TWIG #295 GTA UGC Future, the Borderlands Movie, and VR Headset Wars

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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 [Music] business welcome to this week in games 295 where we read and distill all of the weekly game in industry news so you don't have to here's what we got today uh professor of Economics Crest will give his thoughts on the one day recession that hit last week he wasn't here so um get ready for a deep e economic lesson everyone we're going to weigh in more on what happened at Bungie with the recent layoffs a little bit more inside baseball kind of dissecting what happened there and then lots of earnings reports are out we're going to talk a little bit about next Nexon and

take two I'm bummed that Crafton just came in because they crushed it so maybe next week we talk a little bit more about Crafton especially because they did the Hi-Fi rut Tango Game Works they purchased them for Microsoft so that might have to hit next week I also Cris imagine we're going to fight over trans media since Borderlands was a bomb of a movie trans media is over Dude Halo bombed and Borderlands bombed what a shitty strategy from the get-go seriously no no it's remember remember we rebranded it it's franchise franchises are important they completely bombed this one I wish I had a better Borderlands analogy I played it so long ago I don't know any words to like make something cute out of that okay anyway hi I'm Jen Dono strategic marketing consultant at bet hat and Jade Inferno and today there's only three of us Eric Crest principal at gossamer Consulting Group

say hi yo sorry he's [ __ ] playing wow right now everybody he is playing wow right now is not paying attention I'm I'm I'm leveling up my eighth character to level 70 like a [ __ ] crack addict for no PR reason this game has got me by the short hairs as they say I don't know what to do with myself so I will stop playing and get through this podcast I promise well thank you for that for your one hour of attention uh Laura taranto senior director of product at Big Fish hey hey and our friends Mishka and Phil are off at some sort of play Venture I don't know they're hanging out in Finland somewhere hiking and saing and enjoying nature yeah who knows who knows all right so Chris I think you've been going all around the country on college tours what what's going on oh yeah I was just out with my daughter is a senior next year and so we are looking at schools sad for is that she wants to get

as far the way from us as freaking possible so we were looking all at East Coast Schools but it was it was really fun I mean I I haven't seen some of the schools so that was kind of a nice thing to do for you know a week at least and then we're going to go back probably and do it later we looked at like we were Pennsylvania you know University Pennsyvania haford NYU Columbia Northwestern she just basically really wants to go to Big City that's where she wants to be my wife went to Penn so that's our big hope but I think NYU she's keen on that so I don't know it was cool very fun good to hang out with my daughter I would highly recommend washu although it's in St Louis which is not a big city a really good friend of mine went to pen and loved it although it's not in the safest of places and Laura I am sad to say that washu is is actually not in Seattle I know I was like is that in Seattle Seattle's not a big city oh that's true so she wants to go East she wants weather all right that's fine

yeah she'll see she'll come right back to San Francisco because weather is GNA kill her my son stepson is doing the kind of Community College local College I'm going to knock out my credits and do the transfer thing so he just graduated in high school I feel so old oh and my wife had to update his RAM on his computer because he is now playing valerant well he's playing fortnite and valerent so he's graduated from just a fortnite he used to play on his iPad with the claw and now he's a PC Gamer so it's it's kind of fun to see the evolution of what a gen a to a gen Z gamer is these days all right a few shills I had the pleasure of attending two amazing La gaming events the first was with a group of folks at EA great mix of women and allies it was organized by the lovely Lupe who is one of the chairs of their kind of women's ER G group it's just

great to see that companies support like hey bring in speakers and do these things the second was another kind of female focused event female leaders in gaming organized by friend of the Pod Grace I didn't know if I was even going to show the event sponsor but I am because AWS I didn't know this that they give startups like varying degrees of credits if you work with them so depending on how big you are you can use almost all of their services basically for free in the beginning so who know good good job AWS so thanks for supporting startups so next if you are a longtime fan of the Pod Adam teler is back and he's going to be interviewing nuu they have their new Global game market report that's going to be out maybe this week next week it's in review and so he's going to pop in and out of a podcast here and there so it's nice to have him I've I actually have never been on a pod with him so I'm excited look you're excited he was he's he's the

smart one he's actually does the work so it's good to have him back first of all I also do the work oh I certainly don't I know all right speaking of work and all jumping into one I don't know if this is a correction but last episode we had a little bit of a back and forth debate on whether House of the Dragons was better or Game of Thrones was better I believe it was 3 to one for House of dragons and was the one who said Game of Thrones and I think our listeners would like there to be some acknowledgement of the art form that was Game of Thrones and how it potentially is better in terms of probably a narrative and kind of the character arcs and development even though there's less dragons than House of the Dragon so they they're both great I think they're both great I think yeah Game of Thrones was a lot slower but I kind of like that that's a tough one they're great both of them are great yeah

there's one more we believe Phil might owe a correction on the Canadian metal count and and Mishka is no longer allowed in Canada after saying that I think he did not enjoy the coffee from Tim Hortons I can't remember exactly what he said I think it was something like very average or oh I think he [ __ ] on it and Sh to be nice I've been to Canada many times and the Canadians do not they're such loveling people they don't get upset except if you mess with our coffee and their Timmy Horton which is what he did so I was like Mishka please don't get us canceled in Canada so if you're a Canadian listener please forgive us the views expressed by Mishka do not reflect ours okay dude we don't need Canada come on let's do it all right speaking of Misha right I'm I'm a bit torn here because I get feedback on both ways on this they don't like when I generally bag on other hosts particularly live and the fact that he's not here is bad is kind of a bad look on

the other hand I got three or four people that said dude what the [ __ ] is MSA doing talking about macroeconomic [ __ ] right like so I I think we got to do a quick correction here because the Japan Market correction was a basically a flash in the pan you know Misha was claiming that it was recession fears inflation problems tariffs War interest rate increase struggling economy stagflation blah blah blah blah blah blah blah like he was just like this like absolute diet tribe of found words from I don't know the internet or something and that resulted in the collapse of the stock market and that we should expect stag inflation until 2032 that was like his his his expectations you know and while some of those things may be true that what what's going on I imagine you could say that about any time in history that this stuff is going on so the reality of it is Japan had a unexpected raise in interest rates which

led to an insane appreciation in the Yen and then it was also disrupted by some technical trading that led to a massive selloff of equities and that also impacted the US which also exacerbated by automated trading in the US the market was down like 18% in Japan right but now it's back up so it's only about down like 2% versus where it was before the interest rate hikes so actually and that's a reasonable move given a surprise and in interest rates so there's no need to freaking Panic every time there's a selloff in the market right markets are [ __ ] volatile by Nature okay and some of these automated Training Systems can actually exacerbate these challenges right and so like don't [ __ ] Panic right calm the [ __ ] down you can't predict Doom and Gloom based on one day in the market and we've had a lot worse things go on in the market and we're still cranking all right so that's kind of all I really wanted to say on

this I think Misha's got to like pull it together you know Joseph Kim used to do this all the time like there was like one thing that happened in the market and then all of a sudden like the world is coming to an end you know it's like it's just not it's not the way the world Works sorry thank you Professor listen this is not my area of expertise but I didn't have enough to really get into it with Mishka on the Pod because he kind of threw that in last minute so I went and actually did a little bit of research on what happened and I listened to an entire podcast on Yen Cary Trade which is basically you know the challenge that happened in Japan it's an hour of my life I can never get back but it's basically how rich people and the mega rich people use and abuse the Japanese yen to you know basically make more money so after hearing that deep dive and hearing about like all of the automatic issues that happened totally agree with you Crest that there was no reason to freak out in fact it all like popped back up just a few days later so yeah thank you thank

you for the clarification and correction all right so headlines Lots going on so I wanted to First kick it off with Monopoly talk and it's it's not the typical Monopoly go talk that we have it's about Google so Google can't pass go as its hand is slapped by a us judge that has finally ruled that Google search is a monopoly in search so as a reminder Google is paying folks like apple $20 billion to be the default search which a judge has deemed that that stifled competition no news on the remedy yet and likely no immediate impact for the games industry but from a tech perspective this is pretty momentous this is kind of calls back to what happened with Microsoft and Internet Explorer and Netscape back in the day 20 years ago by the way this came up in a previous administration and is now being you know took four years to get to this moment it's going to take

forever but so that's Google and then on the other side with apple and who knows how that's going to you know impact Apple they have revamped its EU business terms for link outs so this is as a result of the dma and I'm not even going to attempt to go into any detail on this because it's incredibly confusing but the gist is that there is basically like two different fee structures that they're setting up and there's a 5% initial acis ition fee and the store Services fee which is anywhere from 5 to 10% versus the flat fee that was 20 17% uh see already I can't even explain it like it's a it's a train wreck so in any event super confusing but again let's wait and see they they'll likely be sued Again by the EU and they're still trying to figure out how they can work on the link outs if you're interested there's a ton of articles that go into vast detail but just give me that heads up this will

all get worked out but they still have these insane like error messages every time you link out to other sites for download so it's like it's still not a tenable situation for third parties that want to build outside of Apple ecosystem so and it's only in the EU just to stress that as well yeah correct correct did you see that patreon is now being there was like an article maybe sefor posted it that they're being forced to migrate over to the purchase system and then be subject to the 30 % fee yeah okay I I saw the headline I didn't read the article but there are a lot of these kinds of tidbits of news coming out people that had been avoiding the 30% kind of fees that are now being hit with it I think also it's impacting some of the social media platforms as well on some of the the advertising that's happening I mean if Apple gets cut in one place or Google gets cut in one place they're looking to make it up someplace else so yeah we'll see yep all

right the Global Marketing reports are are out from two big companies well one is not a big company one is newo who do a great job on all of their free reports and they often cover the entire industry mobile console PC and then yoast who we talk about all the time who has a great newsletter he has a new company called Aldora a l d o r a and so we talked about them a long time ago at GDC that his new company is a data company looking to in in a sense rival what newu is doing so both have competing views of the industry that came out like within the same week so it was very fun to kind of pair these things together so I just want to give you a few highlights and Cris ask you a few questions about this so on the 2024 total industry Outlook both of them are about the same saying you know between 186 187 billion for 2024 I think the yast also goes into 2025 well as does newo as well so

they're projecting that there's about like 4 and a half to 5% uh year-over-year increase as we look into 2025 so both of them are predicting kind of growth in the market which is great although I think I hear Phil calling from Sweden saying inflation right like are you accounting for inflation and I don't know man but you know the good news is it looks like they are projecting growth um Yos actually talks a a little bit about VR expecting to grow 11% in 2025 basically driven by The Meta Hardware that's going on there I think cres is going to make fun of that in a moment as will I you know 11% off of a small base is mice nuts content is king So software publishing Remains the primary generator of course that's going to grow around 3 and 1 12% you know mobile continues to dominate also growing so let me get into some of the growth rates here compare and contrast

between both of these reports so both say that mobile growth is about the same around 3% growth which is probably around like inflation PC is also they say up around 4% on both reports the difference is that console they are predicting a different growth rate so Aldora or yast is up 3% newo says down 1% so chis high level what's going on here what do you think I think both are very reasonable outlooks I don't agree with juice expectations around VR I think VR is dead again but maybe 11% on a small base makes more sense but maybe he sees something that I'm not seeing but you know Apple's entr was a disaster you know I think Facebook is losing its thing and and the focus of this [ __ ] is all is all gone everyone's focusing on AI so they're not going to spend any more money on this [ __ ] right so it's like I don't know what what he's seeing that I'm not seeing on that and

then I think the only other criticism I would have is the console business even though he ju has a growing I would say that Hardware with with switch 2 and GTA coming Hardware should have a good year next year is actually potentially for units to grow maybe Revenue comes down because pricing comes down how about this I hope that Hardware does better than he is forecasting even though I know hope is not a method um I will say one thing about UST or ju or whatever y whatever Yost okay he must have found an editor dude like his stuff is so freaking challenging to digest you know with my small little brain I have to filter this [ __ ] through chat GPT but this the most succinct thing I've ever seen from this guy right and I think it's a great marketing tool to build his competitor to newu so really well done for him oh I a thousand per agree I'm a I'm a fan of his newsletter and then to see this report and it's a free report you can go to the website and download it it's actually been covered a lot in

gaming press they take his hit the first slide so I'm going to be guest peing at the USC gaming school which is local here for me because I'm in LA and I went in and I'm quote borrowing a few of his slides to show the students like what a great Market summary looks like the his first couple of slides just really nails like how do you think about the market what's going on at a high level cuz part of when I talk to them it's like how do you find blue ocean how do figure out and filter through what it is that you want to approach with your product like what's product Market fit and how do you get there and so he's a professor at NYU so I could see why some of this is great and then and then from a business perspective I think it's really it's awesome all right a few collabs of the week I'm a huge Star Trek fan I'm not a surprise for you guys CU I'm a geek Galaxy Quest do you remember Galaxy Quest you remember that movie from like forever ago oh it was really funny it was like a spoof right it was a little

bit of a take a satire on Star Trek inspired type shows yeah movies Yeah Yeah Tim Tim Allen yes and soury Weaver so Galaxy Quest characters will appear in Star Trek Fleet command that's the scop game so there's kind of an interesting campaign for a free Avatar that's basically a way to introduce players to the web shop I just wanted to call this out as brilliant there's a lot of friction we're showing an image that they have up and they've been promoting there's like four steps you have to take to find a way to get this Avatar and get into their web shop and it's only for new players which is kind of a little bit of a of an insult I think if you're an existing player but you know I I I think it's a great idea as a way to number one get new players in and and promote the web shop so really interesting collaboration there and then Cris I thought you would find this interesting although you're deep in WoW World of Warcraft has entered Diablo 4 with new Cosmetics sets and a mount bundle in the

cash shop so does this give you any reason to go back to Diablo or no because you're deep and wild not really no I I actually do really want to try Diablo again but no well didn't they time both of the major updates at the same time so that feels like a little bit I don't know a little bit difficult I you I only can really be engaged in one of these things at a time I'm so obsessed with it so it's like makes sense it's not it's not healthy as it is I don't want to add any more fuel to my obsessions hear you all right so let me trigger you a little bit um we were just talking about VR and as we move into the next section which is investments in m&a I don't know if this is a rumor or not but I saw this article Microsoft plans new mixed reality VR headset to rival Apple Vision Pro may run Windows apps via the cloud what wh what what is going on I mean

this apple thing has been a disaster why would why would they even consider this it doesn't even make sense and Microsoft's been down this road they had that piece of [ __ ] Tech before they spent gillions of dollars on Hollow lens it's over just stop just stop it stop it stop it I hope they never give up I'm still very optimistic on this I've done a couple well I've did one thing I can't talk too much about but there's some interesting Hardware changes I feel like certain companies are making to make it feel more seamless without having two eyes that are a projection of your face on the front of the screen like I feel like there there's more than than what we've seen in the current execution of these of these headsets for sure I'm hopeful okay well hope it's not a strategy as cres say hope it's not a strategy how much money did they spend on Hollow lens I mean are they really going to go back against I mean Jesus Christ the people forget you know like r&d's expensive maybe the remainder that that team is hard at work at something else

that's going to be not gaming related something else like I don't know more productivity related maybe I don't know they should go go watch your talk Jen on finding product Market fit maybe they see a refresher well they're going to see that 11% up from yast and be like look look yeah exactly that's why I don't like these reports suggesting that there's growth in Industry where which is almost dead you know so it's like so that's what I don't I don't like those things so all right moving on I know Cris you might not be able to go too deep into this but WB reported weighing the sale of the games division in the wake of an almost 70% decline in its stock price since Warner Brothers Discovery was formed in 2022 so this is the second time this decade actually that WB Games has been kind of up for a potential sale back in 2000 Microsoft and take 2 were interested in buying them and at the time the deal would have been around maybe like 4 billion which is

interesting that scopely went for almost five so that's pretty funny obviously the sale never happened WB gains has stuck around and it's its own entity and Microsoft never fully took its eye off the Warner ball leaked documents from the 2023 merger you know potential merger with Activision showed that it wanted Gotham Knights Mortal Combat one Suicide Squad bet they're glad they missed that one on Game Pass for a range of 50 to 250 million each so those were leaked documents they're probably old but I mean it feels like they're always kind of up for sale and they're always up for licensing I was kind of like is this really news isn't everyone always kind of up for sale yeah I mean this is a long drawn out story of which most of I can't comment on but from investor perspective I'll just I can say a few things like there are some valuable assets here that that would be worthwhile to own the biggest challenge is without the ownership of the IP itself it's far less valid Val than you might think right so

if you have to sign long-term licenses for Mk Mortal Kombat DC and Harry Potter and then on top of that you have game Risk and you know and Dev risk Etc like the value of this is far less than it would be otherwise if it was like wholly owned IP that could be transferred yeah and then part of the reason it hasn't sold in the past is because the valuation expectations got out of out of hand in that time period and a lot of the leadership at Warner doesn't know anything about video games or they claim to know but they really don't so in my estimation I bet the company's worth about the same you know in the 4 billion three to four billion range maybe maybe a bit lower given some of the challenges that they're having the biggest problem is that there's no more buyers right I don't think EA and take two are interested right I don't think Microsoft can really bite off another multi-billion dollar acquisition you know there's Amazon maybe Netflix but Netflix may not be interested because the IP doesn't come with it right they want to own their IP as well on their

platform yeah so I don't know really only leaves Amazon oh and the Chinese are out right still like the Chinese can't make uh big Acquisitions in the space so I think they're great teams I just don't think there's a lot of bids out there anymore and maybe they get sold peace meal I don't know whatever well Crafton could maybe be interested oh but they just bought Tango Gameworks and the high-fi rush IP from Xbox as part of a strategic agreement and you know they're a Korean company right so the firm said is working with Xbox to enable a smooth transition so that the Tango team can continue developing the high-fi rush IP and explore future projects I think they were working on high-fi Rush 2 which is why they potentially were let go is because that they were at the beginning of that next project which is a lot easier to cut something at the beginning than later on so thoughts on that one yeah I mean this is great news for tango I mean much better outcome than what Microsoft you

know did to them and it also further makes Microsoft look like an evil dictator why couldn't they get this done before they announced their closure right like why wouldn't they put this out there to see if anybody was interested you know they put through this team through hell right I mean it's it's it's almost evil right and I'm maybe there's lots of things going on behind the scenes that I don't know but like on the surface and from a PR perspective this is a [ __ ] disaster Absolut disaster for Microsoft but I think overall great outcome for tango and I and I hope they can find the success at at Crafton that was clearly not happening at Microsoft yeah I want to go back to something you mentioned about you know the Chinese with the US kind of putting through legislation to potent to kind of force bite dance to sell Tik Tok Chinese ownership of us companies is in question if not you know obviously impossible to do now but also is in question of existing companies and I was thinking about Riot

which is owned by 10 cent and also well supercell doesn't matter cuz they're in Europe right because it this is a us thing is there any concern about 10cent owning outright Riot and they have a huge stake in Epic although I think that's a little bit different now so Chris I know we didn't I didn't like script this for us to talk about but I I don't know I'm I'm kind of wondering if Riot might be up for some sort of sale oh I mean is there like regulatory concerns about correct Chinese ownership of Riot yeah no not specifically I mean I mean it's a always a possibility but I think right now those type of Investments are relatively safe although they do collect information on customers right but you know I think there's some degree of separation between those companies I don't think they're going to get as much scrutiny as something like Tik Tock which is you know propaganda causing lots of other issues yeah no so sure I I've these conversations it's kind of complicated I'm not going to

really go into it right now I I I think I think Riot's okay okay with that all right very good all right let's talk a little bit about games Laura yeah I had some puzzle games so last week or the week before we covered time blast which was by a studio within Wildlife they are a developer I believe out of Brazil and they actually just launched another puzzle game called secret puzzle Society It's s launched back in March it's still very early I was check taking the numbers play through the game a bit it's this wave of kind of there's been a match three what do you do with match three what do you combine it with I mean if you look at any type of puzzle game it's been combined with a lot of different ideas this is more of a match 3 meets mystery I would comp this against a little bit mystery Matters by pic or a bit of small town murders by roio it's again early days I didn't want to pull the numbers too much on this because I think I'm like level 70 I have some early thoughts but they still need to add more Playbook more live Ops but I think it's interesting but I actually

what I like more about it is that Wildlife they are going for puzzle and I love that they are experimenting with time blast they were doing some experimentation with what does the next wave of the match 3 engine look like now this is a little bit more of a metap playay but I'm I'm happy to see there's people have not given up on puzzle yes it's hard but I think there's still a ton of opportunity if you're if you're willing to take some risks and I like companies that take risk all right so Harry Potter Hogwarts mystery another mystery game it's a theme it works well for to get lower cpis people like mystery racks up 500 million in Revenue this game's been around for a while actually I remember playing it a while ago it's um Mission driven point and click adventure with a Harry Potter theme more RPG actiones if I remember correctly yeah yeah yeah this is from Jam City and it's one of their biggest games it's actually their most downloaded game for the first half of 2024 I do love that you know the reason why I put this in here a couple things

is again from a PR perspective I love that we're seeing more Milestone PR that's getting covered right so either Revenue numbers although I think we'll all kind of make fun of the you know the pre- numbers since some of those aren't actually converting into the actual downloads when you launch but it's nice to see that these things get picked up and it's nice to see games that have been out for a really long time you know Jam said he's got a bunch of these we talked about Cookie Jam still being out you know 10 years later and who would have thought that mobile games that back in the day when you know we all started on this it's like it'll be around for a couple of years and like many of these games are around for 10 plus now yeah uh yeah yeah so and then I want to talk a little little alliteration we have pla's plan and Claire's Chronicles so we did cover this but way back when 18 months ago plti was talking about pivoting their strategy moving away from new games was too difficult the landscape was uncertain and they want to focus more on m&a it

seems like and I think this is good news there's been a change to that strategy as they're going to be targeting a launch of Claire's Chronicles in Q2 2025 I think this is a good move wuga has established itself as the leaders in the Hidden Object space they still are with June's Journey before June's Journey they had Pearl's Peril I assume Claire's Chronicles is a hidden object game there's not much about it so far but I'd assume by the title since it's now you know Claire Chronicle June Journey Pearl Perl um assuming it's a hidden object game I'm curious to see what they do there's is a lot of opportunity and hidden object because what June's Journey has been out what 2 oo I I don't remember exactly I think it's like 2018 is it's been out for a while still number one there's been some experimentation on how to integrate hidden object with Match 3 that's what Manner Matters by play was trying to do they were trying to find ways to make it more level based as opposed to kind of

just make finding a scene how do you make these scenes that are kind of expensive to make rep playable I'd love to see how they're going to combine things I think mystery matters manner matters mystery all these matter games by play we're trying to figure out different ways to incorporate Hidden Object maybe with something else yeah I'm excited I'm going to I'm definitely going to sit down and play when it comes out so the other takeaway I have is you have to have alliteration in the title of your name yep Claire Chronicle 2 C's the so the other thing I think you brought that up plka and and not launching new games and we covered this a little bit last week I think singular had a a report out and there's a lot of kind of marketing companies having reports out around UA is bouncing back a bit you know maybe not on both platforms I think I I covered that cpis were going down a little bit on Android up a little bit on iOS but I think with with especially what's going on at App 11 and

axon 2 I I think there're starting to be a little bit in AI ironically this is a place where AI is really benefiting people is that acquisition and the cost of acquisition and the ability to find good players is getting better it's I don't think it's preat levels but it is better than it was so that might be another kind of reason of plka changing strategy and deciding to launch okay so Bungie I know we talked a little bit about this last week just a a quick recap so Bungie sadly laid off 100 people out of the 1200 you know the CEO came out online and said you know sadly that they they kind of overestimated and overspent and over hired for what the execution that was you know coming out Sony has decided to take over some of the people from Bungie so many teams and and folks are actually getting absorbed into Sony they

had actually another project in development that is going to get absorbed into Sony or another team so I think what's left is marathon and you know the the rest of Destiny so you know obviously this is kind of a hit on culture and a hit on morale we haven't had a chance for Crest to weigh in and and I know that you give a lot of thoughts so I'll hand it to you I I'm really kind of torn on because I can really see both sides and we actually talked about this on the podcast before I was like this acquisition made no sense at the time it was way too rich for what Bungie was and then the stated expectations were out of control in terms of what they were expecting Bungie to accomplish within an organization like Sony right so from the Sony perspective like they required for $3.6 billion doar so expectations High you know in terms of what you're going to do and perform and not only were they

responsible for their own games they're responsible for the entire sers of service strategy at Sony and then we know that Destiny's the expansion was delayed and performed well below expectations Marathon has been delayed a few times and their mobile game never came to fruition so you know Bungie took a [ __ ] ton of money and didn't perform right and so this is what happens right I so I'm not to be like I mean not to be like too straight forward about it but like and then on the flip side you know Bungie is like super fiercely independent they want to do their own thing you know I don't think they ever really were capable of managing live service games at Sony it was kind of a never a fit from the start you know they wanted to build their own creative things it is clear that the cultures are quite a bit different than Sony that was always the case and you know Sony obviously forced layoffs at the studio which did not help morale at all and then on top of it you know Jim Ryan who is the biggest executive Champion basically got replaced by heroki son I

think who is like a total beat counter so it's a shitty situation all in right but this is the third time Bungie is going through this I mean like this happened at Microsoft and happened at Activision so it's like there's clearly some kind of Disconnect between what expectations are set what expectations are met during these type of transactions because they were certainly late and delayed at Activision as well so I don't know I hate to be Doom and Gloom here but I've said this a few times the podcast like the minute Sony people started to take over at Bungie and now are basically seeing a huge integration of that you know it's really sad to say I absolutely love their games I think the team really needs to stay independent to do its best work and frankly they just seem to be never belong at a big company like Microsoft or partners with Activision or as a part of Sony you know so it's a little bit shocking that they made the same mistake three times and you know obviously they all got paid though you know and so you know maybe they'll go off and do build

something on their own again I don't know yeah it seems kind of over we talked about this before in reference to EA when EA buys teams that you really have to think about the H how do these things come together like what's the 1 plus 1 equals three what's the chocolate and peanut butter of you know if you're going to buy someone and absorb them you know is it a culture fit what you know what are you really going to have them do and in this case I mean all ever since I've been on the podcast we were like why on Earth would you bring in Bungie and then assign them to do basically the live service infrastructure for Sony like is that the root cause did that take their eye off the ball of Destiny and marathon and all of these other things or not I don't know anything to to speculate but when you have kind of competing strategic directions I think that can really pull people and take their eye off the ball so if you're going to go acquire someone you really got to be clear of like is this the right fit and what do we

envision the output of this thing going to be and because you can't have your cake and eat it too I'm going to keep going with analogies on this there nothing worse than being acquired for something great that you've made and then be not being able to make it again or being told to do X Y and Z when you've been doing something else that's been working and it not saying this is what happened with Bunger but with the acquisition and culture fit 100% is a reason you're buying them let them do that thing they're great at don't put them in a corner and be like do this I'm going to go back to the valuation thing like they were not worth 3.6 billion to keep doing what they're doing you know correct Destiny 2 is a successful game but it's not that successful you know like it's could be a lot better you know than what they're doing certainly hasn't performed well as of late so you know they didn't even execute against their what they're good at right and they certainly did not justify the valuation that they given based on the expectations from Sony yeah you said 3.6

I mean we just talked about the Warner valuation was four scopely was 49 or something like that and I know that Bungie's acquisition happened in a very different world and many years ago but I think that just goes to show that valuations are maybe hopefully right sizing a little bit in this day and age with with where we are and yeah that was probably just everyone was you know as Scott Galloway likes to say champagne and cocaine like just really L like woo I'm going to throw money at Bungie 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 demanded subscriptions and streamlined Payment Solutions worldwide unlock new markets and maximize profitability through their customized secure payment architecture

and dedicated support team exola powering game developers to achieve Global [Music] success this podcast is brought to you by apps flyer in today's Digital World understanding your apps Journey from Discovery to download is more than just insightful it's essential enter apps lier the leer 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 talking about throwing money at things Nexon earnings okay so I just wanted to cover this because of dungeon

and fighter so nexon's Q2 Revenue exceeded expectations by 30% year-over-year net income was also up 63% and the growth was driven by dungeon and fighter maple story and FC I was like wait EA FC so altogether that saw a 57% year-over-year increase so dungeon and fighter doubled its franchise revenues year-over-year by by expanding to Mobile in China so we know that I think it's overtaken everything and is now the number one game in China I think it's the fastest to half a billion was a stat that I saw in China maple story we were talking about earlier about games that have been around forever That Grew 9% with regional expansions and then FC online and FC mobile exceeded expectations despite FC online's Revenue dip so I didn't actually know this but Nexon distributes or publishes yeah AFC in Japan and Korea and 10 cent takes

China from them so it makes me think a little bit more about why folks might want to consider working with a local publisher in some Asian markets especially like Japan and Korea obviously you know for China that's a whole different topic and a whole different choice but as someone who and I I had to launch some games in Japan and Korea I can tell you it's extremely difficult as a western publisher to do that successfully and you know would many companies just benefit by handing that over to somebody like an Nexon or somebody in Japan anyway I just was thinking about that but Chris anything that I missed from Nexon I've been really bullish on Nexon because of dungeon and fighter it's a game that's really really successful in on PC for years I mean years and years and years and they just have been on the sidelines um not getting approved and not getting to Market on mobile which is obviously a much bigger Market in China so yeah I've been really bullish on it Unfortunately

they gave really absolute tepid guidance for next quarter which just [ __ ] crushed the stock so I'm hoping that it's very conservative and they're just going to blow it away because if it has any longevity the way the PC skew had then this thing is going to be a home run for years right because that game has never died in China on PC so I'm still very very bullish on the company and hopefully they just gave kind of like conservative guidance makes sense all right so our next earnings is take two and there's a lot in here so they have a lot about Zinga and how their new games are performing they even touched on ugc a little bit in a lot of the different news stories so let me just do a recap so first you know we already [ __ ] on trans media of the week which is the Borderlands movies so just as a catchup the Metacritic score was 27 and the user score was a 2.8 out of 10

which is yikes usually I always look at the the consumer score more than the critics because I feel like I Vibe more with that and even even fans thought it sucked so oops they got their ass handed to them at the box office the Ryan Reynolds Family kicked their ass so Deadpool was obviously number one and then Ryan Reynolds wife Blake Lively was in a film and so both their movies were above above Borderlands and it pulled in 16 million globally for the weekend I think it was like eight or nine in the US so under 10 here that is like truly an atomic bomb disaster just awful I again firmly believe that building franchises are important and this one is a huge swing in a miss so anyway all right I'm going to keep going the thing that we all care about the most honestly is GTA 6 they came out and said that it appears to still be on track for fall 2025 we all know that they can change that at any point in time but I think for their own

messaging that's what they want to say right now the take two interactive software posted higher quarterly revenue for a wider loss attributing the latter to heavy spending on marketing of new games so remember so I just also wanted to you know sometimes I forget everyone that they own so they have Rockstar which is GTA 2K which is NBA WWE and 2K actually has a ton of mobile titles too and then Zinga which is all mobile and so the results mostly came in ahead of expectations shares were up around 4% in recent early trading and then so here's something I wanted to get your thoughts on they asked the CEO TR about ugc and ugc you know we see that obviously in Roblox we see that in ufn how is that going to come to fruition in terms of the GTA franchise it's it's interesting because G GTA modding has probably helped the franchise stay alive over the

last I think it's 10 or it's going to be 12 years in between the games but he came out and said that ugc doesn't appear to be a major factor in the company's future is that a Miss for them like what do you think I've been actually trying to understand what the opportunity here is in this market so I've been having some calls in this and I had a great call yesterday with a clear bull in the space on ufn as well as Roblox and you know I think the guy on the phone that I talked to yesterday would argue this is where gen Z is like they're on these ugc platforms they their expectations are set of their entertainment being delivered you know like Roblox and fortnite where you know a heavy social layer and you know get in get out you know these type of interactions that sort of thing um and even though you know Gen X and Gen Y have tons of edenal incomes and spending insane amounts of money on games they're dying breed and you need to embrace a future I think that's kind of how he would argue it but I think I'm with Strauss I'm J X to my

death right it doesn't really make sense to bring his franchises to other platforms because his biggest franchises are platforms right GTA and NBA 2K are [ __ ] juggernauts right so it's like why would you want to bring those experiences to other platforms it doesn't even make sense and to some degree despite you know Tim's you know benevolence ufn seems to be a platform to build out epics business I'm not really sure if it makes sense outside of the smaller Indies to you know build on for big software and service companies like EA or take 2 or whatever to bring their big franchises of platforms to support epics platform I don't know if it makes sense even though that's where that audience is I still think that that young audience that is interacting with ugc are evolving and moving on towards you know Triple A I think that's still we'll still see that so I don't think Strauss was suggesting

not to allow ugc on GTA actually he says obviously we're excited about what we see in the modding Community for GTA that's pretty exciting I mean that's his quote so I don't think he's talking about not allowing ugc on GTA I think he's just talking about being part of other platforms ugc platforms so I think what he's kind of saying is that that the whole industry is not going to turn into some Ty of ugc playground right it's not a ugc driven in Industry that customers are looking for the best entertainment experiences and that is what Take 2 is going to provide them and that's not what they're going to find on these ugc platforms I think he would argue so no UE GTA FN I'm just kid no no but it's interesting I you know I mean he could have the next platform like he could be the next fortnite or the next Roblox if they develop better modding tools and they develop more ways for people to come in

the GTA universe and allow for better customization and better modding is that the next platform I I think he could have the next platform because so many people want to go into that world and you know it's the naughty wish fulfillment platform that you can be anything and do anything naughty because you can't do that in Roblox and you you know it could it be the the rated R version of Roblox and fortnite that I oh that GTA that's a great idea we should go pitch that you are the rated R version in the next you know ugc platform we let you do and and mod all of these crazy things anyway I've been having these like battles on the internet on LinkedIn you know just taking pot shots on LinkedIn about this [ __ ] about giving up oh yeah I didn't even talk about this yet a16z had some [ __ ] nonsensical article about like the biggest IPS in gaming in the world and that oh yeah when when are they going to open up their IP so that

anybody can build out games based upon their IPs or you know just open up their IP right and which made no [ __ ] sense because in the context of what the article was saying was that these are the biggest IPS in the world and they all have been protected for decades you know in order to build it that way so why in the [ __ ] are they going to build open it up to anybody to use right and so in the same way I still think that allowing people to change the type of experiences that you have in a amazing platform like GTA or NBA 2K just doesn't make sense it doesn't make sense people like the curated aspect of what that experience is they don't want a bunch of yahoos building different content for that that's doesn't fit the franchise or the IP you know obviously not 2K NBA 2K but you don't think that I think that fits in GTA I mean GTA is about being the your most awful self and I

don't know I think of all the things that one feels like it could work yeah and you could do that by creating crazy content from the company that makes that sense but if you open up the ability for them to create whatever they want in this world I think that breaks the whole fiction of the world itself right like that's not what they want they want to be immersed in the experience that is GTA that is curated by the GTA developers I I'm just talking out of my ass right now but like you know I don't think they want like a a thousand foot dildo wandering around like you know downtown LA like you don't think that kind of breaks the whole thing like if you're able to create where the [ __ ] you want you know should you be protecting the brand guidelines Jen isn't that like part of being in brand marketing is understanding like this is how the story should be told versus not otherwise yeah we're going to have like walking dildos in La which is is GTA have you like that so that is the brand the brand guidelines

is you can be the craziest thing ever and especially if you were to construct it in a way with there you know there are worlds like you enter portals and you know there's the main world but these are offshoots that you could go into that are crafted by you know creators the rated R version of that or the rated X version in many cases since we're talking about a walking dildo time to penis everybody we are we're 57 minutes in and we finally got to TTP I I I don't know I I think this is the perfect brand fit for this kind of thing anyway hear you on that but I want to give you time Laura to dig into Zinga and I know you did a lot of homework so take us through what's going on with Zinga homework's a generous term I got curious then all of a sudden I was like where did my three hours go how did this happen Okay so I think from this is the beginning bit is from the report itself right

so more marketing spending for the re of new sevil gate mobile titles from Zinga as we know Zinga has a lot of games like I think that that should be established early on and when we're talking about m& earlier what take two owns 2K and Zinga like then Zinga owns a lot of stuff they had a ton of m&a throughout the years and that's I actually went through censor Tower categorized all of their games by their subd developer and then by genre and then did a revenue report to see did they get their bang for their Buck but they've bought Peak they've bought small Giant games natural motion Graham social point and Relic I mean they have a massive portfolio just to give you an idea of how big this Rabbit Hole was I think Jen's question was when we talked about match Factory early we were rather divided about whether or not we thought it'd be successful and I thought it was a very good move when it came out it was

experimenting yeah it was experimenting on a simple way to test a mechanic that's already been tested before in other games so they weren't first to the 3D matching which is what match Factory is Time 3D matching but they were adding they kind of took the same approach as what Spike did for tile matching is they started adding more elements to it that work that we know work in puzzle games so I think that's how they started to carve themselves out and they're seeing pretty good success ESS from it yeah I think zinga's match Factory which grew 50% in terms of bookings over last quarter while Tom Blast has continued to grow show this hold on okay so you have this and then I went through and I was like where's all this money coming from so you can see in this little pivot table I made I took all the Zinga games and I would say this is like 95% accurate because this is a manual exercise so they had like 200 games so instead of going through each row and checking each game specifically to make sure I got the genre right I I took a

little bit of Liberty here but you can see in 2023 blast was probably their leading category and 3D match which is basically match Factory was not so Revenue heavy and that's kind of flipped on its head like match Factory and the other games they've done in that category are doing really well blast we knows declined I mean it's mostly from toy and and toun blast is it toonblast is having a little bit of a resch now I didn't capture that but they are with the super light ball and the different um offers and everything they're throwing and with the live Ops they're it's definitely making a comeback you can see merge has decreased that's mostly from merge dragons merge magic the other merge games but then when I thought I got a little lazy I I just kind of classified almost everything that Ric has made into hybrid just because they were too it was I didn't want to F like slice this any finer but you can see like they actually doing really well every time I looked at a chart from Zinga and I saw something

kind of all the other games classified into other Revenue buckets so in sensor Tower they had all like you know the big games and then the other category was massive and I was like why and it's a lot of these smaller games that are actually doing quite well let me see what I he I have oh this is me rabbit hauling I just broke it down the estimated Revenue by the developer yeah year to date 100% I was more Curious to look at how these were how the actual developers were performing and then how the categories were performing all that's happening is that Peak is doing well the rest of the business is [ __ ] okay let's just be honest I disagree with that the rest of the business is absolute crap right Peak is killing it [ __ ] Star Wars Hunters is a disaster like everything is down except for [ __ ] Peak which is doing match Factory and and blowing it out of the blocks with tomb blast or whatever they reinvesting in Tomb blast L that is definitely not true Ric their revenue it's not even a full year their revenue has increased their share of the pie has increased from last year I listen I'm

like the one of the first people like ah those games I don't know but I actually think they're they're going about it in the right way they're testing a lot of stuff Twisted tangle doing well they have something I think there's like bus jam and screw Jam everyone's getting ads for it and people are playing it and they're getting smarter with how they're doing ad strategies I disagree I think I think Ric is adding a lot more than and they're to me they were doing a little bit under the radar maybe some of the others like let's see let's see I'll do I'll I'll pull this chart again I'll submit it for y'all at the end of 2024 and then we can do a proper Zinga comparison just look at look at I wish you had your year-to date by developer would be really interesting you'll see like how bad it is outside of of of what's going on with Peak so Star Wars Hunters I I was curious they did like 2.5 million downloads it's like 1.5 million in Revenue I just oh the game was in development for seven years five years seven years could you

have a bigger turd with a Star Wars IP I mean I I just like a broken record thing like that is this dumb [ __ ] game right I've said this from the very beginning it's a stupid idea it doesn't make any sense that's not how you make money in mobile this is like the fever dream of like a blizzard game or like you know any of these like high flutin like AAA developers trying to get into Mobile it just doesn't make sense you know like cosmetic economies with this [ __ ] you know I don't know kind of reminds me of what's going on with uh Call of Duty war zone where you have a bet on a major IP and a bunch of developers who've never really made a game in a genre on mobile and I mean that thing's also in rough shape as well yeah I I'm with you the fact that it was like kind of tying into the the overall ecosystem and I haven't been following it too closely I thought it was going to do a little bit better than this but I

think that game is almost a bigger disaster from the perspective because the expectations were so [ __ ] high and and I bet they spent about the equal amount of like insane amounts of money on building these nonsense right like I I'm sorry for the Star Wars runers guys I those guys that team is actually really good hell that that game is not a bad PC game you know like potentially yeah it's just not a mobile game mobile game I I think the challenge with these things is that same thing with war zone it's so difficult you know maybe at the end of the year we do like what was the biggest turd like were the biggest like game that had the highest expectations and missed the most because those are just two games in my mind recently that feel like they have a great IP but have just absolutely we should follow up on war zone how about this yeah I I want to be clarified I think part of the reason that I don't think Star Wars Hunters is as bad as zone is because I think expectations were really low for Star Wars hunters from the GetGo oh got it

okay so it's like so like I think people's expectations for for that war zone would be a lot better like bigger than it is which but in terms of the overall investment and time and energy and money I think they're kind of equally bad interesting okay God damn it Hunters that's crazy right did you did you you only got three yeah on an action game in Star Wars you only got $3.2 million downloads I mean how is that even possible you should get multiple tens of millions of downloads even though the revenue is never going to be there because it's terrible designed game from that perspective like you should at least get the goddamn downloads where's the marketing department what the [ __ ] are they doing well I I think you're right however what I will say is that the marketing department didn't have anything to work with so what I said you know I I I think I've told many of you I've worked on Star Wars my entire career I was making Star Wars toys since 199 six sadly I know that dates me so I know this IP

probably inside and out there were no iconic characters used all of the characters are completely made up and so in any of the marketing material you have no identifiable Star Wars characters so you don't see anyone and you're like oh I get it I get the aspiration of wanting to play one of these characters that I know and love now even in like Jedi Survivor or the EA games or battle front or all these you have iconic vehicles and characters and lights and and weapons that you're like ah I get to go into the universe and interact in the universe that I know and love and this game didn't do that from the beginning they also had very weird marketing which was like a game show it was like you're going to come to the Star Wars Arena and fight and battle and it's like whoa this has no basis of reality in the IP and so again like I think we say this all the time Ethan may have started it you have to deliver on the core fantasy of the IP and it's not to like I want to go in and have a battle arena experience with the Star

Wars brand like it's just not a fit so I think they had a product marketing complete Miss from the beginning if I were to give my thoughts all right all right guys well I must go it's good to see you guys good to see you as well all right uh see you next week you're in for a while right no more travel for you or you're in for a few weeks oh yeah [ __ ] done yeah I'm absolutely done okay excellent and I think Adam teler joins us next week so it'll be fun my first time all right all right see you later 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 games industry experience go to deconstructor of fun.com slack and apply to join join the games industry best professional Community filled with peers always willing to lend a hand or subscribe to

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