Latest / The Game Business Show / How did PS5 boxed games sell in September? And the problem with industry consolidation

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How did PS5 boxed games sell in September? And the problem with industry consolidation · The Game Business Show

0:00
SPEAKER_03: This week we discuss the consolidation of the video game business,
0:03
SPEAKER_03: we reveal who came out top in a competitive September,
0:06
SPEAKER_03: and we chat with the European boss of Crimson Desert publisher, Pearl Abyss.
0:14
SPEAKER_03: Hello and welcome to The Game Business Show.
0:17
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1:33
SPEAKER_03: Now.
1:34
SPEAKER_03: Back to the show.
1:35
SPEAKER_03: Right.
1:35
SPEAKER_03: Now, in a moment, I'm going to be welcoming our guest.
1:38
SPEAKER_03: His name's Josip Andrin, and he's been on before.
1:40
SPEAKER_03: He's going to be talking to us about the consolidation in the video game business.
1:43
SPEAKER_03: And knowing us, we're bound to talk about other things as well.
1:46
SPEAKER_03: But before I welcome him on, I've got some data to share.
1:49
SPEAKER_03: It's been unusually long time since we've done the data thing and September was such
1:53
SPEAKER_03: a big month for video game releases I thought let's do it.
1:56
SPEAKER_03: And there's some really positive stuff and some really surprising stuff in here.
1:59
SPEAKER_03: So I'm going to start with console sales data.
2:01
SPEAKER_03: Now I don't have it for every market but I do have some UK data from Nielsen IQ.
2:06
SPEAKER_03: The data covers August 23rd to September 26th and it reveals
2:10
SPEAKER_03: that 125,000 consoles were sold in the UK over that period.
2:15
SPEAKER_03: That's 78% up over August and 9% up over September last year.
2:19
SPEAKER_03: It's units of course and it's just the UK but I think it bodes well for the other markets.
2:25
SPEAKER_03: Now consoles are more expensive this year so the revenue is up even more.
2:29
SPEAKER_03: PS5 sales,
2:30
SPEAKER_03: it's unit sales,
2:30
SPEAKER_03: up 117% in September versus August and up 24% over September last year.
2:36
SPEAKER_03: It was the number one console of the month in the UK.
2:38
SPEAKER_03: However, overall it's still down 26% year to date.
2:42
SPEAKER_03: Switch 2 was up 70% over August and 17% over September last year.
2:47
SPEAKER_03: It was the number 2 console of the month.
2:48
SPEAKER_03: And overall it's up 13% year to date, so it's doing still well in terms of year to date.
2:53
SPEAKER_03: And in third spot is Xbox.
2:55
SPEAKER_03: Now this one was up 30% over August.
2:56
SPEAKER_03: They're actually down 29% over September last year,
2:59
SPEAKER_03: but overall Xbox sales are up 1.7% yet to date.
3:03
SPEAKER_03: Now UK as I say,
3:04
SPEAKER_03: this isn't the world,
3:05
SPEAKER_03: but it is a good, it can be a good indicator of what we might see in other markets.
3:08
SPEAKER_03: And there's a few things that are happening here
3:09
SPEAKER_03: because this data window It does include the reveal of GTA 6 on Netflix.
3:13
SPEAKER_03: I think that's had a big impact upon sales of next generation consoles.
3:17
SPEAKER_03: We also have some big releases like Wolverine and we'll come onto that in a moment.
3:21
SPEAKER_03: On the Nintendo side, they had the big Direct which revealed the Zelda reveal.
3:24
SPEAKER_03: So I think that's probably done good for them as well.
3:27
SPEAKER_03: It all bodes really well for November.
3:30
SPEAKER_03: But let's look at some of the games.
3:32
SPEAKER_03: I've got sales data estimates here from Ampere Analysis.
3:35
SPEAKER_03: They track 45 countries, including all the big ones like US, Japan, France, Germany, UK, China.
3:40
SPEAKER_03: You know, all the big countries are covered.
3:41
SPEAKER_03: And according to Ampere Analysis,
3:43
SPEAKER_03: no surprise, EA Sports FC was the number one game on PlayStation 5 and Xbox.
3:47
SPEAKER_03: On PS5, it sold nearly 5 million copies across those tracked markets.
3:51
SPEAKER_03: That's not a surprise.
3:52
SPEAKER_03: The number two game on PlayStation was Wolverine.
3:54
SPEAKER_03: Also not a surprise.
3:55
SPEAKER_03: According to Ampere, it sold 2.16 million copies across the markets.
3:59
SPEAKER_03: I think Probably a little bit lower than PlayStation would have liked, but we don't know.
4:04
SPEAKER_03: Interesting stat with Wolverine,
4:06
SPEAKER_03: 35% of its sales in September were for the physical version of the game.
4:10
SPEAKER_03: So over a third of the game was sold in boxes.
4:13
SPEAKER_03: In Europe, according to GSD, More than half of Wolverine sales were sold in boxes.
4:18
SPEAKER_03: More than half.
4:19
SPEAKER_03: So more people in Europe bought the game in a box than they did as a download.
4:22
SPEAKER_03: Now that number will go down in time, I know, and it does differ by market.
4:25
SPEAKER_03: So two thirds of Wolverine sales in the UK were digital, but in France two thirds were physical.
4:31
SPEAKER_03: We talked about this in previous episodes,
4:32
SPEAKER_03: how about how markets like France, they like their boxes.
4:37
SPEAKER_03: For me, stats like that sort of show I'm not sure PS5 players are ready to go fully digital.
4:42
SPEAKER_03: And it does, be clear, it does vary by game.
4:46
SPEAKER_03: Ampere's got loads of stats here around the PS5 games that did well in September.
4:52
SPEAKER_03: In September, like 7% of EA Sports FC sales were physical.
4:57
SPEAKER_03: But, you know, 30% of Onimusha sales were physical.
5:00
SPEAKER_03: 36% of Blood of the Dawnwalker sales were physical.
5:03
SPEAKER_03: Physical is still a big thing.
5:05
SPEAKER_03: And I know I've said that before, but I'm going to keep saying it.
5:11
SPEAKER_03: There's some other really interesting stats in this.
5:14
SPEAKER_03: Halloween the Game did really well on console,
5:16
SPEAKER_03: coming out ahead of games like Control and Silent Hill Townfall.
5:19
SPEAKER_03: Both those games didn't make the top ten on Xbox or PC by the way.
5:22
SPEAKER_03: Halloween was the number two game on Xbox behind EA Sports FC,
5:26
SPEAKER_03: sold 650,000 units on that platform.
5:29
SPEAKER_03: Onimusha from Capcom did good numbers on all platforms.
5:31
SPEAKER_03: It did nearly 850,000 units on Steam, 725,000 units on PS5, 177,000 units on Xbox.
5:37
SPEAKER_03: It's all Ampere data.
5:39
SPEAKER_03: It is all estimates, to be clear, but, you know, it clearly did well.
5:42
SPEAKER_03: For me, what stood out is how many new IPs did well.
5:45
SPEAKER_03: War Dogs topped the Steam charts with nearly 3 million sales.
5:48
SPEAKER_03: We know that.
5:49
SPEAKER_03: Friends Lock Game How to Fish also performed exceptionally well.
5:52
SPEAKER_03: Blood of the Dawn Walker,
5:53
SPEAKER_03: which is the new RPG from former developers of The Witcher,
5:56
SPEAKER_03: was top five on all It's a really fascinating chart.
6:01
SPEAKER_03: Some of the things that we thought were going to do well in September,
6:03
SPEAKER_03: I'm not saying they did badly,
6:04
SPEAKER_03: but they were outdone by games like Halloween and On Every Show and Blood of
6:10
SPEAKER_03: the Dawnwalker and War Dogs and Bodycam and loads of things like that.
6:15
SPEAKER_03: You can check out the full charts on today's Game Business newsletter.
6:19
SPEAKER_03: I'm not going to read it all out here.
6:20
SPEAKER_03: You'll find that pretty boring.
6:23
SPEAKER_03: Just head to thegamebusiness.com and you can get that.
6:25
SPEAKER_03: Right.
6:26
SPEAKER_03: Let's welcome this week's big guest.
6:28
SPEAKER_03: He's one of the industry's leading analysts, perhaps even the next Matthew Ball, dare I say it.
6:33
SPEAKER_03: He is the writer of the Super Yoast playlist substat, which I fully recommend, by the way.
6:37
SPEAKER_03: And he's a lovely man that I've known for many, many years.
6:40
SPEAKER_03: He is, of course, Yoast van Drunnen.
6:42
SPEAKER_03: Hello, Yoast.
6:43
SPEAKER_03: Welcome to the show.
6:44
SPEAKER_03: Thanks for having me.
6:45
SPEAKER_03: I've just been sharing some facts and figures about September and sort of end of August.
6:49
SPEAKER_03: Did any of it catch your eye?
6:51
SPEAKER_01: Yeah, it's been an interesting month.
6:53
SPEAKER_01: Everybody is getting ready to full force for the announcement, the release, right?
7:01
SPEAKER_01: It's not going to go any other way than we know that it's going to go.
7:04
SPEAKER_01: We don't have to say what title is launching.
7:06
SPEAKER_01: And so then it's sort of interesting to see how everybody else is reacting on
7:10
SPEAKER_01: the fringes and in response to it, I guess.
7:16
SPEAKER_01: You know,
7:17
SPEAKER_01: first things first,
7:18
SPEAKER_01: I did like the Saturday Night Live skit of having Link
7:26
SPEAKER_01: to sort of go at it for
7:28
SPEAKER_01: a bit.
7:28
SPEAKER_01: You know,
7:29
SPEAKER_01: it's just from an observational point,
7:32
SPEAKER_01: like when the industry is always being mocked,
7:35
SPEAKER_01: you know, there's always sort of like this underhanded commentary around it.
7:38
SPEAKER_01: I think it's hilarious.
7:39
SPEAKER_01: And I think it's interesting that mainstream media picks up on the fact
7:42
SPEAKER_01: that Nintendo is like, yeah, whatever, we're doing Ocarina time.
7:45
SPEAKER_01: GTA be damned, we got what we got, and we're confident about it.
7:51
SPEAKER_01: So that's one observation.
7:52
SPEAKER_01: I think we're going to see some of the pillar releases,
7:55
SPEAKER_01: but then there's going to be a lot of nothing,
7:58
SPEAKER_01: a lot of why would you launch against this?
8:01
SPEAKER_01: The reason or the secondary observation here for me is sort of the changing of
8:06
SPEAKER_01: the guard at different companies.
8:08
SPEAKER_01: So Xbox has had a lot of layoffs, as we know, not exclusively, of course, on the creative side.
8:14
SPEAKER_01: In fact,
8:14
SPEAKER_01: there's a lot of management people that have been shuffled around or have left
8:18
SPEAKER_01: on their own accord over the last 18 months, 12 months.
8:21
SPEAKER_01: And you see them pop up everywhere else.
8:23
SPEAKER_01: So when you and I were both at Gamescom,
8:25
SPEAKER_01: I had more than a few meetings and sort of sightings of former executives
8:31
SPEAKER_01: from both Xbox and some of them at PlayStation as well.
8:34
SPEAKER_01: They're now wearing a different shirt, right?
8:36
SPEAKER_01: They have a different logo on their polo shirt and they walk around for
8:38
SPEAKER_01: a big tech company and they have a different Flag that they carry,
8:43
SPEAKER_01: which is, you know, in many ways, I think an indication of what's to come next.
8:47
SPEAKER_01: Like once GTA launches and we go,
8:50
SPEAKER_01: we get over that hump,
8:51
SPEAKER_01: you know,
8:52
SPEAKER_01: I think in many ways the road will be much more open for other companies to jump in.
8:56
SPEAKER_01: The road will be clear for other,
8:59
SPEAKER_01: you know, large companies to make their play properly in the wake of GTA 6.
9:05
SPEAKER_01: So those are some of the things I see for the remainder of the year.
9:07
SPEAKER_03: Yeah, well, I think I loved that Saturday night.
9:10
SPEAKER_03: I know there was the joke at the beginning about,
9:11
SPEAKER_03: you know,
9:13
SPEAKER_03: I don't play games because I've had sex,
9:14
SPEAKER_03: sort of a classic line,
9:16
SPEAKER_03: which is,
9:16
SPEAKER_03: you know,
9:17
SPEAKER_03: it's a joke from 2002, but even though I actually I did kind of, I enjoyed it.
9:23
SPEAKER_03: I also enjoyed it because I know other people had used the Barbenheimer comparison,
9:27
SPEAKER_03: but I'm pretty sure I'm the only one that put it in a headline.
9:29
SPEAKER_03: So I'd like to think that the SNL are the readers of The Game Business.
9:35
SPEAKER_03: But what I found fascinating about that,
9:37
SPEAKER_03: you talk about Zelda,
9:39
SPEAKER_03: it made me think because would this whole Ocarina of Time sort
9:42
SPEAKER_03: of versus GTA fun thing, even though they're not really versus each other.
9:48
SPEAKER_03: Call of Duty would normally be in this conversation,
9:50
SPEAKER_03: yet somehow I think because of Nintendo's placement of the game into November,
9:53
SPEAKER_03: I don't know,
9:54
SPEAKER_03: maybe I'm overthinking this,
9:55
SPEAKER_03: I think they've made themselves the jokey competitor to GTA 6 and Call
10:00
SPEAKER_03: of Duty has almost become...
10:03
SPEAKER_03: Silenced coming out the week earlier.
10:06
SPEAKER_03: We're only two weeks away, three weeks away from Call of Duty coming out.
10:09
SPEAKER_03: And it's strange not for,
10:10
SPEAKER_03: even though it looks great,
10:12
SPEAKER_03: not to be part of the conversation at the moment, I guess it will be as it picks up.
10:16
SPEAKER_01: Yeah, I think Xbox really put all of its money behind the Gears of War, E-Day.
10:23
SPEAKER_01: You know, I think that that was their big one.
10:25
SPEAKER_01: That's the bookend and then we're going to have a little quiet time and get GTA Up
10:29
SPEAKER_01: and, you know, spun up.
10:30
SPEAKER_01: They've renewed their license too.
10:32
SPEAKER_01: If you recall,
10:33
SPEAKER_01: a week ago they announced that they had this sort of new consolidated license
10:37
SPEAKER_01: with Take-Two Interactive, which doesn't really change too much.
10:41
SPEAKER_01: It sort of consolidates some of their existing things,
10:43
SPEAKER_01: but they want to get all of their third party titles,
10:47
SPEAKER_01: I think, set for the time that's ahead of them.
10:51
SPEAKER_01: And so they probably are holding short on some of the marketing and some of
10:55
SPEAKER_01: the effort behind You know, the Call of Duties.
10:59
SPEAKER_01: Does it really need a big blowout?
11:00
SPEAKER_03: Well, yeah,
11:01
SPEAKER_03: the community for that is very, like,
11:03
SPEAKER_03: I'm talking about it from a media point of view,
11:04
SPEAKER_03: and actually Call of Duty has become so focused on the influencer space from a PR
11:08
SPEAKER_03: and marketing perspective that it sometimes does pass us by.
11:12
SPEAKER_03: But I don't know.
11:14
SPEAKER_03: I've heard good things about it,
11:16
SPEAKER_03: and after last year's disappointment, I think it'll be interesting.
11:19
SPEAKER_03: A few things I picked up,
11:22
SPEAKER_03: I was really pleased to see console sales spike,
11:24
SPEAKER_03: and I know I've only got the UK data at the moment,
11:26
SPEAKER_03: but I think that's probably the GTA 6 reveal and the Zelda reveal,
11:29
SPEAKER_03: which bodes well for the launch of those games,
11:32
SPEAKER_03: I think, particularly often the price rises.
11:37
SPEAKER_03: I wasn't surprised actually to see Wolverine's physical sales so high
11:42
SPEAKER_03: because Spider-Man 2 had the same stat even though it was a few years ago
11:45
SPEAKER_03: but it does make me,
11:47
SPEAKER_03: it just sort of cements in my mind that I don't think PlayStation fans are ready Yet
11:52
SPEAKER_03: for that disc switch off, at
11:55
SPEAKER_01: least some of them aren't.
11:57
SPEAKER_01: No, I'm with you on that.
11:58
SPEAKER_01: I mean, physical sales, I mean,
12:01
SPEAKER_01: it's both sort of the industry data,
12:02
SPEAKER_01: but also the casual observation in my classroom, if you will.
12:07
SPEAKER_01: Particularly around strong IP, people have a need to collect.
12:12
SPEAKER_01: You know, like the thing about GTA, I would have done this differently, right?
12:16
SPEAKER_01: But the GTA box,
12:19
SPEAKER_01: the whatever collector's box,
12:20
SPEAKER_01: that's the one with the map in it that used to come with the game, if you recall.
12:24
SPEAKER_01: You know, same thing with, you know, things like around the Marvel Universe.
12:28
SPEAKER_01: It's like, these are heavy collectors.
12:30
SPEAKER_01: They want to have the little box with the pretty pictures and the little swag.
12:34
SPEAKER_01: I think that's where the physical sales are still incredibly relevant for the consumer markets.
12:39
SPEAKER_01: And the industry is ready to move on.
12:41
SPEAKER_01: It's like, yeah, I'm not so fast.
12:43
SPEAKER_01: This is increasingly a big part of it.
12:45
SPEAKER_01: In fact,
12:45
SPEAKER_01: you could argue if you look at other industries,
12:47
SPEAKER_01: whether it's music or fashion,
12:49
SPEAKER_01: merchandising is an increasingly large part of the overall revenue.
12:52
SPEAKER_01: And so it's a bit of
12:56
SPEAKER_01: Are we missing an opportunity here to extend the fan experience?
12:59
SPEAKER_01: Why isn't there more available even at a lower price point?
13:03
SPEAKER_01: I think this luxury category is cool, but you got to give people what they want.
13:07
SPEAKER_03: Yeah, I always talked about it at length.
13:09
SPEAKER_03: I think it also depends on the market,
13:11
SPEAKER_03: actually,
13:11
SPEAKER_03: because some of the stats was it two thirds,
13:14
SPEAKER_03: over two thirds of people in France bought Wolverine physically.
13:19
SPEAKER_03: And so for me, that's like, well, France certainly, it obviously varies by market.
13:22
SPEAKER_03: But we've talked about it before.
13:24
SPEAKER_03: I think that just sort of cements my full view.
13:26
SPEAKER_03: And I was pleased actually from September to see Two of the big games were War Dogs
13:31
SPEAKER_03: and Blood of the Dawnwalker,
13:32
SPEAKER_03: which is a new IP from Independence Studios, which happens a lot.
13:37
SPEAKER_03: I know it's not that infrequent, but it's good to see.
13:39
SPEAKER_03: But anyway,
13:41
SPEAKER_03: shall we talk about,
13:41
SPEAKER_03: because you've just done some research into the consolidation of the business.
13:46
SPEAKER_03: I did.
13:48
SPEAKER_02: You've been busy on it.
13:49
SPEAKER_03: Is it a three-part series that you're preparing?
13:53
SPEAKER_01: Yeah.
13:55
SPEAKER_01: Let me lead it in,
13:56
SPEAKER_01: bitches, to say,
13:58
SPEAKER_01: so for the longest time,
14:00
SPEAKER_01: my angle on a lot of things is that games are amazing,
14:03
SPEAKER_01: of course,
14:04
SPEAKER_01: but they're developed and designed and published not in a vacuum but in a market
14:08
SPEAKER_01: with lots of restrictions and constraints and opportunities.
14:11
SPEAKER_01: And so if you look at the economic structure of a creative industry,
14:14
SPEAKER_01: it gives you a sense of direction of how things go.
14:17
SPEAKER_01: So that's not unique to games, of course.
14:20
SPEAKER_01: That applies to all media and entertainment industries.
14:23
SPEAKER_01: But nobody really does it, so fine, I'll do it.
14:26
SPEAKER_01: I've collected over the last 20 years a dataset that looks at all of
14:30
SPEAKER_01: the major companies,
14:31
SPEAKER_01: private and public,
14:32
SPEAKER_01: and then aggregates Their market share is based on revenue
14:37
SPEAKER_01: across different categories, PC,
14:39
SPEAKER_01: console,
14:39
SPEAKER_01: mobile, countries, and so on, just to get a sense of who's dominating the space.
14:44
SPEAKER_01: When we talk about GTA 6, that's the big one left.
14:50
SPEAKER_01: That one takes so much market share in all these aspects.
14:56
SPEAKER_01: But we used to have a games market where you had lots of pure play,
15:00
SPEAKER_01: publicly traded publishers like EA, Activision Blizzard and so on.
15:04
SPEAKER_01: So the structure of the economy has shifted.
15:06
SPEAKER_01: So the short form or sort of the summary of that is that over the last couple
15:11
SPEAKER_01: of years, like 10% of publishing revenue is now controlled by 56 companies.
15:18
SPEAKER_01: 56% of publishing revenues is controlled by 10 companies.
15:22
SPEAKER_01: Sorry, I'm saying this the wrong way around.
15:24
SPEAKER_01: And so when the top ten companies own and control that much of the market share,
15:29
SPEAKER_01: it's very difficult for everybody else to launch into the industry.
15:32
SPEAKER_01: And that's remarkable because we had a transition when mobile came around
15:37
SPEAKER_01: where everything dropped in terms of content.
15:39
SPEAKER_01: All of a sudden, it was much lower because you had more platforms, more people.
15:43
SPEAKER_01: And so you see this re-consolidation
15:46
SPEAKER_01: where consoles were historically very consolidated and PC came out in
15:50
SPEAKER_01: the early 2000s,
15:51
SPEAKER_01: if you recall, with,
15:51
SPEAKER_01: of course,
15:52
SPEAKER_01: Steam and it became this hugely distributed And then mobile came after it.
15:56
SPEAKER_01: And so everybody sort of thought like, oh, no big deal.
15:59
SPEAKER_01: That's changed now to the point where it's breaking through the ceilings of say
16:06
SPEAKER_01: the FCC or the CMA's metrics for concentrated industries.
16:11
SPEAKER_01: And so suddenly now we are You know,
16:13
SPEAKER_01: we're looking at an industry that's consolidating and it's impacting
16:16
SPEAKER_01: the creative outputs.
16:18
SPEAKER_01: So that's sort of the top line finding, right?
16:19
SPEAKER_01: So the top 10 companies control most of the markets.
16:23
SPEAKER_01: And what does that mean for everybody else?
16:25
SPEAKER_03: I found it really interesting because obviously the data is the data.
16:28
SPEAKER_03: You can't really challenge that.
16:29
SPEAKER_03: But I had Undead Labs on the show this week talking about they were part of Xbox
16:34
SPEAKER_03: to become independent and they went out, we need to find a publisher.
16:37
SPEAKER_03: They went out looking for a publisher and the guy who runs Undead Labs,
16:39
SPEAKER_03: he hasn't had to do that for a long time.
16:41
SPEAKER_03: When he had to do that before, it was like EA had to visit Ubisoft.
16:44
SPEAKER_03: It was a handful of companies.
16:46
SPEAKER_03: And now he's presented with a huge number of potential publishers.
16:51
SPEAKER_03: And we just had a big Star Wars game come out and that's by Secret Mode
16:55
SPEAKER_03: and Claire Obscure was by Kepler and War Dogs is by Team17.
16:58
SPEAKER_03: And it feels like there are more publishers than ever breaking through.
17:02
SPEAKER_03: And that's before we get to the self-publishing side of stuff.
17:05
SPEAKER_03: But you're suggesting actually that these organizations are either going
17:09
SPEAKER_03: to get bought up or they're playing in a smaller
17:14
SPEAKER_01: slice of the pie.
17:16
SPEAKER_01: Yes, that's correct.
17:17
SPEAKER_01: So there is a degree to which we have more sort of the AA style companies
17:23
SPEAKER_01: that are finding success.
17:25
SPEAKER_01: That has everything to do with the fact that the large game companies in the world,
17:29
SPEAKER_01: they can only You can't afford so many shots.
17:31
SPEAKER_01: So maybe that's why Call of Duty is sort of taking a backseat this season.
17:36
SPEAKER_01: But at a high level,
17:39
SPEAKER_01: at the sort of multi-billion dollar scale,
17:41
SPEAKER_01: you can't afford to take that many shots on goal.
17:43
SPEAKER_01: It's just too expensive.
17:45
SPEAKER_01: The risk is too great.
17:47
SPEAKER_01: And so you put all of your eggs in one basket.
17:49
SPEAKER_01: This is why you have these blockbuster releases.
17:51
SPEAKER_01: But that's its own category.
17:53
SPEAKER_01: In fact, a month or two ago, I wrote a piece on sort of the...
17:57
SPEAKER_01: So this recurrence or the comeback of the mid markets on Steam.
18:03
SPEAKER_01: Yeah, we have blockbuster titles coming out and that's true,
18:05
SPEAKER_01: but the double A's of the world of finding success.
18:08
SPEAKER_01: So it's
18:10
SPEAKER_01: While market share is controlled by the large companies,
18:13
SPEAKER_01: innovation and sort of growth is coming from the bottom and the middle increasingly.
18:18
SPEAKER_01: I saw also Sean Layden,
18:20
SPEAKER_01: I think,
18:20
SPEAKER_01: finalize his fund,
18:21
SPEAKER_01: former PlayStation head of studios,
18:24
SPEAKER_01: you know, and he's focused very clearly on AA studios.
18:26
SPEAKER_01: Like that's his growth thesis in that sense.
18:31
SPEAKER_01: So that's what you're up against.
18:32
SPEAKER_01: And so I say consolidation not to throw my hands in the air saying like, well, that's it.
18:37
SPEAKER_01: We're done now.
18:39
SPEAKER_01: That's the market circumstance.
18:40
SPEAKER_01: And so if you want to zig,
18:42
SPEAKER_01: then you've got to first figure out where all the big dogs are zagging,
18:46
SPEAKER_01: so to say, right?
18:46
SPEAKER_01: And I think that that's really the lesson for me.
18:49
SPEAKER_03: You also,
18:49
SPEAKER_03: you do predict that it's going to get to what,
18:51
SPEAKER_03: two thirds by 2030 of publisher revenue will be amongst that top 10?
18:58
SPEAKER_01: Yeah.
18:59
SPEAKER_01: I mean, it's a function of a few things.
19:01
SPEAKER_01: So you have to immediately break the industry out into mobile PC and console.
19:06
SPEAKER_01: Console, of course, is console.
19:07
SPEAKER_01: That's always going to be consolidated.
19:08
SPEAKER_01: Always has been, in a sense.
19:10
SPEAKER_01: PC has gotten very expensive.
19:13
SPEAKER_01: And it's increasingly difficult.
19:15
SPEAKER_01: It's encouraging to see that Steam is trying a little harder to bring visibility
19:20
SPEAKER_01: to everybody else, but it's still relatively difficult to do it there.
19:25
SPEAKER_01: Mobile is the hardest one.
19:26
SPEAKER_01: And because that's half of everything,
19:28
SPEAKER_01: You see these incredibly successful companies like Supercell or Dream Games,
19:33
SPEAKER_01: but they spend 95, 99% of their revenues on marketing and user acquisition.
19:40
SPEAKER_01: That's where a large part of that consolidation comes from.
19:42
SPEAKER_01: That's why I would say two thirds will be owned by 2030 by the top companies
19:48
SPEAKER_01: because it's really just who has the deepest pockets.
19:53
SPEAKER_01: There's only a few ways out of that.
19:55
SPEAKER_01: One of them is innovation from the middle.
19:58
SPEAKER_01: Or some technological disruption in the form of AI,
20:02
SPEAKER_01: but it really depends on the degree to which companies
20:05
SPEAKER_01: and consumers are comfortable adopting it.
20:08
SPEAKER_03: The AI thing was, well, loads of things, I could spin off that one.
20:12
SPEAKER_03: I think,
20:14
SPEAKER_03: I'll ask though,
20:15
SPEAKER_03: I had a little bit of a conversation on LinkedIn about this,
20:16
SPEAKER_03: which is a dangerous place to have a conversation.
20:18
SPEAKER_03: Star Wars game came out this week, right?
20:20
SPEAKER_03: And it is from Fuse Games, which is former Criterion Locks, former Burnout developers, right?
20:25
SPEAKER_03: But it's an independent studio, and it's public by secret by an independent publisher.
20:30
SPEAKER_03: The last Star Wars game,
20:31
SPEAKER_03: which came out the end of August,
20:33
SPEAKER_03: I know EA and Respawn were involved,
20:34
SPEAKER_03: but it was also an independent studio-made game.
20:37
SPEAKER_03: And Lucasfilm clearly have an interest in...
20:40
SPEAKER_03: Disney in general, going, hey,
20:41
SPEAKER_03: let's find some of this innovation in these independent teams,
20:44
SPEAKER_03: the team that used to make XCOM,
20:46
SPEAKER_03: the team that used to make Burnout, and let's work with them on taking these IPs.
20:50
SPEAKER_03: And I do wonder,
20:51
SPEAKER_03: even if that consolidation happens more at the top level,
20:54
SPEAKER_03: when EA decide they want to do a new Command & Conquer,
20:56
SPEAKER_03: do they build a Command & Conquer team or do they,
20:59
SPEAKER_03: maybe it's a stupid question,
21:00
SPEAKER_03: but does the money sort of flow out potentially to these new companies
21:05
SPEAKER_03: that are cropping up as a result of these layoffs at the moment?
21:09
SPEAKER_03: That's a good... My question makes sense.
21:12
SPEAKER_01: No, it does.
21:13
SPEAKER_01: So the problem or the challenge with IP-based development at
21:20
SPEAKER_01: that scale is things like minimum guarantee.
21:24
SPEAKER_01: And the fact that Disney will hold you accountable.
21:27
SPEAKER_01: I mean, Disney is no different than like the toy makers or the Legos or
21:30
SPEAKER_01: the world saying like, yeah, you can make it.
21:32
SPEAKER_01: At first,
21:32
SPEAKER_01: you're going to cut me this size check and then we're going to talk about royalties
21:36
SPEAKER_01: and then you're going to jump through all these hoops so that I feel comfortable
21:39
SPEAKER_01: that you're not putting my name,
21:41
SPEAKER_01: my brand, my characters out there and somehow dilute the value of our asset.
21:46
SPEAKER_01: And so that's not for everyone, right?
21:48
SPEAKER_01: If you go to like the licensing expo,
21:51
SPEAKER_01: And, you know, development shops or studios that will try to get an IP.
21:56
SPEAKER_01: And one of the barriers to entry is like,
21:58
SPEAKER_01: can you afford to bring enough lawyers into the room to negotiate all these things?
22:02
SPEAKER_01: If not, then you're not in the right place, then you can't have our project.
22:05
SPEAKER_01: And so there is substantial barriers to entry to get those contracts, in other words.
22:11
SPEAKER_01: So as a development studio,
22:12
SPEAKER_01: it always helps if you have a big publisher to help you out with that stuff.
22:16
SPEAKER_01: And so what the publishers get out of is like they de-risk or offload a lot
22:21
SPEAKER_01: and they outsource a lot of the creative work,
22:23
SPEAKER_01: but they take care of all this sort of business-y capital stuff and vice versa.
22:28
SPEAKER_01: So that's sort of the trade-off.
22:30
SPEAKER_01: To develop,
22:31
SPEAKER_01: to set up studios internally and also do the capitalization and all the licensing
22:35
SPEAKER_01: and the legal work, I think that is probably unaffordable for the EAs.
22:39
SPEAKER_01: Like they're better off just giving it out of hand and take a piece, come on the way.
22:44
SPEAKER_01: That's how to de-risk a lot of the work here.
22:47
SPEAKER_03: Yeah, no, I just,
22:48
SPEAKER_03: I didn't,
22:48
SPEAKER_03: I'm just,
22:48
SPEAKER_03: it's an interesting,
22:50
SPEAKER_03: you know,
22:51
SPEAKER_03: you've got IP,
22:51
SPEAKER_03: also these big companies are focusing,
22:52
SPEAKER_03: you're talking about how many shots on goal they can have,
22:55
SPEAKER_03: and Xbox is an interesting one because they've got so many IPs
22:57
SPEAKER_03: that you think this is probably not going to do anything with.
23:00
SPEAKER_03: Why resurrect that mid-size shooter franchise when you've got Halo and Call of Duty?
23:04
SPEAKER_03: Why do a Banjo-Kazooie game when you've got Spyro and Crash Bandicoot?
23:08
SPEAKER_03: But then there's probably studios that go, oh, I can see an opportunity there.
23:11
SPEAKER_03: I don't know.
23:12
SPEAKER_03: I'm deviating off from your topic a little bit, but it's just a thought.
23:17
SPEAKER_01: It's sort of like a recurrent theme, right?
23:19
SPEAKER_01: So you have portfolio management,
23:21
SPEAKER_01: whether you're an IP holder or just a platform or publisher,
23:23
SPEAKER_01: saying like, oh, well, we have two or 20 IPs that we could put into market.
23:29
SPEAKER_01: For large conglomerates like Xbox,
23:31
SPEAKER_01: for instance,
23:32
SPEAKER_01: what you often see is that they will take just the two or three that work and
23:35
SPEAKER_01: the rest of them,
23:37
SPEAKER_01: they either get much less attention or they go into the freezer entirely.
23:41
SPEAKER_01: And that's fine for a season,
23:43
SPEAKER_01: but over time that means that innovation slowly withers because
23:48
SPEAKER_01: the big IPs are also rarely the site of most innovative gameplay or sort
23:53
SPEAKER_01: of forward thinking around what you could do with them because they have
23:57
SPEAKER_01: so many rules attached to them.
23:59
SPEAKER_01: Whereas the back of the portfolio allows for a lot more wiggle room.
24:02
SPEAKER_01: And we've seen this time and again,
24:03
SPEAKER_01: but so it's the larger the company,
24:07
SPEAKER_01: you know, you could make an argument that it will also give you less innovation.
24:12
SPEAKER_01: And that's why innovation comes from elsewhere.
24:14
SPEAKER_01: The skirmishers of the world, they are much easier.
24:16
SPEAKER_01: They're much more flexible there.
24:19
SPEAKER_03: I did wince at your stat that Tencent's entire publishing business
24:22
SPEAKER_03: in 2025 was larger than the top five publishers a decade ago.
24:27
SPEAKER_03: It really highlights how the business has changed in that time.
24:32
SPEAKER_03: That's remarkable.
24:33
SPEAKER_03: It's interesting.
24:34
SPEAKER_03: If the ten publishers,
24:35
SPEAKER_03: big publishers,
24:36
SPEAKER_03: are two thirds of the market,
24:38
SPEAKER_03: Because obviously you're planning to do something on platform holders, I think.
24:40
SPEAKER_03: We haven't done that one yet.
24:41
SPEAKER_03: And they're increasing power in the industry.
24:43
SPEAKER_03: But if the 10 biggest publishers are two thirds of the market,
24:46
SPEAKER_03: does that not shift the power a bit towards those publishers from their perspective?
24:52
SPEAKER_01: Yes, so that's an excellent question because it comes down to definition.
24:57
SPEAKER_01: So this analysis is only on game publishing revenue.
25:00
SPEAKER_01: So it's just all of the money made by people paying games.
25:04
SPEAKER_01: The platform component is just the platform fees.
25:07
SPEAKER_01: It's the 30% that you fork over to the Steams or the Apples of the world.
25:13
SPEAKER_01: And so what you see is that,
25:15
SPEAKER_01: of course,
25:16
SPEAKER_01: game publishing as a revenue category is larger,
25:19
SPEAKER_01: but platform revenue grows much faster and it's The numbers are still in beta,
25:25
SPEAKER_01: but think of it is that over the last 15 years,
25:28
SPEAKER_01: game publishing revenue has grown 3x compared to 11x for platform holders.
25:34
SPEAKER_01: And so when you basically have all these toll booths,
25:36
SPEAKER_01: you have this bottleneck in the value chain.
25:40
SPEAKER_01: Everybody has to feed up into this one subset of companies that control things.
25:44
SPEAKER_01: And increasingly, those companies don't even make games.
25:47
SPEAKER_01: And so you can kind of go back and forth like, yeah,
25:50
SPEAKER_01: you know,
25:50
SPEAKER_01: of course,
25:51
SPEAKER_01: Valve does have games in its own marketplace and so does Epic and so does,
25:56
SPEAKER_01: you know, Apple has like Apple Arcades.
25:59
SPEAKER_01: Sure, I guess it all counts.
26:01
SPEAKER_01: But really most of their money comes from platform feeds.
26:03
SPEAKER_01: And so that's really their primary function is to be an intermediator
26:08
SPEAKER_01: between audience and creatives.
26:10
SPEAKER_01: When you have a bottleneck,
26:11
SPEAKER_01: all of a sudden, you know, you'd think you'd have leverage against that.
26:14
SPEAKER_01: But if you are a small publisher or a small creative outfit,
26:18
SPEAKER_01: good luck getting Apple on the phone.
26:20
SPEAKER_01: Good luck getting Steam on the phone.
26:21
SPEAKER_01: You know, that's never going to happen.
26:22
SPEAKER_01: If you're EA,
26:23
SPEAKER_01: you have a much bigger seat,
26:25
SPEAKER_01: then you have a special line of communication, of course.
26:29
SPEAKER_01: Then you can negotiate better deals, better rates, but everybody else.
26:32
SPEAKER_01: And so it's really I'm a little unsure to use this analogy,
26:37
SPEAKER_01: but you get this sort of gig economy.
26:39
SPEAKER_01: We have all these small individual units that do all this work,
26:42
SPEAKER_01: and they hand it off to this all-knowing, omnipotent platform in the middle.
26:47
SPEAKER_01: And while we're not at the same level in the games industry as you would see in
26:50
SPEAKER_01: an Uber or Instacart,
26:53
SPEAKER_01: Those are platform economics that they all have in common, right?
26:57
SPEAKER_01: And so that's a problem.
27:00
SPEAKER_01: Creatively,
27:01
SPEAKER_01: can you build anything outside of what works for those platforms is really
27:06
SPEAKER_01: the challenge them.
27:07
SPEAKER_01: And so by 2030, yes,
27:10
SPEAKER_01: they will have more negotiating power,
27:12
SPEAKER_01: but okay, so now we have four or five providers for a handful of platforms.
27:17
SPEAKER_01: Where's the rest?
27:18
SPEAKER_01: Because this industry thrives on the innovation coming from the bottom up.
27:24
SPEAKER_03: I've always got a slight thing about it.
27:25
SPEAKER_03: Sean Layden said this to me once about how platformers have become too powerful
27:29
SPEAKER_03: and he wasn't necessarily talking about the size of them, the scale of them.
27:33
SPEAKER_03: He talks about the fact there was a time that a game console was just
27:36
SPEAKER_03: a machine you played a game on and now it's the shop.
27:40
SPEAKER_03: And now it's increasingly becoming the media outlet as well.
27:43
SPEAKER_03: Like it's where you discover the games,
27:44
SPEAKER_03: it's where you buy the games, it's where you play the games.
27:49
SPEAKER_03: And he said, I don't think that's healthy.
27:51
SPEAKER_03: And well, someone who's associated with games media people, I agree strongly.
28:02
SPEAKER_01: But anyway, what do you eat?
28:05
SPEAKER_01: It's true.
28:05
SPEAKER_01: So you end up dealing with these intermediaries that just sit on top of everything.
28:12
SPEAKER_01: The problem was never paying Apple 30%.
28:16
SPEAKER_01: It's now you're also paying for marketing.
28:18
SPEAKER_01: And in fact,
28:19
SPEAKER_01: if you don't adhere to our rules,
28:20
SPEAKER_01: that's a whole other problem because now you can't compete in a certain way.
28:25
SPEAKER_01: You can't always make what you want to make.
28:28
SPEAKER_01: It isn't that they dictate what you can make as a game developer,
28:33
SPEAKER_01: but they restrict what works in their store.
28:36
SPEAKER_01: And so I think that's where Sean and I generally agree.
28:39
SPEAKER_01: It's sort of like it's You know, should they get a fair price for the service they provide?
28:44
SPEAKER_01: Of course.
28:46
SPEAKER_01: But by doing so, they have all these other policies.
28:48
SPEAKER_01: For instance,
28:50
SPEAKER_01: one of the big ones is always you can't price your content at
28:55
SPEAKER_01: a lower value somewhere else to draw in customers that maybe could not afford
28:59
SPEAKER_01: as much in that other market, whatever that is.
29:01
SPEAKER_01: It has to be on par with everything else, sort of this parity clause, as they call it.
29:06
SPEAKER_01: And so, in other words,
29:07
SPEAKER_01: you end up subsidizing More affluent players by overcharging less affluent players.
29:13
SPEAKER_01: And so that's an economic inefficiency that is only constituted by the fact
29:17
SPEAKER_01: that platforms operate this way.
29:20
SPEAKER_01: So those are some of the problems that you get and that restricts access to capital
29:23
SPEAKER_01: and therefore restricts innovation and growth.
29:26
SPEAKER_03: But I think long term, We're seeing it now with consoles.
29:30
SPEAKER_03: One of my big things about the state of the console industry right now,
29:32
SPEAKER_03: and I'm sure it's making more money, but it's a shrinking industry.
29:35
SPEAKER_03: And actually the way,
29:36
SPEAKER_03: particularly PlayStation is at the moment,
29:38
SPEAKER_03: but the way sometimes these companies act,
29:40
SPEAKER_03: I'm starting to think they're okay with it.
29:42
SPEAKER_03: Audience expansion isn't necessarily They're number one focus at the moment.
29:46
SPEAKER_03: And I'm sure that might be the circumstances they're in with all the component prices.
29:50
SPEAKER_03: But my worry about that is,
29:52
SPEAKER_03: and you talked about it in your thing,
29:53
SPEAKER_03: about how there's no middle on console, I think, in your article.
29:57
SPEAKER_03: And I interview a lot of independent developers and publishers who are doing
30:00
SPEAKER_03: the innovative stuff.
30:01
SPEAKER_03: And they're all, Steam,
30:02
SPEAKER_03: they all,
30:03
SPEAKER_03: I mean China as well,
30:04
SPEAKER_03: but they spend all their time talking about Steam, and that is their focus.
30:06
SPEAKER_03: Sometimes every now and again,
30:07
SPEAKER_03: I get somebody getting excited about Switch or Nintendo,
30:09
SPEAKER_03: but console is very much an afterthought.
30:12
SPEAKER_03: It's not the thing they're talking about.
30:14
SPEAKER_03: And I think that's a problem,
30:16
SPEAKER_03: maybe not today,
30:17
SPEAKER_03: but certainly down the line for consoles when I think this generation has suffered
30:21
SPEAKER_03: from the fact that the biggest games of this generation were the biggest games of
30:23
SPEAKER_03: the previous generation.
30:25
SPEAKER_03: And I remember the launch of the PS4 and it was, okay,
30:28
SPEAKER_03: these are big games,
30:29
SPEAKER_03: big companies, but it was Destiny and Watch Dogs with these big PS4 launch things.
30:32
SPEAKER_03: There were new things.
30:33
SPEAKER_03: There were new characters, new games, new ideas.
30:36
SPEAKER_03: And the biggest launches of PlayStation 5 and Xbox was Call of Duty and Spider-Man.
30:43
SPEAKER_03: Anyway, I think I made a pause.
30:45
SPEAKER_03: It wasn't really a question,
30:46
SPEAKER_03: but that's
30:46
SPEAKER_01: my...
30:47
SPEAKER_01: You point out what's been troubling the console space in a very clear way,
30:53
SPEAKER_01: which is The reason Xbox is having a hard time is
30:56
SPEAKER_01: because it is only this large stuff and they are too dependent
30:59
SPEAKER_01: on first-party content.
31:01
SPEAKER_01: Post-acquisition of Activision Blizzard,
31:03
SPEAKER_01: now they're making 11, 12 billion dollars a year of just first-party publishing.
31:08
SPEAKER_01: And third-party publishing is like three to four billion.
31:11
SPEAKER_01: And so they've just put that whole balance out of whack.
31:15
SPEAKER_01: And they're trying to run that back in a sense.
31:17
SPEAKER_01: They're investing and they're doing layoffs and stuff.
31:20
SPEAKER_01: And you start,
31:21
SPEAKER_01: you will slowly see them Turn back into third-party publishing as probably
31:26
SPEAKER_01: the largest category because its two competitors,
31:29
SPEAKER_01: Nintendo and Sony, have been doing this the whole time.
31:32
SPEAKER_01: The big strength that Sony has is that it does rely mostly on third-party publishing.
31:37
SPEAKER_01: It is its own first-party content, of course great, but it's really to help everybody else sell.
31:42
SPEAKER_01: When you talk to their third-party People, you know, that's a thriving business.
31:47
SPEAKER_01: All these account managers,
31:48
SPEAKER_01: like that's really where they make most of their value because that creates
31:50
SPEAKER_01: the most value for the ecosystem.
31:52
SPEAKER_01: Nintendo,
31:53
SPEAKER_01: which has long held out for most of this,
31:55
SPEAKER_01: like that was historically mostly first party content,
31:59
SPEAKER_01: Start to open that up with the switch
32:00
SPEAKER_01: to very deliberately saying like we must be more innovative.
32:03
SPEAKER_01: We must allow for smaller games to be in here.
32:05
SPEAKER_01: We're going to support indies and so on.
32:08
SPEAKER_01: So all the consoles realize now that third party is really the way for them to grow,
32:13
SPEAKER_01: to create value for customers and sort of get people to come into their ecosystem.
32:17
SPEAKER_01: Whereas previously they didn't think that way.
32:19
SPEAKER_01: They just wanted to be big and exclusive and you know, the only thing that you care about.
32:24
SPEAKER_01: It's interesting.
32:25
SPEAKER_03: I was at Tokyo Game Show.
32:26
SPEAKER_03: How was that?
32:27
SPEAKER_03: The thing I found with Japan,
32:28
SPEAKER_03: somebody mentioned,
32:29
SPEAKER_03: described Japan to me as being a country that seems like it's the future from 1980s.
32:35
SPEAKER_03: And I kind of get that.
32:37
SPEAKER_03: It both feels incredibly futuristic and somehow retro.
32:41
SPEAKER_03: I also found it really fascinating to see so many people buy video games in shops
32:44
SPEAKER_03: and there have been lots of arcades.
32:46
SPEAKER_03: But what I found in the Tokyo Game Show,
32:47
SPEAKER_03: and it's interesting when you see it,
32:49
SPEAKER_03: you sort of get it a little bit more,
32:50
SPEAKER_03: is I was fascinated by the sheer number of Japanese publishers that are going all in
32:55
SPEAKER_03: on Nintendo Switch.
32:56
SPEAKER_03: Like, you know,
32:56
SPEAKER_03: Square Enix coming in with Final Fantasy and Capcom and Monster Hunter and this sort
33:00
SPEAKER_03: of stuff.
33:01
SPEAKER_03: But when you walk around Japan and realize that Switch is the market,
33:05
SPEAKER_03: you know, in that country, right?
33:07
SPEAKER_03: You start going,
33:07
SPEAKER_03: if you want to have,
33:08
SPEAKER_03: if you want to sell a game in Japan, You've got to be on the Nintendo.
33:12
SPEAKER_03: And I thought that was,
33:14
SPEAKER_03: in a way,
33:14
SPEAKER_03: it's not really what your point,
33:15
SPEAKER_03: anything to do with what you were saying there,
33:17
SPEAKER_03: but it just made me realise why that can be so attractive,
33:20
SPEAKER_03: certainly to Japanese publishers when you're living in a market where most
33:23
SPEAKER_03: the audience is playing on that machine.
33:25
SPEAKER_03: That was my one observation.
33:28
SPEAKER_01: It's a unique market.
33:30
SPEAKER_01: The two cents I'll add is Japan is always,
33:33
SPEAKER_01: it's futuristic,
33:34
SPEAKER_01: but it's also just an odd one out in the same way that Korea was with free to play
33:39
SPEAKER_01: for a long time.
33:41
SPEAKER_01: What you have in the market of Japan is just barely any Xbox presence there,
33:46
SPEAKER_01: which is not some secret,
33:48
SPEAKER_01: but then that leaves really Nintendo and Sony Sony developed a handheld device,
33:55
SPEAKER_01: the portal,
33:56
SPEAKER_01: because they realized every household in Japan might have one PlayStation,
33:59
SPEAKER_01: but they have multiple switches.
34:03
SPEAKER_01: There's an incredible demand and there's an incredible sort of pervasiveness or penetration.
34:10
SPEAKER_01: And it's such a keystone of their entire economic model that they must do well there.
34:15
SPEAKER_01: And it has everything to do with this sort of oddball behavior
34:18
SPEAKER_01: that you don't see anybody anywhere else.
34:19
SPEAKER_03: Yeah, it is definitely a unique place to visit.
34:23
SPEAKER_03: But obviously it's a big market as well, and also games are sold there.
34:26
SPEAKER_03: Anyway, I think that's interesting to your thoughts on the third party expansion.
34:29
SPEAKER_03: I hadn't really had it framed like that before.
34:31
SPEAKER_03: Let's talk about the other thing you bring up in your article, which is around...
34:37
SPEAKER_03: You suggest that in the immediate future,
34:38
SPEAKER_03: actually,
34:39
SPEAKER_03: that consolidation might stop happening because of AI and prompt-based games,
34:44
SPEAKER_03: I guess,
34:45
SPEAKER_03: because we've got Roblox,
34:45
SPEAKER_03: we've got Google now doing it,
34:47
SPEAKER_03: and Meta doing its prompt games, experiments and platforms they're launching.
34:53
SPEAKER_03: One of the things I can't quite work out is if this is a business opportunity,
34:57
SPEAKER_03: or is it sort of a thing for people who are playing around,
35:02
SPEAKER_03: people in their spare time, UGC thing.
35:07
SPEAKER_03: Right.
35:08
SPEAKER_01: So that's an excellent question.
35:10
SPEAKER_01: Is it sort of a bolt on existing stuff or is it something new in its entirety?
35:17
SPEAKER_01: And if it is entirely new, does it come with its own revenue and business model?
35:21
SPEAKER_03: Yeah.
35:21
SPEAKER_01: And so one allegory for me is live streaming,
35:26
SPEAKER_01: for instance,
35:27
SPEAKER_01: when Twitch became popular and said, okay, everybody kind of got the concept.
35:31
SPEAKER_01: Did Twitch develop an amazing revenue model?
35:34
SPEAKER_01: Eh, not really, right?
35:36
SPEAKER_01: It's a sort of intuitive part of the industry and it has a lot
35:38
SPEAKER_01: of marketing around it and there's a lot of visibility and you have your influencers
35:42
SPEAKER_01: or whatever, that category, that class of people.
35:45
SPEAKER_01: And then there is a degree to which you're like, okay, well,
35:47
SPEAKER_01: but they never really overtook the core business,
35:50
SPEAKER_01: which is just playing games with AI.
35:54
SPEAKER_01: You could argue,
35:55
SPEAKER_01: I think you pointed out correctly,
35:56
SPEAKER_01: like UGC is sort of playing with the game rather than playing the game is sort of
36:01
SPEAKER_01: the primary objective.
36:03
SPEAKER_01: You see this in younger audiences.
36:04
SPEAKER_01: They're just sort of tinkering.
36:06
SPEAKER_01: This whole brain rot phenomenon,
36:08
SPEAKER_01: this aesthetic that you see on Roblox has very little to do with let's make
36:13
SPEAKER_01: a pretty game with a cool story and save the princess.
36:16
SPEAKER_01: It's about what's the most insane thing that I can conjure up to entertain my friends right now.
36:21
SPEAKER_01: And then tomorrow we log back in and we do it again,
36:24
SPEAKER_01: which is why I think Roblox and Epic and Unity and everybody
36:27
SPEAKER_01: between is making this available because they realize That's the nature of it.
36:31
SPEAKER_01: It's like just this goofy fun of it.
36:34
SPEAKER_01: If they can figure out a sustained revenue model is another question,
36:38
SPEAKER_01: but certainly it's gradually taken over.
36:40
SPEAKER_01: You see it's expressed everywhere, right?
36:44
SPEAKER_01: It's a challenge for existing incumbents in that,
36:48
SPEAKER_01: for instance,
36:48
SPEAKER_01: in music you see now like companies like these are all announces like 50%
36:52
SPEAKER_01: of uploaded music in the month is like AI generated
36:55
SPEAKER_01: and they're not sure how they even like deal with that because it's so overwhelming,
37:00
SPEAKER_01: but it devalues the service in a sense and it creates a huge amount
37:04
SPEAKER_01: of additional costs for them.
37:06
SPEAKER_01: So what is the equivalent there for the games industry?
37:09
SPEAKER_01: Will steam be flooded with AI generated slop?
37:13
SPEAKER_01: Kind of is, but is that a problem?
37:15
SPEAKER_01: And what does Valve think it should do about that?
37:17
SPEAKER_01: Can it do anything different than like a Deezer or Spotify when you make the comparison?
37:24
SPEAKER_01: So that's where it's disruptive.
37:27
SPEAKER_01: But ultimately, in the absence of a revenue model, it will just be part of it.
37:31
SPEAKER_01: In the same way that esports and live streaming is a subset of the industry.
37:35
SPEAKER_01: It's not the dominance.
37:37
SPEAKER_01: It doesn't have the dominance of anything.
37:39
SPEAKER_03: The thing that I wonder if most people will be playing these sort
37:41
SPEAKER_03: of AI generated prompt based games, if they'll be browser based, right?
37:45
SPEAKER_03: Which is a growing, growing segment of the industry.
37:47
SPEAKER_03: I've just recently spoken to Poki, Poki, Poki, Poki.
37:52
SPEAKER_03: And they went from 10 million MAUs in 2020 to 100 million in 2025, which is obviously amazing.
37:58
SPEAKER_03: But still the top performing games on their platform.
38:01
SPEAKER_03: They sort of hit a million dollars a year.
38:02
SPEAKER_03: That's what they make.
38:03
SPEAKER_03: Which obviously is a lot of money if you're, you know, three people.
38:06
SPEAKER_03: The game developers, like, these games cost 10 grand to make, right?
38:09
SPEAKER_03: They're all very different economics.
38:11
SPEAKER_03: But obviously from a big business point of view, this doesn't seem worth the attention.
38:16
SPEAKER_01: Yes.
38:17
SPEAKER_01: It's the, you know, does EA care about any of this?
38:19
SPEAKER_01: And the answer is probably no.
38:21
SPEAKER_01: But that's why there's an opportunity there.
38:24
SPEAKER_01: Because there is an absence of apex predators,
38:27
SPEAKER_01: that's why I think browser-based games have been increasingly popular, right?
38:31
SPEAKER_01: Sort of this web GPU phenomenon where in recent years is both consumers
38:38
SPEAKER_01: and creators have been spending more time there.
38:41
SPEAKER_01: You know, I mean, the easy explanation is like, well, consoles cost a thousand bucks.
38:46
SPEAKER_01: I can't afford a custom PC anymore.
38:48
SPEAKER_01: Everything is so expensive,
38:50
SPEAKER_01: but I have a browser on my whatever walkie laptop that I still have left from
38:54
SPEAKER_01: the pandemic kind of thing.
38:56
SPEAKER_01: Accessibility is a sort of requirement for growth.
39:00
SPEAKER_01: And as a generation of new players comes into the market, it's a lot of hand-me-down devices.
39:06
SPEAKER_01: They don't have top-of-the-line stuff.
39:07
SPEAKER_01: They can't afford it.
39:08
SPEAKER_01: So that's where the growth comes from.
39:10
SPEAKER_01: But then that's just the distribution model.
39:12
SPEAKER_01: The next is then the revenue model, which you correctly point out.
39:14
SPEAKER_01: It's like, well, the numbers aren't exciting.
39:17
SPEAKER_01: Once, of course,
39:18
SPEAKER_01: so this is a space where you could expect direct monetization to be sort of
39:22
SPEAKER_01: the first line of thinking or maybe free to play sort of the existing set of models.
39:27
SPEAKER_01: But here's also an opportunity for advertising, right?
39:31
SPEAKER_01: Which is entirely
39:31
SPEAKER_03: ad based.
39:34
SPEAKER_01: And that's going to dramatically offend lots of people because they say,
39:40
SPEAKER_01: why is there ads in my games now?
39:41
SPEAKER_01: It's like, yeah, well, you know, for the same reason, it's everywhere else shortly.
39:45
SPEAKER_01: But you see, for instance, this week in New York, there is a big advertising week.
39:49
SPEAKER_01: All the advertisers come into town for play funds and ad week and all this kind of stuff.
39:54
SPEAKER_01: And increasingly game companies take up presence and market share.
39:58
SPEAKER_01: EA comes rolling around, Unity is out to play, Xbox is here with a full team.
40:03
SPEAKER_01: And it's interesting like how the big dogs are moving into the ad space at
40:07
SPEAKER_01: the same time that you see growth
40:09
SPEAKER_01: in these like low entry barrier markets like browser.
40:13
SPEAKER_03: The browser-based games,
40:14
SPEAKER_03: particularly,
40:15
SPEAKER_03: obviously,
40:15
SPEAKER_03: this is based on my chat with Poki,
40:16
SPEAKER_03: is that the games seem to be almost the TikTok, video game equivalent TikTok.
40:20
SPEAKER_03: People play these games.
40:21
SPEAKER_03: People aren't playing Halo in their browsers.
40:23
SPEAKER_03: These aren't big story games.
40:25
SPEAKER_03: They're things you play for 10 minutes, maybe even less.
40:29
SPEAKER_03: And then you move on to the next one,
40:30
SPEAKER_03: which I think is like the opposite to a live service game,
40:32
SPEAKER_03: where you're living it for years and years.
40:35
SPEAKER_03: And the browser games actually look a lot better than I think people expect them to.
40:37
SPEAKER_03: We've moved on from the Flash days.
40:39
SPEAKER_03: I think AI
40:40
SPEAKER_01: plays into that.
40:41
SPEAKER_01: It seems like, what's the next logical...
40:44
SPEAKER_01: Step in all this, right?
40:44
SPEAKER_01: It's like, this is sort of brewing.
40:46
SPEAKER_01: It's like, how do we expect this to manifest in a more material sense?
40:50
SPEAKER_01: And I would argue that it's,
40:51
SPEAKER_01: if you've ever read any of that sort of Clayton,
40:53
SPEAKER_01: Christensen,
40:55
SPEAKER_01: Innovator's Dilemma stuff, where a lot of innovation comes from the bottom.
40:59
SPEAKER_01: Like, and so if I,
41:01
SPEAKER_01: as a 13-year-old with the use of some AI tool,
41:03
SPEAKER_01: some language model I get for cheap or free,
41:06
SPEAKER_01: can generate something that's fun enough,
41:08
SPEAKER_01: that costs me 10%,
41:09
SPEAKER_01: and it's 80% is good,
41:12
SPEAKER_01: Whatever, then all of a sudden it starts to push everybody else in the market up.
41:16
SPEAKER_01: You know,
41:17
SPEAKER_01: it reserves incumbents only the top spots where they spend the most to capture
41:23
SPEAKER_01: the most value.
41:24
SPEAKER_01: In the meantime, the bottom of the market is, you know, it moves up a little bit.
41:29
SPEAKER_01: And so I suspect browser based AI generated content,
41:35
SPEAKER_01: perhaps You know,
41:36
SPEAKER_01: driving revenue through advertising will start pushing everybody else up the chain.
41:40
SPEAKER_01: This is why you see GTA 6 being this spectacle.
41:44
SPEAKER_01: I mean, come on, like this is a, this is the Taylor Swift of video games, right?
41:47
SPEAKER_01: It's like, how much bigger does it get?
41:49
SPEAKER_01: Is that appropriate?
41:50
SPEAKER_01: Is that going to offend people?
41:51
SPEAKER_01: It's just like, how do you launch the biggest thing in an industry?
41:58
SPEAKER_01: You know, and it's like, you couldn't possibly do it the other way.
42:00
SPEAKER_01: You couldn't do this.
42:02
SPEAKER_01: On a browser, you can do GTA 6 on a browser-based launch.
42:05
SPEAKER_01: Not until way at the end, right at the end of the cycle.
42:09
SPEAKER_03: Yeah.
42:11
SPEAKER_03: I might have a slight,
42:12
SPEAKER_03: this is like a side worry when you talk about the ads in the ad business model.
42:17
SPEAKER_03: Go on.
42:17
SPEAKER_03: There's a lot of moment talking,
42:18
SPEAKER_03: and AI is sort of part of the conversation around piracy at the minute.
42:21
SPEAKER_03: And piracy is a thing that's sort of faded away.
42:24
SPEAKER_03: I mean, it's always bubbling in the background amongst certain communities,
42:28
SPEAKER_03: but it's sort of generally been pushed down and down and down.
42:31
SPEAKER_03: With the prices of everything rising,
42:32
SPEAKER_03: I think Gabe Newell famously said,
42:34
SPEAKER_03: like, piracy isn't a price issue, it's a service issue.
42:38
SPEAKER_03: And I sort of broadly agree with that.
42:39
SPEAKER_03: But then you throw in the fact that our services are now increasingly complicated,
42:44
SPEAKER_03: and then now we're throwing ads into everything,
42:46
SPEAKER_03: and then we're making the service worse, potentially.
42:49
SPEAKER_03: And then we've got all this AI stuff going into it.
42:51
SPEAKER_03: I don't know if it drives more users towards Illegal means of attaining their games
42:57
SPEAKER_03: and AI is making that potentially easier to do.
43:01
SPEAKER_03: I don't know.
43:01
SPEAKER_01: That's a weird side of conversation that I've not fought for.
43:05
SPEAKER_01: It's a question that's in a lot of people's minds, whether it's investors or creatives.
43:09
SPEAKER_01: And the precursor would be something along the lines of,
43:13
SPEAKER_01: you know,
43:13
SPEAKER_01: I think maybe the best way to explain it is like
43:16
SPEAKER_01: the games industry has this Stubborn history of seeing its audiences,
43:20
SPEAKER_01: this homogenous,
43:21
SPEAKER_01: singular,
43:22
SPEAKER_01: uniform category of humans until 15,
43:25
SPEAKER_01: 20 years ago,
43:26
SPEAKER_01: they discovered women like,
43:27
SPEAKER_01: wow, there's two genders, you know, and it's this incredible growth spirit, right?
43:32
SPEAKER_01: I mean, Candy Crush and that's your mom playing.
43:34
SPEAKER_01: They never felt that that was possible.
43:38
SPEAKER_01: Once you start to take entertainment or gaming seriously,
43:42
SPEAKER_01: then you have to also adhere to the different food groups,
43:45
SPEAKER_01: the different categories of users in there.
43:47
SPEAKER_01: And so what may not work for you, like I'm a Gen X gamer, so I'm mostly single player.
43:52
SPEAKER_01: I like narratives, you know, I like campaign mode.
43:55
SPEAKER_01: Multiplayer, cool, but I suck.
43:57
SPEAKER_01: But it's the,
43:57
SPEAKER_01: you know,
43:58
SPEAKER_01: but, you know, put me in front of BrainRots and I will pay you to get to leave.
44:02
SPEAKER_01: Because it's not for me.
44:04
SPEAKER_01: So in other words, but my 13 year old, the key is all about it.
44:07
SPEAKER_01: And so I think that the static appeal and the sort of sensibilities around it have changed.
44:12
SPEAKER_01: And as we take the industry more seriously,
44:15
SPEAKER_01: you start to do more segmentation in terms of the type of content.
44:17
SPEAKER_01: The kind of stuff like, I don't know.
44:19
SPEAKER_01: Let's ask this question.
44:20
SPEAKER_01: How much reality TV do you watch, Chris?
44:22
SPEAKER_01: Right?
44:23
SPEAKER_01: Like for me, it's whatever I see in the corner of my eye when my wife watches it.
44:27
SPEAKER_01: I don't watch true crime, but I know lots of people do, you know?
44:30
SPEAKER_01: So there's the categories of content and Distribution models
44:33
SPEAKER_01: and revenue models attached to those that apply to very specific demographics
44:37
SPEAKER_01: that traditionally don't have anything to do with the games industry.
44:41
SPEAKER_01: And so that's really the mindset shift.
44:42
SPEAKER_01: Like we are more people now and we have different tastes
44:46
SPEAKER_01: and different revenue models and distribution models and so on.
44:48
SPEAKER_01: That's really the change.
44:50
SPEAKER_01: The fact that the industry is more businesses than it was before.
44:53
SPEAKER_03: You've phrased it a lot better than I've ever done it.
44:55
SPEAKER_03: I've said it a few times where I talk about the fact that there was a time when
44:58
SPEAKER_03: the video games industry for me was two groups of people.
45:01
SPEAKER_03: They were nerdy men and children.
45:04
SPEAKER_03: That was the 90s, right?
45:05
SPEAKER_03: They were the two people that played games.
45:06
SPEAKER_03: And if you made a game, you knew it was one of those groups of people, right?
45:11
SPEAKER_03: But now we've got to that point where Everybody plays games.
45:16
SPEAKER_03: So, therefore,
45:16
SPEAKER_03: you need to think,
45:17
SPEAKER_03: when you look at something, you think, well, I'm not sure that will succeed.
45:19
SPEAKER_03: But you often find it's older industry people that haven't quite escaped the mindset
45:23
SPEAKER_03: that that is what the video games industry is.
45:26
SPEAKER_03: It's nerdy men and children.
45:28
SPEAKER_03: And I've mentioned that.
45:30
SPEAKER_03: He talked about in an interview recently that the games industry has become
45:35
SPEAKER_03: so much broader now and there's so many different groups of people that
45:37
SPEAKER_03: a Star Wars racing game actually,
45:39
SPEAKER_03: even though it did quite well back when PodRate,
45:41
SPEAKER_03: when episode one came out, it sort of faded away for a while.
45:45
SPEAKER_03: It wonders if now the reason why it might work today is because there's just
45:48
SPEAKER_03: a lot more people who just like that kind of thing.
45:52
SPEAKER_03: And that's what Amazon are trying to do with Luna now.
45:55
SPEAKER_02: And it's what Netflix is trying to do with its Playground, what Next
45:59
SPEAKER_03: Playground is doing.
46:01
SPEAKER_03: I know that a lot of this is going back to stuff that we've tried in the past,
46:03
SPEAKER_03: but it's sort of going,
46:04
SPEAKER_03: there is entire groups of people in this industry that aren't actually being served
46:08
SPEAKER_03: by the traditional market.
46:09
SPEAKER_03: I don't know.
46:10
SPEAKER_03: That's another subject.
46:12
SPEAKER_01: No, that's the future.
46:13
SPEAKER_01: That's the future.
46:14
SPEAKER_01: It's like, how do you accommodate?
46:15
SPEAKER_01: Like, if we truly are three billion people,
46:18
SPEAKER_01: you can't possibly expect to know by a Spider-Man copy.
46:21
SPEAKER_01: Like, that's crazy, right?
46:22
SPEAKER_01: And so I think it's like,
46:24
SPEAKER_01: and so because play is such a universal phenomenon and because we all have access
46:29
SPEAKER_01: or increasingly have access to all these different technologies and devices and ways
46:33
SPEAKER_01: to connect with others, okay,
46:36
SPEAKER_01: what type of forms of play can be Come up with and design
46:41
SPEAKER_01: and all these different moments for all these different audiences.
46:43
SPEAKER_01: And I think it's been very uniform in the same way that the film industry used
46:46
SPEAKER_01: to be all spectacle and, you know, Cleopatra and pyramids and elephants.
46:51
SPEAKER_01: And then it became reality TV,
46:53
SPEAKER_01: piped right into And so there's a transition
46:58
SPEAKER_01: of what filmed entertainment looks like nowadays.
47:00
SPEAKER_01: The same with the games industry,
47:02
SPEAKER_01: as it becomes more mainstream,
47:03
SPEAKER_01: it has to also accommodate much more diverse, different tastes and aesthetics.
47:08
SPEAKER_01: And that is a whole nother question.
47:10
SPEAKER_01: That's where the growth will come from.
47:11
SPEAKER_01: But the longer you look at this as how do we keep doing the same thing,
47:16
SPEAKER_01: which side note,
47:19
SPEAKER_01: One of the interpretations around the Xbox troubles is the fact is like,
47:22
SPEAKER_01: yeah, okay, so there is a lot of movement here, but no production.
47:27
SPEAKER_01: And when it comes out, it's more the same.
47:28
SPEAKER_01: And so like, at what point do you turn over the generation of developers and designers?
47:34
SPEAKER_01: Like in the same way that you see that in fashion and music,
47:36
SPEAKER_01: like, you know, if the Rolling Stones were still top of the charts, Really?
47:41
SPEAKER_01: Do you think people would listen to music?
47:43
SPEAKER_01: They need their own artists.
47:44
SPEAKER_01: They need their own songs.
47:46
SPEAKER_01: So it's time to move, sort of refresh it a little bit.
47:50
SPEAKER_03: And I think that's a good idea.
47:52
SPEAKER_03: So I'm going to bookend this because it's a great bookend I feel I've got in the mind.
47:55
SPEAKER_03: But I'll also say that I've always had this slight issue with the generations.
47:59
SPEAKER_03: You've talked about it there,
47:59
SPEAKER_03: like my 13-year-old's into this and I'm into this because I'm a Gen X gamer.
48:02
SPEAKER_03: But actually, I've always got a...
48:04
SPEAKER_03: I don't know, because we're a first-generation gamers, really.
48:07
SPEAKER_03: I don't know...
48:09
SPEAKER_03: If my kids,
48:11
SPEAKER_03: when they're 40,
48:13
SPEAKER_03: if actually they'll be interested in the same games that I am interested in now
48:15
SPEAKER_03: that I'm 40.
48:16
SPEAKER_03: Because I played a lot of multiplayer games when I was a teenager.
48:19
SPEAKER_03: I played a lot of GoldenEye.
48:20
SPEAKER_03: I played a lot of that stuff.
48:22
SPEAKER_03: And now I play less of it.
48:23
SPEAKER_03: And now I'm watching my, you know, youngest play a lot of multiplayer games.
48:26
SPEAKER_03: I know they're different There are types of multiplayer games.
48:28
SPEAKER_03: I know the industry's moved on, technology's moved on.
48:31
SPEAKER_03: But I do wonder to myself sometimes,
48:33
SPEAKER_03: actually, would I have played the games he's playing now when I was his age?
48:36
SPEAKER_03: And is it more an age thing than a generation thing?
48:38
SPEAKER_03: Excellent question.
48:39
SPEAKER_03: I have less time now.
48:41
SPEAKER_03: I've got different needs.
48:43
SPEAKER_03: Sometimes I just want a bit of me time.
48:45
SPEAKER_03: It's just different, right?
48:47
SPEAKER_03: And so I ponder when we talk about people have different needs,
48:52
SPEAKER_03: younger people have different needs,
48:53
SPEAKER_03: and we need to be thinking about what the different groups are.
48:55
SPEAKER_03: But actually I think older people,
48:56
SPEAKER_03: we need to be thinking about them as well and what they different want.
48:59
SPEAKER_03: But it's interesting with the going back to the Uh, the SNL sketch we talked at the beginning.
49:04
SPEAKER_03: One of the jokes in
49:05
SPEAKER_03: the SNL sketch was how boring Zelda sounded versus how cool GTA sounded, right?
49:10
SPEAKER_03: Who wants,
49:11
SPEAKER_03: you know,
49:11
SPEAKER_03: GTA was heists and stealing things and attractive women and Zelda is,
49:17
SPEAKER_03: um, Just ride a horse.
49:43
SPEAKER_03: Yeah.
49:46
SPEAKER_01: You have to always wonder is like,
49:48
SPEAKER_01: you know, so GTA,
49:49
SPEAKER_01: I love GTA,
49:50
SPEAKER_01: big fan,
49:51
SPEAKER_01: but Rockstar and Take Dude,
49:53
SPEAKER_01: they're very sort of entertainment focused sort of media company almost.
49:57
SPEAKER_01: And so to a media audience, GTA is what a video game looks like, right?
50:02
SPEAKER_01: It has like action heroes and explosions and guns and cars and whatever.
50:06
SPEAKER_01: And to, again, For the gamer audience, something like Zelda is what a game looks like.
50:10
SPEAKER_01: And so they're just different aesthetics.
50:11
SPEAKER_01: And so you could argue it's like DGA is what media companies think a game looks like.
50:17
SPEAKER_01: And it does to some degree, and it's super popular.
50:19
SPEAKER_03: But that's not the only version of that, right?
50:22
SPEAKER_03: Yeah.
50:23
SPEAKER_01: So I take that point very seriously.
50:25
SPEAKER_01: I think you're right.
50:25
SPEAKER_01: I think it's a good observation.
50:27
SPEAKER_01: We've gone off consolidation.
50:30
SPEAKER_03: I don't know,
50:31
SPEAKER_03: you seem quite pessimistic at the beginning about having become consolidated at
50:34
SPEAKER_03: the top and where's the innovation going to come from,
50:36
SPEAKER_03: but actually there's a lot of hope we've had through this conversation of where some
50:40
SPEAKER_03: of that might come from.
50:41
SPEAKER_01: Well, I'll borrow one of your lines,
50:42
SPEAKER_01: which is whatever the circumstances in the industry,
50:46
SPEAKER_01: the only way out of it is make better games.
50:49
SPEAKER_01: That's just fundamental.
50:51
SPEAKER_01: And so the challenge is never like, oh, are big companies too powerful?
50:56
SPEAKER_01: Of course, that's always been the case.
50:58
SPEAKER_01: That was the case from day one.
51:00
SPEAKER_01: Atari was way too powerful and then spent it all kind of thing.
51:05
SPEAKER_01: You realize what are the pockets of innovation?
51:10
SPEAKER_01: Where can we create something that we haven't seen before?
51:12
SPEAKER_01: Where can you be brave?
51:13
SPEAKER_01: Where can you invest?
51:14
SPEAKER_01: Because no investor wants to go up against GTA.
51:17
SPEAKER_01: So where do you go?
51:18
SPEAKER_01: And I think that that's really the answer.
51:20
SPEAKER_01: Once you understand the environment, then if they're zigging, let's zag this way.
51:26
SPEAKER_03: I think, should we end on that one?
51:29
SPEAKER_03: We could talk for hours.
51:30
SPEAKER_03: We should definitely have you back on, yes.
51:31
SPEAKER_03: I really enjoy chatting to you.
51:33
SPEAKER_03: Yeah, and yourself.
51:33
SPEAKER_02: Yeah.
51:34
SPEAKER_03: Thank you for your time.
51:35
SPEAKER_03: Of course, always.
51:36
SPEAKER_03: Pleasure, Chris.
51:38
SPEAKER_03: Right then, we're not done yet.
51:40
SPEAKER_03: I have another thing for you.
51:41
SPEAKER_03: It's a small interview.
51:42
SPEAKER_03: At Gamescom, I had a chat with someone called Libby Park.
51:45
SPEAKER_03: She's the CEO of Pearl Abyss Europe.
51:47
SPEAKER_03: And Pearl Abyss obviously launched the breakout hit, Crimson Desert, earlier this year.
51:51
SPEAKER_03: It's another successful game to come out of Korea.
51:53
SPEAKER_03: And I thought I'd catch up with her to talk about the game,
51:55
SPEAKER_03: talk about Korea, how it's impacted the studio.
51:58
SPEAKER_03: It's a short interview.
51:59
SPEAKER_03: It was on a very noisy booth at Gamescom.
52:01
SPEAKER_03: But I think you'll find it interesting.
52:04
SPEAKER_03: And here it is.
52:05
SPEAKER_03: Hello, Libby.
52:05
SPEAKER_02: Hello, Rick.
52:06
SPEAKER_02: Welcome to the show.
52:07
SPEAKER_02: Hello.
52:08
SPEAKER_02: Thank you.
52:08
SPEAKER_02: Thank you.
52:09
SPEAKER_02: Congratulations on the success of Crimson Desert.
52:11
SPEAKER_02: Six million sales.
52:12
SPEAKER_02: Thank you.
52:13
SPEAKER_02: The success.
52:14
SPEAKER_02: Has it had an impact upon your other games?
52:16
SPEAKER_02: Like if you had to sort of move people over to work on Crimson Desert?
52:19
SPEAKER_00: Not really.
52:20
SPEAKER_00: We have our designated Black Desert Studio and then Crimson Desert Studio just on their own.
52:26
SPEAKER_00: And we have also Dokevi Studio internally and etc.
52:30
SPEAKER_00: But since we are sharing,
52:32
SPEAKER_00: especially for Dokevi and Crimson Desert, we are sharing our Black Desert more.
52:38
SPEAKER_02: Let's face in.
52:39
SPEAKER_00: We are sharing Blackspace Engine.
52:42
SPEAKER_00: So whenever they actually learn something new that works amazing
52:46
SPEAKER_00: on Blackspace Engine, just talk every team, shares it with Crimson Desert team.
52:52
SPEAKER_02: Not really.
52:53
SPEAKER_00: They are sharing internal knowledge, basically.
52:57
SPEAKER_02: 80% of the game sales are in US and Europe, at least initially.
53:00
SPEAKER_02: Was that a surprise for you?
53:02
SPEAKER_00: For me, yes.
53:03
SPEAKER_00: It was a very good surprise.
53:06
SPEAKER_00: But indeed, we had this...
53:09
SPEAKER_00: We are confident deep inside of us.
53:13
SPEAKER_00: People will recognize us.
53:15
SPEAKER_00: But it is also a bit of a gamble because it is our first title
53:19
SPEAKER_00: and our audience never met Pearl Abyss' style of games and et cetera previously.
53:26
SPEAKER_00: But it was really a surprise, surprise for us in a good way.
53:32
SPEAKER_02: It's been this massive breakthrough success in the West.
53:34
SPEAKER_02: What is it?
53:35
SPEAKER_02: We're starting to see more and more of this.
53:36
SPEAKER_02: What is it about Korean games that appear to be resonating so strongly outside of
53:41
SPEAKER_02: the markets it normally does well in?
53:43
SPEAKER_00: I think it's being exotic is one side yeah
53:49
SPEAKER_00: but also Korean game industry was very small like nobody knew where Korea is located
53:56
SPEAKER_00: before or if like if we make our own games and etc
54:02
SPEAKER_00: but initially Korean developers Make our presence with MMORPG strongly in
54:08
SPEAKER_00: the western market and by having that recognition of international fandom,
54:15
SPEAKER_00: it gives us more confidence to build up and expanding our Game knowledge
54:21
SPEAKER_00: or game languages.
54:23
SPEAKER_00: So it's been decades,
54:26
SPEAKER_00: even though we are recently recognized as a memorable company when it comes to
54:31
SPEAKER_00: the games.
54:32
SPEAKER_00: But Korea has been preparing for these years
54:36
SPEAKER_00: to actually meet these international audiences' expectations
54:40
SPEAKER_00: while keeping our own identity and kind of being slightly exotic or different to
54:47
SPEAKER_00: the audiences.
54:48
SPEAKER_02: But it's not just games, is it?
54:49
SPEAKER_02: K-pop and Squid Game and all this sort of stuff.
54:52
SPEAKER_02: It seems to be,
54:53
SPEAKER_02: I guess, digital distribution is making it easier for people to discover this thing.
54:57
SPEAKER_00: Yes, for sure.
54:58
SPEAKER_00: And also during pandemic,
55:01
SPEAKER_00: everyone We became more open to listening to those 14 languages
55:07
SPEAKER_00: and reading those subtitles other than having full voiceovers in their own languages
55:12
SPEAKER_00: and etc.
55:13
SPEAKER_00: And also that opens up a lot of opportunities for entertainment industry in general.
55:20
SPEAKER_00: So they already have enough amount of those familiar contents of their own languages
55:26
SPEAKER_00: and people were willing to explore further.
55:29
SPEAKER_00: So it was It was very difficult time,
55:32
SPEAKER_00: but in that sense of like cultural experiences, it was really different.
55:38
SPEAKER_00: It made huge difference.
55:40
SPEAKER_02: And I think the game sales were 50-50 between PC and console.
55:44
SPEAKER_02: Has console become a bigger focus?
55:46
SPEAKER_02: For Pearl Abyss?
55:48
SPEAKER_00: I should not admit.
55:48
SPEAKER_00: Maybe it's my personal opinion, but console is obviously the dream goal, no?
55:54
SPEAKER_00: Because Korean game industry,
55:56
SPEAKER_00: we started as a PC game developer because he was more familiar It's
56:01
SPEAKER_00: a very familiar tool for us, but obviously everyone is gamers, right?
56:06
SPEAKER_00: Everyone has these higher goals that they've been growing up playing
56:11
SPEAKER_00: and also watching all those amazing console titles and dreamed of becoming
56:17
SPEAKER_00: So those experiences while developing PC game now giving us more chance
56:24
SPEAKER_00: to understanding console market,
56:27
SPEAKER_00: console language, console like fans needs and wants.
56:31
SPEAKER_00: Yes.
56:31
SPEAKER_02: Yeah, I didn't expect to see the 50-50 numbers on console.
56:34
SPEAKER_02: Really?
56:34
SPEAKER_02: I was just, well,
56:36
SPEAKER_02: I just felt,
56:37
SPEAKER_02: I think because it's Pearl Abyss and it's,
56:39
SPEAKER_02: you know, I thought it was destined to be more PC favorite.
56:42
SPEAKER_02: To see it do so well on console is great.
56:44
SPEAKER_02: But I guess that's part of the Western success of it succeeding in the world.
56:46
SPEAKER_02: It's probably doing quite well on PlayStation and Xbox.
56:49
SPEAKER_02: And it's coming to Nintendo as well, isn't that right, Switch 2?
56:52
SPEAKER_00: I was about to say this.
56:53
SPEAKER_00: So just we are eager to meeting the more fans possible.
56:58
SPEAKER_00: So we would like to support the tools they are comfortable with.
57:03
SPEAKER_00: So that's our main focus.
57:05
SPEAKER_00: That's why we are trying to expand to serving all these different consoles, including Switch 2.
57:12
SPEAKER_02: Now, I was a bit surprised to see the player response to the game was very strong.
57:18
SPEAKER_02: The critical reception was a little bit more mixed, right?
57:21
SPEAKER_02: It wasn't terrible, but it was a little bit lower.
57:24
SPEAKER_02: Do you have any theories as to why there was a disconnect there?
57:27
SPEAKER_00: I can have my personal opinion, right?
57:29
SPEAKER_00: So I do believe both parties have fair points, especially for critics.
57:36
SPEAKER_00: They had to play the build that is not the exactly same version of the launched game.
57:42
SPEAKER_00: And also they had limited time and then usually the classical approach
57:46
SPEAKER_00: when they review the game is following the main quest line.
57:50
SPEAKER_00: But Crimson Deserts, our unique charm is spread all over our in-game world.
57:57
SPEAKER_00: All those tiny details that are hidden,
57:59
SPEAKER_00: all those freedom you can actually explore even further beyond
58:04
SPEAKER_00: the common Expectations.
58:07
SPEAKER_00: So all those unique bits and interesting new,
58:10
SPEAKER_00: freshen up bits,
58:12
SPEAKER_00: I don't think critics had a fair chance to explore experience
58:16
SPEAKER_00: while those reviewing periods.
58:18
SPEAKER_02: Obviously there was some controversy around AI assets in the game.
58:23
SPEAKER_02: And I know they've been taken out and all that kind of stuff,
58:26
SPEAKER_02: but has there been any impact on sales or have you had to change any processes as
58:32
SPEAKER_02: a result of all that?
58:33
SPEAKER_00: So our game being so massive and also we've been developing this game for years
58:39
SPEAKER_00: and years while working on our own engine development.
58:43
SPEAKER_00: So since it is so huge,
58:47
SPEAKER_00: there are all those small bits or important bits still not found or like realized
58:53
SPEAKER_00: within the build.
58:54
SPEAKER_00: So it was really good waking up call for us because it was never intended to be even in, right?
59:01
SPEAKER_00: So it was more of a kind of placeholder at a kind of initial settings to check how
59:08
SPEAKER_00: the atmosphere would feel and it should have been immediately removed.
59:12
SPEAKER_00: So yeah,
59:13
SPEAKER_00: it was a bit hard experience,
59:16
SPEAKER_00: but it was really good learning point that we really need to kind of approach
59:21
SPEAKER_00: with all this cautiousness.
59:24
SPEAKER_02: You're focusing on free updates rather than paid DLC.
59:27
SPEAKER_02: I might be being naive.
59:28
SPEAKER_02: That doesn't seem the most commercially prudent way of doing things.
59:32
SPEAKER_02: Why do it that way?
59:34
SPEAKER_00: Why do we do it in that way?
59:36
SPEAKER_00: So it is very similar approach to us trying to reach out all these different platforms and etc.
59:44
SPEAKER_00: We wanted to deliver our game that satisfies us and that we can be So we thought
59:52
SPEAKER_00: if this is fair to add this additional changes,
59:57
SPEAKER_00: adjustments that we feel even more comfortable even after launch.
1:00:02
SPEAKER_00: So that's why we made decisions of just giving it to our fans for free
1:00:07
SPEAKER_00: because we want as many as possible can experience as our full game.
1:00:15
SPEAKER_02: I'll ask a couple more.
1:00:16
SPEAKER_02: You've got multiple projects in the works, right?
1:00:19
SPEAKER_02: How do you make sure you don't get distracted by all these new projects?
1:00:23
SPEAKER_00: So we have our amazing operations team.
1:00:26
SPEAKER_00: So they are the front liners who meet our fans.
1:00:30
SPEAKER_00: So Black Desert team,
1:00:32
SPEAKER_00: even though,
1:00:33
SPEAKER_00: of course,
1:00:34
SPEAKER_00: they share our success of Crimson Desert with Full Heart and et cetera,
1:00:40
SPEAKER_00: but still they know and they love
1:00:45
SPEAKER_00: Black Desert is amazing
1:00:47
SPEAKER_00: and they understand Black Desert is our first ever game title and it kind
1:00:55
SPEAKER_00: of contains all this vision of Pearl Abyss.
1:01:00
SPEAKER_00: Thanks to Black Desert, we learn a lot.
1:01:02
SPEAKER_00: And so it allows us to implement into even Crimson Desert, etc.
1:01:06
SPEAKER_00: So they have their own pride in our title.
1:01:10
SPEAKER_00: They still want to learn things from Crimson Desert experience.
1:01:14
SPEAKER_00: But implementing into Black Desert working even further for Black Desert
1:01:19
SPEAKER_00: and we also recently announced that we are closing our first chapter 10 years
1:01:24
SPEAKER_00: of first chapter of Black Desert and it'll be the second new chapter
1:01:29
SPEAKER_00: of Black Desert.
1:01:30
SPEAKER_00: So Black Desert team is excited and they will still develop even further purely on Black Desert.
1:01:38
SPEAKER_02: You've got separate teams that are fully focused on their project and they're sort
1:01:43
SPEAKER_02: of learning from each other.
1:01:44
SPEAKER_02: So that's helping each other.
1:01:45
SPEAKER_02: Oh, I see.
1:01:46
SPEAKER_02: Okay.
1:01:47
SPEAKER_02: I'll ask one last question.
1:01:49
SPEAKER_02: Where would you like to see Pearl Abyss in five years?
1:01:52
SPEAKER_02: Like I was going to say 10 years, but five years, I think you're doing so much.
1:01:54
SPEAKER_00: So I would like to see Pearl Abyss being recognized as
1:02:02
SPEAKER_00: Trusty developers,
1:02:03
SPEAKER_00: even though we are going to have multiple IPs, new IPs, different junks and etc.
1:02:10
SPEAKER_00: But still we have our own like spoken languages throughout those games.
1:02:15
SPEAKER_00: So I would like us to be received as the Devs with the characteristics, unique characteristics.
1:02:29
SPEAKER_00: Thank you so much for your time.
1:02:30
SPEAKER_00: Thank you so much
1:02:31
SPEAKER_02: for having us.
1:02:31
SPEAKER_02: And congratulations on the success so far.
1:02:34
SPEAKER_00: Thank you.
1:02:35
SPEAKER_00: Thank you so much.
1:02:37
SPEAKER_03: Thank you to Libby there.
1:02:38
SPEAKER_03: And thank you to Yoast earlier on as well.
1:02:40
SPEAKER_03: Now, before we completely finish,
1:02:41
SPEAKER_03: it's worth wrapping up some of the big news stories of the last week.
1:02:45
SPEAKER_03: And one of the biggest stories was about Google
1:02:47
SPEAKER_03: because they've announced Playground,
1:02:48
SPEAKER_03: which is a new consumer platform for games made using generative AI.
1:02:53
SPEAKER_03: Anyone 18 plus in the US can generate and customize playable games using
1:02:57
SPEAKER_03: a text prompt with no coding required.
1:02:59
SPEAKER_03: You can make 2D and 3D games and depending on the genre,
1:03:02
SPEAKER_03: both single and multiplayer experiences.
1:03:04
SPEAKER_03: The company calls it an experimental platform.
1:03:06
SPEAKER_03: Now later this year,
1:03:07
SPEAKER_03: This will be supported by an expanded creation toolset called Unity Spark,
1:03:10
SPEAKER_03: which is from, as the name suggests, Unity.
1:03:13
SPEAKER_03: It keeps the prompt-driven interface,
1:03:14
SPEAKER_03: but at professional level mechanics, high-fidelity 3D and more.
1:03:18
SPEAKER_03: It follows similar offerings from Roblox and Meta,
1:03:20
SPEAKER_03: and we will be covering this story more and more in the weeks ahead,
1:03:22
SPEAKER_03: including we've got an interview coming up with Meta.
1:03:26
SPEAKER_03: By the way, it also follows the Playground naming conventions that other companies are using.
1:03:30
SPEAKER_03: So you have the Next Playground,
1:03:31
SPEAKER_03: we have the Netflix Playground, and then we have the Google Playground.
1:03:33
SPEAKER_03: That's three video game platforms called Playground.
1:03:36
SPEAKER_03: Anyway.
1:03:37
SPEAKER_03: Another massive story this week.
1:03:38
SPEAKER_03: Paramount and Warner Brothers has completed his $110 billion merger.
1:03:41
SPEAKER_03: The companies will now be called Skydance.
1:03:43
SPEAKER_03: And more importantly to us in the video games industry,
1:03:46
SPEAKER_03: their two games teams are uniting as well.
1:03:48
SPEAKER_03: Now,
1:03:48
SPEAKER_03: Paramount Games has only recently formed and they're overseeing titles including
1:03:51
SPEAKER_03: the upcoming Teenage Mutant Ninja Turtles,
1:03:53
SPEAKER_03: The Last Ronin from Platinum Games,
1:03:56
SPEAKER_03: plus games in the Avatar, SpongeBob and Star Trek franchises.
1:04:00
SPEAKER_03: It's also working on the Marvel 1943 Rise of Hydra game, which Amy Henning is building.
1:04:04
SPEAKER_03: Warner Brothers, of course, is a massive games company.
1:04:06
SPEAKER_03: It makes Hogwarts Legacy.
1:04:07
SPEAKER_03: It has Batman developer Rocksteady in its portfolio of studios.
1:04:11
SPEAKER_03: It's got the Lego games.
1:04:11
SPEAKER_03: It's got Mortal Kombat.
1:04:12
SPEAKER_03: It's got loads of titles.
1:04:14
SPEAKER_03: However,
1:04:14
SPEAKER_03: the new combined entity will be managed by the Paramount Games Studios boss,
1:04:18
SPEAKER_03: Tony Driscoll.
1:04:20
SPEAKER_03: Disappointing story, this one.
1:04:21
SPEAKER_03: We knew it was coming two months after announcing layoff plans,
1:04:24
SPEAKER_03: horror game developer Supermatic Games has cut 70 employees,
1:04:27
SPEAKER_03: according to the studio's facilities director, Frank Tindall, on LinkedIn.
1:04:32
SPEAKER_03: Another sort of, it's a UK story in a way, but a Far more positive one.
1:04:36
SPEAKER_03: So you may have seen Star Wars Galactic Racers come out this week.
1:04:38
SPEAKER_03: Got great reviews.
1:04:39
SPEAKER_03: I'm very excited about it.
1:04:40
SPEAKER_03: I've just bought it.
1:04:41
SPEAKER_03: But it's also a surprise released on Amazon Luna.
1:04:43
SPEAKER_03: The game's single player mode is available to all Prime subscription holders.
1:04:46
SPEAKER_03: And reading that out makes me realize I should probably have done that rather
1:04:50
SPEAKER_03: than bought it from Amazon, like I say.
1:04:51
SPEAKER_03: Anyway, I'm actually looking forward to it.
1:04:53
SPEAKER_03: I'm happy to have bought it.
1:04:54
SPEAKER_03: Elsewhere, Embark Studios' Ark Raiders and the Finals are both being adapted for film and TV.
1:04:59
SPEAKER_03: The production company that has signed the projects is churning in entertainment.
1:05:03
SPEAKER_03: Another sales story,
1:05:04
SPEAKER_03: Tom Bannon's No Room in Hell 2 has sold 1 million copies after leaving early access.
1:05:08
SPEAKER_03: And finally, Krafton is ending development on PUBG's spin-off Black Budget.
1:05:12
SPEAKER_03: The Extraction Tutor had a closed alpha test earlier this year,
1:05:17
SPEAKER_03: but the publisher concluded it isn't going to deliver the right experience.
1:05:21
SPEAKER_03: That's it for today's episode of The Game Business Show.
1:05:23
SPEAKER_03: I hope you enjoyed that.
1:05:24
SPEAKER_03: Next week, we've got loads and loads of cool stuff.
1:05:26
SPEAKER_03: We've got a big interview with Velland Studios at Guha and Karthik Bala.
1:05:29
SPEAKER_03: Those are video game legends.
1:05:31
SPEAKER_03: They really are.
1:05:31
SPEAKER_03: And their new studio, well, it's not new studio anymore.
1:05:34
SPEAKER_03: It's 10 years old.
1:05:34
SPEAKER_03: And they've just released that Starbox game with Nintendo.
1:05:37
SPEAKER_03: It's a really good chat.
1:05:38
SPEAKER_03: I can't wait to show it to you.
1:05:39
SPEAKER_03: That comes out on Tuesday.
1:05:40
SPEAKER_03: Then on Thursday,
1:05:41
SPEAKER_03: barring,
1:05:42
SPEAKER_03: you know,
1:05:42
SPEAKER_03: any last minute changes, we've got interviews with Lucasfilm and Call of Duty.
1:05:48
SPEAKER_03: So check us back on Thursday for that.
1:05:51
SPEAKER_03: If you are in the UK and you're heading to New Horizons,
1:05:54
SPEAKER_03: which is a big conference that takes place in the UK,
1:05:55
SPEAKER_03: you might see me there because I'm interviewing PlayStation legend,
1:05:59
SPEAKER_03: the father of PlayStation, Ken Kucharagi, live on stage.
1:06:03
SPEAKER_03: So a bit of a Game Business Live mini there for you as well.
1:06:08
SPEAKER_03: Massive busy week for us next week.
1:06:09
SPEAKER_03: And if you want to make sure you don't miss any of that,
1:06:12
SPEAKER_03: head to thegamebusiness.com and put in your email and you'll get
1:06:14
SPEAKER_03: an alert every time we put out a new episode.
1:06:16
SPEAKER_03: You can also become a paid subscriber.
1:06:18
SPEAKER_03: We do a Monday morning bonus show for paid subscribers that you'll get if you want
1:06:22
SPEAKER_03: to do that as well.
1:06:24
SPEAKER_03: But until then, thank you for tuning in.