TWiG #367: A Certain IPO, 2026's 1st Cozy Launch & When CEOs Get Sued

The problem is it's still [ __ ] cosmetics. Still [ __ ] cosmetics. Hello everyone and welcome to this weekend games 367. I am Jen Dano. I play the marketing publishing role in the podcast. Today it's just three of us.
Eric Crest, strategy and investing.
Phil monetizations are
all right. Here's what we have on the podcast today. Legal drama with Bobby Kotic in a Swedish pension fund. Phil, are you gonna defend the Swedes on this? I can't wait.
I'm a plaintiff in the case. Of course, I have to.
Oh, boy. Another ad tech company liftoff files for IPO. UA financing and friend of the pod, Turbozilla, with our friend John Wright. A Resident Evil Showcase. Crest, I guess. Are you a huge Resident Evil fan? I was
I am not. I I can't possibly play those games. I just It is. We'll talk about it in a minute.
All right. Okay. Uh, new games are

topping the Roblox charts. Craftton talks its franchise strategy. Phil takes us through My Hearttopia launch. Even the coziest games on mobile. I love
telling you they're coming and like this is the first one up.
I'm excited about this. And then I probably won't get into the details, but from Alenia Analytics, they talked about Steam hitting a record December. So all-time high with 100 million players and 1.6 6 billion in gross revenue. Apparently, this even topped the COVID 1.4 billion high in 2020. So, congrats there. They also talked about Arc Raiders hitting 12 million units. So, big AR Arc Raiders holiday. So, for the banter section, I wanted to talk a little bit. Crest, I I wish you could have come down for this. We had like this mini UA reunion in LA and thanks to Mike Doom and Autumn Brown for setting this up. So, it's really astonishing just to see how many people come through the EA doors that are still in gaming

and still in LA. And these folks work at Blizzard, EA, Scopley, Netflix, Apple, like on and on and on. So, the highlight for me, and I'm going to have to talk to you about this offline because I can't tell you all of the secrets. Bernard Kim and I caught up BK, if you remember, he led um like mobile publishing at EA, then went to Zinga, was on the executive team at Zingga, then is the C was the CEO at Match, and then now is trying to figure out what he's doing next. And he's dabbling in gaming again, and my new mission is to get him on a podcast that I'm just going to call like the secrets and war stories of the game industry. He has so many of them. He told me a ton of them and I don't want to give anything away until he comes on the podcast. But the one thing I will tell you is he backs up what we say about Turkey and China dominating going forward. He did a lot of research, let's say, and uh thinks that what we say is absolutely true. So if any of you know BK, please tell him to

do this podcast because the stories are a gold mine. Absolute gold mine.
He's like someone you should follow. Like yes, he's a get [ __ ] done person.
Absolutely.
I will continue to argue that he does not did not belong as CEO of a publicly traded company, but but he is a get [ __ ] done dude.
Oh, absolutely. Okay, so correction. Oh, we've got a couple. So, one is last week we talked about Loom's Pixel Flow game and I think we all said, you know, the guys the guys and you know I many of us use that. Just to be clear, one of the co-founders is actually a woman. Her name is Kubra Gunda. And so that's super cool. The other thing is Steal the Brain Rod that's on UFN is now licensed. I think I was saying that it was ripped off, which I think it was to be fair. Uh they've retroactively licensed it from the Roblox creators. And then a little bit related, I'm giving a little kudos

to the UEFN team for acting really quickly. So last week we talked about the prize wheel being basically this like gratuitous gambling feature. So they actually went back and added a developer rule about this. It's 4.4.15. Do not offer any in island transactions that directly or indirectly influence the prize wheels in any way. For example, you may not offer as an in island transaction a spin or an increased luck for a prize wheel.
You can't be kind of pregnant. You're either pregnant or you're pregnant not pregnant. Dude, stop with this [ __ ] Right. You're you're in the dirty business of freeto play. So don't don't pretend differently, Mr. Epic. You know, come on. Let's get real,
Phil.
Splitting hairs.
Well, right now we are looking at a screenshot of steal a brain rot and one of the things they offer is loot boxes. And so the thing that may leave listeners confused is, wait, you're telling me that Epic crafted a specific policy to prevent payment from entering prize wheels, but you can still do loot boxes? It's a

completely arbitrary distinction that makes no sense. This is complete and utter PR management. Thank god I'm back on the cast. It was painful. Painful hearing you two circle jerk each other on this issue. Um I just don't understand what the strategy is here. I I guess it's just PR management. It's it's just weird. Why why this particular one? And I just want to remind everyone that it's not as though these games just came out with paid loot boxes. It was in the epic UFN in island transactions guide that if you had paid randomization, you would had to disclose odds. That is a tacit endorsement of the ability to do this in-game. Confusing.
Yeah. And I think we said we said that last time that it is
Why are you coming at us? We're the ones just reporting the news, dude. They're like changing their policy.
No, it was with glee and celebration.
I thought we were rather balanced. I thought Crest specifically is like I'm talking out of both sides of my mouth on this issue. Good that it's here. Ooh, this feels gross. I if I had to

summarize last week.
Yes, this is Yeah. Anyway, all right, we're moving on.
Roblox allows this, too, by the way. Roblox does have prize wheels for sure. Very common.
Of course, do Yeah, Roblox doesn't give a dude. That's all good. All right. So, Mishka put defending Mishka and
um just to clarify, yes, Giannis Verufakus that is the Valve economist that was mentioned. He is also Greek. He became the Greek finance minister during the Eurozone crisis and he does not work at CCP. He was the steam he was the steam guy and he now is like an outcast Greek politician who runs some socialist crazy party. Um I [ __ ] you not.
Um
these are the guys you're bringing on the podcast to defend your points, huh?
Yeah. Another cy having to correct the Greeks. Mishka thinks he's an economist. I don't understand like where he gets this from. So what? Obviously he's off the podcastes. I can talk all the [ __ ] I want. But I mean, come on, Mishka. Stop it.
Oh, he's at PGC London posting all kinds of pictures in Slack, which is fun.
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Let's get to the headlines. So, uh, let's do a little, um, little drama. So, the drama in the game industry is actually starting to rival what I I hear on the news with like Open AI and Elon Musk with all their legal battles. So, we have our own version of this with Bobby Kodic and and Bracer actually gets pulled into this one. So, Chris, I know you must be like so excited to talk about this one, so I'll let you do it. There was some information that came out that was kind of interesting. Anyway, the Swedish pension fund AP7 claims that Kotech rushed the $69 billion sale to Activision to Microsoft in order to protect his $400 million payout and avoid the sexual harassment accountability. Bobby says that indeed he was not trying to do that. It was because he was seeing the writing on the wall and that he wanted to get out before things you fell off the cliff. Right. And so he said that Black Ops 7 sales are down 60% year-over-year, you

know, justifying the $95 share price to Microsoft. Console market collapsed in November. He brought that up. You know, Xbox is down 70% year-over-year. PlayStation 5 is down 40. He said that, you know, the Battlefield effect is actually proof that, you know, the FTC was completely wrong about Microsoft's gaining huge monopoly power through the acquisition. And then obviously Activision basically said that following the Black Ops performance, he's not they're not going to do back-to-back releases. So anyway, he's just trying to defend his decision in order to, you know, fight off these claims that the transaction was hasty, I suppose.
Where do you think he got the 60% decline in Call of Duty? I mean, isn't it hard to get that math because of the subscription? I doubt it's 60, but it's pretty significant though, you know? Like it's probably in the 40 to 50 range if I were to guess,
but he got it from some source. He wouldn't just like throw this out there, I think.
Yeah. The thing that I thought you were

going to go after because of your love of Embracer was was this part. And so Bobby says that the lawsuit was secretly meant to help Embracer Group. So this is what he said in the lawsuit. This Delaware lawsuit was apparently aimed to help pave the way for Embracer to increase its foothold in the California market at the expense of Activision, making it more difficult for Activision to recruit talent and expand through M&A activity of the sort that Activision relied on to grow historically. Embracer then comes back and denies this and says, quote, "Perhaps difficult to accept for Mr. Kotek, but we did not and do not need any help from a Swedish pension fund in competing with Activision." That's pretty funny. I was like, "Oo, kudos on your comeback there."
Yeah, that was a good comeback. But but to be clear, dude, Embracer could never actually compete with Activision. So, there's that.
Exactly.
Look, I wanted to include this because I wanted to make the point that the Swedish investment firm is absolutely correct, right? All these things are

intertwined. protecting Bobby's legacy, protection of his $400 million buyout and maximizing shareholder value were all aligned at that time frame because we talked about this at the time when this deal was happening. I do think that this deal was probably the worst deal for the history of vid of gaming, like for the gaming industry, per se, but I think I still think it was a brilliant move by Bobby and the board to unload this asset in perfect timing because there were a lot of headwinds that were coming for this company with between Blizzard, between Call of Duty and a lot of that stuff. So the Swedes should be thanking their lucky stars that this deal was gapily happened because it was actually right before the implosion was likely to occur within Activision
as a plaintiff in this case and to give you more context AP7 is the public Swedish pension fund. So I have a lot of money invested in this case just to give you context 100 billion under management at least. And so I want to bring us back to Bobby's decision to sell the company. If you remember before Bobby's decision

to sell the company, there was the sexual misconduct case at Activision. And this was like a very serious misconduct. And if you remember the details of the case, there was extremely gruesome example where one of the employees died by after male employees circulated pictures of her genitalia. That is grotesque. It is it is grotesque and is unacceptable. Not only that, there was evidence that Bobby shielded other executives and he did not promptly inform the board and they end up settling with, I believe, the California Fair Labor Commission for $54 million. That is a fireable offense. That is absolutely a fireable offense. And that is also why sometimes CEOs move to do things like this. They can sweep it under the rug. They can basically exit cleanly. And so the goal of a board is to manage and maximize shareholder value, right? The CEO reports to the board. And so the thing that's really important for AP7 to show, and I'm surprised you haven't picked up on this, Eric, or at least you haven't criticized it, they need to show that at least Bobby tried to shop this asset around. And the reason I'm doubtful of that is

because the chairman of the board is Brian G. Kelly, which is Bobb's partner in crime going back to the founding of Activision. The board needs to be independent. And if you go back to Eugene FMA, and Eugene FMA, for those who are unfamiliar, is one of Eric's favorite economists. He is the man behind the efficient market hypothesis. Separation of ownership and control is, I would argue, his second Nobel Prize-winning paper. And he argues that basically these boards have become rubber stamps. They're weak monitors of CEO behavior. CEOs don't always act in the interest of maximizing shareholder value. And so I think AP7 absolutely has the right to say, let's go through the discovery process and let's see who else this asset was pitched to. I mean, there must have been a million biders for this. First of all, let me correct the record. The settlement that they came to stated that the court that no court or independent investigation substantiated the allegations of systematic or widespread sexual harassment at Activision Blizzard. The specific instance that you're talking about, yes, that clearly was true.

It was Bobby's behavior that matters here. It's Bobby,
but it wasn't Bobby. Bobby was not even shielded it, but he shielded it and did not report it to the board.
Okay. No, that is incorrect. Okay. And they also like California actually withdrew all these serious claims about this because of the investigation that was conducted, right? It was just not part of the culture of Activision. It was individual circumstances that ultimately were proven in court.
That's not the claim, though. The claim is Bobby's involvement in this
Bobby was completely It's like Bobby being responsible for what happened to Blizzard, right, with those three or four guys that got in trouble, right? It's all the evidence on the ground from what talking to a lot of people that were familiar with this stuff back then. It was not systematic.
But that's not the claim when it's relevant to the shareholder case. The shareholder case is whether or not Bobby should have reported this to the board and whether or not he should have reported it promptly. Obviously, it eventually got to the board. And so, did he report it promptly? And I think this is a good piece of evidence that if you're someone looking to, again, as you

mentioned, Eric, protect your legacy, you'd want to exit quickly after something like this. So you can clearly see that this might have been an incentive for him to perhaps not shop the asset as aggressively as he should have.
That point I I would agree like he wanted to get out of this mess and protect his legacy. I've actually made that argument many many times. I'm just trying to tell you that it was not like this systematic thing at Activision while it is was I think systematic at Ubisoft from every all the evidence that I've heard from people. That looks correct. So So I there's a difference is what I'm trying to say. The second thing is in terms of shopping this around at the time like there was just no one that was going to pay this kind of money for Activision period like there was there were no other buyers to to look for right and
savvi savvy I mean first of all whether they should have at least tried they need to show evidence they at least tried
dude even didn't do it because they didn't want to blow the deal with savvy because they knew that they couldn't get another buyer right the bankers are smart enough to know whether or not like there are other buyers that are interested in these assets because they talk to them constantly. And so rather

than trying to sour the deal with Savvy, they EA didn't shop the deal either. Goldman didn't shop the deal for EA either.
And I think that's wrong, too.
No, I I think you're I think you're wrong because I don't think you understand the dynamics of how M&A works for bu deals that are worth like $60 billion, right?
So they they should have formed an independent commission, which we know they did. But the idea is that they at least need to show they attempted this. That's the that's the whole point of this discovery process. That's incorrect. The minute you do that, you actually could sour the deal with Savity, right? And they knew what they had on the table. And I would I would imagine the Activision had the same issue. And so, you know, maybe I'll talk to the banker at Goldman and see what he has to say because I'm sure he has some like really like insights as to what the [ __ ] backend dealing of this stuff was. But I I don't think you and I are actually on the different page on this to be honest. Except the fact that like yeah, don't you don't shop deals, right? like this and these Swedes should shut the up and count their blessings that they actually got out at this value. Cuz if if if this [ __ ] happened, here's my

point. If this [ __ ] happened with Call of Duty this year, this stock would be in half, right?
Yeah.
Will you at least concede that like having Brian Kelly as chairman of the board is improprietary? Like that's impropri. It needs to be an independent board.
Dude, the EA board is completely not independent. The EA board is all
completely aligned with a kiss ass board these days. Like this is all you need% I agree with that
corporate and governance deserves deserves to be independent and be protecting shareholder interest and we need stronger controls for that and stronger monitors.
Again I am not disagreeing with you. What I'm saying is that in this particular case I think all the stars were aligned. This is my opinion right
and I look forward to trial and discovery.
There will be no trial. There'll be no one gives a [ __ ] about the Swedes. They certainly don't give a [ __ ] about AP7. Right. Chris, let me let me just ask you on this. Like, was this filed a long time ago and it's just taking forever? Like, why don't why now? Why now?
I don't know. Yeah. Why now? It's taking

ages ago.
It was filed a long time ago. It's just been working its way through the courts.
All right, let's move on. Move on.
Here we go. More business stuff. All right. So, the Liftoff IPO, they just filed what could be, you know, one of the most significant IPO adtec IPOs in years. So, uh, this happened back in January. They're filing for a NASDAQ listing under LFTTO. The target raises up to 400 million. The valuation is expected to be around 4 billion. It's majority owned by Blackstone who acquired Liftoff in 2021. General Atlantic is also a minority stakeholder. Just a reminder, you know, while we don't talk about them as much as we talk about Apploven, they have a thousand advertisers, 140,000 apps are integrated, 1.4 4 billion daily active users. The revenue is doing pretty good. They're actually up 30% year-on-year. The thing that is interesting is they're carrying a lot of debt. It's kind of similar to the EA story when we were talking about that back in the day. So, they have 1.85

billion in debt. And why they are doing well is, you know, many of these adtech companies have new AI. And so theirs is called Cortex which is their AI processing model which is uh 21 times more data than legacy models. So everyone who is engaging you know with AI in their models is seeing like just huge outcomes. Just a reminder too they were uh formed back in 2021 with the merger of fungal and liftoff and then Blackstone kind of consolidated those two. So here's my take on why I think this is kind of interesting and we talk about app up app up app up app up app up app up app up app up app up app up app up loven all the time and how how crazy it has been. I think like this is apploven fomo. I think the company is you know looking at what apploven is getting in the public market and being like hey like we could be getting that too. So on the on the pro side, you know, the TAM for inapp advertising is projected to double by 2030 up to 617

billion. On the con side or the bare side, uh they're fighting for scraps. Like you know, Google Meta are on fire as well. Apploving is on fire. You know, Liftoff isn't the one that people are like, "Oo, I have to try that one." So, you know, that's kind of on the downside. One thing I also thought was really interesting is the debt play. You know, is this them trying to save themselves from that? So, we we know that picks and shovels are the future of what's going on in the game industry. Crush, you talk about this all the time that VCs aren't looking for content, they're looking for the picks and shovels. So, this is where you know more hundred times more than I do. You know what what's your thought going into this one? Well, this is clearly a private equity like transformation and I agree they're totally drafting on the success of App Leven, but but what's interesting in all my discussions around UA, I've never even heard I mean I've heard of Vungle, but I've never really heard of Liftoff. I It's not Yeah, it's not on my

radar. I don't know. But I think ultimately like this feels a little bit dangerous from a deal perspective because they're still so small relatively and and they're still going to like be you know impacted by you know apploven's complete dominance of the space but having said that I think there's a lot of money out there and there a lot of people chasing returns and trying to get alternatives to apploving and maybe they can provide a better you know some kind of you know additional revenue streams but they're going against you know Facebook Google and apploving it's like it feels like unity again right or you know or iron source right which they may have some success but whether they can maintain it longer term against these juggernauts with all this data. That's the remaining question. And then the one thing that seems to be clear is that these guys started initially emphasizing more on like services and manual optimization, right? Versus the AI and the tech tools that like basically apploven and now Facebook is clearly

getting in. So they're at a huge disadvantage because they started off at a weaker position than Applov1. And so I wouldn't be buying an IPO like this. How about this? Let's say yeah that I I would not be betting on this on the long term. I think you you these are the type of IPOs that you watch like at long it might go up initially but then when the lockout ends in in six months and people start trying to sell out. The one thing that's interesting is that Blackstone evidently is not trying to get out at the IPO which is is at least some good indication.
Okay.
So they're holding on to their shares at the IPO. That's what it was.
That's a good signal. I just think that this business is is really turning into a commodity business. I understand what you're trying to say with the commodity thing. The thing is that like app has such an advantage on data that it's where you throw your money in to get the best returns is that's where you know with app how much money can you throw at it liftoff to get the same returns? It's like very limited.
No, I Okay, that's fair. I But in the world of UA, the ability to switch from

one network to another or the ability to, you know, add in your exchange and then you have multiple. So you know no one game uses just one and you'll test every single network you can to see what works for you. Now I agree that it is difficult to come up against what Apple has and you know Unity and Vector are coming up from behind as well because they're starting to get more data as you know the engine starting to really integrate throughout the whole network. You know Vector is coming up as well. So anyway there's just a lot going on in the space but an IPO felt a little bit interesting. In fact, on our next story related to UA is uh friend of the podcast has some UA news. So, go for it.
So, this falls in the mice nuts category just to be clear. But since since I love John Wright and he's a friend of the podcast, I'm announcing today Turboillo, Madskills Motocross, and Mad Skills BMX

franchises have now surpassed 200 million downloads worldwide. Anyway, so John Wright signed a deal with Metica, which I've never heard of, through Medicica Fuel, and they are doing a advertising UA funding for 5 million duckets. So, good go John Wright.
Congratulations to
They're going to help scale Turbo's business and make John Wright a gajillionaire. So, let's hope that happens.
Well, our deconstructor fund spirit animal, John Wright, congratulations. I think another data point that the new VC model is called UA financing.
Yeah,
I I I you know I think we've predicted that this is going to be the new credit card in the game industry and all the deals we announce are going to be UA financing deals in 2026. It's funny.
Medicica is really cool. I will say that Metica is doing a lot of really fun multi-arm bandit experimentation. They have a really cool engine. Getting them into UA is really cool. If you haven't

checked out Metica, you should. They're doing some fun stuff. I've talked to them quite a bit.
Especially if you're a match three company, there's really cool things you can use their tools for. Okay.
All right. The next thing is a quick announcement. Resident Evil is coming out in February. The only reason I'm saying this is this is a huge franchise. Capcom has a lot resting on this for their fiscal year. And they have a lot of cool new features with this Resident Evil game, but this is probably the biggest game of the first quarter. and it kind of will help get a temperature of what's going on in the console business for the year in anticipation of GTA. So anyway, it's something to look out for in terms of performance to see how well it does. Capcom really, you know, has had a great cycle. However, Monster Hunter really the sequel to Monster Hunter really fell flat last year. So hopefully this will work as they kind of evolve Resident Evil. So just keep a look keep an eye out.
It was cool at the game awards. Mila Joel Joelovich. She played the main character in all the Resident Evil

movies. Like she's in a completely different franchise now. And so it was weird to see her at the Game Awards and not be with Resident Evil. It's my one Resident Evil.
What was she doing? What was she
I'm going to have to look up what franchise she's with now.
Okay.
It's a new It's It's another one, but it was It was like, "Oh my god, it's her. She's back." Oh, it's not Resident Evil. Okay. It's something different. All right. So, Roblox corner. I think we've been getting some feedback. We want to hear a little bit more about Roblox. So, the chart we're going to look at is from creator exchange.io. This is David Taylor who puts out some stats along with Blox. So, FishIt is the new number one with 813,000 concurrent players. Fishing simulators continue to kind of dominate. I think there's a couple different ones. So, the idea of cozy progression seems to be working. Uh the brain rack games are everywhere now. There's multiples of them. So, Escape from Tsunami of Brain Rotss uh is number two in CCUs. Stila

Brain Rod is number 10. Plants Versus Brain Rods is number 11. So, all of these are in the top 15. So, this is the meme pet genre. Like, congratulations everyone. We have a new genre, the meme pet genre.
Uh and then, uh Stila Brain is still holding the number one earnings spot. So, while that we're seeing a lot of engagement and competition so far, they're still kind of holding on to it. Crushel, you'll you'll love to know that Grow a Garden has dropped to number 24 in CCU.
I I still can't believe that a genre like Steal the Brain Route, which is basically child torture videos, is is is blanketing the airwaves of Roblox. You know, what a platform Bizooki has created. You know, I am sure this was not in his vision document 22 years ago. is that they would be creating entire child torture videos on his platform. It is unbelievable.
And by child torture, you mean they're very sad because their brain rots get

stolen, right?
Yes. Exact. The whole point of the game is to steal brain rots from children, right? So, so that they cry and scream and you can put videos on YouTube, right? It's cra It's crazy. Absolutely crazy. all of the people making money off of the videos of the kids playing the game is a whole other topic that we should probably talk about. That feels kind of uh gross and sad.
There is some other stuff I want to call out on these charts. So, one of them is the number two top earning game called Arrivals. It's an incredibly polished shooter that almost no one has been talking about. It's something I want to talk about shooter monthly. You know, for every steal of brain rot, there are highquality Roblox first experiences on the platform and Rivals is one of them. I hope to do a bigger deconstruction conversation on shooter monthly. Another one was Fish It, which you had mentioned, Jen, which is now in the number one spot for engagement, and I'm sure it's moving up the earnings chart. And again, Eric, like new games are getting onto these charts, right? And this is what Roblox needs to show is

that you can launch new games on the platform. They can rise up the charts that the charts are dynamic and that there isn't this this homeostasis on the charts where the same games are there. A lot of the games that are on these charts have been there for quite some time, but again, Rivals was really only in the last couple years. Of course, Fish It is new, Steala Brain Rod is new, 99 Nights in the Forest is a little bit old. Adopt Me is still there. So again, there there's some dynamicism on these charts and that's very very important. Yeah, anime is still super strong. I think what's becoming really interesting is the breadth and the new creation of subg genres. To your point, Phil, about like where's the innovation in the industry coming from? I never in a million years would have said Roblox.
It really is YouTube, right? I I mean, it's the barriers to entry are much lower and you're seeing a lot you're seeing it is the bleeding edge of design. You know, if you really want to study economy design and progression, the number one place I would send someone is Roblox these days. Well, that's
play adopt me.
Yeah. If you if you want to learn how to torture children, let's just let's just

make some.
I mean, I'm so hardly go to Roblox.
Yeah, exactly.
All right, Phil, let's talk about Craftton.
Yeah. So, I wanted to talk about Craftton cuz we haven't had like a serious conversation about the company and particularly about PUBG. And that seems like a tragedy considering PUBG is the number one game on Steam of all time when it comes to Mac CCU when it launched a while ago. And this was before it went free to play. And we've talked about Craft and it's mostly just [ __ ] on them for the Subnotica up or talking about Enzo's magnificent sales. And so do ourselves a service to talk about them more seriously. And the reason they're interesting is they have the problem that a lot of these companies where they come out with a huge success and they can't figure out how to grow outside of it or how to expand. And so Craftton has basically been throwing money everywhere. They've been doing a ton a ton of investments. They spent 500 million

$500 million this year on a Japanese anime and PR agency called ADK. They also bought an American studio as well. They've been doing a ton of investments in AI, but honestly, it just looks like a company that doesn't really know what to do next. And I think they finally have started to figure out what that next chapter is. And that next chapter is exactly what all the companies that have these huge successes should be doing, which is doubling down on your core franchises. Like this is straight from the Eric Crest playbook. So, you know, PUBG, if you remember, is not just successful on PC console. In fact, the PUBG mobile version that Tencent makes, is actually responsible for the lion share of the company's money. At one point, it was 75% of the company's revenue they disclosed in 2024. And so, you remember they tried to launch their own version called uh was it New State or New Light, excuse me, off the top of my head, new state. And that was a absolute cluster of epic proportions. That thing is largely dead, but they are finally doubling down on the HD

franchises. So, they have PUBG Blind Spot,
which will be coming out next month, which is a 5v5 tactical shooter. Let's see if they can go after Valerant and CS GO. I think that's a sound thesis, at least at a high level. They also, remember, took a shot at Enzo,
you know, we'll see if that franchise ever goes anywhere. And the other PUBG game they have coming is called Blackbudget, which is going to be late 2027, and we're starting to get some more information about what that's actually going to entail. I have a friend who got into an early access, so we'll be covering that on shooter monthly. And the other things that they're doing are particularly interesting on mobile, which is again where they should be focusing, I would argue, is Dark and Darker mobile, which is called Abyss of Dungeons. It got renamed, although that thing's been in soft launch hell. And when you look at the downloads, it doesn't look like it's moving. So, you know, rest in peace. And I actually think there's potential in Power World Mobile, which they signed. I really think Pow World has some opportunity to grow. It won't be a card game, which they announced for the franchise, which is bizarre from the

original developer in Japan, but I do think Power World Mobile, like a true adaptation,
can work. And so, kind of where where does this leave us? Well, I'm a little bit cranky like Eric, like I honestly think they should have returned money to shareholders. Like if you can't if you can't reinvest capital into your own company to grow and you're just throwing money at M&A or these really silly investments like Japanese anime firms, like you you should be returning your money to shareholders in the form of dividends. And so we'll see if the strategy goes anywhere, but I do think they're finally on the right track after some upups and some misadventures and the uh the tropics. So let's let's see if PUBG Blackbudget and PUBG blind spot can scale. Actually, I'm just going to kind of agree with what you just said because like yes, doubling down on the PUBG franchise with with different iterations sounds like it could make sense. You know, they have such a cash cow with this thing. Reinvesting that rather than going after things like Enzoy. Yeah, the Abyss of Judges looks terrible. I do like the Power World Mobile. I think that makes total sense for them to pick

that up. By the way, my one of my best short calls of the last like three or four years was Craftton when they came out with New State. They're in a tough spot. They have so much success with PUBG is that there's just nowhere else for them to go. So hopefully these new iterations on on the core franchise will work
and it's growing. PUBG is growing. PUBG has done is growing on PC. It's done fairly well. Right now we're looking at max daily concurrent players on Steam. And really since 2024 it's been
growing. Remember they also made a freetoplay change. And if you look at the mobile version, which again is operated by 10 cent, it's been a little bit on a decline and we're still looking at a franchise that's doing around 20 million DAU on mobile alone. So like you combine all of these franchise DAU together. I mean, I'm sure this thing, you know, maybe does 40 million DAU across all the platforms. I mean, that's extremely impressive.
No, I think Phil, I agree with you as well. This is came from an article from pockamer.biz. And so this was like the biggest no duh part of this. The model

supports early validation through early access and limited market launches, allowing projects to prove long-term potential before scaling. So, this is a quote about like their new strategy that they came out, the CEO came out and announced the strategy. And I was like, "Oh, isn't this like how the game industry already works?" I think they finally just realized that they need to operate like a Scoply, like a EA. They need to try new games. They need to expand their franchises. They need to do early access and soft launches and prove that it's successful before scaling it. I mean like this is how our industry works. The thing that I thought was really interesting is UGC. And so last summer they launched something called uh PUBG Alpha, which is their UGC experience. I don't know exactly how it's doing, but I imagine that's going to be a fantastic way to expand that franchise. As you think about where it can go in addition to what you said like Tac Shooter or other platforms, UGC also feels like the place to go given what

you're seeing inside of Fortnite and what you're seeing, like you said, with rivals and shooter success on Roblox. So, makes a ton of sense. They have a lot of international presence. Freef Fire kind of owns a bit of the like Brazilian market and some of the lower markets, but PUBG has a lot of global footprint to it.
And we'll definitely check in on FreeFire on Shooter Monthly, too, because FreeFire has been on an absolute [ __ ] tear and also has dipped its toes into the UGC space. You're seeing a lot of shooters kind of play around with, hey, can we make this a platform? You know, of course, Ro, you know, Fortnite is the number one example, but it's interesting to see everyone else tip their toes in. you know, Battlefield Portal exists, waiting to see Call of Duty do something, but that's also a game that's been on an absolute monster tear.
Yeah. I mean, the tools that they're giving now, like no code, you just like, you know, kind of like go in and you just place things around and make your own map and your own customization, making it really easy and accessible. It really deepens, I think, engagement and what you can have and giving people a way like to make up their own maps. The

other thing that really stood out here, just to do a dig against Larion, is that Craftton basically reiterated its AI first direction, which basically means using AI as a tool to improve development efficiency while freeing creative teams to focus on building what it calls the next generation of franchise scale games.
I just wanted to point this out. They are not worried about some backlash from some half morons on Reddit, right? They're looking at, you know, you use the tools that you're given, right, to make the best possible content. just enough of this nonsense.
I know. I again like why Arc Raiders came out and the CEO talked all about using AI in their pipeline to make content more efficient and better. Like I don't understand the cherrypicking of AI hate that happens from the Reddit mob. I just I don't get it. Like these are tools. Stop it everybody. like let's be thrilled that we can get more awesome games faster and more efficient and and

that we all love to play. So,
but that's that's not an irrelevant point. There's actually really important mechanics that go into why that's the situation. Like the West always pays attention to the West. Like Craftton is not logging into subreddit as an additional tab on Chrome. And I can tell you almost every PC console developer I've worked with has an additional tab which is the subreddit for their game. They're obsessed with it is the TMZ for their own game. They love the visceral feedback. And so when you pay attention to those people, they get inside your head and you're constantly managing the reactions. And Reddit has a very interesting paradigm where everyone aligns around a hive mind position and that position becomes the position. It's the same when it comes to monetization, right? Why does Valve get a free pass for having loot boxes in CSGO and yet when any other developer comes out with it, they get absolutely shon? because there's no con logical consistency is about keeping an agenda together. And if you remember, Twitter is also where there are a lot of western artists. Western artists are the most active community on Twitter and so they yell

very loudly when these tools come out. You never see a programmer coming out and saying, "Oh my god, I'm worried about these tools." Right? The focus is on the keyword generative AI. Right? No one's [ __ ] on the programmer who won't exist potentially because we have these AI tools. It's only the artists that we end up paying attention to and are the loudest. That's not an irrelevant point in this conversation.
So, you are absolutely correct. So, when I was at Riot on League of Legends, it's not just artists. It's it's like you said, monetization and gameplay and some other things. So, because League of Legends were based in the US, you're right. All the developers had Reddit up and they would come and they would be like, "We need to make this change. We read this on Reddit." And I was like, "Guys, I appreciate that we're getting the feedback. We need to get real consumer insights across all of our major markets, and not react to the US, which is one of our smaller markets. We have China, we have Korea, we have other markets that are bigger. We just can't overreact to what a couple of the vocal minority are saying on Reddit. And so

what you have to do is take the insights that you get from Reddit and go do real consumer insights. like stand at Beta Hat always says like you've got to go get stats sig research before you go and actually make any changes that you have. Now what that means is it takes more time. It's super helpful if someone's like, "Oh my god, something's broken or this is like an absolute dumpster fire and we need to deal with it." But for bigger issues, you got to do it right. So that's my caution to everyone. Phil, good point. Don't overreact to the vocal minority on Reddit.
And if you're an analyst, put it in the dashboards. What is the percent of Reddit subscribers or active readers as a percent of the games DAU? That is the most powerful thing you can do as an analyst. Bring context.
Oh, interesting. Yeah, it's a good one.
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All right. You want to go from uh PUBG to something closer to your heart?
Hearttopia is here. I've been on the hype train. [ __ ] Enzo. Let's go Hearttopia. If you remember, there's a wave of cozy games coming out this year. Remember, we have the Pokemon one on Switch. Sorry, go ahead, Eric.
From one Lost Cause to another. I'm just
kidding. Hold on. Hold on. You said you end you you endorse these cozy games. I'm just I just I just wanted to rip on you a little.
What was that? A amino. What? Sorry.
Ano? Ano? Also a tragic naming convention.
Um that's not exact. It's not as cozy, but if you remember, we also have Hoyoverse, right, which has been testing their Planet game as well, which has been fun to watch. You've got the Pokemon one coming out, which I think is going to do absolute gang busters, but that's less of a live service. And so, like, this one's really the first one that's up to bat. And it came out uh last week, so the data is still fresh. And I was honestly just surprised at how

hard they went on UA, particularly in the United States. So, right now we're looking at the category rankings on iOS across the games category, the family category, simulation, and overall. And they actually ended up pushing this game to number one when it launched on January 8th. And it's still in the top 100. It is slipping, but it's maintaining its position in the top 10 on family and simulation. If we look at the UA mix, I was really confused. The United States is number one with about 19% of downloads. At number two is Thailand. Brazil, that's that's some fluffy stuff. Japan
is number four. And then it's a bunch of southeastern Asian countries. And of course, France is at the bottom. France, by the way, a big lover of kind of anime style Eastern games, but a bizarre UA mix. I'm not quite sure what to make of it.
I wonder if they soft launched. Did they
They actually did not soft launch, which is pretty weird. They kind of just like let this thing rip
really.
Um or at least they might they might have done a closed soft launch, but they didn't have an open soft launch. we look

at central power data at least. I didn't see anything. The other thing uh I don't have in front of me, but they actually just launched on Steam,
which I think is another very interesting take. We've been talking about these crossplatform opportunities. I think they had around 28,000 max CCU last time I checked. The thing I will say about their Steam launch is they didn't actually announce the date of their Steam launch and ended up coming on January 17th, which was just a couple days ago. You should announce when you're going to launch on Steam. You should let users know that this is going to happen. And not only that, you should make it an achievement or a goal in the game to download on both platforms. That is a free win. Like you should take advantage of this whole idea of crossplatform. It just was strange that they didn't do it. The game itself when it comes to coziness is essentially Palia. If you remember, Palia is the VCbacked company. Singularity 6 is the creator. They end up getting purchased by Daybreak Games. And Palia is still going. And when I say it is pali, what I mean is that there's

basically no violence in the game. You are focused on building your life skills. And there are a number of life skills that you can end up improving or end up progressing along. So like one of them is bug catching. You can do cooking. It's all of the life sim stuff that you would expect. And the other piece that's very important is that you are really anchored to your house. And this is something I think Palia needs to work on. But your core loop is always coming back to the house, customizing your house, doing different things inside of your house to make it your own, to make it cozy. And the thing that's really interesting about the game is that you spawn into a neighborhood. And so a neighborhood is with 11 other players. And these are real players. And they aren't always active. So sometimes you can see their houses and you can go in them and they're not actually there. But when they are active and you do have other players, you can do a lot of activities together. And there's a ton of fun things you can do. You can also buy a car, by the way. Thank god they have cars. This is their version of mounts. Pets end up coming later in the game. It's kind of an Elder Game feature, but you can buy cars, you can race them around, you can crash each other, and then the thing that you can

do when it comes to monetization is that one person in the party can end up buying special events that everyone can participate in. If you remember when we talked about Pokémon Go, that was one of the things that I always loved about their game and is in almost all of my consulting decks is the lore system. Now, if you remember lures, you can buy these lures and they incent Pokemon to come to a particular area and everyone benefits. So, kind of this pro-social monetization I think is absolutely fascinating. If you know Gabe Leman, founder of Machine Zone, the quote I always go back to from him is that $1,000 dinner bill looks expensive until you realize you're paying for 10 other people. And I think this game starts to get at that philosophy in terms of monetization in a really compelling way. The problem is it's just too [ __ ] soft, right? It's just too [ __ ] soft. The revenue per download is only 38 cents right now. It's looking pretty weak. When it comes to the core monetization, it isn't social. The core monetization is cosmetics.
Why are you doing this? It's cosmetics and there's no hook into the gameplay. It is hardcore gotcha. Don't get me wrong. They get the theming right. They

don't have they don't have rarity as far as I can tell. It's hardcore gotcha. It is customizing your home. It is about selling fantasy right now. There's an ice palace we're looking at as one of the interstitials that you can buy via the gotacha. Like a lot of this is really packaged in a compelling way. The problem is it's stilling cosmetics. Still [ __ ] cosmetics. And so if you are a cozy based game, this is the challenge I think the genre is going to have going forward, which is how do you integrate these gameplay monetization systems deeper into the core experience. So I think social's very interesting. I hope people end up doubling down on that, but at the end of the day, they need to double down on how housing is related to monetization. And the thing I would implore designers of these games to take a stronger look at is actually design home. Remember, design home has been going on for a really long time. You enter competitions. There are restrictions on what competitions you can enter based on the items that are in your house and then other players vote on them. And if you do well, you can win rewards. So there is a designer set limit on the items that you need to be

enter competitions. And so you can very easily imagine this hooking into a cosmetic based system or if you want to enter a particular competition, oh, I need to buy the ice palace or I need to have an ice palace chair to be able to enter that. just add some goddamn teeth to these loops.
Yeah,
right. This is this is what's gonna prevent the game from scaling. I do think there's gonna be a slow burn if they have the social mechanics that predicts long run retention, but man, you're not going to get to the Arpoo heights we need to be able to scale this thing. And that's also the frustration I've had with Paleo.
I'm on the Steam page just looking. It's It's beautiful. Actually, the art style it reminds me of my my Sims. It it feels a little bit young. So, here's the description. and welcome to Hearttopia, a multiplayer life simulation game crafted for creativity, freedom, and peace. Build your dream home, explore a wide range of hobbies, and forge warm connections with friends in a town full of endless possibilities. So, the challenge I have with all of these games is there's no [ __ ] game. Like, what do you I mean, yes, I want to be cozy

and do things, but you're but you you still have to give me like a little bit of a like, why am I going to do this? Why do I want to come in and have a multiplayer experience? What am I going to do? And Phil, you have you played a little bit more? Is there an answer to that question?
You can make the same criticism at the at the Sims. I mean, it's it's a simulation game, right? It's you being able to go out and get deep in some of these skills. You kind of create your own fantasy about living in this town. Again, to me, the core anchor is the house. You are always going back to your house. You're always putting things in your house. The house is integrated into a lot of quests. To me, it's really about customizing your house. But I agree, they can sometimes feel like a free-for-all. At a minimum, you can say, "Oh, I want to upgrade my skills because I want to upgrade, you know, let's say I want to collect all the bugs, right?" And so, to be able to collect all the bugs, I need to upgrade my bug skill and then I need to get, you know, an additional net. So, again, you can think about each of these life skills as kind of having their own end state. But I agree, like
selling the fantasy from a marketing perspective is something that these games struggle with.

You know, you got to give me the why I want to do this a little bit. I mean, even in the Sims, you have a little bit of like direction in your life, like find a job and establish, you know, like all these cozy games. What people are forgetting is you need a little bit of directed play, a little bit of like why do I want to come and engage in this world and what what what am I trying to do? You have different personalities. And so, yes, there's people like my wife that just want to go into Animal Crossing and decorate their island and their town and never want to talk to another human being ever in a social experience, which is why she's actually not downloading the new Animal Crossing that just launched this week, last week. There's a brand new like Animal Crossing update for Switch 2. And she's like, I'm not interested because I don't want to be social. So, there's those kinds of players. And then there are other kinds of players that do want to be social and they do want to go on adventures and do different things together. So, this one I just don't feel like there's enough directed play in the description if I was to give marketing feedback on it.
My fundamental thing is like I think you

just need modes in these type of games that are super competitive that people will spend oodles of money in order to be competitive in. Like that's the way you have to do it. Like there are going to be casual people that just do the cosmetic stuff and they just come and do that. But you need something for those people that are kind of lunatics and want to spend like madmen on competing with others.
Yeah. No, I think you're saying something interesting sadly though is almost no one in this type of a genre wants to engage in competitive play. However, they do purchase differently. Phil, you can probably back me up on this a little bit. I mean, how did Sims monetize all those years content packs? Do you want the cozy cottage? Do you want to be in the urban downtown? Do you want the Katy Perry music be a superstar pack? And that's the challenge when you do these kinds of games is because the core play pattern and the motivation to engage and spend is very different from these kinds of players. You can't just put on typical monetization loops.

I agree. I I I don't think it needs to be competitive. It can be group goals. Again, like one of the things that stood out is for instance, there's a fishing event where you all go fishing together on a boat and you're all trying to get like a certain amount of uh fish caught. And again, one person pays for everyone else to be able to unlock these events together. But again, it's like, okay, why do I want the fish? Well, I want the fish because I want to advance my fishing skill potentially, or I want to fill in my fishing codeex. Okay, why do I want to fill in my fishing codeex? Well, it can just be about meta collection. Like, Eric, go back to your Bartle types, right? Go back to there are explorers, their achievers, their collectors, their competitors. Like, there are different ends that are not just shoot each other up or win on a leaderboard. Like I agree that is the most compelling one and is the one that has the highest arpoo, but that's not what these are about. I don't think that's what appeals to this audience.
But design home, that's how they did it, right? I mean, it was all about competing against others.
And I'm not considering Design Home a cozy game by any stretch, but I'm saying like
the same mechanics of like designing things and building things was monetized

through competition. I do think there were leaderboards if I remember that game correctly and you do want to show off like so part of the personas in this is I want to decorate my house and and show it off and have other people come see it or how am I stacking up to I mean it's Instagram basically for gaming is I want to you know show my stuff and have other people be jealous and come see it might be one of the different ways. Phil I wanted to ask you who's this developer XD Oh my god, they're they're kind of interesting. Um, they actually were into like peer-to-peer networks really early on. Uh, they kind of pivoted the company into games. Uh, I believe they're Korean, although that may be a correction next week. They have been doing a variety of games. They did Torch Light Infinite, um, which I think was fascinating. And now, yeah, now they're doing this game. So, they have a very wide ranging portfolio. I'm very curious to keep track of them. very very similar

to Century Games in that they have this ambition to not just take one genre and go hard on it, but to try to master all of them. And I think they've been they've been relatively successful. I don't you know, they're certainly not anywhere close to Century Games in terms of their level of success, but they still have made really compelling products. And I will say this is a [ __ ] well-made game. Like you can feel the love and the attention to detail. And they used AI, by the way. I just want to point that out too. Yeah, it is. It is gorgeous. It is gorgeous.
And they are they are Chinese, by the way.
They're Chinese. Okay. So, yeah. I don't know. I I have good things to say about this developer. You know, if it's not this game, I think people should keep track of them.
30,000 followers on Steam.
Could have been more.
Yeah.
Could have been more if you announced the [ __ ] release date. And not only that, you should be doing your marketing, right? Your marketing funnels. If you are doing UA on Instagram, you should have iOS and Steam. Let players choose the ones they want to opt into. Maximize your CAM,

which will reduce your CPIs.
That's difficult because if you're doing UA on your phone, you don't really want to push them to Steam. You could do it in your in the artwork, which you know at your end slate, which is typically what we do is you're like, you know, you want to download it now because you want to in in performance marketing, as you know, you want to have a CTA that leads to a direct action. So typically that's why you go to download now which is on your phone. If you're doing brand awareness you can certainly put an end card in says also available on Steam by the way if you didn't know but I would advise a direct download from phone to Steam.
Well you can do that but again what I would argue is if you can add both logos both opportunities players can choose which one they want to opt into which maximizes the amount of people that are likely to click on the ad rather than just having one. And so I don't me wrong, you have all the attribution problems you mentioned. So you know blended or gin, however you want to do that, but still if you can push push

someone down the ultimately I think one of the ways Steam platforms have solved this is to just get their email address and develop a direct to consumer relationship and then
Well, yeah, for sure. For sure that as well. All right, everyone. That's all we have for this week. Uh I may not be here next week. Got some client meetings. So they'll put you in charge. Oh god. Oh god. Oh god. All right, everyone. See you next time.
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