Session: How To Build The Next Forever Game Franchise - Michael Chang, Mavent Partners, LLC

[Music] thank you [Music] starting with I think some amazing insights or at least I'm expecting amazing Michael don't let me down an old friend of mine Michael Chang from Azure games he's going to be talking to us about a really trivial easy simple task how to build the next forever game franchise so as Dave mentioned uh I've known Dave for 14 years unlike many of you it took me a long time to figure out that Jamie was a place where you could make money and do work I was a generalist in venture capital and I was introduced to Dave little he's 14 years ago yeah he wanted to do some entrepreneurial work in gaming and so

fast forward here I am so I'm going to start off because it's a tough act to follow with Serena here I'm gonna start off by asking you all some questions uh the first question I'm going to ask you violates every HR rule that you're taught not to ask so if I could by show of hands and I'll go up in age here could I ask just to understand the audience and so for you to understand the audience too how many people in their 20s how many in their 30s 40s 50s yeah 60s okay we're going to stop there and if I could uh trying to understand uh how many of you are Gamers some of you've actually played games by the way it's it's not not a bad thing if you don't you'd be surprised how many Executives at some of the biggest companies in the world actually don't play the games uh uh of the companies they run for those who play games can I ask you in terms of your preference of a

platform how many people are console Xbox PlayStation Nintendo switch PC gamers mobile all right great cool thank you for that uh let's see I have the switch I'm supposed to hit to the right all right there we go so quick background to myself um I actually did a career outside of gaming for a decade Plus in banking Venture Capital private Equity I was always a gamer I've got two years of my life on World of Warcraft if I woke up and went to sleep two years later most recently apparently uh EA tells me I have 6 000 hours on apex Legends so clearly I don't work very much if you fell uh I actually got into this business because a friend of mine in 2009 formed a game company Facebook was hot games on Facebook were hot and he said well I'm gonna form a Facebook game company which is great except he never played a game in his life in fact he used to make fun of me for playing video games

um his friend I want to make money I found this company wasn't very good so I was like you know who's dumb enough to buy this company so I reached out to Zynga yay a few other people turns out EA didn't want to buy the company but they were for someone to buy companies for them so for three years from 2013 to from 2010 to 2013 I became the number two merger and acquisition person for Electronic Arts and that was the time when Facebook was coming up free to play mobiles coming up I had the chance to buy a few free-to-play game companies uh so I'm gonna move on a bit here so this this topic is titled forever franchise and I guess what I'd ask all of you is why do we care about forever franchises why do we care if teams make 100 million dollars a year or they last many years why should we care why do we care about the games game development is really expensive and difficult sure other reasons why are you in this business it's branding you don't have to start

from scratch sure but why do you want to make big games if you're here you're here you're making games why do you want to make it games yeah ideally you're here in this business because you're trying to make games that you want other people play to have enjoyment from maybe some level of Pride that you make a game that everyone knows creator of Minecraft creative Roblox that sort of thing and unfortunately it is generally very expensive to make GameStop because this is not a cottage industry anymore there are a lot of a lot of big players in the business um tell a story here I joined EA in June 2010. the first meeting I had was with a small finished game company that made a game about Birds and pigs okay and then later on they ship me out to Moscow to meet a team that made a game called Cut the Rope it was uh it was up to the labs as a team it was two brothers an outsourced artist and a music person four people who made that game okay back then we were talking to them about sequels how much do you think those

sequels of those games cost to make anyone throw out a number half of a million exactly half a million dollars to make a sequel to Angry Birds or cut the rope how much money to spend on marketing user acquisition branding all that sort of stuff four million what else zero Apple featuring that's it I'm gonna spend no money on marketing just get the game featured get a bunch of installs when I left ncsoft two years ago I didn't look at a mobile game that didn't have a budget of 20 to 30 million dollars Dev and maybe double that on the marketing user acquisition side it's a very interesting time out there now obviously we we hold up the Indies as Heroes who we aspire to make independent games that are popular and everyone loves to play them um how many years ago when I was at EA we have these uh Town Halls where uh employees can ask this you any questions

and we had one really passionate places we should back more independent games we should have more Angry Birds and backflip Studios DragonVale and other games like this unfortunately we'd have the CEO John Raquel actually play these games so he actually knew what these games were and John says you know what I love indie films how many of you guys love indie films right like the Sundance Film Festival type stuff it's great the problem is if we add up all the revenue and profit for those indie films and stick up stick it up against the revenue profits from Fox or Disney or the other major Studios all all the indie films all the Indie Games is basically one company's Revenue profits and unfortunately EA is one of those larger companies so this is why we care about forever franchises this is why we care about thinking about how do we make games that can get to be this big and last this long yeah so I'm actually going to focus you because you know um I look at you here as at some level

entrepreneurs folks who are trying to figure out where you want to go next I want you to spend your time in the most useful way possible and selfishly I want to have things to back in the future so I want you to have great ideas when I grew up in venture capital I was taught what they call a Holy Trinity of Investments and I encourage you to think and this is just one framework for looking at opportunities but I encourage you think about this framework and others for where you go with your future uh you know projects that you'll develop companies that you'll join first one is management seemingly that's a that's a clear thing to understand you want to work with a good management team or a good founding team but what is a good founding team what's a good founding CEO can I ask you guys um can you name a famous name a famous company that's that has their Founders still at the Helm of the company a large company that's done well yeah steam sure others

sure valve yes yep others what are famous companies that are public today and have the CEO of the helmet company install supercell well he's owned by 10 cent but you'll keep it on it yes come on easy ones Fang anyone who the fangs are Amazon so Jeff Bezos no longer but for a long time Facebook Mark Zuckerberg uh for a while it was Bill Gates at Microsoft so uh let me ask you this uh Bill Gates at Microsoft Steve Jobs at Apple Larry Ellison at Oracle of Mark Zuckerberg at Facebook Travis kalonic over at Uber Mark dinkus at Zynga as they were building up their companies did they have a nice kind gentle reputation were they known as kind warm fuzzy fuzzy folks interestingly they were they were not uh and and so when you think about management sometimes you're thinking I

want clean-cut nice warm kind you know folks sometimes that may be the case um 99 of 100 companies that I've backed to start they say they're going to do this to start they end up don't doing that sometimes you need someone who's a bit of a cockroach who kind of pivot pivot hit a wall spin around repent figure out how to work in the market so again there's two types there's some people who are amazingly nice kind and gentle you'll put on in from supercell there's some that are a little rougher around the edges but both have their own kind of value here you just have to decide who you want to work with so again measurements generally folks like myself are looking for great teams teams who've done it before teams can adjust them changing market conditions it could be experienced could be just great Raw Talent keep that in mind in terms of whether that's yourself or someone that you want to join oh so again this is a picture of a company that I'm working with now it's

called Azure games the company was founded by the CEO for my best acquisition at EA as we bought a company in Sacramento for 15 million dollars I'm not sure what to say that but whatever five years later they launched a game called Star Wars Galaxy of Heroes and it's made 1.5 billion dollars in Revenue to days right we've reassembled a team here we raised 25 million dollars last year it's about 40 people now uh worked from office not work from home it's great if you want to if you have a live live game or creating additional content maybe you can work from home we have a belief that developing a game from zero to one you need everyone in a room together collaborating ideating oh so number two Market what does that mean um we're in a very uh interesting time right now in gaming obviously things are a little bit slower across the board in the economy I'm looking for companies that can be leaders in small but rapidly growing markets so that when bigger people understand bigger competitors understand

there's a market here when they come in you can defend your position they can't Crush you right look in the pictures here today we have Call of Duty Battlefield Halo you want to make the next Triple shooter right now maybe but it's an expensive place to be how much do you think Call of Duty spends on development right now for their AAA game for the next Triple game 700 million I'm guessing it's a little bit less than that but I think the magnitude is is around there anyone else certainly a couple hundred million dollars and how much are they going to spend on marketing not the same now a few games do step into this world you guys remember uh pubg uh Apex Legends fortnite how many of you play fortnite how many of you remember at the launch of fortnite that one of the biggest

games in the world was a Dutch so fortnite launched there was a conference in Germany called Gamescom and the folks from epic games that said hey come show up to the booth show support and so I go visit the booth they have a very empty boost there's epic employees a lonely llama and nothing else because that game was an absolute and abject failure at launch but they pivoted they copied the Battle Royale genre and now we have fortnite one of the biggest if not the biggest of games out there so again try and find yourself if you can and you have to look forward here can you be a leader in a small but rapidly growing Market or can you be differentiated in a highly contested market and so to that end I pick um in terms of markets think about I joined when Facebook was coming up uh you know next came up with Apple iPhones and free to play we've all been around when on Facebook about Oculus and went all the way to meta try and find what that next thing is and obviously what is the next thing that

everyone here has been talking about what's the what's kind of the news Trend here at this conference of AI absolutely we're at a golden age here this is a new Industrial Revolution okay um and I don't want to be the factory worker of the Industrial Revolution I want to be the factory owner ideally you guys want to be the factory owner too because you have only so much time and energy to give of yourself ideally you want to be with a winner if you can you learn a lot from from mistakes but if you can avoid those mistakes and go straight to a win I'd be more than happy for you to do that so lastly differentiation when you're looking at different opportunities when I'm looking at opportunities I'm looking at what is unfair what is the company's unfair competitive advantage it could be a great team that executes well it could be some technology it could be some Channel it could be some IP that you have access to for Azure games because we did so well with a Star Wars IP we can talk to all the different

IP out there and say hey look at what we did for Star Wars and perhaps we could do this for you and we have a better shot of getting that IP than most people um again you have to look at the opportunities that you have in front of you but try and find or try and articulate what sets you apart for everyone else what is the unfair competitive advantage that you have above everyone else so again management Market technology differentiation whatever that may be ultimately I want to leave you with this following point time is the most precious thing that you have to give of yourself I generally say the softeners but it's everyone you only have so much time in the world you only have so many places you can go and join every company that you join has a lot of energy I have this uh I have this kind of back the envelope calculation I take I people are trying to figure out what they're going to do next I say take the number 65 65 years old subtract your age divide by five that's the number of shots on goal

you've got to do a really good job and and hopefully hit it out of the park so be mindful of where you spend your time because there's actually not that many of those I just hit uh 48 so I only got really three left here uh you know some of you in the 20s 30s you got a few more shots on Google a few more chances get this get this right but again be mindful of your time it's the most precious thing you have to give it yourself so yeah I'm actually not sure um I have two minutes left happy taking questions if you want otherwise that was it are those three elements you talked about which is the most important team always the team and frankly too it's because you're gonna be living some more than perhaps your own family you want to spend time with people you enjoy working with right so you mentioned Ai and this is

a little more exciting to you've seen or thought about happening around if anyone had told me that games today would be made with gender of AI like three years ago two years ago I say you're full shed right It's Magic now to watch what can be done here with mid-journey and stable diffusion of the rest so azra has been adopting this well before everyone else um kind of before the Europe ended uh picture if you will I can type on on the computer I want a ninja in feudal Japan I want a ninja in King Arthur's time I want a ninja with poison attacks I want a Ninja who uses shurikens right not so old days frankly very recently a bunch of folks who go into a room Joff about what the perfect character would be the right attacks the right look the right armor the right feel today the

tools that ours has developed so we don't we don't focus on tools we focus on the layer of intelligence about those tools the 250 years of experience developing successful RPG games but you type this information out and you get a ton of 2D art characters that look great it's not 3D yet for us but 2D a 15-page backstory and a list of suggested attacks and now you can have designers sit in the room just assembling this all together what took five days ten days forever to make the perfect character a fraction of the time right what does that mean does that mean we need less people to create the content or does that mean because everyone's going to have that ability we have to do better than everyone else right um sorry out of time here but something to think about right so thank you everyone [Music]

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