Inworld AI Raise / Playtika Acquires Youda / EA Earnings / BattleBit Remastered

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digital channels Harbor is a foundational technology loved by millions of Gamers and integrated into the communities of the largest mobile PC and web3 gaming products on the market to learn more about this Flagship product simply head to harvard.gg or check out the details in the show notes and with that let's dive into the episode hello everyone welcome to another novik Roundtable I'm your host Devin Becker and with me I have excellent panelists as always the ever Lively Aaron Bush and we've got Tammy Levy here as well we are we are one short but not short on topics today we've got a lot of great stuff to talk about uh we got some some big gray phases uh here from in world platika with an acquisition EA of course coming in on the earnings as we like to make sure we catch all those the future of physical game retail good discussion there and then some stuff on Battle bit remastered so we're gonna you know we're just gonna dive straight into it today right into the meat of it with inworld yeah I love the diversity of of topics

today but we can go ahead and jump in with um in world so they raised a new funding round LED by light speed and so now in World AI has raised I think about 100 million dollars now 500 million dollar valuation so big numbers now and for those who don't recall and World AI is building an AI based character engine that will enable Studios to develop intelligent more nuanced NPCs and and plug them into their games um in different ways and obviously much of this funding will go towards hiring towards r d building infrastructure but it's also going to to go towards launching an open source version of the the character engine which I think is a smart move and it's pretty pretty interesting and so you know launching an open source version of what they're building I think it'll help them not only improve more quickly in public but as a first mover to really do so in

games it's also going to be where a lot of the early uh early movers in terms of game developers who want to embed um Ai and PCs into their games so kind of lean more in that direction initially at least to see what's going on but um but learning in public improving in public being a first mover to do so and to get into the hands of of developers that's a I think a pretty smart tactic for building early competitive advantages obviously it's still very very early days and so there's much more to prove um you know with in World specifically but even AI more broadly in games on how how it gets developed and all the the intricacies of doing so where you draw the line on you know what NPCs can and can't do under different circumstances and so it's still going to be the Wild West in in some ways but I think a smart move from from in world um and I guess the last thing I'll I'll say um is that four to five months ago um

Nico one of our great hosts interviewed kylan Gibbs and world's co-founder and chief product officer and I definitely recommend checking that out just to learn more about what exactly in world is building and how they're thinking about NPCs and games and what it means for developers looking to implement it what the business models are Etc there's a lot of really good contacts in that episode I'm also I'm trying to to work up a future panel interview that um should include someone from in world but probably another company or two as well to just really dig into like the nuances of like embedding AI into games and when it's still so early what does that even mean what are the tools to consider the opportunities and challenges there so I'd keep an eye out on that in the coming um month or so but you know this is uh the biggest you know games X AI company now so important to keep an eye on it going forward I think yeah and I I when

I saw this uh I you know I've been trying to keep an eye on what what inner world is doing because it's like it's super interesting to see where like true AI driven NPCs uh look like and where they go um early weekend I was actually watching a a short YouTube video kind of going over the quote-unquote Sims AI um and you know would how it's evolved over time even from like the early 90s and throughout the whole time I was like that is a very smart way of doing it but that's not AI That's an algorithm it's like I want to see like true like AI in NPCs and what that ends up um doing to the whole game interaction in the world and how uh that all pans out in and builds up and now we have the technology to build that type of like actual AI not just an algorithm that you know has kind of all these rule sets that are like still very manually tweaked and adjusted even

if you know they have formulas with it that that's an algorithm that's not an AI so I'm very excited to to see uh in a world continue to grow and build towards something that might be incredibly fun incredibly uh complex incredibly terrifying or you know who who knows what the what the future holds it's the Wild West it's gonna be gonna be fun for those who can you know Embrace some level of crazy um before it calms out but I'm I'm excited for it too I'm interested to see whether or not um they start doing more from Beyond just like NBC kind of stuff that like maybe is sometimes better scripted anyways uh towards the like just allowing a little bit more free reign uh because it makes me think of that there's a lot of like uh the AI stuff that have been trained to learn to play games right that was one of the the things that was a really great demonstrator of AI was was letting it

play games because it's a constrained system that I could learn and there's a simulation and so you got to wonder like obviously you like you could train AI to like play like a player and uh and you know emulate a player right or be a bot but what about even like AI that plays the game but in a different way like from the monster side of things right like they could have NPCs that aren't just scripted or like guided but actually learn how to play as a monster using its own set of monster rules in this simulation so I'll be really interested to see where that stuff sort of goes because you bring up the second idea of AI being not really AI before it was kind of procedural like uh designed around certain stuff but like in a way we could still sort of do that but with like here's the here's the rules that you follow when you learn how to play but not the rules you have to follow in the sense of like prescriptive so I don't know I'm really interested to see where that goes but I I do Wonder Aaron if you think uh the the going to open source uh was one of those things that's like kind of trying to fend off uh like the the criticism that a lot of this AI

stuff gets when it's kind of closed uh or even just something to try and deal with competitors because we've seen a bit of that in the space where you know the open source push like we saw the Llama stuff come out uh for meta like it seems like that's a big like push back against a lot of criticism of AI like does this seem like it's that sort of thing where it's just like contributing like what was it um my guess is it's a bit of both um I think that sure there are some people who are more fearful of AI and you know when they can see it open and provide feedback and just understand how it works it you know it assuages criticisms um but really I I mean I think most of it is probably more from just like the business model perspective of like just getting code into the hands of developers who want to play with it is a big deal and we've seen other like massively successful software companies

um you know start with open source and in the past and just kind of use that as an onboarding tool to then get onto like Enterprise level offerings that have upgraded features and such like a DB um or or others and so I sort of think it's probably more important from the business model perspective but it certainly doesn't hurt having it in in the open and I mean it's it's about like it like in-game NPC so it's not the same same level of um but an open AI you know is working on um for example but I just think it's a good business decision above all but we'll see cool well hopefully that works out uh because obviously it would hate to see AI flop fast right it'd be good if we actually get some some traction out of this for maybe a year or two at least maybe get some good progress uh before we end up in any kind of hype cycle movement but uh speaking of spending a ton of money uh we also have play Tikka

with an acquisition for decent chunk of change uh yeah so playtika announced their next acquisition uh interesting enough their next earnings call is on August 8th so this comes kind of like a good time to have them talk about it more and kind of comment about you know yes we're still in our kind of acquisition strategy uh very focused kind of earnings call uh next week but uh just to go over the um in a deal terms uh and what the acquisition entails so they uh announce that they're going to be acquiring uh Assyrians uh Yoda games portfolio so a quick debrief on on who these folks are so as you're gonna eat is um company that's been focused more on digital advertising and just entertainment in general they've done

and kind of dabbled on gaming a little bit over the last few years through some Acquisitions they acquired the team behind Habbo Hotel uh they acquired spill games uh they have another platform called gamedistribution.com but that kind of has fallen to kind of second third priority for them over uh you know what's really taken over for them is the the digital advertising side of things um so them think about okay we have this portfolio of games uh specifically the the Yoda games make sense uh for them to not you know if you're not focusing on it to sell the assets so the portfolio games is mostly poker card casino games so when you think about it perfect fit for playtega's core gaming uh expertise and uh the structure

of the deal is they're going to do 89.4 million dollars up front and uh they have kind of up to 165 million uh in terms of performance-based earn ads so what's interesting is you know they've been they were very transparent about The Upfront versus a Performance Based earn out I think that when I read that to me that reads as platika has kind of some confidence on the games being not live service at kind of like their optimal state so whether it's you know they're not doing um you know aggressive as aggressive live obsessed by playtika would do there's a lot of Revenue optimization to be done there's a lot of potentially like user acquisition optimization to do so I I really read that as as they have confidence in them being able to grow the games um there's no notes on the current team

coming over so it it sounds like it's very much an uh asset only acquisition um and you know the the games that Yoda has been running right now uh they have been super stable for the last three plus years so I think that there's they are starting from a very stable base and something that they can potentially grow especially with their three top games being uh poker honestly their top game Governor of Poker is 90 of the revenue of the the whole portfolio and it's at around like two million monthly Revenue um so it has it has potential to grow especially if it's a solid uh poker game um so yeah that's that's the the gist of the of the acquisition uh you know there were a few episodes back where we were reviewing the the

playtika earnings uh in with all the you know closing down new projects and cost Productions and all kind of the news that they've uh played again a lot of uh these companies are have been aggressively acquiring in the past uh kind of pulling back a little bit one of the questions that we had is like where where did they go next and how do they actually grow they're not uh building new games and this feels like it's much more in line with what their core competency is which is you know they're going to bring in the the set of of games and potentially you know really be focused on growing them and uh optimizing and really running aggressive live Ops on on them we're given the strategy shift uh whether or not releasing new games and as you said this maybe aligns better with what they're what they're trying to do do you expect more Acquisitions of this type than in the future like maybe not right away but maybe within the next year uh I think it's it's very possible I do think it's

very possible that they go and seek more of the asset only Acquisitions uh it's it's clear that also based on how playtika has done their Acquisitions and been very aggressive at uh maximizing for profit and closing down in studios I think they're going to have uh trouble finding Studios that would come come on board unless like they their values align perfectly or you know business the way of of operating business-wise aligns perfectly with plentika I do think that they're going to have a hard time finding Studios that would be excited to join playtika as a complete like as a full Studio that you know the first thing that they're going to think about is like when when are they gonna close this down and move over all our games to to some other team so I think that if they want to keep doing Acquisitions like that's this is their best bet and this is their best path forward is finding under

uh uh served or under serviced games that have that are stable that have potential to grow that they know how to um live Ops and really put their team behind it yeah I mean I guess I have a couple thoughts on this I mean at first I think that was really well summarized um I mean my thought is one like this is a pretty small acquisition in the big scheme of platika even though it's down a ton from its highs it still is a 4 billion plus size company um and so this is still less than five percent of you know what the value of playtika so I don't think it's a massive needle mover um also I mean this is a platika has emphasize in the past that it really wants to move away from casino and get more diversity elsewhere but because this is a small move I don't think it really hurts that too badly and also

like they kind of have fumbled other opportunities elsewhere anyways so maybe it getting back to their Roots um someone at playtika recognizes actually is their their better chance um to when when they can get a good deal um and maybe this is a good deal I don't know um the one thing about the deal that strikes me as interesting is how wide the range of the acquisition value is or the guaranteed was like 89 90 million but it basically the earn out like doubles it and that's like a pretty like a double um is a pretty Stark you know difference in Big Range that really could go a lot of directions so obviously we don't know the details of you know what triggers different levels of earn out but um it seems like they are protecting themselves and ensuring that if they're going to pay more it has to be because there there was out performance um so so I thought that was interesting

um of course playtika still is in a pretty um rough shape I think um I mean Tammy mentioned that if they want to do more Acquisitions um it's kind of tough because of the reputation they've developed and how probably not that many teams really want to go sell themselves to play Tikka and this might be different because someone else is selling what isn't a priority to them anymore to play Tikka maybe it was a an easier justification um but even that said if platico wants to do more deals they still are a bit handicapped by their balance sheet and so again it's a four billion dollar company and currently they have 700 something million in cash but they have two points 4 billion or so in debt and so still like half of the value of the company is in debt right now and so that

just limits the magnitude of of what they can really do as a company to to bring anything else needle moving so maybe we see more of these smaller deals um really they need to figure things out more organically I think how to um you know launch new games and maybe build new internal Studio or two um to kind of trigger organic growth that doesn't just mean paying a lot of money to acquire someone else and hurt the balance sheet further especially because I don't think their cash flow production is very very robust either um right now so so anyways it's an interesting deal it's I guess another small milestone for playtika but if they want to have bigger Milestones I think it still is going to be a tougher slog is my guess yeah I agree and and I think that what's what's very Stark is that um the the piece that you mentioned in like new games right like they they don't seem to be at least from from what

they've announced and what they've shared publicly they don't seem very focused on the new games side of things which honestly is like it that's what moves a needle uh to get kind of like that makes like step right like we even see it with with you know a lot of a lot of companies like even if they're let's think supercell is like the uh Golden Child of trying new games to find like that next hit like you have to try to to find kind of that next step function and they don't seem to be really investing in that part of the business at all so it it is it is interesting in terms of you know where they're kind of like in this like slog stable kind of down kind of up kind of just cruising but how do they get out of that um and eventually like the games are gonna decline like that that happens

right so what's gonna replace uh that decline yeah it's tough um I mean I do know to their credit I mean they own like Wooga and Wooga you know they I could I know they have tried to to make you know several games and several have gone into soft launch and I'm sure there's others around the the company to other subsidiaries to have that have tried and they just like haven't made it out of soft launch for not hitting their the needed kpis to justify further investment so I think some of it too has just kind of been the nature of mobile and them struggling kind of with the new economic dynamics of scaling um but yeah it does put themselves between a rock and a hard place if on one hand they're struggling with Organic growth to make games that hit the kpis that they want to move the needle and justify reinvestment and then on the other side not be able to acquire the growth otherwise at at scale so

um so yeah it's interesting and maybe an acquisition like like this kind of points where it's like well it's not a huge budget value and platika has something to offer that can help scale what they already know works and it can unlock more value there than than elsewhere but yep curious to see how the playtika story plays out over the next few years yeah it's funny you mentioned the woogu thing and then also supercell being mentioned because both of them are still have have not launched a game out of soft launch for a long time now like supercell continually struggles with it like Clash mini is like almost there right and then you had those games that they put out the um the uh the the one where it was like a whole bunch of them the name's escaping me right now but uh and then also the the Battle Royale kind of one that they tried it kind of at the same time and just none of them seem to be getting past that point and it seems to be as you said Aaron it's sort of a debit of the the mobile like industry in general right now and it makes me kind of Wonder like do does then like do we

end up in a situation where they just can't take the risk on trying to find that themselves because they're continually burning money just trying to develop those over and over and instead they go hey like let's let's look for someone who's really developing something that's already got traction and potential like that's already made it past that soft launch phase so they've done that for us and we could just take the money we were gonna spend on our r d and development and stuff and just pick them up because we've got the cash that they don't have to be able to like just LeapFrog that step or we just need some new genres or some new user acquisition methods but it seems like the whole that whole industry is just kind of spinning in circles right now trying to to figure out some way to move forward and everyone's kind of in this stalling pattern I mean it just seems like either something's got to change or the strategy's got to change in terms of how they go about the the business side of things uh since it's just you know even just announcing we're not even going to make new games from playtika like that's pretty desperate and you even got like you know Voodoo kind of

stuck in their weird place where they're like oh hyper casual is not working anymore so like we're gonna try and pivot like there's all these kinds of things across the space so like I don't know I'm I'm really curious to see where it goes because it seems like we're kind of at Crossroads for all of mobile right now so definitely definitely exciting times but uh speaking of earnings as you mentioned the earnings call for platika we had one for EA so some great stuff to dig in there as always yeah um and this one can probably be kept briefer um so this quarter for EA bookings were up 21 earnings for sure jumped 32 um that was really driven by two things one the continued app performance of FIFA and we covered the whole Rebrand to EA Sports FC last week and second the launch of Star Wars Jedi Survivor which is seemingly selling well and it's outperforming the original game um otherwise it just kind of looks like business as usual for EA right now the company generates high margin profits

the business is stable they return you know some value to shareholders via dividends and share repurchases regularly um and even with the the never-ending game of executive musical chairs the core EA engine is still chugging along um I guess I would say from an investor perspective the big question to ask for EA is is just where will long-term growth come from in the future because um this quarter the 21 quarterly growth is nice but if you zoom out of a big one-off launch quarter the growth is way lower from an annualized View and guidance for for next year is basically um calling for flat-ish performance um so you know what is that growth engine it's probably not mobile EA has dropped the ball there multiple times um maybe it's some combination of

fostering existing franchises like they did with Star Wars Jedi or maybe how they'll innovate on the Sims or how FC uh EFC will have higher margins but um it also probably will have to come from new things too um and so uh I guess we'll see what that means probably the best thing we can point to right now are like upcoming Marvel games like like what they're doing with Iron Man and Black Panther which are just new and on top of like the other IPS that they own and they're building on like a like a Dragon Age or like you know the upcoming Sims 5 game for example or perhaps will be things that we don't see like how they launched Apex Legends out of nowhere and literally no one saw that coming I'm sort of skeptical of that but I think that's the big question is just where will the growth come from like what are the new projects um that that can lead this company to higher Heights than it already is right now even though the business is already um a fundamentally great company um so so that's just kind of what I'm thinking about with EA as we kind of

look at the results from from right now but um that's my summary not sure if either of you have anything you want to add about EA it's pretty pretty straightforward but happy to discuss or move on yeah I mean I just curious on your take on the battlefield franchise future and dice in general where they fit into things I know they had some shake-ups uh bringing over I think it was Vince from respawn who was formerly from Call of Duty and all that stuff like to try and shape things up better and I know they have like some plans they wanted to reorganize well they were thinking with that but do you think after like the the big huge you know flub that was 2042 and like losing a lot of people over time that there's still future in that franchise I don't have a strong take on the battlefield franchise um so uh yeah I don't know I mean obviously they also close the mobile game and just shut that that down so the scope of the franchise has diminished I

don't think it's a franchise they want to let go of by any means so I think you know it still is their Flagship shooter um and they'll they'll do what they can to turn it around and create something steady and and stable from it is is my guess but you know as we'll talk later with you know battle bit remastered event like there are other games out there that are kind of scratching that itch for players and kind of a different approaches so um I think whatever they do they'll have to come out strong and it's not you know it doesn't have the same weight as the Call of Duty or something like that I guess I'm probably underselling Apex when I say Flagship shooter too but um yeah I don't think they'll let go of it but I don't have a strong take on what exactly they'll do to revive it or change the team from here yeah I guess I'll be interested to see because you mentioned Apex and that comes from respawn who was you know like I said Vince I believe uh I can't remember how to pronounce his last name

starts with the Z uh came over from respawn and like kind of took over it sounded like Battlefield and you know feel free to like email us at podcast novik.com if I'm slightly off on those details uh but I believe that's what was going on right so I'm just interested to see if that could mean something positive because even though Titanfall probably didn't do as well for example as uh respawn would have liked it was an amazing game uh and like shoot a lot of potential that then went into Apex as you said that just came out of nowhere so I don't know like I I'm kind of curious especially because of the the previous problems with Battlefield 4 where it launched pretty much in a similar state of just failure and then was like slowly pulled out and then is like still played to this day because people love what it turned into I don't know if that could happen with 2042 given the Damage Done but having played it myself more recently it was like a lot better and so I don't know I'm just kind of like I think Battlefront probably is dunzo like as far as the Star Wars stuff goes I think they kind of lost that uh license I believe so

probably no more of those but at least battle Battlefield in general you know maybe has something left there but I guess we'll see like I'm hopeful because it's a franchise that I that I enjoy as well but uh I don't know they've goofed it a few times so we'll see where that goes but uh speak of the future of things that uh may or may not have a future I think we want to dig a little bit into a topic that's been slowly Brewing which is the future of uh physical games especially in retail stores which has slowly been kind of getting eroded especially with uh GameStop so there was a couple of different news items that I think kind of brought this topic up one was that Tesco was actually going to just straight up stop selling uh physical games in their stores to free up the the retail shelf space for other Goods which is an interesting thing to happen you know where just an entire chain just like you know what just not making enough money off it we're gonna make more money off of other stuff that we sell let's move on to that and of course like could that lead to other uh big box

stores and things like that uh considering doing that could we see Target go you know what margins aren't there for us we need the Shelf space you know scooter out of there or Walmart or any of these other companies uh decide that that's just maybe not profitable or not profitable enough and then we've also got GameStop continuing to struggle uh with the CFO already leaving uh they just the continued turnover there uh what what looks to be like a bit of a Tails but you know they've tried pivots uh into things like to get more into the digital space where they realized well maybe physical is not going to have the future we hope it does you know they try it with congregate they've tried to do all these other digital things they've tried to get into to the web 3 side of things with nfts and digital games and it seems like they've known the writings on the wall for them for a while and they keep trying to do stuff but I feel like one of the one of the big uh the Hallmarks that I that I see is like whenever I go into a GameStop store just plushies t-shirts selling Magic the Gathering cards like Pokemon cards they've drifted like we're to almost a

third of the store now depending on the store you go into is non-video game merchandise now it's still tangential of course to video games right it's still like the culture and things like that but at the same time I could probably go to Hot Topic or box lunch or a number of other stores and find video game clothing and merch uh and then it kind of leaves you wondering what's the point of this other than to come in here to pre-order games which of course you know generally doesn't work out well for most people that do it uh so that you know that's another issue that's that's come up and then also we we have some games starting to go digital only now like there was a couple of them but one of the ones that was I think one of the bigger AAA ones that was considering doing so was Alan Wake 2 which was in a little bit of a unique situation uh because it's being published by epic uh and like their kind of new publishing label there was some things around them not really having the greatest pipeline for retail them wanting to like kind of not take such a big hit on all the costs associated with manufacturing and all the distribution all that on top of the cut that Microsoft or Sony is going to

take and also of course they have their own storefront on uh digital on PC which of course PC he has I I think you know traditionally drifted further from physical uh retail sales than console has so you know that makes sense there you've got pretty much Steam and epic mostly controlling that that storefront so I think there's a lot to unpack there in terms of different issues different like directions people are going uh but but I'd love to know you guys thoughts on where you see the future of this going and whether or not we're like kind of in the middle of something or this is just hard times yeah I can start I mean I think physical sales are gonna continue you know easing towards zero um uh at some distant point in the future that's the trajectory it's been on for the past 10 20 years at this point and I don't think the next 10 to 20 years are going to be any different and a company like GameStop really is just a zombie um and before we record it I know you

you even had some thoughts and parallels to Blockbuster Devin in saying that um you know what you see with GameStop selling just merch today just trying to find other things to sell similar to so it's a Blockbusters final final moments before they became irrelevant I think maybe we mentioned GameStop in the future the way people joke about Blockbuster now right it'll just become one of those dudes remember GameStop yeah and I think there's a lot of Truth to that the difference is that GameStop got so miraculously and super weirdly Lucky by becoming a meme stock right where it's just Reddit just fundamentally changed the value of this company for no fundamental reason whatsoever and through through that the company at like much higher stock prices was just able to raise money in public markets and so this is a company that still has like over a billion dollars in cash on its balance sheet even and even though it continues to lose money year

after year and close its store count or you know reduce its store count year after year it's able to manage the bleed so effectively just because it because it was a meme and so they still have another decade or so where they don't have to be worried and they can just continue to test and iterate uh honestly probably they should feel more of a sense of urgency than they do and you've talked about the revolving door of leadership um Warren Buffett has a quote that when um I'll butcher the specifics but it's basically like when a bad business meets great management the reputation of the business is what remains intact and that's exactly what is happening with Blockbuster it doesn't matter if you have seven CEOs if your business is fundamentally broken and not built for the future um it doesn't really matter what you do and I don't know if there's a clear way to blow it up maybe they can turn it into more of a game store and also solve

board games and you know Magic the Gathering games have more little events or stuff I don't I don't know maybe there's some path but no one's been able to crack that code yet and and bigger picture right like seeing like an Alan Wake too it is different circumstances but it is like the beginning of seeing AAA games recognize you know we could actually still do okay just going digital there are now consoles sold um that don't have disk slots anymore and I think it's you know just the like the trend towards you know five ten years from now the Next Generation like disc becoming even less important um and you know in the same way today like if you're still into DVDs you can still find your Blu-ray versions somewhere but with you know the emergence of like new business models like Netflix and subscription um and just the different ways that people even get content and how it's made it just changes the way that people even buy it in the first place too so I

am have been extremely bearish on physical I don't know I feel like if you're if you're not super Parish I I would have questions but um anyways those are my quick quick thoughts yeah and I think that um to to GameStop specifically um and uh I I did get to experience some of it as part of concrete but uh you know they've they really uh I mean they've been understanding that physical and Retail gaming is going away for more than a decade now like they when they acquire congregate in 2010 they acquired like a bunch of other I forget it specifically like around that time but like digital kind of forward businesses um they also were trying to dabble on like okay let's see if we don't do games only if we focus on our retail strength they want to acquire Spring Mobile which was cell phones off of atnt

uh and then they went uh and moved towards the Collectibles uh peas when they acquire ThinkGeek which is the piece that we now see in in the source right it's like that carried over from that Think Geek uh acquisition I think that what they've they've never had a strategy or or at least like looking from the outside never thought on how to actually like understand like what is our biggest asset of hey we are a physical space where Gamers want to go and how do we leverage it instead of just like how do we sell more stuff and I think like that's always been the the problem with you see it with GameStop you see with Blockbuster like they they don't quite really appreciate what their biggest um as it is and at this point that ship has sailed because now people don't like correlate GameStop as like a place to gather around physically with excitement for like the

next big game right like that used to be it now it's like that's no longer a thing so I think like they it's it's going to be that that excruciating downward Trend that we're gonna see with GameStop but just from like the trajectory that they've been on like doesn't seem like they're they're grasping like how to reinvent their business or leverage um their IP or their or their assets uh specific like more broadly to physical games I do think that we're now kind of like in this um pivotal kind of moment where Technologies coming together to make to fully make physical games obsolete with uh Wi-Fi speeds being what they are today like even when it's slow in in some uh developing countries it's still

now it's starting to like pick up in terms of speeds uh the hardware now has you know uh the space like it's not expensive like crazy expensive to have um you know enough storage space to have your whole collection of you know Triple A games on uh just download it and say it on the hardware instead of having to do uh DVD CDs and just the availability of platforms to be able to you know go in and find the games that you want and download them from Steam to you know Microsoft Playstation stores like now all of that is like that technology is all coming together um where you know it just I think it's it's pushing like it's it's that accelerating moment of like okay we can actually start doing without the the physical game

itself and you know even generationally like I'm gonna sound uh old here but you know kids these days they don't understand what a DVD is like they they see a DD and they're like what the hell is this like eventually like that's that's it right like you know we're gonna have this slow decline as uh that generation grows and like they are not gonna expect to buy something physically they want like immediately they want to download it on their device whatever their devices and that's how you get games so I do think it's kind of like this pivotal moment where both uh generationally technology and kind of all these pieces are coming together to really make physical games obsolete yeah I and in a parallel like I probably haven't used a DVD since I was you know like in my childhood home but I it

launched with my dad this weekend and he was super excited to tell me that he bought the Blu-ray edition of water world and he was so excited to add it to his his collection um and so you know like they're with games you know 20 years from now even there's still might be people who are you know excited to add something to their their collection and they view it more as a collection um than just a a means of playing so you know it's not going to zero imminently um obviously but um it's just kind of a kind of a funny funny aside but the other piece of this that I feel like might be underrated in the discussion and could be a next Tipping Point is Game Pass um and specifically um and this is this is less of a comment on the viability of subscription or whether it's good bad for for the industry but just think about Call of Duty right Call of Duty is a game that probably drives more physical sales than

anything but if you put it into a subscription model where suddenly for a bunch of people it makes a lot more sense just to be part of a subscription to get Call of Duty and a lot of other things there probably is going to be another change and you know who even wants to buy Call of Duty Standalone which then even removes the question of how do you buy it um when it's Standalone and so I don't know where exactly Game Pass or other subscriptions are going to go in the future and whether other you know Mega franchise is like a Call of Duty will kind of get sucked into where that question is Bible I mean probably with Bethesda even like a star field that's a question too like you could buy the physical copy or just be in Game Pass and get it along with everything else and so I that's kind of my guess of where we'll see like where the next big drop-offs happen in physical sales or some of these like leading leading IPS uh but beyond that probably just a slow trickle well here's

the twist because there's there's actually like some strong benefits for gaming developers assuming they can get the same or at least relatively close to the same level of sales in that first off like when you have to physically manufacture a disk ship it out deal with retail distribution all that stuff we already went through all the supply chain issues of covid that still haven't been completely solved we've still got all kinds of strikes affecting a lot of that stuff there's all these issues with that and and then you have to deal with like do we did we over print to be underprint did we get enough pre-orders to really like understand what the demand for this looks like that sort of thing right that's one one risk the other is used sales cannibalizing your game sales right which was you know GameStop's model which was hey we'll buy your games and then we'll sell them back to other players for nearly twice the price as what we bought them from but it's cheaper than what you bought the game for now obviously that was you know great for annual games right like annual sports games or Call of Duty games stuff

like that that was a I'm sure a big thing but it was like one of those things that benefited players way more than game developers and game developers generally hated I'm sure there were exceptions but more often than not they were like this sucks because uh you know people are just basically flipping it you know when they're done with it and obviously they try to do things to make it online and require a disk and you know tie to an account all kinds of stuff like that but obviously if you just don't sell a physical copy that just can't happen right it's none of these Digital Services are allowing any kind of resale outside of like a one web3 experiment we won't even get into so in general like it's just not happening right and therefore like that risk is gone the other risk of retail distribution you're literally printing on demand like when someone downloads the game like you just give it them then like you don't have to pre-print the copies for digital distribution right like it just doesn't happen that being said you have like this kind of weird hybrid which is like the cards that that go into stores so like games that are digital only that still want some retail

shelf space like indie games like say something like you know cuphead it might have eventually gotten a physical version but at least at first you know you'd see just the card in in Target and I'm sure other places I think GameStop does the cards as well where it's just a download code and I've even seen sometimes physical games where you where you buy them and you just get a code in the box which is like the weirdest thing like I remember that even happening I think with uh Mario Maker 2 when I got it with like the the kit with like I think it was switch or something like that it just came with the code like it was a box and everything but like here's the code to download the game you like in a way way that's kind of good because like I guess you get the day one patch already part of it right like it's already updated you don't have to install or like put in the disk and then still update it but it's it's still like this weird in-between spot that we've had like paralleling that with like DVDs and Blu-rays DVDs and Blu-rays are still selled right the sold right they never really completely phased out partially as you said because of like collectors and and the kinds of features that they put on those and people want it on a shelf space and all that but also there

was never like the codes the same way like Voodoo and some other ones tried to do the codes with like the things but then half of those went out of business like ultraviolet I think even went down and like I remember even like getting emails from Target like sorry the thing that we sold you doesn't work anymore you could try and transition it over this other thing uh because like they couldn't even keep it up with these Services instead they just all want you to go to like you know iTunes or Amazon or whatever buy stuff that way for for on demand so it's an interesting parallel where at least they have the in-between with video games because they had CD Keys was something that existed you know like way before DVDs even existed so there was like already like a precedent for that where like CD Keys just turned into download codes basically in Steam obviously helped push that as well right with activation codes and stuff so I mean I guess I'm kind of interested to see like at this point I think as you said it Aaron it's like inevitable right it's like it's more just a question of like when and what happens in the meantime does it just become a collectible sort of thing I mean we're already struggling with like

the prices right being too low for games where they're having to like find other ways to monetize after you buy it and stuff like that so it's like yeah might as well just make it all digital only cut out any costs risks they have any cannibals any cannibalization and uh maybe even like you said put it as part of a subscription thing to even further mitigate risk right because then it's just oh well we get some money you know off of the the game pass or whatever it is to help cover our production costs potentially depending on the deal they strike so I don't know but a lot of question marks but also I guess as you said kind of an inevitable Cliff for the space and then I guess maybe some Boutique like game you know physical game Collectibles that we do see like you know there's ones where you can get like a a limited run I think that's what's called limited run uh where you just get like the The Limited special edition collector's box kind of things for games I guess that's that's the future of physical games at this point so vintage I don't know vintage well yeah and that's the thing is it's like we talk you talk about the used games right and that that sort of thing

right and that's where GameStop starts business but you also see like those games as well as use DVDs and stuff end up at thrift stores end up in like Dimple Records or like uh what used to be Tower Records those those kind of stores that will sell like old stuff and so it's like I guess that's where like GameStop doesn't need to exist because those already exist to be that Marketplace for people that want to buy like used games or like you said they become just retro Collectibles and you go to like stores that are selling like N64 games next to like you know the the last remaining physical games it's like where I still see the last remaining physical box copies of PC games half the time so I don't know interesting space but uh bummer for GameStop uh you know being in the business I'm interested to see uh if Ryan Cohen does anything because he's been slowly taking over the business uh it seems like so he definitely thinks there's something there but it does seem like it's going towards digital anyway so I don't know wait wait and see but speaking of retro battle bit remastered a game I think

we've talked around a few times but I think we wanted to really dive into now it's become quite a bit of a hit yeah uh it's a cool story and for those who don't know battlebot remastered is a low poly multi-player FPS game that can support 254 person servers um it's sort of like a lower Fidelity Battlefield also without you know the aggressive in-game monetization is kind of how they want to position themselves but what's cool is that this game was built by three developers over the past seven years they started in 2016 with battle pit which had a lot of you know issues in the early play tests and such so early access was stalled then it took four more years of development and marketing to launch a revamped play test and you know to reach 100 concurrent players for the first time and over that time you know the team was supported via patreon um but it wasn't until the beginning of this year that you know notable streamers and personalities started you

know Finding and bringing attention to the game um and then you know the game launched on June 15th um so you know a month and a half ago for 14.99 and since then has garnered really positive reviews has been climbing up the charts um and it was announced that two weeks after the game launched that it sold 1.8 million units which is about 30 million or so and revenue and that was a month ago and the game currently is still holding up at you know the number 11 spot on the steam top sellers chart and it's still seeing uh 35 000 Peak concurrent daily players so it really has become a pretty you know great success story and major props to to the swell team for for turning it into a win but really I think there are a few takeaways rolling through my mind and we can discuss whichever ones sound most

interesting to you one is just you know again like how much does Fidelity really matter in games right and should more teams be building especially their first games more in this um type of way um so that's that's one thought um you know second is just that success was a long and grueling process to pull off um in in this case and so is is this actually a a model that more developers should be thinking about um pursuing even despite the the success that came about and then lastly it just kind of almost on the flip side of of that last point is that you know despite the rise in Venture Capital even across gaming we continue to see small teams small companies like this prove that you can create hits that top the charts even in you know multiplayer modes without out raising any Venture money whatsoever

or in this case I think even really working with a publisher and so those are kind of like the main talking points in my head um but I'm curious you know when you see this story like what stands out to you and like what does it point to more more broadly kind of about where we are in the games industry right now yeah for me for me I think it really highlights like just some pillars about what game development should really be about uh whether you're like a small team or a big team and that is that you need a good game first and foremost like that's that's always going to be the most important pillar for making a successful game business you know granted good games sometimes fail but you know you don't need like flashy uh art flashy

Graphics or you know the the the fanciest um engine or you know this huge marketing budget to really have you know a very successful game on your hands if the game is good I think that part of a good game is also understanding who your audience is like be very clear of what kind of game you're making and what audience you're serving because with that you can actually make sure that it's a game that's fun to play for that audience and that even if you go to kind of like this more low Fidelity um you know lower the Quality quote-unquote quality bar for the game you can understand what that what's acceptable for that audience um and what's going to still be interesting and fun to watch for that audience and the third piece is uh again with understanding who your audience is is

that through that you can actually nurture and grow your community and yeah it was not like an overnight hit like they did as you said Aaron it's like six grueling years of slow and steady game development and community building and just this slow slow growth that you can only achieve if you actually understand who your community is you can actually reach your community and you know grow it much more organically in in that way so I think that it's it really for me it's like it highlights kind of like all those points it's like hit games are not made over time you really need to have a good game first and foremost um and then I think that you can start thinking about you know where do you compromise in all these these different areas whether it's like getting creative on on how you reach

your community and you you know you don't have marketing budget so how how are you going to make a splash and what not when you when you launch the game or you know low Fidelity lower the quality bar like I think that all of that is very available to game developers like I think like that constrainable like hey it has to be super high quality and you have to have this big marketing budget it's it's very much a uh it's not it's a constraint that we put on ourselves players time and time again show that if the game is fun to play they will play it uh if you know if you reach the Right audience so it's kind of like that match right it's like fun to play reach my Right audience they will play it and they'll see past any kind of rough rough edges um the other piece of it is like it it has been very much talked about uh on Tick Tock and uh you know

twitch and like all these other social media places and I think it's like part of that being fun to play is that if it's fun to play it'll probably be fun to watch and have these memorable moments but you can't manually like necessarily manufacture those like you have to like they have to be authentic so I think that one one downside of watching games like uh battlebed remastered is for developers and teams to think okay how do I create like these moments I'll be like very memeable on Tick Tock and if they're not authentic they're going to wear out very quickly very rapidly and not really have kind of like that staying power of like someone watches that tries the game and sticks around to play it yeah I I have like a very simple philosophy when it comes to Fidelity like which is which is subbed up as like the Fidelity of the of the

graphics needs to be bashed by the Fidelity of the gameplay and what I mean are the game mechanics and so it's like you have these games with these like super great like Graphics you know 4K HD all that stuff but they're mostly just set dressing the actual mechanics like if you actually took the the mechanics of the game you could still do it in battle bit style right because it the graphics aren't actually generally enhancing any of the mechanics of the game they're almost always like at best animations that look nice to represent things that you could represent as block people or whatever because at the end of the day you're just communicating feedback back to the player it does need to be hide Fidelity obviously people appreciate you know like nice Graphics right that it certainly doesn't hurt but I think it's kind of funny with with examples like battle bit because you could like directly contrast it to Battlefield uh is the the expectations uh so when you see something like Battlefield you have certain expectations for the gameplay when you see something like battle bit you don't right you're like oh yeah I'll be lucky if this thing works and when it

does and when it works like sometimes better than Battlefield you're you're just blown away like you're just dopa means firing off because you're like whoa this exceeded my expectations like I am really excited now and that is a huge driver for this game I think personally having played it and seeing like oh yeah it's cool like it's I mean it's not like you know 10 times better than battlefield but it does some of the small things better and I think that goes to the other thing with the team of three people and the low Fidelity means it can it can pivot towards things that people actually want where I feel like the Battlefield games have gotten really kind of out of touch with what people actually want and they're just this big lumbering Beast moving forward they can't pivot they can't make the changes now obviously they're trying to right once the game's already like out they've already sold as many copies as the realistically get a cell and they're just trying to salvage the game they could be a little more responsive but when they're in production to help you like spending years and millions of dollars building the game they don't have time to make huge pivots they've

got these production pipelines and when you have high fidelity Graphics it is that much more static to what exactly you have in your pipelines you can't pivot like if you just got a bunch of blocked people you'd be like sure we'll do that this week even if you only have three people but you know three people like with that same level of Graphics if they were to try and do that that's the problem right there like even if they had you were able to use AI to generate that art it would still be really difficult to deal with that from a technology level to build the gameplay to match that and so I think that's just it's just one of those things where people kind of underestimate the value there uh as you were putting out like just there's there's lots of value to be gained from that sort of thing and like there's room for both to exist on the market neither one really needs to like dominate and I think you you put it out there that we've seen this kind of like you know like uh fall guys or Among Us or some of these other like so sort of smaller game hits that have come out that were just about the gameplay and some of those were just really social dynamics kind of coming out uh and I think that's another thing to think about with these is that sometimes like

the lowest Fidelity game ever can be amazing if you were playing with the right people right like I mean Among Us is just werewolf and werewolf is just sitting around in a room with people talking or Mafia whatever you want to call it but like that's the slow Fidelity as you get right it's just a talking game with some graphics slapped on top but I think that's just a valuable lesson for game developers it's like if you want if you're as if you want your audience to have like really great graphics cool but like that doesn't mean you sacrifice gameplay to do so and if you want to cool but like at the end of the day you'd be making more cutscenes than you are a game and I obviously don't try and replicate seven years of development hell with three people uh maybe keep your expectations a little smaller but you know I put something like vampire survivors another great example of like a break at it where the dude just like board during Christmas or something he just made it like for the hell of it as like like sort of practice thing and because he was one guy and so you never know yeah there are a lot of examples of you know these kind these types of games becoming hits and I think there's going

to continue to be many more examples in the future we've we've talked in the past about sort of at least like my thesis of what the this kind of next era of the games industry is going to feel like where it's a barbell or on one side the biggest games with the biggest IPS at the most modes Etc they're just gonna get bigger and get reinvested into and just try to get as many people as much time um and a lot of them are going to pull it off um and then on the other side of the barbell is um more the you know the upstart small team triple double A Studios the ugc tools that you know enable anyone to build and create and I think there's going to be a ton of really interesting activity that goes on there and and really my thesis is that we're gonna see a rise in what's going to feel like counter Trends in some ways where we're gonna see the games that non-professional non-game developer professionals make that are going to get

more attention we're going to see more people playing in their browsers different games um and we're gonna you know be seeing more of these you know double A kinds of games continue to just stand out in their own um domains and I think that that's um pretty pretty exciting but it's going to be really interesting counter Trends and even just like as another example um with uh like uefn inflate which is probably going to be like a new major Hub where we see some of these examples um you know similar to what we've seen in Roblox in the past is um Devin you send a link over before we started about I think it Cipher PK uh is his is his name and he created a uefn game called Rocket Wars it's already rivaling the play time of games on Steam like among us and so I think we're going to continue to see more or many many more of these types of games and different forms on different platforms

continue to to rise and attention and I think that's that's exciting probably the downside is kind of of the barbell the middle probably gets hollowed out a little bit and there are other parts in Australia that it gets harder um to to get attention and really win at certain levels of budget but those two sides of the barbell I at least um very bullish on yeah it definitely make me think of the uh the flash era I was just gonna say that I was like man I'm so excited excited to see that come back I was like yes please uh we saw like so much Innovation during the The Flash era and just like playing around and Quake development and you know not every game had to be like this massive production and I think that we're we're overdue for for another era of that type of of game development I think it's it's kind of second wave mod right where like we had the mod errors you mentioned Quake mods and there was Half-Life mods

and that kind of started dying down into so like kind of late into the Half-Life 2 cycle uh just partially because we came really complicated but now we've got Roblox we've got uefn you've got other alternative stuff like core you've got all these platforms now and and I think that's extremely helpful when you have a platform that you can build or Minecraft even that uh people could like first off they've got an install base where people don't have to download something new uh I mean obviously the example games we gave earlier were you know installed new but they were obviously small and easy to download and steam made that pretty easy to discover and download them but also these platforms make it really easy and that was I think one of the advantages flash had as you mentioned playing stuff in the browser Aaron like uh it'll it'll be interesting to see where that goes because webgl is kind of like struggled it seems like at least with like unity's webgl exports so I'm not sure where we go technology wise with with that sort of browser stuff but it does seem like the actual platforms we'll get there and I don't know like now with Roblox potentially uh moving into VR as it

started opening that up I believe recently uh I was just reading about that I think earlier today uh that could then even suddenly VR you got you start seeing pop off because now there's a platform for developing for it that doesn't require this huge complex setup to figure out how to do so yeah maybe we're just we're just moving to another era and maybe a short-lived one but an exciting one for lots of experimentation new genres stuff like that maybe this is what mobile needs I know there's been tons of attempts at building platforms on mobile and there's there's roadblocks and stuff like that but maybe we need something on mobile that sort sort of unleashes this creativity so we could see lots new genres emerge and then the big game companies can copy those and then have new games to acquire users for basically my very final comment is that I don't think it's going to be short-lived I think this is going to be like a defining attribute of the next like extended era just as um barriers to entry and barriers to Creation fall AI tools come into play

better modding tools come into play like like this is just going to be much more important for a very long period of time and I think that's going to be really exciting definitely looking forward to the AI tools is definitely going to really uh address some of the Fidelity stuff we were talking about I think as well so be interested to see how that goes but you know we're also interested in what you guys think so if you have thoughts on this topic or the other topics we discussed feedback anything you want to say as well to uh any of the previous podcasts also uh make sure to email podcast navic dot Co so we're always looking out for good questions good comments things like that to share here on the air as we've done in the past so definitely do so uh but we want to take the the panelists here for a great discussion uh lots of great topics as always as this business doesn't seem to stop moving forward so we will of course uh see you guys next week make sure to catch you then if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or

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