End-of-Year Learnings & 2023 Industry Predictions - The Metacast by Naavik

[Music] then we have Elon Musk going into Twitter with a flamethrower getting rid of half their Workforce that's uh 3700 people then you had Michael sink it was a sink yeah it was a sink I'm not a flame though exactly wow you know I think it was a flamethrower in the sink [Music] hi friends welcome to the metacastrante world by navic I'm joined by Aaron Bush co-founder of navic and Neil Des Gupta co-ceo of first night games and Joachim Akron kind of kind of right uh founder and CEO of elite game developers Venture partner at play Ventures and I'm sure you know him if you're in the games industry welcome everyone hello hello hey thank you so much for joining us this it

was uh honestly something I dreamed maybe doing is being on a podcast with you at one point in my life so this is my Christmas present right that's great yeah this is my first poem for me on the metacast so it's the first time guest long time listener from the beginning I think you did a collaboration with navic was it for a still front we were just discussing it yeah I think that was still the days before it was still Master The Meta I think that was is that correct Darren I think so yeah those were the the master of the meta days and yeah we we did a deep dive on still fraud uh Joaquin interviewed the CEO and um yeah learned a lot it was good to collab we'll do it again sometime but yeah excited to have you on today Joaquin thanks sir I saw a prediction for 2023

collaboration we're kicking things off yeah it's a good prediction solid one so to give away context uh today is a special end of the year episode so we're going to be reviewing all the learnings from this year and also doing some predictions for next year and before we move on you know that I always like to get to know anyone who's joining for the first time a little bit more um yeah so make sure that you check out iwakim's Elite game developers the newsletter the podcast the services I've been listening from day one since I wanted to join the industry it is just a treasure Trove of information and learning so yeah go and check that out if you're not a listener yet I want to do a quick intro about you yeah so my background is like being an entrepreneur in gaming for from 2005 when I started my first venture-backed gaming studio so it's been a while of trying these things out uh then like

I was at supercell for a bit before starting next games which was acquired earlier this year by Netflix so that kind of um ended my journey so far as a as an entrepreneur in a VC backed company but then I've been doing Angel Investing for three years also run an angel syndicate with over 200 people from the games industry where we do spvs as a group we invest in companies we've done like 20 20 SPV deals in the last two years and then I do some personal Angel Investing as well plus I'm part of the play Ventures team as a part-time sort of board partner and Venture partner where so it's a mix of things so that's me oh so did you get

um I assume that you got to know the Netflix strategy quite early on so I think next games was one of their first Acquisitions wasn't it well the acquisition happened early this year but there was a project with the stranger things IP going on for several years already um so there's there's been a relationship in place for for several years already and I think it was a good time to to team up with a with a IP conglomerate like Netflix and get things to the next level hell congratulations on the acquisition thanks yeah it's really good yeah so yeah like of course like Elite game developers is kind of my my focal point now it's like somebody who still wants to do some creative work so I write a newsletter every week targeting gaming entrepreneurs so you can check that out on Elite gamedevelopers.com

so yeah all right thanks um if you're wondering oh New Year New Year resolution what should I do next year I need a new adventure well I might have the solution just for you this is my intro of a pharmaceutical uh product no it's not uh we're over actually opening up new people joining the round table panel and so if you listen to the round table if you think that you'd like to join we'll be sending out a bit more formal details uh further maybe earlier in in January but yeah if you want to know more about the opportunity uh just send me a message on LinkedIn send us an email through the metacast email and we'll get back to you we're looking for people in the industry who like analyzing games like analyzing game adjacent Tech Industries company strategies and driving insights from M A analysis so yeah reach out if this is something you're keen on

because some of the predictions might be a little bit negative and it was a little bit of a tough year I thought we could start this end of year special with a positivity note of everyone saying what they're excited about for next year so I think I'll pick you first Aaron what are you really looking forward to in the games industry um I mean games right um I mean I'm excited for some games coming out and I don't know if this is stepping on toes for for later in the episode I don't know but um I mean there's a new Final Fantasy game coming out there's a new Zelda game coming out star Fields coming out you know there's lots of like huge games coming out that I'm excited about I feel like 2022 there were still good games right but it was like a slower year of some of these like massive releases and so 2023 is gonna be you know Revan revving up the engines again and you know having no chance of you know

getting through any backlog whatsoever because you can't keep up with with anything because there's too much goodness out there so yeah I mean that's what I'm looking forward to I know what anil's going to be doing in June 2023. you you would be right but before I get on that I'll say there is another positive thing but I'm going to save that because I thought of my predictions one's actually positive so I'll actually start with my negative prediction first and we get there and do the positive thing because I think it's important to go into a new year with a positive outlook but yeah as Maria is hinting at June 2023 is when Street Fighter 6 has been announced um I got to play the beta earlier in the year it's pretty amazing I remember being on a previous metacast with um Aaron and Matt and Matt jokingly said imagine if it was a street by the six metaverse where you could walk around and do stuff that's actually what they've built but the most important thing is the gameplay so far is really good um fighting games are interesting because I feel like you have to play for 100 hours before you can even save it's good or not um I've played it for about 10 so far

and it is pretty good and um just so you know that I worked on on number four which was really good that was like one that had a gap for about 10 years but I wasn't at the company when they made five and when they first released five they released it in a really bad state it had sort of no single player content that online barely worked and I remember actually texting one of my friends as soon as I started playing it just going what have you done so luckily this time around it looks like they're taking their time they've delayed the launch they're gonna make it really good and um so far from what I've played I think it's really really fun I think it's quite a fresh take on on the the genre as well and then yeah I think um I will be taking off some holidays in June to play it I think that's a prediction you're predicting Street Fighter will be a massive success I think in London there's a competitive scene I helped start that when I was younger yeah did you really I used to run tournaments in a good Street Arcade uh called Casino which is now unfortunately a uh Scientology

uh convert but actually was next to that so that's not quite right but yeah I did I'll actually send you some footage I used to run tournaments that's how I ended up working for Capcom actually oh wow okay uh that's a fun fact yeah uh you like it how can you be that what are you looking forward to yeah I'm waiting for some games as well one of them is definitely blast Royale so that one there you go there's like to get that mentioned on here yeah yeah check it out Clash Royale um so there's a lot of startups that are actually coming out with the game in 23 and that's that's I think the most exciting thing like most of the companies that I've been working with after I started doing investing three years ago the the kind of like at the stage where the the ones who've been figuring out what their game is going to be they're kind of like at that point

where next year is the year of the launch for so many people so I think that's that's what I'm looking forward to to a lot then I think there's also other other interesting games coming out from like um bigger Publishers so definitely interesting year and hey now we're ready to enter the first end of the year prediction maybe we'll be able to put some drum roll sound effects here Maybe Aaron what do you got for us yeah I think uh next year the console Market will accelerate and you know my my take here is pretty simple and so I don't know how much there really is to discuss uh because it feels pretty obvious to me if I'm curious what you guys think but you know ultimately the console Market is poised to improve because several headwinds that you know hit it once over the past couple years will um we'll just start to weigh in and so

for starters new console shipments have been held back by supply chain issues namely semiconductor shortages but you know already in Q4 which we're in right now should see improvements and that'll extend to the next year and there's plenty of pent-up demand still for new consoles especially the PS5 so um that Tailwind is there and then of course the the consoles that people play on has an impact on their engagement right so for example in Sony's latest earnings call um or in their earnings report I should say player engagement on Playstation as a whole actually was down a bit over the previous year but uh performance was actually quite positive for PS5 Gamers and so that higher engagement leads to more sales and has more ps5s specifically get out there with other consoles too we'll see more engagement around newer games and as I mentioned you know you know it for his last question much of 2022 had a noticeable Game launch shortage and 2023 is poised

to to turn that around and just be a more active year for game launches and even something um as simple as going from a week Call of Duty year to a strong Call of Duty year um has a noticeable impact on on the market and that's exactly what has happened in the new Call Of Duty Modern Warfare 2 game is very successful of course Call of Duty itself branching out war zone and other and with war zone 2 coming out that's going to be gonna be a hit and even if you zoom in a bit to something like subscriptions which have been a big topic of a conversation um you know wondering whether something like Game Pass will really work how disruptive it really is ETC um obviously we'll see what happens next year with Microsoft with you know whether or not Activision the the acquisition of Activision Blizzard will go through if so that's very meaningful um for for the console Market as a whole um but whatever happens there even games

like Starfield redfall just like those next big Xbox AAA hits coming out um it's probably going to have pretty decent um positive momentum for subscriptions like Game Pass and we already know that um PlayStation which this past year has kind of branched their subscriptions into different tiers they're just going to lean into that even more kind of refine it further and probably see some more success there um like with everything kind of the big wild card in my opinion is just what the heck happens with the economy in which parts of all of these markets get impacted to various degrees I think if you look at the consoles themselves there still is going to be plenty of pent up demand for you know PS5 consoles and just the the top IPS that people are clamoring for but but still across all of this how many games people buy how much they choose to spend um in in some of these games it still could be could be impacted but as a whole um you know a lot of headwinds are going to turn into Tailwinds so I feel pretty good about console acceleration for for

2023 but also but you know really just like this generation of moving forward the next few years too so um yeah I feel like I'm right on this but does anyone disagree anyone have any um further points worth noting about the console Market heading into next year I think I might chat and do a little bit on that I I would I would normally agree with you I think though the wild card at play here though is the global recession and I think the thing is is that when you know people are struggling with money do they buy the shiny new expensive console or do they stick with sort of live service games and free to play um I could see it going either way because I would say that these days consoles tend to have a more aged audience than they did maybe in my year when I would buy them when I think it was kind of like a an 1824 thing now I think it's pretty conscious that you see consoles are bought by an older audience and and they have large disposable incomes but I do I do wonder I just think that like

um it is going to be a tough year for everyone involved and will families justify spending 400 500 bucks on the brand new console or will they tell their kid to suck it and you know just make do with what they've got and then it kind of accelerates once we start coming out of the recession uh I would agree though that the supply chain issues are definitely something that has hindered PlayStation 5 especially for years so maybe just that alone being cleared makes it accelerate I I could see either way I guess that's what I would challenge you on yeah yeah I'll challenge your challenge but go ahead him yeah I think like I was looking at the Black Friday sort of that that really like sales numbers in Europe at least things look really positive so it's not showing up yet if if whatever is going to happen next year we don't really know uh but at least there's no signs of things really like already slipping downwards so

everything's looking good I I myself have been playing with the steam deck recently quite a lot uh I don't know if it categorizes as a console like whatever it is but is it more like a PC yeah there there we have one um so in a way like there's there's probably a lot more opportunity out there so I'd rather blame Microsoft and Sony of like you know not innovating enough if if numbers aren't picking up I think there's interest for people to have cool gaming devices and uh and spending is there but like if if it's not you know provided through like value I I don't see like numbers improving yeah I just think there's so much pent-up demand just from people who haven't been able to buy it yet um especially the PS5 but even the switch has had a lot of supply chain issues over this past year um and so and and who knows what will happen with the the switch market and whatever new you know skus they throw

out next year if any um but I feel pretty good about that and I guess what I would I would actually maybe push back and ill and I could be totally wrong on this too the other part is I actually feel like free to play could be more impacted than premium because of how more like whale driven and people having more of a choice of how much they spend that people more at the higher end might might pull back and while people who wants to buy consoles or just spend you know 60 70 bucks on the game will still do so but I guess we'll see the market the the games industry has changed so much since the last major recession I think it'll be interesting to see how different it reacts um this time around but anyways those are my thoughts so yeah last question since the the steam deck was brought up I'm curious to hear you guys now that it's been out for a bit you've played it um how important do you think it is to the market I think it sold it hasn't sold that many units maybe like a

million or two uh which is you know way less than any other console but I'm curious if you think there's something there that will stick and get iterated on and become bigger than it is now or if it's just gonna kind of be the Super Niche thing for a long period of time I feel it will be a niche thing um I think it's quite fun to play but it just feels like the ultimate boys toy um I would probably get divided here by people from valve they hear me saying this but I sort of feel it's the most luxury purchase I've made in a long time I only really got it because I thought it'd be something cool to bring in and let people in the company play it every day and everything I will say that a day I got it about five people that have never spoken to me before like started coming around the office saying oh is that a steam deck can I take a look and they've played it but it is sort of a gimmick I I think it's fun it definitely has a purpose especially if you're on like long-haul travel and things like that um I think it will stick in a sense that I think we will see different iterations but do I think it's going to be like a new competitor I'm not really sure I

think it's still a little bit it's neither cheap enough nor accessible enough not powerful enough like maybe it's trying to appeal to too many things at the same time I'm glad it exists though put it that way yeah I'm I'm waiting to see like games that are actually made for that platform So currently it's still like okay this these are like PC console games but what what is like a steam deck game uh I don't know yet um but in a in a way it's it is a convenient device to actually like keep around versus like uh a like a gaming device that's that's usually like used for work like I'm I'm a Mac User for instance so I don't have that much access to to Steam games anyway so it's a there's some convenience there for sure yeah in terms of my habits I would more quickly buy um a handheld how do you call it a peripheral for my iPhone to play games

like I do my console on my mobile phone instead of a steam deck switch their own yeah I think it'll probably be pretty Niche too um I think yeah between the price point nothing is what Joaquin said nothing is really made for it um yeah it'll just have a tough time but it's been more successful actually than I thought it would be so I'm I'm happy to see all the the positivity around it but guess we'll have to wait a while for something like that to really move that that corner of the market yeah let's talk about the platform we have not talked about yet mobile I think I know you ring a prediction for this I will do it's not just mobile it's relevant to the whole games industry but as as promised unfortunately it's not a positive one but I think it's a it's true where we are and I think the only way to sort of say it is I think there's going to be Mass redundancies layoffs in the games industry and I think we'll see Studio closures and um never nice to hear this but I think why are we in this and why is the situation got that way I think big Tech kind of were the first

sort of like real candle and signal for this right uh meta laying off 14 of their Workforce globally which is 11 000 people then we had Elon Musk going into Twitter with a flamethrower getting rid of half their Workforce that's uh 3 700 people then you had Michael sink it was a sink yeah it was a sink not a flame though exactly well you know I think it was a plane Pro inner thing um I actually didn't really make light of it's quite a sad situation I think Microsoft laid off a thousand people some of which were in the Xbox games division not necessarily developers but still part of that and then you know today as a time of recording this play to code just announced that they're laying off 600 people that's 15 of their Workforce Wildlife Studios lead up 300 people last month Kabam laid off seven percent of their Workforce as 35 people and unfortunately I think this thing is going to keep happening and I think it will also affect um not just existing Studios that are just looking to minimize their Workforce but I think unfortunately a lot of Studios won't make it um hopefully they're none of your Kim's Investments

he said a lot of them are launching the game this year but there will be some people in precarious positions and why are we here why we've got this you know in the first place I feel like what happened is that kovid was actually good for the games industry as bizarre as that might sound because you know the amount of Revenue and play time in sort of all technical products went through the roof and companies really over indexed on that thinking okay this is the new normal Gaming's Recession Proof you know even in the global pandemic gaming Rises and I think that's kind of partly true um that's why it was interesting debating with Aaron next year like do we think like console sales will either you know accelerate or decelerate because I feel that like when times are bad you tend to play a lot more games like I know I certainly do it's a good way of getting out of depression but I think these things are secular and so because we kind of now got this sort of lag period where people have realized they went too hard too soon on increasing their team sizes now that we've got this Global recession they're going to cut back hence what's

the first thing to go it's always people sadly and that's why we're going to end up there so it's not the best news I'm afraid but I think we're going to continue to see this across all major corporations and I wouldn't be surprised if we do see a few high profile ones bite the bullet as well yeah there is a there's a downer of a prediction but um and obviously it sucks for people who who are affected but I I guess just to kind of take the the glass half full perspective on that is that that's actually very healthy for like the future of businesses obviously a lot of factors here are kind of beyond the control of businesses whatever like platform decisions get made has a very large impact on ecosystems that are built on top of those platforms and that's just that's what you sign up for um um kind of that uncertainty there when you operate in a space like like this um and so regulations you know you know come in but um but yeah I think um obviously like covid and the growth we

saw that saw from there paired with just Capital being cheap right with uh yeah the equity values being high enabling you know stock based compensation and raising value for companies at higher rates being able to kind of fuel that towards employees who then kind of feel on that growth and debt being cheaper and all of that um it's sort of like pulled forward at what people thought was a new normal that wasn't and then Capital became more expensive again growth normalized again all of those things of which are normal it was the acceleration that was abnormal um and so a lot of this is is not really going back to or it's not you know going in a New Direction um in the sense of things being so negative we haven't seen this before if anything it's kind of going back to normal and that's healthy taking a more moderate approach to how you run your businesses and what I've seen so far just in terms of even just like

unemployment rates in general is they've actually held up really well and so even though we kind of talk about these pockets of weakness there still are pockets of strength um and other in other spots so I actually feel pretty good about people's abilities to kind of jump through the new uh jump to new places you know there still is a ton of Entrepreneurship around there are companies that are succeeding and and growing um so even though it's a hard time I think it's healthy and ultimately Talent even though it could be tough and the answer on we'll we'll probably end up being being fine because of the still the entrepreneurial and growth driven Spirit of the industry do you feel that the the cycle will ever be broken because I feel like the irony here is that because we will see a recession despite the layoffs I wouldn't be surprised if gaming is a whole actually growth and when we get to this time next year people look back on it and go oh wow gaming really was Recession Proof do you know what we should do we should open loads more Studios on the higher loads of people into games and then a

year later and I feel like this is sort of a never-ending cycle and um you kind of mentioned about companies being maybe more you know Savvy in terms of doing this so I really would be interested to get your your thoughts in the yorking because maybe you know it just seems to always happen it doesn't seem to be something ever stop or is it something that just Market forces mean it will never change and this is just the way it is that we have to get used to it um I think mobile is still kind of the dominant platform globally like three billion people basically play mobile games um so in a way like that that's not gonna go anywhere like even though we're talking about it's really hard times in a mobile game industry but I think I think we need to go through this phase of okay the Playbook doesn't work anymore that we had for the last 10 years uh there's going to be a new one uh we need to adapt a lot more uh there's there's probably like with like how the

incumbent in free to play that's sort of like still a question mark how do we how do we get rid of those candy crushes and all of those ones who are sort of like topping the charge for for over 10 years I I love Clash of Clans but like it's time to move over somebody else take over please so in a way like that that there's no answer to that I don't know how it happens um because there's there's so much loyalty there with the SP like the the user base that they have coming back um so yeah probably it's also like an interesting for me a lot in like the diversity of different kind of games coming up like inventing new genres new kind of audiences that are playing games so that's a big interest for me like how big will those genres grow I think it it'll take time but like yeah mobile is not gonna go anywhere for sure

if if we look at the data of mobile we see downloads grew on Google Play but they slightly decline on iOS and then if we look at the revenue uh the revenue on both platforms decline this year compared to the previous year even though they're still higher than pre-pandemic levels do you believe in terms of Revenue and iOS downloads growth do you think we'll see those metrics changing around next year for me that's part of the you know incumbent problem that we have where we have these old Legacy games people are playing them and sticking to them and then downloads are going down because people aren't actively seeking to to get rid of those titles I think that's part of the reason for me at least I don't know Anil Aaron I mean I hate to say the idfa word but I just said it I think that that has a pretty big impact here too just in how people are investing in UA right

um and I I don't really know the direction of downloads or things like that um really and but I do think that a lot of the kind of the negative trends that have put I mean economy aside just kind of the structural headlines have been put in place from making UA more expensive to Target the right people um I don't think that's changing anytime soon companies are still trying to figure it out and adapt and you know new solutions to kind of you know improve in other ways or even just waiting for like apple to like improve its own capabilities on its own you know ad networks or whatever that really becomes like that takes time and so maybe at like the end of next year our 2024 prediction will be like there's hope it's getting better but I don't think that um there is there's just like the clear turn around there I would guess I think you'll have to say the idea if I were seeing the downloads to decline on

Apple compared to the growth on Google Play companies still haven't figured out how to adapt to the Privacy changes and maybe it has to be a more drastic change like you walk in is saying um I wanted to get your take on this actually you welcome I was thinking about what you're saying in terms of the diversity of games and new games being built with the Playbook changing with the recession and inflation probably affecting potential Founders in terms of the savings that they can gather to build their own their own Studio funding being more difficult to get do you believe that there's a financial context through which new Studios can take these risks um like thinking about like raising funding like Equity funding for instance like VC or Angel Investors I think that's still happening but it's gotten a lot harder

um I think there's there's sort of like the the 10-year hangover from mobile like the the Tailwind so definitely like nowhere to be seen there's not been a lot of positive news in gaming recently and I think it's really like Shifting the sentiment on the investing side um we haven't really seen any m a to be honest like anything like sort of interesting happening um like in a while now it's like even thinking about how 20 like 2022 the the big deals like the Microsoft Activision um deal is sort of one but if you remove that it's pretty sad that's how I feel and I think that that sentiment kind of reflects back towards like Venture Capital not being also like very interested in doing doing like race gear bets like that now I've even heard

some generalist funds that I have previously done gaming that they're pulling away for now that they're not going to do new the gaming deals because things are looking sort of like harder to you know scale something with Venture Capital ironically my guess is that even though you said a lot of things that would make people maybe sound less enthusiastic about him my guess is that like the the 2023 vintage of of funds and um you know like VCS investing in the companies that still are taking those shots and doing stuff are probably going to do better than some of the funds that you know launched over the past couple years where there was a lot more activity a lot more exuberance but a lot of it was priced in a lot of it didn't work um and I mean I think you see in harder times that even though maybe there are fewer people taking shots on you know at

the goal that the there tends to be less enthusiasm but it still can be often the best time to be investing I mean it's kind of the whole um you know Warren Buffett says like be greedy when others are fearful fearful when others are greedy like that's so true um it doesn't just matter in public markets but definitely private markets too I think um so yeah not all of that is is necessarily positive what you said but I think um I don't know I I lean more optimistic on all of these things so I'm not at all um I'm not on the unenthusiastic side yet I'm still pretty excited by what we're gonna see out of this year there yeah I think Aaron that's that's totally true sort of the the idea that okay you raise funds for a game Studio okay you you're not gonna go on the track of okay then we'd raise another round of funding before we launch or that we raise a

couple of times before we launch I think that's that's sort of like out of the the picture right now and now it's more like okay you have a solid uh VC case where you can raise Venture Capital uh but you need to actually prove out things you need to launch something that works in the time frame that you have the runway that you get with the funding so that that creates sort of like a Dynamic that creates like the great companies the great companies yeah it's healthier and I guess like one like kind of trend line I want to roll through a lot of this is that again through a lot of like the negativity a lot of this does lead to healthier activity and Anil I know you were kind of asking before about the cycle like will we ever get out of this cycle of like when times are good people you know the games or when times are bad the games industry does well and it leads to people thinking it's this new crazy New Normal I think there always will be that I mean Cycles will always

exist right they always have both in the economy and Technology everywhere that's just the way the world works but I think the smart people learn from it like you like your company yourself doesn't have to cycle your attitude and your mindset to how you handle your approach to money or hiring or things like that and I think like seeing these wild swings is like the best opportunity to learn and like reset and be like Oh yeah this is what actually healthy normal looks like and so the next time things get weird We're not gonna go weird with it and you know get all out of whack when everyone else does and suffer the consequences later and we'll maybe not be as exciting we'll be moving a little bit slower in those times but come across the other side healthier and I think a lot of you know the smart entrepreneurs and investors um do realize that so yeah the Cycles will always be there but I think smart people can learn to adapt and play them well one take I know what you're talking

about in terms of talent I I it's just been on my mind that games in general usually pay less than having the same role for example in Tech and so with the layoffs and with the inflation salary is not really being able to keep up with the increase in cost of living I believe that we'll see Talent leave gaming to go into Tech where you can easily get maybe almost double but your salary would be in gaming do you think overall this might affect the industry well but the issue is Tech itself is hemorrhaging jobs even worse than the games industry so I'm not sure those jobs will really be there I think it might be quite similar to I was but a lowly programmer back in the days of 2007 when we had the financial crash there and I remember around that time there was no point looking for a job you know just every recruiter would just be like no no what are you talking about just stay where you are now I don't think it will ever get to that stage I

think is kind of Aaron sort of mentioned that when times are tough others can be greedy and perhaps those who've got those Pockets could actually pick up some really good talent on the cheap I also think that you know the work from home Revolution is actually great for gaming because it means that you're not just tired to have something in your own local you know domestic but you know you can work anywhere in the world if you've got the talent you'll always be sought after so I think if you're good at what you do you don't really need to worry in that sense but I do think that just in general though these sort of times of sort of seeing Mass hiring and people try to take those people on the team they'll be way more conservative um so I don't think we'll see people leave to go to other Industries no and we may see more people doing contract work short-term gigs maybe working on something they're not truly passionate about for a year or two just to make ends meet before they go on to something big I think that's more likely in my opinion hey um are we all ready to move on to the next one I think or yeah it'll really lean on what what we just discussed this

is actually part of my intro so we've talked about uh Mobile gaming metrics we've talked about the impacts of idfa and the consequences of that is that Mobile gaming is a mature market and the UA budgets needed to scale a UA game or just growing and growing year on year and then I think we're also we're going to see an answer in terms of Studios exploring Creative Solutions to these problems available you're saying about Reinventing the playbook in terms of mobile gaming and this is my prediction I think we're going to see more multi-core gameplay games this is the name I came up with to try to describe what it is so we when ATD first started coming around there's a lot of discussion about you know Studios you'll be doing cross promotion keeping players within the same ecosystem but that comes with a lot of friction um that comes with not really being proven on a wide scale

on how to do it and we started seeing some examples in the market of for example X hero and um Asia frostfall of games that are using a gameplay mechanic that is hyper casual casual to have a bigger top-end funnel within the game itself that then is used to onboard players into a more complex mid-core core gameplay that's where the spend depth is and I think we're going to see more Studios trying to figure out these Solutions of how do I mash up my spend death and the complex midcore game but how can I use the core another gameplay within the mobile game to Target a wider audience yeah like I haven't seen that work usually I think there's a players are smarter than we think you sort of you can't do a lot of these kind of trick areas where where people are sort of like you know brought in in

the side door and then it's actually a different kind of party that they were thinking that they would be joining so I think that's a the conflict there um which I think is it's a hard one to crack I think some a lot of people have been trying uh I'm hoping that it will happen one day but like I'm not too positive what's the time you gave it Maria I love the uh it's a multi-core gameplay multi-core gameplay love it love it well um it could do I I don't know if that's necessarily the solution I suppose it could work you've definitely got precedent with the examples you've given I think though the wider point which is Reinventing The Playbook which has come up a few times already over our kind of current themes I think is definitely true um that's kind of happened already I think you know some companies already done it like branding is still really big you know IP influencer marketing was big but now you know more difficult to get going but for example right now I think a lot of games see a lot of

success marketing their games on Tick Tock for example so there will always be a way I think it'll be interesting to see what the the winning formula is and I think that can apply in many different ways as well I mean sometimes you just get a breakout genre that comes from nowhere EG Battle Royale and then all of a sudden or Auto battles was all the rage for a while that sort of dissipated after about a year when it turned out to spend it wasn't there but it can all always happen and perhaps that's what we'll see and maybe you know again kind of tying back into what Aaron's been saying is that maybe this sort of healthy for the industry is that when it gets us of the tough times people have to be more creative um you know there's a story they love to say in the UK how the Spitfire was developed because uh that's all the parts they had left in in England at the time to make a plane and they came out of this Kick-Ass plane if they had 10x the budget they'd probably make a worse one so you might well see something there um I think as well there are some other topics I'll probably lean into it later as well that could help that that could really make for some sort of new ideas or ways to get um games working again I

for one will be very interested to see what new playbook is because I'd like to know myself if I'm being honest but I think that there will always be successes even in the down times and I think it will probably be most likely that this year we might see some unusual ones come out um but you know even with like Performance Marketing like Survivor i o recently by Abby who made archero has been doing really well and they've not been shy about spending on Performance Marketing and you know there are some sort of AI Solutions out there to work out what the best marketing is so maybe that's not as dead as people think it is um and you know maybe what's uh old is New Again might even see something like that yeah I think why I keep coming back to you is the costs of trying to scale a game on mobile on the mobile platform because all the things I will mentioned in terms of influencer marketing brand marketing performance and marketing that requires High budgets to spend and it's a lot of trial and error that has a high cost if you have an error and you know before mobile you did a good game and

you got featured on the store and that would be what you needed to become a successful game I think what's been on my mind is is mobile still the right platform that if you're a scrappy Studio you have a short Runway or you know you have a small bootstrap and you need to extend that Runway is mobile the right platform to Target that's a really good point because it does feel like the barrier to entry is way harder than it was in the past um yeah yeah I think like more people should think more outside of the box in in like you know because I'm still thinking seeing a lot of people going through like okay we're gonna launch the game to look at kpis is that the right way you should be thinking about with this new playbook and there are other ways to approach uh getting a feel if this is a good

like Market match if there's a product Market fit I don't know like that I think there's there's mobile sort of is stuck with the the old patterns already so let's shake them off so you don't think it will be substituted by a new platform I don't know maybe Studios opening in the next couple of years targeting something like AR VR the new platforms that still don't have those incumbents yeah it would be fun to actually see a new platform get rid of apples sort of dominance and and also cool I do think there'll be more pressure yeah um true that is I do think there there will be more pressure on just like the App Store monopolies though right and so much of like what's holding people back is just what they're not allowed to do um in the sense of like even just like links elsewhere and you know having like

we saw recently was it like I forget Microsoft did they like Sue apple or it was it was something they did they did something that we talked about where basically they were trying to you know put their own like you can't have games within a game or like several games within an app and so seeing more regulatory pressures allowing just for more types of things to be possible um I think it's inevitable that that happens I don't know if that if 2023 is going to be the year Regulators finally crack down or what the Catalyst of that is really going to be but it's so obvious that tensions are rising it's so obvious that like the the Anti-Trust concerns you're a really severe and I don't know why I mean I've had this rant so many times won't do it again on just the insanity of why Regulators focus on certain things and not other things um but one like once some of those like pieces are like unblocked it's it's just gonna unlock more creativity and New Dimensions that is probably going to

benefit the biggest companies most um who can like you know kind of bundle things together and have distribution advantages but it also will unlock potential for startups to test you know do designs and Link things in different ways and you know just anywhere there's creativity there's usually um you know something interesting happens Aaron you're going to talk about talk about blockchain games yeah another riveting topic um so um so I guess first of all um just uh just to mention it novik is working on an upcoming Report with Delphi digital that we were kind of working on building like the ultimate guides to the state of blockchain gaming going into 2023 so if you're interested in seeing that it'll probably launch early next year just sign up to navic digest as I'm sure most listeners are and we'll we'll drop it there for you to see it but I'm really excited about that and our core thesis of that report really is just that if

2022 was the year that play to earn died in other words win games in which the point of playing is to earn they very clearly proved unsustainable and all fell apart then 2023 is going to be the great reset it has to be um and there's been a steady stream of infrastructure and tooling improvements um but 2023 really has to be the year in which most people making these crypto games refocus and re-prioritize on what matters most which is fun above all but you know also sustainability scalability and business model and like really move towards best practices that don't hinge so purely on Greed fomo um High barriers to entry and you know that's really the only way that this industry can move forward from its Wild West State that it's in today there are a ton of people trying to do that and a

lot of it is just there's been a lot of good and a lot of bad but a lot of the bad is leaving and so there's more good there but those good people that are that are in there like really have to kind of take the reins to reset the narrative around um what they stand for or what they're trying to do um kind of as a as a whole um to kind of move that side of the industry and a new healthier Direction and that perspective isn't necessarily new we've been talking about a lot of the the the unsustainability factors as well as you know kind of debating the the philosophical like upside potential and um you know best practices around all of this for a long time now um but you know my guess is that you know 2023 is just going to be a relatively more quiet building here we're already seeing a lot of better games in this space hit the alpha and beta status and um we've covered a lot

of them and not like Pro recently we've covered Guild of Guardians eluthium Phantom galaxies Aurora Etc and we'll see you know much more of these types of games you know make progress next year um but at the same time it probably for the most part means that 2023 is probably not going to be that breakout year just because it's really hard to go from everything is broken to suddenly everyone is playing this thing like like that um so quickly there's there's a longer time period of I mean obviously like the building of the infrastructure and tooling to like make it better for awesome people to build awesome things like there there's that whole layer but also too just you know figuring out the the best practices um and then just taking time to build great games and all of these factors um especially when there's uncertainty you know it just means it'll take time for really like what's gonna move the market in massive ways for that

to play out I do think it'll be a much healthier year and we'll see progress and more reason for optimism um probably not even in the sense of just you know transforming people's lives and things like that but just being good games like like back to the basics of good games um and so you know I don't know if that's a positive or A negative prediction um I I think it leans more more positive just again because it leans more healthy and what is sustainable but um yeah I guess that's that that's my take on that we'll see a lot of progress but probably not like the mainstream breakout hits there but Anil since you're in the thick of it I'm curious uh what you think about all of that I knew this one was being fired my way well I'd like to say I'm part of that fight right now which is trying to make great games first and utilizing the technology second I think it ties into a lot of the things that we've all been talking about it's kind of funny how a lot of these predictions have common themes so I guess I think Studios that I can see

going out of business are ones that have what poorly thought out games that raise a load of money and the crazy Bull Run and now are working out that their tactic doesn't work and they don't really know how to make game and they're going to be in trouble those probably will go under I think you're right to say I don't personally think that there's going to be a Breakout blockchain game this year um but the main reason I think that is maybe a bit different I think that's because it's still going to take quite a while for it to really get popular in the west and I think things like the FTX debacle that's happened recently I mean it cryptos in an even worse place than it was from the previous storm which was the Terra Luna situation so that's got so much work to do that I feel like even if there's a great game it will have a lot of work to do if it's appealing to the west where I could see a caveat is I do actually think in other regions of the world that don't really care about that so much we may start to see like serious traction from some games and I actually think that is likely because I think there's so much in development I cannot see there being

just by the sheer sort of it's like you know there must be aliens out there because there's about a million planets that we don't know about right it's like similarly like there must be a blockchain game out there that is good that's going to do well because there's so many in development it's impossible for it not to happen so I think that will be the case I do actually think though that there is a slight problem though which is that with people just building and not releasing especially if they stay in sort of beat or Alpha that you are going to get the classic mistake of some teams over developing a product that it just turns out was never going to work in the first place and my prediction is I actually think we're going to see some quite high profile casualties of that and I think they're going to be guilty of not really learning a space like this is like one of the most rapid environments I've personally ever been a part of like um priority Discord I just told you how it felt like it was 10 years in one year and I don't see that really changing and therefore I think if you put all your eggs in one basket and you over develop something that never really had product

marketing fit then you're gonna have like this you know sunk and cost fallacy of putting all of this money into projects and they won't work out um I actually think it's going to be smarter for people to try many different things within the same ecosystem and then just work out what is the best by sheer trial and error because that's the best way of doing it like control things you can rather things that you can't and that said I have played a lot of the the high profile ones myself there are definitely some that are really cool so I could see them being good when they launched this because they feel pretty good already if I'm being honest um let's see it but I think you're right I don't think we'll see that um massive breakout success this year maybe the year after it's more likely but I think we will see some good stuff in Asia and regions like that what kind of stuff um in Asia do you think would do well in this space or like have you seen any like projects from particular that you think have like have what it takes and I asked because like I I mean we have looked at a bunch of projects across

regions and you know they're like even like most of like the big companies in Japan and Korea you know they're they're all working on things but personally and there's a lot we haven't seen probably most we haven't seen but from what I have seen I'm not sure I've seen a single thing yet that really has me going like yep that's that's the one um so yeah I'm curious like yeah just any more like thoughts you have on like what possibly like what about those games or like where could it come from that there actually would be some success over there that might even inform success elsewhere I'm quite bullish on this mobile Battle Royale game that's been mentioned a few times on this message every month but you know putting my own personal gender aside I do sometimes think that some people are going a bit too crazy on things like the innovation in these games to begin with is just the blockchain web 3 element like that by itself is a huge Innovation it's like I then feel that people are doing

additional crazy things on the gameplay or maybe trying to jump to the end game too quickly when you've got to do all that basic building blocks first so I think what you'll see is that the games that are out there may surprise you by not necessarily looking like totally transformative but it's more like I guess like a burger joint it's something that you've already liked but it's got some sort of slight twist to it and they're the ones that pick up traction I mean at the end of the day that's what we're looking for is traction we will know what the winners are just because they're popular and why are they popular just because just they happen to be the games that really resonate with certain markets start doing really well and and then they end up taking over um I wouldn't really know what they are but I actually think that there will be more in a conservative end than they will be in this sort of you know crazy thing I think just like what we don't have right now is just like a successful game that just has nfts in it for example you know like where is the first person shooter where is the MOBA where

is the the strategy game where is that you know insert any one of multiple genres that are always popular fighting game etc etc so I feel like we need a few of those first they're going to be the ones that really sort of like start opening up the gates and then you'll see the more Innovative stuff come in and that's my personal you know that's probably not the most audacious you know prediction that's ever been made but I think it's just most likely I mean even if I go back to the early days of free to play Clash of Clans was an amazing game but it was just Backyard Monsters by kicksite with the mobile um you know Heyday was Farmville but I had a nice ux not to obviously diminish in any way shape or form how amazing those games were at the time but they weren't kind of like crazy revolutionary they were ideas that were already existed there they were just like really well done in this case by using the free to pay business model but also I thought the ux in those games that appealed to mobile and showed you that you could go that way so I think it'll be the same thing like you'll just get a a game

genre that's already popular that has these transactions in it that's what makes it popular they start blowing up then these ideas get carried across and then you'll see maybe the sort of real behemoths in a couple of years time afterwards so um yeah that's how I see it yeah and if that's the way it goes it might you know I don't want to say Kill The Narrative of like web 3 games crypto games like being its own thing but they just become games again right absolutely yeah yeah same same here like there's no like I think we're gonna hide the whole block to anything yeah I hope the day soon it's somewhere and be in the background yeah the day I play a blockchain game uh you know actually every day and be very much into it is the day I can sign up link my account with my Apple account and then if I want at the end of the day to sell my account but I don't want to see anything else I don't want to go somewhere else to have to go and sell my

things I don't want to have to store a seed phrase in my password password holder because then I'll forget about it yeah I think I'm absolutely on board with you on that and last Royale well I mean you might notice that that's kind of similar to what I've just described there so that's obviously our strategy around particularly launching that but I think again that like having been involved in sort of uh mobile games early on a similar thing happened where uh to begin with people went a bit toward audacious and those ones didn't particularly succeed whereas there was sort of like a slower trajectory so you know for example now you know fortnite pubg are huge on mobile but even back in 2007 2008 people were trying it there was a game called eliminate Pro I don't know if anyone remembers that um that company ended up getting bought by dear neighbor that was like a first person shooter already working on mobile at a time twin sticks and back then people said twin sticks will never work you know I remember at one point people said to us mid-core will never work etc etc and it did it just took a while but it took certain games to break down

the barriers before we would get there and you know same thing I think your um representation memory is you know very typical you just they really want to care about that stuff you just want to play a game but if you play the game and the game is brilliant and then it had this additional stuff on top and there was a benefit to you as a person and this player then sure you're all for it but first and foremost as we've been saying here concentrate on the game making that good and then last one for the episode of running a little bit but I'll walk in very curious we've talked about M A funding here and there I think you're going to wrap up the episode with giving us a prediction for that yeah like I I said earlier I think the the whole whole industry needs sort of like good news soon so that we get things back rolling again um of course like it's it's hard to see like where that will come from but I think there's people are building stuff there's so many games coming out so like

good news it's definitely in the Horizon somewhere people are there are uh demographics that are looking for great games or are ready to play those great games so as long as we get some good news I think M A will start picking up um there's you know the capital they will find the capital to do those deals um if it makes sense but currently it's just you know it's not the right time right now so we have to wait and see but I think this is what's exciting and beautiful of being in games we talked about mobile the Advent of pubg and fortnite all of these new platforms are being explored it comes in Cycles web 3 is just it comes in cycles and people always want to play games always want to have fun it's just a need that we all had it was snowing in London the other day and I couldn't go to sleep because there were adults having snowball fights and

laughing like they were very very young of happiness so good news will come I'm very certain of that well no I was going to lean into that with where I think there is possible good news and I was surprised we kind of haven't talked about it but unless you've been living under a rock everyone's LinkedIn and Twitter feed is all about generative AI or let's call it what it really is machine learning but I think the thing that's most applicable for that sort of technology is games and I think if there is going to be a rally that's where it's going to come from and I feel the reason why is because look if we're talking about people cutting costs and people sort of not wanting to take risks well being able to generate loads of content without having to have huge workforces to do it means people can be more Innovative means people can try more stuff and I think it's going to be like one of the most sort of you know relatively things in gaming for a very long time and I hope it doesn't lead to people losing their job I don't think it will do I think what will happen is you'll just get existing artists that

work out how to almost sort of create their own subdivision of people that work for them and be able to create more assets but some of the results I've seen already from some developers is absolutely staggering I think to myself that if I hadn't if I wasn't in the startup right now I would be super motivated to do it purely because of this technology because now there's a case where like three or four people could probably make a game that would take 20 or 30 people to do 20 or 30 people when 3D sort of generative AI will be able to make a much bigger game as well so I think that that will be the good news thing because I think it just means that there can be so many more shots on goal being made from so many other teams that people who understand it and I think we will see when m a start picking up again that people who've got that as part of their pipeline are very heavy and integral part of it will probably be the ones that get acquired because they could prove so much traction so much faster by working smart not hard well I came I'd like to get your pulse on the the funding environment going into 2023 uh

just sort of like based on the segment the different segments like obviously you know blockchain gaming was all the hype last year AI it seems to be you know accelerating in hype right now um and you know mobile is kind of going through its its struggles I'm curious just from your point of view of looking at a lot of companies talking to a lot of investors like where are people becoming more excited as an investors right now where are they becoming less excited like how is the the sentiment in the VC Community trending I think things are in a way like great teams with a great product uh you know great traction all of that always gets funded like it doesn't really matter there's there's gonna be somebody who's gonna fund it but like if you're coming in with something that uh was okay last

year it sort of not gonna be okay this year so in a sense it's just gotten a bit harder that's how I would categorize it for everybody uh of course we saw things like you know like what didn't work like Play-Doh and stuff I think like you need to figure figure it out in a different way what you're going to be building I think also I'm not sure like what's happening on the metaverse side I don't really um have any like thoughts on like if because none of those products have been working there's no binary and product Market fit yet uh with all those metaverse startups so in a sense like I think a really good team a studio um with something that's differentiated it's definitely going to be funded um but yeah it's it's a lot harder for sure on Elder stages and it will be funded to try to prove

traction further rather than getting constant funding without proving that traction which I believe you said earlier in the episode yeah exactly so kind of going back and raising another round before you launch that's extremely hard right now is this the next thing that like people are just going to be throwing money at left and right you think joaquim I mean not not speaking for yourself but just in general like are you seeing are you seeing this yeah like that next big thing I'll give my five cents as well no I I um I think there's there's a lot of big things that are coming out there for sure like how do we start utilizing this generative AI stuff but I think I I'm not a big believer that the tools uh that are out there right now is is the place where you know the big returns will come for VC funds I think it's more on the sort of what lens uh is doing

right now the app like how do you take that forward like that consumer appetite for uh generating ugc with AI like I'm more interested in that that sort of area versus like okay what's the next Photoshop filter gonna be with AI so I'm I personally think that next year we'll see a mid maturation is that an English verb I think it is right yeah of the usage of these tools and understanding product Market fit further and how they can actually be applied in gaming I do believe that similar to blockchain is something not professionals you can't avoid it it's here it delivers benefits and so it's finding how can you reinvent yourself how can you reinvent your role and what you love to do alongside these tools hopefully it doesn't end up in job loss but it it does change how we execute and so is figuring out I think whoever

adapts to that first will have an advantage not only in terms of building games but also being better at executing and I think what came I thought it was quite interesting when blockchain first started coming about that you're very transparent as an investor you had to just upskill on that whole segment so that you could understand the market better and in terms of your decision making is there anything you have slated in term for next year that you want to scale up on I think constantly learning on like what characteristics of a founder uh are sort of like early signals of success I think that's I'm I'm so early stage focused that it's usually just a team in place so like that's an area where I'm spending a lot of time I think like the blockchain thing went quite fast

actually like just you know quickly understand like what are all the the tokenomic systems that people are working on how do these chains work and everything like that that was quite technical in a way and later on you could see that that's of that layer of understanding isn't that necessary anymore um as an understanding I think there's general knowledge is great but like as a as an early stage investor I think the the area where everybody should always be focusing on is just figuring out like what are the characteristics of Founders um that makes sense to invest in and I don't want to put you under the spotlight but we are talking about funding next year do you have any words of advice of anyone who's listening that is Keen to start their own thing of you know do this and you'll have more chances of succeeding

uh regarding like building a great uh a succeeding company um yeah that area is yeah I think team picking the right team is the biggest leverage that anybody can have like at the early stage like just adding right like one team member who's like a like a superhuman that that usually helps a lot that's what I've seen happen like as the biggest thing like the the most um biggest leverage you can think of and when you say superhuman well and well in a way some areas where they're complementary to you but they they have ambition they are they have the right kind of attitude for building a company uh they can also build teams I think because like startups where you're thinking about raising Capital it's

usually it means that you're gonna be adding people quite quickly so like if you have somebody who already knows how to start building a like an organization and setting up things that it's effective and works I think that's a big big superpower does anyone else have anything to add in terms of predictions learnings I don't think so I think um I'm just excited to see another year and the surprises that it brings I mean the thing about predictions is that you're always wrong about something and so there's always something something to learn and you know something new to get hopefully excited about um so yeah ready to move on to 2023. yeah thank you Anil walking Aaron for joining that was really good to go and just wrap up video of everything that's been happening if you want to join the conversation you can find us on the navic Discord you can sign up to the navic digest which is the free newsletter to stay up to date with everything that's happening and if

you're going to be on holiday you can also just listen to our library of other episodes in terms of the round tables crypto corner and industry leader interviews thank you for joining in I'll see you next week bye everyone foreign [Music]