Microsoft Acquires Speedbumps / Apple’s Legal Victory / Ballooning Game Costs

foreign [Music] gaming podcast where it is our mission to explore the business and future of video games we bring together the industry's brightest Builders investors and thinkers to keep a full sun current events dissect emerging Trends and games share Lessons Learned and have a great time this podcast is also part of novik's growing ecosystem which ranges from free and premium research to Consulting and advisory services for more information visit www.navic.com now let's jump into the episode hello everyone and welcome to another novik Roundtable I'm your host Devin Becker and today we got some great panelists as I said before the ever Lively Aaron Bush co-founder here at navic got the The Familiar Anil dasgupta here from FirstLight games and then uh first time for me Jonathan anastas CEO of clash TV how you guys doing today doing great

glad I can be here with the familiar Anil and never know that's how it is could be worse excellent yeah happy to be here thanks for having me back yeah I guess before we jump in Jonathan I'm even just curious for you how have your your first days as CEO of clash TV been going for you curious to get an update all right so you know early stage company first time CEO I'm trying to keep it all consuming but from being all-consuming you can very easily take up every moment of my of my day uh you know awake or asleep I think the lesson I'm trying to learn that's probably familiar to any startup executive is like ruthless uh focus on taking anything extraneous out of your schedule right and trying to only focus on the things that move the levers the most but I've seen a lot of traction in the first 45 days lots of big news to

come I'll try to keep this from being a commercial for Clash TV but uh we've been working on some deals that we'll be happy to announce in the future some in this genre of gaming so sweet perfect that's exciting we'll have to have to time your uh your next appearance for when you get an announcement right when you get when you're winning exactly to talk about everything exactly cool well uh we actually managed to get a letter in the uh well a letter from from the last mailbag uh ask and uh I believe the the email was podcast norfolk.com right Aaron for the mailbox yep podcasts.navic.com you you think we you have any comments on anything we say any questions you want to throw at us if you think we got something horribly right or wrong um let us know we want to showcase your insights and thoughts um too as we you know grow out this great community that we have so glad we got um got the mailbag flowing a bit let's

let's keep it rolling yeah we uh we actually did get this one as feedback on a topic which I thought was great you don't get the keep the conversation rolling from that previous episode so I'm going to read it out it's a little bit of a long one uh but I'll I figure it's worth you know giving them the whole thing here uh so I'll go and read that out now they got the the one thing I felt the crew forgot to hit on when discussing monster hunter is the IP genre fit and this was referring to the Monster Hunter uh Niantic game they said they're skeptical of the title success but I think there's more Nuance one of the big reasons Pokemon go worked for Niantic apart from a huge IP is the IP genre fit Pokemon is about collecting Pokemons around the world which fits perfectly to the AR gameplay Niantic made Harry Potter doesn't share a similar IP genre fit and neither does NBA All-Star Monster Hunter on the other hand is all about hunting and capturing monsters in a large world so IP genre fit is huge but the issue is that the IP is only famous in Japan so even if Niantic does not fear too much away from Pokemon go style gameplay Monster Hunter could actually be a great fit for the genre but just that it might only see massive success in Japan and it'll be up

to Niantic to figure out how to maximize Global success if that's your goal anyway my question to the group when they said they don't think the game will be success did they consider IB genre fit and do they think it won't be a success in all markets including Japan it's a good question I think I think I was on that episode and I have thoughts but maybe Anil or Jonathan since this would be your first time chiming in I'm curious if either of you have any thoughts on this one um I think it's a great question great comments from whoever said this in I mean I I would generally agree but a lot of they say I mean my opinion is so spoilers I sort of did work off one of the old old Monster Hunters that I'm a PSP so that's showing my age to be honest with you and one of the big thing in Japan what was really crazy about that game is it sort of single-handedly made the PSP a relevant device so you used to have Monster Hunter cafes and people would go there and there's a social thing play the game all together and you get huge cues and it's amazing

and Capcom spent many many years trying to get that game to be successful in the west and they did finally do it now of the you know the new ones have come out on PlayStation and things like that and that is quite interesting I think there's a lot to be said there I think you know on paper it sounds like a great fit right it's a game that's even proven itself on mobile I'll be in one territory um you know you hunt monsters that worked with Pokemon go will it work this way but I've been about for you guys but I remember when Pokemon go really exploded onto the scene I think that's sort of phenomenal sort of everyone knew it everyone grew up with it now you can fulfill that fantasy that you had as a kid stroke teenager but you're an adult with real money and can spend something was really what powered it into the stratosphere but I do remember seeing surreal things like being in um St James's Park in London and seeing one person go a Charizard's over there and seen like a hundred grown adults have run over to it and I was like wow games is happening that that was one of those like feel good moments I think I don't

think monster hunter is anywhere near the same level of IEP to get there so it's an interesting choice to make for a game um I I in my opinion I don't really think the game will be too successful perhaps they will be successful in Asia I think in Japan especially it could blow up because um yeah it's hugely like IP over there and they're really well suited so a bit of a rambling thoughts there but I I think the writers spot on with their their comments have to say just uh just to give us a little bit of credit from the last episode I think we did say at least that out of all of the the new lineup of all the games in the new lineup for Niantic Monster Hunter uh is probably the one to keep an eye on the most because of the IP genre fit um and so there I think you know we're still curious if not just you know a bit skeptical as an ill is also laying out and I think it's just going to be hard to make any kind of comparison to Pokemon go so I think you just kind of

have to to pause there because that is just like you know on a complete end of the Spectrum in terms of what it was able to accomplish as a phenomenon but um lightning in a bottle right I don't think you'll ever see that again with a game like that unless there's a Pokemon go too that's probably the only way you've put it on yeah but I mean between the brand not being nearly as big between it it is probably going to be more Regional focused and you know the core audience is more hardcore than than Pokemon too and that's going to be harder to translate I mean some mobile one but even just specifically to an AR location based game um too and and frankly it's fair to be skeptical because nothing else has worked besides Pokemon go to date and so you kind of need to in some sense see it before you believe it uh but at least at least for me um when it comes to these types of games and of course it's not even really a dig against monster monster hunter as it is just like the hardware isn't ready to

support more variety in this type of game and even with Pokemon go a lot of people turn the AR off and so for this kind of game to really scale up and be more interesting around the world and be something novel I think we just have to give it some time for the the hardware to catch up to the to the the dreams and the Ambitions behind what these projects can can be so maybe maybe the next version of Monster Hunter and you know AR location basically you know 10 years from now or something that could be a lot more interesting than what they would spin up this year so hopefully that provides some context but it was a great great question um to throw out and again podcast navic dot Co hit us up yeah man let's get it rolling obviously uh we may have guests change up so you know it may not necessarily be the same people answering it so keep that in mind when you write it but we definitely uh will be able to speak on it regardless so I really appreciate uh especially the

early adopter there maybe we can give them some kind of nft badge for that or something yeah but uh we definitely appreciate it I was just thinking as well like um you know maybe uh okay maybe uh NBA All-Star would have been a better fit since it was about capturing basketball players if they just made it Space Jam themed made a lot more sense but uh let's get into a bunch of topics here because we have a lot for today a lot of updates uh on all kinds of different topics starting with uh some updates around Microsoft's acquisition and cloud gaming as we like to continue to talk about because there's always drama there uh some Apple lawsuit results which uh are always a long time coming just because of the legal system and then uh some some big topic broad one on uh just the cost of games just going nuts here uh which is kind of I guess in a way related to the first two so uh let's dig into uh Microsoft though and their progress or not with their

acquisitions here we go again so I'm tired of talking about this deal that I'm sure most people who have been listening to this podcast are tired of hearing me talk about this deal too so I'll uh I'll try to try to keep it moving we can pass it around a bit but my really my my rant for today is that um you know the CMA the UK's regulatory body blocked the deal on the grounds that it may harm competition in the nascent UK cloud gaming Market they even took to social media with all sorts of branded graphics and Emoji you know covered tweets and messages to explain their their so-called rationale um for this decision so you know of course most of you have probably been listening for the pockets long enough to know that at least I think that this is pretty absurd um I'm not sure if this deal as a whole even makes perfect sense or if it'll

work out or be perfectly executed even if it were allowed to go through but I do know that there really is no Anti-Trust case here and hinging the deal's viability on the UK's cloud gaming Market is a total clown move and whoever is running the CMA either still doesn't understand this Market despite all the months of conversation and research that they've had they're blind or just don't care about the concessions being made here and I'll let Jonathan talk about that a little bit more and in a minute or they just don't care and it's like a political decisions um kind of being made in bad faith in some ways so it's hard to say from the outside but either way um it doesn't feel right to me at least so of course with with this block happening it's technically not the end Microsoft will appeal the decision it'll go to UK courts um you know however the history of such

decisions getting repealed in those courts as I understand is not necessarily encouraging for those trying to you know repeal these decisions and go against the the government um and the the rulings that have been made but either way it's just going to drag The Saga out further and these companies will almost certainly at this point miss the summer 2023 deadline that they were aiming for which of course was still a year and a half after the um the deal was announced in the first place so what's next one is the fun Court action to look forward to um second is that maybe they'll try to to carve out some specific deal for how these combined companies can operate in the UK although that's really probably a complicated path to go down that will just be difficult to manage um and then um you know uh I mean third is just the kind of the bigger picture that

you know just kind of reflecting on this so if Regulators are going to block this deal out of all deals then you know similar Regulators also took issue against like meta acquiring like a VR fitness app too for example so um but what this is really doing is sending a signal to the rest of big Tech in particular that hey we don't like big companies that are getting bigger through Acquisitions um without regard for the the Nuance of it and I think it could just freeze up the m a market for big Tech even more than it than it has been over the past few years um so it's a weird time um and I I kind of just want to my final sentence here just to clarify is that I don't hate Regulators I think regulations are important it's just that um whatever is going on here I guess I would say it like I don't like clowns and I feel like Regulators are acting like clowns right now at least with regards to this deal um so anyways I'll end my my rants right

there um but anyways I'll hand it over to you Jonathan I'm curious if you want to add anything else or maybe even just add some details from the standpoint of what Microsoft is doing on the cloud front and how that connects to these decisions being made sure I have very little to add to your excellent rant there's a little bit of color that's worth noting which is in part of the response Bobby codic called out that potentially the CMA and the FTC met semi secretly in Washington well that in of itself is not technically illegal Bobby made the point that you know with ongoing court cases involving the FTC that actually might be potentially not Kosher but clearly you know the the other piece I would add to your rant is sorry UK and the EU this is why you can't have nice things this is why you can't have trillion dollar companies this is why you can't have a disproportionate number of unicorns like you know we live in a global economy

money will flow business will flow jobs to float will flow to territories that are friendly to such things and I think this is a a real shame before I kind of talk about Microsoft's response um Anil do you have any sort of specific addition to you'd like to make I I saw some vigorous head nodding to Aaron's rant that's all right yes yeah yeah there was one very interesting thing I didn't if you call wimble so in the UK someone from Microsoft came out and made a statement where they basically said oh this seems like Britain isn't the place of big Tech anymore and there are better opportunities in Mainland Europe so I found that really interesting that was like really quite a pissy thing to say and I think you know you mentioned in your point is it a political move it speaks volumes that 100 is political move because as you say the cloud gaming Market in the UK I mean I'm laughing as I'm saying it there is no cloud gaming Market in UK there's no cloud gaming Market period right it's all completely trumped up and did it I mean I have to say I'm not necessarily against the move

I can sort of understand why especially if you give the size of the the acquisition compared to any other gaming that was in it's on a completely different planet but the reason given is just sort of so poor um and I actually have a feeling though that for that reason they will not appeal it because I kind of think I actually didn't know about that this sort of secret meeting behind closed doors that's very interesting to to hear that's a rumor I could definitely believe it but definitely I have to say that they're feeling in over here was they thought that maybe Sony had gone to the UK government and sort of kind of pandered towards them but they don't really strike me sort of people that would do that in this country per se with enough clout anyway not necessarily as much as Cloud as Microsoft have but um yeah I just wanted to say that that is very interesting that they would resort to sort of such a thing to sort of like say oh we're going to move our sort of offices to somewhere else and um yeah the drama just keeps going on and off speaking about the cloud Focus which you know as everybody's sort of eye rolling right like Google walked away from this business like the cloud Market oh like you know needs to be protected

Microsoft uh you know their creditor continues to double down you know you know the immediate follow-on to this deal was Microsoft signing a 10-year deal with end where which is about the fifth or sixth Global cloud computing deal they've done you know in a recent period sort of promising full access to their games which then would mean Activision's games if the merger goes through to anywhere in there I believe 10 million customers or subscribers for 10 years so if we're trying to make a case that we're building a closed ecosystem and it's not going to be fair play and these games are going to be behind our secret little Walled Garden you know here's another big giant Fu to sort of say like what the heck are you talking about here so you know I I think you'll continue to see Microsoft make strategic moves like this to kind of show the availability and openness of their IP but again I think it's all all window dressing because nobody's making money off cloud computing right now do you think the deal is dead I don't actually

um you know I think I can't speak to UK court jurisdictions and you reference the very low you know sort of win rate or overturn rate if we move back to the U.S side of this deal the current FTC has a very poor track record in their blockage of these things because of their overstep you know I think meta's handed them a couple of significant losses they've lost undergrounds so you know again I I'm no expert on the on the UK you know antitrust business landscape when I look at the U.S side I see Microsoft and Activision prevailing and they're acting in a manner of which you would win they are not backing down they are doubling down and at least on the U.S side I I predict Victory and I predict the deal closes do you guys think there's any chance that Sony could be involved because of the um they'd been making some moves around Cloud stuff recently right like we talked about that in a previous episode that they had some previous Cloud people they were starting to do some hiring around it like they obviously have some level

of Cloud ambition which you know is more their kind of play Anywhere sort of thing from uh Playstation but do you think then like obviously Sony's been you know big player in constantly trying to kick Microsoft's legs out from under them in this deal and as you said a nil like maybe they're not a big player with a big influence in the UK but do you still think that they might have been involved in helping like foment this excuse for this oh 100 100 they would have been if it didn't you know it'd be stupid for them not to do it um I just don't think that they would have the clout required to pull it off completely by themselves whereas if it was let's say A Google a meta and Amazon you know one of the big five then they worked then I would totally believe I just don't see Sony quite on that tier I see them as being the tier below which is why they kind of done that I do also think with the deal specifically it's kind of convenient that like oh so a a big tier one country has disapproved the deal but it's not the us so you know I well you know we can't really approve it if it's not you know the deal is kind of

always the type it just seems like rather like you know very nicely wrapped up in a bow in terms of like not having to make the big decision where it really matters but actually making decision elsewhere and as we know you know the UK is you know sometimes described as like you know the the airport for us anyway into Europe but in terms of where you do your business so um and I would be curious now who what did it you know behind the scenes was it you know maybe even the vet or that or something like that I mean they would definitely have you know made their feelings known but I can't really think of too many instances in this country where Sony's for example leaned on the government hard enough to get a decision going their way that is quite common done over here but I'm not really by Tech or or companies like that so that's why I don't think they were responsible here but who knows it's all speculation on my bar sorry my my final question about this sort of related to like whether the deal closes um is I'm just wondering like if the FTC says yes if the EU says yes with the UK

still is stubborn and saying no what happens does that break the deal do you think it's likely that they'll just carve out unique uh rules for the UK specifically with cloud gaming or or like how do you expect that to maybe go down and maybe none of us really really know but just trying to like play through the potential outcomes here and it's kind of it's obviously weird because it's a lot of this a lot of the decisions aren't even necessarily based on logic that are happening so it's hard to talk logically about it um but yeah just in terms of understanding like the potential outcomes like is there a world in which that actually makes sense maybe Jonathan I'm curious to hear your take since you have experience working in these these big companies I am not a legal expert in terms of how that can play out but uh I I do think there's probably a carva path or a compromise path you know in the UK If the EU and the US ends up approving

the deal but I am I am hardly uh you know a legal expert in these matters totally fair I think the issue is is that if the UK says no Then it sets the precedent for all of the European countries to also say no now admittedly the UK left the EU so perhaps it could still be resurrected but generally speaking that's why you would do some others the first Domino to fall without it being the last one so I think to answer your question Aaron it could be possible but I think as soon as one other country says no and the next one will probably be either Germany or Belgium then I don't think the deal can go ahead no matter what and that's what I personally suspect will happen but we'll see so just when you think you're done talking about this deal I'm prepared to put money on the fact that it won't be the last time you talk about it I know they're so tired of it I'm sure Microsoft is at this point too it was a I did find it ironic that Bobby kotik of all people though would call out like a a closed door secret meeting

for Raymond knows his reputation but maybe that's why he knows but uh on the topic of other regulations and uh and you know deals and things like that going on Apple had a little bit of a victory and a little bit of a of a maybe not so much of a victory a recent lawsuit against Epic I would say it's pretty overwhelming picture for them but with one interesting caveat which we'll get to so this relates to the apple vs epic games lawsuit that happened a few years ago he's been going on for quite a long time where Tim Sweeney you know tried his audacious move of launching fortnite on the App Store and you didn't have to pay using Apple's own Payment Solutions but you could go straight to Epic and get a discount from doing it and you know calling it antitrust and anti-competitive so that finally had the decision ruled on it and apple basically won pretty much everything right so they said that like it basically this there's an Anti-Trust law known as the Sherman Act and they said that everything that was kind of proposed fell outside the

bit so you know it didn't work out basically because it Apple pretty much kind of celebrated a pretty big bigotry Tim Sweeney noticeably quiet I think though the one thing that is well I think there's a few things interesting one there I mean I have to say I wasn't quite sure that that would be the the case because you could argue with this sort of amount of of transactions that Apple and Google both make on that platforms thoughts that um I personally still think at some point in the future that will change but it's interesting that this wasn't the one to do it but the the one sort of thing that they did lose on out of the 10 cases was that they were actually um not allowed now to prevent people from linking outside of the app so what's kind of curious especially for us in the web 3 world we know this very well is that you cannot basically say oh um in this app you can go here and you can also pay for these items without doing it you literally cannot mention it at all you cannot hot link out you can't do anything right so it's like a very very vague and obviously keeps people in the app and it means they spend there now you will be allowed to do that now

so I I believe that means you could have a link that link some immediately into a web page let's say you're on a Spotify app that's a pretty popular app that people like to pay right you know you can subscribe outside of your app where you can subscribe inside the app and they even try to push you outside because they say you'll actually save money and we as Spotify even make more money so just do it everyone's a winner but because the convenience and people not reading they don't do it but now I believe there'll be an option where you can press a button it can probably even open a web browser window inside your app and you'll be able to do the transaction then so that's pretty big I think um now I am curious is something I believe that as of right now today if you were to try and submit an app that had that they would still tell you no you're in um you know you're against our policies and they would ban you for it but when this will get enforced be interesting to see so I think that this is big news because this is something especially for thus for those of us in the web 3 world this has been like a huge sticking point and you know has basically prevented people from going in fact that is one of the things that Tim

Sweeney mentioned as being you know the anti-competitive things it's like you know really stamping down on the new emerging technology before it gets the chance to go I still don't think it's like a silver bullet right because it's still going to look scary from the consumer point of view but I do feel that it is some kind of progress and you know a common theme it's kind of funny actually of these these podcasts because sometimes I don't know about you but I get Deja through with the topics like Activision cloud gaming payments and regulations like what episode are we on are we on 94 or on 44 you know they all kind of go around and this is like another thing and I think one what's come up uh many times in the past is we've said that we felt that like Microsoft for example were trying to push their own app store that you'd be able to have on on Apple there have been some regulations recently saying that you'll be able to side load apps onto your your iPhone which wasn't allowed before now you're going to be able to link out of the payment so I personally think that even though this was like a big victory for Apple there was still something significant now I don't think it was significant enough for epic to

justify the the legal costs that they paid for this um and I remember you know I think Tim Sweeney perhaps didn't expect such a big defeat there but I think that something meaningful has happened here and I think it will be interesting to see what happens thereafter and I'm curious who will kind of take advantage of this first as it may well open the door for something big to happen there I I agree I mean it's super interesting because to your point the ability to link out of these apps and subscribe out of these apps or make purchases out of these apps can be hugely you know even a positive to the companies who are able to do this now right like it sort of felt outside of gaming like Netflix was the only 800 pound gorilla that could ever get anybody to like hey you can actually only initiate the subscription on our website not the app because they were the 800 pound gorilla and nobody else could really get the conversion including Spotify to the point that you spoke about so now to be able to link out and really change the Rev share could be quite meaningful for you know any one of the top 50 apps could be very

financially meaningful so yes huge overall legal victory for Apple but I think huge fiscal Victory you know for for many many many you know developers and game Publishers Etc to your point to the degree that Apple actually arguably has to approve apps now you know with link outs and also sec secondarily as you said to the web 3 world which was just recently had to had to live in two separate you know parallel ecosystems and now can live in one ecosystem that it's a nice boost to web3 gaming so I guess to to clarify just on the other side of this though um I think Apple won nine out of its like out of the ten uh possible um you know stipulations they were battling over and I don't I don't know what all of the other nine are but as I understand it a lot of it revolves around third-party app stores and alternative payment methods and so you know whereas you know these anti-steering Provisions are great it

still actually probably does shut down a lot of the hopes and dreams that people had for those Alternatives and even something like um payments you know where it was allowed elsewhere um Apple was still finding ways to make its cut and so maybe that doesn't matter as as much as as people originally thought but the third party app store um side of it um is I think pretty notable for games because when we talked in previous episodes we're making the point that probably really the only candidates that could do something impactful in a third-party App Store are the larger game companies that can you know whether it's Xbox and Game Pass or maybe if Sony wants to start porting more stuff to and supporting Mobile in some way um or epic and their epic games store which of course I'm sure was top of mind like directly in this and in these Court battles um it seems like that is of

major loss here and so I'm not sure what's next in that battle whether it's just trying to attack new regions and then it becomes a domino effect or something else or just has to be given time I don't know um but I think it's also worth just noting kind of the the downside of that lawsuit from there and what was interesting to me from um Tim Sweeney he he tweeted let me see if I can pull up the quote real fast okay he said though the court upheld the ruling that Apple's restraints have a quote substantial anti-competitive effect that harms consumers end quote they found we didn't prove our Sherman Act case and for those who don't know the Sherman Act was like the first set of Anti-Trust laws that were created in the United States in 1890 and there have been other other laws that have you know come and been created since then but the the thing I just want to point out that's that's also a little crazy here just on the regulatory front is that a

lot of these decisions that are being made in courts are made using laws and acts that were created in the 1800s and it's it's sort of absurd to to be able to make the right decisions and regulate modern digital companies on you know case studies of like railroad companies and you know manufacturing companies from over a hundred years ago um and so you know just as an aside I think something should change there I don't know if it will and it's probably not even worth like digging into too much but um you know you know how those things riled me up but um but yeah I'm I'm curious to see the impacts in games my my thinking is that anti-steering Provisions are going to be a much larger deal for companies that are not games it's you know the the dating apps the spotifys of the world those kinds of companies will probably get 90 of the benefit of this this change but you know Anil as you're

saying the web 3 side of things in particular um is probably where it's most interesting in games I guess you could say if you have a large enough brand um like a Call of Duty or supercell or something like that you might be able to get away with pointing large audiences elsewhere um but web3 really is the the angle that is probably most interesting from an innovation being unlocked standpoint so I'm I'm curious to know like how you see web3 on mobile changing specifically because of this do you think it unleashes the the floodgates do you think it's going to be a small trick or trickle of teams still figuring out what to do about this or how how do you see this impacting web3 on on mobile over the next couple years it will still be a slow trickle unfortunately I think it's something that there's a few different people who've got different playbooks that are trying to figure out people like immutable X people like um Skyway with their sequence well

there's quite a few other ones that are trying to do it here but this is still a a step in the right direction I mean I do know that when I've spoken to people who are in this world as well everyone kind of has this belief that it will happen it's just going to take a bit of time to go there and it's like a fluid situation and this would happen so I think you will definitely see a few apps try to to utilize this I think to be honest I already know some apps that did manage to put it off already but then even though it's not legal within Apple's laws it's only that they're not making sizable revenues enough the one that did happen I don't know if you're familiar with a title called stepper they actually were already allowing you to do this and then because that started doing my 200 million a month then all of a sudden oh that someone did review it properly and they're like no no that can't be allowed and yourself so um people will definitely try it and I think it will do it but for example I don't think you know this time next month it's all of a sudden going to lead to it a huge cataclysmic shift but I think people will be trying I I think you're right to say is the other gaming companies because there are big deals of

like providers like exola and things like this are people trying to move around there like you know if you do this sort of volume that supercell or you know Activision Blizzard does on mobile then it's bad say you're paying less than 30 is absolutely huge to your to your bottom line right so you absolutely would be doing it so I think they're more likely to try advice and some of them in a case of supercell have already been experimenting with that stuff so I think they will be the first movers I think it's just it's nice for web 3 because it means that some of the as Jonathan mentioned is kind of living in two separate worlds it's a huge issue there uh we could just all live in the same world please that would be a big a big change there so um I have to say that our team is very excited for it um but I think that's still got quite some room to go before it's mainstream on mobile we work three do you see a lot of um potential then for Apple that just do selective enforcement of stuff to find ways to shut down people that like they don't like doing that meaning like let's say you're you're a big huge company like with the Netflix thing where they're like oh well we probably can't

get away with finding some reason to deny their app but with the smaller players right where they're trying to come in say on web3 stuff or like because obviously supercell could probably get away with it right where they could just be like oh because they've already had their web shop now they can kind of direct people to it uh that'll that'll be a big thing right who knows how fast they'll Implement that but they definitely will right but a small fish coming in on web3 like even you know like yourselves uh with blast Royale maybe not being this huge thing you know do you think they'd just be like you know we'll find another reason to deny your guys's app uh because they do that right they have pretty selective enforcement uh that's been a big deal for a long time and of course that's even part of why epic was pushing this case was those kinds of issues I mean do you expect that like that sort of retaliatory uh Behavior will still kind of block a lot of web 3 games I hope not but I say you could be right um as I say it tends to happen only when people start picking up traction and it goes crazy I think when you're doing you know a small amount of volume per month you don't really need to realize it but I think it is quite possible that if one

of these games does blow up and starts hitting the kind of five million a month Revenue plus then it could be called up but I think as well though that both them and Google will know it they're like they can try and contain this sort of thing for as long as possible but they'll never be able to stop it and so surely at some point they'll we I think especially if it's like a a well-established or at least good-natured developer that they'll rather work hand in hand and have them using their own Solutions rather than do some external one and you know I do expect that both platform holders are probably working on their own Tech in the background to do some of this stuff in a more seamless way that plays all with their own apis that would be the smart way to do it but then who knows a lot of these companies did just lay off 10 of the global Workforce so maybe those projects are important but I I think that always the thing I think that maybe it's a mistaken belief but I think the feeling in the industry is that it's going to happen it's just a matter of time of when not if and it'll probably happen within the next two years I think sooner than that I think really as I say it's a bit of a chicken in the egg situation it probably needs that title

or titles to start blowing up to reinforce the issue hopefully at least it gets them to lower that 30 maybe down to a more reasonable number as a compromise uh just to stop people from going off the store and things like that but uh speaking of large volumes of Revenue and uh and on a lighter note uh we've got a bit more follow-up on Super Mario Brothers movie yeah so here we are back to the worlds of Ip you know transmedia Nostalgia all came together here so Super Mario Brothers was the first 2023 movie to make a billion dollars I believe it's the fifth movie since the pandemic shut down to make a billion dollars what's important to note all five of those movies have been Legacy IP or sequel right so you know in the ongoing theme of like every one of these episodes sounds like every other episode we're back to you know sequels Nostalgia Legacy IP being the most valuable things that we live in you know this world of

transmedia you know IP moving from games to television to movies is not new but it's clearly having another moment right and potentially the first multi-billion dollar moment I mean Mario's perfect right though I mean it's like it's a little bit like Top Gun of gaming right which is like you've got everybody who grew up with Mario taking all their kids who love Mario you know my son's school had a had a trip to the Mario movie every parent was as excited as every kid like it's it's where these worlds come together in the best way and I think we've all discussed the upsides and the downsides right the upsides are going to be we're going to see more incredible you know exploitation of our favorite IP and we get to introduce it to our kids and our kids friends and the and the downside is like does that close the door towards you know development a new new IP Etc you know I'm not so worried about the latter right you know there's always been independent movies and independent games despite the fact that you know the top 10 lists have looked like this but

you know seems like another win for the most beloved IP in the world can succeed on any platform I gotta imagine as well that it's had a pretty positive effect on Mario franchise in general I know they were running some sales uh on the games and things like that uh Mario Land only like recently came out here in uh in the US in uh Universal Studios and obviously had been doing you know fairly well in Japan after finally opening up after covid and so you gotta imagine that this is this is much more money than just that that billion dollars as well for that franchise and then illumination as well right like we're also forgetting that this was another potential franchise winner for them coming off of you know the Despicable Me movies they've just kind of I'm sure made ridiculous amounts of money off of uh like I got to imagine you know they're they're thinking sequel like hard right now uh more than anything else or you know bringing it over to like the transmedia stuff like TV shows or whatever I obviously even the movie itself is referencing the old TV show

right where it's almost possibly cyclic at that point where it goes back to another TV show referencing the movie referencing the TV show and and things like that um I I gotta Wonder though like do we see then like uh a Zelda movie as a follow-up to this right because we've got the new Zelda game coming out and things like that seems like a hot time they know they could trust illumination to do it agreed or even or even extension into theater right like you know I've watched the I've watched the explosion of Bluey in America right that great Australian show and of course I had to take my son to like the bluey play you know and he had to stand in line for the bluey stuffies and you know his favorite Bluey stuffies were sold out so we have to order them on Amazon on the phone while we're standing there in line because he's in tears right like you could you can exploit this stuff in a in a million multi-billion dollar ways well hopefully it uh it doesn't lead to a Bad sequel but uh you never know when they when they get greedy like that but either way like I think it's good to see that you know Nostalgia grab was was successful in the sense of uh actually people

enjoying it I think for the most part it wasn't one of those ones I think that just made money off everyone going and trying it out the reviews are pretty decent things like that so not too bad uh but we did have another hit come out uh recently on mobile though this time from a different Asian company yeah uh mahoyo the the Chinese developer that most people know is behind ginshin impact looks like they have another hit on their hands the the new game honkai Star rail which is more of a a Sci-Fi theme turn-based collector RPG um apparently received 20 million downloads in just its first day uh which is a very big number um and it's only been out a week so there's not a ton of great data yet but according to data.ai it looks like the game might be up to 45 million downloads just on mobile and I'm not even sure that's counting everything um in China um too so um the downloads have had legs so far and I'm not going to comment on the

revenue side yet because there's not much the comments on there but clearly it's a very strong start in terms of getting users in the door and it's even outpacing gentian impacts launch uh which is a pretty killer outcome for this game and it's it's early days so I wouldn't didn't say that this game is as revolutionary as ginshin but it still has the potential to be a high performing game and of course not everything needs to be revolutionary but in the the short time I've played um the game is clearly well polished it exists within the same hoyo verse uh it takes a lot of the same character collection mechanics of of genshin but puts it into a turn-based type of game which is a very proven model um on mobile um this is a game that's really not going to perform as well on PC as an open world ginshin Style game um but it doesn't necessarily need to for it to be another big win for mahoyo

um and I have a couple more comments but I guess before we even go into that I'm curious if if any of you have played around with this game at all whether you've early Impressions or anything along those lines yeah I've checked it out I have to say I think this company is really being slept on this company is a juggernaut that is coming big time and I think no one really talks about them this is now really impressive two really sort of big Juggernaut titles and more are definitely coming I I kind of feel that they are always the Gen Z equivalent of let's say a blizzard an epic someone like that that in 10 years time when um Erin Jr is hosting another podcast along with Devin Jr that they will have grown up playing games by this studio and these will be the ones that I sort of really thought of in that iconic way as the same as sort of Nintendo IP and things like that and um The Game's pretty good I mean I think here's a key thing I wanted to get across right they're not really for me uh definitely in that sort of millennial Boomer

mentality right it's a nice enough game I don't particularly like that art style but that art style has really tapped in and that's the big reason why they're winning so well I feel and the reason why I mentioned you know it being a kind of Blizzard is what if all the effect that they've got is they're now sort of being able to launch any game and the hype around that game is huge before anything's even been shown because the sort of Love of their characters and universe is there and that's such a stronger again which is literally mentioned IEP right and that being so prevalent in in the Mario Brothers movies success and they've got that already so I mean it's pretty good I'd say a lot of people what in my team have been playing the game they were sharing it already they they love it as well they think it's really good solid Edition and it's different too again similar kind of mechanics so um I think yeah perhaps this game is safer as you say than um you know what Genji did although against an impact was just kind of like the Zelda game but with a gacha added onto it right but um the Polish is great I mean the one thing you have to

say about this company is they've said that many times that I think just against an impact it cost them 200 million a year just to run the live operations but it shows that quality can always win and I think it's also a huge success story for China as well in that in the past people are always like well you know they can sort of replicate but they can't really innovate and they'll never really be able to achieve the sort of levels that Western developers can do and it's like well hold my beer because they're coming and they're taking you know the Studio's already taken over I kind of feel on a mobile especially so um yeah I recommend they do check it out or if not pay more attention to what this company is up to because I think they're only on one trajectory and that trajectory is up curious if this might um end up being kind of a transmedia play as well because you talk about the IP and uh the characters being beloved and stuff like that now like obviously if it was a it was a Japanese game right I would expect anime to come out of that uh but that does that doesn't mean like that they can't do that but I'm just curious if this could be something that if it catches on in the west with the way anime has been really picking up in

West in general like more more so than even had you know before where like maybe the 90s there's a little bit of interest and maybe in the early 2000s there was some more growing and now anime is pretty huge here if that could kind of really explode and open more opportunity for China to get games over here if uh whether it be through that company or other companies if they're able to kind of piggyback on that that growing interest just in that style and that type of game uh over here especially as you said with Gen Z they should do it if they have no witty feels about it I have to say if you look at things like Comic-Con the amount of people that dress up as characters from this game name is insane so I feel like they've already achieved it what you're talking about that's why they're successful they've already tapped in it's like gen Z loves gentian impact they love this new game so yeah how they exploit it I guess what maybe they should employ you it seems like you know what you're talking about Devin but that's exactly the sort of thing that I feel that they should be doing whether or not on how they're allowed to do that at that what will infringe upon it I

don't know but if you look to maybe like Arcane which was Riot games play of the league of legendary Universe something like that I think would would be amazing in this sort of setting 100 and I haven't I can't really think that off the top of my head of um a Chinese Studio doing that something outside of China you know making it for a western audience but I mean one thing I think is also worth mentioning is that this game is not only doing gangbusters outside in the west but if you look at the Chinese stores it's smashing it there as well that's another reason why I think it's important to take this game seriously because on the studio seriously because oftentimes you might get like Candy Crush for example is huge in the west but in Asia whilst it's done well it's definitely not on the same level as you know honor of Kings or something like that right um whereas this game is basically in equal positions in both arts and that is a serious level of Revenue that's going to embroider company yeah I thought that your earlier comparison to like the next Nintendo of sorts was was interesting and the analogy that was coming to my

mind is is more like Riot where there might just be like a few steps behind Riot games and have naturally more of a of a mobile pants because of of where they they come from in the world but that's more the trajectory that I'm I'm thinking that they might have but you're totally right that this this is a company that's being slept on the second part of my notes was was really just commenting that if there's any private gaming company that could go public that has it mojoyo should be either at the top of that list or close to the top of that list and um According to data.ai which again I don't think tracks like all third party app stores especially in China so this is um certainly like under counting the total but it's averaged 102 and and obviously not like PC either but it's averaged 102 million dollars in Revenue per month over the past 12 months and which puts it well over a billion dollar um run rate with all of those caveats

and that's also not including you know the revenue that's going to come from this game that was just launched to and so the trajectory here and the size that they're operating at um is is very uh noteworthy and yeah they should consider going public at some point and I know being China based and all the foreign listings Shenanigans and how that is all political that certainly is playing a role here in the same way that you know a company like bite dance which is enormous because of tick tock it also um you know is still private to to this day um and so there are some of some of that weirdness at play in terms of how it can really play financially on a global stage but but yeah what what they're doing just fundamentals based with with their games building their connected Universe um and and yeah the the kind of the the unique ACG art style that is increasingly resonating around the world

it's it's setting up Mojo to to be on an interesting trajectory and this this game is probably just one more stepping stone and whatever that trajectory is is going to look like the funny thing is is you're right to say that either number one or two and the company that I would have as either above them or below them is also China we're actually they're based in Hong Kong and that's Lilith games who make AFK Arena if you're familiar with that game so I think that's another one that seems to have tapped in they've also got a similar art style that's also working on gen Z it's working really well it seems like everything they do is you know just smashing it out the park as well I think that's another company should be looked at quite closely but if it's similar things I'm not sure that they can go IPO either which makes it kind of a challenge yeah and honestly like we're just in a dearth of companies going public in the games industry anyways obviously we saw you know with kind of the peak of the last bull market it led to you know good you know notable companies like Roblox

and unity going public and obviously you know through specs and all that stuff we saw you know a lower tier of you know company go public too that you know aren't moving the needle as much as some of the big ones but since then it's really been quiet um in terms of you know upstart gaming companies I mean both of the the m a front which is um you know there's some action but it's it's it's slowed down in large part but especially on the the IPO side it would be really great to see um a new wave of kind of these next-gen companies um start to to make it out there and I would just be exciting on the topic of exciting mobile games Jonathan there's a a mobile game you've been excited to talk about sure so this week mythical launched Early Access to NFL Rivals it again and ties into a lot of the things that we've been talking about today right like obviously super powerful you know IP with the NFL a combination of building a

game in a web 2 space in a web three space simultaneously there's a standalone web three store interestingly could benefit from what we were talking about with with epic over time I believe they claimed 150 000 players in the first two weeks of the soft launch what's super interesting is the way they've been talking about it right like the marketing has been very much like what you expect around the NFL which is you know they had a marketing beat around the Super Bowl they just had a marketing beat around the draft which makes a ton of sense leverage all the power that you can out of the IP but what's really interesting is they've been real they've been talking about gameplay first I've almost been leading with web 2 right they've almost been selling it as a web 2 game for broad for a broad set of Gamers and there's a web three component if you like if you feel comfortable and I I think that's an acknowledgment of putting gameplay first which I think is always more important and I think the gamer doesn't care about the mechanic or the underlying you know

financials as we were talking about but also I think it's an admission that sort of blockchain and web 3 and anything crypto has brought a bit of toxicity you know in the in the last six or nine months and so as much as they're sort of talking about well it's about a game for gamers quietly I think that's an admission of the toxicity around kind of web 3 in certain parts of the world but I do believe that like the game experience and the gameplay and you know should always be forward in the in the underlying you know what it's built on should be a ladder I would also say and with the big giant caveat that I worked with both of the co-founders John Linden and Jamie Jackson I think this is a perfect management combination of like Jamie is like High creative sense High creative style always gamer first I launched DJ Hero with him I launched the reboot of Guitar Hero with him he was always the voice for the gamer he was always the voice for the creative you know in the business meetings at a highly commercial organization like Activision and John Linden came into gaming for being a technologist first and kind of built a lot of the studio

side stuff that helped power like the live Ops and only on and microtrans behind Call of Duty when it kind of went from a console game you know to largely like an MTX powered or at least MTX add-on game so you've got this incredible Partnership of a creative and a technologist which is which is a super powerful combination so I'm a big believer in the two of them as Executives I'm a big believer in them as a partnership and you know once again when you put like a strong Studio together with triple A you know IP it's hard not to win you know none of this is easy but uh you know I think we're seeing a lot of early traction here and I think they can continue you to push the web 2 side of it into kind of Mass Appeal right and the web 3 side is is there for those who wish to participate so do you think then having the it be football uh American football just to be clear for UK people here uh is is going to help you know sell the web web 3 aspects for people because obviously we've seen like things like so rare the

other kind of football uh and and you know the the NBA Top Shot and those kind of things really push like you know because Sports people are into Collectibles stuff like that uh push this kind of into the mobile space maybe a bit more for the web 3 stuff than we've been able to do so far just because of like the the audience expansion and the optionality of this stuff absolutely putting my you know current CEO hat on is somebody in the sports space like I'm a massive believer in that like sports super fandom is going to be monetized through web3 through blockchain through Collectibles through gaming you know it it to me that's DraftKings 2.0 or DraftKings web 3-0 depending on how you want to Define it right so I'm I'm a massive believer that this is where Sports is going and you know I'm watching the NFL space I'm watching the NBA space I'm watching the NBA 2K space you know I I really think this is a new modernization angle not

just for sports teams and leagues but given the new nil rules it's going to be a modernization Avenue for amateur athletes like I I I I have bet my career on Sports Plus web 3 plus gaming is going to be a highly profitable space for all involved is this the kind of a game though that would benefit from the the the anti-steering stuff we were talking about earlier like late being able to link out or is that more just like secondary Market kind of thing where they actually probably are fine with people staying in the app and and giving Apple the 30 cut to get like a primary sale like how is this I can't see how it hurts right I mean they've built a standalone you know web3 store you know I can deal with speaking about earlier this is the default web3 gaming thing so you know even if you can move five percent of that Standalone business you know or five percent of your 2.0 to a 3.0 business through linking you know through the confidence that you know at least initiating that transaction or initiating the move through the app ecosystem that you know and trust it

certainly can't hurt their p l after this epic case I would be going back and redoing my financial models if I was mythical and the NFL in a more optimistic way right I would I would expect higher conversion higher participation higher arpu higher LTV I can't imagine how it does anything but help their p l hopefully they could pull that off then definitely um I guess we'll have to wait as Anil said right probably going to be a little bit of like a honeymoon period uh before that stuff is enforced I'm not sure if Apple can necessarily appeal that uh or try and kind of shut that down in the meantime but like you said like Now's the Time to start thinking about the financials figure out like okay well how can we take advantage of that now that that just happened as well because I'm sure they were focused on launched uh in just getting it out there first right uh but I think this is and the irony the irony of course sorry the sorry to step on you the irony of course is that you know the NFL is uh their their media rights are now owned by Rivals right they're now owned by Amazon and Google but also as you're starting to see Fang buy rights into this stuff I think you

can see some increased pressure to make that happen right so if I was Major League Baseball right and all my media rights are on Apple TV plus I think that gives me more leverage when these conversations start happening you know about the uh you know the Major League Baseball or the Premier League or you know any of that stuff again back to trans media right when Fang increasingly has media rights to these large Sports properties and and Fang is participating in multiple streams of Revenue that will be increased pressure to get these deals done and get the stuff approved I'm curious to get a to slightly tweak the direction of the topic I'm curious to get a pulse check on mythical like hearing your endorsement um on the the leadership is is great to hear Jonathan and I just and I haven't been following this company that closely I just know that you know when web3 gaming was taking off this was like a more of a like a flagship type of company that was getting off the ground everyone was excited to see what they

sped up um and over the past couple years I guess it's been pretty quiet and you know it's great to see that they're you know spinning up you know interesting projects like this NFL game Etc but it seems like they're the weight that they have in the web3 space has fallen not because of necessarily like missteps um but more just because there's been a lot going on while they have been quiet so I'm curious if anyone has thoughts on like the state of mythical what we should be looking out uh with them or you know what their impacts might be going forward I mean who hasn't fallen in web 3 I think that's that's the thing right no one's really kind of gone on um I I can say I remember like last year they had some really big sort of marketing activity and stuff in the space that's probably all prepaid for this year it's completely been toned down reflective the current market and general drops I don't think that's something to be held against them I

think one interesting thing specifically about mythical is they were embroiled in a little bit of a situation right where two of the former Founders have left to make their own fund and had prior knowledge and that's kind of interesting as to where that's going to lead I don't really know too much into it other than that is a thing that is known about and it's kind of the same with them but I think you know Jonathan and um I really like it was a lot of stuff he's been saying about them that you know with their kind of experience they've proven pedigree and also the IPS that they have like I think you know as mentioned before with the kind of the Apple subject is like these would be the sort of people that could make the big song and dance and the noise to kind of push things forward I wonder though if someone like that is that something that they want to do or they don't I think again if you look at like who are the biggest players in web 3D would really expect the big big pushes from they're certainly one of them I think immutable is another one um you know whether they coming with a guild of Guardians has been delayed multiple times but that was you know one of the ones Devin's laughing here

exactly so you know I know it's not vaporware but that's got like a star study team as well when is that going to drop um there are a few other ones like what about Gala games right when are they going to be pushing out all their stuff they've got real right Peter molyn you and things like this it's interesting that a lot of these people haven't gone yet but it's only so long uh who's gonna be the first ones to go what kind of you know Advantage is it going to cause I you know I'm excited these games can't wait forever someone's got to go first I'm sure one will succeed so um we'll have to see but I think it's interesting that you know even though we talk about this it's only Early Access right it's not really the big thing but NFL is always tied to the start of the season right that's my experience I actually used to work on a NFL card game with gree when the expansio guys and stuff like that so I remember that they were like the big things right and you probably really probably want to pique your activity for superbot and stuff like that so I guess what's interesting about a game like this is they can't sleep on it forever you know that if there's going to be a push you can guess when it's going to be and and fool is that time right and then we'll see I

guess go out big and then yeah what I think is really great especially about NFL themed um games is that very specifically they do amazing in the US and they don't do so well elsewhere but it's targeted for that so it would be amazing to see a blockchain based game going hard with an IP like that that's going to put amongst the pigeons as you would say yeah never heard that one before it's definitely definitely gonna steal that I think we just have a little bit of a little bit time left here for our last topic that I think is it should be a media one uh which is digging into uh the the just kind of ballooning budgets that we've seen uh in games in general and maybe some of the unsustainability that comes with that yes let me take this one this one I'm I'm really would like to hear what the panel have to say because it's something that I think we hint about a lot on this podcast and our weekly or fortnightly talks but we've never really covered as a topic so perhaps Now's the Time to give it so this is like um taken uh from a kataku article um and yeah

specifically we're talking about Blockbuster game because spiraling out of control and a lot of this has kind of been the Fallout of what's been shared in the public with the Activision Blizzard takeover and some sort of stories heard it but um you know what they basically said is that you know some games are having a budget of over 200 million dollars some people now thinking even over a billion has been spent all in when you include like marketing so on and so forth with with game production and that's just taking things to a level that's just never really been seen before I mean I I don't think this is something that's a surprise to people who've been in the industry certainly it's not to me I mean having kind of lived through the eras I can certainly say that for example take Playstation 2 on PlayStation two you could make a game with let's say 30 people in a year and be pretty positive that would be Roi positive and that meant you could even take some creative risks in terms of the games that you could make we went into PS3 era all of a sudden not so much because now the game probably needed 70 to 100 people and it probably took three to four years to

develop so that kind of changes it then we went into the Advent of the quadruple a game right I don't know if that's like a phrase It's still used but you'd start seeing job postings for like AAA isn't enough anymore we need an extra eight to work here if you want to work on this IP and you know are we getting to quintuple a sort of phase that's kind of what it's been hinting here and the thing is it is working right like you can still see that like what you know what the sort of takeaways that we see from this right so we we're kind of seeing that like the games at the top of the pile make crazy amounts of money right look at like how many copies Grand Theft Auto 5 is sold that's something that I think I quote every time that I'm on it so I'm recorded it again and the latest Call of Duty how you know in just like in three or four days was it reached a billion that was a record Aaron maybe correct me I do remember we talked about that in a previous podcast so so that's interesting that we can definitely see that the success is there and if you compare these budgets to things like movies like look at that Avatar movie that James Cameron just worked on and how that did it's perhaps you know a drop in the ocean you could say but is

it sustainable because the video games industry has seen crashes before but I had seen up times and down times even people that we felt could do no wrong have had Fairly high profile failures I think Nintendo being a really good example of that how after the Wii we never really speak about the Wii U but that thing was an absolute you know mess and luckily the switch and you know DS sort of fix it enough that we don't really talk about that that was really poor decision from them so as people they're also sort of you know in the industry I'm curious and then sort of things I'd like to ask you how high do you think both development and marketing costs will go because you know marketing right now is it can be a I think the reason why you see a stifle of innovation in the industry because you just IP is great because the marketing is cheaper that's the sort of tldr on that um but is that the way are the other ways to kind of hack it what does that mean for Innovation and is it sustainable and I think maybe the thing that I want to solve the test on which is of two things is like you know

that do things need to to change right is is gaming now actually a closed door because I sort of remember being like a teenager and wanting to get into games I was fortunate enough to do that it felt like oh anything was possible you could do anything but have we kind of already reached a stage where that's actually a bit of a lie and the big players have already been established and we're sort of in the end game so tons to talk about there I'm curious who wants to pick this up there's so much to unpack there I I mean at the first level like you no surprise to me I lived those Call of Duty P L's for five years you know so none of it was a surprise at all I think you know when you talk about marketing and Dev costs I think at least on Call of Duty one of the things that we saw happen over time is as we moved you know into an MTX and a you know microtrans model the cost of Dev went up because you weren't sort of one and done like you know back to the old days of like okay a Call of Duty might have cost 200 million dollars to make but you shipped it and didn't really cost

anything after that you made a couple of DLC drops and that's it and now I think that same article you quote is like hey there's not even one lead studio anymore there's 1.5 right you know because there's always like you know okay Treyarch made the game and then raven made all the add-on stuff or whatever right so Dev costs go up the interesting thing is post launch marketing costs go down arguably if you built the right kind of CRM feedback loops right because you shouldn't be doing any Mass marketing anymore when you're talking about add-on content right and live Ops you should just be marketing the people who own the game and it's an installed base and in-game messaging and you know other CRM you know highly targeted you know be targeted digital ads so you should see for the biggest IP ballooning and continuing to balloon development costs you should actually see marketing come down as a percentage you know of of their overall mix and arguably that should lead to like greater rpu and LTV and when you look at Activision's you know public financials

that's in fact what you see right you see increased revenue and you actually see declining you know concurrent players right like they're making more money but there's fewer players playing and so arguably at that level it's working kind of exactly how it should like margin is still very good right um so sort of hit another point about is the door closed potentially the console door is closed right or the console door is closing but again I'm going to go back to the movie analogy I think the mobile door or the web three doors more open than it's ever been and I think as long as you're building your P LS and you're building your team and you're building your Ambitions to the potential market and you're not overspending at that level there is great room for Innovation and there's great room for a new IP and it's that new IP expands you know and grows it can it could earn its way up to console in essence even if that still matters so I actually don't see Innovation going away I actually don't see doors closing except for

potentially console right potentially console is like the platform for winners the platform for Quad a right you know we've talked about this I think you know eight out of the ten or seven out of the ten are the top 10 list or SQL console quad a licensed whatever but I see a whole ecosystem below that that is open that is potentially more open than it's ever been open before and in part as a response to that other thing so I think you know I think it's all true at the same time if that makes sense that's a really good answer can I ask like you know having lived that how far ahead did you see that right because they were very Innovative to be fair right in the sense that Call of Duty went from being like a one Studio game to the two Studio games or a three Studio games are having kind of like five year ten year roadmaps and so you must have seen this and this must have been planned quite a while in advance and some do this and you know actually we just touched actually you know even on mobile with like mahogio how they have 200 million live operation costs to

support a game then actually to launch a new game you think in your head what the budget is for that did they double their company did they do the size yeah that that's why I can't see the sort of challenges here and um yeah like I say I I see it's both good and bad right because I think from the consumer the quality of games you get these days is absolutely ridiculous like sometimes I feel like what people are complaining about is like I mean you know wow have you not seeing the things that we play this is like impossible to believe but then at the same time it's like how can you reach that quality barrier if you're a new engine say I'm curious in your thoughts on that it's interesting the biggest structural change in my tenure at Activision and I kind of lived the transition from like console plus a teeny bit of DLC to like you know loot crates and all that stuff was really moving from like annual green light processes into three-year green light processes in a five-year Greenland process like I actually didn't see 10-year Greenlight processes like you laid out but this idea of like almost like a like a real AAA quad a package good right like you're a Procter Gamble

or Pepsi like there were five-year franchise plans right and franchise planning became more important and sort of like making capex Investments for three years from now or five years from now right we're starting to Green Light the next Call of Duty three years before it launches as opposed to a year before it launches that like that was the structural change during my tenure and I can only imagine it it going further since then right but uh but but that was the big structural thing right it's like you have to have a longer lead and a longer vision and you have to be capitalized the ability to get there you know and you have to make calls with like less you're making calls you know with less current information and more future State information yeah I think this conversation is super interesting I mean I think to simplify it like the costs are going up because the revenue opportunities are also going up as you have more players on more platforms spending money and and in more ways um digital makes margins higher Etc et

cetera um so I mean as a gamer I'd like to see you know these bigger and better games like it's exciting you know like recently playing a game like God of War and I'm like oh my goodness this is like incredible you know and like what they're able to to pull off and so I'm like yeah throw more money at that like we'll give you more money when you make these these like amazing games um the the couple other things I would add to the conversation at least as a as an outside Observer not having lived these these P L's um like like you both is that I still think that you know even though we're seeing these costs rise and perhaps and Justified ways at least some of the time that we still are at least entering a period of like Financial Fitness for for these companies where they still are being very mindful of the money that they are spending and we've seen so far over the past few months that's led to layoffs

um it might continue to lead to to more of that in the future um but the other you know as we kind of you know think about the trajectory over the next several years is that I do think that AI is going to have like some some impact here in terms of how companies think about their efficiency and how they think about their cost structure and I think the question is going to become um you know at some point when these tools become more viable and easier to integrate and solve the systems Etc is the question of whether hey do we leverage these tools to just need less people and therefore you know can make these games even more profitable or is are we going to continue to see high cost and including the AI tools or these these companies go even harder and even bigger and taking things even to another level beyond what we see here and my guess is it's going to be both we're going to see some IPS that are the biggest IPS in the world continue just

to get bigger and bigger and better and that's going to be awesome and a lot to look forward to and then we'll see others that maybe don't have have those same Heights and where it makes sense for them to be managed more from a cost I don't want to say a cost First standpoint but they don't have that same level of ceiling to reinvest into at that same rate and I think that's going to be a really interesting Dynamic to watch over over the future and at the same time a lot of that same Innovation might actually unlock more upside on the bottom too we talk about like the growth of ugc and you know what the future of modding could look like and I think that even if the door for competing for these billion dollar games that becomes a lot harder to compete with at the same time we're still going to see a lot of interesting activity and growth on the other side of the spectrum with you know platforms like Roblox with fortnite creative mode leveraging unreal and whatever else is to come and I think

back to a conversation I had with um Scott Rice Manis who's the founder and CEO of mod IO and one interesting thing he said some me just regarding Indie developers was that a lot of the the Indie developers that we've seen over the past decade before that many of them were focused on on modding like they wanted to build on the platforms and games that they loved most but because of the business modern model and culture around modding that didn't really provide Financial incentive it wasn't possible and we've seen the pendulum swing to Greater Indie development and I think too we'll we've seen like Rising like Venture Investments to support you know bigger teams with bigger budgets from from the ground up which is worth noting but if we enter an error again we're more building on platforms and modding on great games in more ways becomes more viable you could even see a pendulum swing back to some degree of a lot of like the like Indie talent that wants to build that kind of game not

even necessarily build their own game but just build on back on top of the great platforms and IPS that they previously loved and that you know or the new IPS that are being built so I don't think Innovation is dead at all definitely the Dynamics are shifting but we're on a trajectory to still have bigger and better games and more games made by more people and on both sides of that Spectrum the opportunity is growing so I think we have a lot to look forward to in the future do you think the opportunities there that's like a really good I just say that this topic could probably have like an entire podcast just talking about oil in its name and it'd be curious those to get Jonathan and Devin's opinion this is too I I in general I think I agree with you but maybe with one caveat which is like the commercial opportunity and what I mean by that is that something that was kind of common again back in sort of PS2 areas you had the concept I guess of like the B game from a b studio right so that's not kind of like you know your shovelware that you'd find anything remember you'd have like these sort of you know Nintendo Wii games that clearly

cost like 50 000 to make we could still turn a profit but they were clearly not competing with Activision with Rockstar you know they were in between and this is sort of where you you did see like Innovation and you saw Studios trying to make a name for themselves and some of those Studios would become a and Triple A developers after that but they would have this kind of like semi title that they put out first and that in my opinion is just not possible on Console right now definitely not right maybe you get it from Indie Games but the difference is is that if you're an indie developer and you make a breakout hit like a hollow Knight or something like that is the upside there for you because in the past what would happen is that that success could then turn you into a blizzard you know who started off with lost Vikings and then you become like this huge gargantuan entity whereas I thought that's not really true at the moment and so that's why I think I agree with you you're going to get bigger and better more badass games you're going to have more opportunity it's going to make it more efficient for people to make but will people get a fair slice of the pie or will they forever be kind of stuck in

this sort of area and that's something that does concern me if somebody's been gaming for a while I think it depends how you define B right because what I was going to add in here is you know the errands and I'm going to go back to I think the answer is all of the above right I think like the I think you know like Call of Duty is going to be more people plus AI right and for somebody at the end of the spectrum it's going to be AI instead of people I think what we have to be mindful of is what I'm going to call the Batgirl effect and what I mean by that is you know when Warner Discovery killed Batgirl because it wasn't a billion dollar franchises maybe only a 250 million dollar franchise right like I think the hard thing is going to be anything that can't make a b at Activision EA you know and take two gets killed right so they only play at a B plus and I think there will be a thriving web 3 in the ecosystem and even like call me crazy when Aaron was talking about sort of like you know the rise of sort of the re-rise of the Indie thing I might even think there's an

opportunity to be anti-ai which is like at the at a certain level in India like this is humanly crafted right and to use that as a marketing position right like this is a this is a crafted game right this is the equivalent of a 500 hoodie of games right and I think there might be an opportunity even for that but I think that like how you would traditionally Define a b might be might be the victim here right might be the thing that gets sacrificed I'm not I'm honestly not convinced and I think that what we might see is that it's the it's the activisions and EAS of the world that lean away from that b tier but at least what I see like unlike the Venture side is that there's more money than ever um like being raised and flowing to um like startup game devs Who a lot of times like have experience like building these these big um IPS and are being given more money than ever before at earlier stages to

create what why it kind of replace like the the B games coming from like these massive Publishers they're just gonna come more from from the startups who raised more money I don't know if that's gonna completely replace it if it's really the best comparison or not but I I mean I still see um people potentially tackling that opportunity but yeah it will be exciting to see where all this Trends where all these trends go in the future but yeah it seems like to me there still is opportunity in more places than than not and talented people can fit in to different parts of that value chain and new and interesting ways definitely a topic I think we'll have to revisit especially since you know money is going to continue to be you know something we we talk about here with games and uh budgets and who knows maybe the next Call of Duty will be a huge flop and we'll be talking about this you know conversation from a different angle but a lot of great stuff being said everyone got their kind of a Blog rant in there

so that was great I want to thank you all for being here always a great conversation with all of you and it was great to to have the first one with you as well Jonathan um I want to remind everyone again about the mailbag as well uh podcast novak.com make sure to to get your stuff in there we want to make sure we have more than enough of your guys's topics and and feedback and stuff like that to talk about as well and to add that in but thanks again for everyone as well for tuning in and we'll catch you guys next week if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a five star review and if you want to reach out or provide feedback shoot us a note at podcast navic dot Co or find us on Twitter and Linkedin plus if you want to learn more about what novik has to offer make sure to check out our website www.navik.com there you can sign up for the number one games industry newsletter navic digest level up your insights with our premium research platform novik Pro or contact

us to learn about our wide-ranging Consulting and advisory Services again that is www.navic.com thanks for listening and we'll catch you in the next episode