but you're know here check this out but I'm a creater look Mom I'm a Creator Creator yeah and and there's stuff in there that says mom right so yeah yeah no that's cool the future of greeting cards okay look out Hallmark apparently you're here first okay so the demographics of these developers you mentioned developing countries a few times you mentioned I'm going to talk about Mobile in a second actually you know mobile devices I haven't got to that yet but we're going to talk about that in just a little bit uh but what are the demographics of these developers

where do they land are they very young are they children just experimenting for the first time are they from emerging economies emerging countries where uh maybe they don't have fast internet like you said they can't download a multi hundred uh megabyte you know uh binary and start playing around with that like what's the what's the demographic uh split I would say it's it's about 50/50 50% is us-based and the other 50% is Emerging Markets whether it be India Philippines other places in where they don't have the SAS internet and way the ways that kind of plays out is if you look at the school day uh kids will go and they start playing and they'll create at lunchtime and then after school they'll play I don't know if it's until pickup and then when they get back home you know they have other options uh at least within the hiber world Universe maybe they do want to play Roblox or some Minecraft or fortnite um but the majority of the time is when

people are at or around school time because they can get in so fast and you know even if it's like you got 10 minutes before school starts you jump in with some friends and we found that one of the fun distribution Parts here is people will take a link they'll start building and they'll throw it into a Google doc because schools use the Google Doc system or the you know all all those places people can share it and they can co-create in real time so you could have 20 people in the same place building something and you know they're sharing messages behind the teachers's back like what's the answer to this they're building math problems in inside the world um but the overall demographic is it is mostly people within that 13 to 18 group I'd say that because you can't really track people who are under the age of 13 and pretty much everybody who's under the age of 13 I think on most platforms just says they're 13 right um but that's that's the majority of of the group and then you do get some

people who are a little bit older um and and some developers who are trying to do something that maybe it's a lifelong dream and they're in their 20s and 30s and say you know this is a great early access point and maybe they go on to to use the coding version of what we have or they'll move on to a Unity or an unreal eventually but there's a lot of people who have unfilled dreams of making a game and it's the game that they always wish they had hopefully were were an inspirational piece in that Journey that they can go and at least start it yeah no absolutely and it's you never forget your first coding experience as you know you always go back as an adult if you enter into the game industry and uh you always look back and say oh those were the days when I was just messing around with my you know Commodore 64 or whatever it was 10 10 print Sean 20 go to 10 there you go exactly um so that is awesome on the flip side catering towards primarily children uh younger children obviously has its drawbacks uh Roblox spends an absolute monstrous amount of money on uh

Safety and Security and rightly so content moderation as well and of course monetization we'll get that question later on in the episode as well so let's start with the the moderation and the uh safety aspect of it uh how are you approaching that what's the challenge there uh so we you're G to love this we've actually been doing AI for about uh five and a half years so everyone else is talking about AI now but one of the first things we did is we partnered up with another local Swedish company uh to help build out some AI models for front operation um what that does is it deals with 99 plus percent of the problems that you run into on the system they were actually eventually bought bya Reddit uh but because of uh the way we set things up we own the model and walked out with some really great tools and and uh and some content moderation pieces that just

takes care of a lot of the problems and the community does a great job kind of self- policing um and we have very little actual moderators that are human that have to go in and deal with this and I have a extensive background in in MMO games 20 plus MMOs over the years everything from EverQuest to Star Wars Galaxies Lord of the Rings Online age of Coan and funny thing is when you're dealing with a bit of a younger audience they're more exploratory and how and what they get away with and I would say a little less sophisticated than when you get that 35-year-old angry person who just had a road rage incident driving home and now they're going to go take it out on a community so yes oh well that's good to hear and and that the AI tool that's very very cool I I'm presuming Roblox has access to something similar it could have built their own but and yet they spend I mean they just announced their earnings I'm sure you guys poured over them but that is still

such a massive part of their cost structure uh is like so it's fascinating that you were able to kind of air quotes get away um with with a a lighter touch and yet still be effective I think I think it's it's also because of the scale they have so many daily active users and you know I on on one level I throw respect at them all the time I think they they built the most amazing thing it's taking a long time um it is very expensive to do that but they're doing it the right way they you know that's that's what works for that size of a community they need to have people in different languages and different time zones so that stuff doesn't develop into those larger problems but it's it's probably also because theide of the community a bad actor or somebody who's a going to try and do something bad it's going to go where there's a lot more people where they can blend in so we we do kind of get away with some things not

having as many people I'm sure if this thing start starts to really scale uh we will also have to go and invest more into the The Human Side of it but for now you know it's it's working yeah I mean arguably a good problem to have you know still a problem but a good problem to have yeah I love those problems where we have to spend a bunch of money because you're making a bunch yes yes um but nonetheless the that scaling can be very very challenging and I think a lot of companies have I'm not wishing this upon you of course and I wish you all the success but that's that's the point where I think a lot of companies especially those serving children that's where they they hit a kind of a an inflection point and they either fight through which Roblox of course was able to do um fortnite you know epic there's numerous examples but there's many more examples where where they have failed um either because it was a felt like a fad because it was like the kids grew out of it or because of the scaling issue with

moderation and Safety and Security and just one bad actor one bad news story that's you know the death nil right so I was there for the original EverQuest stories about online addiction right and you if you look at online games they become almost a microcosm of and a reflection of of normal society you people who meet and get married you have people who actually pass away in real life and they have memorials and game you have I mean the community literally is just like a regular community and that's what people don't don't think about but in your average community and you don't want to think about this on a daily basis but there's some pretty horrible people out there so yeah if you're Community gets large enough you're gonna have those people but for the most part you know just like your neighbors if somebody's breaking into your house they're going to call the cops right they're they're not going to be like well you know I really don't like my neighbor you want to protect your property value at the very least and be like it's not good to have Prime

so I think if we if we started to look at online communities and said they are just like real world communities you could see how a good Community with good neighbors becomes a place where you want to hang out yeah yeah well I don't know if property values in the metaverse are quite the same as they are in the real world at least not anymore maybe they were in the height of the crypto boom when other side plots were selling for hundreds of thousands or millions of dollars in in eth but uh we could talk web three too yeah I'm I'm withy on that um okay let's shift gears a little bit uh that was a lot about the users and the developers and kind of like who who is the community you're serving and I think that is really important to understand um let's talk more about kind of the tech side and how you're evolving uh you started on the web and you still talk about it as your your web engine um but I know you are moving heavily into Mobile obviously as as is you know everyone and they need to be um talk a little bit more about that especially on

the Creator side on the developer side um what can you do on mobile is it parody with web or absolutely wow that's one of the beautiful things here I think we are the only or if if we're not the only we're one of the only technologies that actually will run on any mobile browser including Safari on iPhones damn even Safari even Safari well you know Apple does a lot of things because they really do want people to use the app store ecosystem and for a very long time it's been a fantastic distribution portal and I think over the last year and a half or couple years it's become a little more difficult for the average uh company to really be competitive as margins are 30% there and you have if you're going to use unit6 because the version you're on is going to be deprecated and you'll no longer be able to make updates uh you're going to be paying them 2 and

a half% if you're really a successful thing so now 32 and a half% of your business is going to third parties uh really for a little bit of distribution at this point when Cloud costs have gotten so cheap you could deliver you know a 100 Meg product for a penny it's so why would you pay 30% Revenue share and then 2 and a half% to another platform in perpetuity it seems like maybe the model should change and absolute props of the Epic team over there whove done some great things in in Europe in general we we uh tend to be a little more consumer friendly than than the US so they do make rules uh that do benefit people like being able to access payment systems on the web where you might be able to get a little bit more because Publishers developers not paying the same percentage maybe they're paying 6% or 8% uh versus 30 so yeah well

that's that's a whole we could spend we've done multiple episodes on uh the Epic guys going after apple and uh differences between Europe and and the US and uh and Doug a longtime developer here we've been working on mobile in particular since the early days of mobile and we just hate giving that 30% over to Apple Google every single time it's off the top it's like it's crazy can you do it on net revenue yeah exactly with no no notion of like what is your actual cost I mean that's part of like again if you go to look at the Roblox financials that's a big part of their problem is like they just they would be profitable they would be quite profitable if they didn't have to pay that damn cut up the top you know before anything else it's Madness so well I mean if you want to delve into that for just a moment if you look at at ROBLOX and say if Roblox did a direct to Consumer offering at this point they're big enough and their brands big enough why do they have to be in an upour I mean they're

roadblocks so that that's right I maybe they're getting to that point now maybe they are getting to that point I think they are I think they've they've surpassed like the equivalence of Facebook for games um at least for the generation that's playing on there gen Alpha gen z uh it makes a ton of sense for them eventually to have a business model where they direct to the consumer completely agreed okay um well let's talk back to hiber again here so you know we talked a lot about Robo obviously it's a it's a great compid that's you know there's a reason we we do that obviously we have a lot of respect for what they've done paved the way for this kind of business um they've had most not most their success that's unfair but they've had a lot of success especially recently because of their scale they've been able to trct a lot of Brands uh companies like gamef fam and Joe over there you know building Sonic the Hedgehog speedrun simulator metel Barbie Dreamhouse I mean the list goes on stuff with the NBA they've done virtual concert they've done almost it all by now um and that is part of the appeal for you know the people visiting is like

oh these cool experiences from The Real World that I recognize and are now in the in the metaverse so you mentioned um Tommy hilfer I think earlier on I think that was a partnership you did is that something you guys are working on actively as well is that your kind of bread and butter Revenue generation because again monetizing younger children is quite difficult they don't have credit cards to whip out of their pockets and pay you even if there is no 30% off top so um curious to hear a little bit about the business model and specifically with the lens on some of these brand Partnerships yeah um so the business model has been PRI primarily focused on licensing of the engine so we've we've done some of that free-to-play experimentation um what we realize is the majority of audience like you said doesn't have that credit card and we don't have a subscription model which if you're doing a subscription like Roblox you got a great setup because they got to go P the parents once and then everybody just has to behave and do

their chores and then you know set on $499 for Infinity that's that's the the dream model uh for a consumer side platform and it's also why our model is focused more on larger developers or people who I think we're more competitive kind of with a Unity than we are with a Roblox so actually sent the other day I'd rather try and get $1 million from One customer than $1 from a million customers because there's so much more work in getting that buck from everybody um even if you were a paid app download so yeah I don't know where I'm going with this other than the the business side of it with the with the brands uh we work with a bunch of Brands and a lot of them have come through our partners at R player and me who work just they're fantastic to work with so a shout out to them but for the most part those are more brand activations and people trying

to to get exposure for what they're doing we do have something l te's a little bit that's going to be massive with uh the the greatest football team in the entire world uh football soccer uh coming out sometime in the next month or so so keep an eye on that my greatest team in the world everyone's got to have a slightly different definition here so I'm a big soccer football fan I watch at uh Premier League on nsbc and uh peacock so uh let's let's make sure we're talking about the same same te team here uh Liverpool I'm not no not not gonna actually say who it is but it's not rexim either even though we'd love to work somewhere between Liverpool I don't know if Liverpool is is the best in the world anywhere especially after Jorgen klopp has gone but anyway that's a whole different conversation um I've been following them I'm not from the UK I'm from Finland obviously as everyone knows but um uh I've been following Liverpool from the very very very beginning so before it was cool so just so everyone knows it's I didn't jump BW with the Jurgen kop era

um okay let's talk a little bit about that Revenue go a little deeper on that because um you know brand stuff and those kinds of things activations like yes it's easier to do easier air quotes getting money out of Brands is not easy right um but uh it's also lumpy right like to your point about the Roblox subscription or even kind of IAP my son is 11 he's a very good fortnite and brawstars player he gets the battle pass every time it comes out and as long as he does his chores you know he requests it I pay it for it um even though that's not subscription ring it's also fairly predictable when you've got the pattle pass concept going on uh it's very lumpy when you're doing brand activations so talk to me a little bit more about that like that that's the challenge with that model it's like yes you can get bigger checks cut but then where's the next one coming from right yeah so so the brand activation thing if you look at the the model how it can work um it's the same model that retailers use right so if you were an affiliate for Amazon or an affiliate for uh Walmart or Target they pay between I think four and 7% for lead

generation ultimately if somebody goes and buys something through your platform so if there's a brand and they're popped up on say hiberworld or even it's embedded on their the site for this specific brand and there's a purchase made uh a lot of times that's a better model for them because then it's just success-based versus paying a bunch of money up front I know during the pandemic stage when everything was going crazy and had yeah people had free money basically and they were investing in everything a lot of companies had metaverse divisions and they were like yeah this is it's all going to be 3D it's all going to be here in two years a lot of those metaverse divisions got laid off about a year and a half to two years ago so it was even even before some of the stuff that happened in the regular game industry sort of really going a bit sideways friends are figured that out they're like nope it's not going to generate money in the short term so stop

investing yeah I so but to to that point then like where do you see that going then what are you are you still focused on that as your primary source of Revenue I know you said you've got this big activation coming with the the world's best football team I'm excited to see what that is um but what are your other sources of revenue what are you chasing what's coming next in terms of trying to monetize the the big opportunity in the market that we see is there's people who are paying a lot of money for other engines right now and those engines are going to be charging even more money and on top of that there's that 30% going to different app stores so if you have the ability to kind of look at the entire Market take a step back you have a successful game maybe you're in the top 150 200 titles on mobile so how do we get around this how do we start building that direct to Consumer connection because everybody is looking at the D Toc payment providers and the

distribution part is is inexpensive so if you can start making 20% more Revenue at least by going direct to those consumers and your brand is big enough it makes a lot of logical sense so there's a lot of people in in the strategy divisions within large companies that are starting to reach out to us and saying H this seems like a really interesting opportunity to keep a lot more of that revenue and kind of shore up some of those deficits that that some of those public companies have so you're like say you're a Roblox and you're say to go okay if we're still losing money how do we fix this well we need to figure out a way to make more or we need to cut our costs and then people don't want to cut cost because then you lose Innovation you lose speed so you have to figure out how to actually keep more your dollars and I think that's that's the big opportunity for us in the market right now is these larger companies coming and say say hey you just built this amazing engine over the last seven

years no one is crazy enough to be building an engine these days that's that is true maybe we'll work with you well we have 7,000 less people than our closest competitor yeah yeah yeah totally totally um okay well that brings us back to the flywheel then right and so you know these brands are coming to you because you're able to post you know big numbers I don't know if you've um announced Your da or ma do you share those numbers I know you Shar the number of Worlds but we will say hundreds of thousand of of Maus and the tens of thousands okay so I mean like I said we're really not doing any marketing so it's all organic right right and that's what I was going to say so the flywheel now is you've done this all organically are you at a stage now where you think you could accelerate that flywheel by trying to Market more aggressively to either consumers the players the users or agress more aggressively to developers creators more professional Studios that can level up the experience is like what's the what's the next lever for you you can't be going word of mouth forever I think

um we could and but here's but here's the way I look at that and and how we look at it as a company if you look at something like Roblox Roblox is a destination if you look at something like fortnite it's a destination Minecraft is ultimately a destination what we have is something that's embeddable on your own website so if people are already looking for Levis or cocacola or your brand even your your video game they're coming to your website they still people still go to websites they do so the idea would be why not put the community and the content where the community is at versus paying a third party to build their numbers and build their Community to send your user somewhere else so that's that's the big pitch here is if we're kind to scale things we're going to scale it on the sites of the people who areed with us rather than on the hyper World site because you can you can put something on hiberworld and embed it on

tommyhilfiger.com and you'll get an audience from both places but the the goal would be that the primary audience is the Hilfiger fans who are going through and having this awesome experience and going oh this is cool I wish I had and they don't care that it's hiber they don't care that it's hiber World they just care that it's Tommy Hilfiger or Levi right right exactly and that's that's why I think that that hyper World brand ultimately is isn't important it's literally I mean it's like steam right no one goes like oh yeah it's on Steam everyone goes okay steam's an account a wallet I have that connects the things okay well um this question then may or may not be relevant U but I'm gonna ask it anyway because you obviously do have a bunch of creators who are creating stuff and um not monetizing directly very very heavily so uh you know Roblox obviously they just again going back to the earnings it's it's hot off the press it was like last week I think they they put it out there so I I I certainly poured over their their earnings I always do uh you know they're now paying their creators over half a billion dollars a year um which

is amazing that's fantastic I mean they've created you know real entrepreneurs children in their teens or even younger are like able to build real businesses right um early on and that's amazing and I just have so much respect and kudos for what they've done there um and that's obviously feeding the flywheel for them and has always has done so curious to hear do you have a version of this do you share Revenue with creators given that you don't generate maybe so much iip and it's more brand like I'm presuming it's a hell of a lot harder to try and parse out like what what would we give like what's a fair rev share if you will uh so we haven't generated enough revenue on the ugc side to really have it be material yet um but yes there there is a way to do that um our our view on that has always been that the Creator would have the majority because they're the one doing the work uh at the same time we

kind of cover our backend costs and some development fees but you know that's that's not even 30% it's it's smaller percentages but that's again huge respect for Roblox and and what they're doing they have a massive overhead so even a half a billion dollars off of several billion dollars for their revenue they're covering their costs and they are really doing some U for a lot of people out there so that you know I can actually make a living as a Roblox developer that's fantastic you can't do that on hybra today there's there's there's not well actually not on hybri world on hyra 3D you potentially could because then you could just own the revenue and we do know some people who are doing some fun things uh like connecting to Shopify and connecting to Amazon and other platforms to take those items convert them through some tools and put them in 3D objects and you can go in there's a store so you want to

want to sell your your brand of coffee or you want to sell whatever I mean eventually I think this becomes a not just a game platform but a mom and pop Serve Yourself type of 3D experience that you put on a website and what we didn't talk about yet is we've been working with Google um and the cloud people over there on some AI tools over the last year plus year and a half almost so you have the abil to actually go in and prompt what you want the world to look like and it'll start setting it up and then you can move objects around afterwards you can also take a picture off your desktop upload it and it'll actually turn it into a world which is really nuts but that is I mean yeah AI is I'm I'm working with who isn't we all have to be working with AI at the moment right um but not for five and a half years I'll tell you that though you guys were definitely probably was there um it's nuts how much things move in like a week or each model like every time they model updates it's just like oh now they

can do this like wow I love that because the the game industry has actually embraced AI for decades they have yeah absolutely it's procedural generation we used to call it and if you play a Rog like well Rogue itself is the first Rog like and use procedural generation so that is the AI yeah and that's there's a reason why game developers have jumped on this latest wave and obviously have raised hug amounts of money like NPC creation making you know World creation faster making uh you know asset creation faster um you know generating video and you know character design it's it's it's quite a lot that is possible and is being embraced by by game developers I think what we're looking at is you've you've had different waves over the past you know almost 30 years that I've been in 29 but I think we're entering what I like to call the age of personalization where within the next

call it five years when you go and play something it might be user generated content but then there's AI tools within it whether it be agents Bots the NPCs the storyline and everything's adapting to how you're reacting to that content and throw that on a ugc platform and oh my goodness you've you've got the Choose Your Own Adventure of a lifetime that's literally a game for you but then you're R into the problem like okay well how do you monetize that when you just given somebody everything they ever wanted and it adapts to them every single time they go in yeah well I will just I will just say yes yes sub that would be very nice um I will just say I mean we've been chasing as an industry personalization for the longest time and I was you know early Zenga and like personalization oh we can do personalization now because we've C analytics well it wasn't that easy you know like now it's like oh we AI we can do personalization let's see let's see jury is still out um you you bring a

good point there we have a fantastic analytics partner in dive and they have absolutely enabled us to to look at these things around like Ai and personalize a lot of the content so we can see everything down to what items and objects do people build with the most um what are the most successful titles and why and then you can kind of cross reference the different pieces like oh if you spend at least this much time and use this many items and these are the items that you're using it will have a popularity index of X and a completion of 70% plus adds to this so that's I I did want to call them out I think dive has has been a fantastic partner through the entire thing and a lot of the decisions that we've made have been because they have such great Advanced analytics that even somebody like me can use uh well that means the kids definitely can use it because they are way ahead in Tech than uh definitely

than us oldies here um yeah you mentioned dive you mentioned analytics I think one of the things I wanted to ask you about is you know what kind of tools are you providing the creators who are putting out these worlds uh you know they don't have the capabilities to build their own analytics stack there not Zinga early Zinga which was like one of a Pioneers in building analytics now of course you can get analytics off the shelf and that's exactly as it should be game developers focus on game development do what you're good at and then have other people who are good at analytics or attribution or whatever um be part of the stack uh how are you approaching that for your creators who of course are much younger they're children so yeah um well for the for the most part we just expose a little bit of the the dive data to them like how many people have played how many completions uh how many likes favorites people saving it to their their account all that kind of stuff but on the hiber 3D side of the stack dive is one of our partners so if somebody goes and wants to build something on there they can get dive out of the box um as well as you know other partners that we have so like

Google Cloud if you want to actually run your stuff on our side you can if you want to run it on your own you can uh but there's there's a bunch of partners that we're starting to spin up that you'll be able to kind of build that ecosystem around whatever you need in a a self-service capacity and then if you're one of the larger companies obviously we have that stuff running so it's tell us if you want it or not if you want to go back to the Zinga days I would also blame Zinga for changing what we used to have they used to be called players and then people became users so evil internet people came in yeah we every every company that I've been involved with or founded co-founded since since Zinga since 2013 when I left um that's the one thing that we've uh very very clearly said we are not going to call them we're not going to call them users we're going to call them either players or customers or subscribers or students depending on what the product is what we're working on like what is most appropriate way to be respectful to uh who is essentially

you know paying your bills if assuming you're making money of course um so yes no 100% And even even while we were there I think we there was a little bit of a user is that the right term imagine imagine you come from like six to seven years of dealing with MMO games and and everyone's talking about internet addiction and then using the word user like oh come on yes but by the way that brings me to the next question which is ironic because this was not planned this little segue into users uh user generated content ugc exctly I'm just going to call it out like that is that is part of the terminology now nobody calls it anything other than ugc you don't call it PGC or dgc developer Creator generated content yeah exactly so so let's talk about ugc user generated content maybe we should come up with a different name and try to you know petition the industry to to change it uh you think you and I Sean can we can we get this going with a little customer generated content customer generated content thank you okay so cgc we're calling a cgc for the purpose of this episode at least um so a

lot of game developers talk about that it's like I said at the intro level it's hot hot hot like everybody's talking about it um it unlike the metaverse you know especially the the broader metaverse uh concept that's kind of Fallen by the wayside but ugc very much is still um in the I mean growing growing in importance I think and most developers are incorporating it if it makes sense for their titles and genres and of course is doing a phenomenal job on that front what do you uh what are you seeing on your side and the hyber side both the 3D Hy Hy 3D sorry and then hyber World side uh yeah that ugc is absolutely the place to dat it's the right place to be in all the conversations we've had with large Publishers and really big game companies over the last four five months we're hearing from them that there hasn't been a conversation at the strategy level or at the level in like a year that hasn't involved

ugc as part of the topics so I think AI is a is a Hot Topic but the reason AI is a Hot Topic is because they believe it should create more engagement and ugc is the ultimate engagement where you've invested just just like if you go back to like LinkedIn when it started if you built out your LinkedIn profile and you had listed at least two or three jobs before that I believe it was then you are HED you know you're actually going to come back and use the platform when you build ugc at the very least what we get is a lot of people returning to see how the community reacted to what they created and if you really did put a bunch of time into something you're even going and promoting it on social media trying to draw off the people and to see what you've got and I think that's that's probably one of the missed opportunities out there um just because we're not a big company and and a big team would be that influencers on YouTube or Tik Tok or wherever if they

went in and built a kind of a branded world around what they talk about what they're interested in you could get a community to go in there and and participate and interact on a pretty regular basis because it's it's a a space where you can put dozens and dozens of people and you can actually communicate in the space so it's it's pretty cool I could actually send over some worlds You' be like wow this is nuts nice uh and I mean to to the point about LinkedIn and you know mentioning that if you put two jobs up there like you know your magic um kind of numbered like this is the Northstar like this is the metric that we need to optimize for like Reed Hoffman of course famously is credited I don't know if it's fairly or unfairly but is credited with uh you know the modern product management function exactly these kinds of you know metrics where like they trying to find what that thing is that you know and then Mark Pinkus of course was friends with Reed Hoffman and brought that over that whole PM culture over to Zinga and the rest is history for the gaming industry so to

speak um that do you have your version of that what is your metric that you look for which is like okay if we get X Y and Z to happen in this period of time or whatever then it's successful or it maximizes your chances of success yeah if if you can convert somebody into actually being a Creator and actually hitting that create button and making it through the publishing process it doesn't have to be in their first session be in their third or fourth session and if they've come back for that it's actually even better if they come back and they publish on that third or fourth session because now they're kind of got a a recurring pattern and they say oh okay cool now I have a reason to come back and I'll watch this the other part is if they spend you can earn these tokens internally called high bucks so that's our in-game currency but you can earn it by doing different actions different quests and achievements and you can spend those in the shop so once you've spent some money or some some tokens

because it's not actual real money you can buy them for for the most part it's it's people earning them you can buy some pretty fun stuff and once you have have a digital item it makes you want to come back there's there's that level of loss aversion um I wanted to actually promote a a book a little bit it's called hooked how to build habit forming products by that in my book stelf I thumb through it I think two or three times now so fantastic book um if if you want to look at how to build out those Northstar metrics and how to kind of Define what it is that's that's what we used that's what I I Look to yeah yeah yeah I know listeners that's a great book by the way book recommendations we don't usually do them we usually do game recommendations um but book recommendation could not recommend it more as well book called hooked by near AAL n e y a l I believe uh it's a yellow cover I think unless it's a new edition I've got it yeah um okay let's talk we're coming

towards the end of our episode here of our time I want to talk a little bit about the kind of the the future um so what does the what does success look like for you I was you know kind of it's it's great to be in the metrics and like oh we got six and a half million worlds and you know we're doing these deals that's that's wonderful it's in the moment but what is your kind of long-term Vision where do you want to be you know five years from now you've been in business for seven years okay let's let's say seven years then make it you know seven is the magic number here so you've been a business for seven years you've got you know great growth got to where you're you know you're heading up and to the right clearly where do you want to be in the next seven years I think when in seven years still do not want to be a gigantic company I think we want to be really tight and focused on what we're providing to the market I hope that there's some huge shifts within the ecosystem where people start to realize that direct to Consumer interactions important I hope that uh and and I'm not talking about us in specific spefically but but I hope within the industry companies like Roblox do take a

leadership position and say you know what we can go directly to Consumers and maybe they become a distribution platform akin to the steam or or epic's trying to do I think Unity I flabbergasted that they've never built their own version of steam they have you know 1.3 million plus monthly users of their editor and why don't they have that they have ad Network for distribution but like but some things there Unity is a bit of a mess Unity is a bit of a mess we've done many deconstructs and what's going on with unity and what's wrong with their strategy and announcing price increases and then pulling them back and wiring uh ad networks that are just a horrible horrible horrible cultural fit I mean we could spend many more episodes talking about that so yeah you are you are surprised I think most most people are surprised by that I'm surprised they don't have that steam store like you already have an asset store why not just make it so people can just list their game their games right there yeah exactly give you a storefront so yeah I um and then you can have the

monopolistic practices and get sued by multiple government agenes in different countries yeah but you get big first get big first and then you're okay and then youal and you can hire the high price lowers and it'll be years and years and years but you have to worry about anything so don't worry Sean that's the Playbook but but for for us um I I think you know we're going to go through more Cycles I think there will be probably a a focus within the industry where there are fewer large format games coming out but they have much longer tales and they have ecosystems around up that are UTC based and I think for us being an important part in that transition to the age of personalization and in their the ugc content cgc massive cgc cgc CG yeah that's right cgc we messed that one up on the first try so see we've got our work cut out if we want the industry to adopt our I got to get own ah head to do it so that that could take a thing or two but yeah I see

that there's some big transitions happening within within mobile U some of the some of the big players within the tech industry are going to probably try and take bigger cuts of of things because like oh we're your cloud provider I I heard the other day that 83% I think it was of people using public Cloud want to actually switch to private Cloud it was I think it was Michael Dell put that out yeah it was insane like that's crazy is that just Fortune 500 companies or like why would you want to switch to a private Cloud it might have been but I think people want to take their customers and their data and and put it back behind some kind of a firewall right you don't want it out there being used to train AI models I guess I guess I don't have that lens on as a game developer I'm just like H I don't know like just the Public's just fine like we have nothing to to hide I feel that way too it's like there's nothing you can hide somebody already knows everything about everybody and especially with AI

especially with a I mean G Gemini is freaky it's like really creepy because it like it is clearly reading my emails even though I haven't given it permission it in fact in relation to this episode it knew something um that it could only have known because it was there was no it wasn't like a public thing it was just a a note in an email that it it brought up in my prompt and I was like that there's no way for you to know that and then I asked how do you know this like there's no way to know this and it's like oh I'm sorry um I don't know and it it doesn't it can't tell you how how it knows things like it's really frustrating and it's actually quite scary and I think Google and these especially Google should be worried because they have a reputation to uphold whereas open AI is they don't you know they're the upstart right so uh yeah anyway we don't need to that's a whole other Episode by the way if you're interested in AI stuff like listen to hard Fork the New York Times podcast with Kevin Roose and Casey Newton absolutely killer podcast uh they they have uh staked this I mean they're very funny as well they're very entertaining

but theyve staked this position of covering AI in great detail I mean they have they literally have like svps of Google coming on they had the perplexity AI uh CEO and founder on like they're that's the podcast for AI by the way if anybody's interested so we're plugging books we're plugging podcast what next Sean what next we're not plugging the product yes yes yes exactly our stuff's really good we're super modest uh you should check it out if you like yeah yeah we'll have links in the show notes both to hyber world and to hyber 3D so don't worry about that we'll put a link into dive as well your analytics partner um and maybe we'll even put I'm gonna have to remember all this stuff I don't write these things down but maybe we'll put in a link to a hooked or a show note in the show not hooked by near I think you hard podcast we're gonna have to have a whole page for you have a page put put the affiliate link on that too you might be able to get 7% from Amazon the most recommendation heavy episode I think we've ever done um and and it doesn't stop here because I have to ask this question because it's now my tradition uh for 2024 is I ask all of our guests

who come on which three games are you currently playing or most excited about and they can't be your own oh okay so that this is a hard one because I play way too many games um I've been playing Empires and puzzles for years so I play that religiously every single day Heyday I'm level 120 Garden Scapes level 2030 I think um so that's on the M side and then anything that I love Ze zbd they have this awesome platform it's it's a crypto wallet that is actually mixed with we've had them on the show they've actually they're actually a sponsor or at least they they were a sponsor I think they still are of the gaming podcast they're they're good guys we had them on the show Ben yeah Ben Cousins Ben Cousins yeah we had him on the pot he's a great guest he's he's a great guy and he actually introduced me to what they're doing and then they have these playtime things where it's like hey you can earn some bit Bitcoin some Satoshi fraction of a Bitcoin yeah yeah

44% bonus for the weekend I'm like okay I'll try out some new game I've never played before and make a few satosi I got like 50 bucks on my account somewhere but you know who knows maybe Bitcoin goes to a million yeah that's not nothing exactly exactly but then I think there's a lot of things that I like to play Archer danger phone is one of my favorites um it's just littered with ads for misplay and other places like are you getting paid for playing games um but then I don't know when this podcast is actually ultimately coming out but it's on Tuesday so we're recording this Friday August 30th is coming out next Tuesday September whatever that is 2nd I think perfect so today is for us on the podcast is the day that the new Call of Duty beta comes out so that uh that'll be uh up and running in about 20 minutes yeah we were joking that Sean's bandwith May suddenly disappear when his daughter gets hold of the uh uh the Call of Duty beta pre we made it through we've made it through I think just fine

until now so we should we should quit while we're ahead that's that's the key it's it's all about uh the secondary backup so I have a a gigabit fiber coming into the house but I have a 5G backup just in case and literally my kids were burning out because my son was home until a week ago he's off at College St they were burning out a terabyte in like 10 days of the month and then Cox is like yeah you're one of our biggest bandwidth pigs out there so I was like I'll show you I'll get secondary internet and put the kids on that there you go oh yeah they'll appreciate that they'll be happy about that um all right all right well listen uh that's all what the time we have for today Sean thank you so much for your time and thank you for joining us on the Nava gaming podcast I've really enjoyed this conversation and I think it's really fascinating what you guys are doing and uh good luck with it all thank thank you for having me I really appreciate it and I I love just talking about stuff in the games industry so if other things pop up and like hey let's talk about this controversial topic that nobody seems to want to touch you know

I've been around long enough I probably can't get in too much trouble well and you work for a Swedish company like it's they're they're usually pretty mellow the the swedes they're superow so uh yeah it's you don't have your like investor relations and your PR team and I tried to get my uh old colleague uh Manuel bronstein from our Zinga days together he's the chief product officer at ROBLOX and uh just tried to get him on the show and he was game and he but then he had to Loop in like his PR and his ir and his legal and all that and before you knew it we had like a 12p person thread going where they were like probing every aspect of like what are you gonna cover what are you gonna talk about like you can't talk about this you can't and then in the end this is by the way how we got Joe fering on the show in the end they were like ah actually Manuel can't come on the show and I was like are you kidding me like we just went back and forth for like three months um so anyway it resulted in Joe and he was a great guest and we enjoyed um our com conation with Game Fan there so anyway Manuel if you're listening I'm still wanting you back okay I want you back on this pod I think

the key there is you know I started out in investor relations and I did PR and I'm the legal guy too so if if anything goes wrong I have to report myself to me so there that's there you go that's the best way that's the best person to report you to okay uh well this was this was really great honestly Sean thank you so much again for for coming on the Pod and um yeah best of luck uh with the future awesome let's talk soon all right so until next time friends uh feel free to send questions guest recommendations and comments to me my email is nn. 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 games industry newsletter novic digest or contact us to learn about our wide-

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