TWIG #327 The East-West LiveOps Clash and the New Era of Extraction Shooters

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residence [ __ ] and residence like that. Adam Teler, product guy. Product. Yeah. Product. You should do it like James Bond. I I think you can own that. That's your branding product. Yeah. Because I have that monotone voice. It's good. Yeah. Yeah. Yeah. All right. Here's what we got today. Uh Crest is back from Turkey and there's a lot of scoop he wants to fill us in on. Very excited for that. Epic Games Store clarifications. So, I wanted to talk about a LinkedIn post that I saw. Minecraft movie passes half a billion. Marvel Rivals season 2 and Overwatch 2 has a new feature launch. So, we're going to check in with our shooter guys, Adam and Phil. And then finally, since we have those two, we're going to see what Bungie's been up to with Marathon. Lots of trailers. This weekend was a dump a marathon content in a good way. So, we'll talk about that. So, first Crest and Phil and Adam. It

was me and Laura and Chris Sides and Mishka. So, completely different crew this week. So, welcome back, guys. Crest, what's your scoop? It's good to be back. Although, my allergies kicked in this year, which is brutal. So, I'm a little bit off. Yeah, my fourth year in Istanbul. Fourth year in a row. Google did not have their big event this year because they lost Semi who was their big coordinator. Lorcam from Laton Ventures through his LP investor advisor yearly thing. This is his first one. So it was a great event right on the water actually one of the venues that we had for Google. Amazing folks like always that come and yeah I've been there so many times that everyone seems familiar anyway. Yeah, it was great. And I tell you, the Turkish people, they never cease to amaze me, right? Despite all the issues around the country and what's going on there, lots of structural challenges. They're just amazing entrepreneurial culture, you

know, with tons of tech people. They work their asses off and they are creating great games and doing extremely well. And also, they know how to market the [ __ ] out of these games. They do. They're [ __ ] crazy, you know. So, I gave a presentation about the state of the state, which I've been doing a lot these days, it seems. And one of the slides I put together was the Turkish publisher performance and they're up like 50% since calendar 20 and but it's not only peak and dream but like grand and others and you're basically see that like 11 of the top 50 games are from Turkey and they continue to scale. So again there seems to be this insatiable desire for these 55year-old ladies to play these stupid puzzle games. They just keep giving them what they want, you know, give them the crack and they'll take it, you know, and spend against it clearly. Right. The first graph you showed, that's publishers, Turkish publishers. So like that cuts out things like Peak and Rollic who are under US. No, no. All right. Sorry. Developers. Turkey developers. Okay. So

specific includes Peak. It it could peique Rick and as it says in the chart, Mr. Adam, pay the [ __ ] publisher. Yeah. All right. You're right. I did publisher. Yeah. All right. Anyway, yeah, it was a great great event and looking forward to going back next year probably. So, and what was the energy level like? Well, compared to GDC, I think it's a little bit more positive because I think there's still lots of things going on in Turkey. Having said that, like money is harder and harder to get. So they're starting to feel that pinch and we're going to get to that later today. Hopefully a little bit of dread in terms of getting the capital required, but there is a lot of activity there and even some of the western investors are are kind of spending a lot of time focusing on Turkey these days, the VC stuff. So yeah, cool. Yep. All right. Well, thanks. Let's go to shills. So first is I did a podcast on brands in the UGC space with the CEO of Super League and the CEO of Geek which is

GIQ got some of their advice and data about how brands are performing in the space. So from Mishka, he wants us to report somebody on our lovely blog deconstructed Dualingo's 15 billion dollar business and launched our engagement handbook, a template we've used when consulting app companies for the past year. That sounds like we should bank ebooks and sell that. Mishka, like what are we doing giving all this stuff away for free, my friend? So get the handbook by going to deconstructor of fun website. And then for me, there's a mobile marketing big convention that happens every year in Vegas. It's called MAU. It's coming up next month on the 20th to the 21st. Trying to decide if I'm going or not. It's in Vegas. Who doesn't want to go to Vegas? It happens sadly to overlap with Games Beat LA, which is May 19th and 20th. And CR, are you speaking there? I think you mentioned something. Are you just going? I I haven't heard [ __ ] so I may I may not be going, but it's really easy for me to get down there. We'll

see. Got it. Okay. So, this is in our correction section. It's not really us doing a correction, especially because Crest wasn't here last week, but easy, easy. But what I wanted to pull out, I thought was really interesting is our friend Yoast did a post around Epic Games Store. And so, they reported 77% of Epic Games Store 1 billion in revenue now comes from firstparty games. And what I thought was most interesting was that Kyle Billings from the Epic Games Store posted a little bit of a comment and and I thought it was just interesting for us as we're always talking about data. You know how we talk about data on sensor tower? Does it include ads? Does it include web shops? So this was interesting as we're looking at Epic Game Store revenue. So what he says is that EGS allows thirdparty developers to use their own payments for IP. He also goes on to say, quote, that many of the biggest titles on the store are using

their own payment systems and Epic does not require any form of revenue reporting. Yes, third-party spending and Epic Game Store payments are down, but third party hours and MAU are up. And so, Phil, since we often talk about all of these different things, I wanted to get your thoughts on that. I will say every Epic employee I've met has that like dog in them. like man, they're always ready to like, you know, throw that out throw throw some fist of cuffs out there. I will say that this was a little bit unconvincing to me, but I think it brings up a lot of we've been talking about with EGS. So, they reported an 11% increase and third party game hours on the EGS platform, and I suspect that's the Asian free-to-play MMOs that they brought on. So, Genchin, Weathering Waves, and Hongkey Star Rail are all on EGS, which I actually think isn't a bad idea, especially for Western audiences. And you remember Riot, I think, put some games on there. I think they put Valerant there at one point. I mean, for a lot of games that have been doing direct distribution, you still get to control your own Destiny on the Epic Store, which I think is really nice,

right? You can do offplatform payments, which we've seen in mobile, and it's been confusing to me that this hasn't been a bigger conversation on HD, like why aren't people going to the browser? Now, Steam has some like vague policies around this, but like I know War Thunder gets around it. like you can make IPS on the web and then you know have your Steam account or make it on another platform and have your Steam account and have that revenue recognized. So I get his point around the GDP number could be bigger when you count third party platforms, but he's still arguing about a relative change. So you have third party gameplay hours up, but the year-over-year third party revenue on Epic's Rails was down 18%. you have to assume that there's been this huge adoption of like third party payments off EGS to make up for that lost ground. And so I just don't think that gets him a growth number for EGS. But like as Eric mentioned, you don't need a growth number, right? Like it did what it needed to do, which was get that company outside of the thumb of Valve, right? To

be able to build a platform like Fortnite to not have to give away that revenue. Like it accomplished that. And so any other ambition it has to me is just sprinkles on the cake. It's it's just all goodness. So, I think the bar should be much lower for EGS's success or failure. I guess I'm looking at it from the perspective of a third party developer of like how should I actually go to EGS now versus Steam? And no, you're talking about like 11% growth in playtime in MAU. Absolutely not. 18% down in revenue in terms of units sold. Absolutely not. Yes, you're talking about like Hongkey and some of these Chinese games. They should absolutely be on Steam. I don't see any discovery benefit by being on DGS right now. Do you have to do one or the other? Why not do both? Oh, you could do them all. You should do both. Like there's a huge opportunity for them that they're not on those platforms or Steam. You would never do Epic and not do Steam. Well, they are. Some companies have done that. Some people have gotten payments or have done delayed launches. I mean, it's classic platform platform economic

stuff, but not on purpose. Obviously, initially they were doing all kinds of crazy exclusive deals. Nicki Oh, really? That was EGS if you remember. That's not How's that doing? How's that doing, Phil? Look it. If any If anyone If anyone at Epic wants to pass me some some numbers underneath the table to trout it success, look at the sensor tower numbers there. That like one big day of freeto play is not looking great right now. Maybe not for Infinity. Nipping this thing in the bud. Like the fact is that they wanted to maintain their own control of their own platform for their own game, Fortnite. And they have achieved that by doing what they needed to do to build the store and build basically the Fortnite launcher, right? And so they control their own destiny. They don't pay 30%. That was the goal. If originally their goal was to create a competitor to Steam, I don't think that was a real realistic expectation. And I don't think it was honestly. I think they just wanted that to be break even, but wanted to build the platform. Could they have done it without doing a store? Maybe. Why get all of those games? Why pay all of those

funds in order to get the games over? But the results the same, you know, so they're in a good position. The other reason I brought this up is because, you know, the GameCraft podcast is going on and today's episode, I only got halfway through, is the Valve episode. And so, Chris, I don't know if I realized this, but they say it's still a rumor. It's likely that GTA 6 is going on Steam. Like I guess here's another one is like if you're GTA 6 like I mean I guess you can go to Valve and be like hey we're not paying you 30%. But why do they do that? Dude Rockstar launcher was such a [ __ ] pain in the ass. Holy [ __ ] dude. You couldn't [ __ ] it up more than they [ __ ] that up, dude. I mean it was unbelievable like how convoluted their [ __ ] was. I remember trying to install stuff. I mean it was ridiculous. So I mean look it's not rocket science but like I don't think you know these guys are capable of actually doing their own thing right and they only release one game every like 10 years you know so it's like exactly how does that work you know like it's not an ongo it's ongoing

service for small well a big group of people but anyway no I don't know anything about steam I that's a real speculation on their part but the PC skew won't be out till sometime next year anyway yeah it's delayed right so well I think just to wrap that one up I do applaud the idea per the GameCraft podcast of new distribution options. Their thesis that I think we talk about all the time is that, you know, you got to have more places to put your product, more opportunities to get in front of people. So, cool. All right. Going to do Minecraft again. They have passed 550 million globally. Crest, I wanted to know if you've chicken jockeyed yet. I missed you last week when we talked about this and so please would love your thoughts. I don't know. Look, Minecraft is an amazing franchise. I mean, it is like ubiquitous. Like, everyone knows Minecraft or has played Minecraft. And I think the demographic is far more broad than Roblox even for Minecraft. [ __ ] my daughter still watches those stupid goddamn people playing that game

constantly. It's like unbelievable. My brilliant daughter listening to that [ __ ] nonsense. Anyway, so it makes sense that it's doing well at the box office. I think again it supports the overall zeitgeist of the franchise and to that extent that that does but there was no coinciding launch of Jack [ __ ] for this thing you know I mean there wasn't like some kind of like halo effect on something new that they're releasing with the movie it's just the overall franchise has become more popular because of the movie and so good for them you know but I don't know it's not this like windfall I can't believe I disagree with you I actually I I can't even believe I disagree with you so right now We're looking at like mobile revenue from the mobile skew, which is a premium title, which is just irrelevant. Yeah, it's up, but it won't do it won't do jack in terms of like marginal up. Like maybe maybe we're squeak 5 million out of the mobile premium skew, but that's not really where the revenue center is. And so I actually go back to what you mentioned, Jen, like it's franchise management, right? And so what is effective franchise management? Well, to monetize these events, to basically

free ride on a movie for all these other vectors, they need to exist, right? And so Minecraft isn't just the game anymore. Like looking at this IP skew, like they have a significant merch component. Like they're in stores, right? Like they actually have a pretty good surface area to monetize the movie and free ride on all this [ __ ] And that is what I think a lot of these other trans media franchises have not had. Like they haven't been able to free ride effectively. There hasn't been good franchise management because you can never time things. I'm sorry. Like that's a [ __ ] strategy. You're not going to be able to time all this [ __ ] together. They did run an event in the game by the way in the mobile skew. They did have a 14-day event, but it's irrelevant compared to having like merch at Target for $20. I'd much rather take that. All right, let me clarify my point of view here. When Riot does their amazing events for the game, that actually accelerates sales within game of digital assets and digital content and battle passes and special events stuff that makes sense in terms of building actually a business around

these type of big events, right? Minecraft isn't doing that, nor do they don't even really monetize all that well. That's the problem with Minecraft is they've never really focused on the monetization front. So, yes, sure, they're gonna sell more chachki, hats, and like figurines and [ __ ] like that, but it's just not the same as supporting the game content stuff in my opinion. Right. When I was at Mattel, I made Minecraft toys and we made a lot of money on Minecraft toys. So, you Yes. from a franchise plan which is what I wrote many times when I was at Disney and and then was a beneficiary of when I was a ly is like these are the moments that propel the brand forward and not only appeases the fans you know like I told you guys I'm a step monster you know Zach is 19 and he has been playing Minecraft since it came out when he was like five six or seven I can't even remember it's been on his iPad the entire time and so he's one of the ones chicken jockeying and in the movie theater while the next 5-year-old is going to the movie and is now becoming a

fan for life because of what that 5-year-old is now experiencing. So, what these things do is really extends the franchise. And yes, in an ideal world, you would want to link up and launch everything at the same time. And I think, you know, the one that is kind of doing it is Last of Us 2. Did anyone watch the premiere? I I was so happy. So good. Yeah. So, so good. Now, they did report is only up 10%, but this is prestige like HBO, you know, prestige TV. They did launch Last of Us 2 Remastered. I haven't checked on how that one is doing. But for me, these are longer term plays. They're not performance marketing. See, I I hate that so much though. I hate it so much because it's it's the Simon Pullman who who's also on LinkedIn. Like, it's this bank account model of brand equity, right? Like where every entry in the franchise either adds or removes from the brand equity. you know, almost like a bank account. And so, okay, we're making all these deposits by like launching these franchises. They're going to have long-term uplift. And I think that's [ __ ] I think the

effective way to do franchise management is to liquify the moment. Like, you need to cash in now. You need to cash in while the hype is the You're just contradicting yourself. Did you just disagree with me? The reason the reason Minecraft works is because they already have merchant channels. Oh, I see. I see. They have everything ready to go. They can liquefy the moment and capture those games, dude. And I think all right like all these effects are going to fade. I just don't think they're they're never as strong as you think they are. Like the bank account model that capital depreciates really quickly. Dude, if you're doing this right, which is look at the Barbie movie, it's everyone else. Maybe the game didn't do something special and huge and big, but it's Voltron or it's Gustalt. Like the sum is greater than the whole of the parts. And what happens when you have these big moments? Everyone for the last 18 months has been making toys and games and t-shirts and bedding for this moment. I guarantee you that the Minecraft franchise just is like cashing in just like the Mario franchise did two years

ago. And I I looked at a lot of the numbers because I had the toy numbers from the toy world is like that thing spiked up as did all the other lines of business. So I think the challenge for us is we're the gamers, right? We're like what did games do? But if you're the franchise owner, you're like, "Holy [ __ ] I just like this is the best thing." Yeah. And what was funny was that I was going to concede on this one to Philip. I'm like, "Okay, you're probably right." Like Minecraft actually is probably achieving some objectives here in terms of the Halo effect of this movie, right? Because they have all this merch and other [ __ ] that's going on within that franchise. But I agree with also Philip in the sense that like like this is not the be all end all, right? Like Marvel did it the best when the Age of Ultron and all that [ __ ] [ __ ] that was going on. All the movies that beats every time they add a [ __ ] movie. They were doing all kinds of licensing and and and and game game stuff. All that stuff was like increasing their TAM and and their revenue across all different channels all simultaneously like because of cadence. It's just like a C classic live ops thing. You know, the cadence of content just kept coming and the beats

kept going, right? But if you have one Barbie movie like four years ago and then another Barbie movie [ __ ] five years from now, dude, that's not the same. That is not the same, you know? Like it gets the zeitgeist for like [ __ ] 10 minutes, you know? That's it, right? That's great. Yes. Bar TV is far more effective, right? You can only do a ro Angry Birds movie like every three, four years. TV you can do seasonally, right? Like you have beats so that are so much more common. You know that you were on the walking dead, right? WWE, all these things are easier to live ops. So, I'm going to do a yes. And so, if you truly do a franchise plan correctly, these are called tenpole moments. And then you build your content around the moments outside of the big massive tempo. So, so you're right. In a perfect world, Barbie should have followed up with there's a TV show and there's this and there and how do you go after the different segments? What's happening right now is I don't think that people are doing franchise management in the best possible way to make sure that they

extend the life of these big temple moments. So I'm yesanding you if that makes sense. All right, keep going. All right, Chris. Okay. All right, so of course the first thing that happens I am not exaggerating like I I literally get up, I walk to the venue and the first thing I see is some douchebag in a vest. Okay, I'm like god damn it, these vests are everywhere. And of course, I look at it and it's Sergey from Aren, right? And and what's crazy is I think I've inadvertently cemented this brand equity with these vests for Aren somehow. And I want to be clear, I do not support or condone the use of puffy vests. I think they're douchy and I think you're just look at me. I'm an investment banker. Okay, I want to be clear on that. Now, of course, the only rep that doesn't wear a vest from Am I think? She just has the fashion sense not to wear those douchy things. And of course, Afon, who is the leader of this crew, he would never wear a vest because that's way

beneath him, right? And have you ever talked to this guy? By the way, guy, he's like almost regal in his approach and how he speaks, you know? He's like, we are but his subjects. That's what it feels like when you talk to him. But he gives that ultimate confidence kind of without that like obnoxious condescending tone. But anyway, to be clear, ARM is one of the best in the business. Afan has managed an amazing team. They do lots of M&A and transaction in the space and their diabolical vest strategy is working because I am covering Aren's Q1 summary instead of convoys because of the amazing vest that they've put together. All right, so they created this report with this guy in vest game with actually founded by this affforementioned vestwear Mr. Sergey who who came from Invest game. So here's what they had to say. First of all, I will give him mad credit. Like the formatting on these this report was absolutely phenomenal. Like they have stepped up their game way above and

beyond, right? Wise man once told me is that when you're looking at a chart, you should understand it in 30 seconds or less. And if not, you failed. So anyway, they did a great job on this. So they went over kind of the M&A in the gaming space, public market transactions, private investments, and some summary of some market trends. And so basically, they're kind of claiming that like the first quarter was actually kind of a higher financial activity going on within the space, but if you actually break it down, it's really not that great. I'll be honest. Like, so there are like 42 M&A deals totaling 6.6 billion. This is true, but these were huge deals. like the scopely acquisition of Niantic obviously mini clips purchase of easy brain and then the app loving game studios sale and so I guess what this is generally like good news it's good news that there's things getting bought because there's like exits for founders and stuff however it's pretty clear that there's just not a lot of acquirers left right and a lot of these were like trying to save these companies right like they're

like fire sales right like obviously the apploven stuff is not the ideal way of selling their studios or 12 like 15 studios or whatever it is. These are good results, but these are just kind of like transactions of necessity. I said, you know, like the biggest problem we have in the M&A space is there's just not a lot of acquirers left. And this is what we were talking about at GDC and in Turkey is like I mean the only real acquirer that's active out there is Scop, right? They're like the only one left, right? Activision is gone. You know, Zinga is not acquiring jack [ __ ] anymore, right? You know, like Mr. Petravic doesn't have cart blanc to buy every [ __ ] company in Turkey anymore and the Chinese are gone so it's like a really really tough M&A space in general. Now of course is an M&A adviser so they have some incentive to pump that stuff up. So anyway all right any questions about that before I continue on my diet tribe? No I think that makes sense. We actually talked about and went through the report last week and got Mishka's take on it. So, I think this time it's really fun to get your take on it since you were with them and get your

perspective. So, thank thank you for listening last week's episode. Appreciate that. Chris, I did actually. And maybe I just don't remember. Anyway, private investments are [ __ ] horrific. Absolutely terri terrible on this thing. Like very very small like point.4 billion which represents like the lowest quarter in like years. And so the people that investing are A16 obviously with their nonsense around speedrun BitCraft and gem they have games. I do want to say just to be fair to them they do have games and speedrun everyone and apply now apparently it's going on. No they are no longer doing games basically is what's happening. And so I got a call from the PR guys over there and and yeah they were unhappy but whatever. Okay. So it's kind of a grim situation on the VC side. We are seeing early stage VC stuff, but the mid-stage like A round, B round is going to be really really struggle. So even at Morates at Lightseed, we haven't heard jack [ __ ] from him in months, right? Like what's next on his thing. However, I think we should see some ridiculous

investment in believer. Like we're 75 to 100 million. I know they're working on it, but like that was like throwing away money. So we'll see in a few public [Music] listings. I don't I don't want to be so negative, but like they're like the $5.1 billion in public listings, but these were all like really distressed asset [ __ ] You know, this is like spin-offs of Asodi from Embracer, which is a failed company, investments for the failed Ubisoft, like Ubisoft credit facility for the failed Stillfront. Like the one IPO from Shift, the guys who makes Goddess of Nikki and Stellar Blade, but I haven't checked out on how well that's doing. This kind of activity is not the type of activity we're looking for, frankly. The market cap for Shift Up is down from 2.8 to two. Okay. So, just want to give you some good news as you Yeah. The good news is, and this is exactly the thesis that I've been talking about for the last year, just to be clear, is that game stocks are up. Like, actually, game stocks are

outperforming the S&P because we are on our own cycle, right? And we have like all this [ __ ] going on in the space with Nintendo and Take Two with GTA and even EA is starting to come up a bit and Roblox, etc. So, the publicly traded names are actually performing pretty well right now because it's the battle of the big out there, guys. Battle of the big. Yeah, mobile has stabiliz, which is exactly what I was talking about in Turkey. But downloads continue to be a challenge. They're at an all-time low. And that's another thing we've been tracking for a while. Steam is still growing. The console audience is growing, and this is not because of hardware sales, but engagement is improving on the platforms. UGC is still growing with Fortnite and Roblox. And then mobile game launches are a lot lower, which actually is another thing is that like it's getting harder and harder to launch games while Steam continues to get more and more games on their platform. So overall, this is an amazing report of like the state of the state. Like if you really just want a really pragmatic look at it and you get away from the spin around M&A, I think this is a really interesting report from a financial perspective. So I do

recommend you guys taking a look at it. Yeah, they do great work. And you know, I think I talked last time at GDC. I I I saw the vest. I saw the Aren vest and I'm like, I have to go talk to them. So, the branding and the marketing is is fantastic. They just need the women's version because we don't wear the puffy vest as the women. When I talked to her, I suggested, "Oh, yeah. Why don't you wear the vest?" And she looked at me like, "There's no crazy I'm wearing that goddamn vest, dude. I don't care. They can't pay me enough to wear that vest." She didn't say that, but I'm just saying she looked like that. Yeah. No, she should. It's like when all the guys get the hats with the branding and it's like there's never going to be a woman that wears a hat with your branding in public. It just doesn't happen. Okay. All right, Phil. Let's go to games. Let's start with Nintendo. Crest mentioned Nintendo. What's up? Mario Kart World's price tag has been unveiled. It is $80. Wow, that feels like pretty significant news. 80 bucks. Nintendo trailblazing. Now, Doug Bowser. God, I wonder how many times that joke

has been made. He wears a pin. So he we Chris, did you know him at EA? I know him from EA. He is like actually one of the loveliest people. Yeah, he's very nice guy. He was on like CNBC. I was watching the clip of him talking about everything and he he wears a Bowser pin just cuz he owns it. He owns it. Yeah. Yeah. Also, good for him for raising the price. This is good. Break the ceiling. Let's get through this. Well, GTA was, you know, was already out there first. If Nintendo's the first one to break through this, right, I feel like that's the right approach. Then everyone else will follow. They got [ __ ] though. No, that's the only shocking thing that it was Nintendo to do it, right? Yeah. Like, yeah, GTA, sure, [ __ ] do it. 80, 190, 120 bucks. It's 100. It's 100 plus, right? Like or 100 120. I don't know where. Well, obviously they have it. This is one of my favorite slides from Matthew Bald deck and he takes a picture of a Toys R Us magazine from 1992 and looks at the game section and what he does is he goes in and he adjusts all the prices for inflation.

And so you were looking at games that first of all had variable pricing back then and were you know 150 bucks for a game inflation adjusted. I know people have mentioned this over and over again but they always mention it as like oh well you know game prices need to go up. So first of all, we have effectively done price discrimination the right way. We have deluxe editions which we've been talking about which effectively raise ASP, you know, to this level. H maybe maybe not, but ultimately like it's not always about maximizing price, it's about maximizing revenue and finding that point on the demand curve. And we do a remarkable job of doing that, not just through the deluxe editions, but I think the other thing we have is that we have MTX revenue now as well. And so sometimes it makes sense to lower price, get more installs, more DAOU, and monetize on the back end, which can extend your LTV. So there's a lot of things that justify where prices have been and why they've been that way. It's not necessarily that like we just haven't updated prices in a long time. Now, when it comes to MCX, I think that's a totally separate case. I think people really haven't updated price and

effectively we've been discounting things for like five or six years. But when it comes to like standard pricing, I'm just not as convinced that we should be like beating ourselves with a stick that we haven't raised price. There's a bunch of reasons why this has been the case. But for the purposes of Nintendo, they don't have MTX, right? Like no [ __ ] they should be 100 bucks. Yeah. I mean, they really they really should be though, right? The single player games are more pricing elastic. Like I think their product is more price elastic. I would argue that almost all games on console are priced in elastic. Like do you think Madden at different prices is going to change the curve for that or FIFA or Call of Duty even? Like I don't think there is a price elasticity. Well, we have FIFA free to play remember in Asia. Yeah. And we when forecasters looked at this and they said here's the impact. All they did was just raise the revenue number. They literally changed zero about players. I agree that forecasters forecasters don't usually assume demand curve slip downward. I've seen that many times in Google Sheets. That doesn't mean it doesn't though. When I was at EA ages ago, I I swear I spent six months on price elasticity and

looked at every piece of data that we had on Madden, FIFA, NCA, Medal of Honor, whatever else was back then and market data and there was absolutely no evidence whatsoever in this particular market, right? These like core gamers that are buying consoles, right? So anyway, that's a whole other debate that I'm sure we could Yeah, with MTX, right? It adds another flavor to it. So last point on this. So for FIFA and Madden, which are yearly iterations, if they try to charge like 80 $100 on the base price, they're out of their [ __ ] minds, right? Because there is MTX associated with that and there's pure SKUs that you could do that make sense. But for single player games like GTA or anything coming out in Nintendo, yeah, 80, 90, 100, go for it. Well, on football and FIFA, that's what they have been doing is the deluxe SKUs and the super SKUs or the, you know, you pay a hundred bucks and you get early access. And so, I think you're right that they've kind of segmented their approach, which makes sense. All right, let's go to something

that does have MTX. Marvel Rivals and Overwatch. What's going on, guys? It's Black Adam's favorite thread. Can we make this a thing? Yeah. Can we take this thing, Adam? Can we Can we call Black Adam? Oh. Oh, right. Philip Black and Adam. Okay. Yeah. Yeah. Yeah. It's one segment now. Oh god, that's funny. So, right now we are looking at DAU from Video Game Insights for Marvel Rivals and Overwatch 2. Now, I put Overwatch on here because remember they've been man, they've been on fire recently just in terms of at least content and I would argue some like PR swagger. They launched Rogike abilities which are currently in the game. Loot boxes are back, but they're not monetized. They're just for engagement purposes. And they have that new stadium mode that's coming out soon. And we're comparing them against Marvel Rifles, which recently had their next seasonal update, and they've gone from about 1 million DAU to about 2 million. Again, we're just looking at Steam, so who knows what's doing on console. Maybe you double this. I don't know, Adam, if you have a point of view here. I don't know, Adam, does this does this update your prior anymore? Like, you know, we're getting plus 1 million DAU on an update. That seems pretty good to me. That's that's like a doubling.

No. No. But no, just no. Now, first of all, I was way off in terms of my predictions on this thing. I will admit because I think I said within a couple months it was going to be down like 25%. But I'm telling you with four months it's down to 25% of its peak at the time. Like I was like I was not off on the metric. It was just I was off on the timing. But Jesus Christ. So what you have to do is you have to do this on a launcher line basis. And I think we can talk to Nuzu and get that because unfortunately the VG insights just doesn't track back that far. But typically even Overwatch 2 had this curve, right? like Overwatch 2 had this decline from launch and then it stabilized. So to me like this doesn't adjust my priors and my priors was this is probably on track for a similar size of outcome as Overwatch 2 because it's it's really like where does it stabilize now after season 2. Overwatch 2 stabilized at about 6 months out. That's how long that decline was. This is now

starting to approach that point. So do we see that stabilization? The worrying thing here was that the season 2 bump was not that big, right? Despite all the content that they threw into this, it's about the same size as they had with that mid-season bump. Yeah. From a season one, which to me is like, okay, that that's going to be a struggle to maintain this level. This probably means that they're going to dip a little bit lower. So, let's watch this. But what I do applaud is that based on this information, right? Like through season one, NI saw the trends and said, "Okay, let's accelerate our live ops. Let's get it to now two month seasons, two characters per season, so roughly 12 characters per year, which is insane in terms of comparing it to the market, right? And I think Chrises did a really good job of predicting this with the PVP shooter podcast we did. Player expectations are just much faster. Three months is too long. One character per season is too little. So, it's good. But yeah, my takeaway from this though is okay, so Netis with Marvel Rivals and

the Marvel IP is getting to this outcome that it's slowly declining. They have a massive IP. They spend hundreds of millions on dev, way more than Spectre and Supervive did. They have a live ops plan that's 12 characters per year and six seasons per year, an aggressive cadence of in-game events, and still they're able to sustain at this level. So yeah, the bar is very, very high. They keep talking about this like productivity of content, you know, what what is the bang they're getting for their buck when they make all these characters. Do you think they should have invested in something else? Because I feel like everything outside of characters in terms of content offering, it's weak. Like even the UX stuff I was looking at this week, like the end of round stuff, like there's so much about the game that just feels flat and almost unfinished. And they've kind of like rammed through this one content pipeline, which is like let's just unload characters. Was that the right decision? They could have made a trade-off to do let's say have the character pace rate and say like all right let's double up on cosmetics or something. Yeah, I think it's rich to kind of say let's talk about making

those things because I think that was part of their strategy their way of taking as much share as they did from Overwatch and from Valerant was doing that like 33 characters at launch huge cadence of characters. So, I don't even think they'd get to the engagement or DAOU level now if they didn't do that strategy. Like, the efficiency of content in PvP games in general is weak. The challenge here is like the bar in order to compete and to sustain players in this PVP environment looks closer to what Marvel Rivals is doing now. I don't know if there is a more efficient form of content. Well, I wanted to ask you this. you know, working with a lot of these different companies, knowing how long it takes to make characters in Western companies, is Marvel Rivals now setting this bar that is almost unachievable for a Western developer because the way that they're scheduling live ops, the people that they're throwing at this, the amount of content, the turnaround time, I just haven't seen that at the companies I worked with on a Western side. So, is it I I think FIFA

Ultimate Team does a pretty bangup job. Like, that team is tight. I think that's one of the best I think it's a pretty good example of western live ops. We're not that desperate, are we? I know, but I mean it's feels like it's a different genre that you you would be able to live ops a little bit differently like in the shooter space or in the you know like an adjacent space like that. I So take your example, but is there anyone else who can keep up or do you just have to build your game and team to turn faster? I don't know. I have not seen a western developer that could keep up with this cadence. No, that's the blunt answer of it, right? is that like Apex had information shared around their character pipeline 9 months plus to develop each character. So the cost of saying okay we're now going to launch 12 characters per year each one of them taking 9 months can we bring that down to six can we maintain the quality because keep in mind here like it's not just about quantity it is really about quantity here too these can't operate if you just do half characters or little

side jobs like mirror images of characters these have to be meaningfully different in the meta so yeah my sense right now is that there I have not seen any webster developer that can reach his kittens. Fascinating. I just think this is the wrong question to ask. Like if we're already positioning this as like a supply side arms race to win in live service HD, like I just don't think that's where we're going to find the solution. Like I don't think that's going to be the next turning point or paradigm shift. Like I think it has to go back to productivity of content. And you know we've talked about the finals before and it is grim to look at where the finals is from a KPI perspective. So, I was looking at the finals DAOU. VG Insights had around 200,000 DAU for the finals. And so, let's say we double it. We get to 400,000, maybe even 500,000. We include consoles. And we multiply that against ARPDOW. You know, we can kind of come up with a run rate number. And of course, we, you know, we multiply it out by each day in the year. And like, you really need to have an incredible amount of DAOU because there's no way any of these cosmetic

based economies are hitting, you know, 30 plus cent ARP dows on a regular basis. I find that pretty hard to imagine particularly this is gross revenue too right that's gross not% true take 30% off of that then you start to take on tech I can't believe we're still having this debate right cosmetic economies don't work unless there's super high mau right and it's like I agree I just wanted I just wanted to reillustrate that point of like even the finals right seems to keep going you know a half a million you know potentially 400,000 DU that's a lot of [ __ ] users every single really strong arpoo like I think what is something like Royal Match doing like what 20 cents a day forex is doing you know a buck all the way up to four bucks a day maybe and you just look at these ARP down numbers on HD and you know I don't have any real particular data here but I can say like 20 cent cosmetic harpow is like actually not shabby and so you're just setting yourself up to have a failure if you don't come in with a

strategy that says okay if we have 500 000 DAU. You need to figure out a monetization model that can make that work. I just don't think you can bet on 2 million DAU. That would be the challenge, I would argue, for these people with these next series of releases. Someone needs to figure out a pay to- win, pay to progress system that works within these type of games. That's the unlock that we've been I've been waiting for for like a decade, right? Like sports game monetization in a non-sports context is because obviously sports is pay to win, right? With loot boxes and I'm waiting for someone to like, you know, do that. I mean the outrage is going to be deafening right from from the crazies but like people are going to spend you know they don't give a [ __ ] right it's your favorite topic but so on league in China 10 cent in order to get skins in the cosmetic economy they use loot boxes it doesn't happen in western markets because it doesn't happen but a lot of the success comes from cosmetic loot box now listen I'm not arguing with you but the step in

the direction there is you said it yourself Phil like loot boxes are back in Overwatch but they're engagement only as to not like rile up the western audience. So I think that's the other even with loot boxes like when I'm looking at these ARP dow benchmarks games that I've seen that have loot boxes still don't break really above that 30. You're not going to double your ARP out with loot box. It's not enough right? You can't be sitting at a 10-centent ARP dial thinking about how you're going to 4x that with loot box changes. Like you got to have a dramatic reimagining. But that's why I'm actually more aligned with you, Phil, on the efficiency of content more in engagement. Like the problem is engagement here. How do you retain a larger player base here? Yeah. I just don't think you can. I think that's the fundamental problem is that the audience is not there that's experimenting and doing different things. There's a small audience that's doing that, but not big enough audience to scale enough to do a cosmetics economy with or without loot boxes for that matter. That's my web stores. You've seen what good looks

like, but have you seen great? App charge is the direct to consumer platform backed by the likes of Supercell and built by monization pros from Moonactive, Platika, Huge Games, and others. People who know the difference. App charge powers over half a billion dollars in transaction a year for top studios. Optimizing every detail. Deeply personalized web store offers custommade design, industry-leading monetization features, in-game payments SDK, and more. 70% of top grossing games already have a web store, but the one scaling fastest, they're doing it with Appcharge. Learn more at appcharge.com. This podcast is brought to you by Appsflyer. In today's digital world, understanding your app's journey from discovery to download is more than just insightful. It's essential. Enter Appslier, 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 Flyier, that's your new reality. Dive deep into datadriven insights that reveal exactly where your users come from and how they'll interact with your app. Apps flyier, where your app's potential meets performance. All right, so Marathon, I'm gonna play a little trailer release in the background. So, we finally got to see what Bungie has been up to with Marathon. They revealed gameplay trailers on April 12th, which was this past Saturday. The game is scheduled for release on September 23rd, 2025, across PC and console. They'll have crossplay and cross save support. I'm not sure. I saw a price point, but it will not be free to play. Anyone want to check me on that? $40. $40. $40. Okay. Closed alpha is set to run April 23rd to May 4th

exclusively for North American players aged 18 or over. I think they're directing people to their Discord to get access to that. So, that's in general the overview. Phil, I I know that you've done a pretty deep dive. Do you want to take it from here? Yeah. So, I think there's the marathon piece which is interesting. I wanted to take a moment and look at the extraction shooter lineage, which I think is an important part of this conversation. And I think sometimes we misframe extraction shooters as what comes next after battle royale as though it's kind of like this next innovation that's just been sitting around. And when you look at where I I would argue the split was in Day Z with Escape from Tarov going in one direction. Now, to be clear, there's no literal connection between the two. I'm just arguing design influence here, but if you look at Escape from Torov and H1Z1, which branched off from Daisy around 2015, again, I'm arguing from a design perspective. Escape from Torov starts to have all these additional iterations. You've got Hunt, you've got Vigor, you've got this AAA cycle we kind of go through in 2122, the cycle, Hazard

Zone, which was on Battlefield, a lot of fun stories from that, DMZ, which was in Call of Duty. You've got kind of this return to core, although I'm still trying to figure out what's really happening. extraction shooters now, but Dark and Darker's, I would argue, not necessarily a mainstream game, and neither is Gray Zone Warfare, which we were covering last year, which is a premium extraction title that is military sim of course for the Steam audience that's done really well. So, I think you've got kind of this branch that is actually closer to survival more than it is anything else, looking back at the Day Z roots, and then I think you've got this other branch which started to become battle royale. And so, I think it's just wrong to think of extraction shooters as the next iteration of battle royale. It's a separate branch. And so when we think about Marathon, I think you really have to situate it in the extraction shooter branch, if that's the design decisions that they're going to make. And the more I looked into it before we got on the podcast, I was hoping that they were going to make more radical design decisions to really think about how to reimagine whatever the core of Extraction is or really to rebaptize it

as the next iteration of Battle Royale. But seems like they've taken almost every Extraction shooter staple and are putting it in this game. And so I'm I'm actually struggling to see this one coming out as a winner, but I would really love for it to. So it's going to be 18 players per map, six crews of three, about 25 minute match cycles. So that's pretty snappy for extraction shooter. This was the most surprising thing I heard in an interview. Bungie expects the typical map survival rate to sit under 50%. That is a brutal loop. Now, there's respawning in this game, so I don't know if we're considering that final number, but man, that's that's a stake in the ground. That's That's certainly not accessibility. I would argue ranked play on the road map but not at launch. I hate games that do this. And even when you artificially hold it back, it's absolutely silly. You just are not showing my rating to me even though you're doing ELO on the back end. There's no social space either. I'll point that out. That's usually an extraction shooter staple. Usually there's a 3D map where you might be interacting with what they call contract

vendors, which are tasks that you're going in the world to doing. They have a menu. Thank god. I will give them credit for that. Thank god there's a menu. You know, they have the oldfashioned contract system as I was talking about. It looks like they're making some interesting choices on the skill trees. So, we'll track where that happens. The other thing I'll just mention just, you know, from an economy perspective, extraction shooters are also fascinating and they're going to have a million problems trying to manage the shooters because similar to something like Zingo Poker, there's an increase in assets on the supply side whenever a player enters a match or an item spawns and they drop it, right? There's player-to-player transfer. And when there's player-to-player transfer, that means you're going to have inflation over time if people are like just, let's say a million DAU join and then they leave, you know, half of them leave tomorrow. There's going to be an excess of supply which moves the equilibrium quite a bit. So, anyways, there's a bunch of economy stuff you got to do to get this one, right? So, good luck to Bungie on like buying the right econ. Should they put tariffs in the game? Oh, well, they actually kind of do have that. This is kind of what you do to reduce supply. Like, if you're an MMO, you do durability. That's kind of a tariff on use. We've talked about that. And then

Tarov can basically degrade items into zero. The only thing that I can say about this game after listening to some coverage from some of the uh enthusiast people on the podcast is that this thing is coming in hot. This is coming in real hot, dude. Like a September release seems [ __ ] ambitious, dude. I I I don't think this thing is fully baked at all. And so I think it's going to be like a work in progress, which for Bungie that's bad. For Sony, that's bad. And for the customers that are going to be really loyal to Bungie, that's bad. So, I mean, God, they're also going to go up against GTA potentially. Well, at least they put a stake in the ground. Adam, I know you can only say so much, but what can you say? Look, there's amazing people at Bungie. I think they're in a really tough spot, and I think the the September date, I agree with you that this is definitely coming in hot, but I am absolutely rooting for them. I think the gameplay trailer unfortunately got a little bit off on the wrong foot. So, I really hope they can win over fans with a strong alpha and really by bringing their differentiation front and center.

the gameplay coverage they've had though so far that's really been the missing piece but overall I am agreed on your assessment around the genre right like the bar to break out as extraction and PVP right now is a highly differentiated shooter we talked this with Chrises on the PVP panel last year this has to create that Elden Ring moment for the genre right first game that makes it the first recommendable game that squads of friends all jump in and art style unfortunately alone can't do this. I'd almost argue that like Hell Divers, despite being PvE, created that moment. It was a big pivot away from PvP, but kept the extraction shooter elements. Just no one really called it extraction because it was PvE. And of course, it didn't sustain. It was a completely different model. But in general, I've just seen PvEVP having a ceiling and remaining niche. Tarov was so core and games that attempted to bring it to be more PvE, more casual just haven't created the same interest. And as far as

I know, I think COD DMZ has been the biggest success like from chatting people close to the project. It was successful for COD as a platform and did draw a strong attach and retention. The blocker of continuing it was more around platform and engine and team studio, but I expect the DMZ2. So I do expect extraction to be more of a mode within a shooter platform and standalones will continue to struggle with unicels. But I think like the philosophical discussion still here is like when can a game meaningfully break out of a paradigm shift versus live within the ceiling, right? Like PUBG to Fortnite, CS to Valerant, Magic to Hearstone. Like where are the extraction shooter breakouts? Where are the rogue likes even on PC console? How do they break out of the ceiling that they're in? And I think it has to create that Elden Ring moment. That's the most important part. there hasn't been enough of a win in the extraction shooter space which is something that I've always pushed back against people trying to make it is that like Escape from Torov has certainly

made enough money over its life cycle despite a lot of things going against it in terms of distribution development cycle but when we compare it to like PUBG which is the most successful game on Steam ever like it had the highest PSU as a paid game not just within the paid category like including freetoplay games that have the highest PSU peak of all time it's very easy for me to see why you'd want to throw more and more capital at a genre like that when you have a spark like that. But I just struggle to see what is the huge win we're chasing with extraction shooter money. The appeal and what drew people to extraction from a strategy perspective was with battle royale. It had no progression, right? Like even people within Fortnite working on Apex struggled to say like, "Hey, we'd love to be able to add RPG elements to this game." That's what people real go. Yeah. But it hasn't, right? It's still it still hasn't given meaningful progression. This is to say like let's pull some progression elements into this game and then it starts to look more like an extraction shooter. I could not agree more with you that the key thing

that everyone likes about extraction shooters is that you've got meta progression. You got out of round progression between sessions. But that's not stakes, right? And that's what people keep going back to with extraction shooter is that it's really the stakes that define this genre. And maybe it's the stakes that define your genre, maybe it doesn't. But the thing that you're still trying to capture, I would argue, is out of round progression. Like that's the thing I think shooters should take away from all this activity. Like that's I would argue is where the paradigm shift is, not in the stake piece. Like that goes back to let's break out extraction as like a a theme and just say let's create the Call of Duty 4 Modern Warfare moment where you start to add an RPG progression wrapper around PvP and it becomes like meaningful progress. Now you can create real retention outside of rounds, outside of extraction. I agree with that thesis. I I hope it exists. I just I would like to see more of it. I don't think the stakes and losing things is going to unlock the next wave in this genre. I don't think that's what's interesting about this genre is the stakes. It's the progression. The stakes is what's interesting in the genre to the existing players within it. Correct.

Correct. But I don't think that's going to vault them success. You're saying like all the people that have set sat around the fringe of the genre will never come in given the stakes. Given that I would argue that whenever we have a monster success, you know, there's a million things that could have been causal for that that thing's success. You know, may maybe it's, you know, this thing caused that thing or that thing has a bigger influence than that thing. And part of what the market process does is try to like test, okay, was it this thing or was it that thing? We try to understand over time what's driven success for some of these genres. And to me, the stakes thing has not driven enough success. Like increasing the stakes has not increased the TAM of this genre. I don't think we can argue that's a causal factor. like the Tarov hideout that you continue invest in that you have a lot of your resources like that's really interesting. A lot of these meta progression elements I just I wish we would double down on those. I agree. Yeah, absolutely. what I can say from my silly marketing perspective and you know obviously I'm never going to have the immense deep knowledge of the actual gameplay but from a lot of what I've seen is that this type of gameplay this

extraction shooter specific market is very niche and is likely not going to be or is a challenging area to be like outsized on a revenue opportunity to recoup what's likely a lot of spend and a lot of marketing on this. The second thing that I see is that you know the marathon IP and I know a lot of people are like it's an IP. It's like well for a very small group of people. So you know you have to rely a little bit on the Bungie brand and the Bungie love. You don't get the CPI like IP bump that we normally talk about here because this IP is not really known to the next generation audience. What I do love and personally the art style is unique. However, I wonder if it's polarizing depending on what region you're in. And you know, if also if I'm in an attraction shooter in this neon color palette, it it feels like it's like a giant glow stick saying like, "Shoot me, shoot me, shoot me, kill me,

kill me, kill me." Like at a rave. So, I wonder about like that art style actually mixed with the gameplay. And then I actually just wanted to do a brief like marketing team message. Your cinematic trailer is like a work of art and it should be because it's an eight minute piece of just beauty from Oscar-winning filmmaker Alberto Blegro. And this might be a little bit more of a technicality and we're actually coming at it I think in the video at the end is the end card just kind of like runs through super quickly and then I'm off to the next video. You got to hold on the end card and tell me what you want me to do. it goes by so quick, you know, you got to just hold on that stuff. So, you know, that's my nitpick. Um, one other super nitpick I think would be I'm really not sure what the unique selling point and differentiation is from the gameplay trailers that I was watching. You know, I I'm not really sensing from this like, hey, besides a cool art

style, what's kind of new or different? Did you guys like have a sense of that when you watched it? I actually reached out to some old colleagues and shared that. I think my hope is through the alpha and through their upcoming beats they were able to lean into that more. But I agree with you. The cinematic trailer was a absolute work of art. I know the team was always very excited to be working with that director and to see it come together was pretty amazing. Oh, so so incredible. If I could have a budget and to do something like that, I would love it. But yeah, then I watched the gameplay trailers and I was like, "Oo, that's how that looks actually in the game." Yeah, I totally agree. That's the feedback to the team is how do you bring that differentiation front and center but in terms of the genre and the cap that the genre is like this is known this is the risk with going after extraction shooters is how do you break out of this ceiling hence refer back to point one that I made that is this is a a niche genre that is difficult one other note that needs to be said is that the gameplay is going to be amazing right like that's what Bungie nails every time they make a game is that like

the way they make the guns the way they make the momentto moment gameplay is always absolutely phenomenal and that what a lot of people were talking about, you know, on the podcast is that, yeah, the game is still amazing. All right, let's wrap up that one. We didn't get to it today, but Royal Kingdom just launched a major celebrity ad campaign with LeBron James, Shakira, Jimmy Fallon, and Kevin Hart. Like, really, really fun. As a player, I can also say that they added the very fun card collection mechanic. So, I can kind of see why they have gone big. We'll analyze it next week. and crest wool [ __ ] all over it next week and you can wait for running out of ideas out there. They're running out of ideas. All right, we are going to wrap it up and see you all next week. You did it. You made it to the end of the episode. As a fan of the show, it would help us out if you'd subscribe and leave us a review on the podcast service of your choice. Those stars and likes, while small action on your part, mean a lot to

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