TWiG #291 Valve Salaries, Leaked MiHoYo Strategy, and Failing Disney IPs!

[Music] hello and welcome to this weekend games number 291 where we read and distill all of the weekly game industry news so you don't have to here's what we're talking about today it's a big episode uh a little bit about gen Alpha and gen Z are apparently the saviors for the game industry in the coming years there's some uh data that's coming out that just really supports how these younger gamers are doing nothing but playing games which is great for us as game industry nerds some leaks and reveals for the valve numbers and we're all jealous of their revenue to employee ratio why doesn't Disney mobile crush it in Revenue in games I attempt to answer this question that Phil poses checking in on how Monster Hunter puzzles and some other games are doing Laura actually is going to [ __ ] on some games

games which is I love when she gets spicy so tune in for that and then Xbox hikes game pass price well after their successful summer game showcases which is I think PR Brilliance they got a lot of Kudos and they snuck in some price hikes Cress has thoughts surprisingly so hi I'm Jen donaho strategic marketing consultant at beta hat and Jade Inferno and today we have Philip black game Economist at game Economist Consulting hey hey Eric Crest principal at go CER Consulting Group what's happening folks and Laura Toranto senior director of product at Big Fish Games hello hello all right so first before we get into everything because I've been talking about football congrats to Argentina on winning the Copa America and Messi finally said goodbye sadly he got hurt and that was like a really crappy way to go out but Messi's done with international soccer any anyone watching football any Euro

stuff any reporting dude I watched I watched the Argentina game that was pretty exciting actually Messi got hurt and they still pulled it out all right go Spain I guess go Spain oh jeez I wasn't I didn't watch that one unfortunately yay sporty Ball g all right so Laura maybe you'll like this I'd like to report that this actually yesterday I officially made it to the end game on Royal match I'm at level 8,900 and I'm in the Royal League that endgame thing and uh I I feel like dream should I don't know send me a crown or something and especially because I spent a lot of money on them I have spent so much money on keeping that damn super light ball streak going this is the best feature to ever be created in casual and puzzle the streak mechanic I Laura you're going to talk all about it as a player I paid so much money to keep that streak wa hold on we got to talk about this 8,900 levels so I'm I'm doing some

calculator math right now and so let's say it's 2 minutes a level you're telling me you've spent 296 hours in Royal match how much time do you think you've spent how much money have you spent so I mean I've been playing it for two years I don't know like every day for two years or something like that and money originally I didn't spend that much lately it has become my only game cuz I was trying to focus on doing work and so I I st for games I know I stopped playing gossip Harbor and Travel Town I did I I I know Laura it's crazy um and so all my money has gone into Royal match hundreds of dollars hundreds of dollars that's that's so great to hear thank you thank you for contributing to the ecosystem I know I'm a whale I told you guys this I will pay for convenience if anyone wants to do whale research call me well okay what are you a whale at did you did you are you a Swifty so I

I went to the Aros tour I had to go to the Aros tour my my girlfriend required me I became a Swifty afterwards and ready to come out as a Swifty midnight Above All Else But naturally my first thoughts at the ARs tour turned to monetization and you know she's she's on this billiona billionaires list but there's so much more she could be doing in terms of monetization so I wrote a piece about it like why are you not leaning into eras the merch game sucks like there should be public goods games you go into a coffee shop you can tip Bulbasaur Charmander or Squirtle it's a really fun game to give you agency when you do things like that increases overall tips why isn't there some sort of game where people are like buying things against a certain era and unlocks prizes there's just so much opportunity there Taylor's version should be a brand that's licensed to everyone why isn't she in any games there's just so much she's like leaving on the table since that failed Like Glue social network it just baffles me and I you know call me someone on Taylor's team give me a call I will send out a bracelet I'll do whatever it takes that's all I have to say on the matter I wish you could see crest's face right now everybody can I

Channel my wife for a moment here like why does everything have to be so [ __ ] transactional right why can't you just enjoy it for what it is right why do you have to why that add everything on this thing and maybe I'm completely contradicting everything I've said on this podcast for the last five years but Jesus Christ dude why is it transactional I want to transac like I want more Taylor Swift [ __ ] and all I had is t-shirts and and tote bags are you kidding me I walk away dissatisfied where's my lavender Haze For the Love of the music well yeah but this is this is how I show my love Eric this is how consumers do it transactional exactly you have to spend and show it to show your love I mean I showed up to the concert I I waited in mine I made bracelets there's a lot of ways I showed my love I I traded bracelets with like five different people is that how you propos to your wife you transacted all right moving on all right moving on all right chilling I don't think we have much please sign up for the newsletter and please tell a friend to listen to us that'd be much

appreciated we have a uh Planet play which is sponsored by stash happy hour event at the hundred thieves headquarters so hopefully maybe you'll listen to this by the time if not we'll report on it next week I think there's over a hundred folks coming La is the new destination the new Hub of gaming in California so we're going to see it tomorrow Brett leang is is our host and he sent me a picture of the table of swag just get ready you're gonna you're gonna impress your son you're gonna come home after that comment he's getting [ __ ] all that's all I'm saying he's getting nothing absolutely nothing but yes I'm excited to hang out with Miss Jen in La even though I [ __ ] hate LA and luckily I'm not driving so well and and then I'm going to I'm going to show you the magic of my electric car as well maybe I'll even let you drive it's a BMW all right driving wait hold on a minute driving in LA in an elect car this is

maybe this is going to be torture this is oh no no no no no no I challenge you you're going to do a correction next week on my car BMW I4 M50 in fact let's go and have some other people do corrections and save it for next week all right who's got one I see a bunch in here oh War robots we talked about it uh quick slip of the tongue there it was $6 million per month it's generating according to sensor Tower estimates not per year thanks for the DMs I got on that one I got I got two so yeah it's it makes a lot more money you knew that though right yeah made mistake made mistake yeah there's some vested interests all right Laura I think I heard you guys talking about Tom blast I stopped playing a few months ago and I also saw a lot of people responding to you of like it's what we just talked about the streak the streak of the super disco ball is the reason for the increase maybe yeah so we talked a little bit about Tom blast and why they saw a spike in revenue and I attribute

it to General liveops and I think navic wrote an article that Phil kindly shared that hypothesizes that it's actually due to the super lightning ball or magic disco ball called in this game so I actually went through all of the updates going back through the end of 2023 to present to figure out what went live and what the revenue looked like so there was a chart in the navic arttic article but I made I made my own because I make my own stuff so disco ball went live in September and you can see here if you're watching you do see a little bit of a rise in Baseline revenue and then I also saw they released a progress pack I AP bundle which looks like this that went live shortly afterwards and then you have the two live Ops I mentioned dragon's treasure and Sky Pirates so yes I would say that magic disco ball did play a huge piece in their revenue uptick and what goes live I think in the game in 291 so it is

targeted towards probably mid early midlevel players what the [ __ ] is Magic disco ball in a quick nutshell uh in a quick nutshell so this is this is the feature that Jen likes so much so correct me if I'm wrong you have to trigger it with what you can't fail 10 levels you have a 10 level streak it turns on super lightning ball each game calls it something a little bit different and that doubles the activation power of your color col ctor correct and then I believe there's a leaderboard attached yeah it's a streak boost okay so what's driving success in these casual games right now is you you power up and you win a certain number of levels to activate a streak booster and it means that all of your main boost has like doubled the impact so if once you keep that alive if you lose a level you lose it and so I now spend money to keep the streak alive so that I can plow through s because they have a

leaderboard event that is also streak based if you get to the top of the leaderboard event you have to maintain your streak to get your 100x point boost and so all of it ties together it's not just the fact that that exists that it ties to a reward system with leaderboards is this featured in other games or are they just copying from someone else now they're all copying from each other got all right that makes sense why don't we just say this stuff up front so that we everyone understands that like these are just features that are completely just being duped everywhere and it's really successful cuz right now the only thing that's working in Zing portfolio like really is this game and then um match Factory what about the Harry Potter one I thought the Harry Potter one was always slots po puzzles and spells yeah majority of all their franchises are declining but these guys are just crushing it right now so there is consequences though there are trade-offs to like having this which is that you're going to consume more levels than you might otherwise consume and it is there is the potential that you get to the end of the experience like you have gen and sometimes they build

endgame content for that sometimes they don't but there are consequences to putting more boosts in which is that they consume more content and they get to the Turn Point faster so these things always have a short run Revenue bump I mean look at it looks like this thing has a long it's worth the trade-off but the thing that always baffles my mind is like okay you've added a new level 10 win streak why have these not been optimized to death like why aren't people coming out and testing okay why not do a 20 Level win streak make it even more powerful you know why not continue to push the bar and see where the point of diminishing turns is like that's what I thought king would have done by now or one of these match companies but if if this is this important that graph was crazy Laura that was a crazy bumping revenue from a single feature that they already basic they already have a streak level in the game so I just don't understand why people aren't pushing this to the point of of seeing where it breaks down that's what you should be doing and this game is six years old yeah and the game was in like sequential decline like it was actually not doing well at all they have not increased downloads at all they are just basically monetizing their existing user base which is genius so cool good

for that the only thing I can say fell to your point they could be testing it it's just that those tests may not be proving results but but it took this many years to get to disco ball right streaks are one of the main findings of games right like that's the one thing I think we've really won at D lingo monetized on this I mean we talked about Squad Busters bunch of the gamification stuff is Win streaks like it's loss aversion it's a ton of Behavioral econ stuff I'm just shocked we haven't pushed this button so hard and quicker if it's this important the first wi streak I remember I worked on a wi streak for Farm Heroes and that was back in like 2017 so this is this feature has been around for as long as toune Blast has been out maybe 2018 yeah it's re it's been it's been around a while they did not used to have it so I told you guys I was a massive player of that game maybe up until I don't know four months ago and they didn't have any streak stuff in there up until now I mean that's why it's working is like it didn't exist

what I will say is the level of detail for the streak mechanics has just now found its stride because like I said I think it's because they are adding in leaderboard mechanics tied to the fact that you get it and we saw this in um Busters I first saw it there in a really meaningful way when that game came out and I was like oh look at this streak thing I I hadn't seen that before it was actually before Royal match was really doubling down on it and adding this leaderboard mechanic I feel like you know I think they're both Turkish companies I feel like they stole it from each other I I don't know if that's where it's originated is tying it all into a meta system but that's what I feel like the insight has been recently now everyone's copying just like you know this is what they all do okay all right I just wanted to do a little bit of kind of like highle Market insights newu has released a new wave of the global gamer study data so this is how consumer engage with games today the

2024 Edition so they survey a bunch of people 73,000 people in 36 markets it's a free report go to their website what I wanted to talk about and kind of as a through line through this section is the importance of gen Alpha and gen Z for many of you gen Alpha is like kids under 12 gen Z is that next kind of group up these are our future Gamers you know the children are our future song here because 90% of these two Generations engage with video games in fact gen Alpha enthusiasts spend more time engaging with games than every other media possible they engage with games over social media over watching TV anything this is the first generation to do that and so for us as game makers to know we need to really understand how to cater to that audience so that'll be important in a second but first I wanted to say that Olympics are coming there was was another Olympic announcement the

ioc which is the international Olympic Committee has announced that the first Olympic Esports games will be held in Saudi Arabia in 2025 so the ioc and the national Olympic Committee of Saudi Arabia has entered a 12year partnership and the games will be held at regular inter intervals City and venue have not yet been selected but obviously we know that uh they are pumping a lot of money into it so Crest you're going to love this you love when the Consulting people put out numbers but here it goes in this case it sounds like it might actually fit with the newu data I went back and and compared so this is from the financial Express ban and Company analysts have forecasted that Global Video Gaming revenue will grow from almost 200 billion in 2022 to 307 billion by 2027 so a ker of about 9% as a point of reference nuu says that in 2023 it was

like 184 billion so pretty close to that 199 billion what was kind of interesting about the report is the why and so what they say they think is why is that the growth is being driven by heavy engagement from younger Gamers particularly those aged 13 to 17 who spend 40% more time in video game environments than other forms of media including social media music and TV even more than the Newser report that I just mentioned so if they left it at that I would have been okay but this is the quote from the article the integration of better technology and the development of metaverse environment are revolutionizing how games are developed and play wrong [ __ ] [ __ ] I agree Bane is basically promoting this [ __ ] and and it's all based upon the metaverse nonsense narrative that never worked out and that Matthew ball wrote an entire book and [ __ ] wrote another version of his book in in order to like perpetuate this [ __ ] this metaverse

is not happening right the metaverse is not happening there are gajillion metaverses out there right and so if that's why it's growing at 9% keger right I don't know what the numbers are behind it I'd be happy to read through it and see and call [ __ ] but if the primary growth is out of the metaverse that [ __ ] off right that it's not happening all right it's just not happening just shut the [ __ ] up and move on right but if it's mobile Resurgence or [ __ ] you know increasing in plat forms hell if Microsoft starts keeps doing the subscription ship we're going to be declining dude we are going to be declining our business is declining if that if if Microsoft keeps doing what it's doing if they pull out of this industry game [ __ ] over you know but but the main thesis here is that you're going to have younger cohorts with an increasing time share relative to older cohorts and as we continue to see those cohorts age they'll maintain relatively constant and the new cohorts that continue to come in will have that elevated share and so as a share of the population the amount of people playing games and the amount of hours should go

up that is what I hear this argument as being that to me seems like a reasonable argument I I mean getting from 200 to 300 I mean the thing is like we just don't see it in a lot of the platform metrics though like where is this growth gen we should already be seeing some of the genen Z impact and it looks like we're just flat so that that's the thing I struggle with I I agree with the idea that we're going to have more engagement from this younger audience and how does that translate to the platforms by which things are happening right like whether it's mobile console PC those three right but if you start talking [ __ ] metaverse you don't know what you're talking about right because that's not what people are investing money in right now are not meta there's no metaverse that people are building the shift in Generations is good but like let's see where they're going to put money at where are they going to spend and and yeah and it's certainly not translating now because we're basically Flatline for the last few years right now I agree with both of you I think that is correct all right so Laura Investments m&a what do you got Investments and m&a we've actually quite a bit all right so

Stellar blade studio shiftup is now public successfully got listed on the Korean Stock Exchange and on their first day jumped 18% in trading the initial public the IPO raised about 435 billion W which is about $320 million us largest in the country for a gaming firm in almost three years why why would you do this Eric I don't understand I have no idea what the [ __ ] is going on this is a single Product Company you know remember next said this on the Helsinki Stock Exchange I I don't why wouldn't you rage from Venture why would you list on one of these exchanges I guess it's just access to a pool of capital they I mean you get tons of money you get some liquidity you can get your your people out there's a lot of reasons from a company perspective to do it but this could this is likely going to ultimately end a disaster the stocks already coming down I will say the South Korean exchange is a bit different and

they may be able to hold on a little bit longer because it's pretty closely held you can't short stocks on the Korean exchange right now which is [ __ ] insane by the way it's like through next march or something like that so it's like so maybe there's a there's pipeline that I'm not seeing that they they they're they're really excited about and then they can stack you know just like our friends at Mio right like stacking or not go go ahead all right pixelberry games if if anyone was jumped on the interactive fiction episodes rage way back when they're the developer of choices which I loved I spent a lot of money in that game they've been acquired by AI games developer Series Entertainment for an undisclosed sun pixelberry was acquired by Nexon in 2017 had a quick look choices has made about 300 million to date in IAP I did some napkin math it's an ads heavy game I'd clock it maybe 60 to 80k per day so maybe about 60% of total daily revenue

Felix please correct me if I'm wrong your napkin math is much better than mine look this looks like another fire sale right you know they're running at like 1 million a month it's a non-core asset for Nexon they were they were at like6 million a month 19 to2 obviously this in our purchases and not Felix's advertising yeah I just think they're letting Nexon just letting this thing go and it's probably selling it at you know peanuts compared to where they bought it with the the here is that this new AI game developer will take advantage of their Tech and their experience and their creativity to build something using AI which I think is actually really really interesting and and a good move right generally but I just don't think this game was doing all particularly well anymore and probably the content costs were more expensive than the money it was generating was supposedly was the the fundamental problem with these type of games and that's why AI could actually help alleviate that I 100% agree slay has raised 5 Mill to build its social gaming

platform their current game is is it pronounced penu penu it's like the the mascot for TF I don't know the virtual pets game Laton Ventures was part of this deal and then I'm quite excited about this so Grand games former Zed match devs announced today that it raised 3 million in precede funding and it's going to put it towards what they're currently working on which is Magic sort which I have not stopped playing in 24 hours I'm at level 84 soft launch in June in Canada in the US and then they have car match which is upcoming but I think what their Flagship title is going to be is neither of these two it's a something focused on social interactions slated for 2025 and they're going to use AI yeah I really I'm actually really enjoying magic sort well early bird digital East Fund as well as Leighton were involved in this one so the guys at Leighton are working overtime making Investments go Leon I'm excited for this I think this is going to be an interesting play I think the the growing interest in kind of these

very light casual games like hexa sort with now magic sort will they be the new Match 3 switcher engine probably not but I think they they are definitely scratching an itch that players want for some very very light gaml that's puzzly embracer secures a 600 million euro revolving credit facility I'm praying for the creditors at this point I'm not really sure who would be lending them money at this point I don't understand the credit world and I'm sure they're collateral izing something maybe his Lambo or his [ __ ] organs at this point who the [ __ ] knows right but $600 million again at these interest rates I I need someone to explain to me how this is possible I mean after this absolute debacle I mean like you cannot make more mistakes at running a company and he's still securing funding right how do you with the history go to someone and say can you please sir would you lend me $600 million bil it's a billion [ __ ]

dollars right oh it's EUR and it's euros right so yeah you're Euros I thought it was pounds no it's like 600 you're right it's still 600 but still I mean that's crazy money for someone like you said at these interest rates which is double what it used to be just you know couple you know a year ago anyway oh bracer all right you still give us things to trigger us and thank you for that thank you all right oh this was actually really interesting story and I I have been doing this business for what 25 years and I have have dealt with valve and I have talked about valve a gajillion times and at one point when I was at EA I actually knew a bunch of people at valve because it they were kind of upart right at the time and I can't remember the guy's name but the marketing guy who's been there forever really nice smart guy too by the way and that was the only time I actually got any type of information about what the [ __ ] was going on at valve and that was like 20 years ago right so anyway so information about valve is few and far between at best it's really really hard it's almost Harder Than You Know Rockstar and GTA and stuff so but

there's a leak from this case the wolfire 2021 antitrust case against valve I don't know what the case is about but most favorite Nation Clauses okay so that's why they sued basically monopolis practices so this is really common in antitrust law this is usually one of the things that starts to let's say put smoke in the air the way it works is very similar to how Nations set up most favorite Nation trade Clauses where basically say we automatically get the best still you offer to someone else so if you're a developer and you go to epic games and you say we're going to sell the game for $20 and we'll sell for 40 on Steam steam says no no no no you got to offer US 20 bucks right okay got it okay so information leaked about valve and he said by by 2021 the head count had grown to 336 employees 35 in the admin group 181 in games 79 in Steam and 41 in Hardware in 2021 valve spent almost $450 million in Gross salaries bringing the average annual pay across the company to around 1.32 million per employee obviously where that money is spent is different

but it it clearly shows that the the company people are really well compensated so anyway we finally got some detail on that so again 181 in games that's not a lot of people in games I mean just if you think about it between Counterstrike and sorry what's the other game Dota DOTA I DOTA yeah I think I'm getting old I am having hard times recalling anyway but those two games could take over that many people so as I've said many times these guys are not game developers and likely Outsourcing the majority of it but anyway what do you got wait I have one other point let me just add this for us to talk about valve has always been proud of its efficiency in salaries with another coure document showing that its net income per employee in 2018 it was a while ago was above 780k per year higher than Facebook Apple Google and Amazon yes they mint money absolutely mint money at valve the leaking number was even more interesting because now you

know you you're taking like total gross revenue and dividing it by employees this took the amount of Revenue that they pay to employees so on average an employee is making $1.32 million which is which aligns by the way with people I've talked to at valve and how they're compensated and why people stay there for like 10 15 years okay makes sense I think it's actually I actually think we need to Revis our opinion I I take it back because we've usually agreed on this Eric but I have been thinking more about it they've got deadlock in development which is a great game I got into it this weekend which is a third person MOA they spent too much time in MOBA but you're telling me they can do DOTA which their live serving they just launched csgo they did the VR game for halflife like it's not just a research institution they actually are still making games the problem is the supercell problem right it's that these type of companies the bossless companies there's a great book on this by by fantastic Economist these companies that are bossless have trouble scaling the ones where you have a bunch of autonomy just like supercell they struggle to scale because it requires so much filtering on who the employ are because with great power comes great

responsibility as Netflix is is eager to remind us and Spider-Man so I I think this actually exposes a lot of weakness and how they're organized internally and just this bossless model structure like hierarchy wins the bureaucracy wins this is how you scale organizations I know we like to [ __ ] on it but it's it is the Playbook again I'm not criticizing them I'm saying they're minting money they're paying their employees well like they don't need to do anything differently right they're privately held company they don't need to grow they should scale they they why because they they can first of all they can make more money that's one thing and I think we deserve I mean so much of their money is so much stuff so so much of the gaming is built on valve right like imagine if if valve spent more to improve steam like they've already expanded into the steam deck which has grown the market like I want to see them take more shots on goal all right do more things yeah but I I guess that's what I'm trying to tell people is that that this is not the organization that you think it is that is going to make those type of bets because they don't need to right yeah I I agree they like public markets are

good pressure it feels like they like their focus on what it is that they have and they're not they don't want to take their eye off the ball and when companies do try to scale that's when [ __ ] goes sideways maybe that's what they're trying to say although you're right they have that new hero shooter on Rails Bioshock rails Deb deadlock so I don't know we'll see this podcast is brought to you by sensor Tower sensor tower has acquired mobile analytics company data AI formerly known as we all know in love app Annie four things you should know significant advancement number one this acquisition represents a major step forward for sensor Tower it expands its customer base mobile marketing and app intelligence products and Global presence number two Undisputed leadership position sensor Tower strengthened its position as the leader in digital marketing and mobile app intelligence through this acquisition

number three combined insights this merger with data AI allows sensor Tower to offer customers even stronger and more detailed insights on the Digital customer journey and last consumer Trends with increasing time spent on digital channels the combined company is well positioned to capitalize on the growing trend of inapp purchases driven by platforms like Google meta Tik Tok YouTube Instagram and snap exciting times lie ahead for sensor Tower and data AI as a join forces if you're a customer reach out to your account director for more information not a customer yet no problem schedule a call to explore the Innovative digital marketing products they offer go to data AI or sensor to.com and get on board with undeniably the best data partner in the business 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 into your players hands faster and grow your community heroic Labs is Battle tested partner and friend of the podcast their Tech enables you to be flexible creative and scale for Success heroic Labs has your Tech stack covered whether you're looking for a worldclass backend game server an amazing game development framework Fantastic live Ops tooling or reliable Mass scalability heroic Labs has solutions for all of these challenges and it's not just us a deconstructor of fun praising heroic Labs the company works with some of the world's biggest Publishers on many of the Beloved games focus on your game save a big chunk of cheese and avoid Tech risks with heroic Labs all right let's go into some games what have you been playing updates I have been playing a little bit of the first descendant Eric I don't know if

you got a chance to play this this is the third week we're covering it it's looking good in terms of kpis wait first descended yeah oh yeah I'm playing I've been hearing great things about this dude the reviews are [ __ ] horrific I I don't know Steam Reviews though that but this is just MTX sandbagging by by Major critics who cares it's a freeo playay game they can say whatever they want the player numbers are the real story can you give a summary on the game for the uninformed myself it has a it has a 57 Metacritic which I'm actually a little bit surprised for a free-to-play game it's like what are they bitching about anyway it's a looter shooter it's basically a very very very very loose story at best like the story is [ __ ] stupid that's probably why it's getting panned a little bit but you're basically going from place to place going through all these levels collecting things it's a little bit repetitive in a way but you're just getting weapons and gear and and and it's primarily cosmetic but I imagine the El Elder game is going to be more pay to progress but but it's a

really really well done game from that perspective and I don't know it's it's addicting cuz you just want to get through and level up to 100 I'm really relatively early because I just haven't had time because I've been traveling but like this is the type of game I just absolutely love dude just shoot shoot shoot get better gear shoot shoot shoot get better gear that's it you know end of story but it's really well done for a freeo playay so does this thing sustain it's been pretty good in terms of PSU we're looking on a you know on the video right now it's it's I mean usually you see these things collapse pretty quickly but it hasn't really been the case here yeah I mean I I I think this is the type of game that can capture an audience and keep them I mean yeah like lost AR on on the on the on the chart here like I think it can maintain a certain level of audience for a long period of time if they can keep supplying it with you know content updates and here's the key though the key to me is that they cannot they have to build in some type of progression montiz a mechanic they can't basically base upon this on new characters is the

one way they could do it but also some kind of like monetization around pay to progress or pay to win or pay for upgrades that type of thing similar to what Diablo did so I think that will be key to its longer term monetization and to maintain a long audience but you know we'll see and there's there's another one that's been on the rise called once human it's not it's not a looter shooter but it is developed by netes whereas the first ascendant is developed by Nexon this one one has also been rising up the charts it's on a very similar trajectory to the first ascendant so we'll we'll see how this one continues to perform as well we'll keep track of all these I also use lost Mark lost Arc as a benchmark which has fallen off quite quite a bit from where it launched let's see if these things have legs the most interesting aspect I would argue of these is that they're free to play you know the the revolution rears its head again we're seeing more and more free to play games dominate the charts you know I just say like there's a lot of grow to go around the summer Eric whenever you want to heat on this one one other update I ended up playing

Concord this weekend which is the hero shooter that's out of firewalk I believe it's firewalk correct correct me if from wrong Studios this is a Playstation Studio I had two conflicting reports from from some sources one that suggested that the reason this game was also available for beta on for PlayStation Plus members is that the pre-orders were so bad and I had someone else say well that's just it was an expected IP this is this is what we expected to happen that's not that's not too shocking I had a chance to play it I you know I don't I don't think this game is going to go anywhere in terms of sales the IP is extremely confused I'm not quite sure what the thesis is the next net one we've been talking about the Marvel one makes a lot of sense even though it's third person but I struggle to see yeah I think that one has the potential to have legs you know they are a little bit different third versus first person there are some interesting ideas in conquer but again I just I don't understand where they're going to where they're trying to go with this and I do think that the Box model is appropriate for a game like that make the money and get out yeah I'm confused by Concord as well it feels like Guardians of the Galaxy meet OverWatch

with where they're trying to develop an in a in in a story s pretty good well I mean I the idea sounds good and then like you said however the you know the the I didn't play the beta but I watched you know I watched a lot of the the trailers and it just seems you know one of the challenges that OverWatch had when they announced that they weren't doing PVE was that it's really expensive to tell stories with your Heroes and is Concord going down that path of expensive development that they're not going to have the game to deliver and pay that back that that's kind of how I felt seeing it and OverWatch is not weak right now you know we've been talking a lot sometimes we talk trash about blizzard because I mean they've their headcount just been like leaving in droves by the way no one's talked about dream Haven forever I don't know if there's if anyone's heard if they still have alive I've never you know I've never seen a a billionaire company this quiet but OverWatch is in a good place

in terms of PSU on Steam and we just talked about Diablo which was doing pretty well with their recent update but like it doesn't feel like there's blood in the water for this either yeah all right what else we got so we have another update for Zess Zone zero you know this was the huge launch from hooe it's interesting kind of putting it in perspective right now we're looking at downloads for hoyo versus portfolio and one of the things Ethan posts in the slack chn really challenge me on is last time we talked about it it felt like we were almost describing the game as a failure and I would say there's there's a couple things going on here one of the things we know is that in terms of kpis pretty much across the board when it comes to you know Revenue active users and downloads this game is down from the heights they had both at genin and when they launched honai star rail so that's generally not what you want to see you want to see things hopefully grow I would say the second piece of this is that we know how much money they spend on marketing when it comes to launching these games and it is a pretty penny so

we have some interviews and again it's challenging because we have to translate a lot of things the interviews are in Chinese there's a there's a lot of translation errors that can happen especially around analytics where details actually matter but they were spending what around 200 million potentially for genin during their launch and 100 million on development costs and then we had another update that they may have spent even more money to launch honai star rail potentially upwards of $200 to $300 million just in marketing marketing expenses that that's an insane amount right and we haven't even talked about you know recouping development costs because it's not as though you can just recoup ongoing development costs you know a full p&l even though it's a sun cost would also include the costs they have to develop this thing when it didn't generate Revenue when it was in soft launch so I I think it's a tough story to to see whether or not this game is doing well or doing poorly and the other part is it's hard to get estimates for China when it comes to Android so we we we're getting partial stories uh we don't have console Revenue either this game could have skewed more to the the console side I would say you know in terms of cannibalization which has been another

recurring theme that we continue to talk about when you look at active users it does look like they're growing portfolio active users with each successive title so they launched genin and end up topping out around 15 million active users honkai star rail comes into the picture they bump up to around 20 million active users so they add another 5 million active users and then with Zena Zone zero they're bumping from their Baseline of 20 it looks like 25 let's see if this maintains but they are stacking weekly active users I think the thing you've pointed out Eric which is exactly true if you look at revenue and you try to stack Revenue it does not look like revenue is stacking it looks pretty minuscule in terms of their ability to grow portfolio Revenue but I would still take the active users and when you look at some of the documents they have in terms of their company strategy and again translation matters a lot here they they are trying to build a portfolio here like that is their stated goal they want things to stack over time even if each new item that they stack isn't as large as the thing before so it can be smaller as long as it's growing the portfolio but the revenue

piece needs to come into play here like they do need to grow Revenue at some point to pay back all this money interesting yeah I think it's yeah I think it's a little bit early but my guess is that we're going to see the same kind of result is that Revenue will just make be maintained that these players are moving from one to the other that's why this stacking user thing is a little bit off to me because if that was the case if they were stacking users the way this crap is is IND indicating Revenue should be going up right yeah so one of the things that was interesting on Reddit was an analysis of the release schedule and the way they do releases for all their games is in such a way that you can bounce between the different games when the releases happens I know I I thought that was that was pretty interesting because like the other hypothesis here is like maybe people have a hoyo verse budget and you know you add more things you know that that eat at that budget but the budget doesn't grow that was kind of my gut on that too you can see by the charts that they released this game during the lull of the other two games in terms of introduction of characters or whatever

they're doing from a liveops perspective to increase spend so maybe they're really really kind of like dialing this in but again they're not growing Revenue so that it's not working right although tell me if I'm wrong on that Revenue chart it did look like assuming that the the black was hunky that that Revenue did Stack with honai but it hasn't stacked with zzz Zen Zone am I reading that right so we should be looking at the the the top line so it's cumulatively adds each game together so don't think about the colors think of this all as if it was green and okay there is true there is an upward like if we applied a linear trend line over a certain period this would be upward sloping but it's a very slight upward slope H C certainly not um comparable to the increase we've seen in active users yeah if you look at tier one English countries it's even worse yeah right and and I I would just like emphasize again there's so much we don't have in this chart remember it's just mobile we're

not looking at console or PC where they have direct distribution and we don't know Chinese Android numbers those are all huge variables okay Riot games has announced they've canceled pool party and unannounced Super Smash Brothers style fighting game apparently 70 80 employees were staff on the project a m leag like platform fighter set in the League of Legends universe and apparently it was because multiverses numbers that they decided to cancel this oh my God so uh they've been working on this since I was there so it's been over 3 years that they've been working on on this first of all I'm just baffled as to how this went public I guess it's you know when the team kind of has to get reallocated or is leaving that leaks and I saw that the comms guy actually came out and had to say something about it you know back in the day it was really fun but with multiverses you know the premise was what's the um project L called 2K 2K XL yeah 2K XO so you know you've got a fighting game that's now kind of Co-op

out there you've got multiverses that's you know the original thesis was Smash Brothers meets League IP and they actually were trying to do it on mobile and everyone internally had a lot of good things to say I I think what we're finally seeing is Riot R&D is working on stuff they are going to have hits and misses and you know this one's is a miss and you know perhaps they should have cut it sooner which is something that Riot struggles to do but I I actually like seeing this I like seeing that Riot is taking swings on new stuff with their IP new game announcement Disney Pixel RPG is a new casual RPG from gungho announced for iOS Android due this year Jen Jen I have a problem I I keep seeing all these Disney games I think there's one at glue sourcers Arena there's been like a there was like a there's a bunch of squad RPG ones the Disney brand should be like the most powerful brand in the world and yet every single one of these mobile games

fails ex the speed force or speed speed storm the The Game Loft one is actually out on mobile I think earlier this week we'll have an update next week but by and large these have already these have all been colossal failures what the [ __ ] brh as the kids say these days brh that is a that is a fascinating question so you're allowing me to put my old job hat on as a Disney franchise manager so so here we go I I pulled some sensor Tower numbers for all of the major Disney mobile games from you know like June to June and last 12 months it also reminded me that my wife spent every day for a year playing Disney Magic Kingdom from Game Loft which is the number two kind of top grossing game that they have this is before she learned how to hack or switch and so now she just plays Animal Crossing cuz she unlocks everything and gives it to herself for free so she's actually not gone back to Magic Kingdom but it tells you about the audience 50-year-old woman who loves Disneyland so anyway last year all of

the meaningful Disney mobile game titles only added up to 76 million worldwide and 32 million downloads the biggest game is Disney Emoji blit from Jam City that's at 42 million 3 million downloads in the last 12 months Magic Kingdom was at 16 million for the year and 12 million downloads I think Chris you might actually call that mice nuts right for the Disney IP and if you're paying a 15 to 20% royalty holy [ __ ] is that a difficult business so how can the best brand on the planet not crush it across um all of these genres yeah Laura do you have do you have zoom Tsum in here Disney zoom Tsum for line no oh yeah that one's big that one's big in in Japan that's actually probably their biggest successful title I I think it's their biggest title yeah oh yeah yeah so it didn't pop up when I'm still learning sensor Tower to be honest with you after being a data AI app anny person so I

still stand that's it and that only does well in the East that doesn't do well in the west I mean you should you should definitely at least have multiple hits and a western hit so okay well let me give you my my simple reason and it's a sad reason why this doesn't work which is that the core audience is too young most kids top out of Disney brands at the age of five and listen this is before Marvel and Star Wars I'm going to set them aside because they have their own licensing teams they do their own thing if you think about just core Disney all of those Brands top out at five it's why my job was so hard back in the day because I was there before Marvel and Star Wars came in doing the the toy licensing thing but because I was franchise I worked across every single group including Disney Interactive which is what it was called at the time you know once you're 5 years old you you you're done with Winnie the Pooh you're done with you know actually Winnie the Pooh Mickey and Friends those Brands you top out at 3 years old at 3 years old you move on from that stuff

and you are now into something older you can go a little bit older with some of the movie IP girls go into princesses the princesses top out at 5 years old and so that's the problem is is the IP you know most parents are going to be obsessed with the Disney plus until the kids are five and then they're going to be like maybe I'll go to Star Wars and Marvel and now Hulu right cuz they brought Hulu in so maybe they won't leave Disney plus but from an IP standpoint they're done with those brands at so talk to anyone with with kids and they'll be like yep my kids moved on to whatever else it is all these other preschool IP that are now living on the Netflix world so there's absolutely an older play and a nostalgic play with some of the female consumers which is why you know my wife was really into Magic Kingdom and Emoji Blitz is you know Laura you should know this like it's all older women who love the IP and are they're targeting that older audience with the appropriate genres that really makes sense so I I I think that the IP is really fantastic for

streaming content to keep your kids engaged while a mom has to go take a shower it just doesn't apply to games unless if what we're seeing Apple arcade the only thing Apple arcade is having success with and their new strategy in and Netflix as well once Netflix feels more comfortable with kids is this family play so how do I have a safe environment where I can hand my phone to a kid there's no ads in IAP it's kid driven it's subscription so maybe the only future would be some sort of Disney plus meets Apple arcade meets Netflix kid subscription business I know Crush you hate this idea I'm just trying to give you give something that might make sense for this IP for that audience otherwise you got to take the nostalgic Factor Target older fans of the IP kind of what Barbie would you know Barbie is taking their game to Zinga to make some sort of nostalgic merge game or something like that that's the idea a that they're going after that's the only way I think you can be successful with

the IP I was going to bag on subscriptions but I think in this perspective it totally makes sense for kids go for it but it would take different types of content it would have be a custom content for subscription it can't be what exists in the market today and I think that's why all these subscriptions are failing miserably is because they're trying to package up basically an all aart type entertainment experience but for kids though you could build all kinds of different different experiences that could be part of a subscription and that is kid-friendly and could have a market but again that market is relatively tiny it is it is and I can't believe you just agreed with me on subscriptions for that so so I feel really good right now I think I have the Apple arcade guy in my ear right now talking about how I can cater to that audience yeah no it's it's what's winning for them and and so the reason why I suggest this is that's where we are seeing success in the marketplace it's a smaller business you have to make very inexpensive games you

can't go crazy but imagine that as as part of the Disney plus offering using the Netflix model right they came out didn't last week you guys talk about or two weeks ago we talked about that their goal which wasn't a strategy Phil I totally agree with you their goal was to keep people from leaving and churning I think that makes sense for Disney plus all right all right this podcast is brought to 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 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 cure and dedicated support team exola powering game developers to achieve Global success all right so there's two big announcements or one announcement and one rumor uh Microsoft is Raising game pass prices a shock to absolutely no one because ultimately they had to do that given the fact that they have all the development SP related to Blizzard and Activision on their books and they need to be profitable at least to some degree

but they're probably still not profitable so they're raising game prices this is a little bit more controversial than necessary because of the way they did it the PC game pass is going to be raised like I think two bucks from 11 to 13 which is actually the best deal on the planet because that gives you access to online and all the day one right so that is the best deal but ultimate which is the only tier for console that that you'll have Day One games goes from 17 to 20 and that's the controversy is that there is no lower tier for access to day one besides the ultimate which basically the ultimate gives you access across all platforms and the standard sub which just basically is online with no day one is being raised to 12 bucks so anyway people were out of their [ __ ] minds like freaking out about this but I don't know why they were surprised but there was an article in pocketgamer.biz and I know I'm probably just picking

articles that basically confirm what I've been saying for the last [ __ ] two years right is that ultimately the reason that they made these changes is I quote the service needs to make money and price increase due to lack of mass Market buying is the only way the only choice right now for them to make their money back the wild scale adoption of a successful ongoing gaming subscription still appears far away right and so the reason reason that this is so bad is that you don't raise prices until it becomes Mass Market that is what Netflix did right they made a mass Market thing they had hundreds of millions of subscribers and then they start to raise prices right instead Microsoft fell flat on its ass lost insane amounts of share never got above like around 30 million subs and now is Raising prices that will make it even harder for them to attract a mass Market audience and so this subscription business has failed ultimately they are just going to extract ract as much money from their core audience as possible Right period

end of sentence this is the article from pcket gamer duub is we' previously written about there is no profitable subscription service for games and right now the only way ahead for Xbox to make Game Pass profitable or at least viable is to put the price up which is hardly good move when you're trying to track users and grow a user install base so basically saying exact things I've been saying for the last two years Microsoft is on the [ __ ] ropes right now subscriptions don't work in gaming full stop just stop please and I don't know how they're going to pull themselves out of this ultimately but all all this means that basically Sony is winning right and Sony wins so the second article which is even a little bit more frightening is that Microsoft has reportedly decided not to continue to Market Xbox consoles in EMA so Europe Middle East and Africa focusing solely on Market Game Pass controllers and Cloud features Instead This consideration comes after they announce they're hiking up game price pass prices which caus a huge stir in

the gaming community so if this is true game [ __ ] over right game over man Sony wins Nintendo wins Microsoft is done right if they are just gonna [ __ ] deal do deals with Amazon and [ __ ] Roku and do like [ __ ] Cloud streaming that [ __ ] doesn't work the technolog is really bad the reviews are horrific in terms of the tech like stadia was better it's over this [ __ ] over right and Sony wins actually I I'll I'll pull it back a little bit so on the positive side they do have a good content lineup coming out in the next 12 months right so correct this may actually help them between Call of Duty and a bunch of other games that are coming this gives them a little bit of respit and so that that's part of the reason that they're doing it now right because they feel like they have the content lineup to justify the price increases but as soon as those goes away and Sony comes out with their Marquee titles next year GTA is going to be primarily on the Sony platform that's where the activity is going to be this is not looking good this is this is they

are on the ropes yeah that's super rough I think that if they were going to have to do this which we knew they would they did it in a Cals way that was very successful right they came out like you said with all that great content they showcased the next Call of Duty they're like hey here's all the content you're going to want and then a month later they're like oh by the way to get that content on day one you have to buy this ultimate pass and now we're going to increase the price on it it's hoping that the availability of the content would mitigate players kind of unhappiness which as we know with Gamers that's very difficult to change their mindset of your service especially in countries like Europe you know they don't really care as much about your platforms they're just going to go someplace else and especially because Microsoft is now putting a lot of their exclusive on other platforms remember one of the things that we made fun of is they actually have very few exclusives left except for things like putting Call of Duty day one on on Game Pass so this

is um you know Red Alert I would say if that rumor is true about them backing off of Europe we we know that it wasn't a key market for them but oosh I'm I'm nervous I'll give the pro case here a little bit I actually think there is a pro case here I would say dust off your like 2008 op-eds we could be heading towards this like one console feature although it looks like it's a bipolar world where you're going to have two console features you'll have and you have Sony but this is always what they wanted right they don't want to be tied to the hardware cuz the news is that they're not going to Market Xbox consoles they're doing doing controllers they're still going to do Game Pass and most importantly they're still going to do their Cloud feature and we can debate we can debate about Cloud but they've always wanted to not have to worry about Hardware Hardware is a it's a tough business to be in very few people make money on the hardware it's a massive cap capital and development costs like this is this is their thesis playing out I don't necessarily think this is a white flag yet this is their thesis playing out this is the next logical step for them there just isn't enough uptick in

in their Cloud numbers though I think to to support that but it's still their thesis right they're they're launching on other they're launching their titles on other platforms this to me seems consistent with what they've wanted oh no no I I actually totally agree with you I think this is consistent with their strategy their just strategy is [ __ ] wrong right it's been wrong from the get-go right subscriptions don't work in gaming right I I don't know how many times I have to go through this you know gaming is not an alak cart Pastime like TVs and movies right it's very individual it's very genre specific you know again it is possible to build that kind of content that is akin to like a Netflix type experience but that is not the content that's popular on mobile and console you know it's like let's give this subscription [ __ ] a rest right and Hardware is razor blades it's always been that way for this particular audience buying a razor is not a big deal right $300 $400 is not a big expense for this audience and that is the the audience when you buy [ __ ]

Call of Duty you're buying an audience that doesn't give a [ __ ] about buying a hardware you know so I don't want to go through this over and over and over again I it's so frustrating because I think they're just going down this path that can never be successful it's like there's damned if they do damned if they don't at this point and I've been talking with people at nause about this and I don't none of us can find a way out of this right there's no way out of this that I can see it's imp possible I try to think about competitive advantage and and you know value proposition and where can they do things differently is there something to the fact that when you buy a game you get it on PC and console like is that audience big enough to care about that benefit or like they just don't have a lot of competitive Advantage standpoints like how can they leverage Microsoft I guess that's where they're trying to go with Cloud I don't know I you're you're right like I'm I'm struggling yeah it's really struggling cuz again a lot of the PC success is a false flag I don't think it's really

catering to the same audience as the console business and a lot of the growth is in China which has nothing to do with consoles and they don't give a [ __ ] about Microsoft or Xbox [ __ ] you know streaming or any of that [ __ ] right like I'll say the last time because I don't want to repeat this over and over again I think that Microsoft corporate had different strategies and they're pushing Xbox as a round peg in a square hole trying to do streaming and try to do things subscription that caters to their strategy their overall Uber strategy at Microsoft and gaming this particular gaming business does not work in that way and and I think these guys were all forced to go down this path that never made any sense for for their gaming market and we're starting to see that kind of prove out over time you know this is 100 wait wait 20 time 12 right I mean this is a $240 subscription a year right isn't that the highest content subscription price tag out there right which basically in essence

requires a console right which is another $500 so what exactly Market are you going after like let's be clear right you're basically going after the console guys you know guys that play [ __ ] FIFA they play Madden they play Call of Duty that's all they play you know so it's like there is no Market here for a subscription anyway okay we have a game announcement that we want to talk about it is from Wildlife Studios if you if you remember Wildlife they have a very interesting story they're mainly based in Brazil but they have European operations they raise a bunch of capital God I I remember listening to it on twig a long time ago it was after one of their their tennis games and it was at a billion dollar valuation and everyone was just like what um they're still alive they have an interesting portfolio and one of their plays was to like launch a bunch of different Studios and then give them a bunch of autonomy and it looks like finally they are launching a game it is called time blast it is by their studio called play a bit and it is available worldwide right now it is a blast game that is based on a match theme which looks familiar to a

bunch of other games we're starting to see based on that exact theme or that exact IP we've talked about Wonder blast which I worked on which I have a lot of belief will come out and be successful but has a very similar theme uh family based there's family Scapes which is another spin on the garden Scapes genre wow we're seeing a lot of family based games and I think Laura you've been looking into the kpis I have I have been looking into the kpis trying to understand them I've played this game I played this game quite a bit I have a lot of thoughts so it's not bad I will give it not bad I think there's some work to be done I was ready to roll my eyes at another blast clone but they're actually trying something a little bit different it's the first game in a launch phase that is the most the highest combination of match three so your your Royal match elements with your traditional blast game elements like tomb blast blast something they did and this is not novel but something one example they added the propeller for

four square again not novel but it makes it more blasty and you can combine it it get it helps address that kind of cross-hatch you get which is super frustrating because it drains your moves to untangle and then puts you more in a fail State this is the part that is interesting they allow you to swap specials with standard pieces I haven't seen this done so I went down a rabbit hole yesterday so I'd get my facts right and I wanted to make sure I was actually looking at this is a table of comparisons for all the blast games that were kind of top of charts and looking at what type of mechanics they use so what kind of bomb clears they do what you can swap what you can't Swap and just to try to figure out how unique is this game in terms of gameplay so I can send this separately for anyone that's interested as a followup the sensor Tower it's been a soft launch for about seven months there's been a a UA push or a download spike it's making like $5,000 per day I think it's like if they actually they do

a couple changes I think you could get it to A3 to5 million a year game if they don't I think it's going to be closer to one to2 million a dollar year game I think the biggest issue I see is their balancing players like blast games they like the puzzle element of it and unlike match 3es that have Cascades that kind of add this more elements of chance and puts you closer to like be able to win if you go too hard in the difficulty curve it just completely thwarts your progression and you end up getting Level stuck and this game if I would if I was going to assume from the outside I haven't seen their data I would assume that they're a level between 1 and 100 their attempts per success is hitting two or higher with difficulty spikes way too early and I would imagine for kind of the elements of chance they've added in with the swaps and the propellers and the changes they've add with the match three elements I bet the standard deviation that is probably quite High making this very difficult to balance I'm rooting for them because they've done something interesting but I think their biggest hurdle is going to be to scale because right now the spike in

Revenue here is due to their insane difficulty early that's going to absolutely slow progression and make it harder for players to stay with the game it's going to impact long-term retention to get them through the end of content that's my Spiel not [ __ ] on the game rooting for it but I do think they need to make some changes yeah I would just say at a high level if you look at their you know RPI Revenue per install after 6 months in the tier one English countries which pretty much all that matters that's around 50 cents per download you just really can't acquire profitably at this level right if this is true and so and then looking at the charts the revenue is just not stacking the way it should so it looks like they need a bit more work maybe this last push maybe they have a version that's out that can monetize but we we'll we'll keep going I was actually looking at their business their business is not that bad I mean they're down a lot I mean they were up at like four to five million a month for a while they're down to around three to four so they're kind of on a search for their next big hit yeah but they're certainly not worth a billion

dollars just saying like not not even close like right I mean let's be real right but you know yeah they just need to stack some more games and get get some more successes out there so go for it I mean while they're lunatics right the SE the execs there like supposedly like in Brazil they're Absolut lunatic so we'll see what happens that's a that's a great way to end the episode just just for that just throw throw throw a Molotov cocktail and walk away all right everyone that wraps it up we will see you next week 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 [Music]