FTC Halts Microsoft’s Acquisition / AI Narrative Gaming / EA Restructuring

foreign [Music] gaming podcast where it is our mission to explore the business and future of video games we bring together the industry's brightest Builders investors and thinkers to keep a full sun current events dissect emerging Trends and games share Lessons Learned and have a great time this podcast is also part of novik's growing ecosystem which ranges from free and premium research to Consulting and advisory services for more information visit www.navic.com now let's jump into the episode hello everyone welcome to another novik Roundtable I am your host Devin beckerd I'm joined by two excellent guests as usual got Matt Dion here a founder of OE scheming and a navic contributor and Felipe Mata head of or Mata sorry I'm almost guys head of Studio fun plus and how you guys doing you guys have a good weekend

I had a great weekend I played a lot of Diablo and a lot of Zelda that the RPG grind it's a great year for games man there's absolutely like amazing titles uh backlash from covet right like where were all these games during covid so we could have enjoyed them obviously we got him now though assuming we don't get a coveted too oh God don't yeah don't push that uh jinx it right what's the line and knock on that uh that hate on me Ricky Bobby well we got some good topics today uh some interesting stuff around uh MOBA as in the abbreviation uh Network acquiring wargraph FTC of course continuing the Everlasting journey of Microsoft trying to acquire Activision Blizzard hidden door launching a interesting AI game experiment that we'll get into and EA splitting up its company into sports and entertainment and that should be a fun one to dig into so why don't we just dive right into the the MOBA Network acquisition

yeah sure so um this caught my eye um there's a company called MOBA Network they're a Swedish company and they acquired another company called wargraph for 53.9 million dollars I think it was roughly 50 million euro um and the reason this caught my eye is not because I knew either of these companies going into it but because Warcraft uh what war graphs is a solo founder bootstrapped company so you know 50 million euro for one person is an incredible outcome so I was curious what it was all about and so um Warcraft makes a number of apps the biggest of which is called poor professor and it's basically like an analytics and kind of helper add-on to the riot games ecosystem primarily League of Legends but not exclusively and it's built on top of overwolf which is like a ugc modding platform uh so just to give you

something couples like poor Professor will tell you how to like build your deck and legends of runeterra or construct your squad in TFT or they'll tell you like win rates or Tendencies about your opponents in League of Legends and like which Champions they pick or you know things like that and um I think I read um War graphs had something like 800 000 Dau yeah 800 000 daily active users with over 10 million app downloads that's crazy for like you know one app that's not actually a game it's it's kind of complementary to a couple of existing games so I mean that was like kind of the headline for me it was like this is amazing outcome for a one-person company now it's not exactly 50 million all at once right um the acquisition is broken down into a 25 million euro initial payment plus additional consideration that an additional maximum of 25 million euro more for ebitda targets

um from 12 to 24 months post acquisition so there's there's a bit of an earn out still but I mean even with that like you gotta commend the founder um for accomplishing this um his name is Jean Nicola Mustin I hope I'm saying that correctly so anyways let me let me throw it to you guys like one do you think that this model this bootstrapped solo entrepreneur model is repeatable are there other like ecosystems out there Beyond Riot that might support something like this what do you think I mean I feel like I've seen a lot of like the stuff around Esports coaching kind of idea and like player analytics before I'm just kind of surprised that like this laid into it we're seeing an acquisition like that or you know that much fun especially for a solo job like that um I I gotta wonder if there was like also like they knew each other they met and networked and like there was a a social connection there more than just a straight business acquisition

what do you think Felipe yeah I think like now with the advancements in AI I think that we are going to see this more more often right like a single person that has an idea and now has everything at that fingertips to actually complete the product by just themselves uh so I think like potentially we could see more of these like especially because now you can also like create art and other stuff that maybe you were limited so sometimes like you know about coding but you don't know about R vice versa but now you can leverage in AI like really have a complete product so I think that we would see these more more often and maybe some ideas that are harder to build a business case around and maybe companies don't don't go for that but like people are passionate about that or they see the value of that

for themselves then they build like a toy project that eventually keeps growing and other people see the value and eventually come becomes a community like this one that's an interesting point um about Ai and you know like it really allows people who are passionate about a certain product or Community to kind of just like Chase an idea with relative ease um this really resonates with me as someone who has recently been doing a bunch of like coding coding on hobbyist projects with chat GPT because I know very little about coding myself um but that's really interesting um and I think it's a you know it's a very plausible thesis for how future like products might form in this manner just just to add a little bit of context here I wasn't really familiar with MOBA Network and what they do but I'm looking at some of their other products and they're all kind of very similar mobafire.com vaingloryfire.com dotafire.com they've got apps for

Hearthstone and Minecraft and uh Diablo 3 anyways they aggregate a bunch of these like fan Community products so it makes make sense for them this has got to be their biggest one by far but anyways I thought it was an interesting news story yeah I gotta Wonder like what that with that AI you know model you're talking about like At first like the hobbyist you know has some Advantage right because they're willing to dive into that experiment uh you know get that going but it reminds me what kind of happened in Mobile where you know like the the Indies would kind of come up with the new genres and then the people with money would come in and just out Market them so I kind of wonder if we're like in a similar situation where you know examples like this cool like worked for us so I mean obviously we're not saying hey I was involved in this one but like these kind of things were like a solo person or a small like Indie Studio like comes up with something and it does well but then if it's successful we start to see like the bigger players come in and spend a lot more money marketing it and then just kind of outdo them but with what over wolf is kind of

set up for with that sort of ugc stuff like I I mean do you guys think this is kind of a a good win for overwolf in terms of like marketing uh their potential because I know they were pushing uh pretty big over the last couple years to try and be like a platform that people were really excited about I think it's a big big win for overwolf like I don't know their their business intimately but I know the other big announcement that they had uh maybe like six months to a year ago was that they're going to be a part of the new um Sims project project Renee um and they did an integration with Sims 4 uh to bring mods to that game so I mean they're definitely growing as a platform I think it's a big win for them you make an interesting point Devin about like competitive response from the incumbents like you know in some ways this result is almost unique to Riot in the sense that like Riot allows them to to exist it's built off of riots apis so if I decided hey we're gonna charge for our apis we're gonna shut it down like this

product ceases to exist but also Riot is like super player first and they want to encourage communities to like go deep on their Hobbies right so not every company takes that same approach so maybe this is like kind of a unique outcome but um I think there's there's little bits it's like look it's a good match for all the parties involved right like it it fits with riots ethos um the solo entrepreneur thing fits with like the community forward uh approach and it fits with overwolf too with what they're trying to do kind of kind of a good win for everyone around then I guess yeah but uh yeah I mean a good amount of money for something like that as well especially if they're just kind of aggregating it into their portfolio of like game analytics stuff they're doing so I mean hopefully something that works out and it's I wish there was more companies being that friendly with their apis um I got to imagine like the alternative is uh the AI stuff where it's like Vision recognition of stuff going on on the screen the problem is like that starts to drift into looking like cheap kind of tools and then it like gets blocked and then you have that whole

like back and forth like oh I'm trying to make a something that's just collecting data but it actually looks like it's cheating and that that ends up in a whole whole big fat mess but uh yeah well I guess we'll have to see how that goes especially for over wolf in general but uh into the into the fun of of people not allowing things uh the FTC uh deciding they they also wanted to make sure they got their piece of blocking uh Microsoft from their acquisition yeah so one one more episode in this never ending Saga so well the the US Federal Trade Commission has temporarily stopped Microsoft from buying Activision blither and this pass is is meant to allow the court to review the deal and they say decide if it's fur to the market uh so it's just like the same Buy in there at the time and making sure that nothing happens until they make a final decision uh well the FTC is worried about competition issues and the UK has

also blocked the deal due to conscience of a Microsoft Community cloud gaming so yeah while Microsoft plans to peel the UK's decision that they had this setback also in the US so it it feels that um more and more resilient or like of appetite to see this deal happening is it's been more explicitly mentioned over time I would say tough times for for Microsoft how do you see it yeah what do you think back given given the endless Saga we've seen here um I'm not sure I have a strong opinion I think it's like just another you know another chapter in the story like we I think we kind of knew that the FTC was going to try and step in and this is just as I understand it correct me if I'm wrong this is just them like stopping the deal from closing so that they can

see through the rest of their complaint make sure that that like runs its course through the courts um so to me it feels like um like an administrative step a hurdle it doesn't change the outcome necessarily I still think that it's gonna go through um but that's just a hunch you know um if you look at the stock price uh I looked at Activision yesterday and it was like in the 80s and I believe the acquisition was like 95 per share so it's creeping closer but markets have priced in some doubt still um which I think is reasonable but um and I think we still have a ways to go unfortunately like you know we thought this was going to be over in July and I don't see that happening I think we still have a ways to go unfortunately yeah for me it looks like it could be like kind of a PR Movement Like and so in that okay we have really like look

into detail of uh everything related to this and like we have really negotiated to have uh the deal going forward only because it's a good deal for everybody and won't cause any like third party issues and that's kind of like yes maybe not this group but uh we'll talk about it every episode so uh I think there was some discussion around that the deal was supposed to like close I think it was in July was like the deadline for the deal to close I mean is there like a certain duration for this FTC blocking it that that could go into actually uh pass that date like it actually mess up the deal to where it has to be like kind of renegotiated like what what impact could this have if it if it takes a long period of time and say runs into August yeah I think like the the note says that the deal cannot happen after five days

after the FTC has made the resolution and then there is no deadline for for that resolution as far as I know so yeah I wasn't aware of a deadline for the deal to close my my understanding was that it was an estimate from Microsoft and Activision when the deal was first consummated that hey we expect this to close in July of next year but I don't know that it was a formal deadline I could be wrong hopefully not in that case right because it sounds like they might not make if it was right but I mean there's got to be like a big uh bummer for for Microsoft when they're like hey Diablo 4 came out made a ton of money that could have been part of their business that they could be you know putting on their books right now obviously they can't right and and who knows when the next Blizzard game will actually come out uh because they just you know just did OverWatch too the dab before now and it's like well okay then what are we gonna get out of this deal like in the short term from at least the the blizzard side obviously

you know there's Activision and King and that could release things as well what do you think the FTC really gets out of doing this other than like is it is this just like purely a political move or is this actually something where it's like hey we just want to look like we're doing our due diligence I mean cynically I think it's a political move I haven't read the ftc's complaint so I I'm just kind of riffing here but like I think it's political um just based on the other actions that they've taken um looking at some of the the deals that they've tried to block in recent memory I don't know like you know every all the analysis that I've read if you did your due diligence you would let the deal go through right like the all the the Hang-Ups have been about like cloud gaming and speculation as to the future of cloud Gaming's Market trajectory and oh Microsoft is like you know preemptively dominating this Market that doesn't really exist like to me that's the like crime of due diligence is like blocking

it on shaky grounds um so I don't know that's my cynical perspective but again I haven't read their specific complaint yeah but I kind of feel the same like it's like okay we will allow the deal later but we make this move now to pretend that we are really like not uh in favor of that from the very beginning and that we are going to do a very thorough due diligence to let them go through yeah it seemed like with the with like especially the the previous stuff around Call of Duty and then stuff around cloud gaming it seems more like everyone's just trying to get concessions from Microsoft like get them to like negotiate more and more and more like okay we'll do this okay we'll do that okay we'll we'll give this and it's like is everyone just trying to like get Microsoft to give something out to everyone on the way like you know sorry we gotta like pseudo bribe all these organizations by making concessions in some way or another and it feels like a lot like U.S politics like what we had with the debt ceiling and everything

like that where it's just like you know fighting over who can get the most concessions out of it so that it looks like they did you know they did their job and I was like hey we got what we wanted even if it was more than we deserved it does feel very political and it does feel like maybe Sony controlled the narrative more than Microsoft did even though they were not a party to the deal which is weird because they're like not really a U.S company so much as Microsoft is yeah so it's kind of weird for that if that was the case I mean it may that would make more sense I think for the EU potentially but I mean it's hard to say right we don't really know what goes on like behind a lot of those doors but uh I gotta imagine too like this is this is probably not great for I mean we focus on the Microsoft side but Activision Blizzard King have obviously got to deal with like this whole thing as well in terms of you know if people were planning to move on when the acquisition happened like job wise or get promotions or some kind of rework happening like that's just continually delayed as well I gotta imagine it has some impact on work it's it's you know

on some level to some of the employees both at Microsoft and Activision Blizzard I I but I think everyone here is like as optimistic it'll close right that this is just like again just another speed bump and another speed bump um is there anyone left at this point that could add one one more speed bump or we are we through the gauntlet of everyone at this point that's what I guess that's what I wonder is like can we expect more speed bumps or we're like okay as soon as this is done we can move on from this topic I think the US and the UK are the biggest remaining speed bumps I think they've cleared the hurdles of any other major markets like it was approved by the EU it was approved in Japan it was approved in Korea um and I don't know that's what improved in China or not China yeah yeah all right well well hopefully that's it then hopefully we've got everyone at this point signed on the dotted line uh and we could just get the FTC through so we can we can

move on from that topic but uh speaking of Regulation and and jumping through hurdles of speed bumps uh we got roblox actually trying to accommodate 17 plus with a little bit of verification yeah this is a really quick update um I I thought it was interesting um Roblox announced just the other day that they're going to start allowing experiences on the platform that are catered specifically to users 17 and older and they're allowing users to verify their age by taking a selfie and uploading a copy of their ID um so just another move by Roblox to kind of age up Their audience and and you know provide services that um go along with that um you know I'll be interested to see what if any sort of new experiences come out of this on Roblox um they're not like they're not going full rated R like there's still some things that are prohibited like I'm

pretty sure extreme violence um nudity sexual content that's all still prohibited but like things like alcohol use um or profanity I think they've loosened up the guidelines on for these experiences you know one thing I thought was kind of interesting and maybe you guys will disagree with me but like usually in my experience platforms allow you to restrict content through like child settings rather than allowing content through adult settings this is kind of like a reverse approach and I'm wondering if you if you if you think this is the right approach for Roblox to go in that opposite direction given Their audience or would it be easier to just like top down like you know these are child accounts everything else is turned off I don't know I just thought it was a little bit odd but maybe I'm grasping at straws here for me yeah it seems like is the the opposite approach that you will usually take but it's true that normally uh like

you don't have like maybe such a large user base of like younger people uh as your main audience right so in this case it can like they are maybe fearing that if they take that approach there could be a lot of concerns about it like many kids having access to this uh content immediately and like maybe there because normally I this I don't this is done by parents that hand over the access and then they limit it and then hand over the action right but I feel like many parents are just not checking on Roblox because they think it's a safe platform and then just a lot of the kids to play there but if they do that move then they will need to many many people won't realize that they need to do that right so I think that that's maybe the approach that they are taking I I could see that there will be a lot of friction because like that's

something that I don't know maybe you need to to do to invest and some platforms or other platforms that really need some Edge verification and it's like from the user perspective it's it's a lot of friction so unless the content that they are offering for this Subs group is really really valuable and maybe I believe that there will be most of the people not not validating there yeah that's a good point the about friction and it's I guess it's really more targeted at like their existing audience that is aging up rather than bringing in new users who may also be 17 and older already because like the content doesn't really exist yet to attract them and there's that friction of having to verify your identity um one little bit that I read also um was about like the ability for Roblox to start doing more with ads so if

you're verified 17 plus then they know okay you've opted into or you were allowed to serve you certain types of ads whereas if you're under that age you you can't be served ads so might be another angle there for Roblox but maybe these alcohol and all of the stuff is not the content of the game is the content of the ads that's owned well let us know if you see any beer ads on Roblox I would like this yeah I gotta imagine then they've got to worry about too like not just age but where you're located like different states have different laws for example in the US and like there's the whole thing about like advertising to minors in different ways in advertising to even like like we're talking about alcohol right but like we're talking about 17 plus and drinking age in the US is 21. so like you're not even within drinking age when you're like verifying this right like unless you verify that you're 21 or over so it seems like a messy thing to be dipping into I mean I've seen seen already like even when meta tries to do stuff with

like the Facebook Messenger for kids and like the weird the segregation ends up causing new kinds of problems and so I gotta imagine like yeah first off like they would have gone this backwards approach because like you don't want to implement this stuff to you have to right like and you can't verify younger kids age because they don't have IDs stuff like that right you don't have an ID till you're a certain age anyways so they're not going to bring in like here's my Elementary School sixth grade ID in my my yearbook photo or something like how are they going to verify it uh so they can only verify people that like are you know with within a certain age threshold but I gotta also Imagine like this is going to cause like a segregation between the age group so let's say I'm 16 and I've got a friend who's 17 plus he can verify he can go play the mature content now I can't come play with him right and Roblox is inherently very social and kind of tribal like people coming you know they're playing with their friends they're hanging out with their friends and imagine suddenly there's like lobbies where they they're hanging out like you know even if it's a game it's still kind of treated like a Lobby now they can't hang out with their younger friends it's almost like you know like the seniors at high school like they'll

hang out with the younger grades and just that weird kind of dynamic I can't imagine that's going to be beneficial to Roblox like by by having this kind of thing I did like yeah they're capturing like the potential for more mature content but does anyone really like want that on there and is that just going to like actually hurt the platform long term in terms of again the segregation or like just like do you really want like say professional Studios coming in and developing like mature content on Roblox for like kids that are just barely old enough that seems like a problematic thing to be doing on that platform as opposed to say going over to fortnite creative or something where the audience is already like a bit more aged up I don't know what do you guys think I I don't I view it as more of like if they want to have um content that appeals to an older audience this is a step that they need to take like setting aside the specifics of how you verify your age like they need to have certain guard rails in place right like just to comply with various laws around the world and you

know to your point about like do they want Studios to come in and build like you know professional mature content like I don't know probably not but like they do want professional developers to come in and make content and if that content happens to be like on the edge they need to have guardrails in place to protect their users so I think they're they're kind of like um opening up the platform in different ways to make sure that they're checking all their boxes and covering all their bases and this is just like a way to allow like an administrative step to allow that so that they're compliant with all the laws and they don't like run afoul of any Regulators that's kind of the way I look at it I gotta imagine too it's going to be like worked around by kids constantly like you're just gonna like log into your older brother's account uh or there's a thing so like that reminds me of um in China when they were trying to crack down on miners playing games uh during school nights and things like that they had that whole thing where you could only play like for like three hours on like a weekend or whatever like

I don't know the exact details but it was some weird highly restrictive thing kids started using their like because they had to like do the the face thing and they started using like their their older brothers IDs and things like that like and I remember seeing that in Esports as well like uh in any sport you know I was involved with that required you to be 18. there were certain players who were not actually 18 and they were using like their older brother's ID because they looked you know similar enough and you know people changed during puberty anyways so it's hard to like verify that you mentioned like a selfie but it's like if that's not a live face scan or you know with the complex ones they're like verifying it's 3D and like infrared and all that stuff yeah it seems like this is like you know the you know Roblox acting like Hey we're covering our bases but like we know no one's really going to be actually doing this it's like hanging outside the liquor store and getting adults to buy alcohol for you like kind of thing where it's just everyone's gonna work around it anyways to be fair to Roblox we haven't seen it in action yet it's brand new but I agree with you Devin that there will almost certainly be a great market for these kind of

things um because you know kids kids are clever and they're going to find ways around it but I'll be interested to see how it plays out definitely I'm also be interested to find out like what the exact details of of what kind of content they delineate as like 17 plus because obviously like you said they're not extreme violence no no pornography stuff like that like a lot of the stuff that's typically associated with like mature rating stuff is probably not part of it so then it's like well then what is like what what was just barely over the edge that's now slightly allowed uh and will people like constantly with the moderation teams be struggling with that and like are they opening up Pandora's Box on dealing with types of problematic content because of that being like difficult to explain to these 17 plus year old creators what they can and can't make so I don't know I think that's kind of like a wait and see sort of thing right but it seems like this this might be more problematic than uh than I imagine the hoping that's probably why they've been resistant to do it until kids were just aging up and

they're like we got no choice we got to do something to capture this audience at that point but a completely different topic and something I think a little less uh sketchy um Ai and games something we've talked about quite a bit so there's a little bit of a different approach here from hidden door in terms of using some some public domain content for some narrative gaming yeah so exactly we have hidden door which has uh launched a play test for a new AI base game so basically it's based on the we sort of hot uh that as far as I know it's like a public IP and and the Montana game is a platform uh where you can do role playing uh with the support of uh AI both for the narrative and they kind of a choices game so they're not that the AI will give you choices and then you can select one of them or even you can type the

action that you would like to to take and then there are some some narrative developing and then again you can take action you can interact with with other NPCs and also you can customize the experience with the use of generative AI for image generation as far as I know this is like kind of very controlled by them so like all the style and and the assets are coherent to the same art style so basically uh the platform as far as I've seen is that you have some uh cards that you can play this like kind of build the the setting for you so you can set like a location a role and some some initial setting and then based on that then the AI would generate the narrative and you will be interacting with that they claim that this is like a social experience but as far as I've seen in

the description I haven't seen it much Social in the sense that it looks like you play solo but that you build this story and this world view and then you can share with others so that's I think like is that the social component of it and the full game is set to the boat in in the winter this year and the plans for the company is to showcase the capabilities of the platform with this IP but then open it up for Partnerships with other other IPS so they can extend their worlds and make them more interactive uh through through their through their platform so they are planning to have some deals with IP holders to bring their stories to the platform I guess before they they they release the the full the full game in this winter and the company is only 13 people uh and

has raised like 9 million funding so far um and yeah I don't know how do you see it I think it's quite uh an interesting idea maybe the most obvious because right now we know that text Ai and to the AI are the ones that are more developed so it's kind of merging the two of them to try to give like more customization and personalization to a game and so for me it seems like quite an interesting idea where they it surprised me is that they've been developing this for three years already so it's not like they just saw that there is disadvance in AI in these fields and they try to merge it like recently but they feel really working heavily on these and training their specific language model to really make sure that the stories are uh I would say a alien and that the blessing goes of rails because of the choices that you

make and the one so what what do you think of this approach I mean I know AI dungeons has been around for a while so I kind of wonder if that was more the inspiration than the chat GPT stuff right was there any mention of like uh what like tools or methods they're using I mean it sounds like you said they were training their own models but like are they using something off the shelf are they just building from scratch because like AI dungeon I believe was like more custom stuff uh maybe maybe sort of a little bit different than gpt3 which was like the current thing at the time like was there any mention of any tooling no I haven't I haven't seen anything they mentioned that they have some AI engineers and there were people that I think that even the founder before these uh was uh also working with uh artificial intelligence and like deep learning in the past so I think that this is maybe like the result of a long story working with uh with AI tools and

machine learning and yeah they've come to this but I haven't seen any mention two by leveraging any of the existing AI tools too to do this yeah I um I had the same thought as you Devin that it feels a lot like AI dungeon but maybe like more on Rails um AI dungeon you kind of go anywhere and do whatever you want with text generation but you don't have uh to my knowledge it's been a little a little bit since I've played AI dungeon but you don't have the ability to sort of store memory of like items and characters and things like that in the way that it sounds like um hidden door does um to me this is it looks pretty cool however it feels like kind of a proof of concept let's get this out there get it in players hands use this you know public domain IP and see how it does and like what do people respond to and what don't they respond to the the article

talks about this is a venture beat article talks about like they're going to work exclusively with um public IP or IPS that they can strike deals with in um fiction like narrative fiction um so you know that ideally gets around some of the legal issues and copyright issues um but it does I I agree with you Felipe like it's not really clear to me where like the social part comes from um they say it's like a social like story driven thing but I don't know how you incorporate multiplayer into this maybe it's not gonna come into this game it's a future game but I don't know to me it's cool but it's a proof of concept and like a wait and see For Me Maybe the social just meant like sharing the stories about what happened in your game yeah like when everyone meant social and it was like share with your Facebook uh feed or whatever uh something like that yeah yeah we were speaking about Roblox

that's like maybe a truly social experience compared to this if the demo is is here more about their ability to put the rails on uh because it sounds like they're trying to go for like the IP right where they're like hey we're demonstrating that we can actually handle an IP in a responsible way that you couldn't by just slapping chat GPT on it right like that there that they put three years of work into figuring out how do we make this first off actually work like a game like you mentioned um at you know like inventories and other game like sorts of uh widgets that you wouldn't get through just a pure imaginative narrative text thing right and then it reminds me Choose Your Own Adventure books that started like developing like inventory tracking and like and Stat rolling and things like that over time like Lone Wolf series and all that uh you know as people figured out ways to do that same kind of idea right like just kind of hacking these things onto this text generation engine but it sounds more like they're trying to prove like we can responsibly handle an IP as a pitch to like get a big IP to

sponsor this or not sponsor but like you know pay for these experiences and it's like is that just narrative advert gaming right like like the old flash ad for gaming days are we gonna see like explore the you know the the Cheeto world with chester like just weird stuff like that I I gotta imagine like there's only so much content you can do narrative wise with an IP without like a huge huge amount of of text right because uh let's say like you know Wizard of Oz has quite a bit of text to it right uh a situation where it's like a lot for it to digest but I gotta imagine they're not incorporating lots of stuff from the outside world because that would make it difficult to have the rails right so they're not like Chad GPT where it's got this knowledge of like huge huge amounts of information because you do that and it's very hard to put the rails on and not have it talk about like hey I'm playing a Pepsi game and it starts talking about Coke right you've got to worry about that kind of thing uh but you like if you're making a Pepsi game like how much how much content can you give it to where it's like okay I could play for like five minutes and you know this Pepsi game's

done because I I ran out of stuff to do because there's just not enough content like I mean do you think these are the kinds of things they're tackling or I think that's it's interesting that idea of like advert gaming is is pretty interesting I don't get the impression that that's what they're tackling just from reading this article who knows um you know it seems like they want to work with like narrative-based stuff rather than you know commercial uh you know brands or whatever it doesn't mean I can't do it I guess but you know uh like there are plenty of plenty of ips like this out there right like there's Harry Potter or there's Hunger Games there's Lord of the Rings there's like all these kind of like narrative based IPS that have gone on to spawn other properties um so you know to your point if they can prove that they're a good Steward of this open source IP or this public domain IP rather um then they can come to these bigger Brands and say like look we're going to take care of your IP we're not going to

allow players to do something crazy that you would never allow but again it's probably like a push and pull right like as a brand and I'm speculating here but as a brand you probably have to be willing to allow some flexibility in these um AI driven platforms to where like even the people who are running the platform and operating it don't necessarily know all the possibilities for what could come out the other end so like you have to have some level of comfort with the unknown as an IP holder probably and again that's why it's helpful for them to start with a public domain IP to where like hey it's out there no one's going to sue us if we get it wrong we're going to do our best and we'll see what happens we see people turning Wizard of Oz into Hitler like immediately on release I don't imagine that's the audience they're going for here but I mean like you look at what happened with like Winnie the Pooh and they made that like Winnie the Pooh horror movie or whatever like you know you could imagine something similar with this sort of Ip but I don't know the vibe they're going for here as Felipe

said it's more like choices episodes I get the impression so you know you can imagine a similar audience would be there Target demographic yeah I think maybe the difference here is that the with the use of ips you can really broaden that to everybody that enjoys reading but want to take a more active role into that story so feel more of like uh the decisions and and not like maybe the like choices that feels like it's more like a very specific target audience uh because if you live for instance the the IPS that you mentioned Matt that is a huge IPS and also like that people are not just consuming then on the films or games it's also like books are like maybe the most of them is where all them started so it feels like a good type of Audis that could fit these narrative games where you still need to read a lot but now you have a kind of a

essay there is interesting for me is what you were mentioning because the the business model for them is not clear right so they don't they don't monetize the to the mention about how they are going to monetize the platform so I don't know if their intention is to become big enough at some point that Brands will be the ones paying to get there IPS there rather than like people being the ones that pay to consume or maybe they have like I don't know kind of subscription model where you can access all the books that are there how how much game can you actually put in that though like you know you're talking about like inventory and things like that but it's like if it's something more along the lines of making dialogue choices like how much game can you have there first off like as an actual game versus just a Choose Your Own Adventure and how much that just ends up extremely repetitive over time like how many novel uh storylines can you generate from from just one set of content before it's

generating basically the same stories over and over like I mean either of you have had a who've had experience with these kind of tools like how realistic do you think generating a game or even like a light sandbox really is for these types of tools yeah there is one one extra thing is that they kind of try to get all the stories to really live within the original Ip so that's also not the limitation so it's not like now I can just go and well change it completely right and have it completely different story it should be coherent with the initial work and that's indeed what I think as you say it's a peer movement to try to attract other brands like okay we are not going to spawn your ipu or like the word view of your AP because like in this game you will be able to do something completely opposite to what's really the Real historic right so I don't know exactly how much space

do you have to really allow players for customization and creativity without really going completely against the original story I mean to your point Devin like some of these other games like AI dungeon they're they're cool and they're Novelties but they don't have like a compelling Loop to where like I do this so that I can do that so that I can earn this thing um and so like with AI you can just kind of endlessly go down that thread and see where it takes you and that's like kind of interesting and you're curious to where it might lead but then you kind of get the idea you know the challenge will be creating a compelling Loop where I participate in the story I make a choice and then it leads me to another Choice and then you know like I'm earning something or I'm getting some rewards and that helps me progress so that helps me you know whatever those players have different motivations but there needs to be a loop and like a compulsion for coming back um you know otherwise it's just kind of like a fun little tech toy or novelty

right I mean it brings up with something you guys mentioned earlier about business models and it makes me kind of Wonder like um let's say it is a consumer-facing business model in terms of like they're getting the money from the consumer and not from like the IP holder right um and in that situation you know normally in games we're selling content right like in some way or another right you're selling that content in this case it's generating content right so you're not selling that uh so then there's like I I think of two approaches let me know what you guys think so think of these or what maybe there's other options is like one is that you're you know continuing to feed it new bits of content that can like help expand where it can go things like that so like it's still kind of like live Ops a little bit in terms of like providing new pieces of information that allow it to generate new things like new scenarios whatever the other way is just like hey you create enough Loops that people play that novelty long enough but they're paying like a subscription model so they could keep doing it like with the way people do like say the virtual like girlfriend uh you know kind of toys or those other ones where it's like something that could string them along for a long enough period of time where they're just

willing to pay for a subscription that do you guys think there's like other possible business models for this around the content or uh you know microtransactions like how would people monetize this I mean I think that they might not know the answer truly like they might just be kind of putting this out there let's see what our engagement metrics are first make sure that this is a compelling product and then we'll figure out monetization but to your point like those are all options they could do in-app purchases like I I may be misremembering here but I think episodes used to do like a uh an option where you had like a premium choice where you could I don't know if you pay per choice or you have some currency or you have a subscription or whatever but they had like special choices that were usually like the the most like Risk a choices um that were premium um so like that's one way to do it you could they could do like um um sort of paid DLC if you will so like the first one is Wizard of Oz that's free but if you want the Winnie Winnie the Pooh and Christopher Robin that's like you know 99 Cents and if you want

Lord of the Rings that's five bucks whatever like you know they can charge by these like expansion packs if you will um I'm sure there's a number of ways that they could do it yeah I think like there is a RPG component here so and part of that is like the cards that you you could play to a I was assuming that this not only to kick off the the story but sitting on location and led by for the characters but also maybe I don't know some extra cards that you can play later so you can play also with that by having some basic cards that you will unlock as you play and that's part of the normal free to play Loop but then you can't have like I don't know a rare cards or premium cards that would maybe allow you to set settings or locations and situations that will be more exciting and that's those are the ones that you could play and uh also if there is an RPG component always like advancing that faster so

uh paying for time let's say like that is something that also could work so if you could level up your character Faster by it's speeding up I guess I could see even like individual content paywalled as well like let's say they wanted to pick particular characters that they're that they won't be in your stories unless you pay to like oh sorry like you're playing Harry Potter but Dumbledore won't be part of any of your stories unless you unlock him right or like or specific locations for example like where you're basically paying to like include areas of content uh that you want as part of your story like that you want to be able to play with um so I guess there's a lot of options here and I I really look forward to seeing like is there a business model that makes sense with this or is this just like you were saying Matt just kind of toys Novelties like where they're just gonna like uh let's just play around because AI dungeon kind of already did that as you pointed out like and it's been around for a while hasn't really figured out a great business model other than like maybe subscriptions that like give you a little like uh maybe faster processing expand what you could do but it's very

minor right um it seems like this is like a you know one of those things where people haven't really figured out what the the right thing to do with it is yet they just know it's cool they want to do something with it and I think I mean I think we're all excited about that right the one thing that didn't sound super clear is like whether or not uh players are actually like typing out what they want to do or if they're choosing right like if it is generating say three choices and you're picking one of those or if you're actually typing because there's ones where you could type right I could see situations where I've tried ones where like I'll just specifically reject everything it tries to get me to do and I'll just go on a completely different direction and just abandon everything it tries to give you content-wise and it's like how does it handle those kinds of things if it just lets you do whatever you want or or does it sound like it was going to go the direction of we're going to generate choices and you're going to be able to pick from those as as far as I wrote it says that you could also add your own by typing so I don't know how how much Freedom you will have on that but but yeah it supposedly gives you the the option

which it also gives me this thought that like will be like AI generated with infinite options like really the best experience for the players so I mean like players without really wanting could this point their experience and they have like narratives that are less interesting or that they reach to at that end sooner they don't enjoy the experience right so that's for me that in the letter like Ai and somehow some ways really interesting because it opens many options but also I don't know if like having many options is the best solution and like at least maybe some creating options it would be the best because then we'll have like a experience that is better for most of the people just going off um some of the images in the Venture beat article like this is not science here but like it says um there's an example that shows like what do you do and it says type to

search which uh implies to me that it's not purely natural language but you're selecting from a bunch of options and then there's they give you some sample options so like if you imagine an interface like um LinkedIn messages or Gmail where like it gives you quick Snippets that you can kind of plug in um that's kind of what they have here so like you have an objective and then it gives you a few like preset options for what to do jump in the lake shatter the gem beg the witch for mercy and then you can also type to search um presumably from many more options but again I'm just riffing off of like the art that they've shared in the Venture beat article I don't know if that's exactly how it's going to work in practice um but it doesn't seem to be purely natural language sounds like a text Adventure game but with like generative content mixed in at the end of the day right where it was just like if you guys remember the old ones they were just verb noun combinations and stuff like that where it was like you know simple rules for you like prior to the the graphic adventure games um if it's just like that again then

maybe we're ending up going backwards but with the ability to generate content on the Fly um but I gotta I gotta mention if a company like this though like could crack this sort of thing right where they could figure out like an engine that works well for this and it'd be a repeatable thing that could be like a very like powerful thing to license and sell on its own to other people like like I mentioned so um in in role-playing games right tabletop role play games you have the dungeon Masters and there's good dungeon Masters and bad dungeon Masters right and so like you imagine you have an AI in this situation that uh you know you you teach to be a good dungeon master right there's certain Like rules you can find like there's tons of books on how to be a good dungeon master like if you were to give it those books and teach it like here's how you guide an adventure well here's how you generate content that would be fun to play if someone could crack that sort of thing and put that into an engine I can imagine there's potential for a business model there uh you know like where it's like it's got its kind of rules and guidelines which does sound like at least they're kind of going that direction in terms of the

guidelines for like at least trying to protect IP but I'm not sure about like you know making a game fun quote unquote I don't know it seems like a lot of possibility there I guess we'll have to wait and see like uh it sounds like winter was the uh kind of deadline which means you know pretty late this year so I I gotta imagine this won't be the last one we'll see like this as well right like uh everyone's trying to jump into this boat right now so but maybe hasn't been doing it for three years but uh we've got a another interesting kind of twist here uh going into EA uh something that's uh I think your domain as well Matt uh splitting up basically reorging into sports and entertainment so what does that mean yeah well I'll just like bury the lead here and and sit well not even barely just like kind of come up front and say I'm not really sure what it means and we're gonna kind of talk about it but um I guess like a quick sort of caveat or uh note for clarifications I used to work at EA so I have some bias on this and like if there's one thing that EA

likes it's a good reorg um so the the headline here is that they've sort of reorganized and split out EA Sports and what they're calling EA entertainment um and so there's also a bit of shake up in the c-suite which I'll get into in a minute but like um EA Sports is now you know kind of very similar to what it was before it's eafc which is FIFA NHL Madden F1 PGA super mega baseball and their upcoming college football reboot um probably UFC as well I'm sure I'm missing some stuff in there and then EA entertainment is kind of all the non-sports IPS it's respawn it's dice it's Ridgeline which is working on Battlefield uh full circle which is working on Skate motive Studio EA Seattle BioWare their EA Originals label and not 100 clear to me but it sounds like all of the mobile titles are also going under EA entertainment which we'll

come back to in a little bit um so I mentioned at the top there there's a shake up in the c-suite so the CFO is leaving um it sounds like he's going to Visa so if you like Finance it's hard to come buy a better opportunity um for a CFO so he's leaving after a short tenure and then the chief experience officer is retiring and is being replaced by the former CMO um Laura Miele the former CEO is now becoming EA president of entertainment technology and Central Development and there are a couple of other sort of moves at the top there um so yeah a lot of changes in organization I I don't know that it's necessarily clear on the front lines how this impacts employees um you know I still have some friends there that work um on the mobile side and like they're not really sure what it means for them yet either it's fresh news I'm sure it will trickle down soon to me I think

um a couple of things stuck out so one was was what's happening with mobile um mobile has historically been a challenge for EA let's say and uh it's not clear to me from this announcement like how mobile fits into the organization uh it used to be that mobile was like its own like sort of separate part of the business um and now it sounds like it's under EA entertainment but what happens to like the sports mobile games um you know I get the impression they didn't really mention it in the articles but I get the impression from some of their previous moves that EA is kind of trying to realign around IPS and franchises so you know when they when they um shut down um industrial toys and Apex mobile like a few months back you know one of the things that that Andrew Wilson said at the time was like look we're we want to do cross play on these big IPS in the future and like have this like cross-platform like ecosystem for

Battlefield and Apex and whatever like that's obviously like many years into the future but um that was like what they said at the time and so inferring from that I you know I imagine that's something that they want to do with skate with Madden with FIFA whatever like with all their franchises coming up um so you know from that perspective it's not clear to me whether mobile is a part of the EA entertainment organization or if mobile is like the central team that kind of coordinates across entertainment and sports depending on the game that they're working on and they're more of just like a platform specific um like branch of the business I don't know it's that was one thing that I wanted to kind of discuss with you guys so maybe I'll pause there and we'll come back to the second Topic in a little bit like what do you think this means for the company's strategic priorities going forward whether mobile or otherwise and like how how do how do you read into this what do you think

well I would say that maybe mobile is also going to be split because as you said like if they are going to really focus on cross-platform experiences uh it doesn't make sense to have mobile as a department and being in one or the other like all the two will need to have like that mobile division to create like the mobile experiences right like maybe I'm not sure you're referring to existing mobile games that won't be ported as cross-platforms as a division and in that case yeah maybe that sits down within entertainment because for where I understood from reading the news is that they this may also it's a move to open to other type of no entertainment experiences and that's why even it's called like that so I'm not just focusing on games but also on all the types or not the inter games only yeah so so I mean I think

yeah you raised an interesting point about the entertainment a bit that I want to come back to um but with regards to mobile I guess we could split it up into two buckets there's kind of Standalone titles so Star Wars Galaxy of Heroes the new Lord of the Rings um the glue portfolio that's still around like Kim Kardashian um and a few of those those type of games and then there's like um so so we might call those like Standalone games and then there's what you might call Evergreen games which would be like Madden FIFA um maybe NBA if they ever bring that back like games that kind of they constantly keep running and I don't see them like shutting down FIFA or Madden anytime soon um whereas you could say like Galaxy of heroes or Kim Kardashian like those have probably a finite lifespan at some point like they've been going for a long time but you know if EA's strategy is to kind of move away from these mobile experiences and go more cross-platform

well then that's like kind of their Cash Cow portfolio that they'll eventually Sunset and then they'll focus on the ones that have a PC or console like extension or counterpart um so I mean that's kind of the way you might like bucket out their mobile portfolio presently but you make an interesting point about entertainment um they have made some uh sort of Four A's in that direction they did a Sims like reality show a year or two ago there was something I saw they were gonna do like a Dragon Age anime or something like that um so they're definitely like experimenting with some of this kind of transmedia stuff and maybe there's something too um splitting out entertainment maybe they're seeing the success of Arcane and uh Witcher and cyberpunk and things like that that have gone to to Netflix and other platforms um there was also if you recall Rumors in the past about EA doing some

potential merger or acquisition with nbcu like a more traditional Entertainment Company um so and by the way I'm purely speculating here but like if they're splitting out sports and entertainment like maybe there is an opportunity if they are still like investigating mergers and acquisition to split the company and take take one or the other with whichever company acquires them um I'm sure like their sports franchise is incredibly valuable right um and you look at you know some of these big tech companies are trying to get more involved in sports vice versa like the entertainment uh portfolio like they've got they've got Star Wars they've got Marvel they've got you know Battlefield and some other things here like maybe that's appealing to some of the more like traditional entertainment incumbents again I'm like wildly speculating here but um this was the other topic I wanted to touch on was like what does the split mean for the company's future is there

more to this entertainment thing um is there more to sports that they want to do like we saw news recently about the nft um like the Nike nft integration in FIFA um I don't know there's a lot there so what do you what do you all make of it I don't know like also sometimes you do the opposite move to be more efficient right than to to like have sir functions that support uh more efficiently the the whole business right so I don't know how that's going to be solved now that this is split I feel like also you will get maybe more more focused and it would be easier maybe to discuss budgets and locate them and like it's something that you can really compare so I don't know like FIFA and uh the other sports game so which is the their sizes and which is their audiences

that this is like we like to like comparison and then you can really maybe balance the numbers better uh so I don't know if that's part of even of the intention so they can be more focused on these games and kind of like maybe the business model is more repetitive uh because it's year after year you just have to update the the squads and all that and leaving the elders to be more creative I don't know it seems like there could be also potential for problems if they normally had any kind of team members that worked both types of games like let's say oh I work in the Star Wars game for a while but then I'm also going to like help with Madden right like now that doesn't maybe work as well because you split the teams up maybe maybe that's not an issue for them at all maybe everything is very isolated but I'm thinking of like obviously it's like over at Activision not EA but like you know the three different Studios working on Call of Duties and having to help each other and and all that stuff or like the way like Ubisoft will tend to shift people after every project over to other projects between their Studios

and things like that it seems like if if they really do have like a clear line of Separation like hey all the annual games I have dedicated teams and we don't have crossover we're not bringing over our creative types more just these specifically type of people and it's good to kind of where like Silo them because like oh hey this is all the people using the mocap Tech and doing the annual stuff and handling the the card style like Ultimate Team kind of things and like it if it makes sense to Silo that business and they have a lot of overlap maybe between those games but not across to other games I could see some benefit there but I do Wonder like are they going to potentially add friction to like sharing stuff like I remember you know when they would like push their engine like everyone's got to use frostbite for everything or you know things like that where if they try and push cross stuff even if it's not like if they're just using the same engine for the sports games as for like a racing game or a skating game like is that going to be then problematic I I imagine they've thought through this stuff but like yeah not really mentioned in the articles is anything to do with

like the tech part of the organization um there was no you know shake-ups mentioned in that that org and like to your point about shared resources like certainly they're gonna share um you know like the mocap stuff you mentioned analytics resources Central Technologies like these I imagine have to remain shared but these are like the these are the people who are going to be working across sports and entertainment I would think uh whereas like more of the creative Talent the people working on Direct development uh of the titles uh are less likely to be crossing over um but again like you know we talked about like mobile where does that sit like that could be one that kind of sits in the middle um you know the mobile team when I was there like they had sort of centralized resources um and there's like a central product team there's their essential analytics there's you know a mobile leadership team and so on like how do those get split up over entertainment and sports I don't know it's unclear

um but I know that I mentioned that EA does a lot of reorgs but I thought that this was worth mentioning because it seemed like while it's unclear it does seem like a rather large reorg um at the very top um and not just something that's limited to like a couple of c-suites getting new titles I guess I wonder at that point if it's been a financial thing like if we're talking about like FIFA Ultimate Team those kinds of things just like basically printing money every year and it being like hey we don't want that money bleeding over to these other things that are these AAA titles that are going over budget and then maybe not coming out great and like and for accounting purposes it's actually better if we like have these games that are evergreen like you said that sell every year that we know are making money and we don't have to worry about like accounting for them the same way because we're not doing these like three five-year development Cycles on these games you know we're turning them out every year like do you think there's like a financial purpose to separating those like that I can only speculate but probably probably I like they wouldn't do it

without considering the financial impact certainly cool I mean hopefully we'll find out a little bit more in the near future in terms of uh what that actually means like as you guys said unclear for certain games I can imagine even like certain games it's like uh is it only sports games that have like a year in the name that count right is skating or racing a sports game you know like those kinds of questions hopefully we'll get some clarity on in the future but who knows I mean you would know I guess better how uh how hard it is to read EA from the outside but that's a good question why isn't skate in sports is it not extreme sports it's only like traditional Sports and racing well if I'm wondering if does it have to have a year attached to it does it have to be an annual game to count as part of their sports like portfolio and and that's I gotta imagine that might be a terminating Factor like like I said of the the process they're going through to develop it or the financials or yeah something maybe but I guess we'll see like licensing requirements and stuff too yeah like you got to deal with you know uh leagues and players associations and some of these other sports but in

skate not so much hey we've got a license Tony Hawk or something right you gotta worry about that a kiss well cool a lot to look forward to a lot of stuff a lot of open questions I guess from the topics today you know stuff to start to explore but maybe a lot of unanswered questions so maybe things will get to revisit in future episodes of course uh Microsoft in aquarium Activision I can guarantee we will be revisiting future episodes uh blame the FTC now uh but I want to thank you guys for of course coming uh great to have you both as always and I also want to thank the listener for tuning in this is I now I believe our 101st episode so we celebrated 100th last time so uh a lot of episodes if you are new to the podcast then you got a huge back catalog to listen to so next time you have a long flight download them all go through that but in the meantime also want to remind everyone about the the email for uh the mailbag if you have any feedback questions comments things you

want to share things you want us to share on the episode uh clarifications things like that uh podcast navic dot Co make sure to send those in we do get those occasionally and it's great to get that feedback or even just questions from you guys so make sure to do that but otherwise uh I will see you all next week and have a great weekend in the meantime if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a five star review and if you want to reach out or provide feedback shoot us a note at podcast navic dot Co or find us on Twitter and Linkedin plus if you want to learn more about what novik has to offer make sure to check out our website www.navik.com there you can sign up for the number one games industry newsletter navic digest or contact us to learn about our wide-ranging Consulting and advisory Services again that is www.navik.com thanks for listening and we'll catch you in the next episode