Nexon’s CEO on Leaving a Legacy, Fostering Talent, & AI in Games

[Music] welcome to the novit 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 services for more information visit [Music] www.nic.edu overwolf is the guild for in-game creators whether you're a gamer Creator or game studio overwolf is the ultimate destination for integrating ugc in games

for Game Studios overwolf offers curse Forge for Studios a white label solution that lets game makers and Publishers easily integrate mods safely and seamlessly into their games both existing and new at zero cost it's battle tested by AAA Studios and games including Maxis with the Sims 4 Studio wildcard with Arc take to interactive and others for creators overwolf is the all-in-one platform that enables creators to build distribute and monetize in-game apps mods and Game servers in 2022 overwolf paid over $160 million to in-game creators proving that they truly value the talents and contributions of The Gaming Community you can check out everything over wolf has to offer at overwolf tocom or check out the details in the show notes and with that let's jump into the episode hi everyone I'm your host Aaron Bush and today's episode in many ways is a part two to one of my favorite and one of our

podcast most popular episodes of 2023 today I'm chatting with Owen Mahoney the CEO of Nexon by now you've probably heard the news that Owen is stepping away from the CEO role soon which will mark an end to his decade long tenure of Market beating performance at the company it should be noted though that although he's sticking around as a board member and adviser he's also handing over the Reigns while Nexon is on top of its game whereas many large Publishers are current ly struggling with growth nexon's latest quarter showed Revenue growth of 24% operating profit growth of 47% and even maple story which is in its 20th year re accelerated to 46% growth over last year in our last conversation we talked about how Owen leads Nexon how to Foster long-lasting Virtual Worlds and how the company's leadership has built zones of innovation and anti-fragility into nexon's corporate fabric I'll link to

that conversation in the show notes and I really recommend checking it out if you haven't yet but today we'll reflect on Owen's tenure what goes into developing talent and double click into how Nexon and others can unleash more innovation in the games industry so with all of that said Owen it's a pleasure to chat with you again welcome back to the Pod thanks s great to see you thanks for having me yeah so really enjoyed our last conversation really excited for today's but I I think just a good place to start is as you look back over your successful run as CEO and congrats on departing while on top um what imprint on Nexon do you hope you left as your legacy yeah that that's a a really good question I think um I I think what I have tried to do is more than anything else strike the balance the dynamic balance that happens

between managing large existing franchises for growth and and then really developing a new business and I think we talked about this a little bit last time but I think any Innovation company has this dilemma and the Dilemma is I could just make today's business keep going and um there's a huge need to do that because you have to make you have to hit growth and you have to hit your near-term numbers your shareholders certainly expect it and um you know everybody else does as well but you also have to think five years out or more and you have to say okay where's the industry going where is technology going you know what's the what's the the company of the future really look like and I've observed companies around the world in you know I'm from Silicon Valley uh I spent a lot of my adult life in Japan in Korea and in those three regions you know there's been companies that have handled that question about near-term growth versus longer term

success some have handled it very well and some and many have really struggled with it meaning they've handled it badly or they haven't really addressed it at all um and what we have tried to do during the 10 years that I was at Nexon was to make sure that our existing large franchises like maple story dungeon fighter that you mentioned and several others continue to do well um while at the same time really investing far a field in things that are going to really move our company and our industry forward and um an example of that was the investment that we made in the purchase we made of Embark studios in Sweden um and we just launched the finals which has done really well for us but I can tell you when we made that investment and all through the last five years since then you know there were a lot of naysayers because it wasn't tangible to them and the innovations that we did around things like AI that we made you know five or six years ago that we were very vocal about at the time you know most

people in those dayses didn't want to hear about it at all if you can believe that today because everybody's talking about AI today but um so keeping those two things in balance is a challenge I can tell you and um and you can't just do one or you can't do the other um I grew up you know in Silicon Valley and in those days everybody um in the 80s was very sure that Japanese electronics companies were going to roll over Silicon Valley the way they had rolled over Detroit 10 years ago and um and they and it didn't work out that way um and I I would respectfully submit that a lot of those companies were extremely well at executing the business that existed in that consumer electronics or disc drives or displays or what have you but they didn't think long long and hard enough about what really the next generation was and so as a result they lost huge amounts of market share and and customer um loyalty to companies like Apple and Google and Samsung who were

very much um leaping ahead of them and I don't want I never wanted that to happen so I think we've done of all the things that I I think we're really happy about in the last 10 years it would be that dynamic balance is something we really strove for yeah and it's nice to see the fruits of that labor start to to pay off um in bigger ways that others are paying attention to now and we'll get to some of that um later in this conversation but um I guess there's a followup just as you reflect on all that you've learned and experienced as CEO what would be a couple pieces of advice to to new CEOs that you wish you had received 10 years ago maybe on how to accomplish what you just said um because that can be tough especially for non-founder CEOs to kind of navigate a company culture like that and get Buy in or or anything else just curious a couple pieces of advice well I'd say a couple things number one is um the thing that happens

when you become CEO is everybody stops talking to you um and I didn't really I I sort of had a sense of this having talked to previous CEOs that I had worked for um at other companies and I sometimes had better information than they did just because we would talk about it around the halls whereas they had to rely on formal reporting from their direct reports and of course you know when you when you get direct reporting everybody's got an agenda everybody wants you to approve their budget or you know approve their plan or convince you of something whereas when you're just swapping stories around the hallways or over lunch people really you get better information that way so I'd say I'd say one of the things that I've really gained in appreciation for is how hard you have to work for the truth and get to information I mean it's just true in life uh these days as it is in a company but you know a lot of my question a lot of my meetings are about me me asking questions me asking the same question

multiple different ways uh of multiple different people over the course of a day or a week and so you know you'd be surprised how hard it is to get to real information um and and everybody's got a framing of an issue I I think another piece of the advice would be I where I've observed other CEOs get tripped up is they sometimes will say something different to their shareholders than they say to their employees or to their customers you know they'll talk about heavy monetization for example to their shareholders and then they're and then it appears on Reddit and customers read that and they get really ticked off and I've seen that happen over and over again I I a I don't think it's a really good way to go about life but also it's it's going to get you in trouble of course with your um with your employees or with your customers when you start talking that way to shareholders so you know I I think if you have a strategy that is is going to please shareholders

you it has to be a strategy that please pleases customers and therefore it pleases the type of employees that you want to get to do that great work because this all this stuff is really hard to do and so um if you can't tell a story if you can't communicate with all three groups in in the very same way then um it tells you you probably have something wrong with your strategy um again monetization for example is a good is a good example of this um and so uh I would say that would be another big thing um I you know the rest is probably a thousand small things I don't mean to be glib but um uh but but I uh the one other thing I would say though is um there are trends that go throughout industry I think you and I talked about this before so if you think about the big trends that have happened the last 10 years so there's been in no not necessarily an order uh social

games on Facebook and then social games on mobile there has been Esports there's been VR there's been cloud gaming I.E Google stadia now we're in AI oh we had metaverse you know all those things and you get asked as a CEO okay what's your strategy for cloud gaming what's your strategy because obviously that's going to take over the world and what's your strategy for metaverse because obviously it's going to take over the world and um typically those questions come most vifly from investors or PR people or interviewers not you but but you know people who interview you and they've sort of decided that that's the next big thing that that's the deox mackina that's going to save us all and that you have to have a strategy but it doesn't mean you have to have a strategy because it certainly doesn't mean it it is the next big thing and we were very vocal about our opinions about the metaverse and Esports and VR and you know some other stuff that was out there and we just said look the the experience in VR sucks we have no Strat stry we're not going to spend a dollar on it because we

we can't figure out we certainly don't want to spend our days in a VR experience as it exists today so therefore we're not going to spend any money on it really you know any meaningful amount of money on it um and in the moment it's hard to do and hindsight of course it's very easy to say hey I Told You So or what have you but I think that the thing that I that that management teams of game companies and technology companies they do get very tempted to jump on the bandwagon because in the near- term their shareholders really want to hear about that and I think it's a big mistake I think you got to start with the product you got to be all about the product when things are broken with the product you have to you have to fix them you have to think about what the product of the future is going to be you know five years out 10 years out you have to you have to go towards that and whether or not anybody applauds you for it is quite you know quite Irrelevant in fact if people are not applauding you for it if they think that you're geeky and weird and you know they're sort of laughing at you then that's probably a good sign that you're ahead of the curve and um

you know we we have a um a senior executive Nexon in our Korea group has a has a great saying that he's repeated a couple times in exact gols sites where he' said listen everything we've ever done that we're really really proud of today felt deeply weird and geeky at the time and you know we got La meaning kind of like in the lunch Hall in high school you got kind of laughed at but then it turned out to be exactly the right thing to do um so I think you know keep your keep your own counsel would be the advice or the summary of the advice those are those are great Reflections and we could probably spend another hour just just digging through some of what you've learned as CEO and even unpacking those a bit more but I have so much that I want to to get to with you that um we we'll have to shift gears a little bit but um maybe one last reflective question for you um the last time we talked I got the impression that while your work experience is

largely in gaming you still learn from and study other things whether it's books or or something else and um I admire that because at times it feels like the games industry and even a lot of leaders in the industry it's sort of insular people are learning from each other in the industry but not actually learning like actively learning and applying that much from other Industries or Lessons Learned From elsewhere um and that doesn't apply to everyone of course but it's just a pattern that I've picked up on and so as you look back over your CEO tenure or really just your whole tenure um in games what were some resources you learned from that left to mark on you as a business leader or any habits you develop just to stay constantly learning and improving as a leader so we're all bombarded by um news and information all the time so I think you have to be really careful about what

you you know let in the door and when you see something that's good it's worth exploring more um you know I I I didn't I've only been in the games industry about well it's not been a very long time it's been 20 years but for the first 10 years of my career I was in broader technology I started my career out in apple in Japan and so I came from the tech business and um you know the the games industry works very differently and thinks about its business typically very differently than the broader tech industry and um so I've always felt at least I've had one foot in metaphorically in in in the broader tech industry but there's a couple of book well first of all I'm very careful about newsletters and and information that I read and uh this sounds like you've teed me up to give an advertisement for what you do but you're one of the few Publications that I read that I read really regularly you've got a lot so it's a lot of work to keep up with the analysis that you guys do but I

find it very very deep and very valuable um and I've learned a lot from it in terms of books I was just thinking about this the other day there there are a few books that I thought are phenomenal and really shape the way that I think about video games and and really they're they're about broader topics than just video games um the one was a was a book called uh Mindstorms by a guy named Seymour paper and papar was one of the founders of the MIT media lab and he talks about how kids learn and specifically how they learn math he was one of the creators of the logo computer language that I learned from it's a derivation of lisp and um essentially you learn by doing by you learn math for example by pretending you're this thing they call the turtle it was a robot actually that Drew squares and circles and so on you could tell the robot what to do and therefore you learned geometry you learn um you also learn computer programming and so on and it was very very it's a very easy read it's very but it's very

very deep and very interesting um there's another book called um Flow by a guy named Mii chiet Miha you may have heard of it it's a it's a you know pretty interesting um it's it's a and he studied what makes people happy and you know he noticed that people uh who are in prisons for example will sometimes report that they in fact you know almost sheepishly enjoyed big parts of their experience because are in these states of flow or people who are in you know um disasters of some sort or mountain climbers or Surfers they all have a very similar experience and typically it means that you know if you graph it there's Challenge on the y- AIS and and capability on the x-axis and you know if you're too challenged you're going to get frustrated if you're too qualified against the challenge you're going to get bored but if you're on that diagonal line up the up the middle you're going to find yourself in a state of flow and um that's true in life it's also true in video games um and so that really shaped

how I think about both how I want to spend my day personally and also how video game makers um make games and what we're really approaching here um so it was a very very sophisticated deep and a book that made me think a lot and then the third is about the video game development process itself and it really goes through the process of defining what a video game is and it's a book by a guy named tinan Sylvester and tinan uh made a game called Rim World which was one of my favorite games of all time my son also plays a lot of it and rim world is this fabulous game and as tinan was creating this game he also was blogging about his experience and he turned it into a book and it's um it's a fabulous fabulous book about the development of games and what it's really all about so you know between those three you're going to learn not only a lot about how your brain works but also about how um about what games are all about and I think one of the mistakes that the video games industry gets into is we we get this Obsession that we're sort of like

Hollywood and um it's it's been that way as long as I've been at the in the video games business and we we're not Hollywood because we're not linear entertainment and games are a different thing they're typically made of systems and the experiences you have are result of how you play those systems and if you design those systems well you can have you can create whole new things you can create your own story and games are unique in that way whereas in movies or books you sit back and someone tells you a story um and and that's what I love about video games and so those books really I I I reread them every couple years or so because I think that there there's there's each of them in their own way are very have a lot of depth to them I haven't read any of them so I'll have to check them them all out fantastic books each of them are fantastic yeah and I'll try to link to those in the show Notes too so others can easily access them um so looking forward to that also uh the flow book reminds me of something that I learned

when I used to compete um in sports which was um the kind of the concept of like your trainings are like onethird is going to be really hard oneir is going to feel like you're kind of in the zone and you're doing well and one third will feel too easy and if you're gradually improving then what used to be hard will feel easy sometimes you'll occasionally be like right where you should be to level up and if things are hard it just means that you still have um area to improve I don't know these days I feel like everything is hard so you know so someday so I need to find a better flow myself but maybe that that book can help unleash it some um I want to talk about succession planning um briefly and in in an interview with gamesbeat uh you talked about the importance of having a deep bench and setting the next generation of leaders up for success and on the surface that sounds pretty

obvious but weirdly the world maybe especially in the west um is seeing more leaders whether it's political business academic um you name it cling to power at older and older Ages which is actually not setting the Next Generation up for Success at all um and so I I I'm just curious like what does you know quote unquote setting the Next Generation up for Success actually look like in around the the sea suite at at Nexon look uh companies are just groups of people and um and so you it you're going to be you you you make your life a lot harder if you don't surround yourself with good people and getting to have good people is an extraordinarily hard task it's hard in multiple different ways finding good people is very difficult takes a lot of time it's very um unrewarding in the near term although it's massively rewarding the longer term um it can also be unrewarding because

you have to get rid of people who are not doing a great job and that's most people don't want to go through that process it's very hard and usually very unpleasant for everybody involved um but if you have a good team then you've got the first and arguably the biggest step for um having a a good a good Su a lot of options for succession um but I think and a mistake that a lot of companies um well not a lot necessarily but the one but there are several that I'm very familiar with they make the following mistake they say uh okay Joe Sally Fred you're the candidates for the next generation of being the leader and um one of you guys is going to do is going to get the the top job so if you do a good job you know you will get the job and um you think you're motivating your team by doing that but what you're really doing is p hitting them against each other you're making like a gladiator Academy and I've

seen this with companies including you know companies that are very big and very well known and that we all read about in the papers and I I just don't think that they're doing them any favors and first of all if you're one of those three people or two people whatever the number is it's it makes your life very unpleasant um second of all it doesn't do any favors to the organization because Joe's group might be pitted up against Sally's group and and you know one of those people is going to win they're not going to work very well in the meantime often times and then when one of them wins the others will feel like losers and so you've you sort of impaired your organization the minute you walk out the door so you're setting your the Next Generation up for failure is what I'm saying and I don't think that's a great way to do it and um and then I I think a third mistake that people make is they just postpone the decision for too long you know if if the company's doing well being CEO is a very nice gig you know you get a lot of Kudos

and you get paid well and you know a lot of people want to talk to you and and it can be really fun it's a horrible job when things are not going well I can tell you that and um because everybody's criticizing you and everybody takes pot shots at you fair or not fair they may not see the bigger picture but in any case it stinks to be failing so publicly um so if things are going well you're very reluctant to walk out the door and so um but if you don't do it when things are going well then you you set your your successors up for failure um and so what I've observed is a lot of comp and what we've observed and we've had a lot of discussions at the board about this is a lot of companies they make multiple mistakes at the same time they they have sort of an organization that makes it very difficult for the successor to come in even though they may be very talented and then they do it at the wrong time they don't do it at the time when when things are going well and people are working well together they do it when when things are you know the company's may be a little bit on its heels and

that's a horrible thing to do it's hard enough to be a new CEO anyway I mean it's hard enough to be to have the CEO job if you've been doing it for a while but to be a new CEO you know if it's the first time you're doing it you're going to have to learn a lot of new things you're going to be definitionally unqualified for the job so you're gonna have to learn the job and if you do that when the company's not in great shape boy that's that's really hard and I don't think that that a management team that is serious or a board that is serious about long-term shareholder returns I don't think they're doing their shareholders any favor by by not handling this well the problem is everybody talks a good game about you know shareholder returns they talk a really good game about um you know corporate governance but when it comes time to do the one thing that you really have to nail for corporate governance meaning make sure the management team is doing a good job on behalf of the owners of the company the shareholders they company after company falls down on us and um so you know we we don't we don't

want to do that we want to we want to be doing it the right way in the way that we would wish that our Capital would be handled well uh as shareholders and you've been going publicly through this process for a month now uh and I'm curious maybe you could just share with our our listeners if is there anything you've learned more from like the other side now of the announcement and going through the pr all of that that that you've learned or appreciate more than maybe you thought you would previously uh well I think you know it's it's I was a little surprised people have been very complimentary so that's been nice to hear um you know when when you're not about to retire people are less complimentary I guess you've also I was kind of like well you know to a couple of our analysts I was kind of like hey it would have been nice to hear a attab boy a year or two ago um but they were they were very nice no it was it was very nice to hear I think that I actually the the big

surprise I guess if that's your question the big surprise is people are very surprised by the timing uh that that was more than anything is what we heard um because it is unusual to be going out when you know the company's firing on all cylinders or we feel like the company's doing very well so so I was a little surprised by the number of questions we got about that um but that's okay it was um I think everybody's happy so yeah makes sense um final question on this how are you and Jan Lee nexon's next CEO and the current head of um Nexon Korea how are you different as Leaders like does he have any superpowers as a leader that are different from your own that we should look forward to well Jung hun um jungan and I have very different backgrounds um and that's one of the things I've Loved about working with him number one is I mean we communicate across a vast cultural and linguistic Gulf um I don't speak Korean um and he doesn't speak

English or Japanese um well but he's learning both very quickly so um it's getting easier every every month um and uh he's a heck of a lot smarter in terms of raw brain power than I am for sure and I'm not just being falsely modest the guy is really smart and um but the big difference between he and I is we have very different professional backgrounds he came through live game operation and he's forgotten more in the last week about live Ops than I have probably ever learned in live Ops I mean he's he's done everything in live Ops and he's he knows it very intuitively and very well and so one of the things I I've really really enjoyed and I will certainly miss a lot about working with him is we just have this very complimentary skill set and but we have a sort of fundamental view of the world that is very similar we like playing fun games we think that that's at the core what we're here to to do is deliver that we feel like if we keep doing that consistently over a long

period of time the business will you know build itself in a lot of ways and so um you know he he will take the long-term win over the short-term win any day of the week so on fundamental things we've never really conflicted and but we've been able to teach each other a lot of things over the years um and I'm I I've really really enjoyed that um but his his knowledge I mean one of the things that I've spent a ton of time doing just because I have to as CEO is investor relations you know I deal with a lot of I deal with a lot of shareholders and a lot of analysts and so on and he hasn't had to bother with any of that so I think he's he's feeling like that task is a little daunting but I'm I'm helping him understand that nothing in investor relations is nearly as difficult as you know make making maple story grow 46% year-over-year um on its 20th year uh so he's so we're we're having those sorts of um sharing of information um cool well I look forward

to seeing what he achieves I'm glad you're you're sticking around at least as an adviser and board member in some capacity to to help out probably transition on on some of that um well this has all been been interesting I feel like I've grilled you enough on on on looking backwards in succession so let's let's shift gears and talk about some other fun stuff which is technology the future where the heck the games industry is going with all of this stuff and um to start Owen you've done several interviews lately in which you you spend a lot of time talking about how the games industry should be more Innovative and how Innovative software tooling like AI or backend infrastructure improvements can enable smaller teams to create AAA games Embark Studios which is majority owned by Nexon did that with the finals and that's a big deal it's a big deal for embark in Nexon but also for what it signals is possible for the industry right and this deflationary

Innovation I guess you could call it sounds like a real Trend and opportunity but I got to ask why are you the only prominent CEO talking about it why is this why is this not like a bigger conversation do you think you know someone told me the other day I sounded kind of negative uh I don't mean to sound negative at all I just to me the industry is is is it's a little bit like the taxi industry the year before Uber came on the scene you know like nobody was happy about their taxi experience in the US I mean in Japan is very different it's taxi experience in Japan is fabulous other parts of the world you get a great experience but in North America you know that it used to be pretty Grim um to get a taxi from the airport to go somewhere and um and then Uber came along and just made all of our experiences a lot better and I think the games industry is a bit in that in that situation um you know as I've said I I think Murderers Row this year was a big

disappointment for a lot of Gamers some of the biggest franchises underperform certainly financially but they also underperform creatively and we've certainly heard fans being very vocal about that and um but the reality is making good games is super hard for everybody involved it's hard for developers and for development managers or development directors it's hard for CEOs and uh and you know many people are not happy I on the question of innovation though here's a fundamental technology question uh Moors law you're familiar with Moors law uh famously in you know introduced by a guy named Gordon Moore who was one of the founders of Intel posited that uh the number of circuits on a chip would double every 18 months which would mean computing power would double at any given price point every 18 months and it's worked pretty well uh until very recent maybe slowing down a little bit now but it's it's a been incredibly precient forecast so

what does that mean at its core it means that you know you get more toys for the same amount of money by double every 18 months that's just incredible when you think the compounding you know the compounding of more and better stuff every 18 months in any given for a thousand bucks let's call it um that's re that's revolutionary and it's guided everything that we have today that the I phone in your pocket is a supercomputer from a few years ago I mean that's literally what it is today well then let's take that back to the video games industry what is the video games industry has done with um Moors law it's found a way to invert it and give us less goodness um for a lot more money uh and you know development costs have been skyrocketing they've gone up from you know 50 to 100 to 200 in one case I know of a of a game that's going to be a billion dollars and um that's

development teams of many thou you know many hundreds of people in some cases over a thousand you go um or more and um you go okay well something's desperately wrong here because fans are unhappy and yet we throw more bodies at the problem um it's an inversion of Moors law so if you take a technologist approach to it and say okay can I get a better game experience for less for Less costs what would be the benefit well obviously the the the near-term benefit would be less cost and shareholders immediately you know like when you say the the cost word they immediately get excited but really what it is is if you could have game development of a great AAA game with a very small team you're gonna have something that's probably a lot more creative because you'll get creative people together hacking up an idea and trying out stuff and saying well wouldn't it be cool if x happened wouldn't it be cool if y happened you're gonna get a you're probably GNA get a better product and frankly that's the reason we all got in the games business in the first place is because we want to

make cool stuff and have create you know have them make creative interesting systems for us to play with and then we'll make the game will emerge from the way that we play out those interesting systems and every great game that I can think of that I've ever played has come from some small group of people sometimes one person in the case for example of Minecraft that has created these really interesting systems and um they've then blown my mind with how deep I can go on those systems and um the games industry seems to have lost some of that and I think that among other things it's just decided that it could throw bodies at the problem more when in fact they could use they could leverage software a lot more and um software is there to help creative people do more creative and interesting things and um I think we should be empowering creative people to do more stuff because they're going to come up with things that blow our minds and um so I'm very excited about this idea and I think we've proven it out in the case of Embark you know

the team that made the finals was 75 people 75 it wasn't it wasn't 500 it wasn't 1100 it wasn't 2,000 it was 75 people so and that's a triaa game and um it's super fun I've been playing a ton of it myself I will be playing a lot more next week with my kids and um and I know a lot of other people are doing the same thing so we ought to be doing a lot we ought to be exploring that a lot more but we sometimes have it have a hard time in our industry getting out of this sort of rut that we're in of throwing bodies at the problem which I think from a technologist perspective is a real mistake yeah and why I asked you that question is because this isn't something that you're talking about could happen this is something that that you were already doing um so which is why it's weird to me that no one else is talking about it in that way and maybe they are behind closed doors but yeah it's just been something a nut that I've been trying to crack and maybe one one part of the hypothesis of why that is is is

just I don't know the state of online culture or uh or or I guess you could say the media and social the social media mob in particular is great at taking nuanced topics and you know forcing them into binary discussions and the role of AI driven software in particular in game development has almost uh turned into a conversation between actions on one side are those who are excited to see how software improvements will Empower individuals and teams to be more efficient and creative and on the other side are those who view it as a threat to the status quo and especially all the jobs that supposedly rely on that status quo um and so you know I'm sure that's true in some cases less true in other cases but but I guess my question my followup question for you is just how do you think leaders can best manage this kind of change given the high tensions

involved like how can CEOs like you or other games industry leaders best set a direction around using new technologies that are obviously beneficial but stir up perhaps valid concerns about about the employee or contractor impact of that change any thoughts on on that that's probably a very long conversation the way we got around it um with in the case of Emar and how you know the finals and got to see the light of day um was didn't have to do with the things that you're touching on at all it was we said listen we've got these very large very profitable franchises like maple story dungeon fighter sudden attack and so on they generate cash flow we're good at making them last and grow forever so what why don't we use that to feed you know we have time because our business basically goes up you know um every year could double without the introduction within a few years without

the introduction of any new major new projects but let's feed let's use some of the frankly the cash that we make from games like that and let's use that to feed some Innovation on the other side of our business and the Embark team really really wanted to invest in software tools because they had a thesis going in that by investing in software tools early on by the way none of had or some of them were AI but but a lot of them were not um you know by by investing a little bit UPF front then we could get out of this Loop of you know our workflows that depend on Photoshop so much you know generating art off of Photoshop and I could give you example after example of of you know painting foliage onto mountains where the foliage of course is going to be different at 2,000 feet up virtual feet up then it is going to be at sea level of course that would be the those are software problems that conceptually are not hard to do and yet our industry typically doesn't do that very much it you know you have to

like be a really good artist and know that foliage at 2,000 feet is going to be different than at sea level so embar wanted to spend several months working on that and they had a team that was doing technology very directed towards the game development process and that helped us a lot and they were happy to be in a place where you know frankly we or I could give them the room to go build some of those tools and so it was really a function of our business model in our insistence again on keeping that balance between today's business and the business five years out um but I think your question was maybe a little bit more about the con the the sort of controversy or the concerns about AI taking our jobs and um I think that those are real concerns that happen typically whenever you start automating things to empower a group of people um and that that's a that's an important topic but what I would say about that

is game developers come to the game development business typically the ones that I know and I've interacted with a lot they've gotten into game development not because they want to work in a factory and yet our industry asks them to work in effectively a factory like here you know Mr new game developer miss new game developer come work in this Factory with this group of a bunch of other people sitting in cubicles and make art all day with Photoshop that's what we ask them to do and they do it on end and our industry is sort of notorious I mean despite our best efforts sometimes of giving this factory work that's very uncreative people keep coming into the games industry because they love video games you know they grew up on them and they love the creative work so if you can hand you know that group of people some tools that they can create better games and automate the work that's the grunt workk of what they do I think that that group of people is going to do better work so it's not about reducing people in the industry in the aggregate it's

about those people having better tools that automate things so that they can make a more fun experience I want those people those talented people to be much closer to the creative process but today they're not you know they work on a team of let's call it a thousand people or 500 people if you're a development director you've got to manage a team of 500 or a thousand people I can tell you you're not spend a lot of time being creative you're spend a lot of time figuring out how you get 100 people not to quit or how you got to scoop up another 200 people in some area you got to get 50 sound people it is really hard work that has very little to do with creativity and I think that we're seeing that that situation this is I'm talking about the AAA world and I think that's a very very big problem so if we can get better tools to help those people I think we're going to get a lot more very differentiated games and so everybody will be happy uh customers will be happier because they're going to get better toys to play with I know I will as a customer game developers are going

to be happier because they're going to be having more fun making their making their work um development directors will be much closer to the development process CEOs will be happier because guys like me won't have to greenlund hundred million projects to get a really cool game maybe they it'll be a$ 30 million project for example and investors will be happier because our industry will be a lot healthier because customers will be happier so everybody wins and I that's that seems like a good future for us and um so I think that's a way to think about it yeah it also strikes me too that this technology is more easily applied to smaller teams or teams that you can kind of that are starting from scratch in some kind of way whether it's a startup or like a um and maybe it's thornier when you have to when you start thinking about how to apply it to larger teams but I also wanted to to ask maybe last question by the way there's one there's one sorry there's one other thing on this you know a lot of the a lot of the people that large game companies have to employ have nothing to do with development they're

lawyers or Business Development people or administrative people or HR people or accountants to make this big people Centric thing work if you had smaller teams doing more creative work those are the people who are going to have a harder time you know the lawyers but they're not the creative people and and um so I think an industry that is leaner and F fed around the people that can actually make games and bring those games to customers is probably going to be a more healthy industry poor lawyers um the the last question I wanted to to ask about this um is you know obviously this deflationary trend is fascinating and it's very likely a big deal but can you help me understand how you think this will all play out longer term like what the second order effects are because for example um if it becomes a pattern that smaller teams at lower budgets can make AAA games then presumably there will be more AAA games

um competing for players attentions and there'll be maybe a rise in the number of triaa games faster than the rise of the number of of players or the play time so it just gets maybe more competitive but also the basis of competition it shifts from budget where you know as you mentioned today very few companies can afford to Greenlight nine figure projects and so the basis of competition shifts something else like creative Talent OR beloved IP or or something um so I'm I'm curious what you think like how the notion of competition and competitive advantage in making games fundamentally changes if this software driven deflationary Trend um makes better games possible with with fewer people well today again we're talking about AAA games right so we're not talking about the Indie scene but AAA games are still required for you know you have to make major Investments to make a serious online game or it has been true till very recently that you've

had to do that so we're talking mostly about triaa games uh I guess in your question look if you're going to make a triaa game you're GNA have a very big budget which means you're going to have to bring your game to the light of day through the orifice of a very large game company they can afford to Green Light 100 million bucks let's call it in round numbers and as a result we get a lot of games um that are not very different iated from other games we keep playing the same games over and over again in large part or we play sequels now that's not because CEOs of game companies are evil um it's because to Green Light 100 million bucks you know is a I can tell you it's a hair raising experience and if you get it wrong your shareholders will be calling for your head um so it induces sleepless nights so what do you do naturally you try to lower the risk you have a development maybe a green light process with a lot of execs around the table and a lot of marketing people wouldn't it be great if that didn't

happen wouldn't it be great if we just focused on fun and the judge of fun was a group of people who were the target market rather than the execs who have to Green like this stuff who are caretakers of shareholder money right at a more senior level who by the way are terrible at figuring out whether a game's really cool or not uh typically in most companies so I I would think that if you look down the future and we can build games that are AAA with small much smaller teams you're going to get you're likely to get a much more different you're going to get more cool ideas that come out of nowhere um because the stakes will be lower and as a result you're going to get more good games and you may you may say the implication of your question included well will that mean we don't have enough customers for all these cool new games I would respectfully posit that everybody is a gamer we all grow up playing games in some form or another and that we'd get a lot more customers for our business if

we made better content and um you see this constantly I mean think about what happened with fortnite or Minecraft it brought all sorts of new people into um games who had not played those genres of games before wasn't that great you know that um all these new and different people came in to play Minecraft or you know the people who would never have touched a mil Sim FPS before started playing fortnite which is an FPS of sorts and um because fortnite sort of had this interesting take on things and so I think the market could get a whole lot bigger I I think one of the problems about video game analysis is that it can look like a consumer package Goods business like diapers or you know deodorant or something like that it doesn't work that way at all those markets are very defined they do not grow or Shrink much year-over-year the games business expands and contracts like crazy typically expands but it also contracts based off the quality output of the industry so I think we would have

much better and more healthy industry in much bigger total addressable Market if we had more differentiated new ideas coming into the games business it's one of the reasons why these why better tools is so important it's not just about cost savings yeah and I think that's a a refreshing take I sort of suspect there will still very much be both a a red ocean and a blue ocean there's always going to be um you know new opportunities that that come along that unlock new new new players or more time from certain players or however however you slice it but also yeah I'm just curious like I feel like this changes like what does it mean to be a double a game and um how does it Empower others to be a triaa business that couldn't have been in the past and you know how does that shake up the industry and I think there's there's going to be interesting shakeups from this also because as you know I mentioned a couple questions back some people are ahead of the curve here and others are not talking about it at all and I feel like that probably has

some implication on um how certain companies at least partially play out over the next um few years so it'll be interesting to see all of this unfold but it's exciting to see the technological progress and see creative people figure out how to apply it in bigger and better ways so um lots to look forward to um I guess a cple last questions for you Owen I could talk to you all day but I got to got a narrow in on a couple final questions I guess first of all um obviously even though you're having conversations like this one about your departure um from being CEO of Nexon you're not done yet you still have a few months left uh Before you depart I think in March um although of course you'll you'll stay on some capacity is there any final act you want to get done before handing over the Reigns like do you want to paint the CEO office pink to pain to prank your

successor or get the official Owen Mahoney scan into the finals any any final plans I wish I had a really uh cool sounding answer for you I eron but I don't I just wanna I just want to have a good smooth transition make sure the company is set up well I know that makes me sound really boring um but that's uh that's that's about what it amounts to that's fine I I encourage one one final prank in there somehow um final question for you um what's one non next on thing in life that you look forward to doing more when your time frees up a bit well I I like to kiteboard a lot and I like to ski a lot I'll probably miss the ski season this year but uh I like to kiteboard a lot so I'm I'm hoping to spend a little more time in Hawaii and and catch up on some kiteboarding uh but I also um uh uh a little more seriously I I I've always been sort of a a a hobbyist coder since I was a kid never serious and I

was never I was I wasn't trained as an engineer but I I kind of wish I was and so um I I hope to spend some time I'm I'm calling it my postgraduate year but um spend some time on three topics number one is um really getting serious about python uh number two is getting very serious about Swift and number three is getting serious about AI tools that plug in a python um you know it's one of those things where you really don't understand it until you go deep so and to go deep means you have to be able to build stuff and so I'm I'm hopeful that I'll spend um I'll be able to spend the time to really it's required to go deep enough on those because I find them both really fun and really valuable um but I um I I don't think it's there's so much going on in the industry right now I think it's going to be a year I think maybe more like a quarter so we'll see um but I'd like to do that if I can and of course I I need to spend a lot more time with my friend my family and friends I who I I don't get to see

nearly as much that sounds kind of cliche but that's really true yeah well um you've had um a really great tenure Owen at Nexon and clearly have learned a lot um throughout your career and so thank you for sharing your insights and and learned wisdom with with all of us and um I know you'll be sticking around in some capacity you're still clearly um going to be in the weeds of learning and and and thinking up whatever is next so look forward to to hopefully staying in touch and and cheering you on um for for whatever's next but thanks again for for hopping on today and and best wishes Owen thank you I really appreciate it it's always great talking to you if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a fstar 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 novic has to offer make sure to check out our website www.nic.edu and advisory Services again that is www.nic.edu [Music]