Market Update: UEFN Monetization, Meta’s Vision, and the Future of Consoles

[Music] Welcome to the Navit Gaming Podcast, where it is our mission to explore the business and future of video games. We bring together the industry's brightest builders, investors, and thinkers to keep a pulse on current events, dissect emerging trends and games, share lessons learned, and have a great time. This podcast is also part of Navik's growing ecosystem which ranges from free and premium research to consulting and advisory services. For more information, visit www.navic.co. [Music] This episode is brought to you by Lightseed Venture Partners. Lightseed is a globally leading venture capital firm with over $29 billion in capital under management and more than 500 investments across the US, Europe, and Asia. With its dedicated gaming practice, Lightseed Gaming, the firm is investing from over $7 billion in early and growth stage

capital, making it by far the largest fund focused on gaming and interactive technology. Lightseed's team combines deep expertise in gaming with a global multi-stage investment platform and a culture that truly puts founders first. Selected investments include Epic Games, Snap, and Stability AI, as well as game designers and producers who led the creation of titles like Fortnite, Call of Duty, League of Legends, Valerant, Starcraft 2, and many more. For more information, simply go to gaming.lsvp.com or check out the details in the show notes. This episode is brought to you by Overwolf. With over 1,500 games supported, 165,000 creators, and 38 million monthly active users, Overwolf is the guild for in-game creators. Whether you're a gamer, creator, or game studio, Overwolf is the ultimate destination for integrating UGC in games. For game studios, Overwolf offers

Curse Forge for studios, a white label solution that lets game makers and publishers easily integrate mods safely and seamlessly into their games, both existing and new, at zero cost. It's battle tested by AAA Studios and Games, including Maxis with The Sims 4, Studio Wildcard with Ark, Take 2 Interactive, and others. For creators, Overwolf is the all-in-one platform that enables creators to build, distribute, and monetize in-game apps, mods, and game servers. In 2022, Overwolf paid over $160 million to in-game creators, proving that they truly value the talents and contributions of the gaming community. You can check out everything Overwolf has to offer at overwolf.com or check out the details in the show notes. And with that, let's jump into the episode. Hello everyone. I'm your host Devin Becker and today I'm delighted to be joined by a familiar face for sure for you those of you here that uh at least watch the YouTube uh Aaron Bush, the managing partner and

co-founder at Navic. And today we're going to do something a little bit different, something we haven't had a chance to do all that much since our previous round table series, which is just take a broader look at the overall game market. Kind of check in, see what's going on, what kind of topics might be important at the moment, especially with it being such a big year, I think, for gaming, both good and bad. So, uh, but we want to start a little more even more broadly than that, I guess, uh, which, uh, we don't talk about a whole lot, but we just want to go over what's new with Navic. I mean, uh, Aaron, what's going on here at the biz? Yeah, I mean, first of all, good to see you, Devin, and it's good to be on the other side of the mic. It's been it's been quite a while. Probably since the roundts that we've done this, but yeah, I mean, we should talk more bigger picture about the industry and um we can dig into all sorts of interesting stuff, but yeah, I mean, starting with Navic, I mean um I mean, it's been an entrepreneurial journey for sure, which I'm sure like a lot of the guests that we have and a lot of people listening will understand in their own way. Um but I mean ultimately things are good. Um,

and uh, you know, some of this is, uh, you know, self- serving, but I honestly do think that like a lot of people should learn and like more about what we're doing because you might find it helpful, too. But I I'll keep it brief. I mean, we're doing a ton of consulting work around the around all sorts of various games and business aspects. But, you know, maybe what's more interesting and newer is like over the past few months, we've we've launched a couple new um, verticals at Navic. The first one is our um fractional talent collective where basically like companies have always come to Navic for support on various projects and filling gaps in their team and Deon you've been involved in a ton of these over the past few years. Um but sometimes like consulting is just the wrong framing and sometimes people just need help, right? They just need like a person to come in uh for however many hours a week for however many months and just play a role whether it's
related to the product side game economy design whether it's related to QA or art or engineering or basically like any function related to like making

successful games and game companies. Um what a lot of people don't realize is that like at Navic we have a really deep bench of this fractional talent. Um, and we're looking for more work for these awesome people. And so, like whether it's now or later, like if your company just needs awesome people to work with to fill gaps at various parts of your production cycle, at various parts of your your growth stages, um, just reach out for a conversation. Maybe um, you know, maybe we can find someone who's a good fit for you. And even if we can't, we often know where to to point you anyway. So, that's one. Um, and then the second newer thing is what kind of got pulled out of us out of a lot of our work with startups and investors in the past is a bunch of M&A and investment advisory type of work. And so we've been helping some teams with fundraising. Um, if you're in the market too, maybe we can help you there. We're not an investment bank. We work a little bit differently, but because of all of the other work we do um, in the weeds with games teams and with investors, um, uh, we have some unique advantages and have

a helpful lens for that. Um and then similarly like on the other side of equation, we've been working with a ton of investors like a lot of private equity firms for example um and due diligence in companies that they're interested in investing in or acquiring. And so um if you're on either side of the spectrum and are interested in how we can potentially help or just need support in general, uh yeah, reach out to chat. We'd be happy to to maybe support you guys. And the last thing I would say which is more timely um is that we have been having conversations with more Indian companies like ever since they uh the Indian government banned the real money gaming market uh which you know was a pretty big pillar of how most people would define the Indian games industry. A lot of these larger companies in the Indian market, most of their revenue was just wiped out. And so they're actively looking to backfill that lost revenue. And so they're in the market for pretty

meaningful acquisitions at the moment. And there's what is likely a 3 or so month window in which we're just going to see more aggressive acquisitions. And we've been working with some of those companies and um investment banks that are connected to all of those companies um to just help them find um like good companies to buy and backfill. And so if you are interested in all in just having those conversations, I'm just talking to a lot of studios um right now. what these Indian companies are looking for, you know, is primarily free-to-play mobile studios um that are, you know, have 15 million or larger in revenue, ideally profitable. Um but like there's a ton of flexibility at the moment just because of the kind of the the crisis point of what's going on right now where it doesn't really matter what genre you're in. If you're not even in mobile, that's okay. if you're in more like adjacent tech related to sports or

casino or or whatever it might be like there could be an opportunity for you there too and I feel like uh a lot of companies don't quite realize that this opportunity is going on right now to the extent that it is and all these conversations are happening um and a lot of it is just because a lot of the conversations are behind the scenes but I don't I don't see why we can't at least say it publicly uh um and so if anything here is helpful to you um you know, we're we're here to serve and so we can kind of talk into the news and the bigger picture points after this, but I thought it would just be helpful to just update everyone on some of the new things that we're up to just in the in case it is actually genuinely helpful to you. Yeah, I mean that's that's one of the things I love about Navic. I mean, not to toot our own horn too much, but the the the flexibility and adaptability to what the market needs at any given time, I think is I personally find great. like uh just because it keeps things interesting here at all times. Uh but yeah, definitely always reach out even

if there's something that we don't have say listed on the website as a service. We're very flexible and have a lot of people that are able to do a lot of different things and know a lot of people and things like that. So I always recommend talking plus it's just fun, you know, good chat anyways if nothing else.
Happy to share notes worst case. Yeah,
exactly. And I mean I you you gave almost gave a little bit of a preview of a of a topic we're not covering but is definitely timely as well which is around the the real money stuff in in India is definitely an interesting one and I think we have a pretty uh recent digest piece if for those of you who are listening who are just hearing about this for the first time uh that I think is worth digging into as well cover some pretty good stuff on that mention that
but there's there's a lot of stuff going on I I mean we we don't have really enough time to cover every possible thing going on and uh we just thought we' cover a couple interesting things from sort of a a business level looking at some different aspects of this this market. Starting with one that I think we've, you know, touched on a lot, but not necessarily uh always dug into the

details of like the financial side since the probably the roundts too much and and maybe some of the guests, but uh there's been some big changes to what uh UEFN or Fortnite creative or whatever the uh the the best moniker is for it at the time uh is doing around making money for people that are uh basically creating content in there.
Yeah. Uh so what's interesting is if you zoom back to what we were saying in the round tables or at least what I remember I was saying in the roundts was that UFN would just take time to improve both in terms of what it enables devs to do and hopefully how it enables monetization around it. And um you know it's sort of a ironically an unpopular position because to creators in the moment it like the time doesn't really matter right they're looking to make games now to make experiences now to make money now and so there's always a bit more impatience from the the creator side and not wrongfully so like you know like

they're like all these platforms should be working to serve these creators as best as they they can. Um, but what at least I've always been trying to remind people is that like these massively complex undertakings like what all goes into these platforms that where you can hopefully one day make almost anything and build like tons of flexibility for people to build on. It's really hard to do and it just takes a lot of time to build up all the unique feature sets to enable that and then on top of that monetization which there has been more of a philosophical element there where I think Tim Sweeney has been much more hesitant historically of in-game transactions and anything that looks like microtransactions and you know definitely not advertisements and so that's why Epic leaned into the engagement model and it's not necessarily a bad model. I think that uh Fortnite and Epic have been generous in terms of the money that they have earned and how they're handing it over to creators to turn turn Fortnite from a

game into a real platform. Um but it doesn't change the reality that the the health of that environment still just hinges so much to the health of Fortnite. And when Fortnite struggles in any sense and just has normal seasonality and uh you and you know changes depending on the time of year or year over year depending on what other games are on the market, the creators um will see reduced benefits anytime Fortnite, you know, is going through like a a depressed time period, even if it's not the the re the long-term reality of of the game. And that's just hard to operate in. and
yeah,
adding all of these um additional monetization changes which really in this case just like it centers around um enabling users to create and sell their own items in their own experiences and I think they get I think it's like a 74% cut of of revenue in doing so. It's just

I mean one it's additive. it's not like replacing any of that other revenue and two it like puts a bit more power into the hands of creators to like control their own destiny a bit and not just live and die by um the whims and engagement of Fortnite as a whole um as much. Um so I mean I think it's a very positive step. It's not the ultimate step that solves everything, but along this like long-term journey, if you're looking out over improving this platform over a span of many years, like I still think this is a platform that is on track and um improvements like this are the steps that prove that.
Yeah. I mean, you have to keep in mind like when it comes to the building up thing, right? This is a company that originally started by making games, built it up into a huge engine, still makes games, and then builds those games now into a huge engine. So it's not like it's new to to Tims we need to to build an engine from a game that then facilitates other games within it, right? That is kind of in their DNA. As

I remember going back to playing like the old Unreal games, like the very first Unreal, you know, like this, they've always pushed the tech and with that, you know, it takes time to do so. Uh but the thing I think that's interesting about this is I mean, first off, they're kind of adopting Roblox's model, right? where they were kind of like, well, we're we're going to do this differently than Roblox, but then at the end of the day, they see like, well, there's also benefit to that. The the other thing that's interesting about this is one of the metrics that they had for payout stuff was like trying to associate V-Bucks purchasing with gameplay where it was like if people purchase V-Bucks within a certain time period of playing your island that they would kind of associate that as as a metric. But now there's actually a way to get that direct metric like because people spend V-Bucks in the game, therefore they actually are in theory purchasing them for that purpose, right? So they can actually directly link it now. And I think that's kind of important because they just some of the metrics were kind of loose, right? You just had to kind of like by association. Now this gives like a direct incentive where you control a bit more your own

destiny as you were saying about the the the creators. The only the only thing I worry about though is like every metric that they pick is going to skew what people create, right? Because they're going to create what's ideally what's going to be successful for them and that's going to be based around whatever metric is paying out for them or at least at the end of the day like survival of the fittest will drive that. And now that that that means like spending V-Bucks in the game, I mean it's good for for for Epic because it does now actually allow a game to drive V-Buck purchases whereas it couldn't really before for right. it wouldn't necessarily like get you to do it except for possibly I think somewhere around somewhere around the license stuff. Um, but in general this is like good for them. But now I I question a little bit. I mean I I want to see how this plays out whether or not this is good for players because we've seen sometimes what happens in Roblox kind of games where it can be very aggressive with the monetization and sort of that pay to win element that you get in there. And then whereas Fortnite is a bit more skill driven than something like Roblox. Roblox is not exactly a game you usually

associate with skill- driven gameplay too much. Uh whereas Fortnite tends to be. So I have some concerns there.
Yeah. I mean a couple thoughts. one I I am curious to what extent I mean we did say this revenue is additive to the engagement revenue but there still is an element of wondering to what extent this revenue will cannibalize the revenue that went into the engagement revenue in the sense that like are players just going to spend more money to buy these items um versus uh just instead choosing to spend this instead of what they would have spent like in the the normal Fortnite store. Um, and the economics here would be better for
creators um if they they do that. But uh
you know I I still wonder how exactly additive it is um to the whole ecosystem. I'm sure it is to some extent, but we'll have to see what that means. Either way, moving the

monetization to be more in the control of creators, I think is a good step. But you know there there will continue to be uh changes from here as well. And to how invest or how creators monetize and how aggressively in the game I think that's just like the benefit of being a platform. Like you can criticize Roblox for example for having creators that do that. But at the same time, like that is a platform that has seen tremendous success because these comp creators compete for player attention on all sorts of different factors. And to the extent that they can get away with it, you know, like it's their right to to to do that. And if they push too far in one direction, players will just go elsewhere to where they feel more more value and and benefit. And I think ultimately like that tension of the marketplace where creators can actually figure out the supply and demand of the

economies on top of building fun gameplay is a very like natural element of building a successful um economy across an ecosystem. And so I'm less concerned about that. Um, I mean, sure, creators will have to be mindful and players, it might create some surface area for players to be dissatisfied with with some some economic items here or there, but in aggregate, I think it is a positive way more than it is a negative. But it's also up to Epic to, you know, help steer the ship and not slip into the types of engagements that a lot of players would um dislike. But I feel pretty good about that given Tim Sweeney has like very strong views on on what like what economics should be allowed or not,
right? I guess the other the other angle on this as well that uh the other announcement on monetization was around sponsored positions. uh something that

you know Roblox has big on selling advertising for you know the the mods or games whatever you want to call them uh and now there's going to be a I believe just a row of sponsored content you know you could skip over that row whatever and when you're browsing for it but now there is you know a way to actually pay your way to discovery which pros and cons right like obviously does help to be able to to do something to to drive some discovery because it's it's currently inundated quite a bit and AI has certainly not made it any easier uh for people that are trying to create quality content, it certainly made it easier for people that don't uh care as much about that. But that's a whole like rabbit hole it could go down. But it and now this having this other sort of cross incentive where now uh obviously if you're making money from the AP then you're going to be even more incentivized to pay for that sponsorship. So now some of that money drives, you know, through Epic to the creator and then right back to Epic in theory, right? Like and hopefully like in a in a in a flywheel to sort of get that up. But we already have a problem

sometimes in Fortnite with entrenched content. And in theory, this can help break that. But this could also make it worse, right? We see that in mobile, for example, where the winners keep winning most of the time and the the top charts barely move uh for the most part because things get pretty cemented for somewhat similar reason. I mean, it's a bit different like the economics of it and stuff and the way it works with the platform. But do you think there's like risk of that? Do you think this is like a good thing for creators as well or just good thing for Epic, good thing for players? Where do you think that falls?
Yeah, I mean, I don't think it's bad necessarily to have sponsored content as long as you don't overdo it and worsen the experience as a whole. I also think that the power law nature is um kind of a given in this kind of content. Like you look on any platform, there's generally power laws at play on Twitch, on Roblox, etc. Um that doesn't mean that it doesn't change over time, though. Um, like I do think large games being able to stay large is uh is a good

thing, you know, like it proves that people can build like real sustainable businesses on these platforms, which is, you know, a goal that these platforms have. Um, but also being able to foster new um new content as well that can ultimately grow on top of all this other content as the platforms grow. like there's going to be more opportunity for more successful experiences as these platforms grow and just naturally as games eb and flow over time. Um, but I mean like all of that said like there still is a lot of work to do just like in discovery in general and you know probably like who's best in the world at discover is like a YouTube right that like shows you like both what it thinks you will like what is popular out in the world and can even like throw in some like like smaller videos from creators you've never heard of that like hit on things that you're interested in. And I do think there is an opportunity more in these UGC gaming platforms to uh to lean

into that as well. Naturally, it's really hard to get the algorithms to be like right and helpful to the extent that it is on on YouTube. Um but I think, you know, moving more in that direction is probably inevitable. And I do think there already have been improvements since the very beginning of these platforms getting off the ground and we'll just continue to see that over time. So I don't really view that like as like a very critical thing to be negative about as much as just recognizing along with all of these like items. They'll just steadily improve over time and these will become like pretty meaningful like consumer platforms that are like become like the iconic platforms of of an era. especially Roblox. UFN much more TBD, but you know, Roblox specifically can be like one of the iconic defining companies of a generation and just continue to outperform bigger and longer

than most people realize by implementing a lot of these best practices in in new ways that just serve its giant network.
Yeah. I mean, like with Roblox, it took them so long to build up and get that traction in the first place. It's almost like it would take take that long to break it down as well.
Uh just with how much like they've been able to stick around. Uh and Fortnite I, you know, maybe hasn't quite got there yet. Uh but they also haven't been around as long as Roblox was before it got that traction, right? So it's it's only fair to kind of compare apples to apples there and be like, well, Fortnite's not even to that point yet. What they're already doing maybe better than I don't know have the benchmarks look maybe better than uh Roblox was doing x amount of years, you know, into their sort of push. It'll be interesting to compare down the road.
Yeah. Yeah. Yeah. No, I'm excited to see how it shakes out. I mean, I'm still like very bullish on this like genre as a whole. I know like we talk about UGC to death. Um, but like as I just said, for like these network effect type of businesses, especially like the ones

that are like proven and dominant like a Roblox, I do think that people, even though people recognize like how big they are and how successful they are, they still underestimate how much bigger they can be and how much like longer that growth can persist. And ultimately like just one thing I learned in investing like a lot of people say that to be a great investor you have to be non- consensus and right like you have to be able to go against the herd and be right about it. Um but like within that I learned that a lot of times like what is most valuable is to not necessarily just be bullish when other people are bearish. It's to be even more bullish when people are already bullish. And I feel like again when it comes to these network effect businesses that are like snowballs rolling down a mountain. Um people are like still underestimating like what these platforms are capable of. Especially Roblox but UFN especially if they can just continue to hit away at

these like adding these feature sets and monetization opportunities like they'll be in that conversation as well.
Yeah. I guess the way I think of it too is like we already have this problem with you can't compete with free. But it's now you can't compete with free that you already have installed that continually adds new content both from the creator and from other creators that are potentially more with the the sort of zeitgeist or trends at the time.
Totally.
So like because Epic can't always keep up with that stuff, right? They could they could try to hire people that are younger and stuff like that, but creators could always stay on top of trends potentially.
Yeah. I mean, Amazon became the largest one of the largest companies in the world because it was the everything store and Roblox will be similar because it's the everything game. Like, I don't know. It feels pretty obvious to me. But anyways, let's talk about some other things,
right? No, but I mean on a related topic, the the the other company that was trying to be the the everything platform that I I would say so far has failed uh which would be Horizon Worlds

uh Meta's attempt to try and do the same thing despite the fact that you can play Roblox on the Quest headsets. Um not not Fortnite though. So maybe that's maybe that's coming eventually. I mean I don't know how well it'll run on on the Quest headsets to be honest. It's not their it's not the best platform for that level of tech. uh they had a lot of stuff going on recently because they had the Metacconnect um event and I think there's you know there's a certain amount of this that relates to games and there's a certain amount of it just as a broader platform especially as they sort of branch a little bit away from being sort of a console into more of an entertainment platform. I I mean not that we haven't seen Xbox try and do that as well. Um, but overall, I mean, if you want to if you want to touch on any of the specific stuff other than the huge Epic fails they had during the Meta Connect event, like you know, what do you what do you think of the strategy where things are going with Epic? I'm sorry, Meta. And what were some of the interesting things that you think that sort of lean towards different directions for them that they announced?
Yeah, I mean, I'm pretty excited about Meta in general, and I have always kind

of leaned that way. Even even if there are there are specific things that you can criticize and not like, similar to what I was saying about Roblox and just like these killer network effects, they can grow faster and longer than people expect. And that is what happened to to Meta and still is what is happening like at his very foundational route with Facebook and Instagram and WhatsApp and everything that goes into that. um and the success that they have in those network effect businesses. Um and just being able to to to monetize through ads and now with AI to be able to like way better like target ads and help people create ads. Like the foundation of this business like has always been strong. It's getting stronger and it's going to be like like very very very strong like once that

like AI flywheel continues to get rolling and they're going to be generating I mean just like hundreds of billions in like cash flow, right? Um and in in time and um that cash flow enables them to reinvest in the types of businesses that others wouldn't do. And this is a business that is founder led which is now like genuinely pretty rare for like these larger tech companies now. It's like Mark Zuckerberg um and Jensen Wong of Nvidia. But if you look at Apple, if you look at Google, if you look at you know a long a long list of these companies, they aren't um founder anymore. And those are the companies that, you know, you see less clear efforts on like very targeted innovation like Meta is now doing with its um augmented reality. Um and when you look at something like Horizon's World, like yeah, obviously like that's a fail. Like

this is a business that would have acquired Roblox if it were like legally allowed to, but like it it never was even like given the chance to for like antitrust reasons and probably for the best. But um so instead of you know buying the best of what exists and like another great network effect and another great generation, they just kind of went at it from their own lens. And I'm sure the vision here has evolved over time. And Meta is like, you know, very obsessed with like the people side of like building connections and helping people engage with each other, which maybe is the wrong lens for uh some aspects of VR and even AR. Um, but I'm not like overly critical of it because I think that a lot of the the investment that goes into that business, even if a lot of money was burned along the way, um, it sets the foundation for a lot of like the technical achievements that just go into other aspects of of AR and VR that we'll all be able to benefit

from in the future. And Zuckerberg recently said that, you know, VR is the future of TV and AR is the like the future of mobile. And I I I I think I agree with that. You know, even if it takes like quite a long time for us to get there and for prices to come down and for the tech to to like really get to the point where it's awesome. Um, so yeah, I mean I I think they can be more efficient in what they're doing and they have been and like cutting a lot of uh like cost at Reality Labs, but ultimately what they're set up to achieve right now is like the byproduct of founder vision, a tremendous underlying business and like a tenacity to like build the future in ways that like others are not doing at the same intensity. And so overall, I'm I I think I'm optimistic. Like there still are questions about AR in particular. Um

it'll take time. I think there are like social things that will need to be figured out. Like people just walking around with glasses recording everything. Like what does that world like really look like? It's kind of dystopian in some sense, but also like awesome in other in other ways. Um, but I think yeah, Meta is one of the few companies that like has the chance to be one of like the largest company easily in the world one day. Yeah. And it's funny because like I am pretty skeptical and and and uh and not as as kind to them, but I also am a huge consumer of all these things, right? So I have, you know, use all the Quest headsets. I think the money sometimes does show in what they've accomplished with the Quest headsets because it's taken for granted.
When you start to look at the competitors, which is like what the Vive that's kind of just sitting, you know, rotting to an extent. I mean that especially with the Steam Deck kind of taking its own, you know, place in in Valve's ecosystem.

Just what they've accomplished with with the Quest 3 and, you know, even the push they did into mixed reality with it, I think it's kind of ignored. Like when I when I first, you know, started using the mixed reality stuff with the Quest 3, it was very impressive. Like we take it for granted very quickly what it can do. Uh, and part of that's just because it hasn't really integrated into our life yet because it's it's still like bleeding edge tech that doesn't have super good use cases. I've done a lot of work in VR, things like that. But the big problem, of course, is that it's just not comfortable long term for a lot of people for a lot of reasons. And honestly, they release them pretty uncomfortable. you have to kind of buy accessories to make it fit a lot of different heads and the Pro was definitely like anyone who bought a Pro I'm sorry you basically bought the thing from Saw that goes on your head like
just it was not comfortable to go and and that was kind of I think a rush release but they're definitely trying and trying and I think it's interesting to see the the AR stuff kind of come out and sometimes in a way feel a little bit behind what the XRE or Nreal depending on which version you're talking about this is Nreal now uh like glasses like

you talk about people walking around with that stuff I was there's a a long period of time I was walking around with the Unreals on. I'm like watching stuff in my screen like I was walking around Japan like in Tokyo like getting directions with the map over in like my side of my vision and like there's a lot you can do with that stuff and I walk around with Meta Qu the the Meta Connect or the Raybam ones
uh constantly taking pictures of stuff not in like a weird way but like oh hey I want to make a note of this or I want to buy this later. I'm going to look this up on Amazon. Unfortunately I can't just ask it to look me up look it up on Amazon which
not yet. And that that drives me nuts that you can't do that yet. I I would love to be able just to be like, "Hey, look, how much is this on Amazon or like what is this product review?" Stuff like that. That's definitely coming, I'm sure. Uh because it's just a lack of like that sort of internet connectivity. But I just h having experienced a lot of the stuff you're talking about like what's that future like? It's like it's it's technically already here. It's just as as the saying goes, I can't remember if it was which cyberpunk author it was, but it was like it's not widely distributed basically. I think it was maybe Gibson, William Gibson, I can't remember, but you know, the future's here just not not widely distributed.

And I think that's true with a lot of meta stuff where it's like cutting edge, but just it doesn't fit into a lot of people's lives yet
and because it's either not comfortable or it's not there or like the fact that I can't ask those Amazon questions. Yeah. Too expensive, too. Like a lot of those things. But the fact that they brought the prices down to where they did any of those, that is an impressive output, I think, of that reality lab spend, but it is a little it does look excessive on paper.
Yeah. So yeah, I guess the latest um glasses they unveiled the Metamorians display $7.99 which is still a lot of money and but it was actually a lot less than I was expecting it to be to the to the extent that like it'll drive like early adopters that are just like interested and and curious and those early adopters will then you know kind of like help set the foundation to help Meta understand where to better take it in the future. It'll serve as the foundation for building an app store,

right, for for AR, which doesn't really exist yet. And it gives the company like a unique opportunity to just like build something from scratch and not force an old paradigm onto like what is going to be new in the future of ambient computing. Um, so so yeah, I mean, I'm like pretty optimistic about where this will go. It'll just take time. Like this isn't the iPhone moment like the the iPhone moment in 2007 I think
or 2009 somewhere in there you know it came together like when all the technology just like happened to be ready at the moment like they could have made something like an iPhone maybe a bit earlier just like would have been clunkier it would have been more expensive you already kind of saw it with like the Palm Pilot types of devices and so I mean Meta they just like got to this technology like way too early which is why so much of it was clunky. and a lot of money has been burned and they're like brute forcing their way into something that eventually will be um available to the mass market

and interesting and you just kind of have to be willing to just like accept a lot of the things that like like that aren't like quite there yet but it's part of the the process and yeah I mean for games like I don't know how that will fit into
to any of this yet. I mean like as things get better I think they will find more of a place and if people are like wearing these devices or immersed in these things more frequently like it'll it'll be a bigger deal. I don't it's I don't think it's investable right now and it definitely hasn't been over the past
like the voice chat agent things that were just like tried to be a platform for a while and clearly didn't have a great like setup to really build on yet other than like just a few different talking kind of games like quiz games and stuff like that. Like I'm talking like Alexa and things like that.
Yeah. Yeah. Um and that's not to say there can't be exceptions. Like there still are successful like VR studios for example, even if there aren't like a ton of them. Um but yeah, I mean I think it's really exciting where this is going

on the hardware side. Yeah, I mean I think AR is going to be a big thing. And obviously on the software side, AI is central to basically everything uh that is being improved around all of technology. So So yeah, it's an exciting future. we'll be operating in and it's going to touch everything that we're that we work on. I think it'll be interesting from the games angle too and then like you know you you're like I don't know what those will look like and that's I think a really important consideration is that that form factor is so different like we already see the difference between mobile and console right like the types of games that that work the kinds you could play in theory you could make the two like closer together from a hardware standpoint but that doesn't really solve the gap they still play very differently they still have very different audiences very different use us usage patterns very different types of things being built for And it'll probably almost always be that way. You're not going to get a lot of overlap, right? Like you will to some extent when people can successfully do that. But I think it'll be the same way with with the any of these other new

platforms like VR was already like you couldn't just port stuff over easily like you know people try there's some decent ones like the Resident Evil 4 port and things like that but ultimately stuff kind of had to be built native for the platform which meant figuring out a lot of stuff. And it has been interesting to see that social I think has been one of the parts of VR as a platform that has been maybe sometimes ignored uh to an extent to where it's like building single player games probably isn't the way to go a lot of times with VR other than as a novelty, right? Like you get it, you play it, you consume it, you kind of don't come back to it a lot the way you would maybe a console game or something like that. There's been some great ones like the Batman one, the Alien one, like some great IPs. I think I heard good things about the Assassin's Creed one, but never played it myself. Uh but you know the great attempts but ultimately you look at a gorilla tag you know VR chat even like if you consider a big screen a social app like a lot of these social aspects have been the more interesting one and I kind of wonder if maybe we'll see similar things in a weird way with AR because it's like it's a weird kind

of platform for like interacting uh with like a game element but from a social element you have your voice you have like what's being seen from the cameras. There could be some interesting things there, but I do think there's a huge gap in time based off of my experience using AR screens um that older people will not get into this platform. Even worse than like an old person using an iPhone when they first came out. It's going to have to be a generational thing where people are going to have to kind of grow up using this stuff to some extent because the focus shifting you have to do between looking in real life and looking at a screen like right in front of you, it's it sounds weird, but if you try and do long-term usage, that's going to be way easier for younger people. the way like using AI has been like integrated more into their life than it is for us where we have to kind of like find use cases. Um, so I think that is going to be like a gap creator. I think we'll see. But Meta is definitely trying to get there and I I kind of wonder like hopefully they'll be able to continue to burn money till they get to that point and don't just run out first because you see them
not running out of money for sure.

They're just money. Yeah. Yeah, but but the like the Metconnect seemed to like while they still, you know, talked about VR as a platform, it seemed like they were shifting towards this this uh entertainment platform. So, where they're talking about the 2D apps, right? Like the we're going to we're going to continue to push the the apps that are like, you know, Instagram or the stuff you port over from Android onto the phone. I mean, I mean from the phone onto the screen and then also even bringing out like James Cameron trying to do like stuff with movies. I mean, it's a great movie platform, but a lot of people can't wear it for two hours, let alone the three or four hours a James Cameron movie is these days. Uh, and so I I don't know. It'll be really interesting to see
whether or not we shift away from even that as a games platform for now
and like we have to figure that out as like a sort of generational leap.
Yeah, I think just give all of these things time, which you could have said like a decade ago, too. You know, we're still waiting now, but I think there's a lot of value in what's going to be created here. Um, and it's going to be exciting and it's going to open up new opportunities uh for so many different

types of right of businesses. And yeah, there's still a lot to to figure out. Like we'll probably see in like the next year, as I mentioned, like an app store for AR like be a thing. And
oh yeah,
that you know will kind of unleash like a new wave of developers being able to just like try things and similar to how like the Apple Watch like how it came out and you know the company was able to like learn what people use it for and that like directed the future of its development and so like the Apple Watch has become more of a of a health device you know because of of that. I think we we'll see similar things happen with AR and and VR once uh you know there's just like more data in place and much when they can see how people are using um all of this and maybe there'll even be like different devices that kind of spring up that are targeting different types of activities um based on it. But yeah, I don't know. In general, I'm I'm excited. It's a little tangential to games, but all of these things are like the bigger picture contexts that are going to like

define the next generation that we're all going to be operating under. So, I still think it's worth
spending the time to at least like to I think it's important to just be on top of all of these things because even if you can't do anything about it right now, like you'll be ready uh when when the time comes and you know, you can ride the tsunami instead of be hit by it. Yeah, this stuff will all absolutely be competing with games at some point and then eventually part of the same world. So, it's like we're kind of early for that, but I think it is it's worth keeping your periphery, which is I think appropriate to AR in general.
Yeah. And it's just fun. Like I I enjoy staying on top of it.
Absolutely. Yeah. I could I could probably go on for another three hours about the AR stuff just based off personal usage. But uh I there is a lot else going on on in the console space that I think is worth talking about too related to you some of the stuff but a bit more games focused around uh we've got stuff going on with Nintendo, with Xbox, with Sony. Um you take us through what you think is the more interesting one you have that we have going on with

consoles right now.
Um well I mean first of all we can keep it short but yeah I mean props to Nintendo for the Switch 2. It's been very successful. You know, it's out selling the Switch um on, you know, like in terms of like number of days, uh which I mean, I think we like in a Navic Digest article, we're kind of leaning towards like I mean, obviously like it's going to do well out of the gate and you know, that probably like bodess well for the business and the stock and all of that, which it has. Um, but you know, looking longer term at the life cycle of the Switch, too. Um, like is it going to sell as well as the original Switch? like we had some questions about that and so far the data is you know maybe showing that it's a little stronger than you know maybe we expected and I think we were just a little hesitant you know in the sense that like it's not that new like it's not like a new form factor and you know there weren't like a ton of like new Switch 2 specific games like launched out of the gate to get super excited by um but despite that you know

it's it's had very strong reception so you know maybe we have to like rethink think what the magnitude in terms of like long-term unit sales of a Switch 2 will be. You're shaking your head.
I'm so bearish on it actually. Um, counter to the trend. I'm I'm very bearish on the Switch 2 for a variety of reasons that I think are slowly starting to be revealed.
Yeah. Well, I was about to say like I'm not quite there to like being like overly optimistic about like, you know, the next like eight years of the the console, but I'm curious why you think that is. I mean, there's there's just a variety of problems with it. The biggest one being that it doesn't bring anything significantly new to the table that drives that longer term. I think the short term it's mostly fans buying it. And like it sold out like crazy, but it sold out like crazy off the success of the Switch One, not the success of itself.
Yeah.
Because there's people buying it because the Switch One was so good. And they and you know, there was the possibility shortages. There's a million different reasons, but it wasn't off its own

success, and certainly wasn't off of Mario Kart being like the the system seller. It was people like, "Oh my god, I got to play this new Mario Kart so bad. I'm going to pay for this really expensive version of the Switch One." Uh, and and to me, it feels closer to Wii U or closer to Gamecube where it's like an incremental thing. And they've had such a bad history with every other console for a while. And the price stuff has been a significant issue where it's like the continued ratcheting up of prices that they're having to do with their games, including DLC added on to them for the value you're going to get. And Nintendo even talking about like they're having to try and figure out like their production stuff. The problem is when you make a higher def console, you know, it it then your costs to make games go up, too. But I don't think it brings that value to the Nintendo audience to justify the extra cost it's going to cost Nintendo to make 4K games. I don't think their art styles uh are needing to be in 4K. They've clearly been able to do so much with the Switch One that yeah, a little bit extra horsepower is not bad for so you don't have like, you know, the the new Zelda

exploding uh when it gets into some really complex stuff,
but I don't think it's going to bring enough to the table long term to make it
for sure. But but look, it's all old PC ports right now. Like, cool. Yeah, I could play uh Cyberpunk on there, but do I want to at this point?
Yeah. I mean, some people might be able to play it handheld, you know, like in a in a way they couldn't,
but I have a Ste deck for that.
Yeah, but most most people don't. But yeah, I mean, I hear what you're saying. Yeah. I mean, like I
obviously it's it is very successful and it's not like it's not going to be a flop. It is not a flop. like it's still going to have like a long tale of success and as more games come out like people will be excited about it for the games not even necessarily like for the tech and that's that's the way Nintendo has always been. Um, but yeah, I yeah, but just like how strong it came out of the gate versus
yeah,
what I thought it just had me questioning a bit of like where exactly it will end up. But I don't even know how much it it really matters. Cuz the

second thing I was going to say is that like um I think it's easy, especially like from an investment lens, it's easier to make like a more optimistic case around a company like Nintendo like when it's down a lot just because it's a pretty cyclical business in terms of like its console releases and like just being able to understand like what will resonate or not um in terms of the the consoles themselves. But longer term, like this still very much is a business that like the industry has grown around it and it hasn't really outside of like the form factor of the Switch like was an innovation and is awesome, but in terms of like other platforms and other technologies and things like all of these other companies have kind of grown the industry around Nintendo, right? and Nintendo has, you know, lost share in the the process. And there are new things they're doing, like the theme parks are cool, like there's another Mario moving movie coming out and

that'll I'm sure do pretty well. Um, but yeah, longer term, I still wonder if it apart from just being able to time console releases well, like does it really have like outperformant DNA um over a very long period of time? Um, and I I question that. So, um, so yeah, I mean there's that. I mean, it still is like very well positioned. It'll be in our lives for an extremely long time. But, but yeah, there's that. I mean, but I mean just like beyond Nintendo, even in console, like PlayStation's doing its thing, like it's, you know, like you can criticize things here and there, but, you know, it's become dominant and is set up to continue succeeding and they're going to make more money from bringing more games to PC, for example. Xbox. We were talking about how they were like on the path. They were already kind of floundering when we were talking about it on the round tables a couple years ago and nothing materially has changed in the strategy. It's just like dealing

with the after effects of it through layoffs and restructurings and
the type of news that like no one wants to hear. And at its core, which we had talked about many, many times, is that there is a strategic disconnect between what it takes to succeed in hardware, which is a lot of awesome exclusive games that drive people to your ecosystem, versus what it takes to succeed in subscriptions, which is being able to have a lot of games be able to be played anywhere and everywhere. And by trying to be good at both, they're not great at either. And as a result, like their hardware future very much is in question, which you don't want to see because you don't want to end up in a world where just PlayStation is like the monopoly more or less and and that type of uh console. Uh but also like I wouldn't make the bet on

subscription. like there's more than enough evidence at this point that it's just not going to hit the scale that is required for an awesome outcome. Um, and so what do you do? Like, and like I do think there are answers to this question, but none of them are easy. And so, you know, the things that you start to wrestle with are things like should Xbox even be in Microsoft anymore? Uh, I don't think so. Microsoft is like is like lapping uh you know Xbox's growth. Should the same leadership be in charge that has led to all of these decisions that have caused the platform to to flounder? Maybe not. At least not to the same extent. And so what do you do from there? I just think they need like very large changes in direction to simplify the strategy and kind of most likely either get back onto like a PlayStation like track where they can

have awesome exclusives and to the extent that there is subscription services. It's not all day one centric. Um or if they do happen to drop hardware in the future that they just become more of like you just like one of the world's biggest publishers um and they could have a very successful business in doing so and selling across all platforms and things but they would lose their identity in the process and so I think there are some answers that are easier than others but the Xbox I suspect is just going to be like one of the massive stories of the next I don't know how many years I don't know how long this can drag Um, but at some point, maybe in the next few months, maybe in the next few years,
we're going to be talking about
there's going to be massive case studies on Xbox and how it either failed, how it turned around, and how it changed the console landscape in the process.
I mean, it's definitely looking more like a Sega kind of case. I you obviously see like Sega's still around, still doing well. I mean, they have a variety of stuff going on. They do a lot

in arcades as well,
so there's some hardware there.
Yeah. But but I mean like the the cross stuff too, you already see the hint of that, right? Where it was like, "Oh, hey, Mario and Sonic at the Olympics are like, "Wow, they're together finally." But now we already seeing like Xbox games going over to PlayStation now. PlayStation games finally coming over to Xbox.
Like it's that that barrier has already been broken where they're already turning at least partially into a Sega at that point. And I mean whether they drop the hardware or not, we'll have to see, right? But clearly they're in a position right now where they have a lot of conflicts at the company with Microsoft's, you know, a software company, not a hardware company. And when they've gotten to hardware, like, I don't know, the Windows phone, it's not always turned out great for them long term because it's still kind of not their core business.
Uh, so I mean, we'll see, right? And even with the like handhelds, they partnered um like with the the ROG Ally, right, to build like an Xbox version of that device, but they didn't make it

themselves. They completely outsourced that capability, which
that's that's what they normally do.
Well, not with Xbox, right?
No, not with Xbox. I mean with with Windows and stuff like that, right? Part of
OM. But like this is it's like a pretty in my mind like, you know, it's it's a lot smaller. the handheld market is a lot smaller than the console market, but the fact that they would outsource it kind of signals
maybe like a change in internal direction or capability and I I I just don't know if that bodess well. Maybe it's not the worst thing in the world if they can reorient the business more around being a publisher, but uh anyways, good for rag Ally. I have one and it's great. But
I love Game Pass on it, too. Like it works really well. But um
yeah, tough spot. So, I think this is like a massive question just for like gaming ecosystem,
right,
in the future.
Yeah, like you said, hopefully it doesn't end up just being pretty much Sony, but it's clear that Xbox is not going to be nearly what it was either way. And they did they just raised the

prices of the consoles as well, which is like these are older consoles now and they're still kind of glorified PCs in a way. It's
I don't know if that was the best time.
Right. Right. But it's it's still not going to help things. And that's my point is that like it's whether or not it's something they have to do, it's still going to hurt this position that's already hurting, I think.
Yeah. And so what what does the next generation look like really is the big question. like are you like and like how are they building up to that right now just in terms of like their overall strategy cuz like the overall strategy determines how hardware sits
um within that and I don't know is the next generation of hardware the last like it's possible I hope not but we shall see
yeah I don't know I think we still see a PlayStation 6 at least
oh yeah if that's right so
yeah I agree you'll see the the seven the eight of PlayStation for sure.
Which, yeah, it's just it's funny to be to come down to Nintendo and Sony again

potentially when Sony kind of spun off from Nintendo kind of,
you know, with that whole dispute around the N64 and everything. So, it is kind of funny that we end up here potentially again, but
that's kind of it. We don't really have any new competitors. Sega obviously bowed out a long time ago. Uh, so it's kind of interesting that it seems like people are kind of almost steering towards PC as a potential platform or even the Steam Deck as something that's interesting or the Steam Deck kind of competitors. You mentioned the the Rock Ally thing as well, like just handhelds as it like potential market of interest, but not like you said a huge one yet. And then then that's more directly competing with the the Switch 2. So, it's kind of kind of we're kind of in a weird place, this sort of transitional place with console platforms right now. Um, you spend a lot of time with investors though like and you're talking about investing in Nintendo and things like that.
What investment related trends are you seeing whether it be related to these companies and their their shifts and stuff like that or just broader gaming in general?
Yeah. Well, I think a lot of people talk

about, for example, the changes in VC money flows and how you can look at the charts from like Convoy or Invest game and see that like obviously over the past few years, the money that's gone into gaming venture has decreased. Even recently, like quarter over quarter, it's been sort of depressing looking at the trends. And it's not all that that shocking. But what I think people don't talk about too much, at least from like a big picture context, is like the what we're really seeing here is a fragmentation in the type of investing, right? And so a lot of money went into venture capital specifically at a time when gaming was blowing up. there were, you know, all the talks about the metaverse, web 3, all these big trends and that led to these large funds investing in games. But I think there's been more realization that

games, companies and games themselves often are not the perfect fit for venture capital specifically, like that specific model. There are plenty of instances where it does and like I think there will be very successful venture capital funds and future fundraising and such in venture, right? Um but that realization has led to a fragmentation beyond venture that I think is interesting. And so we're seeing you know more revival in project financing where a lot of traditional venture-minded people are realizing there's a difference between investing in a game and investing in a business. And it's not necessarily wrong to invest in either one. You just have to know what exactly you're investing in so that you can set that investment structurally up for success. And if you're investing in a game, project financing versus backing the business as a whole from an equity lens is often the better way to go. And so, you know, we're seeing more of that get carved out. And that's always existed through publishing. There's just more players um doing that

type of financing or slate financing now, too. Um, similarly, it's just like the new big thing everyone is talking about these days is UA financing, which is, you know, more on the mobile side where it's like, yeah, not all of this money has to go into games. You can just raise money specifically
around structurally what it should be used for, which is user acquisition,
scaling,
for scaling, right? Um, and there still is a place for venture in that. people still need to build products and grow teams and uh expand the business not just like any one game but if you are focused on expanding one game equity is often not the way to do that and um all these unique models around UI financing they have a place and um Alex and our team recently had a conversation with the TiltingPoint chief business officer about what they're doing here too which is interesting and they're just like one of many players um and you know you I've seen just through conversations and

looking around like a lot of investors are figuring out where to place their bets here. Um, and even if you look at a Tilting Point for example, like they have to get their money from somewhere and there's other investors behind the scenes that are providing the like the the financing the debt financing um to to serve these kinds of funds and businesses that are deploying at larger and larger scales. And so I mean I think it's really interesting and that's just two examples but even beyond venture like as the market slows down um and there's just kind of like a reset in various parts of the industry private equity very much has a place and I've seen more private equity interest literally like in all corners of the market um from mobile to VR to Roblox to to UA financing to all sorts of um things like literally every platform and every like lens of investing um you can think about there's like more types of money um coming in which I don't know I

find fascinating and all of this goes to show that like I think any given snapshot moment of the investing world around gaming probably is the wrong view of where things are ultimately going and in the same way that we've seen a lot of innovation recently and how people are at least realizing innovation might the wrong term. This is just financial engineering. Uh, but we're seeing more financial engineering around like how to back teams in ways that create real win-win scenarios. I think that we're going to see more innovation in financial engineering in the space, especially just like with this AI wave in particular coming where smaller teams are going to be able to create larger outcomes for themselves than we've seen smaller teams be able to do in the past. And as a result, do those teams really need to raise venture money the exact same way? Um, in some

cases, yes. Maybe in some cases the model is a bit different. Should it be project financing?
Maybe something like that, but maybe not quite that or publishing. Like I think there's going to be um room to innovate in how people back the next generation of game makers. And I think that's really interesting. So even though a lot of the headlines, I guess there's a bottom line to this like look kind of negative and to some extent they are, that really signals like a reset going on and a fragmentation that will just lead to being able to support games teams in the ways that they specifically need the support and structured in a way that generates win-wins and sidesteps a lot of the issues that led to kind of the up and down swing that we've seen in this last generation. Um, so yeah, I've really enjoyed having a lot of these conversations with investors. And if you're an investor and you want to talk about this stuff, too, be happy to help out where we can. We do a lot of this kind of work at Navic. But

it's been super interesting to to watch and figure out what's going on.
Yeah. I mean, it just makes me think too like even the movie business is like one of the other newer ones in relation to, you know, games and and just businesses in general, and like that's had to go through all kinds of stuff. It's in its own question mark period to some extent as well, especially when you throw streaming in the mix and what we've had to deal with movie theaters and everything else. So, everyone's kind of trying to figure out these new models as for for media in general like and creating like creative content as a business. It's
such a difficult model. the value chain has changed even too like with like K-pop Demon Hunters, right, which has like taken over the world like it's a it's the first Disney like success that Netflix has had and you know like one of like a small handful of moments that they've like really tapped into the zeitgeist, right? Um maybe like the last big one was Stranger Things, but this one, you know, was like a more like a Disney-like movie, but they didn't make it themselves. It was Sony Animation, right?

Sony's just hitting, man. Yeah. And so they're Sony is like playing into the the streaming gold rush of like uh you know they're just like selling their services and you know they'll make decent money but they give up a lot of upside when it hits. They don't feel the downside maybe as much when it doesn't. Um, and yeah, the value chain and that type of content has restructured. And I don't know to what extent that's like parallel to what we'll see in games, but yeah, just as people engage content differently, engage with content differently, um, it's going to have like some impact apart from some of the changes that I talked about. if things move to other platforms or console changes or what whatever like all of these like trends stack on top of each other that ultimately leads to like how money flows differently and where value is captured. So, um, yeah, it'll be a very fun industry, I think, to to be a part of with, you know, future ups and downs.
A lot of layers to dig into, too. Like, I I don't think any one person will have

any of like significant chunk sorted out. It'll all be people have little little pieces here or there that hopefully you could throw some bets down on now and then. But, uh, we're just we're going to finish off with a with the old rapid fire finish. just a couple of hot takes from you possibly here on a few different questions to wrap things up because I we had a million more topics we could have covered, but I think we we had some good depth in there rather than breadth. So hopefully that was a was a good set of uh topics, but just just the first one just any game or company you're excited about, especially if it's one you didn't mention during any of the talks so far.
Yeah, I I'll give a couple answers just for like different lenses. I um I mean I guess first I would just reinforce some of what I said like I'm most bullish on the companies with the killer network effects today. So this is like the Roblox and Discord maybe as like the prime two um where they already have been successful. People have already been bullish on them but I still suspect people underestimate what ultimately they can become. And so again, like uh

uh being non- consensus and right, I feel like the non-conensus is just you should be even more bullish on these kinds of companies. And even when you see uh like negative headlines like Discord is having to like testify in front of Congress for neg for very negative reasons or Roblox gets criticized for safety related things. Like these are all very good reasons for criticism, but they all point to how important they are as platforms.
Victims of success almost.
Yeah. But I don't even necessarily think they're victims. They're just they are that successful and operating at a level of scale where society is having to just grapple with what it means for these companies to be as large as they are now. And that's we're seeing some of this criticism for the first time at scale, but it's probably not going to be the last time. So I So that's kind of like my longer term answer I guess. Um

more uh this year I think the game release that's going to matter most is Battlefield um from EA.
And I I think it's going to do really well. Um, and we'll see exactly what it means, but I think it could mean a lot for EA. Um, in the sense that EA really needs like another, um, killer IP to like push the growth of its business. EA as a company has kind of stagnated in its growth in a lot of ways as it's um, become more reliant on fewer of its biggest um, games like EFC. Yeah. Sports. Um, and so, you know, Battlefield has had like a long history and has been successful at very much at times in EA's history. And if they can make it bigger and more successful than ever, and kind of use that success to turn it more into the Call of Duty model for better or worse, like just from like a business standpoint, like that is

going to make like a very real difference for EA. And I feel pretty optimistic about um the new entry being a catalyst for for more to come there. More than just being a successful game, being a catalyst to like reinvigorate a franchise that grows the company um in ways that maybe you wouldn't have seen a couple years ago. Um and then just personally, I'm excited for Ghost of Yote
coming out this year on PlayStation. Ghost of Tsushima was one of my favorite games when when it came out and still to this day. So very excited for the sequel.
Nice. Well, hopefully hits well. Same with Battlefield 6, which
I would actually love to see that somehow then combine with that resurgence of Battlefront 2
uh to to become some something as well, you know, like capitalize off both those like sort of things to that Battlefront 3
uh it not have all the issues that Battlefront 2 had on launch.
Yep. Totally understand. Would love to see that, too. But I think I'll I'll take a successful Battlefield

Yeah. One step at a time for sure. Well, uh, what else are you watching the industry right now? Uh, and it doesn't necessarily have to be like games specifically, but something, you know, related to just the broader industry. Yeah, I mean again um some people will say that, you know, we're getting too ahead of ourselves if we talk about things like this, but I think that the intersection of world models and vibe coding is going to have a very profound impact in defining the next generation of entertainment um and in gaming specifically. And Devon, you you know, helped write um like an article uh one of the deep dives that we wrote about this. And so if you're listening and you're you're curious to just learn more about like the history and kind of like the present state of world models, like we have a deep dive on it, uh that digs into all of the different players and is super interesting. Um, but I really can't help but think that, um, creating immersive digital worlds in an entirely new way that just sidesteps what game

engines have been, it opens up like new creative surface areas for people to
um, just rethink almost what like games can be. Um, which is sort of like almost like a too big thing to say. Um, but I do think we're going to just see more types of like digital 3D immersion. Some of it's going to be fun. Some of it's going to be maybe more like interactive experiences. Um, but in the same way that like LLMs with text have taken over the world and then you start to see great success with images and then video is coming next and that's going to transform much of how like content creation on YouTube and Tik Tok and all those places work. I think we're going to see something similar after that with these like 3D immersive worlds with world models and connecting that to more like the just like the vibe coding aspect just lowering barriers to creation in general and enabling people to create those worlds and to kind of create the rules of what you can do and

what happens in those worlds um is just going to be something entirely new and very different that I think like the next generation especially like that'll be more what they native too, like similar to like like how Roblox took over the world. Um like I think there is an aspect here that I would just predict. I don't know exactly what the platform is or what exactly is going to look like, but um when once world models become more of a thing and there's a younger generation that is native to it, it's going to redefine a lot of how we think about what games can be and how they work and where people experience them in the same way that every generation kind of has that that moment. And again, similarly to what I said before, like even if it doesn't really matter right now, I think we should all pay attention to it so that you can ride the tsunami instead of be hit by it. Um, and that's very important.
Well, here's where the intersection to to our earlier conversation at the very beginning ties in, right? This is where you get Metaverse 2.0 know with AR is

suddenly now you couldn't just hardcode AR that responds to the real world and becomes a layer world over top of it but suddenly you throw a world model in there the ability to generate some of this stuff and react to your voice with that sort of vibe coding stuff that you know maybe that's where the intersection finally hits with that what are games in AR you start looking at that that metaverse 2.0 know with that word model stuff. I don't know. Just food for thought.
Maybe I I feel like that'll fit more in the like the VR side of things, but like generally like could be a catalyst for like AI world models will be a catalyst for um like a new generation of VR where people can just like experience entirely new things or create like their own worlds to experience whatever that looks like. Um I do think that's going to be a big deal for for VR. Maybe not as much AR, but you know, it's all the tech is all like pretty interconnected in terms of just like the next generation of of hardware.
Absolutely. Well, a lot of a lot of good stuff. Hopefully, they can keep spending money to keep making our dreams come true cuz I'm I'm not going to be

personally funding that development. So,
can keep it up, you know?
Neither will we. Um
uh need very deep pockets to to do that. But I mean it's been really exciting to see what companies like Google have um been able to to achieve and yeah a ton of startups um in the space. So anyway, some of this is very much like
in the sky, kind of abstract, unclear. Um, and you know, like even like in our business, like of course like our day-to-day of working with clients, like it's less with world models and it's more, you know, like like how are you thinking about your economy design in your mobile game and and you know, just kind of more like the present state of things. But, you know, like
as a as a founder, as an investor, as like really any of us who like want to like build something longterm in the industry, I just think all of these things like
like we should just try to stay on top of it, like make it fun, make it interesting, and

um
well, to uh to just looking at layoff headlines all day long and and shaking your head, you know, I think we've had enough of the the doom and gloom over the last couple years. is starting to start thinking a little optimistic even if we have to still sit through some of that doom and gloom for the moment.
Yeah, things will things will change. Like there's always like anytime new technology rolls around like you're going to see some structural changes and there's going to be more unemployment and uh you know shutdowns and things whenever all this starts taking over. But, you know, it'll be replaced by like awesome new businesses, new platforms, and sort of just a redefining of what the industry can include the same way that it has changed many, many times. And so, I think it's important to,
you know, even if you've been in the industry a while, and many people listening have been in the industry much longer than I have been, you know, don't be the the old man yelling at clouds or yelling like, "Get off your lawn." like

recognize like what has happened historically. Like at some point like you might have been the upstart that was doing something new on a new platform that didn't exist 10 years before um and to be kind of welcoming to the to the change that we will see in the future and be excited by it.
Well, games got to be the the the driver, man. We got to keep using games to push tech forward. So, always good idea to keep an eye on that ball. uh even if it's a far ahead of where you can actually do something at the moment.
For sure.
Cool. Well, thanks for joining Aaron. It's always great like you said we had had a good conversation since uh going back to the roundts and uh and it was good to just kind of talk about the market general gives some broader perspective. I know we do, you know, there's a lot of just talking to individual companies and developers and things like that. So hopefully uh you listeners enjoyed just a good broad look at what's going on. a lot of lot of interesting things happening and of course make sure you're checking out the digest as well because we're still, you know, firing on all cylinders with that, putting out lots of great content, lots of deep dives into things, uh, games,

companies, as as Aaron mentioned a couple of those things earlier. Um, so definitely make sure you're subscribed to that and keep up to date on everything. Uh, and in the meantime, you know, appreciate everyone tuning in regularly to the podcast. Also, I wanted to mention uh just since this is probably my last chance to plug it before happens, uh next month for anyone who is in San Francisco, I will be speaking at Games Forum SF uh on the 22nd, so the first day of the event uh around I think 3 in the afternoon. So, it'll be on if you if you're into game economies at all, uh it'll be on game economy balancing. If you're not into game economies, you probably will be by by the end of the talk. So,
make sure to stop by and check that out if you're going to be there uh right in the heart of San Francisco. So, hope to see you guys there. If you're looking to reach out to someone at Navic in person, uh you know, it could be good good opportunity to do so and I could always also put you in touch with with others like Aaron as well. Uh if you wanted to speak to him through me, that's fine as well. But uh thanks everyone for for tuning in. Hope to see some of you in person next month. But you know, in the meantime, make sure to check out the podcast and I'll see you here.

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