TWIG #395: Xbox Prices Explode, Roblox's Worst Day Ever, and Merge Eats Puzzle

[music] Hopefully hopefully I get to talk about [ __ ] Castle Busters. Castle Busters.
We're going to talk about Castle B. All right. Jesus Christ. Hello everyone and welcome to this week in games 395. I'm Jen Donna who I play the marketing and publishing role in the podcast. Today we have
I'm Eric Crest and I will not be silenced. Black funar fun [laughter]
man of the people friend of the founders.
Oh, all right. So, here's what we got going on on the podcast. And a note, never let Mishka write your introduction summary. You'll see that in a second. So, good news for PlayStation as Xbox prices rise 30 to 50% in Europe. Capcom is killing it. Well, actually, their back catalog is killing it in a really good way. Sadly, Roblox is getting killed. Their stock is down 30% after

their latest earnings. Mishka finally, maybe hopefully gets to talk about Castle Busters from Voodoo. And this is what he wrote that I refuse to say, but I'm going to put it in quotes. We've been plunking this game for a week. A game that has extended his toilet sessions for over a month now. Are you actually eight? You're like an eight-year-old little boy right now wanting to make a podcast. Never grew up.
Never grew up. Ark Knight Enfield surpasses $100 million, making it officially not a mice nuts game, which means Crest, I think we're allowed to talk about it. Well, Phil's going to talk about it. And then Phil also wanted to bring up if we get their merge is going nuts. I mean, actually, I think it's still going nuts. The trajectory of
merge.
Oh, the subg genre is on fire. And Phil actually vibe coded a cute little game that I was playing. Was adorable. Good job, Phil. Uh, all right. Any banter other than Spider-Man is now the largest grossing movie for its opening weekend, fastest to a billion dollars? I've not

seen it yet.
I think we should take a bet. Which is going to be bigger, Doomsday or Spider-Man?
Spider-Man.
Spider-Man. I think it's going to be Spider-Man.
Is going to be divisive.
I'll have a forthcoming review of Spider-Man. I've written up 3,000 words expressing my thoughts about the Spider-Man franchise. Yeah.
Are you serious?
Yeah, I'm a huge Spider-Man nerd. I'm like into the all the side characters.
The death of the box office is clearly
I know. Well, there's a whole IRL trend which actually is maybe bad for us in gaming where a lot of the young folks are like, "Hey, I actually want to touch grass. I want to go physically to a movie theater." All the things that we thought everyone was going to be alone on their phone in their bedroom is kind of reversing in a good way. I think
good friends swap games.
Yeah. The other big news this week that we're not covering because there's just no detail yet is that the EA deal has closed. The Saudis now own Electronic Arts, there was some early like management change stuff, but we don't really know exactly the extent of the

big changes in terms of layoffs and such. There's reporting by Shrier who's kind of doubling down on the 700.
Yeah, I saw that
savings, which is like mass layoffs. But when
did you see the quote from Bloomberg that said Shrier wrote on Blue Sky the publisher has told debt investors that it'll cut 700 million in annual costs including 170 million in organizational efficiencies per Bloomberg which is Shrier
in other words mass layoffs you know obviously that's for reported we don't know for sure but
yeah and they have been laying off over the last you know since the deal was announced so anyway once we get more detail on that we'll report, but I will concede that I may have been wrong about this extent of the layoffs, but I don't know for sure like yet.
All right. So, my first kind of not as shill, but more of an amplification. I had a guest on Eden Chen who was from First Look. They have a brand new tool

that I want to kind of highlight for folks. I think it's pretty awesome because small companies to big companies can use it. So, the Firstlook platform is launching creators.gg. It's the first all-in-one creator CRM for game studios. So, this means that you can list your creator programs, onboard creators, and distribute keys for zero dollars. I think this is like such an amazing opportunity for folks. So, good job, Eden. First look, creator Sachi. My other actual shill is by the time you hear this, we will be in our Seattle round table. Looking forward to that. Uh we'll get a little bit of recap notes next week when we come out of it. So, uh ton of fun there. Mishka, what do you have?
Gamescom this month. So on 24th, Sensor Tower State of Gaming Summit. I know I made a LinkedIn post about how lame panels are. Guess what? I'm hosting a panel. So it's about sensor tower. It's with Moonbug. So Coco Melon VPs and Ree and Chris Petrovic is always in every

panel that I host. So we'll be talking about the growth pockets in gaming. And then on 25th, you have a choice. You can go to the dinner. We have a supper club at um undisclosed location high up in the sky and we have paddle and paddle has been blowing up. Like I've gotten so many fun messages from folks around the industry who are excited to come to paddle really like sea suitors are also coming in. So uh unexpected demand for paddle which leads us to scheduling multiple of paddle tournaments. No more roundts, more paddles.
No people don't want to actually play. Do they want to sit and watch and make fun of other people playing?
That's exactly our event. Like we have buffets, it's drinks. It's like the games last only 10 minutes and there's going to be four players. So if you come in to dominate, maybe there will be, you know, partners for you to play. We have heroic labs doing matchmaking. So that will be handled. But most of the people, you know, we'll have some some healthy and semi-healthy things and, you know,

have fun. Saturi, it's the Japanese Zen Buddhist term for sudden enlightenment. That flash where everything clicks. We're told that Heroic Labs team had theirs when they [music] realized that most studios run live ops like a horoscope. Vague, kind of generic, same advice for everyone. So, they built Sattorii. Realtime experimentation, player level personalization, events that [music] actually respond to player behavior. Say sananara to your old live obstet and konichiwa to Sattorii from heroic labs.
Unless you've been living under a rock, you know this is web store rumbringer. 70% of top apps are using a web store. And the best ones, they're doing it with app charge. Do you want a $20,000 inapp purchase? [music] Yeah, app charge does that. Do you want to pretend that subscriptions are still a viable monetization strategy for games? Yeah, app charge even lets you do that. They

get what high average revenue per paying customer means. And they're [music] already doing over half a billion dollars in transactions a year. So, are you going to be the first to do a $20,000 [music] AP? Don't accept microtransactions. Embrace macrotransactions. Learn more on appcharge.com. [music]
All right, Chris, you want to talk about the Netflix FIFA World Cup game?
Yeah. Just quickly, you know, Deli Interactive, the vaporware company, basically shutting down Refractor Games, the studios behind Netflix FIFA World Cup launch edition, were reportedly laid off 85% of the staff, which was around 80 people 7 weeks after shipping with no severance. That was what was reported. So, we talked about this a few weeks ago. I don't know exactly when when Netflix told their investors that this was one of their two most successful cloud debuts with monthly active players up some [ __ ] number 11x. This is exactly what I'm talking about, right?

Those stats have absolutely no meaning and actually less than no meaning. They are completely pushing you in the wrong direction. Clearly, this was not successful for Deli or certainly not successful refractor, right? If they're shutting the [ __ ] down after six weeks, right? So, the moral of the story for all you out there, and you know who I'm talking about, is don't believe and regurgitate press releases. Please stop it, all of you. They're complete nonsense. Okay? Read between the lines, people. You said it's not good. Like, I think there's a winner. Deli Interactive is the winner because Netflix games, if I know anything about the deals that they make, paid upfront for Deli to make this game. They took a third-party studio that was probably relatively cheap. That studio shipped a game that we knew was bad game. It had like one out of five stars. We all knew that it's not going to be a good game. Nevertheless, they got paid. They got the press release. And now the party there's no long work never work with Deli. That's the moral of the story.

No, did themselves, but never work with Deli
if you're a studio.
No, with Deli has made a great 007 game. That was a great partnership with all IO [ __ ] Did they license? They gave the license to them.
Well, they published IO with IO Interactive. That was a good game. They secured the license. All I'm saying is is like if the business incentive for you is to ship a game and after that, you know, you're not getting paid anything. Then this is the type of structure that I get. Like if somebody says to me like, "Hey, there's a cricket world tournament, whatever they play." No, no shame on cricket, but let's say there's a I have no idea what cricket even is. So, I have to make it. I'll find a studio to make that game. They'll pay me upfront. Netflix pays me 10 million to ship that cricket game in three months. I'll contact Lovable. We'll we'll put something together. There'll be a studio in like I don't know. It's Slovenia making that game for for a million. We're going to ship it and
Developers beware. Developers beware cuz they're basically mercs, right?

Yeah.
Incentives are off. All I mean, but I think somebody won here and sadly
not in a good way. and not in a reputational way.
And the moral of the story is that this this Netflix game stuff is
clearly not working.
Yes, that's that's exactly what that that is true. And then we know people
even though it's up 11, that's [ __ ] up.
I mean, if it's 11x, you know, it's got to be good.
I think we've talked about it. We actually agree with some of the other ideas that they had, the the forest thing, the kids thing, the party thing. This particular one didn't work. So, we don't know as I mean we don't know as much about the other stuff, but anyway. All right, Chris, Sony had their earnings, right?
On Yeah, on the good news front, uh Sony basically said they have I think about 95 million hardware install base at this point, which is basically in line with the PS4 generation, which is good. Now, it's also, you have to keep in mind that they are so far ahead of Xbox this time around that that the overall install base is lower

than it was in the previous generation. The good news is they have secured enough memory through the end of their fiscal, which is the end of March of 2027, to hit their targets, hardware targets. What that also means is that hardware is going to be really hard to find. So, if you want to buy PlayStation, you better buy it now because I think they will sell out in anticipation of GTA next Call of Duty and everything else that's coming out this year. They also said that they're not going to have any price increases before the end of the year, right? So that means that it puts the PS5 price at 600 bucks versus the Xbox Series X at $750, right? So the decision is crystal clear here, right? The choice for the consumer is obvious, right? Like PS5 is is the way to go for this for this season and for the rest of the generation for that matter. And this is where I think Microsoft strategy is not very clear because they really can't win the console wars if the price difference is so dramatic. I mean, we're talking about $150. Like that's insane, right? And for to me it seems like they probably likely will

abandon hardware altogether ultimately, which we've talked about before. But ultimately, yeah, this is great news for Sony and great news for the the console ecosystem that they can keep that price for the remainder of the holiday.
Yeah, I wanted to double down and just dig into all the price changes because it was this week where the cost of an Xbox in Europe was has jumped dramatically. So, we're looking at a chart if you're watching us. But the the fun fact now is a Xbox base S now cost as much as the Xbox Series X did when it launched. And they went and discontinued the two TBTE Series X because of all the prices. So when you look at this chart, you'll see that like I said earlier, anywhere between a 30% increase and a 50% increase on the smallest unit, it could be upwards of from 100 to 150 lbs or euros difference. The second chart I did is kind of crest your comparison. When you think of the Xbox Series X versus a PlayStation 5 with discs, which

is funny because PlayStation having a disc, I wonder if they they're going to change the hardware and and cancel that skew or if they're going to keep it going once they get rid of the disc. Well, that's 2028 anyway. So, you're right. It's $150 or euros or 100 pound difference for a consumer who's like, "Hey, I want to get in and play GTA 6." Like why would you even choose an Xbox anymore when it's like that much of a cost difference and you have to pay for Xbox Live? Like well I guess GTA is single player so we don't really care too much.
Yeah. A couple of comments about this memory thing because it's been pretty crazy. Like the numbers that you're showing from 2020 when PlayStation 5 launched I think it was 400 bucks and then 6 years later the same device is 600 bucks. Switch to they they did a price hike of 50 bucks just recently. Xbox showed has raised prices three times from $499 to $799. And then on top of that, Nvidia has been capping playing hours when using their services and and

I kind of looked at the memory part as you know the memory problem that exists here. So all of them have like this RAM memory. So 16 GB RAM. So single AI chip from Nvidia, you know, let's say like a Blackwell Ultra is about 288 GB and PlayStation 5 has 16 GB. So that means it's about 18 PlayStation 5 worth of gigabytes of memory. And I'm saying this even though it's it's a different chip, but they're made in the same production line by the same company. And when we have these data center investments happening, they buy chips and chips are sold in racks. And each rack has about 72 chips. And when you buy rack, you essentially buy clusters of rack. So essentially when you build a data center like the recent one that Microsoft announced, it had 64 clusters which makes it worth of 83,000 PlayStation fives in terms of memory. And then you go to the crazy numbers that Open AAI or Meta have been saying where they build data centers with 100 times of what Microsoft has built. So we're talking about millions upon millions of

PlayStation 5 worth of memory going into the data centers. And the challenge here is that the companies that make these RAM memories, there's only three of them. It's SKH Highix, Micron, and Samsung. And they haven't really invested into new capacity because they are raking in cash. They're saying like, well, we could put all these billions. It takes about 3 to four years to to put up a new facility to produce more of this memory, but why do that when they price increase 5x as these companies have started buying memories for the for the data center? So, they're just making way more money with what they have. So, what I think will happen from here, Chris, correct me if you're if I'm wrong because you're really in tune with this market, is handhelds are over. Like, there there's no point. Like, you can't it's going to be too expensive. It doesn't make any sense for this type of niche product to come in. Valve that was kind of gearing up to take the hardware category by storm. At least at least charge at it. It's going to be too

expensive to capture a significant market share. PlayStation 6 will be at least what 1,000 with these price hikes. It will be probably 1.5,000, which means there will be less players, which means essentially that the new PlayStation 6 cycle or new console cycle will fail because gamedev won't take the risks to make this super highfidelity game for the new platform that won't have like 10% of the install base of the current platform. And so that puts a whole console cycle if this continues at risk in long term because players will be drifting to other platforms, namely probably PC. So I think what's going to be happening is price increases not only with hardware, but we'll be also seeing more subscription price increases and increase in game prices as the console cycle is trying to hold on.
This will delay the release of the PS6, right? Clearly. And actually I Sony is working on a handheld, right? So that it's too early to speculate and and the idea of them going to PC that's kind of a [ __ ] too because the fact is the PC is going to cost more too because

they use the same RAM right and so it's like you know people aren't buying new PCs and and [clears throat] the PCs are actually ready to actually run HD content are the ones with discrete graphics which require the RAM but also are much smaller percentage of the overall PC like Macs can't run [ __ ] for for for HD games. So, I think this is a little bit too early in doom and gloom. And I think at volume, the PlayStation will be able to sell these consoles at a much lower price than what [ __ ] Valve did. Now, I agree with you on Valve. I mean, the Valve thing was dumb to begin with, even before the price hikes, but I would not count Sony out. And they can also subsidize the hardware, which some of the smaller players can't. So, I would not be out there talking about death of console because I think that has been said every [ __ ] generation and it is the best place to play this content for 18 to 44 year old males which is all that really matters in this business.
I would always echo your words which is like new platforms are new opportunities. Matthew Ball's chart that

console has not grown. All growth has basically come from mobile freeto play. And to your point like this is a very limited market that's only interested in a very premium experience and that doesn't seem to change. I think that this is bad though. Like if you're just getting your margin eaten by memory and I think Michigan's description is right. Like there is a crunch on memory. There are very few suppliers. They have not increased supply. Our favorite AI CEOs are practically begging them to do so. Like it's going to hurt. It's going to hurt all these manufacturers and that means price goes up. And if price goes up that means you're going to see less demand. You're going to have less active users. Like there is a real impact to this. We've been saying that for weeks though. The ramp apocalypse has been a topic for the last couple of months. It's just, you know, how it hits us. But I think I've seen charts in the world that talk about how the cost of consoles related to like inflation and cost of living actually haven't grown as much as they the prices should have grown. I don't disagree that a console over

$1,000 is just also a mental challenge to be like, "Oh, this entertainment device costs that much money is going to be tough."
The one other data point I will put on there is between the last two generations, the price of hardware went up like 50%. Like the average price of hardware 50% during the cycle and we still sold equal if not more hardware units over that cycle. So we may see an increase over the next cycle, but in this cycle we're definitely seeing a price increase over the last cycle. And we're still selling as much almost as much hardware. So at the margin, it may not be as impactful as people might think. And these RAM prices might ultimately come down when things settle out in the next 3 years.
We don't know elasticity. So that's the biggest probably dominator there. I think the biggest issue is attention versus the cost of the consoles that there's so much other stuff people would rather be doing and spending their money on like gambling or couch she or whatever. Anyway, right.
Gambling is horrible.

I'm not saying I condone it. I'm just saying that's what the data is showing that this consumer, this male 18 to 44 that Crest just said, has so many other things pulling at their attention versus playing an average console game. So I that that I think is almost a bigger story than a console being a thousand bucks. All right, let's let's keep going.
All right, moving on. Capcom announced Q1 and they basically just crushed it in the quarter and they also reiterated their guidance for the full year. They released uh Pragmata, which was their big release, but that was relatively small compared to the catalog from Resident Evil, Street Fighter, and other things. So kind of my take here is like this is like one of the companies that's executed well along with take 2 and EA and Activision in terms of consolidating on IP. I just want to showcase this is they're consolidating on three or four IPs and doing extremely good job of actually monetizing this stuff, you know, versus kind of the shotgun haphazard approach of Ubisoft and Sony

even and particularly Microsoft and the THQ of old. So this is a strategy that's worked in this in this generation or last 10 years for that matter. You know, Pragmata is a good example. I mean, it's a it's a somewhat of a success. I mean, I think it only sold a couple hundred million units, but but they are still trying to do new things at Capcom, but their primary focus is Resident Evil, Devil May Cry, Street Fighter, etc. So anyway, just want to reiterate that this is what the customer wants. This is what the customer is paying for. They're paying for established IP that people want to play, that they're familiar with, and this is what's doing well in the marketplace, which is evident in the earnings of these companies.
No, agree. And this has been our theme the last couple of weeks, which is it's challenging for new games to come in and be successful. Established franchises are winning. We'll even talk about that later. And they're also, you know, I I know you guys hate to talk about like sending the content into other medium, but that Street Fighter movie, which

looks like an amazing '9s geekfest on October 16th.
Uh, [laughter]
oh my god. Yeah. With with everybody, right? like WWE superstars like it look the trailer looks like so ridiculous that I am in like Chley looks like like all of them behave like it they're coming right out of the game and it's actually set in the '9s and so it feels like that anyway that that era so you know and Capcom is putting that movie that October 16th date in the Q1 investor deck alongside Devil May Cry Netflix season not my IP but I guess if you're into that that's cool and then the Capcom Pro tours in 2026. So the the thing that I wanted to touch on and crush you said it is like what's working for them and what other companies may look at is back catalog. It is a resale engine on those franchises. Like do you go back and do I mean remakes are everywhere these days but catalog was 90% of units like 21.26 million of the

23.8 8 million 60% yearonear in a record quarterly high for Capcom's own label. New titles contributed only 10 11%. So the top sellers were the old games. Five games averaging 7 years old outsold everything Capcom shipped this year except for Fragmata. So Resident Evil 4 was, you know, like two and a half million. Resident Evil 2 from 2019 moved almost a million and a half units. Devil May Cry 5 from 2019. Like all of these are like in like a little over a million units and they're, you know, seven years old. So what's going on? Like are are players going back and reliving these franchise moments? I just think it's something if you are a company that has a franchise with back catalog, you may want to look at that strategy of how you can go back and leverage that. Every week I I listen to Eric Crest get on thising podcast and say the same [ __ ] over and over again. [laughter] And and like it's remarkable to see a company

that's just done exactly what he bangs on the table, which is like double down on your core franchises, which like I've started to echo too. These companies, they get lost. I don't know what what happens if money blinds them. Like I watch [ __ ] King just waste money buying to build a midcore game for the better part of 20 years. 20 years they've been trying to do it rather than double down on Candy Crush. And so like when you look at Resident Evil, you look at Monster Hunter, you look at Street Fighter, I mean these are the franchises Capcom has align themselves around and they've been rewarded with what a 65% 68% operating margin. I mean the Japanese have not looked good in terms of game development for a while, but the right strategy despite all those headwinds has put Capcom in a really great place. Are we seeing a further almost divide in play pattern and play pattern acceptance by the consumer base in east versus west? Because I think we are seeing that like I think what you're saying is that

Japanese games coming to the west are not having as much success in the past. That'd be something interesting to go back and look at.
I don't necessarily agree with that. I first of all I think we need more research. But Monster Hunter did pretty I mean first of all majority of sales are definitely in the east. I think the question is, is the West gaining relative share? Like for instance, when we look at the Monster Hunter series release over release, that that to me is an interesting question. I think the West is certainly gaining share for franchises like Monster Hunter Wilds. I mean, did you see the Monster Hunter movie?
No.
No. No one did, Jen. It was really bad. [laughter] The Resident Evil franchise also had it. They've actually had a huge attempt at at trans media, but I I I think these games are actually more Western. Yeah, they're rebooting it again.
No, no, no, no, no. Monster Hunter Wild just brought the that that franchise to a huge Western audience that they didn't have before. That was a primarily Japanese title
and the open world
version of it and and how they designed it. Now,

sorry, the first Monster Hunter, the second Monster Hunter didn't do nearly as well as they had hoped. Um, but it still did reasonably well. the history behind this just quickly. I'm gonna try to do this in in the most succinct way possible and it's it it eliminates a lot of detail is that when we went to the PS3 era, like Unreal kind of broke and EA bought renderware from Criterion, right? And so at that time during that transition, they didn't have actually a default engine for the Japanese publishers to do. They didn't have their own engine. And so it kind of broke everything for all Japanese publishers. It wasn't until the next generation in which Unreal kind of came back and now I believe most of these games are all built on Unreal that they came back with their franchises in strength. But I think maybe in in some ways that actually led them to the path of actually focusing on core franchises rather than expanding out because of how poorly they had done during the private prior transition. Um anyway, that's a really brief summary of something that's

very for anyway. So they are in pole position right now because they have the IP that actually is working and they have the technology that's working with that IP and this is the result versus Ubisoft which is [ __ ] everywhere and has all kinds of [ __ ] that they're trying to doing racing and you knowing toys to life or whatever other stuff like this is the complete opposite strategy. And then the final thing I want to keep reiterating is that this is what the customer wants and this is not a supply thing. This is demand thing. The customer wants this [ __ ] over and over again. And despite how sad that sounds and how upset people get about, you know, the creativity of this business, but this is what sells, you know, and so anyway, all right, moving on.
All right, let's go to Roblox. They had their Q2 earnings in the last couple of days, last week, I forgot already. So, they got their stock got its ass kicked. And so, at the time when I pulled the chart, it was down like 30%. It had its worst day ever after earnings were

reported. They guided their Q3 bookings down as much as 18% and pulled its first year outlook. So from a Q2 perspective, bookings landed at 1.56 billion, up only 8% at the low end of guidance. DAU grew 10% year-over-year to 123 million and ours grew 5% to 29 billion. MAU was up 15% to 27 million, but from a DAU perspective, and we'll look at some charts in a second, it was down versus the prior quarter. So, I think it's one of the first times we're starting to see DAU declining. Probably the biggest red alert was the declining average bookings per daily average user. I think many of you know for for Roblox, bookings is the more accurate uh number versus revenue number because of the way all of the stuff works. I won't get into
the counting stuff. Basically the booking is what is the actual revenue but revenue is kind of divided depreciated by three years. So if somebody buys a skin for 10 I believe it's in a way that $3.3 come in on the

first year and the second and the third in terms of accounting revenue but booking actually shows it on the first year.
Thank you Mr. Mishka Finance. I not who I expected would correct me on that but thank you for [laughter] that. So average average bookings per DAU had its first ever year-on-year decline in the US and APAC and so we're looking at a chart now and I oh my god I can't feel I can't wait to hear you talk about this. So the company withdrew its fullear guidance that we talked about that that's just a big deal. It's one of the first times it's ever done that. We're going to start to get into a little bit of why. So, Roblox blame lower spend per hour amongst the under 13 users in the US and Canada after its April recommended for you algorithm change. I love how we just blame the algorithm now. They also disabled cross experience game passes. And so I I think one of the things that they probably should have blamed but they can't is well one is discovery. So the way that they changed

their discovery system that drives our monetization and so what they did in this algorithm change is they tried to steer players away from the high monetizing, you know, vintage viral hits to the quote retentive games. So I guess they're trying to say, "Hey, we don't want to send you to those addictive high monetizing games. We want to send you to something else." And so obviously when you point a Discovery Bazooka at something that doesn't make money, you're going to see a change in your money. And so I think the thing for all of the poor creators is they're scrambling to figure out, oh no, like how do I keep changing what I'm building to deal with the discovery algorithm. So the second thing I think for blame that isn't actually getting the blame is the hangover from the Q1 privacy and safety changes. So I listen, I think that it's the right thing to do, but it's not a growth machine when you have to limit all the kids that are coming onto the platform. They did come in and say that the age checks appear to be at a

progress metric of 57% penetration. That still means that so many kids are out there taking pictures of their sleeping grandparents to try to get into the game. Um, but I think the other thing that's going to be interesting is like I'm sure Instagram and all of these other, you know, social media networks that are being, you know, pressed to do age gating are looking at this saying, "Oh [ __ ] my numbers are not going to continue to go up into the right." So, Phil, you know, maybe this uh average booking per DAU in the US. Uhoh. Right.
Oh, no. This is this is not a good report for Roblox. Like, one of the things you need to have your [ __ ] detector on is that he puts everything for year-over-year metrics, which is fine. and it looks much better year-over-year. But the real key here is that quarter over quarter things started to look bad. And not only that, it's the first time we've seen for instance, as you mentioned, like DAU is down consecutively.
Like that is not a trend line like you see. That is not a company that is growing and understanding their cost curve.
Like you just pointed out average daily bookings per US and Canada. And bookings

I think is good here because this also gives us ad revenue. Like if they're generating anything from that vertical in the business, it should be included in bookings rather than just inapp purchase. This includes Roblox subscriptions to like this is the whole kitten kaboodleoodle and they have been growing this year-over-year around 3%. And for the first time they actually had a dip in the US and Canada. And so that means that your DAUs are declining and your monetization has basically been held flat or is declining in other regions. That means revenue goes down. And the other thing we saw is the amount they spent on infrastructure go up, which has always been a concern. And if we remember, age gating came into effect. And it looks like they're spending more to implement age gating. It looks like they had to spend another 30 million. Let's see if like this is a continuing cost. And I mention it only because they spend a lot on infrastructure. Like this isn't a small budget. This is a quarter of a million dollars every single quarter. So it's what are they spending over a billion a year on this? I mean that's not a that's not a small hunk of change for a company

that also positive margins.
Yep. Look at the only thing I will say to to kind of I say be in their corner but when you look at where the DAU declines were they were mostly in row and Europe. So it was not the United States where most of their valuable users are. So there is like some softening of the negative news but you know where is the ad revenue Dave? Where is my ad revenue? Where's my connected portals? He talks about expanding content limits. He talked about AI creation in his call on device. I am very skeptical that he knows what the next step is to grow the platform. I thought moments were interesting. The idea of turning, you know, kind of an Instagram or social network feed into Roblox more short form video stuff, but like where are the results?
Yeah,
there's still a long way to go. The company always got to make money. I wanted to ask one stock question because I honestly was like just didn't know how to gro this. So the 30% stock drop, it erased about 10 billion in market value.

O, but Roblox had already bought back 8.2 million shares for about 380 million during Q2 under the 3 billion authorization. So is this a signal that they knew something? It's like is this insider insider trading? They they is this a way to mitigate the ass kicking by buying stock back? I don't know. You tell me.
Well, I mean, first of all, you're supposed to buy low and sell high, right? So, they bought before the stock got destroyed. But luckily, they have like what $2.6 billion left to buy low. And they actually might buy it low, low, low, low if this continues because the fact is they guided to a 16 to 18% dip in revenue bookings for next quarter. Dude, that is [ __ ] terrible. You cannot have the valuation that you have and not grow. Like, that's like insane. Okay. Okay. And then they didn't give guidance for the full year. So while next quarter is bad, the next quarter is even could be even worse, right? And so they may actually not grow for the entire year fiscal year overall

year-over-year, which is actually very likely frankly. But we've covered this at nauseium and I don't want to like completely go over this thing over and again, but fundamentally this is the wrong strategy at the absolute worst time, right? And I I keep saying this over and over again. They had an impossible comp with the child torture video creators games
grow a garden right absolutely impossible comps even without these algorithm changes then you couple on the algorithm changes in which they are moving
users from games that make money to games that don't make money right like by definition that is what they are doing right which ising nuts right and on top of that you to deliver these HD games. It cost more than it would be to to deliver these chachki [ __ ] games, right? And so like this is an insane thing. And it all comes down to the fact

and what I believe anyway is that he has no controls. He is in charge. He is doing whatever the [ __ ] he wants to do. Bronstein's gone. Manuel's gone. The CFO is gone. And so he's the only one making decisions up there. and he's doing it for the best of this platform supposedly. I'm not going to go through the whole arguments again about what why this is the wrong customer, the wrong developers and the wrong platforms. You can read the LinkedIn post and over. But I will concede I will concede this one fact that to the pundits is that this could be a great long-term strategy for the health and of the platform, right? To build a higher quality platform, but I'm not convinced that this is going to make it a more profitable platform, right? And Dave, as as good as a genius as he is in in in creating this platform, he has a fiduciary duty to his shareholders to grow revenue and grow earnings, right? And I do not think this is the correct path to do so. So don't

put up with this [ __ ] right? And this stock could continue to deteriorate significantly over the next few quarters.
I'll try to take a glass half full. So actually today we're going through some of the number. So one of the clients is Roblox developers. So we were going through the numbers of some of the newly launched games and and this algorithm is in full effect. It does have impact because we can see that if the retention is not at the level that it should be as it cross certain thresholds then the visibility of the game really collapses. So it puts a lot of emphasis on long-term retention versus previous one was a lot around the QBTR. So qualified playthroughs where a good thumbnail and early gameplay that like first few few steps are the ones that kind of push you in the algorithm and that was giving growth to certain topics and those games were of course the last summer's brain rod and grow a garden that pushed the record CCUs for the whole platform. But when we look at the actual numbers, and I'm comparing this year-over-year, of course, quarter over quarter looks worse, but year-over-year we're looking at revenue that was up 36%.

The bookings, which is the number that reflects real cash spent, grew just 8%, which is of course down for the 43% bump last quarter and a 70% bump three quarters ago. And you know the key3 guidance that Jen as you said in the beginning calls for bookings to fall even further which is the first contraction Roblox has ever guided to the DAU 123 million. It's up by 10% year-over-year but third straight quarterly decline as we saw from the peak of 152 last summer. and net net the engagement underneath the hours the AU the retention they're all still very healthy with the free cash flow up by 66%. So I know that there were multiple sell ratings coming out. The price target was slashed across the board. One analyst even said that they're going through life cycle decline. And what caused this is the two things. So first

as I said change the algorithm where the previous system really heavily optimized on day seven engagement window. The new one measures retention across 28 day view. So it's phase as well whereas there's day one retention. Then there's day 2 to 7 and then there's date 8 to 28. And those affect how well the game is shown because when you run ads on Roblox, God bless them for adding ads and they're very cheap. But the impact that we're seeing from running performance marketing Roblox is not quite there. You can talk to other developers, maybe they're seeing more luck, but I have talked to few and the UA ain't quite the UA on mobile. Roblox stated the the reasons for this for they wanted to take away the short-term engagement proxies with a strong thumbnail game and weak retention and displace those games with games that add value long term and instead of those as Crest calls them child torture games or child torture monetization, whatever you call them.

Yeah. So, I know that we say this all the time explain what we're saying because it sounds really bad if you haven't been listening. The child torture videos were kids wanting stuff in the videos and it was hard to get because of the rare mechanics, right, Crest? Is that what you mean when you say
they could? No, no, no, no. They created games in which you give kids toys and then you steal those toys and then they cry, right? That that that's the game. In an essence, that is the brain mechanic. A brain rod.
Steal a brain rod. Okay. All right.
Steal toys from children, right? that is the game that that has made their the last quarter last nearest quarters, right? So, just to be clear and what makes it worse is the the really strong monetization is for adults that are spending all this money to steal toys from children and to make YouTube videos and then monetize YouTube videos about stealing toys from children, right? Like this this is the platform we're talking about here, folks. you know, like this

is not like some benevolent like,
okay, moving on.
So, so they're getting rid of that. They're getting rid of that and they're changing the privacy change and we had the whole podcast about that. So, you can you can check that one out. But I think everybody's on board with with with it. But at the same time, like the PG-16 classification is now, you know, automatic. So, it's it's harder to for people to communicate inside the game. And that has naturally the effect on the virality and the growth. So all I want to say is what common between these two factors, the algorithm and the privacy is that they're selfinitiated and the kids didn't leave Roblox because it became uncool. Like this is Jen's term always like cool, uncool. Like it's still cool. Roblox is doing these things. It's like it would be much worse if the kids were just like ah lame. We're done. So I I read this on LinkedIn. I forgot the gentleman's name. I think Chris, you were commenting on his post, but he was making an analogy that YouTube made almost the same trade in 2012, shifting its algorithm from clicks to watch time and that caused the

clickbait channels to lose traffic overnight. There was a massive panic, but longterm it was the decision that paid off in the next decade. And the difference between YouTube ad revenue, it it wasn't tightly wired with the signal that changed. So advertisers barely left. But in Roblox, their bookings are directly wired to it. So the pain shows immediately. Crest, why don't you take hand off your face and tell me what do you think? Cuz you saw this post as well. And you actually commented on it.
Oh, I wish I wish people were watching right now as Chris puts his hand on his face.
Face complete complete disgust at what Mishko was saying. The fundamental problem here is that they've been pitching this thing as a DAU MAU growth story. Both geo, both demo, both. This has been the whole pitch of this company. And they've been doing that by delivering these chachki [ __ ] games that are monetizing children and in essence creating torture

videos for children. As I've said a million times, predatory monetization for children and child torture videos, right? This model will not support HD games that they are suggesting. Right? This is not what this audience wants. This is not what they promised to deliver. It is not on the correct platform, right? Because mobile games don't make money if they are HD. Full stop. Less than 5% of the revenue on the app store ising HD games, right? And so they are going to continue down this less profitable path of delivering HD games to a customer that doesn't want it, a platform that is not optimized against it, and developers that don't know how to make that content, right? So what is the alternative? Manuel had this strategy, right? Build out the advertising, build the Instagram platform with moments, right? Maintain this virality of the platform, continue to both expand geographics and demographics. That was a more sound strategy for the shareholders

of which Dave has a fiduciary duty to support. Okay. Now, if you want to talk about the fields, right, I can talk about the fields, right? I will concede that the right long-term health of making this platform more benevolent for the customer and more politically correct, let's say, and stop torturing children, right? and and to help against the government oversightes that's coming down to destroy them, right? Fine. But as a public traded company, you cannot pivot this way. You just can't, right? So, I was actually looking at the at the valuation of this stuff and I don't like going into valuation work because it's be very terrible, but like they're still trading at seven times revenue and 70 to 130 times adjusted EBIDA.
What? That's where they're trading now after the stock got creamed. Okay. Do you know
over the accounting because no this is

EBIT dot adjusted EBIT dot. This is like bookings minus cost. Do you know what take two trades at? 30 times EBIT dot.
Oh my god.
Yes. And take two is actually growing profitably, right? So at the end of the day, this thing could go get absolutely [ __ ] destroyed, right? If this this trend continues and they continue to deviate in the way that they are and drive their customers into games that don't make money, I mean it's just insane on the surface. It's a terrible strategy, right? It's a terrible strategy for a publicly traded company. If they were private, go for it. Change do whichever you want to do, right? But you're a publicly traded company. That's not the way this world works. So expect
is it becoming a hedge fund hotel? My favorite.
No, it's always been a hedge fund hotel.
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Phil, you want to take the the next story?
Yes. In an extremely rare deal, US mobile gaming juggernaut Scopely acquired a stake in Tokyo-based mobile game studio Ano. And this was last month. It's rare to see a western company take a stake like this in an eastern company. It also is notable for Scopi, which has kind of like woken up and had a Japanese arm. They've always been like poking around in Asia, which

has basically amounted to like Jack Squat in almost all of their Asian branches. But like now that they bought Nentac, it's like, oh [ __ ] You know, Pikmin actually makes money in Japan. So does Monster Hunter now, by the way, for that matter. We were talking about Capcom. All of Nek's other franchises have been disasters. But somehow these things are actually like they've got some legs. They're justifying their cost. But I think the real story here is that Japan has actually been trying to open up its shores to more foreign investment. This has been an initiative by the government for a couple years now. There's a ton of really interesting economics on why Japan has been so hostile to foreign capital and there's a lot of incentives that managers have to basically refuse foreign capital to basically shut down any sort of take off takeover offers. They don't have the same level of fidiciary duty. There's this interlocking company situation that almost all firms in Japan have that's notable to their economy. So some firms will own other firms and so they've kind of created almost this insurance policy not to fire managers. There's really bad corporate governance, but the Japanese government

has been again they're they're trying to open this up and I think this is really good news. I think everyone is going to be better off if foreign capital can flow to Japan. There's a lot of really talented game makers there. I think we have a geopolitical incentive to make sure that the Japanese economy is healthy and so is the Japanese mobile game development ecosystem. Like it's not just China that exists in the east. We also have Japan a close ally of the US and the West. And so I'd love to see more of this and I hope there's more encouragement here. I hope the Japanese do more to openly try to get foreign capital because I mean you can tell me Eric and Mishka who wouldn't want to interact more with Japanese allstars. So the founder of the studio by the way is one of the key figures behind Sai games the us pretty derby girl racing game and so they're funding a superstar here Scopely. I mean how many more superstars would you love to fund in the Japanese talent pool?
I don't disagree with what you're saying. I do think this would be a positive thing for the overall industry. However, I'm not sure that this is as big of a change as you're suggesting, right? Where
I mean it was just a venture investment,

right? It wasn't like an ownership state.
There was 10-centent, remember Tencent took some public stakes. It's a little bit more hesitant on the public side. It have been more successful in other sectors. I just
I hope more can be done here from the Japanese government side because remember you would trigger all these reviews if you bought a certain number of shares. even if they were to remove the restrictions, which I think is a huge if and I I don't know if they're ready or prepared to do that, even though they may be signaling that there is a cultural issue here that you can't really ignore is that like I don't know if culturally they would be wanting to be owned by a US company. It would be,
you know, like it would cause
I mean, have you seen Have you seen Robio? The Fins are doing fine in the inverse.
Uh I don't uh very different culture.
What? [laughter] Not only that, have you seen uh how the Arizona factory has gone? the one where we um we had the Taiwanese build in Arizona. That's been going really well. No, you've been reading like the New Yorker reports about the Taiwanese complaining about the Americans not working hard enough. [laughter]
Well,
like they're actually grinding out

there.
I can't imagine Japanese and Finnish working culture. Like
I mean about the Europeans, the Mishka [ __ ] about the Europeans, but they're having Asian podcasts where they're bitching about the Americans not working hard enough. I can guarantee you that it's just a chain. I want Japanese to come in on a podcast. Tell me how it's going.
I don't know. I think Scopley is getting on this venture investment thing because I mean if you look at all of the, you know, Google and Amazon and Google and all the other tech stock earnings reports, a lot of them are up because of their venture investment arms. Crest, I don't know if I'm
speaking out of turn or not, but like why not? Like if you're Scoply, why not put some of that cash to use and invest in companies in other places in the world where you can't actually purchase them, but you can still like you're saying, Phil, like you know, put your bets on some horses.
But hey, Scolley put in $1 billion in a seed investment that was called Loom Games. That was a fourmonth-old company that just launched a game. They bought it with billion dollars.

Did you see the founders were on the cover of some very prominent magazine? It's amazing.
Saw them in real life. They were in Were they Phil at the event
again? Scopably PR crushing it. All right, so guys, we are close to time.
Okay, merge. What's What's going on merge? Why do we keep talking about merge? We talk about merge all the time. There's puzzle monthly. So much merge. Well, merge is basically the thing that whenever you listen to Eric Kresco and rant about how people are playing the same game over and over again, they're not new mechanics, yada yada yada. I'm just sitting there in my head just waiting to unleash Merge 2 on him, which again we've been covering, but I cannot I cannot emphasize enough the revolution that's happening, right? So, we saw Gossip Harbor overtake Candy Crush in terms of revenue. Like dramatic dramatic moment, right? And so, right now, if we look at it at a category sector, it's not quite there yet, but Merge 2 has increased to around 20% of the US puzzle market and Match has actually dropped. Match is down to 40%. If you look at

even just 2024, you're looking at maybe 7% for Merge 2 and around 60% for Match Swap. Wow, that is dramatic. That is a dramatic flip. And I would say the thing that's even more concerning because this is predictive of future revenue is that for the first time, Merge 2 downloads have overtaken match swap downloads in the US. That to me is another like crazy moment, right? For the first time, more people in the United States are going to be downloading merge games than they are match games. Like, this goes back to like that amazing cohort that we had of Garden Scapes, of Candy Crush, of Royal Match. Nope. It's all about Merge, baby. And so, like, what is the thing that is growing here? Who are the players that are placing their bets? Well, Century Games to me is still the most interesting company in gaming right now. I'm happy to be quoted on that. They are [ __ ] out merge games like no other. They refuse they refuse to be denied a top merge spot. So they have family farm

merge based on their family farm adventure series. They have hotel legacy which they've been pushing quite rapidly recently. They also have just desserts merge and story. H that sounds awesome. And so there's been so many players here that are just spamming games to see whether or not they can land a UA that makes sense. I mean again it goes back to mobile game generator. Uh you've got Frost Valley, Flomble, Seaside Cooking, Food Stars, all of it based on food and ordering. Same thing with the Gossip Harbor makers, right? It's not stopping at Gossip Harbor. Like they have Flam, they have Seaside Escape, they have Icy Hearts. It is it is crazy what is going on here uh in this genre and it is a new paradigm and it violates narratives left and right.
Does it really though? I mean, they're taking the existing play pattern and trying out different themes and art styles to attract players.
It's so funny that you sit there and you actually call it merge two is the defining characteristic of this genre

and that's like some innovative like you know utopia. [laughter] It's the same [ __ ] dude. It's just different.
Are you kidding me? Are you kidding me? You think a merge game is the same lineage as match?
No, I'm saying merge merge has been around forever. It's just they are actually executing against it that mechanic. You cannot say triple town and like merge dragons. Like it's true that there is lineage there. Sure.
No, it's merge three and not merge two.
Yes. So this has very
I see
destroyed. Go back. Get craw. [laughter] Crawl away, buddy.
I'm being sarcastic. If you really think that this is like the big innovative like change of genre, you're out of your goddamn mind. Like this is the same mechanics that have been around forever.
Yes. Are you No, there's no fail states. Eric, what are you talking about? That's a completely different change. You're spending on energy. You're spending on time. Have you played a merge game, Eric?

Yes, I have. Of course.
Can you Can you do Hollywood merge for me? I I love that one.
I want to I want to just recommend something to Crest. Go to Deconstructor Fun. There's a literally a post, does Merge 2 monetize better than MASH 3? And it goes through how it monetizes with no fail states, etc. An excellent article by our editor Cell. Crest, knock yourself out. Everybody else, follow up.
Guys, I I don't know why you're beating up on Crest because you're you're not presenting this in in a way that makes sense. He's not arguing that Merge 2 is uh an evolution of match three. So, here's what's going on. They they are evolving merge to mechanics by adding on metagame features that allow you it to be more sticky. It's not about the actual mechanic of what you're playing. It's about the metag game features, the cards, the card collection. Now you have wild cards that you can only get
that's in every genre. That that's not

that's not a cause inference. You have you have cards in a ton of other match three games. You have collection cards. The easiest [ __ ] to copy everywhere. Monopoly Go has the cards. Cards are not I mean it's it started.
This is all so consistent. what I with I've been saying for years now. You take a casual gameplay mechanic and you layer on deep monetization design. This casual game mechanic has been around for [ __ ] ever. So it's not some unique gameplay element that's just being,
you know, thrown upon us. And even if that were the case, you're still layering on the same monetization mechanics every othering game that's kind of put these things in. So it's not innovative in that way at all. It's just adding what what monetization layer is the same in your view between merge and match.
We're not comparing those two anymore.
You're saying there's nothing new here. There's nothing new in this mechanic. And I don't agree with you. The way the core mechanic is configured in this particular format is a genuinely new innovation. Yes, there are lineages you

can draw. We can we can say that about anything, but then there's there's nothing in your view that's innovative. Then it's true they have meta mechanics. They have a meta that can be applied to other games, but the core idea of merging and completing this orders. This is new for us.
We haven't had this before and it's crazy.
This Godsup Harbor has been around for like 5 years. What have they done differently? We did a whole conversation on this a couple months ago. The difference is the metagame features that they added. And I went and I looked at the exact moment when they added those features and that's when revenue took off. Like I totally don't understand why
they took power and they're just executing against that that that game and they're changing the Oh, what are you talking about?
What are you talking about? Tell me. Okay. All right. All right. Please, what is the core mechanic they have changed in Gossip Harbor's merge 2 that has made it a different experience versus when it was not monetizing as well?
I am saying that they have been able to

scale this game which is a legitimately new mechanic. there's a legitimate new mechanic behind it. I agree that they have added interesting meta mechanics on top of it. So, to give you one example, like they have a battle pass that's layered on top of their live ops events where you can basically double up and you can get new resources that let you generate more items, which let you do more merges, let you move up the reward chain. But that's a legitimately new mechanic. Like, if you just stuff that and match, which they're trying to do, it doesn't work to the same degree. You're pointing out like cardction. You're just you're arguing our point.
Yes.
No, no, no, no. Cuz if this were the case, you would expect to see the same games in Match. Why is Match not increasing at the same rate that merges? Again, they have album collection. They have these features. You're not explaining the relative change between these two things.
I completely argue with you there cuz I play the [ __ ] out of those match three games. They do not have the exact same live ops and meta features that you're talking about. Royal Match does not have wild cards. They don't have those

multiple battle. They only have one battle pass. You go into Toon Blast and there's threeing different payment systems for the battle pass. And that's why Toon Blast has been going to to your puzzle monthly.
If you don't consider this new and innovative, if you can just consider this reskinning, I don't know what you point to then. What what do you point to as legitimate innovations that have happened ever then?
I am trying to articulate that this is not an innovation in the core gameplay mechanic. This is an innovation in the how they are layering on meta aspects of the game, metagame systems, live ops, monetization systems to your point, which is very astute. Multiple battle pass uh implementations, the wildcard mechanic, those are the innovations, not the core gameplay. The core gameplay for all of the merge games is exactly the same that is reskinned with a theme difference and they're trying to find the artwork and the theme that allows you to find a customer base that is different from the last game.
I agree with you, but there's an intertwining of the core mechanic into

those live ops events, right? It's running running from
the intertwining of the core mechanic of merge, the intertwining of the core mechanic of merge and how they intertwine that into live ops is the genuine innovation that Gossip Harbor brought to the table that other merge games didn't. That's tied to the original mechanic of merge, right? You can't just run the same playbook in match. Match was already running this playbook. You can't just go and say it was meta. It's it it to your point, it speaks to a core a different motivation motivation because you don't have fail states, right? It's a casual relaxing activity to sit there and to continue to do these generations and move up your level chains. No, dude. That that is a different core motivation than match. It's not just the meta.
So, go and look at the Tomb Blast game that you just talked about. Look at the growth that that game that game's been out for 10 years or more. When did the growth happen? When they layered in the live ops features that you're talking about. Not all of these games have it because many of them are over 10 years old. Any game that goes and implements exactly what you're talking about, which

is a great call out. Those games are featuring and seeing the growth that you're talking about. So, you're you're absolutely correct. I agree with you. the the how you blend both of them together is the innovation.
Yes. But not the gameplay. The gameplay is exactly the same. The only innovation in gameplay over the last like 10 years that I can think of is Pokémon Go. And before that it was Supercell. Most of their games were super innovative in terms of gameplay mechanics, right? Clash Royale and and even the original Clash of Clans, right? But we have not seen innovation in this [ __ ] whole market. Everyone runs the same meta playbook on a lot of these casual titles, right? It's it's the same, okay, we'll have our version of Lava Quest. Voodoo has like this template that they try to run on all the hyper casual puzzles. Again, the core gameplay of Gossip Harbor. If you want to say that 5 years isn't recent enough, right? And we should that's not recent enough. It had to be more innovative when we've seen this particular interpretation of it means that it isn't it isn't new and

fresh. Okay, I think that's fine. I definitely think that what makes Gossip Harbor stand up is how they've intertwined merge specific elements, right? These idea of cooldown timers, this idea of passive gameplay, this idea of energy into their live ops in a way that match couldn't do. Match doesn't have the same way to integrate it. Match has fail states. Lava Quest has to activate differently. And that to me is legitimate innovation that Gossip Harbor brought to the table that let them scale at LTV and buy a bunch of traffic. and apparently is what everyone else seems to have figured out. I don't know if the the live ops cookbook on all these other titles, by the way, is as good as Gossip Harbor, right? Like the suggestion here would be like, oh, they're just going to go out and they're going to totally kill it on live ops, but there's crazy CPI competition right now for Merge. And so if these other titles are not able to do more on the live ops side, if they're not able to increase ARPO and you just see CPI increase, then merge merge will not continue to grow, right? They haven't really unlocked something, right?
Okay. Do you think merge will continue

to grow or this is an asmtote?
No, I think it's going to absolutely continue to grow. Again, what is astute about what you're saying is how they have taken the core mechanic and the energy. You have to really engage in the game and you have to pay money to keep playing in the game. And so there is an element of people that want to continue to do that and fulfill different motivations. I want to make the collection. I want to continue playing. I want to see the story. You know that some of the things we don't talk about with Gossip Harbor, there's a story and each of the story points, it's time to ended energy when it's a cliffhanger of the story, so you want to keep playing. Those are all elements of the game that I think are incredibly well done and fulfill a need state that is different than what you get in a match three. And that's why you're seeing those games still grow. And you're actually, if you were to do the research, you would see that many of the players play both of these games or multiple games because they fulfill different needs and motivations. So yes, I agree with your conceit. I agree with your assessment on how the integration of core mechanics into live ops is a success. So I will

give you what you're talking about there. Absolutely.
Yeah. And I would also argue that the Chinese are coming full force on this [ __ ] right? So they're loading up the UA channels with this [ __ ] and that's going to take away share from the established people likeing King and Candy Crush and Playicks and others, right? And so that share that you're talking about that is being lost is being lost by the west and gained by the east, you know, and so like this is the same trend we've been talking about.
Yep.
And if you're loading up hundreds of millions of dollars of UA against this, you're going to start taking customers away, right?
When I pull this top charts, this is the biggest number of downloads by the nominal number of downloads in the United States for Merge. And so all of these publishers that are in the top 25, I I think literally all of them are in the east. Not a single one is in the west. Not a single one.
Except maybe run active. That's it.
Israel, right? But that is the challenge now. That is the challenge now in the game industry with these top games is

it's almost like a factory of how quickly can you put these things out, reskin it with the things that are working and change the theme and start pumping it. Like these are just like commoditized products almost. It's like it just breaks my heart that that's the key to success in these genres.
But that that is huge. Okay. Uh thank you for hanging in longer. Uh we will see you next week. Bye. You did it. You made it to the end of the episode. As a fan of the show, it would help us out if you'd subscribe and leave us a review on the podcast service of your choice. Those stars and likes, while small action on your part, mean a lot to us and help to grow the [music] show. More importantly, are you a member of the Deconstructor of Fun Slack group? If you have 5 years or more of games industry experience, go [music] to deconstructorofund.com/slack and apply to join. Join the games industry best professional community filled with peers always willing to lend

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