TWIG #381: Xbox Loses the Plot, Ubisoft on Life Support & Western Gaming's Darkest Take

Clint and Bernoit Benoit Oh, Benoit.
[laughter]
[ __ ] Americans. Benoit Benoit I'm just I I I can't do it.
[music]
Welcome everybody to this week in games episode 381. My name is Mishka Katkoff. I fill Jen Donahoe's post as the marketing and publishing officionado. Jen is on the mend today. Her throat is hurting. But we do have in the first chair Eric Kress, strategy and investing. Phil Black, monetization Tsar. Boys only episode. So, welcome to hot takes and even hotter opinions. Anyways, in this episode today, we got Xbox blog post. We got UK gaming subsidies

dissected. We talk about Reforge that went out and raised $30 million. We're going to talk about Habby's new game Dice Hero. We are going to talk again about China and what poor Western developers and publishers can do against this onslaught of Chinese companies. And finally, we're going to end it in the most negative blog post I've ever read about gaming industry. And we will find out if Kress has anything to disagree with it. So, that's the menu for the today. How's everybody doing? Good. Wow.
nothing.
[laughter]
Got nothing, dude. I don't know. You want to talk about GI Joe? I don't know. It's all boys. What do we do?
[laughter]
Well, I can say Kress, you've been pulled back to the grindstone. My head was above water. I was about ready to get out. Escape from this drudgery. And now they're pulling me back down. So, we'll see. We'll see.
[laughter]
We'll see. Yeah. I'll know by the end of

May. Oh, get get Kress back to the grindstone. Otherwise, he'll start producing more content. Wait, you'll know by May? Is it like a retirement groundhog that comes out? Like
[laughter]
No, I but I did join the law alumni association which you probably seen on LinkedIn and other places. And I am grinding on it. It is like so fun because I'm just doing nonsensical work and doing posts and all this other stuff. It's so fun. It's like I don't know. I really like it. But, you know, that might not be enough. So, we'll see. By the way, when you guys do get done with working, there are gazillion organizations that need people like us to do [ __ ] So, like don't worry. You'll figure out [ __ ] to do. Like believe me, foundations, alumni associations, boards, school boards, yeah.
you want to do. Retail investing. There's so much work to be done.
[laughter]
Definitely much work. Pokemon card trading? Yeah, that's true. So, Puzzle Monthly came out this Monday. The boys and puzzle queen

talked about Hay Day Match. So, apparently Supercell hired a Turkish crew to make a new puzzle game for them. And again, a puzzle Hay Day game. They talk about Scopely hitting with a hammer everybody who tries to copy Pixel Flow. And then they talk about Turkish founders who get funded but are not in Istanbul residing in places like Barcelona or Berlin or these other places full of temptations other than working for 14 hours a day making the next puzzle hit. Oh, we got a I I want to show a new partner for Deconstructor Fun, so a new sponsor. We got Moloco joining the crew. Now we're full of sponsors, no more sponsors. And if you don't know Moloco, Moloco uses machine learning to turn your first-party data into revenue. In a world where signal loss keeps getting worse, that's not nice to have. It's the game. So, anyways, you're going to be

hearing more about Moloco, happy to have them on board. And then final show, your boy and Mr. Kress are going to Istanbul. We're going to be there between the 12th and the 14th doing a couple of events, the Tan Summit, Moloco's executive summit, and then our own little thing with few chosen partners. Location unnamed, but if you have been invited, you know what it what's up. So, fun times in Istanbul. If you're there, we're ready for gym workouts, we're ready for swims, we're ready for everything and anything. So, bring it on, Salt Bae. Istanbul's always fun. Yeah. There is an update. So, remember we were talking about The Division Resurgence, the game that was lofting around China forever and has launched but doesn't apparently have a release date in the Chinese market. Like is there anywhere to save this product particularly in the West? And we talked about like going with the Diablo Immortal strategy which is okay, just slap this on this mobile skew under the the launcher which is exactly what Blizzard did for Immortal. Which by the

way, from what I understand, there is very little coordination for that move. That was not part of some like grand strategy. And so, Ubisoft has kind of just done something as well which is they ended up taking our advice and putting this game, the mobile game, on the Ubisoft Connect launcher where all 10 DAU will be able to see and download the game. I'm totally in. I downloaded it. Yeah. Immediately. Yes. I love The Division. God, I love that game. There's something about it, right? And it it it's just a it is a great game. It's like the you know mission-based, it's lots of shooting, it's upgrade, it's like it's the everything I I love, right? But unfortunately, I got bugged out in the third mission. This [ __ ] right? I don't think it's ready for prime time on PC yet. I can't even modify my screen size. So, it has to play full screen on my insanely large screen. So, it might take a while for it to get ready for prime time. But Jesus God, putting it only on Ubisoft Connect? Are they stupid? I mean, what How is that even

a thought in their heads? I find it confusing why Ubisoft always launches. Like they always go through it. No matter how troubled the development is, no matter how clearly dead on arrival the game is. They're like, "You know what? Always be shipping." And they put out these dead titles with no support. It's crazy. No, the game leverages lots and lots of assets and maps from the original game as far as I can tell so far. But it is custom content for these missions. I don't I don't remember any of this content from the original game. So, they spent a [ __ ] ton of money making this game. And unfortunately, it doesn't it looks like it's DOA. But we'll see. Maybe. Yeah, where's Netflix games when you need them? Like this is exactly up their alley. You should sell them this. Put a TV show on it. This is a Ubisoft. Netflix is your partner on these things. Eiffel Tower, iconic. Tower of London, historic. The two towers, simply epic.

But none of them tell you anything about mobile app intelligence, downloads, revenue, active users, and my personal favorite, weekly cohort of retention. Get the real story, get the real data, get Sensor Tower today. Let's be honest. You're tired of chasing installs across the same crowded networks. We all are. That's why Vibez built a new playbook. They're the fastest growing game if I do awards platform, and they are helping studios scale smarter, not just bigger. Their AI-powered targeting means you will finally hit the audience you want. And with their new ROAS optimization engine, performance doesn't just grow. It actually levels up. So, if you're looking for a growth with a fresh angle, check out Vibez. It's built different. It's designed for growth. And it's powered by good vibes. So, head over to v y b s dot c o and get yourself some good vibes. All right, let's talk about our other

partners, Xbox. Xbox, Xbox. So, they released public leadership memo that rebrands Microsoft gaming is back to Xbox. And it sets daily active players as the new sort of a North Star metric for Xbox, acknowledging that the platform is falling behind on PC and console feature delivery. And lays out four pillars: hardware, including Project Helix which plays both console and PC game, content, experience, and services. The tone is, "We are challenger now." With heavy emphasis on global expansion, creator platforms, and cloud. Kress, what do you think about this? So far, so good. I think for Shama, she's just like knocking it out, man. At least, you know, she's showing that she's doing something, right? Like I don't think it's good necessarily, but I think, you know, she's doing something. She's making a big splash so far. No, go for it.

Honeymoon season. There were so many interesting things between the lines, like shifting from units sold or Game Pass subscribers to daily active players. And that kind of signals that the Xbox sees itself competing with the likes of Roblox and Roblox. So, the [ __ ] kids don't don't tease me on. Roblox and Fortnite for time and not with, you know, PlayStation in terms of game sales. Kress, what does that mean? They've already conceded to some degree. And it's not even concession, it's just reality. I actually don't like the idea of going for a DAU metric. I think that's always a vanity metric. Particularly when it comes to consoles because console is about content. It's about revenue per user. It's about how many games you sell per user, what's through tie ratios, and all this other stuff. That's not the right metric for a content platform like console. Like if they want to reach a broader demographic, if they want to go more casual, then they need a whole [ __ ] ton of more content and different types of

content, which they don't have. So, I think that's the clear disconnect with this strategy, generally speaking. There is is not an unlimited amount of players for console business, right? There's just not, right? There are not many people that want to play FIFA, Madden, Call of Duty, GTA. Like, it is a fixed amount of people, right? And so, they want to expand beyond that, more power to them, dude. But, they need to do something completely different. They can't build the same [ __ ] that they've been building. Call of Duty, Fable, you know, dude, their racing game. I mean, are you kidding me? You know how small the racing category is for people? Like, that is not a mass market right thing, anyway. So, maybe they build a UGC platform, you know, a Roblox-type platform on top of Xbox that is cross-platform between console and PC. Minecraft.
But, they are [ __ ] Yeah, Minecraft.
Yeah, it's a younger market. How about that? Like, it doesn't cater to the to the to the existing. But, it would cost insane amounts of money to actually build out something like Roblox at this stage. And if they have these limits in terms of

profitability from a corporate perspective, I think there's no [ __ ] way they're going to spend hundreds and hundreds of millions of dollars to build a platform like this that may or may not be successful, you know? So, I don't know. I This is a strategy. Like, if that's what they want to go after DAU, MAU, and like live that dream, sure. But, that's not the business that they're in, right? At all, right now. So, So, why are you congratulating her? Like, I don't I don't understand. Like, they do have an answer to this, right? Well, first of all, we should put a memorandum on like ever talking about Xbox for like the next 6 months, please almighty God. They're not that interesting anymore. But, let's go through like my Eric Kress reasoning. So, like they did have a play at expanding DAU. That was Game Pass and streaming, which now we know did not return the results they needed. Cost profile doesn't make sense. That was their play to get the numbers up, right? We're going to go to streaming, it won't be bound by console devices. There's been no pivot or response since that strategy was failing, except to go back to Game Pass. Remember they even talked about those things being intertwined? And so, the

question now is like, what does Sharma do with that failed strategy? And she's going back to like the DAU well with no way to solve the exact problem you're pointing out, Eric, which is like they have no strategy to get DAU up. Price is one way to do it. Are they going to enter another era of subsidy for consoles? No, they're not going to do that because RAM prices are going up and video card prices are going up, which will increase price and shrink TAM more. And so, her option is to go back to the content well, which you've been banging on. Where the [ __ ] are my key franchises, right? What was the whole point of all these acquisitions? Where is my Gears of War being a key franchise again? Where is Halo? Where are the things that made this console rare is like missing in action. I used to hear these like 6-month beats on like Sea of Thieves. And so, like the Eric Kress response is like double down your franchise. Like, your answer is not in Redmond. The answer is in the studios that you acquired. And what I don't know from you, Eric, is like tell me then, like how do she use these puzzle pieces? Cuz the the drag is they're just like, [ __ ] we make so much money being a multi-platform publisher. Like, why

should we take Starfield off of PlayStation or any of these other SKUs? I'm giving her kudos for actually doing something. Placating the masses, reducing price for things. All these things are [ __ ] that she's actually doing. Not that it's going to be [ __ ] helpful, but that on a PR perspective, it [ __ ] makes her seem like she's doing something. I think we should wait like at least another 6 months before we talk about Xbox. But, like I'm going to say right now is that none of these strategies are going to work. The only strategy is to retrench and go directly against PlayStation, do exclusives, get rid of day-one [ __ ] subscriptions completely, and just have a regular subscription for Xbox Live like PlayStation, and compete head-to-head on content, and build out the content. That is what needs to happen. And what should happen is they should spin this [ __ ] thing out and do that. That's not happening. Sharma clearly is not going down that direction at this point in time. Maybe in 6 months she'll start to realize that she's totally [ __ ] and that she will have to do that, right? But, like this is all she can do, and she at least she's doing something, right? Give me a

blueprint for how they get back Europe, right? Like, that was their big loss this cycle.
they can't get Europe back. They can't get Europe back. You think it's over?
get back Europe. That's that's why they're totally [ __ ] Then this whole thing is toast.
win back Europe. This whole thing is toast if you can't win back Europe. It's over. Yeah, cuz even if they spun it out, there's not necessarily chance of success, right? Yeah, I mean, that's why they are not anymore Microsoft Gaming. Yeah. It was it was an interesting read. I mean, they they talked about Project Helix, that appears to be the next big bet. And it kind of makes sense on data front. If you look at Sensor Tower, they show that PC is growing. That's the one that drives, you know, the growth of the whole industry at the moment. But, could be the next connect level over-commitment. Right, Chris? I was actually talking to a guy from Sony last weekend. You know, one thing they could compete on is on the software side, like discovery. And like, if they could improve somehow the way of improving distributions, like the store fetch.

[laughter]
That's coming. I mean, how do they actually compete directly against Sony? Cuz they certainly can't win on content. So, maybe they can win on platform, but then the platform is kind of generic now. It's not really all that interesting, so. She mentioned nothing about AI. Yeah, that's actually was a little bit surprising, honestly. Like, that that there was no AI embedded strategy within this or some at least a reference to it, because that, you know, All the PR is like she's an AI guru, which she is [ __ ] not, by the way. Allegedly, we don't know. She doesn't want to piss off core gamers. She's trying to win on win core gamers, exactly your point. Like, just like our favorite guy from Toronto. Yeah, they exactly. Didn't mention Game Pass economics. I mean, Xbox doesn't want to talk about those. Didn't mention about layoffs, despite doing layoffs. I love reading these press releases. I I I don't understand who who writes them for the I mean, I actually know who writes these, but it's so toned up because I they talk about in this form

like a challenger framing. This is a Microsoft-owned company that spent $75 billion to The [ __ ] are you talking about being a challenger? It's not a startup.
[laughter]
Activision Blizzard and Bethesda and like, what are you a scrappy underdog now? And then they use phrases like signal over ceremony and makers over managers. Again, this is Microsoft. Stop, we know. We know what this is. Silly. [laughter] Yeah, I think we should have a moratorium on talking about Xbox until there's actual results, something that actually moves the needle, cuz right now they are [ __ ] drowning. They are [ __ ] drowning right now. They have [ __ ] nothing going on. Wow. Minecraft 2, baby. You buckle in. Yeah. I mean, you're you're totally right though, doubling down on something like Minecraft. And Minecraft doesn't monetize for [ __ ] You think Roblox is bad? Minecraft is horrible, you know?

Candy Crush Solitaire. Candy Candy Crush Solitaire. They totally [ __ ] that whole platform up. It has maintained its purity, which I guess is in some way positive, but they haven't monetized that thing for [ __ ] How much do you think it does annually, the franchise? I don't know, actually. Do you know? No. No, I think that's an interesting question. Yeah. Too bad we don't know anybody who works at Minecraft.
[laughter]
Yeah. Yeah, we'll we'll never figure it out. This will This will remain a mystery for all of us. Anyway,
[laughter]
moving on. So, UK government pledges 28.5 million pounds sterlings for UK games. So, this is a a funding to support the next generation of games developers in the country. They have three tracks. The track number one will provide up to 20,000 quids for newly formed companies with limited track records. Track number two is the immersion track. They offer

grants of up to 100,000 pounds for prototyping new games. And track number three is the expansion track. That makes available a whopping 250,000 pounds to take games to completion and help them scale. So, the government is also investing $1.5 million in London Games Festival over the next 3 years. And the government said it will engage with the newly established UK led UK esports advisory panel to help ensure the country remains a world leader in this industry. Eric Kress, what do you think about the United Kingdom. The overall dollar amount is by definition mice nuts, right? Like, well below mice nuts level. And so, these grants are like irrelevant in a day and age where everything costs like 30 to 300 million dollars to make. I

mean, that's that's obscene. I I think if they were doing real tax credits and like programs like that, like Canada and and and maybe France back in the day with the Thieves at Ubisoft, maybe that would be more interesting, but this seems like just PR. Giving 100,000 pounds for a company to help with prototyping, that makes sense. That's a good amount. Like, you're not going to do AAA, but you could prototype a nice little hybrid casual game or a little Steam game. And then expansion track is again, who are you talking to when you think that 250,000 pounds will help you to finish and scale a game. But, I mean, overall, I think this is like I happen to advise a a government on ecosystem building, so I I've been going through all these different subsidy systems, benchmarking them them against each other. And so, UK is example what I personally advise against because it feels like they don't understand the game industry ecosystem. They focus too much on like, what do the small teams want? Like these small indie

teams and build it almost around them. There's no aspect of platform support, no tools, no tech, no hardware, no infrastructure. It already when it comes out as an announcement, it feels outdated because they talk about virtual reality, they talk about esports. It kind of tells you how long they've been working on it. And it all makes sense because they talk to UK versus setting an independent advisory board like other governments would do where they would have successful founders, entrepreneurs talking about what actually makes sense and what helps companies. And again, I didn't know that many people don't know the details of the Turkish ecosystem subsidies. So, that in my opinion is the best in class because they help you with UA up to 1.14 million dollars per year giving either 50 and up to 70% of spending in target countries. They give you platform commission sharing, so up to half a million almost per year

covering half of the Apple Google commission. They got cloud cost support, they got data analytics tools subsidies, they got employment support where domestically you get $2,000 back per employee per month and overseas staff almost $6,000 per employee per month. And I don't want to [ __ ] fully on UK because what they do have working for them is VGEC, so video game expenditure claim or expenditure credit or something like that. I've I've actually gone through this process. So, this is actually pretty good subsidy system if you are not building a live operated game, but you're building a premium game or a seasonal game because I'm not going to go to the details, but basically it will give you significant portion of your human resource costs back through this VGEC subsidy. You can do your own calculations, but that one is powerful. This 30 million pound thing makes little

difference, but you know, it's good for London Games Festival, so yeah. Phil, what do you think about subsidies? I think subsidies are dumb, but if you're going to do subsidies, I don't understand why you want this founder led one. Like I don't trust founders to like understand. They don't have the same goals as countries do. And so, I don't understand why you'd have such a hands-on approach to funding each individual aspect like cloud cost support and data analytics. Why do we need all these like individual line items subsidized? It's really silly to me rather than a block grant. Like if we look at Quebec, what does Quebec do? They subsidize salaries and it's it can be as much as like 30% of a salary can be subsidized by the Quebec government, which is insane. And the thing that I think I would point out is that it's also incredible that salaries are still so low
[laughter]
despite the fact that like Quebec subsidizes 30 plus percent of salaries, but like why don't just do something simpler like that? Why can't I choose and pick all these line items? That that seems rather ineffective. We've gone through the Turkish system with in in other countries kind of like reviewing it and and really it is so founder friendly because it basically breaks

down the cost. It doesn't push you to build bigger teams, you can stay compact, you can stay lean, but at the same time it derisks shipping new games and that's what Turkey has has really shown and by shipping it's not just taking the game to the market, but it's actually trying to a little bit scale it and see how it floats. So, I think that element really helps Turkish studios to ship about two games a year at least and it's part of it being subsidized, part of it is just giving, you know, access to the tools at cheaper cost. So, I find it best in class. But maybe just that's just the founder in me that that looks at it. Free money is nice. Yeah, free money is always nice, but hey, Turkey's getting the money back. Like there's clear ROI. Very, very clear. I I saw this on LinkedIn. This is not a news, but I want to I want to share this image. So, I I saw
[laughter]
there was a company called Reach Players and their CEO was posting this on LinkedIn. Like all power to them. I believe it's a company that essentially

puts in your brand into a game. I mean, those exist on on Roblox, but this is clearly made in UEFN. And they they put in L'Oreal, which is cosmetics like world's largest cosmetic brands and now they're putting like shampoos into UEFN and and it was like this this post posting on like how genuine and real the experience with a brand is in this game and how it fits and how players can get these shampoos and it feels so nice. I mean, luckily this is just a UEFN and nobody will find this island and the company got paid for it, but it's hard to imagine that that this was Tim's vision is like pedaling French shampoo through Fortnite. It's like This is a [ __ ] abomination.
[laughter]
Are you [ __ ] kidding me? This is real, Chris. This is real. They had gameplay videos and they and the the whole LinkedIn wall was like all these marketers, like brand marketers just

just jerking each other off like, oh my god, this is so cool. This is so genuine. This is amazing brand integration. I've had nightmares about this. I've had nightmares about this. We again, we did this at EA like 20 [ __ ] 25 years ago we were looking at this [ __ ] dude. [ __ ] this, dude.
But this was the worst I've ever seen. And like I don't wondering like who in Fortnite needs to know about Garnier Fructis? Like [ __ ] shampoo with I don't know, fruits in it. Jesus Christ. Oh my god.
Yeah. I blame Eric for this. Everything is an ad network, dude. People take that to [ __ ] heart, dude. This is [ __ ] dude. Don't don't do this.
I'd rather get an interstitial than than this [ __ ]
You guys are all [ __ ] gross. You guys are all gross that are doing this. I I I Talked to my Sony friends about this too cuz they were looking at this pretty heavily. I'm like, dude, don't do this. Are you out of your mind? Are you Are you sick? Like this is this is insane. Don't don't do this.

When looking at this video and everybody can see and watch, maybe I'm wrong. It's called Reach Players. It made me honestly sad and I started thinking about that that Epic is in a real trouble if they're doing this. But then again, it not it might have nothing to do It might have nothing to do with Epic. It might be just somebody making an island. How can you go back on only half of Eric Seifert's like wisdom and preachings? Like his scripture tells us more. His scripture tells us that like ads have supported so many array of products and they brought them to so many different people. The internet fundamentally runs on ads and for you to say like, oh, this one part of the world shouldn't have ads because it's my precious thing. I think it's silly. If they win with this If they win with this, they win with this.
[laughter]
You know? Like I just the whole the whole book, the old and the new testament is important.
[snorts]
[ __ ] you, Eric Seifert. That's all I'm saying. He's right. That's a good point. Well, let's let's talk about games next. Yes, Habby has launched a new title or

seemingly launched a new title. It's called Dicero. It is scaling in the United States as of this week. It's been compared to the roguelike game that recently came out Balatro in terms of its style and we'll see some screenshots, but I actually think the closer comparison is to Bastion. And if you look at the two screenshots I have in front of me
I don't see I don't see any similarities. I don't see any similarities. Nothing at all? Nothing. No.
[laughter]
No. I think What are you insinuating? I would never I would never insinuate that someone would find inspiration in another Western IP. Oh, no, no, no. Chinese companies would never do that. So, not at all. Send a cease and desist to Hong Kong.
[laughter]
Will do. No, it's Singapore. It's Singapore.
Oh, even better. Send Yeah, yeah, yeah.
[laughter]
Yeah, let's talk about where Archero and Habby have been cuz if you remember, we've been covering them. They were not in a great place last time we checked in and that does not appear to be a path

that is pivoting. They are still struggling. Their whole portfolio is down. Archero 2? They got dumped by They got dumped by Google and
That's your story, but I mean this is a quick This is a quick decline if they really had to replace those developers. Like
Thousand developers in Beijing. Thousand developers. Capybara Go went from being nearly a $100 million game in 2025 to being $26 million game this year in terms of run rate. That is that is not good and it's the same case for basically the entire portfolio. Survivor.io is actually having the smallest relative decline, but it's still struggling. We've been talking about the squad RPG RPG genre like really suffering under 4X and I think we'll come back to that when we examine more of the game's mechanics and how they're they're using their template again. But to talk a little bit about the game itself, it is basically following their same monetization template. It's everything you've come to known Habby about. It is a roguelike in which you go into instances and you face

waves of enemy. Every time you defeat a wave of enemy, you get a roguelike ability that you can choose. The ultimate triggering mechanic for damage ends up being these dice rolls combined with these abilities and a lot of the modifiers that you have in terms of your gear. So, it is a game that does not appear to have autoplay in the core session like they do have the raid system, so you can go back and kind of like blow out some levels to gain resources, but I was pretty surprised not to see that at least in the early part of the game. If other players have had experiences with autoplay, that would be great. They do have speed up, but that seems strange to me because as you know, you have to grind so hard in these games. Without autoplay, that becomes expensive. There's a lot of taps you got to do particularly in this game. It has the same monetization format that Habby's famous for. Remember they do a lot of these passes or annuity mechanics where you might pay a fixed fee and then for a month you'll get daily claims of hard currency. And they also have another iteration of this called challenge passes where as you level up, you'll basically get an additional hard

currency subsidy. But they market it like a battle pass where you can buy it at any time and you get all the rewards that you've previously earned on the premium track. So they're still throwing like the same playbook at it. They have talents in terms of their meta like they've always had. They have the gear fusion system like they've always had. Like this isn't anything new or remarkable. And so I'm really confused about what they see here. The The best thesis I could come up with is that they see a user acquisition play, which is what is the story of Survivor.io that made it the most successful game in Habby's history. It wasn't Archero, it was Survivor.io. Remember they scaled on TikTok and they had a certain narrative post Vampire Survivors. Maybe they see something in this 8-bit style and they decided to to implode it. But honestly, like I think this meta is toast and I think this is the wrong direction for them to go in. It is time to get on the 4X train chugga chugga chugga or or [clears throat] what's like see what Habby does in casual. I don't know. Like give me this but give me like a merge core. How about a different platform? How about PC? No. No. No. No. No. This is not how you compete

on PC. This is not because first of all, they're making games for an But you don't think that Habby could have success on PC as a publisher? No. No. What are you talking about? They have no experience in PC. What would they What would they do? What would What would be the play? Well, rogue-like games on on Steam. No. Dude, these games are Dude. Not not Not this but like they would start making PC games. No, they should not do that. Don't do that. They have no experience making PC games. They don't have people that can make PC games. They just get a studio. Does the same thing as with Gorilla.
that Okay. Okay. Why why
[laughter]
Stop it. Dude, this is why people fail constantly is they Oh yeah, [ __ ] Let's just [ __ ] pivot to PC console. Hold on. Hold on. Air crash, in his defense, what about What about the Love Nikki guys doing Nikki Infinity? Huh? How about that? How about them apples? Yeah, I'm just glass half full. I see opportunities, man.
[laughter]
That's the best I could come up with. That's the best defense.

It's a failed EGS game. Yeah. Yeah. PC might be the thing. Why not? Look, I think that we we often celebrate China. And like I wrote previously, like there are some paper tigers out there. And I think this is one of them. You know, I'm very curious to see how miHoYo does with its future franchises but you know, ain't all that glitters gold, baby. I don't know. I think there's some some holes in the Chinese portfolio. Yeah. Lilith is another one. That RPG playbook kind of Yep. melted. Yep. Still trying to keep Farlight Farlight alive. Sometimes you got to pay the light, yes.
Farlight 84. It's like their Ubisoft mobile.
Just keep Just Just launch.
We're We're continuing our East versus West discussion. Very quick update on what I think is Mhm. actually like It's kind of like Miracle on Ice for video game developers. And it is Marvel Rivals versus Overwatch 2. They have been competing for users for a really long time. If you remember Marvel Rivals like using Western IP, it's from NetEase. It launched with this like

explosive update cadence where they were going to do heroes monthly, sometimes 6 weeks. And so that's like basically unheard of for a character-based game to move at that sort of pace. And then of course, they have the Marvel characters. And unfortunately, I would say that that strategy maybe hasn't panned out the way they expected it to. So right now we're looking at daily active users across Steam, PlayStation and Xbox. For Marvel Rivals, it's declined basically a year since its launch when it was launched in 2024 December and it kind of reached this steady state equilibrium around May 2025 but it's declined in recent weeks while Overwatch has done remarkably well. If you remember, they did the stadium mode a while ago. They had a number of brand crossovers which were really exciting. They dropped the two. They've done massive updates to the underlying game itself. They had a new UX, new live ops. They've done so many new things to reboot that franchise and they are basically neck and neck. And the thing I'll also point out here is that Overwatch 2 has the Blizzard.net launcher and so I think you're getting a real undercount

of Overwatch 2. And I think this game has exceeded Marvel Rivals. And I think that is a solid point into the Western category for development. And remember, I talked about the fact that we'll probably get [ __ ] in mobile. That's what we'll talk about later. But we can still win in HD. And this is a proof case that we did it. We are winning right now. Like this strategy, the Western style of creative development, of productivity, of all the systems design is beating raw production right now. And I think that's important that is getting lost. Yeah. Well, what happened to Marvel Rivals? I think the game is boring. I think it is repetitive button masher and I don't think they've added enough depth or meta intrigue into the title in the same way that Overwatch has started to do, clearly with their their in-round progression. Their perks, the stadium mode. I think these are really powerful innovations. Yeah, it seems like Blizzard is really doing reasonably well. Like their World of Warcraft's doing reasonably well. It seems like they revived Overwatch 2 at least temporarily. Okay. And then Diablo, the expansion came out and it seems to be doing okay.

So Yeah. Maybe that is one positive thing for the Activision Blizzard Well, remember Korea? Korea's cooking. Remember they they they give some more stuff to Korea. Let's see how that get that plays. I mean, the only really minus now is Overwatch rush. That's the only thing where I'm like, ah, please don't. Come on. Yeah. I mean, they're they don't know how to do mobile. Guessing where your users come from? That's so 2010. AppsFlyer is like having a cheat code for mobile marketing. Pinpoint attribution, real-time insights and analytics that actually make sense. Stop flying blind and start flying smart. AppsFlyer because your data is your best co-op partner. Kick-ass live ops need kick-ass tools. That's where Heroic Labs comes in. They just released a massive update to their Satori live ops platform. And having done my research, I can say with confidence that it's second to none. In a single product, you get everything you need including event capture, player

segmentation, feature flags, remote configuration, AB testing, experimentation, live events calendar, messaging, retention graphing, analytics and so much more. If you're serious about running live services in a game, get serious about the tools you use. Connect with Heroic Labs and make some serious cheese with your live ops. Web stores, you see what good looks like but have you experienced great? AppCharge is the direct-to-consumer platform that powers over half a billion dollars in transactions each year for top studios. They're not just another vendor. They're backed by Supercell and built by monetization veterans from Moon Active, Plaktika and other industry giants who understand the difference between merely functional and the truly exceptional. What sets them apart? Deeply personalized web stores with custom design offers,

industry-leading monetization features, seamless in-game payment integration and a robust SDK. While 70% of top-grossing games already have web stores, the ones scaling the fastest are doing it with AppCharge. Ready to transform good into great? Learn more at appcharge.com. All right. Another update. Ubisoft. So I'm not going to I'm not going to go off on Ubisoft like I always do. But there were some changes up north in the Great White North in Canada. So there's been like four big departures from the studio up there. The first one was Mark Alexis which we we spoke about. That was actually I think a bad one generally speaking. However, the next three seem to be actually reasonably like cleaning house type things. Julian, Clint and Benoist Benoist. Benoit. Oh, Benoit.
[laughter]
[ __ ] Americans.

Massive
So Clint was the creative director of Hex. He left in late February. So evidently, they were going down a path with the next version of Assassin's Creed and it wasn't going well. And so I think he was let go for that. Benoit. Benoit.
[laughter]
I just I I I can't do it. Anyway, he was a game director on Hex and I think just generally speaking, Assassin's Creed Hex was in a [ __ ] bad place, right? And I think that is their next version of Assassin's Creed. And so I think they're just cleaning house and rebooting that franchise to make it more contemporary is the hope anyway. So some of these veteran people are leaving but I don't think this is actually necessarily a bad thing per se. They're making changes to hopefully get more efficiencies in terms of game development. And then Julian was the head of the Division franchise. He left EA to go on Battlefield. Which sucks but I'm still hoping that they can pull out a great Division game. So fundamentally, it looks like they're

cleaning house up in the Great White North. The problem is fundamentally is they have no games that are actually imminent right now. So Assassin's Creed Hex seems to be in development hell and it's nowhere. Ghost Recon is questionable although they say that's coming out next year. I don't know. Far Cry, I think they had to reboot that thing and that thing is less contemporary. I spent like an hour and a half with some investor yesterday talking about this. So I I don't want to go too deep into this but finally, Division, the next version of Division is a pipe dream at best, right? Because you know, they spent so much time wasting on this woke [ __ ] of
[laughter]
of Star Wars. But the really good news for Ubisoft right now is the remaster of Black Flag looks off it's off to a strong start. It's coming out in July, but the pre-orders are really strong and people are really excited about this game and it could really outperform. So, that could be good short-term for the stock. Having said that, this Ubisoft thing is a ticking time bomb. Evidently, if they don't get [ __ ]

together by 2030, which is not that far away, you know, for triple-A game develop, that's a [ __ ] that's pretty close. Tencent's going to basically take over and take get rid of all the [ __ ] babies, dude. They're going to just get rid of everybody, you know? They really need to start executing and they're not executing on these the franchises that matter. In the short-term, I think things are looking better because Black Flag is is tracking well, which could lead people to the conclusion that it is still a contemporary and meaningful franchise. But, what I worry again about all their franchises that they are so [ __ ] old and they're so dated in terms of their design, they are no longer contemporary or interesting to the audience. This is my biggest concern because Elden Ring, Ghost of Tsushima, all these games are coming out that are like changing the formula and upgrading everything. And Assassin's Creed just seems old and stale in comparison. Far Cry, I don't even know Far Cry has a market anymore. And so, the longer they wait, the less they have the opportunity to actually execute against the audience

that we have now.
Isn't there a Far Cry movie coming out? Who gives a [ __ ]
No, we've already did it. We've already did this earlier in 2000.
Just stop. Assassin's Creed movie, [ __ ] that [ __ ]
I saw like somebody was tweeting like that some executive Hollywood executive that, you know, essentially they have free reins on Far Cry because players don't care about narrative. It's like they skip all the narrative, so it's like they don't even know what happened in Far Cry. They could just do whatever. Mr. Chris, would you support the French government blocking the acquisition of Ubisoft eventually by Tencent as their like inevitable future? Like why would they should they give up the crown jewel of France? And I guess I guess Canada. 1,000%. Dude, [ __ ] no.
Oh, really? Oh, wow. You're coming out swinging on this one.
in this case, the only way to save Ubisoft is to get it out of the Guillemot family's hands and and give it to the [ __ ] Chinese, right?
You think it's okay for them to give up acquisition of a major Western publisher to the Chinese? You're You're okay with that? I don't like it. I don't want it.

But, in Ubisoft's case, it's the only solution. Yeah. Why wouldn't a PE firm be a good place for Ubisoft in the West? Like can they come in, cut the costs to the bone?
Like KKR type of a thing, Blackstone, KKR. Get what what do they still have the hyper-casual studios like Ketchup? Again, Give them the Blackstone treatment. Bunch of giants. Yeah. RTS MOBA, like what they already have the subsidiary company, remember? They have the creative houses. I feel like a PE firm could like do some do some [ __ ] here. Yeah, French law restricts the type of requirements for a PE firm to really go in there and and cut significantly. They have lots of limitations from that perspective. If the Chinese were to take over and again, the reason I like this structure is that most of the development that were all of the development of the key franchises on the Tencent owned division or 25% owned division is all in Canada, right? So, they could literally
think that would continue? You really

think that would continue in Canada?
is so cost-effective.
is cheaper than Romania. Longer term, they would bring it probably to China, but like in the short-term, I think they have a good development I don't think so. I I think they would keep Canada as a development hub. It is still incredibly cost-effective, probably I would argue cheaper than Beijing. I think the the missing point here is that the games actually do fairly well in China. Like a lot of Ubisoft games, like they have their own skew of Rainbow Six Siege in China. Like there used to be a Shanghai team operating this. But, I still have I mean, you're I still think they're going to go for the corpse at some point if they own this. Like there's no reason not to just we saw with the division on mobile. Like they're going to continue to like say, what can we what can we milk out of this IP? To be honest with you, I think this is good. I think they should do this. Like why don't we have an Assassin's Creed mobile? Someone deserves to take a shot at this. Rainbow Six Siege mobile, by the way, we haven't talked about that in a long time. Now, the Nerf war back. The Nerf war back. Jesus.
Uh saving you guys all the segment. Yeah.
Moving on. Moving on. Moving on. Um let's talk more about China. There was

how China came to dominate mobile games. This was an opinion piece on Game Industry Biz by Danya Lukyanov of Value's Value. I'm not sure what that is, but kudos to her for writing. She basically I'm just going to go quickly through the article. Writes about how big the Chinese domestic market is, 772 million active gamers and worth about 50 billion dollars. Chinese companies, according to her, do operate with structural advantages. They got massive geographically concentrated talent pools. They have cultural acceptance of shift-based work, including multi-shift live ops. High workforce discipline and replaceability. Lower unit labor cost at scale. Organizational tolerance for very large teams and rapid restructure. This is like a private equity's wet dream.
[laughter]
Then she talks about that talent circulates primarily within China, so that the knowledge remains internal and

competitive advantage compounds. She talks about acquiring know-how that that the Chinese companies acquire know-how with acquisitions, studio building and hiring Western consultants like Philip Black and
[laughter]
And this was a This was an interesting piece actually in the in the in the write-up because she's like painting this picture that these Chinese developers get together in a room and be like, "Hmm, who are the consultants we should hire to extract their creativity out of them?" Extract away. Yeah, extract away. Give me a call. We can set something up.
[laughter]
Yeah, your your boy has also worked for Chinese companies, so I know what's up. So, anyway,
are missing out. Saudis are not missing out. They're They're doing fine. Uh the writer offers kind of like two opportunities in the end for Western companies to compete. Uh I'm quoting her. She says, "The only viable response for Western companies is talent density. Fewer people with higher leverage per person." Sounds like Supercell of the old. The second point

she makes of the competition is that Chinese are not creative. That's a bold statement. I'm being a bit of hyperbolic, but essentially she says like, you know, Westerners are creative and Chinese only copy. She doesn't say that directly, but I kind of reads between lines and I find that very confusing. Philip Black, straight out of Shanghai, what's up? Is this the view you share? Have you been sharing secrets of the Western nations out there? Oh, man. Oh, man. If I charge enough money, for sure, I'll tell you whatever you want to know. Look, this is basically what I've been saying. This is basically what I'm saying. I just think that she just misses the point that the US consumer is in the driving seat of all of this change and I think that's really important and she does acknowledge that Chinese growth is slowing down. We can always debate Chinese official numbers as well, but I think that's a problem and I think the other thing she doesn't acknowledge is that remember when the Chinese advertise to a Western audience, they pump money through US platforms. They pump money through Apple. They pump money through Google, through Steam, through Meta, through Google. They pump it through all YouTube. Like they still

are using our platforms because again, the US consumer drives the story. And so, at the end of the day, who wins the ad auction wins the market. Remember we've been talking about that? And so, I think that's the piece that's missing here. And I would again highlight this only applies to mobile where I think there are few barriers to entry. The games are ephemeral. There's little loyalty. Copying is prevalent. Like this is how the Chinese got here to begin with, but again, I think they're going to struggle in HD where you can't employ the same tactics that I think they have. I mean, they've gotten better at the margin. But again, let's go back to that Marvel Rivals versus Overwatch where I think that's like a really key part of this type of narrative. Mhm. Yeah, I thought it was a good write-up. They She gave a lot of anecdotal evidence, you know, talking about some studios that she had experience with. She paints the picture of these Chinese developers as this coordinated force that methodically approaches global domination by sucking creativity and industrializing it. Like that's how I read it and it's not like that. We're talking about individual developers and publishers that are incredibly competitive with each other. They're

expanding into Western market because their market is quite concentrated and it's very difficult to launch games, sometimes faster to launch games in the West rather than in Chinese market and they are hiring talent from the markets that they are trying to access. This is exactly what a Western company would do. And I actually have done this. We've launched in Japan. We've launched in Korea. We hired local talent to culturalize either the games or at least marketing and then just be, you know, for the consumers there. How did that work out? What's the What's our penetration for Western developers in China and Japan and Korea?
For the games for the games we launched. Okay, so this was Supercell. Supercell is the biggest publisher in Korea to my knowledge.
Yeah, okay. But, you're the the tallest [ __ ] right? Like Like the amount the percentage in Korea is horrible, right? What we were doing to get to the East is not working. What China is doing to the West is working. So, let's let's try to see what the differences are, right? And I've been arguing this for years. I

mean, I think since the first Turkish presentation like 5 years ago, 4 years ago, is that they don't give a [ __ ] about creativity, dude. They are basically so pragmatic in their game design that they are like efficiency beyond reason, right? Like they're not building [ __ ] like Supercell, right? These casual games that have no [ __ ] monetization that they don't even test on the markets and expect it just to do something just because they're Supercell. Dude, they are [ __ ] doing the same [ __ ] over and over and over again, right?
Yeah. They're creating a casual gameplay wrapper on a traditional deep 4X design over and over and over again and killing us. Killing us, right? Like I said last week. And they're kicking our ass at this stuff. And so you're in a zero-sum game right now. Market's growing at 3%, not 20, like it is a market share game. And you are trying to build the best experiences for the market that you have. We're not expanding markets right now.

We're not getting more users. We're not getting more spenders, right? Spenders are the spenders and you give them what they want, right? And I think Turkey's figured that out with puzzle. And I think these Chinese guys have figured that out with 4X. And we're sitting here on the sidelines circle jerking about creativity and innovation and and we're just getting our clocks cleaned. Yeah. So that's my my cynical take. So Uh do we have time for one more cynical take because there's a the video game industry's very dark night. So super long text by a gentleman called George Zoeller? Zoel you know, this was circulating LinkedIn and drew me in because it was so incredibly negative. The most doom and gloom piece I've ever read probably. It's written by a person who has according to my quick LinkedIn checkup literally no experience in gaming and he wrote a very deep analysis. But we are not elitists on this podcast. We will not not cover your opinion just because

you're not in the industry. If you've done the analysis work, we'll give you the space. So the core thesis of this very very long post basically there's 10 things why we are absolutely [ __ ] So core thesis Western gaming industry isn't in a cyclical downturn. It is structurally uninvestable. No credible growth narratives exist and without one capital won't return. Full stop as Chris would say. So what are the 10 tenets of doom in this article? Number one, growth narratives are all dead. Cloud gaming, VR, metaverse, NFT, e-sport, gas non-delivered and there's no AI X gaming narrative either four years into the boom. When growth narratives die, VCs leave and capital leaves. Uh number two, East growth exists but it is inaccessible. So good luck publishing your game in China.
[snorts]
Number three, live service

/games as a service has collapsed. Number four, indie boom is a hoax. The vast majority of indie titles never recoup. Number five, AI native companies with models that will one-shot games are influencer nonsense from people who don't understand the business nor the technology. I [ __ ] agree with this one. Number six, tech is stagnated. Seven-year-old games still look cutting edge. Number seven, platforms impose a rent. Apple, Google, Valve extract 30% risk-free. All cost savings from AI flow to platform ad auctions, not creators or investors. Number eight, short-form video is eating gaming's lunch. According to the data, adults gained 1 hour daily online time between and almost all of that went to short-form videos and social, not games. Number nine, AI is negative for the industry right now, sucking investment dollars

out, driving hardware costs up. And number 10, the layoffs are not due to over-hiring. Companies like Epic are still bleeding talent. This is a structural decline. Who wants to go first? Where do we want to start? I mean there are some truths and I would say some some egregious mistakes. Let's go with the mistakes. I think we we can Yeah.
So I I think the narrative of short-form video is outdated and it's like honestly like probably two years of analysis outdated. TikTok growth has stalled. Short-form video is not exploding at the rate of YouTube.
I think short-form video stuff is really exciting. I think we've talked about a little bit here. There's some growth there. Let's see what the Western penetration ends up being in the long run. But by and large like TikTok is not this huge monster we need to worry about anymore. Like Netflix is worrying about YouTube on TVs again. Like I just don't think the competition for time from short-form video is strong as they make it out to be. Not only that like we've responded, right? The games platform that we have is in the New York Times. It's in LinkedIn. It's in Roblox. It's

in Netflix still. Netflix games is surviving. It's not like our service area has shrunk. So we're still like in the fight for DAU. But I would say the two wrong assumptions he makes about the demographic changes is first of all we can have growth just by virtue of automation freeing up more time for people. Like one of the ways we choose to fill leisure is with games. And there can be a reasonable debate to had over our marginal acquisition of time. So for each additional hour of free time that is added to the pool every year cuz we essentially are getting better and more efficient at producing things. And for people who do not believe me, right now we're looking at annual working hours across the United States, Australia, key T1 Western nations from 1870 to 2017. There's some more data points that support this. But the number of working hours has actually gone down. Like Keynes always used to be made fun of for saying oh my god a four-day work week is going to come and instead we chose more consumption over leisure. But at the end of the day like we have more free time than we've ever had. We're working less than we ever had. And so the question is

is like well how are we filling that time? And I think games have buoyed from this. But the question will be like if we continue to have this then games will expand. So I think that's one point. I think the second is is remember like Roblox is acquiring new people to games. How can you look at Roblox's numbers? We're talking about hundreds of millions of MAU that would have not been gamers years ago. Even if those gamers age out, if you stack those increases from the Roblox cohort, I think you end up with total [clears throat] DAU for gaming increasing over time even if the retention curves in terms of the whole platform are collapsing. So we should analyze this. We should analyze games like you would any individual game. And I think this is one thing that is in our corner that people haven't talked enough about. But I agree with the other criticisms. We suck on AI. There's some headwinds. We're not growing at some crazy rate anymore and we're kind of looking at these big macro factors instead of gaming itself. There's no new platform. Eric, you've already talked about this. That needs to be solved for something exciting in the short run. I fundamentally believe that interactive is better than passive. And ultimately if there's going to if people

have more time because efficiencies around AI longer term, then they're going to come to what is the most best form of entertainment which is interactive whether it's mobile, console, PC or whatever. But I do think is that we should be thinking about what new platforms and new types of experiences we can get to engage a bigger audience cuz again, I think the biggest problem with mobile is that everyone believes that just cuz you have a smartphone that you're a mobile game player, right? And that may be true. You may be a player, but you're not a spender, right? There's a very small percentage of people that actually spend significant amount of money. And so when you actually put it down to that like this platform of mobile is not necessarily as big as people might think it is. So engaging broader audience in games that actually monetize better is kind of critical which you need just need better platforms or different new platforms. I can't really refute what he says cuz that guy is saying that cuz I've been saying

the same thing for a while. There are a couple of things. So I I went through three of the different reports. A Reams latest report, Newzoo's report and Sensor Tower's gaming report. And kind of like where the data disagrees is like there's no growth narrative. Well, that ignores PC because PC has been growing about 10% year over year. Yeah, but PC it's all in China and he said this in the in the piece. It's like possible for the US to really penetrate China in PC.
but like the Steam titles that have been doing extremely well. If PC has been a growth
This is This is what you got wrong earlier, Eric, right? Cuz we still have League of Legends. We still have Teamfight Tactics. League of Legends is getting its ass handed to them. Dude, they are [ __ ] dying out there. They are dying out there. League of Legends you mean Have you heard from Riot people? It's bad news bears. Yeah, yeah, but I don't get me wrong. I'm sure the recent trend line isn't good and we should talk about that more cuz those numbers have not been surfaced as much, but they still have penetrated the East. Like they still have a strong business inside of China. Just like Dota has. But they're losing share to China. They're losing

share to Chinese publishers. Do you think it's Honor of Kings is on the rise? I mean I haven't looked at Honor of Kings numbers. Suzy, in the market share in China? Dota? No. And again, Teamfight Tactics is still done remarkably well in China, too. Basically owns the auto chess market. All right. Mobile Legends Bang Bang? What what is it What is it? What is it?
Bang Bang.
[snorts]
What a name. Has the most Chinese name.
is not doing like actual real analysis on this stuff. Yeah. We don't have the data. Okay. Well, hopefully they can figure it out. Yeah, we we we've seen this. M&A most active since the pandemic. For 52 transactions most active over 100 million dollars gaming content M&A quarter since the since the pandemic was the Reams report. Hold on. The Chinese AAA flood was literally one game, Black Myth: Wukong. Or we if we start calculating the mobile games the HoyoVerse game as AAA then then yeah, that would be more. And the whole like AAA is dead. It's not dead. Like Battlefield 1 Battlefield 6 was was number one console title in

2025. EA Sports FC 25 26 outsold it when you combine. It's like the sales have been real. The hardware stuff Switch 2 kind of disproves that because they recorded at 20 almost 22 billion dollars driven by Switch 2 in sales in Q4 25. And then engagement exactly what Phil said. Like this totally doesn't take into account Roblox's insane growth and the play time growth. Sandbox genre grew in terms of play time by 36%. PlayStation network plus 12% like there are there are growth elements but the main criticism I feel like when I'm when I'm reading this type of a post is the writer is making the analysis in a vacuum. So there's nobody to kind of debate and throw these numbers. There's no way I can say screaming at you you're [ __ ] insane or stuff like that. And so you kind of end up over selling the ideas that you have. So I agree like mobile is quite [ __ ] you know, thanks to Apple, thanks to, you know, the Chinese structural advantage and

pragmatism but mobile is not the whole industry. And the investment thesis have changed significantly because in 2015 and 2022 like between those years it's basically mobile free to play games as a service live jobs at scale and today it's like PC first mid budget gameplay led UGC platforms. Platform adjacent tooling that's the thesis now and it's smaller the average check sizes but it's not dead. So.
[sighs]
All right, we'll leave it at that.
[laughter] [gasps]
Comment if you feel like we are in the long dark night or if we're seeing the light at the end of the tunnel and there are just other ponds we can jump in and and it's nice to swim there. So on that note thank you very much for hanging with the boys and we will have Miss Jen back next week. Thank you everybody. You did it. You made it to the end of the episode. As a

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from the Deconstructor of Fun content creators. Thanks for listening.