UA Financing Reshapes Mobile Publishing with Tilting Point

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All right, what's up everyone? and

welcome to the Noviet Gaming Podcast. I'm your host, Alex. And today we're diving into a part of the industry we frankly don't cover that much, mobile publishing. Um, and when most people think about publishing, they think of PC or console juggernauts that help studios get to market. But on mobile, publishing looks completely different. It's about scale. It's about speed, operations, and above all, user acquisition. And few companies have made a bigger mark here than TiltingPoint. Founded in New York back in 2012, Tilting Point built its name by stepping in to help existing free-to-play titles grow through marketing muscle, creative optimization, and of course, U.A. financing. Over the years, they've raised multiple funds to back this vision. Um, and the most recent being a $150 million UA financing fund that they announced earlier this year in March. Today, we're going to discuss the landscape of mobile publishing, first party, third party, and thirdparty financing, and how Tilting Point is evolving to navigate that market. And my guest today is Aussie Barack, the chief business officer of Tilting Point.

Aussie,
hi Alex.
Hello. Um, Aussie is calling in from sunny Barcelona, and he leads BD, IP licensing, and growth partnerships as many other things at TiltingPoint. Um, Aussie's been there for over a decade at this point and has helped TiltingPoint achieve a 25x increase in annual revenue and secure a spot on Pocket Gamers top 50 mobile game m makers for four years in a row, which is pretty incredible. Um, something I also admire about your background is that you've previously chaired a nonprofit, um, Games for Change, which, um, is actually right in my backyard in New York City. Um, for those in our audience that aren't familiar, Games for Change is a nonprofit that helps facilitate games with a social impact, so education, humanitarian causes, the environment. Um, all of this is needless to say that um, we've got a great guest for today's episode. And welcome to the show, AIE.
Thank you so much, Alex, and uh, glad to be joining and thanks for hosting me. Awesome. Um, so before we dive into the meat of our show, um, I want to ask a few questions to set context about you

and Tilting Point. Sure. Um, so first of course about you. Um, and we talked about this a little bit in our kickoff, but you played a 15year-old 15-year role essentially running a nonprofit and now you're part of a big business expansion at a mobile publisher.
Yeah. Um, what is your mental model or reconcile or if reconciling is even the right word for you between the mission and monetization at this commercial publisher given your background in in nonprofit work?
Yeah. Look, so so it's it's really interesting because most people most people I know that jump between the two worlds, it's the opposite, you know, they they go in they go on they make a lot of money and then they start to do some charity work. In my case, I did start in business before I moved to the US, but very early I started to dive into the nonprofit world because I was fascinated by the idea that video games can do more than entertainment. And I had um me and and a relatively small

group of people back then, let's let's say it's 2004, had this uh this same vision, the same idea, the same ambition. It was very early. Think about it. Before mobile games, before Facebook and the stigma, the the perception of video games was very very uh negative. I mean, today you see you see some leftovers in in certain crowds, but back then it was really very narrow and uh and that idea kind of drove me to invest in it so much. And then I went to the commercial world. So I did the opposite route. Um but I think it gave me some perspective in the commercial world that helped me on one hand to work with developers to understand the struggles of an indie developer because I was an indie developer in the games for social impact before I
ran games for change. It helped me to understand the impact that we can have

on their um life basically on their on on them and their audiences. And I think it also helped me to do some projects. I wish I could have done more, but over the years we've done probably five, six uh initiatives like this that take Tilting Point into that world as well. So participation in the green uh game jam
that the United Nations is sponsoring whether it's integration of nonprofits into our games for a campaign. Uh, one case that was very successful is with Spongebob, our cooking game where we put a um a nonprofit with a product called Life Pack. And Life Pack uh two or three of those can sustain a a hungry child in in a certain country for a day. and people by playing the game and by donating and by buying packages could could make a real

difference. We did others with tree planting and and other initiatives. So, you know, that gave me satisfaction that I got some of that DNA to but it's not only me. I saw amazing reception of the young generation of of employees, you know. Mhm.
So, it was a very easy thing to to get in. I just had the right connections and the right uh structures for it, you know.
Yeah, that makes sense. And I think also like, you know, as you know, you talked about the evolution of gaming, right? And how it, you know, had a little bit of a negative stereotype around it and obviously it's evolved to what it has become today. Even I feel like I've witnessed that in my lifetime. Um there's also a very different level of I guess generational um importance and focus on charity and giving right and so um companies for good companies that have kind of a peripheral like you know kick back towards some sort of like

economic sorry some sort of ecological or societal benefit I think is very important to a lot of generations you know Gen Z and um below. Uh, and so I think it's also about building a good culture um of a company because you feel like, you know, of course we're making a business, but we're also doing good things for the world and where we can. Um, and so I guess that also brings us to discussing Tilting Point a little bit. You know, you brought up this example of Spongebob, but um, give me the elevator pitch kind of for the audience for what Tilting Boy Tilting Point does and its value. Um, we'll obviously go way deep into this into in our episode, but at the high level sort of like who are you guys and what do you guys do? So, so I think that you know you you started uh defining it very accurately at the beginning that we're a mobile publisher. Um and when we started it, it was a a unique creature, you know, in mobile and I think we were one of those that kind of shaped it as as an industry helping mobile developers to scale, helping mobile developers to grow and succeed. Erh today I would say er

because of the size and growth we are very focused on uh acquisitions basically taking studios even to the next level with acquiring them allowing them to exit to continue independently and be successful. We're uh doing a lot of uh user acquisition financing.
Mhm. It's the same type of I would say perspective of of empowering and growing studios but uh a lighter touch right and the third is that we we over the years by doing publishing by doing partnerships by working with licensers we established a big portfolio. So we have a very strong portfolio of mobile games with a lot with licensed IP some of the very known like Spongebob or Avatar the Airbender that we launched this year. So I would say these are the three legs uh you know the portfolio the

UA financing and the M&A that makes us all together I would like to think one of the top 50 uh mobile mobile players in the market today.
Okay, got it. Um, and like I said, you know, we don't cover mobile publishing at Navic that often. And that's not because we don't cover mobile, but it's because mobile publishing within itself is just more rare compared to PC and console. And it's primarily this way because I think games on the PC side and console side are often divided in creation and development and distribution. Um, and both are so ownorous and complicated that you kind of needed two distinct entities, the publisher. Yeah, exactly. the publisher and the developer to you know unite hands and get to market. Um but in mobile games launched with a direct to consumer format through app stores and so there's a posity of mobile publishers simply because there's a less of a need when mobile became big in the early 201s. Um effectively it's like kind of

easier for everybody just to be first party. Um or at least that's my pitch to myself. But um I'd like to hear from you. You know talked about Tilting Point's legacy as being you know one of the top 50 mobile publishers. Um but why do you think that we need a mobile publisher given what I just said? Look, when when um when it started kind of mobile publishing and and when when uh and and this is even before freeto play, of course, it continued through freeto play. Uh Tilting Point and others played in a game played in a in a domain or or a discipline that is similar to PC and console. And that um that principle was I'm going to take a bet, right? I'm going to invest in a developer before they're even out there. I think that uh for just like you said for developers that could go directly to the market um it it presented a dilemma because

they are basically tying their destiny to a to a publisher without knowing much about each other without knowing much about the success of the game. So the the chance for misaligned expectations is much higher. And uh you know if for example the the publisher put a lot of money and the success is not immediate they can immediately get disappointed or decide not to invest anymore and developers could be disappointed of their own expectations and and uh desires. what we did and I think that that was the point probably not the only ones but among the only ones that said you know what mobile has something that others don't have and that is you can access consumers directly and you can show data that is is a treasure trove of information that can basically make or break a game
and we said we're not going to come to

you before and take 50% of your revenue. We're actually going to come to you where you're already live and then you need very specific help and maybe we take less because we took less risk but the expectations are much more aligned. Okay.
And I can also tell you you know right now your game the size of your game is X. Reading your data reviewing the data assessing what I know I think I can take you to Y. But I have much more confidence and knowledge in in saying this, right?
Mhm.
So I think that that opened the way for developers to be much more flexible to take their things uh to the market to decide then if to work with someone like me or maybe just go for UA financing or maybe do it all alone if they can uh if they if they can uh get the resources. But uh I think that that made uh the industry and and publishing make much more sense for people

in mobile.
What to you are you know you mentioned one of them right this gap maybe between expectations and knowledge right so I feel like I have some sort of asymmetric information about how successful the game is going to be and therefore writing an upfront investment is challenging. Um whereas for a mobile publisher, they're coming in pre-launch a little bit more like growth equity than venture capital. Um but what to you are like the top three differences between mobile publishing and PC and console. Um beyond just the fact that of when a publisher usually taps a game on the shoulder in terms of timing.
So look, I think the reliance on data is critical. you know that I know that it took time for the industry to get used to it and it's still counterintuitive for creative people but data is almost more important than anything else. You know in in the in the other industries today you will go and make a pitch to a publisher and most of your effort would

be that the publisher would believe that you know the audience would like the game and that the game is um and and you will have it in a mobile pitch but the data would be the the real reason that someone will see the potential because the data shows that you can actually scale it. uh he chose the retention it I mean it it's it's tough to think about it like this but but in mobile this is the the dominant thing the second one I would say is user acquisition it's related to data but it means that uh unlike other industries you have a lot of control and impact on marketing that can show real immediate proven results. Mhm.
I you know I I I was thinking about it for many years when we do UA in mobile so successfully and and predictably and profitably like you don't have it in in

in many other industries you know you don't have it in film I don't think you have it in in console and PC games in that level like you can really make an investment in marketing a game and know what you will get and when the money is going to go back to get back to you so I think that's the second very important important thing and I think the third one is probably um I think there's more flexibility because of what you described as the fact that sometimes you don't need a huge team and sometimes the budgets are smaller and you can go directly to consumers. I think there's more flexibility in where you divide between you and the developer. you know at the days that we did a lot of third party publishing which we don't do today you know we were doing V on the things that we feel the the developer needs or he says that they need but the thing that they cover and they're good at why

would I why would I interfere with them
you know so so it's it's a much more of a collaboration than okay I have this template of a publisher you're going to do your development and leave it leave marketing alone no if if there are things in marketing that they can contribute to of course they they should be collaborating with us.
Yeah. In a way actually I think that a lot of PC console today is shifting towards that model
um as the traditional like trad publisher model becomes quite out of style right a studio is expected to
do their own marketing um and build their own social media pipeline um similar to maybe more what the mobile studio do and then the relationship between you and the publisher is more about like what are your gaps what do I need you for? how can you help me and have those services be a little bit
here here the it's not secret in in mobile
at the end of the day you can do a lot of things but UA would be 80% of of the
so in in that sense and you can do a lot

of things that would support but at the end of the day you'd need the big capital and you'd need a big expertise and
so that's I think that will still be something that um in PC and console unless unless the system changes is not there yet.
Yeah. And actually that's I think where my next question was going to go is that you know one of the things that has become fragmented in PC console was the relationship between marketing dollars in and unit sales or downloads or whatever out right that is still not true for mobile right and so in a way what the way that at least I have thought about PC console is that that fracturing has actually leveled the playing field to some extent just because you have 50 million in marketing dollars does not mean that you can't beat schedule one which is made by one guy. Um but on the mobile side given that UA is 80% of base of the battle as you said do you feel that creativity in that kind of environment is stifled to some extent because the UA dollars have

such a large impact on outcome that there's no room for kind of any actual creative campaign grassrootsy kind of activity that's being displayed in PC console.
So so yeah I let's let's fix the impression with the with balancing the with balancing back. There's definitely a place for creative uh it's a bit different on how you think about it. There's definitely a place for creative marketing and there's a place for creativity in the content itself. The the ads that you in we call it user acquisition. It's advertising. It's marketing. The the more creative ads will have a much much stronger impact. They can come from the publisher. They can come from the UA expert. they can come from the the uh developer and and you know they they make a huge impact. But the other thing is in mobile that because it's free to play games as a service in a very very meaningful way. It's not DLCs. It's like daily daily uh

uh grind of creating new content live ops um you know events. uh there's a lot of creativity in how the operators, the people that run the game on the developer side or on the publishers side interact with the marketing campaigns. So, and and the better they go together many times the the bigger the success. You know, it's not it's not like I'm going to hire this ad agency, they're going to do something and you know, come back with the results. It's it's a it's a daily collaboration. So in that sense there's a lot of creativity in that as well. By the way, I've seen uh many many cases on how much art style of the game the the choice of uh the look and the characters uh or the let's call let's say if a famous IP known IP is is uh

integrated how much the creativity of the integration the match with the uh fans how much they make a difference also for the user. acquisition. So it does, you know, to conclude with it, it's not like floating in some limbo. It's all connected, right? And the user acquisition will be much more effective if the the game itself has the materials and the content to build on.
Yeah, absolutely. Yeah. And I think that that's been a big topic today of of playable ads and um the difference between, you know, the I guess what I I would call them the falsely misleading ones, right? Where it's I'm not exactly sure what the appropriate term is.
Yeah. I just call those the the lies. Um but um this is not what this game is going to turn into into being. But right
um I guess like in that vein right before we move on to the third party approach and the evolution of tilting points you know strategy and third party um I want to discuss maybe in the past

three years specifically and I don't mean like and I don't mean tilting point but I mean in general um how mobile publishing has changed and one of them of course is at right um but what else has become very different about mobile publishing in the past three to five years um and and this is going to obviously inform what we talk about for tilting.
So, look, I'm I'm not going to to beautify it, you know, and and give you a a BS answer. I think that it's tough. It's tough out there uh to player at any size. By the way, it's also a problem right now that is shared by the market leaders to launch new titles. You know, if you if you want to think about an equivalent, you can think about the film industry with blockbusters that it's it's much safer to unfortunately to create a sequel sometimes than a whole new innovation. That's where we are and the reason uh is is a lot of it is has

to do with the I mean it has to do with the economy, but I would say that at plays a major role. the the fact that user acquisition has changed dramatically and you can't be as effective as before.
Mhm.
And the market is saturated, it's very very tough to do UA effectively. It's still happening. I'm not I mean we are seeing new uh titles all the time that are launched and can get funding and be be scaled but it's much much more uh difficult than the past. the the dream of the five guys in a room doing something that explodes was very true to mobile four or five years ago, less so today.
Um and and uh and and to get the visibility and discoverability stuff. As such, on one end, publishers uh might be needed even more, but you could also argue that they will

be very very risk averse and um they'll prefer to invest their money in things that are established, you know, rather than than take any any risk on something new.
I see. Erh the the good news is that uh there's more financing options and funding options for developers. So there are more alternatives for uh the traditional publisher you know if you want to get yourself to to the next stage there are more options out there I think and and more education out there.
Yeah. Um, so I mean, but again, you said that um, most mobile publishers are not onboarding or signing up with a game before there's already some sort of live
data, right? Correct.
Um, and so
again, wouldn't that always have been true then that everybody that publishers were always incentivized to just dogpile on the ones that were the most successful or at least the ones that

thought they could make an impact on?
Now we're talking about a different level of risk. When I say established, it's like you know the game is already showing that it can run uh budgets of millions of dollars
while in the past uh they saw the publishers saw data but it was in a smaller scale. The scale you know so yes so so it's kind of how much you're willing to kind of take the bet and extend. Sure.
And um and I think that it's also a question which is also a question for ting point. Okay. So if I see something that is coming to us uh is it worthwhile to do third party publishing versus investing in my own teams for big publishers right that will create something on their own.
Totally. where I don't I work in a in

better business uh structures. Right.
All right. Well, this is a great segue to basically now discussing tilting points and the evolution of your guys's third party approach which you kind of started hinting at in terms of, you know, do I invest outside or do I invest inside?
Um and also I want to talk a little bit about UA funds just in generally 101 in terms of structure. Um, and so probably based on what you've just explained, but you've seen in the mobile market over the past five years, Tilting Point has recalibrated its strategy, shifting away from thirdparty publishing, I believe you guys were calling it progressive publishing in the past, to third party financing. And so, why was the continuation of third party publishing not the right step specifically for Tilting Point?
Yeah. No, it's it's a super important question because you know some people still and you know recognize us with the past with the progressive publishing which is which is good because it was a strong uh approach and I also want to say as I told you Alex in in our in our

call before um the live uh broadcast um that that's what made Tilting Point you know so I don't want to dismiss the third party publishing I think that is what took us from you know being a company when I joined 30 people to being uh 400 you know so uh it was a very important part of our evolution and creating the DNA of tilting point however with AT with the economy with all the changes and also with the I think with the scale that we got to third party publishing started to be harder and harder to maintain erh as is something that really moved the need moves the needle for T3 point.
Mhm.
Um it it's much harder to launch games as I said, you know, to succeed out there. Uh it's much harder to take risks.

uh the margins are smaller because of UA cost because of the platforms that are still you know even though their I'm I'm going to say even though I'm a good partner with the platforms I'm going to say something that everybody knows their value is has diminished you know I remember days when when we took a whole team to pitch to Apple in California because their featuring would would make a huge dent in in huge impact on the game today that's not the case. So I think that with all of that third party publishing became tighter and tighter and harder and also not big enough for us and we decide to go much more for first party uh as in acquisitions as in if we publish it will be from our own studios and helping them to to scale and grow. I mean, it's still collaboration because they're independent and there's a lot of a bit

of the publisher developer relationship there, but we own we own the the studio. Uh the only exception is what you ask about is UA financing. That's that's a bit of a business segment that stayed with us from the third party publishing. I can explain to you um why, but that's that's kind of still third party in nature.
Um
yeah.
Yeah. And you raised that $150 million fund to address that. Um and you know, right now actually I think that
UI financing is like all the rage. Um you guys are doing it,
VCs are doing it, even other publishers are doing it.
Um and I kind of want to spend some time discussing how it works. um so that our audience has an a strong stronger understanding about what you guys are looking for and how the fund works. Um and so at a high level um I'd love you to tell me how the fund works. Um you know where do you raise from?
Um what are you looking for in terms of

investments? Um it's non-dilutive. So you know share to the audience what that means and
for Tilting Boy specifically like what's a good what's a what's a target return for you if you have a hurdle rate.
So look it's a lot to cover. I'll try to uh we we break it into parts but um I think the the first thing I I'll do is differentiate Tilting Point. I I owe it to to our uh reputation. We really did it before anyone else. I'm proud of that. By the way, it was something that the people in the company before me invented as a as an engine. I was kind of the fuel because I was the first one that came and actually introduced it to developers and back then it's crazy you know today I'm going to developer to talk about UA financing he already speaks to three other companies he knows all about it he's asking me the details of the details in 2017 when I spoke to developers they had zero clue what it is

and uh it was totally new to the market as a model and the idea was that I'm coming to them and I'm saying Look, I'm not loaning you money as a bank because when a bank gives you money, you need to return that money no matter what. Your house, your house can burn, your game can be off the store, the game can fail. It doesn't matter. You got that money, you need to return it when you promise to return it. I also told them it's not equity. You know, you're not diluting yourself as a founder. By the way, sometime I I was as a founder myself on some companies. Sometimes you only realize very late how much equity is precious. When you start when you start to get more and more people in, you you get how how much you maybe gave it too easily. And I always tell them, don't give it on UA funding. Don't get it on on user acquisition. Let me fund it or someone else for that matter. Erh so

then then you know the question would be wait so you're not taking equity you're not taking uh it's not a loan so what is it it's h it's really my and it shows you how user acquisition is is predictable and crazy in that sense I take uh it's almost like I buy your future cohorts I I fund them I pay for them I'm taking my erh uh capped fee at the end when the money comes back and that's it. All the upside is yours. So not only that you didn't fund it h I'm also kept you know I'm not sharing revenue with you in that sense. So it's a very smart mechanism to say yes it's more expensive money than if it was my money but on the other end no strings attached. I didn't give my equity. Erh, I don't need to pay it if the game doesn't return it. This is the most amazing idea here that I

need to wait for my money to come from the game, not from your pocket in that sense, right? And if it doesn't come from the game, I take a risk. Um, so that was the revolution of this. And now you're right. It became insane that everybody everybody is talking about it. took so many years h to be so popular and the most interesting thing I see is that even bigger uh publishers and developers consider it
which never happened before people associated with it with I don't need UA funding I have the money but now they think about it more as a resource allocation like how do I think about it more as a tool it doesn't mean that I'm poor It just means that I'm, you know, using different methods of fundraising for different goals.
Okay, so let's just kind of walk through

an example here. I'm I'm a mobile gaming studio. I've decided based on my E and DCPIs that, you know, I need about $20 million in UA financing. I come to you and I say, "Hey, can I have that $20 million?"
Um, and you say,
"What?"
Okay. So, so I I tend to speak with developers about it, not at the beginning, but after a while, as a as a visit to the doctor, you know, I I see ourselves as very good doctors in the sense that we have this expertise to assess your game and not only of what it can do now, but also see the potential. I get to a resolution with our analysts that and it will take very quickly. you will share data with me and uh you know the more transparent you are the better obviously because I can also give you feedback as a doctor and then I will tell you you know what I think that on your game maybe 20 million is is is even modest you know I think that we can put $2

million a month and still return it and I also know when it will return so I will tell you we can put 2 million it will turn it will return in 10 months So every core that I will put 2 million. So then you can ask me so why don't you put 2.5 and I will tell you on your specific game with its specific genre specific curve and KPIs I will lose money if I put $1 more than 2 million or maybe I'm not losing it but then it will extend to 14 months which is too long maybe in this case. Sure. So,
so I get to a level of prediction that is like how much I can put
when it will return
and then you can kind of think about the annual budget out of that and and then I will also tell you just like in a doctor visit go see other doctors if you want but I'm pretty sure that that uh you

know with all our knowledge with all the games we run in our portfolio with all the gains we've seen over the is across genres. We have a very pretty, you know, a pretty good way to to assess your game and give you a very honest feedback. Now, the other answer could be you're not a $20 million now, you know, but I can maybe put 1 million a month and we'll grow together, you know, maybe we'll get there,
right? And maybe KPIs improve and maybe, you know, over time we see that we can do more. But so maybe I'll start slower,
right? And per user, you've decided that you're getting paid some sort of capped amount
per cohort. So it means that uh if I invest 1 million in January,
Mhm.
I will wait to get the 1 million as long as it takes.
It will take it can take months obviously.
Yep.
Even more than a year sometimes.
On top of it, I will take my fee. So

let's just for the sake of uh obviously different it's different from deal to deal game to game. Let's say it's 5%. So I will take on top of the $1 million the 5%.
Right? Theif the 50k and that's it for that court. Everything else is yours right?
Um next court February same thing now the interesting thing is that courts behave differently. It could be the season. It could be a lot of things they can, but you know, the differences are not crazy. So maybe they pay less for a court that returned faster.
Maybe the percentage is 4%.
Sure, makes sense. Yeah. Okay. So there's some sort of target payback period you guys have. You're scaling that payback period to to come with that capped royalty rate. Um and Okay. So there's probably a bunch of other details in there. I have of course
but the thing I think the thing that is important that both sides but especially us we're doing

everything in in our power this is this is almost the opposite from the old publishing world not only to align expectations to put even in the contract when are we going to check certain things checkpoints mechanisms for for going up and down and uh if you know sometimes the developer said I want to fund too So, how do we co-und? You know, some I'm putting in, some he's putting in. How do we make sure that it's all calculated? So, I'm I'm just saying there's almost like transparency and full detail of how it works.
Got it.
As Yeah.
So, what is working right now with this strategy? Um what products genres are you parking most of your funds in? Um given that you've kind of shifted from the old thirdparty publishing model to thirdparty UA financing um tell me about

those investments in gaming and also in non-gaming what's attractive. So look, we we still see a lot of the traditional titles, right? The the match three, the merge, the the strategy games. I mean, a lot of that social casino, a lot of things like that are coming. There is one thing that I'm seeing uh this year that I didn't see as much in the past, which is real money gaming. I'm not talking about betting. I'm not talking about gambling. I'm talking about skill-based. I'm talking about, let's say, an app that rewards you with cash or other real world uh prizes. I'm talking about maybe a rewarded platform like uh you know there are those that realcash.com and others that you know if you play a game you can get a certain level you can get a prize or cash. So you know um sometimes it almost feel and and by the way those have a very very fast payback

uh they can deploy a lot of money and they get they they also suffer from sometimes not long enough retention but they they return money very fast. So it's almost like you see the shift of the industry in that sense for those apps and games to a place where it's no longer enough for players that we move to freeto play. Now they they want to actually make money. So it's like earn to play in the re in the real sense. It's not earn web 3 that was a bit speculative and narrow. It's like much more mainstream earn to play and I see it more and more. It's very interesting to see uh you know we we are trading uh light lightly in the sense of to know exactly where to ethically and legally where we can participate where we can't just as a as a to color this a few weeks ago India

decided overnight to ban all real money gaming in India uh it was a I think something like a $4 billion industry overnight basic basically you cannot uh do real money gaming with Indian customers and a lot of Indian companies are really struggling now to to find where to go. So there is it's still an emerging place where things are being tested and regulations formed. So you know uh but it's interesting I think it's interesting to see
that uh new crop of things that is coming in and I don't remember before you know. Okay, interesting. So, gaming, but also this new RMG category um for you guys um and apps.
And apps. Okay, awesome.
Because because apps, you would argue compared to four or five years ago are much more gamified uh with things that became household names like Duallingingo. It's much easier to do things like this in the market. So I think that's another area

where the boundaries between what is an app, what is a game, it's kind of especially with certain audiences.
Yeah. Okay. I want to shift gears a little bit to your first party strategy. Um, and the thing that I want to call out is that you obviously have the publishing DNA, but you're not a developer and Tilting Point never really has been a developer. So you have and have been basically buying Up Studios. Um, and so I'd like to discuss sort of what are you looking for now that first party is becoming a priority for you guys? Um, your two main things are third party UA financing and now first party publishing. Um, what are you looking for? Um, when it comes to a studio that you want to bring in house. So I I would say without revealing too much um the the things that kind of our strategy to competitors or whatever um I think that the interesting things about the way we look at M&A is uh what most people would want is the find the hidden value.

Now the hidden value can come in different flavors. It can be something that others are not seeing. I think that was a bit the case of budge.
Mhm. uh Budge that we bought from Montreal um is a company that in the last 3 years tripled its uh profit with us and it's a leader actually in games for kids in in um not in the free-to-play um uh domain. We saw a business that is very solid that is not dependent on user acquisition at all. It's very organic. It has this cross promotion. It has a subscription model that is a very lucrative model and very good management very on on one end conservative but growing all the time and a lot of uh other companies passed on them and we we saw a great business and and it was a a smart acquisition also in a time where at came and didn't actually uh hurt them because they were not dependent on UA.

So I think that was that was kind of hidden/public view that others missed and uh and it was a great acquisition. In other cases it could be a hidden value that you can unlock and that's more the case of uh you know I'll give you an example a studio that we acquired in Korea a games a n like the letters a games they they launched Avatar the air bender. In their case, we saw a studio that is proficient in one genre. That's what they do all the time. Game after game. Every game is bigger than the last. And the category is the Forex, you know, strategy games. And uh what we thought that one we can augment them with our western expertise like east to west because you need you need different expertise to address the western market with also with user acquisition and

other marketing tech and publishing. And the the other thing that we thought is IP like to bring them something like Avatar the Airbender that they might not be able to to get the loan. By the way, to your question about mobile publishers, I think that's another area that we didn't mentioned before, the IP, you know.
Yeah, definitely.
It's tough for small developers, especially that unfortunately, but outside of America,
to go to Paramount or to go to MGM and say, "Hey, I want to use your license." It's
yeah,
you need you need sometimes someone that did did it before. And
yeah, you jumped actually forward to one of my questions I was going to ask about, you know, how important layering IP onto your first party studios is. Um, and I could see that as probably one of the edges that you can provide, which is just access to IP. Um, and it's something I think on the mobile publishing side, many studios are interested in basically layering or lacing IP on top of the fundamentals of their game. Whereas in PC console you aren't always you are actually less

commonly approaching the product that way. Um not always but on the margin.
Yeah in mobile in mobile I think the also the perception is much more positive.
Mhm. Even though look there were IP successes in console as well obviously but uh I think that a lot of the leading games in the market might be licensed g license licensed IP you know uh and uh and uh approach to it is is uh much more positive and also everybody understands that if user acquisition is is a big part of what you're doing when you have a known IP
uh it does attract audiences.
Sure.
I I will say a word of caution here that it's not just slapping an IP obviously and uh and the match between the genre, the mobile genre and the IP need to be super super tight and um and smart and

if the IP audiences will come and find something just like the ads that you mentioned before, you know.
Yeah. But well, if well done, right, organic to paid ratios increase um and so therefore you have a better chance at basically spending less um per user. Uh which I think is kind of like the the general TLDDR. So you can provide that to a studio internally and then kind of lever up their their UA strategy when they go to market.
Um so you kind of explained why Budge and um A Games or Onames um was attractive to you guys, right? Um, and we talked a little bit about IP, so that's kind of in the direction that we're heading. But, you know, why as a studio leader or a founder of those mobile studios would I want to be bought by Tilting Point? Um, why am I better off with you guys maybe beyond just the capital? Um, what other resources are you providing to these studios?
Yeah. So, so M&A in many ways it's like marriage. It's it's even a you know a bigger

marriage or if publishing is engagement this is this is full you know full on you need to feel not only good with the people that acquire but it's like you're becoming part of a family um and I think that uh for us coming from publishing from that DNA it's probably making it a bit easier for studios to work with us because we speak the same language
versus buyers that come from you know their financial rollups that they're not necessarily, you know, coming from gaming per se. So I think that that gives us an advantage. You know, when you when you come as a developer, you say, "Hey, why would I join the family?" So I would say, "Look, the the family is a family that cares for products. It cares for IPS both original and licensed, cares for studios, cares for the culture uh as offices all over the world. Uh a

lot of the work uh is done remote because this is this is what we do. You know, we travel all over the the world to meet our developers. So I think that uh we want to we want to prove and and when we acquire but when we convince someone to be acquired that it's not only the money they will get it's also about joining a family that they will enjoy continuing to work with and hopefully we can retain them. you know that uh that that's another big challenge of acquisitions like that you want the people not to run away after one or two years that I'm talking about the big talent the the founders and uh that's also something we're we're really thinking about like how to create an environment that they actually would want to stay
got it um and I guess going towards that organizational question and and we'll loop back to one acquisition question before we close out but um you know there are from news articles in the past, you know, Tilting Point downscaled

its operations to about 50 people today. Um, and now you're saying that you're also supporting a bunch of first party studios. Sort of help me understand how you guys divide the team. You know, how many product people are there? How many investors are there? How many operators are there? Um, and what's kind of like the apex of first party studios that you would bring on, you know, an operational internal headcount to studio count that's ideal for you guys? So, so, uh, first of all, let's let's, uh, focus on the 50, uh, this is TP core, what what we call tilting point core.
That means that's the that's the meta team, right? And all the rest of the people that make up the I don't know what the exact number is. Let's say 3 350 400 are the sub companies uh that we own, right? Together. uh whether it's a games it's badge it's other studios that we own and uh the meta team uh has uh the BD function

right the M&A function uh so that that's on the business side it has a marketing team it has a it has the PR it also has product people in some cases to support the studios but it's it's when it's needed again going to that principle that we're not dictating or overtaking. And um and those 50 people are basically kind of the headquarters. We we make it to to your question about the size. I mean, we can buy studios that are very large. That that's not the issue. It's more about what they need. Uh in the case of Budge, for example, they needed very little because they came with a very strong ability to get IPs. that was their business
just like we have IPs in freeto play they have IPs in kids
from Barbie to Paw Patrol to Bluey that's their thing you know so business development IPS

and in many ways they know more than us about how to work with with parents and kids right so there were things we did for them and with them but it was al always on demand like things that they really needed on the case of a games or others we might do much more but again it will be um because we need to because it will really make an impact right it wouldn't be uh forced it wouldn't be also uh also from you know uh operation and cost uh we don't want to to duplicate right uh so I think that that change of downscaling being a much leaner center with a lot of independence to the studios a lot of power to the studios is serving us, you know, we're much more focused. We tried to do probably too many things in the past and very heavy-ended, you know.
Okay. Um, and so in that relationship,

right, you said it's less about how big the studio is and more about what they need, right? Um I'm curious whether or not you guys have ever done an acquisition that maybe didn't go well so far maybe where you got a little bit over your skis and what you guys learned from that um in term and how that's informing your approach today with M&A. I think that if we made I'm not going to name obviously the companies. I think that if we made mistakes, it was a couple of cases that are in the very small range. Uh that, you know, we thought we can help them grow or we thought that we can make a big difference and it didn't. And that's fine. Um and I think that with the market and everything that we talked about risk management where it took us is to a place where we would prefer to do larger plays even if they take a long time even if they cannot succeed at the end because not succeed in the sense of

executing the deal right but they are much much more established
and are much more mature for our stage. than doing a lot of smaller bets, you know, or smaller acquisition, smaller partnerships. I think it took us to this place that um we will do a very thorough due diligence, but it's also that there's a lot of information about that company, a lot of history, you know, a lot of products that are maybe 10 years out there, you know.
Yeah. And I think that makes sense with a small team, right? I think that there's a ratio, a healthy ratio of kind of external groups that you can support and really be paying attention to that you have the mind share for with a team of 50 people.
Yes.
Um I think that
there's you know an over portfolio allocation will just mean that you have your hands in too many pots. Um and you won't even have the internal team to staff and
yeah and also and also you you when you

buy larger and you buy more independent and more established and more I would say strong like stronger then they need less of the of the scaffolding and support you know.
Mhm. Yeah.
So that's part of it.
Makes sense.
All right. Well, we're rolling up into almost at time and I want to ask you kind of two concluding questions before we sign off today. Um, so far, you know, we've talked a lot about mobile publishing, your thirdparty strategy, your thirdparty financing, um, for UA and also first party. Um, but you know, one of the things I just generally want to talk about, there's been a big theme throughout this podcast about, you know, the Apple and Google and a lot of the AT changes having fundamentally like an irrevocably changed the space. That actually kind of is what led you guys to shift some of your strategy as well.
Um, so you're sitting here like 5 years later. Um, and I kind of want to get your perspective like what is your total holistic reaction to AT? Was it earthshattering in the way that you expected or is it earthshattering in a

way that you know as you've unp as the industry has unpacked it for the past 5 years is different than maybe the initial reaction to what was going to occur.
Um, I think it was very traumatic, you know, as in 20 to 30% impact really. I mean it was it was huge. I think it it stoalled a lot the growth of the industry but over the years uh people learned how to live without uh debt resolution at least on Apple. I think that people learned how to uh make predictions even without the certainty that they had before. I think people learned to use alternative uh methods, alternative platforms, alternative ed channels. So I think it the the good thing is that it demanded more sophistication. I think it was a bit a bit too easy. It demand more

sophistication from publishers, UA experts and developers to to get there. uh and I think that what we see now is also maybe it's something we'll talk about uh uh later but uh we see if if uh 5 years ago it was all Apple and Google you know 50% of your revenue was at Apple 50% was at Google in Apple you had less players but uh more quality as in they pay more uh in terms of revenue but in Google you had many many more users but you know they they pay less But it was equal in terms of impact on your company. Today we start seeing other platforms. We start seeing web shops. I have a lot of games as tilting point. We have a lot of games on PC, Steam and Windows and even web. We have games that we started to put on console. So I think the the the prison has has

been and and a result of it was also at and and the the confines you know so people started to look elsewhere and sometimes you get to a place where you have a game where 20 25% of the revenue is made on on the web on a web shop you know outside the store outside Apple and you have direct to consumers relationship So I think that it it forced us to come with those solutions, you know,
in that sense.
I see.
And and get out of the dependency,
right? Which in a way could have been a good thing for the industry.
Exactly.
Just it was you know sometimes uh
look the big question the big question is the big question is is it enough? I mean I think that there are some people that would still sit here and say it's not enough. I mean, something needs to come beyond freeto play. It's no longer the place that allows for innovation and

growth as it was before. Where's the new model? What is the new model? What is the new innovation? So, I think that you could argue that, you know, we're still maneuvering. We're still kind of the ice is is melting a bit, but it's still icy.
Got it. All right. Well, again, as they say, necessity is the mother of invention. And so, there's possibly a way out of this um when the business is disrupted.
Um so, the last question I have for you to close us out today is, you know, right now you are a mobile publisher. Um but as the landscape of publishing and crossplatform is changing, um would you guys ever consider taking PC and console titles, um or at least crossplatform mobile titles, um how are you guys thinking about maybe the next journey in Tilting Point strategy um in first party? So look, we we definitely do that. Uh we definitely take a lot of our uh titles that make sense, right, for the audiences to PC. We took a few to console as well recently to see how how

it fares for us. Um I think that that that will definitely continue. You know, we do more on Switch, we do more on PS and Xbox, we do more on PC. Uh so that definitely will continue to be the the case. However, I think it will be still mobile first in the sense that they will be designed for mobile and extended then to other platforms. Um, I think that through our acquisitions, we'll probably also gain some expertise in other platforms because we might buy someone who has also a very strong uh PC title and and they're very good at uh so maybe the whole family could enjoy more uh from the benefit more from their very unique expertise. Um so I I definitely see the crossplatform. I see the web shops evolve and uh and um regulations are changing every you know few months. It's like you need to learn the whole thing

again. You know what the court in the US told the that Google now needs to do and how to to set yourself. Oh, it's only in the US. So in Europe it's going to behave differently
or it's the opposite.
Yeah. Yeah. It's it's like you need you need to really do very very uh frequent mapping and and kind of run between the the bullets. So I think to get expertise which we're already having but to to sharpen that and I think that you know be better at uh the synergies what we call synergies which is uh how do we become even more efficient in in adding value
to the studios.
Cool. All right. Well thank you so much Aie for coming on. Um it was such a pleasure. uh there's a lot of opportunity obviously in the third party UA space and I think the role that you guys are playing is is pretty critical especially for mobile publishers that are trying I mean sorry mobile studios

that are trying to you know lever up and take their games to the next level.
Um so thank you so much for coming on. Uh it was an awesome episode.
Thank you so much Alex.
All right and as always friends um if you've got feedback or ideas please hit me up at alexanderavic.co. Um I'm always open. And with that that's our episode. Um, see you guys next time. [Music] If you enjoyed today's episode, whether on YouTube or your favorite podcast app, make sure to like, subscribe, comment, or give a fivestar review. And if you want to reach out or provide feedback, shoot us a note at [email protected] or find us on Twitter and LinkedIn. Plus, if you want to learn more about what Navic has to offer, make sure to check out our website, www.navic.co. There you can sign up for the number one games industry newsletter, Navic Digest, or contact us to learn about our wide-ranging consulting and advisory services. Again, that is www.navic.co. [Music]

Thanks for listening and we'll catch you in the next episode.