TWIG #394: Playtika's Solitaire Meltdown, the AppLovin-AdMob Duopoly and Why Nobody Wants New Games

[music] Hello everyone and welcome to Deconstructor Fun. This week in games 394. I'm Jen Dano. I head up the marketing and publishing role on the podcast. Today we have the three other guys.
Crest strategy and investing. Phil Black Monizations are
Bishkaka, friend of the founders.
Oh, everyone's back. Low energy crest is on and the guys are back.
[laughter]
Here we go. Here's what we have on the episode today. We have updates to the Platika story from last week. Sensor Tower has a pretty big 50page half 2026 report. So, we're going to cover a few topics. Castle Crushers update from Mishka. Warframe is doing well. So, we dig into what's going on with them and their mobile skew. And then Capcom had their earnings which went really well. And one of the reasons is their love of back catalog or I guess players love a back catalog. So we'll get into that. So

Mishka, how was your island gallivanting? Isn't it great to be a European? You can take a month off and like just live life.
So we were we were getting to know our new home country of Greece here. Visited a lot of, you know, obvious places that that people do visit when they go to Greece and then visit some of the non-obvious places. You know, the ones that you hear from the locals. And now I'm sworn to secrecy to only reveal those places to selected few through DMs. So if you are traveling to Greece and you want to, you know, you want to flex on others by going to islands that people haven't heard yet, then you know, you know who to DM, who to talk to at Gamescom. So I'll name some places that you can pronounce.
Did you do like the Odyssey world tour and like take pictures? You know,
I had Ithaca on my iterinary, but we ended up on another island which was also pretty amazing. So is for the next time around and I do have to say that bringing in my wife to this conversation. So uh close circle knows that my wife is a hard ass as they come

and we were driving back from visiting different places and different islands and she was like ah I want to cry this country is so beautiful. I'm like who are you? Like [laughter] you're so cold and now this. So so thoroughly enjoying. I'm not gonna even post the photos because this because the envy is going to be impossible. But I'm sure there are other beautiful countries and I know they are, but Greece is one of them. So, so yeah. Yeah, that's my
She loves it cuz it's not Finland in the winter, sir. That's why she loves it.
And [clears throat] and winter in in Finland is 11 months. [laughter] So, that's We'll be in Finland next month. So, shout out to Finland.
All right. What do we have uh for the shilling? All right. What do we have uh for the shilling? So, first, there was a really good Puzzle Monthly episode out on Monday of this week. They covered Toon Blast and a bunch of other things. Phil, what's your endorsement?
This is in my top five nominations for best podcasts of the year so far. I

thought this was a banger episode from the crew. I will echo the words of David Nelson. Where is Bubble Witch Saga 4? This goes through like p casual puzzle history. It's talking about mechanics. It's talking about like where the market has been right now and where Toon Blast has been. A lot of really fun things to to see and to hear from the crew.
Yeah. No, it was fun.
Listen now.
A lot of history. It was a really long history. And then why Tomb Blast is rocking. All right. So, we also want to just do the update on the roundts by Deconstructor of Fun. So, this is coming up on August 6 in Seattle next week. All right. So this is hosted at Amazon AWS. App charge is our premier sponsor. Uptake is also sponsoring. We have over 100 people that have confirmed AAA platform holders, mobile freeto-play studios, independent studios, growth tools, and infrastructure. We're going to do a lot on AI because the Amazon AWS folks have some really good insight into

AI and games. So a lot of these folks are really senior, too. So, if you still want to get in, a few spots are left. Apply to join. Slack website has the link or newsletter. Mishka, what's going on for Gamescom coming up in a in a month?
Yeah, games Gamescom is around the corner. So, there's going to be a lot of events and then afterwards, so there's a deconstructor fun/event. So, you can check out there, apply for those that are coming or in the works. For Gamescom, we are not doing whiskey tasting for the fourth year in a row. It has been retired because we are middle-aged and we can't handle the hangover. So,
I'm not coming. That [laughter] was it. I'm out.
That was it.
Where was the water tasting? Didn't you have water tasting? [laughter]
I hate whiskey. I'll be honest. Now I can say I've godamn I hate whiskey [laughter] more than any other alcoholic drink in my tequila, vodka. [laughter]
Like I I hate the smell of it even. It's can be expensive. It can be cheap. I hate it. Scotch, whiskey, bourbon, all

of that nonsense. I hate it. Anyways, so so as a middleager, we have brought in another inclusive event called Grand Slam. So we have a paddle tournament that will [laughter] be held in the evenings.
Oh, inclusive meaning
is that inclusive when you have
What do you mean? It's not even a sport. [laughter]
I don't want to sweat.
It's not a sport. Paddle is not a It's a hangaround at the paddle club. There's going to be drinks, there's food, there's all that stuff. There's matcha, like everything that that keeps you nice and glowing post age 40. So, they all be all there. It's not serious games. It's a good hangaround without, you know, being in a nightclub or a bar or something like that. So, very inclusive one. And then we also offer the exclusive one. So, the supper clubs are are happening. So, that's for founders and executives and investors. Now, they are invite only. So you won't find the link unless you get an invite directly. So if you have if you are an executive, if you are a founder, you know, the

normal supper club crew, please DM me and I can send you the link or go to Morgan Stanley or Tik Tok or Appch charge or Nuzu who also have the links to this fine little event that we're throwing. And then the Sensor Tower Gaming Summit thing that's happening on Tuesday, but that's on newsletter. Another inclusive event. So inclusive and exclusive. We play both worlds. in sickness and any help in soft launch and in loss through every meta shift and every platform policy change that's the kind of oil divides built between your game and your players AI power targeting a real metal layer robust optimization that actually compounds that's what makes vibes the fastest growing platform in all games to turn to part by vbs.co [music]
web stores. You've seen what good looks

like, but have you experienced great? [music] App charge 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 [music] by monetization veterans from Moonactive, Plateikica, and other industry giants who understand the difference [music] between merely functional and the truly exceptional. What sets them apart? Deeply personalized web stores with customdesigned offers, [music] industry-leading monetization features, seamless in-game payment integration, and a robust [music] SDK. While 70% of top grossing games already have [music] web stores, the ones scaling the fastest are doing it with AppCharge. Ready [music] to transform good into great? Learn more at appcharge.com. All right, let's get into it's not

really corrections, but updates. Uh Chris, I know you wanted to talk about Playa.
Yeah, so looking into the Playa thing a little bit more. Alex from sideplay recommended or suggested that I look at the cannibalization of solitire Grand Harvest which is their huge game for Play Tikka and kind of look at it since Disney Solitaire has come out. Uh first of all you Alex for actually [laughter] making me do work but second thanks for the feedback.
I pulled the chart just to be clear again here. [laughter]
Thank you. Thank you. I I pulled I No, no, I did I I actually did do work. I I pulled their entire slate and it it is [ __ ] dire. Okay, so holy [ __ ] dude. Platika's cash cow is just getting decimated out there. So, not only is the deal structureing them from perspective of payouts, but Platea is like losing almost half the revenue, 50% down for the first six months of the year. the new game is actually cannibalizing their

existing game, which was their cash cow, the one that was making most of the money, particularly on the casual side. So anyway, 50% down since um Disney Solitire came out. I mean, that is devastating. So them selling this asset doesn't make sense, but if they're actually losing their shirt, they may actually need this money. So I don't know exactly what's happening on that front of it, but that is another thing that's happening again. And the question I have to ask myself, and now I'm going to throw shade on one of our partners in in Supper
is that where the [ __ ] are the bankers on this? You know, like how is the do these get deals get done when it is pretty clear that this has kind of been devastating for Playa?
But Disney Solitire hadn't launched before the
This is a great deal. This is a great deal because you sell it twice. First you sell it to Platika and then you sell it to 10 cent. It's it's the most amazing deal you can make.
No, no, no. I had to look it up. Right. So, at the end of the day, the ones that

are going to get out the best are Aim and Rangroup, who are representing Super Play, right? But the bankers play are who? Morgan Stanley. So, where the IS THE DILIGENCE, MR. MORGAN STANLEY? And so, I know they can't comment on this stuff and they're not going to call me, but I know these guys. They're really nice guys. But this I I don't even know how to spin this in a different way. It's like the diligence on this deal was not properly done from the perspective of Platika, right? And who represents Playa? Morgan Stanley. So anyway, I could be wrong. Maybe there's something I'm missing in in this equation, but this is justing absolutely train wreck for them, right? It's just an exercise in what not to do from an M&A transaction on multiple levels. the payouts that they're giving to this acquired and that also the cannibalization on their existing portfolio, right? It's crazy. So anyway, I just want to update that. Thanks, Alex, for the uh feedback, but you [laughter]

Phil, do you have some charts?
It's a great snag. We are looking right now at revenue between Grand Harvest and Solitaire. I think it's important to point out that Solitaire peaked in 2023 and it's been on the decline for a while. It's really hard to look at this chart and not come away with the conclusion that Disney Solitaire hastened the revenue decline of Grand Harvest. I think the only alternative is that sometimes teams reallocate capital to its highest valued use and so maybe the LTVs were higher during the launch of Disney Solitaire and so they made a strategic decision to reallocate capital. I I would put it as plausible. I'm still with you Eric. I think there's cannibalization that they didn't fully realize, I guess, in the deal structure when they were thinking about it that it has to be like marginal revenue. That's how you have to like evaluate super play. I don't know. I This just seems very messy.
The other challenge is it's a license and so you have to bake in to your math, Phil, that you're paying out to Disney.

So, is truly is your LTV that much higher with the license?
I think so. I mean, they've been continuing to scale it. I think that's the ultimate evidence is that they're pumping more money into it. The question I would have strategically though is if you sell this to Tencent, what are they going to do? They're going to turn around and try to scale it even more, right?
After looking at their portfolio, the rest of their portfolio overall is down 35% yearonear, right? Including
Grand Harvest Play is down 35% and and obviously not doing good.
They're kind of left holding the bag here and selling it actually makes less sense because of that, right? Anyway, if anyone has comments, please reach out directly. I'd like to know what the is going on.
Mishka,
you want to talk about Mr. Mr. Petravic?
Eric mentioned that that Chris is is [clears throat] uh should be doing an M&A master class on this one and he has done it. It was about 3 years ago that Chris joined Deconstructor of Fun podcast and we did an article. It's called M&A Masterclass by Chris Petridge

where he talks about acquiring great companies. So there's not only the acquisition, how you make the deal, how long it takes to make that deal, but also how do you construct the post acquisition [clears throat] merger or integration. So really great if you search for the constructor of fund M&A, you will find that article, you will find that podcast. So Chris did it because he was being asked about this question so many times. So he was just like, let's record a master class and I can just send people the link. So people take the link. All right. The one other thing I I wanted to comment on was when I was looking into this, Plateikica is also in a US lawsuit. So, Washington State is suing Plateika. They're also suing Aristocrat, who is the owner of Bigfish, to shut down 16 casino apps and recover $225 billion. So, this is just a single state in the US. But what's going on? That's a lot of money. the apps are free to download and the virtual

currency can never be cashed out. So everyone's like, well, why is this in a sense a casino? And that that's the core legal question that they're going after. And so, ironically, players sued Playa back in 2020 and the companies ended up paying out, but the game didn't change anything. So, right after that settled, Washington went after them and filed a motion to go after them because it kind of like sucks all the money into the system. So, Play Tikica filed a motion to dismiss. They're citing its new continuous play feature that makes it not a gambling app, I guess. So, oral arguments are coming up in August, but this will likely go on for years. I I think this is just something to keep an eye on because is it another reason why Social Casino is getting its ass kicked? I mean, it's on the struggle bus, but Phil, what do you think when you see cases like this? we are cooked if this legal president ends up getting defeated, which is whether or not you have the ability to cash out. Like, if you go back to remember the Star Wars

Battlefront 2 controversy that rose up in the Netherlands, all of the legal challenges that that EA is constantly involved in all rest on what they call like the in and out of circuit distinction about whether or not cash can leave the system, which of course becomes like sketchier territory when there's a marketplace and when people break terms of service. I mean, this is the controversy Valve is always in, right? Whether or not they're enforcing their terms of service and whether or not people actually have an ability to cash out. And so, this is just being applied to social casino right now. But if that distinction falls, then just simple loot boxes become gambling, too. Uh because the argument we always lean on is that the money is trapped in the system. You can't export it outside of it. That is because it does not bring up gamblerish fallacy, which is an important component of gambling. Uh web 3, I love how it always gets a pass, by the way, in these conversations. No, everyone has just forgotten about it.
Just not to beat that dead horse. So, look, these cases pop up here and there. This is something to keep an eye on. Like, if we lose, it's not just social

casino that will pay the price. It's it's almost everyone.
Washington state has some of the strictest gambling laws in the country. And they've had a hard on against these social casino companies for a long time. And I think
they're going for sweeps a lot right now, too. Yeah, I think they settled an actual claim in earlier like 2020.
Yeah, when I looked into it, that was a players had brought that suit. It wasn't the AG. So, it's pretty it was pretty funny. It was like they the AG let that play out like then they filed their own suit against the companies. And so, it's it's in a sense almost like a double dip because the companies didn't do anything to change. Big Fish got busted because there was actually cashing out transactions happening on third party sites that they did not not allow if that makes sense. And so they got busted for that which was a clear violation at the time as as far as I remember. Anyway, so but just to be clear, Washington does does go after these

things. Washington state, excuse me, goes after this stuff. All right, so let's get into Sensor Towers really big release coming out today on July 29th. So this is covering half 2026. It's still weird to see mobile, PC, console, and web in one report cuz remember sensor tower now has VGI. They bought app magic too, right? Like there, you know, they've got their own little fifth going on over there. There's also a lot of really good ad information and soon to have direct to consumer. I wish they had direct to consumer in this one because I feel like that is still something we need to really diagnose industry trends, but they didn't have it yet. So, I'll do a few key takeaways that I saw. It's a 50-page deck. On their executive summary slide, it was kind of useless because it's so broad. It was like gaming is mature. Yeah. No, no, no [ __ ] FIFA World Cup was awesome. Uh-huh. YouTube. Now, this was a little bit interesting. YouTube is a gaming hub

for advertising. The slides that if you're a marketer that break that down are really interesting because it is different by subgenre and and genre as you get into it. So, the two charts next that I pulled were installs and revenue. The chart was like a worldwide chart, which I know Chris you don't love, but it's what they had. So, this is worldwide half 26 versus the prior the prior halves. It's only down 2% versus half one 2025. But on the next slide, you'll see that downloads are down 12% and downloads have been in decline for the last couple of years actually. What what the hell is going on with downloads? So sensor tower says it's hyper casual. Casual held steady, you know, obviously thanks to all that puzzle UA that's going on. So Crest, what do you think is going on? I know downloads isn't your most favorite of all measurements, but I do think it is an indicator or player interest.
Well, first of all, it's the Apple apocalypse, right? That that that started the download trend. But actually, I think it started even before

then, frankly. It's like
discovery is broken. Everyone's playing the same games over and over again. There's less new games, right? And to a lesser degree, there's more like less of an upgrade cycle on phones. So, you're not getting that kind of like, you know, push. But mostly like the big thing is that consumers don't want new games. [laughter] They're just playing the same [ __ ] over and over and over again. And even the games like the puzzle games in which they they are downloading more games, it's the same game just reskinned or a different mechanic to some degree with the same players. You know, it's like this is a big thing. It's not a supply problem. It's not the publishers, not the developers. It's a demand problem, right? customers don't want new [ __ ] right? And maybe a small percentage do, but at the end of the day, they're playing the same [ __ ] over and over again. And you know, like obviously 60% of the revenue is driven by games that are 5 years or older on mobile. Only 7% 6% of of revenue is is new games in any given year. So, it's kind of over and

that's I think that's just kind of the trend we're seeing. And not to mention the stores are broken as we all know. So, you know, it's just all those things kind of coming together. But I want to really focus on the fact that it's consumer demand is the problem really.
Well, it kind of leads into the next one where you know we've been talking about Forex and that surge like crazy. So, Phil on the next slide you'll see the Forex strategy surges over according to them to sensor tower. So, the last couple of quarters uh it looks like forex is is finally kind of trailing off and it's heading back down for the first time. So also declining is MMO RPG slots and coin looters. But I have to wonder direct the impact of direct to consumer. So you know Crest I think as we we look at this is this is this what is causing the decline do you think?
I don't know. It could be partially DTOC issues. I wish they would not do worldwide and they would just focus on

North America and Europe or you know just so we can get more isolation on that front because first of all MMOs are [ __ ] irrelevant right in the west.
It's not even a data point that matters for the majority of their clients you know so I don't know why they insist on doing worldwide.
I I'd have to look in the forex strategy to see what the what what makes the comp so tough because we are seeing new games come to market and them scaling relatively quickly. But I bet maybe it's just a year-over-year comp problem.
Well, I also know that Center Tower is close to coming out with the direct to consumer cut of things. I mean, you know, we need to I think see that so that it can speak to the overall trends. I think that we in media, you know, I'd like to say media like in quotes because jokingly I guess Mishka, we are media. I think we might be chasing the wrong stories if we don't have all of this direct to consumer impact. And so when I I just went and looked up the timing of like when web shops were kind of coming online a little bit bigger. So in the US

at least that was kind of like May of 25 for iOS and October for Android. And I I think that you guys like me we're hearing that direct to consumer for casual is you know 40ish% of your total revenue for goes up to 70%. I've been hearing hybrid casual inapp purchase revenues and the 50%. But Jen, if I can add [laughter] to this to Can I add to uh Yeah.
No, no, no, no. I'm not letting that go.
I heard it from the founder. Heard it from a founder at a RE event. At a re event, as a percentage of the overall business, I can't wait for this numbers to come out because it's going to being sobering, right? because there's most of it's like the forex style and social casino side that's super high and so like the percentage is going to be in the 10% range you know 15% ma max overall but we'll see we'll see but the data I saw was not suggesting a 40 to 50% DDC

thing that would actually really meaningfully change these metrics on top of it we were talking about year-over-year changes right so like DTOC has been around for a long time right so it's like the year-over-year incremental changes are not as significant as what you're suggesting. So yes, they were 30% last year and 40% this year. That's not like, you know, that's not as material of an uptick, right?
But the ability for them to be executed in the flow of the checkout purchase is dramatically more streamlined. Like when I make a purchase now on iOS in the US, it is almost as seamless as making it's like two extra set steps on iOS versus what it used to be. So, I I'm just saying I think that the the ease of the direct to consumer from a player checkout experience may be increasing some of those percentages and and I have talked to people on some games and some of them casual, some of them midcore.
Um the you know 40% is is kind of like a like a like a floor.
I'm going to say this one more time and I'm then I'll let it go. Okay. It's like

you look at a game and I'm going to pick on Marvel Strikeforce, right? And I I don't have the latest numbers in top on top of it. So they are probably sitting at like 50 or 60% DTOC right now, right? But their revenue is still overall down 10 15 20% year-over-year and it's been declining like this. So yes, the percentage is going up, but the revenue is declining. So it's not like it's saving them. And this is like the saving grace of all things. I I agree that these are genres, especially RPG, that are that are likely still declining even when you factor in direct to consumer. I don't think it's as bad as the charts we're seeing are, I think, is my take. Like I think Forex is probably slowing down, but not as much as maybe is on that chart that we just looked at.
Let me add something about this graph separately because like when we're looking at it, it's like strategy slipped about 5% year-over-year and Puzzle rose nearly 20%. So it's it was like in in the once you start kind of breaking it down into into genres

and and separately there was Block Blast that were saying like that posted the highest day D1 180 retention of any track title which is no surprise you go to any plan you go anywhere any restaurant there will be somebody playing Block Blast and it was ahead even of Royal Match and then there were games like Last War which had huge revenue midcore and it's nearly gone by D1 180. So the the way I was reading this is that the genres with the best retention economics are also the ones that are gaining share and strategy engine seems to be stalling. There's a lot of competition, a lot of similar games and if you played one strategy game, do you really want to restart another one? While puzzle seems to be compounding not only with the existing match games but also with all these hybrid casual puzzles that have much higher retention than a typically these sort of a lighter puzzle games used to have. So all in all saying that the genre leadership could be changing towards puzzle in just a year or two.
I mean I think retention always matters

but okay I want to go to a bit of a craze that we we haven't talked about since we don't really love the idea the hyper casual products anymore. We haven't conquered the arrow craze. Have you played these games?
They're incredible team from Lesmore. Brilliant people. We are warriors adventure. just like an absolute brilliant group of people who got purchased by Mini Clip and they come out with a hyper casual game that is something that anyone right now could could have made could have made using AI could have released it could be a millionaire right now. That's what like this studio lees more like always does to you is they embarrass you because their designs are so simple and yet such thoughtful and well executed and yeah they get all the monetization ad revenue stuff right sorry go ahead Jen I think this is like incredible story
so what's going on these are the hyper casual games where you've got either a picture you got a group of arrows and you have to click the arrow and they like you know they they go off the screen and the idea is like there's a little mini puzzles it's kind of like those the games that had the car park with all the cars that you have to like

empty the lot. So, the Aerotap Puzzlers took three of the top 10 downloads in June of 2026. Mini Clip owns two of them. So, this is pretty funny. And by the way, Tencent owns Mini Clip. So, they are in a sense competing with themselves. So, Mini Clip Studio Lesmore originated the mechanic with Arrow's Puzzle Escape. So, and China's Learning shipped a near identical Arrow Go, now rena renamed Amaze Go under the Oak Everel weeks later. So very important and subtle note on the name change. My strong guess is that a trademark protection change came and mini clip called in the legal guns and arrows to force a name change in the May June timing. Not exactly sure when that happens. So you've got maze go uh you've got arrows puzzle escape from lessmore and then arrows puzzle tap puzzle games from easy brain which is also mini clip. Mishka, you mentioned Block Blast. So, they got their ass

kicked. They were under arrow attack. They were at 26 million installs in March and now they're under 14 million in June. It's the third straight month of decline. So, this is the new kind of craze likely we're seeing, you know, trends in just these trends.
Blockblast is Survivor. That game is crack. [laughter]
No, I get it. And and so Chris,
I saw these posts on LinkedIn and I almost like threw up in my mouth. Like who gives a like this is this is all the same [ __ ] the hyper casual voodoo [ __ ] from the back back in the day. Let's stop this talk. This doesn'ting matter, dude. It's MAU. It's retention. It's monetization. Like this shit's going to come and go, right? It's irrelevant. Like it's a trend. That's it. Until someone figures out how toing monetize this [ __ ] thing, then we can talk. Then we can see like let's see what's what right but this is [ __ ] just stop
50% of the volume of MAU on this [ __ ] game is from India you can't monetize [ __ ] in that it's like

750k from tier one English countries who gives a [ __ ] right that's what that's the audience you're talking about that's not monetization that's like [ __ ] all right I don't care adm [ __ ] you're not doing [ __ ] in India with Admon right so don't no don't talk to me about this stuff it's irrelevant absolutely irrelevant.
I I don't know. I think if they continue the runway, if they can get going in the US, you can have,
you know, 507500 million.
It's a hyper casual nonsense that go in, they go out, they go in, they go out. There's no retention. It's over before it begins. [laughter]
Well, let's see. I think uh I would like to see where these ones are going because you got 10 cent backing them likely putting some marketing dollars behind it. So, let's see. I think it's just early in the trend. Anyway, Mishka, what did you see from the report?
UA costs are spiking and not just the downloads falling. So, the ad spend rose by 8%, the ad impression rose by 14%.

And downloads fell by 12% worldwide. So, more money going into more and turning into more impression chasing a smaller install pool, meaning that the CPMs are climbing faster and the download decline is actually really the sort of a a headline story. So, I meant that the download decline isn't really the headline story and the CPI inflation is the bigger threat for these UA dependent studios right now, which is honestly most of the studios that don't have these big titles long in the tooth generating cash. And this kind of goes to back to my point that's something that we discussed few episodes ago about apps beating games and and Phil had a nice set of charts on on it. My point there was more that apps are taking a lot of this inventory and the CPM rise being driven also by apps advertising very aggressively. Number two, uh there was a graph that shows the power of Apploving. We knew that but also the power of ADM Mob. Now the two of them

run 2/3 of gaming ad revenue. So the combined share of ADM Mob by Google and Apploven was 65% in May and it was up from 61% in January. This is consolidation and cons consolidation leads to pricing power and that could be one of the reasons why we're also seeing the increase in CPIs. According to to one of the graphs that I saw recently, ad monetization market was about 90 billion dollars a year and it was growing since 2020 to 2025 at 16% compound annual growth rate compared to inapp purchases that were growing by about 2% compound annual growth rate during the same period of time. So these two companies have taken quite big of a chunk and you know publishers negotiating for for these user acquisition rates are increasingly negotiating with just two counterparts and that's not as competitive market as it hopefully would be. So it would benefit us if the metas the unities I

know crest did the the unity rant once again in last episode but it would benefit us if meta unity melo you name it would get more power and there would be more parties to negotiate with.
So I was clicking through these by subg genre. This this is a really interesting chart and again it's it's a little bit difficult because I don't think it was US only. Is it? I can't see it. But when you click through the different subg genres, like I said, I'm working on a midcore game right now. It was just astonishing how much apploven plus ADM Mob, which is Google, right? So YouTube and all and Instagram and Facebook, all the other ones. So with Google and Apploven, holy [ __ ] it's like 60 70% of UA. And I think that we're living in a world that is really difficult to scale outside of those two platforms. And I would love some of these other folks to, you know, use AI or whatever it is so that we have more options because that's why CPI prices are going up so much

because you have consolidation, right?
All right. First of all, this is like ad revenue, right? Like this is estimated ad revenue, not UA.
If this chart is true, like you look at Unity and you look at how far they've come down from a perspective of percent of Unity ads as as a relative measure to the others. It's crazy, right? They're not competing in the same world as the rest of these companies, you know, and so people are talking about this new system for Unity, but they're just nowhere. Vector, you know,
Vector.
Yeah, Vector. Like you can't you can't compete against AppL and
Yeah. But this was a this was a really good graph on the report. So
So ve very very interesting. And then the the last piece was was basically the uh the heat map of different uh genres. And here you can see the the casino inapp purchase revenue dropping the most. It was - $648 million. So that's the single steepest genre decline in the whole heat map. And sensor tower

attributes this to spend shifting direct to consumer potentially. Yes. And we know that that through the public company whether it's Fika or Huge, they've been posting how much their DTOC revenues have been growing up. But this is a big number. And then they flagged the same pattern for Roblox, which lost 30% of mobile inapp purchase revenues. Mihoyo, which lost about a quarter of its revenues, stating that's 57% of Mihoyo's US revenue now runs through web stores. So that's an interesting data point. Over half of the revenues to that point.
That feels right for that kind of game.
Yeah. Yeah. Exactly. For a crossplatform game, for sure. and yeah crossplatform they most likely have their own payment systems and you know they're aggressive in monetization using those the channels whether it's WhatsApps or or email and then so the kind of conversation in this report leads to if the chunk of that declining inapp purchase revenue is

migrating from Apple's and Google's books to you know the the spending to through DTC and that would make the market look meaningfully healthier than the data applies so the overall all minus 2% decline of inapp purchase number might not be actual which is most likely isn't and the demand destruction is maybe not that steep or maybe not even existing but the data is not showing us yet so Chris has a valid point that the revenue that is going through DDC might not be offsetting the overall revenue decline but again at the moment we don't know so I will concede that it would look better the market would look better but also concentration would look a lot worse Right? Because if you start talking about the concentration issue in terms of the amount of revenue that's being driven by big games and big publishers, it would look a lot worse because those are the ones that are primarily employing the DDC type functions. So there are two things that are going on, right? If that

is true. So anyway, we'll see. I The Central Tower stuff should be out any moment.
Yeah.
The direct and consumer stuff. Yeah. Yeah.
Yeah. Phil.
Phil,
hold the horses. I think we got a lot of really interesting things that wasn't just the DTOC stuff. We actually got ad revenue stuff which we haven't had for a really long time which is in this report. So they break down the share of revenue for each country by ad and I which supports what you've been saying. Although I think they're underestimating when they say India has 30% of the revenue coming from IP and 70% from ad revenue. I I'm I'm skeptical that's the right distribution. But the thing that caught my eye the most was that they break down top publishers by game revenue. Um, and this is broken down by ad revenue. And Hungry Studios, Block Blast, of course, number one, Easy Brain, it's all of the usual suspects. King actually came in fourth in terms of ad revenue, which again, I think some people underestimate the the ad revenue business that they built. And then it's

basically the usual suspects. The problem is is that like the ad revenue excuse of like, hey, their numbers are better than you think. When I look at this chart, it maxes out at $130 million.
Um, I mean, it's January to May, but if this is the top of what it means to be at the height of an ad revenue game, this is a lot smaller than I expected. If we're finally like getting to look behind like a macro picture, I don't I don't know if anyone else had differing opinions here, but this feels small to me.
[laughter]
Like this is the best ads can do. This is not a this is not a saving grace of this industry.
What the [ __ ] have I been saying for the last six years, you know? Like Jesus Christ, dude. The only reason you do ads is you can't figure out [ __ ] inapp purchases, right? You can't if you don't get nothing.
Just be clear. It's not here. Massive market.
Ad revenue is [ __ ] garbage. All right. Fundamentally, it's garbage. It's always been garbage.
We have the data right in front of us. Yeah, we have we have the data right in front of us. I just I was surprised at how low these were. I expect it to be

higher higher values.
I mean, dude is absolutely
it's my snugs. And for King, for instance, I you know, it was a great addition to their revenue stream, but they're still primarily driven by inapp purchases, you know? It's like it looks like it's like 500 million like roughly like that's where it was like five a couple years ago.
The only chart I'll highlight that you guys haven't talked about yet was the biggest publishers. And I thought this was a great chart because Tencent and Century Games get their own subchart just because they break the scale.
And it just goes to show you, by the way, Century Games, we'll talk about them a little bit later.
What can't this company do is the question I find myself asking. Like they seem like the most impressive Chinese company right now. Tensson of course is just a conglomerate, but we [ __ ] on the United States all the time. All the time. And what do I see? I see Roblox. I see Take 2. I see Microsoft. I see Scopley. I don't think that's an awful showing for us when we think about the biggest publishers by at least AP Game Revenue and know of course they have subsidiaries in other countries, but I

don't think that's an awful showing for the West. I mean, Moon Active is on here, Play Tikica,
Dream,
Aristocrat,
if you put ad revenue on this [ __ ] chart, dude, it'd be below the line, dude. It'd be off the GODDAMN CHART. YOU KNOW WHAT I'M SAYING?
YEAH.
Let's get Let's get real, right? Let's get real on this [ __ ] Well, even even more to your point, Eric, is like if we look at the share of revenue that these companies generate from ads, how much do you think it is? What 5% maybe from these top? Like you're a top company, you're not doing ad revenue.
All right. Are we wrapped up on sensor tower? Well done.
Yeah, that was a that was a big big discussion. [laughter]
Damn. Well,
this was an excellent report. This is an excellent report with data we don't always have.
They let you split it on the website now if you complain about the cuts and you want a different cut. I think the analysis has gotten better. Their coverage has gotten better. Like hats off to Sensor Tower.
We didn't even get to the PC console

stuff.
Yeah. And and Sensor Tower,
they're on the podcast next Monday talking about ad modernization specifically. So we'll put Josh Chanley on that as the uh the admon man. So should be interesting discussion and newsletter piece. They're also before that they're working on their state of advertising report that's going to come out in August. And so we're talking to them about giving them some questions and partnering with them a little bit on on that. I gave them a bunch of questions for their advertising deck coming out. So we'll we hopefully we'll get a a little exclusive look at something. I don't know.
Make it 200 pages. Make it 200. [laughter] That's like 100 pages.
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Let's talk about some real games. So, Digital Streams makes a Warframe, which is really long longunning um shooter that's done extremely well. And the the only reason like there's a couple games that are doing extremely well in this category. One of them which is Warframe. Why I'm talking about this is because it's a great comp and a discussion about how Destiny and Warframe are different in terms of how they operate as live services. So, the article is very fluffy and it just talks about all the things that they're doing, the Android launch and all this other stuff, their culture

and how they develop and how careful they're going to be with their next game which is called I've forgotten already.
Soulframe.
Soulframe. they're expanding into a new product which they're taking very very carefully. Um, but the point of this whole thing is that they are actually very very very very successful as a live service. And when I talk trash about Destiny not being a live service, this is like the exact opposite of that, right? So the reason that they've been successful is not that they're doing like monetization of pay to win. I think that would be even better if they were to be able to manu figure out that. But it's definitely pay to progress, right? So, you know, you skip basically you're saving time, right? You're skipping crafting cues, buying slots instead of grinding for them, you know, inventory slots. You're buying boosters to farm resources and accelerate resource gathering. And then you also are using currency to buy like finished items from players. So, really like jumpstarting that. So, Destiny never actually really

achieved this success at all as a live service. Their primary model has been expansions while Warframe has just created systems and live services that give people reason to play on a regular basis like on a schedule. Daily sorties, weekly traders, seasonal, you know, night waves is what they called them. And also they did the same thing as Destiny and they released like major content expansions like one or two per year. So at a more frequent cadence, right? So, not only did they have better live services from events and things like that to spend money on, but they also released major content at a much faster pace than Destiny did. So, again, this is a great example of a great live service in the same genre that has done extremely well and an example that people should look at when they're thinking about creating live services for any genre, including RPG, including shooters, including other things. So, great success for Digital Extremes. Congratulations.

Yeah, I could talk about uh Digital Extremes mobile skew. They're having success. Their live operations, those are amazing. And and as you said, it's not it's not based on these expansions, but it's truly free-to-play game. If anybody has played Warframe, it is a deep, complicated game. Not very appealing at the beginning, but once you get into it, it's quite the community and and like the uh the quintessential looter shooter. I believe it's older than Destiny 2, right Chris? Its initial iterations are older, but it was really redone during its tenure.
2014 was the launch date.
It was interesting. They launched a mobile version and they launched a mobile version, if I'm correct, in like 2023 late. So, they did this mobile, this is how I know it because we were very interested when I had my own studio in these type of games and making these type of games. And they we weren't the only Finlandbased studio making looter shooters for mobile. Visual Extremes made a mobile skew with a Finnish developer called Nitro Games. And you're like, who is Nitro Games? We don't know

them. You're like, well, you probably missed the the Superheads called Mr. Autoagon, which is the clone of Mr. Auto Fire or Nerf Super Blast, uh, which has the quality bar of a good Roblox shooter. So, anyway, [laughter] I don't want to dunk on Nitro games. I'm just saying that they might have must have had the best BD people to land Digital Extremes as a game that they develop. So, so kudos to them. But anyways, they they launched the mobile title in late 2023 and it was one of those apples, you know, like sign up before and it will download download automatically when this game launches. And unfortunately on mobile, this game has not been very successful. But if you zoom in at these graphs that are almost, you know, stable and at the bottom, you can actually see that the Warframe success on PC reflects on mobile. They went from doing 100k a month, which is what they were doing on mobile, quite

sad of a number for a game this amazing, to doing 400k a month on mobile. So that's, you know, this is 300% 400% growth. H and it's driven by the install push, but the revenue looks steady as the push subsides. So, in comparison, there's Destiny Rising that I put in also on the graph that was made by Netis. Uh, and they seem to have just shipped the game and cancelled the project pretty much after the the submit button because there's no updates and and Netis doesn't seem to care and nobody else either. It was just a sad thing because the game and the quality of it was was really good. I remember Crest was was uh was very positive about and made him want to play the original Destiny more. So I think the main takeaway here is that imagine if Warframe had been done by one of Tencent Studios like T-Mi or Lighteed and that would have its mobile version today. I think it could be quite big probably top

five shooter in the in the market.
I actually agree with Mishk like remember Digital Extremes was bought by Tencent. Warframe does well in China, especially with, you know, Steam having increased distribution in China. I'm sure that was on the table at some point and then for whatever reason they were like, "Don't worry, we'll take care of it." Or Tencent wasn't insisting on it. But I I completely agree with you, Mishka. This is a huge loss. And not only that, when we were looking at those grids earlier when you were talking about the biggest changes in IEP revenue, one of the biggest ones was actually shooters almost all coming from China. We've tried to cover that on shooter monthly. like mobile shooters in China are just an enormous category. I agree with Eric Crest too that this is a really compelling live service story because it's first of all been going for a long time. It's been remarkably stable and it's not by a super large studio. It's not AAA team size. I would say when it still comes to these RPGs like the playbooks that they're going to are ones that like mobile has solved so much earlier. Like when you think about the update that they did this year, they

introduced basically two rogike modes that have repeatable loops, basically two dungeon crawls. One where you defeat bosses, you get boss specific currency. Use that boss specific currency to unlock certain items and another one where you're basically doing floors that escalate in terms of difficulty on a weekly refresh. I mean, that is like 2020, even earlier squad RPG playbook. Yeah.
So, I feel like the HD studios are like really far behind in terms of the designs.
It just takes longer to chew through the content
than a menu based game versus being in a 3D world with 3D geometry and having to do all that modeling.
So, you know, I [laughter] maybe the execution is there, but that like the mechanics here do not seem innovative in such a way that would that would pause cause me to pause and study.
I don't understand how they ended up working with Nitro. Like nothing against Nitro, but imagine you're a studio out of Canada, like right there in in Montreal, Digital Extremes, right?
Yes.

Yeah, I think so. In in Quebec, they had to Toronto.
Well, Toronto, same thing. I mean, like time zone, but then you you pick a studio from from Helsinki that is so far away. Like time zone wise, like what was the reasoning around this? Like how did this deal go through? I'm always curious to just get somebody from Nitro to come in and like how did you land digital extremes because it makes no sense. This could have been a big game on mobile. Has there been any US company that has a successful su [laughter] successful mobile shooter? Because even Call of Duty Mobile
in the west,
let's [clears throat]
mobile. Yeah.
Mobile shooter in the west.
Sure. Right. Like is there any western developer
Call of Duty
Call of Duty is used as Timmy.
No, I actually think the the answer is Fortnite. That is actually our best answer. Our best western published mobile shooter is and yeah, Timmy developed I I think that's fair to I I think the the answer is definitely Fortnite here. And then I would argue that it's Roblox titles.
It's titles like like Rivals.

If we broke out that CCU, I bet that would be competitive in some ways. Actually, Joe from GameFam wrote an incredible piece that I wanted to cover about how big Rivals is, especially when you split it out. And of course, it's Roblox numbers. It's fluffy. Those heads are not worth as much. Yada yada yada. I get it, Eric. Don't even need to say it. Still, I think there's something to be said said for it.
It's just not it's not revenue, you know?
Yeah. It One last point around Warframe. They actually, and you almost never see this, but they credited marketing with some of the success of of the chapter releases, how they so Crest talked about the details of the actual monetization, but the strategy around these chapter releases. They had, you know, one that was like 1999 themed and so they had a whole Y2K theme. And so they have in a sense these moments where they change all of the theming and then the marketing of those chapters really ties in. So I thought that was nice for the studio lead to call out like hey marketing actually plays a role in this

as well. Good job.
Shout out shout out to Christopher Dring. Like he's been doing great work. He asks really smart questions. He's gotten good things out of high-profile interviews where you think their lips are going to be sealed like Tim Sweeney. He's doing really good work right now. Subscribe.
Agree. I agree. I do. He's on my uh he's on my must listen list. Cool. All right. Well, that's going to wrap it up for this week. We will move a bunch of topics to next week and see you then.
Castle Clashers next week.
Castle holding castle
and [laughter] uh Capcom that we skipped, guys. All right. Anyway,
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