The State of UGC Games in 2025

Welcome to the Naavik Gaming Podcast, where it is our mission to explore the business and future of video games. We bring together the industry's brightest builders, investors, and thinkers to keep a pulse on current events, dissect emerging trends in games, share lessons learned, and have a great time. This podcast is also part of Naavik's growing ecosystem, which ranges from free and premium research to consulting and advisory services. For more information, visit www.naavik.co. This episode is brought to you by Overwolf. With over 1,500 games supported, 165,000 creators, and 38 million monthly active users, Overwolf is the guild for in-game creators. Whether you're a gamer, creator, or game studio, Overwolf is the ultimate destination for integrating UGC in games. For game studios, Overwolf

offers CurseForge for studios, a white-label solution that lets game makers and publishers easily integrate mods safely and seamlessly into their games, both existing and new, at zero cost. It's battle-tested by AAA studios and games, including Maxis with The Sims 4, Studio Wildcard with ARK, Take-Two Interactive, and others. For creators, Overwolf is the all-in-one platform that enables creators to build, distribute, and monetize in-game apps, mods, and game servers. In 2022, Overwolf paid over $160 million to in-game creators, proving that they truly value the talents and contributions of the gaming community. You can check out everything Overwolf has to offer at overwolf.com or check out the details in the show notes. This episode is brought to you by TikTok's Live Ops program, which is designed to help mobile game publishers keep players engaged and returning for

more. In 2024 alone, TikTok found 9x growth of live ops campaigns on its platform, driving dynamic in-game events, seasonal updates, and post-launch content. By leveraging TikTok's innovative platform, publishers are able to enhance player retention, improve engagement, and ultimately boost in-game success. Learn how TikTok can help your game thrive by visiting TikTok's link in the show notes. It's just one click away. It's a super compelling program, so definitely take the time to check it out. And with that, let's jump into the episode. Hello everyone. I'm your host David Becker, and today I'm delighted to be joined by David Taylor, founder of Creator Games, and also a fellow Naavik analyst and podcast host. So today we're going to actually explore the current state and future of user-generated content, otherwise known as UGC, which you'll probably hear that term referenced a lot more than the full name, in games, followed by following the recent release of a a big, huge

Naavik deep dive that we just put out not too long ago on the state of UGC games by another senior Naavik consultant, Jordan Fang. So uh for those of you who don't hear David's already other podcasts on the Naavik channel, could you just quickly tell us about yourself and let people know, you know, what you do and get them familiar with you? Of course. Yeah, and thanks for having me, Devin. Appreciate you inviting me to talk about Jordan's article. Um yeah, so I'm the founder of Creator Games, as you mentioned. What we've built to date is a Roblox analytics platform. We track 35,000 games, and we, uh, you know, track all of their metrics, engagement, average session length, and even monetization. So if you want to know how much any game on the platform is making, you can basically go to creatorxchange.io and and check it out. Um some of these games are making a lot of money. Um, so you might be surprised by what you see. Uh, additionally in my in my uh, 9-5 is as a senior business manager at Xbox

Game Studios publishing. Um, my opinions here are my own, not not Microsoft's, just for the record. Um, but yeah, in my free time I'm I'm really focused on the UGC game space. Um, and particularly Roblox, but always keeping an eye on Fortnite as well. So, I and I was curious what brings people to this user-generated content space, like the UGC space, because you know, some people have a long history with it, some people are just think it's cool from a business perspective. What's your own personal interest in UGC? What what brings you to space? And you said emphasize Roblox, so especially that like area of things. Yeah, I what what brought me originally was a strategy project at my former employer Electronic Arts. Um, it was a it was a web3 project. We were looking at platforms like Decentraland and The Sandbox. And then I stumbled upon Roblox, and I was like, well, they have all the same sort of, you know, user user selling points as far as the ability to earn money on the platform, as as far as your

ability to own cosmetics and and keep them or trade them. Um, so I thought to myself, like maybe we should do a partnership with with Roblox, but my my boss wasn't interested at the time, so I just started writing about it for Naavik. And my basically my first article just blew up. And uh, clearly there was like uh, interest in the in these platforms, but no one was really writing about it. So, I just kept writing about it, and you know, that led to me getting a job at SuperSocial, which is uh, a Roblox game studio. I I headed up product there. And uh, ever since I've just been you know, trying to get deeper and deeper in the space through through various entrepreneurial endeavors, which has, you know, brought me to uh, where I am today with with the analytics platform, which is eventually going to be an M&A platform facilitating buying and selling of of Roblox games. But, uh in terms of what has really like interested me, I think it's a it's evolved over time. Initially, it was the

data because Roblox publishes data through an API. Uh it's just a stream. So, if you stream the data that they're publishing, you can basically track every game on the platform and and the sort of life cycle of every game on the platform. And if you do some additional work, you know, this is proprietary to our company, you can estimate the revenue. And so, there's really interesting insights that that come out of that. So, yeah. So, in terms of uh you know, how I got started, it was really the data. And then over time, you know, interviewing creators in the space, I just realized like creators are super down-to-earth. They are really interested in sharing their own stories and very welcoming to others who, you know, are coming into the ecosystem. And so, it really started to feel more like my own community. And so, once I had that sort of sense of I'm part of this community now, I wanted to sort of contribute to it. And that's sort of how we got to all right, I want to build a platform that, you know, is is solving, you know, a key pain point for creators

in the space. And and I think the other bit is like is that Roblox is also like the ultimate uh game loop if you're as a creator, right? You you you do some work, you make a game, uh you launch it, players come in, you see the numbers go up, you look at your data to see like where the areas that you need to improve. You go back, you do some more work. You go back, you check your data. Like, is it is it doing well? You know, you interpret the data. And so, you go back and forth over and over again. And I think that's a really compelling in in in in a good way addicting experience for for people to have because, you know, it's analytical, it's entrepreneurial, it's creative. Uh and so that whole that whole game loop is sort of attracted me as well. And I've always been very, um, fascinated with, you know, people other people's creativity. Uh, you know, I think, uh, being able to support other people in in, you know, bringing the the the creativity out of them is something I really, uh, am excited about.

It's funny cuz in a way you ended up being a creator around creators, uh, by creating these platforms. So you got It's like you have that creator itch from watching all them do but you're just like, I would do a round Roblox instead in Roblox. Yeah, I mean, I I think, uh, you know, I'm trying to find a place where I fit into the to the ecosystem and that's where there was, you know, as I mentioned before, like nobody was writing about the space. So there's clearly an opportunity for me to add something, uh, at the at the high level, you know, explain to people what are the dynamics of the of the ecosystem, what is the data saying at the at the platform level. I mean, I guess you're talking about the people have that the access to analytics and stuff when they're working when they already have a game and they can be in that loop. But I guess when when people are entering stuff like what you're providing is helping people that are having the analytics ahead of time of the space so they can go into it a little more informed, whether that be from a business perspective or from a creative perspective, right? Which I mean, all the all the more information the better, right? So you don't walk into it blindly when it's been around as long as it has. You don't want to just

kind of stumble into it. I'm sure there's, you know, similar things in like the YouTube creator space, things like that where people just don't want to walk into it totally blindly. Um, but you know, in terms of numbers and anal- analytics and things like that, that, uh, the deep dive sort of state of of UGC gaming report, I think, went into a lot of data, which of course you know, that's what we do at Naavik is taking lots and lots of information, trying to make it so that there's, you know, a lot of good takeaways from it stuff. But it definitely was a long one because it's it's an entire year's state of things. Um, and and you yourself having worked on previous ones, what are your kind of big takeaways from this existing one? Obviously, like I said, there's a lot you're not going to repeat the whole thing, but what stood out to you in terms of especially contrast to where you'd seen the state of gaming before, uh what what, you know, was the big takeaways this year for you? Yeah, I think the the biggest change or the biggest thing that I thought stood out differently from the 2024 report was just that some really large AAA developers are starting to like enter

the space from a modding perspective. You know, uh Hogwarts Legacy was one uh modding through mod.io, I believe. The other one was uh Hogwarts uh Baldur's Gate, or sorry, maybe Baldur's Gate was mod.io and Hogwarts Legacy was Overwolf, but in any case, uh these are some really large games that are um starting to, you know, want to benefit from UGC and extending the life of those games through the creativity of their players and and of creators. So, I think that was uh one big difference and one thing that we sort of had predicted from the last uh last report. The things that really seemed to stay similar for me were Roblox had a really strong year. They had 2020 uh they had 24% uh bookings growth year-over-year, 21% DAU growth year-over-year. And then on the Fortnite side, you know, we saw that they had something along the lines of like 15% DAU growth on the Fortnite Creative. And but I think a lot

of that is attributable to the long tail of the Big Bang event in December 2023 that they're benefiting from, so not really really an in- indication of anything that they did successfully in 2024. And also, you know, keep in mind that's also that that's their first-party event, right? And so, when I look at it all up, I think Fortnite continues to sort of be uh having some middling results in terms of being able to deliver on the promise of UGC through their increased engagement payouts. Um but they but but but they reported $350 million in engagement-based payouts, which is a ton of money, especially given uh you know, the results that we're seeing. Yeah, I remember seeing the report, too, that it was like kind of outsized for Fortnite per individual creator versus Roblox parts because you've got a much smaller pool of creators where it's like it looks like you're hardly getting anything on average as a creator in Roblox, but that's just because that's

on average, right? Because there's so many creators versus a lot fewer in Fortnite creative and you're talking about like there's it's not like a smaller growth perhaps in Fortnite. Yeah, I think that's an an interesting point to touch on. I think one of Roblox's advantages is that a lot of those creators are kids or young adults who don't have expectations of making money versus Fortnite creative, if you're making a map in Fortnite creative, you're probably like a you know, at youngest you're a you know, older teenager. But often times you're no you're you have a another full-time job or you want to make this a full-time job. And so the expectations of of being able to earn a living on the platform are much higher on the Fortnite side and you know, I was at GDC 2 weeks ago talking with Fortnite creators and I think the the sentiment from from many who I spoke to was like it's it's they're struggling to get by even more so than they were before uh creator economy 2.0. Obviously, these

are sort of OG creators. Right. But um but yeah, they're they're you know, because so many creators have entered the space, 70,000 I think was the reported number from Epic. Uh versus 12 and 1/2 thousand the year before. Uh you know, it's it's become so competitive that even now they're you know, the the original creators had had less money from a for for the ecosystem, but were able to make uh more than they can now. I mean, it's interesting, too, given the the two different business models. But, you brought up something that uh that just made me think back to the report in terms of something that I'd noticed that was kind of interesting is I you know, there was a discussion of ages. Uh you know, you're talking about Fortnite generally being an older demographic, and I just always felt like, you know, Roblox was still just staying at like the grade school level, but it was it was surprising to me to see the graph of Fortnite the Roblox players aging up. But, not just as individual people growing up with the platform, but older people coming in a bit more in terms of like it was higher

than you'd see from just people aging up. So, when you're you know, I I imagine you've talked to some of the people in person as well. What are you seeing in terms of like the age demographics and that sort of Is it Are people overlapping? Do Do Roblox players also play Fortnite? That sort of That demographic seems really interesting, I think, to dig into. Yeah, so there's a there's a sizable overlap between Roblox and Fortnite. Um you know, there I think there's probably that that 14- to 18-year-old teenager demographic that's doing both. I think a lot of the reason why uh you know a lot of a lot of what Roblox serves for kids is an alternative to Fortnite because their parents won't let them play Fortnite, but then they go and they play, you know, FPS games in Roblox, and their parents have no idea. Um so, there's definitely some overlap, but but Roblox is just so big that uh there's obviously not you know, I think it I think the overlap is like 30% according to Ampere

Analysis. Um which is large overlap, but it's not everything, right? So, um there's definitely there's definitely some some elements of that. Nice. I mean, obviously um you're you're big on Roblox, but I'm kind of curious what other platforms and it could be totally outside of you know, UEFN and and Roblox altogether. What other platforms are you kind of bullish on or that you find really interesting or think have an interesting potential future? I know you mentioned some of the mod platforms, things like that. Where's kind of your interest lying or excitement outside of those main two maybe? Yeah, I think GTA is going to be an interesting one. I I think people are hyping it up a little bit more than what it what it actually will be just knowing how difficult it is to introduce UGC tools having watched, you know, Fortnite struggle with it. Uh I think they're going to, you know, take a marginal improvement approach, not a completely completely revamp it. What it is today is is basically people using this um this server SDK provided by FiveM to

basically spin up these individual servers that they host themselves. And so, there's not the same dis- scalability through discovery like you see on on Roblox and Fortnite. Basically, the way that these communities operate is they they go from from one server to the next as a collective. Like, these are people that that they've gotten to know online. And when they leave a server, like, everybody leaves a server and moves to a different server to try out that server. Um and so, it's a just a different ecosystem, but it will be interesting to see, given, you know, GTA scale, it will be interesting to see, you know, what are the elements that they decide to include in GTA 6 role-playing versus GTA 5 and how they make the on-ramp into being a creator a little bit easier uh and also uh the on-ramp for a player easier as well. Yeah, it'll be interesting to watch. I mean, obviously, there's a lot of hype around that. And we'll we'll get to talking about GTA 6, I think, a little

bit uh further on as well. But, just because that's I I wanted to say the elephant in the room, but you know, there's a million elephants in this room, I think, at this point. It's become a very interesting space. Uh one of the things you mentioned was the difficulty in putting these platforms together, trying to build them over time. Roblox has had what, I think, over a decade of building this stuff up. I mean Yeah, it it it took them a bit of work to get there, right? And I think a lot of people kind of see the success now forget how long the road was there. I mean, I guess surviving during all that was probably the the tricky part, right? When How do you like the network effect is just massive now getting to that, but they it took them forever to get there and building up that critical mass is even going to be harder to try and build up that that sort of critical mass with a group that keeps aging out in the early days at least, probably. I mean, now maybe they're retaining a bit more, but I got to imagine earlier it was like they'd kind of just age out and do something else. Um but especially around Fortnite, uh but including Roblox as well, which is it sounds like from the report has also been doing a a great job of addressing a lot of of issues. But I'm just kind of

curious in general between these two platforms and over the last year especially, um what do you see in terms of like have they been able to address a lot of the shortcomings where whether that be from tooling or community response or managing discovery, there's a lot of different areas, but like how do you see that progressing over the last year and and maybe even into this year? Yeah, so I can start with Roblox and then and then go to Fortnite. Um so on the Roblox side, I it's hard to describe these things as shortcomings, but maybe we call them areas for improvement. Uh so so what they said that they were focused on this year what or what drove a lot of their their success from a DAU perspective being up 24 uh percent year over year uh was sort of improvements to search and discovery. So um basically the ability for for better recommendations to be made to players and also for, you know, more uh more content to be discovered uh which benefits creators. Uh they talked about a virtual marketplace. Um so, you know, the ability for anybody to be a UGC creator.

These are the the cosmetics that can be taken from experience to experience. Uh and and then also some other things around, you know, new monetization stuff. Uh price optimization, so like they'll tell you like what you should price your in-game cosmetics at based off of your like your um your uh sales numbers. And then, you know, they made improvements to app performance, so fewer crashes, quicker speed to change games. And then live ops, they've been having these events, which is sort of like taking a page out of Fortnite's book, which is I think is interesting. Um so, the two bits that I think are are most uh impactful for Roblox were search and discovery and in-app performance. And I'll tell you why. So, on the search and discovery side, uh what that enables is for creators who may not otherwise be discovered to, you know, for to be discovered, their content to be discovered. It allows for new play styles to be to emerge on the

platform. That innovation, you know, facilitates new games breaking out uh and and going viral, you know, cuz when you have a new when you have a new play pattern, you know, there's a lot more interest and a lot more uh distance that players can go in those in those games before that they sort of exhaust it. And that's what we saw through some big breakout hits with Rivals and Dress to Impress. These were like new play patterns that people hadn't experienced before that they were really excited about and that ended up driving DAU in Q3 of 2024. You can see there's a significant uptick that's driven by these new games that that came out and went viral. So, I think that's the that's like a really critical component to to their success. And then, the reason why I think app performance is so important is because uh the ability to change games rapidly also facilitates the the discovery of new content, right? Fortnite has this problem where it takes like 3 minutes to get from one game to the next, which

is super high barrier to trying new content. And so, as a player, you're you're you're probably not going to you're way less likely to discover new content and for those innovative games to really bubble through and and be successful. So, I think that Roblox's uh ability to change games within 8 seconds I I I did a post timing basically like the speed to enter a game on Roblox versus the App Store versus Steam. And uh Roblox is like 8 seconds, the App Store is like 20 seconds, and then Steam is like 31 seconds or something like that. So, anyways, they're they have this massive innovation, which is like the ability to seamlessly go from one game to the next, and that's what's driving a lot of discovery as well um because players are trying out eight you know, can try out eight different games in a in a single play session. So, uh they've you know, the fact that they were able to make headway on all of those things has has I think contributed a lot to that 24% uh increase in bookings and 21% in in DAU growth.

Um so, yeah, well, that sort of brings me to the Fortnite side, right? So, Fortnite has a few problems right now. Uh I think the the first is that the tooling is still sort of limited. Like the types of content you can make uh are pretty constrained. Even though they introduced uh you know, data permanence in the last year, which was really important cuz now you can ac- there's actually a reason to come back to a game cuz you your data is stored, which is kind of mind-blowing, but it's a long road uh as I've as I've written about previously. Um and so, you know, they still have a long way to go before they're enabling the variety of content that that Roblox enables. Basically, on Roblox, you can make any game imaginable. Uh on Fortnite, it's still pretty constrained to these like short uh short sort of uh progression system games. And so, that's definitely going to hamstring them in the in the long-term goal of like bringing in a larger

audience and and giving people of all sorts of of uh of demographics something to play. The second thing I would say is that uh the engagement-based payout system that they have is fairly limiting in in Epic's ability to identify what content is really compelling to players, right? Because like if you think about what are the like if you're an if you're an algorithm, like what are the key features that you'd be looking at on a game to decide whether or not it's high quality or not? It's probably going to be retention and monetization, right? Session length is a little can be a little bit misleading because people can take advantage of that and have all sorts of like um sort of AFK features, away from keyboard features that are just artificially extending the play time. Um so you so really retention and and monetization are are the key key uh levers that you can look at for whether a game is compelling or not. And so then they've taken out monetization. So now

that you've just got retention but then on the retention side like you don't have a lot of you don't have easy access to communities like you do on on Roblox via Discord, right? Discord is not widely used by the the Fortnite community. Um just to give you a a stat there like the top the top uh Fortnite creator has a Discord of 77,000 uh players. And so that's Good Gamers, the boy Dilly's company. Uh just Blocks Fruits for point of reference has 2 million players in its Discord. And so you can kind of get a sense of the scale of of community engagement that can occur on on Roblox, which is a key part of driving retention, versus Fortnite. So so again, so like going back to the discovery bit of we've we can't do monetization because if we're we're just sort of ruling it out de facto. And then retention is not really something that you see a lot

a lot of of activity on on on Fortnite. It's just not something that happens both because you can't have long-term progression currently and secondly because there's not easy access to community engagement tools. So, there's a very you have a very limited scope of data that the algorithm can rely on in order to you know surface high-quality content. And as a result, what you see is very few new games breaking through on Fortnite. And and just to give you some data on on that. So, for Roblox, five out of the top 10 games in March were made in the last year. Right? Or actually last 18 months. Five out of the top 10 games in March were made in the last 18 months. For Fortnite, zero out of the top 10 games were made in the last 18 months.

And so, that kind of gives you a sense of whether or not new content is being discovered and in breaking through and becoming popular. And that's really important for the reasons I previously described, which are A, that it drives engagement and monetization for the platform at large when they have new content that people are playing. And Roblox even stated this in their in their Q3 investor letter that basically what they see is when people play new games, they spend more and they they play more and they spend more. Right? So, so yeah, so so they they aren't able to capture that that additional monetization and engagement that comes from new content. And then secondly, when creators are looking at the space, you know, when when creators are looking at creator exchange.io to see like which games are breaking through, you know, when they see, "Oh, there's five games that have broken through in the last 18 months to be top earning games." That tells them like, "Oh, I

could do that." Right? Like, there is an opportunity for me to to reach that potential. That's a That's a signal to them that they should be creating. That they can make a lot of money if they if they make a really good game. Uh and then secondly, it's a signal to And so so when you have more competition coming in, when you have people excited to make games that are going to that are going to be innovative and potentially replace the existing incumbents, the incumbents then need to reinvest in in live ops and making their games even better. And so there's a sort of virtuous cycle that happens when you have a very competitive environment that all of the creators are putting their money that they've earned from the platform back into the platform. And that's something you see on Roblox, but not so much on Fortnite. And and you know, I had uh uh Chad Mustard on the podcast and he basically stated like, "It's kind of frustrating when you see someone who's, you know, making $10 million a year, but not pushing any new updates or not really contributing to the the ecosystem." And uh that can be really

sort of discouraging for an entire creator base when when that's the case. Well, one of the interesting things that's different then I guess about the Fortnite model is that because they're monetizing through just retention, which isn't happening, and they can't actually monetize directly in the game. So this sounds like a situation where they're not really incentivized to update, especially if people aren't really coming back most of the time. The just the monetization model sounds like it it skews that reinvestment like mentality. Yeah, I mean creators are are, you know, doing their best, right? They're They're invested in the platform. They're going to do whatever it takes to try to make their game as successful as possible. They put a lot of hard work into getting the game out in the first place. And then they're going to push updates until, you know, eventually they give up. So it's not necessarily that they're not going to do it. It's more that uh just the incentive structure where um you know, if you're if you're unable to monetize, then you're basically just building games that are driving long play sessions,

which sort of you know, it it it puts the type of game that you can make be successful on the platform in a box. You're not going to see a lot of niche content being successful. On Roblox, you know, there's there's a game uh that's like it's called Fight in the School, and it's like the top 35 earning game, and then it's like the top 120 uh engaging game, right? So, this is a game that only has like 6,000 CCU in it, but it's making a few million dollars a year, right? Which is very high monetization. Now, if that game were on Fortnite, it probably wouldn't even, you know, you know, it would probably be dead in a few weeks, right? And so, that monetization is is a way to identify whether there's a smaller user base that is having a high degree of uh of engagement or fun uh that's driving spend or retention, right? So, it's it's more around the ability to allow for different types of content to be successful on the platform, and showing the creators that

it is actually successful, right? You know, the creator of that game is he may No, he's probably happy with 6,000 CCU. Let's be real, but but like he's also like, "Oh, I can you know, get more engineers to work on this. I should keep working on this rather than building a new game." And I think that's that's the problem with Fortnite right now is like you have to make content that the existing audience is ready to engage in, which sort of stifles innovation. I'm looking forward to kids building out live ops teams for the Roblox games. Like learning that early cuz you maybe they could send some of uh some of the WB execs' kids over to to Roblox to learn that. Dude, it is uh it's happening, man. There's some really sharp kids who are making a lot of money uh on the platform and they're savvy. They're they're able to find contractors through Discord and and bring people in when their game starts to gain traction like Yeah. Fantastic. Like a lot of kids just learning to be little entrepreneurs, which of course Roblox is, you know, touted for a long time as something they feel like they're empowering kids in.

But one thing you mentioned around Fortnite, I thought that interesting based off of, you know, some of the ways they changed and this was in the covered in the report of it as well, the monetization model. You're talking about, you know, the not a lot of, you know, metrics coming from retention, not no metrics coming from monetization. And it sounded like like Fortnite or Epic in this case was looking at actually not even either of those two. It's how many new players do you bring into the game? Cuz they care about this using this as a growth engine for Fortnite, which doesn't super really align with creators the way a lot of the other metrics kind of did. Do you think that's also potentially hampering some of this that like these creators are like, "I'm not going to go out to YouTube and bring people in like you're supposed to give people to me from your game and then I keep them entertained for you." Yeah. I think I think that it makes sense because ultimately that's what Fortnite wants is for new players to come in. I think that it gets it's a little bit fuzzy because they're not transparent about how much money you're actually going to make for bringing those new players in. And if you're going to bring new players in, you know, that's basically marketing spend. And then the thing about sort of

UGC platforms, at least today, is that if you bring players in, then you're sharing those players across the rest of the platform. So you're basically like acquiring a player but then sharing the revenue from that player across many different games. Um and Roblox had this initiative they announced at RDC this year, which I think is sort of a step in the right direction, which is that if you bring a new player in, then you capture 50% of the revenue that that player generates over, I think, a 6-to-12-month period. I can't remember exactly what it was. But that basically says like, "Look, if you if you spend money to bring in a player to your game, we'll also give you the money that they generate on other games." Which is I I I think a really smart move. Um I know I haven't heard any creators talking about like, "Oh, I'm making so much money now because I'm like bringing in new players." But, I think at least like being transparent about what exactly you're getting when you bring in new players is important because ultimately, when

you're doing you know, a ROAS calculation, you need to know what the return is. Right. Yeah, exactly. Well, kids the kids definitely learning about that, you know, that whole that whole business model, their cash flow model, and Robux. Yeah, be interesting to see. Uh in terms of like monetization, more maybe on on the business side of things from, you know, both Epic and Roblox, there's been, you know, looks like some shift in how Roblox thinks about advertising and brand integration. And that also goes to creators, right? With integrating brands into uh you know, different you know, creations, different games, and things like that. Like, what do you think overall of that the whole platform? I mean, just the the platform in general, especially Roblox, as a as a platform for businesses coming in to either advertise or integrate into like brand experiences, whether those be integrated into existing games or their own stand-alones. That whole sort of movement, and I know that's something you've you've explored a bit yourself. Yeah, so I guess the early in the early

days, the way to advertise on Roblox was through uh building a branded experience. And uh over time, that sort of you know, Roblox did a lot of hand-holding and a lot of incentives to people to brands who did their own branded experience that enabled them to artificially get engagement. Over time, they sort of removed that advantage that they had given to brands. And as a result, branded experiences have basically like been ghost towns for the last 2 years or so. Uh and and and so, you know, one of the things that they were promising brands and have been promising for a while is like other ways to advertise to to players beyond branded experiences. The way that uh brands have been sort of uh you you know, able to reach players at scale so so far has been through brand integrations, which is like you find uh experience that already has a really large audience and you like you know, do an integration where like I

don't know if it's a if it's a role-playing game, you might and you're Coca-Cola, you might say like, "Oh, we're going to put like Coca-Cola vending machines in the role-playing game." And that might be your way of doing an activation and then you pay the creator, you know, $20,000 to $100,000 to have those Coca-Cola vending machines in there for a month or, you know, two months. And because the scale of these Roblox games is so massive, uh you know, this is probably the biggest marketing arbitrage opportunity there is right now. Um because Roblox hasn't figured out how to to effectively monetize all those eyeballs and creators are going from having no ad revenue to having some ad revenue. And so, they're you know, the the the prices are definitely going up as people are catching on and and creators are becoming more sophisticated about what the value of their player base is, but still there's so many there's so many games that have, you know,

10 million D or 1 to 10 million DAUs that like you can still reach just an absolute massive audience for a fairly low price in these games. And so, that continues to still be an opportunity for brands I think is under under appreciated. I think people are just not comfortable because it's a little bit harder to measure like engagement. But um but that's that I think there's no doubt that that leaned in engagement of gaming is far superior than a YouTube passive passive ad that, you know, people stop watching the second that it goes to an ad or or just waiting for it to end. So, I think the quality of engagement, the the cost, you know, the CPMs on it are absurdly low. I I calculated it. So, I think YouTube is somewhere between like 10 cents and 3 cents CPM and then Roblox is like 1.5 cents CPM. Uh for some of these, you know, top games to to to do an integration in. So,

yeah, essentially it's like a better form of of brand engagement and it's cheaper as well on Roblox at the moment. So, sounds like the power's more actually in the creator's side than Roblox's side if Roblox can't get advertising working in a way that they could directly monetize, you know, themselves and maybe kick down a little bit to the creator as opposed to creators themselves getting paid on this. Cuz right now, you know, creator payouts are pretty much directly through Roblox to the you know, that percentage of Robux that they get and get that cut. Whereas if they're working with a with, you know, a brand, they could be getting paid directly by that brand integrating into the experience that they're monetizing through Roblox. And then they get money from both sides without having to like funnel it through Roblox first. I mean, that's my understanding, right? That sounds like that's a great opportunity for creators as opposed to a great opportunity for Roblox. Yeah, yeah. So, they do circumvent the the um the Roblox fee as well. And obviously Roblox is trying to capture this, you right? Cuz they need to show to investors that this is an advertising platform that they're generating revenue off of it. So much so that like Roblox

has actually like stepped in. So, so before, like the company that I used to work at SuperSocial would would work with brands directly to build these these Roblox experiences, right? Roblox now has stepped in to be an intermediary, which is something that these third parties were providing before. I think that market is probably like a you know 80 million to a hundred million dollar market that they're sort of stepping into. And and that's because they're so desperate to show to to to to investors that they're generating advertising revenue that they're basically like all right, we're just going to do the job of these third-party agencies slash brand studios. Um in the meantime, they're also trying to build out these different ad units. The most recent one they announced was rewarded video ads, which I think is you know, that's a really interesting one. Creators I've talked to are are are excited about this as well. I think it just makes a lot more sense because you

know, when you're playing a game, you want you want to gain currency and like usually you have to pay for that currency or you have to pay for that reward. But guess what? Like if you watch this 30-second video, you can get it for free, right? So like that makes sense to to creators and I think it's something that would been missing in in Roblox's previous miss, which was uh immersive ads where you could just like put portals in games and hope that people walk through them and like go to a different experience, which made That doesn't sound like a great alignment with the game because they're they're leaving your game temporarily at least, right? It didn't make sense for anyone. Like the the player's confused because they're like, well, I was just in this other experience and now I'm like completely in this new context. I don't get what's going on. And it's a crappy branded experience, by the way. Uh so it's not good for players, not good for creators cuz it's taking players away from your game and disrupting their engagement in the existing game. It's not good for brands because players get into that new experience and then they're like, oh, I'm leaving this immediately. Which tanks which tanks the metrics on that game, so it'll never get into organic discovery. Uh never never scale in terms of its

player base. Uh and then, you know, so like it's a lose-lose-lose across the board. Player, brand, uh creator. Like nobody nobody gets anything. But with this new model, players are getting rewarded for with currency or some other cosmetic reward. The brand is getting someone to look at their video for 30 seconds and then, you know, there's some positive affinity with the reward that they're getting as a result of watching that brand. Uh and the creator's making money. So, and Roblox makes money, too. Right. I'm curious though like how that works out for the creator in the sense that they now have to integrate that sort of concept into the game design a little bit, right? Because if it's rewarded, you have to design that reward into the game's economy and things like that of I can't just be like I'll just slap it in and I have to you know, consider now people can Am I limiting how many times people could do that? Um what what size, you know, reward am I giving them? And then also, am I hurting my own cannibalizing my own monetization because people could do that instead of spending money. And I'd imagine the payout's going to be much lower than

what you'd get from a like a direct in-app purchase, right? With with Robux. Yeah, I I think that this is going to be it's a tactical question for the creator, right? Like you might If you have like an RPG game, like the game that I mentioned before, like if you're monetizing at that rate where you're, you know, making uh an you know, an uh ARPDAU of like, you know, two plus Robux, then you shouldn't probably do that. But if you're one of the lower monetizing experiences like an Obby or like a I don't know, like these kid younger kids games that are on there, like those kids aren't I guess you can't advertise to under 13, so you're sort of in a tough spot. But like All right, let's say you're in like a low monetize you have like a low monetizing uh uh demographic, right? Like let's say a lot of, you know, Philip Philippine users are playing your game for whatever reason. Like that's the perfect opportunity to to do it because you wouldn't necessarily expect them to monetize anyways. Are there situations also where it's

mostly younger audience playing is that is it then okay to uh monetize through brand like when it comes to rather than advertising using brand integration, you know, of where you're throwing in machines in that, is that okay for when you're dealing with a, you know, under 13 audience? What do you mean by is that okay? Like Meaning like, you know, you're not having to deal with the COPPA killing you at that point basically in terms of, you know, if you can't advertise to like period to people under 13, then your situation will you just if that's a large part of your audience, you just can't do it. Whereas if if you're allowed basically, you know, without dealing with any kind of problems afterwards to just do the brand integration instead, that seems like that would be a high potential with so many potentially under 13 players in the game. Yeah. I mean, I think that's more of a that's a it's a gray area and it's on a case-by-case basis by the brand. Like I'll I can tell you like when I was at SuperSocial, we had one brand that wanted us to make the brand invisible for all under 13 players. Um and which, you know, you can do

technically and we did. And then we had others that didn't have an issue with it being visible to all players. So, it just depends on the partner and I think from a legal perspective it's sort of a gray area that I'm sure a lot of parents are, you know, up in arms about. Yeah. Uh I mean, on the topic of all the advertisation brand integration stuff like that, um is there anything you've seen on the the Fortnite side of things? I mean, obviously there was the big integration of like, you know, Teenage Mutant Ninja Turtles and stuff like that, but that was a top-down integration from, you know, Epic's side bringing that in and then allowing creators to participate in some of that. Um but are there creators then bringing stuff in? I I know there's only like some limitations on what you can create yourself, right? I'm not too familiar with the current state of what that's like, but what what does that look like in the Fortnite space? It's kind of It's basically the same, uh although it's basically the same from a branded experience perspective and brand integration perspective, you know. You can You can build your own Fortnite experience and pay somebody to to build

that for you. Uh you can also bring a a into an existing Fortnite experience. I know uh Berto, who I've had on the podcast, uh who's a you know, a top 20 Fortnite creator, uh he's had many brands coming through his game mini game box PvP. Um so, you can do both. Again, integrations are always the way to go. People are already playing these games. If you can figure out a way to like um you know, a tasteful way to include the brand in the overall experience, it doesn't impact engagement for the game itself and and then the brand gets all of these, you know, highly engaged players. So, I think that's always the best way to approach it is just to work with creators and ideally work as close to the actual creator as possible cuz there's a lot of middlemen in the space. Um the on the sort of programmatic advertising side, which is like what Roblox is really bullish on and and

driving at right now, I think Tim Sweeney's been pretty vocal about like he doesn't want ads in games and so I don't think that's that's ever going to be a path. Although, you know, again, there's there's so many ways in which uh you know, Fortnite is being hamstrung by by the sort of uh the the constructs of what is uh you know, what is right from the from the founder's perspective in terms of monetization, in terms of ads. These are all things that would be generating revenue for creators that uh they're not they're not allowed to do and they don't have plans to do. I mean, do you see also any issues with that? Let's say if they were to allow ads or if we're just talking about brand integrations with the content itself in terms of, you know, uh Roblox is not a game, it's just a platform for games and there's whatever on there. And because of that, it actually trends away from uh as much overt violence, right? There's a lot of role playing, there's a lot of stuff like that. Even the violence is very like beyond cartoonish down the bar. It's like, you know, ridiculously low

poly, silly looking, doesn't even look like violence almost uh kind of thing. Whereas Fortnite is very explicitly a game of shooting and killing each other. Uh you know, maybe it's not gory bloody, but it is definitely a violent game. And most of the experiences tend to be something revolving around that. There's not huge amount of And not that there isn't a growing percentage of it and there's good some good detail in the report talking about some of that growing out a little bit, but overall it still seems to be huge amount of gravity towards the shooty killy experience. In the in the in its different iterations, um do you see that as a problematic space then for brands because like not every brand is going to do very well. So, it's like a a different problem than the under 13 problem, right? It's like the over 13 problem, I guess. Yeah, I I I will So, yeah, just they That was one of Fortnite's wins, I think, was like they they said that 30% of Fortnite creative engagement was in non-shooting experiences, which suggests that there are new types of players coming to the ecosystem, which is great. I think that's a that's

a big win for them and I'm not going to diminish that. Um the um the thing about the question around shooting, I think, is more of a uh public perception thing, right? There's plenty of super violent games in Roblox. Uh and you know, now that they have their sort of mature um uh age ratings that they can put on things, you know, you've got some really gory games too on the platform that uh particularly in the RPG genre, like, you know, there's this game right now um that is yeah, just incredibly gory and is doing quite well. Um so yeah, so I think that it's really just about public perception, which is obviously very important. Uh lot of brands don't want to do Fortnite because it's shooting, right? But it It you know, there's way to ways to have games on Fortnite that aren't shooting shooter games at this point. And

conversely on Roblox, there's plenty of violent games. It's just that people don't necessarily think of Roblox as a violent place. Right. Public association, whether or not they've there's exceptions, generally people don't know about that. And I kind of said this at the beginning is like one of the things that has you know, one of Roblox's uh uh sort of secrets that they've benefited from is the idea that it's not a place for first-person shooter games. So, all the kids who want to play Fortnite that their parents don't let them, they just go to they just go to uh Roblox to play it. So much so there's actually like there's actually like 10,000 CCU 10 to 20,000 CCU uh in Fortnite replica games on on Roblox. So, it's like actually like a full on Roblox The Roblox replica games in Fortnite, right? I think we've seen a little bit of that. Uh well, sure, yeah. So, like re re reinventing like the Brookhaven's and the and the murder mysteries and yeah, yeah, you definitely see sort of taking

the play pattern and bringing it bringing it over, yeah. I'll be interested to see that that sort of demographic spread and like I mean, on that topic it's kind of funny we got like, you know, the the younger age and then sort of like teens into young adults potentially. And then GTA, right? The the big one that's like, this is definitely a mature game and and like one that, you know, kids probably shouldn't be playing uh and that sort of thing. As a UGC platform then it it you know, I kind of want to just talk a little bit about that sort of impact of Let's say it does release this year. I'm always a little bit skeptical of them hitting any kind of real you know, release date and including for the UGC, right? Like let's say it does come out, but the UGC stuff is, you know, a year out from that because they're like, hey, we can't prioritize that. We got to get this game out. Um those kinds of situations. Uh But in general, this this sort of impact, right? You've got this higher on the age demographic spectrum, but it's got a huge built-in audience and brand. It's not like Fortnite where it came in and built its brand from that singular game and Roblox having, you know, as you said, 20 plus years. GTA has also a long history, but it's it's building off of

this brand. Like, what do you think the impact looks like? Like I said before, I think GTA's, you know, been a little bit overhyped uh so far. Uh I I just as you sort of inferred on on that question, like you the main priority is getting out a game that is like fun, free of bugs, all these things. And as anybody who's worked in the industry knows, like the closer you get to launch, uh the the more things get get sort of scrapped from the scope. So, like it's really hard to prioritize UGC when, you know, the majority of the success is contingent on making a really fun and and compelling game first, and then you can add the UGC to sort of prolong the life of the game. But, like if you don't make a good game, then there's no reason to have UGC tools cuz nobody's playing it anyways. So, you really have to prioritize making a really high-quality game and and I'm sure Rockstar knows that. And as a result, I'm sure the UGC team over there

is like just scr- being very scrappy and trying to get whatever resources they can dedicated to to the platform side of things, and I just think like, you know, that's that's going to always be a struggle for them, and I'm sure they're doing great work, but realistically, it's probably going to be some incremental innovation off of what already exists in the 5M ecosystem where, you know, they maybe make it slightly easier to be able to engage with with the RP side of things and find different servers to go into, but I don't think they're going to have like massive innovation in terms of discovery, in terms of ability to try out new experiences, um and certainly probably not on the tooling side. I don't think they're going to they're definitely not going to be investing in like creator tools to make it easier for people to to make mods and stuff. think it's just going to depend on the sort of the mod scene and mostly just kind of launching with the role-playing stuff that they've acquired to

demonstrate out, you know, other experiences, expanding the game, and see how long that can kind of coast them while they work on, you know, DLC type content, you know, the live ops, the heists, the things that they did. You know what, I'm not sure what they'll do in terms I don't know if they'll do heists anymore, but that that sort of idea that they're going to be focused on that for most of their extension as opposed to like, well, let's kind of see how this RP thing does. Let's see if we can kind of let it sort of organically grow, maybe throw mod people a bone, things like that. I think the biggest the the uh the the biggest win that Rockstar is looking for right now is to effectively convert all of those GTA 5 RP players to GTA 6. That is sort of like that's what success looks like for them. What they're going to do to make that happen, whether it's like making it easy to port the the the servers over to GTA 6 or giving some sort of monetary incentive is unclear, but like I just mean from a technical perspective, like they're not they're not going to be able

to bring put the amount of investment that Fortnite has put into to UEFN or or Roblox has has done for their entire 20 years that they've been building that platform. I mean, I guess you know, let's say the game's a huge massive success and makes, you know, tons and tons of money. Do you think they can, you know, use that money not necessarily ramp up hiring, but maybe to acquire some talent or things like that to be able to sort of speed I mean, they already did that to an extent, right, by acquiring some of the role-playing servers. Can they sort of buy their way into making some of that work so they don't have to focus on it themselves, and they can continue to focus on developing the content that they monetize? Yeah, there is that there is that article, I can't remember who who wrote it, but that apparently Rockstar had been talking to Roblox and UEFN creators about coming over to their ecosystem. Um and yeah, of course like in UGC talent is the scarce resource for sure. And so you'll always see different platforms talking to the successful

creators in other platforms and trying to convince them to come over and build something great. So I don't think that like you know, that'll that'll always be there, but I think that ultimately like they're they need to prioritize making the game and getting it out when it makes sense for the from a market perspective as opposed to you know, being able to dedicate too many resources to building the next Roblox through GTA. It's just not Especially given the current market, right? Where it's like if you could be a success as a triple-A right now, that's that's already a good start given Yeah. I think a lot of people are going you know, they I like my biggest critique of Fortnite isn't that they're building a UGC ecosystem or how slow it's going. Like those are all things that are just I think first of all, I think it's the right move strategically to build the UGC ecosystem. My biggest critique is that they spent they they five acts or six acts the payouts to creators before they had given them the tools to actually make different content. And so so for

for Fortnite, they've now spent, you know, 700 million dollars to acquire like seven K or 70 K creators, which is like a thousand dollars per creator, which is like crazy high uh cost of acquisition of a creator. And you know, to the point I made earlier, it's like but there's no new games in the top 10. Like there's there's nothing that is really driving value for Epic Games at this moment based off of that 700 million dollar investment. So if we're looking at it, we're taking that lens to GTA, it's like that that whole ecosystem has driven a ton of revenue because people are buying GTA games paying like you know $50 to $70 in order to play GTA role-playing. And that's why they allowed that separate ecosystem to exist even though they weren't monetizing it. So now you know there's this opportunity that they can maybe monetize that a bit more if they if they own it. Um and then secondly uh there's the

the uh you know desire to port all of those all of those creators all of those players from GTA 5 to GTA 6. The I think the biggest mistake that they could make is to sort of do what Epic did which is like go all in on this thing before they were ready. If they if they think of GTA is like a 50-year franchise they can just sort of incrementally add these tools in without sort of dedicating too many resources to it without sort of you know disappointing creators uh and so it makes a lot more sense for them to just slowly add you know features that solve sort of the biggest pain points versus just like you know go all in like like Epic did. Yeah, I wonder if Epic was just thinking well by doing this we we make a big splash get people excited about the idea hopefully bring in players as well as creators but also get creators that are top talent and want to push things and then we can see which way they want to push and try and respond. I'm just guessing it maybe what their mentality might have been around that like let's

let's take this money it's not going to directly work but it'll like help give us feedback or something like that. Yeah, I think there maybe and this is we're all this is all speculation at this point. But my my sense is that there is maybe too much pressure or fear of like public backlash if they didn't give a high enough percentage to creators. So they are looking at like okay well Roblox gives 25% or 20 I mean ultimately it's 21% of revenue to its creators. And then, I think Minecraft gives something I think it's like 50%. I I'm honestly I don't really follow the Minecraft ecosystem. So, I don't actually know ironically even though I'm at Microsoft. Um And And so, they're you know, they're thinking like what's a what's better than Roblox? Uh so, they will throw out this 40% number, you know. Right. And uh yeah, I think that was sort of the

the key mistake is like they were thinking about what's going to look better versus what's actually What is this going to cost and how long is it going to take us to actually reap the benefits of that? If they had just If they had If they just included the tools and not done anything to the to the uh to the uh engagement-based payouts, like you would have probably seen a similar result. Yeah. Right? Like there would be fewer creators to be to be clear. Yeah. But like all the All these creators right now are basically making the same games over and over again because that's all they That's all they can do with the current tool set. So. Yeah, makes me wonder if they just not overly incentivized it and just kept it as like a mod toolkit at first where it's like you could do this for fun. We're not like trying to pay this out yet. We're just building it up for you and we're going to spend money like building it, but we're not like really going to give out money till we feel like comfortable with that. I could see that being a valid strategy. Yeah. You obviously want to build with with your user base like actively, right? I think that's like a key part of success particularly in

games is like as you build something out, you want to constantly be getting feedback, which is the benefit of having this economy right now. But I don't think it needed to be that much money. And you know, those resources could have gone to more developers to maybe help them build the tooling out faster. Um you know, they had those layoffs in 2023 that were sort of correlated with the UEFN launch. So, like you know, there were serious consequences to that misstep, I believe. Hopefully those people can find a place. Maybe they'll find it over at GTA. But uh you Certainly not a great job market right now. No, definitely not. I mean, hopefully there's definitely some room for the growth growth opportunity for these people. And I mean, on that topic itself, actually, uh my I guess my last question for you is in terms of, you know, we have Roblox clearly dominating the market. UEFN being at least doing what they can to be, you know, a close competitor. GTA, it sounds like, you know, from your perspective, is probably not looking to

be a big competitor anytime in the near future. Uh unless, you know, it just happens to launch with just the right thing. Um is there space in this space for more people? I mean, you mentioned at the beginning like, you know, in this covered in the report a bit about mods and stuff like that. Is there room in this in this space in general for more platforms? I know network effect is obviously a big part of it. And you know, you can't It's hard to compete with 20 years of Roblox. But do you think there's like a finan- or either financial or just even attention uh distribution enough to be able to survive in the in the sort of competitive landscape right now? Yeah, I mean, there I don't think that anyone who's taking the same approach that Roblox and Fortnite have taken uh is going to be able to be successful. As I mentioned, like, talent is is certainly is a big scarce resource here. Um and that talent's going to gravitate to either the platforms they're already on or the platforms where they have the

greatest potential to succeed. And that just is really hard to to do if you're an upstart. Like, I think Jordan mentioned Highrise in the in the uh report. Right. The sneaky one. Yeah, I've heard like there's a lot of hype about I have actually not really checked it out myself. But like, he said that there were that they paid out $444,000 to 5,000 creators. I mean it's crazy. It's just no money. That's not Yeah. That's not no money at all. So, that's not going to really like they might I don't know if Highrise is like a really compelling user experience and like in fun game like great ad UGC tools on top of it and and then extend the life like a like a typical, you know, mod scenario. So, you think it makes more sense than to look maybe if if anyone's looking to expand in the space, they're looking at it more as a as a mod extension of an existing successful game maybe then rather like technically more of the Fortnite strategy than the Roblox strategy.

Yeah, I mean I mean I think more of the like Baldur's Gate uh Hogwarts Legacy strategy where build a build a really big game that's successful and then figure out UGC modding tools using, you know, the third-party SDKs of mod.io or Overwolf to make it easy to for creators to come on board and then extend the life of that of that game by adding like new interesting content What about like Bethesda's approach then cuz they've definitely had their they've been big on modding tools for a long time and I believe they have a program now where people could sell mods again. Like a a bit a bit of time has has passed since that whole backlash on Steam where they I think they have a a plan now. I haven't looked into the recent implementation of it but I know they were doing something around allowing monetization of content. As a as a studio of Microsoft, I am not going to comment on that. Fair fair enough point. I didn't think about it that way but I I'd be interested to see where that goes. I know there were like I think Starfield had their stuff released recently. I'm

not expecting you to comment on that but I'm just as a side note, I think they're they're continuing to push in that space. Yeah, no. I was just going to say where that goes. At a high level, people are recognizing that that that if it can be easier to integrate UGC into into games that it it's definitely worthwhile especially if you have a a really large audience. It's that's the key bit is like, do you have an existing large audience? If so, then it makes sense to to have UGC because, you know, that content can be distributed across that large audience and there's more money for different creators to make. Well, I hope that I mean I hope that happens cuz I I think I'm a big fan of mods myself, you know, like we need like the the early Doom mod days and the Half-Life 1 mod days and stuff like that to sort of bring some of that fun back even if it's not monetized. I know monetization helps motivate people, but we we just need those tools in general and if that's the way to motivate creators to you know, the the game developers to build those tools, awesome. Yeah. But uh I so so final final question, what are you looking forward to in the next state of UGC report to you know, to have

happen between now and then to be talking about to be excited about? Whether whether it's realistic or not, you know, what are you hoping to see going forward between this report and next report to be talking about then? Yeah, so I mean I'm my my primary focus is on the Roblox side at the moment, so it's it's going to be, you know, stuff on the Roblox side. Um I think that the there's two kind of things. I think M&A is a really exciting area right now on Roblox and then AI and I think they're actually connected. So So and actually it's also goes back to your previous question about like what could upend the current power dynamics? I think AI is definitely something uh that you know, it's hard to predict how it will change the uh creator's ability to make content, how it will change the dynamics of of these platforms that have, you know, these massive network effects. But if you have like AI agents producing content instead, like maybe you can just, you know, replace all of the creators

instantaneously and then, you know, have a competitive platform. So I think that like if there is going to be someone to to to upend the existing structure, it will be someone who finds a way to leverage AI to sort of you know, supercharge those network effects or surpass the network effects that Roblox has has established. The the reason why I think this is really interesting from uh from uh uh Roblox and M&A perspective is that basically the reason why creators have started turning to to acquisitions rather than building net new experiences because it's there's so many experiences made on a year-to-year basis, right? 20 million experiences, I think was the latest was the most recent report uh in the New York Times that that Roblox gave on how many experiences are created every year. So, there's 20 million experiences created every year by 5 million creators. Like, the probability that any one creator is

going to have a breakout hit is basically zero, right? So, it makes a lot more sense for you as a creator to go and acquire something that already has traction and then, you know, make it better. You know, if you're a sophisticated creator, that's probably the route that you want to take. But with AI, it's like okay. So, Roblox's vision with AI is is to basically make it so that anybody can be a creator. Okay, so, you know, now we're going to have 100 million creators producing billions of experiences every year. And in that scenario, it just becomes even more more, you know, uh competitive and and saturated. So, I think like what is what sort of the acquisitions uh phenomenon that we're currently seeing and we've seen some pretty big acquisitions, right? Brookhaven was acquired by was for a lot of money. Uh you know, I'm hearing, you know, five to six x revenue multiple. Um

and so, basically uh what that what sort what what that's a function of is this idea that like creators and and actually I uh when I was talking with with um uh Sergey on the on the previous podcast, he brought this up. Which is that uh creators like don't necessarily want to always be building from scratch, right? They want to evolve on on things that already exist, which is sort of what modding is, right? Like Right. I mean, just build a new game. They want to add little parts and and new pieces of content to it something exists. And I think that's sort of where I could see this all going is is rather than everybody having to build something new from scratch, they're able to sort of collaborate on a massive scale to make these games better and better and better rapidly. So, when a single piece of content starts to take off, let's say, you know, it gets to 10,000 CCU, that initial creator can bring in

additional creators pretty seamlessly to add in things and and make it better and and then allow it to sort of reach its full potential. And that's how I think I see these these ecosystems operating and and that would all be enabled by AI and then maybe long-term you all of the creators disappear and the AI's just doing that and you know, It's creating for us all day long. we don't have to think about that. Yeah. Probably not by the next state of the UGC report. I don't think any of anything that I just said in the last 1 minute is not going to be in the state of the UGC report. doesn't say. I do think that we will see some even bigger acquisitions than than Brookhaven. So, I I would I would definitely I definitely believe that there's a lot more money entering the space. People are taking notice at the revenue multiples, the margins, and the size of revenue that people are making. Uh so, I expect uh it will only heat up from here. Yeah. Especially given the risk right now in entering any market in games. Well, everything else is shrinking. Roblox is

growing 20 plus percent year over year. the rest of the games world. And 20% is is a lot, right? That's 24% year over year increases. It's doubling every 3 years. So, like you know, I don't think that the creator base is growing that fast. So, there's definitely more money being available as a participant in the ecosystem than before. I'm giving away my alpha, but whatever. We'll do it for the pod. Steal it. Yeah. Exactly. The for the Naavik. Cool. Well, I I want to thank you so much for coming on. I I really appreciate it. I you've got a wealth of knowledge in this space and and hopefully people that are interested in in finding out more, especially about creator platform and things like that, reach out to you. We'll of course make sure to link to your stuff in the show notes, as well as the state of UGC gaming report will be in there as well. So, you know, who knows, maybe you'll be collaborating on the next one with Jordan or whatever, but I mean, we look forward to your input and I appreciate that you went from being interested in the space to sharing what you were so

excited and interested about because it definitely was needed at the time and continues to be needed. So, thanks thanks for all that. And thank of course to listeners for for sticking around for what was hopefully an insightful conversation, uh which now you've got to spend the rest of your time going and reading the report if you didn't already. So, uh you just missed the weekend. Make sure to reserve next weekend for that. So, it is it is a good good read good long book, but full of information that is actually actionable and statistics and and things like that as opposed to just uh a fluff piece or something. So, really appreciate that as well from Jordan. So, big shout out to him as well, who was not able to attend, but definitely attended in a very big way here. And thanks everyone and we'll catch you on the next interview, as well as I'm sure David will have some uh coming out in the future as well, potentially. So, make sure that if you didn't already check those out, Got to record later this week. Yeah, already big back catalog of David's stuff if you're if you're suddenly excited about David on Naavik podcast. So, but uh I I you guys enjoyed and catch you guys next time. Thanks. If you enjoyed today's episode, whether

on YouTube or your favorite podcast app, make sure to like, subscribe, comment, or give a five-star review. And if you want to reach out or provide feedback, shoot us a note at [email protected] or find us on Twitter and LinkedIn. Plus, if you want to learn more about what Navic has to offer, make sure to check out our website www.navic.co. There, you can sign up for the number one games industry newsletter, Navic Digest, or contact us to learn about our wide-ranging consulting and advisory services. Again, that is www.navic.co. Thanks for listening, and we'll catch you in the next episode.