Microsoft’s Done Deal / Predicting Holiday Hits / When Will Layoffs End?

[Music] welcome to the Novi 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 novic growing ecosystem which ranges from free and premium research to Consulting and advice ADV services for more information visit [Music] www.nic.edu providing an Enterprise grade data platform and services for gaming Studios on all platforms dive bi tools and service of data experts replace the need for a full in-house bi team saving Studios hundreds of thousands of dollars

yearly if you're interested in learning how dive can Unleash the Power of data in your game's business and save money doing so simply head to dive. games or check out the details in the show notes and with that let's jump into the episode hello everyone welcome to another novic round table I'm your host Devon Becker and with me I have fantastic two panelists as always now Aaron of course as you know from navare and Anil from first light games pushing out that uh blast Royale as best he can how's it going guys so you got the uh the skeleton up for Halloween there yeah thanks for calling it out it's Halloween time which is the best holiday as almost no one agrees with me on um so yep got the Halloween decorations out pulled my skeleton out of the closet today I'm sure we all have skeletons in our closet um is that part of the theme of the episode May maybe it will be can tie it back in uh but yeah Halloween coming

which means candy is coming and I'm still very much a child when it comes to Candy so excited yeah definitely I uh I I Halloween's my favorite as well but as a diabetic it's also a sad holiday for me you know take one or the other but uh fantastic weather I wish it lasted longer I don't know about you and Ne I I know the weather could be a little H walk over there around this time so we'll see on that one but we've got some uh some topics for you today I mean not not a ton of them but some some definitely meat to chew into around Aaron's favorite topic especially Microsoft and activis a blizzard which can hopefully finally be put to rest here we'll see and then uh you know a little bit of sat side some some more layoffs but we're going to kind of look into what uh what could be coming from there and then we'll dig get some holiday game predictions and talk about the holiday season keep it festive there well why don't we just start off with uh you know trying to hopefully put a tombstone on this Microsoft acquisition

yeah it's funny because it's a light Newsweek it kind of feels like nothing is going on but also at the same time like this is like one of the biggest possible things to ever go on in in the industry where this where the largest gaming deal ever is finally like fully approved and done so that is very big news and I don't know what we'll do with ourselves now that we don't have it to talk about it's been the staple of the podcast for at least 2023 all the way through but 2022 before that um and of course as has been discussed previously in 2024 we'll really start to see the synergies with between these companies begin to click namely Activision blizzards games going to Game Pass um and we'll see what kind of lift that has on Game Pass next year and also especially when next year's Call of Duty comes out we'll see what sort of effect Game Pass may have on uh you know that game unit sales and how the the

predictions shake out there in terms of you know whether people were too optimistic or pessimistic about how uh Call of Duty unit sales will be impacted so that's a big question obviously Xbox will not be making any more big Acquisitions at least anytime soon um maybe there'll be some tuck ends but you know one thing that I'm I'm kind of thinking about going into the future is like well anytime Xbox or probably even other major gaming companies going to make Mega deals they're just going to be met with so much friction and headwinds from Regulators that they're just going to be thinking of new ways to grow and so sort of like what we've seen with the 10 cents and net eases of the world and we've discussed before how you know in the face of regulatory scrutiny they're they're not leaning as much into m&a and instead they're leaning into just creating a bunch of new Studios from scratch um it wouldn't surprised me if

like that becomes kind of a new growth pillar of Xbox um at some point over the next couple years that that comes into focus a bit more clearly but really that's all speculation for now the deal is done we can stop talking about it so much and really just like sit back and watch and listen for like the next like real steps of this Saga to unfold for us to dig into more into the future because they're going to be important they're going to have an impact on the industry they just need some time play out from here i' be interested what you think about the potential side effects from the compromises that Microsoft had to make during some of that I mean a lot of them were just kind of like uh yeah we'll let these kind of like tiny little Cloud things like you know have whatever like for example the the Ubisoft deal right where they had to kind of let Ubisoft be in charge of their Cloud stuff um you know there was there was a number of like small compromises around like the the deal for like 10 years of Call of Duty and these kinds of things that like I'm wondering if you guys see any short-term consequences or this is like H we'll

deal with that 2025 kind of problem that that's what I think I think it's coming later I think we may not even really see the true ramifications until the next console cycle begins but I still think Microsoft will be more than satisfied that they've got this wrapped up now and they can start putting their nefarious plans into action right now um but I I pretty much expect it to be status quo as for now I I do actually have a question for eron you mentioned that you feel that that will be the end of Xbox Acquisitions and maybe big Acquisitions for for the short term um is there maybe a counter argument to that just to say that currently games industry I think it's fair to say it's not in the best place you know in terms of it overall health we do see a lot of Studios closing I definitely buy your argument how a strategy could be to form new Studios because it's often the best time and there's a lot of great talent that's out on the market that can't be swallowed up to start putting those Investments now but I also feel like let's say this acquisition was formerly proposed this year right now I I feel the valuation would be even lower than

it was before and we always kind of said that maybe they went for it because they saw that kind of friction and the sort of trouble that Activision was happening and maybe they thought wow we could get 10 billion off this deal I feel like they could get more than that so I'm just curious and if so maybe are there any more predictions the in terms of what another big acquisition could look like first of all um with Xbox specifically it when I say that they're probably won't be like big Acquisitions I'm saying more more them and maybe just like the other like Mega companies out there like big Tac um just because anytime they try to do anything at all there's a ton of of friction so for a company like Microsoft and Xbox to make more moves they probably can't make another move anywhere close to the size of Activision Blizzard again I also do think that they push for the deal to go through because it's a pretty good deal that they got on Activision and I'm not sure if it were to go through today that it actually would be the same price um because um Call of Duty in particular

has has rebounded and has like built out its ecosystem much more than you know a couple years ago uh so um so yeah maybe they do some tuck or something but more broadly I totally see m&a picking up in some kind of way it's definitely been quiet over the past year um and that's mainly because valuations across the board have just reset and companies have you know been trying to figure out what makes sense for these private companies to even be trading at um and money has been tightening as a whole so there's just more Hoops to jump through to see if you know if you're going to take on debt to make a deal happen at higher interest rates or sell shares to make a deal happen at a lower stock price than you had before there's just more headwinds and more tricky math to to get those kinds of deals done unless you have a lot of cash sitting around where which makes it easier and that's

why we see you know like the Savvy games groups of the World which have $ 38 billion dollar in dedicated cash to to put towards making deals like they're fine to buy a company like scopely even though others might not be so um I I do think that we will see more m&a pick up again it's inevitable and even if it isn't happening at the same frequency or magnitude that we saw before it's it's not it's not done and could see you know any deal happen at any time um you know for example like we're already hearing the Rumblings again that many of Disney's advisers are pushing Disney to make some type of big deal into the games industry I think the timing of that is a little tough because Disney is just trying to figure itself out and especially itself out regarding the future of Television across um you know cable declining Disney Plus uh you know slowing down what a

streaming bundle even looks like what are they going to do with Hulu the ESPN losing leverage like they have so many big TV related questions to think through that could change that could lead to spin-offs or restructurings that like change what Disney looks like in that regard so I have a hard time seeing them jump into gaming in a huge way before figuring that out but once they do actually one of in one of our very first um podcast episodes couple years ago one of the predictions I made was that once all of these big entertainment companies grow tired of streaming as like the narrative for the next big thing they're going to Pivot that to gaming next and I I feel pretty good about that you know a couple years on at this point because streaming um has proven like very costly we're going to see a bunch of these companies either shut down streaming merge together pull back expenses rethink how that fits into a Cable Bundle and once that's all

figured out yeah I do think gaming is going to be the next uh big thing for them Warner Bros Discovery they went from considering spinning off gaming to Hogwarts Legacy being a big hit and like oh okay maybe we can actually make some money from this um Netflix obviously getting into gaming in bigger and bigger ways and I think Disney is such an obvious fit with the IP that they have to not replace licensing with you know just in-housing game development but adding ingame development on top and so whether that's requiring an EA or something else at some point that actually could make a lot of sense for them to do um so I think that's one area that I would be looking at and just really quickly I know I've been talking for a while but the second area that uh I would just mention is private Equity I think private Equity is sleeping on the games industry right now and we'll talk about this a bit more later in the episode about how like obviously a bunch of companies have reset their their cost expectations their forecast for the future um when that happens uh especially in

like big troubling ways like we see with companies like embracer usually that's a signal for private Equity to come in and find their footing somewhere in the industry and make their bets on like what can be streamlined and turned around very effectively and I do think there are opportunities in the games industry for that to happen but as a whole private Equity has been very quiet um and in fact basically non-existent um and in gaming and so I don't know if it will uh you know come in in a big way but it could and so I'm not going to put that possibility um past these big private Equity companies and if that's you or a activist investor something hit me up I have I have a ton of ideas for you um but uh that that's just like another category that I think should pick up um but I'm curious what you both think too in terms of what m&a categories or even just specific deals

like could make sense or we could see yeah I have to say it's SP you kind of stole my thunder a little bit of the EA one I think that's the obvious one them and maybe Ubisoft but I think we've discussed this several times on this round table how Ubisoft some of the deals they did recently sort of make it seem like that that's no longer possible so I I don't think that will happen I I do think as soon as the Activision one was announced everyone must have thought EA right that's the next most obvious one to go um they've kind of been treading water for a long time interesting to see how EC perhaps understandably right now is a little bit maybe not performing as as well as FIFA last year I think that was always expected but still again maybe that makes it the right time for a kind of acquisition I think we are getting into this kind of heavy consolidation phase so I feel like in terms of absolute Mega deals that's one of the few that's kind of um out there one that I always mention a lot is is Capcom Japanese company I feel that that's undervalued given their kind of performance it's something that I could see um especially something that Savvy games group going in I think maybe some more slightly

under the radar stroke hipster choices for you who who like these kind of hot take ones is that I still feel that other companies that maybe could go I think miyu who do um genin impact and hanaki star rail I mean maybe they're already past the point where they can be acquired but I still personally think that it's absolutely phenomenal to have seen that in the last s five years the emergence of such a superstar Studio from China that isn't net ease or 10cent owned already so that feels to me like I'm kind of surprised it hasn't already happened really that someone hasn't tried to invest in another one is Lilith um who are based out in Hong Kong and China again they I think have got a a real kind of uh talent for making kind of new genres and stuff that's someone I could see and yeah maybe for my sort of like slightly Alterna take I don't know if you've seen But like one of the sort of big success stories I feel isn't talked about enough over the last sort of year is is the success of Monopoly go which has come from absolutely nowhere now of course that's made by scopely so there's obvious acquisition but but there is a game that's been kind of Fairly consistent in the top 100 for a

long time called Solitaire Grand Harvest and that's actually might made by a Danish company called super treat and I feel that goes under the radar so I don't think that's going to be a mega acquisition but could I see them getting acquired by like a pler or someone like that I absolutely could but um slim pickings I would say I would say too like if we see more consolidation I mean obviously Xbox and Activision merging together is huge and Disney looking to get in in big way potentially like that would also be huge and take another big player off the table which you know kind of raises the question of like does it even make sense for if this consolidation is happening for like someone else like a take two to even be left stand alone or would it push someone like PlayStation to make an even to attempt making an even bigger move sort of even defensively just to be like well if this is they may have to right they may yeah they could they can make some kind of big deal as well um and so

yeah I think consolidation um is a good bet and it's always made more sense to me for this consolidation to exist around like entertainment ecosystems where it kind of centers around companies that have incredible IP um whether it's it comes from a movie or it comes from a video game wherever um and they just find ways to like take that IP and across these different mediums whether it's anime whe whether it's theme parks Etc um and so seeing more of these like entertainment ecosystems uh like be thoughtful and come together in bigger ways and add gaming as a component to that that makes a lot more sense to me it always has than just like the growth by acquisition mindset purely within gaming where like inorganic growth is a company strategy like I don't think inorganic growth grow is a strategy purely like that can't be

your singular strategy um within gaming or sure you just come up with a collection of games but you don't get those same like competitive advantages that you get from like a broader ecosystem or that you get by just focusing on like truly incredible IP and so I think that maybe that's like sitting the obvious at at this point because some of that's already played out but this year I like especially with the Disney thing the reason why that makes so much sense is the Super Mario Brothers movie doing such amazing numbers that's the first time that you've seen a gaming IP translate into a non-gaming behemoth right and I that would open my eyes oh wow okay so whereas before you made the IP in the film and then you might make a game and the game was successful like Hogwarts Legacy which is still a really big hit as well now it's been shown that the other way around is also possible and therefore you'd be looking oh wow if we don't even have the cave ability to do that that seems like a pretty bad idea

and the fact that you know you've got Nintendo Land as well um I have a friend who's visited and sent me the shots very jealous I'd love to go it looks amazing so and that again would tie into it so yeah agree with everything you said there so yeah I guess bottom line I mean we won't predict everything and you can't because things happen like you know you know just like random companies out there like app loving like app loving is always making moves but like you know whether it wants to still merge with unity or go a completely different direction like who knows there's like a bunch of companies like that so we can't predict everything but yeah I mean the lle that we are in right now besides Activision Xbox it's temporary it's definitely consolidation is still very much a Thing For Better or Worse yeah I I probably expect 2024 to show more signs of life but it probably just depends on the the economic environment that we'll be seeing as well I'd be curious if someone try to scoop up the Volver one of these other ones that have been like minor successes um that are you know like having a little bit bit more of a rough time at the moment um

that you know no one's really thinking about as as a big one to pick up like in terms of having a portfolio and some experience stuff like that I don't know what would be a great fit for them is they kind of have a bit of a punk attitude uh that might be kind of hard in in some of the bigger companies but one thing you do make me think of air when you're talking about the um sort of like media landscape with it is something like a crunchy roll games like with the success we've seen of anime just in general cross games and you know platforms like crunchy roll uh like being able to push that out to the kind of current generation of like kids and teens and like going into like young adults stuff like that I could see some kind of play like that being actually pretty profitable and kind of sideswiping Netflix in a way basically because Netflix has definitely tried to push into anime quite a few times and you know somewhat successfully to some extent right like obviously cyber Punk was huge uh in terms of like that being you know and it was talking about video games into movies that was a perfect example one that was like a little more lowkey than the theatrical release but still like I think pretty significant in driving sales of a game that that had been considered a flop to kind of come

back uh back you know and make it at least worth uh CD project Red's time to to continue to revamp that game but the other thing that you guys may think about as well is the you know a lot of times when we're talking about these these big Acquisitions that like seem like they can't happen and stuff like that a lot of it's down to like government regulation and we look at the FTC and things like that but I do wonder if there's like opportunities in other countries like you guys talk about like China to China Acquisitions right where it's within the Chinese government and other you know maybe governments don't have a say we don't have like you know EU trying to block it or us trying to block it uh is there maybe more opportunity in uh some of these other countries either within the country itself or just across countries that's maybe a little smaller without having to deal with like such uh antitrust kind of issues it's hard to speak to China um so I won't Japan I think is also just like like uniquely its own um has like its own business culture right that just thinks differently about um being a ired so um yeah in in general you only really

get mergers there right or an acquisition from another Japanese company to the other Japanese company they really don't like going external but you never know yeah and beyond that everything feels more Western and sort of in the zone that we were talking about that kind of falls into the same like ecosystems the same type of IP we could definitely see um more small m&a and you know there are still like acquir out there whether in Mobile or um even just some of those companies that have been more of those growth by acquisition companies that still hav it in their their DNA to be always looking at deals um so we'll definitely see more of that kind of thing but that's not I don't think where like the industry defining deals will come from I guess the final question then I to try to put the hatchet in the uh the Microsoft acquisition uh so like as as like we've been trading up to so before even the acquisition was was announced

things like that it it had seemed like an inside Activision Blizzard Activision had kind of been starting to take over and eat blizzard so to speak right like it seemed like a lot of the chatter from the inside was really kind of Activision people sort of taking over kind of like pushing blizzard to do more what Activision is doing for example like blizzard had these long timelines to build their games they could kind of take their time they were building like these really AAA polished things and then that culture started sounding like it was kind of eroding as people left as Activision kind of started taking a bigger sight of things uh and you know that seems to still be the case as far as I could tell right like obviously I'm not on the inside but I wonder going into Microsoft uh does that exacerbate it so for example like Activision's obviously been much more console friendly than blizzard has right blizzard traditionally has been more desktop or even trading into Mobile with Hearthstone uh and obviously like Diablo has drifted into uh you know console pretty heavily starting like like in three uh stuff like that but it's as then you move into to Microsoft who's running a console business with Xbox

does that then push yeah obviously with the bigger success with Call of Duty then all of a sudden blizzard people kind of like whatever remains out and it becomes basically Activision I think there's always an impact culturally when Acquisitions happen um and it kind of depends how it's done but yeah like in this case like Bobby cic is going to step asai CEO um and that in and of itself is going to have a huge impact on like giving Xbox and Activision a chance to just sort of like reset how they want to work together from like a CEO to CEO kind of level um but even like more broadwood I would say like it's always a question with Acquisitions of like what you want to centralize and what you want to keep decentralized in decision making and operations and so you see you know at one extreme like even with like a Savvy games grow group um which is more

of a holding company and you know it seems like you know when they acquire a scop Le like they just kind of leave scopely B so far and you know they're just still are kind of doing their thing but then you have the other side of the spectrum where uh you know like a a unity and an iron Source merge together and nothing is decentralized the whole point is to centralize as much as you can and like get the synergies out of it so I think that you know what you have in mind for how centralized or decentralized decision- making becomes and operations are has a huge impact on how cultures play out and I'd also say too that sometimes it changes over time like embracer is like a perfect case study of this embracer I think really came in with the mindset of like hire awesome like Leaders with great teams to build games and leave them to do that um but when hard times hit it it caused a reset that forced you know embracer

leadership to really change the way that it views running its company and working with leadership and stepping into to make to make more centralized decisions than I think you know many of the decentralized teams wanted so that's sort of a roundabout way of answering your question Devin but I think there always the relationship with bethesa could be an example of like what we could expect because they've been running that for a while and it seems like there's it's pretty tight at least in terms of what Starfield was maybe but Pete Hines just retired I don't know what that says um I would yeah I would say the opposite I've got to be honest my my understanding is that it's already quite a bureaucratic process working with Microsoft that I know developers that have personally worked with both Microsoft and Sony in terms of relationship and they say it's way more Hands-On and has upset some people it depends on how you've done things some people are okay with that process but that would be my slight warning is that we haven't really seen a games company yet be of the size and

stature of this new Mega Juggernaut that's just appeared and that would be my initial worry and I would say that like two things that don't do too well in terms of making games is bureaucracy and creativity there's always a painful light I mean at the same time they've got proven IPS I'm sure they'll make really killer new stuff in those IPS but I think it might be a little bit painful and you saw a lot of talent bleed from blizzard when they join Activision and I would expect to see much of the same well speaking of people leaving the companies voluntarily or not we unfortunately have a lot of the the unvoluntary kind uh happening recently we've talked about a little bit uh in some previous episodes but I think it it's still kind of going on and we we don't want to ignore that here yep I'll take this yes it's more unfortunate news um this time around it's Frontier who are also based in the UK the UK's actually been hit quite badly I would say of recent given epic getting rid of media tonic a lot of employees there recently too so this time around they've announced they were going to make 20% um

cut across the whole company they uh kind of cited the underperformance of the F1 manager game that kind of underperformed at Market I have to say I didn't even know Frontier made that game that's was a bit of a surprise to me um but yeah they're more you know famous for elite Frontier like you know they're the big game of the famous for so unfortunately that's rather sad news maybe some positive s news we've heard the Avalanche Studios has set up a new studio in Montreal Canada perhaps it's not all doom and gloom but I think you know really we want to dwell on this topic too much but I think it is something that we we should discuss in the round table which is like clearly games industry is in a bit of a contractual phase at the moment um why is that how long do we think it will last for what is needed to get out of it and you know hopefully we can do that soon what what are the panel's thoughts of course it goes about saying that our thoughts are of anyone who's been laid off hopefully we can help you land on your feet I've seen a lot of good responses on link in especially in the UK community of trying to help people out um yeah it's bit of a tough situation at the moment yeah well I think we've talked um a lot

in the past about why this is happening um which is several reasons right like postco effects uh ATT and mobile and then you know just like the era of cheap money coming to an end which has Ripple effects for like how companies you know forecast their growth and then if they have to change that that has Ripple effects of how they think through their cost and hiring which is a lot of what we've been seeing um today and it's always a process to unwind some compan are better than others some companies are just like depending on where they are and the the value chain um or whatever their strategy is like have to unwind more than than others um and so I think a lot of companies have already like made most of the adjustments that they've needed um some companies again I I don't mean to overly pick on embracer again and again in this conversation but like you know they're going to that unwinding process is going to continue to take time and it's going to come in different phases um so like the end is

not over and it just depends where you are right like web 3 like whatever's going on there that's driven more by like when are the games going to come out that are going to like bring traction to the next level it has less to do with the macro and more about the micro um in in Venture markets I think seed stage companies are in a pretty good start they're getting like good footing in in right now but like later stage Venture companies that ra money at higher valuations and you know had certain burn rates that that they were running with they're probably a lot of those are probably stressing out and have to reset themselves because they can't raise money at higher valuations um which you know if they want to go back and raise money it messes with your cap table U messes with like investor returns at different parts of the stack um Etc and you know you probably have to you know cut back and rethink your burn so that you can last longer with what you have or with what you're going to raise next um so even within the startup

world it's different and for like public companies they just like these big private companies like an epic even it it depends you know companies like EA are always going to find reasons to restructure um and you know there's going to be Ripple effects from that on on individuals um but others the embracers is going to take more time and there are even others in between that probably just need like one like one of chopping and reorienting probably like we've seen with epic maybe we can talk about them some more but there probably are a handful more of those but last thing I'll say here like a lot of this is bottoms up like what's going on specifically in the games industry reorienting around your strategy and your growth for the future but there still is a macro element to it too where um you know a lot of companies have set back but also like with interest rates where they are and governments trying to to to manage inflation without it like screwing up demand and

unemployment and all those things whether governments can STI The Landing is a huge open question at least in the US um and historically I think the data suggests that it will be a hard Landing meaning that like it will lead to Consumer demand contraction more unemployment um and maybe that has an effect on gaming I mean who really knows exactly how this unfolds but again like when you kind of take these uncertainties into account as a company like you really have to be thinking like all right maybe things don't exactly turn around a quarter or two from now but you have to start planning out like six quarters from now is that when the Turning Point really is that you can bet on more is it eight somewhere in that zone you don't really know but for if I were you know advising startups or even public companies that's kind of how i' would be thinking just assume that you're not going to see maybe like we're seeing a bottoming out but we're not necessarily going to see like a return to to like re accelerated growth or tons

of hype in different zones um for at least another year by now um to to play it safe so anyways those are my views on that I'd be curious if you guys either you guys have any idea on kind of the general roles that are being cut or the the types of cuts that are being made specifically like what is the fat that's being trimmed is it just failed game projects that like you know are not no longer good bet is it like uh you know extra roles that just are not necessary that were more for a growth phase like what is the F new projects yeah new projects at is that's the tldr so anything that is already maintained you double down you keep that going anything that is like this won't be released for another 18 months two years it's gone and you redistribute it because just yeah when you're going to see the return on it you can't afford to turn of I mean some pseudos may be who can kind of take but in general that's that is a kind of sense I think you know we saw it already maybe even a year ago of pler saying that they were no longer going to make

new games and just look at supporting you know that's a very common stance across the industry right now they'd rather buy a game that's already working rather than take the opportunity risk to try and get something working because you know it's it's not just um you know the financial situation but we mentioned before as well the other things like scaling games I think is quite difficult like what is the the winning formula one right now and there's two really which is IP and the other one is to sort of have a a kind of like Community esque kind of you know seven guys in a garage make something and it somehow gains traction and then you get that kind of good story there isn't this s of in between that there was before and I think that's where to figure out it's it's almost like you know if you think about games development how we had kind of like tripa a games and quadruple a games then we had the kind of like freeo play but then what happened is there was this other tier of game like the B tier game that used to exist that kind of went the way of the dodo and maybe it's a similar kind of case with Markus it's like if you're going to go like Grand Theft Auto 6 will probably be the

biggest game of all time how big would the marketing budget be probably the biggest marketing budget of all time right and and that will work out that's on the top end of the spectrum a game that comes from nowhere but has some cool game play that just you know picks up traction on Tik Tok maybe blows up but in between those two things how do you get that to work that I feel is a challenge for the entire industry actually which maybe we should talk about more but yeah it's the the new projects the ones getting cut I would take it one step further too um new projects getting cut obviously has an impact on people on those teams but also even just you know other s an organization like recruiters and others that you know were brought on to like help sustain like the growth of a business and and like other functions but even more so than that like when companies that set these expectations for outsized growth and you know build their teams around that around those new projects and when those new projects get pulled a lot of these um like companies just have to like

reset their Direction as a whole which leads to like just changing strategies changing focuses and in that change is where you see a lot of the hurt and so you can look at like an EA for example with mobile like like as they've struggled with mobile as the market has become harder to succeed in Mobile to some degree like they have they made more drastic changes to re Orient their mobile strategy which has meant a lot of cuts and focusing elsewhere in the business um you look at what epic is doing you know they're betting on a bunch of different different places and building up like an ecosystem of of services uh and a lot of that hasn't panned out and they're realizing that their future is maybe a little different than what they were expecting in the past and so betting more on like the ufn side of things which is a lower margin business than you know just fortnite

going gang busters and all of these additional tools and services um kind of building more of like a metaverse ecosystem I'm sure they still believe that in some way but again changing market dynamics have forced them to shift focus and that's just led to changing needs of people needing to change your like cost structure and I think you could go on down the list of like different companies that have just had to change in some fundamental way as they review their future and obviously cutting new projects has an impact but there are Ripple effects across organizations um that that happen as well what do you think these the the people that get laid off right like say there's just variety of different roles different types of talent like in this current market does it make sense to then go hey let's just try and start our own startup or does it make sense to continue to try and look for a job like what's what is the strategy then for people that like good talent I mean obviously the bad Talent obviously hopefully takes up another job but the good talent like what do they do with at

this point do they just go hobbyist like in this particular phase of the market what makes the most sense that that's a really good question I think in general it could be good and kind of idealistic to expect more startups to come out but I think there is also another thing in the background that there is a kind of global cost of living crisis going on too which makes that tricky which means you know can you afford to Skunk Works you know your own game for a year even if you've got the most Talent that's out there given that everyone's costs are going up so we may not see that so much um I I still think we'll see a few though because it does make sense there surely will be some people that are successful but you know unfortunately lot of times these exits are not through choice right so that kind of makes it difficult but you know Erin mentioned it earlier at the kind of top of the show like maybe this is the time now to start kind of writ those checks if if we're not expecting any movement for eight quarters was mentioned there you know well why not put the investment down there you won't get much of a better return and that

Talent still exists out there um I hope we see it I think it would be good to do but I don't think we will see as much of it as we might have seen in previous Cycles like we did before just because we're in a kind of Uncertain position globally we've had Financial meltdowns before but I don't think we've had it with you know more than that going on right now is all that the postco thing unfortunately war is going on these things do make a big difference um is an issue what about like uh contract development work it seems like something that is kind of been a gap fill for a lot of people that you know don't have a big game that they're that they're going to be ready to push forward with to some big dream they can get funding for but they still want to kind of build their way up to it but also like a lot of these AAA companies have had trouble kind of hitting their deadlines needing a lot of outside it almost reminds me of like uh you know Marvel movies and all these other things are like having to have like 10 different Studios involved just to finish on time like is there maybe some opportunity there then in terms of like being kind of a gap fill like hey I've got talent I worked at these kind of companies maybe even the company you just got laid off from go do

some you know some uh some Gap fill work there or you know one of these kind of smaller Studios that sort of are on kind of an ongoing contract basis with some of the bigger ones I hope you're right but again I kind of fear that I seem to have noticed recently I feel if anything has gone the other way where I've seen even some of the big deps kind of rushing things to Market a little bit and clearly cutting cost and I'll give you a good example I feel like Mortal Kombat one is a good example of that uh quite good gameplay but I think even the fans themselves there are some quite questionable bugs or reused animations and to me that feels like a game that they probably would have spent another three to six months on normally but they didn't why didn't they do it so I don't think that they got you know I I think everyone's in cost cutting mode I mean look look at where these redundancies came from they come from some of the biggest companies out there so um yeah yeah but I think that is still a good option for those that are people that are affected that is one of the better ways to kind of keep yourself going and you know companies tend to prefer that too right they don't need to commit and

to be honest with you maybe that is something that the bigger companies need to learn rather than just a taking on 2,000 new people maybe take your time a little bit and and plan it growth out because I think at the same time some of these key decision makers maybe do need to be a bit more reflective over what was done there because people went crazy right and was there need I guess we it was all because Co is the future right everyone's going to stay at home and play games but that always felt like a bit of a false narrative right it was a very unique point in time was never going to last forever U last thing I'll say on this is I'm actually optimistic like obviously it's a hard time um it's a reset and in resets like you know negative changes on individuals do happen but like the games industry is still very much a growing industry with all sorts of new interesting Trends and platforms um that are going to need all sorts of new tech um new gaming experiences um and there are lots there's so many like like interesting

younger teams you know being formed and being scaled up that need people like there still are a lot of companies hiring right now but even like you know Zoom forward a year from now like you know maybe we'll be in a different spot or two years from now like I think it's inevitable that like as the games industry grows there's a reshuffling effect that's happening now but the demand for talent is Absol absolutely not going away at all um so yeah I think there's maybe too much Doom and Gloom sometimes you know like in the moment but when you kind of zoom out and look bigger picture there's there's not as much to to worry about as it seems as long as we don't hit our Atari you know ET landfill moment right like this industry we're fine like that was that was kind of the one big uh reset I think we had other than that it seems like it's you know it's still the new form of entertainment as you pointed out right like movies have gone with their ups and downs as well in their industry

over time as being one of the other new mediums you know before games so I guess it's not a big surprise I just I do hope that obviously people weather the storm it does sound like though like in general games is one of those kind of Industries where if people like did good work and there were good people like it's there's kind of this sort of like Brotherhood sort of effect where people will kind of find each other jobs things like that like I meanes this seem like then you know we'll just kind of wrap it up here but like a good time for then people to really start kind of working that LinkedIn not just for like posting your resume but really like doing some networking on there because it sounds like as you said there's there's hiring going on it's just finding it now right like maybe you need to move to another country maybe you need to do remote work for a while or contract work uh but like that opportunity maybe just isn't obvious and requires kind of like a a little bit of networking now H now now we can fly different places in the the postco age you know maybe there some opportunity there moving forward into the uh hopefully not dismal holiday season uh we just want to kind of talk about like I just want to see what you guys's you know thoughts are on what might be a

big success this this holiday obviously there's been some some interesting releases over the year of various quality levels uh so like definitely different things coming out obviously not a ton of big releases I don't think in in November December necessarily but what are you guys's uh bets in terms of what you think will be the big winner Anil look like you're ready to go yeah I can give you a few I mean you say this no big ones but I think like Nintendo still have Super Mario Brothers Wonder to come out and that's in like two days exactly yeah so still just in time and Mario Brothers at Christmas it may not be you know it's one of the 2.5d ones rather than 3D but I'd still expect that to because what I always observe is games like that or Harry Potter's another one they kind of go under the radar like people of our kind of age and demographic don't talk about it and you look at the end of the year and you go wow that actually sold 17 million copies how did that happen so I think those are are pretty uh likely to be good the other one I call out I think Spider-Man 2 could you know the movie did really

well earlier this year was like and it's kind of funny it's not just like games that may be a bit Doom and Gloom but movies are kind of in that phase too right it feels like we've moved on from Superhero syndrome and we might be moving on but the the Spider-Man movie really like did surprisingly well with that amazing art style so I could see this game picking off the back tail of that by all accounts you know developed by Insomniac really good traversal mechanics as always so I think these games could all do pretty well I agree I think those games are going to pop off in in a big way um obviously switch there's just so many people switch consoles now and Super Mario wonderers getting great reviews Spider-Man 2 has also been getting really awesome reviews better than its predecessors and that one's only selling on PS5 so it has a bit more limited install base but I think it's going to have a really high attach rate so completely agree with you on that and then just like a couple other obvious mentions right like Call of Duty Modern Warfare 3 is going to be huge as always um the EA Sports FC game

came out recently and that's just going to continue steamrolling throughout the holidays um I guess like I I think that's probably like those like encapsulate like the mega hits that we'll see like top the charts but I think um maybe just to call out a couple others I think that um it's actually going to be like a pretty good A pretty interesting quarter for like horror games um Allen Wick 2 is coming out I think that one's going to sell pretty well for for that genre but the other thing I wanted to call out is um Silent Hill Ascension which is uh gen vid's new massively interactive live event or mile it's launching on on Halloween and I'm pretty sure it's going to be their best yet it's also the first time that a mile like this has used a popular video game franchise and tapped into a gaming fan base to create an interactive streaming series um and it won't be a massive

money maker like these other uh names that were we mentioning but it's probably going to be one of like the most Innovative like experiences like in the realm of gaming that we will see um this year and and especially in this quarter so I'm I'm really looking forward to trying that out and just seeing what it's all about and they're coming out like before like you had to play their events through like Facebook or something but now they're like launching their own like apps that you like play through so I'm just curious to see what this is evolving into so yeah I guess those would be kind of like the the other two I would just note but yeah I think andil nailed it on the main games is there anything Devin like on the web 3 side or even like for both of you like on the mobile side of note or is the the main action like these big like AAA console PC launches web 3 I don't think is going to launch anything on time and I think this year would be considered on time at this point for just about anything that was been working on obviously nothing like Star

Atlas or anything coming out could be a surprise I the like I mean uh off the grid for example was pretty off the grid for a while until they like popped out with something that was that was pretty you know pretty cool looking but at the same time like I feel like this is obviously it should it should take a long time to make a high quality game so we're St kind of stuck in that period and in Mobile you never know like we we have like uh supercell trying to just throw out some games now and then as well right we have that new one they're gonna pop out with and uh there's always a chance Clash mini could finally go to the global launch like they're they've got like an interesting pivot they're trying to do on their monetization and like power scaling I don't know if that will work but I would love to see if that would and that that could be like a real big surprise I think coming out of like a very different style after their their loot box dropping they did before so I I think there's possibility within the mobile space like that uh speaking of mortal Comet that that Onslaught one just came out too it was just kind of like another one of those kind of like ho hum games and I think we've seen a lot of that kind of just copy basically like you said earlier and it like everyone kind of playing it safe and I think that might prevent some real big

surprise hits from coming out unfortunately on kind of the mobile space yeah although that said like I say I mean I mentioned it earlier but Monopoly go is the number one top grossing game in the state for a mobile game to achieve that like that is not done too often it's actually the first time that's happened in quite a while that a brand new kind of game with is it a new genre not really it takes elements from other things it's it's kind of coin Master the rest but still for a new debut on and they're scaling extremely aggressively these days it's kind of hard to understand how much they are but some of us in this space think they might be spending 2 million a day on marketing for example right and so Christmas is the biggest festive period I mean I don't know about you but we used to play a lot of Monopoly around the Christmas period that was kind of good for it so I could see them making a really big push and I'd be interested to see what numbers they have past that I think they'll be quite eye opening I think that's a game that people shouldn't really you know um unell really I I think it's all some of these big IP holders they may be looking at and go wow it just shows you that there are these Mega hits potentially that can

be untapped if you if you get the right team and give it some good faith so those ones but yeah I don't expect to see anything else and yeah as of web three I very much agree I think that the soonest I think you'll see some of these big things is maybe around the middle of next year but I will say that there are is getting to that point in time where these guys going to have to launch right they can't just sit back forever and I'll be curious as to what happens when it does and they'll probably all around together to kind of get a magnifying response but won't be this Christmas not this fested period yeah um and then I mean that's like on the game side of things on the the company side of things even just like other stuff um like we talked about Disney and I think like I still am curious to see like what Disney is going to be up to in the next like couple months few months I think we'll get some clarity on just like their Direction which may or may not have like an impact on like the games industry but I think that's a company that we have to be paying attention to even though it's not really a games business um Roblox is

like another company that I mean I'm kind of like always paying attention to because they're like always like interesting right like in terms of what they're building um in their their platform but like you know they just launched on quests not too long ago they launched on the PS5 and I think you know seeing some of those like results over like the holiday period and and such and just seeing what kind of momentum Roblox is able to build across new platforms I think that'll be just interesting to see and to just better gauge roblox's future in more areas uh and unity like will they get a new CEO by the end of the year will we have like any Clarity or new thoughts on on their Direction it's possible um we'll we'll see and then the last thing I would say is just like on the hardware front like I think the steam deck is still gonna continue to be a great seller over the holidays and even just like I think we should keep an eye on the quest 3 not that it's going

to like automatically bring VR to the mainstream but um it it looks like a really compelling device that honestly just looks fun to play on but even more so than that like it's sort of bringing like mixed reality games like Beyond like the Niantic kind like the kind that you actually like wear through a headset like to Market and enabling them for the first time and that's not going to change the world or change the industry anytime soon but starting to see like the early signs of like what people could come up with for like these mixed reality games um and you know what people gravitate towards over the holiday period um within the like the a revamped Quest ecosystem I think is going to be pretty interesting to see yeah I remember Quest 2 being a big holiday seller like that was one of those ones that was kind of surprised uh like that that it sold as well as it did as like kind of Christmas present like I think there you know people were starting to see all these activations of accounts and people actually starting to

pop up uh with a lot more than was expected and I don't know I me we might be in a tighter environment now where where people see that as too like more of a luxury than we did then with the Quest 2 so that might be like something that kind of hamstrings it a bit but like obviously it does have like potential to be pretty interesting and I guess uh I guess we'll have to wait and see in terms of like the consumer Hardware side right where would be kind of hard to tell and then also like you guys are you know talking about uh some of these sales too that might even be hard to track to determine like you know the the Silent Hill one which is kind of more of like a brand impact than an actual like retail sale or you know you talk about Allen wake to that's not even going to have an a retail release if I remember correctly that was one of the ones that was going to go digital only so it be interesting to see like if we even get like really accurate numbers on some of this stuff uh with with some of retail kind of taken out of the mix some of these things and obviously like mobile one that's a hard one to tell right if it's obviously there's no there's no upfront sales for most of that and uh you know depends on that that IAP reporting but it should be a very interesting holiday just because

maybe like not a ton of competition either so maybe good opportunity for someone who could launch something polished within the next month or so right try and get it ready for Black Friday if that's still kind of the thing when everyone actually buys stuff now I don't know if it's like a there's so many games that have come out recently there's I feel like there's so Ling yeah that's that's what I feel like is this like but that's the thing now is I wonder like a lot of people that uh like all the games that have come out in October or like are is everyone already going to have those that wants them right like is is are people still depending on their parents to buy them these games for Christmas like I'm sure there is of course right like I don't mean like it's not happening at all but I wonder if that has that shifted at all where if like Gamers now like core gamers are like 35 and up like I don't think they're waiting for their parents to buy them the game for Christmas they just buy when it comes out when they want to play it uh to an extent right so obviously like if you're like in a family situation a lot of times you'll still like you'll be like I'll get this for myself for Christmas or my significant other will like because we've got a you know budget for the kids and all that stuff so there's different situations but I I do wonder if there's any shifting we've seen in how the

holidays impacts game sales for games that have come out in like October or earlier we'll see right like one of those things but anyways uh you know a lot to look forward to for the holidays hopefully a lot of this stuff will actually just be like kind of bottoming out and turnning around but you know might be kind of qu quiet but in the meantime spend time with uh with your loved ones of course and celebrate and uh I want to thank of course you guys for joining me and all the listeners out there thanks for tuning in as usual and uh enjoy your weekend and we'll catch you on the flip side if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a festar review and if you want to reach out or provide feedback shoot us a note at podcast nov. or find us on Twitter and Linkedin plus if you want to learn more about what navic has to offer make sure to check out our website ww W w.n. there you can sign up for the number one games industry newsletter

navic digest or contact us to learn about our wide ranging Consulting and advisory Services again that is www.nic.edu [Music]