Live from San Francisco + Special Guest Stars!

[Music] [Music] you've heard of heroic laps by now and we keep talking about them because you need every Edge to be successful in today's market heroic laps gam stack is built like a Breck house you got the Nama their backend game server hero their game development framework Satori their live op service and last but not least heroic Cloud to provide massive scalability heroic Labs is a battle tested partner and their Tech enables you to be flexible creative and scale for Success focus on your game avoid Tech risks grow your product with scalable liveops and save a big chunk of cheese all with heroic Labs all right I hey everybody uh good

good to see you all here how many of you listen to the deconstructor of fun podcast okay so so good amount raise your hand Joseph you know you're you should come up and be V honor or other person so JK was a founding member of this podcast and so yeah yeah okay well and you can just yell we don't have a mic for you but yeah come up talk oh you'll figure it out this is what's great oh yeah also we have a special guest who is not on the podcast but is here Matt with one t who is representing himself and not his company so I want to make sure about that but I'll let you introduce yourself in just a second so let me let me tell you what we're up to today because this is not your typical panel thank God we are going to make this interactive and so if you're familiar at all with our podcast and how it works we talk about all the game industry news we break it down we distill it every week people listen in and just have a fun time with it so what

people like about the podcast most when I ask is we fight and by fight I mean we have healthy disagreements because all of us represent different disciplines within the gaming industry cres is strategy Laura is product I pretend to do marketing admon right and then JK is just a knower of all things and builder of shooting games in India and also has an amazing podcast game makers and newsletter if you don't follow that you should because it's awesome all right so this is going to be a little bit of a live version of the podcast it's designed to be more of a discussion and so as we go through some of the topics and basically what we're doing is breaking down what we heard today across all of the different conferences I'll kind of throw out a different topic raise your hand if you want to participate and get on the fun it's like an interactive version of the podcast so please know that this is designed to be we're all one team one dream here together so I'm Jen Dono uh I'm a strategic marketing consult consult in

for Jaden Inferno and beta hat and today we have Eric Crest oh you introduce yourselves Eric I am a consultant so I consult for investors primarily on trading the publicly traded names but I also consult industry so like Warner Brothers and others on product and product strategy my job is basically looking at things from a 30,000 ft View and you know screaming from the cheap seats that's kind of my role in the in the gaming ecosphere he's the villain on podcast I'm the being one yes I'm Laura taranto um for the podcast I mostly cover casual I especially cover puzzle because I love puzzle games I think they deserve more credit than they get yeah and on my you know my side hustle no just kidding my main job I work for big fish and I was working a little bit on new games and now I'm doing helping out with some publishing titles yes and so in my world I love marketing teams at EA Zinga scole

EA Riot wait I said that EA twice so I work with a lot of uh game companies in that regard and so as a consultant I get a chance to see you know things across so many different companies which is really fun after having worked at all of the big guys but special guest Thanks Jen and nice to meet everybody nice to meet you mat Harris good to meet you nice to meet you let's see I run product management for Activision Blizzard media I've been there for about a almost two years now in March it'll be two years I've been been putting ads on the internet for a very long time so you're welcome for the free internet that I and my ads have been providing all this time started putting ads on the internet in about 2007 I had an ad agency which we we started to dabble in adte we ended up building a video advertising platform didn't really go very far but it launched my product management career I ended up moving to California from Austin and joined in Mobi and I've been working in mostly in Mobile ads uh for the last you know 15 years call it most

recently I was at Google for a short amount of time and before that I was at meta responsible for Facebook Audience Network and a handful of other products rap developers and and various monetization like based so it's really unfortunate that we could not find somebody with more experience apologies for that jakay KY you yeah so Joseph Kim some people who listen to the podcast earlier no JK but currently building a St out of India working on an extraction shooter game as well as a dating simulation game for India it's very challenging turns out game development is not as easy as you would think so have been struggling for many years shocking is making games is hard I think how many times do we fear that during the course of the day okay so the first topic of the day was pretty fun it was was was unfiltered growth and and Mike said something that was really

resonated with us which was this monetization model sucks and what he meant by that was the idea that in the world of UA we show ads to Gamers inside of our games for other games so he comes from the world of entertainment where you can imagine you don't watch CBS and see an ad for an NBC show on CBS or you don't go into McDonald's and see an ad for a Whopper so for him coming in new to the industry he's his mind was just blown of like why on Earth do we inside of our own games let other people advertise their games inside of I don't understand so that's kind of the first to because this really kind of triggered cres of like oh my God that is just such a a weird way to think about what has become our industry so you go first like what were your thoughts well my thoughts on the panel just to be as Frank feedback as I always give is they spent the first 35 40 minutes saying nothing and then it started getting real with

the exception of Josh who's I think here somewhere here's song anyway he was dropping F bongs which I really do appreciate I swear just all so yeah when he came out Mike said look this business kind of sucks like yes that's true it's a really tough business and that's what it's UA Arbitrage and you spend money to make money and that's the business and everything creative is kind of in the L of that and that's a really challenging business to be in particularly if you are from traditional media there's Jos there's Josh oh you just missed it thanks from the shout out thanks for dropping the F plums thank you so yeah it was a really yeah that was a good takeaway I'm glad Mike woke up at the air yeah what do I think okay so one thing to add was also what was it where we make money it's we only monetize a very very small part of the audience for I APS and I think that also startle Tim a little bit when he said that just like how can this be a business and it's funny after being in for I think for us being in this indust so long that's just like that's just

known I just feel like I've accepted that as it is what it is and what you try to do is get creative and and work around it and his other interesting comment was trying to monetize the middle class in terms of the median ltvs the Medan LTV D I was like then I was like oh that's what you do how do we how do we create that where you have these Big Spenders little group what about the rest of them and I feel like that's that would in my head I was like oh this should be a great topic for our session for now yeah absolutely well I mean people have gotten used to getting free stuff and playing games for free and watching shows for free and this is sort of how it all works like even from the days of like Romero and karmac with Wolfenstein and Commander keen and the shareware games like you could get them for free and just play them for free and on mobile of course it's just free to play and just this concept of freemium where you get it for free and then you can buy stuff in the game has really taken hold the problem is only a small percentage of people ever get their

wallets out and make a purchase and so you end up providing a game for free to a lot of people who just frankly can't be monetized anyway besides ads and we got to remember that people don't play games to be monetized of course but game developers I brought up Romero and car for a reason I want to go back to it because if you think about it there are just so few ways for software developers game developers to make money and they put so much time and effort into building a title and then that gets out there and then you hope somebody will play it but if people don't play it then it dies but if people play it and they don't pay you anything for it that's awful so there needs to be more monetization options for games yeah I was just about to say I think the one thing that's probably baked into the Assumption or the the Assumption that's baked into the comment about the monetization model being bad is the kind of assumption behind the the lifetime they gain and so depending on the kind of game that you have certainly if you have long-term durable products then switching from one to the other time is limited is sort of zero sum in that

sense and from a wallet perspective sure but there are some games like some hyper casual games where your Ard your average retention days may be is designed in a way that you actually want to ship players from one game to the other and so and certainly some games that don't monetize themselves the way in which that game would monetize is by shifting players to other games that monetize more strong so I think it depends on the situation the kind of King it it absolutely depends on the genre there are a number of games so when I was on TFT and we were looking at you know the Auto Battle genre it was very much like the ccg genre and what we noticed when we really dug into the player behavior is that for those genres that require a lot of like mental knowledge about your deck you know it's cognitive load like you were I call it the Highlander syndrome you only play one there can be only one it's a great movie from the 80s everybody and a TV show I'm sorry if you missed it go back you'll know what I'm talking about so for those types of games yes you would probably never want to let another type of those games

advertised inside of not that Riot does it anyway but you don't want to give away your players if you need to keep them inside but for like hyper casual for maybe some puzzle games there are genres where people I call them the vacation games those are the types of games where you're going to go take a vacation in a hyper casual game and then come back to maybe your midcore core game that you need to be a dedicated player right and the game itself may be actually designed as a feeder so for example would argue that a game like stumble guys that was acquired by scopely did they acquire that game for the game itself to be uh highly profitable game or was it acquired so that it could feed other games in the portfolio and so from a portfolio perspective that may be a reason to bought to you know have that game advertise other games because that's the nature of the monetization for that specific game well that's interesting but but you're talking about cross promotion right I'm talking about cross promotion and for a kind of game where the game itself and I know I think that

scop I believe I saw something where they're trying to make changes to sble guys so that it itself is a game that can monoton correct but I don't think it's there yet and so for some of these games they may be because of the characteristics of the game may be designed to to feed other gangs oh that's interesting I know that that's one of the few games that is more admon than the other typical and they're casual games are a little bit more higher on admon the midcore are lower on admon and higher on IAP but now I like that idea because it's also a feeder for the younger audience it's their game that truly hits that that younger audience that they have and it's almost like they're Roblox competitor in a way because every 12-year-old is playing stumble guys audience again raise your hands if you want to like if anyone has a take because we're all friends if not okay so another topic that kind of extends from this one was the idea of what came up a lot in your conversation and also earlier with was incentivized

and this is kind of goes back to your by the way incentivized and rewarded an offer wall all kind of generally mean the same thing right I'm just just just checking because I feel like we're just rebranding stuff over and over and like o rewarded is the new way to say incentivized is kind of what I felt like today but that topic felt like it came up as something of interest because everything else is so tried and true with the idea of incentivize kind of coming back around and being a major topic why do you think it kind of coming around as being something that is interesting that is getting a lot of conversation today as kind of a new channel well not really a new channel but a it felt like it had a little bit of a Revival and a Resurgence today in the conversation ver since where it's been I I mean I I think like if if you go back historically and this one thing that I mentioned is that in the old days and for some of the folks in the audience who are super old school I think I mentioned that when I did speak to somebody from tab jewelry when they first kind of innovated that model of incentivized traffic that there was a

point in time where on iOS half of the installs were actually from incentivized traffic and so certainly what we see is a model that can work now Apple has put into place a policy so that you can't I mean they don't want that kind of behavior right on their platform but I think we're in a space now as far as you know trying to find Alpha in the market user acquisition being very difficult that you need scale and so where are you going to get scale and so it makes sense that by figuring out a new model for driving user acquisition and this model seems to work and it doesn't seem to be currently being cracked down upon by the platforms that it to me makes sense I think there part of it is that they're rebranding it so that they can stay away from apples coming down with a hammer so I think it's only a matter of time that Apple says [ __ ] all and and canel the whole thing I mean that's kind of my thing because they hate that stuff to the extent that they actually makes a difference or makes changes to the way

people consume or download content on their platform they're going to basically just cut It ultimately that's what my concern is so I worked at tap jooy from you guys got canel you're welcome you guys Lally got cancelled back and that was you were the first first people to get canceled from Apple and I'm willing to say out loud I worked atap to it I worked from 2012 to 2015 and it was right after the Heyday of in order to even chart in the IOS app in the app store you had to run ads with Tapo had to be on the offer wall and burst campaigns were all the thing people would get their credit cards out and they would sign up for a weekend burst campaign and get thousands of installs paid installs and those were the good day good old days right y um I funded that house that you have wherever you live no no I got there I got there later I got there just after that and and we were working on tapjoy.com at the time which was sort of our way to be one step ahead of the posi sending basically saying consumers you can't do this on iOS you can do it on Android but in order to do it on iOS you can go to

tat.com and that's where you can get all the all the great offers to install get a bunch of rewards and then come back and it's just a game about seeing if you can install something and you might just get a you know few it you know play it for a minute you may never actually play it but that install was helping these Gate apps chart of course Apple hates that they hated that hated that but while I was a Tapjoy we innovated rewarded video and that's the thing that's actually stuck rewarded video and rewarded rich media and the thing about rewarded video and rewarder rich media is that it is the only way where players can actually get into the value Exchange in a way that they really feel it understand it we have this pretty tenuous connection as consumers to advertising we know that ads are paying for the football game we watch and ads are paying for us to have access to content but if we can avoid ads we will in a game that's rewarded you actually in Candy Crush you opt in you can choose to watch and engage with an ad whenever you do that you get a reward and it means that you're going to stand there and you're going toh give your attention

and what we saw at Tapjoy one of the main things we saw about reward and video technically we couldn't incentivize an install so rewarded video was thing we could reward you for watching the video all the way to completion but we couldn't reward you for doing the next thing what we discovered is that as people watch the video they became much more likely to install the game because video ads actually do work whenever you watch a video ad you are learning about something and you're that consideration phase that was interesting how Crush you politely challenged one of the gentlemen from the from what is it cash king cash king cash thank you I mean I knew it was it was it was 2ks but you were talking the head like isn't this kind of like a race to the bottom where as you are you know as you keep now giving players real money or real prizes or real rewards how do you how do you stay afloat when the next guy has to give 10 bucks and now you have to give 15 bucks and that value and so yeah so I I did a deep dive on

this because it's becoming an alternative way of acquiring users I wanted to see how much it could scale and so one of the issues that keeps coming up is that yeah it's a race to zero in which you give more and more compensation to the player and they're more and more incentivized as BCS get in and they want to optimize Revenue growth and growth just at all costs they're just going to keep throwing more and more money at the consumer and therefore the profitability is going to go down for the rest of the players so it's like it is a race to zero right cuz the barrier gries are very low but you know I talked to him a little bit and they differentiate themselves and sort the types of offers they do and whatever and they won't take that kind of business that they're not going to be losing money but we've gone from like you know two or three or four players in the last like two years ago to like 40 right so it's only a matter of time before you know the business model kind of falls apart in my humble opinion but there's a lot of other issues right there's a tech issue there's the Apple issue it's funny how everyone like totally gas lights and doesn't talk about the big you know

bastard in the room is that Apple completely destroyed this ecosystem in a matter of moments like in six months but anyway Apple and Google could come after these type of things at any moment right and just shut them down immediately right because that's what they can do right I think Apple's eyes is off the Privacy ball because I don't I don't think they give a [ __ ] anymore because they're going after Ai and other stupid things but you know if they come back to the Privacy thing you know they could go after this they could go after fingerprinting or whatever oh and then scaling right so how many people are actually willing to sign up for these type of services right how many consumers in the US and tier one countries in the in the world are willing to sign up how much can you scale this it's never going to match the scale of Facebook or app Lovin or anybody else like that so there's a certain limit to the amount of people that are going to be willing to pay for this type of service so while there's a lot of people chasing this I think there's just there's a lot of risks associated with long term as the VC start throwing money at it then you know it's a race to the bottom yeah it it was interesting an applier who's one of the sponsors of our

podcast has their like 17th annual tracking report out and and so I was you know trying to understand which of the platforms kind of were ranking the highest and there was something called was it games light or misplay is typically up there and so these are the channels that they're starting to track differently you know as incentivized channels versus like the traditional channels so it's just kind of interesting to see that this is floating to the top of something else for the record misplay evidently is minting mmy right now so they are huge and they're making a lot of money so if it's not saying it's happening now they it's eventual Bally up yeah it's just one of those things that until somebody the eye of soron like stars down and decides to like break it up you know get in while it's hot I guess oh yeah go ahead got a question on in question on in let's Less on a policy side but okay going back like you know mid 2010 in's always been around you know what it is but it's mostly empty Cali I me they all like intrinsically not super motivated to

play you get your installs up retention is bad so it's like okay tried it but it's great for charting back in those days but I think what's interesting with inent is this Resurgence I was like the math is starting to work out for the first time in a long time I would love to hear from the panel like what has changed why was it garbage before but now I was like man things are things are changing I'm just trying to figure out underneath what's going on so in incent was garbage back in the day in today's world it seems to be working panel why is that right I think because I think before the objective was install now you know that's against iOS policy at least right and so now the objective is an event and which could be defined by the stud and so you have to go into the game and you have to actually engage with the game to some degree which if the objective is just to install you'll just install then uninstall but here because you actually

do participate in the game you might find that hey I actually like this match game or this whatever game that that that you're bet you're trying out well also we get to set up like what the reward is and when they get it and like if you have a good data science team they're figuring out what behaviors they can model to say the likelihood of person getting to like level 30 that they're going to become a 30-day spender and then their the LTV is going to be good you can set that all up so you can actually control all of that so I feel we got in there and we were like all right this has to change what can we do how do we make it work and by the way that's not just for incent there's event optimization across you know all of the platforms are allowing for it and in many cases that optimization tends to be better than you know traditional roaz modeling or roow or t Raz whatever Google calls it but yeah I think the key again and we we talk about one team one dream on the podcast all the time is how do you make sure that your UA team and your product team are identifying what those markers are those events are

making sure that the tech allows you to track that and then going and buying against that and seeing how it does you can actually learn a lot about like the game itself from doing that yeah a danger though is if if you are assuming that these guys coming in and you set some kind of objective which they will likely achieve because they're incentivized to achieve it but you're comparing that against a natural cohort that's not incentivized there you might see like let's say you're you're optimizing for like some you know D7 metric of some kind and then you're assuming that that curve is going to continue because you're assuming that player's going to continue but then they just finished their objective now they're cashing out well then you you might get hosed and yeah those kind of assumptions yeah it's up her point you have to make sure that you that's right understand and track the different cohorts differently from the install Source right right and you have to be able to actually be able to track yeah which is not easy these days yeah for sure so back in even back when I was at taty we were incentivizing post install

so you would install then you would play to a certain point and then you would then you would earn your reward and optimizing for that is indeed the right thing because then you're getting people to actually play the game and experience it and you have a much higher chance of getting somebody who's going to stay with the game long enough to make it worthwhile one thing that we have gotten better at as an industry in the last handful of years since then is actually we've been talking about machine learning since at least those days but like in reality we're finally getting really good at optimizing for these events and the misplays of the world are going to have sophisticated you know data models they're also going to have uh knowledge of those players like these are essentially a network a known network of players that they have now right so they're going to do a much better job of matching players with games that they know the players are going to like and doing a better job of like basically becoming a discovery vehicle for them actually that was the most interesting thing of a whole kind of project of looking at this was that there are not many Spenders in the US like you could estimate between 10 maybe

15 20 million tops right in terms of that then actively on games so if you can catalog those people and a lot of these companies came off from the Crypt Bros right that had all these networks people that they wanted to optimize and monetize and so they threw them into their database and started doing misplay and other stuff so at the end of the day like if you are actually targeting and finding these customers and holding on to them there is a value huge value for that so that was the one part that kind of like struck me as interesting is that if you get all the spend in the US all the thers in UK Germany other tier one English countries that's really really valuable can you hold on to them though if they're getting incentivized from all these other people like trying to steal them from you you know that's that's the race to zero problem so 100% but as a as a UA Channel that's really optimal right if you can go after them and what I heard from third parties or people that are using a service is that they get the most the best bang for their buff by spending on these type displ and others but it just doesn't scale large enough to be a big part of the mix so yeah we'll see how it evolves it's it's an

interesting new kind of category or new old new whatever category yes and it seems like to your point which I think is the most powerful sadly is that you can't scale on these so if you're a small a medium or a smaller sized company you know it's it's really great and maybe that kind of works for you or maybe that's a way for you to kind of survive but for you know the bigger companies that are looking for scale this has always been the problem of of even when I was back sco or trying all of these different channels it was like yeah but it can it can its scale and and that was spending like 90% of their their dollars on atle so sorry sorry yeah no it's super hard anything else on this Captain excellent awesome thanks everybody this has been really exciting um Sarah here I lead a partnership team over at Google actually and have this love apps and and da so probably know all of you guys who second degrees thir degrees I was just in the offside kind

of talking through a lot of the growth areas we wanted of focus on for next year and gaming is one area that we see as a lot of challenges well as a lot of potential uh one of the things that I think has came up is really thinking about then we talk a little B about advertising on gaming Partners right and really thinking about how do we really expand that from gaming advertisers to Beyond gaming where I spending potentially so thinking through that I love to kind of hear from this here of to see what's your thought on expanding the ging from an advertising standpoint and how do we think about like how might we represent ourselves in terms of in front of Brands and agencies to really help in kind of drawing more dollars into the ecosystem absolutely so from an advertiser's perspective the distinction between CTV and running a video ad in a game like there is a distinction of course of course and so what you want to do is you want to find advertisers who are advertising on CTV and show them that video ads in the game are similar and how are they similar well we have

the same people the one the people who play game X are also watching these shows and you can find the same audience and you can find them more predictably like there's there's all sorts of ways you can approach advertisers that way the issue though is goes back to the very first thing we talked about in the panel which is the second a game decides to monetize with ads even if they say at that moment they're not going to let game adds in eventually all roads lean back to that because performance advert izing is where the money is and so once it becomes a yield maximization exercise then now you're looking at who's going to pay the most where I get the highest tcpms and frankly there's no higher qualified advertising opportunity in the world besides a game advertising a game to a person playing a game while they're playing a game right and so this is highly highly qualified and it all trades on the same coin of the realm a mobile advertising ID that's the same across the entire ecosystem and so you can find your audience you can exclude

them you can have the most sophisticated marketing teams in the world I believe work for UA for games they have it on lock so they're willing to spend a lot of money to get an install from a person that they believe is high value and they have a really good understanding of who is high valued so a brand that wants to advertise tooth faast in a game is not going to pay the cpns of a performance Advertiser who knows they're going to find performance in the game so you will get it but it's going to be you're going to have like the Spectrum effect and we have a decent brand business I would say where I work but the fact is that that comes like of course these the brand dollars compete against performance and so you ask like where to go next I think definitely other performance like DTC or e-commerce there's got to be other lead gen midf funnel objectives those are things especially with a reward on top of it could be very valuable yeah I mean that's the the number one problem is the difference in objectives from non-gaming

Partners which is typically brand goals versus the performance deliverables what what I've seen in ads and and why you see this directly right now is is collaborations that are more deeply integrated into the brand experience and so this is why you see SpongeBob and John Cena doing a brawl stares ad or the cutest little baby pygm hippo in a pubg game I it was like the weirdest collaboration I've ever seen um but you you're you know KFC in sponsoring events in Esports typically also a ton in Asia and so you can you can understand that when you're a brand and you get to do an event for this moment in time and you get to be more seamlessly integrated into the experience where players get a lot of value then the players are like oh cool I'm getting this great game value and now I have a positive association with the brand those are the types of experiences that are really a win-win however they are more

complicated to do they take more time and effort you have to like set those up and so my recommendation of why I always talk about collaborations on the podcast is like that's the future of this stuff is programmatic in the game I'm sorry because I'm killing his business by giving this recommendation if you're a brand partner outside of games and you want to like how do I leverage this amazing audience of all these different people and that we're not even talking about Roblox or the ugc 3 which is you know Minecraft which doesn't do ads yet but you know Roblox and ufn there's a massive you know Teenage Ninja Turtles event that's about to go live in in UE FN and then on Roblox holy [ __ ] like the re I mean Sonic is a brand who played Sonic as a kid right right like do you know that that that's the number one game on Roblox right now is Sonic of all the game Brands because they have found a way to revitalize that entire brand within the Branded ecosystem so there are games that are Brands and then there

are also collaborations inside of Roblox you know Laura you need to talk about your Walmart Roblox because she thinks the future is selling [ __ ] inside of Roblox so Tik Tok shop yeah how do you integrate Tik Tok into the Tik Tok shop but the Walmart experience you can buy actual products there's Shopify integrated into Roblox right now so elf I I I know nothing about makeup but there's a makeup brand called elf right or is it called elf I it it it has periods in it okay good thank you you can actually buy products inside of Roblox this is targeting kids everybody like it's crazy that you're able to do this you never have to leave Roblox we don't have to leave I mean so sorry did we I did we totally answer your question I I went off as I typically do I went off tangent yeah all right yeah but no I just get excited about talking about that I feel we don't talk about it enough like the old the old I think you mentioned this earlier that when stumble guys was kind of like the gate weight to other games I actually thought you were going to say

some games were designed not to be the Gateway were designed to kind of take a break and that's how we used to do design that's how we used to set the timers for lives refills or we used to restrict things either you're going to pay or you're going to come back and we know that less than 5% of players pay so therefore they come back and now it's the shift to well where is everyone let's look so TI talk is one of the if you actually look at where people are spending money in terms of Revenue it's moving into Apps the Tik tok's the number one it was from a report on sensor Tower and it's the same idea that Roblox and Walmart are pairing together because you go where people are staying and the goal now is to get them to stay it's how some of the design in G in game design has shifted like when we did the township breakdown you never have to leave and they don't want you to yeah anyway so that's why I'm hoping to see like a more conversations around what are we changing in terms of how we think of monetization not just in terms of IAA or IAP but what are the other crazy

things we can do that some of the non-gaming well Roblox is a game but some of games apps like Tik Tok are thinking about like get them to stay you never have to go home you can always just stay here oh it's the best bar wait not for kid not for children though this podcast is brought to you by apps flyer in today's Digital World understanding your apps Journey from Discovery to download is more than just insightful it's essential enter apps fer the leader in Mobile attribution and marketing analytics that allows you to measure the full potential of your marketing efforts making every ad dollar work smarter with appsflyer that's your new reality dive deep into Data driven insights that reveal exactly where your users come from and how they'll interact with your app apps flyer where your app's potential meets performance step into the future of game monetization with exola the premier partner for game

developers seeking to expand their reach in Revenue exola provides a robust Suite of tools designed to enhance user acquisition manage subscriptions and streamlined Payment Solutions worldwide unlock new markets and maximize profitability through their customize secure payment architecture and dedicated support team exola powering game developers to achieve Global success I thought we would move to another topic that came up which was how to survive in 2025 because it Rhymes and you know here Crest this is one I think you know we talk about a lot which is it's harder to break through the Clutter feels like the bigger getting bigger it's really difficult to survive so what are some of the ways that you're looking at this and seeing this because it's it's really what we get asked about all the time is it you know is it okay to be small to start a company is it how does the little guys survive or do they yeah I've

been kind of on a presentation tour I went to Blizzard I went to Epic or was it Sony confidentially he did all of those things everybody both about mobile and console and what's interesting is both mobile and console are kind of in this existential crisis right now where even though the Market's growing pretty well this year for mobile generally we're going to be at a 3 to five% kager for the next decade right there's no new platform there's no like mobile which is going at 20% kager for like a decade which is unprecedented in entertainment by the way so we're basically at the slow growth rate and we have winners and losers and it's a battle of the big right so big companies with big budgets like King and scop Le on mobile and then obviously the big Publishers on Console of the AAA the dying of the double A and like these are the type of things these thingses we're talking about and uh it's getting mixed perceptions I'll be honest I a lot of people just don't want to hear that right because we've been in this

hyper growth rate for so long and the attention that was focused on video games not only during the hypergrowth rate of mobile but also during the co time in which everyone was getting involved in in gaming in some way these Venture Capital was coming out of nowhere with absolutely no experience no knowledge a16z spending gajillions of dollars on [ __ ] you know like you know then there we had blockchain and we I know we had a lot of web three people here there was a complete disaster so anyway there just lot of money attention on there but now we're heing this huge hangover and we're at a slow growth Market winners and losers big guys are the only ones that can compete it's going to be a tough space you know I mean at the end of the day that is what the the problem is is like you can't compete right Monopoly go $500 million they spent in the first like eight months I mean that's insane insane that was that's insane just like 5 years ago that's an insane number you know and so having said that there have been things that are breaking through on mobile that are really interesting where it's more casual type gameplay with deep

monetization design these 4X games that are disguised as like Runners and things like that and I'm always going to forget the names of these games but I've been writing about them you know last four survival white surv white out survival those type of game that's very very smart but still it's still very Coe and they still have tons of money it's not like they're like they're struggling for money to pay for this thing so yeah this is a big challenge for the industry moving forward and that's kind of my hot quick T I thought she I think that this for me is a particularly interesting topic just because I do think like we've seen a lot of layoffs we've seen a lot of the industry contraction and a lot of negativity around the industry in general but to the point that you made it is because of the overhang because of a Zer environment because of covid and linear extrapolation from covid so I do think that what's happening now is a little bit healthy for the industry but overall the industry is I mean we can argue about the growth rates but it is growing I personally have more of an

optimistic perspective in terms of like the outlet for the industry because you could capitalize a market in terms of the mobile games industry as only the big guys are winning you don't really see that on the HD side right like we've seen lethal company valheim battle power we've seen a bunch of small stos achieve you know number one sales on Steam with very small teams because these smaller teams have a better sense of player needs and Market needs and they're better able to address those Market needs now on the mobile side I think there's something else happening for example you know when I was in Gamescom the there was a lot of negativity but one of the things that we did see is that there was a dramatic shift from new games development to live Ops and just trying to make existing games work and so what we seeing now is we're clearly going to have a a new games pipeline problem right and so when even the

bigger guys when you look at 25 26 they're struggling right now to figure out their new game pipeline one of the other things that I think a lot about is that the industry hasn't changed very much it's like the darwinian notion of like the companies that are able to adapt to the environment are the companies that are way to survive well we haven't seen bigger companies adapt and so we still still have like these large monolithic game development processes at these bigger companies we've seen the big flops whether it's Concord wb's Justice League whatever the suicide $200 million loss right yeah and we're seeing like these huge game development projects that are based upon let's make a better version of this let's scale up this big team in 8 years later we're going to launch something with the sort of vision of the game being developed by a lot of big company Executives Who

Don't Know Jack [ __ ] about games right and so what we're seeing on the HD side is we're seeing these small developers that really understand the market that are able to achieve product Market success to scale but they suck at live off so they those gain Shucks in and on the mobile side I actually think we're going to see a lot more opportunity there are so many structural changes that have happened in our industry whether it's Zer whether it's upcoming things like Ai and other things and so my prediction is that there's going to be a new class of smaller companies that are able to successfully adapt the market to deliver products that are better adapted and not just again you know you can't use MBA thinking to develop hip products for mobile which is what's being tried over and over and over again and then we we sit here as an industry and be like okay here's another1 million $200 million

Dame that that failed gee I wonder what went wrong right you've got a lot CR is he's GNA explode right now sorry I want to agree with you I want to shoot all the Consultants I think Bay and McKenzie go the [ __ ] home get the way get away from gaming if any guys were Bay McKenzie please go away anyway no so I agree with that point but I I disagree with the idea that these small Publishers or developers can can compete and things like Po world is like kind of a false flag right so power was built like they started 2015 they copied Zelda that game failed then they used all leverage all that Tech built power got a bank roll from Microsoft right that's not reported upwards of 7 million no no no 7 million was the investment but there's like 20 million or more this game after the fact by Microsoft which wasn't reported and they copied an IP right so they didn't even build their own game right they just copied Pokemon right so yep sure that game was successful successful for a hot minute but that doesn't bode well for Success cuz to your point which I agree with is

that they can't support the game after the fact that keep players engaged which is a problem not being big enough right so I do think it's a battle of big but what I would argue is that this is a feature not a bug right the F the fact of the matter is when you get to a mature part of an industry particularly when it comes to entertainment it is a b battle of the big like before Netflix and the rest of these streaming services it was like four major Studios or three major Studios and four major movie studios right that was it and you got the same sh [ __ ] over and over and over again and you guys ate it up right you know with the Marvel and everything else but when Netflix came and and changed the game then then options were you know abounded right so same thing with mobile right when mobile came out in 2010 12 ibody was part of that was it was amazing people were throwing anything out there to see what sticks you know King had like 20 games that they threw out there of which only one was really that successful you know and so it's like like that's just the way this Market matures right that's just the situation that we're in and and I think would did and what I was trying to say before is that it changed expectations

because there was so much buzz and hype and investment from people that don't know anything about games into the space it created this artificial bubble that we're still kind of reging from right now and one of the ones that burst today the news is that team blue which is the AAA development team at Netflix who had been working on a massive shooter game new IP for two years with some of the biggest industry leaders got shut down today yeah people making like a million dollar salaries I mean it's like ludicrous right these I mean it's insane right it was insane back then I talked about on the podcast Netflix investing in a AAA game makes no sense it doesn't make any sense and Mike Rue I known him for for command days I don't know what the hell they were thinking and so getting if you're Netflix you're trying to get as much of the 24 hours everyone has right in a day they're going to sleep for eight hours but then they have 16 hours left how many of those are spent on Netflix know sorry I agree with that what I'm saying I'm not saying they'll be successful at it but I think you can see why that somebody would want to try no what no yes and no I they

should lend to them strengths right their strengths is they have this huge network of people that are engaging with their TV app or their mobile app build games to service them you don't build things outside of your ecosystem 100% yeah that's what didn't make sense we actually did an exercise about a year ago I was leaving a strategy session for a bunch of product managers at Candy Crush in stockhold and we did a we did a strategy exercise around okay you're the you're the product lead for gaming what are you going to build and the only thing we could come up with like in this group of 60 people all talking about it was if they came up with games that reinforced their own IP in a way that allowed them to extend while they're waiting for season six of stranger things if there was a game you could play and engage with to keep you in that and then go back like that would be a really valuable thing yeah like interactive stor but that's about it too hot to handle money Heist they yeah they they they try interact with story this is what was driving me insane I know people that worked there and they were telling me that this is what they were working on but yet all this PR was

around nonsense in the podcast so mobile spending $50 million on GTA to throw it on mobile so they get some downloads that people play for like 10 minutes and then drop it right the none of that strategy made sense but they are working on these type of interactive experiences that could expand interactive and and make make an interesting play in the mobile for Netflix and then the other one I want to mention is steam so steam is is a really a false flag to also to some degree right all the growth is in Asia right so 50% of the ma that they talk about in terms of growth is all in Asia and that's not a bad thing I'm not saying that EA Ubisoft Tik 2 Capcom all are benefiting from the fact that there's a new audience that you could monetize in China right which is great but it's totally illegal right it's gray Market the Chinese CCP could come after them at any moment and shut it down no they not for whatever reason but that market is tenuous at best right so when something like lukon is successful it's about Chinese game made by a Chinese

developer with a Chinese theme right that's what works in China right so that's going to be successful but you're not going to be able to support anything and expect it to be successful in China with these you know 50% of the audience on Steen so there's a lot of misreporting about what's going on with that now the PC market is growing like in Japan there was a report there I think it's doing well in Asia in obviously in China obviously but also in Europe and North America but still it's 10,000 games a year right it's impossible to get discovered like people are losing their ass on schem I'm out there talking to these developers on a regular basis it's not fun for them you know so I I question some of those metrics as well so again I think again we're at a stable growth rate the big have a huge advantage and it's going to be a real challenge to go forward just one comment on Netflix I I think the interesting thing for me about Netflix game strategy is that my understanding of the objective behind the games team at Netflix is as a reaction to fortnite that you know the the CEO was rasing is like oh we realize that fortnite is

stealing time away from Netflix and so we want to make games but then I would then question why make all these small little tiny games if the real fear is a game that has extremely long-term durability and engagement right I would almost say like the strategy should be like a few teams that are extremely high quality that are working on these like huge hits rather than having small I understand why Netflix would invest in something like that okay but I don't know how they would guarantee success you be swinging every single time and you hoped you'd hit something because it's still catching Lighting in a bottle and it doesn't matter how high quality the game is really it's one of the most important things necessary but not sufficient most likely right yeah I I just think like from an objectives perspective there's like okay we're trying to react to fortnite but then it's like well how do we leverage our our assets and what we have to B games seems to be two different things it comes down to right to win does Netflix

have the right to win against fortnite on fortnite's I don't think so no yeah not at all yeah I they could they chire something that might but like will may have what it takes to do it like and how does that reinforce their own subcription it's like you know it's something it doesn't even make sense none of it makes sense it's you know I guess what's so frustrating is there these people these director level people are making like 800 maybe I'm just jealous right they're making 800 Grand a year for doing what nothing nothing I mean it's crazy none of them will talk to me either like friends of mine that I've known for like decades because they don't they don't they run away from us they they don't want to get off the The Tee of the you know the money that they're getting they hey I'm not I'm not rocking the boat you know sorry this is not meant to be a flex but I was getting a call from the Wall Street TR this weekend about about this about what what was happening with this triaa team getting canceled and I'm like look there's no way any friends will ever talk to me about this because they're worried about losing their you know $600,000 job you know so sorry I

can't help you but but anyway the news came out anyway that's a bit flex we're coming up on time just to give you guys a chance to ask anything that is off topic go for it uh hi yeah I'm Tiffy uh on this Netflix topic it seemed like you guys were in agreement that trying to make these smaller games that are just Tiding people over until the next season comes out like that could be their biggest strength but yet we see what maybe like 1% of their base actually downloads these games so like what's really the sticking point there on actually getting their install base to engage with the content that is designed for them or like what about using their games for things like a way to further their own product marketing for the series that they plan on doing next when you look at like the IPS that they have to leverage when we see them leveraging them for some reason it's actually not creating SAS well the inside baseball that's going on is that the gaming group and I wrote a

piece on this on LinkedIn if you ever want to read it but the gaming group gets no leverage at all in the organization right it's all set up to service the movie and television guys right and so they have like I I think it's like 150 PL team of strategy people that are all talking about how to optimize the network and gaming gets like this much attention right so this is the problem right it just hasn't been elevated enough and it's just a traditional problem with traditional media and gaming in general is that they just don't get the attention so and I just don't think they've had the product that actually would justify the investment frankly I think interactive stories based upon their existing IPS or whatever would be something that would be interesting things like did well was like oxenfree and I'm forgetting there's one other one that did really well for them Storyteller from an engagement perspective and the real inside baseball stuff is they're optimizing around metrics that make no sense for interactive it's like they're looking at like God dang it I forg the name of it but there's you get points for every time they interact with the content on a weekly basis up to like four weeks or

five weeks or something like that so they're just optimizing around this like really short window to keep people engaged with content and they're using so they're using the same rubric they do for movies and television on games which doesn't make any sense either but that's the way they think that's the way the whole organization is set up the one of other thing about the way the org is set up so it's all about Discovery nobody can find any of the games every time I talk to a late person they're like they're games on there like where are they I've never seen it and so the gaming group and the group that builds this the way to surface and discover the apps they're different groups and so when the gaming group's like hey product team can you and they're like no you are priority you're come come back in two years when I get through all of these other things on my road map and so all of this goes back to the earlier conversation about how Tapjoy the reason why people use Tapjoy was to get your game up to the number one R ranking in the app store because rankings mattered

back in the day because on Apple before they got rid of rankings every player would see that and it became a flywheel and so Netflix doesn't even have anything close to what the App Store is today that we all even [ __ ] on like I would even take the shitty Discovery today tab on the Netflix app that and that's [ __ ] so there was a new ad on the Today Tab and so I was asking the community hey is anyone seeing anything cuz it look like you can actually Buy and add in a today Tab and they were like nope still sucks and so Discovery is I think their number one problem and then internally they have no way to rectify that so many of these large game companies like work at Activision people'll talk about like our biggest competitor it's another game it's Netflix it's YouTube because we're competing upside yeah yeah so does does Netflix actually consider gaming this way absolutely that's what they're looking at like who can eat up that share of time is actually gave to the Candy Crush why don't they care more

about prioritizing it I mean the fact that they're investing hundreds of millions of dollars on nothing right now they're's just like blowing money I mean that's at least they're committed right they hired a new guy yeah well and new guy the Epic guy I forgot his name has come in and what do what did he do he shut down yeah the one key thing from investor perspective just so you know is that when the Netflix guys the management go after something they never stop right this is not like Google which gives up after three years and and abandons all no I mean that's what Google does I mean that's just fact right so and you saw it was stadia right three years out right but the hting they they don't mess around they will keep going and going and going then they're going to just do it until it and I was wrong about this in my piece is that they were going to give up on gaming but after this three three years from now I I think they probably will give up one thing that I saw from from the inside of like these companies right was that I used to think

that a lot of these decisions were top down and in reality though I think some percentage of things like this whether gains will win or lose at a place like Netflix comes down to product engineering teams seeking impact because they want to work on the most impactful things I mean the best engineers at Amazon aren't working on Alexa right now because they chose not to and the same thing is probably true for other things that we all thought were going to to be important but it's just not where the impact is you can't be promoted you're not going to have like you can take a different trick if you stay in something like that yeah I think that's more relevant for technology companies like Google or it's super relevant for techn for Google and Facebook for sure I think I think the strategy for Netflix is more high level like more tops down I constantly bagging on Apple if anyone ever listens to podcast but like the Privacy thing that they did had nothing to do with the store it had nothing to do with anybody Google into caring about privacy and they do the customer like no one gives a

[ __ ] about privacy I mean who's giving a crap about privacy even from the customer level they had to convince the customer to care to differentiate themselves from Google and then they throw this privacy [ __ ] at us and destroy the ecosystem for no [ __ ] reason besides selling a few more phones and now they've moved on right they don't care anymore about privacy right they did hire a bunch of DSP product manag Engineers like they are building an ad product of some kind right right well they have ASA which is that's rft they just wanted to stick it to Facebook I mean come on let's be real they lost control of their store I mean they have all these IGN guys making stupid like editorial and there store I mean the whole thing is a disaster as we know so back to the point a lot of these things are so tops down and that's actually what we talked about on the podcast oh one of the reasons is EA here still yeah oh so the reason I mean I said this on the podcast a million times and this is total truth as far as I in my mind anyway the way my mind works the reason EA continues to fail on mobile is because Andrew [ __ ] hates mobile right so they will never succeed in

Mobile because they will never make the appropriate Investments to actually be successful in Mobile and that's why EA has built over and over and over and over again the glue acquisition was disaster so like at the end of the day like these top level decisions are made and you know the ego like maniacal like nonsense from like the top is what kind of makes these decisions and and this trickles all the way down to ecosystems Steve Jobs was the first right he made lots of interesting decisions of his history of Apple so all right should we start to wrap Josh and team here I'm just you know sorry I have one I have one end to the the thought experiment so let's say we make them care they find that Netflix's subscriber turn big reason they want to do games right is if games actually can be linked back which are unable to make money to solvate their subscriber turn issues because they's stuck in these games endlessly then would they care is that like the L pin to getting them to truly invest or do

you think it would need to be something else no no if they solve a churn issue like even by a fraction of a percent like that's huge money for them I have heard specifically that Ox free and other games have actually shown that they've had the performance that you know you can manipulate the number of some like super nerd keep de can figure this stuff out with you know like some squel can n right but like and so like that's all they need to prove and then they will keep investing forever right yeah the ones that are working in their definition are the games that are based on their IP the more interactive stories now the the challenge it it everyone know what the interactive stories basically it's like and anyone know skinx that phrase so it's basically like softcore for porn in story mode so number one is it's it's creepy and then number two is it's really really expensive to actually produce that kind of content it's the content treadmill many of us know what this is and so their whole like approach right now is

how do I do more of that against the IP that we know resonates by the way and mostly women are are interacting with that and and how do we do that as cheaply as possible as quickly as possible because that is the thing that is working uh they're struggling to get more of the traditional male Gamers traditionally in in those other genres to participate like double down on what's working and that's that's why you see again the aleaa studio is now no longer there it's going to get cheaper there's no way this is where AI can oh my God this is the I mean thank God D well there yeah I skipped that one although we were very impressed with blackbox and and one was cool there's replay and there's other companies that are doing the how do you take UA creative have ai go in and cut up the parts and pieces and recreate ads and automatically test it well done that's brilliant [ __ ] if not if you're not already talking to those times of companies and you should be right away because this is like truly gamechanging

in the world of how AI is benefiting marketing okay should I really wrap up this time because you probably want to go home all right thank you everyone it was like JK Matt thank you for joining thank you you did it you made it to the end of the episode as a fan of the show it would help us out if you subscribe and leave us a review on the podcast service of your choice more importantly are you member of the deconstructor of fund slack group if you have 5 years or more of games industry experience go to deconstructor of fun.com slack and apply to join join the games industry's best professional Community filled with peers always willing to lend a hand or subscribe to our newsletter to get all the latest insights from the deconstructor of fund content creators thanks for listening