Why Did Magic Eden Make Creator Royalties Optional? - The Metacast by Naavik

[Music] an hour and a half of the kind of squeaky Mario voice might be a bit much um it's a great personality and great character but you don't usually hear long monologues in that voice [Music] hi friends welcome to the metacast Roundtable by navic and this is a One-Stop podcast to stay up to date with the latest game business news and all of their insights I'm joined by Anthony pecorella co-founder of level up Labs Tim Menville CPO ah Hutch and a new face today Tom kinenberg web3 gaming and mavic core Consultants hi Tom hi how are you Maria I am good how are you yeah really well um I definitely was a bit sick this

weekend though I just had a cough and a cold so coming out the other end of that my voice might sound quite husky because of it but um yeah I'm really excited I've been doing a lot of work on web3 and uh just mobile consultancy so been fun yeah you used to be in the freezer play Space right and you moved into like the web three yeah I've sort of done a little bit of everything been doing mobile basically for 12 years um most recently actually was working uh as a sort of uh head of product at a London Studio pixian games which are working now on web3 um and then now I'm working with novik specifically on web3 and blockchain and actually with a lot of blockchains as well as gaming companies as well so sort of expanding beyond beyond just gaming and sort of working with blockchains directly if there was one animal you could choose to pair what

what animal would that be uh I would pet a Phoenix I think uh I like if I could have anything I don't need a real animal I need something dramatic and a fiery Beast feels like the best wow that sounds very warm laughs I'm sorry we're just talking about weather um yeah Anthony and Tim it's really nice to have you here again it's always good to catch up with you good to be here we have a lot to touch on today many topics in different areas of the business and games we're going to be talking about Riot games acquiring or gaming Sydney magic Eden which is a Solana Marketplace making royalties optional for buyers so we're going to dive into some of these principles of web3 the game pass on metaquest that was announced last week by meta and we'll be diving into voice acting pay there's been a lot of

discussion going through the socials about a voice actor of Bayonetta raising concerns about pay in the unfairness and we're also going to be roping in some discussion on the potential impacts that AI could have in this segment of the industry great all right well I'll just jump into it because I actually have the first topic which is the riot games everyone good yeah okay so wargaming was founded in 1998. I was really impressed by that because I'm only eight years younger than wargaming apparently you can calculate my age wait younger or older anyway let's move on from that gotta guess which one okay yeah you have to guess and uh wargaming acquired big worlds that was based in Sydney in 2012 and then became War gaming War gaming Sydney uh wargaming develops a lot of free-to-play real-time multiplayer games

if you have World of Tanks or warships um that's from them and they acquired big roles that was developing MMO technology um that was being utilized by World of Tanks and then the acquisition happened and now wargaming owns the technology of of big roles the Sydney Studio has around 100 people and was very recently now acquired by Riot games the amount is undisclosed and Riot games in turn is owned by tencent and from the announcement it sounded like the riot team had had the opportunity to work with some team members from wargaming Sydney maybe related to this technology of the services they provide for MMO back-end services and we'll be jumping into just thinking about okay why does this make sense for gaming and for Riot we'll just do a quick touch on the topic so that we can dive into the wider discussion ones does anyone have thoughts um it feels like a very positive outcome for all parties feels um like a good

acquisition for Riot uh maybe wargaming uh having a good person to sell it to uh and actually for Big World Sydney it doesn't sound like many anyone's lost their jobs uh maintains basically that coherency of the studio down in Sydney which um you know they've been doing it for 25 years I believe um and there's a lot of um things that will be have been built up there you know relationships understanding knowledge technology um so Riot buying into this gets a lot of that um it's probably something to do with the market you know uh sort of bear Market at the moment making things more difficult War gaming feeling a little bit of pressure um and then also maybe being in a sort of different time zone in Australia with Eastern Europe could be more difficult but overall I imagine all parties have had a a positive outcome from this after doing some research into wargaming

I started to understand that actually the Sydney Studio is a very small slice the 100 people out of I estimated between four thousand five thousand five hundred in total across all of their Studios and also I I assume it must be hard with the fairly recent closures of their Russian Leicester Studio or wargaming Moscow and wargaming Minsk because of you know the war and sanctions and then they they um open new Studios one in Serbian one in Poland with full relocations of whoever wanted to move there if I can only assume that I had quite a lot of cost and I looked into their at least mobile games which I'm going to make an extrapolation to their uh other platform games that Russia was their MO their country with the most downloads and the second country in terms of Revenue so with the with the restrictions now with platforms um I assume they're taking a

hit into their revenue and their profitability so looking at the 100 person Studio I assume it was a good deal um wargaming keeps the rights to big worlds uh back-end services so there's no concern there about the the maintenance of being able to use that Innovation for their games and it also yeah helps to support the coffers of the new games that they're developing they're developing two new mobile games and so with all the market um the market downturn that we discussed and having to move out of out of Russia that that allows them to keep financing those new games and big world uh sort of back in the day uh when it was first founded was the biggest and best middleware for MMOs and they've sort of built around that technology stack all this time um there's their um Focus has always been on live Ops and running huge multiplayer games um which war gaming everything they've been doing is has founded from that

right so over the last 10 years I'm sure they've passed on a lot of that information um and I believe wargaming is set up in sort of um studio-led teams where each studio is focused on one game they have sort of more of their own um focuses and changes and they get to make their own decisions so this probably feels like a natural thing where they've got a lot out of them and then actually Riot could still improve um some of these areas definitely with liveops I think Riot also um you know they're just increasing their relevance in in their main titles like League of Legends it was obviously the biggest but they they're just trying to build out their known IP with this sort of technology and who knows maybe an MMO is coming from League of Legends that could be well it is coming it is okay so yeah that is why does it make why does it make sense for Riot it is essentially an aqua higher to bolster the internal knowledge of developing an MMO it's also to support the live

service of League of Legends in valorent um by I think building MMOs is a historically hard and that know-how comes from getting that expertise and people that have gone through the motions and I think big worlds develop supported the development of 30 or so MMOs so I couldn't imagine a team of experts more than big worlds to support riot in the League of Legends MMO that they're developing because there was a tweet I think where they put some expectations management that is still early in development so there are some rumors about the MMO potentially being at risk and it's going to be very hard to develop so this could be a a way to try to decrease that risk and increase the chances of delivering that makes sense it's um it's been interesting to see like Riot really kind of expanding with its League of Legends IP um I I'm not a league player um I did a little bit of Dodo and still don't know what's going on when I'm watching

it um but like I don't know if any of you saw Arcane on Netflix but yeah he's really good and it I think introduced it you know those characters to people who never would have you know you don't didn't need to know anything about League of Legends to enjoy it um so you know they've found some really good partners to do some you know high quality material with their IPs so it makes sense that they're going to build out an MMO and continue to kind of find ways to expand what is becoming our well has been a really dominant IP and what we talk on on this podcast and other people number on it as well often about the oh no consolidation and just giant companies buying everybody and but this feels different this is not like whole 10 cent but another thing it's like oh right I've got it so that Riot can do more that and that yeah I'm excited about like with what they're what they're doing I'm like yes yes bring it on more of that I'm interested similar I'm not a lead player I like talking I'm like yes it's about my IP do it real me in give me more things yeah I'm too late oh sorry you guys I

was just gonna say uh do you think uh you know maybe we're a little bit old to start playing League of Legends but do you think Arcane would have encouraged people to like the younger generation to actually pick up the game or do you think they tied the two together like great TV there's wild Rift as well right on mobile so you've got another entry point there I was actually disappointed with wild Rift I thought that might be a sort of more accessible way into the whole thing oh no no this is still pretty crazy actually yeah I'm just going to ring the bell again for mobile Legends bang bang and if I am eight years younger than uh wargaming Sydney then I'm 22 so that's that's all fine per perfect audience much yeah yeah I think um I just to answer the specific question I you know I suspect it's not going to get that many people moving from not playing League to playing League um you know anyone who's going to be somewhat inclined to do that probably is well aware of it and

um you know maybe a few people will try it out but I think it's much more kind of going in the other direction of introducing an IP to a a huge audience who's completely unfamiliar with it and that helps them build out I mean so you know well it may not leave people are playing League it might lead more people to play the MMO if they can see these characters that they really like now available in a different genre that you know they weren't interested in the MOBA but you know as they build this out into other uh other genres and other platforms and you know probably a movie eventually and uh you know it just keeps kind of expanding out a lot of League of Legends theme park soon I don't know you know it's there's a design problem there isn't there League of Legends character based across the thing MMO okay well hang on a minute there's not enough characters to go around so how are you how is it massive I guess in the universe right but you're not yes it's gonna be that character that you saw there it's based on the Rune Terror Universe from what I understood so that

I'm sure they'll introduce new new characters and in terms of tencent tencent offers his own game services so I can imagine also this acquisition of that depth of knowledge in terms of doing back-end services for MMOs and multiplayer online games it will I don't know if how much tencent has this crossover of knowledge but it could also support them with their expertise so we'll jump into the next topic which might be spicy might not be spicy we'll see um Tom what's going on with magicita sure yeah um so for those that don't know magic Eden is or the largest nft Marketplace on Solana and Solana in recent time has really grown into becoming sort of the number two area for nfts in all of blockchain so ethereum is definitely still the daddy in terms of having uh just transaction sizes huge you know board eight yacht clubs 200 000 um uh per person of transaction uh but

why Solana sort of excelled is it's faster cheaper very very cheap transactions like Sub sub Ascent um and Magic Eden was the primary Marketplace it expanded to capture over 90 of all of the sort of transactions and that's mainly art collections but there were some games coming through um sort of notable new ones there's Eternal dragons which is an upcoming one launched through magic Eden they do a sort of launch program so all of this is going well and um in nft land uh there's basically three ways that people get paid um you have the fee so Marketplace fee um which uh is usually done by the provider of the marketplace you have an idea of a royalty which is for the Creator or the builder of the nft it as a sort of Kickback and then you have the difference between sale price so if I could buy something for five soul and sell it for 10 Sol then I as the user has made five sold profit

and what was interesting is that this royalty segment um although coded into an nft so into the smart contract to build the nft it didn't need at the protocol level to be applied meaning a Marketplace could could ignore it they could um not pay the the royalty for every sort of transaction now magic Eden had been paying royalties he'd been following the best practices but um there was in the last month or maybe two months um there were a number of other smaller up and coming uh marketplaces that just removed all fees they got rid of their Marketplace fee at zero percent They removed all royalty fees they weren't doing the Kickbacks and it was just the sale price now from a sort of um user perspective obviously if you can buy something at Five song ten Sol and pay no fees you've definitely made more as a user um but it was a very unsustainable model so uh you know the the most uh

widespread one was one is called Hades uh dot IO I believe um but what was interesting is just how quickly it accelerated so from a sort of market and we're talking uh in the region of sort of 40 to 100 000 transactions a day um on Solana at the moment uh you know it definitely spikes uh Hades was capturing 30 of that and it did this within a month so from from unawareness to being awareness you know it's capturing a really reasonable portion and it forces sorry just like a question along the way um you said it was an unsustainable model like do they have any sort of Revenue or is it just like Advertising based or at the moment my understanding is Hades didn't have any um direct Revenue but often these uh the marketplaces still collect uh actual um nfts themselves so say they launch a platform or new project they'll ask for

you know to be given a few of the nfts or in promoting they have Bots that could Arbitrage away so there's ways that they can play their own system to sort of fun fund but that's a murky area I'm not exactly sure what has or hasn't been happening but it's possible um but the most interesting thing is for my opinion is the defensibility here so we had something that had a 90 market share had a reasonable UI ux very great experience good customer services lots of people using it the majority of users using it and then within a month they'd lost 30 market share to an upstart with terrible UI who just completely undercut the fees and they had no defensibility so this was really interesting because I sort of relate it more to like an eBay um where it's a kind of network effect Dynamic where if you're eBay and you uh you know you're selling let's just say bikes um you attract people to your

platform because other people are selling bikes and if you go to the place that's selling the most bikes then the bike buyers are also there you can command higher prices on your bikes because everyone is looking at your service for a competing service to compete on bikes they need to attract all those old bikes or the or the sellers and they need to attract the buyers at the same time and it it's basically quite defensible in a non-web three area where the overhead of importing and putting up things like bikes or whatever is quite difficult in an nft land though it's incredibly indefensible because the nft is um just a pointer essentially and for a Marketplace to create you know a section let's call it bikes in nft it's it only needs to read the smart contract uh interpret it and then it's create a whole storefront for that particular nft type and this is what Hades was doing it was ripping all of the collections that magic Eden was having putting them up there and then selling them a discount and users were

responding they had no allegiances sorry to Magic Eden um they were moving the nfts off magic here and putting them on Hades just to undercut and so the main story revolves around magic Eden coming out and scrapping the uh the royalty segment they said royalties are now optional so if you as a Lister of an nft you can choose to ignore basically the royalty or pay the royalty um so this is sorry Tom this is why I didn't understand because I thought it was the buyer whoever lists wait if someone created an nft they could have a royalty attached to it but then it's up to the buyer to decide whether they want to pay for it or not well it was usually up to the marketplace to enforce that royalty so say on openc um when you click to buy a nft it will say you know 10 10 10 ethereum plus two

percent fee for openc and two percent fee for the Creator and that was called the royalty now what I didn't realize is that this is not protocol enforced meaning that's interesting yeah the in the nft um uh config you know however they've been scripted this particular section is just non-enforceable by the by by the protocol so the protocol won't read or listen to this idea it's it's up to the marketplaces to implement it now up until this point all the marketplace has had and there hadn't been this Competitive Edge but with these high transaction volumes and Solana seeing huge numbers of like transactions basically compared to ethereum this undercut was a lot faster a lot a lot more yeah with no planning just happened and and it's really showing that the users didn't care you know if I thought about like that's a bit like saying you don't

want to pay the artists for their fees you know that but they just wanted the cheapest nft and I think that's important to understand that like um you can't if you're creating a new project and your business model is designed around well we want to take quite large royalties because you know we're important we've maybe paid Snoop Dogg to like be involved here and that's part of this this isn't enforceable in the layer and very very quickly your entire business model could be evaporated when you say royalties does that include for example in a game economy where a Game Dev releases an nft and then the game um the game monetization is each time it's resold on the secondary Marketplace they get a percentage is this the royalty fees as well exactly yeah so because so yeah those three three ideas the fee is the marketplace charging its own fee no matter what happens they can charge a fee on if it gets sold but the

royalty it can be set up in multiple ways so two percent of all future sales could go back to any owners of an nft the creators of the nft a white label address like a trust fund you know it can be quite complicated which is a good idea because um just like any business uh or or stock or share or it's like a dividend for instance you know it's it's a type of financial idea that could create some interesting outcomes and usually is about funding and kicking back into the project but because it's not enforced at the protocol level it's completely redundant as shown here so I imagine you know people are aware of this and um we'll see an upgrade to the ERC 721 which is like the classic nft um script uh both on ethereum and probably on Solana but how they do that it's I'm not technical enough to understand that so well isn't the more surprising thing that this didn't happen sooner then this

yeah yeah I mean it's maybe something where um it's a faux pas right it's quite socially unacceptable to just take someone out of yeah I'm not going to do that um it's like not tipping at a restaurant maybe where yeah it reminds me of other uh battles right which go on where usually people are hoping to secure Monopoly and be profitable in the future so I still remember the video streaming battles of like 2007. and YouTube one because they didn't have any adverse yeah and everybody else had adverts so it was like okay yes YouTube you and they had no interest no others no of us they're like everybody gone everybody gone great same with like uber for instance right you know yeah take over a market get everyone using your cars then increase prices it's like a I can't remember what the type of capitalism it's called but you know that's a definite model

interestingly though I always think about this so apple and the app stores right they charge their 30 fee and you're as a developer in some ways inclined to pay that right they provide a service they are good at what they do they promote you they do all the downloads and upload costs but what's interesting about nfts and and blockchain is these Services these windows of marketplaces they aren't the blockchain they don't they don't provide the back end for driving the transactions they don't provide uh you know the costs of of funding that blockchain they are just Windows to view anything on the blockchain and as such they out-compete themselves very very quickly so um it just makes it very hard to make a defensible model um one thing to think about so I find it very interesting from the from the Gaming's perspective where obviously you want your nft collection to be viewed by lots of people and spent and invested in

but because of the ease of creating these marketplaces you're you're probably your best bet is to always try to make your own keep it yourselves keep the revenues keep those fees if you can charge any at this point because control is far more important than availability it seems like controlling where things are and I think that's what axi and I think step in is another good example where they looked at what was going in the market and very quickly responded by we want full control we'll make our own we'll do our own things so yeah yeah I don't know what yeah I I I'm always quite aware that I don't know if nft as an idea will survive I think it will have to evolve because there's so many Oddities around it you know for instance even on the artist side the image isn't really included in the nft you know it's actually just a link to a PNG somewhere which is madness you know you're really paying a lot of money for not actually even an encoded jpeg or or anything so you're going to

say Anthony I was gonna say yeah that yeah there really are a lot of interesting um stories there um I yeah I like you I did not realize that the Creator fees were not enforced like we're not enforceable by the smart contract itself um it sounds like that's not the case on ethereum or Solana or anywhere um because I was originally thinking oh well this is the reason that people just abandon Solana because they'll go as creators to whatever chain has support for enforced fees um at least as a Creator that's what I would do um but uh yeah the defensibility is really interesting it feels it's I mean it's like a Commodities market right so it's not that you're selling things that are better than someone else or um it reminds me a little bit of maybe of like travel websites like you go to Expedia or Travelocity or like they're all selling the same flights um but they'll I mean they try to get people through advertising and name recognition uh through rewards programs through ease of search like you know it's it can be very difficult to find the right flight you want and I will

pick a place that has a better um user experience because I need to find the thing that I'm looking for so I guess that'll be what they'll have to move towards um because yeah the race to the bottom in terms of costs obviously is extremely effective um I think your point about you know the the marketplace having so much information about the nfts and being able to profit off of that is is really interesting like that feels like they could easily do that because they will have um a lot of that access faster than I mean when you're flipping nfts and specifically looking for like someone's listed it ad they've left a zero off their price or something you know you want to find that faster than everyone else um and they'll likely be able to have a slight Edge on that um but uh yeah I mean this is this is exactly the what blockchain you know it's been talking about is like it's wide open non you know decentralized anyone can do it this is this is what happens you know it's um and the people entering the the

system need to be aware of that and remember that you know I I respect magic Eden for her and and others for having paid out you know just sort of out of um you know good character or however you want to to put it um but uh yeah you're always going to find someone who's willing to just undercut if it's possible and and now you have to find a some other way of of Defending it yeah I wonder if there's also some behavioral psychology at play here to make that position less defensible because if it's a small price point and you're paying uh I don't know a 37 fee on a small price point the value that you see are losing your brain might be able to process that of yeah this is acceptable this is okay but when you're buying nfts of I don't know 300K just these values where when you see the amount that you're losing it's a bit like if you look at your income statement and look at how much you're paying in taxes it just physically hurts

to see a number that big that you're losing and then you stop caring about customer service and what the experience is like if you can save that money um you'll go to to the competitor I'm just I'm sorry well I was going to take a little off topic with uh I find this similar to Airbnb whenever you know you have the cleaning fee and you have the Airbnb fee and they break it out now and it's getting to a ridiculous point I don't know if anyone's looked on Airbnb recently yeah most cleaning fees in the like 70 plus which for me you know you're renting somewhere for two days or something it's ridiculous cleaning so I imagine from a user experience perspective like you're saying Maria about um your income statement it's it's not going to work we're going to have to see an inclusion of any fee into the final buyer price and then how those fees are divided up you know is depending on uh on on on protocol level

uh ideas of when the thing was minted or even just business to business relationships we might have to go back to contracts and just being paid back directly unlikely in web 3 they'll work out a technical solution um but yeah it's going to require some changes on the Block and blockchain from I imagine there will be a competitive Advantage potentially to the chain that does it first because maybe the creators will move to there just the arising I'm I'm just surprised that this is not enforced at a protocol level because wasn't it the a principle of web 3 that you keep ownership of your creation and you'll always be rewarded from you know starting point a and then it's going through the community it just fills counters to what the principle is and I try to dig into what that meant and why it wasn't and I haven't been able to technically understand it um it might just be a Solana thing I'm not sure if it's exactly the same in ethereum again though I'm I just know from

um magic Eden that they they called it out as as solvable from the protocol level but the final point is really interesting so what magic Eden then did to compete against this and they've now got back their 90 share is they turned off their fees so they say oh there's a sort of benefit for everyone there's no fees they also you know made the protocol uh for Kickback uh to the Creator optional but they've now lost that Revenue stream everything now on Magic Eden has no fees when before they were losing some percentage they've lost all of their income Revenue so how do they go back from zero percent up to even any percentage even half a percent might feel like a lot to people nowadays so it's it's a bit like the race to the bottom for uh app stores and free to play when we were like five dollar apps and you go down to the 99 Cents price point and then you went free and no one can imagine now if you're a

reasonable um you know mobile Creator you have to be targeting free you know I mean to to make a business model on 99 cents is far more difficult or at least very very niche in what you're targeting and so thus you know the same might be for marketplaces now they they need to look at other revenue streams well marketplaces have existed before crypto you know where you sell used goods and you can pay to be placed in the higher tier of the presentation so yeah that's a good point there are non-crypto businesses that have achieved this so exactly just as an inspiration I'm serious like how many people sorry how many people go to a crypto Marketplace to browse like you know when you're absolutely right when you're trying to find the best vacation or what car you want to buy or you know which couch you want to get on Facebook Marketplace like you know anything that you see first is going to matter but um you know maybe eventually it'll

that'll switch but I I just have a hard time imagining going to a Marketplace and not knowing almost like I'm just gonna buy an nft today let's see which looks cool like you know I um that's a great challenge that's a very good challenge yeah yeah makes us that makes sense um does anyone else have anything to add on this on this topic so where we have other deep topics what there's one tiny thing but it's I don't think it doesn't apply here but there's a there's one world I know of where you have optional uh ability to pay more and people do do it which is this thing I have personally as a case study at a theme park where you know they sell you a photo of you on the ride uh and they do they take all the photos and then I do want to buy one it's like 15 bucks and people like it seems like quite a lot and then they did a test where it was like Pay What You Want and that didn't work out and then they did pay what you want and half of it goes to charity and that way they made more money that was the winner so literally pay what you

want but half of it goes to charity and that turns it around and then the same thing that comes up kind of in The Humble Bundle right they sort of dove in on that and then you get into more things like patreon where it's more of a relationship and like I want to support this person so okay there is an aspect of human benevolence where we will choose to pay more when we don't have to but we're talking about a marketplace where the prices can range from three dollars to 300 000 or whatever at the I think there's a limit to that um all right uh yeah yeah so to come back on this so this was actually the newsletter but you know it was why we're everywhere but meta Quest announcements what's the next thing what are they doing now they've got legs okay yeah now there's a Pro headset and it's 1 500 wolf quite a lot okay but it can do all these cool things uh uh and then there's like oh and there's this game pass feature in it uh and I did get my

attention a little bit and then I was disappointed but uh so just to go into that a little bit so the interesting thing here it's a little bit like what we've just been talking about right when you want to produce a new World a new ecosystem of some kind where people are creating things and consuming things and values being created for everybody all around right it's just a massive chicken and egg problem because no buyers are going to come if there's no sales no sellers are going to come official buyers uh you know like we talked about eBay for bytes like well okay if I want to buy a bike while I'm gonna go to this place where there's nothing so okay right away you you have to solve that and of course this has been done in the past in various ways but how do you do it when it comes to Hardware specifically it's like it's not just a chicken and egg problem you know it's like chicken egg and a ham house and hey like that you have to have all of these things working somehow yeah right and then and then people who

want to buy eggs it's just slightly stretching the metaphor too far really but uh it's kind of true there's like you need loads of things to come together it's really really hard uh what I liked about this is it reminded me of like probably the closer to the best prediction I have made right I'll pick myself up here the blog post is down but you can still find it on archive.org I've got to dig it out and repost it so back in like 2008 uh Sony had the PlayStation move controllers right and 3D TVs were coming up they were going to be a thing I was like ah wait a minute there's a cool thing here actually because you could have 3D AR games and Sony have solved particular neck problem they've already got the hardware the TVs are coming they've already got the interface that you would want because it can recognize where you are in 3D they've got so many other pieces already that they could just make the sphere thing and the killer app is going to be that your move controller becomes a lightsaber in my hand

now of course I was totally wrong about the 3D TVs because the 3D doesn't work that way it's not coming out to you in your hand it was a vague thing in the background so that didn't work but right then Along Comes VR and beat saber is the killer app and I'm like yes that I kind of kind of I was kind of there uh so I'm thinking about that again right because okay here we are right it's another punter VR well what other ways of solving this chicken leg problem and so the software side right what are you going to do well okay you can just buy Studios to make the stuff for your new platform which matter have been doing and then antitrust shows up and goes hey wait a minute you're taking over too much of this nation market and argue with two Mason friendly just to get involved because I haven't even started but it has started but you know anyway that's a whole other topic then you've got free games and they're free to play model because okay there's there's lots of possibilities there and VR chat right is

huge and free and there's loads of that value creation going on so if you've got that and your headset okay already a bunch of content has been solved for you there's people making it right now and it's free for everybody uh there was by the way this implied thing and the way they presented that the reason the headset has to be expensive is because people are getting all the value out of these free games which Mecca doesn't see any of the revenue so they wanted to make Rarity from the headset if they didn't say that directly but it's what it sounded like it seemed kind of weird to try at this stage anyway but then what I never thought of before is there's a third way which is like oh what about subscriptions what if there's a subscription for games somebody already has and you go oh and you can also play those games on this little bit of Hardware so right away some of that chicken leg problems gone away it's like oh I could buy this and there's already things I could do on it so it could make sense and that way genius the disappointing part is that well no but they're not VR games we're playing it on a virtual screen uh and

like the metal Quest Pro headset it's like a surf up in a lot of ways I think it's still not like virtual screens are cooler than real screens not not not yet so that was uh you know a bit of a down on that idea but I'm still quite excited by how much they're bundling in up one more thing on that solving the chicken maker is also the fact that the headset is the complete solution it's all there you don't need a pipeout PC as well you don't need to monitor you like you just get this thing and it's all there that's all that solves some of it as well so I'm quite impressed but still not enough impressed that like this is going to be it yeah yeah the the quest definitely onto that last Point um was the the first time I thought you know this is truly going to go mainstream um I I had been interested in VR for a long time but even with my interest I was often not using it because I had to like string wires up across my ceiling and boot the computer and try to get to work and like it was

just a lot of literal overhead I suppose um and uh you know not to mention having to have a big computer but my quest I've taken to bars and coffee shops and just had people like trying them out there and um so they really did solve a lot of that accessibility and price points now down to a console um so that's certainly a lot better um I The Game Pass idea is interesting um you know I like you were saying is it's kind of like a Amazon Prime where like all right you've got Prime subscription now you also get Prime video and Prime music and Prime music exactly but um you know just sort of expanding the value of the core subscription and then you know everyone you know pulled up Prime video because now you've got a ton of content there um I guess the the challenge here is that you're not getting any new content from it this is all stuff that you could just be playing on your computer um or on your your uh Xbox and then you know VR is it's very isolating you

can't see anything around you you can't really share it with people and um I feel like that is something I'm okay dealing with in order to experience some of the really good VR content but um to just do like I mean I'd rather be playing on a steam deck or something uh than a giant VR screen just because it's it just feels a lot more like I'm still in the real world and um uh yeah so like you know if it were a bunch of really great killer apps if it were like all steam VR games now suddenly worked on quests or something like that could make a big difference um but yeah I'm a little skeptical about how well this is um going to work um and also a little surprised if it's Microsoft's is Microsoft still doing the um uh Collins like weren't they I haven't heard about that in a long time okay I mean it's just like you know if they were working on their own kind of VR AR stuff it'd be you know it'd be interesting to see if this was sort of a predecessor to you

know them giving up on that and moving over to supporting Quest Pro or something but maybe it's not a threat because they're like well this is just a giant screen with our things on so it's fine well they've gone into partnership right this was the big announcement yeah it is a partnership yeah where and I think the interesting bit of this story is that partnership in the sense that Quest might have found out that they can't sell it as a gaming you know peripheral to Consumers but they're looking at this business opportunity now where virtual meetings and and everything like that I don't know if anyone saw um Carmack unplugged it was called which was sort of on the launch day it was two hours of John Carmack in meta virtual world on the VR headset just talking about what they'd done and everything and he you know it's a very interesting technical guy I didn't know Holds Barred basically um and you could see this sort of people

watching and you know it was it was live and and everything was unscripted um and I could see the value there right you know I could imagine going to see a famous CEO and watching them in a sort of VR with attendance you know like an Apple event let's assume I went there and I'd be in attendance I could walk into a room and watch the keynote I could walk out and I could demo in VR their new devices definitely in the future I'm not saying in the next year or two but um that's I think more where they're pushing towards like reality gaming uh sorry reality non-gaming where um the the interests and the ideas of putting on your quest are to be involved in a social environment um you know there and and that that felt very interesting to me yeah some people don't uh buy it but I feel like there is a possibility there like we've just been through this whole thing of the pandemic of not seeing anyone and doing on calls and then

getting back into offices and seeing each other again oh how much better this is like okay but exactly why is it better and how much of that could you solve with a VI headset and I feel like it is less than people think like for example I think eye contact and exactly how that works is tremendously important okay and so the metaquest pro has eye tracking uh right okay so maybe you start to solve that problem a little bit uh I feel like you could get a long way towards that and sure when you're talking about 1500 headset immediately you're sounding like you're talking to businesses uh anyway so just possibly that makes sense yeah my only concern about this potential future is accessibility because I know quite a lot of people cannot use the VR headsets yeah everything else before with the the Nintendo 3DS uh right I have 3D capabilities and then I I believe the way it went was they said oh okay no nobody's allowed to use the 3D in a way that matters to gameplay because then

we've lost accessibility thing and you're like okay well I think what are we doing now then okay yeah well they have that yeah just turn it off yeah yeah yeah how much 3D like all the dimensions the 3D part like looks like more of a problem with an opportunity right like I get another chicken and egg problem 3D in cinemas right they took a massive go at it okay we're making the films in this way we're projecting it this way we're doing glasses we'll do the whole thing and it was pretty big for a while and still it's like uh no not really um so yeah I I think um meta should take uh more reference from Peloton I think their business model could look more towards highly expensive Hardware that specialized um with a subscription model to an environment um where people come together to do something now obviously peloton's all about Fitness and I think that's a very good one you've got competitive levels that you know that Hardware all links in

I don't know if any of you ever do cycle across or um CrossFit where you're on the bike and your RPMs are all being competed it's it's a lot more interesting than just going to the gym um and I think what Peloton did do well at first is they had these bikes which were expensive but you joined because you wanted to be part of this community that helped you feel or realize your fitness goals and in the sense like VR being owning that VR headset could be along with this subscription where that subscription could then pay for meta to fund a load of free games uh um a load of free events like um uh music music uh sort of venues where you could come and watch a live Act but you have to be paying that subscription and you have to have the headset but once you're in there it's a free environment so that feels to me better than say the App Store model where they're sort of saying oh anyone can put anything on it then

you pay this little bit extra and you know they haven't got a quality bar in the same way as Peloton had or Quality Bar in the same way say like apple Fitness has um so yeah I think that subscription model should be the way they go but if we're if we're talking I'm sorry I know we need to go to the last topic of today um if we're talking about accessibility I is the it is it is paying 30 to the App Stores a lot it does feel like a lot and yet it's a barrier to access millions of people who everyone everyone owns a smartphone you just get access to the audience so you're paying a fee to get access to the audience but when we look at a high luxury product because this is a luxury product and you know peloton's stock is tanking because I have high production costs and they have low retention um I'm not you know it's not about Peloton so I won't go into it it just shows how that model can be quite fragile when compared to try to get your

product to as many people as you can with a lower barrier of Entry but what do you think the only comeback would be that the hardware right so a phone they did a interesting thing where phone Dynamics just got so cheap that everyone had one and then you're right like the App Store became important because everyone's there but with VR at least I know you know one of the main barriers for me I just haven't bought it because it's expensive and I don't see the value so if I can drive the value of that cost with a premium subscription that I want to be included maybe it could work to bootstrap it and then maybe you know cost Dynamics change over time because you can sell the hardware at a loss even yeah or cheaper yeah yeah this is what like Sony and Microsoft I think did usually did with their consoles right at least when it was first launched they would sell it for less than it cost them um make up for it in royalties and first party games and then over time you know it's going to become cheaper um so it's also a bit of a bet on just

kind of the future of of tech and pricing but um yeah I think so you weren't saying that they should be increasing their prices and aiming to like more in the thousand dollar range is that I'm thinking that um you know they can go for if I mean the quest Pro is 900 right I believe somewhere around that so they've already pushed that barrier up for this very powerful piece of kit but what I think the Peloton bike did right and that's what I meant is they attached that to the subscription service and then when you were in that subscription the bike excelled you know it had all these extra features and the community had all this ongoing elements and it felt very curated and if you've ever used a Peloton you're like it's much better than any other bike but it's damn expensive so I wonder whether that could be a route in where this this sort of subscription gains you all this access within this VR world that meta has curated

um rather than it being third party where it's you know drop in drop out load up an app it's completely different look and feel and and everything like that we have to go into the last topic for today let's do it yeah honey okay um so the last topic is kind of a two-parter um there's been a little bit of um voice acting drama recently um in in games uh in movies um so you know one to mention is that uh the Mario movie was they released the trailer recently and I think everyone was a little surprised to hear that Mario was Chris Pratt and really just sounds like Chris Pratt and you know this is really surprising Charles Barnett has been playing the voice of Mario for like 30 years or something um and so everyone was wondering why why not go with the actual voice of Mario um so there's a lot of drama around that um and potentially dig into that but then also just recently there's been

drama around um Bayonetta three where the original voice actor who is uh Helena Taylor Taylor uh did not renew with them for the third um in the series and just I think the game's going to come out like in a week or something and and just a few days ago she put up this series of videos saying that they had offered her an insulting amount of money something like four thousand dollars for the whole roll and that you know kind of appealing to fair pricing and treating voice actors you know better and um and so uh Jennifer Hale who was the voice of um Shepard and Mass Effect among many others ended up being hired for it and um you know she's kind of historically been a big workers rights activist and so it was kind of interesting that she went in despite this question about pay um but now Bloomberg has come out and

done some research and it sounds like maybe um Helena Taylor was offered quite a bit more than she was representing uh so there's all of this question around those um so I think actually let me let me stop there for a second and then I'll go into the the AI side but um just curious as so you know what thoughts are around voice actors I I have not worked with a voice actor in a game before um so I'm not as familiar with that world but uh it's there's a lot of passionate people out there about this right now well I mean right away it makes me think yeah I think it's probably the least interesting part of it but that Paradox of choice between the authentical very best voice for the character versus a famous person that you're going to get people in the door just because it's them like that's been going on years and years and years right like Disney or having this debate Robin Williams is the genie and he said no but you can't make me the main thing in promotion and they found a way to do it and uh recently I think they probably do that actually going the other way with some really great you know casting calls and finding

the perfect voice for a character that's amazing they're going straight to Disney plus so you don't know what the box office effect is anyway but yeah that tension is always there and it's not going to go away I think it's interesting I mean but I mean Mario is a bigger name than Chris Pratt like you know you've already got all of your your IP and your followers and everything um I did see someone post an interesting point which is that an hour and a half of the kind of squeaky Mario voice might be a bit much um it's a great personality and great character but you don't usually hear long monologues in that voice yeah um as you're playing right yeah exactly um so I mean maybe they did some testing and just realized like that's not gonna work and that's not what this voice was designed for it was you know designed for quick little Snippets um and and you know martinette's done a fantastic job of that but uh yeah maybe that was a big part of it too I don't know what do you think um Amara is an

interesting voice as well that do you think the voice actor of Mario is a single person or is it multiple people over all the years I think it is a single person um you've uh you can see like he's probably in his like late 50s now or 60s um but uh he I saw an interview with him and he talked about how they had approached him you know way back when to do it uh they may have had someone else filling in occasionally but my understanding is that he's been the majority of of that character uh over the I guess was it Mario 64 I think when they first had the voice um yeah but yeah I think my oh I shouldn't go into this not that's not really the topic here I think my main issue with voice acting is that you also need to have cultural sensitivity if it's a character a character that looks in a certain way or comes from a certain background or you should have a voice actor that that matches the the character and it just feels a bit

awkward that I don't think Mario was always meant to be you know with an Italian voice that kind of happened with that way that it has some Italian accents to how people remember and say sort of Mario quotes she just feels a bit odd like why not get a voice actor that's closer to to the character anyway uh no fair point um so so transitioning then though this starts to get um really interesting in so I mean right now one of the biggest topics probably the biggest Topic in Tech is is AI and um you know we're all seeing what's coming out of like Dolly and stable diffusion and um you know it's not there yet but it's definitely coming along rather rapidly uh but you know visuals is certainly not the only place that AI is going to appear and is appearing uh and so right now there are Services um like uh replica Studios and semantic.ai

which do full AI voice acting so you can type in your text and choose the various voices they have and then the voices will read them pretty well uh you can tell it's not a human but it's not bad and I have little doubt that it's going to become almost indiscernible from a human within the next few years so you have full AI voice acting and then you have things like voice mod which will in real time replace your voice streamers have a lot of fun with this but it also means that you know I could be Chris Pratt in in a movie or sound like Chris Pratt in a movie um without actually being Chris Pratt and so you know questions there like you know what is the impact going to be on the you know first the voice acting uh community and uh and those those employees and then you know second is like you know Beyond just sort of replacing voice actors if that's what we want to do like what else could AI voices actually add to games

um where the kind of like the two big questions I had well if we look at the cost of creating a deep world that feels real uh we once discussed here on the podcast I believe it's called in World AI it's a company that's fully focused on building AI uh NPCs that feel uh feel real to populate digital worlds that are expansive with lower Dev costs and this is where I see it coming into Play Because voice hearing someone in a game say something to you and a voice is a completely different level of immersion as having you know Final Fantasy times uh a pop-up that has a lot of letters to to read but it has a huge amount of costs to to develop and even if you're walking through a sprawling City and you're going through a bustling Market you want to hear the Little Voices having all of these discussions again that comes with the cost so I see that this is a potential of of AI I'd love it to come to Indie Games because I I love Indians as well I do a lot they're always the

voice is the bit where it's like oh I just read this and absolutely amazing game and then just weirdly silent there's just this text from this character now okay well they're aliens they're probably not speaking English but I just the idea that that could become cheap and anybody could put it in yes yeah all right because that's it it's a price thing right from an indie game perspective the one of the first things to cut back on is voice and even um you know even from the size of uh the creating the files is also a lot of uh headache you know it's like waves you know what formats and things um I know uh that when um I've been looking at adding voice and I still work with a few voice actors we have gone with cheaper ones who are sort of like a company and they might have one guy who will do five voices for you you know and just read various scripts um and they added a color like a lot better than having no voices but we had to definitely look at our pricing and

just sort of see what we could afford um so I think AI immediately comes in so definitely there's unknown voices sort of surroundings or you know a shop seller maybe it just comes in but if it's the lead character I would imagine people might start to take issue with that you know a little bit like when we had uh the mid-journey winning the art contest what if we have an AI character created that is completely made up and people love her or him you know then I think it sort of you you're brushing that barrier again so um I I've been looking I I did a quick bit of research about the legality here so um in if you are impersonating someone so if I could do an accent of Samuel Jackson I am not there's nothing some of our Jackson could do about that I'm standing here making his voice of my voice recording it I could say anything the

only thing that I can be uh in trouble for is if I uh make a deflammatory comment so if what I say the words that I say are bad towards Samuel Jackson then that could create a you know a legal issue but the fact that I'm impersonating him has no issue I could say complete nonsense like reading a shopping list is Samuel Jackson and there'd be no recourse so I wonder if that's true from an AI perspective because an AI isn't actually impersonating they are making or creating the sound therefore and are they responsible you know you can ask an AI I think there's a really good example here of Joe Rogan meets Steve Jobs where there's a podcast a 20-minute podcast and I recommend listening to it where they both sound like the two characters Joe rodency jobs but the content the words that have been said were made up nothing was recorded or taken the whole interaction what they

talk about is an AI just generating it and then is that impersonation that's just creation right again and I believe that says a lot of minefields basically from a legal perspective what there's a there's a question I can also look at that that might be related what we're about Symphony but the it was quite recently that James Earl Jones sold right or sign of the rights to the Darth Vader voice at 20. I think and I was like did he have to do that or could they have just done it so is it different when it's a character's voice that you're impersonating versus a real person real person of course character's voice is that owned that was very unclear to me I wonder if it's um like a training based thing like they they can use his real voice to train because if you if you're training off of a voice then you're sort of like remixing samples in in a way like it's it's messy but you could at least I think argue that um whereas you know if you're just

synthesizing it and just sounds really really close but you built it from scratch I mean it'd be like um you know just sort of figuring out the recipe to Coca-Cola like they I don't think they can sue you if you just happen to make something that tastes really really similar um as opposed to actually like stealing the recipe and using that um so yeah I mean lots of interesting legal side um I I was remembering Red Dead Redemption 2 I was trying to remember the number and I found it they had 700 voice actors in that game wow so um yeah an additional 500 motion capture actors uh so like I think they were like the number one employer of actors for a few years in in Hollywood um so uh yeah in terms of scale and scope and everything to be able to have all but like maybe the top few I think your your point was interesting like if we may want the top couple of of characters like maybe Joel and Ellie and um last of us are still voiced by humans who can add like just that extra bit of of

um emotion like a you know a human piano player versus a AI piano player but if it's not one of the lead characters I I have to think that all of those other ones are going to start being AI voiced um I mean not only is it cheaper but I mean the the ability to go in and adjust a line of dialogue late or rearrange I think oh yeah it wasn't um I think they changed the name of one of the cities in Red Dead Redemption too um I don't know if anyone remembers this but for some reason a city had to be changed and they had to go back and get I don't remember how many voice actors to re-record all of their lines that had the name of that City in it whereas if you're using AI that'd be you know find replace you're done so it you know beyond even just cutting out the cost of The Human Side the development time and flexibility is just tremendous how much of a difference that is yeah um so

I'm not sure we'll get to a point where actors for the main characters or the characters that have most impact in the game will ever be substituted by AI because AI is very weak machine learning is very weak in understanding emotions and the relationship with the voice actor and the characters you have to cross that bridge between the emotion that they're trying to portray in game and how the actor is you know doing the voice acting and if you're working with an AI you can't have a conversation really with AI and say oh just you know put more power and emphasis and more emotion into that you're going to turn a dial right you have what little dials of frustration anger love and I don't think that's inconceivable no I feel like that could be oh there we go I wonder what that noise was the like I it's generally not gone well I would say to bed again say I it's generally surprising it's like I was thinking about this in terms of uh why even get

Chris Pratt you could just do an AI Chris Brown but uh it's one thing to read something in their voice it's another thing again to do their choices of how to do that line and the comic timing and all of these things that makes an individual successful the an AI that just replicates The Voice is not going to do that but why well what if it could let's get sci-fi right what if it's or if what if an actor what if an AI voice could do it and could do the comic timing better well is that inconceivable no I listen to this Joe Rogan Steve Jobs podcast they can do it you know they get the essence of the voice and it comes across in the podcast it's ever so slightly um you know uncanny valley where things are a bit weird but at its core it's it's a it's a it's a realistic uh tone and and and and and focus what I actually thought because I've been doing AI uh artwork so I've

just been learning on it and I think what AI could be used for is to generate a vast array of sentences that you could then listen back to and pick through what you like so what AI is very good at is just quantity it can crack out lots of things but it's not always getting it right but certain times it just gets it perfect and you can pick through that so I could imagine a contract being given to a voice actor to say a hundred sentences that you know hit all these ketones they give the rights to a character for I don't know some amount of money then the team uses that to generate an AI that they then script and then they send all the scripted vocals back to the voice actor who listens and if he doesn't or she doesn't like them would re-record that one sentence and send it back essentially speeding everything up uh allowing the team to get what they need to do done giving the voice actor

you know credit and credibility for creating the voice in the first hand and then giving the voice actor the the right to give back their voice as they see fit now that might sound oh you're undercutting the voice actor's time well what happened if the voice actor could now work with even more Studios do even more characters provide even more feedback they only have to read 100 lines think of it that way around then as a voice actor I'm now a hundred voices in in this at the same amount of time as it's taken me to do you know maybe one one game so that's where AI in my head starts to work now there's definitely it's not there right now but um it's happening so fast it's just an example of this thing that's the real ideal for me it's not I think it's not naive that the very best stuff is going to be AI computers working with humans together yeah you get that cooperation working right you've got it the best plan it's even really good in chess which surprises me uh just just to go ahead and make a huge bold BET right and this is what I'm

saying it goes all the way out let's say where are we now okay 2036 Disney Plus watch any film with any actor in any role that you want that's what happens I think I think just uh when we discussed about Dali and mid-journey and the in the archive line of game development I think you can take 80 to be AI time but you'll still need a 20 to take it to the Finish Line with the with the humans so you'll accelerate your development you'll reduce your costs but you know maybe you need one actor who's doing the emotion and the intonation um sorry I lost the the word but then the AI can do multiple voices so you can have one person doing all the kinds of voices that you need but if we're talking about AI being able to portray emotions accurately I think at that point we're talking about the singularity potentially and I think we're so far away from that but it doesn't know emotions it just knows it's

accurately represented what you've told it to do so yeah I I feel that's where it it doesn't know what it's doing and it's always a curation process so I've always felt AI now has the idea generation down you know it can do everything so much but it still can't curate correctly like if you ask an AI write 100 sentences pick your most emotive sentence there's no way it could understand that concept but you could ask a human to go through this 100 AI sentences most emotive one and and you would get in the top 10 I would imagine with with a lot of different um checks so it is a tool AI is a tool how you utilize that tool you have to have innovative ways but the humans who understand that in their industry and I think this is really important it's very interesting specific um I can see in game design AI being really useful balancing uh testing even

playthroughs or run-throughs of level designs you know and I'm not I might be taking somebody's job in some sense like there's a level designer who already is doing that but I'm not taking away the creative side or the emotive side I'm taking away the The Brute Force checking of levels The Brute Force creation of playing 100 levels with this tank and what's the balance of his of the damage so that's difficult but good companies will see and leverage that to an advantage in their Niche and I think that's important that if it's still in that Niche phase of AI and figuring out how to apply it to that Niche is whether where the value is I think this is a really good point to wrap up today's episode because from why I've seen AI in a topic could be discussed in a full in a full round table and we've started to see a lot more content around this she has always such an interesting topic to dive into yeah if you want to add your ideas to

this discussion and you can find us on the navic Discord and thank you all for joining us lovely to have you here we'll see you next week foreign [Music]