The Metacast by Naavik: Roundtable #37 - Will Steam Deck Become a Success?

[Music] when i was playing last of us i always had to end a little bit early before going to bed then i usually do and then i'd read a really happy book so that i could i could sleep well [Music] hi everyone welcome to the metacast roundtable by navik and today is a special episode because not only do we have one but we have two people from navic today um so we're going to be skipping intros we're joined by aaron bush who is a co-founder of navic and fuzzy itani he's an investor for runner ventures and content lead at navik so if you love your newsletters you have fosee to thank for them because he's managing it

and you're smiling fosey thanks maria yeah and i just want to give a huge shout out to aaron he announced he's full-time novick on monday which is just a huge milestone for us um we're so excited i'm excited too yeah really happy that it's official took a while to get here but we got a lot to build so just very excited to be working with all of you and a ton of other people in an expanded way i hear your first agenda as full-time at navic is the exciting task of choosing accounting software this is true there are a lot of details that you just need to put together when you start a company and we've been you know turning navic into a c corp and so you know dealing with all the legalities and all the accounting and you know figuring out payroll hr software you know all of the fun stuff of starting a company is you know just the things that you got to do when you start um but i'm

also just as excited to move beyond that and start you know putting more of my mind power on you know actual video games you know figuring out what's going on in the industry and you know sharing that and lots and lots of ways that we do but it's true lots of accounting software thinking right now you're really geeking out over this yeah i've never done it before i mean it's kind of interesting but yeah yeah i've been to a conference about technology for accounting software it can get quite interesting actually um moving on to the exciting topics we're talking about today which is not accounting software where there's a lot of new games out there that we're excited about so we're going to spend some time just talking about what we're playing and what what we're looking forward to playing if we haven't started doing so we're also going to talk about play tica's 2022 strategy and steam decks release um

so yeah we'll just jump jump right in with aaron what are you playing what's new what's exciting you in the games world well i feel like i'm drowning right now because there's so much to prove to to just choose from and i always feel like i'm i'm the kind of person that like has the uh what's it the like paralysis by analysis mindset and so i'll literally you know just be like staring at my computer then staring at you know my ps5 and looking at my phone just being like there's like three games i want to play here two over here and like you know four over here and it just takes a while to even figure it out but right now i am enjoying dying light two which came out in early february it's sort of like um you know it's like a fallout like world but with zombies and with the assassins creed like parkour thrown in um and it's just it's been pretty fun and you know it's taken me a while to get through because you know i started it at the beginning of february then it's february has gone on like there's

there's just been so many other games that have come out that i want to play right there's you know horizon forbidden west eldon ring you know destiny 2 expansion came out and you know a new total war game and you know new games coming to xbox game pass and i i feel like i'm drowning but that's a really fantastic place to be in this industry it's really been february was like an insane month for for games that was just console and pc too so um feeling really happy right now is dying light scary i've never played the first one uh not really um i would say it's not it's i don't know if you've played like the last of us um i would say it's similar to that um in terms of a scary level so maybe it'll have like moments you got to go in like dark buildings and maybe something will like come up behind you that you don't see and you'll have a little bit of moment of like oh crap gotta deal with that thing that came out of nowhere that's terrifying uh but it's

not it's not a horror game by any means you're right when i was playing last of us uh i always had to end a little bit early before going to bed then i usually do and then i'd read a really happy book so that i could i could sleep well yeah so it still might be good to have a happy book on the side if you choose to play this game but it's been a lot of fun and also i was just looking um this game is made by teclan which i just like didn't know much about they just kind of they're like one of they're just kind of like a smaller studio not part of any like bigger conglomerate but they just you know they regularly you know you know every couple of years or so you know develop and put out like a new cool game like this and so you know as i was just looking down the list of all the you know the games that have published there there are a few in there i'm like yeah like that that's a studio that i could see at some point maybe getting scooped up by you know one of the bigger players as the consolidation happens don't know if that'll happen with tech land but i'm like yeah i could see you know a sony like wanting this kind

of game to be um you know more playstation first or something like that um so anyways yeah been lots of fun but can't wait to move on to other things too are you do you play destiny 2 a lot no i i don't i used to play the first destiny song but i never never quite got into destiny 2. but i know you're a big fan maria have you been to the witch queen um no no yeah i i turned from my clan so this is why i was excited by this idea because maybe we could create a raiding party of namic on destiny 2 but yeah just do some team building of trying to survive as a friendship through a raid we need to figure out something about that yeah sorry go ahead yeah i was going to ask a fuzzy what have you been playing that's nice i'm still reeling that um aaron flecks

the ps5 on us so that's where i'm still at my wife got it for me she's the the real flex here yeah there you go so i'm much more of a backlog type player i sort of have things on deck i buy them and i don't play them until i have some free time in a couple months um so lately still on the halo infinite grind i know that like dius for that has dropped precipitously and i've seen it in my multiplayer lobbies but uh the other one that i've been playing a lot is wild rift um i'm just like really trying to get into mobile gaming my roommate is a big riot fan so we've been playing together and it's been really fun you know i used to play this solo but it's totally changed my experience to like have someone right next to me makes it easier it makes it a lot more fun and then the third game is quartal it's wordle times four all simultaneously but i think it's like nine tries instead of six so i've really been enjoying the challenge of taking

wordle up a notch um non-new york times style i i can't picture this you have to share it yeah i'll put it in the chat later check it out it's great it's like you guess you guess for four words at the same time but each guess counts toward your total guesses so you're trying to figure out four words simultaneously okay maybe maybe not i know with like elven ring out and horizon now i'm still on the wordle grind it's kind of embarrassing but i do enjoy it yeah i i hear that manu is playing eldon ring and he might join the next round table so we may get a first-hand view on the first survival of ellen ring i think i'm just like generally impressed by people who can play souls games and like deal with that frustration and just like continue to like play after a death or after multiple deaths

it's like it really takes a lot of tenacity in my mind that i don't have i finished bloodborne that was the only souls game that i i finished and since then i haven't been able to play another souls game i just can't face it again the grind there was this boss that i fought about 40 times before i managed to pass it was it was long but i am looking forward to eldon ring um on part of the horizon forbidden and west release i thought it was quite interesting that i think around half of the sales were digital and i was wondering if aaron do you have any thoughts about i do you think that this is a trend we're going to keep seeing um an increase of digital sales and changes to to player behavior yeah i mean i think this isn't new this is probably you could have looked 10 years ago and i've started to see that yeah digital is becoming a thing it's already stealing market share in a few years it's going to be half and one day you know it's going to be 100

and that still might be a ways way to completely get you know remove discs from the equation another generation or two of of consoles and you know big franchises like call of duty uh the biggest franchises still tend to have you know the largest percentage of which of their sales are sold disk-wise but it's yeah i mean this is this is just a continuation of what's been going on for a really long time and these digital first platforms you know like sony and xbox now with their storefronts and steam and everyone now um yeah they're they're just going to continue to try to push people towards digital because it's also a better business for them they're like digital games are higher margin and when you buy it through their platform um they take their cut that they don't get if you go buy it you know at gamestop or you know whatever amazon whatever other website so yeah what's

going on makes a lot of sense to me and i think um this we're gonna see this continuation over the next decade still yeah if i might add anecdotally i live with two other guys and we share an xbox here so space is quite limited um we're always downloading games off of xbox game pass and i definitely see a future where microsoft starts to upsell people on cloud services storage kind of like what icloud does people really love to have their own libraries you know when i when i log into steam sometimes i just like like looking through the games and like seeing what i want to play and the catalog that i've sort of built up over the years and i think that's going to be the case for xbox um games are just so big now like when we wanted to download eldon ring we had to let go of a couple of our favorites unfortunately um yeah that's why i had to uninstall warzone it was just getting too much i couldn't play anything else it's a big

l for activision yeah the game's a beast but also like i mean with this whole digital trend thing too i mean you can look in other mediums and see that when when the when content turns digital it also just has an effect on like the business model of how it's sold and so i mean games will continue to be sold on a one-on-one basis but i don't think it's a coincidence that you start to see you know as these platforms like xbox and playstation they like really put their storefront and their software front and center that they're also shifting into more types of subscription models which at minimum is something like playstation plus where you just pay for um you know access to online services and it comes with you know a bundle of a handful of games you get you know a couple free games a month so all the way on the the game pass side where they're leaning all the way into digital and putting everything behind a single you know price point per month and um

that's not possible in a physical world but it's made possible in a digital world and so in the same way that we're going to see market share continue to shift over to just digital sales in general i think we're also going to see market share shift away from single purchases more towards subscriptions there will be both but it's just you know the market share trends that i think we'll continue to see and that's interesting i think that's a good thing and it's ultimately good for consumers too and a fight oh sorry go ahead oh no you go fuzzy if i might add like i remember when the shift happened for music and sort of piracy started declining as a result of moving to subscription not to say that it still doesn't exist but that it decreased heavily and maria you and i were talking about like secondhand second market sales on like gamestop or something and what that meant for games and i definitely feel like uh when the games industry is calculating their

financials they're like definitely accounting for how many of their games get sold on the second market and so this is definitely a welcome change for them well it might disrupt other business models like gamestop they're really excited about not having those lost sales and having people just like purchase directly from them or purchase through a subscription yes i i don't i think this is the reason why i don't see disks disappearing entirely it's just so important to gaining accessibility to playing console games if you don't have a lot of funds to put towards it because you know i don't know maybe a year or so after game has been released you can you can buy it a really low price price second hand and if that no longer exists i do wonder if we're going to lose accessibility to console games for people who can't do that i would argue that we might even see increased accessibility as you move towards a subscription model because it's a lot cheaper to buy something like

xbox game pass for 15 a month that gives you access to an enormous library compared to buying you know each game 60 70 each um and so i yeah i mean i i think accessibility is going to increase i also think that as you know free to play continues to take hold or you know even free to start in some circumstances that that has been the biggest you know boon for excessive uh you know just making games more accessible to people um but yeah i mean it's interesting when you take away secondary markets it removes a price point for single sale purchases and just sales for people who want to recoup some capital that they they put into buying a ton of games um but again i think we've seen this in other industries and it works out okay in the end we're just sort of in the awkward middle stage of that transition and it wouldn't surprise me if we see um you know companies have moves that we don't quite predict that kind of spin up their own

business models and behind the technologies that they're building that continue to evolve the landscape yeah i think i think one of my favorite points to that aaron is nintendo's strategy of like nostalgia games and how they're just not building a subscription service for people to access some of their old games but it seems like a no-brainer because there's such high demand for it nintendo's one of those few companies where i can imagine physical game sales still outpacing digital game sales not to say that that's the case but there's so much brand affinity for them that i think like people really love opening their switch case and showcasing all the physical game cartridges they have versus the xbox cds which nobody really cares about and so i think like we'll probably see a little bit of a difference across consoles across companies when it comes to this at maybe a slower rate of change yeah actually something interesting happened the other day where i was

speaking with my neighbor about a game i was playing and when i finished it i i offered him the game of oh you can go and play it he said oh i don't i have a disclose ps5 so i can't play it and it was the first time that dawned on me that that community feeling of sharing your game it's gone you can't do that anymore um it's a thought that counts maria thank you thank you i hope he he thought the same so um last question on on this topic do you think this is a strategy that was set by both sony and xbox maybe a decade ago where they decided we need to start planting the seeds of shifting players into buying and feeling the the ease of buying a digital copy so that they could increase their margins over time i don't think it was necessarily you know a hand-picked strategy from one or two companies it was just more like a natural transition that

most consumers and essentially all companies can get behind because it and in some ways is easier for consumers and in basically always it's better for companies in the value chain except for whoever the retailer is that's getting cut out um so i think it was inevitable just from the economics of how it would change the game and how it just plugs into where technology is moving for all entertainment but yeah i don't think it was a big scheme by anyone definitely definitely not a scheme i i definitely think they took a look at their balance sheets and were like wow we've lost hundreds of millions of dollars not being digital like let's think about how we can recoup that money and that led to that business model shift and you know i think consumer behavior changes are really important to call out to during the pandemic it was just like harder to get physical game sales we're having supply chain issues now i'm not sure if that's affecting physical game sales but like it very

well could and so i think like there's more of an acceptance now for people to just download things internet speeds solid state drives now are in such a like good place for people to like have a good games experience and i think that's definitely a contributing factor to what we're seeing today um [Music] cool thanks man as i think we'll just move on to play playtika's 2022 strategy and um they're a household name in mobile free to play and they did an ipo last year in january and i believe navic did a report at the time so i was wondering aaron if you could let us know what changed since then have any of the predictions from the ipo come true yeah so monument and i we took a look at this company i guess it was over a year ago at this point and basically at the time the conclusion that we came to was yeah playtique is a good company it's a decent company it has strong profitable roots in the casino genre and it's made

pretty good early inroads into the the casual genre mainly through m a of a handful of teams like wuga um and it was just a company that made good money and it had strong ltvs compared to competitors so it made sense like there was a reason why this company was going public and why it was going public at a 10 billion dollar valuation or so at the time but also at the time the question and where we were hesitant was about growth which is obviously really important to your value when you trade publicly and especially when you when you ipo and typically when companies ipo they need to make sure that they like really nail their first year as to maintain confidence um in the market and we had some questions we i mean we said the the casino market is only so big and they probably don't have that much more upside there the casual market did have a higher upside for them but we were unsure about um playtech's abilities to launch successful new casual games developed in-house and then even though they seem to have a pretty

strong tech stack through boost we were a bit nervous about the post idfa world and the uncertain effect that that would have on their ability to do user acquisition and then you know lastly on the m a side we knew that platika would continue to pursue more m a but m a was getting more competitive and expensive and even though the company was about to raise money it was coming public um with a lot of debt so at the time 60 of their operating profit which is you know after you take out all of the costs of marketing and r d and the you know the cost to make your product um you know 60 of what was left was going to paying interest expenses which is a very high percentage for a business so we were questioning you know their true flexibility and ability to make great deals that would continue to regularly move the needle for them um and fortunately or unfortunately depending on how you look at it we pretty much nailed it at a high level

and we can dig into some more details of of where they are now and how the you know the finances are trending now um and just games going on but you know for many of those reasons platika's growth engine just isn't as strong as probably anyone wants it to be and they definitely aren't at a place that they probably wanted to be a year ago when they ipo they they have had some bright spots um and growing some new games here and there but if you kind of look as a whole they're over the past couple years they've struggled to to grow their daily active users and if you can't do that even though you're trying to launch a bunch of new games it's going to be hard to to continue growing at high rates that the market wanted to see you do when when you start going public so in a nutshell that's sort of what happened over the past year compared to what we first thought when we when we looked at the at the ipo filings

was there anything about uh their 2021 results that that surprised you you said that the results were as you had expected when you analyzed the ipo was there anything that surprised you though um i mean i guess i would say like i'm not overthinking the specific numbers too much i mean if you look at the numbers and i'll just race through some of this because it can be dry but you know in the for the full year they grew revenue about nine percent um they had decent margins but the casino part of their portfolio was down a little bit and the casual part was up and a lot of that is because they have games that are growing part of it is because of acquisitions that are clicking into place but again across all of that their active users are down and they basically had to kind of fight the idfa negative trend to to figure out how to better monetize the users that they do have which is what has led to their growth um and

you know really like i don't want to like overthink you know current growth rates or current margin profiles or anything like that really the bottom line for me is that they didn't grow as well as they wanted to and they and part of that is because they came to market um already somewhat tapped out on their most important category casino and they came more financially limited just by having a ton of debt so it was just harder for them to make those moves at a time when the market was changing um like how you acquire customers in the first place which is what they which is the one thing they really needed to nail to um to you know truly outperform so um i mean that's really kind of my bottom line they did acquire another company called redecor this read decor this past quarter which um i don't know too much about it but they but i don't think it's you know technically a game it's more like game adjacent it's more like a decorating app

that has more like gamified components and so it kind of makes me wonder if they're gonna take more of an app loving twist and you know be willing to support other types of apps that still might have gamified elements that they can plug into their tech stack and find ways to succeed um but i'm also not necessarily a huge fan of the lack of focus i think that also shows that what they are focused on maybe isn't entirely what they want to double triple down on um so yeah i mean those are my my general thoughts of course the elephant in the room which we can talk more about is because of a lot of that they're putting themselves up maybe for sale which is you know screw everything else i just said that's really the headline here um but those are my talk about that a little bit yeah see do we see this happen in the space often where someone announces in like a very acquisitive market that they're up for sale like what does that say it says it says that nobody wants to buy us like

i guess i'm not really understanding where platika's is coming from and like why they would do this you know we saw like some major acquisitions happen in january for billions and billions of dollars this company is valued at like seven billion dollars right now so down four billion from its 11 billion high and like they're not finding a buyer so i guess someone internally is saying something's wrong and someone externally is saying this company maybe isn't the right type of company we want to acquire and i think that like says a lot about the market conditions at the moment um you know our friends at deconstructor fun had a really great casino uh deep dive they're saying something like slidomanias which is play tikka's biggest game it accounts for 70 million dollars the year-over-year downloads were up 70

but that didn't reflect in their revenues which is like quite worrisome the casino and slot genre is just like hyper competitive at the moment i think moon active is like the leading publisher but there's just outside influences too of like real money gaming nfts like idfa all of these swirling forces are just weighing down on the casino genre because they're i guess kind of similar and it just brings to question like this idea of diversity um aaron you were talking about rita core but like they just really haven't been able to do anything outside of casino or casual and so like what does that mean um just like one last quick note is i was reading that one of their major shareholders wants to sell like 15 to 25 of the company and i think part of the cell pressure is

them just wanting to liquidate their shares and what the negative effect of that might be and so i think they're just trying to preempt what that might mean for their overall share price by selling the entire company um and getting rid of those shareholders these are all assumptions but i think it really does speak to like the state of the market today on on this genre and like what type of companies and what type of genres people are looking for um i think then a big question for plate tikka is just like an ability to execute outside of the genres that they're already experts in yeah so you give them credit well aaron was mentioning about yeah yeah i mean to their credit like they at one point were really just a casino company and they have made inroads into casual and that has become it's now the majority of their business i think and so there's definitely props to give there like they did succeed in diversifying into a second um genre but yeah i mean i think a lot of this is macro related as

you were saying fosi like like in the casino genre it doesn't really matter how many downloads you get if you can't really target the whales that are going to be the most important drivers of your revenue and i don't know the ins and outs of that enough to truly comment on that but i think there is a lot of that going on in the market right now in general just as companies are trying to adapt to the post idfa world we saw it with zynga which sold themselves to take two probably for somewhat similar underlying reasons um and i think we're gonna we're seeing it here and um for contact zynga sold themselves at about a 10 billion evaluation i think which is around what platika would probably go for too um and so i think i think there are similar undertones going on here but yeah i mean really like the bottom line of that to me is companies in strong competitive positions with clear growth opportunities don't put themselves up for sale like this and so if they are then those underlying assumptions of why

you would have gone public in the first place to prove that you have that you have strong competitive advantages and you have um clear growth opportunities that's been put into question it also just raises the question of like okay you you want to put throw yourself out there for strategic consideration what does that even mean and who would even target you i mean the you know selling the entire company is probably the first thing that comes to mind but who would be the buyer right take two has its handful has its hands full activision has its hands full almost definitely not a console company um it's probably too big for still front and embracer which have been hammered recently along with everybody else and public markets um it's probably too big for a company like nexon i don't even know if that makes any sense um ea maybe like they their latest big acquisition was glue a while ago and they have a bunch of cash and could probably you know would be interested in the cash flows

here and the debt taking on that debt wouldn't be an issue because they have so much cash but um yeah even that is still sort of a question um maybe they even sell off part of their business instead of selling all of it and maybe they want to cash out on what is not growing so they can reorient around what is i don't know um but yeah it's tricky when you have shareholders that want to get out and it has an impact on your strategy at a time when you just sort of want some patience um to just get through these times and figure out how to leverage the the impressive tech stack that you do have to you know adapt that and work it to your advantage much more sometimes i feel like um the market and people wanting to push for these strategic moves are a little short-sighted but at the same time i totally understand the trend of consolidation that we're seeing across the industry and how that can make sense

um and it wouldn't be shocking if that platika wants to move more in that direction it's just going to be given their size really hard to to pull off i think yeah the last point aaron to to what you're saying is just people are probably thinking about spending billions of dollars on other companies and not play tica and like if they're looking at the market holistically and they want to make a big splash they'll probably pay a premium for something with a little bit more diversity with a little bit more console applicability or just different types of mobile genres that are growing at a higher pace than the casino genre is yeah and typically like they're you know like an 8 10 billion dollar company like that's the size of company in the market that typically is buying the other companies they're the acquirers not the acquirees um and so yeah when you flip that equation it just gets a lot a lot harder and your options just become so much more limited but

even if they don't get acquired because i i don't know i don't think i would bet that they would um they're still fine like they still have solid games that are generating you know decent cash flows it's just that their growth expectations need to be put in check um which they already have been by the market to a somewhat large degree so um it's okay whatever happens out of curiosity what do you think changes with how uh if if at all a game company operates when they do an ipo how would this be different if they were acquired versus being ipo'd i don't think it really should affect the underlying business decisions too much it's just extra transparency and you have extra stakeholders that demand more communication more hand-holding um it means like when

you're private your stock price doesn't fly up and down every minute right but when you are public you you sort of have those pressures like you can announce something and then within the next minute you can see you know your stock price you know rise because you did well or plummet because people don't like what you're talking about and so um for some people that's fine they can withstand the volatility and they're you know they communicate well with their employees about it but for others um it's a lot harder to deal with and it puts more pressure to deliver um quarter to quarter in a way that just wasn't needed or is necessary when they were private and i think that the pressure is even higher now the covet sort of boost that they went public on is like kind of dying down and people are just understanding that like it's a lot harder to grow in a postcovid world and so

i think they're thinking about that sort of pressure of like what does it mean to have that transparency to have that covered pressure but also like an ipo is a liquidation event and so people are going to want to start you know selling their shares in earnest and i think that platika in specific is probably feeling that cell pressure a little bit more than other companies on the public market right now do you think that could affect perhaps the risks that they take in terms of ideation and the prototypes that they might be trying out to to put into the market and validate because they maybe feel like they need to get a guaranteed shot maybe i could see you know i think there's more necessity on finding games that move the needle in a big way and i i i don't want to speak for them or anyone and saying what that really looks like for them but i think that that's more important than it's been in a while and sure i mean it could also

mean um we saw it with zynga when they kind of moved out of just focusing on their forever franchises and bought uh what was it rolic which focused on hyper casual and chart boost which was more like ad tech and things like that and so zynga responded in a way that was like all right well if the market is changing then we need to change our focus too and i could see platika doing that a bit maybe the rita core acquisition is a small sign of that i don't want to over extrapolate based on that um but you know i mean they faced really similar headwinds as the other big mobile companies so i could see them trying to think about how to adapt in similar ways and just in general like you know there's been the conversation about content fortresses that's been going on for uh a year or two now i think uh you know from eric seifert kind of started that conversation at mobile dev memo um and um yeah i mean the whole idea is that

you don't if you're a giant company you might not just want to make games but you might want to own more parts of the underlying infrastructure that supports them um whatever whatever that means and so you know platika boost which is their platform i think they have like 13 15 services that help basically like automate monitor optimize various you know user acquisition back-end game operations product design kind of stuff so i could see them trying to reinvest more in that direction too just to continue to bolster their efforts there um but that's more setting the foundation to win bigger with games but that investing of that doesn't necessarily equate to you making new successful games from scratch i would say well we look forward to seeing what all come throughout this year for for playtika and just very quickly before we move on to steam deck i was wondering fuzzy do you have any thoughts about netflix's acquisition of next games it's

hot off the press today oh i didn't see that uh so cool i so netflix spends like 13.6 billion dollars on content a year which is just like this mind-blowing statistic uh you could look at roblox and say they spend like zero dollars on games that's not obviously not true but like you know you run this like counter ugc strategy to like actual content production um in-house and so it's really cool to just see that netflix is reinvesting money into one building really really good games teams into in-house production [Music] you know i'm not really sure how netflix as a games company is performing at the moment i think that like they're gonna probably struggle going horizontally at first um but like you know as they continue to build up a bundle in their subscription offering i think that will probably see a lot more

usage on their platform especially as they you know strengthen their ips through that cross media strategy and then also people just like understand that there are now games on netflix which i don't think like a lot of people do know about every day i see someone hiring a new games person at netflix that's funny yeah i mean i think the acquisition yeah i was just saying i think the acquisition probably makes sense i mean obviously gaming is still spec um at netflix it's a tiny tiny minuscule percentage of what they have going on um but it's going to grow over time and really one of the first steps beyond just initial licensing to you know just throw some initial games out there and just learn how people engage how it should interact on the website and just kind of those just basic early tests next game kind of makes sense to me because i i think like their their focus has

always been on working with more like tv related ip and so they have you know walking dead games a stranger things game which means they've already worked with netflix and so i think it's a natural extension for them to go focus on the largest tv ip you know company in the world and well hopefully i think it it'll be a good exit probably hopefully for for next games and it'll be just another good small step for netflix as they try to to scale this up and put you know billions and billions of dollars behind it over time you got to start you got to start small but these these small moves initially add up and kind of create the foundation for a team that can increasingly execute for you played uh stranger things puzzle tells when it first came out i i really enjoyed that game it was just nice to dive into the world of the

retro wave music whilst playing some match 3. um yeah hopefully we'll keep seeing some good quality games being developed by next games yeah and it makes more sense too because you know if you look at the games on netflix right now like most of them have like no netflix ip associated with them it's like random basketball game where you just swipe to you know get the basketball in the hoop and it's like okay that that was that um but i mean you can imagine just even just like the click-through rates of like um people are like oh there's a stranger things game and they'll probably be 20 times more interested in clicking on that than just random something else because it's exactly where it should be posted and i've you know i think you know the netflix homepage is probably like the most powerful one of the most powerful you know quote-unquote advertising platforms in the world and so when you can connect these things together in a way that's very

native then yeah i think they'll see pretty meaningful engagement improvements over what they have now i think two just like one quick note on this is just um the type of entertainment we'll likely see and i don't think it's limited to games you know aaron and i have both written about massive interactive live formats um i think i said it wrong but miles with genvid and then also portal ones sort of approach to entertainment these days is not limited to just games it's like an interactive type of show and i think we'll probably see that to some degree with netflix you know they sort of straddle the line between passive viewing content and active content and i think that they'll probably find like a middle middling ground um that sort of resonates with an audience that they have in a very powerful way and for the last topic of of this round

table i'm very excited to talk about steam decks release so valve started sending fulfilling the pre-orders uh i think it's a first come first served basis as they as they go through their production and the base version costs 399 us dollars and the top-end version costs for 649 us dollars that's quite a big price tag so i was wondering erin what do you think about steam deck oh man well listen i'm happy that they're doing it and putting r d dollars behind it i think that you know we've seen for decades that people want to play games handheld and obviously mobile won the day um for many reasons um but there still are plenty of other games that people would want to play handheld that you can't just play in an app on your phone um and so i mean the switch is the most obvious example but there are other form factors

that can succeed and you know having being able to take the games that you already play on pc to handheld and finding a way to make it work does sound interesting so i'm glad they're doing it i will say i'm not super optimistic that it's going to be a success i you know i pretty strongly think it won't be actually and that's just because as you're saying maria it is pricey um you know the first edition is just gonna be you know it's gonna be heavy and loud it's gonna be glitchy in some ways um you know we've seen that it has pretty horrible battery life only like one and a half two hours depending on what you're playing which kind of puts into question the true portability of it you know i can imagine like people wanting to go play on an airplane or something and not really being able to because um they just or not being able to play it as much as they would want um plus you know it doesn't actually support that many games yet i think they're

trying to port a lot of games over um plus it's just going to not play a lot of non-steam games that are popular like um you know like the fortnites of the world because of you know anti-cheat reasons running on linux and then lastly like there are no games that are purpose-built for this device which is you know part of the reason why something like the switch is so successful is because um you know it has tons of beloved ip and those games are made specifically only for that device nothing is made only for steam deck at least yet maybe maybe valve will try to make something in the same way they did with you know half-life alex on their vr platform but um yeah i think for those reasons i don't see this having too strong of a launch and if you just look at you know if you just think through the numbers um you know i think uh what the switch has sold over 100 million units starts on the path to

something like that um steem has 120 130 monthly active users and so um even a five to ten percent attach rate on that 120 130 you know probably like best case you're looking at like five to ten million units which is just night and day compared to you know what switch the top dog right now at this is so um again glad they're doing this i hope it's just a start and they continue to reinvest to improve on it so that it so that it also increases the odds of something like this getting accepted more in the future but i think as it exists right now it's just going to be limited in adoption i think their addressable market is the existing player base of steam um right i personally i don't use steam and i personally wouldn't invest this amount of money in a in the hand-held console um but i was speaking with a couple of friends who have very large steam

libraries and that was the value that they saw they're very interested in acquiring one when when they can it's to go through their backlog of games because steam has so many sales that you end up picking up a lot of games for cheap but then you never have time to play it and so having something like this gives a gives you a different way to play for example you want to play in bed or play on the sofa and not be on your at your computer to do so i agree that i don't i don't see enough value being propositioned for the wider market of these type of devices yeah i think the ideal value proposition is there like a lot of people want something like this to exist and to work really well um they just it's just not there yet and i mean it hasn't been that way for for a long time um and it still might take a while to play out but really i guess kind of like it's not even necessarily just specific to steam deck or valve but i mean i do think that there is underlying interest in being able to play a handheld we see it

on switch we see it on mobile um even in master of the meta this past week we talked about a company called backbone which is a hardware company a peripheral company they basically make a controller that you can can attach to your phone um and so play games like inch and impact call of duty mobile and you know what's more interesting there is over time probably more like cloud gaming and the streaming from you know xbox game pass and other places to other devices um that's gonna become more prominent being able to like play on controller it's not necessarily going to eat away at you know time that people are spending on their xboxes it's just another means of providing that type of gamer another means to play and encourage them to spend more time playing those games so um i think the hunger is there for mobile and i don't even want to call it mobile gaming just like handheld gaming and in the same way that we've seen the form factors change a ton over the past 20

years i think the next 20 years we're also going to see the form factors continue to change quite a bit and this is just more like one stop on the road with the steam deck and what backbone is doing and it's not really the the full end game yet plus did you have any thoughts on steam deck yeah and sorry my my audio cut off so apologies if i repeat anything but i think that the key question or the key point is like where and how you're playing video games um i think aaron started touching on this too i think steam deck and backbone and luna is all a bet on cloud gaming there's just a lot happening in this space and i feel like i feel like if you're really interested in these companies and like interested in backing them from a venture perspective you are making the bet that this is a cloud that cloud gaming will probably be a thing in the future and so like when i think about

steam depth yeah it deepens relationships with existing users it's kind of like a tough to replicate mode with hardware and it sort of like helms a new market which i think is important but i what i really like about it is just like the flexibility and ease of use um [Music] you know they're creating like a modding platform inside it that's like pretty innovative i think that's just you know by virtue of having linux as their operating system and then also like this library point that aaron was mentioning that people just like bringing their steam libraries with them on the go and this is just like a new way to do that steam has built hardware in the past like they've had steam control or steam link steam machine steam index they've had a lot of hardware and not a lot of them have been like that successful but it does sort of show an expertise and like building out hardware rolling it to a general public and then like executing against that and i think like

while this is an expensive price point there will be a niche audience that will want to use it and i think like opening up that market to one your power users and two people who like don't have a pc but might be on the go nomads whatever is just like a decent strategy i don't think it's gonna outpace switch sales to any degree but it'll get people more engaged with the steam marketplace and that's the most important thing yeah it's just a question of are they going to get enough traction to justify continue continuing to support it and investing more r d money behind it because uh a project like this the goal is not to make money really on the hardware it's just to provide people another piece of hardware on which they can play games and work and spend money on your platform and put more time into your platform and that's really i think what valve is trying to do here is just trying to support

gamers in more places so that they can play more games and spend more money on on steam and it's it's cool it's a cool vision um but again i'm a little i'm pretty skeptical that the uptake is going to be enough where valve feels compelled to continue investing significant resources into improving it in really big ways i could be wrong i hope i am but that's that's kind of where i'm leaning right now yeah certain with competitors in this market for example backbone where you can attach it to your smartphone personally i'd be a lot more willing to pay an extra price to have a very good smartphone because it does multiple things one of them being games and then being able to transform it into a controller so i can play um more competitive games perhaps than spending this a similar amount of money buying a specific handheld console that

that's the only purpose i have for us to play games yeah well we'll wait and see i think hopefully we'll see throughout this year how how the sales go we'll have more reviews coming in and we'll we'll see oh i i forgot actually valve made they reached out saying that they'd love to have game pass on on steam what do you think about it aaron do you think we'll see it i'm sure they would love it and actually i i don't i don't know if uh microsoft would be that opposed because um you know really their goal is to be everywhere um on every device accessible in many ways it's not really about selling the most exclusive consoles anymore um it's about maximizing the number of subscribers that's really the key metric maximizing the number of players and play time across games is probably what they're most looking for and so if working with steam

unlocks you know pretty tremendous upside for them i wouldn't be shocked to see them be open to it depending on what the terms were um but you know i don't know if the terms will be agreeable enough with them to justify also being on steam when they already have their own platform essentially on pc already so we'll see but you know we've seen with other companies um like ea their ea origin subscription service i think it's called um that is on steam i think where you can purchase it and that one's also in game pass too so that's a wonky one but there is some there is some precedent to other subscription services being sold on steam and um steam again has over 100 million monthly active users so it's a pretty enormous user base to tap into to help accelerate whatever subscription service you're on um can ultimately become so yeah i think it's interesting it'll just

come down to the to the terms associated with it i think awesome well looking forward to this year and seeing how how it goes maybe some exciting news about game pass on on steam i actually i actually don't know if it's all only about like the games or the subscription i think those are really important components i think what we didn't talk about and what's important to note is the underlying infrastructure behind these peripherals so steam deck has like presumably all the steam integrations that games love steam chat whatever that like people want to use and want to use to play with their friends and i think that's part of what makes the steam experience so good backbone i think is like a hundred dollar subscription for like social features i'm not mistaken or it could be free i forget but that like implies that you have to have the backbone app downloaded to be able to use it and i think that's

like a tough proposition based on where the company is at right now not to say that they won't get there but like i think people would rather use discord or like a bunch or a bunch before they pivoted to the metaverse stuff um and then like secondarily which i think is an important point is this apple platform tax steam also has a platform tax but like what does it mean to d platform or get off of apple right and so like we've seen this play out with a company called tap tap in china and so they've basically created a way for people to download games outside of the app store and steam is effectively allowing people to do that on their platform and i think also backbone might have that potential as well to like take games off of apple give them a way to for people to download through their peripherals whatever that might mean and i think that's like a really interesting avenue to maybe explore at some point for these companies you're effectively

bypassing a 30 tax and maybe making the marketplace a little bit cheaper for apps that want to be on there that's why i'm sure xbox is very happy to integrate with steam aside from wanting to be everywhere that's so interesting and um again like i mentioned before like in the same way over the past 20 years we've seen form factors change um with handheld gaming i think we'll continue to see them change and it really wouldn't be surprising that as again like more of these big platforms they start bundling into subscriptions and cloud gaming becomes you know slowly more viable that all of these platformers will want to support um players being able to play on any device and i think that what that could mean is that we'll start to see um you know backbone could even get competition from like an xbox or a playstation that launches their own controllers that can connect to um phones or even you know

come up with their own tablet kinds of things that you know you can attach to you know a controller that the games stream to that don't cost 600 because it doesn't run on the device it's running from the the cloud um and so i yeah i mean i i'm really excited none of this is gonna happen like this year i think that but over the next five to ten years i think we're gonna see this is gonna be a space that i think is gonna get more interesting it's it still is pretty small and the big scheme of things but um you know in some ways the switch was like really onto something when it kind of launched in the way it did and i think that you know nintendo's normally behind when it comes to um you know how they run their platforms and you know what exactly the switch is that's also going to change over time too and not everybody's going to replicate that but the idea that you can play the same games in multiple

ways um being supported by these leading platforms i think that yeah that's gonna that's going to become more of a thing and it's just a question of which companies have the resources and abilities to execute well on it how are partnerships going to form between all of these to you know let certain subscriptions be available on certain other devices and those are all big questions but it's going to be really exciting to see all of that come to fruition in the next few years well with that exciting look ahead into the future we are going to have to wrap up the round table today unless supposedly you seem like you wanted to say something is it very important no i'm just i'm i want to pose a question is backbone allowed in tournament settings because you know it seems like a cheat code that i'd love to use as a as a person who can't game very well i'm just innocent but yeah maria it's such a pleasure thanks for hosting thanks for joining and i don't have many

friends and that's why i forgot about the social features of backbone um but on that note if you want to make my day you have our email in the in the show notes so send us an email let us know what you thought about the episode and the metacast as a whole we'd love to hear from you and yeah we'll wrap up the round table there this was the metacast by navik and we'll see you next week [Music] you