CES Takeaways / Subscription Strategy Changes / Second Dinner's $100M Raise

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comes to monetization that's because outside the app they can collect payments from their players at half the cost or less of doing so through the app stores kod shop is our Global Marketplace for game currency and in-game items trusted by tens of millions of Gamers around the world and developers that want to accept payments outside the app on their own websites can use Coda pay which allows them to support hundreds of local payment methods globally with a single integration whether our partner leverages Koda pay Koda shop or any of our other Solutions we offer local market insights provide live local language customer support ensure tax compliance and manage fraud risks if your listeners are interested in retaining more of the revenue they generate I hope they'll get in touch with us at Kota awesome thanks for sharing Neil and if you are listener are interested in learning more about how Koda Payment Solutions can take your game to the next level head to codap

payments.com or check out the details and the show notes and with that let's dive into the weekly Round Table hello everyone welcome to another novic round table the second one of 2024 lots of exciting stuff going on as always the world never seems to stop in gaming because gaming of course is resilient and we are too so lots of lots of fun stuff to talk about obviously uh the thing we're going to talk about a little bit going on at the moment CES which we'll dip into but of course want to uh you know introduce the guest that you should definitely know by now unless you're new here in 2024 Aaron and Dave what why don't we just jump right in CES is going on lots of stuff like flying around obviously not all of it gaming but definitely some cool stuff around gaming uh Dave what what's your highlights for what's going on over there right now in terms of like cool stuff around gaming uh I think you're definitely seeing uh some some interest in trying to capture more of the the handheld PC uh gaming Market MSI uh unveiling their new

handheld gaming platform the claw uh I'm not sure I would say they win for a best name of handheld PC but uh they certainly are trying to put together a very uh well-rounded rig um also a lot of interest around AR headsets uh you know people trying to see if they can uh create something new in terms of uh viewing platform for for games uh you know probably trying to uh borrow some of the oxygen that that apple is trying to steal with the with their New Vision Pro headset um some new Cloud controllers uh The serap Firm S3 cloud gaming controller uh looks like it's you know trying to uh take the uh best design award for new controllers in terms of not only just how it's designed but the fact that they're using uh hall effect uh controllers so no uh you know Nintendo switch drift uh from their controllers or those

um and then you know some interesting things that are a little bit outside but you know could have some longer term potential interesting uh use cases for games uh transparent displays coming out from Samsung and LG uh maybe we'll see some transparent displays on the car windows you can play AR games inside the car um and Samsung uh showing a new version of the Samsung Bali uh which is meant to be a an AI uh ball that follows your around and able to answer your uh Voice or text requests uh using AI of course as is everything at CES this year um projector for movies and video calls maybe we can see some games being uh integrated into the Samsung bully interesting stuff coming up it's funny funny to kind of uh converging everyone on on handheld gaming a lot of those even the arvr like the one of the best uses of the the xre glasses which are just got an update at that is hooking them up to like the steam deck as a nice

you know uh big screen essentially display that you have for that so just kind of funny the display technology uh and gaming technology just everything shrunk down obviously CES is a little biased right in that in that direction but yeah absolutely I mean being the the opportunity to game on an 80 inch monitor you know just a few feet in front of your head while you know sitting inside of a a train or a car or even just sitting at home uh yeah certainly some appeal there for sure so my my unpopular opinion is that if you're an industry analyst of any industry CES is actually not helpful it kind of sucks and is misleading in a bunch of ways I had the chance to go um one year I think it was 2015 and I was so struck by how well CES encapsulates whatever is peing like at the top of the hype cycle at at that time it is actually like the worst first time to be talking about uh so much of

what is being showcased and so when I went uh the hype was all about 3D printing consumer drones um The Internet of Things it was literally like people were talking about like drone paintball and the internet of things all was being showcased I remember there were like egg cartons with sensors that would like give you notifications when you're running low on eggs it's things like that CS to me has always been just like whatever trend is like peing in its interest uh at the top of the H cycle often before like the actual technology can truly serve uh consumers in the best way possible that's what is hyped at CES and I I didn't go this year but as I look over all of the headlines I sort of see that Trend again where this year it's all about AI as the big Trend that's

popping off where it's AI infused anything you can imagine I was looking um there are AI infused massage chairs that's a thing now um Good Year the tire company is now integrating AI into tracking tires um and it just like the list goes on and on and on it has nothing to do with gaming but there there are pockets of where that is being showcased with gaming like in Nvidia with Partners showing AI NPC you know new new demos and progress around that front which really is not there yet in any any real way but that that's the profound trend of CES to me of what I see it maybe secondary uh to to Echo off what Dave was saying with ar there seems to be more AR technology being displayed where other companies are coming up with headsets of of

various types that are almost definitely totally going to get crushed by whatever apple and meta end up doing but it's interesting that we're now at a point where these I don't want to call them knockoff companies but you know more of like these second tier they're not Apple companies are are coming out with their own their own devices they can actually do it now it might not be the most awesome thing in the world but the fact that all of these companies are able to come up with something means that we're actually getting pretty close to that technology being real for consumers in some way um in a sense that we just haven't seen before and not entirely sure what that'll mean for gaming I'm not like that excited about turning my my windshield into video video game playing I mean I guess it's cool but it's not like it's not the future of video games um so so those to me are like the two trends that stuck out that again are at the peak of some type of hype cycle everyone's talking about it

people are implementing it in Dumb ways and it's actually just going to take some time to actually be useful to consumers in ways they'll they'll want I know I'm still looking forward to my AI infused internet of thing fridge that I can play games on while finding out how many eggs I have right yeah your your egg egg replacement your egg reordering game there you go it's surprised me Amazon hasn't really like jump on that as as hard as they could be considering how are they push like trying to reorder stuff with Alexa and the fact that they also have like some tech for being able to track things uh like movement and stuff that they use in their stores so it just does does like surprise me that people want that stuff but uh Amazon hasn't really jumped on it to they have it's peak of the hype cycle they they have't a bunch of ways I don't know if you remember but they they had these like little clicker things so like I

yeah it's on my fridge right now as a magnet at this point there are so many versions of those it was a weird wave at the time where it's like oh I'm out of toilet paper let me let me click the button and so it'll show up and you could like put it all over your house or in your fridge or at all these different places it wasn't tracking it but it was it's because they didn't have ai then yet like it'll be it'll be good now we promise Aaron like yeah ai ai just replace the word smart and things is what I've noticed like the stuff you're describing they just took took the word smart and swapped it out with AI pretty much um so so that was the the big trends that stood out to me in terms of gaming itself though probably like what stood out to me the most was Sony um where they actually put forward substance and data and pipeline that is exciting so they announced that PS5 crossed the 50 million Mark which I think is still ahead of the PS4 um so I mean we've talked about this a million times obvious success um and the second thing that we've also talked about a lot that they just continue to to push out

is the trans media efforts and so they're showcasing more about the the upcoming Zelda movie that they're in partnership with Nintendo on which will be interesting um and then of course like new TV shows uh zero Horizon Dawn is coming to Netflix god of war is coming to Amazon Prime and those are some of their biggest franchises that they're making bigger bets on and that seems to be the norm and so I think Sony did a good job but I mean of course CS is not really the place where companies are announcing new games or like their big lineups or anything that's reserved for for other events there is apparently it's reserved for awards shows according to the new trend so that's true we already got that out of the way like a month ago yep it it is interesting though that Sony I I noticed is spreading across all the networks they're not really picking any one network as you mentioned like you already were talking about like uh they they're trying to go to Netflix they're going to Amazon they also have uh the Twisted Metal on peacock they have HBO I

think was last of us so they're not really picking any one winner and I I think that's actually a smart approach uh to kind of like because for example while Twisted medal is kind of a fun show I I don't see a huge future for peacock so it's like oh good thing they didn't put all their eggs in that basket uh you know I mean we'll see like right but I obviously HBO kind of probably sticks around for a while but it's it's smart to them to like spread their view because they're they're trying to spread their IP to different places different audiences and in theory those have some different audien um so I think that's it seems like a smart approach we we don't see like that level of trans media when it comes to like TV shows and stuff around games I think yet from anyone else so I mean I think they'll push it till it fails with all these people right that's what they do they if it if it works they'll keep pushing it until it fails and then they'll push a little farther than quit I mean I think their strategy has been pretty perfect um they're they're the Arms Dealer and the streaming Wars arms race seriously and and so not launching their own streaming service has been very smart and um not being dedicated to

anyone service so that they can bid each property across all of these players it's it it's created pretty high margin Revenue I think for them and has been smart obviously as the sub subsidizing of this streaming Wars dies down as these companies begin to rationalize that that may impact their business s and that's of course on top of uh you know the writer strikes that occurred last year which just slows down the pipeline for this year quite a bit um movies and TV shows so there'll be short-term bumps but the strategy overall that Sony has had has been great and the fact that they have super unique gaming IP to um tap into fan bases automatically uh is is really excellent as well so they they played they played trans media very effectively so far well I think that's one of the benefits that Sony had over it its competitors is that

it actually has an arm that is focused on that type of media you know with Columbia Pictures Sony pictures um you know they they have that expertise inhouse and order to be able to look at what is more of a holistic approach to to trans media which is why they end up doing Zelda instead of Nintendo pictures well it seems like it's working so far I do hope that there's an app for each of those networks on PlayStation 5 so you don't have to like leave your PS5 to watch them because that would be kind of a big Miss right like if there's no peacock app for example on there which you know is like obviously one of the the smaller ones in a way uh then you know that could be problem but I imagine there probably is I I don't own a PS5 to verify that but uh it would be great you know if everyone could be watching all these things on their actual device as you said is sold big numbers and and so obviously a lot of people own it it would be cool I I the big test for me I think is can you can you launch a new IP using one of these right these are established IPS to an extent that have had at least a couple games that have had some some successes otherwise like

they wouldn't bother with them but like Can it can it help launch a newer IP obviously helped to bring cyberpunk back but that certainly wasn't a brand new IP but it did bring people back to a game that like had sort of faltered a bit um so like if Sony's going to launch something brand new like maybe that's like an exclusive or at least a big launch for their platform like can they come Out Swinging with that by leveraging this this as you said the their movie divisions and things like that to make it a big deal uh like we were talking about you know previously things like Warhammer being ble to come in uh like into more of the broader sphere of of people's attention through Amazon because they never really had much of a trans media thing and that's kind of that's an old IP but that's into a brand new audience potentially um so I I do wonder if there's a play here on that I would love to see that be the test maybe this year maybe next year yeah I do think that there are some studios that as they're looking at building out new games they've been talking about hey this is going to be you know a full trans media push for this new IP we're making a new game there's going to be some sort of media

that's attached to it as well um trying to think was Rebel Moon one of those ones that they were looking at doing more than just the the show they were also looking at doing some sort of interaction certainly wouldn't be surprising he's definitely trying to kind of make it a a franchise IP sort of thing I'm just thinking about how if you're watching Twisted Metal on peacock on Playstation you're probably like one of three people to do that if that's possible I don't think that's that big of a lever U is that you Dave you're one of the I I actually I don't know I didn't watch it on my PS5 I watch it through uh uh but for me in Canada it's through Paramount which is through Amazon yeah yeah yes I was one of those three people that did watch Twisted Metal and some it no I mean I mean doing it on your PlayStation too it's not I don't think that many people are are doing doing that especially peacock on their PlayStation anyways that's that's a stupid tangent um Deon do you mind if I segue this to to Netflix absolutely yeah okay so um the this past week we also saw a couple

interesting strategy changes I guess you could say or discussions about strategy changes from a couple notable companies um Netflix and Xbox but I'll head on Netflix first since we're on the the streaming topic um so it was noted by The Wall Street Journal that Netflix is having internal debates over alternative ways to monetize games especially among different subscription tiers now that they launched their ad subscription tier at the lower price the industry has beaten this topic to death over the past year or two so I don't think we need to dive into the weeds I'll keep it pretty brief but the primary purpose of course of games on Netflix is retention for the sore for the core subscription but debating the monetization angle here likely Rose in part from Netflix launching that ad-based subscription tier and just wondering how games fit into that like do they monetize the games with that ad do they just let it be a thing like how

do you even think about that in different types of of TI um and then from there once they're having the conversation it just you know naturally opens into like well if we're going to be thinking about this you might as well think about it in alternative ways too and so I it's all a discussion Netflix has these internal debates all the time we'll see where it goes they'll try different things um but the core purpose is always going to be that retention angle but seeing how Maybe they integrate ads into certain parts or how they even think about just inapp purchases that still maybe present a full game but allow a battle pass or allow um skins or something in some type of way that doesn't kind of get in the way of that core experience wouldn't be surprised to see them poke into to that as well all of this will take time um but hopefully over this upcoming year as they're releasing a ton more games we'll get um some some deeper strategic CL CL it as the team themselves see how it

performs and they they modify their pipeline um from from there so anyways um trans media continues to to be its own its own thing the second is uh Xbox and this is actually maybe a bit more interesting to kind of round this part of the conversation out um uh it was reported that Xbox is taking a couple of its exclusive games to PlayStation 5 Hi-Fi rush and sea of Thieves um and so we'll see if that actually goes through it might even be more than that but but that's what has been reported and this follows up on a conversation we had last year about wondering how Xbox might use a diverse windowing strategy sort of like what it did with with Starfield where maybe it provides some window to play for people who buy a unique version of the game then Game Pass has it own window of pure exclusivity and then you

know it's open to discussion what they do from there and so I think essentially what they're doing here is what HBO or Max now has has done on on streaming which is they create their own original content and that content is most valuable at the very beginning when it launches right and that's when it pulls in new subscribers that's when it retains users want new content um and then after a point most content not all not everything is the office or something but most content becomes less valuable the the longer it lives in a subscription library and so management teams start to think hey we could probably maximize the value of this content by still benefiting from that windowing strategy where uh they maintain exclusivity get the benefits of that from their users but then later get the benefit of Revenue by licensing it out elsewhere and I think Xbox is

thinking about doing something similar to here I think it's a pretty close analogy and so as they've sort of whiffed on their expectations for Game Pass and probably are looking to grow the gaming business at a faster rate that's probably pushing some of this discussion um but it is notable that they're doing this with PlayStation 5 where PlayStation they also have a window strategy and after a long L will Port games to PC but not Xbox um and so a little bit of it here I think is swallowing their pride in you know in following a purpose a larger vision of like making their games available everywhere or just needing the revenue so we'll see where it goes I bet they'll continue to iterate and test things out uh to see what benefits game pass trying to balance what benefits Game Pass and what maximizes Revenue uh those things are maybe sometimes at odds with each other but I think that's the the balance that they're going to be looking to

strike more and more so anyways I thought those were a couple interesting updates that sort of both randomly tie into streaming video in some way um but curious to get your quick reactions on on either of those if you have any yeah I think um I mean Netflix games on Netflix uh on the mobile side have uh some inherent challenges that they are subscription based in that from discover ability perspective they're not going to show up on the charts because they don't have the downloads it's the same challenge as you have with um Apple arcade titles um they're not downloaded you know with with the exception of of a few uh they're not downloaded to any huge numbers and therefore have a bit of a you know discoverability challenge that they're never really showing up on any of the charts um and it does make it tougher for you to actually find them if you're looking at uh store optimization um so you know looking at different ways of presenting the games be it you know

do they does Netflix even go as far as the old um you know the original free-to-play model of offering a couple levels for free you know through you know true free-to-play allow anyone to download it and then in order to be able to continue the game you then have to um put in your Netflix uh ID to sign into the game um as well as you know other ways yeah monetizing and then they could very well split it up between you know the free to uh their mobile games stay as that sort of that overall Subscription Service their PC games maybe they offer uh some additional layers like as you said you know either different types of game passes or season passes or original content for an you know an additional amount same as what they did with Starfield and the Xbox game pass um on the Microsoft side it wouldn't surprise me if their end goal is just get everybody on Game Pass we don't care what platform they're on they could be on this Nintendo platform they

could be on the Sony platform but if they own that login and able to own that player through games uh you know through an actual games as a service platform versus a hardware platform that may very well be Microsoft's end goal anyways and we're just starting to potentially see that a little bit earlier um but I think it it certainly is an interesting play you know the the last time we saw a hardware manufactur go from manufacturing to just being a software developer with Sega and it was really strange initially to see things like Sonic appearing in uh in Nintendo games but uh it would it was great to see in the end um so it' be interesting to see you know at what point do we saw start seeing the master chief on uh Playstation is that GNA be PlayStation 6 PlayStation 7 uh through the Game Pass um but yeah I I I do think long term it's about getting everyone into games as a service with the Xbox game pass

yeah I think that's totally right um I also don't think that'll work on PlayStation and Nintendo they're just not going to let Game Pass exist at least like anytime soon um uh it would make a lot of sense for for Xbox um and you can maybe even de debate make sense for a Playstation to allow it uh allow the number one reason to use Xbox to exist on Playstation to just Sol ify your dominance so why would you ever buy an Xbox then right um so yeah it it wouldn't shock me one day if something were to change there but yeah I mean this is a bit different in the sense that they're just licensing specific games that you don't need Game Pass to to access and so it's kind of balancing that tension between what it takes to win with subscription versus just what it takes to maximize your Revenue as a business which might not be the same thing um but yeah if they can figure out how to make the conclusion to that lean

more in the subscription Services favor that's definitely the way they would they would lean it so I don't know it'll be interesting to see what else uh what other games might make the jump or how they you know change up that strategy this year let me present an interesting lens to all this though that I think is like a historical context uh that is beyond just gaming around subscription services in general and the problem they run into with not maximizing monetization and running into problems with that because uh so like I think cable is a good example right cable TV was originally presented as this idea of like hey no commercials like it's just straight up the TV you want and we all know where that ended up not only did that end up with commercials it ended up with premium channels that you buy separately bundles things like that right clearly same thing is happening in streaming and I don't know if a lot of people notice this I I certainly noticed the email I got from Amazon Prime telling me by the way just so you know we're going to charge an extra two bucks if you want no ads on Amazon Prime you

know that that Prime service that you were paying for already and they already did that with adding ads to Twitch after making it so that when you had your Prime subscription you were add free for a while so always these things end up in the same situation where you cap out your earning on subscriptions Netflix tried to do things like oh we'll increase the tiers right oh you can have more TVs simultaneously and whatever realistically that was more just around password sharing monetization and clearly they realized that was not working well enough it started cracking down instead on password sharing to try and monetize separate accounts because the the full like eight or $10 dos or whatever it is for a basic account is more than the the two or three dollars extra for an extra TV and they were just leaving money on the table and that goes down into the game level where like these subscription Services Apple arcade Google pass Netflix is one all of them are going to realize at some point like hey this actually isn't enough money for me now obviously Google and apple are also controlling the hardware platform and stuff and that's where it leans a bit more into the Xbox side of things but on the Netflix side of things they're looking at this being like crap

we're we're like we're already changing these games that were like generally monetized games into like non-monetized ones and it screws up the whole economy of the game anyways and like why don't we just offer a basic level of the game as Dave was saying out there just put it out there as a normal game and then if you want to if you're a Netflix subscriber you also get like premium content in it or hey like if you're not a Netflix subscriber you could buy stuff and guess what people would actually spend more than it costs for Netflix subscription if they were buying stuff in the game and Netflix goes wait a minute why why are we giving away anything for Netflix subscription why don't we just make games at that point because at the end of the day like again like capping out your Revenue just kind of sucks and even Xbox is like Hey we're gonna sell some of these games now on another platform because we ran out of juicing the revenue form over here uh and they've already like oh as you said Aon like the timing is done so like oh cool we're done with that now like we could just move on to selling it somewhere else and the upside of that is they increase the IP exposure something like C if these are high five Rush which increases the potential to sell a SQL

and things like that so there's different upsides here but everyone's looking like Hey we're not making enough money with these systems we need to and that's the inevitable cycle of all of these I think if you look historically It's never enough with these flat subscription tiers I if you look at the reason why each of the subscriptions are there as well I mean there is a difference between why Microsoft is looking to have that subscription base in play and that's to maintain people inside their overall gaming uh ecosystem whereas Netflix it's about retaining their subscribers in their main in their Core Business which is still video um so I I I think I do think there is a difference in terms of not only their approach just based on you know what it is that they're trying to accomplish with through the the use of this I think the end results ends up the same though I could see them giving away just the base versions of the games on gu Game Pass and then if you if you want the like extra stuff or the DLC or whatever you start having to pay for it because again it will it will cap out

too much when you're giving away too much of the stuff for a flat price if people are actually taking advantage of it and it it doesn't really keep people in the ecosystem as much as you You' think like I don't own an Xbox but I play it I own a Game Pass I'm in their ecosystem but it's through windows it's through my phone that's Android it's not necessarily keeping people I mean obviously I might be an exception but it doesn't guarantee you buy an Xbox I'll put it that way no but the Xbox buying the Xbox isn't their end goal you have already done their end goal which is you are an Xbox you know pass owner only just on the PC side right but now I'm not buying the games or spending extra on top of that correct but you are spending a monthly amount though well in terms of uh twitch which I mentioned earlier uh they are still continuing to go through some some monetary problems it seems as uh we've got some layoffs from them as well as Unity which we hate to bring up the layoffs but we got to keep on top of that stuff just so you know what's going on yeah it's unfortunate but 2024 has

started off with a bang in terms of the layoff Trend continuing and the two big culprits are unity and twitch as you mentioned U Devin so Unity is cutting another 25% of its Workforce which is about 1,800 employees which follows about 1,200 in in layoffs last year I believe and that also followed layoffs before for that and so it's really been in unity's case just a long string of kind of gutting out um the the company which unfortunately was needed in some way because this is a this is a business that um had a scattershot approach to building out lots of different product offerings had so many different Acquisitions even had a massive acquisition or merger with iron Source um a year or so ago and what was not profitable throughout any of it and so

when market dynamics change and you're kind of left exposed for kind of the lack of value that you created and some of the execution flaws unfortunately that your employees often get the Brun of the downside and having to correct for that and so in unity's case that still is ongoing hopefully I I sort of expect this will be the last major cutting that they do from here it'll definitely slow down their product expansion feature set um you know additions going forward but I think being a bit more focused on what matters most to them and what matters hopefully most for their customers um will will serve them well interestingly of course markets are always they're forward-looking and so they're often showcase uh Improvement before the underlying company through its fundamentals shows Improvement and if you look at Unity I think it's more than doubled from from its lows um from last

year uh and um that just showcases the Market's belief that the changes that they're making will work out for for the better but of course we'll we'll have to see um and then similarly twitch I think is laying off not as many people I think it's like 500 or so but it's about 35% of their Workforce in what is a major C I'm not sure about Cuts they've had previously um but that's still huge either way and this is of course a business that has struggled with profitability for years as faced slowing growth as competitors have emerged and it's just kind of proven out especially from YouTube but that a platform dedicated to just video game streaming and not and having trouble expanding into other genres um that that is a niche audience that maybe will not take over the world and has been a bit

Meandering I would say in terms of How It's serving like a broader gaming purpose within Amazon over the past few years too that I feel something has been missing there and so this is another reset probably more for profitability than than anything within Amazon but it kind of makes you wonder uh about its future within Amazon whether it it should be spun out whether Amazon just somehow needs to get more cohesive in its for gaming um or what whatever whatever it might be um this doesn't feel like enough to really reset the direction as a whole um and then really the last thing I'll I'll say just to put some numbers Matthew ball um shared some numbers on on Twitter today that uh in 2022 the games industry saw 8,500 people laid off uh last year they saw 10,500 laid off and each of those years was a record for the industry and the number of layoffs and then in 2024 just

between these two cuts really already we're about at about 2,300 which is in the less than two weeks into the year already about 25% of what we saw last year that was a record and so um anyways it's not fun to talk about but it's probably not over in terms of the cuts as as companies continue to to reset you still see companies like embracer out there uh making divestments and cuts and so um yeah we don't I don't think we need to predict or anything what what exactly will go on this year with this but this age of efficiency continues we're even seeing in companies outside of gaming like du lingo they're cutting a bunch of their contractor base as AI is proving more capable and a lot of the translation work that's going on and just as these pressures Mount you could see some some of the the early beginnings of whatever version of that

um in in gaming and in various Corners so um so yeah it really is it's not just a year of efficiency last year it really is more of a kind of an emerging era of efficiency and rethinking efficiency so I'll close out there not the funnest news but important nonetheless well then good let's switch over to some fun news where we're going the opposite direction instead of cutting we've got some more money flowing into a company uh and into one of course that like you know I I personally quite like so this is this is good news I think we could be excited about which is a second dinner perhaps getting a third dinner here yeah okay we'll work on our transitions maybe uh yeah the news certainly is a lot more appetizing than our transitions uh so Marvel snap developer second dinner raised aund million um and with the majority of that

going to supporting Marvel snap uh as well as being able to start working on creating some new titles uh so the series B investment was led by Griffin gaming Partners uh one of the larger VC firms in terms of uh Investments inside the gaming space uh a little bit bit of background on second dinner they were founded back in 2018 by uh former blizzard developers they did initially receive about $30 million for net ease in 2019 so this is another round for them uh and in terms of Marvel snap uh first revealed in uh in May of 2022 and and released worldwide in 20 uh in October 2022 so the majority of the 100 million as I mentioned will be used towards expanding Marvel snap um but some of the funds will be used for the development of uh new games and new IP and and according to the CEO also to be able to better write uh their their press releases for things like this uh maybe

they'll utilize AI for some of that yeah I was GNA say I want to raise 100 million to write better press releases how could I pull that off oh I want to dive in on the 100 million you think think you wouldn't get 100 million unless you already get a writing press releases what a weird thing to put in a press release anyways continue D but that's but that's press releases not funding pitches they may be two different people well you probably were reading a press release when you heard about this announcement so maybe they slip that in there there we go um and I think you know the new funding definitely should be great news for the sustainability of the title especially giving the concerns that the game publisher new verse um its parent company bite dance is looking at reorganizing its game business now second dinner has already stated that anything that happens with new verse going forward really shouldn't affect um Marvel snap uh but this you know is really some additionally some good news and and ensuring that Marvel snap will

be around for hopefully quite a while um to the joy of its fans and I really do think you know as you as you mentioned this is really um a bit of good news overall for the uh for the games uh for the games industry if you looked at as a comparison to 2023 um you know the the funding in 2023 was at abysmal levels in comparison to previous years so as an example in 2022 um worldwide funding inside games is around 13 billion doar uh at 2023 that was down to 2.7 billion so an almost 80% decrease uh the number of deals decreased by half from about 824 in 22 to 403 in in 2023 um and those were uh these are numbers provided by uh crunch base um and then if you're looking at uh in

terms of uh Venture uh involved funding for uh for companies in 2023 there were no deals that exceeded $100 million in traditional gaming um now that does exclude situations such as Savvy buying scopely but that is one company purchasing another company uh in terms of Vester uh Venture investment though it's uh the biggest one um so I mean I think that's great news you know 20 uh 2024 over 2023 uh in the US specifically for example um overall investment volume was under a billion dollars for 2023 uh and that's down from uh six point almost 6.9 billion dollar in 2022 so a decrease of 86% and the number of deals uh was almost half um in 2023 so 2022 saw 281 versus 46 deals for last year so I think this is a great kickoff

uh in terms of of the year and hopefully uh a little bit of a uh a sign of the things to come that we'll start to see a little bit more investment I personally don't think we're going to see you know we're certainly not going to get back to the levels of investment that we saw in uh 22 21 or even in 20 but hopefully we'll get back to at least the the numbers in 2019 and hopefully a little bit more than that um overall thoughts in terms of uh investment they just released their road map too recently uh for the year and it was pretty ambitious but it addressed a lot of gaps in the game so I'm actually really hopeful that this can really Shore up a lot of the things that they were just kind of excusing as we're a small team uh you know we don't have the Manpower for that uh but I think that's interesting to note just on this topic of we see a lot of companies not releasing new games and just doubling down on what they had so it's nice to hear that they might release a new game and given their success with Marvel IP I

would imagine could potentially have some other IP attached so their own IP um yeah yeah and so yeah I mean it's interesting I I haven't seen the road map for Marvel snap i' would be curious to to to check it out or just see what the the highlights are um but yeah I mean raising 100 million is pretty ambitious um for for kind of the one game that they have so it really is a bet on being able to replicate success in other ways I was looking at data. um before we hopped on just to see where Marvel snap is right now it seems like their their downloads their worldwide downloads have um dwindled to about half a million per month uh but the game still makes about seven million a month in revenue and so I mean if you analyze that that's about 85 million in in Revenue which you know having raised as much as they have like that does not justify it's

whatever valuation is attached to uh what they raise which we don't know but obviously is probably several hundred million at least so yeah it it really has to be a bet on these new these new games succeeding and probably using their own IP as I mentioned which will come with higher higher margins but I guess we'll see they've done a good job with Marvel so others might want to to work with them and in interesting ways um I do wonder about the publisher situation a bit um it kind of matters who your publisher is right for how you think about scaling games and you know just being having it having someone having your back and supporting what you need to succeed um and so it'll be really interesting to see what happens with new verse as we talked about before uh bite dances investment into gaming were way overvalued and so for them to to sell they're going to have to

take enormous losses on on the valuations that they sell out and it'll probably be to another Chinese company uh like 10 cent or nety I would guess um and it's worth you know noting that too that at least with second dinner uh netes was their was their at least their primary um backer if not their only backer in the early rounds and so it might make sense for netes to try to get involved in this in some way just to kind of close the close the loop and uh being investor publisher um not not really sure how that'll work out there are other factors involved um but it kind of matters and so I would kind of hope they they they figure figure that out or it'll be interesting to see who else they they published with for new games and and what that will will mean going forward maybe outside of China too um so so yeah we we'll see lots of

questions here it's interesting timing for a massive raise giving that uncertainty I think um but it says a lot about the the quality and respect for the team above all it seems I guess just to to talk about the Venture stuff a bit more too unless anyone has any more to say on on Marvel stap I I do think that uh net e probably will be taking a good long look at it uh especially given how net EAS and 10cent uh are probably looking at more more opportunities outside of China given some of the the new uh limitations around monetization that are being proposed uh for domestic and I think net ease is something like 80% of their revenue comes from domestic Chinese uh sources so um for uh yeah I I definitely make sense from both 10cent net ease for them to be looking at it uh the part that I do find interesting uh is that the $100 million

in nowhere did they say that that part of that hundred million was to start looking at doing their own publishing because that would then be a very large increase in headcount a large you know you'd have to put aside a huge amount for UA spend um so it does look like that 100 million is going to go towards actual pure game development and we'll be looking for a publisher to be able to help support the game long term as well as uh be the Publishers for uh new titles that they come up with yeah and press releases they better not come out with any of that black and white boring press release material we better we better see to be fair time they do the season updates like Ben bro does this whole like promotional video for the updates they're good if you haven't watched the news on like YouTube or whatever they're always very enjoyable so if that's what they're talking about that's money well spent yeah there'll be the state-of-the art art for the for the industry there um to to venture more broadly um just a

quick plug I I just recorded an interview with Mort bear Lance the head of gaming at light speed about the state of VC and of gaming VC in 2024 and that'll publish next week um and so look forward to that we dive into a bunch of like what what the heck has happened what's changed like what should we expect in 2024 and how is gaming VC going to evolve more broadly in in the years to come and it was all pretty interesting so anyways quick quick plug to to stay on the lookout for that um but yeah I mean this massive slowdown over the past year what you didn't say Dave is that most of that has come from later stage like the growth investing having dried up as uh you know previously seed stage series a deals were done at pretty high valuations raised a lot more money than companies could get get away with today being able to follow up on that is really hard because it leads to valuation cuts and

kind of messes with your cap table and it's just like really thorny to work through in a bunch of ways so that that market has dried up and a lot of teams have tried to figure out how to make their what they have raised last longer which means being leaner and that's part of what we've we've seen um take place in the industry with the layoffs and such so seeing this a series B come out and be pretty meaningful actually is like pretty good news I don't know if we can extrapolate from this one deal to say like we're back like growth stage investing 2024 is the year of the series B I don't think we can we can say that yet but it's something and and it's meaningful and I think it does show that for teams who have raised even like more recently over the past year at U more Market adjusted valuations that are friendlier to where we are today we could see more followup Investments faster um for for some of these

companies than we have seen from this previous cohort where it was just really hard to to justify um from a cap table standpoint so we'll we'll be interesting to see where that goes but uh good news from from that standpoint I guess the question then that I have to like one of the things that we'd seen as a trend for a while was was the m&a stuff uh and we even kind of talking about it here with you know new verse and some of the other stuff under bite dance there's obviously going to be some companies looking to be bought as they cut down headcounts and get leaner as you're saying and try and like clean things up like and I know we've talked about this a bit with embracer and some these other companies where it was their main strategy but like just the broader field for like uh m&a in general especially as things look to slim up and potentially maybe even be more right for purchasing in terms of being a better deal as valuations go down and things like that like what do you think it looks like just broadly for 2024 in terms of m&a I personally do think that we will see probably some

more m&a but at much much reduced prices you're going to be able to see some things like some aqua hires uh where you know developers are looking at how do they survive and they be much more willing to take a lower valuation for their company uh they more likely to you know just figure out how you know they've brought together an amazing team of people they want to know how do I continue to support that people and that may be you know being um you know finding a buyer for the company not in terms of you know looking to make a massive profit but just to make sure that people still have a job um so I I do think there is there's certainly the opportunity uh the number of buyers is certainly down like you don't have the free money that you do today so you know you're not going to see a a new version of um well of how many different aggregators have there been over the years funny enough a lot of them seem to

come from the Nordic regions but um you know we're not really going to see that embracer level of you know wanting to take a whole bunch of different companies and try and bring them all together but I do think that there is some opportunity for some um you know so for some very bespoke choices in terms of well this would be a good team for us to add and certainly at a much better uh and more realistic valuations right now than we would see over the last couple years yeah I I think I would expect at least the first half of this year to be somewhat in line with the second half of last year like I don't know how much will change in terms of just like smaller more um normalized m&a I guess you could say um uh we'll definitely see some I I think that more teams are going to be willing to come to the table to negotiate um recognizing that the cap tables that they have the valuations they have it's just just admitting that

it's going to be really hard to work through and surpass and so there has to be some type of negotiation to to reset um and some of that resetting could result in um m&a and I think that that makes sense uh but we'll we'll see there still are tougher pockets of the market uh where deals are still going to be harder to justify like corners of mobile and and such but um it could get better but I also think too um I mean we we have seen some massive deals in previous years that like obviously ex Microsoft buying Activision is the the biggest example that sort of have nothing to do with the these Venture Trends right they just these are just the Giants at work ignoring everyone else just doing their doing their thing and we could see a bit more of that obviously regulatory pressures have proven how unfun like very large outsize deals can

be but on the other hand it really wouldn't surprise me to see a like someone like Sony come in and I don't want to say retaliate that's probably too strong of a word but be like look you know Xbox just bought freaking Activision like what's our big move to like extra solidify our our ecosystem where we have more more say um what surprise me to see something like that or as Netflix figures out whatever the heck its strategy is actually going to be to like actually lean into the direction that it decides on a bit more meaningfully or some of this trans Media stuff I still my my bet has always been that once the streaming Wars die down and people kind of get over you know the hype of that that figuring out something with gaming is just a natural next step and maybe we're getting a bit closer to that it's it's so hard to say like what big deals would be um but I think that's the other shoe that can continue to to drop that's a bit separate from the Venture discussion but is perhaps even

more needle moving for the industry as a whole yeah well I think scop is gonna come in and buy Netflix oh then they get then they get everything they get do we get a monopoly go show then what's that do we get a monopoly go show like a series absolutely and then on top of that there will be the uh there'll be the new like F1 drive to survive it's only it's all about s business developers trying to figure out who they're going to buy but starring bar grills so we can make sure that we help him through his journey there we go but I mean speaking of the big like you were talking about the the big you know guys doing what they do uh Middle East has has kind of re like stated their hunger is still there like the appetite for being like the Hub of gaming or like at least as an ambition is still there I mean do you see do you guys see that like as somewhere to still pay attention to regardless of like this global you know economic situation they've got money that's literally coming out of the ground I I mean they still have their

same focus of um changing what their economy is based on uh so their goal by 2030 is to have you know entertainment being a big part of what their overall economy is uh and you'll see that the number of theme parks that are you know being built inside there the the neon City being built um it is uh you know certainly still a really really big Focus um Savvy uh being the main um recipient of the of the government funds uh along those lines they still have a huge War chest you know they they spent a lot of money on on scopely but they you know that was just a fraction of what they have overall um now there's there's has been an interesting uh investment strategy in that they're not just buying individual companies they've got investments in into Nintendo into Electronic Arts they' got investments into a lot of the larger players uh as

well as uh looking at you know purchasing companies so I do expect we'll you know we'll probably will see some more purchasing companies Happening by Savvy um I think they just need to find and feel comfortable with with the right deal you know they were rumored to be the company that was going to provide uh you know what was it a couple billion into embracer uh before that deal fell apart um so I think they're they're just going to pick and choose and find something that they they feel comfortable with um Brian Ward who who uh runs embracer is a a very smart gentleman who's been in the games industry for a long time uh and uh I think they'll they'll do a good job about picking uh the right the right fit for for Savvy and and what their Ambitions are my my personal question is are they going to stay more focused still in Mobile which is uh very much the dominant platform inside Mina or are they going to start looking into other

other area other platforms PC and console I mean scop is already branching out into the PC side of things um are they going to look at uh or will they have an appetite to to go out further uh and and more work on being a a true Global uh Force rather than just um you know focusing on on increasing the Mina uh space yeah I think you just got to follow the money to see where a lot of deals will come from and there's a lot of money still in um savy I don't know um I don't really know what we'll see there I don't know if it'll be another big publisher developer acquisition if they want to get more into pcks and shovels in some kind of way um sort of like a key keywords not acquiring keywords but you know something more in the co- development realm we might also just see it might not even be as much Savvy buying it as making these deals as much as just impairing subsidiaries too and

so I totally think they're going to get into console PC and some way it's just a question of how whether they'll acquire some business to be Standalone and doing that or whether they'll just be empowering scopely to work with more like more capable teams in new interesting ways um and what that could could be um and even on the ESL faced side which is their Esports ecosystem it really is an ecosystem and um I bet they'll continue to to build that out and so um a lot of the tuck-in Acquisitions they could make you know probably wouldn't make the same kinds of headlines as some of these other larger deals but is it crazy that like a like if twitch were spun out that someone like Savvy through ESL face it could like view picking them up I have no idea that could just be a stupid thing to say but I think that makes a lot of sense actually um so I think there could be some creative Outlets but of course savvy's not the only one with money there's so much money flowing around the

the industry on all sorts of balance sheets all around the world um any any speculative picks for most likely buyouts and 2024 The Savvy by EA and make so jealous that they didn't pick up EA probably a little too big uh yeah just a little bit it on henes jaw at that point I mean the one of the questions that I have is are they going to look at outright purchases like they did with scopely or are they going to take a little bit more of approach uh that 10cent and net e have inside North America where they have done some purchases they have started up uh some studios but they've done a lot of investment and rather than you know outright directing a company you know just helping support that company um and then building out sort of that that ecosystem of support um and you know just trying to figure out longterm who

are the Best Bets um that may be an easier way to acquire uh a broader range of of potential companies to work with them give them an opportunity to get to know that team get to know the um the management get to know the the capabilities of what their of their game making side of things and you know just find find their partners that way a little bit longterm not quite as splashy as uh buying something like scopely but um could be a lot more effective in terms of building out their their ownership and and you know what kind of knowledge they're able to bring back to the Mina region as well yeah they already do that in public markets I guess um maybe a bigger picture I still wonder about twitch it's just it's such a weird fit with with Amazon I'll stop talking about that um but maybe a couple a couple others um I know jagex which you know is behind the RuneScape Universe um they were in discussion I

guess kind of later last year uh nothing has happened and that's a company that's sort of been in a game of hot potato just being handed around to a bunch of different owners and I've I've kind of always said you know forever games really should have forever homes and so hopefully Jag X could can find some forever home for um for the RuneScape World in particular um but yeah I mean there's always others out there that you could see maybe not being the biggest deals but could be good tuckend for for someone there's like super giant I don't think is owned by anyone they make Hades and Hades too is coming out um I guess you have like an IO interactive behind Hitman you know like they're still still out there kind of doing their own their own thing and not um haven't been swooped up by anyone I think um gear gearx is up for sale still yeah so yeah gearbox will be interesting to see and

then of course there still are companies on the mobile side and um like pretty meaningful ones that haven't had an a an exit and I don't know if it would make sense for them to go public or find a buyout but you know I guess just one example of that is a it's like a playrix right like homecapes Garden Scapes still probably a multi-billion Dollar business or at least used to be um that needs liquidity at some point so I think there are lots of interesting companies out there that we still could see some pretty major action the this year or or next year uh but I think it'll again as I kind of mentioned I think at least we'll kind of start out the year in a similar trajectory to last year um but hopefully hopefully it it starts picking up again uh uh in the second half for going into 2025 which feels so far away at this point but these are long Cycles place your bets

now I guess then on on a lot of these independent ones you mentioned Erin like it's like all right which one of these looks the juiciest to to pick up because you mentioned some good names like of of companies that have been doing it well for a while maybe they want to stay independent but if if belts are tightening and people are looking at like uh can we stay independent forever kind of thing like maybe there's some good opportunities out there well second dinner will be one of them because you know raising a $ hundred million dollar certainly brings some expectations of an exit at some point and Griffin's gonna at some point go okay so who are you selling to everyone's looking at Griffin's calendar for like the rest of the year see who they're meeting with definitely well I I think there's a lot you know as as there is with every year right to keep in keep a lot of companies sort of in your radar and see what's going on especially now when we're kind of in a a rough period for a lot of this stuff while still good games are being made like we had such a great year last year for games there was a lot

of games announced at the game awards for this year and next year so a lot of good stuff coming up at least in in terms of quality games or at least exciting looking games so I imagine like as much as we've had to kind of report some of the bad news hopefully we'll get more of the kind of good news um like we do a second dinner even if it's just through Acquisitions in terms of good companies getting to continue to do their thing so I do look forward to that a lot of great companies still pumping stuff out even if like when we look at the mobile side sometimes we think like oh no like things are not looking great uh you know it's easy to forget the broader picture so good good to hear that but we'll keep an eye on all that obviously I'm not uh I'm not out placing my bets just yet because this the year just started but definitely uh let us know if if there's some companies we forgot stuff you could think of that would be like perfect targets please let us know at you know obviously we can place our bets at podcast nov. Co give us a shout there and of course as Aaron mentioned make sure you are subscribing to the digest and of course that to the

podcasts in general right because this is the channel for also the excellent interviews that Aon mentioned we've got just a constant pipeline uh of good interviews and then the crypto Corner as well um pumping stuff out so tons of great content coming this year I don't think that's going to slow down for us anytime soon so I know we've got great plans to to keep it rocking this year so definitely look forward to that but I want to thank of course you guys for listening continuing to 2024 and of course Aaron and Dave Superstars here uh you know constantly here on the podcast so thanks you guys for for coming on and of course we'll catch you guys next week listeners out there until then have a great weekend if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a five-star 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 navic has to offer make sure to check out our website

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