Xsolla on D2C's growing momentum and its biggest product wave yet

[music] Hello and welcome to the pocket gamer.biz podcast and today a special episode sponsored by Exola a company you're going to be heading into a lot at Gamescom and other events because yes it is the name in direct to consumer. First of all Chris Huish Exola president great to have you here and and great to see you again. How you been?
Thank you Peggy. It is a pleasure to be back and it's great to see you again as well. We've done a few of these together over the years. I've been great. Things are going really well. Thank you.
I see that on the announcements by the way. And and yes, we have been meeting at Pocket Gamer events doing interviews. I would say we can almost say a little bit of an OG thing going on here because way back when before DTOC was so hot when we were all talking about it, but we didn't have the structure and we didn't have the strategies in place. So now we can talk about where it's really headed. So I think that's exciting.

Absolutely.
So to get on with it, maybe a little bit of background for people who don't know you, but we do have Pocket Gamer episodes from before. You know, you've worked at Sky Dance as EVP of interactive and head of studio. Servios as head of studio, DreamWorks Animation as head of global interactive. So you've seen it from both sides. I'm going to assume that that really plays a role in what you're shaping and doing at Exola. Now,
it really does, Peggy. I've been very fortunate with my career, even going back to Activision when it was only about a hundred people in the early days and through many, many years, over a decade of growth. You know, I've been fortunate to see all sides of the business from being in the trenches as a designer and producer developing games hands-on myself to running portfolios and slates to being in media companies, being on both sides of licensing, mobile, PC, console, direct to consumer, retail, all of that. So, I've been really fortunate to see all these different business models over the

years, all the different genres, and being able now to really lean into that experience at Exola, where we really do provide all the things that studios and developers need to bring their games to market, to launch them, to scale them, to build better relationships with their players,
and understanding the importance of relationships long before I think many studios did for that matter. you know, they knew they had a player community to cultivate, to nurture, and to keep, but you they weren't really necessarily thinking about the direct to consumer process. You know, it's not just payments. It's much much more. And that's what you do in the web shop ecosystem. If we can just get to that, why Exola brings together these four areas. I mean, engagement, monetization, operations, that's different. How is it different to how we were thinking of this before? Because before it was really like, oh, direct to consumer means I can take money, right? It's payments, but it's more than that.

It really is. And, you know, a lot of this is informed by the fact that, you know, not only have I been an avid gamer all of my life, so I appreciate the relationship with developers, that direct relationship. But a lot of people at the company are the same way, right? We we kind of we we walk the walk, right? We're gamers ourselves. We understand the importance of the relationship and direct to consumer as you said is much more than just a commerce thing. It's much more than just improving margins by having a better fee or being able to do more active live ops in real time. It really is about building up trust, understanding who your players are and bringing them together with, you know, on your journey as a developer and a studio and letting all of you share and get a better value proposition out of that. And you know, that's what we really try to provide for our partners is the ability to really lean into that relationship.
Yeah. Because owning the customer, I mean, that in non-gaming, that's a no-brainer. You have to have your place

in that customer relationship, in that player relationship in the case of games. But where are we now, Chris? Because if you think about it, direct to consumer, we've seen some regulatory and legal battles. We've also seen some obstacles come down as well. So just for everyone to have that highle view where are we right now? What are the opportunities right now? Because the market conditions have changed in many ways.
They really have changed and there has been a growing momentum over the years supporting the ability for studios to go direct to consumer. You know the regulatory pressure on app stores, it's not just a a moment. It really is a true direction, a change in how business is operating. We've had the Epic versus Apple rulings, the Digital Markets Act, broad legislative pressure on app store dominance in regards to things like anti- steering and and whatnot. And these aren't, you could look at these as

isolated events, but they're really not. They're all part of a broader larger shift which is benefiting the consumer, opening up platforms so that the people that are creating content and the people consuming content on those platforms can connect more directly. So there's a real structural shift that's happening and the question really isn't whether developers can build direct relationships anymore. That used to be the question. Could I do it? Would the guidelines the rules on a platform allow me to build a direct relationship? that's been answered. You can. So, it's not whether you know can you, it's just do you have the tools to be able to do that at scale. And you know, when we look at this, it's one thing to talk about the regulations and the theory and the benefit. But when you look at the numbers direct to consumer is not just a workaround or a side thing anymore. It is a real scalable part of any business model. You know, at Exola, we've processed the past few years billions in direct to consumer web shop payments and

revenue. And that has been gaining momentum. What we did in 23 to 24 uh we did that same amount just in 25 alone. And developers are really embracing this and and building these capabilities as a core part of their business, not just as a reaction to regulations.
And the opportunity now is to move fast, move first, linking your in-game offerings to your own web shop. And this can mean that you're keeping if you're doing like a up to $19 on a $20 purchase or around 13 on the same app store transaction. So that that's your margin play. And that delta is available today. But as I said, it's not just about the margin. It's about an improved relationship, better lifetime value from your players. You're providing better offers to your players, better value for them in things that they can't maybe get on on through the app store. being able to do this more in real time and live ops and and all of this through your web shop just to build up a better stronger relationship.
Great to have the relationship and also

I always hear it now from marketers you know the data matters because you can understand more the more you understand the more you can predict you can have maybe different types of live ops or different types of onboarding or different offers. I mean that's what we do in real commerce. It's never oneizefits-all. So why should it be here?
Yeah, that's exactly right. I mean, I' I've talked about this before and and it really is a core part of where the industry is now where it's no longer about just a single channel that you're selling or distributing through. You know, that's kind of the old retail era approach and the industry held on to it as we went into digital. But the fact is every company now can pursue a multi- channelannel approach, leverage the data, get real insights into who their players are, be able to provide different value to different player cohorts on different channels and direct to consumer is a very important part of that when you view it as a holistic approach to your business, not an eitheror.
So it's very exciting. I mean, I love new frontiers. I think this is great.

There's opportunity can also be daunting, right? And I think that comes to your raft of announcements for Gamescom. You're revealing a lot, quite a bit to to to go through and and important at different levels. Maybe you could start with just an overview of what you're revealing at Gamescom.
I I'm really excited for this Gamescom. You know, we we regularly release new products, new features. This time around we are announcing six major solutions over the next two weeks or the two weeks of Gamescom. You know for mobile studios uh we have web shop ecosystem which is a complete direct to consumer offering built specifically for mobile games. Um for PC studios we have new engagement tools anchored by a community hub which I'm really excited about because I'm an avid PC gamer myself. And for studios on every platform, we're offering more than 15 new local payment methods. Uh, and and that's important because the more

payment methods there are, the more players can actually engage and transact with you on your game. That's a little piece of the business that a lot of people don't think about. But platforms, when you're only going through a platform, you are constrained by a very limited number of payment options that they provide, which means literally anywhere from 10 to 40% of the players in a region are unable to transact with your game. They may want to buy stuff. They literally can't. So, we solve that. We provide and always are updating the number of payment options that we have. We also have an AI toolkit. can't talk about anything these days without mentioning AI. But this the AI toolkit has a has a CLI uh you know sort of a command line input capability which is an AI assisted path from a new publisher account connection to a working web shop. So what does that what does all that mean? We're all using things like chat GPT and Claude these days, right? And that's a that's that's the command

line input where you can just type in a command and the AI will make it happen for you. So we have that capability now where you can do that to get your web shop built up and do that through our publisher account. We've expanded our creator platform uh which we call partner network. That's really exciting. It allows and I can talk more about this later but it basically allows people to work with content creators at scale which means you don't need a big content creator team to be able to do your creator marketing and engagement which is really exciting and we've brought that into publisher account uh so it's much more accessible. And then we also last but not least have a back-end partnership with Excelbite. Uh they provide great back-end technology and I can talk more about that. But every one of these came from a conversation that we've had with developers. We talk with partners and and developers all over the world all the time. And it's just really offering a different point in their journey. You know, how do I find players I can't reach? How do I close sales that I'm losing? Keep players that I've earned and do it all without hiring a

massive team that I can't afford. So each product solves a different problem and they all point in the same direction. The studio should own the relationship with its players and owning that relationship should not require a platform team.
So I'm excited about console as well because everything is everything now. You know it's not just mobile. Mobile is console. Console is mobile. Platforms crossplatform matters. But you did talk about the mobile only solution. So let's stick with that because this is Pocket Gamer and we look at mobile games first and foremost. Just peel that back a little bit for me.
So you know look for the web web shop ecosystem is is what we call this. You know mobile is such a big important part of the industry and what we're providing here connects products across four areas. Core engagement monetization and operations.
What is going on here when you have it all in one? We had them all fairly covered before, but webshop ecosystem brings them together, makes it mobile

focused. What's going on here?
So, you know, look, a checkout page either on a web shop or a website or even in your app that just moves a transaction,
right?
But it so a checkout page on its own was never enough. And that's what a lot of people think a web shop is, just a checkout page. That's that's not enough. That's not going to work for you. Studios need and and have needed, and we've heard this, not just the ability to do checkout, but they need the acquisition, the engagement, and live operations tools that go around it because that really increases your monetization capabilities and your retention. And that's part of what most studios could never really build or staff on their own because it does require additional work to to create these things. So what's different now is that all of this lives in the same integration and this is our web shop ecosystem. We already power more than 800 mobile web shops and the web shop ecosystem connects products across those four areas through just a single mobile

games account. And that means that every studio can now run loyalty subscriptions chat commerce no code live ops with analytics and attribution all from one place alongside the storefronts that they already sell on. And it and it means that they can enable only what they need without building or maintaining separate systems. So it's not just payments precisely because payments you know really was the part that was solved. It the the part now is engagement uh you know providing engagement because that's why players come back. Monetization connects every revenue stream including non-payers. So we have things in there that can help you monetize non-payers. And operations lets a studio launch and optimize campaigns without needing engineering resources which is really important so that you can move fast. And then payments of course is the foundation
and the ecosystem is everything a live service business runs on top.
Monetization part is really interesting because then really nothing is wasted. Yes, you're not able to monetize every player. But if you can understand and

see more into the engagement, the patterns, the data, then you will have a way to connect with that player and make it worthwhile. The ones who pay, find, the ones who don't, now you have a way of finding them and creating an experience that's going to capture them.
Yeah. Absolutely. And you know, this whole thing of paying versus non-paying players, you know, it's useful in in in you know, certain sense, right? because obviously that's the economics of the industry. But I think too often it's been a real binary divide that has kept people from really thinking about just the overall player experience. Realizing that, hey, non-payers, if you keep them engaged longer, you know, will start to transition to payers. Even engaged non-payers who never pay are still providing value into your ecosystem or into your game uh because they're helping, you know, to build out your community. They may be advocates that are promoting and helping with discovery, which is a a hidden cost you don't see necessarily. So, the more

tools and analytics and attribution that we can provide at your fingertips, you know, the better you can understand your entire player, you know, community and where the value is coming from beyond just payments.
I like that we can finally capture that K factor. Chris,
exactly. thought that was important and it was something that was always slipping out because yes, you don't know quite how to measure it, but you do know it's important and now it will not slip through the cracks. Another thing we're announcing is the AI component because yes, AI is everywhere. We wouldn't do this show if we didn't mention it, right Chris? But, you know, there are the questions about the productivity gains of using a lot of tools. So, you're building out these tools now. I've got chat GPT or I've got an AI agent that I'm like this is the way it needs to look. Build it, right? Is that what you're building to or what is it that you're thinking is the most benefit to developers?
Yeah. So, absolutely. I mean AI is part

of our workflows. It's part of our lives now and we really are providing that capability as well. So, what we've done is we we have a we have a free AI toolkit. We've added CLI, you know, command line input where you can just type in in native language uh support and that really completes a path from setting up in a new publisher account, creating a new publisher account to a working web shop in in a single session. So the CLI handles the provisioning that used to be done by hand. It creates your publisher account, generates API credentials and configures web hooks from the command line
and the toolkit guides the integration inside uh the AI coding tools that developers are already using like claude code or cursor. And importantly, it validates every step before anything goes live. And you know, this is important because it's I'm not we're not saying that you should rush and try to set up a web shop in one session. You can, but it means that you can really have that capability which gives you more time to test and iterate and make

sure you're getting what you want before you go live. And the benefit really is concrete. It's not speculative. It set up when you were setting up a web shop and you would come to us, create your publisher account, do all of this, it meant that you used to have to read a ton of documentation. Should still read the manual, I suppose, but you know, you'd still have to do that. You'd have to do provisioning by hand uh for every account, debugging AI generated code that looked right but maybe failed in production. You would still needed somebody to manually debug that. Um and that was a real cost of of AI coding code that looks right but isn't. So introducing validation at every step really is our answer to exactly the productivity question that that a lot of people have encountered and have been raising. So overall, much better productivity, much quicker path, taking a lot of the manual, you know, labor intensive work off your plate and making sure it's all done in a way that's validated before anything goes live.
I like that validation at every step because sometimes here's a moment where you need to think about this. So it

won't be like I build it in a single session, I'm ready to roll. I'm going to have a reality check. There's going to be something going on there that makes certain that best practices are playing in my favor. I'm not just going to be out in the wild with something live uh without having something tell me, you know, check it out, look at it, test it, you know, make certain you've got this web shop ready before you send it live. Is that what I'm hearing here?
Yeah, absolutely. And, you know, it's that that's a fair it's great to highlight that, you know, because the honest answer is fast and careless is not the pitch here, right? Because you can stand things up in a single session doesn't mean that you still need to be, you know, careless about what you're doing. The whole design is that a developer reviews and validates the result at each step before anything goes live. You know, now a developer can review exactly what is shipping before it ships. And that's more control than the old way where you found out in production or everybody would have to build their pieces, put them together, and then you would find out something

breaks. Now you can really validate it in real real time. So it makes the workflow faster, more reliable. Developers get more control. You know, speed is what you gain and review is what you what you get to keep.
What about the outcome for for players here? The end of it all. It has to be a benefit to the player. We hear about the benefit to the publisher. How does that trickle down and spell out something that's really going to move the needle for the players as well?
I I love that question because, you know, player first, player centric. As a gamer myself, and I still I I think I played three hours of Apex last night alone. You know, I I'm still an avid gamer and I'm always thinking about how does this benefit the player at the end of the day because that's also good business. So, look, when you're setting up something, when when setup stops consuming the Times team and budget and all their resources because they're trying to set up a new, you know, feature in a web shop or they're trying to do whatever they're trying to do, that takes time and resources. And if those if that time and those resources

can go instead back into the game, you know, that's a win. That means that the developers are spending more time understanding the player, uh, you know, owning that direct channel where they can understand the player and then pass value on to the player through, you know, better offers, loyalty rewards, you know, content that's on on the studio's schedule and actually getting it and delivering it. you know, basically bringing more value to the player when they say they're going to in a way that the players like, you know, that's a win, you know, and and the player side of this is also on display at Gamescom. You know, we have talked about that a little bit where we're debuting three new player experiences and a preview of the rewards engine underneath them. Really built around a simple idea that when a player earns, what they earn, that should belong to the player. So, you know, a $5 card, for instance, if you're buying a character card in a game, shouldn't be a onetime purchase. It should start a relationship between the player, their game, and the things that they collect. So, what I mean by all of that is that's just an example of, wow, now that the studio and

the developers don't have to put as many resources into standing up, right, their their web shop or whatever it might be, they can put that same amount of time into really fulfilling part of the participation promise and player value promise that helps to keep players more engaged over time and doing things that they would not normally have been able to do just because their resources were allocated elsewhere. So that's a benefit to the players. It's a business benefit. You can shift resources to what the players value most and then that becomes a benefit to the players.
You've got the Exola partner network. What are you doing here? What are you trying to bring together when we're talking about content creator campaigns, mobile publishers? What do you have in mind here, Chris?
Yeah, this this is another really cool area. I think we all recognize that the way players are discovering games has changed, right, quite a bit. I mean, I I have I have two sort of tween in the house and, you know, their form of discovery is watching YouTube and seeing

creators, you know, playing games and and talking about them and all of that. And we really know that the that players now, a lot of them find their next great game through people that they watch and trust, not just through ads that, let's be honest, often they just skip over. And this puts creators at the center of how every game grows out there. And we've all heard the stories of games that get promoted by a creator and take off. The problem has been that most studios were never built for this, right? They don't have a creator marketing department. They don't have the tools that allow creators to really promote and engage with with their game. You know, they they kind of have one person who's doing their marketing, a budget, you know, then they work with agencies to get everything done. And up until now, trying to work with creators meant that you had to go out there and vet hundreds of different channels or chase payouts to those creators across all kinds of countries, deal with all the W9 tax information. Well, that's the US version, but also global equivalents.

And this is all the gap that our partner network really closes. It's a creator platform that we've had, but it now lives inside of the Exola publisher account. And that means this is where developers already are running their business. And now in the same account they can now run their creator campaigns. Every creator passes automated identity verification. Campaign management goes through a single workflow with attribution deep enough to trace every click, every sale and every, you know, dollar or euro or yen or whatever it is that you're you're you're transacting with. And a recommendation engine that matches campaigns to creators, you know, that that will are built for them, the right creators for the right campaigns and the right games. uh these are flat fee campaigns that are coming alongside revenue share campaigns. We handle the payments, the payouts, the taxes and compliance throughout this whole journey. So one person can now run a creator program with hundreds of creators all over the world that used to take an entire team and that changes

really who gets to compete and benefit from this whole creator discovery ecosystem. So and on the user acquisition side it's no longer an eitheror. It's it's both. is and you know creator campaigns don't replace performance channels but the attribution depth means that mobile publishers can finally measure creator spend against other user acquisition spend on equal terms instead of just treating it like kind of a brand thing they don't quite understand. So super powerful bringing all of this together
especially the attribution that was always the question you know does it work you did have this separate before but bringing it together and making it part of the publisher solution you do have some insights into creator campaigns versus you know other UA channels maybe you can just share a little bit about why content creator campaigns why that's really going to be a plus here because yes it's going to exist with other UA channels but you've seen how it's performed because it was a separate solution before. What can you

share about that?
Sure. So, creator campaigns are all about trust, right? And trust is it's it's similar to how we've talked about for years that the most powerful form of marketing is word of mouth, right? Where if you have a friend or somebody you trust telling you about a game, you are much more likely to go out and check it out. And you know, trust is something that has, you know, it's not, you wouldn't necessarily immediately think of trust when you think of traditional ads, right, that you're seeing. They can be engaging. They can be fun, but they don't have that trust element to them. That's where creators come in. Creators are trusted sources. People, you know, really do take at face value often what they are engaging with. And and I don't mean and there's even a difference there, you know, creators that and this is why it's important where we have an engine that connects the right creators with your campaign. The ones that believe in it and promote it and and it works with their brand and who they are, the benefit is tremendous. You know, you see a lot of engagement around that and a lot of people that go on and use that

as the form of discovery for their for their games or whatever product it might be. So that's really what we're bringing to the table. And it again kind of how I mentioned earlier, even the way that we distribute games and sell games used to be based on that old single channel approach. You're just going through one channel, one platform because that was the old retail model. Similar thing and now it's not either or. You can do multiple things. Use multiple channels. Same thing now with your discovery. It's not either or just ads or just creators. Now you can do both and you can do it at scale.
And you have to do both. Now that's that's the way of the world because social is discovery. Creators are discovery. Discovery feeds the funnel. You absolutely have to have that in the toolkit and it all has to work. So then we get to your partnership that focuses on the back end making it work. Tell me about that. So this is a founding partnership with a company called Ascelbyte which pairs the Aselbite

gaming services which is their fully managed back-end platform with Exola's payments and monetization in one integrated stack. So Aselby was built by veterans of the game industry who have engineered the online systems behind some of the largest live service games and platforms in the world. And this combined solution brings their player management, matchmaking, store, and analytics together with our payment, subscription, monetization, and identity services. So really, you can say that we've opened uh a great opportunity here. Not only a great opportunity, but we've also opened up a closed testing program. And the first partner studios will directly shape the feature set ahead of what will be a broader launch. And we're building this by listening to developers who use both of our platforms. We're engaging with partners. Now, we'll be sharing more about this at Gamescom, but it's really a great opportunity again to provide a one-stop shop for all the things that you need to

to run and operate your game business. You can find us in Hall 2.2 and we're booth A030-B35, but anyway, Hall 2.2, you'll you'll see us there and we'll be demonstrating all of this. you've given me a great sort of overview and for our audience as well. So, I would say, you know, this is the one stop. This is the one show to know what to expect from Exola overall and at Gamescom and I look forward to seeing you there.
Thank you, Peggy. Likewise. I look forward to seeing you and your audience, all the listeners. This will be fun.
Absolutely. Okay. Thank you. Thank you.