TWIG #406: What if Roblox Goes Private and Which Games Get Kicked by GTA VI

[music]
Hello everyone and welcome to Deconstructor Fun This Week in Games 406. I'm Jen Donahoe. Head up the marketing publishing role in the podcast. Today we have in first chair
Eric Kress, strategy investing.
Phil Backman are
Mishka Galkoff. Friend of everybody.
What the What happened to you all in the 5 minutes since we were just like low energy crew?
Cuz you started talking. We were all like focusing on different documents and you kind of the mood lowered down but now now we're ready to rock and roll.
Okay, now we got this. All right, everybody. Uh GDC is extending its dates in March. So we have lots more GDC and I think they actually Mishka answered your call for like a place to have business meetings. Uh we're going to recap our very last Deconstructor of Fun Roundtable of the year. Kress and I had a lot of fun on Monday. Roblox crushes it on PC and console play time but should it go private? Convoy has a great

article we're going to go into. App store reviews are taking forever because of AI. What does this mean for Steam too? Our creator shows that dropping content actually works. Go figure who knew that that was actually the case. Who is going to get their ass kicked by GTA 6? There's a report that talks about who that's going to be.
[clears throat]
And then I have called this an Xbox free zone today even though there are a few things in the news. So commentary on this is not allowed. Mr. Kress, this is directed at you. If you are interested, just know more layoffs are coming. Surprise. Handheld is coming in '27. Project Helix is likely late '28 and very very expensive. And then Game Pass is likely going ala carte with things like cloud gaming, multiplayer, and console only game options as options for that. Maybe we'll allow Xbox next week but All right, so Kress I wanted to compliment you and I guess me on our podcast with Riot CFO Mark

Sodosante that dropped on Monday of this week. Getting a ton of really great feedback. What was your major takeaway other than Arcane season 2 broke even basically and all future Riot content will likely be paid for by the media partners. What else was your takeaway?
I mean, I guess what I learned was that they went from like one game to like seven in what felt like almost immediately at the time and what he basically had said was that they were iterating iterating iterating I guess behind the scenes and not many people knew what was going on and they had all the teams kind of set up to build this stuff. So at the time it felt like it was really haphazard and really like unfocused but in retrospect it they actually had a a lot of people working on this stuff before they announced it after their 10-year anniversary.
The regional split?
Yeah, I mean I think he confirmed what we've been talking about on the podcast to some degree is that they don't make any money from the China stuff.

Yeah, so like
No, he he said minority but he did No, it's not any. He said minority. No, no.
Well, what he said was that they basically of the five regions of the revenue that they collect, it's basically evenly split. Like, you know, Tencent is a publishing deal that they get. So, when you kind of do the math and pull out China and Korea of like what the top line actually is, then you get to, you know, 60 plus percent
of the revenue. And they're top 15 mobile in China. Two of the games are top 15 grossing in mobile. So, that should be a lot of money.
It's three.
Okay, okay. See, okay, this is
Teamfight Tactics, Wild Rift, and Valorant.
Oh, yeah, sorry. Stop playing this game. Mish guy, if you you're not listening again. The fundamental thing is the model in China is that they are getting a very very very very small percentage of the revenue, right? So, the fact that the revenue is top 15 in China does not matter because they're not they're not generating that revenue. So, if you look at the top line revenue in China,

it is the majority of their revenue. What he was saying confirms that, right? The problem is is they are not benefiting from that the way they are from the revenue in the West.
I know, that's what I meant. Is like when they say it's even, but we know that they're making all this money in China, we know it's not like there's something missing here. That's what I meant. Like they are on the top of the chart. But he said they are not generating that much money in the West. Okay. So, my point is is that when people talk about the success of Riot in China, it's not their success. It's it's basically Tencent's success, and you need to be wary of that and the opportunity or potential for China as a market as in all things. It's like with the movies thing, right? They say some movie did a billion dollars in China, but no one's [ __ ] making money in that besides [ __ ] China, right? Because the number of people that are like taking money out of that pot, right? Is not it does not make it a viable place to publish movies.
The one thing that is interesting is that the the money that Riot does make from China is basically equivalent to

what they get for each of the other four regions. And so, they they do make money, but it is, like we said, a small percentage of what the overall opportunity is that Tencent is actually generating.
But in the end, they're Tencent owned company. So, it's like from the left pocket to the right pocket. Like who cares? Like this is just accounting stuff.
Phil, what would you
No, I think Mishka's point is actually well well understood. I don't understand where you're coming from, Eric. Like I understand Riot's P&L is less, but Riot is owned by Tencent, and so if the publisher is just skimming off money in China, that's fine. But it's still that's still League of Legends is still making a lot of money in China.
Chris's point is don't get excited about taking your game to the East and being successful.
Let me be very clear on this. This is why I've been going ape [ __ ] on MOBAs for the last decade is because everyone says that it's such a huge market. It is not a huge market. It is a very small market that's dominated by

by one company and they don't generate a lot of revenue from it individually, right? So, it's like the the TAM for a MOBA game in the West is so [ __ ] small, right? Because the majority of the revenue is in China, which creates like all kinds of misinformation out there in terms of what the opportunity is. And that's why you've seen 12 MOBAs being made, you know? And it Oh my god, we're talking to someone last night about and I know it's not a MOBA, but it might as well be, that Star Wars game from Zynga. Dude, that was built and envisioned based upon the [ __ ] fallacy that there's an opportunity for that game. The Star Wars I know it's not a MOBA.
shooter?
There was a MOBA, though. There was a Star Wars MOBA. There was a a Clash Royale Star Wars MOBA as well that didn't work out. Yes.
I guess the cost of making games like that to a market that's like so [ __ ] small is so stupid. It's It's like it drives me insane that that keeps happening, you know?
Yeah. It was a really good listen. Like normally when you drop an interview

like, "Hey, we're interviewing a CFO." I'd be like, "Oh my god. Like what what is this going to be about? [ __ ] Gab? Like finances?" Or But it was Their CFO was almost like a COO type of a character, really into the business, and joined Riot because he played these games and clearly plays these games and gives feedback. So, very much into the product. Like tons of learnings. I mean, this the seven things that I wrote on LinkedIn myself, not AI.
Things I wrote.
[laughter]
Yeah, I was Yeah, oh yeah, yeah. And then I Yeah, I borrowed and then I wrote it in my way. Yeah, but like saying saying just I I wrote. Yeah, yeah. So, see I'm all confused. Bots, Jen, like
[laughter]
this is crazy. Like who am I anymore in this equation? But yeah, what I what I wanted to like the the thing that I was that I wish you would have asked or kind of talked about is like, Riot is notoriously slow at making games apart from TFT that came out of nowhere and nobody was able to apparently stop it before with the review rounds, but we know from all sorts of talks around the town that they

just have a hard time killing a project. And the fighting game is a good example. That was probably a decade into development before it launched. So, it would be that would have been an interesting question is like, how come they haven't developed this ability? Like, where does it come from that they're so slow at killing a project?
I don't know. They killed the fighting game after they launched it.
in development. 10 years in development.
yeah. And then uh Legends of Runeterra was like 9 years. Yeah.
Exactly.
missing the headline. I think I I would argue I think you're missing your headline from Eric and Jen's beautiful podcast, which is that they've transitioned and you said this, Eric, they've transitioned to a multi-product company from a one-product company. And I think that's the hidden success story line. And it's not just Valorant, as you guys have pointed out, they have three games in the top 15. Like, that is impressive, right? And we [ __ ] on the fighting game and the CCG all the time, but they can subsidize tons of those bets if they have Valorant and League hitting

it and TFT.
Yeah. You look at company like King who hasn't made one new game in their entire career is crazy, right? It's absolutely crazy. Or even Rovio, right? Which they tried to make new games, but they certainly didn't get really out of their core competency of of one IP and then it's really hard to do, right? And and Riot did it really successfully, so it's like definitely something to watch and something to like learn from. And the other thing is that the the guy is like a super nice guy who is really humble and again, you're right, he's not a CFO. He's more of a a chief revenue officer type person that really in the weeds on this.
And they also stayed true to their vision of not doing predatory monetization. Right? Like and and that's kind of remarkable in this day and age since you know, there are very few games that can do that. And so I applaud that as well. I don't know if I would advise that frankly, but they've done a really good job of of maintaining that integrity. So anyway, it was it was a

really good interview. He was a really nice guy, good guy.
Yeah.
Yeah.
Fast listen. Fast listen. It was it was good good job, guys.
Oh, thank you so much. Okay. So let's go to Shills. Mr. Mishka, do you want to talk about Sensor Tower's new report?
Uh Sensor Tower. The two towers. I love by the way Phil's ad. We were just talking with our editor today is the best in class. Phil, what's the what's the Sensor Tower ad? The uh the the two towers, iconic.
[laughter]
The Tower of London, historic.
Yeah, but nothing nothing tells you anything about mobile app intelligence.
Yeah.
That's one of the best ads. Anyways, that's what the benchmark ad. We were just going through our ad strategy. We're like, "We want more like Phil's ads." So Sensor Tower state of game advertising report is out. It tracks how publishers in both, this is important, PC, console, and mobile space promoted their titles across 41 markets. You will not find more complete analysis on gaming marketing anywhere else. Go to sensortower.com, check out in our newsletter. So this is a very interesting marketing analysis for PC,

console, and mobile all together.
Yeah, I think next week we'll pull out a couple of slides. It just we couldn't get to it this week with everything going on. So um I I just appreciate that they do this kind of service for my people. Uh the marketing people. All right, let's get into more of the news. Just really quick on GDC. Uh they're moving to a four-day event week. So now it's Monday through Thursday. The business hall at Moscone West will offer dedicated meeting and deal-making space. Mishka, you have asked, they have answered.
We literally had a call with GDC about this.
[laughter]
So, yes. We've I've asked, we've talked, and it came. So, not my I'm sure I wasn't the only one asking, but I'm really happy that this is happening.
Yeah, so conference programming will now run Monday through Thursday, and so it has all of the different talks that you would be excited to hear. The festival hall at Moscone South is going to run Tuesday through Thursday. And then, we are recording a Twig from GDC. They have a podcast booth. We'll be

doing that Thursday, March 4th. So, everybody GDC is earlier this year. So, March 4th at 4:30, if you want to come by and heckle us, we'll be in this little booth recording. One of the GDC folks actually came to the event on Monday. It was lovely to have her there, and she was really impressed with what we were able to do. So, maybe we can do more at GDC. So, it's
And we will wear full cosplay outfits while recording this one, your favorite gaming character.
Um you will.
[laughter]
I don't know about the rest of us. You can do whatever you want, but my friend.
[laughter]
Oh.
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top game companies [music] leverage AppsFlyer and are a key partner in their success. AppsFlyer, where your app's potential meets performance. All right, let's get into a a round table recap. I mean, the room was packed. This was hosted at Zynga's headquarters in San Mateo. They were great hosts. Also, thank you to AppCharge and and Uptick who helped sponsor us. So, we did a quick Gen Alpha presentation by Stan Kwon. I think one of the takeaways people really enjoyed hearing was that generation old, like us, we played to disappear, but generation Alpha plays to be seen. And so, when you think about a lot of the customization, about social, about identity coming through, that's a really big Gen A kind of takeaway. We also had a UA creative short presentation from Uptick. Uh I think what what I learned there is uh never before have you needed to have such creative diversity by channel to the

extent that you do now. And so, they talked about polished cinematics and looping motion graphics dominate meta and Google. Lo-fi organic storytelling and developer diaries, actually dev diaries, drive the the top-rated kind of requirements on short form like TikTok. So, that that was a a couple of interesting things. And then, we did a panel. We talked about cross platform. I think everyone knows Chris's kind of view on cross platform.
What's Chris's view on cross platform? Is it the same as with cloud?
Please give your view.
Like cross platform mobile to PC type thing?
Yeah, yeah, yeah. Cuz we we The insight that we talked about that that the panel had seen being success was using this more as a retention play than a revenue play, which I think you kind of agree with that, but you're kind of like stop it. Don't do it.
[laughter]
Look, I mean, at the end of the cross platform was was a is a myth. It's a

very, very unique opportunity for very specific type genres that may or may not work depending on how you execute it. So, it's a total myth that you're going to be able to build a game that goes from like PC to mobile, right? With very rare exceptions. And so, it's better to make a pure play game for mobile or pure play game for console or PC. That's my opinion.
Yeah, the one thing that we did notice that is a trend in China is that any of the Chinese developers are only doing cross platform. So, all of the new games like Ananta, Delta Force, which is still crushing it. And so, we were debating like should you as a Western developer think about that? And Chris is still like stop it.
Yeah, so yeah.
[laughter]
Yeah, exactly, right?
Rest in peace, my sweet child.
Oh, right. Yeah. I think that was the context where it's like, yeah, that stuff works in China and Asia, but it does not work in the West. And I think people continue to assume that things

that work in Asia are going to work out here, and they just do not, right? And the counterpoint, which I do agree with that he said was there are certain things that the Chinese are doing from a monetization perspective and and and a design perspective that could be leveraged in the West, but they have to be built with executed in a western way, right? And cross platform just doesn't make sense in that context, so uh
All right. So, the second topic, it's my event, so I picked a marketing topic. I'm just looking for innovative ways to do things in addition to UA, which is more expensive than ever and more saturated than ever. And so, Tina from Mr. Beast was there, and she talked about uh COD Mobile activation that Mr. Beast did. And actually, the COD Modern Warfare 4 partnership launched. So, COD Mobile was so successful that they I think that she said they tripled down and did, you know, a bigger event for Modern Warfare. The takeaway is when you do these kinds of activations with creators, if you can get additional short-form content and cutdowns that you

can then utilize in lower funnel in user acquisition on your own channels, that is the insight. It isn't the one sexy thing that you pay millions of dollars for. It's all of the other content that you can then use in UA that refreshes and makes your UA perform even better. Can I at least get you to concede on that notion?
No. I'm not You know what? I'm not I'm not I'm just not conceding on this. This is a [ __ ] waste of money, you know? Like, Call of Duty can do it all they want with Mr. Beast, and they can spend billions of dollars doing more like advertising stuff and getting all the assets they want to like, you know, their $500 you know, media budget or whatever, but to try to leverage this to release a new game in this market it is insane.
Did she talk about the King of Meat? Mr. Beast tie-in? Did she talk about that integration at all? No, because the game [ __ ] flopped at launch and failed.
Of course it did.
But I mean, [laughter] but
Of course it did.
it did.
Very personal topic, but yeah.

Well, I I I meant to mention ask about that. But she wasn't part of that group at the time, so she probably wouldn't have any insights there, but The reason it bothers me, Jen, is this stuff is that like we're pitching it to people that may or may not want to create new content and new experiences and new products for this market, and this is not the right approach.
This is when you've exhausted all options.
Yes, that is my point though.
As I said yesterday, if you're not optimizing against games that can do UA arbitrage better than the next last game, then you are going to fail in this market. And so, leveraging this type of [ __ ] is only for the games that are already well established and have run out of ways of spending money. That are ROAS positive. And none of this stuff that they're talking about had anything to do with ROAS. Like they did not even mention that. They're talking about uplifts in downloads. Even the Mr. Beast [ __ ] was about, "Oh yeah, we got a 20% uptick in downloads for Call of Duty." It was all organic. Who gives a [ __ ] RIGHT? THAT GAME HAS LIKE BEEN AROUND FOREVER. It doesn't matter how many

downloads you get.
Reengagement, maybe. But Jesus, Call of Duty's in the worst place at Battle Mobile.
this [snorts] stuff This is the only stuff that you're getting going to these conferences and you're like
you are you are proving my point though. I mean, I am trying to highlight what are marketing innovation and activations you can do when UA has become saturated, when things are expensive, when nothing else is working, what can you do to give it an adrenaline shot in the arm to get you new content that's going to convert better in the UA anyway. All right, you actually did agree with me. I'm going to move on. All right. So, and Chris, I think you did like this point. So, I thought this was a really great nugget that came up was even among the highest spending mobile players, roughly 20% are actively free agents looking for their next game. And so, I think you were actually like, wait, what? Say that again.
I'm a little bit dubious of this stat.
[laughter]
I just I need to understand exactly how they're measuring this because assuming that 20% of the big spenders

are out there ready to purchase and play in the next game just seems like absurd on the on the surface. So, I'm going to get to the bottom of this, but that was a really interesting stat cuz if that is the case, then they're always looking for their next thing. And so, that's what AppLovin is optimized against the most is that they know exactly who this group of audiences and so, they are just feeding them new games all the time so that they can keep trying and churning, right? But the thing is that the people stick around for games for so long. That's why the 20% doesn't make sense.
But it does when you just think about ads. I mean, the whole point of ads to show games that you may be interested I mean, that's why people pay for ads is the eCPMs. So, you're just constantly getting pushed games and that whole business survives on people going to the other games and paying, right?
Mhm. And that's why AppLovin can charge more for their inventory because they bring you quality.
What doesn't make sense is we know that these games, these big games retain the spenders for long periods of time

and they're spending insane amounts of money. Intuitively, if they're actually moving games constantly and spending on new games, why would they continue spending on old, right? And I guess what he was saying was that they spend on both, right? They have a primary, a secondary, tertiary, whatever games. I just need to understand exactly
It's exactly like dating. I mean, you've got you got your main and you got your side your side chick. Like this is it really is how this works, right?
Nobody Nobody on this podcast knows anything about dating.
[laughter]
Anything. Like I'm kind of on the rocks. I'm kind of on the rocks with Call of Duty. I'm like, "Oh, Delta Force looks pretty. You know, I might give that a shot."
You always got a couple in the background. You're kind of rotating. [laughter]
Dude, you're living in a fantasy world. Dude, you've been Dude, you've been in Cyprus for how long and now you think you got side pieces?
This is what happens when you buy a sports car. This is exactly what happens when you buy a sports car. This
When you're talking about that Asian RPG or that Korean RPG, you're not you're not like, "Hmm, maybe this could replace

World of Warcraft." You know? And that's not what you're thinking. That's how everyone consumes content, Gabe. What's with your analogy?
[laughter]
Yeah.
Oh my god. All right, moving on.
Oh my god, we are in such All right, let me just wrap that up by saying thank you to AppCharge, our main sponsor. And by the way, they actually had some news this morning, so they appointed a new COO, so it is He is from former monday.com VP of payments, Ronan Marek. Do you know Mishka? Is that Do you know Ronan?
[laughter]
No, I don't I don't know. I don't know Ronan. Good for him. Congratulations. Mazel tov.
So mazel tov AppCharge on your new COO. All right, let's go into our next topic. We're going to do a little Roblox. There's a new report from Newzoo and Geek. I pulled out just one chart on this, and then I wanted to hit two topics that lead into what Kress wants to cover with Convoy. So, Roblox is now the most played game on PC console by total hours. So, when you think about

actual play time, this is where they just kick ass. Despite a largely mobile audience, Roblox top PC console play time in half one of 2026, driven by engagement rather than reach. Roblox is 1.4x more than Fortnite, and when you look at all of these other games, they are basically double play time for all the other Minecraft or double League, Counter-Strike, Call of Duty, FC. And so, just they're just crushing it on play time. Here's what I thought leads Kress, and this makes him so happy. Roblox players have distinct gaming preferences. They gravitate towards arcade co-op and survival horror. Remember, I always talk about this being a huge organic genre, and they're underrepresented among players of realistic, premium, AAA titles. It is the tale of two towers. It's really the tale of two cities and in polar opposite spectrums. there is a group of players who love what we know Roblox for, and

then there's a very very small couple of people who are playing what's it called Rivals, the shooter called Rivals or triple A experiences. This data from Newzoo and Geek is telling us that they're underrepresented in that market. So, I I'm just stunned by the playtime number. It's it's massive, but Kress, take us through how you're seeing it and how does this go into the the Convoy article that talks about they should go back private is basically the gist, right?
Jason Chapman of Convoy wrote an amazing piece on Roblox. It just hit, I think, yesterday. He's the founder of Convoy Ventures. His brother's name is Josh, and they both started Convoy Ventures. They really were big and early into gaming, but I think their thesis is kind of changed and they're more focused to tech. And Jason himself is like engineer type. The guy's brilliant. So, they're more looking at picks and shovels these days and other technology companies. And I think part of the reason why he has some expertise on that. Jason's thesis on Roblox is that they should go private. And this is

kind of kind of the similar ideas that I have is that this new strategy for Mr. David doesn't make sense for publicly traded companies. Basically, kind of what he's saying. And so, I'm not I'll use his words, right? So, he says booking's growth is stalled, cash generation is strong, they had like 1.3, 1.4 billion of free cash flow in 2025, and they hold 6 billion in cash. The stock is down to 65% from its 25% high, so the price is now workable for a buyout. All right. So, he went through the whole structure of how this works, and I don't think that's all that interesting in terms of the premium they need to pay and how that would work. And, you know, the fact that David owns a lot of the stock stocks, so that helps him. The challenge is that it's up to David, right? So, David does have the you know, a majority of the voting shares, I think, or a good portion of it to make this vote. So, he has to have it. So, the real interesting thing is why. Is that again, he says the strategy to go HD, the strategy to do more retention style games does not fit a

publicly traded company.
[laughter]
Basically, what he's saying is exactly what I've said, right? They're spending insane amounts of money on R&D, creator payouts, safety technology tools, all this stuff to try to attract and build games that attract this audience for the long term, and the market continues to punish them with their spending every quarter and missing revenue guidance. If you remove the quarterly like referendum on their performance, then it would let management actually do a five-year plan that makes sense. And this is where I agree with David. I think that it does make sense for the long-term viability of this business because I think the way the business is situated now is it doesn't make any goddamn sense that, you know, the pinnacle of all things Roblox are games where you steal toys from children. That is not sustainable. Like that is not a sustainable model, period, end of sentence. So, anyway, my take is that like, again, this strategy doesn't make sense for the public markets. Going private would actually give them the cover fire to

actually change their model and change their business and change their whole organization around this, and this could be a really good way for Roblox to survive. Because if not, I think what will ultimately happen is that they're going to trip all over themselves, and David's going to continue to push this HD crap, and they're going to continue to deteriorate on revenue and continue to miss numbers, continue to lose profitability, and the stock is going to get [ __ ] annihilated, right? Or the other option is to screw this HD thing and continue to go after these terrible games that are, you know, torturing children, that sort of thing, and and just keep going and and releasing all this slop, and I don't think that's a viable way out either. So, maybe Jason's onto something. They should go private.
I I get the stick. Are you just laundering your criticisms of Dave, which you've been very persistent about through this piece? Like, what does Roblox get out of this? They need access to large amounts of capital. That's what the public markets are for. And the Convoy piece is literally just explaining how

a bunch of investors get to cash out at a premium. The markets need to understand that Roblox's cost curve is always going to be tied to its marginal revenue curve, exactly like it is in Spotify, right? Every dollar they pay out, a certain share of that is going to go to the creators themselves. That's just what you're signing up for with a platform-based company that like took forever for people to understand that's how Spotify works, and it's the way it's going to work here. Their investment in AI and infrastructure is not that far off. It's been remarkably consistent. It's large, but it's remarkably consistent. So, these things aren't getting worse. So, I guess I'm still just confused what they're going to they're going to get out of criticism because you don't like Dave's strategy? Well, then the answer here is just replace Dave.
We can't, though.
Well, I'm saying he would step down. He would step down there be public pressure if the results were not there.
But, again, this is what puts public pressure on him. So, Josh is not an activist, but you could get active activists shareholders responding to this and saying, "Hey Dave, you got to either step down or go private."
don't understand why this strategy is the right one for Roblox. Is it just

because it gets rid of Dave?
No, this doesn't get rid of Dave. Dave would have to participate in this.
I get your criticism of the Roblox strategy of the triple A. Totally makes sense to me, but that seems to be your issue, not that they're on a public market.
They can't be valued what they're valued if they continue down this road. That's what I've been trying to say.
Well, I mean, the market's going to punish them, though.
Well, it's going to get worse because I think there's still people that believe he can pull this off, but he cannot. And this is why I think this piece confirms kind of what I've been saying is that they're in a position in which they need to go private, otherwise they're going to fail, right? Because they can't execute against what they're trying to execute against without completely destroying their P&L and continually to underperform, continually to bring down revenue guidance and profitability guidance. And that's far worse for the shareholders and Dave and the employees than going private at a premium and then relaunching when this strategy is paid out in five years and in his mind, you

know, go out at a a bigger premium than they are today.
But you're still taking a shitty strategy private, which is that they shouldn't be making triple A experiences. That's not the right thing for them to be doing as a company.
They can get off the heroin of the Steal a Brain Rot games and by not having the public pressure, they can start to orient more towards games that are repetitive and
then?
I I do.
Okay. Okay, that was new to me. I didn't know you agreed with Dave's strategy. I think that's that's garbage. What are you talking about?
I hated the strategy building these No. Okay. I guess it is relatively nuanced. I [ __ ] hate Steal a Brain Rot and those type of games. I think they are horrific, right? I like the idea of building a strategy around HD games that retain and you know, even a premium potential model for Roblox moving forward, right? That makes sense to me, right? And I think that's good, right? Generally speaking. But it's not nearly as easy as seems to be to make the stupid [ __ ] trash, right?
You just sound like Apple where it's

like all these free-to-play games are making money. I don't like them. I think they're gross. I don't think you should do that. You should do editorial-focused [ __ ] What is it? Momentum? What's the What's the what? With monument value? You should make monument value three. Like where is that argument that says like this is how the market works. This is what's [ __ ] working. Go make more of it. Why are you suddenly stating some sort of moral stand on what the consumer should demand when it comes to Roblox?
Have you seen a child cry because their toys are taken away in any of these Steal an Egg, any of these any of these games?
You can say that for any Pokémon game. You can say that [laughter] That's from the That's from the dawn the dawn of children.
I don't You know?
You were actually pointing out a huge inconsistency in my reasoning around these things because as a publicly traded company, like they have to do what they have to do, right? And so this was necessary for them to execute. And they fleeced the entire investment community that this was a sustainable model.
What are you talking about shitty games like Adopt Me, Brookhaven? We were talking uh about
we're doing. Those are the games that don't make money, dude. This is the

point. These games do not make money for the platform. What makes money is these [ __ ] insanely demonizing games that create torture videos for children. That's what's making money on the platform.
They had their moment in the sun, but we can go to the top grossing games. I mean Rivals has been around for a really long time. Adopt Me has been around for a really long time. All these games have Blox Fruits. I mean you can debate if that's scammy or not, but you're really focusing on this one title. It's not
Dude, it's not one title, dude. It is like that's eight, 10, 12 titles that do the exact same [ __ ] thing, Philip, and you know that. You're not being genuine in your
top five games
The number one and number three top five games keep rotating with this play pattern. And what exploded them into the revenue growth and the DAU growth were these play pattern kinds of games. Yes, you're right. The Adopt Me's and all those other games have existed, but what really led to you know, in a sense they become heroin addicts to these kinds of play dark play patterns that propelled them to the success as a public company.

Now they have to figure out how to match that.
My god, that's such such a loaded such a loaded
series of frames to describe these games. Like you're you're you're focusing on one segment of the platform. The platform has a number of long-term successes that you guys I think would endorse. I think it's been one area of growth this last summer, which by the way went away, right? Roblox's DAU is down for the first time historically this summer. A lot of these games have been underperforming recently. And again, you're you're pointing out one trash e-game that has mechanics that you guys don't support. I just think you're outdated on this. You're taking your your boomer attitudes towards monetization and what an experience should be and applying it to these kids. I think that's appropriate.
the algorithm to point away from those games, which have led to exactly what you just said, which is the numbers are down. Showing that what is working on the platform was that. And they're moving more towards exact the HD games, the retentive games. The numbers are down.
This quarter, the numbers are going to be up because they're pushing people to steal an egg, which is the exact same

[ __ ] game.
But they are not pushing anybody. Like the algorithm is working and the algorithm is is very much towards D1, D7, D28 are big parts, social gameplay. Like the algorithm is very much towards a long-term gameplay.
No, it's not.
Mishka.
I mean, they literally updated the algorithm to take out longer time frames to be the ones they prioritize.
Exactly. And that Dude, are we [ __ ] talking in circles here? That Dude, the stock was down like 40%, right? Because they [ __ ] torpedoed guidance and torpedoed earnings, you know? Now, this quarter is what I'm saying is they changed the algorithm back. So, these other these other steal games are coming back now and they're going to [ __ ] crush the quarter, right? And the stock's going to be up.
Steal an egg is the number one game.
So, when we analyze mobile all the time, we come across these hyper-casual games. I mean, when you go into Sensor Tower, you basically have to spend, you know, your first 30 minutes filtering all the things that drive downloads but don't actually drive long-run retention. And

now, we wouldn't describe mobile as just that's all of mobile is hyper-casual games that are stuffed with ads in the first 30 seconds. There are great experiences we all know on mobile that sometimes have lower D1 retention but have longer-run retention, mid-core, 4X, all of these things. And so, it may be the case that Roblox is deprioritizing some of the hyper-casual high-download things and pointing people more towards those mid-core experiences that have higher LTVs. I'm sure they're trying to figure that out, but I just wouldn't paint the platform in one broad stroke and just look at let's say what is popular right now and say like, "Okay, well that that that dominates the whole platform and we can paint it." We certainly wouldn't do that in mobile. I mean, if we were to look at mobile top downloads right now, it would be all this trash and we'd be like, "What the [ __ ] is this? Like the 10th Arrows clone?" Uh I just don't think that's a good way to illustrate the platform.
What generates revenue is what defines the platform. Right? Not what downloads or what people play, right?
From from a financial perspective.
I think we should come back when we have our next Roblox discussion and talk more about like breaking down Roblox earnings, but let's also consider like

what are the games that have the highest LTV on the platform and I don't think it would be the games that you described.
It absolutely is.
When I say LTV, I mean what the games themselves have accumulated in terms of cash. I I don't think that's a good way to illustrate that. I think we should I think we should do the analysis.
10 of the top 20 are going to be steal toys from children.
You You think that's accumulated more in its lifetime over a bunch of these other titles?
Well, they're newer. So
100% 1,000%
Well, I mean that's kind of the argument here is that from an LTV perspective, are these games going to be able to continue to generate revenue? My point is they don't cuz they don't have great retention. They're flashes in the pan.
That may be, but you just they get swapped out from a new one, you know, a few months later, right?
Yep.
There's like 20 of these games out there, you know?
Yep. I have no doubt about it. Every time there's a success, there'll be Arrows copies.
Do you want to talk about the number of games coming on?
There's similar charge. I just found one of these ones. So, this is first timers pouring in on the platform. So, we previously know that at least the public

number that there has been about 16,000 experiences coming in every day. And with the onset of AI tooling, so this is not necessarily the AI tooling that Roblox is giving to its developers, but this is existing AI tooling. Especially Claude has been very good. Also, you know, ChatGPT and other ones, but Claude has seemed to be the primary tool for game development. We can see that the onslaught of new games has been rising to So, this weekly basis. So, what we're seeing is after September, the rise of new games is increasing rapidly. It's pretty much doubled since September. And what specifically is driving the growth of new games being made for the platform is the amount of games made by new time game builders. So, first-time game makers have grown 10x since the launch of these powerful AI tools in September. It has also increased the amount of the games that are being made by existing studios. So, naturally, they have been much more effective and faster and and, you know,

hopefully better with the ability to create games and hopefully better to create those type of AAA experiences. But what we're seeing is really an onslaught from people who haven't done games before are launching them. And there are success cases. I forgot the name, but there are success cases definitely with the games done by first-time creators. But naturally, the head percentage is abysmal. And this one is also creating the the challenges on the platform because the algorithm is so significantly skewed towards longer-term retention. There's this onslaught of games that are maybe not as great because they're done by people who haven't done games before. And as a result, it's very hard to kind of get the initial traffic to see if your game has legs. So, advertising is used to drive traffic to Roblox games. And advertising costs, the CPIs for advertising on Roblox have also been booming. So, it This is kind of like the microcosmos of what happens when everybody becomes a creator. And

we're going to see this in in like accelerated time of what happens in Roblox. And this is kind of like what might happen with with the other platforms that are being launched, whether it's the Metas or the or the Googles ones or I don't I even forgot whoever was launching these platforms.
Now, if you're watching the YouTube version, Mishka posted a graph of the growth in games submitted to Roblox, particularly by first-time makers, and it's tracked with Opus 4. Or, excuse me, 5.5. I mean, like dramatic increase, right? And they've also been boning up their MCP and AI tools. I think the question is is well, does this does this replicate on other platforms? And if you remember, Steam actually has an AI disclosure form, and so that gives us some insight into whether or not games are increasing on the Steam platform or those with the AI disclosure. And it is true that they're increasing. If you look at July 2025, we're around, let's say, 7,000 games, and now we're around 14,000. But that growth rate is pitiful. It's not

nearly what it was in the Roblox case. And I think we all know the reason for this, and I we don't have to spend too much time on it today, but it's just interesting to me how this particular genre and community is punishing AI in a way that younger generations are not.
But I do have to say, Roblox generation is not happy about AI, either. Like, yes, the platform is supporting it, the developers are using it, but if you get caught of blatant AI, they are very unhappy about that. They can't possibly support this many games as a platform, right? This is going to create cost overruns that are going to be insane. Like, they need to curate.
What What do you mean cost overruns? Where do you think the cost would come from more submissions? No, it's because you would no one would no one would play.
That is true. Like, they're not just not going to play. Yeah. But they need to start curating, though, just generally speaking. I think curation is the only way of eliminating a lot of this stuff, right?
Okay. All right.

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Should we get to our next story, Mishka?

This is a very different story and then a totally different type of a size of a story. Like typically as Chris would say, this is beer below mice nuts even. So, but I think it's very interesting example of microcosms of of Steam games and independent developers. So, this is what I would call an honest and practical story from the CEO and the founder of Liquid Swords, a studio I would say a small AAA studio in Sweden that went bankrupt recently. So, they're shutting down and the CEO wrote for PC Gamer or answered their questions. And I think the most revealing quote that he made in that one was, "Quote, market conditions and some bad business decisions brought us here and I own my part in that." So, what are those learnings? Basically, they built what they wanted to build, not what necessarily they were able or capable or had the resources for building. I don't know if he talks directly, but it seems like the scope really ballooned on this game and instead of cutting back on

scope, they kind of cut back on quality accidentally by just, you know, working harder and then trying to finish everything. As a result, the game got very mixed reviews and that, of course, on Steam leads to poor sales and poor sales, well, leads to closure of a studio. Chris, we've talked before on this episode about the need for demand planning and apparently they did some demand planning and they made it that, according to the CEO, they they demand planned based on like a Christmas scenario, like like, you know, everything goes perfectly and everybody gets a lollipop at the end. And if all stars align, this game will be successful. Well, all stars did not align and, you know, as they rarely do in real world and of course that was a challenge. And then final one was they self-published, interestingly. And development is very hard. Distribution is also very hard and you kind of bundle those two together. There's very few studios that are able to both develop and distribute and that's the reason why we have publishers and they did not use one. This was interesting for me because I see this a lot in the advisory work in the sense that I get to talk to people

who are behind these very interesting projects and they're very smart, they have excellent backgrounds, they're very hard working, they're creative, they're experienced game builders, just like in this case because the founder of Liquid and Sword, Christopher Sandburg Sandbear, he was 17 years at Avalanche, the studio that he founded, a triple A studio, and he was the chief creative officer before starting this new company. So, the way I'm seeing it often is that these very super qualified founders who definitely know what they're doing kind of continue where they left off and this is driven by a bit of a overly positive funding environment that we had before, I assume when this company was started, it was quite quickly funded. And the challenge that I'm seeing a lot of the times when talking to them is like they never started from square one. Yes, technically they did, like they have that small office, they have that small team, they have their new logo and it feels like a fresh start, but in a way they are kind of like a restarting a new project from previously and they don't

really think about that you have to start small and get to the green as soon as possible and build from that. So, in this case, he says that he will be back. His quote is, "I'll be back at it again as soon as and we'll share more about the plans for the new studio. It will build with the current market in mind with solid foundation, etc. etc." So, kind of like very practical things and with these type of situations it's when when founders start studios, there's kind of like three things that I would like them to keep in mind. Like one is definitely what you want to build because you have to have have passion towards the games you're building. The other two that gets often neglected is the market, so what players want, the demand planning part, what does market really look like if you're making something differently. And the third part is like what can you actually build with quality, with the resources that you have in the amount of time that you have, the amount of runway you have, and when those two pieces kind of fall off or even if one of those pieces fall off, this is unfortunately what we tend to be seeing, but Swedish game industry is

alive and well, and I'm sure he'll be starting a a new project and I mean pretty soon.
I think you can't really talk about this story without discussing how it was actually funded. I mean, they they founded the company in 2020 and then they were backed by NetEase for in 2022, right? And so they don't know how much money they gave him, but I'm sure they gave him a lot cuz they had 100 people, right? So
Yeah.
NetEase was funding all these things and they pulled back completely, you know, from funding and they were left holding the bag, right? So So it's too bad. Like I mean, like I the game that they were making made sense to some degree if they were continued funding and they had a publisher to help, you know, offset and and publish the game, but they just didn't have enough resources to finish what they had started and it took them too long. So it'd be interesting to see how he retrenches and and what he does next. Like if I were him, I would actually go work at a big company and start I I I'm I'm sorry. I'm sorry. It didn't make sense for him to go on his own.
Yeah.
The one thing about the investors, also the way it affects they affected the

scope of these games because they pushed these founders to do something very risky, very big, and so the scope was giant and then suddenly, you know, the funding is not coming anymore and so you're making too big something that is too big for the team to finish.
But he was the one that said that this is what he wanted to build, right? Like isn't that what he said in this article? Yeah. This is the game he wanted to build.
Yeah. Swedish as [ __ ]
The whole the whole story is about as Swedish as you can get.
Yeah, basically.
[laughter]
It's a lifestyle business.
Yeah. Yeah, well, he, you know, 17 years now.
to that in a minute with Arc Raiders, right? Cuz
Swedish as [ __ ]
Yeah, I mean, we're [laughter] Dude, okay, so like I mean, can we Who's doing the Arc Raiders thing? It's like
Case in point, monthly shooter.
They finally got off their vacation and they actually came out with some content and now the game is doing well. Shocker of all things. It was like the Swedes are like on vacation like two months out of the year, you know?
They will be back on Christmas vacation.

Yeah, they're they're going to be back on vacation a month.
in a month. Four weeks of legally protected leave in July. Um legally. I just wanted to mention that. Anyways. Um okay. So right now we are looking at Arc Raiders DAU across all platforms. Why are we looking at this? Well, they just released a huge update and it's been a topic of conversation for us because we have some doubts about the ability for new IP to enter top leaderboards. This actually happened. It happened from a fairly young studio. Remember this is Patrick Söderlund. He used to be the CEO of DICE and then got that $55 million a year pay package above Andrew Wilson and then quit after he did Anthem's suit launch. And now he came back with a studio. Remember they did The Finals which is another shooter which is actually still going and is showing some signs of life. And this is their second breakout hit, Arc Raiders. We've been tracking it as a evolution of extraction shooter which I think it certainly did. There's a lot of particular mechanics we could look at of how they evolved it. The challenge for this game since it

launched in November 2025 is whether or not it's going to be able to maintain any sort of player base. As we know, this is the struggle. How do you build a live service? And so they had a pretty rapid monthly content update and you can see from 2025 to 2026, I mean the game is in a really good place. They're hitting around 3 million DAU across all platforms. And then it really starts to have a shed cycle around March 2026 and just keep shedding and shedding and shedding. I don't know if we've done enough updates on the podcast, but it's not been a good look for this game as it's been trying to find bottom really in the latter half of 2026 and it found bottom around 500,000 DAU according to video game insights. And one of the things they announced was that they're actually going to be moving away from these monthly content updates to I believe it was bi-yearly big content updates. Now as someone who's worked with like a lot of HD studios, I can immediately tell you that this is more appropriate for a lot of HD studios. They're not used to that level of content pace, the level of coordination, also just the amount of time it takes to build content on a monthly. It's hard to

build the beats that brand marketers love. Like console people, they tell stories. Whenever I go into design meeting with console people, it's like, "Oh, that scene from Black Hawk Down." Like this is how they describe the world. And so, when they think about like big campaigns, big marketing beats, big updates, new biomes, I think this is just really consistent with what I expect from AAA. The thing that they also did as a part of this like big content update is they had a free weekend on Steam. And you can see right here in the graph that they have uplift on both Xbox and PlayStation without the free weekend. This is exactly what you want. This is a really good comprehensive strategy. You have a big content drop, which has a really great new biomes, so you get tons of new visuals that people absolutely eat up. You have a free weekend coming, so with all the media hype, it's easy for new players to immediately enter the game and play with their friends on Steam. You have an upsell for the base game once you're in the free weekend, and you get uplift in your other consoles, which might not have the free weekend. You're going to see increased sales there. Just like really [ __ ] solid execution of an event like this.

The question is, are they going to be able to reverse their fortunes of declining DAU? And that's what this update is about. They did a lot of rework to fundamental systems. So, they have all the run-of-the-mill stuff like new map, new enemies, new quests. The thing that was interesting thing is that they reworked the skill tree, which is one of their core system designs, to have gates. So, now you make choices at part of the skill trees. You can choose ability X or ability Y. So, they're trying to add more variety to the builds. The skills that you get in the skill tree themselves are also becoming more intricate. There's more of what you might call conditional passive effects. So, to give you an example, you might be sprinting, and if you go beyond your sprint capacity, you can almost build up debt, sprint debt, and your exhaustion period will be longer. So, there's just a little bit more to consider with some of these abilities, which I think creates a more interesting meta, more things to reason about. Big changes to the war bond deck, which is their battle pass system, right? So, they kind of went in the war bond direction we've been talking about where these passes do not expire. The Helldivers model let you earn these

currencies called metals, which you would spend on the war bond to be able to buy different items. Now, you could accumulate those metals no matter what. So, essentially you were always accumulating these coupons that were redeemable for content in the battle pass. And so, if content in the battle pass slows down, those coupons can be redeemed for less things cuz there's just less things to buy. The change they're making here is they're making the pass more of a traditional battle pass again. It still has back play. You can still have no time limits. But, what they do do is auto assign your XP and auto choose linear based rewards. And my assumption for this is what they're trying to do in this update, which is create more sandbox mechanics that require less content. So, a war bond which has agency means you might be able to complete it with only buying 30 out of the 50 items. Whereas, if you have a linear pass, you have to go through all 50 levels. So, I think they're just basically trying to milk content. I mean, we we came up with this word productivity of content, and I think that's what they're trying to nudge at in this debate is how do we get more productivity of content? Like another example, weapons are now going to have like this level five end game loop.

And that's going to be really important to drive all of this engagement that they need between their next content drop, right? Cuz now they got to wait 6 months before they have another big drop. And so, they need systems in the meantime that are engaging enough and aren't expensive to maintain. And I I think that's what they're trying to get done here. The question is time time will tell if this is the right strategy, but I do think this is a good opening execution of their new model. And I think it's appropriate for the developer. Just please cut the [ __ ] finals. Like this is the one recommendation I just they need to go back to is like move all ships because it's a simple marginal cost, opportunity cost. Can a developer make more money on the finals which has like [ __ ] 10 users or can they make it on a Brazilian dollar product? Brazilian dollar product.
You're arguing that they should be having more people on Arc Raiders. That's a very very solid argument because we know that the Arc Raider team is quite compact. I think it's like 100 people the whole company. They are not using to my knowledge AI aggressively

because they did use they are
Well, they they I mean that was their whole that was all Sutherland's main narrative. I mean they're using it before it was hot. They they were using it when they called it machine learning.
Oh, well was cuz I remember the backlash.
lane. That's exactly how they're using it.
Okay.
Remember the voice controversy? They did generate a voice and then they
Exactly. That's that's what I thought and and I remember the the backlash from it and I kind of remember that they are pulling back on the usage of AI because of like Eurogamer backlash but
Oh, consumer facing. Okay. So they are they're careful and methodical in the use of of AI. So so how how do they keep this up? Like Phil, should they just hire more people in Sweden? How do they not blow this up by going for a another two-month vacation?
I do think this is the right strategy just to be clear. I mean beyond dumping all the employees in the final off at Arc Raiders, like this is appropriate strategy for HD developers who just aren't used to this pace and focusing on sandboxy systems that you can maintain is the right strategy.

Mhm.
Build more systems. Don't be throwing me 10 cosmetics. Cosmetics, remember? They're not a part of a gameplay loop. I get a hat, what happens? Nothing. I put on the hat. If I get a gun or I'm working towards a gun, well a gun is hours of engagement that I get to have with exploring it, mastering it, understanding how it works, figuring out where it's beneficial and where it's not. You never do that with a hat or a cosmetic. It's an unproductive piece of content.
Yeah, but they could still use more people, right?
Yes. Yes. Outsourcers. People from The Finals.
Co-development.
Keep hiring up until marginal cost equals marginal benefit. Hire more people.
All right. Let [snorts] Let's get to our last story really quick because it is it's starting to be a little bit time sensitive. So, it's a new report from Open Worlds. So, the stat that was pretty astounding is 69% of PC console gamers 18 plus say from a top two box that they are definitely or probably going to play GTA at release, which is November 19th, which is just a few weeks from now. So,

who is at the biggest risk of getting their ass kicked by the 70% of people who are going to drop everything to play that game? It's competitive shooters. It's arcaders, sadly. Sports games. And players that are drawn to speed and high stakes. And so, these are actually all of the driving games as well. So, we've talked about this for a long time that you know, the reason why the driving genre and racing genre is so niche is because Grand Theft Auto has kicked its ass. Because you get a lot of your adrenaline rush fulfilled by going to that game. So, if you are a driving game, competitive shooter, or sports title, watch out because this report from Open Worlds says that it's coming for you. Right now, just tracking on estimates from Sensor Tower on units for pre-order as of October 13th, it looks like about 6 million digital pre-orders, almost 600 million in revenue. I think next time, guys, we need to start taking bets on unit and revenue bets for the year. I

think that'd be kind of fun. We all We all place a little bit. What do you think?
Mhm.
Sure.
All right. Next time, we're going to come back with that. And I think that's going to wrap it up for this week.
No. No, let's have Let's have Eric do his walk of chart shame for Roblox. Let's go Let's go through the list, Mr. Krass. What you got here for us?
[laughter]
Last time I looked, Stealing Egg was number one. What does it say? I can't see, it's too small.
Stealing egg is number one.
Explain the chart. Explain the chart.
Brooke Haven doesn't make any money was the other one. Of
No, we didn't say that, guys.
Oh. Oh, for Roblox?
Well, how about this? We know that Stealing Egg monetizes a [ __ ] ton better than Brooke Haven, right? Like, I mean, multiples, right?
Yep.
So, not only is it number one by three times, right, in terms of DAU, it monetizes probably 10x, 20x compared to Brooke Haven. So, in terms of revenue concentration, it's basically all Stealing Egg, right, right now.

Now, if they were actually doing what they said they were going to do and pushing the algorithm towards games that are not Stealing Egg, basically, this would not happen, right? This would not happen. Brooke Haven would be up higher. It's actually down in September. All the other games in the chart are actually games that are not Stealing Egg, basically, except for Steel Brain Rot, which is
Yep.
So, to your point, these games come and go, right? But, still, even Steel Brain Rot at 200 Was it 100,000 or 200,000 last month? Makes more money on a monthly basis than Brooke Haven, right? Because of the monetization is much, much, much, much, much, much high. Do you have the revenue
no revenue chart.
So, so again, this is not a revenue chart, but I like to point out that I think we could say seven of the 10 games here are not the kind of hyper-casual trash you guys are criticizing the platform for. Brooke Haven, Blox Fruits, Murder Mystery 2, Rivals, Jujutsu Shenanigans,

Adopt Me, 99 These are all quality games. These are great experiences. I'd be happy giving my child any of these. And not only that, your Steel Brain Rot is is significantly down, which is consistent with my story of that it's it's kind of just this hyper-casual trash that kind of comes and goes, whereas these are mainstays. Adopt Me, Rivals,
Look, Steel Brain Rot and Stealing Egg make 10x the revenue of the rest of these games combined, right? That's what's driving revenue and profitability on the platform for Roblox. And those are the games that need to be destroyed. So, all this other stuff, this is the stuff they need to focus on, but they can't do that while they're a publicly traded company cuz the revenue's going to fall off a cliff and their earnings are going to fall off a cliff. This is the whole point. It's like, this game does three times the next game and it monetizes 10x times. And we These are the type of games that he does not want to promote on the platform. That's what the point of this chart is for me. And if we looked at the revenue, yeah, it would not be this. Like, these beautiful games that you're talking about would not be the top 10 revenue,

right? I mean, actually, Brookhaven's probably up there, but not
Yeah, some of those are are on the top revenue. I forgot the best place to get a top revenue chart. Well, next time we can go
All right. We'll go over the deeper on the revenue thing.
And again, the the point I would make is not, you know, what makes money this month. It's like, okay, let's look at the lifetime accumulated revenue, even if we want to do it, let's say, like on a year year three basis. And do we think, for instance, that Steel a Brain Rot over its lifetime will make more money than some of these other games with longer time horizons? I don't think so because they retain at a higher rate and LTV's just spread over a longer period of time.
All right, everybody. Thank you for hanging in there and we will see you again next week.
Bye-bye.
Hello everyone and welcome to Deconstructor of Fun special edition. Um there was some news yesterday around uh the storied EA BioWare closure. And so, Chris and I wanted to do a very special podcast and come on and talk about all of the news that happened with EA, uh reminisce about our love of BioWare since both of us uh

worked kind of closely with that business back in the day. So, uh let's let's get into it. So, major news from EA today as the most influential Western studio for RPGs has closed. Uh we've been waiting for the news since the $55 billion buyout closed back in August for the PIF's acquisition or leverage buyout of of EA. And so I'm going to cover a list of all of the different factors that happened and then we'll we'll break down each of these into the little separate sections because there's actually a lot that's going on. Uh I use Game File a lot for my bullet pointed list, so thanks to him for all of that, but we have sourced this uh through all of the different sources of people. So EA executives today or yesterday uh informed employees of some deliberate choices to align talent and investments where we see the greatest opportunities for players and long-term growth. That means sadly we're going to have layoffs and closures. And so here's what

this means. First is the closure of BioWare, uh the revered role-playing game studio founded in 1995 and sold to EA in '07, which had about uh only 50 people that were left working on Mass Effect, uh a new Mass Effect game, they they shut that game down. Many of the other folks had already been allocated to different projects. Uh the quote is BioWare is a legendary studio that helped define the role-playing genre, and we do not take this decision lightly. Um so that is first BioWare, we'll get to that in a second. There is a 3% workforce reduction. Uh the math is around 400 folks. Uh this is coming after a a lot of other layoffs over the last couple of years, usually in the, you know, 400 to 600 number. So they have canceled the new Mass Effect. There is a TV show that is in development at Amazon Prime. What I read this morning is that that is still happening. Uh so the IP is is not being

shut off. They are pausing the development of something called Project Lotus. This is a next-generation Sims project. Uh I think it had some mobile components to it. They are still continuing with something called Project Evergreen, which is Sims-related. Uh, they are downsizing the live service team on Skate. They are, um, this is super interesting and I want to talk more about this. They are assigning the the teams at DICE and Respawn to work together in Voltron up on what is rumored to be Battlefront 3, Star Wars Battlefront 3. They are bringing back, uh, EA Fight Night after, I think, a 15-year hiatus. I don't know why boxing is huge. I did watch the Tyson documentary, which was really interesting, so I guess they they saw that and boxing is coming back. Uh, development of brand new social-first open-world experience for American football. Uh, you might know that as Madden. It's going to be called Project Gridiron. And then a commitment to

continue developing and eventually launch a previously announced game based on Iron Man. Uh, they are also continuing with the Jedi Survivor series, as well. I think that's coming, uh, in '27-ish. So, first let me give you a little bit. Let's let's talk BioWare, uh, and and licenses. Um, it is, okay, well, I'll just do the blanket. Like, it's always hard to hear about layoffs and closures. It sucks. Our heart goes out to those folks. Um, it's awful and we know that we, Chris and I have been at EA, it's it's hard to know that lots of those folks are are leaving. Uh, KotOR, uh, Knights of the Old Republic is one of my favorites. I was at, uh, also at EA during the time where Mass Effect series and Dragon Age series were happening and so, um, it's just sad to know that that is going on. Now, on on the licensing side, I'm a I'm a little bit confused on the licensing pendulum swing. Uh, it has gone from,

yes, please, we want lots of licenses. We'd like to pay 20%. Um, they they actually got out of a lot of those licenses in 24 25 and now maybe they're back to this. So you know, it's it's interesting to know that the the Mando era shooter that respond was working on. I think that was canceled in 24 and then Black Panther was canceled back in in 25, but now they're back. Looks like Battlefront is back. I think it is the most wanted Star Wars version of the game to come back. So Chris, as you think about licensing and you think about Bioware, I guess first give me your Bioware eulogy. I know that this means a lot to you as well being a fan.
Well, first yeah, I mean clearly really sucks. Um it was such a great studio and but frankly, I think and this might have happened and people are talking about this. This might have happened regardless of the transaction with the Saudis.

Um But I'll get back to Bioware in a bit. You know, I I just wanted to just talk about this quote-unquote layoff or mass layoff that was expected, right? So I mean this is it folks, 3% 400 people, you know, 50 people at Bioware, right? That's the extent of layoffs at EA related to this transaction. Um And to be clear, there's been some culling since the announcement. I I I I would imagine it's probably closer to 5 to 6% but they've hired far more than this many people in the meantime, right? Different roles, right? So there there is actually no impact whatsoever to the PIF acquisition of EA and anybody that reported um differently should mea culpa, right? I mean like this is I mean I I they were just dead [ __ ] wrong, right? And the doom and gloom folks, particularly Jason Schreier, who clearly didn't understand this deal at all, right? And all the other like underlings that were like kind of repeating his [ __ ] was like Reese

Elliott, Simon Pullman, Matt Mark Dera, David Cole, Michael Futterer or something. You know, but the original sin was really Jason Schreier who basically ignored all the evidence to the contrary at the time and reported on mass layoffs. He had access to the information. He was talking to the right people. He should have been more objective in the reporting and he chose just not to be. And the original one was really his announce the announcement 2025 where he basically said this to the BBC, this could mean mass layoffs, more aggressive monetization and big cost-cutting measures. And then he wrote a piece on LinkedIn and then posted a piece on Bloomberg all kind of suggesting that in order to service this debt, they're going to cut insane amounts of people and do mass layoffs at 20 to 25%. We are at 3% folks, three. Net zero probably with all the other hiring. But the worst part about it after all

the evidence to the contrary in when the deal closed in August in 2016, he doubled down and he re-released his [ __ ] right? EA's annual EBITDA is around 1.5 billion which should be enough to service the interest payments. Which should not be enough to be service the infant payment. In other words, mass layoffs. Like he doubled down after year later after many, many people including people at EA he should have called would have told him that that was not the case. So, I guess like what bothered me about this whole thing was that he was being so disingenuous and kind of reinforcing his own narrative that everyone picked this thing up. And BGC, PC Gamer, Push Square, Level Up, WCCFTech, TweakTown, NeoWin, Tech 4 Gamers, All Key Shop, The Verge, and obviously Rhys and others in our space, Chris Weatherly of course, picked [laughter] up his analysis of this situation and reported on it, right? So, he created this barrage of [ __ ] that was not based

on the facts of the deal or the specific things that were going on with this particular deal. Um and I and I I just you know, in my I don't want to get political on this, but like or you know, geopolitical stuff, but this is like what happens when you reinforce narratives without really looking at the specific transactions. Like, Saudi never wanted to destroy. They want to build. And as much as I disagree with Andrew on many things that he has done over the time over this his years, he does not want to his legacy to being destroying a company and selling it for parts. I mean, that doesn't even make sense. And I think again, Jason had access. He had access to this information, particularly in recently in 2026, to report on this accurately. He chose not to, is what I think.
Yeah. Just to interject here, I think the other unintended or intended consequence is that culturally at EA, they've been living under a specter of waiting for an

axe to fall for, you know, over a year. And that just feels awful when you work at a company and you think that's going to happen. So, this narrative is out there that you're saying as being perpetuated that isn't actually true. It it's difficult to then listen to your internal people be like, "No, no, no, it's it's okay. It's okay." when on the outside everything you know, the the sky is falling. And so, I think you're right to say that you know, it it it's sad to know that there's a narrative that isn't necessarily the right narrative with the right analysis of the data, right? Because that it wasn't even the right analysis of the data.
No, and yeah, he misunderstood what the debt requirements would be in terms of um what the interest is on the debt and how much cash flow that they had in in order to more than cover what the debt load is. He misinterpreted the fact that the what the Saudis what their intentions were with this business.

He he misinterpreted you know what EA was saying, right? And and of course EA is in a position where they can't actually communicate anything more cuz they're kind of in this quiet period between the announcement and the close. And so like the only voices we he heard the people were hearing was Jason Schreier who's not accurate about whatever. I don't know who he who he was listening to. And then the fundamental thing that he just just did not seem to understand or or comprehend is that this was not an LBO, right? This was a strategic deal that was being participated by Silver Lake, but Silver Lake had such a small share of this deal that that should have been the evidence all the evidence he needed to realize that this was not a typical LBO which they do typically cut like 20% or more and and and sell it for parts. But like he just ignored all the evidence that was clearly in front of him in my opinion and and that's what irritated me the most.

And I talked to him personally, right? I'm like, "No, this is not what's happening." I gave him five different people to talk to that would have given my opinion on this you know this take, right? And then and I know the company was likely communicating to him. So anyway, all right, enough of that. So back to BioWare.
[laughter]
This is I don't know why I'm so incensed by this. I mean he Jason has done some amazing work in this space. I mean I don't want to he's a he's an amazing person and amazing uh what do you
Reporter, journalist?
I journalist. Like he is a journalist. That's what's that's what's so annoying about it. Like he's a journalist. He's really really good at what he does and I I I just anyway, I just don't understand why he was so um I don't know.
I think when people double double down even when presented with facts to the contrary. I think that becomes really frustrating.
Yeah, and that was the chance he could have said, "Look, you know, this may be more of a strategic deal. They may we may not see as big of a of a

of a layoff as we as I had thought." Like he could have actually just positioned this in a different way when the deal was closed. That would have like been fine, but he didn't do that at all. He just totally doubled down. Um all right, back to BioWare. Um look, I I personally I this is very sad. Like BioWare is beloved, right? There's there's there's no doubt. Um some of my favorite games of all time are BioWare games, particularly like Baldur's Gate on PC when we were kids, my brother and I would play the crap out of this game. Kind of the o- OG single-player RPG, you know, that that took off, right? Knights of the Old Republic is considered one of the best RPGs of all time still to this day. Um Dragon Age 1, Dragon Age 2, Mass Effect 1, Mass Effect 2, hell, Star Wars: The Old Republic, you know, despite all of its challenges, I mean, that I love that game. I mean, these guys were prolific in their day. They did an exceptional job. So it's really sad to see them go. Um you know, but the the fact of the matter is the studio really has not produced a successful

game since Dragon Age: Inquisition in 2014. And even that game was many many iterations, delays, and and cost overruns, definitely over budget. Um but let's be clear. I mean, there was only 50 people at the studio when it got shut down. So it's like this is We've They've already seen the feel felt the pain over the years. So it was just kind of a matter of time. Um but the games that came out since 2014 were Mass Effect 3, which did fine, I guess, but it was really controversial because of the ending and and and and and whatever. But Anthem was a train wreck in 2019. Uh Mass Effect: Andromeda did not go over well and then most likely most recently uh um Dragon Age Veil Guard which only had like a million five and cost quite a bit of money to make. Um So I and I know everyone like tends to want to demonize EA for all these missteps and believe me there's a lot to

blame right at EA uh particularly their management. But there was also some faults at the studio level as well. Um I've always said and I kind of believe is that really they just did not want to evolve their design.
Yeah, yeah.
And I don't think really the management of the studios particularly since the brothers left um really didn't execute against their own visions. You know, like a they didn't have a cohesive vision about what they wanted to do. And this like led to like really long production times, reboots, and lots and lots of chaos in the studio and lots of management turnover. So this is kind of the situation that they were in. Um But the one thing that was clear to me like covering this over the years is that the really the beginning of the end was Star Wars The Old Republic and I'm not going to go into a long diatribe about what what what what the challenges were with this. But but fundamentally at a high level EA particularly Frank Gibeau who you know played World of Warcraft religiously uh really wanted to make a clone of World of Warcraft, right? And BioWare

did not, right? BioWare wanted to make like more of a single player action-adventure style MMO which is basically kind of not an MMO, right? I think the original design was quite interesting but it would have been completely different than than typical MMOs. Now I'm going into it anyway. Um but I think this is what broke the company, right? Because basically right after this game released both Ray and Greg left, right? In 2012. And I think this was kind of the end beginning of the end cuz they did not have not only creative leadership which I think obviously Ray and and Greg were geniuses in that way Um, but they just didn't have a buffer between EA management and the studios. And so, I think this was the ultimate the original sin type thing of of and the end of the studio. And then EA, obviously the Frostbite mandate, you know, was a huge EA blunder, you know, requiring Frostbite with no real RPG capability for Inquisition, Andromeda, and Anthem.

That caused serious technical problems and there's all kinds of reporting on that.
So, Frostbite is an engine that was developed at DICE, right? Wasn't it?
Right. Right. And Söderlund um, and others were pushing this engine to all the studios, including sports, but also to BioWare for the uh, creation of you know, their RPGs and and and I understood what he was trying to do. He was trying to build the capability within
Yeah, engineering capabilities where you could move people around the company, you know, when to avoid crunch. Yeah, all like we get the reason why, but when it is so proprietary and not built with the right capabilities for the right genres, then you're hamstrung.
Yeah, and I and and and and the and the Dragon Age and BioWare was not familiar with the engine, so they had to really learn a new language and a new way of making game. It was a it was a [ __ ] of all portions.

And then the other part that EA really did was the live service push and they tried to do that both for obviously for Anthem, but also for Bale Guard, right? Bale Guard originally was supposed to be a live service game and they converted it back to a single-player game. That created all kinds of because they just didn't have the capability of doing that, you know, they didn't have the team or the people that were really into that, right? So, there was a little big mismatch there. That's sad. Um, but from a studio perspective, and this was reported as well, and also from my contacts, they they really just had bad poor production discipline, right? They just didn't stick with the design. And I and I and I think in general and I I the management would argue is that they were not being contemporary in their ideas in terms of what was what was popular out there. Um and then leadership kept coming and going partly because of the EA, but also because they just never really had a consistent leadership um at that thing. And then the live service thing is that they just didn't have the right people to do live services. So to

the extent that they move forward with live service, they just didn't have the people to do it. So that caused all conflict but problems. But at the end of day, it's a really sad day because BioWare was an amazing developer and they have some amazing IP that that may or may not be iterated on from from now on. So I I I really do think it is a big loss for the industry. But likely would have happened regardless of the acquisition of Piff by the Piff.
Yeah. I I think I want to go back to the contemporary design question because I I do think that is something that it feels like is a challenge for some of um I don't know, our elder statesmen of the industry and elder statesmen studios of the industry is how do you continue to evolve what has been successful but keep up with the trends that are changing. And so they fell into the you know, ever remember everyone was for forcing live

service on everybody. But now what we're seeing is actually there is still a place Wolverine I I think I read today Wolverine from Sony is crushing it. Single player game, no live service, right? Let me before I talk out of turn. Yeah. So there still is a place for some of these more traditional or old school games. But when you try to fit a square peg in a round hole and try to force studios to do what they're not good at, I think sadly this is kind of what you end up in. It And so maybe there is a world of, you know, ballooning AAA budgets and all these different things is you can't be everything to everybody. So, why don't we give studios with you know, their expertise the right budget to make the with the right demand forecast to deliver things that some players still would love to have. They're just not going to be grand slams. They might be a single or a double, but I think we're seeing there's no appetite for that. That should be the strategy. But there's not an appetite for that, right? Because everybody is like fewer,

bigger, better. Like that seems to be the notion.
Right. And that was the situation that we were in at the time that all this stuff was happening at BioWare is that they needed to build bigger and better games. And so you know, and then Baldur's Gate comes out, right?
Yeah.
And it kind of like throws throws this whole thesis out the window, right? Cuz it in theory, I mean, you could make the argument if they kept doing the same type of game as Dragon Age, they could have had the same success as Baldur's Gate, right? Right? But um but anyway, be that as it may, it's like but if you look at like something like Elden Ring that came out, right? A huge open-world RPG, like that's the kind of game that I believe like Mass Effect and Dragon Age could have evolved to, right? Like that would have been
Yeah.
contemporary design. That's the way That's what I'm thinking, anyway. So,
Crazy question for you. Uh in the world

of AI, you know, so the brand So, I remember being at EA and talking to the Dragon Age and Mass Effect people, and they were like, "Jen, we create all of this branching content, right? Because there were like literally people making the stories, and I think the stat was something like when a player plays through and they make all the choices, they've only engaged with 10% of the total content that was developed for the game because of the way branching content works. In in a world of AI, the I I like I wonder if you could have go back and actually reinvent those older style of branching content stories and use AI to make that easier, more cost-effective, and still have that magic, but
Yeah, I don't Okay, we talked about this last yesterday. The problem with this whole idea of creating unlimited content with AI is that you know, ideas and content are not designed,

right? Like, things have to be designed. They just can't be just thrown out there, right? The way
No, I get it. Yeah, but but in the in that old structure, like the
But like, you want to build another level, like or another area for something like Mass Effect, you know?
Not like an area, but like some of the the story or the content or or where you have it generated and then and then a human edits it and does that like accelerate, I don't know. But no, I
Yeah, I don't
I'm I'm looking for something in the middle.
Yeah, I don't know.
Yeah, okay. I mean, yeah, I get it.
What what Yeah. Yeah, yeah.
Cuz I the way I use AI, and I think you you too, you know, Mishka's on the other end of like it does everything for him, which is apparent. I mean, you and I use it as a thought partner or as a uh brainstorm partner or as a starting place. I always tell people like uh using AI can get you 70% of the way there, but if you're not doing the remaining 30%, it's going to be wrong,

it's going to suck, and it's going to feel generic because it's trained on the median of the internet. Um and so, I I don't know. I just wonder with that with that one 10% data point stuck in my head of like these games were so expensive because you had a team of writers and those people were some of the most creative smart writers at you know ever would this have allowed them to to help anyway. Just just just a thought. Or is that kind of branching story driven game of of yesteryear you know are you and I dinosaurs who and and some of the way that we used to play Kotor and you know those games you know it is it have we passed that? And the only consumers of that are 50 plus.
Yeah I I think there's Yeah there is a certain nostalgia factor on that that may or may not live you know versus something like Elder Scrolls and and you know all what Bethesda is

doing um you know these open world epics you know it's like I don't know. It's
wonder if it's too much if it's too open world. I don't know I So there's something called the paradox of choice which is
it comes down to the expectation of the consumer right?
It does.
If they expect an Elden Ring or an Elder Scrolls or a GTA you know building the Mass Effect of old is just not going to do it or the Dragon Age of old that's just not going to do it right?
Yeah I don't know I don't know you're right I
Baldur's Gate Baldur's Gate is a big contributor like [laughter] I had said earlier
Yeah.
Like that came out of nowhere like you know I would not have expected that to do as well but the nostalgia factor was there and the game quality was high obviously it took forever to make too.
I don't know remakes
But anyway it's again it's a sad day you know one of the big studios is gone you know you know Bungie may or may not be exist you know either you know like

we'll see you you know it's like some of these like really really like um historically amazing studios are just kind of falling by the wayside these days and it's it's sad.
All right, Chris. Well, thank you for our very special episode or our supplemental episode. Uh we will see you all next week.
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