Games Industry: Trends 2023 and Predictions 2024

hello everyone and welcome to game makers we're now in the last quarter of 2023 and so much has happened this year in the games indt given that we have brought together a great group of people to date to discuss some of the biggest trends that we've seen this year in 20123 and to discuss some early predictions for 2024 with us today we have monate lri from Two and a Half Gamers podcast which is growing quite strongly I know you've got a newsletter too which is destroying but you're a mobile UA specialist we have Lexi sidow who heads marketing and I forgot your exact title Lexi but you're you're an awesome content person at data. and of course we everyone loves data. um and leis Ward from IDC today's episode is sponsored by data. a to access estimates for rankings downloads Revenue usage or engagement for millions of apps on the App Store and Google Google Play sign up for

data. and speaking of data. in IDC um I want to highlight that they have published with Lexi and and Lewis a really great report relevant to the topics we're going to discuss today they have published a gaming Spotlight 2023 review report includes content about gaming Trends mobile games that Define the first half of 2023 mobile game app and key themes for the year I'll have a link to the show notes but for anyone interested in some of the things that we're going to talk about as well as those topics I definitely recommend that you check it out but let's go ahead and get this started I think we're g to first talk about uh mobile Trends and I don't know I I feel like mate I I think you and I share a trend I believe so maybe I could kick it off to you to start with one Trend and we we we'll kind of go around um getting different Trends from from

folks but what is your key trend for 2023 yeah I think we discussed it on on multiple podcasts and also in La uh in your in your collab yeah in the collab so uh but this this this is the thing so I think uh what we saw and I I kind of call it like user acquisition the the New Frontier of game development uh which is like a fancy fancy name for using fake ads as as a part of the the funnel because there's there was this evolution of kind of using fake ads and then putting those into the screenshots and then kind of uh people saw these creatives and then they saw the the screenshot so the expectations were kind of met but obviously this is not as as cool as if you take out all these like um fake ads and then you implement this into into the game so the expectation flow is kind

of like seeing it ad then seeing the screenshot then playing this fake game and then you kind of like suddenly you are in a totally different game so what happened and what we discussed was these two games uh within the the same gaming studio which is called Century games they're doing an amazing job so they developed a idle game called Frozen City amazing Graphics low poly really good in terms of the CPI since I'm the UA guy I can tell it was really good uh from the the CPS standpoint so what they did actually they took the whole idle game and they put it as an onboarding funel for their Forex game so you're playing the idle game and then suddenly in level seven you just zoom out of the idle game and then kind suddenly you're in the Forex so as everybody knows or maybe not everybody knows but Forex games strategy games RPG games they have very high cpis so how can you go about this well you

kind of implement this kind of very interesting totally different game you all you use it for UA to lower down the CPI and then suddenly you have very wide funnel of really high amount of players that kind of stay in the game because well oh here's Forex game let's let's play this as well and we saw it with f out survival we saw it with storm shot which is Forex game by fun plus with top war they mer yeah they use merge mechanics uh in the in the tutorial and then again Forex and then we have Kingdom guard which uses Tower Defense kind of uh game in in their tutorial on the on boarding funnel and then again Forex game so we would see this like kind of like a formula of using a low CPI kind of mechanics uh in the early onboarding funnel and then suddenly we can see different types of

games afterwards this is the this is the very strong tend that we saw and we kind of discussed uh like multiple times which is going to go very strong in in also in the next year and I guess like that's going to be kind of like a new way how to build games I guess yeah I just just jump in here I don't know how you first became aware of this Monte but I actually know people at Sentry so I I can't confirm or deny but I'll just say I definitely agree with that Trend and I've been seeing it more and more too um and yeah it's just clever it's like PE the marketers realize that you can get you know much lower cost of user acquisition on the ad side so why not just move that Downstream directly into the game and um and maybe as um I I don't know if Lewis or Lexi feel free to just kind of jump in with with thoughts on this as well but or disagree or or disagree yeah but I I think the other thing that this kind of um

this trend indicates to me is almost like kind of a sub trend of of this which is I I think that the ramifications of this is that there is a shift I mean if you look back at the history of the mobile gaming Market there's been times in which like distribution during the early tap Joy days was like most critical where game quality became more critical and now I think we're moving back where and especially with whatever is going to happen next year which we can talk about during predictions but uh where there is now like this shift towards there there was a period of time when it was really important to be great at not just game quality but live operations infrastructure capabilities and growth and I do think that for companies to be successful um in the future and what we're starting to see with these kinds of tactics is for product and growth to be more tied uh and to be you know to be working together more more closely I mean I mean my gut reaction is

uh it sounds somewhat deceptive the way you described it in other words you you're starting off with like a match three game and then suddenly you find yourself in something M much more you know hardcore leaning or whatever it is and the gameplay mechanics change I mean that handoff has to be super smooth and I presume I have no idea uh whether the attrition rates like the the the you know the folks that churn away once you hit that magic level of here's your introduction to the kitty pool and then you go to the main game and it turns out you're doing something much more sophisticated and it is it is I could see imagine it working for the the level of The Game Dev rep publisher but uh I would expect unless it's there's a really smooth way of doing it that that would be very uh hard on the gamers who who feel that their expectations has been broken but I just don't know it like I'll take your word for that it's happening I haven't run in I haven't played those games you mentioned so there's there's the evolution so the Frozen City to White out survival that's very smooth you won't even realize like suddenly you're on a Forex map that like that's super smooth and that's why I

think like the game is making so much money and it's really good there's like the evolution of Hero Wars which they just duct taped this uh fake ads into the game play just to get this like kind of like illusion and there are these Reddit threads where players are asking like hey so I played this puzzle game in Hero Wars where is it coming again because I'm on level 300 and it's not there and I'm kind of playing to get to the next level of the puzzle so it's like this is kind of happening nobody told this person that's it's not in the game unfortunately anymore sping the money I guess the game dep pop wouldn't really care but it does seem like uh I mean I've heard of playable ads where you want to do something very basic make it seem you know that it's going to appeal to a lot of people but it sounds like you're getting them onboarded through that mechanic uh and then you're kind of SP spoon feeding them to the point that uh they have to learn these more sophisticated mechanics whether they wanted to or not to keep playing so interesting idea though cool I like that

Trend I wonder I mean I'm curious are there any sort of gameplay mechanics or subg genres that wouldn't work right like I do think there's that world where if you go in and it is more core leaning and then it goes to like a little bit more intense gameplay like that makes a lot of sense to me but if you're playing yeah if you're playing like a match game and then you graduate to something way more intense like that does that work so there's I feel like those are yeah those are different personas and players very different personas of players but then there's Evon which is a strategy game and they kind of implemented the pull the pin kind of like puzzle mechanic and but this is that's kind of like very hard and if you think about the match free uh games they have a lot of male hardcore players as well and they are quite like in candy cr like level 1,500 so on like on the surface kind of yes it's different type of persona but

then if you think about it then it's very close yeah maybe just a shout out to data. but you know there was a period of time when a number of folks from the product side of mobile games business were were looking a lot at like the I forgot what it's called the cross Affinity data like the players of this game kind of play this different genre and things like that but if this trend continues I do see that an implication would be probably a lot more folks looking at that data if we're g to you know we had the fake ads Trend and now it's shifting to the um let's just call it fake game Trend so if you're gonna do this game thing then what to so so Lexi I think you are bringing up a good question if you're gonna do that you know um have having an understanding of that cross Affinity data probably could be that's that's super important yeah it's super important it was available in Facebook audiences which now did like it doesn't exist anymore yeah too bad I

used to look at that all the time too bad but then too good for dat AI on the other yeah that's true it is interesting because it there is that sort of you know it's not always obvious there's like something you know there's something in the more of the mentality of the player for why these you know people who play certain games are kind of overlapping with others so it is interesting I wonder from the user experience though how I'd feel if I was chasing forever chasing the part I liked but it's a level I mean that's interesting that people are sticking around like they're still trying to get to that thing that got them in and they're like is it going to come where is it yeah that illusion is perfect in that case constantly keep playing try to get to where you were when you started all right well may maybe we can wrap for Trend one Trend one fake games and for Trend two Lewis what what do you what do you think what's a trend from you oh well yeah so one of them that I that I'm just been personally interested in this year is kind of the ongoing rise

of live service games so I know they're hard to Define and I guess I'm asking this group if there is a kind of core mechanic obviously or you know something built into the game that sets live service games apart from other games but at a high level you know whether it's uh multiplatform or constant you know updates and releases um you know does it is it focus on live multiplayer um you know is it a persistent world that evolves over time like what are what are the elements if you think about the most popular live service games fortnite being a prototypical example you know that that they have in common versus other games and I find it difficult to do it to separate those things out uh but but in terms of you know just stuff that happened this year um Sony's acquisition of Bungie for what was it 2.3 2.4 billion dollars something like that I think um you know was kind of a somewhat of a c change from Sony's perspective they want to have like 10 live service games by early 20 26 I believe it is up

from zero three years ago and they say that something like over half of their R&D next year will be devoted to developing live service games that's in addition to potential Acquisitions right so to me Sony put its foot on the gas of live service games this year and then I would say the Microsoft acquisition acquisition of uh of Activision Blizzard would be another example of them getting at least uh you know um Call of Duty uh war zone 2 and some other you know assets that are live service games and so you could possibly say that hey Microsoft is also doubling down or trying to grow its footo in the live service game Market as well so um I don't know I would say that that is a trend that I become more aware of this year obviously that term's been around since before the pandemic but it seems like at least Microsoft and Sony on the console side have kind of figured it out and they're doubling down on it this year and so I'd like um you know just my sense is that it's growing but if they if they're counter veiling views that

one it's too difficult to define or two there's too much in go investment going in there now and unless you're a huge market player you simply can't succeed there and therefore your recommendation is not for smaller teams to get into it or whatever it is I just I just like to hear definitionally how you look at it and B you know do you think it will keep growing or is there something tempering how much uh Market Focus we should have rather than just having it be a buzzword which uh you know is hard to Define it's great that you said the console games because I think like this is happening on on mobile for a long time I mean if you if you look at the Royal match candy crage and other games like the live Ops and the the new content and everything like that's happening for a long time like thanks to that like they are growing like crazy still yeah and I would say leis to your point I think that maybe one of the things that you're discussing where and what we're seeing is that more of these kinds of games that are you know term forever franchises by by Zinga but

these games that don't just last you know a couple of years but can go on for 10 15 15 plus years and the implication of which is that players if you are able to appropriately live operate your game that um that because of the the durability of these games that like you know my kids play the same game every weekend and I I think they're going to be playing the same game valant for a long time right and so so the implication of this is like how then what does that mean for new games trying to enter the market you've got to displace one of these long-term durable games and so um and it kind of speaks to the previous uh point I made that the kind of sub trend on the fake games is like you know having a a shift in terms of orientation of your development not just to the game quality but game quality and live operations or live Services understanding how to do that well as well as as grow but I don't know I I guess my point here is just I I kind

of agree with you Lewis that this is becoming increasingly important that um there's always I think there's always going to be a space for your um kind of like narrative based action you know like your God of War your Spider-Man those kind of games but also there's gonna there's going to be this increasing focus on how do you then displace a long-term durable game that's just really locked players in the the kind of players like like said that that have been playing um these puzzle games for forever where or who are you know uh playing League of Legends or wal drift or fortnite or whatever for such a long time well I'm still playing Clash of Clans so I guess I mean I think what you said to disagree Lex just by just by Define by Design you have to disagree with us Lexi I know I feel gosh well I mean for me I do think there's I struggled with thinking about

like can you can you put these in a category it's more you know obviously I think more like a vend diagram like so many games are going to like fall into this and other types of genres it's more of a like a tag if anything but I I think what you said mate about like games mobile games have been doing this a while and that's where my first thought was like we've have such good examples of games and like even recent ones like genin impact and like honai Star rail like these are games that you know are have made a huge Splash in recent time and are doing it really well and I guess one of the things that I kind of think about is especially with mobile and like the audience it commands is you know this kind of feels like it's becoming in a lot of ways very table stakes and then in some like s uh instances I think is there a case that like Gamers on the whole are sort of like evolving and their expectations are getting bigger and like you kind of need to have these new um you know content or features or events that are evolving

because just everyone's playing games and like our Collective like you know even with and it goes I think back to these like fake ads or fake games it's like okay so maybe if you get kind of Hoodwinked in and you're you're playing a game and then all a sudden it's kind of a switch but you've been exposed to so much more of different um core gameplay mechanics and other games that like maybe it's not that big of a switch for you because mobile has kind of made it super easy and a lot of people have gotten into these spaces that traditionally you wouldn't have thought you would play that type of game maybe like have we collected has like the tides risen overall and people are expecting a lot more and we're all kind of like more intense I don't know for lack of a better word Gamers the definitely is but also like what you just said it kind of directly impacts UA so you want to have live op systems you want to have new content because that helps UA that helps scale and that's it's like that's how it how it should be right yeah maybe one

followup on on your comments Lexi is like I I do agree with you that like the the quality bar or the expertise that will be required to appropriately deliver a great live operating um experience right and and what does that mean to the design of the game as well right in terms of granularity in terms of how you make a game extremely replayable how you have to then think about do we change the meta or do we change specific features in the game so that it can continue to gain interest in in the game over long long long periods of time but yeah I I definitely think that this is uh so to your point Lewis I I agree that this is something that's kind of kind of happening in in which game development studios are going to have to adjust uh to be able to deliver a great customer experience that then can lock these players in and the implications of the game is industry could likely be somewhat profound in

terms of like um you know what kind of expertise is required and what kind of capabilities are required and also the ability to introduce the number of new games or the kinds of games um into a space and the need for games to actually be more differentiated because if one game has really locked in certain kinds of players like we can't be subtly different anymore potentially so yeah I I do think that this trend has a lot of implications that we'll have to figure out and we'll we'll we'll see how that unfolds over the next few years also for every anyone who is actually listening uh Le mentioned gen back then honai uh don't get inspired by them because you would need like 4,000 uh employees to actually put the out so try to get the the different gaming company as an inspiration yeah know one of the things that they share in common is they tend to come from very large companies and there are some examples of smaller Studios that haven't

succeeded with with with live service games so it is what it is yeah maybe part of it yeah all right um Lexi do you have a trend yes I do so this um you mentioned the report that we did with Lewis um at IDC before and I think this was a really interesting one um that's continuing right now and it's super topical and seasonal but we've seen in terms of sort of the mobile games that have been doing very well this year um because people especially coming off the back of last year where gaming had a bit of a dip in spend for mobile uh a lot of people have asked us you know what's working in a in 2023 then like who is succeeding then in this climate um and I will I wrote the name down so I don't get it wrong it used to be FIFA now EA Sports FC mobile 24 soccer um that game in particular had a really good year and I think there is a little a fusion of a trend where I see the companion gaming Live Sports Live

Events Demand Being a really interesting intersection so post pandemic we've seen still really strong interest in live sporting events um just recently in Q3 we've seen football both American and like English so soccer um have done very well in terms of streaming and also interesting games so during the World Cup we saw a a huge surge of downloads for at the time FIFA um for EA's soccer game about 135% we've seen they hit a billion dollars in spend just after this time uh the Women's World Cup had um the biggest viewership uh in terms of any Women's World Cup yet and attendance I was lucky I got to go to some games since it was in Australia which is awesome um and then part of the new rollout for um the TW FIFA or see I Al I always say FIFA EA isifa forever it's GNA be anyway really hard I have questions for

you on this I have questions about UA here it's coming um but the um you know they' they've released their first um you know they've got female players so you can have a un like a I think they called a universal team where you can have like female and male athletes kind of combin and create that big team so that's one big area I think and and to kind of continue on it in Q3 we saw um the EA Sports uh fc24 companion app where you have to have you know an EA a PS or an Xbox account um and you're sort of having your ultimate team that you're working towards that has surged in spend um in a lot of markets and then this was an interesting UA tactic we saw soccer manager 2024 football by Invincible Studio out of the the UK timed their release for the same day as EA dropped the new team so they saw a huge surge um yeah super savvy in organic interest so they had this massive growth um across

downloads and especially in like big soccer countries Brazil Mexico Germany Spain UK Italy and there's no need to have an account it's just you just go in and you can kind of play a similar thing um so this is a trend that I think I'm particularly interested in I also really like soccer so I'm a little biased but um I think that's interesting to me and I I think one of the questions I have is around with the no longer being Fe what happens with UA does it affect it does it hurt you know re-engagement or you know do they have such a sizable base of enthusiasts that people know that it's not going to be a big deal for them going forward yeah if this was any other gaming studio I would say The Branding and the IP would have very big effect on like on the UA costs but since it's EA and they don't do on the UA so I'm not super sure about that and also as as you said and as I said it's FIFA it's going going to be FIFA all the time so nobody cares there's Pro

Evolution Soccer and FIFA nothing else and Bs is also or always was the game number two so on the USU and also like the the soccer manager 24 it also it's kind of like uh it's different Studio than EA right so they know EA doesn't do any uh any like very big UA so they just said oh well okay well we can we can kind of get these players on on on our app and there you go number one in Brazil Mexico Italy Germany Spain UK great do we know if the Spanish coach is playing pro is doing the football manager thing yet the fired coach he should you have an opening there oh no I mean the team obviously the limid team did fantastic but great players controvery about the coach after I guess he got fired but I I

think it I think it's really interesting just connecting the dots between Live Events right and how many what happens to Associated games and it makes a ton of sense that you would see bumps that even if they're not necessarily marketed right just because people are simply interested in it they will go look up games and and go play them if they uh if they have a chance um whether they're you know free to play or whether they have to pay for it um but yeah I agree that uh uh people will probably still continue to call uh EA sports's version of that FIFA you know and that's not necessarily I mean just because they're the biggest game at town it's just it's probably going to be a tough to uh a tough um a tough Hill for anybody else to climb to kind of match that or you know maybe that maybe eventually over time they'll resolve that deal and they'll get back in bed together who knows but um but yeah I agree that I don't expect um FIFA to to Really crash and burn in the next two years because of that all right guys well one Trend I have is

something I've been talking about a few years but I think Mark Zuckerberg when he talked about at meta one of his shareholder newsletters he called this year the Year of efficiency and I do think that what we've been seeing in the industry in terms of the end of Zer zero interest rate policy environment means m&a field growth focus on Revenue growth rather than like the real fundamentals of the business I think that's going to change a lot and so do think that we've seen a bit of rationalization in terms of layoffs and things like that not not to be a bummer Trend but but I do think because you know because I think once we focus on the fundamentals now and get leaner and stronger I think that's gonna that's going to be the tea up for a stronger future but I do expect to see like new kinds of management teams and leaders succeed versus the previous environment and I do think there are some current and upcoming layoffs that

are going to be a little bit surprising for folks but uh yeah I would say the trend that I I want to just bring up which some people um in our audience are probably already seeing and feeling is this the age of efficiency now um less m&a field growth less Revenue more on fundamentals more on really like trying to operate businesses more profitably um any thoughts on that we were always talking about how how many companies are L of people but uh we should take a step back and see and look at how many people actually they hired before Co or during Co it's just like that's that should be a comparison between each obviously nobody likes to be laid off and I've I've seen it and experience it multiple times and most probably if I wasn't a cons consultant I would experience also in the future but you know that's that's kind of like hard life yeah man I I disagree 20 2023 has been rough on a number of fronts like I

think you have this huge surge in 2020 even 2021 maybe the first half of 2022 and then things really slowed down whether it was perception of recession or recession plus inflation plus did the the denum of the co 19 pandemic all came together to Simply drive down you know hours of use spending people going back to you know physical workplaces simply not playing as much and I think that um you know probably a fair amount of companies had hoped that those Trends this The Landing would be soft or the trends wouldn't come down back to the Baseline almost uh but I think the reality is that in many cases uh we're kind of back to a somewhat higher Baseline than pre-co but further down than I think a lot of expectations kind of would have thought uh a year or two ago and so you know I I get what you're saying about efficiency I think that's that's probably what you just described um Joe's is basically the same thing

that you could say in most downturns like what do you do you've got to circle the wagons you've got to get back to basics you've got to execute and deliver on you know listen very closely to your customers and deliver on um an experience that they find really compelling and so um I I I agree with you I know I know we should be disagreeing on such things but I agree with you that in these circumstances no it's it's just has to be done it's just a function of surviving I mean look at Unity or look at um epic games or whatever you want to take just um you know pretty deep Cuts uh recently and so I wouldn't be at all surprised if there are some significant layoffs coming from you know God God knows what happened is BRAC are still around uh you know you can take take your pick of companies that have had very rough years but um but I but I think you're right I don't think we're quite at the bottom yet yeah hope hopefully in survival and once we get leaner then you know survive

then Thrive so uh definitely you know kind of a tough time but I I do think this is going to be a setup for and fortunately we're we're in a great industry for for growth and Innovation so uh is there a world where we see you know more in this climate like I don't know how much of this is global or us focused right like I know there's Global elements but a lot of a lot of what at least I've seen is you know heavy emphasis on some us I wonder you know is there a world that we start to see more titles succeed out of China that are going global in markets like the US uh where like we basically the thing that I'm looking at a lot um and it's not necessarily gaming but we see for the first time in a meaningful way teu which is and Sheen which are headquartered in China and e-commerce shopping sites have broken into the US retail Market in a way that they're the you know number One apps above domestic players right um and that's a big shift

for at least I think the American Chopper um you know there's questions around staying power and things like that but weekly active users of teu was bigger than Walmart in the US recently so that's pretty huge obviously there's foot um you know foot traffic in stores but I just wonder if there's any sort of efficiencies or if the the way the models work um or the how the teams are run or from a cost perspective if that g gives an advantage or if there's something that we could see happen there I know it's a big emphasis of a lot of studios in China like the Going Global model especially with what you can produce domestically um under certain licensing rules but curious what you think because that's something we've seen with you yeah yeah so I I think what's been happening is that there are a limited number of game licenses in China and so a lot of the Chinese game development Studios understand that part of their strategy now is they must go Global even the Japanese have been talking about going global for a long time just because they have limited

growth in their domestic markets and then to to your other point uh because of cost structure because of you know like the West has in this Age of Excess previously like it's been very difficult to be able to cost-effectively produce titles out of the out of the West when you have salaries that are pretty dramatically higher and so like when you have companies like me hoyo spending 200 million year in ongoing game development out of China working 996 relative to you know like like Ubisoft who's going on a four-day work week and you know who's you know you know what I'm saying it's like so that trend has been there and I agree that's not a trend we we talked about but uh I that's kind of like a couple of trends that that are that are there from what what you're mentioning yeah and the the games coming out of China like three of those games that I mentioned are from China actually uh Kingdom guard to War

uh white out survival as well and uh there are also other gaming companies from South Korea Japan expanding to to Western Market as well and doing quite well so it's definitely there and we've seen on the on the ad side like Tik Tok kind of creeping up that list of AD Network providers right Mo moving out of the top moving from outside the top 10 in gaming into the top five in some cases for uh ad Network so uh to your point Lexi that it's beyond just games at the rise of some Chinese you know Giants uh in North America and Europe are uh seems to be a trend that's probably going to keep continuing yeah all right maybe one more Trend how come nobody said nobody said hybrid casual definit the trend everybody's talking about start with that with your idea it's a hybrid casual game that turns hardcore not it's kind it's slight it's slightly different it's slightly different but yeah like Sim ilar but different because on the hybrid casual side it's more like these hyper casual

Studios like kind of like adding layers on the iip side and the like deeper monetization with using uh kind of yeah hyper casual style or visual style so yes cpis and the LTV on like the kind of the framework is the is is similar than the the fake gameplay as the on boarding but this this is slightly different because yeah it's it's actually not fake like building few few different games in one game so yeah it's definitely doing quite well some of the studios 10 million revenues a month out of nowhere uh on the hybrid casual side like dream Dale mob control my perfect hotel now just exploding in us like worldwide it's just yeah it's it's crazy yeah interesting it's goe oh the just the um Hy casual it's one of those funny ones where it's kind of like how do you

define a hybrid casual game like I think that's where you know I was about to ask you before you obviously gave us the the list like what games in your mind would be hybrid casual and that's that's a really interesting one because September was a big month for my perfect hotel we did see I mean it was like number five globally by downloads um huge I mean it was number one in like 39 markets it was massive um yeah they killed like crazy like there no tomorrow seriously it was uh it was everywhere and uh well appline was their like biggest partner on the on the U site uh to like power this growth and feel it interesting yeah I my I did my homework on on all all of these before yeah we could we could talk about it for for hours should we close this section out with one more Trend yeah I can I can go I just I I was was looking at ufn right and and unre unreal edited for fortnite and it looks

like the the content creators there could generate about $400 million or at least it seems to be trending toward that this year the payouts to the creators on ufn and I was thinking about I'd put Roblox in that same group of a you know a platform where the game devs are probably on track more to make 600 or 700 million I had about 680 million this year annualized based on uh the payoff percent of 25% uh based on their 2q revenues and then Minecraft Marketplace maybe $150 million there may be some other examples but we're talking about like $1.2 billion dollars generated by you know level creators you know map creators Island creators or whatever you want to call them um and it seems to me that if we rewound that clock a couple years that would be zero for ufn I guess um you know U minecraft and uh and Roblox have been there for for many many years but I I have a sense that that's

trended up quite a bit um and I maybe there's another great example out there but I have this idea that if some of those micro Studios that are doing that we're probably talking more than a hundred of them that are making millions if not tens of million dollars this year based on that content you know that that could continue and would they kind of join up with some massive live streamers or YouTube video content creators and basically a partnership between content creators on the you know driving driving viewership to those places and then the revenue generated from those experiences I just get the sense that that could be a really interesting you know growth dri in in a down market right but over the next 12 months do you guys do you guys see the same thing or you think it's possible that this is kind of overblown and um that the idea of content co-creation platforms growing over time becoming a more important part of the market is is uh you know probably not

going to happen I mean I kind of you know sorry to keep agreeing but like when we look at the history of games like every major hit has come from like a mod there's there's been some you know kind of like there's been some indication of of of traction of you know product Market fit to scale somewhere right and like you know I I would say Warcraft 3 in particular was a a game that really kicked off Tower Defense kicked off like mobas and a bunch of other games and so like you know and and Battle Royale was was like a mod and and and so like to to to that point you know we do see some companies who actually are using that as a strategy so like aund I had did a podcast with uh Pete Holly from hun thieves who mentioned that you know they they have two teams they have their ufn team that's building prototypes and things like that and when they figure out something that works then they're their triaa team goes to work on it and so I I think like this notion of being

able to create different kinds of game experiences that are really fun and cool and and leveraging the creativity of a huge ecosystem of people who generally would not be able to make games but using their tools can bring an idea to uh to manifestation in some way and then finding something that's really cool and then productizing that as a standalone thing it becomes a lot easier and much faster based upon the trend that you're talking about so yeah I I I totally agree with that and um hopefully we'll have more disagreements and predictions but I don't know you guys have other thoughts I mean I feel like I just want to put a stake in s now that I want to do something with Taylor Swift and the Chiefs and like build something here can we all come together I feel like this is the super idea of like let's get a piece of that pie let's build a level of something that has this

game IE you I think that authenticity is important yeah the idea of the of metaverse right which I know a lot of people do not like at this point uh but the idea that uh people at the edge of the network the creators themselves that you give them the tools and it may even be just a concert thing or whatever it is right it doesn't necessarily have to be a game but if you're driving huge amounts of use in a 3D real environment it certainly is game likee and I wonder if there will be you know some of them will probably be very derivative of what already is or doing send-ups of other things um mashups that we don't expect but um I don't know I think that the creativity uh by some of those creators will probably you know break expectations of what normal Dev teams would do at least that's my sense of where this is probably going all right and in the interest of time I know we've got probably have a lot of other Trends we could talk about but maybe shifting now to prediction and so you know we we've had so muchen in 2023 but looking to the Future and

thinking about what should Executives game developers UA managers whoever in the games industry be thinking about for next year and I don't know you know I'm sure there's a lot of safe predictions we can make but also if you have any crazy predictions I I don't know maybe starting with you again mate what what do you think what do what do you have as a prediction for next year well first of all I hate predictions uh but I have one uh only thanks to the data uh that uh well prediction should be based on data that we have so um I kind of think the APPL will be the the biggest Dua channel uh amongst the the all of them uh surpassing Google for sure well Facebook is not up there anymore and Tik Tok is maybe number three so number one uh will be definitely up L because I see like such a good performance on so many games not only the hybrid casual games that I I could see but also iip only or ads other Revenue based games as well

and it's just mind-blowing just may maybe for predictions we should make a role that you have to disagree with one prediction and so I'll disagree with you on this one mate okay I have only one because here's my uh here's my counter to that okay my prediction will be that uh that Apple will crack down on fingerprinting which will then nuke Up's business no problem no problem with that you will see you will see not it's never gonna I I told you on on the last podcast it's not there there are workarounds there are work there no way this should uh this should happen for for the for the sake of disagreement though I'll say that I I have I have I have my own prediction but like all right anyway um leis what do you got um I mean one of the thoughts I had was that Microsoft seems to be looking

at how they can get advertising into their mix more generally right so obviously in a in in the mobile business it's a huge part of the revenue Pi for a lot of developers and Publishers you know pretty sophisticated and I've been waiting to see honestly you know more uptake in again something like Xbox something like PlayStation steam probably won't do it though but you could look at some of the bigger PC or console ecosystems out there communities out there and I'm keep looking for evidence that one of them is going to go big into it so this is out on the limb prediction I'm not going to take it personally it could you could probably say 2026 rather than 202 2024 but um I'm positing that Microsoft will launch a some ad Revenue um subscription based business model around Game Pass ultimate so would have its cloudstream gaming Services especially in some developing economies where this the the interest in

spending $10 or whatever it is per month or $15 a month on that service is low but they could do a lower price tier half that much maybe even less than $ five a month but you've got to watch a certain amount of ads in order to access their catalog of games it leverages their Azure assets so I'm not seeing that really from Sony I'm not seeing it from Steam um but Microsoft has been doing some heavy investments in advertising and they've talked about it some of their execs have noodled on this idea as recently as this year so My out on a Lim prediction would be that next year Microsoft is the first kind of major console ecosystem to support an ad-based subscription tier in at least a few markets uh where they're pairing their game catalog with you know ads whether they're coming before a game in between levels whatever it is and um you know trying to augment their their game keep growing their game pass subscription Revenue stream and number of subscribers to kind of hit their their larger goal which is to move

subscriptions to being you know the foundation of their games business rather than an adjunct thoughts comments ha hatred comments I'm still processing yeah I'm still processing as well but yeah I I I could see that um and it does make sense I mean I think even Netflix introduced something like that as well right or I'm not sure if that's still I think I think Netflix and as chose Microsoft as their ad partner which is seems out of left field to me but I believe there was a deal sign between them like a strategic deal where there's going to be they're going to use Microsoft's adte um to kind of push a lot of things but probably their games as well and I'll throw out there that in the leak from the Activision Blizzard deal I don't know if it's true but it sounds like they're trying to think about a a a small device that could be plugged into a TV set it's more like an appliance like a set toop box where you don't even have to have the console but you you'll be able to do cloudstream gaming on a monitor or TV set Whatever It Is by 2028 which implies

to me if they're going to do an ad-based business model they're gonna want to have that out there for a few years before they launch such a device to make sure they're gonna you know be able to monetize that to a significant extent all right well Google stadia [Laughter] V2 well they didn't have do they have many ads though they didn't no they didn't have ads but the model in terms of like you know Cloud oriented gaming yeah yeah with ads okay it's it's interesting I think I'm trying to do the like mental calculation here around like if I would tolerate it personally or not like I think when you have console like buying a console is such a like step up you know you're committing it's a huge investment and then how much of the annoyance of ads would you tolerate like I don't know that's a question I'm not sure because I guess we I've never seen it on Console in that way but I feel I I feel like I'd be inclined not to want to tolerate ads I don't know

it's a hard one to think like I don't about it they settled on $3 as as the cost that where the tradeoff was where most people would accept ads in exchange for uh get getting that service but but that was just a one survey yeah the type of game like the type of game as well like if you depending on what I'm like what you're playing on a console too maybe I just feel like the mental math around how much I invested in the console it still kind of like tripped me out that I'd have to like suffer through ads potentially yeah it may be Cloud only it could be more of a make more sense in cloud gaming context and therefore through that's what I was saying through uh maybe Azure and um you know what they're doing with the Game Pass ultimate okay Lexi you have a prediction I I do let's make it out there let's make it crazy all right oh I should have got first crazy could come

later um I'm not going to challenge you on App 11 being the biggest UA Channel but I do have I won't challenge directly um I wanted to talk about Tik Tok because I do think from a UA standpoint it's a really compelling one I know you said it's about number three um I think there's some really interesting things with Tik Tok being competitive or potentially we need a sponsor call out here yeah I know I feel like you're an influencer a sponsored influencer now um but I think there's I think there's a world where um Tik Tok actually eats a bit of Gaming's lunch in some respects on mobile right we've seen spend in Tik Tok has like skyrocketed in the last two years especially among Americans they're about 40% of all the spend um and which really surprised me I didn't really initially I didn't think that that would be a behavior we'd see take off as it did in the us um and gaming spend decreased for the first time last year about 5% um this year

we're still forecasting we think it'll still decline a little bit about 2% on the whole um and then hopefully Rebound in 2024 so bundling in a few predictions I feel like but Tik Tok is one where they're the biggest they're number one right games have been the number one leaders of mobile for spend for what feels like Millennia but it's you know what like 12 years um and Tik Tok is actually so far in front so q1 to Q3 over $3 billion have been spent on Tik Tok on the App Stores through the kind of like in purchases uh number two was YouTube number three was honor of kings and Tik Tok saw double um and that's the first time we've seen that level of like this massive Gap and so there's a world where I'm wondering because we are seeing that you know non-gaming is growing for for spend and I I wonder if there's this we saw Tik Tok sort of come in and first disrupted social a bit and in some metrics right downloads and an engagement and things like that we see more people are spending more time in

Tik Tok than on YouTube on average it's almost at 40 hours I think it's like 33 or 34 hours a month per person so almost a whole week of work you're giving to Tik Tok on average um and that past YouTube which is huge because YouTube's been that like Behemoth for time per user and then we see it kind of creep into video streaming we saw it in China where time and popular streaming providers dipped As Time grew in Tik Tok and I'm wondering if there's this sort of entertainment pool or this entertainment wallet that Tik tok's eating into a bit of gaming money so yes there's lots of other Trends happening in the gaming space and happy you know we can talk through those two of like why spend decreased in disposable income but you can't deny Tik tok's influence and then there's also that counterveiling like but it's a UA Channel That's growing as well so is it kind of competitive or is it helping the ecosystem and this kind of natural tension and I wonder with with respect to the trend that you talked about before around um these fake ads fake gameplay I mean Tik tok's whole thing is

a bit more of like authenticity at its core right it's how it's making money from live streaming and whatnot so I wonder if there's this like if it's a great UA channel do people tolerate you know do they want like an authentic or like does it tap into a different psyche when you I don't know so throwing out a lot of angles I think with Tik Tok but I think the biggest thing is I think there's going to be a massive year and like does it kind of takeway while it from gaming or is it more of this new UA channel that ultimately helps the industry specific definitely a new UA channel that helps it just climb out of like top top 10 top 15 which was very minimal in terms of spend to top two top three maybe on some games it's huge already and it's definitely growing like like hell so IE but what happens if Tik Tok loses all the uh the roaz targeting type of stuff from fingerprinting but they're not doing fingerprinting they're using scan what are you talking about so

they're good it's yeah it's the same thing and on Facebook I'm using V value optimized campaigns I'm using optimized campaign purchase so it's yeah it's yeah it's very good you how can you do that with scan that shouldn't be possible what do you mean like you are kind of uh this is going to be very deep in terms of the UA discussion obviously uh you are setting up the conversion schema where you use the revenue schema where you kind of use purchase event with the revenue brackets and then you can actually identify not user level limited window limited window yeah you can it's on day one now scan 4.0 we'll we'll save this forcast like don't don't even ask all right okay um any other thoughts on on Tik Tok I mean it's a really interesting idea if it if it could cannibalize the timeing I mean we got a we got a seven yearold and I know she well she watches YouTube videos but but Tik Tok videos show up in her stream and you know it's

definitely she can do both at the same time quite honestly she's multitasking playing Roblox while watching fun or or whoever it is some stream streamers out of Canada crew uh who she loves um you know playing Roblox it's kind of like surreal thing but she's actually multitasking so the hours on both I suppose are rising at the same time uh but yeah I think Lexi it's a really interesting idea that will could could you know non-gaming applications which you've talked about the downloads and revenues everything kind of trending away from gaming which has been so huge for so long it kind of makes sense it would Trend that way but whether this is a a really precise example where it could um cannibalize at least some portion of the time and the spending that's going on in gaming proper just because kids I think especially are probably watching a ton of videos on on Tik Tok and elsewhere so yeah I have to agree with you sorry yeah I don't have any go ahead I'm

just curious from so from the UA side right like you talked about it being like a spend Channel what about organic on Tik Tok because that's what I think is kind of compelling as far as like a new it is it is also to die right uh then also some yeah exactly it's thanks to the algo it kind of is like the goto channel for organic growth which can translate into the St because it's still kind of early but also because how the algorithm works so uh it's definitely good one for organic installs and the growth and then you can actually translate that into even UA because you can use those best performing posts in terms of millions of views or the highest number of views to actually use it as a UA creative which again boosts the whole uh whole system so yeah it's it's both actually okay yeah I was just about to say I I don't use Tik Tok at all so I'm not quite sure don't do it but you can follow two and a half

Gamers there I can't I can't disagree that it's it's a massive Powerhouse so that for on that I I can't disagree um and I I have one prediction coming from me uh which is that I actually believe that AI will be much more fundamentally transform transformational to our industry in a lot of ways not only on the game development side but I also think it's going to become an enabler for a new kind of game genre so now a new genre enabled by Ai and so like an example could be like PVE Dungeons and Dragons where the AI is a dungeon master or some kind of a new kind of game we just haven't been able to figure out yet so I'm not sure if this happens next year in a few years but I do think that there's going to be a game that's fundamentally enabled by AI that emerges and potentially becomes like a top genre

well maybe not like top five genre but like it will get there it'll get there yeah well even I created my own uh mate AI so AI is definitely going I can I can I can be your mod in the Dungeons and Dragons if you want I disagree only in that I think it's going to take some time for that to happen Joe in that um I saw I think it was Adobe Max had Firefly examples one of their clients was listed as as EA and I asked them what exactly is EA doing with firefly which is their geni tool but that's really like Photoshop type things but they are looking at not only videos and how you replace the backgrounds and do like art assets and you know uh changing advertising uh to to kind of you know make it localized based on one ad and localize it in every language and and etc etc but the the trend is for models like full-on 3D models that you can import into some other you know game development process

right and so moving away from flat images and and concept art into actual 3D models that you could import and texture and do everything else and and start you know real making game assets out of it that can be used in a in a in a finished game um I think that's going to take some time I think we're probably a couple years away I mean oh no no no that's going to be way that's going to be be like un a company that's that's actually making a ton of money from game de pubs by enabling that very soon yes very soon it's like exponential growth in terms of the AI you could see that in in mour mid Journey daily and what table diffusion as well it's like so many different companies already working on these type of assets it's so yeah so in that case you know if it comes a lot sooner than that then you know could be a small team that comes up with a crazy idea of an open world where you know you have ai gen AI driven NPCs and whatnot mixed in with a a an AI generated map and you know you

could do some things that you don't even know what the game play is going to be like um what was that space adventure where where the you went to the planet and it wasn't defined until you got there um the one from oh yeah the procedurally generated um yeah I know what game you're talking about the world where you go out but that game yes that one but I didn't play I didn't play yeah I I didn't I didn't play either um all right any other predictions anyone wants to uh talk about I just wonder with the concept of AI like well with AI does that actually do you guys think that that in any way would level the playing field because like Louis you just mentioned like maybe a relatively small team could gain traction or like is there a possibility of like these Indie developers being able to produce you know you talked about the example of like genin impact in honai Star like there's you know how many person teams building those like does AI help level the playing field or does it still maintain that I I can tell

you how my creative team leverages AI they usually kind of uh kind of decrease the the amount of hours put into work by like 5x just by using AI tools in the video creation and it's like that's huge yeah so and it's only a a creative theme for video production and create creating like ads for mobile games if you put this into the game development then yes like in these Studios or small teams they have definitely an advantage yeah I do think that that it is um you know because it's almost using Cloud compute to do a process that you would need a ton of people to do right in other words it it's automating a process which is very difficult to do and it's not going to be perfect there's going to be Illusions and lots of problems with it um still to be sorted out and may maybe perhaps copyright issues things like that right but um it certainly allows prototyping today I think much faster but the actual you

know creation of game levels and much more sophisticated things you know I think will um you know it will come um and the smaller team should be able to benefit because you can you can create those assets without the without the same level of expertise right it it's it's a rare it's a rare skill to be a great artist right um but if you can prototype stuff with AI that gets you most of the way there you know it seems to me that would open up the possibilities for smaller teams to come up with really awesome stuff that um you know that would wouldn't be possible without without geni right and maybe even tying back to your Trend Lewis about life Services uh to the extent that AI can get better and better and allow a Content treadmill type of games to be able to dramatically lower their their cost of production that would allow small to your point smaller teams to be able to compete against bigger teams as as well as like the the new

opportunities in terms of potentially new kinds of games and capabilities that we talked about so yeah I I definitely think that um when I I so I talked to a bunch of gaming CEOs and other folks but I do think it's it's something that as Executives it seems like many folks in the industry are just kind of fast following or or just kind of like waiting for someone to do something then they'll fast follow and I I do know a few folks who are who are kind of diving in and really trying to learn this stuff well sounds like monate you're kind of diving in uh but I I do think more people should get closer and start working Hands-On with with AI if you want to get additional Alpha and advantage in the industry moving into 2024 I have one question for you mat about um geni and uh and ads right in other words it seems to me that that machine learning and gen could be applied to these big data sets about users and you could get to I don't know personalization you could reach some

insights about how to Target people Gamers better with geni if you if you brought those two things together and I'm wondering if you've also seen that's useless because you you kind of use the algorithms from Facebook Google Tik Tok toin and you kind like well you still can kind of Target very Niche audiences and maybe Target better but use kind of like events like purchase different maybe onboarding funnel events uh to Target these people rather than just handpicking them with with AI okay so you don't think that's like something we're gonna see pop out in the next couple years as geni plus uh plus advertising targeting and whatnot no I yeah I don't see that which you know may you know uh may happen but I don't I don't see that happening at all all right cool all right guys well any any other predictions before we wrap this up all right well sounds like the only prediction we really the only thing we

really disagreed upon is this view on app love and becoming the biggest UA Channel but it's it's actually more of a fundamental issue on on whether or not in a post finger post fingerprinting World whether you are able to do attribution against spend well or not um so maybe we can tee that up for our future podcast mate we we should dive into that this is this is a very critical issue that has a lot of implications so so maybe we can dig into that deeper but for our audience yeah 2023 a lot of Trends happening I'm so happy to be in the games industry that is so Innovative we got all this stuff happening you've heard our predictions tell us what you think but until next time I guess we'll catch you later thank you very much to our esteemed guests today and thank you so much for your insights we'll catch you all later bye thank you [Music]

cheers