TWIG #290 Nintendo's anti-AI Stance, 4-day Work Weeks, and Netflix Games' Clap Back

[Music] well hello everyone welcome to Twig 290 we are distilling all the news or as much as we can this week so that you don't have to We're The Three Musketeers today so we're missing Jen and Eric but with me I have Philip black game Economist at game Economist Consulting bjo you're you're still in Sweden straight from Sweden I got back earlier today okay my heart is still in Italy well certainly my stomach and we have Mishka katof King founder extraordinaire of deconstructor of fun Amigos whoa wow this is is every episode can you show a little Improvement dualingo is just adding word so I'm I'm technically on vacation this

week so uh if anybody's watching the cast I'm not going to apologize for the tank top I am on a vacation so I can wear a tank top I did shave for this one I like how you're like don't don't sweat the tank top look at if you can see the the beautiful view behind Mishka it's a perfectly Blue Sky beautiful Spanish buildings and then you've got us Phil and I kind of like well I'm roasting in Seattle over here in our little offices yeah yeah I mean Spain is undefeated when it comes to weather let's be honest so there's that yes Phil it is it is not compared to Los Angeles no one no one beats la oh well we're talking about Europe because this is honorary European episode we got two of The Californians out we got Phil who's already a European and Laura who's an un honorary European after living many years in Europe and now we can do a cast just focusing on things like now that we don't have the California we talk about

the election we can talk about the elections in UK we can talk about the elections in France let's get French politics geopolitical French politics and UK politics mess boy no I'm just kidding let's not talk about any of those things please I I prepped by only looking at games this week I didn't I only followed very very lightly the BBC in terms of the UK elections well like we did yeah and sorry in the hot SE in Seattle you've got me Laura Toranto senior director of product at Big Fish games all right so we've the I think we've been posting a lot on doof recently there's been a ton of great content Mishka you had an awesome interview with the solsten founders it was awesome interview but it was really really late like we recorded that back during slush in November it was sort of like a an impr promp to podcast I don't know what we were supposed to do I think I was supposed to record a podcast for their soulen and then like you know what let's record one for Doof and then then

I kind of totally forgot about it and then I was getting some uh some updates from Joe and I was like oh wait we have that podcast and that's how it came to be so some of the data that we're talking about especially about certain games is actually not true anymore but other than that I think every everything else kind of stays true we talk about AI we talk about launching games etc etc so it was a fun onsite podcast but we had other really really interesting content we had your piece Laura on the um Royal Kingdom I was always like Royal match Royal Kingdom so you and Amicon wrote a really interesting piece about dream games's new game and then Phil just came with the third 30 days post launch for Squad Busters and that's making rounds right now so a lot of very interesting content for people to read and listen to I I don't know if anyone read the squad Busters piece yet based on some of the com comments we're reading Ju Just to be clear it is not an assessment on Squad Busters as future that's up in the air we don't know that and that's repeated throughout the piece

what we can assess is Squad Busters launch and we can put that into context and we can talk more about the decision to soft launch and that's ultimately what it tries to do is contextualize some of that what went right what went wrong and what do we take away from it those are important things that we can make assessments on there's no nuances when it comes to anything that he post on social media it's like people project everything right away it's like Phil said this game is crap and super super doesn't know what they're doing thought I thought it was really interesting I think it was a really interesting analysis and just behind the scenes like the process that went through it like Phil wrote a really long piece and then he almost changed like what 70% of that that was heartbreaking uh for the for the next week that's a that's a lot of dedication you got some new information you were like you know what I'm just going to change a lot of feedback from the folks so so that was H that was interesting piece and and I think overall when we were talking about Squad Busters I was kind of like analyzing why I was so wrong with this when we did the podcast like we were projecting this

game is going to be a Smash Hit because we have such an appreciation towards supercell or any company that is you know shows longevity shows their ability to ship hits uh has a super talented crew etc etc and then even when they do things that don't make any sense like you're going to skip soft launch are you like this isn't like if any other company would do it we would just laugh like this is crazy and when supercell does it we're like oh okay there must be something something to this this is a new thing that we don't know about it's like no it was a silly decision and but but because we have so much respect toward supercell we're just like doubting even our own understanding of what it takes and how to do it so it's it's fascinating it's fascinating and we we might have a podcast coming too uh it was it was ultimately a marketing story so you know we're going to get some marketers on and we're going to get their point of view um whether or not they agree with the piece so look forward to that in the next coming weeks I think I mentioned the last podcast episode that that somebody might we outat from Netflix and give us a little

bit of a little bit of a context to the stuff that we're talking about and we did get uh a message from their comms team and really it was about three different pieces that that they wanted to clarify so first part was a lot of unconfirmed data that we've been using so I was referencing this CNBC article that was actually two years old and talked that that only 1% of their players were playing those games and that they've spent $50 million on G ta which was a rumor that that that Chris had but those are not confirmed by Netflix the only thing that they have confirmed is that their engagement has tripled year overy year and that their investment in games so far is very small compared to their overall content spend which I believe is 17 billion a year filed holy smok screenman Laura do you do you would you like to go first on this one I would

Channel CR I think I've been a little bit more bullish than bearish on Netflix as a whole what I end up having a lot of questions about is their approach to what games are they making what audience are they trying to make those games for are they taking the right games right IPS and putting them together to attract an audience so I think uh I'm just going to quote mishka's very indepth analysis I think the point that stuck with me we want to have a game on Netflix for every member something for everyone hence the broad portfolio totally understand that agree with that I think my question to them is are they picking the right mix of things are they actually are they creating audiences or are they they create they're basically creating games for zero audience and I think that's where I have a question mark interactive fiction great I think that's perfect I think that that will cover it games for kids perfect they have it they have a lot of families they I'm sure most of their audien is families they have a lot of content for children it makes sense that they want games for that but then I

look at some of their other choices I think some of the stranger things games has have been a question mark in my head because I don't think that's necessarily an audience mashup for some of the The Stranger Things games that's where I I give them a question mark no doubt talented people smart people but is it are they approaching it in a way that's a little bit maybe more methodical and I would just add like all of the pr fluff that was just mentioned in terms of thata is complete nonsense like engagement is up you know tripled year-over-year yeah well like when you know you've got three people playing Netflix games and you you know you you add 10 more people like oh yeah look at look at everything tripled from a low base and of course like the data is unconfirmed who would want to confirm like where Netflix games is which is not in a good place this is smok screen stuff but look it if they want to put out real numbers prove us wrong and I think one of the things that people are starting to point out is that Netflix hasn't done great at distribution of their games and I think that's completely Fair there was a great interview in Mobile gamer. Biz with Leanne who is the head of external games

at Netflix where she talks about ideas like having a QR code at the end of a TV show that you'd be able to take a snapshot of and that would take you to the App Store where you could download the game those are the things that they should have been doing years ago and are still not implemented and this is this is just the confusion Mark is that they're years into this and we still haven't seen the basic things played out um it turns out an Emily and Paris game is coming but it's like Netflix story stuff again it isn't match like a lot of the stuff that is obvious hasn't been tried yet and that's the frustration so let's let's yeah part of the correction was ALS not the correction but the reach out was also the point that we keep mentioning not only we I mean Super pointed out this really clearly as well that FX games lack strategy but Netflix games told us through their communication that what they've said from the beginning was games are meant to be an added value for Netflix membership intentionally not monetized through ads or in a purchases they also mentioned that number two is we want to have a game on Netflix for every member something for everyone hence they have

that broad portfolio and number three was they want these games to be on all devices where Netflix is so that means that they will be on TV and that wasn't a pivot because mobile wasn't doing well which is sort of a what was insinuated in the piece so in short the goal is adding value to Netflix membership and they will do this by offering games without ads and a purchases building a large portfolio variety including games based on their series films and by being in all places where you have Netflix now they refer this as a strategy and I kind of you know we pointed out nicely that that those are goals and they were like no no no this is a strategy and I've actually studied business strategy at University of Manchester so shout out to England that is playing today and shout out to Man City and I kind of go back to you know 300 years ago when I was studying business strategy and the way I understand business strategy or a good business strategy is that it's a plan that outlines how a company will achieve its goals and improve its

competitive position in the market and it's comprised of components like market analysis who are your customers who are your competitors the unique value of the business offering to its customers that differentiates your products and services from the competitors it's your key strength and capabilities they give the business a Competitive Edge measurable strategic goals and objectives Financial models operational plans marketing plans performance met risk management etc etc etc and when you don't have a business strategy and you only have goals we want to be number one you end up with individuals doing seemingly random stuff that often is Loosely tied to the goals that you've set but there's no how you're going to do it so still I would argue that we don't understand the business strategy of Netflix games they're not bad games but how does this make sense what do you think Laura I completely agree what comes to mind is like I know Prest doesn't necessarily agree with the Apple

arcade like as a whole however what I do like about what they did I think a little bit they were hodg podging it to begin with too seeing what worked and then they decided I'm not saying I necessarily agree or disagree with this but they said we're going to focus on family-friendly games and they started doing investments in what was it they started like leaning into Hello Kitty Adventures is it the best strategy maybe maybe not but I do see that as a little bit more focused so they want to be I'm sure they have a similar goal kind of like but at least they picked maybe what their strongest demographic was going to be and decided we're going to look for and make specific games to Target that audience and then what it's helpful that you can yeah you can actually like what you basic yeah what you said it's measurable did we achieve it did we not do we pivot from there do we not so yeah and and with these measurable goals that are part of strategy like I referred to that just in the sense that when we hear interviews and when we talk to people from from Netflix games who are actually creating content and working on it's

it's or even Leanne's interview it's always about like oh we get to do fun stuff that people really enjoy those are not measurable goals per se there's no star ratings or anything it's like you know when we're making games we have certain rois that were're trying to hit with so there was there was other points where they were kind of like not very happy of me comparing Netflix games to Apple arcade I mean it's it's it's not quite apples no apples to oranges in know way but but it is it is a package like apple arcade on its own is arguably a not successful product but Apple arcade as a part of apple one is an added value and so Netflix games as a part of Netflix subscription is an added value but if we're getting into this game of like what is an added value and what should Netflix or apple you know focus on like apple one why it's so awesome is not maybe the the Apple TV or the Apple arcade or the combination of those it's the memory that it's the it's the cloud

that you get from that and if and if Netflix really wants to play the who gets to give the most value they should really open up a cloud you know like give let me put in my photos and videos and and my you know shows and share them between family members like that's a valuable thing then I'm definitely not canceling the subcription ever because I have like you know 100 gigs uploaded into into Netflix Cloud anyways anyways and then the the last point was just about GTA stuff and I I think this was the most accurate this is where I failed when I was looking at the GTA games and there was a rumor that they paid 50 million from it like we don't know about that that was just only a rumor it's actually the definitive edition and when I was talking about this I was talking that that there used to be already these same games and Netflix kind of relaunch them well apparently they relaunched the definitive editions that came in at the same time with $20 per pop so when they were launched you can get them for free with Netflix subscription or you could pay $20 up per game came to download

these games so essentially the way Netflix games saw it is that every Netflix member got a $60 value included with their membership it's like okay well well I guess you can count that out no no that's that's PR I know I know that's of course that is like like not everybody it's it's like if if you put in a movie that I will definitely not watch you can't say that now you gave me like because this movie was so expensive that you're never going to watch you got just like $50 in your Netflix subscriptions like it doesn't that way but anyway it's a fair point I didn't notice that was a remastered version so I kind of went back and I and I was looking at how this Rockstar GTA Definitive Edition did and on consoles The Collection has sold more than 21 million units across digital and physical channels and it was $60 per piece so that's 1.2 billion from those old games wow and on mobile I don't know why I was only able to find the Vice City definitive addition in terms of

revenues for both Apple and Google and all platforms like everybody else was showing kind of like weird Revenue numbers but just on one of these games that was $20 a pop that generated 27 million in net revenues uh according to sensor Tower just selling this game for $20 so Netflix got 65 million installs from those three games and and come to think of it I think take two should have just sold directly on mobile like they would have probably made more money than going through Netflix but I guess in this case they got both right but like in the end like if T 2 would have just launched this without Netflix they would have probably made at least 60 to 70 million right on mobile am I in the B partk fill for a paid game I mean give me a break no well no like Vice City alone Definitive Edition so that you can buy one of these you don't buy them as a bundle you buy them as a piece each of them cost $20 and so Vice City alone Definitive Edition generate $20 7 million in net revenues as a $20

game so you're saying that if the developer sold directly they could take two they could have then just you know Rolling Cash yeah Netflix way overpaid for this T to got a risk-free paycheck and I'm sure this is just a lockout can sell it essentially a minimum guarantee they sell it the App Store like this is great you get to double dip you get to you get to go in on Netflix willing to overpay to establish something and you get to sell it I mean this is this is the dream and you can launch this game on this same day with Netflix putting it on on subscription you could also launch it and get your you know direct revenue from that it was it was weird deal but anyway I'm happy that Netflix is happy with this deal I guess it makes the service much more valuable so oh I wanted to do one correction so that was Netflix correction really long but I wanted to do one more correction actually two more so one was the Daybreak game that we talked about originally they were originally Sony Online Entertainment and did H1Z1 not DayZ as I me mentioned and they also not part of embracer but part

of eg7 and we almost forgot about that consolidator from Sweden and then Singularity six slly got bought from mice nut so this is from uh undisclosed slack dector fund slack Channel member and I'm quoting any Corp Dev or an investment banker will tell you that the CEO of Daybreak is notorious for putting up offers around 100K for m&a transactions that end up selling for tens of millions so apparently the deal size was probably pretty small and then my second correction was the Bandai Namco mobiles bugbuster so that Spanish Studio from Barcelona so I talked about that their game soft launched and it it had 3.3 Stars after four years of develop and I don't know if they spent four years at this particular game but the studio has been live for four years and and to be clear I've made an entire career of building games that are killed in soft so I wasn't saying that hey you launched a game that is not that great in soft trust me been there done that many times and and no matter how hard

you try it's the saddest thing to to build something that never goes you know globally live I was mentioning things like you know soccer tournaments and normal length work dayss with nice lunches and so forth not to make fun of it but but more to say that the original thesis the way I understand a 4-day work week was that if you work 4 days a week they will say that we are more focused because we have a shorter week we work longer days because we're a shorter week and I just mentioned these things that I'm you know that are happening in the studio that they actually work normally just should work four days not not 5 days and my point was not about the talent because I know that this studio has super good people it was more about the implication of the 4-day work week and and I understand why they had originally the 4-day work week because the studio was set up in 20120 and that was the peak time of talent Wars even though they had the superb location of Barcelona even though they had the

reputable brand of band damco you kind of have to take a step more and they probably weren't able to pay those outrageous salaries that that some of these companies were paying at this time so they came up with like hey how about we just we implement this 4-day work week and that that's a major benefit for many very talented people and that resonate really well and they were able to build a super talented Studio but my point really is that that strategy in my opinion is outdated in today's time of profitability and efficiency and I'm I'm not saying that if they would work six days a week you will be a successful game I'm just saying that when you work four days a week and your Rivals work much more like we are in constant communication with the Turks the Israelis the Vietnamese even the Americans they all are outworking Europeans who work five days a week and now you're going to limit yourself to four days a week It's just tough to have this this strategy and and we can kind of see that in the result it's not that you will do better games if you work

less I think you have to work at least as much as your Rivals spoken like a man on vacation in Spain for a month like listen for a month listen I'm not in development but I what I would say is that that when in development you know it's a toughest thing it's like especially when your game hits that skid during the soft launch and trying to solve the problem I'm sure that that the team at supercell working on Squad Busters they're like oh our launch didn't go so well maybe we should go into 4-day work week and really solve this problem it's like most likely they're going to you know work super hard and long hours to turn around this game and and you kind of have to throw a lot of work on it to make it happen so again I'm not using myself as an example of anything I'm just saying I understand the strategy and I'm I don't really believe that a 4-day work week is the optimal solution or the winning strategy in today's I understand why it was in 2020 2021 maybe 2022 early but not today that was my main point the talent the

location the band dynamical team they're all great as an honorary European I like to think of quality of work versus quantity of work and if you have a launch and it's not going well cutting your work week down to 40 probably not the right move but if you're in a little bit more of a stable content generating you're making live Ops you're making new content for your game I would 100% consider it just because I think that extra day promotes rest spending time with your friends and family recharging so you come to work for those four days with a fresher more relaxed mind which I personally think generates better higher quality work my two cents but again I agree that it it is circumstantial it entirely depends on how your studio Works what your studio is doing but I think I drank too much of the European Kool-Aid when I lived there and I I firmly believe in a very good work life balance for generating better quality work I I I mean I agree on on work life balance part just to be clear so I

remember when I when I moved back from us to Europe there was a culture shock of how little the people worked and how proud they were to work so little like meaning that you would come to work at around between 9 and 10 and there was a coffee breaks and this and that and kind of a slow start that was a scrum etc etc and then the whole studio would be empty at 400 p.m. like like crickets and so I'm not saying that that if you work long hours that is the key to success but I'm also saying that that it's not the key success if you work short hours and then there's a balance in between the both like you can work too little and not get anything done and you can work too much where you just burn out and I've you know I've worked with the Chinese companies and the 996s it's just the employee turnover is absolutely insane we're talking about 50% year-over-year employee turnover because people burn out of course that's not unsustainable and that makes no sense but if we say that that 40 hours is the

amount of hours you're expected your employees to work in a week I think you have to keep to that if you cram it into four days like these companies are saying that could work but then again in live Ops and in other phases like like the world works really five days a week and it's kind of hard to play around with a four step into the future of game monetization with exola the premier partner for game developers seeking to expand their reach in Revenue exola provides a robust Suite of tools designed to enhance user acquisition maned subscriptions and streamlined Payment Solutions worldwide unlock new markets and maximize profitability through their customize secure payment architecture and dedicated support team exola powering game developers to achieve Global [Music] success this podcast is brought to you by apps flyer in today's Digital World

understanding your apps Journey from Discovery to download is more than just insightful it's essential enter apps flyer the leader in Mobile attribution and marketing analytics that allows you to measure the full potential of your marketing efforts making every ad dollar work smarter with apps flyer that's your new reality dive deep into Data driven insights that reveal exactly where your users come from and how they'll interact with your app apps lier where your app's potential meets performance I'm going to move to Quick hits and we're going to discuss two American companies that are definitely not working four days a week there was an8 billion doll merger of Sky Dan and paramont that will see the former entity take control of the combined group and the reason I put this in is because it it is slightly relevant to the game industry as Sky Dan is developing a pair of big budget Marvel and Star Wars games and they're going to today promoted its

ability to help paramont make significant Entre into new entertainment verticals then we have the Apple tax so in effect from July 1st Apple will pay their 30% fee to advertisers who boost posts so effectively ads on Facebook and Instagram apps on iOS so this is effectively saying that if you are a small business or an influencer and you want to boost your post for visibility Apple's going to be taking a 30% cut of that and meta on their blog in response to this has been pushing people to be if you're going to be doing boost post to use their desktop app to skirt the fee all right those it for markets Investments and m&a we have a lot of news here yeah a lot of investment news going on here so first one from friends from Kali John pinged me about this so let's give a John a shout out so qu

makes a minority investment into devolver digital and devolver digital is an indie publisher in the UK Stock Exchange so as of today qual holds 3.6% share of the business uh the investment into devolver fits with qu's broader growth strategy to expand Beyond its Heritage in hyper casual Mobile gaming to achieve more balanced growth the minority investment in devolver increases quality's exposure to PC console segment one of its Target verticals kali's own entry into PC console Market is relatively new with its latest launch Robo beat rated overwhelmingly positive on Steam receiving 97% positive reviews and qu has over 10 over 10 promising PC console games in the pipeline so clearly qual moving away from from its roots and uh diversifying its portfolio and not only in terms of like other developers going from hyper casual to hybrid casual but seems like they're going into all

directions there was also a new of them news of them opening up a publishing cooperation in Mina in Saudi Arabia focusing on on different growth markets in in in that sense so platform and Geographic diversification going on other news japan-based video game developer and publisher Capcom has acquired 66% share of Taiwan based Outsourcing tech company minimum Studios for an undisclosed price this acquisition is part of Capcom strategy of selling 100 million game copies annually so buying more manpower there was a finland-based ugc game development platform called bit magic that has raised 4 million in seed funding round the funds will enhance the development of the company's no code game development platform a generative AI to transform textual description into fully interactive multiplayer 3D games along with funding announcement the company disclosed it that it's platform is now freely accessible to the public via

steam play test we're going to talk more about AI in our Nintendo news so I'm not going to comment on this more congratulations to Finland too by the way I mean I I talk about hyp hype a lot which is a game platform I think everyone should be keeping track of which is more ugc hyper casual stuff on mobile this looks more 3D and PC based but one of the things that yoim from Elite game developers wrote a long time ago I think we covered here was just Finland struggling maybe ugc is the kind of the next acclamation effect if they can get bit magic and H highpipe going you know maybe this is the next chapter in Finland growth we we we'll see yeah hype hype is I mean it's been hyped up quite a lot I remember first trying their game that was maybe like almost already three years ago and they're still kind of like you know figuring things out so I'm I'm a little bit less bullish I was super bullish in the beginning I was like oh my God this is like Tik Tok of making games and since then it's been years and

they've raised more funding they grow the team so they're kind of like operating like a bigger company right now there's still no product out it is real it is a fantastic product it it it's real it's out there this team does deliver and the other thing I would note is that Roblox was nothing for 10 years it was nothing it was taking VC round after VC round had zero traction building platforms takes a lot of time particularly with ugc it takes time to build assets it takes time to get the creat tools right takes time to get player like the symbolic relationship between players wall it's and mization it's very hard to get this flywheel going it takes a lot of capital too but I think it perfectly aligns with VC style outcomes yeah because it's like nothing or huge yep that makes sense all right uh well talking about huge San Francisco based volley raises 55 million in series C apparently there is still game development in the city so so volley games are built on a proprietary stack

integrating four rapidly evolving AI Technologies speech recognition natural language processing LM powerered content generation and speech synthesis it was founded in 2018 popular volley games include Jeopardy Wheel of Fortune 20 questions and Who Wants To Be A Millionaire these sounds very familiar the games are available on Smart speakers like Alexa fire Roku and mobile devices so again this is uh light speed steel so they have Mor has been on this one so I trust it makes sense but when I hear that that we're talking you know all this AI talk but in the end these are games on Alexa I would love to hear morewitz talk more about what he sees as the thesis and vo based games how does mon like there just there's so many question marks that doesn't mean there aren't reasonable answers doesn't mean there isn't a strategy there but I would love to understand more what he sees as the thesis here so the Alexa games are not bad you can play them while cooking and I believe when we play I play the Alexa one where it's like guess the name of the song and you go head-to-head with

someone else it was like guess the song if you want more songs buy additional content packs via voice the game was via voice I'm sure you have to buy the content packs like it'd be easier on iOS I don't or actually Alexa has a touchcreen you immediately got a funnel there that you got to imag that that just says drop off to me like that that's some of the stuff that I struggle with seeing on how this is going to be solved maybe it's improved this is a while ago they are kind of fun you know somebody said once the podcast don't make any sense and look at that actually they do so so we don't know but on the face value this doesn't make any sense and it might be the biggest thing ever so what do we know but this one uh doesn't make sense uh and that is us-based web 3 games company azro game has raised $32.6 million in funding round from undisclosed investors so let's let's get let's get deep into the crazy Zone here so their total funding at the moment is 57. $6 million a16z has led previous two rounds

10 million in 2022 so this is not like an old company 2022 10 then 2023 rolls around they're giving another 15 and now 2024 they're giving like they just double up every year anyways I would really understand nevertheless why this investment was made it's very simple I I can tell you it right now it's because it's the team behind Capital games which is the ones that made Star Wars of Galaxy I mean that that's it no no no that is how you make maybe the two previous rounds of Investments which is already putting it at 25 million but now 2 years later they need more money so they spent what 20 23 million well let's say they spent 20 million in 2 years as a startup that sounds like an insanely High burn rate I checked out on LinkedIn it Associates 71 people to them on LinkedIn but part of them are investors let's say they have anywhere between you know 50 to 60 employees and and of course this is a web 3 game

that's why I'm covering this and I like whenever I just read this I feel like somebody's getting Bamboozled and I don't think it's the creators or the holders of whatever nft is being made I think it's those who are putting money into this I could be most likely I'm totally wrong but nevertheless 57.6 million and you just you know pouring more money because they have that team but there's still no product out there's still no traction it just it's it sounds sounds it sounds crazy well let's talk about bamboozling one more thing infinite reality the company working on metaverse like Technologies has raised $350 million to acquire a Roblox game developer landall for $450 million doll the deal shows Financial velocity of infinite reality and the financial velocity that they've gathered so that their value is $5.1 billion and the company focused on immersive platform and Enterprise service Technologies so far this year

New York based infinite reality has spent more than $800 million in stock on previous acquisition including the purchase of drone Racing League 250 million ethereal engine for 75 million action faith for 10 million and Stakes for 8 million so infinite reality is on a shopping spree building the fullon metaverse yeah I guess the full-on metaverse I do say I don't know if describing landolt as a Roblox developers is quite appropriate here because $450 million for a Roblox developer you know even if it's not in cash even if it's in you know performance pays whatever it may be would be I mean that'd be insane that' absolutely nuts um they have a technology play they made Roblox games beforehand but but they're technology play they they have much broader Ambitions Roblox I think is just a testing platform for the broader technology Ambitions that's how I Lal started as a tech platform and then they pivoted or started making Roblox games and then

they were acquired so there is that technology because it's not I think the company was started in 2018 nevertheless $450 million it is an interestingly High that's a lot of money and it's not cash it's it's not cash I mean that's that's clearly a vanity number similar to the voodoo acquisition but still even that for for this company is crazy however the real breakdown was Phil they raised 350 million so let's say is million well I mean they could just be buying the balance sheet too you know could be could be a lot of money so you know congratulations to lvol and infinite reality with a $5 billion valuation so I guess they're doing a lot of things right I hope this valuation holds and grows that's it all right putting on my Crest hat layoffs Employments and closures coming with the good news courtesy of NE long from mobile gamer DPP is Monopoly go creator scopely has appointed Mike severs as its new senior vice president of technology

and he's worked in similar positions at Yuga Labs epic games and WR games and then tactile games has hired Jacob Krueger as their CMO he's worked he came from fun plus and from what I remember they've been looking to fill this role for a while so congrats to Jacob and tactile this podcast is brought to you by heroic Labs you've heard of heroic Labs by now and we keep talking about them because in today's mature Market you need every Edge to be successful rather than spending those precious company dollars on building game Tech focus on building your game and shipping it get it into your player hands faster and grow your community heroic Labs is a battle tested partner and friend of the podcast their Tech enables you to be flexible creative and scale for Success heroic Labs has your teex app covered whether you're looking for a world class back-end server an amazing game development framework fantastic liveops tooling or reliable Mass scalability

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first game we should talk about is something that you had picked up Laura and we're going to be talking about a lot today toune blast's Revenue has been seeing an optic recently so I had a little look and I was my first question is always like why what are they what are they doing because this game has been out for what seven years six years now and looking at game Refinery new live Ops were added so they basically added something called Dragon's treasure which is social wi streak it's the same thing as Royal matches lava Quest style event that released kind of end of December so matches when we started to see that and then what they've also been doing it looks like it's mostly content updates and live Ops and they also took if you play gossip Harbor they have Coconut's treasure with a cat you make merges and the cat Rises and that's how you get prizes is it's basically a reward progression they've implemented that as well so my guess is it's content and new live op I mean this is a wild increase Laura this is almost a doubling of Revenue

since it looks like last July looks like probably probably the end of the year probably October September 2023 they start to see just this huge increase and they've maintained it ever sense going from it looks like around $400,000 a day to around $700,000 a day I mean wow and there hasn't been a corresponding increase in downloads either so it doesn't look like there's a huge UA push either this is this is Straight Cash Money Baby they had like a couple modest spikes and downloads but nothing that that suggested a major UA campaign if any okay open this up if anyone knows why if it's not the content the live Ops or anything else they've been adding please let us know I'm very curious next thing on the docket has been the launch of a zenist Zone zero which is affectionately labeled zzz and it looks like this one might be put out to pasture let's see it's been 3 days since its launch we know that downloads have crossed 50 million that is been reported by Hoover verse which is really interesting because it also gives us a

benchmark to look at how sensor Tower isn't able to cover a lot of Chinese numbers so we'll be able to do a deeper analysis on this one we need probably another week but so far the returns do not look great in terms of Revenue when we compet against both honkai star Rail and genin impact at least just on mobile and remember these are multiplatform releases it looks pretty abysmal it looks like it's doing about a third of where genin was and and it looks like it's 30 to 40% down from where genin launched and it looks like it's probably doing a fourth of where honai star rail was when it launched so not not a great outcome and again like this kind of shows that pre-registration numbers are basically worthless you can't really rely on them it it looks like it's becoming a vanity metric I mean 50 50 million downloads did not translate to a lot of active users and it doesn't look like it translated to a lot of Revenue either I mean the the the only star Mark I think you can put here is that you know this is an action RPG you you know maybe this plays better on Console maybe we're seeing more console Revenue here

but I don't know that sounds that sounds like a grab at straws here okay so I played a little bit of it I can't comment I'm still too early and I got very distracted by the next game we're going to mention I thought it played well first impressions it played well I made Mark play it he liked it I do think yeah I'm with you let's give it another week or two and then we can dig more into it and compare the console versions to the mobile versions but first impressions were not bad and we got to talk about anization with these franchises well I mean that's always that's always been the narrative I'm I'm a little bit more skeptical but I'm sure Eric will have a interesting point of view here I think Eric's gonna say cannibalization but let's see let's see next up hex aort I don't know is this is this the lur episode oh yeah sorry Crest is gone so I'm like throwing mice nuts and puzzle games in this left and right so you know how I heard about this game my friend's daughter was like Laura you're in games right I said yeah she's like I've been playing this game Non-Stop and I downloaded it I was like oh okay this is interesting I don't really like you know hybrid hyper hyper casual

inspired games that are now hybrid casual ads heavy are not my jam I thought I was going to enjoy time blast more I actually couldn't put this game down and so I had a quick look I've never watched so many ads before and I was shocked at how I thought it was doing quite well for a mixed monetization model so so far the game's been live maybe 7even eight months they've made $8 million in Revenue in Western countries last June was one was a very big month at 1.3 million so it's about just under 100K a day in I AP and then the estimated like Dow is about 350,000 Felix from Two and a Half Gamers was kind enough to give an estimation of what their admon would be because again this game has ads everywhere they have interstitial they have Banner static Banner they have rewarded video my napkin math I was like oh maybe 50% of total revenue but his more sophisticated formula clocked it at closer to 65% so

the estimation was they're earning about 166,000 per day in inapp ads on top of the just under 100K per day in IAP honestly like I don't I don't know if I can say the game is very enticing very enticing I think the some the level the levels are so well designed I think the ad integration complements it's a little it's a little aggressive but it's it does very well very well thought out in terms of putting ads for things you need in level basically they've done it for like the EGP the endgame purchase equivalent extra board Space daily rewards I could not put this game down I was yeah I really liked it so I've been playing this game ever since Istanbul and I remember I got introduced to a bunch of these so we were taking a long and dangerous ride as as every every car drive in this tumble is it's a life or death and I was sitting with a bunch of developers out of cypress and and there were a lot of casual developers and they

introduced me to a bunch of these games and they were talking about these puzzle hybrid casual games and hexas sword was one of them so I downloaded several and hexas sword is the type of a game that I had played and talked to people and give gave it to people for them to try to play it and everybody has loved it like everybody who tries it not everybody but I would say 90% of the people who tried are absolutely in love it's so fun type of puzzle game and what I think that in terms of the ad monetization the really cool piece is is like they would block an area this is a match three game but basically they would cover a portion of that playable area that you can unlock by watching an ad so it makes your likelihood to to complete a level much higher essentially you have to watch the ad and it makes you feel so good and basically you start a level and you watch like three ads three video ads and then you can just you know give it a proper go because before that you're kind of like at a deficit so as Laura

said I've never watched more ads than playing this game it's thoroughly enjoyable I play it on planes I play it off planes well-designed levels kind of like a new mechanic I like how the tiles kind of you know jump automatically I like that there's that speed element of like almost like Puzzles and Dragons approach like if you're fast enough at placing stuff you're actually going to perform better so there's that skill element in terms of the speed speed of how quickly you drop things on the playable area and then there's the puzzle element of like you thinking ahead of where should I put what even talking about this game makes me want to play this game that's how good this game is so what I don't understand is like the reason I love hyper casual and I've talked about beforehand is because it it tests mechanics so quickly and you you get these sorting mechanics that you're talking about I mean there are a lot of hyper casual games that have used these type of sorting mechanics that are in this game but this one looks like it's pretty stable it looks like it it might be able to do 100 million in the year let's see if it can maintain where it is what I don't understand is why we aren't

seeing some of the bigger players try to out these mechanics and use a lot of their UA expertise and kind of productionize some of this like where is King where is playrix why aren't we seeing them take these ideas which have kind of been tested for them and kind of take them to a new scale like I keep waiting for these games to have a bigger breakthrough and they it never seems to happen and I'm confused about why why that hasn't happened King is I covered this a couple God maybe a couple months ago now what they did was they created kind of a skeleton for a meta and then they started testing different mechanics so they definitely tested a Candy Crush IP themed sorting triple match and a blast they did okay yes they did they did I play I have not seen I mean that's kind of where hybrid is supposed to be right it's it's templating a meta and then kind of dragging and dropping different core experiences into it I'm surprised I haven't seen a bigger player take a swing at this and I'm also surprised that these type of games haven't been able to sustain for longer periods of time like the match economy

is so straightforward as you guys have pointed out like we know what the Playbook is for monetization and more importantly like we know what the Playbook is for Content like you make more levels you do more level design you sell boosters like on game Economist cast I call this the greatest game economy of all time like it's been going for 10 years I'm just surprised that these games haven't broken through into you know the upper echelon of 200 300 you know 500 million a year I I think Phil you're kind of comparing two very different business B it's almost like compar like cheap airlines and expensive Airlines and you're like why can't the expensive Airlines they established do exactly what what you know Southwest or Ryan Air are doing they're just very different model and build differently and so when it comes to these hybrid casual puzzle games if you will they are actually copying each other so hexas sword was inspired by block blast that was a Chinese Studio that made it they were they were raking in like half a million a day with ads and in purchases and that was kind of like the first stab at these puzzles and of course app Lov and others jumped in on this puzzle core

that this is a new thing that we can start exploiting and because they have that hyper casual background that ability to work with multiple Studios take multiple bets move really really fast test marketability find you know the the low cpis monetize through ads they have such a different way of making games monetizing them and growing them that the incumbents that are working in the inapp purchase space are just not equipped and should not be competing against these ones they have just a very very different ways of operating but these hybrid casuals are copying each other left and right I agree I can't imagine like these games there yeah there you need a lot of them because most of them are going to fail and I can't imagine like if you if you're have a more established company you're thinking is my investment going to go into my game that's already making a lot of money and that team could do X Y andz feature that on a very big Revenue number could generate uplift that will probably generate more than a new game so they have to want to do it and then from selfishly I can't imagine having

like 15 ideas that I want to test quickly and having to go through any sort of heavy greenl process for it like yeah that's a lot of lot slides exctly exactly like Laura is like this is what I mean by the ways of operating like think about it like you have to get your Executives like do we want to do this and who's who in the team wants to do it and then you're at wodoo and you work with 100 Studios literally 100 Studios you're like all right uh so let's get these five to crank up a prototyp type A week or every second week and we're going to test them and and we're going to go through it like they're going to they're going to go for the puzzle genre and every week we're going to get prototypes that we can test it's a different business model it's a different business model some news out of Pocket Gamer Biz Rainbow 6 mobile Siege is on pause this has been in soft launch for six months I'm kind of bummed to see this you know ever think since the the failure of really farlight 84 I think from lth games to really scale has some question marks in the mobile firstperson shooter Market I also heard that valerant mobile which I thought was cancelled looks like it still has some

some heartbeats in China so let's see if that one can make it out the door some news from my do games War robots has blastp passed $900 million it is celebrating its 10th anniversary when this game came out I was a doubter you know this was at the Advent of a lot of 3D games on mobile with those dual analog sticks and I really didn't think they would work I mean at the beginning of the App Store we had a bunch of these ports and it was you know hey let's make mobile first experience but this is one of the first ones that really took off and the incredible part we're looking at the revenue graph right now is that this thing consistently makes $6 million a year and it's been doing that since 2018 I I mean that level of consistency is breathtaking it's a this is a super interesting game because it kind of came like it's it's World of Tanks but with a much more Global appeal of Mech if you will tanks are are very popular in Eastern Europe mainly it's Mech Warrior it's the mech Warrior IP that that they didn't move fast enough to do something

like this there's some small things like when you compare to the war gamings economy of that like small additions that they did is very interesting like for example you go into a battle with three mechs so you have to choose your roster and like when one dies you take another in World of Tanks when your tank explodes that's it you can just now watch or just get the hell out of the game so like these small iterations small additions that make this game better monetizing as I said the appeal is different and when I I had these guys on a podcast when they crossed 500 million it was very interesting to hear how when they went into a soft launch they saw absolute dog numbers like we're talking about like day one 18% like just shut it down and their whole approach was like wait a minute let's analyze the data and they saw that there's a small segment that really likes this game and sticks and so they just kind of like you know identified who is really our player and through that soft launch was able to to pinpoint and acquire more of those type of users and that kind of show them the path of where they should be going and really focusing on their players rather than

everybody so so interesting story and seems like they're continuing and they have been doing now a lot of spin-offs for this so when when my games was last time on the podcast they were talking about the Triple A PC console version or was it just a console version that came out and then they also did sort of like a brawl star version of U Mech Warriors for a little bit of a younger audience with with these ones nothing has really stuck quite like so it's interesting how they're going to continue the growth whether they want to do like a relaunch with this with better graphics or so forth so so but yeah looks like like a forever franchise even more shocking is this this launched a whole genre I mean there's a whole genre of War robot battle games now I think plarium has one of these as well like there there's actually a couple of like now War robot games they really found something here yeah vehicular Shooters we have an update from the first descendant this is a game that is from korean-based publisher Nexon it has been

doing fairly well on Steam I ended up you know checking in with it last week it had just launched it looks like it's actually maintaining its PSU which is incredible to see and when you compet against the finals in multiverses which is something that Adam teler suggests this is this is what I'm be doing to to measure a lot of drop offs is you know compet to these two titles not only are the heights of this game higher in terms of PSU but the drop off has not taken a foot yet so it looks like this one is actually growing a little bit they're stacking some diu together that to me is a signal to really take a look at this game so next week we're going to have a little bit more information on this and to Eric's point you know we do have Steam Reviews by language so we can get a better sense of where this game is falling in terms of nationality it's not quite what you get on sensor Tower but we still have a rough idea of how this is breaking down regionally Now's the Time I Think to really check this one out now that it's stacking some users together all right Nintendo PC Gamer picked up a Nintendo investor Q&A and I actually so the the document was in Japanese so I I

translated it not myself I translated how a look there were I mean Japanese is not that good there were 18 questions covering the gamut so it was about accessibility theme parks exchange rate how the yens affecting sales or versus the the dollar etc etc but what was picked up kind of across the board by news outlets was Nintendo's take on AI in just context it was one question of 18 the question was like how do you feel about AI and the response was our company has had the KN how to create optimal gaming experiences for our customers for decades while we are flexible in responding to technological developments we would like to continue to deliver value that is unique to us and cannot be created simply by technology alone in other words they are not interested in using AI to replace their work right now outside ofing I I think I think this requires some clarification I thought this was actually a pretty pretty dishonest headline and Report from PC Gamer the comments were like they were specifically talking about gen AI

they're not talking about AI in general and they actually go into detail and talk about like look at technolog is changing over time we adapt to new tools but right now you know our our superpower is is designed and I don't think we're going to need geni and not only that like Hey we're going to re-evaluate this decision going forward it was a far more nuance and I would argue less ideological view of of what AI is and how they're going to integrate it they they took it as like you know like you know let's not it's not that's fair just like everybody takes everything that is written everything is black and white now you're adding nuances and confusing everybody pH let's go with black and white like I mean the headline was like you know they were drawing a big the biggest games company to draw a line on AI and that's that's not at all what they did so that's the truth but we're going to review it as Nintendo said that they will not use AI yeah that is what the that is what the headlines are picking up that Nintendo is saying no to AI but yes I agree it's that it is much more Nuance than that and okay so as an exercise and

I I agree with those all of those sh all of those those amazing I wonder what AI could do to create Mario elephant Mario from wonders so I prompted it and I said can you create Super Mario win an elephant form using Nintendo style and this is what I got so if if you're listening to like have a quick look at the video it was very interesting and it I was like this just proves my point that you have so much to take into account when you want to make specific characters or specific anything in in game is not just about an art asset it's about what the design does about the product intention is and all of that is kind of combined into what an artist makes and what we see so they they have to put on more than just an art hat I think and so I was like I could understand why Nintendo might be like adopting certain parts of AI more slowly but the first thing this is the first thing that came that came to mind mind oh and I used mid Journey for this those are those are really cool but

yeah it's just an ideation tool just like I use chat GPT before writing anything or just summarizing stuff it's just just for ideation but overall like when we zoom out like the AI has basically two-fold Grand promises number one is it allows smaller teams to execute their unique Creative Vision without being held back by the resource demands so more unique games entering the market that's the promise and large Studios can't afford the risks of making much else than sequels these days so it will make the market bigger and more interesting as these small developers can make bigger games and the second sort of a grand promise is that the large teams can now make more immersive like exponentially more immersive games with no matter whether we're talking about AI NPCs or AI ugc or etc etc now when we think about like who loves AI well of course exacts and investors love AI because you're getting more and better with less so you put in less resour ources you get more and better that's exactly what any executive and

investor is focused on no matter what business they actually work in the founders love AI because you get funded slap an AI on everything if you don't slap an AI on anything then it will ask you what will AI do when AI comes is your business still relevant and then when Nintendo takes this sort of an anti- aai stand which they didn't take but the news reported that they took an anti- aai stand it's almost like the Toyota taking the anti an EV stand which made all the sense by the way when you read it is like why they were anti EV they were just saying that there's not enough resources in the world etc etc it was all logical but nevertheless the market the world said we don't care give us an EV and and pooto being public company ended up making EVs and because they were late they created the shittiest EVS on the market and that's kind of a the situation if the Nintendo would be anti- aai and would not invest anything to it they would be just slate coming in into the market so overall like if this was truth on short term this has positive

effect on Nintendo because Nintendo Fanboys Will Rejoice they are still creating that that handcrafted magic the the good PR will continue because the good PR previously was that they were not laying off people and like the American companies and now they're not using AI which is also the message that we're not going to lay off the artists the designers and anybody you know Juniors Etc and that kind of creates more of that positive news but everyone who who works in games really knows that Nintendo is about as kind as Apple in terms of a partner so there's that but overall kind of like summarizing and going away from from the original point is there's two cases there's the bull case and the bare case for AI now the bull case is that AI will supercharge Indie developers allowing them to challenge large incumbents the triaa developers by removing production constraints you know all but the marketing constraints will remain and then there's the bare case that the market will be flooded with lowquality throwaway games almost like a hyper

casualization of the market this in turn would give more power to Quality developers like Nintendo that hold IPS while killing the Indie scene with a flood of CopyCat products because the moment somebody gets something good ai ugc ai will quickly generate and you'll have a copycat game and they will just outm Market you and so forth so I'm personally inclined to have the same sentiment that Mitch and Blake from gamecraft podcast had which is more on on the bare case and kind of looking at the pitches where everybody's using AI even that that Finnish company that was just you know like hey you can make AI games really quickly with just text and and we can quickly create and that's the whole thing I think that is most dangerous for companies that don't have those same abilities that Nintendo that that core competence of making unique games as well as the IPS and they are the ones that can kind of you know hold back from from AI so that's my point it's been what like a year and a half since chat GDP launched there's still a lot to be settled on on what this piece of technolog is going to do and where

it's going to integrate you know I'm still surprised we haven't seen things like AI generated music like that that to me is one of the big missing pieces I really thought there'd be a lot more AI generated music in fact I hear almost nothing about this I thought we'd see more AI generated novels we haven't seen that yet and again we're like really early into this I just think there's a lot of question marks and everyone's you know right now it's a bunch of it's a bunch of political points it's a bunch of political points technology has always been advancing like you were mentioning earlier like hey look at Executives and VCS love this because you know I insert a dollar and I get more than a dollar out like this has always been what technology does like technology is a labor saving device and like the you know the first piece of technology what is is a poy you know poy system that reduces the amount of Labor you need to till the fields introducing a pla like these are all base forms of technology which are labor saving devices and you know there's this great piece in economics called the candlemakers petition it's satirical piece where they talk about the fact that you know if you were a candlemaker you'd want to blot out the Sun so you

could sell more candles so there's there there's there's always there's always this tension of Technology introducing these labor saving devices and guess what jobs change people change we change Industries we retool that happens all the time there isn't necessarily these huge shifts they've had one of them which is the Industrial Revolution and we got over that pretty quick in terms of retooling so there's just a lot of panic on uncertainty that feels very premature and again like you know we were talking about King using AI beforehand you know with all of these things I would expect that the first time we start to see AI really taking effect should be more content it should be more cosmetics in fortnite it should be more levels in Candy Crush I'm confused on why we haven't seen that yet because I mean I when I worked at dice EA had a almost a research firm called seed which which sat below us in Stockholm you know I I saw the voice generation you know we we signed voice artists for Lifetime rights and we made generative AI voices you know this was way back before chat GDP and I kept wondering like okay well why why isn't this in the engine why is this stuff exist yet animation you know in terms of smoothing the amount of frames you need to be able to animate a

character like there's all these really obvious use cases that I could see in front of me but just don't seem to make it in production and we haven't felt yet so I'd love to just see some of this play out a little bit more for all of us to get a taste of this in production in a game in a creative field before before you know that the Panic sets in so on the Nintendo short-term no AI future is uncertain probably AI thanks all for listening next week we're hopefully going to cover even more puzzle games and I think we'll have the full crew back next week maybe maybe not no see you in August I'm out okay well have a great holiday how about none four Work Week all right take care everyone you did it you made it to the end of the episode as a fan of the show it would help us out if you subscribe and leave us a review on the podcast service of your choice more importantly are you a member of the deconstructor of fund slack group if you have 5 years or more

of games industry experience go to deconstructor of fund.com slack and apply to join join the games industry's best professional Community filled with peers always willing to lend a hand or subscribe to our newsletter to get all the latest insights from the deconstructor of fund content creators thanks for listening