TWIG #322 Farmville, Pokemon Go, and Female Gamers

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Phil black monetization star Eric Crest m&a effici a Mishi catco founder Whisperer and a fractional sea star oh I'd love how every week you get a new job and event herder event rang oh yes I'm the event Master that's what I want to be actually that's what I don't want to be but for this week I am we're hosting about like eight events and I just realized how big of a mistake it is to do so many events during one week jetl out of my mind so see you see you at jdc all right here's what we're covering today on the podcast we're going to dive a little bit deeper into the triple dot acquisition of App 11 gam since uh we gleamed the surface last week and I think we did a little bit more diligence this time and by we I mean Crest on the research side media has a new player segmentation report and it really explains why Crest doesn't socialize when he plays games so I'm glad we're

going to dig into that the sensor Tower state of mobile games 2025 is out rumors were true everybody scopely announced the purchase of Niantic this morning for us as we record on Wednesday they couldn't stand that there was a Pokemon go brand because they didn't own it because of Monopoly go so expect to see an exclamation point on Pokemon go soon brand marketers for the win got to put their mark on something so maybe we keep banter a little bit short because we have so much to get to but GDC is coming up but there is a different kind of event that just got announced Chris you've got to go this year for blizzard fans BlizzCon is back however it's not this year it's skipping this year and will happen as September 20126 in Anaheim California I got to go in 23 and if you're a blizzard fan like this is like a religious experience I really think you got to do it yeah I'm one of those only ones type people it's it's definitely worth it I think it was really cool to go but there's a huge

difference between being a Star Trek fan and a treky and like going to that thing on a regular basis just puts you on the edge of the abyss of weird you know so just just yeah once is enough that's what I'll say okay all right once is enough got it all right let's get into Shilling the Shilling Master is back you have been you have been pretty light on Shilling so let me come with Vengeance on this one so on podcast side we got the full Turkish Buffet so an interview with the CEO and founder of roly games Barack vardal that came in last week this week we had the Turkish masterminds of gaming so we got bban from Grand games the fastest growing Turkish gaming company and I think the fastest growing European gaming company at the same time uh we got Eric's boy and my boy too gkim gkim Turk from Laton Ventures and then we had Mt who was the co-founder and CEO of Graham gam so kind of a OG of the Turkish game scene so we had uh p

this week check it out the lighting was great I didn't look as tired in that one that was a great podcast I saw it last night I mean we talked about this a while ago there haven't been a lot of visible leaders from Turkey in the games industry like Reena can't do everything you know and so it's good to see some other people from notable companies speak up and and have something to say and it was really interesting to hear from their experience like it seems like company culture is still the number one thing that dominates a lot of these founders and it was curious to see how each of them have dealt with scaling under hiring was one of the interesting things I took away from the podcast that's a trap too all of them are great ban who the the CEO and co-founder of Graham and by the way X good games too good job games I think we're going to talk about them today as a part of the acquisition or Investments anyways he is a really interesting cat all of them are really great but but he's like a a deep thinker so I think it comes through in the podcast it was very interesting very different than than most of the the Turkish Founders that I had there just

like go go go go go mode he's more like you know culture first let's think about it so super super interesting cat newsletter site 6X hiring mistakes you should avoid this was written by me so learn from me to do not what I did and then we got the the Turkish Diaries so this is from my trip to Istanbul wrote that piece but Jen do you want to show a couple of events for next week the last show yeah Crest buckle up last time we're gonna do this PR here I am so happy okay so first of all check the newsletter on the deconstructor of fund slack Channel our events channel for all of the links apply to join I'm just goingon to say sorry in advance in many many of these hundreds of you won't be able to get in I can't even believe that I'm saying that I'm sorry we did the best that we could so Sunday beta hats GDC pregame is full 800 800 RSVPs we can only get 300 in apologies everybody we did the best that we could we even scaled up I think we

doubled the size of the venue so next year we're going to get like the Coliseum or something I only said the Coliseum joking because that's what Mishka said off air that's not even in San Francisco so Monday Center Towers gaming Mastermind dinner is also full now we do have a little bit of room in the brunch on Tuesday that is the Ops flyer and exola brunch on Tuesday we also have another brunch on Tuesday with heroic labs and Convoy Tuesday night is game night with exola that's at GDC Wednesday is the product and marketing brunch with app charge solsten and Matika who's Matika Medica Medica Medica who's Medica why is do I have to sh Meda here Med is awesome Medica is a really great an interesting company let's give them a show like the reason why I keep doing this everybody is thank you to the sponsors who make these events happen like they pay the bill we just show up and talk a bunch of stuff so that's why

I want to make sure we do this right Wednesday another Supper Club this one is also packed in amazing newu Tik Tok applier and Griffin gaming also full we will give you hopefully as much as we can a Lowdown on what we talk about at these things well whatever's off the Record is off the Record but we'll try so Thursday this is going to be fun we're going to do a live twig at GDC nights GDC nights is a new event they're setting up where people can go to GDC drink have food so there's a Monday event a Thursday we're doing Thursday so we're going to wrap up all of our GDC takeaways record in person you have to have a GDC badge and GDC nights add-on ticket we'll have a link that you can go to and any of our stuff we get a little bit of credit if we send you there so please click on that there we go wrapped it up last time we talk about GDC and it could be the last time we're doing the GDC night the first and the last you you don't know know how Rowdy is going to

get on on third even they'll be like you don't have to come back guys like this this was good enough you pissed off every sponsor we have so thank you I know I think our massive amounts of cursing and yelling at people might get us Uninvited from future ones we'll see all right let's get into like I don't know Corrections diving deeper probably not the correction that this guy was hoping for so I me I got some criticism on LinkedIn that I didn't do my homework on Triple dot which is absolutely Fair criticism because I certainly did not because I don't know didn't know much about triple dot so I looked into it a little bit the main point that I was trying to make is that app loven's mobile business is bigger than triple dot which is actually the case we don't know what 2024 revenue is but I can almost assume that it is a bigger business on a revenue basis and even likely profitability than triple dot but what I did know is that triple do is actually relatively big business in the hyper casual space so according to their financial 3 30 million in revenue and

15% margins according to in calendar 23 so that is a big company honestly it's not a great business I'll be like the profitability is relatively low the revenue is impressive but this is evidently a really really great hyper casual business but I don't think it's a very attractive asset and evidently they went on sale at late 23 they had no buyers and with 15% margins and $ 1.4 billion valuation on the last round not a real shocker that there were no buyers cares for this thing in this current market condition but they do have $300 million cash at the end of 23 which is likely a lot more in calendar 24 and so they do have the money to get this deal done with app Loven to acquire their games business and there also the notion is that they can raise some debt to fund the rest of it raised with app Loven like securing it it looked like right there to make up the difference along with equity in triple after the

transaction after the deal is closed to be clear Apple whats out of this business like it's very very unusual for them to take Equity stake in a company that's acquiring an asset from them it's really kind of not ideal for App 11 or very clean for Apple frankly but in order to get a deal done but what I think I what's clear is that this is a real huge stretch for a company this size to absorb such a big operation right they lost two of their execs recently a keen and Alex who's the guy I spoke to who Moved went to the Rain group in September of 24 but on the flip side this is really low valuation for this size of a business right it's like a billion dollars in Revenue maybe like three to eight times Eed dah for this type of business so it's actually a pretty good deal from a valuation perspective even though it's a big big nut to crack for triple do I deled a little bit deeper talked to a few people that kind of were more close to this than I was is that you you know app 11's been in the market for about a year and

a half and they were just having a real struggle trying to find a buyer for this business because it's [ __ ] a complex business it's like over 10 Studios with over 200 games a billion dollar business almost and you would have to have quite a bit of infrastructure to support and manage those teams and the games they operate I mean I'm sure there's a ton of people that kick the tires and I think there was some concern that some of the games performance was due to their most favored nation with app and Tech which there's no evidence of that but I think that was part of the issue is that they weren't sure about how good these games would be outside of the Apple ecosystem but I think the biggest problem with this whole transaction is managing such a complex organization I think they have like three or four teams for machine Zone them itself much l all the other teams that they would have to management and even though everyone says the triple dot team is absolutely amazing I mean they're kind of the Envy of the hyper casual world it's like a huge huge task to manage such a complex Organization for the team at triple Dot

and I imagine that part of the reason that Keem and Alex left was you know forging this new strategy of going away from admon and Hyper casual crap to you not purchases like Voodoo and hom have done maybe that was clearly too much for them to handle they were not along for that pivot but after failing to sale last year so anyway triple dot is clearly a strong team they are experts in their space from a perspective of hyper casual crap this seems to be a strategy to to transition away from hyper casual but you know managing such a complex portfolio at app Loven seems very very challenging it's a transformative move but definitely a big risk for them so that's kind of my take I think you have completely undervalued the as business that came out of this though right I mean they're doing 340 million in ads per year and we usually don't get good visibility into ads data but one of the things we can do is we can dig through their financials which someone sent over that they report each

year which is what Mishka was just sharing a moment ago and so we can see what their revenue growth has been and it is true Eric you were right that there's a lot of there's a lot of buck trading that goes on in more ads driven games which is why their margins are so low relative to that so last year they did about 50 million in profit but again 340 million in revenue is a sizable amount and when we combine that with sensor Tower I AP data that gets us to about a 99% ad Revenue share which is crazy right that 99 or even 90 plus% of your Revenue would be generated by ads rather than I AP which I think does add to the operational point that you're going from a business that's been almost exclusively ads to a business that's going to be what almost majority ads I don't know when we combine the two Revenue figures from all the required Studios like that's a big leap right and it's not a bunch of Match 3 games they're requiring right it's a lot of 4X stuff you know like Final Fantasy from machine zone is actually still doing pretty well each year and each month driving a decent amount of Revenue it takes a lot of tribal knowledge to be

able to execute against for instance managing Forex and so if they're going to go in and just like cut headcount I think there's a lot of operational risk for some of these games that have these lineages so I'm curious to see how they'll figure out managing all the headcount integrating things because I would assume Eric that's the first thing they do right they're going to cut down costs and consolidate things after acquisition yeah maybe but again they have no experience they have absolutely no experience whatsoever of managing live games period end of sentence right like this is an ad business that's fair but I would also say you know and all of their games are hyper casual games that die after like a month like they've made Innovations in match that I think have been more durable and are starting to scale so I wouldn't necessarily put them in the same category as like a voodoo I think they have a more sustainable stream of Revenue than than a lot of sensitive hyper casual Publishers we've seen at 15% margins though yeah it's not a good business dude I've been very consistent in my view of hyper casual I think it's terrible it's a terrible business but

that's fair Eric but then doesn't this make more sense then I mean immediately just Diversified right 50/50 almost yeah I'm actually applauding the strategy to some degree but there's one thing about trying to transition to inap purchase stuff and get away from this garbage ad stuff but like there's a difference in terms of like buying 100 products and 10 teams like that's a that's a big big [ __ ] leap you know like you do Transition slowly you know and all of them are are hyper casual right like the transition to hybrid casual takes takes time oh yeah they're around the world but Mishka you you deal a lot with Hyper and hybrid casual like yeah yeah so so let me let me kind of do a little bit of summary first of all this episode really hit so I hadn't listened to it last week but I'm getting messages right away from people on WhatsApp like oh Eric Crest is out of pocket he's saying crazy things I was like what happened what's going on on T just another Friday yeah oh there were apparently some people who are like

you know calmed down on LinkedIn like take it off like Mish is going to get mad I'm like I don't even know what you guys are talking about like I got apology messages being sent of some of the employees saying certain things that were not right I'm like no no no it's it's chis attack him he likes it he corrects it if if you're right and and shoots back if you're wrong anyways I remember in 2023 at Gamescom an unnamed person who I know came to me and asked like hey do you know anybody who would like to you know acquire app Lings game folio like it's 2 I was like how much 2.4 billion so it was 2.4 billion in 2020 I exact maybe it was 2.2 maybe it was 2.6 but it was over two billion trust me so I that was being shopped around at 2.4 and now it's sold for 900 let's start there this is the the current valuation the triple dot valuation what are we thinking it's 2x Revenue would be extremely generous for hyper casual business One X Revenue right so we're talking about 300 they have I don't another 300 in the pocket so it would be

like 600 million valuation of triple Dot and as Crest said they Tred to sell the business try to exit nobody wants ad base business nobody wants hyper casual so everybody moved out of AD based gaming and now triple dot was in the place where either they're selling the business they tried couldn't work now we have to transform the business and here it starts so on the pluses with this balls and move so they get a big chunk of Apple portfolio lion studi so they got a lot of hybrid casual hyper casual games that boost their existing portfolio that's great and they're gaining a lot of you know almost like Market leadership and this stuff and they know what they're doing with ad base monetization on the minus is just like you guys said they have no structures for in a purchases at least none that have been battle tested and proven so you know they need game Economist help they need all kind of help they they need to get into a whole different business and they're doing this overnight versus the voodo the Rolex the homas all of them have been

building towards this for for a long time and then there's the more like attech issues if they try to migrate the developer accounts on Apple they could be losing significant Chunk in organic Revenue potential so my take it's no surprise that most m&a deals fail and it would be very easy to say oh this is one of those 70 to 90% deals that fails to prove value but that's easy to criticize because it's typical in this so let's talk about how they can succeed I was thinking about this today on a plane so first of all I think they need to run this organization and and what Crest calls the citystate model they don't have the internal process let them do whatever the [ __ ] they were doing they're making money good let them do it and and be clear about that and that avoids them the issues with the leadership structures the process the tech Stacks do what you do right now and then you know unless you're failing we don't need to move in another thing is that they really have to make very quick decisions on all the elements that might be confusing because with these type of

structur especially with these so many studios there can be a lot of uncertainty a lot of loss of momentum that typically happens in corporations where where you know a lot of executives are thinking how how we should manage this acquisition this is a smaller company so avoid all that [ __ ] make quick decisions and clear reporting lines and so forth so just move fast and then last two identify key Talent I'm sure they've done that set the right incentives I'm sure they've done it to retain the key town and finally they got about 100 days to figure the things out because in 100 days we'll know how this acquisition is going like glue is a perfect example it took only 100 days and in 100 days we knew what's up so let's return to this in three months and see how the acquisition is going but overall I think this is super ballsy I think their back was against the wall I think they have great relationship with applovin because app Lovin came through and helped them to make this acquisition happen and and I really wish it pays off

they really pivoted fast into fingerprinting and and IP tracking which really kind of helped them pivot much faster than some of the others even hoba and gudo and part of the reason they've seen so much success so and I have to imagine that part of that was because of their relationship with apple and and they're they have a direct like really close relationship with Apple so I think what would be critical for this success is if Apple continues to support them in a way that helps them moving forward to help transition this thing but it's unclear as to whether they actually can do that you know teach they can't treat them really as favored nation type thing so yeah I think this is going to be a big challenge for them but you know we'll see like I don't think they had any choice really like I think this is like kind of a move they had to make and you know the execs that weren't on board just left but like now it's up to them I think they're like five six hundred people or something so so it's like not allowed people to manage this business so anyway and if there's anything I got wrong correct me I don't care the guy pulled the LinkedIn post I don't care

keep the pink LinkedIn post there I don't care you can criticize me all you want I saw the LinkedIn post being pulled and I said no no no no no don't do that don't and especially like there's no retribution from us like come on well no believe me there there is retribution there is rri yeah of course we GNA be called out publicly if you're wrong and you're GNA be called names in a nice way someone's going to punch me at GDC that's why I need to hire use security for all of our events but we call balls and Strikes and I sorry that's a very American term to say you know we try to be represent both sides on these topics and if we're wrong we I think we're we're great about like calling out where we're wrong and going after people when they're not right so I I just to wrap this one up I I think that apple and Adam are super smart for getting ready to that pesky game business so that they can increase their margins even more like what a cash machine that ad business is it's holy crap okay couple of reports to cover I'm going to do

these a little bit quickly media research has a new gamer segmentation report many many companies do these so it's always nice to see like what the newest folks say so this is qual and Quant and it was tier one countries Japan and Mexico was the data it combined HD and mobile together which I I probably wouldn't recommend doing just because the it is so so different and so take a this with a little bit of grain of salt and their big takeaway was 53% mainly play to relax and Escape reality while the other 47% play for a mix of creativity competition Challenge and socializing I think this is a little bit of an apples and oranges comparison I don't love to add escape to everything else because it it's just so dominating that there everything else just kind of Blends together but you can see a chart here that kind of uh talks about that and the different personas the second chart they have is kind of interesting it has another challenge though but it reveals an

inverse correlation between age and the two primary motivations for gaming that they call socializing and relaxation escaping so basically what you see in the second chart is as the age group increases the importance of socializing declines so this is why we often talk about single player game experiences won't ever go away because you want you know that kind of game to take a vacation in even younger folks who like socializing want to take a vacation and and relax in some of the gameplay this is why Crest loves to play you know all his games by himself because he is antisocial so that tracks that tracks a ton so I I think overall I've seen a number of these so game Refinery does some which is predominantly mobile quantrik Foundry I used in my past when I was at Riot obviously friend of the Pod Stan from beta hat does this in a bit more custom way so you've got kind of your big segmentations that you can go out and buy and then you work with them and you can apply it to your game

or you can have smaller Boutique people do the segmentation for you I usually recommend doing this in your genre or sub genre and on the platform that you're doing but that work is really expensive and timec consuming so you know kudos to them for doing this work to give folks who don't have access to those kinds of resources something to kind of work from so Crest did you have thoughts look there's two thoughts here one is easy the other one's a little bit more complicated so the first one is that this seems to contradict the whole notion that social is everything in gaming right that even at 17% that seems [ __ ] low right for 16 to 19 year olds and 8% for the overall industry I mean that's almost like social is irrelevant right but you know that doesn't fit right sit right with me at all but nonetheless like I mean it kind of reiterates my thought is that the single player games and games that are not social are actually still super viable in this industry the second point is that this could either mean that people evolve their taste away from social as

they get older or the expectations for the younger crowd is that they will want more social games moving forward right so I've been asking that question a lot of people about whether or not the notion playing Roblox and playing ufn and doing social events there is something that they will carry forward with their tastes as they get older or is it something they leave behind because they have no [ __ ] time to be social on [ __ ] video games and they're just trying to get away from their family and their kids and their nagging wives etc etc you know what I'm saying so like that's kind of what I would love to get better get smarter on so I kind of agree with you and so the challenge here is that it's the way that they're saying it and they're saying that the main reason for playing and all of the research that I've done no one ever says oh I really love playing League of Legends because it's social or I really love playing this game you love it for all of these other reasons first social is almost always at the end of any of

the feature prioritization lists that I do and that's why I think that they're they're doing a little apples and oranges comparisons between some of these metrics so I think if you were to do a more holistic approach to this you would see social show up a little bit differently but I do think that you see more social gameplay younger especially with you know as we've talked about the ugc platforms coming in and I do think you see less social as you get older in your life just because I mean I remember my good buddy just had like a kid and he was a huge League player and he was getting banned from League because he kept going AFK because he had to like go take care of his kid and so it becomes more difficult just as a life stage to like you know coordinate with your friends and play when you're a teenager and you're no one has anything to do after school it kind of makes a lot of sense the other thing is I also used a service called solsten on a number of of

products that I've worked on as well and they help with understanding a lot about motivations and where things are coming from and so you will often see there are so many different factors of why you engage with games and it's not always about social it could be about cooperation alteris all these different things so don't take away too much around the reading of Social and gaming from this particular segmentation all right that's well still a question I want to answer and I guess we really won't know until you know 5 10 years from now I've used many of these both internal player research teams as well as the external ones with Souls was that's the different one because like instead of demographics it has these psychological assessments like you have and I'll just give one example so solstone is used if I'm correct by EA supercell pelaton the other bike company but there was one example that I that I always remember like they had the shooter game on that used solson and there was a high value segment so in the platform basically once you upload your data you can see

different motivations for different value segments and so they had a smaller segment that had a relatively High LTV actually highest one and that segment really overvalued altruism over some other motivations so the company changed the ads from the typical Run and Gun to like the Saving Private Ryan that resonates with people who are high on altruism and through that they got the segment of altruistic players increased and that increased the overall LTV now these are not individual like Game Changer you put this in and and you go from a failing product to multi-billion Dollar hit but these are again elements that help you to optimize your game as well as understand your audience better and how to design and how to Market it I don't know sometimes this feels like astrology like we're looking at tea leaves and we're like oh what does it say oh oh they're alteristic I'm a little bit skeptical of this it is it is it like behavioral economics no no I wouldn't I would say this violates so many tenants like let's

let's look at how people act rather than what they say they have I mean you're you're relying on them to understand their own causal chain of logic right of like oh I play this game because of social well if I took it away would you play it you know like you play Candy Crush you know you really want to beat hard levels right like we know that has a really big effect I would bet those are also the players that put relaxing up there you know was it a rank Choice survey right we don't know that they say main reason were they able to rank things and remember these responses are pre-populated by the survey taker there's a little bit more Nuance here but to me it's very hard to get a lot of actionability out of this yeah and back to the original thing was that like you should not blend mobile and console because yeah mobile is like what you want to play versus what you want to pay for right at least with console you know that they're actually paying for it right in theory as so it's like you can't do surveys based on both you have to kind ofp them yeah yeah agree this stuff is really helpful if you are building a new game and you don't really know what your audience is looking for

what are the needs and motivations they have and Mishka you made a great Point not who are they they're not a male 18 years old that lives in you know Dallas Texas it's what do they need and want from your game that is different from all of the other games that are already out there and I think that's from Ohio you remember that one at Zinga I was like I don't have no idea about Ohio like Ohio to me sounds like like a word when I was on FarmVille and we so you know Penfield and I were doing this research it was we were working on FarmVille 3 at the time and it was going off and doing all these focus groups around the us at the time and we were trying to understand the motivations of why people play Farmville and so the Persona that we had was this 65y old woman from Iowa so yes similar similar but it was really interesting that on FarmVille Escape was pretty high in the list of what people really wanted to do because these women tended to want to get away from their screaming kids and go went to a game where the weather was beautiful they could take care of their

farm animals and then they could help other people they wanted to go to other Farms they wanted to help out and that altruism thing that you were talking about is very important especially for a lot of female Gamers and Monopoly go did a great job of hitting on that as well as the you know the [ __ ] you part of it which is I'm gonna destroy your town but I also kind of want to help my friends right like it it it actually hits both I just remember a feeling that it was a very coastal city take on the on on this of Ohio yes because we were all in San Francisco and they're exactly it's Ohio it's the middle right like it's she just has screaming kids in a truck all right the second report out is the sensor Tower report you did a first podcast with them if you want to go back and check out episode 269 on February 12th it was I think you were making fun of them for being like overly hyped and I think you're going to do Mishka another Deep dive into the report and go into the learnings I'm going to trigger Phil

right away was the first the headline was that mobile games Revenue was up 4% Phil please chime in with your inflation inflation web stores stores Jen is that number adjusted for inflation Jen does that include web stores Jen does that include ads Revenue what about peripherals Jen what's in there what about tokens how about that thank you Phil thank you Phil for chiming in on the report that I did not write yes so Mishka you have a list of four questions that you can ask your Center Tower folks what's this chart we're looking at uh downloads I just the thing I remain astounded by is the worldwide number one amount of downloads has been generated by the runner and the arcade platformer category so this is basically Subway Surfers it is still just absolutely dominating downloads and most downloads things uh that you see you know end of year reports I usually throw out because it's hyper casual

which is fine if you understand hyper casual but if you're if you're trying to study I it sends a lot of really bizarre signals and makes the data hard to read but this is this consistent result that Runners just generate insane amounts of downloads and I'm surprised no one's taking advantage of that fact to drive more downloads in midcore like that was one of the you know the softer parts of the report is that Squad RPGs down which we've been talking about on this podcast I keep seeing this this hyper casual fake ad into Squad RPG and I can't understand why no one is doing the last war Playbook because that was the other thing coming out of this is how successful that game has been and of course have pioneered this this fake hyper casual ad strategy let's put this way triple thought like maybe this is your playbook you know for your integration with machine Zone like I mean I'm serious like if this is how you might be able to combine the two these Platformers are sitting here for forx and Hyper casual have a baby and it's like the new genre for Squad RPG I think it's just sitting here but I I'm just I I don't understand the psychology of why these

games download so much why why Runners why is Subway Surfers still killing it more than a almost a decade after launch because you could play for free yeah yeah but that's any to play game that doesn't explain the relative ratio because it's fun to play for free so easy to pick I know but so Candy Crush you know and they're they're generating these these number of downloads almost strictly on our game I that's why I never You' never look at downloads Actually I don't even it doesn't matter downloads are Irrelevant in calculus it's all about Revenue it's a top of funnel metric here Jen I'm Jen I got my Jen batch on I I know I i' love this there's still insight to be extracted Eric like there's and the Insight is is that people are using these casual mechanics as ways of getting downloads for core games right like that's been the strategy since like ATT right and so like that we've talked about this a gajillion times and so that's where these download metrics really do matter is that these mechanics are very very popular so make a runner like it's a great game but it gets into a because

it's primarily like that that fighting running mechanic the end of the day it's a 4ex game and and people just get you destroy you ultimately you know well these Forex games have gone with everything like there's the one with merge that was the pionering of those merge ads where you just merge soldiers together and you make that and then it ended up being Forex game there's the card game card RPG that is actually a Forex game Chinese put Forex into everything yeah yeah well in in hybrid monetization you know to crust's revenue Point let me hit two points hybrid monetization 37% growth in hybrid casual so you know like that's the blend of you know ads in IAP and there's a new billion dollar club last war survival brawl stars of Monopoly go surpassed a billion in consumer spending in 2024 the final point and this is just me triggering Crest Latin America and Middle East see double digit growth while Asia saw a 3% drop in IAP Revenue Latin America America was up 133% Middle East up 18%

emerg as the fastest growing gaming markets Brazil in particular solidified its status as a key soft launch hub for Global Publishers Crest explain why these percentages are actually not that meaningful Middle East is $200 million a quarter as is Latin America which is Latin America's 17 different countries okay combined combined Latin America Middle East is 3% of over overall worldwide Revenue it is [ __ ] mice nuts absolute mice nuts and a complex ecosystem on the flip side particularly down in South America the outside of app store purchases is very high but even if you double the revenue down there it's still not that interesting unless you are a few of the big games that do well down there so yeah buy or beware it's not a strategy make it work in the West North America and Europe which are five billion dollar a quarter 7 .7 billion doar in a quarter versus 400 million so

that's the market guys so but not only that like 4% growth year of a year okay yes you adjust for inflation that knocks it down a peg downloads are also down which to me suggests like if web stores I think have have certainly plateaued like the games that have web stores now are the ones that are going to be I think that well has been sufficiently searched and it'll be what it is you know whenever there's a new regulation to the App Store maybe that pushes up but that that rate is pretty stable ads you know we still don't know but it's hard for me to imagine ad Revenue being up but I'd love to be corrected on that or see if we can get any sort of data on that but this is like a pretty sobering report and it all growth basically comes down the United States for the App Store to grow this is this is basically what everything is dependent on is the United States getting richer and I you know I gave a presentation earlier in the year where I tried to highlight this point you know even if the United States is only going growing at let's say 3% a year you got to remember that's on a really big base and you see what change in real disposable income that means it's a it's a huge swing in demand the United States needs to grow if you European trust me you want the United

States to grow if you're Canadian if you're in Latin America the United States needs to [ __ ] grow right now for the mobile games Market to be year-over-year I think truly positive and that scares me because we are not in control of our own destiny anymore I don't like that what's what's your over under on growth of United States for 2025 like disposable income growth right or my S&P 500 is fund is not looking great right now so I'm I think I'm going to take the under I would say look it I love to get 4% real growth that's always been my dream you know 2% sounds good I'll take that at this point I think we just press the reset button it's going to be fine I love how us bounces back nobody bounces back like us so gonna clean so overall I'm positive on the long term but I don't know about the the short term all right well you're not watching the news then all right let's move on to the Saudis go for Saudis are back [Music]

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and dedicated support team exola powering game developers to achieve Global success all right so as we talked about before scopely has bought Niantic games which includes Pokemon go monster hunter go and Pikman for 3.5 billion shoens uh Niantic spatial which is their Tech arm that does the AR stuff they will operate Ingress and Perot and they're focus on geospatial AI powered by Next Generation Maps okay whatever Buzz evidently they're carving out like 400 Souls I think their teams are in Seattle in Japan if I'm not mistaken which do the game stuff all the members of the niic game teams including the tenur leaders of K kaai and Ed wo will join the 2300 scans across Asia EMA North America Central blah blah blah blah first of all

get rid of scopan that is [ __ ] stupid just be clear like is [ __ ] I'm bringing the word back all right here's my quick take on this right why they paid too much and why they paid just right so this is my kind of assessment on this thing why they paid too much $3.5 Billion Dollar Plus $300 million in cash 3x Revenue okay dude we're not in [ __ ] 2021 anymore Co is over right we're not paying this kind of multiple of revenues like that's insane that is an insane valuation just on the surface right regardless of profitability almost like that's an insane valuation now antech has been trying to sell this thing for years years with no takers they did an absolutely massive riff last year to get more profitable but I think the overall business with the text guys the geospatial AI powered Next Generation map they were not profitable no one's going to buy a business for 3.5 billion that's not profitable that's insane

right the other why they pay too much is Pokemon has a ton of games coming out right now right not only on mobile but TCG and but also the switch so there's a lot more competition on the Pokemon sphere than there has been the past which could cause some headwinds going forward and the big thing here and this is what I think they've gotten a lot of flack for on the message boards and such is that if they [ __ ] with monetization too much they are going to piss off the Pokemon fans so they can't go heavy-handed on this thing because these people run for the door you know I mean I think there's a big group that are insanely addicted to this game but like at the end of the day if they really mess with it too much this could be a big problem for them why they paid just right you know1 billion doll business like this is right with really low overhead assuming that the AR whatever [ __ ] they're talking about that's dead weights gone right so like maybe it is a relatively profitable Enterprise once they pull it out right in order to this thing sold I think they had to pull it out is kind of what this notion is

and so the numbers probably work from that perspective assuming some growth the golden cohort the lunatics that have been playing this game since day one are some of the most stickiest customers out there like their Ma and da numbers are really really insane and the people spend insane amounts of money so they just have to keep those people going and they're they all be good right for a long time I do think that scopely probably can optimize this this game with better live Ops and also Juice user acquisition potentially right to get more people in similar to what they did with Marvel Strikeforce but I think also with Marvel Strike Force they pushed a little bit too hard so they can't do that dude and the other big thing is this is [ __ ] Pokemon dude the Saudis own Pokemon like how in what world is that even possible that I would I would see the day in which Saudi Arabia Prince Muhammad owns Pokemon that is nuts that is absolutely nuts everyone knows what happened three years ago right but anyway I'm not want to get political but but this is crazy like crazy right so

and the other big thing and this they said this at their press release is that this really does put scopely at a different level they're like the only company outside of 10cent that has two games in the top 10 top 15 you know this is like a big big thing for them as a company so in my opinion this is overall great acquisition right thech shareholders finally get an exit from this thing and as we said last week not a great exit like all things said particularly for the later shareholders but a big T Payday for the founders and my friend Quigley who continues to push prize picks to my 15-year-old I'm sure he got paid quite well good job Quigley and my guess if if I was a betting man Mr Rob R from scopely is out in Paris the next week or so we'll see what happens right oh they're on a a buying spree with the French there we go dude unleash the house oh what's happening in Paris are you thinking are you thinking hybrid casual or you thinking hardcore all I know is the same company they are rioting in the streets they are like

because of miscommunication there's just a notification today about this they work so little and yet now they're still on the streets like protesting what's going on in the company so we'll see we'll see as someone who doesn't follow French employment PR you you have to do a little work you have to do a little work and figure it out you you don't have RTL running on the background all the time no no sorry sorry I I didn't know that last point I want to make this is an acquisition only scopely can do and I've said this on the podcast before what I think makes you scopely uniquely positioned is that they don't give a [ __ ] about profitability they're part of a big conglomerate that's owned by the Saudis they're not [ __ ] public right so they have the flexibility of absorbing these type of things and making them work on their behalf if it doesn't work it's just going to get buried anyway right like you know what I'm saying so like they have like a publicly traded company could not do this right this is like the lunacy that was EA buying glue or take two buying Zinga right which is absolute disasters

of Epic Proportions right this is the type of acquisition that could result in the same thing and it's too much of a risk for the publicly traded companies so there're not a lot of buyers for these type of assets but but this makes a lot of sense for scopo that makes 3x Revenue multiple is not of this day like like when you talk to Bankers they're like if you're if you're really good you get 2x like 2x it's like wow yeah clarium scale too like at this scale was 1X remember guys clarium with same size of a game $1 billion a year probably better profitability better suits by the way is sc's portfolio they're like Noah and and that was primarily one game right like you can't make the analy with with the app love and stuff because there's too much too much crap but like the single product type games yeah you know like I would have said raid Shadow Legends would have fit sco's portfolio much better than this chachki Pokemon game no no I don't I don't no

okay I'm going but by the way I'm going back to what I said last week is that this is a huge feather in the Saudi cap of owning something like a Pokemon like this is like the big like peacocking like let's put this on the mantle type thing we own [ __ ] Pokemon right oblation to send a check I I'm I'm being hyperbolic and I know that I'm not saying that they own Pokemon but own a Pokemon right think gota catch them all they caught the big one right the billion doll one all right like what better Pokemon to own than the billion dollar Pokemon right yeah Phil you have to think about it in a way like if you're a Savvy CEO I'm not saying like Brian is the Savvy CEO but let's say you have to do a little presentation and you have to use different assets for your presentation what pres what assets do you have we can put Monopoly in the we can put Pokemon in there we can put Walking Dead we can put Marvel like all these IPS are now part of their portfolio so when you make a presentation every slide will have a

killer IP well that's scop strategy right like they are the masters of Ip they use it top of funnel it helps reduce all the cost you know all the different things but let's just know it is licensed and at any point in time the Pokemon group could say we're not going to renew that license you you don't own the means of production like I mean that is that goes on the risk side right I mean we're just talking about the fact like what is the exclusivity deal on on Pokémon go we don't know like you get a monopoly on geospatial games GE thanks right because we got Pokemon Champions coming that [ __ ] scares me because that's going to be on mobile as well that's not just a switch and that signals to me that Pokemon company is like we're waking up to mobile I can't even believe it's happening but they're waking up to mobile there's going to be a lot of competition for downloads that scares me and you've got to weigh that against what you can do in the growth side and I just don't know how much more they can first of all they're definitely going to update systems design Eric I guarantee you those progression curves are going to be a lot more sting that would be my expectations I don't think they're going

to scare away players I think it's people are usually afraid to sacrifice a little bit da for some some dollars and cents I think scopely is pretty good at figuring out what that ratio is the quote I always go back to from the former PM is like you know they used to take you know C games and like live Ops them to like bb+ and like now they got a [ __ ] and I am excited to see how they get to A+ and I think they'll be able to do it I just don't know how much growth is still there to to take there's no more low hanging fruit in my opinion I just want to remind everybody that Pokemon made a MOA just to be clear yes yes Pokemon unite that does not work talk sleep that's hanging around too not a good idea all right let's check in on the battle of the Pokemons which is TCG versus go so this isn't the shitty Tyson versus paight there there actually is a battle going on here so between Phil and I we pulled a bunch of charts so censor Tower thank you I pulled up T1 revenue between go and TCG and saw something really interesting TCG has been outperforming since it's launched on Revenue but go doesn't really appear to

be cannibalized Phil will will comment on that in a second from the week of February 24 so a couple weeks ago go has rebounded and has hit the same Peak that TCG had the week prior so they hit like a 20 million T1 Revenue Peak so you know kind of looks like there's there's room for both here on the on the revenue side of things a little bit more Nuance here don't think revenue is good to look at I think downloads is more indicative here of any competition in cpis because it's something that I think is realized much more quickly than Revenue might be and so what we're looking at right now is the number of downloads is a 10-day trailing average between go and pocket after TCG Pockets launch and I think you can see like a pretty good depression in Pokemon go downloads of course what's happened is that TCG pocket has actually been declining in terms of downloads week after week after week so the impact is becoming less and less so that's a good sign I think if you're scopely right now and not only that they ran an event recently that had a huge spike in

revenue for go huge spike in Revenue so I think this is all reassuring what I would say is that Pockets launch definitely had a short-term impact on downloads But ultimately what I think happened is players sorted into the games that they wanted to play like hey I'm going to check out pocket you know if I'm more into the meta collection I'll men booom I'm going to that one and if not I'm sticking with go so I think that impact has largely been weathered and combine that with TCG Pockets still having a decline in downloads it looks like that'll have a mitigating impact I mean we were looking at you know dream games like they they make a lot of I think really interesting choices on when they hit the scale button for their titles yeah so I think in the last couple weeks you have seen go been able to respond they had uh 65% download bump that coincided with that Revenue bump and so it looks like there's a fight right they're going to go back and forth they're offering different play patterns and so what's interesting is it feels like there's room like you said there's another game coming I know how much more room there is with the IP um I think you

have to get the core motivations of Pokemon which I think is really interesting and I'd love to hear from people this episode like it's something that I've thought about too especially as we've seen games like pout world like is Pokemon really about collecting collect them all is is what Ash Ketchum sets out to do right you know quote me if I got the text wrong but when he leaves his mom's house right he's he's going to collect them all and so is it that is it exploration is it evolving Pokemon obviously can be more than one thing but like what is the core fantasy of this because I think that matters on how you look at Pokemon Champions which is going to be more of a combat focused game yeah we'll see there's a little bit of that but I mean that's why we said Pokemon go worked is you got to catch them all and you got to actually get up off your ass and get outside to catch them all and it was the first game to really kind of have the right fantasy fit with the play pattern uh that they had I wanted to point out a couple other interesting things that came up so scopely this morning released a bunch of blog posts as well and one of the blog posts was from Ed Woo who is the head of the game and so he hit three key points

scopely expressed a deep admiration for this community so this is messaging towards the community the entire Pokemon go team is staying together through the partnership which continuity and we will be joining a broader organization dedicated to games so maybe hey a little bit of shade against the AI go location word salad that we just talked about with the rest of them so I I kind of applaud this kind of you know hey we're directly going to speak to the community this may be a little bit reactive and I think Chris you hit on it earlier with some of the community perhaps being a little bit worried that scop leag can rhyme with something like oh free to play and pay to win and got your games and you know I think you've got Pokemon go fan saying you know don't [ __ ] with my Pokemon and so I think scop is trying to get ahead of this get ahead of any Community Mutiny and get out there and say hey number one is we got you we hear you we're not changing the team and so I think the lesson here is a really good one from a com's perspective so really

quick it's we understand the impact you're going to get ahead of it you understood that the community was going to revolt you're getting ahead of it and then you're going to tell them what's not going to change that they love and then you're going to tell them what they're going to get with the change that's going to help it be better and so that I thought was really smart and how they did this kind of preemptive you know comm's approach getting you know going out and getting ahead of it any other wrap UPS you guys want to do enoy it's coming baby March 27th Buckle in 1.9 million wish lists I believe it's number four in terms of a top ranking Eno is a Sims competitor which has been in development for a while and and as EA is like sitting on its hands with the biggest chug chug Eno is coming out and out beating you know outclassing them to some degree and if you remember Paradox cancelled their Sims competitor I think it was last year we covered that so the runway is clear for a fantastic Landing

we'll see the name is so bad though I wish it's so bad fix the name all right we're Landing the plane everyone see you at GDC and then the next podcast will be us live from GDC talk to you soon C 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 well 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 fun slack group if you have 5 years or more of games industry experience go to deconstructor of fund.com /s slack and appli 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 a