Palworld Explodes / Riot Scales Back / Newzoo’s 2024 Report / Bullish Trends

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processes increase speed to Market and optimize your post-launch live Services rally here Powers games that have been played by over 200 million Gamers worldwide across PC console and mobile including Smite paladins Rogue company and many others rally here's Founders were also among the first to embrace crossplatform free-to-play games meaning the rally here solution incorporates over a decade of hard one experience and learnings in Live service games R here's partnership approach to customer relationships makes them a trusted and experienced co-pilot to help your team as you develop and operate your live service games so do you want to know how rally here can help you with your live service game if so simply head over to Rally here.g to learn more and schedule a demo again that is Rally here. G so with that let's jump into the episode hello everyone welcome to another novic Roundtable I'm your host

Devin Becker and of course we've got great panelists as always we've actually got a full house today which is nice to see it's it's always a little up and down but uh everyone I think with some great uh topics and ideas today but how are you guys doing first and foremost awesome starting off the year in in Korea the the word for happy New Year is which literally translates to like wishing you a good fortune in the New Year effectively and I feel like you can say that for until you see someone so you have to say Happy New Year for a legit like three straight months in a way that I feel like I get crap for saying happy new year after January 2nd in the state so happy New Year to you guys it's like wishing someone good morning in the afternoon well before we get into things uh we have a couple things to talk about uh first off Aaron had something to share navic related yeah so this is super fast I just wanted to share quickly that navic has officially launched its investment support Consulting vertical and so in some sense this isn't new novic we've successfully worked with investment team across Venture hedge funds private

equity for the past couple years but as we've grown we thought it made sense to to you know act actually package our offerings around this more formally and so if you um saw our last novic digest or to you may have already seen this but um in short we provide reports around market and investment research we can plug into due diligence projects around major Investments or m&a um and we also love setting up advisory relationships so that we can help customize to your investing needs um our team and I personally would love working with you on this so if you want to learn more or reach out Simply head to nvic.org and I would love to chat and if you think eron takes our hot on the podcast you should listen to when he's on your Advisory Board there's some truth to that

hopefully for the best though the cold truth it's gota especially if you're paying for it right you got to get it well cool hopefully that gets a lot of uh interest here especially with the B kind a newer thing but definitely make sure to to check that out go to the website as well uh as we've I think this is we've introduced a couple new Services recently so we're continuing to grow and I think that's great um not everyone's so fortunate but uh Sebastian actually you have a project that's been kind of growing that I think is kind of interesting people would want to know bound share with yeah so for my full-time job I am the co-founder of infinite canvas which is a user generated gaming meets AI Studio publisher and so we do a lot of things on a lot of different platforms uh I've talked previously about some of our uh fourways into making games inside of like Tik Tok and Discord and some of the other platforms we've been launching a couple of games where we've effectively changed the live Ops and game development of the live Ops to be powered by GPT uh or other types of

generative AI via text based llms or image generation and we've been slowly rolling some of them out and so one of the games that we soft launched finally once we had enough tokens on GPT was prompto which is a wle Style game where it shows you an image and then you type what you think the image is and then it generates an image based on your prompt that you put it in and it Compares a two images against each other to give you a score uh we're we're really excited inin canas about not neily the core Tech like there are so many smarter people who are working on really cool core Tech and we're not really a huge fan of tooling because we're just not a tools based company we're we're content company we we love making games we love being in games and so we've been spending a lot of time on effectively using AI to cover some of the live Al cots which are often the largest driver of games dying right there are often enough people who love a game there just may not be enough people to house a team of a 100 to work on the

game and we think that one way to approach this is effectively to use AI in order to continuously generate levels and generate some really interesting stuff for folks so if you want check it out we're at infinite canvas. G you can find prompto p r m pt. and you can just follow me on LinkedIn or Twitter and you'll see some of the new games are coming out and I'm really excited about a lot of the game design space we've been working through and it's it's really an exciting time reminds me of early mobile I'm super excited everyone's excited J yeah I've just never seen anything like it you know before right like uh game is a GPT I I just be curious SB like like what is your like thesis for building a game on that because people don't you know view chat GPT the open AI world is like a gaming platform right like most consumers don't associate it with gaming at all so I'm just curious like what are you thinking you know building a game there like kind of what's your like what are you hoping to to learn or or achieve in doing that

yeah my personal philosophy when it comes comes to Consumer anything and this is true not only as an operator but also as an investor and advisor and everything else is that gaming eats consumer every day of the week and it doesn't matter if it's Excel sheets it doesn't matter if it's a TI 83 it doesn't matter if it's chat GPT I think the best example of this is some of the most played gaming devices in my youth were on like a TI 83 right you would find the like Mario clone you put it onto your calculator and like play in class right and in a similar vein we think of GP like chat GPT but really the entire library of llm and computers as a mechanism for more distribution distribution so hard in gaming and it's awesome when you have like exit and escape velocity and you have a platform that helps you get there but a lot of times you are in a huge red ocean where you're competing against thousands if not millions of people making games and you're just trying to be found you're trying to make something

interesting and fun and to that extent we think that the ecosystems around you know AI are are super cool to work with from a game design perspective it's just really fun to work on things that are like completely different and like the constraints are completely different so on a selfish personal level it's just been a ton of fun to make games where the constraint is interacting with an llm as opposed to interacting with other humans yeah when we talk just generally as an industry about the the blue oceans in gaming right now which are sometimes hard to see you know people are talking about like well maybe like a a Roblox or something is just tapping into like a new demographic right that isn't that doesn't really play all of these other games or maybe like there's VR as a new platform but you know it's putting a super computer on your face is is hard and it takes time for that to to like really manifest at scale but this is kind of the first time that at least I

have heard treating an AI platform as a Distribution Hub that is a potential new blue ocean I think that's a really interesting idea I and I guess maybe just one last question for me like kind of in the spectrum of like uh TI 83 calculator to the iPhone like like like where do you see like this type of Distribution Hub like Landing long term in terms ter of its like scale and impact as a as a place to actually make and play games yeah mobile almost certainly right one one of the cool Parts about a lot of these models is that you can ping an API and it gives you an answer and it gives you an answer in a fairly quick amount of time and so when we think about game design and distribution obviously you can use HTML 5 you can use you can create like off thebox games for places like Steam but it doesn't actually work in the old

school console Box model right because you're constantly working online and so mobile seems to be in my opinion the best form factor we we'll see I I think the thing that I can't emphasize enough for people who are thinking about game development or thinking about company building that so many people are obsessed with things that don't exist right because that's the exciting thing like it's the mystery box of things that could be but often especially when it comes to successful startups and successful games and successful things there are things that already work right there are things that are in Industry fundamental technology that's been tested or fundamental technology that's evolved and so that's I think one of the things that I love which is we are not beholding to you know open AI we're not beholding to Google we're not beholding to any specific person we're super excited to just test out new models all the time and we do so uh a good example is prompto ran for I think a hot minute on lambdas Gemini stuff and then ran on

gp4 and then ran on doly and then ran on scenario for I think like 12 hours right and it's just like using different tools and seeing what fits uh our ethos of game development the best cool I think I think a lot of stuff to learn from what you're doing so I think anyone who's interested in that space should absolutely follow what you're doing uh because even if it doesn't work out I'm sure there's a lot to learn but i' sounds like you guys have also made like a lot of interesting strides and uh I definitely recommend everyone check it out uh if you're looking for is linked it as well that that's usually Linked In the show notes so if you want to find a way to get a hold of Sebastian that way you definitely can there uh pretty easily if not of course you know like lots of other places but uh definitely definitely reach out as well to Sebastian if you're interested because I think it's he's doing some really cool stuff and I think we want to just make sure to share a little bit of that uh since it's you know I think very relevant right now especially this year so cool we also have a you know a bunch of news topics uh but the first of which I think is probably the one that's on a lot of people's minds right now uh which is kind of the Hot Topic at the moment

as as of like maybe the last week which is po world of course yeah I I guess I gotta talk twice in a row uh so power world if you haven't heard of it yet is probably the biggest game in the world at this exact moment there are a lot of through lines about the game that's worth mentioning the the New York Times headline says Pokemon with guns and then I think the wired also published something called Pokemon with guns but yeah huge successful game you know they built it with about $7 million5 million copies in three days it's a it's a box game style uh it's not free to play you have to pay 30 bucks for it it generate like $125 million in revenue and it's been really fun uh it's at least for me I will describe it as like a mix of Pokemon meets valheim is probably the closest corollary I've seen um and felt personally in the game you know I've talked to some of my friends and colleagues in the world and and they're and I think the best articulation I've heard is that it's effectively a mashup of you know Rim

world and Dwarf Fortress and fortnite and satisfactory and Thim and Pokemon and really trying to find the fun by bringing together a lot of different through lines and so uh depending on if you like that style of game it may be the perfect game for you I've quite enjoyed it personally I I also love Pokemons I'm a bit of a biased party for sure definitely a a little bit of on the risky side though being so close to Pokemon I think is kind of something that's been on a lot of people's minds yeah and I think this is something that is is worth talking about here which is that uh first of all like us trademark and copyright laws are incredibly misunderstood for the most part like there are a lot of mechanisms for it uh and I'm sure there's a lot to be said about that but realistically the question that people have been saying on Twitter often is effectively hey like this is so close to Pokemon aren't they going to get sued and so

there's a question as to whether two Japanese corporations are going to sue each other in the US courts around us trademark and copyright uh personally I think they're overblown but we can get into that in a bit it's sort of an interesting spot for sure because it does seem like Pokemon plus guns is a is a real mechanism yeah I think that um on the games up side like there's also like an interesting case here with with pal World um and I don't know if folks uh have have gone through the trouble if if uh of um reading through the uh CEO's letter and blog post that he did it was pretty lengthy um like three days before the game launch and it was like oh my God we don't we don't know if this is gonna work we we shall see but uh he kind of like narrates like almost move my by move like the ins and outs and like ups and downs that they went through to get um you know to to be like one step away from launching the game

and it's it's just such a like it was such a good reminder of yes like Game Dev is a roller coaster uh one two it's one of those things where we end up like feeling like we we have like the formula to build games and if someone's not following it like it won't work um and like the the the last piece to that really like resonated with me is just like games have to be fun man um that's like first and foremost right and you know we get sometimes uh to cut up in uh our thesis with data and trying to be like data driven and end up like I I wrote a it reminded me like I wrote a little essay um at the end of last year where basically my my take was like man it's an industry we've gotten like data blind instead of like data driven and

this was kind of like just resonated with with that uh kind of thinking as well of you know we need to it's a creative field It's Entertainment and uh sometimes we get to cut up on trying to maximize our our returns instead of like building fun games it's it's so true Tammy and and I think one of the things that makes it so hard at least for for most of my colleagues in game development it's that you just don't know if it's fun until it's fun and I think that I'm sure resonates with everyone here which is it's it's like a step function right you're you're working and working and working and you just don't know if you've just wasted a year or two years or five years on a game and when it's fun you can tell it fun right and if you can't tell it fun you wouldn't have got gotten into the industry right like it's it's a little bit it reminds me a lot of

um the it reminds me a lot of just the idea that you just have to put in work in order to get there what's weird about uh like Po World in particular and I think this is sort of the like list of list ly of things that are worth talking about like heris it breaks a lot of the known conventions we've talked about in game development in modern day so one you're really not supposed to do paid $30 game that's triaa for cheap but at the same time they did that right you're not supposed you're trying supposed to be original quote unquote but there're really there is no necessarily original Mechanic in the game right it's like certainly a mismash of some of the most fun mechanics X Y andz you're not supposed to invest into polish and granted they haven't but like there's there's a lot of heris sixs that are quotequote broken and and certainly I'm biased because I like Pokemon and and I and and I want there to be a good Pokemon game but I think the five

takeaways which are interesting are one always release everything in as Early Access just so much more leeway when you release something as Early Access and things are buggy and your characters are getting deleted and things are bad two you can probably charge for some styles of games and get away with it like if if your models depending purely on free to-play and that type of like 30-day 60-day LTV calc like it's just not necessarily the biggest thing for everything other things are still true multiplayer still super useful you don't need to be massively online multiplayer but Happ multiplayer is still very valuable uh four like and this is my favorite one which is that like if you are doing something that is Pets or Pokemon related like that type of like companion related it just has great througho we saw this on Roblox we saw this in fortnite and five none of these hero sixs matter right like if you're making your own game these are probably not that applicable to you at this point this game is hit escape velocity all

your takeaways from this game are probably not relevant to you as a person one of the funnier things I've heard and this is something I've seen debated in the west a lot is people assume genin impact was mihoyo's first game people assume that this is somehow po pocket pair's first game and it's not right they have craftopia there clearly are a lot of learnings from craftopia into this so as much as we want to say that oh this was $7 million and 18 months of work and we've shipped this game you should probably include the like five years of time between craftopia and this and everything else that they've worked on and so yeah the the biggest take takeaways hybri games continue to be successful people love Pokemon style games async multiplayer is awesome and everyone's going to try replicate it and you probably can because there's a lot of luck involved there's a lot of RNG of hitting that escape velocity the lock P's and like timing it it's just like such a such a big pce two games uh

hitting at the right time that it's just something that you can't can't manufacture whatsoever and it is always going to be a little bit of a gamble there um make sure that you're not you're at that right place uh one last note for that um that I wanted to make on on what you were saying SE is uh I've also seen a lot of folks either you know be like oh you know you should replicate this or be like brush it up and be like Oh remember when we were all talking about um what was it uh bid crap um bid world I forget yeah bid World a couple of a few months ago and like it hit like that escape velocity and then it dropped they're like watch my or it'll be it'll be dropping off and um you know for folks like myself that live in the freeto playay world like that's immediately where you go it's like where

are you going to stain like the velocity and installs battle bit yeah um in you know kind of like that that view but you know it's a different it's a different world when you're like releasing a game that is 30 bucks that millions of people already download like you've already won and from here is like what do you do with that and what that audience that you've already captured but it like the the dynamic there is very different like even if they drop off uh you know they're probably going to have already you know gathered and captured an audience that can sustain them for a while and then it's like and then what do they do from there right with that audience so I think it's also like it's very it's a it's a different Dynamic than you know a mobile or like just like generally like freet toplay game that hits like super high installs on day one and then you're like oh it's if it drops off that's it right uh there's a lot

that this this team can do you know off of this you know initial release but they have already gotten like huge success out of the gate just because it's like a that different Dynamic with like a paid game I just think Pokemon with guns is a hilariously brilliant um just like catchphrase to to be able to like throw out and people cling to um I just even remember when the game was announced and you know you see like this Pokemon creature and all of the sudden it's like going crazy with like a machine gun it's like oh my God this is hilarious and I just like I know like that was a moment that just captured so many people's attention in a way that just like other other games haven't so I do hope we see other hybrid type of games like you were saying Seb that just like think up these like hilariously brilliant ways to like mash together things that people love um clearly there still is so much opportunity for people to come up with original ideas uh but I don't have too

much more to say about power world we have it downloaded in my house but haven't haven't haven't quite gotten to it yet um but I my my big observation is just that it's a continuation of so much of what we've talked about right like we talked about kind of how like over the past couple years like there's sort of been the barbell effect in the industry where triaa has just gotten bigger you know maybe that'll change but triaa as it's gotten bigger has taken more share and the other side just kind of like the whether it's like through ugc or just like small teams single developers have just been able to to pop off more seemingly more um like lately in the past we talked about battle bit there was Lethal company recently Now power world which isn't by like one person but it started as a pretty still as a pretty small team that you know many would consider still Indie to start than turning maybe like double A or or something but um it's almost like this new breed

of um business or uh you know small team that seems to just constantly be popping off and taking share and seems to be defining will probably Define the next few years as well especially as game development gets more efficient in in different ways and you know Superstar developers are just enabled to to do more with less and so yeah I I just think what we're seeing right now is maybe even just the the iceberg for what we could experience over the next decade and I think that's really exciting yeah completely agree and and there two like Dave the diver is another game that was such a big hit at the end of last year small team sold three million copies for 20 bucks each that's great and I think that's that is one thing that I will say that is worth rehashing is that original creativity looks like this in a lot of ways right like it's rarely n plus 10 it's basically never npl 10 because if

it's npl 10 no one plays the game like what you really want is a slight deviation or derivation of something on top of it you're building on top of other people's work and so as much as people want to say fortnite was an original game it was no it wasn't an original game it was just the next iteration of the previous game and to Erin's point we're gonna see a lot of teams that have a lot of more effort build on these types of ideas and if it works awesome and if it fails oh well and then we can move on to the next I think there's a couple things that like I think you all mentioned at some point or another in this discussion that I think is worth taking away from this one is that Pokemon whether you're doing it as a a sort of knockoff or the legit thing is very strong and I think if you look back at Pokemon Go versus everything else Niantic has done that becomes really obvious really fast and how crazy fast that grew and that audience in general and then the other aspect of uh what Aaron was saying about the the Pokemon with guns I think having a really obvious hook that like just breeds curiosity like if you hear that

you're going to want to see what that is and I think having a clear hook like that that everyone could understand is like really helpful and going back to the battle bit one uh it's like oh it's battlefield but with Minecraft style like pixels he's like oh I I get with that it's like I'm kind of curious why that would be good let me try that out or even like stuff like goat simulator or other weird sort of like curiosity uh driven like games where there's something you can understand in a single sentence and I think that does actually do a lot for it as well um but I mean we'll see you how often we see this sort of thing going out but I think those kinds of things are important to keep in mind if you are trying to like be discovered now it's like I mean obviously latching on to Pokemon and latching on to what would that be like with guns even though technically Digimon did that first yeah look the the thing that's interesting here is that people s fail to recognize just how much of a like a diaspora effectively of gaming we have in ourselves like the fact that we know to wasi to move on a keyboard the fact that like the controls

for your left stick is movement and right stick is camic control these are heris sixs that people build and people don't like relearning new things from scratch often times if you were to completely give someone a completely new concept that's like this know this is uh you know linear algebra for Pokemon right like that's just not something that people gravitate towards because you want something familiar in order to enjoy the newness of something and I think frankly po world did an amazing job it cannot be understated that they did an amazing job of making all these different parts from different games feel good yeah granted I would like to catch more Pokemon faster so if someone can just send me a bunch of right catch be just join their their server and have them have give it to you but uh building on actually what you said I I when I looked at some of the there was like a sort of 2023 review of Steam games like by like the top ones by concurrent players and stuff like that and I spent a while just looking through and like uh kind of building some some graphs off the genres and one thing that stood out to me is survival still being very hot

although a lot of it moved to survival horror but but survival in general is still like you know we kind of felt like maybe it was overplayed but I think clearly this shows that you know they're still building off a genre that people do feel like there's some room to explore and I think that's important to consider like if you have a new enough angle on it or something interesting to do in it like it's still worth building off that genre obviously I'm not saying go out and build the survival game it is starting to get a bit saturated uh but you know like it was clearly uh enough players out there interested in it as you said Sebastian valheim was a good example and that was still a game that did still fairly well last year um so you know something to consider but in terms of games uh maybe starting to outstay their welcome a little bit uh Riot has uh started to look at scaling back smidge yeah well it's been a tough week for four Riot games of course um according to a letter that the CEO put out on their website Riot is eliminating

about 530 roles globally which represents about 11% of their Workforce um and they say that the biggest impact uh is to teams outside of core development and just to read like a short paragraph on why they're doing this um the the note says today we're a company without a sharp enough focus and simply put we have too many things underway some of our significant Investments we've made are not paying off the way expected them to our costs have grown to the point where they're unsustainable and we've left ourselves with no room for experimentation or failure which is vital to a creative company like ours all the all of this puts the core of our business at risk um and so you know interestingly enough you know we talked about kind of creativity and risk-taking you know it basically is the entire episode so far um and um I think that's true it's also just worth noting that Riot kind of through Co and such as they expand the scope of their business uh I don't have the specific

numbers in front of me but they just hired uh massively and so this this is um even with these layoffs it still is a much much larger business than it was years ago but specifically to the products um that are affected by um this this reset in the business Legends of runara which of course is their their card game uh has apparently been running at a loss and so they are shifting it to supposed sustainability by reducing the size of the team and Shifting the focus to the path of Champions PVE game mode uh which is kind of a curious move for um a card game to prioritize PVP PVE over PVP uh usually you kind of see the opposite uh but it'll be interesting to see what they're doing with that um and then the other big move is the closure of Riot Forge which is Riot's publishing unit that has worked with other generally smaller development Studios to to create games in and around the the

riot Universe right um and so um shutting that down just shows again kind of they're refocusing on fewer projects directing again most resources internally not being completely closed uh minded to working with other great developers when uh when it makes sense to but but really again slumming down their focus to what moves the needle most so so that's the bulk of the move it it kind of looks and feels like a ripoff the Band-Aid moment so I I think I would be surprised to see much more big changes to come from Riot I would hope so at least um um I was a bit surprised to maybe not see like team fight tactics on that list alongside um Legends of runara just kind of given the monetization issues that auto Battlers have had over the years but um glad that they were able to keep most everything else in intact and it seems like they're

doing about as well as they can for those they are they're laying off so anyways not not the funnest of news this week it's a continuation of much of what we've we've talked about and I think at this rate already within the first less than a month of the year we've seen probably about 4,000 layoffs uh in the games industry which is about 40% of what we saw last year and so it's been a brutal January um and I don't think we need to rehash all of that over again but I'm curious for for everyone else here um as you saw this news from Riot did you have any other thoughts on like other Ripple effects it might have on Riot what it might cause for other companies um in and around the industry the human cost of a layoff cannot be understated I I think one thing that I want to make sure that everyone understands is is especially when we talk about the analysis as as it relates

to the health of a company or the growth of a company it doesn't change the fact that someone lost a job and that I think there are some great resources for everyone involved especially if they're in the US especially if they are people who you know have been building out their skill sets I highly recommend following people like Jordan maer as well as nck Claus on places like LinkedIn they're some of the best Recruiters in the gaming space I've ever met they're really awesome Brooke at bit craft is another person who I recommend just following along and see what's happening there a lot of what we talk about Ripple effects are more industry based it doesn't change the fact that you had an income yesterday and you don't today I think that's something that is crazy that said especially when it regards to gaming to say that this is the norm would be to undersell how gaming has worked historically right gaming historically has been very good about hiring massively and then laying

people off after the conclusion of a game or a title that is very similar it's similar in that in the movie and entertainment Industries that's just assumed right like when you like finish a movie you don't assume that you get to continue to work on John Wick 7 right like the assumption is that John Wick four is over and if there is going to be a John Wick 5 sometime in the future we'll get a call and and really it's been the evolution of live op style games over last decade that sort of changed that Paradigm riot in particular the weird ripple effect that's true across all these layoffs we've seen be it Discord Riot twitch is if you were to compare their team sizes before the pandemic so if you were to compare pre like beginning of 2019 to 24 their teams are still massively larger so in a lot of ways a company like RI had like 2500 people they had about 5,000 we can work backwards to say they PA off 11% of their staff and it's about 530 people they had about 5,000 people so they

still have 4,500 people working on really interesting things that ripple effect is that the gaming industry is still growing it's just going through a contraction and fortunately I think there are a lot of great Studios and Publishing houses that are spawning up and people working on interesting small teams if they have the resources to do so to be able to handle that and I think that's a that's just like a good thing to think about in general do you think uh in three years there will be more or less people working in the video game industry compared to today compared to today I mean we're down uh it's a great question my guess is that we'll have a similar number of people working in the gaming industry in four years as we do today one of the things that's worth thinking about from a company strategy perspective is revenue as relates to headcount if you have $2 billion of or let's say you have like $2 billion of Revenue and you have 2,000 people

each employee basically makes about a million bucks right and you have a lot of leeway because no one very few people in the company are making a million bucks a year you have a lot of overhead like you can you can clear that hurdle if you have 5,000 or 10,000 people for $2 billion you're now at 2,000 and so someone's making 250k they're actually net negative on a per headcount basis you need someone making 60k this type of expansion contraction is hard to predict my guess is that there will be a very similar number of people just spread out across more teams in gaming the other thing to consider is that what we consider working in gaming to be to be very different in three years time if you told me five years ago you would would you consider people making games on Roblox as a person in the gaming industry I would imagine majority of listeners would say no but given that their revenues are fairly substantial and the fact that there are a bunch of these teams working on it I

would say the answer is yes and so if you were to include a lot of the ugc generating um game studios and Publishers gaming has basically 20x in the last like three years in terms of number of pcal and I'd imagine that trend line continues I think depend if you're only defining gaming as AAA publisher W2 employees 401ks I think that pool of people after a contraction will probably stay stable for a number of years but if you include the entire diaspora of gaming be it Indie Gamers ugc creators mobile Gamers mobile creators my guess is that's only going to go up and I think that you make you make a super good point set in terms of um you know looking at it a little bit wider like a wider time frame and seeing you know there was a mass hiring with the pandemic boom and we're seeing you know the the revenue you know ripple effect p like saw huge growth then drop and then starting to

stabilize um and you know jobs are following a very similar Trend right like it's you know the revenue supports the jobs therefore like there's that adjustment happening as well on on the employment side um so I think that there's you know it's not it's not going to be like an over like a correction for many years to come it's more as you were saying SE is just it's going to level off which is still higher probably than pre-pandemic levels because we did see that expansion that was massive yeah I I completely agree with that I think to talk about riots specifically for a second um one one thing I will say is eron made the point that he hope that this is the last layoff I think the executive team and the board is strong enough that this is probably the last layoff for a while you uh the the best rule of thumb is you always should do overlay people off you should like fire more than you intend and you should do it once because as it turns out if you

do it once you can do a pretty like rousing speech about how hey we've contracted this is for focus and all this other stuff if you do it twice that's just a line like you gotta quit right like if if there's two rounds of layoffs at your company you should take a serious look in the mirror and see if you should be going somewhere else it's often the the advice I hear for folks in in in the space because you just don't know that Aron also brought up an interesting point about Legends of routa versus TFT I I think them focusing on their effectively slay the Spire version is a great use of Legends of routa it seems to play to the skill set of the developers and game designers on that team it always felt to me to be more lore based they were doing such great things with the language of Runa in that game and I think the biggest difference we saw between Legends routa and TFT is whether it adds value to the riot ecosystem as a whole TFT seems to be growing the pie in terms of additional players playing the game Legends of routa didn't seem to hit that exit

velocity for for them as a rule of thumb and so I completely agree monetization in Auto balers seems absolute crap like what are you gonna do just sell more skins as it turns out you that's exactly what you do but like the flip side of it though does seem that it is a focus on what's growing their Pie as a company as opposed to necessarily what's necessarily generating revenues from day one and again they're I actually don't know where those 200 people were hired into like that's the thing that I think is hard for us as outside observers who aren't part of the executive team at Riot to know which is what what happened between when there were 2500 people and making a couple billion dollars a year to 2023 when they were at 5,000 people and still making a couple billion dollars a year like what were they working on we can easily point to Riot Forge we can easily point to Esports but that's I like I somehow doubt that that's 2 200 people right and

certainly it could be 500 people but that I think is the question that will further show what ends up happening with Riot over the next couple years to decade was it just a few years ago when Riot announced like 10 new games they were working on or something like that it's like five or 10 it was it was a huge amount and I think this was kind of before valerant really like kicked off and then included like the fighting game I think an MMO all kinds of stuff so they had announced like a ton of projects in the world works so I imagine like a lot of those employees are still kind of on some of those maybe some of those they didn't even haven't even talked about yet but I mean it's hard to say right like that's speculating but they they didn't say which games are getting axed in this outside of like a little bit of it right so I imagine either some are getting silently canceled or some are just continuing to be worked on but aren't to that point yet you've got like things like valerant mobile to come out you know stuff like that we we talked about this before right finding the fun is so hard and it's a step function right like it's you just don't know if a game is like you know when the games aren't fun right I think that's a pretty clear thing you

just don't know when a game is fun until it's fun and you only have so much time even if you're a massive company like Riot games of a massive Bank you you you only get so many years to work on something OverWatch is a good example OverWatch was initially an MMO right like OverWatch was project tridon was supposed to Titan was supposed to be this like massive MMO OverWatch was a miname in said MMO they worked on it for a decade they couldn't make parts of it fun OverWatch was fun or is fun and so that became the game but you just don't know and I think that is one of the uh especially in the world of data and especially in a world where what we do in game development has moved towards data and being more outcome driven is always refreshing and sad and scary to think about how we just have no idea if it's going to be a success or not at least we probably won't see them in some kind of like supercell style soft launch hell right where they're just waiting for the numbers to come in but I mean on on the the positive side like they've successfully done some trans media for

example with the with the League of Legends IP so there's some strong pull there that they could use on some of these other games and I imagine they will try and continue to leverage that so I guess we'll have to kind of wait and see what they end up coming out with uh as a result of this I do hope the V fighting game for example is still gonna kind of happen I think they showed it off even at uh Evo last year I wasn't there so I can't verify that but uh you know I'm sure there's some projects like far enough along that hopefully as you said they've been able to find the fun but we'll see definitely over the next year or two especially around Esports stuff as well um but definitely interesting stuff but in terms of like the broader scope of things and where stuff's going for the rest of the year we actually did have a new uh report from new zooo new zooo yes NEW Zoo released their 2024 Market uh report and forecast and it's it's actually uh there's I was digging into it and there's not a ton of controversial stuff in there uh last year they and they've done this a few a few Cycles but they've notoriously overestimated the revenue growth uh for the last couple of years by a lot uh especially last year where

they forecast they just crazy growth recovery after 2022 and they had to revise their forecast several times across and throughout the year this year they were taking a more conservative approach with small you 1% growth year onye which I think it's much more prudent based on everything that we're seeing uh and their free report focus more on Trends uh where they supp did by an industry survey they ran so kind of did a little bit of a Suter uh report I think uh this this time around um they the way they structure is they ended up calling out 10 different Trends uh so I think we can we can rip off of some some of them and uh I can call it some that just jumped out at me but reading through the report as I said none of these Trends seemed Earth shattering or controversial uh and it can be bucket into like just two big themes that we've already been

covering for um quite a quite a while right it's like first off uh bucket I would say actually three buckets uh bucket one is is that uh you know year year growth even uh too optimistic uh based on what they're calling out is like the the drivers behind that growth uh number two is you know a lot of their friends that they called out it it just goes towards you know the industry right now doing this contraction and becoming and focusing more on uh being better or more rigorous operators um and then the last one is uh similar to what we've mentioned is like finding pockets of opportunity and and you know where those pockets of opportunity are so jumping into the first one uh you know their whole uh bug number one of of Market will recover and grow uh the two levers that they're

they're calling one is mobile quote unquote likely to recover I disagree with that uh and uh second one they called uh growth from Xbox and PS5 releases and the third piece was uh not sure how this ties exactly into this but they C significant mergers and Acquisitions will happen in 2024 which I also um disagree with just based on you know even the thesis of being more conservative and cautious operators uh as a whole so uh kind of just jumping on that first uh kind of theme what what are your guys's thoughts on kind of this forecast and the the whole like recovery and growth theme I'm pretty triggered right now I'm not I'm not going to lie by by a lot of this I I'll I'll stay calm though um I

think the the first things to recognize is that uh these forecasts are usually wrong um Matthew ball uh just published like a super long but great piece kind of on the state of gaming like how it's both like tremendous and troubling at the same time which Echoes you know so much of of what we're we're saying like you get like crazy launches like Po world but then you know you see layoffs you know the same the same day um and what's interesting is that if you go back to 2020 and what newu was forecasting for the next three years throughout through 2023 they they were forecasting essentially a 9% uh compound annual growth rate over that time period and in fact in reality the market just grew a little over 1% uh you know annually in that time period which really is negative when you count inflation right um and

so uh you know in 2022 newu completely whff and its forecasting around mobile like not forecasting the decline at all that we would we would see um and also in 2023 was too optimistic and so um you know there's a tendency to extrapolate out current conditions um and and you know sometimes it's fair because you can't see random policy changes or App Store changes necessarily years ahead of time um and this isn't unique to to you know forecasting the video game industry basically like all investment analysts everywhere just as another example you know you know usually forecast out great things when everything is going well and forecast out you know negative uh you know trends when things are going poorly um so in general you know not even just for forecasting 1% this year but they're forecasting out it's roughly like 3%

annualized growth over the next three years that actually sounds kind of reasonable to me that's basically like flat if you C count what inflation will be that's in line with probably what GDP growth around the world is going to be so it's like a very conservative um estimate and they're probably going to be you know off on on little things like mobile here and there but um in general it's okay but with the caveat that it's been wrong basically every time over the past few years but the other thing that triggered me was these trends that you highlighted Tammy because one so many of these are not even Trends right like saying the Nintendo like a new Nintendo device is going to launch this year that's not a TR yes please please thank you thank you sorry to to interrupt but yes thank you that that had the same reaction like that's just a a random pretty obvious concern conservative prediction right um and so there's that H let me find my

notes CU I I have a bunch of these written out um they say that uh their Trend number one uh which you you noted Tammy is this year promises a significant rebound when they're literally forecasting anemic growth that's probably going to lose to inflation and is going to lose to just general growth in the economy like it contradicts itself is their Trend number one um and and you know I don't need to go on forever about this but even you know Trend number five around the multi-game subscriptions will exit their growth phase that was curious because um you know one outside of Xbox and Playstation there's never really been a growth phase really um uh two you know Netflix is in the middle of ramping up if that even counts and even with something like Xbox like this is literally the year that they're adding Activision Blizzard games to the catalog like it's going to grow like it's not like forecasting this whole subscription

thing just not growing anymore or at least for the year it just feels really off even if you don't believe in like that subscriptions are going to take over everything or that there aren't you know like like Technical and specific economics to consider it's just a really weird Trend um to call out that I don't think is right and so so yeah I basically am quing with everything that I see here I would just say hey new maybe next year if you want to if you want to reach out we can collab and make it even better with you um but anyways I'll stop there I too many quibbles on my end I sorry I interrupted a little bit of that that that uh red but I I agree as as I think that you hit the point uh really well where as I was reading this uh especially as you get at second half of the trends they're not Trends they're

just happenings news uh you know Xbox will launch a mobile store and Android is not a trend it's something that's been talked about and announced um so it it it was definitely like you know hard to like even try like bucket these into like what are they actually trying to say uh and where are they um you know it's a little bit contradicting across across the board it's it it felt like a safe play after having like my my takeaway was like it felt like a safe play for a 2024 report after having been off uh in 2023 and having to like backtrack so many times yeah and the last thing I will say too that triggered me was I was reading through it I'm like all right where's like Ai and it's at the the very bottom in a caveat where they don't list it as a trend and they're basically like yeah this doesn't really matter right no they

they do they do have it as a trend they have it as TR number nine is generative AI will accelerate game production in a few ways all right I was looking at a different different length then where they listed out like five Trends and then um it's like what about Ai and they're like yeah blah blah blah and I was like man kind of weird so the the the 10 Trends I I'll just go like the quick bullets Market will continue to recover and growth but number two 2024 will be a lean year for gaming companies uh you said subscriptions will slow down uh four companies will return to developing premium games five mobile developers will turn to PC gaming six Nintendo will launch a new console seven Xbox will launch a mobile store uh eight Nostalgia will be a key driver for live service games nine generative Ai and then 10 it's an interesting call out of open like too specific like open world souls like Souls like games will take

the spotlight that is Rand if you're not if you're not watching our recording and you see Devon's face it's Priceless um so yeah anyways I I was triggered by so much of this I'll I'll stop I'll stop myself from saying more but sber de I'm also just curious any any reactions from this yeah it's it's weird that they just try and like latch on to kind of whatever like the easiest lwh hanging branches are and then even like when they're contradictory um I don't I it doesn't sound like there's anything in there that's really very predictive so much as like yeah this might this might go this way this might go that way in terms of like continuing uh outside of apparently you know switch to being a trend uh other than that like it was it was all just kind of like either continuing in One Direction or the other as you said like this is almost like this idea of you know there's just prediction and n whichever whichever way it's going it'll probably keep going that way uh which is not super helpful but I I do imagine like you know there's

a lot of different sort of bies or angles that go into reports like this but I mean overall I actually actually one of the things we like wanted to talk about in general was just then you know like there's a lot of the negative predictions you know which are probably somewhat realistic and so we just wanted to kind of talk about you know what are some of the sort of positive predictions about 2024 maybe even some of the Undiscovered gems there some of the stuff that's maybe a little less obvious than to switch to uh that that would be worth paying attention to I think for people to look for something to be bullish on and not necessarily just oh no more layoffs uh which you know are probably unfortunately a little bit inevitable at the moment so anyone want to throw out uh what you're excited about go ahead Seb yeah I mean I'm a broken record I'm I'm super excited about sort of the consequences of a lot of AI generation as well as its effect on team size one thing that we've started to see in the greater consumer world is this idea of like curated cozy spaces you've probably seen that buzzword pop off or pop up rather over

the last uh six 12 months about instead of having this like massive multiplayer iteration of twitters and Facebooks we're seeing like communities on medium or substack patreon twitch Etc be very specific and targeted towards their audiences and a little bit curation there are a lot of positives and negatives about this as an ass sign but what's really interesting about that is if you assume that groups of people are making games or content for their own audience and that the cost of doing so is sustainable you're going to start to see a lot of the fragmentation we saw on YouTube where actually there is an audience for ASMR dog videos um there might only be a 100,000 people in the world who want to watch that kind of stuff turns out there's a lot more but uh but like that's a sustainable audience for that Creator where they're able to do content like that they're able to pay the bills that way one of the beauties of not necessarily requiring thousanders teams in order to

make games which we're starting to see in a lot of layoffs is that it does by by just like you know logical induction also allow for smaller teams to exist and for the smaller teams to be able to afford to build games for specific audiences and so we're going see a lot more games that may be the ideal game for you but not for Devon or not for tamy not for me or Aaron right and so I think that is something that I'm super excited about and super bullish about the industry where we're going to start seeing more fragmented specific games good prediction yeah I would just add I mean honestly like this isn't even specific to 2024 but I think it's important to zoom out sometimes um and just recognize that like even if uh that whole covid wave kind of caused a surge that wasn't sustainable in our industry to some degree is paying the consequences of of that sustainability right now if you zoom out still the demographic and Geographic

Trends are still very favorable to gaming long term like that hasn't really changed and so on one hand um you know demographically like younger Generations you know they keep on coming and they continue to just play play more games right and so there are more and more people on Earth every day that are um playing more games or are to play more games than in the past such as with older Generations where gaming wasn't really a thing and so um we're just going to continue to see more people spending more time playing games as a Pastime and that's good for the industry longterm no matter what's going on right now also um I mean we kind of talk about even with this like newsy report it's just like the big number right of of the industry like this is the revenue number and it is struggling or not growing as fast as expected um but you know if you look around even just geographically like there are corners of the world that

are not that way and are actually like pretty exciting and some are still kind of nent with large populations um and so you know places like India like India is going to be a gaming Juggernaut you know over over the next many years and I think it's gonna be really exciting to see what comes out of that country both you know you know Indian game developers making games for for you know you know their fellow Indians but also just seeing uh you know what new types of games they bring out to the rest of the world where you know we've seen a lot of maybe like Egyptian mythology or Norse mythology types of games and places but like we'll see like really refreshing um you know new types of experiences with new types of narratives coming from different places of the world uh and so I'm super bullish on India um also I mean you can look at other other places like uh across Africa there's so many different um you know emerging hubs that are very nent in the games industry

today but um you know population Tailwinds you know internet Tailwinds uh mobile Tailwinds uh you know uh increasing you know GDP per capita Tailwinds are are going to make um so many emerging countries more more important to the gaming industry um across so many different continents um and that's going to provide opportunity for everyone opportunity for new entrepreneurs for new games but also for a lot of the existing you know businesses that we often often talk about so um so yeah I'll I'll I'll pause there I think there's other more like specific Trends we can be excited about this year but I think just zooming out sometimes is important yeah I think um for for me and kind of ripping off of some of what you both guys said uh Ai and Game Dev that's definitely something that I'm very EXC said about just uh whenever there's like new technology like this this to me does feel like that

next wave of you know what is like the evolution of of web and games and just how we how we interact with technology and how we build um and whenever there's a wave like that there's a wave of creativity and you know even things that we can't right now think of because that's that's part of like what creativity is so you know we we've seen this technology get to uh you know be much more accessible and usable over the last year I think we're going to enter now the like explosion of creativity and yeah you know some some games and experiments will work some won't but it's going to be kind of like a new a new wave of iteration and what even like what we Define as games right uh there was that um MPC uh experiment simulation that uh I forget it's like Stanford and and someone else ran and they published a

paper in the summer last year you know just like letting NPCs lose with you know in and and learn and evolve and you know come up with their own personalities and just like you know there's like such an interesting opportunity here and like how how does that you know end up evolving um as it becomes more AC ible for for game development so I'm super bullish and excited about that uh and I'm really excited to see and and also get hands- on right on like what what can we build that it's like that we couldn't do before um in a very creative way uh so that that's one the other piece uh to what uh you were saying Aon is new gamers are are growing up right like the and and Matthew called this and in his uh report as well the Roblox generation quote unquote

is starting to kind of potentially age out of Roblox or you know age into different platforms different genres and that comes with you know a whole other set of you know paradigms of of what this generation expects out of games and you know as an industry we're going to need to make sure that we're like keeping a good pose and like what that audience wants and needs and uh is excited about so that we're building towards that um as part of of the future um so this is kind of like more of a start of a wave uh again it's not going to be like oh the big thing in 2024 but it's like the start of that wave of you know this next Generation that has grown up with um devices and uh much more accessible gaming and social gaming from like you know since they can remember like you know it

all it's also going to challenge our um paradigms and like preconceived notions of what games can work and cannot work and what should we be building as as game makers so uh for me like that's also very very exciting just like that challenge and that that is going to make us you know evaluate not from like a technology standpoint of like what are what is fun but from like an audience standpoint yeah maybe just a couple like very last things I mean I think this year is going to be good for handheld gaming I mean the the new Switch device will probably come out but also like we've talked about like steam deck a lot but even like other devices are hitting the market and scaling up like the the Rogue Ally um the Lenovo Legion go like we're at a point where um you know similar to like the old school laptop days like there's just so many um like the technology is there for people to make like these types of experiences

that expand the market for what trally you had to kind of be planted in front of your computer you can take that on the go and I think that's exciting will grow the market in terms of people spending more time playing games um I think we probably hit the bottom in web 3 at this point doesn't mean it's going to come raging back to life in 2024 but um I mean Devon he's even working on a piece right now that maybe we'll be published when this goes out or soon about just the most anticipated um web 3 games in 2024 and I think that's pretty interesting um and then I guess lastly I still think I mean 2023 was a golden year for kind of trans media with Mario Brothers movie The Last of Us Etc I think that's just going to continue and gaming is just going to become more and more integral with culture and being more integral with culture um is is going to just make gaming more relevant in so many different ways uh which is which is

exciting and provides opportunities for developers to build on so there really are so many things to be excited about even though efficient like an age of efficiency um and kind of a reset can be challenging so yeah I think we're all still excited about a bunch to come it's funny when you're you're talking about the this sort of like age of gaming and gaming becoming normified because it's just there's there was periods of of History where board gaming was so like just Norm everyone was doing it all the time but there was never like a oh I'm a board gamer like that that sort of identity so it is kind of funny that like we've established an identity around video games but uh if it becomes so normal then everyone's doing it as we've talked about with mobile games and other things maybe it's just not a thing we talk about as its own thing as much anymore just like you're not a a movie Watcher right you can be a movie offici a movie buff but that's more of a like a cultured take on it rather than just what you do on your free time because well that's what everyone does on their free time but uh my kind of like sort of uh pseudo prediction is just uh orderly

thing that I'm excited about is generally a lot of times when there's these periods of like high stress on everything that's been built so far meaning like discoverability is a problem because everything's inundated money money is like a problem because these Financial models aren't working as well anymore and all these things sort of hit that that point where they're not working like they used to toward where it's diminishing returns that's just the time when something new gets developed something new and exciting and that's why I was like both on web 3 was that opper one opportunity for example to to be a new business model and I think maybe it doesn't hit this year maybe it maybe it's you know drags out till next year even potentially but I think that period of high stress you know it's the necessity is the mother of invention sort of thing right like in order for this industry to survive people got to come up with something new and I think you know that will be a good way to to put pressure on that and also building on what what you guys are talking about I think um social stuff I think is you know you talking about all these people that grew up up on social platforms that just didn't exist as much back then uh you know we we had Facebook games that transitioned into Mobile but that wasn't

really social in the same way things are now and I think the stuff like what Sebastian's working on uh just things like that where you're building off these social networks where you're talking about Cozy Community things or just looking at the way what web 3 did for Discord around gaming in terms of all these pocket communities uh dedicated fan bases to each game I think there's a lot of potential and that stuff to to blow up this year and you know maybe some of these latent Technologies like VR and web 3 that have kind of like took a dip for a minute you know may hit you know before the end of the year but maybe not it might still be a little ways out these hype Cycles are a little slow so they kind of a a bit more broader I guess maybe going into 2025 but I think I think exciting stuff to come I don't think it's going to be uh Dow I think once we get kind of past the layoff phase I think there will be actually a lot of really cool things to be excited about uh that we just didn't see coming which is part of the fun right some something hopefully uh by second half of this year would be nice so we get that ball rolling but uh yeah speaking of the ball rolling and and you joining in this year uh thanks to

everyone who has tuned in so far of course we've only had a couple episodes this year so hopefully you've got off to a good habit for the new year right everyone making New Year's resolutions and hopefully yours is to catch every episode of the round table and of course all the interviews everything else that navic does as well as our digests and the new Services as Aon mentioned as well so lots of cool stuff going on at least from us right we're trying to keep it interesting so thanks to everyone tuning into that and of course thanks to panelists as well for coming in and bringing a lot of cool topics a lot of cool thoughts and as well as cool projects like Sebastian's working on so make sure to check that out but in the meantime enjoy the rest of your weekend and yeah hopefully that uh web three article pops out around the same time as this make sure to check that out uh in the digest and uh catch you guys next week if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a festar review and if you want to reach out or provide feedback shoot us a note at podcast nov.com or find us on Twitter and Linkedin plus if you want to learn more about what navic has to offer make sure to check

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