Unity Sparks an Uproar / YouTube Instant Play / Roblox Developers Conference

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sure about anyone else but uh if you did you know make sure to give us a shout in the mailbag right and tell us what you thought of it but yeah we have a lot of great topics today a lot of Juicy stuff uh especially our kind of top topic around Unity which we'll get to uh in their monetization changes we've also got some uh stuff around uh two large Publishers potentially getting handed off uh jagex and gearbox uh YouTube finally deploying some other instant play games uh as people call it stadia 2.0 sort of and a story protocol raising a good chunk of money in the current uh they actually spoke at uh the KBW also which was pretty cool uh and then a couple other topics we'll hopefully get to if we have time here but why don't we just jump right into it to get things going uh with potential change at hands for to the large Publishers thanks Devin yeah um so really just very quickly uh two fairly large Publishers potentially Changing Hands over the next little while um potentially for different reasons not

sure some of the reasoning for uh one of them but uh gearbox uh looks like it's probably up for sale um embracer's been going through some restructuring over the last little while looking at reducing their costs and the Rumor has that gearbox is now up for sale um and this is even after there has been some layoffs inside gearbox which mirrors basically what's been happening across the embracer group uh so a little bit of History you know embracer just bought gearbox really uh back in 2021 uh they bought the company for approximately 1.3 billion dollars and now interestingly from a structure perspective inside embracer um a lot of Studios were put underneath gearbox uh when it came to you know who who was helping run and uh with the with the especially with the console and PC side thing so underneath

gearbox for example where violation which unfortunately was closed uh and perfect world is a couple of examples um so it's gonna be interesting to see you know as they look at potentially um you know selling gearbox what does that do to the overall infrastructure inside the the larger company um I think one of their challenges that you know they bought gearbox 1.3 billion dollars at a time when valuations were really high uh valuations are a lot lower these days and got to wonder what uh what's going to be the end result there um um so uh yeah it looks to be part of the overall embracer group um you know try to figure out how they're going to right size themselves uh and then secondly jagex um is potentially being put up or potentially even spun out by the Carlisle Group um now jagex funny enough was actually founded in 1999 the same year that gearbox was founded and for those that

uh remember they're the maker of RuneScape but uh they've certainly changed hands a number of times over the years um so there was a group of U.S investors that purchased them um or a majority share of them um around the 2012 um with some initial investment prior to that a group of Chinese investors between 2016 to 2020 uh the MacArthur Fortune Holding Group for about a year then that took place back in 2020 and it's the Carlisle group that owns them right now um and you know the jagex themselves have been going through a bit of an acquisition spree uh mini spree I guess back in July last year they acquired pipework Studios uh and they also acquired uh game uh game hires um so it'll be interested to see where jagex ends up if they end up in the hands of another uh Investment Group or if they do end up getting spun up

publicly uh again you know it's a challenging time for for raising money so we curious to see where things go um you know the kylo Carlyle Group bought the company for uh an undisclosed amount but it certainly it was over half a billion dollars of where that ends up uh what remains to be seen and be interesting to watch as uh what happens to those two groups definitely be interested some good parallels there between those two companies both being kind of Legacy IP with the you've got RuneScape and I guess Borderlands I mean gearbox has done some other stuff as well but Borderlands I'd say probably their standout IP so the the also having the companies underneath them I guess will be really interesting and maybe that's part of the reason why they're getting handed off is maybe they acquired too much but I guess we'll see where that goes but hopefully both of those companies end up in good hands as uh you know like I said some beloved IP and it would be a bummer to see that kind of end up in the wrong place but something to watch out for there's always a possibility of course that it doesn't happen right if they're just just shopping around and I'm not sure we're in acquisition season anymore so

might be a tough one but we'll see YouTube uh actually pulling off a slow roll out of their uh instant play for YouTube should be interesting yeah so on this one like YouTube is now officially testing a feature that allows users to play games directly on the platform and I say officially because it now appears at the experiments that are enabled on YouTube so the feature is called playables and it's currently in public testing in the United States and the United Kingdom is not clear how like you are eligible or not to to test that for the test uh but it's on right now and it's also not very clear which other games that they have basically the the article says that the playables are short free to play games that can be accessed from within YouTube videos or from YouTube gaming homepage and for the ones that I've seen it resembles a little bit to hyper casual or even like some some games that are

hyper casual mechanics are there that to play a playable like users simply click on play and the game will load in a in a new window and uh yeah right now this is limited to a small selection of games but YouTube plans to add more games in the future and often it to to developers to to allow them to to publish their green create their own playables uh so it seems that Google is still trying to to get into gaming right and to get uh part of the pie and like what do you think on this one like do you think that this this is the final winning feature for for Google related to gaming can I ask a question real quick like is the is the intent here to keep users on the platform more and see more ads is that sort of the whole business plan here and then I guess the follow-up question is if I pull up a game like a YouTube instant game does my YouTube

video stop playing or does it open in a new window so I I think on on the first one I would say so so I would say like the main the main driver I would say is like they they understand that they have like content from from games and so that means that they have that audience there and they want to keep them engaged for for longer and probably well that's I would I would say like the monster appears way to really and monetize this and the second one I was assuming that what you click play it opens on a new window but your previous video stops at that moment so you can play and you don't have like the two sounds at the same time and like you can enjoy the game and close it I don't know if they have like some kind of like uh I would say uh history of uh information about like whether you have played it already and then you can continue your previous session or not or it's just all the time instant games and you start from scratch uh I don't have like

information on that because it did the article was um was a quite quite uh short I try to research a little bit with Bart the AI tool from from Google and it was interesting that it was giving me information that was in public so how like I or at least it didn't found in other articles and also find out his own um comment that he would like really to test himself so really fun to try to get more information that way so yeah this is what I could find on on all these but I haven't seen like any video of how it works uh the the only one that I I saw as a type of game is correction or a mechanic like Helix jump that is like a very popular hyper casual game but nothing else no more stuff for me given the challenges around monetization for it I wonder if the

people that uh would be would find it the most beneficial would necessarily be even traditional game developers but actually potentially even the influencers that are running you know creating the videos on YouTube and are looking at ways of engaging their Channel further um so you know if you have influencers you know especially the ones that love to um you know rage at games or um you know using the games as content additional content for their for their channels um you know and that way it really just becomes more of a ad Revenue generator for them rather than necessarily A a large scale gaming new gaming platform where you find you know the Activision Zas or uh or even even potentially you know the voodoo's uh or say designs on there um so I it'll be interesting to see where where it ends up but for me it seems to be sort of the

probably the likely driver yeah probably it's useful for game developers that like could find like whether their mechanic is engaging but maybe like having a shorter cycle to like create a full build upload it to a Apple or Google Play go through the review do UI campaign somewhere else that is not connected to the platform which you are really playing the game so having everything like maybe in the same side I don't know also how they are going to enable to browse for games or is like when you see a video you have a game that is somehow suggested because it's related somehow with the video or is the the one that created the video that can enable to show games or not I think it's still like many open questions and we'll see how this develops and this account is an install for Unity I think it's a big yeah that's I didn't want to enter this now

open Panda Xbox too early well yeah I'll be interested to see a bit more how this develops because uh Google hesitancy to just kind of do stuff and try stuff out and see how it goes um and they're never I mean maybe this is my personal opinion but I don't think they're good at ux and UI pretty much ever so that'll be really interesting to see how that like plays into uh especially the questions around where does it show up like when does it show up uh how does it show up like it made sense with uh with for those who don't remember stadia actually integrated some of that sort of feature towards the end of its life where I think it was when it was like related videos around that gaming category that you could start playing the game instantly uh off of stadia and I believe it worked with like the games that were free uh because you already logged into a Google account uh for YouTube generally uh which then would also be your CD account which then the games that were free to play uh it was fine like Destiny 2 and uh I think there was at least one other one so I don't know that was

something that tried before so it's not necessarily new technology but it does sound like they might be using something different and I I gotta Wonder like is this uh still using the same Technologies in Cloud hosted uh or is it HTML5 kind of games because we've seen a push for this kind of thing from Facebook for example before uh with their sort of instant gaming uh around HTML5 games and then Google it also pushed something similar for mobile around their sort of like uh instant gaming sort of setup where uh you had to configure your game in a way that there was like a small enough download to start playing that was uh able to be played initially I don't know if that ever got a ton of traction though uh because I haven't seen it a ton of places I think everyone kind of wants that time to start playing to be as low as possible um so it's interesting that they're going with Hyper casual on that and I'd love to see unfortunately I I didn't get it at the way to know for those who are wondering if you have it enabled I don't believe it's an experimental feature to turn on or off on the experimental page I think it's just if you have a playables cat category on the left that

shows up I believe that's how you find out if you have it which unfortunately I don't I would have loved to try it out uh before this to get a get a feel for especially you know where's my reward for my Stadium loyalty right chilling them so long get nothing for it but yeah it would be really interesting to see how this rolls out hopefully we'll have an update at some point uh down the road when this may be a little more fleshed out if they don't just abandon it like most of their products at some point so we'll see good good to see that there's still a push to uh keep some of these sort of instant play features live um you never know who knows maybe it'll show up like attached to this video at some point right by YouTube if you're watching it there uh you never know but uh speaking of uh IP and monetization story protocol raise a good chunk of change yeah so um I thought this was an interesting story for a couple of reasons um one because I just sort of tracked the web three space closely and and IP is a sort of a major challenge for uh web3 and and sort of ownership and control of Ip but um secondly because this is a pretty big fundraise in an

environment where there's not a lot of that happening particularly in web3 right now but fundraising and entertainment and gaming generally so um as Devin mentioned this company called story protocol raised 54 million dollars uh and this was from a range of interesting investors so it was it was led by a16z um but a couple of the highlights here this is a long list of investors but um contributors here include Endeavor Samsung next um a person named SI hyokbang who's the chairman of high B and BTS The K-Pop group um also Paris Hilton's uh 11 11 media CH Kim who is the chairman of Crafton um uh also uh uh uh losses oh here we go Rohan who is the founder and CEO of dapper Labs um biology srinivas and a bunch of sort of well-known folks in the crypto space as well

um and what story protocol aims to do uh and this is a quote here is they want to be git for IPs with ownership and incentive so they're looking to allow for creators and owners of IP to bring it into sort of the digital age and overcome some of the very sort of antiquated IP legal infrastructure that exists in the analog world and so they're doing this through the use of uh web 3 protocols that allow for tracking of provenance proper attribution of um you know royalties and ownership of these IPS and also they're aiming to enable composability so that others can sort of remix and remake these IPS as they see fit and also greater liquidity for IP on the blockchain you know everything is a little bit more or I should say a lot

more financialized and so that allows people to sort of buy and sell IP with relative ease which is not something that's easy to do today but um I guess liquidity is not really the main focus they're looking for to make IP accessible on the blockchain so that people can remix and compose uh sort of in the like money Legos idea that you hear often in D5 so um you know we don't have to spend a ton of time on this I did think it was really interesting and Devin I'm curious to hear if they spoke more about this at Korea blockchain week it does seem like um a strong Korean presence in both the the investor group and the founder group so one of the three founders Sy Lee used to be at radish fiction which was like a interactive storytelling uh platform I believe and they were bought by cacao which is a Korean company and then the other two Founders just really quick Jason Levy who actually I used to work with at episodes on pocket gems back in the day and

um the final founder was Jason Jason Zhao who's a product lead at Google's Deep Mind so there's an AI piece in there as well but um yeah I'll kick it over Devon real quick did you hear anything at Korea blockchain week yeah I caught some of the talk hopefully those uh the talks get put online at some point I'm not sure if they do that normally is this is the first one I've attended but uh yeah they had a pretty interesting talk uh around the topic of Ip in general kind of talking about the idea that a lot of the stuff around IP is a bit Antiquated and thinking around it which is definitely something web3 has been pushing and I actually really like the the idea that royalties can be automated I think is a big sort of potential unlock for web3 that it definitely seems like companies like this are looking to try and tap it do I gotta imagine though this is probably going to go through some some rough stuff in terms of figuring out things when it's trying to Pioneer like you gotta imagine for example like oh you know you've got royalty tracking for attribution and stuff like that what happens if people just copy the content wholesale and then start it themselves and then Market it better and then get the all the

attribution to their site just just problems like that IP itself is kind of fundamentally problematic especially when it's monetized automatically especially like let's say they don't have ways to reverse uh things where they go to try and you know moderate the platform things like that opening it up seems great but it also like opens up a lot of uh issues but the composability nature of web3 definitely makes this I think idea at least a good fit so I yeah I mean I would have loved to see I didn't get to catch the whole talk but I did like that they were trying to rethink IP in general and I think this is like something we're going to see a lot from web3 uh in sort of the smaller sea like maybe not so much from aaa's right they are going to continue some more Antiquated thinking I think around IP uh but as we I think as they pointed out as well like AI is disrupting a lot of Ip thinking already so it definitely uh I don't think people are just gonna like you know put text you know up there text stories and try and monetize that that's going to be pretty easy to just copy into another one stuff like that but this does bring up you know the old

right click save sort of uh issue again right so uh really interesting to see what they do with this money as you said it's not uh common to see that big of a check in the current sort of bear market around it uh and obviously being you know with a lot of South Korean influence on the company and uh you know announcing the stuff around Korea blockchain week I think they know their audience down there for that and they tend to be pretty ahead of the curve on uh like different different ways to think about monetization uh you know they've pioneered a lot of that stuff in the game Space so it seems appropriate seems like a good fit uh I imagine we you know those of you who are paying tons of attention to Korea might not even see what they're doing for a while if you're not super into the space so maybe kind of a quiet thing and either like you know they it goes away silently or we hear about it later through some big uh thing they get going on hopefully but uh yeah really really interesting to see what they do with that obviously um uh they'll be ramping up you know with that money hopefully soon uh get some good stuff out there make sure to check

out their website though to like see kind of what they're doing as I imagine they'll be trying to write off this press but speaking of press uh the the big one for today uh that I think a lot of people are talking about that we were actually looking forward to really digging into uh some changes around unity's monetization model uh for both the the pro and the free uh it's very interesting ways yeah on a day that I think Unity was hoping that the developer Community was going to be focused on Apple's new phones and watches and such they released a small bit of news that effective January 1st 2024 they will be introducing the unity runtime fee that's based on game installs um now the basically what they're saying is is that if you have uh or if you're using Unity personal or unity plus that if your game makes more than two hundred thousand dollars U.S in the last 12 months and at least 200 000 lifetime

installs or if you're in the unity Pro or Enterprise uh seats that you've made at least a million dollars in the last 12 months and have at least a million uh lifetime game installs they're gonna start charging a fee and that fee does ramp depending on how many new installs there are uh past that uh initial threshold um and they do have a scaling rate that depends you know if it's up to you so if you're a million uh installs for example uh over uh the threshold if you have a Unity Pro it's uh down to two cents per install but you know in that first hundred thousands 15 cents per install um and you know they tried to soften the blow a little bit by saying hey by the way if you're using some of our other services such as uh level play mediation for uh for ads um or other gaming services that they'll

you know potentially give you some credits towards some of those costs but as you can imagine uh Unity is suddenly dumping a huge bunch of fees on the developer community at large did not result in much in the way of good press yesterday um and even today they're still trying to work on clarifying some of their statements um but there are some huge questions still around right now so some of the questions were uh well you know is this based on every install that happens and they try to walk that back a little bit today and say well if it's on the same device only in the initial install will charge a fee however if it's a multi-platform game and I install one version on my PC one stall and one install on my mobile that counts as two installs um demos they're saying will be largely exempt but that will require the basically the company say hey this is a demo please don't charge us Unity

um and also to be able to say whether or not the game is for charity Unity apparently we'll we'll back off on that um and supposedly they're saying that you know don't worry developers if you're working with something like apple arcade or Netflix or Game Pass we'll be charging the Publishers we won't be charging you so won't be a worry whoever said that I think really needs to understand how publishing deals work and those charges will be passed down Unity May charge Microsoft first but I can pretty much guarantee that somewhere that is a developer will still see that those fees so um and and you know right now as we start asking well how are you going to um you know how you're going to calculate these installs uh unfortunately the answer right now even though it's supposed to be rolled out in you know just over a quarter is well we're not really sure yet we're they're still working they swear that they've

got um uh they're working on figuring that out and that they'll have a system in place at that time but um yeah it's a lot of questions and right now a lot of developers are really starting to wonder is Unity going to be their engine of choice going forward um you know how that affects you know myself my own personal opinion on it uh this really does change the success criteria for games that I'm looking at making in the future you know this really does affect my uh effective cost per install and you know what does that look like in terms of uh CPI versus LTV um you know and what hyper casual oh my God they've been hit already with Apple's privacy and now with this when you're looking at the razor thin margins that they're running on um it makes it really really difficult to start thinking about well how am I going to create a game that has millions

and millions and millions of installs but you know as soon as that game just crosses that threshold that is really going to be costly for hyper casual games right now and then on top of that um when you start looking at the emerging markets and and they did make a difference in pricing depending on if it was a tier one market or Emerging Market um I'm really going to start looking at does it make sense for me to release my game in countries that have really high installs but a much lower um Revenue return so you know the countries are probably going to be affected are places like India Brazil Indonesia Mexico uh countries where you do see high installs but lower Revenue rates so um I yeah yeah there and I mean some of the developers come forward and said look as soon as this goes ahead the game that I'm making right now I'll actually lose money I'll owe Unity more money than I

received from uh from the stores themselves so you know Unity is saying look this is really going to only affect about 10 of all Unity stores but if you think of the number of unity licenses that are out there for schools for personal use for people that are just fooling around sure it won't affect them but the people that are trying to make their livelihood out of making games that any development Community the the companies that uh you know their bread and butter is the hyper casuals they're moving you know potentially moving from hyper casual into hybrid casual it's really going to be uh you know really causing a lot of people to wonder is Unity the engine for me am I going to switch over you know is it possible for me to go to Godot is it possible for me to go over to Cocos 2D um do I look at you know uh unreal for those that uh you know we're still looking at um or you know have the ability to go to a slightly more expensive engine

um a lot of questions and a lot of frustrated developers right now love to open up to the floor and hear what others have to say at this point I have a question Dave because I I couldn't find out but uh this is for by developer right it's not by game it's by developer so if a developer had like several games and they pass in total no mine are saying it's per game it's per game okay but I could be wrong in that yeah I don't know it feels like very restrictive and like something that you said like you could have like a lot of instance this is really about many games yeah and that's you know another thing is that um uh you know they they do have different pricing dependent on which level you are so if you for example uh are at Enterprise versus Unity Pro

Enterprise is um you know once you cross that one million threshold uh their cost per install is half so it's two cents per install for pro one cent per install for Unity or for Enterprise but in order to get an Enterprise license you have to have 150 plus seats so most people are going to fall under the unity Pro because if you think of you know if it's 150 plus seats then you probably have a company of you know at least 250 people uh because you're probably doing the publishing side as well right our you know all the people that don't really need seats you're not going to be paying for those seats so I mean those are some pretty large companies and if you look at the size of the companies that do um uh you know the hyper casual the hybrid casual um they're not that big you know some of the games some of the companies that you know do really well say designs for example does really well inside the hyper and hybrid casual space I went and

looked on LinkedIn to see how many people they had and you know they had like 40 people inside the company as a whole so I mean and as the publisher they're the ones that are going to be hit with the with the fees so you know how are they going to justify um you know games the same the same games they're gonna have a much harder time justifying from an economic perspective just based on the increase in the in the CPI um and I know one of the questions was uh this is one of the questions that they did receive from the development Community um whether or not you could you know take a look at a competitor and go how can we bankrupt them well let's take one of their games and and just install uninstall install install and uninstall um and unity swear so they've got the technology to be able to figure out that sort of thing but um but there are other you know really good questions like steam Returns what happens with steam returns someone installs the game they play it they

return it as far as we can tell from Unity side they've installed the game so therefore they've incurred the fee but if it's a return to steam then they don't require any of the revenue for it and they could you know the developer then gets the issue for our a lot of questions um and then for me the other question is how do they determine revenue for games that are ad generated where they don't use Unity ads are they just going to guesstimate I mean how do they figure how do they figure out revenues for uh yeah for that yeah I mean these were the main doubts right like how how they like really can can be sure about the data they have right like about the and what then it's like I don't know like exchange of excuses rather than like something that you can really yeah and I think another issue that's definitely been brought up is that so yes this goes into effect

uh in 2024 but it affects games that have already been released so you know if a game is already crushed across the thresholds every new install at you know the on the beginning of the uh on January 1st every new install for that game now incurs that fee so you've published a game based on certain economic assumptions and now those economic assumptions change come January 1st through you know you know not something that you would expect yeah there's certainly things that you can plan for some things that you can um you know potentially look at okay well you know the economy looks like it's in a bit of a downturn so we need to make sure that we bring our estimates or Revenue estimates in in line with that but this is not something you generally account for that retroactively affects you know games that have been around for you know five even ten years

there is also this threshold for the for the revenue right like is I think it's 200k in the last 12 months right so there could be companies that want to earn a little bit less and be under threshold and try to prevent the game to monetize this is there yeah they're five dollars underneath the threshold it's like everything's free now yeah IEPs are free you have that yeah I was wondering about the the like because we are discussion about this short-term implications right about this is like uh okay hyper casual will be really hit by that and there will be many probably developers that shift switch to a different engine uh at the end of the day for hyper casuals we are saying like the the cost of install is like 20 to 50 cents so this is like doubling the the the the cost so it really hits them hard um but I feel like the other aspect would be that we will have less games

running like there will be even people that maybe withdraw the game because they don't want to maybe all we monitor to Unity or like the implications that this may have or just at that moment like maintaining the game doesn't compensate because there are no new extra cost uh and especially the ones that are generating inventory for for us for acquiring users right so the the secondary effect that the second way for this would be like the increased CPI so it's a consequence of this right like for any developer any developer when you're introducing Unity there will be hit secondary because like you will have less place to to buy for this inventory and it's like CPS will will rise eventually yeah yeah even um uh I saw on Twitter the uh the makers of cult of the Lamb have said buy your game now because it comes off the store on January 1st so I don't know if they're 100 serious in that but I mean there certainly are people that are

not level frustrated that they're willing to take you know their games off of the store just to make sure that they're not having to deal with these fees especially when they're you know something that they really don't have much control in you know your only control over installs in reality is are you on the store are you not in the store I mean advertising obviously will have an effect but really I think that's what the existing developers like called the lamb right they already know what they've hit threshold on Revenue wise and end users so they know if they're going to be hit and they know how much it's going to cost them and stuff like that so I imagine they could do the math right now if they're already over the threshold and be like yeah let's just pull it stuff like that so you gotta imagine those cost decisions are going to be calculable especially when you're trying to like get long tail installs uh versus like a launch game like you know for the more retail model it's it's like it seems to hit both The Upfront payment models and the free to play like imagine running a steam sale now uh to try and get people to buy your game cheaper well

now you're taking uh more of a hit in theory like percentage-wise off of that sale and even you even gotta Wonder like are the free keys that you give out the steam keys to try and get like some some pressing reviews are those now going to count towards being charged and stuff there's so many questions around that but I wanted to ask like if you had some thoughts or any of you guys have some thoughts on why they went this route what was the reasoning for this like uh did they say anything about the the approach why they did it this way and whether or not like they they care that this is going to piss a lot of people off uh it's really it's Revenue needing to generate more Revenue as a public company like really what they're looking at doing is pushing people up inside their subscription uh packages um you know they want to move people from you know the unity personal up to Unity Pro if they qualify for Unity Enterprise they want to move people up to the Enterprise it is yeah it's they're a public company and

they need to get more more Revenue in um I just think there are better ways they could have done that yeah downside is going public right you start to have a lot of pressure on that sort of thing uh I think they also mentioned that it's not just pushing people uh into the revenue but also pushing people into the other services they offer because there was some exceptions uh around the monetization that has to do with uh the services if you want to clarify that yeah absolutely so um they did state that um the quality you know and this is directly from uh Unity qualifying customers may be eligible for credits towards the runtime fee based on the adoption of unity Services beyond the editor such as Unity gaming services or Unity level play mediation for mobile ad supported games so they really are yeah they're really trying to get people to adopt more and more services um now the the best part for them is you

know if everyone signs up for their level play ad mediation then well they've got a better understanding of what Revenue games generating um you know makes that side of it easier for them um but yeah it it really is this is all about generating more revenue from the company so not just from the the fees but from what seats people are are purchasing what subscriptions they're purchasing uh and trying to get them further into the unity ecosystem overall and because this is what I was thinking like if they can measure everything that they say they can measure they could have really estimate what is going to be what they earn with this but also the impact how many developers they are going to probably lose because of that so I think in general they were thinking that maybe this just is not taking us so such a scary thing it's like oh I need to move to use their services and then that everything will be fine but that like the reaction has been like like much more dramatic than they

expected oh yeah oh yeah I do think that it's more dramatic than they hoped probably I I'm sure some people there expected there there would be a very large uh blowback but uh yeah yeah I mean to your point Dave like there have been a couple of um sort of anonymous like employee posts on on Twitter and like developer forms and stuff like that it seems like it wasn't necessarily A unanimous decision to roll out with um with these updates um I think like like clearly the marketing and PR was botched and it's there's a lot of um confusion over how this is going to affect people uh but you know I think it's safe to assume that like there are many smart capable people that are working there uh who thought that this was a good idea for some reason and so like if we were to just sort of take the other side of the argument like why why would they be doing this like you know Dave you mentioned money like that's

probably the number one reason they need to bring in more Revenue to support their business um we we touched on um you know potentially moving people towards some of the added Services one question I had and I don't know if this was covered anywhere in the coverage of the story was like you know Unity is pushing really heavily into AI services and I wonder if they're expecting like a a large like usage bill from all the like AI calls they're gonna have to be doing to where they need to pass that on to some of their customers I don't know and the the third like uh thought that I had was maybe they just sort of overestimated their strength in the market um in terms of like they're like well where are other people gonna go um that use Unity it's such a widely used engine um you know probably we'll see a lot of people go to Godot I think uh to sort of tee up the next topic here I think we'll see a lot of people go to Roblox actually um you know it's I don't know that that's necessarily going to fully replace everything but like uh platforms

like Roblox and and uefn I think are are going to really benefit from some of these these changes on the sort of low like hobbyist or prosumer end where people want to just like get an easy tool to use to spin up some games really quickly there are other Alternatives out there and maybe Unity just overplayed their hand yeah uh you are right they are including uh some of their new AI systems um available at runtime uh and they're being integrated I think in November uh for all the subscription plans so they certainly are adding more components uh to the overall you know what those subscriptions pay for so what they are going to do next like you you have ads integrated in the editor so you need to watch an ad to to go to one line or it didn't seem like this is about uh monetizing the editor so much as it was like they were trying to emphasize that this was around monetizing their runtimes because one thing that for those of you don't like understand how

Unity Works uh because it's it's different than um uh unreal I believe and a lot of these other ones is rather than coding their editor like build output necessarily for every platform that each platform has its own runtime that's basically the engine to run Unity on that individual platform and it your game like sort of content is portable across those and so the idea is that they can optimize the performance and that's part of the reason why I do think it performs uh optimization wise a bit better than like unreal uh besides you know obviously the huge graphic differences and GPU uses and such but they optimize for each platform to make it so that like okay this is we can keep tweaking this we can keep proving it and they were trying to justify this basically saying we got a lot of feedback from people saying they wanted us to spend some money improving these run times so this is how we're doing that by saying you know we're monetizing the runtime the only the only problem with that is clearly they're going to prioritize the runtimes that get you

that get them the most Revenue right so let's say uh Android for example is just not pulling in a ton of Revenue because it tends to lean towards maybe a less paying players than iOS then suddenly they're just less interested in spending time on the Android one you know you know depending on how the metrics go right and so this could backfire on that well under you have the teacher for hit the things to start yeah right exactly and so like they're I think they're kind of looking at those trade-offs and one thing I don't think was mentioned so far is uh supposedly this is like kind of a replacement for their previous Revenue sharing model um which I think unreal still does uh feel free to correct me on that but uh it's it's funny because they both kind of went to that model and then seems like they're like well people don't like that and they were kind of mad about that so let's see if we could make them more mad with a worse model and see what happens I guess it's it's very interesting that they went from kind of like a taxing the revenue to taxing the installs uh based off platform so really

they're like almost like attacking the platforms by targeting specific runtimes uh and the monetization model especially especially free to play right I think we all realize free to play is going to be hit pretty hard by this because we're already in a market where cost per installs is already too high and this just exacerbates like the biggest issue right now in free to play and just it kind of gaming in general and makes it worse uh so that doesn't seem like a good idea yeah and it and I think it's um and some genres or something maybe hit more than others so I I did some digging yesterday just to take a look at you know um I was looking at one of the um highest downloaded casual games right now I'm not going to get the names for the games not but um the game had done you know north of 19 million installs so 18 million over the threshold and they certainly did uh meet the revenue threshold

um at a company that was small enough that didn't fit uh Enterprise so they were dealing with unity Pro uh pricing now their revenue per download and this is IEP this is not ads but the revenue per download was six cents so at two cents per install that then removed one third of their IEP Revenue now it's a casual game they get a lot of their revenue from from ad monetization but um you know that's that's the level of impact that can it can be for some games uh and something I also don't think was uh was addressed yet was the difference in the fees per uh country in in the sense that the quote-unquote developing countries which of course the one that I think that comes to everyone's mind is India here uh being a huge one of installs but very low Revenue per install uh they have lowered the the fee

for those countries but at the same time like I think if you look at the the revenue per user in those countries it's still probably sometimes below the amount they would even be asking for to where some of these companies trying to consider deploying in India may actually lose money to playing out there yeah yeah and that's what I was saying before is that you know there will be discussions about whether or not they geo-lock games out of some of the countries that have really high installs so not just India but Brazil would be another one potentially Indonesia potentially Mexico not quite to the same degree but um you know if you're if you're looking at from a holistic perspective you know you've got the United States the UK wherever they're the countries that are going to push you above your Revenue Target but then you've got uh you know India Brazil pushing you way above your downloads and so you've met those thresholds but if you look at how can I

better my average revenue per download it would be okay well yeah I'm just going to take out India because it's going to cost me you know not much in order because of all those installs but I'm not going to see the return in terms of the revenue side of things so um yeah I expect it will it will greatly affect some countries and will greatly affect some genres other genres I think they'll be okay just based on you know they've got better margins a little bit easier for them to absorb per install costs but yeah I think it's it's it certainly is going to be a challenge for uh for some games and some and what that means that ripple effect for some countries uh to your point uh uh Dave around uh certain genres and certain games being heavily impacted um it's just a quick anecdote but I was I'm writing a piece on mobile shooters for navic digest right now and I had a quick look after I saw this news uh free fire is made in unity I believe and free fire dominates that genre in terms of

downloads by a wide margin and where do most of those downloads come from it's India it's Latin America it's southeast Asia and this is a a game uh or let's say a parent company that's already struggling um you know we've covered that previously on navic digest C limited having a lot of problems uh so this is really only going to compound things for them um but one one last bit I wanted to end on here before we move on is you know obviously the the backlash has been near Universal um do you all think that they're going to change course or they just gotta plow ahead you think they're going to pull this back honestly I think at best they're going to do they're going to clarify some of their rules um I don't see them pulling it back I mean the thing is I think they probably did a calculation of how do we get close to what it costs uh for someone to develop on unreal but be a little bit below that and know that it's much easier to do

your full integration of all of your sdks of all of the other elements that are required inside you know making especially when it comes to a mobile game it's that much easier still do all that inside Unity than it is to do inside some of the the other platforms be it Godot Coco Studio or what have you so I think it was a calculation of will push as far as we think we can but then we'll hold because they they need as a public company they need more Revenue coming in to be able to reach that profitability uh you know consistently um so I think they'll do some clarification but I don't think they're going to pull it away yeah I imagine this clarifications would probably involve like some adjustments to exceptions or tweaking some of the rules or thresholds right where it's like or maybe they'll even just clarify by showing some of the math right like here's here's the math we did like they already quoted that 10 number right so they're already trying to like add a little bit of transparency but I think they need to obviously add a lot more if

they want to like here's why we were thinking this and here's the math behind it so like at least those of you that are math minded can get it but I do Wonder like could this uh Force so let's say you're a game company and you are dependent on Unity for your particular games you already have live could this be an opportunity then to go you know what uh I'm over the threshold already but before this comes out I can't obviously can't limit quantity of installs which would be a funny thing in and of itself if you actually could limit how many times the game could be downloaded but I imagine then they go you know what let's switch to a 99 cent model uh because I believe that's still I think the lowest you can go and uh add bonus uh like you know those 99 cent sort of starter pack acts that you get in games like maybe just you start with that like uh sort of Founders editions for free to play games right that sort of concept you get to bonuses which you got to pay and maybe they just switch to that model be like well the 99 Cents will cover any installs I get going forward for sure and then now I'm also going to qualify towards customers who

are more willing to pay and kind of regress a little bit towards that model because cost like the cost per installs are too high anyways but if you didn't spend for cost per install you know you're at least going to get 99 Cents well minus 30 plus minus unity's cut now but you know you I'm sure you could do the math and decide if it makes sense but I just thought that was kind of maybe another thing we might see some some developers try but speaking of publicly traded companies that are gonna have to start thinking harder about how they monetize although they're doing it well already Roblox and some interesting announcements around for their their developer conference as you mentioned earlier Matt yeah thanks Evan um I before the unity news I felt like this was kind of the biggest news item worth discussing um that happened over the past week or weekend here so the Roblox developer conference kicked off and there was a bunch of news that came out of that um so I thought we could hit on a couple of discussion topics that that were announced there and um you know really just for funsies

um uh the CEO Dave bizuki released um his 10 five-year predictions for Roblox and we can get into some of those and uh and and compare them to his previous predictions and how well he did on those so um sort of the headline news here first is that Roblox is continuing its trend of trying to age up and they're going to be releasing on the PlayStation PlayStation 4 and 5 in October and they're also coming to VR on The Meta quest in September um and if you were lucky enough to attend this conference uh apparently the attendees all received a free meta Quest Pro um at the the physical Roblox developer conference in San Francisco um so that was one bit of news um also another bit of news Roblox connect this is a video chat feature that they're adding into Roblox where you can like video call your friends but it's not you know video call like we're doing right now it's with um it's with

avatars like your digital avatars and these are maybe slightly different from um the Roblox avatars you see in the games they're not super blocky um they're they're an attempt at like a slightly more lifelike if you will Avatar if you if you look up the article you'll see that there are some examples there so in short a video chat feature with avatars and also like gyro controls somehow this is going to be open sourced interestingly enough so they're hoping developers build on top of this and speaking of Developers there was a bunch of news relating to Roblox developers um the biggest one that caught my eye was that developers can now be paid in US Dollars and not in Robux um which is like I don't know it's just kind of like a silly hurdle to have to to get over but that's big for people who develop on Roblox and then also um they're going to be releasing a an AI chat bot that's meant to Aid with development and answer developers questions about you know working with

the platform and help with code completion this is like on top of some of the existing AI tools that they've announced as well um so those were the big um discussion topics I guess that coming out of uh Roblox developer conference there was also separately like a developer was arrested at the conference or like nearby the conference for threats of violence I didn't like read into the story too much but that's also something worth monitoring in the sense that in my opinion in the sense that like Roblox is like it's a thing you know it's like we talk about it sometimes in gaming and some people take it more seriously than others but like if you look at the the hold that Roblox has on the generations that are growing up right now like it's a it's a major like cultural phenomenon and like we all should be paying more attention I think um is my take away from that little sort of um bit of bad news but um let me open

it up before we get into uh Dave bizugi's predictions any thoughts on some of these announcements um around Roblox aging up around their AI tools uh VR like it it already had a huge number of downloads on uh medical it's like easily the biggest IP and platform to come to the quest store by far so just just uh open up to the panel here any thoughts on some of these announcements from Roblox um I mean my son loves playing Roblox and you know that's probably it's probably where he spends the majority of his time is actually inside Roblox and he plays fortnite he plays Minecraft he plays a wide range of games but uh Roblox is certainly where he spends a lot of time um the I mean I I think there still are some challenges uh for um developers inside the Roblox infrastructure

um you know their payout system um you know I'm not sure if it's still still at the same Caps or the you know the same levels that they had previously uh which can be challenging you know if you're if you're bringing in um you know a professional team to try and build out like a full full game the um game experience inside Roblox I think that still may have a bit of a challenge trying to be able to uh justify the economics of that um now there are I know there are companies that do really well gamefam has done a fantastic job inside the Roblox infrastructure um and certainly looking forward to seeing more that they do inside there and more developers going into Roblox um you know the the move into VR you know it's not I don't think that's huge news just unfortunately just because of the size of the the VR Community um you know I've got a quest here at

home certainly we'll be trying out Roblox and VR but I'm not sure if that's really going to be the Mover PlayStation is an interesting one uh twofold because it does finally get them onto another platform uh but two I think it does work towards their their aging up of uh of of the players um but as you mentioned you know aging up is something they've been trying for a while and uh I think they've seen some limited success but I don't know they've seen the success they quite need to yet I think like every time that we have news about Roblox uh it found it quite interesting they have good thoughts about how to to keep developing and evolving and for instance like you were mentioning math that Roblox for for jogger uh Generations is a real thing it's a it's a very important thing like and then like Roblox connect could be complementing that right and giving them

more options to connect like give it like avoiding other platforms like and keeping them inside like just like they do now because I it's hey they could see like people like playing Roblox but then using other means of communicating with their cliques and now having everything inside is like okay like like absorbing all all that very smart move that's an interesting point um you know maybe it's pulling people away from Discord and keeping them on the platform um but um also like if you if we sort of skip ahead some of the the prediction stuff um there was one that Dave Bouzouki had there's a couple that are kind of related to this like video chat um function that they've added um one one of his predictions was that Roblox will be a frequent Communication channel for my family um another one sort of related to that Roblox employees will spend more time

using Roblox for remote meetings than with video um here's a perhaps even uh more outlandish one a school will integrate a full K-12 curriculum with Roblox including language classes with schools in other countries and Virtual Field Trips so they're they're really kind of like leaning into some of the um dare I say metaverse capabilities with Roblox now keep in mind these are five-year uh predictions and um you know there they might not all come true he was um 58 on his last five year predictions for 2018. which is not bad and we can go over those in a little bit but um before we sort of jump away from this previous topic I just wanted to add that bit about like they are taking the video chat but very seriously the timing of it's funny too because uh it meta is just starting to try and take Horizon worlds and integrate it more as sort of

like a social platform built in to like the home as opposed to being like its own Standalone app partially because it basically failed as a standalone app let's be honest it's been a total disaster with the amount of money they've spent on it and so it's kind of funny that now they're going to be competing with Roblox on that or at least according to these predictions right they'll be competing with that uh and that'll be kind of funny to see because then you'll be like hey do I use the thing integrated into the home or do I launch Roblox and I think obviously meta in theory has an advantage there but I think people generally lean more favorably to Twitter blocks but I do I do Wonder um with the with the VR rollout is it possible to develop VR more like VR native experiences where it's actually using the VR aspect or is it just you know the same client and everything exactly the same except for there's a screen on your face instead of like five feet away from your face like that if that's all it is then that's a problem but if it's more where you can develop like more VR native style experiences that could become a dominant platform for VR development because right now VR

development's not easy it probably won't be for quite a long time especially if Unity is charging you know for install for that it's uh that's even even less easy right and we've we've already seen like rec room try and do something similar on VR and and they're also cross-platform by the way I think most of rec rooms users are on like Xbox uh for example but they are you know a big player on VR so um clearly there's a track record there of success and developing in VR but I don't know the answer to your question Devin whether it's like a different um development experience maybe they'll get there eventually do you have some more thoughts Felipe I just hope that uh sorry I just hope that they fix frame rate challenges if they're doing VR because Roblox is not known for a silky smooth 90 frames per second but the visual Fidelity is so high of those Lego people yeah it was going to comment on the AI chatbot that they think that's something that Unity is trying to push and like

it's part of what they are offering with the I said like some service that they are giving and that's why they are aiming to increase the the runtime fees so it's fun that they give it for free um yeah I mean certainly they're they're um investing into AI in their own way um there was a bunch of news you know previously before the Roblox developer conference around some of the the fun stuff that they're trying to implement into the the Roblox uh editing tool um that uses like a an AI sort of natural language input um I did want to um just have a little fun here before we move on um and and look at some of the predictions that um Dave bazooki made so um as I said he did pretty well on his 2018 predictions he was uh 58 I don't know how they calculated this exactly maybe they give him like partial credit on some of them but um here is here are some examples of things that he got right uh in 2018 so

he predicted uh one million concurrency in a Roblox game he predicted that more than 50 million people would learn to code on Roblox uh that a hundred thousand people would watch a Roblox game stream in 3D uh that a Roblox developer would earn 50 million dollars in one year and that 100 person company uh would be developing on Roblox so um maybe those aren't like the most outlandish predictions but he did get those right so let's take a look just a quick look for fun um at some of the predictions that he made uh at the Roblox developer conference the other day um so I mentioned a couple earlier here are some others that caught my eye uh one a Roblox developer will be valued at one billion dollars uh a musician will perform live to over one million people on Roblox using a phone for motion capture okay interesting um a top fashion designer will be discovered on Roblox without having any

experience in physical fashion um and similarly on the Fashion Point some Roblox creators will make more money from selling physical merchandise on Roblox than virtual merchandise um I mean this stuff is pretty interesting they're super ambitious um so we talked about like the virtual presence stuff obviously they're leaning into uh developer support and getting you know more developers at larger scale and then music and fashion as well like really leaning into that heavily trying to get massive uh concurrency on a musical performance in Roblox and you know encouraging like fashion and brand building through Roblox um I don't know I find this stuff fascinating and it's like Way Beyond the realm of quote-unquote traditional gaming but um really makes you think about what's possible with these platforms what do you think is he like crazy are these um realistic predictions these are five-year predictions keep in

mind uh I certainly do think some of them are like they've already done musical performances inside Roblox and and I actually did see some great success there um you know the valuation is a billion dollars I think the biggest challenge for that one is the revenue caps so unless developers are able to see more revenue from the games that they develop it will be hard for them to get that super high valuation based on their per year Revenue multiples I think some of them will be will certainly be interesting I was certainly thought it'd be funny that people would be meeting inside the Roblox dating experiences um because I I really want to see what that actually looks like you look nothing like your Roblox character what what is going on yeah I agree I feel like some of them for me look look plausible like the ones

related to to Fashion I feel like it's not just Roblox that like it's thinking that that's a good opportunity is like really uh fashion brands are really using Roblox already and that's like I think it's not a wild shot from from him to say that it's like he's seeing like how things are performing how like uh the the industry is pay more attention to it as a as a channel and eventually this could lead to it right because they have the user base this reminds me a second life when that was like a big deal right and people were making money off of you know making fashion and wearables and things in there and obviously like other games have tried to recreate that sort of thing but it seems like Roblox coming at it from like the make games and make money off your games angle seems to have like carried this I think quite a bit longer than second life really lasted I mean technically second life's still around but not highly culturally relevant anymore except as a sort of you know predecessor

to a lot of these things but it is kind of funny that they managed to get traction with like a much younger audience I would say than Second Life did and if they could just age up with them then like that's you know that was their big challenge but also if they could pull it off like a big success right where they you know kids started on this and they just never really age out of it that could be huge to where then it does make sense for people to be dating in it if they grew up with it they never leave it yeah I mean why not like uh we've seen people like date get married and what whatever else in in MMOs and it is it is a little weird given that the um the style of of Roblox right where it's like very kind of little kid uh you know Lego looking kind of low poly stuff uh so that that does make it kind of funnier but given like that obviously kids don't care about that right like at the end of the day people still make retro games people still play retro games like I don't think that's the real barrier to going up and people trying to like make stuff looks nicer uh doesn't necessarily bring people over but I do think that these

predictions now have to contest with the the unreal editor uh the the uefn as like a big competitor now that we I don't think we really mentioned in regards to this yet that that now there is something trained Edge into that space um yeah and like just following up on the fashion bit I mean there are luxury brands that are inside Roblox right now Brands where you'd think uh my seven-year-old daughter's never gonna go out and buy a Gucci handbag by herself um but the what I've heard from the luxury Brands is just trying to get them into the Mind space of the the kids growing up so that you know Gucci is something that you wanted to have inside Roblox when you're a seven-year-old kid it's something that you want to have when you're 27 years old and can afford uh you know an actual Gucci handbag yeah this makes me think of um have you ever watched any of the um like the the toys that made us kind of things on Netflix

uh you see a lot of the stories of the toys where like selling the toys was about like creating a comic or a TV show I wonder if now we've moved past that sort of phase where when you're trying to sell products you make like a cartoon for kids and instead we start to see products in IP built primarily for something like Roblox where let's say there's a new toy they're trying to sell the kids and instead of being like hey let's make a cartoon about it because that whole phase is passed they're like oh we'll make a Roblox experience for it and obviously you know if it's something like Pepsi or Cheetos that looks a little cheesier pun intended but but if it's uh you know something that's just like a toy or whatever trying to come into an interactive space and being able to play with that toy virtually or you know like a giant version of it whatever like it seems like there's some some interesting potential for cultural shifts here if they can survive but I mean I guess I guess we'll see it right like Roblox has definitely I think they've got a lot of struggles but they've outperformed I think where we expected at least at least where I expected them to end up at this point

and surprisingly obviously most of those predictions you mentioned Matt that he got right were all about growth and he hit most of those and so like that's I guess pretty bullish for them to make those big kind of like this is what's gonna happen because we're gonna grow and succeed and get a bunch of those right as opposed to like stuff that's tangential to Roblox so obviously you can't grow indefinitely but uh you know stocks like apple try and try and keep doing that if they can um uh you know they'll hit a cap at some point but we'll see where that is and whether or not uh we all end up doing this podcast in the future in Roblox right through their new things or who knows but uh anyways I want to thank you guys for joining a lot of great topics today uh I imagine as usual with these many of these we will end up revisiting as they develop because a lot of these are kind of just at the beginning of their hopefully interesting phase and so we'll see where that goes but of course I also wanted to thank you listener and and hope if you have some feedback questions other stuff around this uh or even clarifications on some some of the stuff we missed because there's a lot of questions around these

topics definitely let us know make sure to hit the mailbag novik at podcast uh sorry podcast navic dot Co so I mix it up there uh and let us know what you think and obviously we'll try and address it but again thanks everyone thanks of course to the panelists and uh I hope you all have a great weekend and see you next week if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a five star review and if you want to reach out or provide feedback shoot us a note at podcast navic dot Co or find us on Twitter and Linkedin plus if you want to learn more about what novik has to offer make sure to check out our website www.navic.com 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.com thanks for listening and we'll catch you in the next episode