UEFN Studios: Boom, Bust, or Choose Roblox?

[Music] welcome to the navic gaming podcast where it is our mission to explore the business and future of video games we bring together the industry's brightest Builders investors and thinkers to keep a pulse on current events dissect emerging Trends and games share Lessons Learned and have a great time this podcast is also part of novic growing ecosystem which ranges from free and premium research to Consulting and advice services for more information visit [Music] www.nic.edu overwolf is the guild for in-game creators whether you're a gamer Creator or game studio overwolf is the ultimate destination for integrating ugc in games

for Game Studios overwolf offers curse Forge for Studios a white label solution that lets game makers and Publishers easily integrate mods safely and seamlessly into their games both existing and new at zero cost it's battle tested by AAA Studios and games including Maxis with the Sims 4 Studio wildcard with Arc take to interactive and others for creators overwolf is the all-in-one platform that enables creators to build distribute and monetize in-game apps mods and Game servers in 2022 overwolf paid over $160 million to in-game creators proving that they truly value the talents and contributions of The Gaming Community you can check out everything over wolf has to offer at overwolf docomo everyone and welcome to the Nava gaming podcast I'm your host Alex te and this is the interview and insight segment and so epic today we're talking

about epic and ufn and epic has been in the news a lot lately um for a variety of reasons I actually had to make a bulleted list because there's so many so I'm going to read this bulleted list um there's the first execution of massive layoffs restructuring and divestments rest in peace band camp um some lawsuit stuff that's going down is Google face off with epic this past month in an Anti-Trust case the primary focus being of course how Google treats third party mobile developers that use the Android Google Play Store on a more posit postive note because fortnite brought back the original map and with it 44.7 million players in a single day a total of 102 million hours played epic also raised the price of v-bucks uh shout out to my homie Philip black at deconstructor of fund who does an excellent analysis on whether or not this makes sense and what else epic could have done besides change the price for Vu v-bucks to help balance the economy but today we're not here to talk about any of that that was more just context for what's going on with epic and rather about ufn which is also in the news all the time time in addition

to Snoop Dogg announcing that he's giving up smoking a Dube upon clarification though I don't know if you guys read this but he's not giving up on cannabis he's shifting to Edibles okay ah well you know he doesn't speak for the entire ufn Community I just want to say that he does he does not but he he and his son announced death row games uh which is dedicated to building content on the unreal editor in fortnite and although we do not have Snoop himself in the house today to talk about ufn we have two other Rockstar guests um and my first is Alex ropan one of the initial Founders and later president of Bungie which of course needs no introduction since Bungie he spent time at Disney founded industrial toys and is now the CEO of a studio called look North World whose main purpose is to publish and make games with a focus on the ufn platform welcome to the Pod Alex why thank you Alex great to and obviously you're the best because your name is Alex's and all Alex's are awesome um my next guest whose name also begins with an a though

is not named Alex um is Amy woo uh who's going to be bringing the investor perspective to the ufn ecosystem she's a partner at partner at menow ventures um and she has a VC career that many people dream of um with names like light speed and inside Venture Partners on her dossier um Amy looked at a bunch of deals in the ufn and Roblox ecosystem so I'm excited to have your perspective today thanks for having me on Alex awesome uh so this would be a really good one uh we've got a builder and an investor to talk shop and before we start I I know I just gave some high level intros for you guys but I would love to tell um have you tell me and tell our audience about your current roles uh Alex tell me how you came to found look North world and um Amy when we get to you um it will tell me about meno's gaming and consumer practice and what they've been up to these days cool cool so I guess like many things um the what I'm currently doing now is the is is a a point on a on a journey um it it

didn't start with uh necessarily uh the focus that we have I found myself at the beginning of the year with some free time um and was looking for a way to express myself creatively with my team and this was right when epic was announcing ufn uh and that platform they I think they still hesitate to call it a platform but really is a platform and it it so attractive just to me as a maker to have an opportunity to build something that I could just wrap my head around in a short project that I could release that um I could own and control uh and just um express myself creatively so that really was the the spark for me of seeing ufn and once I kind of tucked into it and looked at it and talked to people at Epic and kind of got it an idea idea of where this could

be going really felt to me like early days of a platform I I was around when when the App Store launched when Facebook games launched when the Xbox launched where all these platforms launched there's an energy there's an unknown and there's so much possibility and that's exactly how this feels now so I just I just like I'm not waiting on the train platform I'm getting on I'm getting on this train um Allard so we have a we have yeah all aboard we have a we have a Long View we've shipped a couple of islands already platform's not perfect but it has so much potential um and that's why we're focusing on it that's awesome I'm super excited to hear hear about it um I remember the GDC Splash that uh epic had made with a bunch of their announcements on ufn it was it's really um exciting launch Amy uh you want to tell us about meno um and the gaming and consumer practice Yeah so um I so I joined meno earlier this year and a little bit about meno Ventures

we're you know generalist uh Tech VC fund uh based in Silicon Valley I'm personally based in New York actually and we actually last week just announced our latest fund uh$ 1.4 billion raise and I am a partner that uh focuses on consumer and gaming Investments and so you know everywhere from C to series B investing and uh in consumer Tech games content you know Studios and also on the tooling side and so yeah you know on the you know I previously had done you know a lot of both also when I was at L speed and so really excited to to uh you know focus a lot on games at at meno and also really excited about ufn because you know similar to Alex I would say you know we are looking at teams that are writing waves and platform shifts and Tech shifts and also you know behavioral shifts are some of these ways and it does feel like ufn is potential large platform that's awesome well first of all congratulations um on the successful

fundraise that's that's awesome huge huge for you guys um and also especially in today's market so congrats and uh yeah it's super Co hear um um super cool to hear about um that that the practice that you guys are setting up and um you're you're so equipped to lead it um so today we got a lot to talk about though um what is look North World more specifically and we're going to talk about where ufn is at what features it has and who's building on it we're going to talk about ufn from the investor perspective so potential exit opportunities and then to take us home Amy you're going to do an awesome rundown on Roblox versus ufn but we're going to hit ufn from the macro and the micro first so exactly like you said we're going to rewind the clock and go back to GDC 2023 it's March and epic announces ufn 40% Creator payouts and this is dedicating to shifting away or solidifies the dedication to shifting away from Battle Royale to ugc as the second pillar um

it's not been super long of a time but from a high level um I'm going to try and take a stab at at why they did this and major shout out to my colleague David Taylor who recks for us at novic um he did a full Deep dive on the Creator on fortnite Creator 2.0 so if you're interested I'll be linking it in the show notes but from a high level perspective there's some thoughts around why epic did this the first is to grow the fortnite user base and create more diverse content So currently questionable if this is successful seven of the top 25 games are made by epic and 11 of them were already on the platform in for fortnite Creative 1.0 the top four games on fortnite Creative now which account for 39% 24% 15% and 2.7% for a total of 81% are all Epic created games so potentially one could argue that's that ambition has not at least bore fruition yet the second reason they did it was to take pressure off the live service team okay that makes sense um

free labor um three bring on professional developers into the ecosystem including ue5 devs and we're here talking today with Alex cupan and that's AAA in a in a general sense um 100 thieves and of course our Snoop Dog is in so that is a signaling that people are joining the ecosystem so I guess at this point that's some context for what ufn has been and why they've done some stuff in the past but I would love to hear more from the Builder perspective of where ufn is actually at um you know what features does it have from the building perspective and what can you do with it so Alex I maybe pass it to you um you know tell me about what you guys are building in ufn and with what tools sure so um you fundamentally ufn is an engine it's the Unreal Engine for foot fortnite and it is it is the Unreal Engine um and it's the unreal it has some

limitations I'll talk about that in a second um but it has a couple of very unique things about it uh one is when you build a ufn you have access to all five plus years of fortnite content that you can use and kit bash and build environments and props and all that kind of stuff which um is a big part of the effort and lift in game development obviously so that's a huge accelerate for teams so it's the engine coupled with that um asset Library it's also plugged into Fab which is epic's um sort of like thirdparty asset Library so in terms of building there's a little bit of a difference in in workflow from say traditional u5 development and ufn specifically a lot of these experiences are built with those existing bits of content so it tends to be a lot faster uh it's also has a modern scripting language which some people love some people don't but verse is um I think represents a little bit of the future of Epic road map but for um

product development so it I think it's actually a great thing for ufn developers have access to um and I think the most significant part is that it it targets a storefront which is inside of fortnite obviously 250 million players and those players I don't have to buy them you know I I have to find them um and Discovery is still very early but I don't have to convince them to leave their ecosystem and in fact it's the opposite I can reward them battle pass XP so I can reward them to come and play uh or game so it's it's a different when you think about like who you're building for and how you're building it's a little different that's so that's sort of like the tool environment um there are definitely some limit huge guard rails you know the the major three C's you know camera control and character those those are still they're on the road map but they're not here yet so you know I you can't really make a first person or a God viiew game yet you can

kind of fudge a few things but that's not really part of the the game design vocabulary right now um as is say changing the how controls work or um you know we're all tied into the same set of character skins it's a huge library but if I want to make um a a game that features one specific protagonist going on in adventure that's not really the vibe yet either so those are some I would say the big main constraints that are on this platform but um it has those unique elements to it as well and I think you know what we've been working on is just learning that set of tools learning how to work within those constraints and really understanding what players want on this platform because it is different I think I somebody said the word behavioral you know and I think that's probably the biggest difference on ufn is that players behave a little differently in this that kind of ecosystem than they do say uh you know

in a paid download or even a free-to-play ecosystem on mobile it would be cool to know Amy um if it sounds like there are some limitations to the kinds of games that we make can't make isometric top Downs you're very much kind of I guess hampered by what fortnite looks like and maybe also even feels like um pointing to your comment around 3 C's Alex um but in your opinion sort of like what are what what is the behavior that people are doing in ufn and what are the games that are popular um what do people do and and what are the game modes that they play yeah I um we'll get to that question but I think it's interesting to to first kind of pull up and and think about the history of how like ufn developed I think it answers some of that um and where I think where epic is trying to go with ufn so you have to understand like um the creative mode really was uh you know a a part of Epic that had been launched years ago I mean so I had it um I was working with the team as an investor you you know when we invested at LP this is back in I think 2019 now

and um and first and foremost I mean Tim Sweeney had had a vision of I mean this is before the metaverse term was was popularized and maybe over popularized but he had that Vision since I would say several years ago in terms of what he wanted to build which was you know the ulti um ultimate sort of multiplayer experience starting with um first party uh titles but you know kind of moving towards third party uh publisher but then reimagining what that looks like uh in a in a platform way and so creative mode 1.0 was the first uh the first iteration of that vision and that was to expand the audience of fortnite which at that time was you know I was say young kind of teen call it you know 13 to um maybe early 20s more slight slightly slightly more hardcore but pretty casual compared to just general I would say AAA games um and but he wanted to explain

that even further and so creative mode had a lot of modes for example the most popular one was um fishing that expanded his audience into one that was more casual more female and it essentially brought in the the um epic games ecosystem and so but I think you know the first iteration of creative mode was you know they were developing that alongside Roblox which kind of you know had had by that point been around for over a decade but has really had really built the tooling and also the community and um and the audience and this flywheel of UDC gaming and really was like the first mainstream platform to to launch and in comparison the creative mode 1.0 tools were difficult for creators to use and so you know where were kind of amateur creators going to build content it was probably not going to be in creative mode um and so that was uh and so I think block gain a lot of momentum and on seeing that um

eventually uh you know I think Tim basically looked at the ecosystem was like we had to do something pretty drastic and to to really I don't say catch up but I would say kind of um create the next generation of what ugc gaming platform looks like and hence you know ufn starting with an EXT um extremely both flexible easy to use and also more powerful gaming engine for a more sophisticated ated creater base or a broader creater base that encompasses both like I would say amateur first-time creators but then also really experienced STS like like Alex and that will and I think like the end goal is to expand the audience even further and the best way of doing that is by democratizing the kind of content that is existing in your platform you know um versus having epic actually create all the content so I think they're moving along that uh kind of that Evolution right now uh you know where the most

popular Maps today are still I would say practice uh games and maps for fortnite but increasingly the metric of their success and we can talk about this in terms of metrics that they are allowing people to track and and rewarding for are bringing on new players like net new players into the um epic games ecosystem and so I think it's a lot very telling in terms of what they're trying to accomplish yeah okay I would definitely agree with that I mean I think I I think it's easy for us to lose track of the site that it this platform has been around for like five months six months and when you know and know you you were listing out that hey is this working because like 80% of of play is the Epic is Battle Royale it's like if you flip it around and go hey five months in 20% of play on this platform is already third party created content it actually it sounds a little different and I and I think it's actually it's a lot more than 20% um at least if you believe epics numberers but in any case it's still

that's down yeah it does fluctuate up interesting yeah but so but it sounds like okay but this but still the practice maps are something super core to Epic right so even if it is the third party Creator content I guess I'm sort of like wondering like you know from the Roblox perspective there's such a diversity of the kinds of games they're they're very much hampered down by the same mechanics like you don't at least from my understanding you don't make isometric Roblox games right you don't do Platformers it's very much set in the engine with the with the way that and the the third person mechanics that it has but there is a a pretty large diversity of the kinds of games that are being played many different simulators or build tycoon or race car or you know even the other day I did a podcast of people that are building education Tech games um I think the question is that for fortnite what's the what's what's planning to being built and maybe this is actually a good time to talk about you know what is look North world going to build um you know I'd also like love to hear about uh the the average life cycle of some of the these games as well so maybe Alex will flip back to you um

you know what is look North world and what's the first game that you guys made and sort of what were the challenges that your team had you know maybe moving over from a a Cod you know into into verse as the new coding language um and how did that you feel like that hampered the experience you were able to maybe that you envision that you wanted to build yeah um so you know when we started and and I you know first I would say the way we're looking at our company um is as an Entertainer company um we are building on ufn because we do feel like that is a great platform and it's it's super efficient uh but at the end of the day we are making games we're making new IP um and that's the engine that we're trying to create um but you know when we first started I kind of imagined we'd be investing more per title larger games um and quickly realize that the life cycles of these games are shorter and it makes sense to do more experiments so we really are doing experiment exp menting to to to learn as much as we can about what we

can do and what players like um we do we look at those constraints as they're just design constraints and any any designer will tell you please give me some constraints because if the you know if the universe of creativity is infinite then it it's you know you it really helps have walls to bump up against you know to help hon a design so we don't really look at those constraints as oh man um we we we look at look at them as like what can we do that's interesting creative and can resonate um on this ecosystem that said you know we will absolutely be leaning into new features as they come out but the first game that we did Outlaw Corral is uh it it kind of leaned in a little bit to that idea of the training uh for playing fortnite it really lets players go through this whole series of one-on-one sort of end game um you know matchups um and you know we we made of a using kit bashing

out of fortnite assets uh what I would say is a a very polished um really nice looking and well playing execution of that um and uh it was very successful for for us in terms of learning on the platform and we've had hundreds of thousands of people come and play it um and then we kind of laded that into our second island career Coast which is a team deathmatch shooter um and we have another game that we'll be launching in in a couple of weeks which is a slightly more sophisticated team-based game um but I think what we're really interested in doing is going Beyond going beyond what sort of the typical fortnite style shooter gam play is um and exploring more sort of role playing and deeper genres and other orthogonal experiences to what you know the main battle royale experience is like so that's where we're spending time experimenting right now a as we've been doing that I I would say

almost as importantly we've been learning the like the customer acquisition funnel like where do we find players how do we find them how does matchmaking really work what makes players Bounce from an experience we've had great success of getting people in Le week one how do we stretch that out into um keeping players attention uh over you know 10 weeks 10 months um it it's like I was saying behaviorally it's it's a little different uh on this on this plat form um for instance the way Discovery works right now is still very early so if you make something that appeals to a let's say 5% of that audience what's 5% of 250 million let's say 10% even number 25 million people that's a lot of people that's a great player base um it's really hard to find 10% of the audience uh unless you have a unless you have storefront mechanics that can support that kind of um customer acquisition so

until we have those features on on the storefront it probably makes sense not to go too narrow that's one of the things that we've been thinking about and been feeding into our design process so it's it's not just what can you make it's also what should you make do you think there's something that you know I I've also heard that Discovery is is bad I've heard that the community is bad and I also have heard that the at least initially for a long time one of the biggest qualms is that there's no ability to build progression into the games because there was no um Save State um is there a tool that you think epic should focus on the most like as a developer like what can they do right now that would be like the most important thing to help ease the development strain for you guys well I mean I I would say the two things that you said would be super helpful I would say though I'm not sure what you mean by Community is bad I would say the community is excellent like at least the online community of people that are building and playing these games super

open Super supportive we've met so many people that are just willing to share their experience and how they've done what they've done and help and collaborate with each other um so I'm not sure if there's another part of the community that that you're if if that you're talking about but my experience Community has been great um ah okay I think it was mostly refer to the fact there's like limited Discord Integrations um so building a community to put a a QR code for our Discord in into one of our islands and that that got bounced um but you know I that's another thing I think we take for granted how mature some of these platforms are and expect ufn to have all those features have a rich and robust Discovery uh algorithm it doesn't yet um you know they know and they're they are working on it uh but that is something that would be absolutely helpful for us if we want to be experiment and building more unique experiences we need a way to

find an audience that likes that and keep them you know um progression absolutely I mean they did introduce some save mechanics uh there there are deeper Save State mechanics that uh are on the road map that will be super helpful for for building a service you know on top of uh what we're building and you know just being able to save data off platform would be would be great like we ran this tournament uh where we were doing daily challenges and we had we had to we had to operate that manually because some of those Challen The Meta Game Challenge you know metrics we couldn't dump off to a server somewhere you know once we have features like that it it'll allow us to uh really engage people that are playing so those are all things I you know that I would agree that once those features start hitting the road map it'll become easier for thirdparty developers like us to to innovate or to build an audience to keep an audience for sure and you know you you mentioned that your first

game was a little bit like a training um training Discovery right where there's one maybe sample of fortnite and then your game mode hones on basically like taking that section and then players practicing for that specific you said 1 V one kind of at the end um and Amy you mentioned stuff about behavior and you're the one that even brought up the fact that so many of the maps that are doing successful that are being that are successful right now are basically training maps for the base fortnite game um and you mentioned that it's it's a little bit have younger skewed um but what do you think the fortnite audience on the platform is looking for in the future of those games like your best envisionment of what you think that the fortnite games um on in in fortnite Creator 2.0 could be once they evolve potentially out of just being training maps um for the base mode of fortnite yeah I think that starts with looking at again I always look at player Behavior so you know fortnite is a shooter game and so you know the core demographic like Shooters and so then there's a question of of this

demographic what percentage of these players like to play other types of games and then as epic is looking to AC um to to bring on new types of players um onto the platform what types of games are they you know are they adventure games are they more casual are they Sports Games Etc and then there and then how that translates into what ufn will allow a developer to create right and so that's where um that's where the road map is is pretty important you know they had released a very ambitious road map pre high level you know at GDC and you know in my conversations with a lot of uh ufn devs I mean the the team has been launching a lot of new features and generally both staying high level on the on the road map but then also you know listening to feedback and I was say incorporating prioritizations that um are coming up that are more critical and so I think more recently you know you've

got persistence features that are beginning to get rolled out you know you're beginning to have other game genres that people can start to create I think Tycoon Adventure being two of them but still pretty early days uh and I think that right now what it feels like at for a lot of developers is they are you know to Alex's Point experimenting in what is still a very volatile uh platform ation state of ufn you had to remember these these developers are used to stable game engines right they're used to versions of unreal and um and or or unity and so they're building their games on one version of that and they can pick and choose features from maybe like new version updates that they want to incorporate that's not going to immediately blow up a game like you know either in production or in sort of live or not which is very different from UF n which is being live updated as an engine

and so a lot of developers are experiencing oh wow like you know you know epic rolled out a new feature maybe it's like a video content feature and suddenly you know a very key part of their game whether it's physics or something like that suddenly doesn't work the same way anymore that they have to take the map down they have to update the map it delays the map um release and so that's really impacting developers lives and I think in just sort following along um all of the releases since um GDC you know epic is doing a heroic job in terms of trying to be communicative trying to listen but they are juggling a lot of balls at the same time and so you know there's still a lot of patience you know I mean game development Cycles historically has been years it's like multi- years in the making and so there's a good amount of patience that a lot of more experienced as have around this but that is finite ultimately and so you know um I think you know it'll be interesting to see how epic balances

this very volatile environment in which devs are creating maps in right now you know as a lot of things are in a black box including payouts uh with just you know how Adept they are at communicating what's going on anticipating that and then fixing some of these uh these issues yeah and and and I think it's just it's good to remember that yes this this ecosystem is so young um we can't be super critical of it it's a it's an entirely new platform they started as critical as we want I guess but yeah but with with with I guess with the c of understanding that it is is super new um but I guess like Amy just brought up some some really awesome points that talk about yeah like there are some there are some lack there's lack of clarity necessarily on the in in the monetization systems in the economy and um you know Alex you're building a studio that's fully dedicated to this and so you know maybe from just for um context setting you know how many people work at your studio and you know on average what are how much are you spending to make each one of these experiences especially given that um The

monation Avenues inside ufn are relatively limited yeah so our studio has six full-time employees uh and we work with a couple of codev studios and uh and we have some individual contributors that are helping build Islands uh we have uh two released and another seven in development um and they range uh the last uh Island we released was built primarily by one developer um so the budget on that uh was pretty small in the tens of thousands um the one that we're releasing next was built with a codev studio so that that was a a beefier budget but you know the projects are right now are in the two three or four month sort of time frame uh with some some projects we we anticipate probably spending more like maybe 6 months you

know three or four people so that's a 24 man month project because you could kind of lad up the math on on what that turns into but that's you know that's six six figures and up you know so it does range and it sort of depends on what you know every every project we do has an a learning objective attached to it um so depending on what we're trying to um achieve and who we're trying to reach and what we're trying to get out of it that will determine the budget that spend on it so so it is a range I would say the on the lowest the lowest end we we probably the but gee I don't know how to quantify the we released the first island the day we launched the company so wow is that is that a zero budget we didn't we didn't put it on the books I guess it was free it was it was a pro pro bono game development um I I can talk about how gamechanging that is though right like from an investor perspective and I mean obviously Alex

has made number of like amazing AAA titles and so historically you've had a team of up to kind of you know a couple hundred people spend over aund million over you know a few years several years to launch one title it's actually very difficult to get data points you know you have Alpha test you have beta tests but um at the end of the day it's like kind of you launch and then you kind of hope for the best and um that the data you're getting your play test much smaller are in line with what you're going to get commercially post launch but you know it's interesting as an investor in consumer Tech you know you can launch an iPhone app in a matter of months of development and um very quickly iterate on test flight and then you know and then uh and then bake in new features quickly depending on what the audience is reacting to and this and building on ufn for me as an investor is really exciting because it starts a look like that but for game deps right you can you know Alex is talking about

launching maps in two to three month time period uh versus two to three years like two to seven years and um before you're bringing it into in front of an audience of you know up to I think you know they have what like anywhere from a couple million concurrence um in a day uh of players which is you know really one of the largest um live player concurrence like platform in the world uh 250 million you know to player base and that is really rare and then to be able to do that and in the future potentially test what Maps work and then be able to then flush that out build a AAA game um you know using you know Unreal Engine or maybe in the future this to Grail of maybe the merge of ufn and unreal is really exciting suddenly you can iterate on um on maps and uh and so a developer and founder can really test ideas A Lot F faster um feedback cycle before you know putting the next

two years of development time or some millions of dollars of venture funding or publisher money into into building out the game we should double down on that a little bit because I think that is that is fundamentally what is interesting about this platform if you look at the macros of what's happening in the market right now there are a lot of games that are taking longer than they used to partly maybe because of the pandemic we're all working from home I don't know the games are freaking phenomenal but how many of them are hurdling their Dev cost and marketing budget not all of them uh we're seeing a lot of contraction uh in the industry a lot of Studios either shutting or laying off and if you if you do that math launching a new IP AAA on a console is is at least a100 million investment if you if you're at Microsoft it's probably a$ 200 million investment so this platform represents a two orders of magnitude efficiency increase in testing a new IP and when you couple it with

exactly what you just said Amy this is on the Unreal Engine so if you have an ability to run that flywheel two orders of magnitude faster and cheaper how much quicker am I going to be at finding a hit IP in games than a a much riskier in Endeavor you know if you have if you have the scale okay but if if you're don't have the scale or if you're investing in a startup or if you're looking at where the new stuff is going to come from it's it's what has me so excited about the platform but I guess like in the way it's basically and and Amy you said this it's an incubation it's an incubation test realm right like you're basically testing maps and then you would go back and as you said build the true AAA version in the 2-year pipe well it's all the above you can do that and still make still make a fantastic B business on the platform sorry didn't mean to interrupt

you but I just that that's what I that's what I see I see it's both C too I see I got it yeah I agree I guess yeah it's it's possible for it to be both and maybe that's a good way to think about which business models actually might work on this platform um you know you just you mentioned okay maybe what you do is you rapidly test you iterate and then you build a AAA game with some magical version of ue5 merge with fortnite creative 2.0 um but if you're not doing that let's just say that you actually just want to rapidly iterate and release Maps you know Amy my understanding is that the economy is um is is pretty limited right now it's basically a champagne distribution model where revenues are pulled and then distributed out Bas based on some revenue of Engagement similar to maybe some of the first-party programs in triaa um and so what do you envision an a ufn economy looking like and how it and how it's working maybe potentially for those that are not going to incubate and spend two years developing a full AAA type off of a map that they tested I think that the economy is still to be

seen But if you look at roblox's road map and what they've released and um then you know there's there's advertising there's ability to be able to sell like in-game items and building your own recreative in game economies maybe using the currency like v-bucks or using or potentially I don't know in the future being able to uh introduce other currencies in the game um these are all possibilities but I think you know a sign of really successful platform is that you know you have individual developers in the platform that can do you know 100 million do in revenue or like if you look out at other platforms like Salesforce Etc you can you can have businesses that are building on your platform and do a billion dollar in Revenue right and um you know of course like the App Store Etc and that is success that's what success looks like for the platform I think if you look at ROBLOX every year they're um you know they're paying out I think close to a billion dollars uh I think kind of just

shy of that to to creators and your top 10 creators is pulling about 300 million per year um and so that's getting there uh in terms of uh in terms of you know on a per kind of app creator on your platform earnings and so that will be some of the metrics that will kind of show success for for ufn and um and so um therefore I think like monetization and opening up moneti ation is going to be pretty uh core part of the road map it's still a block box today like most of the features are not released you can't I don't think you can build bring advertisers for your own map right now but these will all need to be uh things to that epic incorporates in order to have a thriving ecosystem and platform and I guess like from that perspective from the investor perspective like how do you I don't know how do you get Giger or confidence in the fact that you know maybe you're investing directly into a ufn studio but their dependency is so reliant on what epic decides to do or not to do um and so how do you I guess

how do you grock that right you just these are all these mization things that have to happen to in order to build a successful business model whe that whether that be the portfolio gamef model which is like fail fast fail quickly and then just put a million dollars behind the one that's working if you're a solo developer it seems like it could be pretty profitable right um or maybe do the AAA development at some point but I guess how do you how do you get confidence that epic's going to put all that stuff in the roap and they're going to execute it well such that this can be a developed ecosystem that actually Studios can be profitable on yeah that's it's a great question and ultimately you know if we invest in the ecosystem then our success is going to be predicated on him delivering on that in order to create these successes on the platform uh and and I think like whether a studio on like building on top of a ugc platform is Venture backal is is always a question has been a question for years and it's been a question on Roblox as well and and um then I think that it's it's pretty early on on on

roadblox and um the reason why we're excited about um ufn is because it is attracting because of the the ambitious road map and what the types of games you can potentially build uh that you can potentially build these rich games that could you know be sand alone kind of AAA sell games themselves uh and you know attracting developers like Alex to build on the platform is why you know I was I was super excited about the ecosystem um the biggest risk is platform risk absolutely you know that the biggest risk is actually not team risk because you know there's a lot of great teams that have um a whole you know sort of lifetime of successes building zero to one or you know successful titles um but I think you know but they are building on a young platform today and so the platform is definitely is number one you know I had I I think that tinini is is truly one of the most like Visionary and generational founders of you know of our

day and uh with epic and so I think he's one of the very few people that is capable of executing on the the strategy and he's already proven that he's you know willing to take some pretty RI risks first with the you know with the um the abori uh you know sort of losses going on but then secondly in terms of the very aggressive payout that they announced you know 40% um crater crater fees and so um I I think that that he's a Founder um that will make bold bold bets and so I'm I'm betting on the platform I mean I would I would say like in addition to that it's like you act a non verba you know you you you look at what people do more than what they say and if you look at what epic has done um they're put they're putting their money where their mouth is you know their whole you mentioned their restructure it was that restructure was a response to uh their vision for for the for the platform um and that certainly wasn't easy or pain-free to do

but it's it's a sign that they're committed and and I you know I think that's it's it's it's vent the word Venture is in the investment for a reason it's like you you're going to bet on something that's early it's going to have an outsized reward if it's successful um but it does have an element of risk to whether it will succeed um but the place to be you know if uh if you want to be early and you want to do something new Amy in your opinion what are the um exit opportunities for a ufn studio um what is the ideal success case yeah I think of it as this goes back to kind of our gaming thesis and I think that um you know successful Studios what what they really look like is a portfolio play uh you know over over their lifetime and you starts with a single title or or in the ufn case a um a collection of maps and then you know what you see the most

successful game studios whether it is um you know you whether it's epic themselves or you know Mi hoyo and you know Riot any other games is that you then start building out multiple titles uh different genres different platforms and that sort of um I think you know what I hope like some of the some of the developers in on the ufn platform will ALS so pursue and so I think it remains to be seen whether you can you know develop a game that does hundreds of millions of dollars on ufn that would be a great success case for everyone and then from there you know there's a lot of um there's a lot of exit paths whether your typical paths you know via m&a to strategics private Equity or um you know eventually building out this multi-game platform and then um studio and then being able to go public these are all potential exit paths I think for these Studios um what really gets us interested though is that you know as a

venture investor we're always thinking about you know what what right does a startup really have to win and beat out an incumbent incumbent with you know sort of like you know hundreds of millions of dollars to invest in titles within also the existing distribution and brand and that is really building on The Cutting Edge of new platforms or technology or genres Etc and so um and this absolutely falls into that category you know incumbents aren't like EA is not building maps on um you know on on a competitor's platform like today and so you have startups doing that and that creates like a really interesting wedge of like you know in this case like Fast iteration and Discovery and I think a unique angle of success and uh and that's why you know it's it's part of our gaming strategy in terms of uh embedding on these emerging platforms and Alex actually I had a quick question when she was she was talking about that and she was telling up talking about building up a portfolio

of content and obviously the time to creation is quite fast but how are you thinking about preventing your content from being copycatted um because obviously the time to creation is pretty quick but um you know the theide idea is to basically Empower and democratize as many people as possible so let's just say you build an incredibly successful map and then 400 people copy it which is a fairly popular tactic to do on Roblox so how do you create your I guess I'm asking like you know sometimes these AAA games cost $100 million to make because those are professionals that can only do that job right Sony and those guys have the marketing budgets to be able to hold out that moat on distribution so for you guys what's the how are you making sure that you guys can create that Mo to to protect the the IP that you've created um well I mean I'll start by saying hey wouldn't that be fantastic if we made an island that was so popular that 400 people wanted to copy it uh that's a great problem true true and uh you know I I I think part

part of what we're excited about is being early on this platform and being aggressive with how we're experimenting and uh bringing our our experience and all that stuff to to build high quality and unique experiences um and I you know I I firmly believe that if we do that well and uh we listen to our players and our communities we'll build things that players like and will be sticky um and whether folks want to imitate what we're doing that that's fine I don't I don't feel like we need to protect against that um I feel like we you know our Focus will be on uh bu building great experiences and if we and if we have that situation then you know that that's I think that's even okay I think that's okay on these platforms yeah and I guess a lot of that's also driven by the way that um epic is building the economy right now to be engagement based so I guess the worst case scenario is that that you build a really awesome game you build a map somebody else copies it for some reason they have better um

thumbnails those th thumbnail click click rate or whatever and then that map gets all the engagement even though you guys built it and then their pipeline from the 40% Creator is going to them and not you yeah I me the part of it definitely has to do with like what we choose to make you know so the the the less generic or the more you know uh the more endearing the IP or the or the or the more um Nuance the The Experience uh the easier those things are to to I guess to own you know not not own like physically own but own you know creatively um but yeah got it own means so many things these days do you really own it if it's you know on the blockchain it's like ownership um um but uh okay so that I mean that makes a lot of sense and it sounds like obviously so much of the stuff is in the uh is in the works and you're going to have to roll with the punches being so early on a platform and maybe that brings us to the point of you know Amy from the investor seat you've looked at

a a good ton of Roblox deals that um at light speed but are you seeing a lot of ufn dedicated Studios come past your desk today um you know do you think that it's an ecosystem that has that's like you know people are rapidly trying to to build and like get funding and launch Studios on yeah absolutely um so lots of uh new ufn Studios uh you know looking for traditional forms of fundraising there's also it was interesting I was at it was in New Orleans at the um unreal Fest this year and I've been there prior years and I'll tell you the audience looks very different this year um I think for the first time you have you have like thousands of people there that were really kind of like new game creators and uh you know kind of hanging out alongside very seasoned you know uevs and also kind of people who are working Hollywood you know using you um U for movies and film and so that was that was interesting to see and I say like a lot of those deaths actually

don't really know how to raise money and they're actually boostrapping a lot of their um a lot of their maps and you you saw that on Roblox as well I think the majority Roblox STS never actually attempted to raise Venture Capital they don't really know what that is and that's like the beauty of the democratization and uh and so I think that you know in terms of what we're looking for you know we I mean we have a I think we have risk tolerance to take the platform risk and and invest in some of the studios I don't think that's going to be every Venture firm I also don't think every Venture firm uh is kind of wants to take the step in terms of investing in gaming content let alone like ufn gaming content and so I think those are all things that these steps should uh to to look out for is like you know who has the experience who's willing to invest in a portfolio of games and then who's interested in making a bet on the uent ecosystem as well you know I think that that platform risk is something that investors have to get over um and uh and and many of them many of them won't so um but yeah it's

it's been pretty exciting to see uh what is like a very Dynamic and excited um ecosystem so so I agree with Alex the community actually feels very excited um roblox's Community is bigger today um I think that you know but again I think the difference is is that the Roblox team you know it's it's primarily more amateur game devs you know obviously you have at the top some of their top games uh game studios uh are are definitely more sophisticated and you have more um and and then you also have like new rollups now where a more like a private Equity style team is coming in and buying a lot of titles and then optimizing them on Roblox they have a robust enough engine to do a lot of the AB testing um in order to uh optimize these games so that it really stands out in the pack so that somebody can't just copycat it and um and expect to do similarly I actually think as you fn's uh engine gets more powerful you'll see some of those effects as well you're

seeing some of the developers on Roblox coming over and trying ufn um and also experiencing that it's still early then you also have you know AAA devs that are coming that you know aren't really as excited about uh Roblox which is really catering to a different age category I would say uh when you know at the at the success of uh when Roblox ipoed I always thought that a really interesting Gap in the Market was a ugc platform but for a older more adult audience you know an older audience don't want to play Roblox games you know that they're they're basically in there um and they'll see kids that are like 8 years old or 10 years old playing that and so that's why actually ufn also expands the potential age range in addition to the types of players coming into the platform and so I I think they have a shot at at really um bringing on that pretty broad range of players and um but you know I think I think we'll see yeah I definitely really resonate with that I've always called

Roblox like the Gateway ugc platform it's like the gateway drug kind of where it's like you start there when you're eight but then after that it's like no it's no good anymore um and you've got to graduate to like the more mature content so that's uh that's really interesting that that's the way that you think about it I've played Roblox game I mean like I test games all the times as an investor but you know when you're in like a lobby with like a bunch of 12-year-olds it's it's a little awkward sometimes yeah yeah yeah for sure um and and Alex actually I would love to ask you if did you um and we're going to do a quick like a quick little hits thing Pros like Roblox versus ufn and a bunch of little topics to see like who takes it home um but did you ever evaluate Roblox instead of ufn when you started um look North world uh yeah and we're we are we are looking at ROBLOX as well um it it is a different kind of platform it's it's a lot more mature in terms of like how monetization Works uh the kinds

of experiences that are popular are a little different than the kinds of experiences that are popular on and it's a different it's a different tool set um so we we feel really good about ufn and where it's going but Roblox is is tick a lot of the same sort of or scratches say mitches you know just in terms of like having a h having an audience that is super engaged um and uh you know quicker development cycles and uh an interesting place to experiment so yeah we did we did look at Robo we still look at ROBLOX we play Roblox uh we'd love to do a project um with Roblox um so yeah there are a lot of other platforms too that are Al that are coming or that are out that are interesting that all sort of fit in a similar category of of you know I Amy you were saying metaverse that PHA that phrase has been overused we don't want to use it anymore but a

lot of these platforms are are delivering on some of those Concepts you know of having a social experience across many different kinds of content but I would I would call I would call fortnite A metaverse A miniverse I don't know it's it's a verse well it's also being built yeah Optimus Prime and Spider-Man in the same place you know so yeah on the Roblox versus ufn situation and I guess also that could be another outcome right is that like you're a ugc studio but you operate on multiple ugc platforms maybe that's another kind of idea that of uh that an investor might look at is like you know we think about like a lot of Studios actually started just as like modding communities and they became like valve um so that's you know it's very realistic I guess um but let's kind of run through this like quick hits of pros and cons like you know Roblox or ufn and who kind of takes it home so on audience you know who who who wins on audience ufn or Roblox um

Amy I'm give these some of the I mean today Roblox well first of all I mean you gota it's not quite Apples to Apples because they're different age targets although there's some overlap right in sort of the early teens but I would say like right now I mean today um roblox's audience is is extremely um passionate just to kind of give a a data point you know the top like top couple games like on Roblox has um close to I think a million people on their Discord so this this is like very passionate um engaged community and I think ufn is um still needs to get there like so I think that the fortnite community is extremely passionate but I think the ufn one is still getting there okay what about um potential for monetary outcome like what which of the which what games are making more money right now Roblox games or ufn as an investor I think that ufn potentially has um in the future um can provide just kind of better monetization

ceilings for these um for these games you know there's a reason why I I I do think the monetization is a bit Capp today for like a Roblox Studio that's why a lot of them are looking to go crossplatform and um and I think that could be a potential roblock that you know ufn um encounters but I think they would like not to and I think the fact that it is kind of um like complimentary to you uh already helps that got it um and Alex this one's for you time to build Roblox or ufn which one's faster well for for my studio absolutely ufn um no question um I think unless you are an experienced Roblox developer you probably have better access to development talent and probably personal experience on uh ufn just because it's so close and based on um on the Unreal Engine got it um what about life cycle

of the games um right now do you think that there's a difference between like tenure in terms of how long one game stays popular I mean I I would say right now there's and I'm not as familiar with Roblox probably as Amy but I I would say that um the tools that ufn has for building live service and deploying content and persistence and player data are uh it is still early um so the ability to operate and grow and experience for years as opposed to months I would I I know Roblox maps have been popular for for a long long time so I would imagine that's probably easier on Roblox today yeah I agree is a function of the um of the of the depth of the game that you can create on the platform right um because you know if it's Apples to Apples like the two engines can do the same thing then it's kind of anyone's guess depends on the title specifically but because you can

build a much deeper game on Roblox you also see um you know a lot more kind of like highly retaining um audience for some of their top games I think ad me is still one of the top games of Roblox the top 10 Studios of roblox actually don't shift all that much they are very talented um at really engaging and really knowing that audience and building for that audience and so and so that that is a function of the the um capabilities of the engine yeah and I you know I think if you if you if you put a timeline on on any of these questions the answers start to change right like sure I'm less interested in what the answer to these questions are today as to like 12 to 24 months from now because that's what we're building towards right um and I think those answers things will absolutely be different in that time frame okay but there's probably one thing that that won't be any different down the road and that's kind of the incentive system you know epic develops games and Roblox does

not and they have an agenda to push their primary game more so than Roblox does given that Roblox is not a developer themselves and I guess the question is can you compete with roaz versus epic and how do you kind of grock that when you think about the future of building a ufn studio both from the Builder perspective and the investor perspective well I mean I I would say that uh anything that epic is doing that grows this platform not just on features uh Etc but on audience is a net benefit to anyone building on on the audience um and if you if you look at what the kinds of things that they are bringing to the platform they're all in service of uh broadening the user base not just reserving an existing uh user base so they are working on things that will grow the platform and also introduce new kinds of play styles to the platform and those are all things that are um uh

multiplicative to uh the Eco system um so you know if if if they continue to follow that pattern I think it's all upside for for teams like us and Amy yeah I agree I actually think that they recognize that they have reached a level of success with fortnite and so to reach kind of like the next phase of the company's Evolution and especially around you know Tim's decades long kind of vision at achieving the metaverse uh you know he I would say that ufn needs to succeed otherwise actually epic is hampered by uh by not seeing that succeed and not and not being able to meet it um its potential got it yeah that's a great Point um all right guys this has been an awesome episode I've learned a ton about looking at and evaluating and building in the ufn ecosystem and also Roblox a little um if anybody in the audience has

you know uh wants to get in touch with you Amy they have a pitch for you um or Alex they're interested in learning about look North World um how can they reach out Amy how about you get first for me they can they can find me on either Twitter or LinkedIn uh like likewise I'm on uh Twitter LinkedIn under my name or on Discord is steak bacon so happy to talk to anybody interested in the in the platform stud that's awesome awesome that's one of the better ones I've heard for sure steak baby um all right guys on that note we'll be concluding um big thank you Alex Amy for coming and thank you to our listeners um I'll be back in two weeks and feel free to hit me up at Alexander nvic.org [Music] comment or give a fstar review and if you want to reach out or provide feedback shoot us a note at

podcast.co 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.nic.edu thanks for listening and we'll catch you in the next episode