TWIG #404: AI Game Mashups Go Viral, Google Launches Playground and Mobile Studios Are Cheap Again

[music] Hello everyone and welcome to Deconstructor of Fun. This week in games episode 404. Episode not found. Internet humor. Come on. That was a good one, right?
We're hitting milestones. We're hitting mileston.
You could be a dad with that joke.
Oh, they they keep coming. And I I would like you to know AI does not actually write my jokes for me, which is I guess is evident. Uh, hi, I'm Jen Dano. I fill the marketing and publishing role on the podcast. Today we have just three of us.
Eric, strategy and investing, Mishkatkov, Kisperas, friend of the founders.
Okay, here's what we have on the podcast today. And by the way, Phil is going to Moby Dictum. So if you're there when you hear this, look for Phil. A very special AI episode. Well, it's not really on purpose, but quite a few AI topics. The game AI mashup videos took over the internet. We're going to break it down. AI prompt to game platforms are popping up everywhere with Google's new playground announcement following Meta's

Horizon Create from last week and what Roblox is doing. So, a lot of AI development going on from Invest game Substack. Buyers paid less for each dollar of revenue they did from 2020 to 2021. I mean, what is this? And 2026 already has more deals in the report than any year since 2022.
There's too many numbers. This is corp dev stuff. We're gonna just show one graph. I'm gonna have a takeaway for the operators because this is written by bankers for corporate development people. That's why it has all the numbers and blah blah blah blah blah.
Well, you know, it's good because Adam Teler in our Slack was like, "This is fantastic. Everyone should have a subscription to this."
You mean corpdev Adam? [laughter]
Yes. Which which is why I allowed this uh this topic when Adam blesses it. I allowed it. And then I I swear I didn't put this in. Resident Evil games engagement left 50% following the re release of Zack Prager's movie.
This is [laughter] just Phil.

We're baiting Philip Black for not doing this podcast, for being in Istanbul. Today we're going to talk about trans media and how it just directly affects with massive numbers.
And then if we get there, we'll give Crest a few minutes to gush over the new MMO AON 2. How do you say it? AON 2.
I think it's just Aon. Aon too. Okay.
All right. So, I also I put this in our Deconstructor of Fun Slack channel. Apply to join on the website if you would like in. Did you see the Saturday Night Live clip of GTA versus Zelda? It is both every gamer's dream and nightmare. You had a guy dressed up as as Link from Zelda and then Jason is the new character from GTA and it was like them fighting over who is cooler. And when you hear Link try to fight of why he's cool, you remember that gamers are geeks uh at heart.
No, you know, no, [laughter] the the takeaway is that the Link game is so

dumb [laughter] compared to GTA. Like there is no comparison between the two games at all, even though they're considered open world, you know, action games. Yeah, GTA is much cooler than Link. I just love that gaming breaks through to mass media right now. Like there's a lot going on where the world of gaming is pop culture for American football fans. Pittsburgh Steeler ex coach Mike Tomlin has broken the internet because he has been playing Minecraft for 12 years and he has a city inside of Minecraft that is like a city. It's actually a really adorable story. He started playing with his kids as a way to bond and then just kept playing because it was relaxing as he was like, you know, doing his whole coaching thing. He's got like four or five million views in like five days and was on all the shows. Actually, I wanted to call Laura and be like, "Hey, how'd those numbers do since he gave you all that free press?" I imagine it's pretty cool. Mishka, what's going on?

I may die this weekend. So, I have been doing the swimming thing for a good year now. And my coach, shout out to Theodoros, told me that I am ready and signed me up to a swim race, which is a open water, so sea swim of 2.5 km, which is like a little bit shy of 2 miles. So I'm doing this on Sunday. So uh so yeah,
it was nice knowing how people have drowned.
Sorry, not to go too deep into this, but the Alcatraz swim is is very short. The problem is it's so [ __ ] treacherous depending on the conditions that sometimes you just can't even finish the race, right? So they have to pull you back up from the boats, right? But um yeah.
Yeah. I don't know how bad
it's an official race. There's there's people and you have these caps, but it is like uh it's a it's a real distance cuz I realized that in Iron Man it's 1.5 km. This is like a full kilometer more, which is like 0.8 mile more. So, I'm I'm becoming like I'm really like incorporating this this [laughter]

Atlantic lifestyle. So, now I swim in the sea. That's what we do.
All right. Well, sending you good vibes and we won't go on Koshi or Poly Market and bet on like you versus the shark versus
versus Poseidon. [laughter]
Yeah, Poseidon. All right.
Oh, little little Greek humor. Oh, good job. Oh, that's really fun. All right. um shilling. So we are 2 weeks away from our deconstructor of fun round table at Zinga headquarters. We are basically full but we might have a few slots for like wait list update on the panel. We do like a little twig live. So Arash who is the GM of Google Play Games has said he is okay to be on the panel with Mr. Chris. Yeah. and he's like, "I'm wearing my bulletproof vest when I come on this panel, but I'm gonna do it." I was so thrilled and excited.
The thing is that he's so smart that I there's no way I can trick him into doing anything like he's he's just going

to [laughter] just be the mastermind up there. He's going to make me say something inappropriate somehow.
Well, that will never happen.
That's not hard. [laughter] That is
I don't know, dude. The Jedi mind trick [ __ ] you know.
[laughter]
So, he'll be up there. And then Scotty Kay, who's chief product officer for Zinga, will be up there. And then I'm working on one other person who hopefully I'll announce her next week if she gets okay. But so anyway, it's shaping up to be super fun. All of the platform folks are there. All of the major companies are there. I'm just really thrilled people are showing up for this. So, thank you to Appcharge for sponsoring and to Uptick as well. All right, what else we have?
Just quick one. 26th and 27th. 26th in Lima, we have a supper club, zero panels. And then 27th also zero panels. We're playing paddle in the morning. So come. I think the events are pretty much already almost full. But go to newsletters deconstruct fun.com. There

will be newsletter popups and signup links everywhere. So do that and you will get the links to all of our events, the upcoming, the future ones, the ones in the past, and so forth. So do that. Thank you. Also probably teasing a couple of the string of podcasts. First of all, kudos to Mishka for founder porn on all of the podcasts, the deep dive interviews. Chris and I have one coming out soon. We we've got it. It doesn't stop on the deep dive. So, thank you guys for listening to those. It does take a lot of work to go and do those and get approvals and make sure that you know we as nonjournalists don't sound like idiots, but uh hopefully you guys are enjoying that. [clears throat] The numbers show that you're enjoying that. So, thank you on that.
Yeah, you guys are doing more like executive erotics while I'm doing just straight up founder porn. So,
oh my god,
now we're not going to do any ever again cuz you just
you just said that. Oh, every time, Chris. Every time.

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All right, so I thought we would um get a week without Xbox, but no, Chris,
the big news this morning was that Xbox has exclusive cloud streaming rights to GTA 6, which basically would mean that it's available on PC at launch. Right. This was the big headline and of course IGN gaming. Everyone covered this thing

like Chris are like same. [laughter]
Well, I mean I don't know why that guy is on my [ __ ] feet every morning without fail. Click engage. You read his you read and you reply. That's why. [laughter]
Yeah.
Okay. Anyway. All right. Why? Of course, Matthew Ball had to send out the correction that GTA 6 will not be streaming exclusively and it will not be coming to PC at all. So, basically, it's a [ __ ] useless streaming deal that they have for Xbox that you need a [ __ ] Xbox, which no one in their right mind would ever do because streaming is the dumbest idea in video games. Period. End of sentence. So, anyway, Matthew Balls saved you from another rant about Xbox and stupid streaming. I thought the [ __ ] tech bros were finally taking over, but no, it is not available on PC. That would be so stupid to do that for Take Two. They were just
at launch. Yeah.
Yeah. And that's so dumb. And not to mention the technical problems that

they're going to have on that game. There's no reason to do it streaming. You need to have it on a dedicated hardware. That's the whole point, right? So, that's not happening. Thank you very much. Well, the other news we didn't cover related to Xbox since we're on them is that Asha Chararma has gone out and says, "No, we're not selling." Have you seen all those articles?
Yeah, dude. This is like corporate PR at its finest. Like, anybody that follows this and listens to this and reports on this like like it's actual gospel is just not thinking clearly at all. And even the way she said it in the press release was not quite saying it's not out of the question, you know, and it's not likely a sale anyway. It's a devesture, right? Or a spin out, which is a completely different thing. So anyway, none of this is binding in any way. The narrative that I think she's spinning is not even the accurate narrative of what she's doing, right? So she's basically talking about supporting Xbox, supporting hardware, supporting uh Xbox in every living room. yet every

single action she's taken so far has been basically decoupling from the platform itself and making a publisher. So, you know, we'll see what ends up happening, but it's it seems like a lot of what she's saying on there is disingenuous and and she is a master of PR. Like even like people that don't even follow gaming just think she's saving Xbox. She has done [ __ ] nothing to save Xbox. If you look at the hardware numbers recently, it is so bad. Like you cannot recover. It's like 1 to 10 almost in terms of hardware.
She has done a ton.
But but like she didn't inherit like she has done inherit like a booming company. Like it was deep underwater structure.
There's there's there's no redemption here until Yeah. Until she grows hardware and she grows share against Sony. There's no evidence that that is actually happening. It's actually the opposite of evidence, right? Because

I mean, we talked about this like but you agree that this is the cleanup phase. There's not going to be growth right now. This is clean up
of course
and prep for growth. And I I don't know if you guys are hearing this, but I I get a lot of like positive vibes from people that are engaging with her saying like they agree with the strategies. She has demonstrated that she's really coming up to speed quickly on games that she is super sharp like you've always said Chris. So they of course they're not winning. They shouldn't win for like 2 years, right?
Yeah. But that's not the way it's being reported nor the way the PR is being spun. Like if you read the news out there, everyone thinks that Xbox is saved. It is not. It is definitely not saved. And actually I think they decouple Xbox altogether. I think Xbox as a platform will go away. Like and I've been saying this from the very beginning and it looks more and more like it. So it'll be just it'll just be another Activision.
What do you mean the Xbox as platform goes away?
It's just there's no platform in practice. So just game pass.
Yeah, they'll stop making hardware.

So it's going to be just Game Pass and their software business.
Yeah, it's going to be there'll be a publisher on PlayStation and maybe Switch and then have a PC
in like three years. [laughter]
Like
for me it makes sense for them to just do it now. Just [ __ ] pull the rip cord, dude. Cuz they're hopeless. Like the hardware numbers are so bad. It's like they don't even own a platform anymore except for the
Apocalypse, right? Like
anyway, all right. We were not going to talk about Xbox.
Yeah. God damn it. Okay, we're going to have to bring Supercell back from our ban on Supercell so that it can take the place of Xbox. All right, so here's what's going on with AI coded mashup mods like Skate 3 and Modern Warfare 2 flood uh Twitter or X in the internet and publishers start issuing takedowns, creating what must have been lawyer hell this weekend. So since September 27th, modders have used Cloud Opus 5.5 to decompile two games, run both at once, and overlay one on the other. And this

is per like one of the outlets is BGC. Viral examples include Tarov in Skyrim, Minecraft in Elden Ring, Mario 64 and Dark Souls, and Kotaku found most lack a public download. My personal favorite was Skate 3 in Modern Warfare 2. I can just imagine, Crest, like that seems like something you would be doing. Bethesda sent a cease and desist to Fallout New York, a Claude Opus 5.5 browser game that hit 3.5 million views. Uh, creator Chrisfist said on October 1st, Activision had X disabled footage of Maurice Helman's AI decompilation of Modern Warfare 2, which he said ran 17 agents in parallel. SFO Grimhammer 3 creator Venice corrupted the Total War Warhammer 3 mod to break AI made copies and restored it, PC Gamer and IGN said. So, Mishka, there's this topic and then I think there's another AI topic and

then we'll like break it down.
Yeah. Yeah. I mean, first of all, like it doesn't seem like there's so much new in that. Like I remember back in the days when I was a kid, I used to mod Command and Conquer the original one, and I put in like
dinosaurs into it. Yeah, I get it. But now distribution is and and my news regarding the sort of AI crackdown was Jagex. So, this was less on the gameplay, but this was on the marketing side. So, they ran a trailer at Runefest for Runescape 3's Dragon Slayer 2 quest. I don't even know what I'm saying. [laughter] And the the Reddit users quickly spotted Jared. Look, do I look like I play? Anyways, [laughter] so they quickly spotted a very popular game. I'm not I'm not It's a great game. It has a fantastic audience. Do not come after me. I just don't play it. I didn't play Ultima online either, so I'm sorry. Anyway, so they spotted Jared of AI in it and including sixfingered hands and medieval boots that look like Air Jordan. And so Jagex came out and said,

"This is an outside partner that made the trailer after they explicitly promised not to use AI." Usually explicitly promise means they had a contract that says you can't use an AI. So in that case anyways so they pulled the trailer and said that this was the second time in a very short span that AI got in through a trusted partner and the first collab that had this issue was with Hunter Thieves. So Jagex is now overhauling it and it's way to review partners' work and will commission community creators to tell the quest story instead. Nice nice maneuver. So, and you know the problem was because Jagex came out, they promised that they won't use shar of AI in anything that players touch and that's why the players got such an outrage about these AI things even though they use AI tooling. So, my take on this is that AI regarding your news has made it nearly free to clone different famous games well enough for them to go viral. And the clones are actually pretty fun as you mentioned. And the way I'm reading it, it feels

like these publishers are playing this whack-a-ole game with individual creators. And they haven't gone against the technology that enables this [ __ ] which is the AI companies. And that's what Hollywood studios have done. They've gone against the technology. So to me, the Swedes, again, I'm just going to age myself like Napster 2.0 moment. We're going after these individual creators and not technology underneath. So next, they're going to be probably what? suing these individual creators for creating mashups of their games. So, Jen, how can we fix this? How can we overcome this? Is this just the way things will be? And everybody's afraid of AI companies.
Well, first I'd like to compliment you on your AI mashup. Guacamole is a combination of guacamole and whack-a-ole. [laughter] Well done. Um you you you inadvertently added that in uh and uh you know, well done. All right, so modders are going to mod, but this feels really different when it's the actual code of the game.

And so I really wanted to dig in because the modding community is a benefit. I mean, we wouldn't have League of Legends if you couldn't mod Dota and then and Dota modded World of Warcraft, right? Like I I think that's the birth that kind of stuff.
Yeah. Like all these different things come from modding. But when I dug in, as I understand it, what AI is doing is breaking three laws. copyright, the game's licensing agreement, which is called an OLA, and then the the DMCA takedown process that platforms like X follows. So, publishers have two tools here. There's the game license, which bans decompiling and copyright takedown notices and forces platforms like X to pull the clips. These AI projects copy or rebuild the entire game and often mix two publishers IP, which goes past what the modding policies allow. That's kind of the thing that's happening here is the explicit code and then mixing IPs. Publishers will need basically a new sanctioned UGC path alongside takedowns

to allow fans to create and stay inside their ecosystem. So if I were the lawyers, I would be huddling in a room right now saying, "How can we turn this into good and and not like piss off all of our fans and make all that stuff come out?" Because basically there's a marketing bonus here. the views on the games with these IPs can draw people in. Like Modern Warfare 2, remember that game wasn't doing that great and now all of a sudden it's everywhere. Skate 3, also a little bit on the struggle bus. Both these things could pull attention into some of these games. Maybe doing a little back catalog, maybe saying, "Hey, why don't we do a remaster? Why don't we do crossover events?" Like showing that there's something there. If you can figure out where this is beneficial and where you can allow creators to have some fun, I would really be pushing for that. I mean, obviously GTA is probably freaked the out right now cuz you can imagine all of the stuff going into GTA when that code is out. But Crest, did

you skate in Modern Warfare with Skate? I that seems like something you would do, right? No,
I don't really buy this Napster comparison. You know, when Napster came out, it was a free copy of the thing you'd otherwise pay for. Like, that's a biging deal, right? An absolutely free copy of everying song on the internet, right? I mean, that was available, period. You know, I don't think anybody's skipping Modern Warfare 2 because there's some [ __ ] mashup with Skate 3 on [ __ ] YouTube. You know, this is like an IP problem. This is a control problem, not like lost sales per se at this moment, right? But I guess there is some concern, you know, because at least when Napster was there, they still needed a hosting, right? And they needed the network to like [ __ ] move these files and they could sue the network, which is ultimately what happened. But I mean, until like people can actually generate their own experience locally, which is not going to happen anytime soon, I don't think this is a real threat to sales at all. Right? And if you're talking about some

future in which that is the case, then I'm sure they'll figure this stuff out as well. So, I don't know. I think the Napster kind of reference is always just overstating the problem right now with this and a lot of this is like promotional, right, from the perspective of the IP holders because the only way you're going to be able to buy these games is on the consoles or on PC, you know, and so I don't think it should be that big of a concern at this moment.
Yeah, I think it's more IP than it is sale. If anything, it's marketing in a good way.
And it could go ary, right? They could market in a way that you don't like, right? But
well, yeah,
it's funny because you think about what they did on Saturday Night Live. Like that doesn't depict either of those games very well, honestly. Like I think it it actually makes fun of both games. Like
it does. Yeah,
that's still real marketing, right? Like almost any marketing is good marketing to some degree, you know, to
no such thing as bad PR. The one concern is like Nintendo, right? I think Mario showed up Mar did I just say Mario? Mario just showed up in Skyrim or Dead

Souls or something like that. and and Nintendo has a little bit more of a family image. So, that could be I think if you can blow characters up and do bad things to them and have clips, I think that that's what gets a little bit bad. All right, let's go on to our next AI story, which was announced today as we record on Wednesday, October 7th. So, the guys haven't had a really a chance to play with anything. Uh, Google launches Playground, an experimental prompt-based gaming platform where players can create custom games in minutes, no coding required. They also announced a partnership with Unity. Unity Spark integration coming soon. So, not in there right when this comes out. So, here's a little bit more about this. Creators type what they want, then change physics, rules, characters, and environments by prompt. No coding required. Finished games can stay private. They can go out by link or get published to the explore gallery with leaderboards, creator follows, and multiplayer in select genres. This even is like prompt to multiplayer. Coming

soon, Unity Sparks adds professional level mechanics, highfidelity 3D and Unity runtime. Unity Spark games will be playable inside of Playground. So, the Playground platform is web- based and you can do it mobile and mobile web. Playground launched today, October 7th, in the US for users 18 and older with creation access tiered by Google One membership. So, here's my take. The race to the AI UGC platforms is really heating up. So, let's talk a little bit about some news we didn't get to the last couple of weeks. Roblox puts prompt creation inside of an audience of 132 million DAU and creators there can already earn through DevX. Roblox Build is a tab in the Roblox app that turns text prompts into playable games. And it's launched in alpha in New Zealand in July. I think it's rolling out to some other countries like I don't know, Serbia, Singapore, and they have some

early stats that like 9,000 games have been published. 71% of creators are new to the Roblox Studios saying that hey, this is unlocking the ability for creators to come in. And then last week at Meta Connect on the 24th of September, Meta launched Horizon Create, an app that turns text prompts into playable 2D and 3D games. Games published straight to Facebook, Instagram, and Horizon with no app store and creator payout terms remain unannounced on that platform. So, this is also reminiscent. There's like another web-based platform I've seen called Astroade, a prompt to game startup that's actually backed by Google AI's future fund reported 5 million monthly users, 75,000 games in May of 26 per pocket gamer and fortune. So when you think of these kinds of platforms on the pro side, it's absolutely amazing that you can unlock your creativity. You can make a game just by talking to a machine. You'll get a lot of people feeling like they can enter the world of gaming. That you know, I don't have to be a coder. I

don't have to be an artist. I can just make something up and you know while being however it's maybe not appropriate for kids since you have to technically be 18 to do it. I'm sure they'll they'll figure that out soon. On the other hand, the challenge with UGC platforms is you know only about 1 to 3% of the games are actually worth your time. Most of this is going to be AI slop or sloppy games. Just that's true of any creator platform even YouTube even Tik Tok. So the real challenge is going to be discovery and curation of these things. Not to mention the business model ensuring creators creators are benefiting from their work. It looks like Horizon and and this Google playground haven't yet announced how creators will benefit. I do see the word experimental everywhere which is a tech company way of saying that they're early on and we're going to change things and we might not know everything. So Crest wanted to get your thoughts. Uh especially on the Unity piece. It feels like Unity wanted to be involved in this since it got hit really hard when Google

Labs announced Project Genie a few months ago and all of the game engines took a hit. It looks like they're getting ahead of it by being involved, which is probably a really good idea. So, what what are you seeing?
Well, first of all, I mean, this business model for this back to the Google thing is completely ass backwards, right? Like Roblox creators are are earning money through developing games, right? This is like you have to pay for the privilege of making games on Google. So that doesn't make sense. And there's no mechanism by which developers can make any money. So this is a UEFN problem. Like at least UFN problem had a model, right? But it sucked, right? Clearly. But anyway, I don't understand.
Well, they have a free tier so that so you can get free credits to play and then you unlock like unlimited credits if you're in the the system. But yes, right. But Horizon Create, you don't make money either yet. It's just like make it for fun.
I know our friends at Google are probably not going to hear this, but like this is not the way you make a

platform. Like this is just not the way you do it period. You know, it's like it's beautiful. It's great. Okay, the second point is that 18 plus I know it eliminates all these problems with Copa, but or cop, whatever you call that, but like
that's where all the creators are. [laughter] I mean, like, they're the ones that are building all this [ __ ] you know? It's like, okay, you're just eliminating your entire creator audience by just right from the get-go, right?
The Unity thing, look, you know, they're they're participating. But Unity, it's all about [ __ ] ad tech, right? All this Unity is just [ __ ] noise in the background. Like, doesn't mean [ __ ] They don't make any money. Like if they had pivoted and tried to create a platform like this like 10 years ago when John Recotella took over, we'd be having a different conversation on Unity, right? But they are not an engine company really, right? They are the de facto engine company which is aing commodity and they're building ade on

top of it, right? And the it's all about the adtech. If that does well, Unity does well. And the final thing, and I'm gonna repeat this 10,00 times about Google and anybody that supports what the they're doing, everything is experimental at Google. Everything. They have [ __ ] done a gajillion things in gaming that have gone [ __ ] nowhere, including spending hundreds and hundreds and hundreds and hundreds of million dollars on this [ __ ] streaming platform that never had a chance of being successful.
What was that called?
I don't even I'm not even going to give it names. [laughter] stadium, right?
He who will not be named stadium.
Yeah, exactly. So, it's like every gaming initiative has failed at at Google, and I've said this a million times before. So, procreators will not invest the time into doing this. And then you look at Facebook, which has the same problem. Like, anybody that spent a nickel on VR besides the ones that were acquired by Facebook, I guess, are justing licking their wounds, right?

They're like they got destroyed, right? And now you're going to have a bunch of people making [ __ ] for Horizon. Like come on. Like you guys have once bitten twice shy. You've already damaged that relationship. There's no trust there, you know? And so I think it's a t tough hill to climb generally speaking.
Oh, I have a funny story about Google Stadia. I I remember that. [clears throat] I don't remember what I exactly was doing with Google at one of their offices. Maybe a speech, maybe a workshop, whatever it was. Google is super nice. The people are the nicest. they give you the gift back. And and brother was giving me the gift back. He was like, "Would you like to have a stadium?" And I was like, "No, I'm good." And he was like, "Yeah, makes sense." [laughter] So, so what I want to say is none of this is a people problem. The people at Google are the nicest, the smartest, and you know, all the compliments. I think this is an organization problem because this is the classic way corporation launches a product. You go like the product team makes a presentation, they go into a boardroom, then you know

executives agree then legal comes in and they neuterize the product fully like in this case not under 18year-old because like you know legal went in too much of a risk so not that okay we don't want any you know runchy games that's bad for image then marketing comes in and that kind of creates a sort of like a generic marketing campaign around it and then coms comes in and tells a story that is kind of about the original product but not really what they're delivering and in the end the product they probably wanted to make is not exactly the product that comes out and even if it's a miss even if they lose hundreds of millions of dollars who cares Google has infinite money but nevertheless like I'm really confused of like why these projects are popping up whether it's Meta whether it's Google or somebody else because there are tons of engines in development there's all these startups that being funded with their AI engine some of them have been on the podcast open AI made a big push on their gaming engine with Astra and Sonet by Claude is actually even better than Astra at least when I'm talking to game

developers and working with the clients. Yeah, Opus, sorry, Opus is even better. Always forget Claude names. They're too difficult. But but if that is already better than something that is dedicated to it. So I'm just confused of like why do we need these engines? What are we doing with these platforms? I know the distribution is a problem, but you don't solve distribution by creating a walled garden with nobody in it. Like it's confusing. Sorry, that's the other point I forgot to put on here is it's it's still a distribution problem, right? You still need an audience, right? You can't justing create an audience from scratch. I mean, at least
like Facebook has like tons of distribution capabilities across their social media, but that doesn't necessarily translate to interactive either really. And Google's
nowhere, right?
Yeah.
Yeah. [laughter] And they look at their audience where the audience goes. It's like it's not like they can just move the audience. It what what makes sense to them as a company? I think people assume that because Google's everywhere that Google can be everywhere. You know what I mean? Like the fact that that everyone has a phone that means that

Apple can be a gaming platform. It just it doesn't work that way, right? It's like Yeah. Anyway, and nevertheless, it is.
I want to defend marketing on this one because you said marketing makes it feel generic. I actually think it's reverse in this instance where if you watch the trailer that they released, the trailer is fantastic. like it really highlights this ability for anyone to come up with an idea for a game and make it come true and it's like this aspirational you know vision of what this is and then the product itself you maybe it's not it's experimental right like this thing have you ever tried to make anything with AI and how many prompts it takes for you to actually get something to do what it wants you to do it takes forever and so I actually think the marketing is is is ahead of probably where the product is at this moment in time for all of these platforms. I think people are going off of the UGC is awesome. How do we compete with compete with Roblox? How do we give the tool democratize game

development? You know, like all of these like, [laughter] you know, aspirational things that people say, but you know, ultimately players don't want to play other people's [ __ ] They want to play really good games. And that's what I struggle with.
Roblox is a different but I mean Roblox is or Steam games where you have indiv from from other creators like it is very creator specific like people actually fanboy the creators and follow them.
Yeah. Shield people and then the same thing with the Steam like you have these individual. But anyways like I'm I'm just confused like why do we need this? Like I don't understand like we have so many of these giant technology companies and like it's not I don't like who's who's out here like [ __ ] I just want to make a game and I don't have any tools. I want to be clear, I am actually not against this idea in concept at all because I think
there is a notion that interactive Tik Tok could be really interesting, right? Like if you build interactive experiences that are really like easy to

play and fun and some figure out how to monetize that like I I think that's
whether it's advertising other ways there's there's lots of ways of skinning this cat, right? To some degree it's just
and the marketing I'm not even actually saying the marketing the the visuals on this thing are amazing. like everything they're doing is good, right? The problem is they have no follow through, right? They're not actually building a platform. They're just building tech, you know, and they're just throwing it out there, right, for gillions of dollars, you know? That's different. That's completely different than making a platform. Like, you know, Roblox took [ __ ] 20 years before they were making money, right? Like, dude, it took them for and sorry, just not a Roblox rant, but like it took them forever. And then they're building games that are like stealing [ __ ] from kids, right? That that's what's making money, right? That's crazy. Like it took them 20 years to come up with that [ __ ] right?
But they're not building they're not building.
No, they are. Hey, they are they are not building it, but they are supporting that [ __ ] right? Because that's the only thing that made money on the platform, right? And so like anyway, that's where they got after 20 years.

People can do better, right? I I'm hoping that people can do better and AI should help enable that. But you need to build a platform. You just can't build tools and tech and hope that oh, let's let's make this thing work, right? even if the tools and tech work, right? So, anyway, I don't
I mean, we didn't even get into like the legal aspect of this is like, can you type in an IP and is Mario now inside, you know, one of these games? Um,
you know, we we call it TTP, time to penis. Like, how how quickly is some kid going to like
time to what? Time to pen.
You don't know TTP, time to penis. How quickly will a time to penis
will you or a a 10-year-old boy put a penis inside of a video game? This is from the great mythic quest.
You know, some 20-year-old and 30year-old and 40year-old are also known to put in penises.
Exactly. Well, my my point is you are all 10-year-old boys at heart who who want to do that. So, there have to be safety constraints and I think they announced that there's safety constraints and I know you can kind of

like white label or black label certain things. It has a little bit of a challenge in the US, not as much in the east or other countries. And will this be a positive for people? Will it keep people from learning how to code? I mean, I guess no one's going to code in 10 years anyway because you're just gonna prompt everything.
It's your fault, by the way, now that I'm gonna say it. You remember Peter Mal when he did this game in 2012 that was called Curiosity? What's inside the cube?
No.
What was inside the cube? You didn't even You remember? So, he made this box game, the cube game, and then and it was like really interesting. computer model has great ideas. But inside the cube, because it was very UGC, there was a PP as always cuz people got to draw. [laughter]
Oh, of course there is. Of course there is. Cuz yes,
people got to draw things. And what did they draw?
Peepee. Yeah. Yeah. [laughter]
Welcome to the box.
Not even the room. Oh my god, it reminds me of the the room, which was so great. Okay, so that Thank you for that AI

chat. Let's talk about your other favorite topic which is investing. Mishka, take this one.
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[music] This is invest game. So shout out to invest game. We always cover their news. They are the best in terms of getting ahead of the curve and and informing everybody on what the latest deals are and who raised what and so forth. Uh this latest one was their Substack. So now they're running a Substack in addition to their platform. So, if you haven't checked them out and if you're a anybody like Adam Corpde Dev Adam, then you should be subscribed to this platform. But they showed a deal flow and how the deal flow has fluctuated between 2020 to the current year. Now, as we've said multiple time on this podcast, please stop measuring anything against 2020 or 2021 and even 2022 because there was an abnormal year. So, long story short, what this graph shows is, of course, 2020, 2021, 2022, abnormal amount of deal activity. Long story short, buyers pay less for each dollar of revenue today than they did in 2020 and 2021. Surprise. But the

positive thing about this news and this graph is that 2026 already has more reported deals than any year since 2022. So 2021 we had 27 gaming deals above 20 million reported deals. Then we have 2022 when it dropped to 18 and then there were like the other silent years where we had under 10 deals in 2023, 2024, 2025 and currently we are already at 14 deals and we are in September when this was done. So my analysis in this one is that the median or this is actually in the in the substack as well that the median is hiding the big spread because deals over 1 billion traded far better. It was 4x revenue and 20 times Ebida. So Ebida means earnings before interest, taxes, depreciations and blah blah blah. So basically your net revenue and roughly double for the deals between. So the deals were more valuable

the bigger the company is. When it was more than 1 billion, you got way more per revenue and per your profitability than if your company valuation was between 100 and $1 billion. And the value per employee, yeah, the value per employee was was also like much larger at these big cap companies compared to the smallest one. And the small hit driven companies naturally had the highest one because they were saved. Anyways, my takeaway from this one is that mobile studios are cheap again. So that's why they're being bought. That is not a good thing for investors. Scale gets premium because scale means you have franchises, means you have less volatility and means that the buyers are less likely to buy you. Midsize studios are getting valued like an ordinary business currently in gaming rather than the growth bets that they used to be. This applies to everybody except the Turks. They still get valued like growth bets. And then this report is of course

drafted by people who are bankers to people who are corporate development folks. But if you're an operator and you're reading this, you're like, "Oh my god, the be the most, you know, sold companies since 2022. The industry is picking back. The market has reopened, but the market has reopened. It's just on buyer term at the moment. Founders are selling because funding has dried up and valuations have gone down because market got overheated during those years and oversaturated with games and because the users diversified their attention to Calies of the world to to other things than they were doing when they were locked up. So this is positive news but it's not as positive as the headline tells you. What say you Eric Crest? First of all, Invest game the tool is very cool. like they've done a really really good job of putting this thing together and I hope they move outside of gaming because I think that would actually be really cool too. In the report it said 40% of the deal flow was

one deal like the $6 billion from Moonton, right? So that needs to be called out to some degree. Fundamental problem right now is there no [ __ ] buyers, right? So I don't know what what deals these are really the only buyer out there right now is the Saudis. So
and triple dot.
Yeah, I guess in triple dot
still. Oh, that's what that is. That maybe that's what how many of those deals were actually put in here. Anyway, I don't know what the list is, but and so the problem with this is that they're only buying the big profitable companies, right? So, there's really no buyers for the small like the aggregators like we had Zinga, EA, Stillfront, Playa, Tencent, Aristocrat, Net Marble, Appleven, MTG, which I think is still, and Triple Dot, which I think are still kind of in the mix. So, it's basically the only ones that I know that are active is Savvy, the Saudis, MTG, and maybe Triple Dot, but I don't know what exactly Triple Dot is doing right now cuz
they bought Supersonic from from Unity for a chunk of change just recently.
Yeah, opportunistic stuff, I guess. So,

what it does mean is, as they say, it's a buyer market. You know, there's not as many bidding wars, so they're not build bidding up assets, which basically results in lower valuations. And what I think it did say in the report is that they are looking for profitable live games with proven user acquisition, right? That eliminates
everything
99% of all game game companies, right? Which basically it's the Turkish companies. So it's [laughter] like I don't know what's else is out there that's like kind of at this scale like with UA profitable UA, you know? So that's what you should be building, right? Cuz that's what they're looking for. This is not like a pre revenue pre- [laughter] profitability situation right now, you know. So anyway, that's what they're looking for.
And the threshold is always increasing. Like with these smaller companies, they're like, previously you could have get gotten bought with like, I don't know, $20 million in annual revenue and then it was 40 and now it's now it's like, you know what, just get to 100 and we'll talk to you. It's like Jesus.
They want these unicorns. these these companies like can't get there on their

own because the cost to get a game to that level is more than they can afford. And so there's this I don't know who these unicorns are that they're hoping to find because it's a supply problem. Well, I mean, it's just a supply problem. Except the supply problem is now at the top end and not at the bottom end because there's so many more game companies trying to take a swing at things, especially in mobile and now indie and PC and console. But there's no one out there to buy anything cuz the consolidation at the top has really happened.
But I want to ask Chris like who's going to buy all these Turkish companies? Like they are being super funded all the time. Like what what happens to them? Well, the Turkish companies are unique in the sense that they are actually driving significant revenue. So, they're of scale enough to be interesting to Savvy and to MTG and maybe Triple Dot, right? Like, cuz they are being funded in a way that is aggressively growing them. But this is a really clear thing. It's like
for Savvy to acquire something now, it has to be at scale, right? Because

there's it doesn't move the needle for them. They're not buying a game that does $50 million. Like, it doesn't make sense. like it's it's it's not worth anything for them, right?
The Turkish companies being supplemented by the government funding as well, which is, you know,
propelling them beyond what maybe a regular company could do.
It's helpful for finding product market fit. It's not for scaling. It just it subsidizes the early part of your development. That's
so of course, yes, it's one of the best subsidies.
I think they're getting special rates on loans. There there's some [ __ ] going on that that no one everyone seems to be denying it, but like there's some like the UA funding dollars are so insane. We have a piece on on Circle Games here that I added about their funding route and cuz like Tencent just invested in Turkey. Chris says always Tencent doesn't invest in Turkey. The thing is like Tencent does invest but they don't publicize the investment unless a company wants to do that and there so anyways Tencent A16Z's they were all

behind Circle Games they were just raised 25 million series A and that was led by Tencent shout out to Circle Games I think I met the founder the nicest guy you know great team etc etc I just want to say nice things before I look at their data because I I started looking at it and and I just wanted to say in the sense that always seems like everybody in Turkey is just flying high and just shipping these super games. But I was looking at their outbreak title which is called Sword Express. Very unique sorting game and it's not even growing particularly fast. I don't even understand always these funding because like it's making about you know 1 to2 million in inapp purchase and ads probably a month. The downloads are really tiny. I put it in comparison with Grand Games that you know does 20 million downloads a month or Cipher Games which is another startup that raised series A last year. They are already that behind Royal Smash the the cannon game. So they are at like 5

million downloads and already going down per month. And then this Circle Games is doing like 51,000 downloads uh a month. That that seems like such a small amount. And then when we look at the other revenues like you know this is just inapp purchases but but I don't know how else to say than than than mice nuts over here. So even even when we're looking at these these funding deals it's like seems that there are less and less of these true outbreaks like say grand games but they are still drawing a ton of funding. They have $1200 million to invest into games like
they're not investing in games. They're not a game investor pulled out. Although I know. I know. But they raised Games Fund 1 and Games Fund 2 are both 600. They're literally called when you go to A6Z, it's called Games Fund 1, Games Fund 2.
Yeah.
Well, ironically, it's San Francisco Tech Week this week, LA Tech Week next week. And like last year or the year before, there used to be a lot of gaming kind of events that I would go to. And

there's just there's just nothing with game folks at these Yeah. It's all AI stuff right now. And so I I think we've talked about this many of the there's there's not that many left, but so I have an idea around this, you know, supply issue at the top for buyers. If you are a buyer, like a Stillfront or an MG, I don't even know who they are, but if you are, like, why aren't they out there raising their Corpdev flag running around setting up events or calling us and saying, "Hey, put on an event for for, you know, and bring these people together." Because it right now it just it feels like there is a brand of no buyers out there. Like if you are buying isn't this the right time because everything's on sale?
Well bankers are doing these events all the time. A re event isn't going to sell next month.
But doesn't a banker need to for somebody?
That's their job. They they bring the founders and represent them to the

buyers and you know there's a list of buyers. Yes, it's might might be a little bit smaller one at the moment, but they are doing fantastic events all the time. So, I
I'm just saying that the companies and their corp dev people should be out there branding themselves as open for business and willing to go shopping and cuz right now we can we name anybody who's really out there shopping?
Raw Bricka from Scopely just
I mean is Scop on a plane? No,
I mean they're they're kind of not.
They just invested into a Chinese company. They just they just did a did a a thing with Chinese. They What do you mean kind of not to? They they literally bought Bloom games for a billion dollars.
It was, as I understood it from they they invested like a lot of money in them, but I don't think they bought them out. I don't know. Well, we we can look that up, but
there's an Scopy. I mean, we the corp dev folks at Scopely are topnotch and we love them, but like who else? Okay. Well, who else? And why aren't they

branding themselves and waving a flag saying, "Hey, I'm out. I'm shopping, right?" Like, it's it should be like VIP whales in Vegas where everyone knows who they are and people should be flying them in and whining and dining them so they can go shopping on sale. I don't [clears throat] know. That's just my
I I I think we're going to see a lot of deals coming out of Vietnam like end of this year. Definitely next year,
dude.
Yeah, Chris, I'm not eating my words until next year. This is I'm dropping predictions already. Let's go Vietnam. Like [laughter]
it's hard to do business in that country, dude. That's [ __ ] dude. You were talking about asking where the flat.
Dude, you were talking about India last year.
Flags are flown. It's all the flags are there.
Buyers Vietnamese companies are not buyers.
Buyers,
they're not buyers. Buyers. What the
Oh, no, no, no, no. But like the buyers are going to Vietnam. That's what I'm talking about. I am saying oh you're saying like
buyers should be saying I am a buyer
everybody treat me like a a whale in

Vegas and come and whine and dine me because I am a buyer
who
there are no buyers left
but that's what I'm saying if you are a buyer cuz right now there is a marketing problem we don't know who they are because they're not out there public and maybe that's their whole thing is they don't want to be out there publicly
NCOFT just did a like we covered in news when NCoft was saying who are they buying? Why they're buying? Literally, their guy was was like, "Hey, this is what we're buying.
They're not buying [ __ ]
What do you mean display? They're spending like hundreds hundreds of millions of dollars." You'd be like, "No, they're not buying this." Like mobile gamer Biz. Hello, I'm NCOFT. I'm buying. No. What did What did they buy?
Just Play. And I don't remember the other ones, but Just Play It was like 200 mil. might not have been 200 mil, but I remember that it was 200 multiple figures. 70%.
Yes,
the founders are fun. The founders are fun.
I'm gonna get them a t-shirt that says I'm a buyer. All right, let's go to our

last story really quick so you can hand grenade toss something at Eric Crest on Resident Evil. Go for it, Mishka.
Resident Evil games engagement leaped 50% following the release of Zack Kger's movie. So, Sensor Tower measured five Resident Evil games going from 500,000 to 700,000 daily players between August and September with daily unit sales rising from 34 to 80,000. And New Zealu is putting franchise daily players 72% above late summer baseline release or after release. So, is this the uh the proof that Trans Media is the way to go?
No.
Okay. Just to be clear, this was based on the release of the movie, which has done extremely well in the box office, and this coincides with that release to see what the impact is to Resident Evil franchise, right? I don't think you mentioned that. First of all, a lot of

this volume was actually captured when they did the price drop like a week before the movie even released. They actually did a good job of explaining this in their press release, but the coverage of this was complete [ __ ] right? And doing this top line [ __ ] right? But they did an actually good job of describing this. The second thing, the movie actually helped catalog which was selling for eight bucks, right? Versus the new release that they just had that is like $70, right? And so like all the volume was related to like the [ __ ] cheapy [ __ ] right? Not not the $70. It was aing absolute mice nuts impact to like the full price skew even with a 30% discount on the full price. It still was mice nuts, right? 6 million people saw this goddamn film, right? And [ __ ] Capcom [ __ ] barely moved for them on a revenue basis. And again, it all helped back catalog. It did not help the new release. So again, this is a proof of the opposite that [ __ ] trans media is garbage. It doesn't mean

anything at all in terms of sales. Like this is a a great piece about how it is ineffective period.
I still think that it is an all boats rise. You've got toys, hard lines, soft lines, all the other categories of products, although probably not a lot of toys for rated R horror movie, although that's becoming a thing these days. You also have Halloween going into the timing. You know, maybe this is a back catalog play. Although maybe do we know the numbers of back catalog yet?
In the piece they show you exactly how much units of back catalog went up and stuff like that, right? That's what this is all about.
And the fact is like this is the best movie that they've ever released for the Resident Evil franchise, by the way. And Resident Evil movies are just awesome, I think. You know, like they're just action nonsense, but
this is the biggest movie ever. And this is the impact that it has. It's nothing. It's nothing. Now, I will still concede that look, the Resident Evil franchise

is a great franchise and Capcom has done an amazing job of managing this and keeping this thing live and and one of the biggest franchises on in the world. But again, Trans Media is only helping in terms of expanding its exposure. It does not impact sales cuz if you're a 55year-old lady that loves revenueable movies, you're not booting up a Xbox and playing a shooter game in which you're going to get your ass handed to you, you know? Like there's a difference.
I wonder if it's what has kept the IP alive though. And I think this this movie was not a direct take on any of the games. I think it was a like in the world of but like an offshoot if I remember. I think it was more related to the Resident Evil 2, which was the $8 skew. So, I think it was in that realm. That's what my understanding is, but I am not.
How many people who actually watch these movies have played Resident Evil? Is it Is it like a like a 70% overlap or less?
Probably less.
Probably less.

Yeah.
Anyway, I do want to give a shout out to a game that's taking my time and my life away is AON 2
MMO. [laughter] So there there there has been some reporting on there's a lot of MMOs coming out like in the next like 6 to 12 months with the World of Warcraft stuff that happening. You have, you know, AON 2 and then next year of Guild Wars and there's a couple others that are like potentially coming out, but this Aeon 2 is basically aing Korean MMO at its heart, right? It's like they do an exceptional job of building games for the Korean market, right? but they don't necessarily translate well to the western markets. So, the reviews are not so good, but the game is so deep and and engaging. And if you like this sort of thing of progression, but this game is actually quite good. It's beautiful and you know, the characters are different. There's lots of progressions. There's so many goddamn systems. It's it's insane. Um, so I highly recommend it.
Yeah. On Steam, so we'll take that

recommendation with a grain of salt. All right, everybody.
You have to be MMO degenerate to like this.
Yeah, basically. Yeah. I I bet uh Wow is bummed because you've moved on to something else and it's taking your time.
I'll be back. Wow, is my
Well, your home.
Yeah.
All right, everybody. That wraps it up for this week. We will see you again next week.
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