TWIG #319 Scopely 💰 Niantic, Marvel Rivals Drama, and Xbox in Downfall?

[Music] hello everyone and welcome to Twig 319 deconstructor of fun this week in games you guys know what we're all about we give you all of our Insider takes because you know that's what we like to do and talk about the game industry news so hi I'm Jen donaho I fill the marketing and Publishing role on the podcast today we have Philip black loot box afficianado I was back in business baby I was wondering if we get to that OverWatch story I just I think you're going to pee your pants with excitement over lootboxes being back Crest Eric Crest strategy in investing Mission catov K pasta I'm representing the fine country of Spain this week so that's the awesome that's all that's it all right so um lots of company changes this week so there's a new home for Pokemon go the

same thing actually for Jurassic world what in the world is going on with all these geolocation AR games interesting sadly there is no home for the Seattle based team of Marvel Rivals I think that's going to be a really big conversation for us updates on Playstation numbers which is why I wore my retro PlayStation jacket Crest you have one as well I told you you should have worn it but that's okay well you won't represent today loads more if we get there checking in on Candy Cross solitire and last war survival is crushing it so anyway Phil wants to do TV talk go for it okay when you put it like that I just a public service announcement there's a show that has been running for Four Seasons that is based on the games industry it's called Mythic Quest it periodes us it makes fun of us it's for us and no one talks about it and I find it the most bizarre possible thing that happens in this industry that someone went out and made this for us and no one no one watches it

to me it's hilarious it plays on humor from the game industry that everyone will recognize like there's this mation character played by Dan PD it's it's very similar to community in in a lot of ways it's a lot of the same writers and actors it was like a launch series on Apple TV right I tried to watch it it was like really cringy for me to watch it it gets better it does get better they can find their pacing a little bit oh they do it just it hurt it was like watching work I don't know I the same thing happen with remember Silicon Valley Silicon Valley was on HBO or Showtime or one of those and it was the same thing I was at a startup at the time it was like oh it's too much like work oh it was such an amazing show it was so much fun I I I lived in SF back then I was like it was like living the show and I remember Pinkus was on the show right oh did he yeah he he did a cameo that foots yeah yeah that puts interesting all right well thank you Phil for the update Rob mcelheny is one

of the owners of the soccer team with rexam that's pretty much how I know the show is like oh that's the guy that owns rex on the Shilling part we got one article out which is written by Yours Truly it's the supercells blog post review if you will it's like supercell is crushing it but at what cost so very clickbaity and basically a full analysis of the annual blog post and tldr a lot of kudos to the marketing and a lot of details and hypothesis of what the company do next so I'm proud of the click baity title that's all oh awesome and you didn't even chat GPT it it was all you no no no of course I chat GPT but the article came in through different variations and I just I use canva I use chat GPT come on oh no no totally totally okay I actually like Claude by the way Claude for writing just Pro tip okay so let's do all of the GDC talk subscribe to our newsletter for all of the invite links because every day there's another one many of the events have limited availability will

try to get you in the Sunday party the pregame with beta hat we are currently at 400 people and Stan did the math and said that we are on track for 500 people to sign up please don't tell the venue I don't know how we're gonna do it so yeah show up and if personal personal vouch personal vouch for that event is the most fun event that I have at GDC it is an awesome appetizer yeah I was a little bit late last year my flight was delayed but it was so much fun to meet with people in person Monday we have a sensor Tower deconstructor of fund VIP dinner Tuesday is the executive brunch with heroic labs and Convoy Wednesday product brunch is it a marketing Branch too now yes we synced up with the partners so Meda and solsten and app charge so solstone was very adamant that we also have marketers so what we'll do is it it's going to be 50 50 product and

marketing people ah thank you for being inclusive of of my kind both sides of the coin I appreciate that because we do promote one team one dream here so Wednesday supper club with NEW Zoo Tik Tok abser and Griffin gaming that's going to be awesome really looking forward to that Thursday live twig at GDC nights it's the first ever GDC nights I just found out that transperfect games is the one who is sponsoring the whole thing so thanks to them so 7 pm. if you can hang in there till Sunday please come by watch us tape in person it'll be a train wreck because we're going to pretty much pull it all together it'll be everything that we have seen that week kind of thrown into some notes and we spewed out live so it'll be awesome Crest what are your Corrections Smackdown I I have no corrections I got it all right last week you did it was amazing I think so I think so you you got us canceled from another company so thank you for that people are just so thin skinned you know know like Jesus

like if you're [ __ ] up and we're telling you you're [ __ ] up who gives a [ __ ] we're a podcast for Christ's sake you know if you're really that sensitive to how [ __ ] up your company is then stop [ __ ] up your company you know like Unity Netflix I'm hearing some [ __ ] around Netflix these days it's like just stop I'm hearing that I'm hearing that too not not good so I call it the do bandwagon we're on the bandwagon these are only temporary bands what I've learned is is we get a band for a while and then the people move on to different companies and they come after like you guys were right and then it turns into positive so so every time these happens I'm like yeah sure let's let's wait a couple of years we got time it circles [Music] around game devs here at heroic laabs we know that great gameplay is what players love but integrating metagame features like challenges progression and rewards is crucial for retention and monetization but coding them is a tedious and time consuming process

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to make smarter faster decisions thousands of app and game Studios from Indie creators to Global Giants trust sensor Tower to help them win so why not you start your free trial today at sensor to.com that is sensor.com [Music] all right so a little bit of a shout out here and and something I thought was really interesting so agbo agbo it's a new studio artist-led independent Studio started by the Russo Brothers of Avengers Fame so they appointed game veteran Pete Wan not as president of interactive technology I know Pete he's awesome so I think this is super cool just I don't know anything about what they're up to although I did Google them and saw that they have the rights to gachamon or battle the planets which which is like these little guys behind

me my very favorite anime of all time so super excited to see what they are up to so these normally work out these entertainment companies that go into games I'm thinking about like what sky dance is another one WB kind of Rob do these pan out Bad Robot do these ever pan out no they don't okay yeah so this is this is as bad as like the tech industry trying to do games so they have da mustard though so the other like game Guru there is Don must who helped create mascot is that like a Civil War Commander Don mus the guy who helped to found fortnite yeah WB Games is probably the most successful right like that's the only yeah WB Games was successful and you know why or fundamentally why that was successful and I think I've red they work with you no no I actually got them on the tail end of that [ __ ] um no because they were actually a independent unit that could operate on their own right not only were they licensing games they were making games right so like

they were not solely focused on IP from Warner they were doing other things as well it gave them flexibility they became a publisher right a develop you know like a real publisher every time when you get involved with the movie people like you just become our second fiddle at all times like I've said this a million times but Lucas Arts was like the most beautiful the most iconic job in the industry was working for Lucas Arts right in Lucas interactive but there was the absolute worst place to to work in the planet at the time right for gaming because it was like just a cesspool of politics and [ __ ] from these like super ego Maniac narcissist movie people and so anyway yeah it never works out because the video game people don't know how to make movies and movies people don't know how to make video games period it's a completely different medium a different skill set stop right it has to be independent that's all that's why I've always said oh interesting all right for 20 years you have to maintain Independence so here we go let me move on to the next one so Niantic the company behind the 2016

Pokemon go is in talks to sell its video game business to Saudi Arabia controlled scopely according to several people familiar with the discussions so this is a $3.5 billion deal any agreement would involve the Pokemon title as well as the other mobile titles that they have obviously so I know that Phil pulled up some numbers so let's take a look so I have around 700 million total for ntac with po go doing maybe around 500 million depends what you want to project in terms of run rate so this is what maybe 5x Revenue so you compare that against plarium plarium maybe does around 200 annually so that was 2.5 so this is going for double what plarium is at least on a on a multiple basis I guess Eric what justifies this where's the magic here like they don't they don't own the IP right like the value here is in the IP I get it at scopely what do they see in this and by the way we're

looking at category rankings that's the other thing I'll set up for you Eric we're looking at category rankings we covered this a couple weeks ago but ever since TCG pocket has launched we've seen Pokemon go start to fall off the download charts and I think it's looking causal at this point I think they're competing for the same pool of users and I'm hearing I sometimes hear smells about this IP you know maybe maybe this bathtub is about to get like a little more full but there could be more people chomping at the bit man I didn't I shoot I didn't even think about that right this is not a good good timing to be buying this this game okay so from a valuation perspective look they did a huge huge riff last year right and so they cut to the Bone right and assuming that they're only buying the Pokemon go team and the other gaming teams right the profitability must be insane on this Revenue right they can't be that big of a team so if they're getting like 40% margins then from a Eva do multiple perspective it does it's not

so bad but from a revenue multiple it's ridiculous right because I think you're being super generous in terms of the totals here but there is some other stuff going on behind the scenes and perhaps scopy thinks that they can grow this thing because at the end of the day even though Pokemon go is pay to win as all things are on the App Store it's not very aggressive right so perhaps scopely really thinks that they can like kind of like squeeze the the loyal audience a little bit more and make more Revenue you know I don't know that might be part of it that's what their kind of their game plan has been I I I almost for certain know that they do not have anything in the pipeline worth talking about so I don't think this is a pipeline play like of of games in development but maybe other people would argue against that I don't know but anyway that's my guess is that they're super profitable and they think they can grow it the the UA machine OS the OS as the platform I mean it's true though yeah let me take a stab on this so like first of all 3.5 billion dollar is a lot

of money but we don't know how the dealer would be structured like how much is Cash how much will be an earnout so that's another important aspect here but nevertheless if we look at the antic just like you said it is a one hit wonder of all of their revenue throughout their whole lifetime 95% has come from Pokemon go and Pokemon go has also generated 92% of all their downloads and people always say like well it's because of Pokemon that's such an amazing IP it fits really well with the game but look at the cemetery of of Niantic like you got Harry Potter you got Marvel you can find Pikmin over there NBA Monster Hunter Katan Transformers like name an IP and Niantic has killed it and then people would say like well no no no no no monster hunter is a successful game it's like okay sure 80% of the revenue comes from Asia and they make around 5 million a month that's a respectable revenue for a game anybody would be happy but you have to take it into account that Pokémon go

makes about 130 million a quarter so overall like this game has added about like 4% to the Topline revenue of the whole publisher so still like if this is the most successful thing then that's not really considered success in the scope of Pokémon go there's really no other successful AR location based game that has been ever released so it's not that they would be buying this for Tech so because of all of this my hypothesis is this is not sc's m&a strategy like we know how scope's m&a strategy works that when they start making a team they bring together genre experts they find an external Studio that has expertise in that genre then they pair it up with a great IP and they also have fantastic Central Tech the platform and then once the game goes live that's where they do the m& that's when they acquire the third party Studio to become their internal studio so that they can grow it without all the revenue share [ __ ] and renegotiations this is Savvy strategy like Scully is savvy's m&a arm

for mobile and they're doing what Savvy wants and Savvy is a private equity and this reads private Equity to me like as you said cut the cost increase profitability put it on the scopely you know their operational machine make it be more efficient and continue to make money and also look good a Pokemon game from Saudi Arabia let's go that's how I think this went H interesting that's not too bad there Mr K and he and he was funny wow immediate feedback I love it I know yeah this this kind of foots though because if my understanded scope's kind of been on the sidelines in terms of m&a since the transaction was happening and every time I say that someone from scopely calls me and says that's not true we're out there I'm like no you're not just stop okay canel I really want to go to that party CR come on stop it my invitees just been roked anyway my net net on this is what if scopely Savvy doesn't matter I think you can justify this transaction in a spreadsheet I

really do I think you can actually put it in a spreadsheet and make it work right two now antic shareholders have been looking for an exit for five years at least like they've been all in on trying to get out and get some liquidity for their shareholders and unlike dream who's happy with the cash flows and maintaining control the greedy us investors and employees went out right and so they they got out they got what they wanted right I don't know I think this makes sense for them to build their empire and maybe they create some kind of Monopoly go go right I don't know like maybe they already had they already had Monopoly go Real World game that already exists location somebody else somebody else did that already yeah but but maybe they gen is dead don't try to justify this on the genre no no I know Pokemon go are bust yeah yeah yeah I'm actually going to counterposition you I don't think they can grow this and I think TCG pocket represents not necessarily a long-term threat to them but I think this IP is going to be chomped at and I think you have to put that in your calculations and unless the

Organics were off the chain which justifies these margins then I struggle to see the value because I don't think they're going to be able to grow it it's look it if it does 500 million a year you know whatever but I mean who wants to deal with this Tech either like I don't know this Tech looks like a tax to me not a subsidy no I know I know and by the way I just want to call out nec's [ __ ] for calling themselves a tech company we were just talking about people not respecting games as a medium I put this company front and center they were always started by tech company people they always hired in Silicon Valley Tech type people and you know they didn't have a bad exit just to be clear but like respect the game scopely learned this right scopely was trying to be a tech company for the longest time and they kept getting disciplined by the market and they had that lesson beaten into them that you got to care about the game and I think maybe this is a great thing for them to be the adoptees but it's still just very tough to grow this let's take a step back here first of all this has not been confirmed right true this could be investment bankers like Goldman going out there and throwing out this rumor that savvy's buying it for

3.5 million as a stocking horse to try to get other biders into the into the mix you know like the 3.5 billion seems [ __ ] expensive you know like and now if I'm more I think about it it's like for what they're buying and the competitive threat of TCG and so and maybe Misha's right where it's going to be like some earnout type structure which would make sense but we we'll see if we get more information on this but I think stars are aligning like they need to get out of this thing but I guess the question is what the hell does Niantic have without these games right like they have no Revenue sources they're location-based company their AR technology is terrible it's like like what is exactly like I don't know doesn't even make sense all right advertising don't they have like physical location based advertising I like to look into that section of the p&l oh no that's no no that never Ms as [ __ ] dude okay no I mean it was actually a really cool idea originally but I don't think that's material but I could be wrong okay yeah I'm a little bit with Phil on the this was a great idea until

Pokemon TCG came out with the real game which I think is going to really just be a competitive threat so something related and somewhat of a coincidence so the only other kind of I would say mildly successful okay it's not really successful game is Jurassic world so Jam City agrees to sell ludia which is the maker of Jurassic world alive so this is also kind of still in works and and all everything that you just said about the deal so Jam City is going to be selling this to Canadian institutional investors for an undisclosed some because I think Jam City is private so this is Jurassic world alive is the number two top Revenue game in tier one countries but Pokemon go is 25x bigger just so you know so over the last year 325 million for Pokemon go Jurassic R was 13 million and then Monster Hunter was 11 million in the last 12 months just to kind of round out the whole AR topic yeah you

remember when Jam City bought ludia like that was part of their spack play like they tried to IPL during the crazy season where you didn't even have to go through the regulatory you could just spack it and they couldn't even spack it yeah so interesting interesting interesting they Jam City has raised over I think what was it 500 or 600 million or something like that I remember we we discussed it at at some other podcast which is the reason why they haven't been acquired even though they are a profitable you know midsize developer yeah for sure all right let's get to the biggest topic that was like a a flurry of slack news for us Marvel Rivals the Seattle developers were laid off so Chris do you want to kick this off yeah let's like quickly so basically Marvel Rivals developers laid off as nety guts the entire team so the headlines were really salacious on this one it was a little bit too much it was a little much right um but the reality of it is is that this is a really small

team in Seattle led by this guy Sasser who was part of Striking Distance Studios who made Kalisto protocol for Crafton right back in the day and that game was a disaster of epic proportions for them it looks like he created a team in Seattle to help netes to support level design and some game design and so his quote was the one that a lot of people took like this is such a weird industry my stellar talented team just helped deliver an incredibly successful new franchise in Marvel Rivals for Net's games and we were just laid off but the reality of it is they were just some secondary team kind of helping with level design right and these details were kind of relayed later after these like headlines I think NY has actually responded they said that like look the main development team in China is untouched not part of layoffs this is the only layoffs that happened in the US so unfortunately it's tragic these people have lost their jobs this is kind of kind of in in line with what's going on with the market conditions for a few reasons one game development in the US

is very expensive relative to China and I think the Chinese teams are trying to keep and create their teams in China there have been rumors swirling and I think Mish is going to talk about this that nety is trying to get out of all their investments in the US now I've had like a half a dozen folks tell me that this is true but I've not really got any confirmation from anybody that really matters but like but it seems to make sense to me because I think there's like this notion now which may or maybe true actually that Chinese developers don't need Western teams anymore they can make their own games and compete and I think Wukong was a real proof of that people that are now in charge of nettis feel that that is true and so they're trying to pull out of all the US Investments and again the team was not part of the core development team so it's very likely that they're not responsible for ongoing live Ops right so it's like that's probably the responsibility of the Chinese team so their usefulness is probably not very high after the launch so in some ways this is much to do with about nothing this is not the core development team this is not the team

that's responsible for Marvel Rivals they were just a small team in the US helping out so yeah as you mentioned like this has been I've heard this rumor for a while for months that nety is pulling out a western Studios I haven't talked about on the podcast but it it recently got out through games industry Biz and some other outlets so I was like okay well it's time to talk about it that has been the rumor for a while and to my knowledge there's nothing geopolitical behind this uh their CEO ding has you know according to these rumors has lost the confidence in expensive overseas teams and what they're seeing is is very business-like there's Rising costs there's lack of results and they've also been clearly seeing that the Chinese can make better games faster cheaper than their Western counterparts and also the rumors that I've been hearing is that when their Chinese counterparts are telling them the best practices they are kind of not listening and be like you know what this is how we like to do things and maybe this works in China but it doesn't work in the west and yada y y and they got frust ated with that so of course netes

came out with a counter statement I think quickly after the games industry Biz told the story about this case and the statement is that they're not divesting but rather establishing unified goals across Studios I'm going to quote the net e piece it says we are very open and aim to leverage our company's strength and accumulated expertise to support all developers in order to achieve the vision we have implemented an evaluation process which app equally to All N Studios globally both domestic and overseas so in other words we're putting all Studios under the same evaluation that means the American Studios by battle scard x bunge x rde x blizzard veterans are now pitted against these hungry New Blood Studios from China and what's happening is what's happening it's hard to compete against those guys especially if you have a good amount of success and you're not the spring chicken anymore so love all kind of geopolitical talk but this is not it I think the the Marvel Rivals

wuk Cod mobile white out survival block blast like all these games came out of China and why wouldn't you continue doing your games where it's more efficient compared to all the investment like you remember all the Investments That e has done they've written like 20 $30 million tickets to angry Bobby for them to leave blizzard and start up a studio somewhere in Irvin H I'm not going to go down this road because like there is some geopolitical issues could arise right so if the administration starts shutting down Chinese Imports then they're really [ __ ] right like they they've just completely screwed themselves you know but who knows who knows what the hell's going to happen if they're divesting though this makes it a buyer market right you have a massive increase in Supply if they're divesting I mean we're just talking about scopely they seem to like always flirt with triaa I never understand what's going on I see these job ads for like AAA product managers remember they bought the cold FR cold iron Studios the alien

one I forget what it was they got like bu then they they got rid of it it feels like they're always flirting with it I don't know do they I think savvy's strategy is to be a player in both mobile and console right plug it in the last piece is to buy you know a a big publisher right and we've talked about in the podcast like it really makes sense for them to go after um I you say the word I I actually I did want to talk about Ubisoft again no way are you serious there no way that's that would happen no [ __ ] way Javier looking at a 1,000 headcount team I can just imagine his eyes popping out of 19,000 19,000 teams yeah he just 16,000 just I don't think he could deal with French labor law I just I will make an argument that there and I've said this a million times on the podcast this is nothing new I think there's a huge amount of value being wasted at Ubisoft and clearly to me is that there's no way

they could be a player in AAA or publishing without acquiring something like Ubisoft like there's no other asset out there that gets them there faster right so if I were them that's the calculus in my head right where it's like you can't buy small Studios and build this thing up and build it it'll take decades like that's that's [ __ ] right but you acquire something like Ubisoft that is so sorely mismanaged that dude yeah a monkey could manage this thing better than than Eve right so this makes sense on paper for me now the [ __ ] struggle and the pain and the agony that's going to be required for the next like two years to get this thing back together the type of people that you need the the HR people the the guys like massaging you know you know who could do this which I didn't talk [ __ ] about before but I'm gonna talk [ __ ] about now oh good Bernard Kim that's who could needs to come in and St that's the that's the type of person he's not a CEO like for match right and he got fired after three years for the

record but he's like the type of person that could come here and massage this [ __ ] and make something you know make something happen here you know so turd type thing right's a mobile guy he's a mobile guy I don't I don't know no no he came from EA he knows he he was mobile at E I worked with him was he only mobile forever yes yes yes all right can I say one thing about Ubisoft so I think the best case for Ubisoft is not to be acquired by somebody who cuts it into pieces but countering your point on sculpy I would say you best thing for Ubisoft is to become very independent units and I think that way they will be much more efficient and and better at decision-making rather than being this one large conglomerate all right so just to to wrap up so Stephen totillo um got a statement from ny's specifically on Marvel Rivals the other statement you read Mishka was about that General topic so and this was really interesting that Net's actually came out with the

statement so the cuts are for organizational reasons and to optimize development efficiency the cordev continues out of Guan Joo and they are investing more in the game and not less you can read it online it's a little bit longer than that but that's kind of the gist of it so in my perspective to summarize this and kind of it's the raffle for the best of the worst reason geopolitics was number one number two is hey thanks guys but we got it from here which is why they're letting go of the the team the dev team versus a liveops teams they probably don't need that you know I think crushy might have said it earlier you you kind of don't need sometimes the team that did the level design because now it's just in live Ops mode corporate strategy you know to change Mishka to your point and then another point that was interesting from the slack was the movie model so Chris and the slack said nety is talking about the movie model which is you bring a team you produce something you put it out and then you kind of move some of that core team on to the next idea and that perhaps is a nety strategy so

that's kind of how I summarize all the different options probably all of them have some sort of factor in it but I don't know geopolitics I think is a pretty big one all right so here we go to Sony's recap they just had earnings Phil pulled some numbers go for it it is probably one of the most unexciting earning Seasons from Sony Mau for the PlayStation Network did grow in December 2024 from our last check in in October it went from 116 million to 129 million you got to remember this is looking at PSN Network so this includes to my knowledge the PC games and if you remember there's a lot of controversy over them requiring PlayStation Network sign in for hell divers 2 and a lot of their single player games and they've actually just dropped the requirement for their single player games so this is kind of feeds into what we've been talking about in terms of stagnation in the games industry console has not grown for a really long time it's not bringing new audiences into the F and I think this is just more evidence of that and it's it's

troubling and the the Microsoft situation is is absolute [ __ ] just in terms of terms of a ratio it looks like Microsoft did maybe maybe 29 million units in the last quarter compared to 65 million PlayStations so there may be being out sold two to one probably even worse yeah I I actually concur with what you're saying like this is just another proof that th this is a market share gains right I mean the PC is helping I'm sure but the this is like market share gains like Sony is absolutely destroying Microsoft right now and it's just not covered enough really in my opinion like it is so bad out there right and I think again with these even with these Sony numbers is a little bit of misreporting and exaggeration because they had a really good quarter in terms of hardware sales in Q4 but the overall year was down right year-over-year which is not what should be happening at this time in the cycle having said that next this year should be better given what's

happening with GTA coming in October this should actually either flat or up Hardware this year which is actually really good for this year in the cycle histo compared to history so from a from a historical Trend perspective we are below what we were last cycle but we should be on par or above but the fundamental thing here is this is the share shift this is not an overall market growth right in terms of an install base because Microsoft is just taking it on the chin right now and that that's like the fundamental problem with this whole cycle and when you look at what what's happening at Microsoft their share of third party is absolute trash like it is like they are getting destroyed like they used to be like 30 40% of third party games like Call of Duty Madden FIFA and they're at like in the tens to 20s now right it is like so bad they've like completely got decimated by Sony on third party because no one wants to buy an Xbox anymore right and not to mention the series s is like half the install base which is a

shitty device that no one wants to play so anyway so this should get even worse when GTA comes out this year because I think even to this day GTA is considered a Sony title because that it was exclusive for a long time in his in history so that should even lead more port to it to to it so Microsoft is really just the one the real story here you know Sony is doing extremely well but it's at the expense of Microsoft and that's the point I wanted to make and people just are not talking about that because the reporting is not good from Microsoft about what's happening with their Network the hardware numbers are not being reported as well as either so this is I think that's the real story is that Sony's just taking the console Market away from Microsoft but Cris why is it so like like I just want to understand like like why why is Sony is so much better than than Microsoft because Microsoft strategy doesn't make sense Game Pass subscriptions is erased to Zer it is like devaluing all their content there's no reason to buy an box there's no reason to be loyal to Microsoft anymore

I think that was a bad strategy it's fundamentally not the right thing for the gaming group to create a subscription all you can e subscription and the only way they can really pull this out as I've said many times is to separate themselves from Microsoft and create an independent entity that has to operate on its own and that it may be too late for that now so on the tun Stone it would say killed by Subscription Service yep okay basically good good that's two for you all I have to do is tell you you're not funny before we record and then you throw them out good job so Chris I I wanted to ask you do we think GTA can grow the market like is that the first time we're going to see any sort of growth well well back to Phil's point like I don't think we're growing the market I think this is a market share shift and even even if we see a big Hardware bump this year from GTA that's only the PS4 users upgrading

that's not like new users coming in you don't think okay no because because the PS people are tons of people are playing PS4 because it's like they're mad and we got in front of us look at this I mean you look at the ratio between PS4 and PS5 there are still and this is based on the leaked documents remember the Wolverine leak that the hack this is internal documents and so we can see that the PS4 had more users in febr as as late as February 2023 the PS4 had more users than the PS5 on PSN on a monthly basis that's crazy right yeah it's nuts that's not the way it should be happening at this point in the cycle is it like the iPhone syndrome where no one's really upgrading because there's not that much marginal difference between where the tech is like H it's not that much difference well yeah that I think that's one I I had this I I had this argument with my cab driver in in Boulder yesterday it's like okay this industry is so mature that again people are Madden players FIFA players and whatever and they don't need

a PS5 to play Madden or FIFA it looks just as good on PS4 for most for the most part part right that kind of use case for a device where you're not really playing anything else there's no reason to upgrade right GTA actually does create a reason to upgrade because I think that game is as big as people think it will be and so they will upgrade but that doesn't mean they're going to change their buying patterns they're still going to be primarily a Madden or FIFA Player right and they buy GTA you know but as I've said before is like if you bring new consoles upgrade consoles in the market people buy software by definition so you will see an uptick in both hardware and software this year it will be good but ultimately next year will probably be very you know flattish to downish right relative to this year with these new players but it's a zero sum I hate to say this but it is a zero sum game on Console right it is basically the same audience that keeps buying the stuff over and over for the last 20 years and that has not changed that's the challenge I want to throw one other hypothesis you know kind

of like only because I saw this in my own household so the Next Generation gen Alpha and very late gen Z's they grow up with mobile gaming they grow up with the iPad hand-me-downs they grow up playing Roblox and other things on their mobile devices or their iPads and then with my son what I saw was he graduated from his iPad play to a PC and he skipped console completely is it possible that we're going to lose some of the next generation of Gamers they're going to not even care about console because they get such great experiences on mobile and you know their Chromebooks or whatever that they have for school and they just might not even go to console I don't think anybody really knows what's going to happen and I think that's one of the concerns that both mic Microsoft and Sony have in terms of yeah what things like ufn and and Roblox are doing to that audience the experiences that you get on Console are very unique and it's aspirational you can't get these type of

experiences on mobile I know there's exceptions to that but like for the most part you can't get the Madden FIFA experience on mobile or the real shooter experience like Call of Duty or GTA in particular unless you're [ __ ] Netflix buying $50 million for chachki download right but anyway so I think there was always being an aspirational like an A A basically an upgrade path like a maturation is that you go from Mobile to Roblox to ufn fortnite and then you buy a console and play the real games quote unquote like for yeah so I think that will always be the case but there is a risk that these people are so used to having such interconnected experiences from Roblox that they don't really replicate on consoles that the content is not gonna be as appealing to them that's like the biggest risk is like a game like GTA or Call of Duty is not going to be appealing because they don't get the same type of interactions and and and social experiences they've gotten on Roblox right so there's always that risk I want to I want to actually support what Eric just said because I

had uh Google's head of gaming today on a podcast and we were just discussing about genz on different audiences and their studies on it and what Crest said it was exactly what a Google is saying is that in order to connect to with this audience especially gen Z it was much more about features than the look of the game you know like more Razzy more edgy like no no no it's more about social features playing together and he also had a data that he pointed out that the younger Generations are playing more on more different devices actually so they are using more PC they are more yeah exactly so they're using more devices they're playing more several more games than the typical and they value these feature sets more than the specific look and so yeah that's actually what might happen is that they just don't resonate by these games made by 50y old yeah that's the data that I'm seeing is more cross mobile to desktop play and more social like needing you know we talked about this many many times that games

are now the new mall like you know for us dinosaurs growing up we went to the mall to hang out or we did the three-way call like where kids in gen Alpha goes to hang out with their friends is in Roblox in the social experiences and so if games are not on Console or desktop going to offer that we may lose that generation because they need those experiences and they expect those experiences I think we really need to pay attention to how different it is to be a gamer if you're gen Alpha versus what we grew up doing I totally get that argument the thing is that's what they're doing now like what are they going to be doing when they're 18 19 and when when when they actually matter I mean I think the other thing you have to keep in mind is that like what matters is 18 to 44 year old demographic it's not how they're playing games now it's how they're going to play games in the future Fair we never had that option I mean so you're right we don't know I think hopefully somebody's doing some longitudinal studies to make sure that follow as they grow is that experience as a kid

that we never had we were lucky if we had Co-op two player in the same room like that was when I could play Halo four people on the screen at the same time it was lifechanging and then that changed the way that I thought about games imagine now you've got this whole generation who is learning to play games in a different way my expectation of just seeing how you know people behave I think that's going to have a different impact on their expectations okay but but I would make the argument we've had social media like explode beyond all recognition YouTube [ __ ] you know not Facebook obviously Instagram snap like you know all Tik Tok all these things are happening and yet our Market is basically the same if not it's it's growing slightly like that it hasn't impacted our market yet right all these Generations that have come up that have had access to all kinds of different media to consume and we're still talking insane numbers for this business right both mobile and console for that matter right well I'm not necessarily talking about share of time because they're

doing both share of time is going to social media uh and the the addiction qualities there and it's still going to gaming because they can socialize inside of gaming I guess my point is that the behavior inside of gaming having social components where I can play with my friends like imagine when you for Wow for you when you first learn that you could go on raids with your friends and stay up till 4:00 amm you could only get that in that game or a couple of the you know Ultima you know online now that kids are having that experience are they going to expect that type of I log on my friends are there I can jump into any kind of experience we want to play a funny game we want to play a dress up game and I think that's the difference I I I I no and I guess this is where i' kind of like I would counter all those a lot of people's arguments on this is that as a kid you have that kind of attention span of aat right and you go from one thing to another as you get to an adult your interests and are aligned on certain things and so you're going to be interested in Madden or football game

you're going interested in soccer game you're Shooters your tastes kind of crystallize as you get older yeah fair enough fair enough I think the fundamental of wanting to engage with your friends I do think you're going to want to take a vacation in a single player game and we know and we see that in the data we see that as you get older you're like okay I just need a I need a vacation from all of my friends the sweaty games and so I agree with you that your behavior and your tastes for what do changes over time I'm just wondering if maybe the whole line goes up differently because of how these kids are growing up anyway fasinating chat thank you very much let's keep going because I know we have a lot [Music] more 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 manage subscriptions and streamline Payment Solutions worldwide unlock new markets and

maximize profitability through their customize secure payment architecture and dedicated support team exola powering game developers to achieve Global 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 fer the leader in Mobile attribution and marketing Analytics that allows you to measure the full potential of your marketing efforts making every ad dollar work smarter with apps flyer that's your new reality dive deep into Data driven insights that reveal exactly where your users come from and how they'll interact with your app apps lier where your app's potential reach performance there is a new game from King they're not a one trick pony anymore they've got solitire out cashing in on the hot nuk craze it has finally gone Global after a period in soft

launch you remember there's been kind of a flurry of new king games remember they had the 3D match game I don't know if that one made it out remember they had blast or I guess the 3D match one did make it out they had blast that was in soft launch if only your puzzle Queen were here they copied whatever was on the market and just put in candy on it and be like here it is same with but they were getting things going it was dead behind the scenes for a while and so this is their latest release we're looking right now at the download ranking in the US App Store on iOS and it started off number one they pumped it to the top of the charts now hanging around 25 and I don't know can anyone come up with a theory for this game you know can anyone anyone take the pro side and I don't know is this a squad Busters launch what is they're probably were going to come out that Google and apple came through and they said this game is awesome you should totally launch it we'll give you featuring and they were like you know what and then the team said like hey we like this game and we want to launch it they're like you know what team can side let's put $100 million behind this marketing budget and that's how this game happened I'm joking

I'm I'm really stunned about this because when you look at their revenue per download in tier one market I think there was soft launch in Canada I think that was one of them just about the time when they hit Revenue per download of $1 according to sensor Tower they're like let's go baby all in and at the same time you look at the top games in the genre they're plka and sculle they have the solitary Grand Harvest and Tiki solitire Tri Peaks so both of those games of course they're long and a tooth but their download per Revenue has been steadily increasing it's about like 12 to 14 bucks but nevertheless like what's most important is not even the revenue per down but the level of concentration in solitary games plka and scul take 83% of all the money in solitire so it's really hard to break through especially with with these games that are long in a to they're not genz who are playing this they're not going to just switch they've

been playing these games for years so so it's like I don't know how how King is approaching this also what's not in the numbers is the real money gaming the skill games the papayas of the world that have their solitary games so those one are monetizing as well through not inap ads or inap purchase but through real cash bags and so forth so I don't know there's red oceans they blue spots but I think solitire is the Crimson hole where Candy Crush King stuffed itself into there is another one that's been in develop another solitar game from Superplay that is now acquired by plka they had a Disney solitire game that's been in soft launch and all I can think about is Jen screaming at a mismatch between you couldn't have a bigger mismatch between solitire which is what 65 women maybe and and Disney for kids I do you think Disney can appeal to like every Disney is one of the rare brands that has Nostalgia feelings with like every single age group so I do think that it can work if you use an art style

that does appeal to that type of player I do think it makes it difficult so this is you know I I talked about this with the Barbie Ric game remember we were talking about the Barbie merge game and I was like well that could have worked if they would have used more kind of Timeless or nostalgic art instead of art that makes it look like a kids game so I I haven't seen the art on the Disney game but that would be my advice to folks is if you are going to use an IP that typically is for one audience and you're trying to attack a different audience you got to test the [ __ ] out of the art to make sure that you can actually attract your right consumer you're absolutely right Jen but I'm now looking at the chart that Phil is showing this is a second game from King second solitire game right there's a pyramid solitary Saga really I didn't know about that one is that live there is yeah look Activision Blizzard pyramid solitary Saga is it Candy Crush or is it a this this is an old game from a game maybe this something they acquired from someone no no I think they developed a a solitary game and they were like you know what let's do it again with

candy cuz the last one didn't do well so let's do it again the roio curse yeah they could they could have just reskinned this one you know when I looked at this I just pulled Global numbers I know typically we pull T1 but Global I just wanted to give it a fair shot three million downloads in seven days $300,000 in Revenue RPD is 5 cents but to be fair to them it was much higher in soft launch you know obviously when you start to factor in all the other countries that that bottoms it out arpal was 12 cents and it was up to uh 40 cents before Global launch you know obviously that's come down and I took a quick look at the creative you know they're they're doing all the typical things it looks like the Save the King like oh no the yeti is in danger and then you know playable ads so nothing you know it looks like what you would expect with a lot of the Candy Crush IP I just don't know how resonant that IP is to really convince you the playable look like a card game right let me let me bottom line this for you guys because it's

getting really kind of in the weeds here is that this game is absolutely immaterial to King right like I don't think they could grow this game to make it material for King having said that they may be able to reduce user acquisition cost by you know cross promoting from their 65y old lady audience and sending them to solitire right which kind of makes sense on paper but this is much to do about nothing right this game is not going anywhere as always King can't make another game besides Candy Crush right like yeah this has like been 20 years now or no not that long maybe 12 years now it's like just stop I think they tried to for the 3D match you know Trend that's going on and that and that didn't resonate either or it's still in soft launch I don't know we have to check on that do you remember the game that well they they tried Call of Duty and then they tried that one game where animals drove cars that were shooting at each other but they're like re rally right U ue5 project yes totally outside the normal Playbook that's also

dead dead stay in your lane stay in your lane or do an acquisition right by Ubisoft been buying studos forever Eric all right all right everyone thank you that wraps it up and we'll see you next week laters 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'd subscribe and leave us a review on the podcast service of your choice those stars and likes while a small action on your part mean a lot to us and help to grow the show more importantly are you a member of the deconstructor of fund slack group if you have 5 years or more of games industry experience go to deconstructor of fund.com slack and apply to join Jo the games industry best professional Community filled with peers always willing to lend a hand or subscribe to our newsletter to get all the latest insights from the deconstructor of fun content creators thanks for listening