Emulator Armageddon / Netflix Ports / Private Equity / Early 2024 Winners

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Capital making it by far the largest fund focused on gaming and interactive technology Light speed's Team combines deep expertise in gaming with a global multi-stage investment platform and a culture that truly puts Founders first selected Investments include epic games snap and stability AI as well as game designers and producers who led the creation of titles like fortnite Call of Duty League of Legends valerant Starcraft 2 and many more for more information simply go gaming. lsvp docomo everyone welcome to another novic round table I'm your host Devon Becker and with me of course excellent excellent guests as we usually have here Aaron and enil how you guys doing howdy great yeah looking forward to rocking the double a power today the double a power that's right fing my name started with it uh or we could have another D on here we could be Del cels but

yeah I we had GDC coming up I'm sure a lot of you excited uh I will be there and I believe Aon will be there yeah I will be there too um so quick plug if you want to chat with me uh chat with navic about working with us in some way whether you want to explore our Consulting some type of partnership whether it's content related uh whatever is on your mind um please let us know we'll um attach a link in the show notes so it's just a quick form fill it out let us know um let us know what you're interested in and I will do my best to get back to you I can't promise that I will be able to have time for everyone that submits time is scarce unfortunately but I'll make sure to to get back to you no matter what and even if we can't meet at GDC maybe we can find another time awesome I set up my own form just for you know play dates or something definitely gonna be a lot of it's gonna be a busy GDC from from what I've heard from everyone that's the attendance at least from the crowd that you know we run in going to be very high

I think this is this is probably the GDC I've been asked if I'm going to GDC the most yeah it's usually a sign that everyone's going for the most I care Cod those sentiments it it feels a lot bigger than last year yeah which funny given that you the layoffs you think people would be like I can't afford to go now because I don't work in the game industry temporarily something like that where it's uh but it doesn't seem to be the case it seems like a lot of people are like this is just an opportunity then to rectify that potentially yeah I think as well it's like the broader story times are are changing in the games industry maybe that means it is time for some bold moves and big announcements and I wouldn't be surprised if we saw some of those I hope so in in GDC yeah time to bring out the big guns this really really captur the the attention of everyone with good news let speak a good news you know we have you know some some positive news in here it's a bit of a mix but uh in general as usual lots of things happening in the game industry I don't think this year started off quiet and I don't think it's gonna end quiet either I think this is gonna be as as you just said a pretty busy year

uh why don't we just kind of jump into the first thing here which is maybe not on the positive side but uh we'll be it will be interesting to see where it goes which is Nintendo uh as everyone kind of knows is not uh a big fan of emulators unless they're the on selling the ROMs on their Virtual Console or Nintendo online thing in this case uh you know I guess reasonably looking at as a piracy tool rather than as a you know collector's fan sort of thing uh have sued the pants off pretty much you a switch emulator for over $2 million is what they ended up settling on and of course you know that emulator is just done at this point there's no way it's going to keep doing it and that has already also shut down their 3DS emulator they had on the same umbrella and basically through chilling effect shut down multiple other emulators even shut down conversations about emulators in this case like on Steam deck and just fan base channels uh pretty much the definition of a chilling effect from a lawsuit um we I mean we'll see where this goes but this was definitely while

just uh chump change to Nintendo it's definitely a pretty big blow to emulators which I I'm not sure how much they were making but I don't think it was this level and this is definitely a uh sort of punishment level I think uh loss in in terms of like the amount for the type of thing and so in this case obviously emulators are not necessarily you know big business or anything like that in terms of uh the way people are looking at it it's not NE something that drives business but as I mentioned with the the Virtual Console that you was a thing before Nintendo is one of the few companies that is selling essentially emulated versions of their games uh you know other companies tend to package them in like collectors you know like whether it be you know like a pack of a few games or remasters whatever Nintendo is like okay we will basically you know emulate and and sell you access to that which to be fair then that's them saying we we have a reason to sue you because you are basically pirating what we are actively selling it's not outdated

things that are no longer accessible which you know of course mixed bag true in this case switch games of course are not are not a virtual console that's still a legit business and you don't even see Nintendo even mark their own games down when they're old so the idea of some emulating them for the price of zero obviously doesn't set well but I guess the question is is there anything you guys think this could have an effect on the games business in a minor or major way that is maybe not obvious I think it can do kind of unusual way we look from a business standpoint no it doesn't it's very small fry the amount of sums that we're talking about but I do think this is an interesting story for a few reasons I do feel that one thing we've seen recently is you know look at Sony Sony do now release their games on PC perhaps they have like a one-year exclusivity on their Home console before they go to PC but with the industry becoming more and more Consolidated and margins getting lower the ability to grow your Revenue outside your own primary platform is something that many companies looking into now

Nintendo have never done that they've always resisted the urge to do that for years they really protect their own platform like almost to a mafiosi level and you know that one of the reasons why you know PlayStation became a thing is because people were fed up paying for the charges so look the emulator I think you know people might not openly say it but I think piracy you know probably was the number one thing people were using it for but I do have to say that I I know of quite a big use case of many people that did own a switch and even did own the game but liked using the emulators because you could play the games on your PC and it also meant that you could ues the games and make it look better um so for example I remember seeing one of the Zelda games running on this emulator with some custom mods on it and you know the game already looks beautiful but it looks absolutely stunning and this is not something that they like to facilitate so I do wonder if it's is it going to come back and bite Nintendo absolutely not but I wonder if you know they are quite an oldfashioned traditional company in that sense and

perhaps there could be something there um look the reality is is that you know these guys dialed back on their you know the emulators basically over right away but not only that it spooked every other emulation project out there it is also notable that a lot of Japanese companies they tend to clamp down on fan projects as well you know you sometimes get things like oh someone's trying to do like Streets of Rage 2 remake of like a 25y old game and they but no you can't do it even though that code is there but you could say that you know another case of emulation I can think of that I thought was actually quite successful was Maine so if you remember that that's like the arcade ROM emulator that happened many years ago and now you know many people own things like Mame cabinets at home where you can play lots of games and I felt that that kind of had a bit of a Resurgence in retro gaming in general and now you get things like the Retro consoles that people made and they sell quite well around Christmas so um going off on a bit of a tangent here but I think there is something to be said there that maybe you know this is speaking to H you know

maybe Nintendo look at it is just piracy but there could be something else there that they could tap into and going a bit broader and not just trying to make people only buy Nintendo based products yeah I mean it's someone who owns one of those kind of main cabinets here but also owns all of the the classic consoles like the SNES classic things like that I also own the actual Hardware still this place is like a museum sometimes when it comes to the fact that I I have a virtual boy here like that was the legit one I owned still have my original game boy that came with Tetris uh but that doesn't stop me from still having these things maybe even out of convenience maybe I know that the wear and tear in those systems is ridiculous and I don't want to play it on those systems for fear of just destroying or maybe I want to play it on my phone it's there is definitely use cases and I also wonder how many people bought say the SNES classic which of course Nintendo profited from purely to then also add emulated games to right like Nintendo still made the money from it and then you also wonder about like well Nintendo's switch online uh Nintendo online emulator on switch is built off

the back so basically I think an open source Linux based emulator and so they they certainly do benefit from the technology uh but at the same time I I I do Wonder like if this is just Nintendo are you still is it still kind of free game on Sega or any those especially with Sega not even having the hardware anymore um or you know maybe if it's Japanese companies maybe outside of that alth although most of them are Japanese companies you know segaon Nintendo that's it's kind of hard to find you just I don't think anyone's emulating Xbox uh when you could already probably play the games on Windows anyways but I I digress it's it'll be interesting to see if there is an knon effect because I do think there is like obviously some some uh Talent loss perhaps from that uh even when it comes to like like you said the remixes or I always think of Christian Whitehead uh who was you know famous for his Sega emulators that he did so good that se like Sega hired him and he was a big part of Sonic media and that I thought that was great like that was that was how you do it basically the complete opposite of what Nintendo did but that being said said like you know

Nintendo's free to do what they want with their property and there's a good reason why they do it but I do wonder if this is not as much of a positive for Nintendo is they would like I don't think they were uh losing a ton of money over it but clearly they do they do think they were so and they might have better numbers on that than I would Nintendo often do unusual stuff like this though like another one that's sort of loosely connected is you know loads of fighting game players like Smash Brothers and they like some of the older games and they wanted to run their own tournaments for it and Nintendo actually won't run official tournaments for that game because it's kind of not seen in their image and I feel like any other company would Embrace that and build out some sort of sub you know division in their company to handle it in the respectful way and they're like no we're not touching this with a 20 foot pole it's just very interesting like I say they're a very traditional company but look they're so successful that you can't really uh blame them for for their moves that they make it's like the dark side of random it's like something that Disney deals with all the time too right

where you know as a company that's kind of similar or even Apple like the more popular popular you are and people trying to celebrate that popularity might be doing it ways that you're not happy about and then you've got to like oh you know slap down your own fans just to kind of keep everyone under control so H we'll see how it goes but in terms of uh cross-platform things in a more positive light uh Netflix has actually been continuing to throw money at its own ports over to mobile yeah so let me take this one so I found this very interesting news so Netflix is going to be publishing and launching Hades which is by super giant games that game's been out for a while it's coming out at the end of this month March the 19th as an iOS exclusive so I find this interesting for a couple of reasons one I feel like Hades is like a super wellestablished game uh you know it's the darling of many people but also quite a commercial success I would say for a small Studio I I own it twice I can say that right now I think it's a brilliant game I play on my uh steam deck quite a lot so I think

it coming to uh mobile makes a lot of sense and this is not something they've rushed they've taken like a full year to develop it they say that they really like try to make it work to be best in class and you know other things like haptic controls so I find it's a bit unusual why this has been done with Netflix because I kind of feel like super giant could release it themselves and not have to you know be at the mercy of some sort of you know logins or signin or having things like this so there's probably more coming down the line you know what else do do Netflix do do they do animated series do they do other tie-ins because they do a push so look I think from Netflix point of view I think this is a huge pickup I do know that they have done some other publish games in the past but I think in terms of both quality and sort of status this is a really big one I feel I'm quite interested to see what happens with this and um I think it'll be quite successful I've got a feeling and I'm I'm curious like what sort of um tie-ins they have

related to this release and what's next because I feel like if they're going for this one what else do they have in store I think there's probably some other quite juicy stuff coming down the line I think this is a real signal of intent for me from what they're going to be doing coming forwards yeah I mean it makes sense to me um given that Hades wouldn't be successful on mobile uh given it's a premium game really and so it makes sense to be bundled with something like Netflix um which would atically you know give it potentially a very large audience and for a smaller Studio you know whatever sum of money Netflix is handing over for it is is probably pretty worthwhile to them um and also I'm not that surprised on the Netflix front either I think this is the kind of thing we're going to see much more often from them obviously you know as we talked about many times like they're still experimenting they're finding their footing with their strategy their business model all all of that um and that is is going to continue evolving

for a while but um the strategy really just like on the most basic nuts and bolts level it was always going to start with licensing like very simple things and then grow its way up to licensing even better games such as Hades now which you know one game of the year like it's an awesome game um yeah you know to you know from there similar to what they did in video then branching off to making their own games um which we're starting to see um more of but that of course takes time to really unfold and they're still figuring it out and the biggest question mark with Netflix honestly is the uxx more than anything especially for like how people are going to play games on TVs like like that's the ultimate thing to solve for um but these these types of pickups I think will become more normal for Netflix in the months ahead uh which is really interesting and it does open the window for potentially like more premium games being ported to to Mobile in a way that

could just immediately make sense and be a differentiator for for Netflix too I mean it makes sense as well to to kind of Target the the highend of able a in terms of popularity without because I get to imagine what they spend for it is definitely better uh you know in terms of value if if they're like hey we're bringing better like value to our brand in terms of the quality of games we're bringing over without having to bring over the highend in terms of triple AI now that that being said they still brought over GTA San Andreas uh but that's an older title right so it's you know they're trying to find that sweet spot where they're like they're not trying to bring Call of Duty over to Netflix well they're definitely going to bring stuff that they know people like that is high quality but also not you know super crazy to Port you know generally like 2D or like isometric in the case of Hades and like Hades wasn't even necessarily the first one in that sort of genre dead cells kind of was the one they did before and was a good test case and that probably helped uh get the Hades deal going in terms of if that did well then people then they're probably

okay well then you know we obviously have an audience for this type of game and also like there's the reverse of what you're talking about in know where uh you know in this case for example uh it is kind of a little bit of a missed opportunity as I joked with you before about dead cells in the Castlevania DLC not existing on mobile yet despite the Castlevania anime and there's still ample opportunity for that DLC to be brought over and that tie to be made but if they see a huge pickup for example in Hades the game being played because they'll have all the analytics for that which you know Netflix loves those numbers to decide what to produce they can go hey now we can justify producing a Hades anime right they don't have to decide immediately ahead of time and this also leads in for super giant this is a no-brainer because as Ain said they get the money to do the port support with the port they also get extra media attention from Netflix do it as we're talking about it right now but also they're supposed to be releasing the second one approximately in Q2 so this is like hey cool free promotion with the old one get people excited about it hopefully audience that hasn't already played the game maybe just Netflix

people looking and go hey what else what what what can I play off this now suddenly our now brand recognition of Hades Hades 2 comes out I mean I don't think Netflix is paying to immediately Port it to mobile but uh this you know this is like a win-win situation especially for doublea and Indie and like there's there's been some other great games like into the breach moonlighter the ninja sht shredders Revenge which was like a great Indie sort of like sequel remake whatever you want to call it and then as I mentioned the GTA games so I you know they've been doing a pretty good job bringing at least uh some good recognizable ones even if they're bringing sometimes IP with like with a Twist like the previously mentioned uh Rainbow Six Siege small world or like some of the other weird ones like the the Shovel Knight one things like that they're they're definitely targeting that sort of Indie crowd uh or like you know the high level Indy quality stuff so they have a strategy it seems like at least as you said Aaron is probably looking to go up if they find success with it in terms of yeah for what they're willing to spend because you said like yeah they're not t targeting Call of Duty like one of my like spicy takes I think I've shared before is that like Ubisoft

now has the cloud streaming rights to Call of Duty for the next decade like I I actually feel like there's much higher odds than people think that someone like Netflix like Ubisoft will sell will sell access to a Netflix again it's just all about the ux and solving for that especially on TVs um but if Netflix is serious and does solve for it I mean it's important to remember that 10 years ago Netflix barely had any like first-party video content and what they did have they didn't even make themselves they just they basically just funded it they produced it but they didn't develop it um and look where they are now as you know the largest video content creators in the world and so if they are serious about games like what could happen over the next decade like like this is an interesting step but yeah the the ceiling is going to become much higher in terms of what they're willing to do given they have perhaps the largest uh um or one of well probably the largest paying um audience

based for content in the world um massive global scale a multiplatform um and the largest or one of the largest content budgets the entertainment industry has ever seen that's only going to get larger you know in the coming years as they continue to scale and yeah what that means for games I still think people are sleeping on like the optionality that Netflix has here even though it doesn't really make much sense what we're seeing so far in a lot of cases from their strategy and it's just a lot of questions I mean who's to say those questions can't really be be answered and solved for in a way that leads to you know bigger moves so I think it'll be interesting yeah I mean like you said they they started with the stuff that was kind of native to mobile and then they started bringing stuff over to mobile and then you know sky the limit from there if they could figure out that that uiux which they clearly wanted to do with game controllers that they were trying to do for TV play you know we've talked a bit about that before like they've clearly shown their Ambitions uh

it's just a question of whether or not they're able to execute on them in timely fashion but it does come down to the question of money you saw you talk about them spending all this money on content and all that and then suddenly they're cracking down on password sharing jacking up the price of of subscriptions trying to look at ad monetization models clearly like this is not making them extra money as much as they liked so much as trying to continue to to grow that market share and hold on to it uh but they've got to have monetized some of it and so I do imagine if they look to continue to scale up those game Acquisitions or spend on the game at some point that leads to then finding ways to further monetize that and not just give it away completely for free as like part of the subscrip or just another tier of Netflix where you're like oh plus games yeah my other spicy take that is probably even less likely is that I mean and I have said part of this before too which is that like I think the writing is sort of on the wall with Xbox over the next generation or two they're going to exit Hardware primarily become a services company and Microsoft's going to look at

that and think about like well we're a multi-trillion dollar company like how can we make this move the needle and it'll make sense for them to merge gaming and video together somehow and Netflix will be there Xbox will be there maybe there's a little interesting type of merger or something that could happen and take you know X like Game Pass to the next level with with Netflix too something like that sounds really wacky and weird today but again like five years from now or 10 years from now even like I think that's going to be pretty normal in an increasingly trans media world that we'll be living in well as long as it means mobile remasters of a lot of the Sega CD FMV games then I'm okay with that get some sewer shark on here and but uh yeah well I we'll see I think it's definitely like you said the trajectory for some of these companies seems pretty clear it's just how they execute and get there that you know we might see some stumbles along the way but uh when it comes to Acquisitions and stumbling and things like that I think there was a a feel things you want to talk about around saber and jagex yeah

uh let me find my notes for that so um so yeah just piecing together a couple a couple news items that have happened over the past couple weeks so um previously a couple weeks ago so it was mentioned that Jag ax which owns all things RuneScape um that they sold to new private Equity owners for about $900 million or so and Ja as a business like it's been like a big game of hot potato of like who will own them at any given time so it's not that surprising uh but you know still still notable that like they're they continue to be in these deals but more recently um it was announced that embracer is selling saber interactive for $500 million saber interactive they're making the nights of the Old Republic remake um and and such and you know part of this conversation could be about like how embracers just

you know selling disc they're looking to sell gearbox they're really just becoming a shell of themselves and that's fire sale yeah fire sale save the company somehow and you end up in a worse position than you really started um so that's awkward but instead of talking about that you know I just sort of want to talk about like connecting the dots between these deals but even like some of what I've seen um elsewhere like um uh the private Equity Group acquiring um Candy Vore which made match Masters and over the past few years there's there's been like a the pendulum slung very heavy heavily towards venture capital and Venture Capital when the market was booming was like the primary investment type to um scale companies start companies and really just fuel the industry and that of course leads to you know know either getting acquired by the

big companies these growth by acquisition companies um big Publishers whoever um or going public and really what we've seen is the pendulum swing back in the other direction in all of those categories which is that if the industry as a whole isn't growing as much um then Venture Capital isn't going to be as active which means that uh also like exit opportunities are not going to be as plentiful the embracers of the world you know they're not buying companies like they were even like the tensent of the world just for their own regulatory reasons are not buying companies the same way that they were in the past and so what we're seeing right now is really like a new type of investor that's not that new but I still feel like it's becoming more prominent and not discussed which is private Equity um coming into the industry and silently making some moves and um you know becoming the owners of of you know these notable IPS these forever

franchises in in some way um uh I think it I think it's notable and on one hand you know private Equity emerges from the Shadows when times are tough um you know they uh you know come in buy companies that usually are more struggling or flatlining and they make money by less focusing on growth and more focusing on how to make those companies more profitable um and how to operationalize them more effectively and it leads to you know good cash flow generating returns for them or they you know spin it off sell it off again to to the next buyer in some way take it public you know there's usually another step after private Equity um but also just like in the case of um like Havi and candore with with mesh Masters that's sort of like it leaned more on the Venture side of the equation but it wasn't you know they they're not a vure Capital company it wasn't a venture deal and so you know

I think what we're seeing there it's just like also there are games companies that realize that they don't have to you know press the gas super hard all the time on Venture and just be regularly reinvesting chasing the moon always um and instead you know like if you have a great game um or games you can have like a great cash flowing business um and there are invest ERS that have a different profile and different desires that might fit that might fit that mold better and trying to get you know more cash flow Returns versus just higher and higher uh valuation rounds until some type of exit so anyways I'm sort of like pointing out different examples but I do think there is like an interesting through line here of like what we're seeing take shape and the more that the industry you know continues to to struggle with growth um you know and more companies realize that they need to

to rationalize themselves in some ways I think that this could become a bigger Trend and private equity in small ways and potentially in bigger ways um too than even what we're seeing with you know several hundred million dollar deals um could become more prevalent in the next few years for our industry so so anyways curious to get your guys thoughts on this uh do you think I'm on to something or there other ramifications of a new investor type you know becoming more prominent what do you think I mean I definitely think the it makes sense when you're like you go through that growth phase when everyone thinks like you can just as you said press the gas pedal indefinitely and then you know at some point that can't last forever regardless of whether the macrom market is working against you or just that you maybe can't find a way to replicate that hit success but you spend a much money trying to do it there's a whole bunch of reasons why it just at some Point starts to kind of be like well okay maybe maybe we can't grow

super fast anymore and some people are content to go let's P this scale back let's just go ahead and you know do what we do well and and continue double down on that but then a lot of companies seem to just go well uh I guess what's do layoffs now or you know they they they get in that sort of like we're not sure how to proceed from here other than cutting back and it seems like that's as you said public Equity or private Equity is a great opportunity for someone to comeing and be like hey we'll help you do that we'll help you sort of like just make this more efficient because you you clearly were spending your money wrong so we will give you some money to spend it correctly and and fix that because we want a part of that right because you you have something there you just W running your business effectively H we'll run it as a business effectively is the mentality right that as you're later on if you couldn't find a way to continue that success and definitely that is kind of the inevitable thing and obviously we had things like embracer and stuff sort of try and shortcut that in a different way uh and it clearly it didn't work out the way they were hoping I mean there's still obviously some

games under there and maybe they'll find some sort of success but we have you know other companies like gearbox other ones potentially looking to be jettisoned off as well I don't I mean we'll see if it ends up like fire Cale kind of situation but we have some of them like just kind of leaving some of them you know you know looking to be bought by someone else like it's kind of a variety of situations but it does make sense because this is not just the companies embracer bought this is like the whole industry right now is in like a tough spot and I think there's a lot of things that probably kind of pointed the waste to this for a while like ever increasing production costs never increasing game prices like there was a whole bunch of Market forces making it like uh this is going to tighten sooner or later right and and maybe the mobile industry made everyone feel like it was going to go on forever and then covid certainly accelerated that was gas on the fire uh and everyone kind of admitted they over hired right like R especially was like we just hired too much you know so someone got to go uh so it's you know it's just it's a cycle that's inevitable right where uh then just another type of business steps in I think it makes sense and hopefully it's

one where it actually keeps these games alive in a form that everyone doesn't just quit and leave it was funny you pointed jagex because I it makes me think to I'm surprised I wasn't someone who played RuneScape I was more of an ultim online person but the amount of people I've heard use RuneScape as like a touch base for different things it clearly has like a brand recognition and like potential opportunity to be something and then I look at Ultima Online still being run but by broadsword kind of partnered with EA because EA kind of picked it up and kind of dropped that ball and but like the these things that have this sort of brand recognition can maybe find someone that runs it it more efficiently like in this case broadsword or maybe someone else can help Jag X run it more efficiently that it's like maybe you could drag this thing on forever if you just don't overspend on it and try and grow it indefinitely just run it like a smarter business if you have a small audience spend like you have a small audience right don't try if they're not going to go away right if you're just if they're just aging into your game and never aging out you know it could be for

everything like the stuff I was talking about with Warhammer like Warhammer is just dragged around forever it's never been the best but it's enough people play it it just keeps kind of going it it works like that so I think I I just I hope that that actually this actually just keeps these games alive or it keeps these brands or or the employees and it doesn't lead to more layoffs that actually just maintaining operational efficiency then means less layoffs it will it'll lead to layoffs for sure um I yeah I mean I think that's inevitable and there's good and bad to private Equity too like sometimes like becoming more efficient is needed for businesses um and it's just hard times to work through um but yeah I mean the there are the implications of private Equity different firms work differently of course but private Equity is usually more debt driven um and so sometimes you know they'll put companies more at risk and you know and how they deploy debt to

finance operations sometimes even they'll you know take on debt pay a massive dividend with it and then you know take it public or something and then it goes public with a massive debt load um and you know they got their return because they basically just took the money out of the the business um and of course it doesn't happen always but it there will be like I bet there will be like weird things like that that happen in the games industry um as well so we'll we'll have to see but I also do think too like there will be instances where you know people with more of that type of background um get involved with with companies and I think we've talked about Enad Global 7 in the past as one example they're sort of like um a mini growth by acquisition company compared to an embracer or or something and really were just horribly wrong destroyed a ton of value and then uh just yeah bought all sorts of random things and then um their current CEO gam through

whatever private Equity Group you know bought in he stepped into the role of CEO and he's actually done like a pretty phenomenal job in turning around that business so far it's you know a very small business today you know with growth aspirations and such but you know we're able to make it sustainable like regularly profitable like actually put it on like a uh a growth trajectory now that everyone in the company can rally behind when it was directionless before for um and we might see more leaders like that emerge in certain places um a lot of this of course is like pretty small um but I do think there are opportunities in some larger companies even where like it would actually be pretty helpful and unlock a lot of value um if private Equity were to go in and everyone's thinking about Ubisoft so I'll just I'll just say it um that that it's like the you know the biggest example where that would make sense but probably won't happen because of the family's control of the business but um but yeah a different mindset at a different time for the industry we'll be

we'll be interesting to see how prominent this group of investors becomes well I think it's going to obviously be winners and losers right it's not going to be one way or the other and some some will work out a lot better than others and and it's you know the painful period right that we got to go through uh to kind of correct some of the things that just weren't working and that's that's the the purpose of any kind of recession type Behavior right is to kind of clean house a little bit uh but obviously like it it will have probably some negative effects on people that probably shouldn't be cleaned house or you know they like like when management is just trying to save their own job through other people that are good under the bus kind of things because you know like they're just GNA bleed the rest of it dry and and hopefully that's not common right it's there's different kinds of businesses and and I not as familiar with how private Equity cleats up like entertainment businesses as opposed to like more operational like manufacturing business like uh one example I always think of that that was kind of surprising me is Safeway a grocery company around here like grocery stores I think they're vs elsewhere and stuff like that Safeway I always just thought was you know good successful company or

whatever and I was like one time I looked up oh who owns Safeway I was oh private Equity that could have surprise me and it certainly wasn't they didn't run into the ground they didn't milk it like Safeway seems like a pretty well-run company I think it's been like that for a while I go get my groceries from there it seems to work fine but it never seemed like it was a hugely detrimental thing but that's a different kind of business than entertainment where you know you got this hit driven up and down thing it's not like something where you just all we got to do is keep turning out groceries uh and so I hope the right people are picking up the priv like the from private Equity that understand the business I think is probably the important part but in discussion of winners and losers and uh people that are maybe on the other side of that that are doing well I think we wanted to also discuss like we've talked a lot of bit about a lot about the the ones that maybe haven't done so well we've also talked a bit recently about some of the ones that have done better and I think we wanted to kind of look at so far into the year outside of all the people that have maybe had to uh change positions temporarily uh there has been you know maybe some successes we can look at actually before we do that Devon

can we head on one more topic which is the the Epic verse Apple update one more one more loser potentially before we we dedicate the rest of the episode to to Winners um so we don't have to spend long on this but I think it's important to acknowledge um again that Apple continues its blatant antitrust tactics um so the dma in Europe in short enables companies to build their own competing app stores Apple initially retaliated by making it prohibita expensive to do that charging I think is like 27% fees so basically like making it just as expensive for like a tougher clunkier user experience so to discourage anyone from making their own app stores of course though epic games they want to push forward because it's in their ethos also fortnite isn't allowed on the App Store and so bringing that back in some way makes a lot of sense for them to do which also you know opens up ufn um to

that audience again as well on on mobile which will be interesting to see but um it was announced not very long ago at the time we're recording that uh Apple is now taking a step further by revoking epic's developer account which would stop them from developing anything on on iOS which is pretty wild and so I was looking at some of the materials from like emails that were being shared about this um and basically Apple emailed Tim Sweeney and I I'll just quote your colorful criticism of our dma compliance plan coupled with epic's past practice of intentionally violating contractual Provisions with which it disagrees strongly suggests that um epic does not intend to follow the rules we invite you to provide us with written assurance that you are acting in good faith and that epic games will despite your public actions and rhetoric honor all of its commitment like and then you know essentially tell us why should we trust epic and then Tim

Sweeny responds by saying epic and its subsidiaries are acting in good faith and will comply with all terms of current and future agreements with apple um and then Apple gets back and just says Mr sween's response to that request was wholly insufficient and not credible and then it goes on to site tweets for for for why that's why that's the case and you know on the surface it's not crazy why Apple wouldn't trust epic because epic did break their rules before um but you know there's a lot of gamesmanship clearly going on here um and it'll go to court I don't know how it will will play out but uh clearly anti-competitive behavior that goes against the spirit of what the dma is trying to allow um and you know Apple they continue to find these loopholes um but I I don't think it can stand forever so I'm curious what it'll be like and obviously this is bad Google

is maybe not as bad but also pretty pretty bad too and certainly not as open with Android as they would want you to believe but yeah tough times for for epic still tough times for mobile at large when um you know Apple continues to crack hard this hard down on developers but I don't know big news important to acknowledge it's also worth mentioning that Google has like seemed like they were going to behave maybe a little bit better and then they of course in the in the final hour uh of the dma stuff were like oh by the way we're also going to do some of that bad stuff Apple was doing and Tim Sweeney called them out for that too so we'll see how his his emails uh back and forth with Google go after this but I do find it extremely ironic for Apple to use the terms good faith uh pretty hilarious at that point just just the choice of those words pretty funny but uh they also got slapped down with anti-competitive stuff around the same

time today even uh pretty pretty big fine for their anti-competitive behavior around music stores too so this is definitely kind of coming to head but we'll see how it takes out it's g i think it's GNA take a while to come to a fruitful head for anyone this point yeah Anil as the the person here with a mobile gaming studio how how are you feeling about the state of all of this going down I just it just feels like two billionaires having a money fight really um but I mean look there has been some big deals and some you know big uh rulings but we've yet to see any evidence come from it so I think everyone waits to see if that would happen but yeah I guess the recurring theme is um you know things aren't right in the games industry right now so maybe it is going to need something like this to open up a new Avenue to start getting things moving in the right direction that would be nice to see but at the moment it gets a bit tiresome just looking at this go on over and over to

be honest yep and with that Devin I'll let you shift the topics back to happy good news right rainbows and everything right now it's uh Ian I mean I was King off with with saying that like I think you know we've talked a lot about some of the big surprise winners and to me double A is it right now and I think there's a pretty obvious reason why uh they're charging less for their games and so people looking for fun new things to do that don't want to spend $60 only to be extremely disappointed by the release which has been maybe a little too common when it wasn't something that you could really count on being good uh you know it's I think it's inevitable conclusion that's benefiting more talented creative people in the industry that aren't overspending and under underd delivering who wants to take a tack at the next happy thought well I could think of a couple of Studios that I think about a great year and kind of echo what you've just said there so two that IM immediately

come to mind first would be Arrowhead Studios who made hell divers to um didn't if you ever played the first game the first game was a very interesting game was pretty uh polarizing I would say like some people loved it some people hated it and to see their sequel you know get to the top of the steam charts is I think phenomenal I think anyone saw that happening and so that's quite a nice thing to see that a smaller Studio I would call that a doublea game it was a digit game maybe slightly bigger budget for this one um stick to their gun so to speak and do so successful and sustain it is really good um interesting to see if they get acquired or not their CEOs come out today and said they absolutely won't be and that's exactly what Bungie said about uh Destiny didn't they until uh you know about a month later they they were indeed acquir so let's see what happens there so I think that's been like a real success and similarly a new a debutant would be pocket pair if you didn't know who they are they're the guys that made power world so that's obviously come up absolutely nowhere but that game hasn't just been a flash in

the pan it's been in the top 10 steam sales for quite a while now since it's come out and you know many people thought it was just going to be a oneand done so they probably already made more than enough money to cover their cost probably for the next three or four years be interesting to see what happens them and you what the both of these games and companies have in common smaller scale games made of sort more passion done on a more sensible budget have Gameplay at their core or something new that hasn't really been done in the mainstream and they've achieved success of it and I do have to say I feel like that is probably where we're going I feel like the arms race of trying to get to hyper realistic super duper quality has basically just ended up in a position where games are too expensive to make the margins are low you make one full step and it's it's catastrophic so we've got to go back to being maybe a little bit more imaginative and being more about art style rather than hyper realism um that said hell div is fairly realistic but again they haven't gone for like you know super quadruple a

standards I can think of a third one as well but I I wait to see what Aon comes up with on that real quick if it come out this year I think balers Gate 3 would be probably yeah yeah yeah yeah yeah Larry and the studios exactly well let's see what on on my draft board of good things for 2024 um uh I think I'll call out applovin um so applovin so far like we have a we keep track of like a public markets gaming index of the top gaming companies and apple is the best performing company of the year so far it's up about 60% in 2024 so far and is up way more from from its lows and so it's been really impressive to see how they've adapted with the times um and kind of stayed on The Cutting Edge of mobile UA um and I was reading something Eric Seer wrote um and his his blog or newsletter and basically what he pointed out is that right before

Unity merged with iron Source um the three companies Unity iron source and appen they all had about equal market share and their advertising revenues um but if you zoom forward to today um unity and iron sources advertising revenues combined as of the last quarter was only 55% of app lovens and so um you know on one hand that says something about unity and iron Source uh about how they've been you know maybe mishandling a bunch of things and they've had their own issues you know in the past couple of years as well where they they they they broke their algorithm with bad data and had to rebuild it from scratch and and and various things like that but also apple is just done a pretty M job at staying adaptive um and you know creating tooling that that works for

people and I think you know they've always had you know some companies have always kind of Taken issue with Apple for their tactics and uh or pricing or various things but you know to their credit they've they've maneuvered very well and you know from even like pitching like hey Unity you should work with us instead of iron Source probably maybe good for them that that fell through um and that they've been able to operate on their own and kind of be away from the the unity mess of of late so yeah app Lovin in a difficult mobile environment they are doing a pretty phenomenal job right now really impressive definitely hope like we could see more you know success on mobile because that's the other area definitely we've talked a lot of uh doom on mostly just because it's been a struggle just based off the way the sort of business model was set up around user acquisition became kind of sensitive but it is kind of interesting with these with all these in the sense of like Discovery and

finding users could be kind of tricky and it is kind of interesting to see like Steam for example be maybe a better place for some of that despite the millions of games that seem to get dumped on Steam but it is it is weird to see like marketing strategies maybe not even being a factor in that like I don't think hell divers to really had marketing uh like I I was someone to play the first one and all the magika games before and stuff and I had no idea it was coming out till it was out uh and so it is interesting that there are still areas where quality could shine obviously virality aspects like we talked about this before like the Pokemon with guns aspect of power world and stuff like that and it's like you come in with a good hook in this case maybe it's Starship Troopers maybe it's pokem out with guns uh that's something that people happen to want and some good quality and actually like don't over crazy spend on it to where you can actually as a as aill was saying not just completely die although it does sound like power world was maybe hanging by a thread there but you know I think that's a lesson to people that if you're

not EA or whatever don't act like you are and and shoot for just do a good job and maybe steam isn't like a as bad a place uh if you can manage to get to BR I was thinking about this the other day like just the effect of seeing what your friends are playing pop up that notification in the corner I've noticed that having a pretty strong effect because there's this sort of Desire like what am I going to play next what am I going to play next feeling a lot of times these days as that it feels like we through games very quickly uh that that having that sort of what are my friends playing effect or curiosity around it uh and steam's continued or Val's continued efforts in trying to improve marketing and discoverability on on Steam in general because they actually put effort into it unlike certain mobile develop or mob mobile platforms that maybe do the opposite it's it's really interesting to see that there's some Evolution there that could be beneficial to the middle of the industry and not just you know the top or bottom what's next on your your draft board Devin oh man like I like I said I think

we've named them all but it's a kind of a spectrum right because like there was like more higher end ones like the balers gate one than I said where it's like maybe there was a bit higher than or high end of double A and then you've got all the way down to like batro which is like the the lowed vampire survivors type one and then I still think there's a lot of these like sort of any kind of horror games that seem to come out with a bit of a splash and I think it's almost like we talked about before like this sort of Roblox kind of developer evolving in I think that's a positive for the industry to see these sort of any creators that cut their teeth in this sort of mod kind of world you know we always talk about like those of us who used to play mods and like missing mods and I think having that sort of infrastructure around ugc whether ugc is a flash in the pan I think it's like benefiting us getting developers that actually get to test their games in the wild uh and like learn a lot before they start to come in to the scene so we're not just seeing Indies come in from like uh just just really liking indie games and making their first one uh and I think ufn can be a big part of that as

well so I think trending into this year having maybe some of these Financial market like driven ways for Indies to cut their teeth I think could continue the success story so it's more of like that's almost more of a trend in a specific game because I said a lot of the games are already kind of named but I think they show some of that and obviously like batro was kind of a odd one it was more just dude making game that because he wanted to for fun uh and got caught on but like sometimes that's that's all really takes it it's like if your expectations are low that's not a bad thing because that was the case with vampire Survivor as well he wasn't expecting success uh but I think that helped both of them focus on quality and that's the through line for me is like focusing on quality and making stuff that you want to play that you know is good I think is is a huge win because even if you don't succeed you still get a game you enjoy playing how about you andl what's what's next so for me is one that I I've got a feeling and not many people know of but you will do if you're in the web 3 world like myself that would be scry Studios so they're the guys that made Heroes of

Marvia that had a very successful launch they listed their token and they've got their game and it's maybe exploring some new space where the interest in their token fueled a massive amount of downloads for the game that getting download over two and a half million times Without Really spending much money just driving through hype and perhaps creates like a new Revenue sort of stream because token transactions just between that and Market making you can generate revenue for the studio now I think it's too early to really say how successful this would be compared to the other products but you know I think again in this sort of spell of of Doom and Gloom in the games industry what tends to happen is that people have to work out new tricks and and see where comes next so just offir Devon said and I think he was quite right to say this that after 2007 financial crash what really happened I feel was Mobile gaming came out of that not right away it took a few years to get going but by a sort of time 2009 2010 freeo play was a thing and then it absolutely exploded in the

2010s um perhaps the return of doublea gaming is one of those but if there's a new thing to happen perhaps it's not necessarily a platform which is sometimes what happens but it could be the distribution and the business model type of thing and I will say that in this case of sry studios and their project perhaps that is some commonality between that and the daa games that we've mentioned and that is it feels like games where you have some sort of tighter Community or interest or super fans to get that initial momentum together can burst out to make more of a successful product and that could be where we go in the future um it kind of feels to me that like where we are in video games at the moment is is quite familiar to movies I would say where you've got these kind of super duper Blockbusters that maybe some of these are still going to make money I mean for example let's be honest GTA 6 is still going to be pretty successful isn't it h is it going to sell over 150 million copies maybe maybe not of the marketing

budget probably it will do if you ask me right but equally there isn't room for that many maybe on the top end games it's a Weds that leave for everyone else and so maybe that is the answer maybe it is about trying to find some initial momentum building from that and that's going to be the new way to do business now how does that scale for the really biggest players in the space not quite so sure but um sorry still Thunder a little bit but maybe another game that's gone a bit under the radar this year that's had the very successful launch has been Tekken 8 by band damco and what happened with them is that I felt that they lost a bit of momentum with their last release and with this one it seems like they really actually did listen to their community and focused on making a great game um they did a lot of streaming and beta streaming of it early and it's been pretty successful for them I think it's already sold 3 million copies whereas by count by contrast you got WB Studios and nether realm and they made made Mortal Kombat one and actually that game is actually sold better than than Tekken a so you might think what's

the point I'm trying to make but the critical reception is pretty poor if you look at the amount of people playing a game is is dipped to like a very low number and it looks like it's not going to come anywhere close to the previous Mortal Kombat it sold 15 million copies and you know if you look at on the surface of that game that game has um three sort of superhero characters in it and there's a lot of rumors that essentially that game was supposed to be in Justice 3 that was quickly made into a Mortal Kombat game to put some money onto the profit books and that's sort of like not the way to go whereas these community-led fairs are been good so skry Studios is my call and the bigger point I want to make is I thought that is maybe an Avenue we'll start to see more of um Can it transition to the top Studios not sure but maybe there are some signs that it could do yeah and just to back up your point about Mortal Kombat one uh which I've been pretty critical of as well it's also 40% off today right now and that made me almost think about buying it but that I think that's a clear indicator that it probably didn't hit the mark despite being relatively successful in terms of

a live service model where like well if people are leaving we got to get some new people in we're GNA have to dip that discount like put in the discount and because most of the complaints were about the price plus the live service stuff but again in terms of WB I was hoping by now that I could be including multiverses on this list uh we'll have to see you know if that will be maybe their successful life because they are teasing it already and it was I was hoping based off their te's we would see something in the Xbox showcase but not quite yet although I think maybe the uh the McDonald's tie-ins in Europe were maybe just a an artifact from before but I think I think we might be getting it back I don't want to overhype it I'm excited because I enjoyed that game and it was free instead of being like the Mortal Kombat like $70 plus kind of thing so uh you know hopefully hopefully we could cheer for the people that aren't trying to milk us and looking to just make a good game from they are kind of a smaller Studio under WB so like that would be almost be again almost double a kind of status because they're very small yeah that that's kind of the

point I'm sort of making here is that maybe because there are other some other commonalities or some other games that had let's say an off number in their franchise that didn't do well and they had to rebuild that trust in the future one by listening to the community so Street Fighter is another example of that Street Fighter 5 launched and it was a hot mess it didn't it was it was literally an unfinished game that was released and almost destroyed the franchise and yet the the new game that came out was like one of the most polished fight in fact probably the most polished fighting game on launch ever made and it's like I wonder if the two were connected there and I I actually have a suspicion I've be curious of the Mortal Kombat case I don't want to call out the Devi because I've got a feeling that they were probably pushed into theing some things they didn't want to do and I wouldn't be surprised if the next one they decide actually okay to take their time a bit more on and and try and like maybe really make it good I know will come at 13 will be the one right it it will of course unlucky for some but not in this case but what I mean by that is you know this does happen sometimes at Studios is that you know they will they'll Target a

Metacritic rating internally right so it could be like okay this game will'll accept it if it's a 70 but it makes this amount in terms of like the return but the next one is like okay it's actually more important that this is Metacritic 90 even if the sales aren't so good and the reason they Justified that is because what you don't want to do is completely ruin a franchise so that youve completely lost it forever right because then you know that's why would you want to do that that's terrible things in the the cross media world that we live in um so maybe we'll see some more of that and you know another one that's coming out quite soon actually is is Dragon's Dogma from Capcom and I'm curious what happens there because the first one also had similarities to that it had like some it was a good game but didn't feel like it hit the mark and again it felt like it was a game that was rushed this time around it looks like they haven't rushed it so let's see with this if this one is both a commercial and or a critical success and and maybe that is the case that people are they realize that you can't it's kind of funny because said that companies need to get more efficient but maybe quality still got to

be the Benchmark that people shoot for yeah I mean you you've definitely got that sort of like every other sort of thing where people are really successful and then they try and cut corners on the next one it backfires but still make some good money because people had expectations from the previous one and bought in and then you take okay well let's take that money that we made that we probably shouldn't have cutting the corters and spend that money to make the next one good and revive the the sort of quality of brand and I think we see that a lot even in movies video games whatever it's like well do we revive this brand or we just keep cutting and see how far we can get down and I think the well let's make the next one better let's take that money that they invested in us because they have faith in us and make that come true in the next one not everyone does that but I think that's that's a lot better of an outcome then so you know like Modern Warfare 4 might actually be worth it maybe for example nice um but yeah I can kind of wrap up with a couple final ones um I mean one to I guess put another web 3 theme on it

um is immutable obviously I mean crypto is having a Resurgence um for better or worse and web all things web 3 will kind of you know e and flow with those Tides but um I've been really impressed with a mutable um and some of this isn't you know in 2024 but I think what what's most impressive is that you know three years ago it really was an open question about you know if you were a developer coming into space like what blockchain would you build on what platform would you use um and immutable has been able to through you know honestly just like pretty brilliant entrepreneurship uh been able to come up with a more definitive answer for the vast majority of teams and so of course like they rais money well to last through bare markets they've built their ecosystem and Technology St St out uh but you know perhaps most brilliantly as they turned competition into Partners um such as

with um polygon and now you know you can get the best of both worlds you know through um immutable um and also I think it was called beam if I'm not mistaken maybe I'm I think so by mer Circle Yeah Yeah by Merit Circle um and maybe they'll they'll come out with more interesting deals like that in the the future but really because of all of this you know their own hard work and their Partnerships it's think their market share is over 80% now of um teams building in web 3 are now choosing to to work with a mutable and um obviously that doesn't mean that the money is being made yet um but we're starting to see like the business development ws and I follow the founder CEO Robbie Ferguson on on X and you know occasionally he'll he'll tweet out or post um just random updates from their BD team and the latest one which was less than a week ago was you know like we hit a new record in 48 hours we just signed 10 new

like games teams U and I'm like that's pretty one of them was my team oh there you go um oh stealth announcement it's not stealth that was announced that was announced actually yeah um so anyways um it's been really impressive to see how they've been able to maneuver and now they're they just continue to accelerate the bizdev wins which at some point will turn into accelerating Revenue winds um probably starting in 2024 but really over the next um few years so that's been one and then I'll also just shout out Roblox of course and you know there's not a whole lot new that is worth digging into here other than just the snowball of roblox's compounding it just continues to roll um especially as they've gone more multiplatform lately uh their user growth is just consistent you know year after year and that enables them to grow their R&D budget year after year and just increase the the capabilities on

the platform year after year and that just continues to roll and the thing about compounding is you know at some point you know the yearly changes you're able to start making just become larger than what anyone else can can match um and so I've just been super impressed with how they they've just you know put their stake in the ground and just made it very clear that this is like a next era of gaming and even as uh mobile flatlines as consoles um you know struggle for for growth too it's just more and more is is gaining share in these platforms Roblox in particular and and ufn to a lesser degree but man it's so impressive just to see the consistency um and the growth of this this Roblox team and they'll have ups and downs in the market as what people focusing on their earnings or whatnot in any given quarter you know get excited or or freak out but really just that

underlying compounding machine is intact and very impressive um in difficult times so I don't know I think there's there's a lot of interesting stuff in the industry and there are these big Winners and you know it's not always even if the industry as a whole isn't in the best position or companies find themselves more in red oan and having to you know come come out with new tactics to to stand out more than before there still are these teams whether yeah it's the app lovens the daa's the roblox's the immutables that really are making the future their own and it's yeah at least as a entrepreneur it's it's pretty inspiring to see definitely and and I also like uh I thought you had a great discussion with uh David in the recent interview run a lot of the Roblox and ugc stuff so I wanted to shout that out uh because I think that was useful to kind of highlight that industry that I do hope and I mentioned earlier like that I think that's a big Trend that I I hope

succeeds for the future of game development in general in terms of game developers having a way to make money that makes sense for smaller people things I mean who knows maybe gets taken over by Studios and there's not even like kids making games for other kids anymore but it does seem like there's an element of that that will stay and also I wanted to shout out that uh on the IM mutable thing like a lot of their games maybe haven't come out yet but they did finally get Gods on chain on mobile so for those of you who didn't know that like it it finally happened I think it's still kind of an early version but it's playable now so I think that's exciting because that's been their success that they've continued to double down on and make it better and like make it grow so uh since they don't have a ton out and I also have played some metal core and I think they've got that I mean obviously that's not their game but it is going to be one of the early amable games I think that looked like it was going the right direction so I'm hopeful as a web three person myself that uh that that business can start to make some sense for a company that's doing it well because it it benefits us all especially if now's B

time again you know like even better for that to to try and come up do something solid because we know game good games take time so we're hopefully like okay you know is it is it time yet uh so we could have a lot more to talk about and not just have to make this a uh a one-off segment of what's exciting this year that that the tide turns in the conversation but uh but in the meantime like we'll definitely uh try and try and keep an eye on out for the really fun stuff as well as the uh the stuff that still needs to be talked about even if it's not as fun but I want to thank you guys of course for coming on as usual like fantastic stuff at Great insights as well and of course to The Listener for continuing to tune in to what is hopefully a lot of good insightful discussions on a lot of interesting things happening this year I'm I'm looking forward to it and hopefully we'll see you at GDC make sure to if you want to talk to novic hit up that form we'll have that in the show notes uh and make sure to do that or I guess if you for some reason can't find it uh you know there's always email but definitely let Aaron know and uh and get that going in person hopefully because that's always much more fun but in the meantime

catch you guys uh next week if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a fstar review and if you want to reach out or provide feedback shoot us a note at podcast novic doco 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 www.nic.edu and advisory Services again that is www.nic.edu [Music]