TWIG #294 Bungie Fires, Supercell Hires and Roblox Grows

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the combined company will offer customers even stronger and more detailed insights on the full Digital customer Journey exciting times lie ahead a sensor Tower and data enforces go to data. a or sensor to.com and get on board with undeniably the best data partner in the business now back to the episode hello everyone and welcome to this weekend games 294 where we read and distill all of the weekly game industry news so you don't have to and then we talk all about it and make fun of each other because that's you know what we do and we're going to make fun of Phil because Phil is having technical problems from Canada and likely can't join us today and so it'll be an extra ragon Phil day anyway so here's what we're covering today the stock market has been doing some crazy crazy stuff around the world and so we're going to talk a little bit about what that impact might have on games and Mishka conveniently is adding this topic

on a week where cres is out traveling and so all commentary and push back will happen next week from Crest I can't wait we're also going to pour one out for Game Informer Magazine after 33 years they are sadly being shut down so we're going to remember them and then Roblox has an earnings report that has all kinds of fun stuff in it we're going to dissect that but we also have a lot of other news to cover so first I'm Jen Donna host strategic marketing consultant at beta hat and Jaden Inferno and today we don't have Philip black or we kind of have Philip black who will come in and out on the podcast we'll see if his sound actually works Philip black game Economist at game Economist Consulting blame this on Canada I love you but also you know this is what you get when you're like you know 20th in the metal count this internet oh an Olympics joke I love it oh my God so much good going on with the

Olympics we should have bantered about that anyway Mishka katov founder of deconstructor of fun now back in Finland oh we're fortunately fortunately and unfortunately I got kind of used to good weather every day kind of like living in California but now back to more volatile weather and Laura Toranto senior director of product at Big Fish Games hello hello hello and Crest is out doing Crest things we will have him back next week all right so as we talked last time I'm A Game of Thrones House of the Dragon fan hotti so season 2 finale happened or didn't happen depending on if you're a fan or not because nothing really happened but a lot of chess pieces moving around and the new Game of Thrones Legends puzzle RPG game announced that they hit a million dollars in Revenue so I was like oh congrats to them probably you know crestes in my ear saying mice nuts but I actually got a chance to check with

people who might be close to that game saying they're in it for the long term and they're not looking for that pop and drop they're looking for you know a sustained campaign because there's two more years of Hot D coming and anyone watch the finale Phil I think you're a little fan or Mishka you're fan no not on this internet you know I would say I mean I you know I I keep watching those dragons and how long they take to go from place to place and I I empathize in a new way Phil is reading the books like on that internet he's on a paperback version Oh that's I haven't watched it is is it really a good show because the first season came in and there was a lot of like [ __ ] talking about it so I kind of did not engage but would you recommend absolutely better than Game of Thrones the pacing better they refined everything really absolutely you think it's better than Game of Thrones absolutely know more Dragons what else you got what else you got up your sleeve we got so many dragons you get a dragon you get a dragon you get a I mean

oh Oprah meets Game of Thrones and the baby is House of the Dragon love it uh I do recommend it there are two more seasons sadly the next season won't be out for two years so check back in about four to six years and then you can watch the whole thing damn damn what other numbers have hit Mishka yeah yeah so last week I was updating the other sponsors and I noticed that we've crossed the two million listens Mark not the YouTube version but just the listens mark on this podcast you know I don't know if it's a big number or a small number because we don't have any comparisons I know Joe Rogan does like 10 Millions every episode so we are definitely a mice nuts but it's surprising how many people listen to us given how little people listen to us at least me in real life like I can't even put my kids to bed so so it's funny to be heard by strangers so anyways thank you everybody for listening and um minor request if you will YouTube versions of twig and and all the other shows are coming out out so if you will subscribe

to that I think we want to do more of those kind of like a sit down interviews we recorded one that is dropping not the woodoo but the next one so we want to do more YouTube stuff kind of high quality and would be great if you could subscribe and that only increases the appeal for these companies and these CEOs and these leaders to come on the podcast but you know gratitude might be the word for all the listen when I get the T-shirt gun million get zon all right we had some goals okay freaking yeah yeah yeah yeah well let's see let's keep growing up so all right I don't know if anybody wants the t-shirts but yeah the next episode is coming it's actually in the editing like the next big one filmed it last week I'm not going to tease it I'm going to post it on LinkedIn I have a video of it and there's kind of you know all the good stuff is coming in but this is a big company and their CEO it's pretty open on the podcast so that's going to be an interesting one can't wait and can I just say a huge thank you to Canada for making Phil extra funny this week not

sure what's going on there I've had a lot of Tim Hortons a lot of timmies this week a little little poutine a little poutine I have to say Tim Horton actually sucks you don't want to continue with this tap I saw Tim Horton there there ton of Tim Hortons making a mistake in in Abu Dhabi I was like I have to taste this and that is not great coffee I don't know what you guys are thinking but that's not great M I would like us to keep our Canadian fans can you you know the views expressed by mishko the hockey team I love the hockey team but Tim Horton is not do not [ __ ] with that country's coffee and Tim Timmy's oh okay anyway I'm going to move on because this is hotter than talking about politics in the US all right I forgot and Laura is actually not wearing her t-shirt today but heroic Labs one of our sponsors sent us custom doof t-shirts you know mine's white with some purple very unbrand I'd like how they sent the marketer the on brand colors cuz Laura got a green one I don't know

what they were thinking on that but that's I have a pink one I have a pink one I love they and it was size large I put it on my wife was like that is a small T-shirt it it was in the US sizes but I will wear it but it's a tight pink T-shirt so I don't know what the right setting for wearing that is that's funny also on the shill I'm back to doing some interview podcast I did a podcast with quite a few great consumer insights leaders from Zinga wizard Riot and obviously Stam from beta hat that podcast is out on podcasting and YouTube and we talk about tips and tricks of how consumer insights can really help you create a really great game and great experience how devs and marketers can come together and really benefit from that I tell a lot of great stories as well and give away all kinds of secrets so please listen to that yeah by the way your episode is like as you said like the Avengers of the consumer inside so highly recommend everybody to listen like it's rare you would hear from Zinga

blizzard riot in the same setting so Kudos on that one we have a piece from Amicon on wi streak he analyzed this feature it's very known in the puzzle genre a driver of all sorts of Revenue so there's analysis of this specific feature and then for Gamescom as you've been promoting just going to promote it once more so we have three different events actually the first one is going to be exola what's it called a secret garden dinner get together anyways there's a link the newsletter so check that one out then we have the whiskey tasting it's wine whiskey and water nowadays because we want to be inclusive because people thought that if it's only whiskey it brings a certain type of an image and so wine and water was added to that so whatever is your advice you will get there hundreds of people apply to that so uh I'm hoping to help with the triage on it as soon as possible because people are asking for invites the place is really cool if you haven't been there last year it's one of the best cocktail

bars it's like there's a bar but when you go through it there's like this nice patio so actually everybody was sitting outside and you know tasting whiskies and whatnot so that was amazing and cigars yeah the bartender is like he's like a an alcohol afficionado like you name it he knows everything about tequila in this country and wine in this country and then yeah he started bringing like cigars and whatnot CU he like the audience which is Game Maker so that's a really cool place uh if you get the invite I really recommend you come and then Supper Club is happening the day before actually with Tik Tok and newu again helping out with a triage on that we have hundreds of people applying to get the seat and I'm not the only one so don't blame me if you don't get an invitation I'm helping to triage with the sponsors so don't blame actually anybody blame the luck if you didn't get the invite so so anyways hope to get that done and get the invites going this week so much fomo it sounds amazing they're fun events they're fun events we try to do the type of things where people just get to know each other

rather than anything else and then the setting might be alcohol or water or a dinner or whatnot but the the goal is not to talk about game specific stuff but just to get to know your peers so love it that's love that you do that we're trying to do a few more of those in the us on our side so we will continue to promote those if anyone wants to you know partner with us on those types of things we do the best we can to highlight those kinds of events because bringing people together is part of what we do in deconstructor of fun Community all right moving on to corrections I would like to again as Phil likes to say this is is how I argue with my wife I'm still right on the licensing topic more and more people are dming me to um give me Kudos so thank you everyone for dming me and giving me the support be great if you also do it in public but you know Timmy is great as well you know what is this we like amassing our troops what is this like the greens and the blacks all right we

that and yeah and I would also like to say that in our slack Channel apply to join on the website I have noticed a lot of marketing folks joining very very comms people woman who does comms at bungee although I bet she had a rough week we'll talk about that later her joining was probably that timing was probably a little rough but a lot of marketing people so anyone can join the slack if you have you know a few years of experience in games we're well over 3,000 people in the slack and what I love is that everyone helps each other and so anyway let's talk about what's not helping right now which is the stock market and so I think the US caused a little bit of a Kur fuffle which is a a silly us word so the jobs report kind of came out and then everyone got freaked out around the world that the US economy might be slowing a little bit I think it's rebounded a bit since uh a few days ago where that happened but Mishka I know you want to talk about this in relationship to how does it impact Us in

gaming go ahead yeah so this was a naturally a big news everywhere and I'm not pretending to be some kind of a an economist let alone a game Economist or or a stock market expert so I started reading a bunch about this stuff and basically the massive slowdown of the markets had two significant events so one was as you said the unemployment rising and low numbers of job jobs created in the US and the US is of course the dominant economy of the world and then the second one was Federal Reserve deciding not to cut rates but just sit on it still and then plus there was a massive sellout in the Japanese Market which is strongly relying on the US consumers and strong dollar it was the largest drop in nikai which is their um stock since ' 87 it has bounced back somewhat the whole Market as a whole but that was a big scare then there was the simultaneous slowdown in Tech with fears that AI craze is a bubble

and there has been the sort of a overall outlook on the fundamentals of the US economy and how much you guys are in depth and how unlikely that this depth will ever get paid and so there's kind of a different type of a thinking so all of these elements together stoke the recession fears and that resulted into a selloff of the stock and that means that the price dropped significantly in a short amount of time now just two about this like the root cause as I was reading is of course number one is inflation problem so the money printing during the lockdowns the supply chain issues then there was you know tariffs the wars and so forth so these supply chain issues continue and they cause inflation and then there's the interest rate that has been curbing the economy so reducing lending reducing spending of companies of consumers Etc and when all these things kind of combine together you have a risk of stagflation which hasn't been there since the 70s meaning High High inflation plus high

unemployment plus lack of economic growth and how does this all relate to games so kind of going back to the analysis that I was doing like a couple years ago or a year ago where economy slowed down you were seeing that the decline in disposable income directly affected spending on games that games weren't Recession Proof as they were in 2008 due to many things but probably the competition for other media sources and other consumption like the streaming and the apps Etc and that means that if the U economy falls into a recession and not the soft Landing as they have been speaking then the notion like game industry Biz had survived till 2025 will be more like survive till 2032 or something like that so there's a risk in the economy but I think Phil has a more positive perspective I'm just kind of looking at the more negative scenario of this beautiful real disposable personal income up into the right baby and that's all I have to say on the

matter just like watch that thing roll call me when the slope changes or or it points down work I've seen different graphs I'm not an economist I'm just relaying the stuff that it was on the Wall Street and all Financial Times Etc so a lot of risks in the in the economics the little bit that I've been hearing um I listen to a bunch of kind of market and Tech podcasts just so that I'm keep my finger on the pulse of what's going on is that hey everybody we're okay things are okay and daddy pal as Wall Street bets on Reddit likes to call him daddy pal has a lot of memes and he has come out and said in September that there is a potential for a interest rate cut and so those memes are printing is coming you know the idea of printing money is coming instead of winter is coming Game of Thrones you know last couple weeks everybody we're all about it so I think that we live in a world where because information is so so just at your fingertips everyone

freaks out all at the same time and very quickly and and the good news is that companies that aren't the magic 7 which are all the you know the Facebook the Google the Nvidia there are a lot of earnings reports that have come out this week that are very positive in completely different Industries like Caterpillar and all these other countries and so even though Intel lost you know all of it you know I think they lost like a quarter of the value of their company in like one day and laid off 12,000 or something 15,000 people hey everybody just it's okay it's okay like let's not all freak out on the same day but I'm going to transition to talking about something maybe we should freak out about is that Game Informer is going away and talk about Ai and the AI bubble well it looks like AI may have written their goodbye message on the GameStop website so GameStop bought Game Informer quite a few years ago and you know it's not profit Prof I think sadly

we know that media is struggling we see all of the different posts from the media Outlets that support our industry and media is a struggling category to be in because of you know how AI is taking over a lot of this and so this was from a Forbes article while it's bad enough to lose your job what the past and the present writers found shortly after is that Game Informer is not just closed but the entire website has been wiped from the internet not just the homepage but every single historical link to say to any Game Informer story in decades now redirects to it an AI quote goodbye message and so on our slack to uh Mike snowski actually who was in my podcast so he's CI over at blizzard he pointed out that Game Informer has an incredible Vault of games there was this YouTube video he posted of like like room upon room of every single cartridge and disc and console and so I think all of us should just hope that any video game historian is going over to the Game Informer office and saying I'll help you

store all of this stuff so rip Game Informer all right next quick topic DraftKings has decided to discontinue rain makers due to uncertain legal roadblocks this was their web 3 an NFL nftd platform um another web 3 blow Phil anything else on that one yeah I played this um you know this is another place that you would expect web 3 to have some leverage we know sare is really popular I've worked with them I think they're doing really incredible things right now and it's just wild to see that this thesis didn't play out the way people thought it would fantasy sports nfts it seems to make sense and yet they weren't able to make it make sense at DraftKings yeah a quick kind of growth topic here so ASA which is Apple search ads Apple has enhanced its search ads reporting by adding view through metrics and updating total metrics to include view through data this offers advertisers a

comprehensive view of campaign performance tracking ad Impressions impact Beyond direct Taps and so cool finally there's like a little bit more coming out of Apple's own proprietary data set that they have to sell you to sell you those ads against all right the next topic is RPGs have been overthrown by strategy genre as the new consumer spending King so that's from censor to so RPGs have top consumer spending charts since at least 2017 but have dethroned in Q2 of 24 Phil I think you dropped this in here yeah I mean I keep waiting for you know the Eric's move to the middle you know we kept saying post ATT there' be this move to the middle broadly accessible IP casual genre and yet looks like strategy is ripping casino's ripping and like you can say well that's Monopoly go and I'd be like yeah that is you know that's a casino game I think that thesis needs a little bit of refinement and I'm curious to see what Eric has to say about this of course we also don't have web stores and

we know web stores tend to be more concentrated in high LTV games because the savings to those users are greater and so I think you know this is perhaps an underestimate of how much strategy has potentially grown relative to other genres yeah I think those two are going to fight it out forever yeah so so I have the Sens of Tower data but I have like uh what they help me out with is that they remove China Korea and Japan because those are kind of like an outlier large markets and the trend is correct but like looking just at the at the markets that are excluding those we can see that the revenue year-over-year growth for strategy has been 15% and for RPG it has been 9% and the difference is strategy looks to be much larger than RPG out if you remove China Japan and Korea so this is Global Market but when you kind of exclude those sort of a closed markets is still the king and actually growing

faster than RPG fair point but both growing all right let's do um two quick quarterly earnings headlines EA announced their earnings their q1 results exceeded its expectations despite a 30% drop in income the decline was due to a drop in full game sales down 58% year on-ear I mean obviously they just didn't ship as many titles this year which makes sense live Services held steady in comparison only dropping 7% compared to q1 and represented 75% of net bookings for the past year FC mobile so this is a quote from I I believe the CEO FC mobile is the blueprint for a mobile strategy grounded in leveraging the expanded access points offered by the mobile platform to continue to grow our largest franchises I would have to call [ __ ] on that because number one FC and FIFA are just outliers because it's the largest sport in you know in the world with a continued just amazing presence

and number two is the way that they've reorg kind of signals that they don't really care that much about mobile I know that they've integrated it back into the brands but not quite sure that's how that works but okay we'll go with that so really quick on Nintendo their q1 profits declin 55% as the switch nears the end of its 8 year life cycle can you believe it eight years switch to coming next fall it's time it's time Laura wants some more games I want upgraded Hardware I want a better battery life I want a whole bunch of things yeah no makes sense it's hard to comp last year's release of The Legend of Zelda tear of the Kingdom so that's kind of why that 55% decline is coming up Roblox we're going to get into a little bit later Phil dropped in big games this month brace yourself everybody black myth wukan is the 25th of August and Star Wars Outlaws a lot of

great Buzz coming out of that right yes yes both these are narrative changing games black myth lukon is super hyped this is a game that looked gorgeous that was previewed a long time ago there was a trailer for it it's out of China a lot of people want to hop on like you know is this China's big moment I think genin already proved that but still this could double down China as a triaa h developer and like Star Wars Outlaws is another opportunity I think for for Ubisoft to control its own Destiny perhaps build another franchise Bill let's see all right keep going Mishka what do you have Investments and m& so number one Microsoft and Activision have formed a new team within blizzard to work on smaller doublea games based on existing IPS now over the past weeks many King employees have switched their LinkedIn profiles from King to Blizzard I bet they were waiting to do this just kidding Microsoft and Activision have formed a smaller team within blizzard comprised of King and various other

employees to work on doublea games based on existing blizzard franchises like OverWatch Warcraft Starcraft and Beyond Microsoft is Keen to leverage the huge back catalog of franchises it acquired with its Activision Blizzard purchase in previous years I only read this as summers are the golden season for executives during the reorgs there it's a quiet moment when when you can think about the organization but this sounds really exciting and little birds have you know told me that there's a rumor going on that that the development might be based out of Europe so that could be a very interesting but no more news about this we'll be watching what type of a games they will be making maybe they will do the three Vikings game that could be a fun one so that's a perfect game to come out of Sweden but um but yeah very interesting stuff one other piece to add to this is that Josh Lou he's now at E6 Z and he formerly was at blizzard he actually was

at scopely very early on too on Twitter he said he saw an incredible Call of Duty Match 3 game and I just I I want to know what this looks like I've heard rumors of what King's swing was the Call of Duty mobile game so more of an HD shooter experience I've been able to unconfirm what this is actually like everyone just Chuckles when you ask them about this but it looks like they may have found their home in match I I would love to see this release it looks like it got sheld but uh let's see what can come with this collaboration this is awesome you know OverWatch puzzle RPGs who knows let's get wild this is what buying buying assets is about like let teams take shots at this what do you have to lose interesting stuff I like to see how they combine this the match three in Call of Duty I'm on the edge of my seat as soon as it's done I'm gonna play I wouldn't hold my breath for that so there was a report from invest game for top 10 most active early stage VC funds in gaming it's on the screen if you're watching Youtube or on Spotify so

it's an updated year-to dat ranking for VCS based in participation in seed and preed rounds so early stage Investments not sure how this data is gathered there's no play Ventures no light speed here we've you know talked about the investments from those funds as well and it shows the really focus on the amount of deals which is very important you want to get into deals you want to lead deals but it's not the most important thing when we're talking about funds like how many de deal you make and how much money you distribute is secondary the most important part is how much money do you return to your limited partners the investors to the fund so that type of a ranking would be the most interesting ranking for us to see and unfortunately that one does not exist but nevertheless I love what invest game is doing and I love that we at least some have some kind of a leaderboards and all the alpha VCS are always posting when they're on top and if somebody's not on the list they're posting like this list really doesn't matter Etc so

it's kind of it it gives a nice fun on LinkedIn for every week they release this funding news so Sweden based PC and console games developer Moon raver games has raised 3.5 million funding round from NC soft the funds will fuel the development of the debut Co-op shooter project Aldos okay the debut game is being developed by Veterans of course who previously worked on Far Cry and Battlefield titles interesting to get the investment from a publisher right away almost sounds like a second party Studio off the bat but nevertheless congrats to them us-based multiplatform games developer two weeks has secured 1.25 million in preed funding read by andreen Horowitz the funds will support the development of short experimental web titles the company has also joined the a16z speedrun program we got the german-based mobile games tech company doplay securing 1 million preed funding red by transcend fund the funds will support new

Partnerships corporate expansion and Improvement of the company's platform the platform provides direct consumer distribution for mobile game developers by bypassing traditional app stores thus reducing acquisition cost and fees for developers sounds like a dma play I believe that the third of the funds and half of the team's time will be going into the paperwork since this is a company based out of Germany but uh what would I know about that uh Phil have you you seen this thesis anywhere else I'm seeing this web thesis talked about a lot this idea that hey we'll go back to the web if you remember the web right now for games is basically dead Forex games from Germany and kind of what it consists of but a lot of people think oh let's screw the App Store you know we've come a long way in terms of web everyone has a computer everyone has a browser you know let's go back to the web store very very skeptical I feel like we've trotted on this water before but it's interesting to see this as potentially an option right what do you have to lose by Distributing the scope lead actually has quite a few number of web SKS which

I think is really smart you know it doesn't cost that much in terms of you know marginal development costs and you know might see some Revenue uplift I'd love to see Monopoly go on there not sure why that isn't there yet but uh let's see you know if they can make this easier for developers just to check a box and and get something on the web what have to lose yeah I understood a lot of like especially male audience games are doing pretty well on web so whether they are the RPGs or the strategy games in particular I worked at Royo when we released some our games on web and our thesis was that they would do good because we were looking at at other titles especially game L strategy titles and they actually didn't perform well at all like casual titles so regarding Monopoly go I would assume that is a quite wide audience and especially uh a lot of uh female audience so might not be the best candidate for web unlike Star Trek for example which is already on on web I think it's a regional play Do You Remember blue Stacks so the CEO of blue stacks Ed a new company called

now.gg and that webbased platform is ironically you can Port your mobile game to this platform it's a distribution and an ad play and you can play these games you know inside of your browser and I've chatted with the CEO who's [ __ ] brilliant I think he started and sold like seven companies one of them like two of them to Microsoft like seriously he's a baller and so now that GG what was what I I found really interesting is in a world where distribution is very very difficult you know knowing the app stores knowing Steam and epic that going to web and offering players around the world the opportunity to play some of these mobile games that are are difficult if you don't have Wi-Fi or you don't have you know you have to still buy you know Wi-Fi packages in many countries that this platform is maybe one of the final frontiers of distribution if you have a game and you're like really trying to figure out okay what's the last 10 20% I can still grow I don't know check that platform

out it could be interesting for some folks to look at actually I should try to get them on a podcast cuz he's like the history he had was amazing in the game industry so anyway what else let's go to you know layoffs you know sadly I think we have to also pour one out for the folks at Bungie some really upsetting news there yeah some sad very sad news so Bungie went through a rather uh large round of layoffs 220 people out of 1300 workers were laid off it said that Bungie was also working with Sony to integrate 155 of the bung rolls into the PlayStation group there was also a note that there is a plan to spin out one of Bungie's incubation projects an action game set in a brand new science fantasy Universe to form a new studio Within PlayStation Studios and then there was one other note that I'm trying to remember I think for the remaining people at the company the focus is going to be on just Destiny and Marathon so for everyone staying that's what their focus is going to be going forward yeah

I got to talk to a friend of mine who works at Bungie and is part of a team being absorbed into PlayStation everyone is as you can imagine kind of sad I think the CEO did a nice job of coming out and saying you know hey we we went too high we you know our aspirations were pretty high and we didn't you know I I think the best thing you can do in these instances when you're a leader at these companies is to you know be open honest and transparent and you know talk about where you might have missed and it sounds like they're trying to take care of the teams as best as possible I don't know but what do we think went wrong there that you know there's a leak from the Microsoft FTC cases and they actually had considered acquiring Bungie a long time ago if you remember Microsoft used to own Bungie until they got too spicy and they kind of let them go and the other thing they mentioned when they were you know assessing the investment was the high burnout risk for Bungie along onside Net's $100 million

minority investment stake in 2018 so it's good to see finally a number attached to that they also noted that Destiny was among their highest hours generating titles on Game Pass we know that they cost a lot of money uh bunch of bung is not cheap and I think that's something that all of us have heard to some degree it's hard to see when you have these like these Studios that have created amazing things kind of take like an unexpected like turn I I mean I remember playing these games when I was had some sort form of like you know hand ey coordination now I definitely don't um the more I was kind of digging into this there was yeah there was talk of high burn rate missing development deadlines and financial targets it was become the topheavy and this is just from sources that were talking to the outlets and it broke my heart a little bit because it's tough you make these great games they are very expensive the bar keeps rising of course the timelines are going to go up and I assume it's when you have kind of a a parent company or keep certain promises hit certain forecasts it can be really hard to balance the creative against making it

this a business that you're getting money from an you know some sort of investment company and this isn't the first company that this has happened to I feel like it's just it's tough overall now to make games as we've talked about before I would love to see companies try to find a way to build more risk-taking and kind of cushion into these schedule so people can create what they want to create which is these amazing experiences so I have no comments on Bungie uh but overall like these discussion about the high burn rate I think like like just zooming out it there's a kind of like compensation discrepancy between us and largely the rest of the world yeah um I have worked in us and in Europe and I can say that my compensation was probably 4X in us than was in in Europe so that's a quite significant change and I don't know kind of feel like going forward I understand the push towards efficiency and push towards Outsourcing especially Studios opening up in another location if the

price discrepancy keeps at this high of a level and especially as the games are not hitting their financial targets like in this case I believe reading at the article they were saying that they were you know missing the financial expectations significantly and at some point even losing money which is of course like unsustainable for any business but overall it's hard to see this as a sustainable way going forward where if the US is that much more expensive to develop aren't even a lot of these folks in Seattle Laura like isn't this a Seattle play for you it yes this Bungie does have an office here and if we're talking about Seattle cost of living I read this crazy stat it's like a Tik Tock stat so not vetted but like it was like the eighth most expensive city in the world something ridiculous about Seattle the cost of living here is insane CU they have offices in San Francisco and La I think they're down here with me as well and just anything West Coast us is anything us to your point is pricey

but especially West Coast us is pricey so you know could have been a factor it sounds like there were a lot of other things that were factors as well you know the integration into PlayStation then probably not knowing what to do with it it seems like there are a lot of things at play 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 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 back-end game server an amazing game development framework Fantastic live Ops tooling or reliable Mass scale ability heroic Labs has solutions for all of these challenges and it's not just us a deconstructor of fund 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 [Music] labs 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 app lier the leader in Mobile attribution and marketing analytics that allows you to measure the full potential of your marketing efforts making every ad dollar Works 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 sler where your app's potential meets performance so Jam City was another company hit by layoff so they laid off 10% of their Workforce which is about 85

employees so the CEO Josh yato said that after challenging 2023 industry analysts predicted an upward trend for gaming in 2024 and that games industry bis by the way said survive till 2025 they keep moving the goalpost so before that it was survived till 2024 while we have seen moderate improvements in some areas the overall upward trend has not materialized as expected this is the quote from the CEO he did not quote game industry Biz so I'm that was my addition to that so I I actually looked at at Jam City I haven't looked at them for a long time so their performance over the last year or so kind of year to date has been according to sensor Tower about 18 million in a month in net Ina purchase Revenue it has declined down to 14 million a month so there's been a steady decline month over month their top games are Disney Emoji Blitz Harry Potter Hogwarts mystery and Cookie Jam that's

an old game Cookie Jam still jamming and those are the ones that driving the growth and their downloads that's where the significant decline has happened has gone from about 4 million a month down to 3 million a month this kind of talks about the challenges with the with the Privacy landscape and then the question of course is like this looks like a decent midsize company like they're they're making more a month than roio and have been for a long time and the question is like why haven't they been acquired and that was my first question and then I go to Tech Crunch and I see how much funding they have raised they have raised $652 million over six rounds so Jesus exact that's what it should said Jesus so so realistically they have to be sold for about 2 to three billion to return to investors and nobody's going to pay 2 to three billion for lots of different companies and not not a disc on on Jam City it's a it's a solid

publisher but it's not A2 to three billion dollar company at the moment they had the failed IPO or spack not even an IPO that's one where were spacking so they tried to spack there was the ludia acquisition and so forth so they've definitely tried to make moves to go public to kind of pay back but that hasn't happened and just for context scopely has raised overtime $1 billion that's a lot but they sold for 5 billion so that's the type of multiples that we should be looking at so we might take a hot minute before Jam City is sold but hopefully they uh you know find themselves back on the growth track uh couple other small news so there was a geolocation game Studio Shipyard games that slipped away quietly as Discord message reveals a closures that was a nicely put this is a small Studio here in Helsinki Finland they raised almost 3 million from supercell back in 2017 this was like the first investment from supercell like this company nobody heard

about them supercell put their money behind it and it was I I kind of look deeper into this it was led by a co-founder of gray area you probably forgot about this game but this company but there was a company between 2008 and 2014 it was the first ever geolocation game developer out of Helsinki and our boy Eric seford was their head of marketing he actually wrote his book while working at that company meaning that there wasn't a lot of marketing happening cuz he was able to write a book so it's definitely a bummer but it's kind of like a doubtable bummer because he ran first gray area for six years they were a little bit early of the geolocation wave they kind of had the first take and then nean came in then he comes up with the second geolocation based game company and Pokemon go is already there and they're like seven years they're trying to make something happen and now he's essentially spent like 13 years making geolocation games without finding success if you will and that's a crude reality of startup life

so yeah would love to have him on a podcast and you know hope that the employees will have new jobs at supercell spark lab which is the employer of entrepreneurs in Finland nowadays finally I wanted to just say one thing about like on on the hiring side something I've been seeing on LinkedIn this is of course my LinkedIn I see somebody from roio somebody who very senior developer or an artist usually developer an artist joining supercell and I was kind of thinking about like supercell's hiring spree just continues they just finished a new building so now they have like two of these wooden castles next to each other beautiful buildings beautiful Office Buildings every week people are joining and it kind of feels like supercell is really like sucking all the talent in the city they have you know it's a small City Helsinki and they pay significantly more than anybody else like you know maybe even 4X to the market rate and when you kind of

consider like there's only Netflix games here and maybe a metacore the makers of merge manager who can compete with that compensation but nobody else can really come close and if you fast forward this will Helsinki become the supercell town like this is the only game in town if this goes on because why would you work anywhere else if they're paying so much better and they have also The Prestige and the resources and the culture and everything you want to have and then again when you look at companies like roio I was actually looking at their numbers comparing to Jam City they have declined much more significantly than Jam City they have gone from 15 million a month down to 9 million a month in inap purchase revenues and yeah I'm hoping that we don't have to report on on Roo layoffs in this section the end of this year with this type of Trends so my my rant didn't Sega buy them right so yeah Sega bought them and they the Sonic Rumble game beta let's see what happens with that yeah hoping that goes really well and they can course correct but based on the trends post acquisition it

has been a very steady decline on on sensor Tower and that doesn't bode well in the current market environment so you know fingers crossed for that Sonic game yeah hopefully they've got some new stuff in the works they probably have something in the pipe yeah let's get to games Phil last week valerin officially launched on consoles in the United States Canada EU Japan and Brazil we will check on how this is performing next week via ciron data we also I'm sure we'll have newo at the end of the week but we can at least see what the rankings are going to be and valerant I believe also gave you all the C if you're on Game Pass I think you get access to all the heroes too so let's see how this one lands and along those lines there was an announcement for Spectre Divine this is from Mountaintop games which is a VCB company and it also has heavy involvement from shroud the streamer I'm huge on this game they've been testing it for a little while now they have a extremely clear thesis you can see it even in their announcement video their game director Lee horn is

the gentleman who built the Apex legends's monetization I can tell you many many stories from this period he got that thing across the door you know the other thing to note here when it comes to Tactical Shooters which is what I would classify this game as is that valerant grew the market you know a lot of times we think of valerant as just like adding Heroes to csgo and going after the csgo market but I think a lot of times you know we were talking about match last week and how match has progressively grown as a genre and you know we looked at design home and how the additional entries to that genre didn't end up growing the genre and so right now like we haven't seen the Tactical shooter thesis really pushed the limit and we're about to find out whether or not this thing has a lot more room to grow as a genre and if so I expect even more entries than just this but I am really excited about this I think I have a great thesis should hop on the play test if they get a chance white out survival is the third fastest game to cross $1 billion of the 2023 releases this Milestone comes less than a year and a half after its February

2023 launch it follows Monopoly go and honai star rail as the third fastest 2023 release to achieve this success wow yeah talk about strategy yeah you guys covered this but like distribution distribution distribution like a lot of the fake ads were huge for this right fake ads were huge but also just I would say their biggest success was the casualization of onboarding into a Forex strategy game and you were Jedi Mind tricked into oh I saw a hyper casual ad that is like I'm collecting a bunch of fish in a frozen tundra to you come into the game and you're like oh I would never ever play a 4ex game and you're playing and next thing you know you're in a 4ex game brilliant just I mean all I Laura and I like I said we did the whole podcast on this and I mean that was months ago but they're continuing the trend and they're accelerating kudos to them I find it a

little concerning that ET has saw so much of a cluster [ __ ] in this industry that the winning distribution strategy is creating the most fake elaborate game you can possibly imagine until you unveil the the clothes sheet and it's like forx I mean this is the 4X meta we were talking about strategy growlin like this is the meta how elaborate can your fake ad fake game be there's something disturbing about that agree yeah no it's it's the hybrid casual you know Playbook but I think it's very player friendly which is how do you make something that anyone can kind of relate to and understand and it makes sense and is compelling and then you slowly unveil deeper and deeper gameplay which is those people that stay will love it and those you know that don't drop out but if you can do that I think that is the formula for today's mobile games is that kind of approach you can end up in this bad equilibrium though where there's such an incentive to go out and run these fake ads that players don't know if an is now real or fake and that raises cpis for everyone because they're

more hesitant to click on that install button if they don't actually know what they're getting when they show gameplay because they don't know what's real and what's not I mean this is the counterfeiting problem right just the existence of counterfeiting can drive down the price of the primary good I Wish app stores would step in like at some point like they need to step in and like do something about this and I've just been surprised there's been no activity you're right that as a player I I am disgusted by by fake ads which is I'm going to I'm going to see something and do something and then even on like Township another game that Laura and I covered I got hit CU I was playing magic sword I was playing magic sword that was good it was good right like you know like completely just turn my brain off and play that game but as I was playing I was served like 10,000 Township ads which was I'm a person running around Gathering resources on my back and that is completely not the game that Township is so even for other casual games they

are using the fake ad mechanic and I'm disgusted as a player because you're you're right that's gross however there no one is stepping in and saying there's fake advertising I would say there's a singular Q2 quarterly Trends report out that says that CPI shifts globally now challenge when we talk about global because they you know you loop everything together but Android cpis are down 8% in Q2 and iOS however to your point is up 6% a little bit more expensive but we're not seeing this disgusting Trend translate into what you're saying on Android which is the predominant device for downloads so it goes back to our whole other discussion on licensing the other day is I I wish it would be something different than it is but it isn't one thing about the fake ads though is that there was push back which is why the mini games have become so important for for development teams is that you have what you described in

Township where you're running around and you're like feeding the chickens to get the eggs to do that they actually have a mini game in the game for that yeah they a lot of these games do now or if you see an ad that shows gameplay that doesn't exist what the game teams are doing is creating a very optional mini game that the players can play or can skip so technically yeah it's like a little bit of a loophole not quite the game play but the gam playay exist you're right I mean we we covered that as part of white out survival many of their miname events are you know some of those fake ads Envoy the Forex strategy game has an entire button that's dedicated to the pull the pin ads Royal match has integrated all of the Save the King ads into the games so you're right that there's kind of a home for those but and that's the way that they're in a sense justifying that that's well match is the most elegant execution of the fake ads that I've seen so so far with so many fake ads like I would assume that the the value of Ip just increases

because when you have an IP it's un like let's like like you're getting something trusted right it's like this is a Marvel game they will not [ __ ] me like this is a real thing you know to your point around the economy and the challeng is is IP is what tends to win in these moments where players understand and have an expectation around I at least know a little bit of what I'm going to get from this where Monopoly really took it to the next level was in that onboarding and because Monopoly go is so not Monopoly at all but it's the feeling it's the feeling of Monopoly of I'm going to screw over my friends I'm going to make a lot of money I'm going to progress you know through the game and I'm going to have a chance to actually I think the unsung hero of Monopoly go too is how you work with other players to achieve goals and that I call it coopertition which is you're working with other against other people or the you know contribution as what Matt Penfield said

on our podcast is hey I want to work and give away my own resources to other people because the motivation for many people playing that game is actually altruism which is this unsung you know a lot of boys making games are like what but for many female oriented players or casual players the idea of contribution or using altruism as a mechanic is very very strong and I think actually the future of why so many of these games are able to grow with all audiences is adding those kinds of features not just the Screw Your Neighbor feature but the work with my neighbor feature all right so do you want to talk about date like goblins oh last week there was date anything it was a trailer and there's definitely a move towards kind of exploring other aspects of casual so people are leading into making dress up games leading more into home decor typically smaller Dow audience is but can be very sticky so this game was started by the former publicist of hinge

and it's called Date like goblins and it let singles meet and seamlessly schedule dates in their favorite video game so you can organize instead of going to coffee you can be like hey let's go play any of the games we want to play we can go meet an Este steam game or whatever and then they've redefined what Goblin is and what they're saying a goblin is this shamelessly authentic imperfect being that shows up as themselves it was interesting I loved it dating for nerds is dating for nerds gamer nerds right like you want to go on a date in a game and play League of Legends together this allows you to do that I just think you know for me as a trend what's interesting is seeing you know we we talk about gen Z and gen Alpha going into Roblox and Minecraft and fortnite and using them as social Gathering experiences and now they're starting to see this a little bit more for older Generations who have grown up probably

you know inside these platforms who may want to now evolve to dating instead of just kind of social hangout I don't think this will solve the fertility crisis no just thinking that yeah I just I wouldn't place my bets on this one yeah that wasn't the problem I was trying to solve loneliness was a little bit more of the what I was referencing not fertility however I see see your point all right so let's actually talk a little bit about Roblox kind of pivoting to that they had their Q2 earnings results Phil why don't you take this one this thing is ripping this thing is RI I wish Eric were here to like eat some Crow on this one this thing is just ripping every quarter it is the stock that could there were some downsides here but in terms of Topline bookings Rose 22% year-over-year to almost a billion dollars Revenue was up 31% year-over-year when you look at quarter over quarter metrics they added another 2 million da their breakdown by region

and this is really important right because this is where Eric was casting some doubt and he was right about this that a lot of their growth was in tier three regions which tend to have lower arpo and not only that when you look at the breakdowns for some of the tier three regions you saw that they did add Dau but the average revenue per daily active user was actually declining that being said the reason that this is up is because they had more Dau in North America and they Rose the bookings for North American players which is unbelievable for a company at this you know day and age to be able to raise those bookings it's interesting there was a comment from their CEO growing forward we'll continue to invest in our core platform to help our create our community build safer and better experiences and reach more people I I don't know who's left I don't know who's left on like the Roblox Conquest I think they're over what 350 370 million monthly active users that is the size of the United States they have so many people on on this platform just just remarkable when you look at the time series from 2021 2022 2023 and 2024 in

terms of peak ccus we look at the daus by region and age grow growth grow growth growth uh average bookings per Dau largely steady right which is pretty incredible that you can scale all of these metrics and still maintain relatively stable bookings per Dau that is the sign of efficiency so remarkable and I would say you look at some of the doubts people are throwing on this company if we look at the cost of Revenue as a percentage of the revenue it's been declining so one of the one of the big stories was whether or not they could get their costs under control servers are really expensive stock-based compensation you know we're talking about compensation when it comes to bunge Roblox pays even higher than budgie from what I've heard it's very close to Netflix industry top compensation very close to tech companies we have a downward sloping Trend so it looks like they're starting to get their cost of Revenue under control it's not magnificent still pretty high we started at 19.5% in Q2 2023 and it looks like we're

down to about 18.7 in Q2 2024 but to me you know the remarkable graph is the next one it's that change over change in Dau quarter over quarter it continues not only to be high and positive but also increasing so hats off to this company you know I I don't know where the ceiling is I've become a Believer let's see how ads play out but by and large they are chugging they are the platform of choice for the younger generation who yell at us Boomers and say hey stop yelling at us for playing these crappy games because we come here for a different need State than you all you want your HD premium amazing game experience like I'm here to hang out with my friends and laugh and joke around with games that are brands that I love or simple play patterns and you know open world social experiences and I think you don't see puzzle on this there's no match three Roblox games

right like this is a very different platform and game experience than us as you know Boomer game developers think about and we have to like recognize that it's kind of like YouTube kids I'm so impressed by that one like my kids one is seven one is three they only want YouTube kits we got Disney we got Netflix we got Apple TV Like You Name It We got all the high quality stuff they're like stop with that nonsense give me YouTube Kids where kids are like playing with these Marvel toys or Star Wars toys or whatever I feel like Roblox is that kind of a thing it's just like we don't get it but it's the preferred source of entertainment and then when we talk about the games that we think are great games what was that shooter game on Roblox front lines rest in peace front lines front lines yeah did nothing we were like oh my God Roblox is now the platform like people are like get this this nonsense out of my face because I can play this type of a game on any

other like platform I want my type of experience so it's I'm fascinated by Roblox we actually we need to get one of their platform people on back on the podcast but it's a fascinating company fascinating audience I will say though their success is not good for this industry at all I wrote a piece this week on LinkedIn about you know aggregation theory in games you know you have Call of Duty franchises you have brawl Stars you have all these platforms you know getting close to 100 million you know in case the Roblox 300 million plus monthly active users it's an incredible size and scale and that means they're able to dictate their terms on their platform right they can control the rules of the game and right now look at the Roblox platform who is number one on the Roblox platform how much money are they making per year you look at someone like adop me which maybe is doing 80 million a year on that platform and so there's just a very low ceiling and a lot of companies are struggling to scale to that next level and what I'm curious to see is whether or not we'll see a rate cut in terms of the revenue share greement I think that's really what's appropriate for these platforms is that after you get to a certain size

they decrease your marginal tax rate valve does this so when you reach let's say earnings above $10 million let's go from like you know 80% maybe we take it down to 50% but there needs to be companies that can scale for these platforms I think to truly be beneficial to everyone and continue to see growth I'm just I'm a little concerned about how powerful they're becoming and they're scaling across all these plat they're sitting on all these platforms right they're able to dictate the terms fortnite got crossplay cross progression cross Commerce done Sony was a hold out because it wasn't in their interest to share their players with everyone else Microsoft was nothingness to them why do I want crossplay why do I want epic game services to sit on all these platforms so I don't know I've I've got some question marks you know if you take the role of what's best for the industry I'm curious to know so we talked about look World North last week I'm curious to see as these platforms that enable more people to create more content for PL platforms like Roblox if that actually will have that M number that down number be larger than the US and get even more

players in I'm curious to see how that starts to affect it as these platforms become more mature and usable yeah I just wanted to point out that Roblox takes 75% that's their split like they take 75 you take 25 like so so they are gangsters they cover a lot of costs they do cover cover a lot they do all backends they do everything and you don't have to do the user acquisition etc etc so you know but still you have to make 400,000 in sales in order to make 100,000 for your company so you still have to incur user acquisition costs there's still a lot that people do to drive to those games but once you know the algorithm just like on Tik Tok takes takes over but what I have heard is that you know that you don't have to have backend Engineers if you're making games and products and services because all of it is done in their proprietary backend system and so so your team size I think can be a little bit different your acquisition costs maybe are not

quite they're not what they are on mobile but they're still there and then you know many of these are licenses and then you have to figure out you know how does that split work although many of these companies are being hired by Lors to all of our earlier weeks of comments to promote their games they're being hired by the marketing divisions of Paramount Disney all these companies because they know this is how you reach kids you advertise on on YouTube and you advertise in Roblox and and if you want to reach a kid that's what you do but this is the theme we've been talking about for the last six month even even year post at we're talking about strategy we're talking about all these different games distribution distribution distribution like for all the costs that Roblox covers the number one benefit they provide is access to over 380 million monthly active users like that is the headline metric that gets people on this platform and that is magnificent that's what all these other ugc platforms don't have there 380 million LLY active users yeah who are in a demographic that is highly desirable

by many advertisers because it's the home of gen Z and gen Alpha so I agree with you I'm a yes handing what you're saying for sure totally all right everybody that wraps up this week thank you so much Phil and Mishka are at the play Summit play thing play Ventures Summit next week all right play play Bo play box we'll be kayaking and going to SAA so you know enjoy the the episode without us with that mental image in mind so Chris is we're gonna tag you guys out and tag Crest back in lot lots of movement see you all next week 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 fund slack group if you have 5 years or more of gamesindustry experience go to deconstructor of fund.com slack and apply to join join

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