In this week's Roundtable, the squad dives into the unexpected success of Helldivers 2, PlayStation Studios' first game to launch simultaneously on PlayStation and PC. We then shift gears to Microsoft's Xbox Business Event, which, despite its brevity, sparked a flurry of speculation regarding the company's strategy for porting "exclusives" to PlayStation. The conversation takes a critical turn as we examine the Epic Game Store's 2023 performance review, alongside Epic's maneuver to reintroduce Fortnite on iOS in Europe via its own mobile app store. Additionally, we dissect Supercell's annual public letter and debate the effectiveness of the company's strategic pivots since its last game released in 2018. This week's discussion offers a blend of analysis and insight into the evolving dynamics of game development, distribution, and the broader industry's competitive landscape. Join us for all the latest games business news with Sebastian Park, Tammy Levy, Aaron Bush, and host Devin Becker.

You can sign up for the Naavik x Betaworks NYC meetup here: https://lu.ma/3lrc2t71

We’d like to thank RallyHere for making this episode possible. RallyHere is a proven gaming backend platform and service made specifically for cross-platform live-service games. RallyHere is your one-stop-shop to streamline your development processes, increase speed to market, and optimize your post-launch live services. To learn more or schedule a demo, visit rallyhere.gg

This transcript is machine-generated, and we apologize for any errors.

Devin: Hello everyone. Welcome to another Naavik round table. I'm here with Steven Becker and with me, of course, three fantastic panelists.

We've got Aaron, Sebastian and Tammy. How are you guys doing?

Tammy: Hello, we are ready.

Devin: Cool. We actually have a meetup we wanted to talk about to Sebastian.

Sebastian: Yeah. So if you are in the New York area, in particular, Manhattan, you should come by to the first Beta Works Venture / Naavik Gaming meetup at the Beta Works office and meatpacking.

I work out there. I think it's a really awesome space. Alex Takei, who you may know for some of the other podcasts is organizing this meetup for people who do gaming in the New York city area. Come by. I believe there's going to be pizza. There's going to be some stuff to drink. There's going to be 2k codes for people who love 2k.

We tossed the Luma link inside the show notes. If you are listening to this and it's before February 29th, which is next Thursday upon recording. Go sign up, let us know, and hope to see you there.

Devin: So that makes sure if you're interested to sign up, hopefully, as soon as you hear this, so you don't forget over the weekend and then it bleeds into the next week.

And then you forget and don't end up making it. So definitely do that. Add it to your calendar. It sounds really cool. If I was on the East coast, definitely would check it out. Unfortunately, I'm on the other side. So it's a little bit of a long walk, but cool. Looking forward to that. Cracking off. In the meantime, we have a lot of great topics today actually might be a bit full in terms of lots of interesting stuff to talk about around games coming out and actually doing a lot more, a lot better than we thought some not doing as well, but which we also expected and a lot of industry talk here.

So why don't we just start off with the game that did well, the good news part. So we've had a lot of unexpected hits lately. Pallworld was a good example. We had Dave, the diver snuck in there, lethal company. So a lot of stuff actually doing quite well. And this one as well, somewhat. I would say indie, but published by PlayStation, which was interesting as this was the first simultaneous PlayStation and Steam PC release from PlayStation, which is Helldivers 2.

So if you're not familiar with Helldivers was actually a kind of a top down, they come from making Gauntlet, which you can see the lineage there. They also made a game called Magicka before that. And they'd done these top-down games and they decided to make this one. I think a little more third person behind the scene.

And it has this kind of vibe of like maybe Warhammer 40 K mixed with like Starship troopers. And it very much wears a Starship Troopers stuff on its sleeve. So if you're familiar with that stuff, some of those games have been trying to come out lately and there's definitely demand for it. So it seemed to do quite well.

This game just stormed with the charts. I saw below a Counter Strike 2. Pretty easily. And I think the peak had beat quite a few games in terms of peak players. Obviously this may not last indefinitely, but for a game that had the previous one, I think the concurrence on Steam only managed to make it up to 5, 000 at one point, and most of the time we're in the two to five hundreds.

So to storm up with a sequel kind of out of nowhere like this, I think it was a little unexpected, especially since it just released. And I don't think a lot of people are anticipating it. So definitely a very exciting and having played it myself. I definitely see. The appeal, it's a very fun game. And the big complaint, if you see the mixed reviews is more just because the servers can't seem to handle all the excitement, everyone is one of those ones where it's a good problem, bad problem.

So it's an interesting mixed bag in that sense, but otherwise fantastic multiplayer game. Thoughts from you guys.

Sebastian: Helldivers is really cool. Apparently as of recording, there's already been a million plus units sold. Helldivers 2 has been a ton of fun. I quite enjoy it, but I've always been a huge fan of Arrowhead game studios, regardless.

I was a big fan of Magicka, big fan of Gauntlet. I think they make really good games. I think the thing that like took people by surprise was that it didn't have the typical AAA buildup that we're used to seeing. Like people are used to the almost moviesque. People going on road, doing a bunch of ad sales and ads everywhere.

And compared to that, it like just dropped, which was awesome. It was a ton of fun. I think it's still doing really well. And it's yet another example of this style of game that we've discussed and we'll probably discuss later as well, which is, Hey, Unlike some of the free to play games that people have gotten used to, Helldivers is not a free to play game.

And deep down, it doesn't have that as its mechanism, right? It's a box game. It's 40 bucks. At least where I'm buying it from. Maybe it's cheaper elsewhere.

Aaron: Yeah, I think it's what you said first, Devin, about it being the first time PlayStation is releasing a game on PC and PlayStation simultaneously.

I think that's a pretty big deal actually, and is a sign of what else is to come. And if you triangulate it with some other data points and discussions that are going on, I think it paints a picture of How the future of PlayStation, at least in this current era, could be a little bit different from the past because as we've seen for the most part, PlayStation has invested a tremendous amount of money into typically it's single player, more narrative based games that become the tip hole franchises of PlayStation.

And because they are great games, they're beloved and respected. Those are the games that really ship. The PlayStation units that make people want to buy the consoles themselves. And that strategy worked phenomenally well. PlayStation sells about twice as many hardware units as Xbox does. But now that they have successfully pulled that off, they are starting to think about other ways to grow their business or improve parts that are Less than great right now.

So Sony, they released their financial statements, their latest quarterly results, and a couple of things about PlayStation specifically stood out. One was that they lowered their forecast for PS5 sales. Which, it's just a sign that market we're now mid cycle. It's now maturing. I don't think it's necessarily as bad of a deal as maybe some headlines are making it out to be.

It is still very dominant in console here and they have a long ways to go, but that's going on. And then the second part of the conversation was around margins, where a bunch of analysts are saying like. Hey, your business is more digital than it's ever been. You sell more of these online subscriptions than ever before.

Why are your margins worse? What's going on? And that's a fair criticism. There's a lot of, there's a lot of reasons at any time why the margins might be what they are. But the Sony president who recently, Mr. to Toki, who recently stepped in to. Spearhead PlayStation in the interim as Jim Ryan, who was the CEO of PlayStation.

He stepped aside. He made a couple Frank blunt statements recently around these earning results that I think also just tie some things together here and help paint where this is going. Also, thanks to Simon Carlos and his newsletter for pulling some of these quotes together. But he essentially said that Sony is their first party developers.

They're very highly motivated. They're very good people. But in terms of Overall growth and sustainable profitability with increasing margins. I don't think people understand this that deeply. And so that was one quote he said, then he went on to say in the past, we wanted to popularize consoles and the first party titles main purpose was to make the console popular.

But if you have a strong first party content, not only on our console, but also other platforms like PC computers, first party can be grown with multi platform and that can help operating profit to improve. And so now we're basically seeing the point in their cycle where they won the console battle, and now they're thinking about how to improve the profitability of their business with the games that they're already making.

And I think it's worth noting that there are real reasons that the margins. are maybe more depressed than they have been. One, budgets on games have massively risen, especially on these like triple A blockbusters. For example, Spider Man 2, which has been their like latest big blockbuster release, it had a budget, people are saying, of a little over 300.

Million dollars, which is three x what the, that first Spider-Man one game was, which is a massive increase. And yeah, , it's, you're gonna have a much harder time getting the same level of margins on that if your costs go up three x. And so it's worth thinking about how to change that up. Also there's a lot of people working on games that have not yet shipped, that aren't live.

There's even parts of the business, a bunch of people working in mobile, for instance, where nothing. Has been shown yet. So those are other factors to consider, but all in all, I think that it's. PlayStation is at a point where they can start thinking about PC more. That doesn't mean that cross platform means they'll be bringing games to Xbox.

I don't think they need to do that, but across PlayStation and PC, yeah, I think their publishing can become much bigger and more profitable, at least in this console cycle.

Tammy: Yeah, the other, the last thing I'd say on this piece is it's interesting, the strategy around marketing, right? I think that's also one to highlight in terms of just shifting strategy.

So we're all not having this multi million dollar budgets for launching PC games or console games in this case yeah. It's, it shifts the economics and the dynamics and like proving that they can have a big hit on their hands without having to spend like these multi million dollar budgets ahead of time.

I think it also, it's a little bit of a glance like into what we can expect around. That focus on profitability and trying to increase margins overall.

Devin: This particular game has some interesting details too. And that first off, as you mentioned, the 40, it's not a 60, 70 game. It just came out and was like, it's at a reasonable price to try it out.

Similar to power world was at 30, just one of these prices where it's like, Hey, if you're into this kind of game, like it's pretty affordable. It's not a 10, 20 indie game, and it's not a 70 AAA game. It's in that kind of AA, maybe AA plus with the quality, this one sort of caliber. And then also the monetization was a nice kind of balance where there's a little bit of live service mentality, but never, it doesn't come across greedy.

And so I think it had a nice balance of Hey, you pay 40 for this, but also you could spend a little bit more, but you don't have to like, so you earn a soft currency sort of thing through the game that you could also buy if you want to move in faster and you could spend it on the stuff for free.

And like the sort of free. Set of stuff, which includes a rotating store that puts a new stuff, but they also added like a battle pass thing, but rather than it being a battle pass, it's just unlocks another shop where you could spend those same things. That's an interesting sort of balance where they're not forcing a grind other than, Hey, there's this currency you could pick up as you do it.

But the part I found interesting, that was a big evolution between the first game and the second game was that they, the first game was just this co op, like a single player experience. Whereas this one has this sort of MMO esque feel by trying to make it like this big. Universal war that you're part of and all your battles are contributing to all the players and what you're doing and this big war against these two different species, essentially, and everyone's participating and there's these ways they create illusions that you're seeing everyone.

Battling from the ship and all this, they create this very cool, like planet side vibe to it. And I think that was an interesting upgrade that I imagine contributed a lot to this sort of virality of this, that sort of feel that everyone's in this sort of war together, as opposed to just a single player game, you play with your friends.

And obviously has the matchmaking stuff like that. So I found it interesting that the timing of a game like this to come out, but also hitting the right mark. Obviously I don't think you could just easily replicate it, but it's funny that this did much better than the more recent Starship Troopers attempts.

It just didn't quite hit the mark, even though this isn't actually an official one, just the spirit of, we'll see how it goes. I don't know how long this will last, but hopefully they get the server squared away before they shut it down.

Sebastian: One really fun fact about pricing in particular and the audience targeting is that we're starting to see more market segmentation around price point as well as targeting this game harkens to gauntlet to Starship Troopers.

And those are terms that no one in Gen Z knows, just as an aside, sorry, Devin, it's like one of those things where. That is a price point that people are used to. That's a type of game style that they want to play. And so we're seeing that type of targeting. That's not to say that live ops games are dead or that the 70, 80, a hundred dollar prestige box sales are dead.

It's yet more segmentation that we expect to see as a March, as a market matures. And so how diverse too, I think is a great example of that type of targeting. I would imagine if I had to guess the vast majority of players. Of how divers too are male and millennials. I think that seems to be a target demographic.

It seems I've hit that note pretty well. And it seems to be the type of person who played honestly, H1Z1s probably when they were in university a decade ago. And now. They're out in the workforce and they're playing these styles of games. Their friends are playing these styles of games and they're coming back to it.

And so it cannot be understated that it may not be unlocking a new audience in the same way that mobile games did, or that perhaps VR games will in the future. But it's doing a doubling down of targeting that audience that honestly, the folks at Arrowhead game studios know. Really well, that's their demo.

That's the audience that they've always sold to. And that's the audience they're going to continue to sell to.

Devin: It also helps that they've got a good track record. They've generally produced quality games. This was like, I think a big step up in terms of what they were trying to do with it, both on the visual side and on the multiplayer side, which obviously they're struggling with a bit of that frame rate problems combined with the server problems, a little bit of a stretch, but overall it shows that building up quality over time and just.

I guess hitting the right timing with everything on the right audience, even without the marketing really there, I literally just saw, Oh, Hey, I guess this game's out, like none of us that play it even knew play the original knew that it was even coming out. So it's, I guess it's just one of those things where, again, you probably couldn't easily replicate it, but it shows like that sort of hard work paid off for this company.

But speaking of terms of targeting and trying to figure out where things should go, especially around exclusives, there was an interesting Xbox business event.

Aaron: Discussing some of that, unfortunately, I don't think it was very interesting, but after a week or two of speculation and pretty poor communication strategy, I would say from the Xbox team, Xbox announced that four of its games are going to PlayStation.

They didn't name the games, but. The general consensus is that these games going to PlayStation as well are going to be Hi Fi Rush, Pentament, Sea of Thieves, and Grounded. That's pretty minor news for them to host an event around. And obviously there was a lot of buzz around, are they going to take Starfield to PlayStation?

What about these big games? And of course, if they did that, There would have been Xbox riots in the streets, but it is, they're framing this as an experiment, but even so that the conversation is taking place, that there is speculation. It is worth zooming out, recognizing where we are and trying to think more about what actually makes sense here, because this.

Does not feel like a bold move in any direction at all, really. And maybe they're tiptoeing their way to another direction. I also would have thought though, that with Activision Blizzard being under their wing officially and them taking 18 months to lock that down, that they would have hit the ground running faster with a more specific laid out strategy that they had plenty of time.

to think through and the fact that they're allowing many days to go by with speculation before figuring out what to say. They have an event and then it's pretty minor. It just makes me wonder what conversations are going on behind the scenes that could have a larger impact on the direction that Xbox is really willing to go.

So anyways, I have a bunch more thoughts on what this could mean for Xbox and the directions that they could. Take, but I'm curious if anyone else has immediate thoughts on this announcement before digging into the bigger picture stuff.

Sebastian: I really miss E3 was one of the first thoughts I had when I saw this announcement is interesting because to me, at least, and Aaron, I'd love your opinion on this.

It felt like a departure from the previous. Build up announcements where you would hold everything until E3 or until one big Keystone event to announce everything there. It seemed more a return to a more Microsoft style of announcing, which is, Hey, here are the updates. Here's what we got. Get used to this cadence markets.

Please don't over exaggerate one way or the other. We're a publicly traded company with a lot of different parts where, frankly, most of our value probably comes from the fact that we own open AI. Who the hell knows? And I think that was the initial thought. Beyond that, I think consoles are such an inherently American concept in a lot of ways.

And as an American, and I think all of us on the call live in the US and are American It seems like a no brainer, given the world we've come from, that consoles take such a large part of the mindshare. It doesn't seem to be the case that it's such a large part of their business line or their international view, right?

Mobile becomes a larger and larger part. PCs becoming a larger part. There's a lot to be said about those types of things. And I Looked at this as honestly, like the reserve nature of the press conference from meta perspective makes a ton of sense to me. It's really trying to set that tone of, Hey, we're going to just keep doing this.

This is something we care about. We really love this. I think Ben Thompson said it great in strategery or however pronounces newsletter, where he mentions that Xbox was a point of pride. For Microsoft for such a long time in a similar way to when I talked to my Microsoft colleagues now, they love talking about open AI.

And it's very much one of those things where Microsoft is taking the step of being more in the forefront of an entertainment world than their old school approach.

Aaron: Yeah, I don't, your E3 point is interesting to me. This felt more, they just felt like they had to say something because the rumors were getting out of control.

But I guess a couple of things stand out to me about this to try to take this a bit bigger picture. One, Xbox in part is doing this, taking games to PlayStation because it doesn't have the luxury of being the top dog the way that PlayStation has. Since PlayStation has dominant market share, it can sell on its own console and PC and create a very large market share.

Dominant business, but Xbox can't get the same results if it follows that same strategy and recoup costs, generate meaningful ROI the same way, since they have a much lower console base and player base to spread those costs around. It's like how in video Netflix would never license its content to max because it has dominant reach, but max fields, a need to license to Netflix in order to better cover its costs and generate meaningful returns on that content.

So even though they have similar ish models in terms of console businesses, the nature of their business models is just different depending on the level of market share and scale that they have. That's one reflection. It sounds like they're doing similar things, but they're actually not because one is caving and putting their content on the competitor's platform and the other is succeeding without doing that.

But the second thing is I can't help but wonder whether this small experiment is a mistake or rather that it signals what could end up being a mistake just because it's so small, it's so minor, it almost lacks courage or something. from my point of view to be able to make a larger move that actually points them in a clear direction.

It seems like they're towing the line between two distinct and somewhat opposing strategies right now, which is one, they need killer console exclusives to gain share in hardware. And then two game pass and publishing success hinges on games being playable everywhere. And console exclusives and being playable everywhere really are at odds, especially when it comes to those major tentpole games.

So I can't help but think that they eventually will have to pick a path and they're dragging that decision out as long as they can. Now having these experiments and such, it doesn't what they're doing right now doesn't make sense to me. And you can look at the different paths. If they minimize Game Pass and double down on hardware and exclusives, that's giving up on a unique business model that's more in line with how Microsoft itself views the world, in which Microsoft minimized the importance of everyone and every device being on Windows, and instead now wants its services available everywhere, on every device, on every operating system.

Microsoft Mechanics www. microsoft. com And Microsoft as a business, it's hard to see them going down, going back down that path. And it's hard for it to see Xbox going down that path again, now that the services strategy is out of the bottle, so to speak. But the other path is to minimize the hardware ambitions and double down on game pass, broader publishing and cloud to a lesser degree.

And this way, if they make strong concessions, They would absolutely unlock ways to get much more game sales because of PlayStation. They may be able to even bring Game Pass to other devices. They would have a much higher margin business. In higher ROI business. And if we were to speculate, and if we were to be allowed by regulators, they could even combine their gaming business broadly with other types of entertainment, like video to create like a new type of super bundle to differentiate that is more in line with Microsoft strategy.

And obviously if Xbox left hardware, that would just leave PlayStation, which is a huge win for them, but bad for the industry in other ways. But either way, like both sides have issues, but walking this tightrope between them. And my mind just solidifies further meandering and further, just not going to win big and either direction.

And so it's hard to get out of that, but I can't shake that feeling that it's just meandering and not bold enough. And anyway, so do you agree with me disagree? Is there something to that? Or am I being too harsh?

Devin: I got another take is from the kind of gamer perspective in some historical context is the first thing that I think of is Sega.

So when they bowed out of hardware, obviously Microsoft doesn't seem like they're buying out of hardware. Like you said, like when Sega bowed out, like it actually was win for gamers, right? Because now suddenly Sonic could be on. Nintendo, you could have Sonic and Mario at the Olympics. Like it wasn't a strictly competitive thing and they're actually doing pretty well as a company in that sense.

Like where they didn't continue to double down and lose money on the hardware. They found, okay, we have enough hardware, software and IP and other businesses. We don't need to like overly focus on controlling the hardware market, even though that's where they made a big push initially, the master system, Genesis and all that stuff.

The other thing makes me think of is these are games that are not like brand new games, right? These are games that have been out for a while, some of them much longer than others and they're deporting them over. So it's not like they're losing that initial exclusive window, right? Where a lot of the sales happen.

But the other big thing is that these are games that are on game pass. At least I know a couple of them are specifically, I don't know if all four of them are, but that. Sets up a situation where it almost like, if you're the kind of person that has a game pass, or is interested in game pass, you'd be like, Oh, I could buy these on PlayStation, or I could play them for free on game pass.

Now, if you're, if you don't, if you have to buy the consoles, like that's less of a decision, but for someone like me, for example, I don't own PlayStation five or the current Xbox. Like I own the older generations, but not the current one, but I have windows. So I can play these games on my phone or on my computer, whatever, through the game pass, and I don't have to buy anyone's exclusive hardware, Microsoft still wins right in that situation, because they've got a position that is, as you said, the services business, the software side of things where they can win, obviously, if you're on macOS, then maybe it's different.

I'm not sure if they have any way to play that on there, but I mean, they're, we, they would even love to be on steam deck and everything else. So they seem to be comfortable with this idea of the, we'll be anywhere. Strategy with the game pass at least. And obviously I'm sure they would love to campaign to be like, Hey, can we get game pass on PlayStation?

Because PlayStation is not meaningfully competing with game pass. They're trying to do their stuff, but let's be real. It's just not the same level of value and interest. And there's been like a lot of debate over the value even of PlayStation plus with the price raises and stuff like that. Microsoft's team is like, they're making their case for Hey, we're still in the software business more than anything else. And our hardware is like a tool for us, but not the whole business. Like it's, it allows us to do a lot of things, but at the end of the day, it's still just a PC in a box. There's still a PC software company.

And I don't know. I don't know where their strategy is going forward, but those are some, I think, interesting perspectives for me in terms of like how I see this as a benefit to me, because I'm not on either side of the war, I just get the benefit from the extra accessibility and the ability to play this stuff anywhere.

I don't know if this is we're going to see a lot of this going forward. This is probably like trying it out. See Hey, are we going to pick up some follow on sales for stuff that we Yeah, if it's on Game Pass and it's not new, they're probably not making a lot of money from these games anymore.

Anyways, it's like, can we just make some extra dough this way? Cause we've spent a lot of money lately buying companies and on all this stuff, like we could recoup some. So I don't know. We'll see, when sales of that come around, if it was. Beneficial or not. And they also do have, at least in terms of the Activision Blizzard thing that you mentioned, they do at least have Diablo coming out in game pass next month.

Not sure about the other Activision Blizzard games, but they are at least starting to move on that. Like incorporating it a bit more. Just thought I'd throw that out there for those of you who didn't know.

Sebastian: Here's a super fun history lesson actually, and one that really informs. This movement, because often I feel we think about actions to Aaron's point.

Is he being hyperbolic? No, it's a reflection actually on how much development has changed over the last decade. When I first started in gaming back in 2012, one of the things that was really fun and then actually. Incredibly difficult problem was developing a multiple platforms. If you want to develop on console, you need to get like a custom console.

You need it to get a specific type of seat, 3d printing, not 3d printing, but like CD printing that was done. If you wanted to make an iOS game versus an Android game, those were completely different tech stacks using completely different chip sets that responded completely differently. Since then unity, unreal, the market share of a lot of these platforms.

Have grown to the point where you can really develop ones and target different devices. You still, it's not like the old days where you need to have multiple different teams running at things in order to maintain multiple platforms. That honestly is really cool. It means that there is no longer the same barrier that we used to see.

Where you would never see a game on Mac. We're starting to see games show up on Linux. I never saw that coming, personally. I just always assumed that you would have to run a virtual machine for a PC to play on Linux. This is representative of the greater trend line. What people are doing at whether Microsoft or Sony.

Is in line with that because whereas before the cost structure was such that, Hey, for me to develop on the Xbox as well as the PlayStation, I need to have two separate development teams to do the exact same thing. Now I can develop once and perhaps ship not only to PC, but Xbox, also the PlayStation.

That's a no brainer for a lot of people. And I think that's probably the larger driver in terms of this change, but more so than anything else. The second thing that I think Aaron brought up, which I really want to flag is the increasing price and cost of all this stuff, as it turns out, if your movies cost a hundred million dollars, you have to market to China.

It's just because they have more people and they have other people to play this. We know that consoles have a smaller market. If you're spending a lot of money on something, you want to reach a larger audience. And that's a no brainer. So we're seeing some of the trickle down effects here. If anything, I think the biggest surprise is that we haven't seen this sooner.

And that's almost, in my opinion, of certainly a function of just delays from COVID. You often don't see the value in the rough. When everything's going super well, you start to see the inefficiencies once things calm down. And that's almost certainly where we are today.

Aaron: Yeah. If I were Satya Nadella and I were looking at this, I probably wouldn't be that pleased.

And again, like just to like double emphasize the business model of exclusives on console and dedicating a big part of your business to console. is at odds with building services where you bring all those games to play everywhere. They're genuinely at odds with each other. And as long as you're meandering in the middle, you're not going to win in a big way.

If I were to guess what would happen, and I could totally be wrong in this, and crazy things could happen, Is at this point, Xbox is probably already like pretty deep into planning its next console generation out. And so we might not see radical changes in the near term, but what I guess would happen is.

Xbox is going to lean much more into the services side, which means that in order for that to win in a bigger way, for Game Pass to succeed in a bigger way, for their tentpole games to get a magnitude of sales to generate ROI that they need and want to succeed, they're going to have to be less exclusive to Xbox.

And so Xbox will still be there for those who want it, but basically their business strategy will shift in a way that makes owning an Xbox less important to being able to play all of these games and put it down the path to. Maybe at some point winding it down so that this strategy can be much more about the games and services.

And as I mentioned, Microsoft does a lot of things. They're a Titan of industry with enormous amounts of cash. Once you have entertainment services that you can buy all a cart, that you can buy the games all a cart or the services in some type of subscription, they can think even bigger about how to make that part of an even bigger entertainment strategy.

Which sounds far fetched from where we are today. But I think once you like take that step, it's the next logical step to be thinking in those terms, it's an experiment now they're taking it slow. But I really think this is just a stepping stone to services being the future of this business and Xbox.

Kind of fading, fading away. And PlayStation is going to dominate console for a long time to come, unless something else crazy happens. That's my best guess of where this is going to go. Could be totally wrong, but.

Tammy: Yeah, I do have to agree with that as this feels like a stepping stone. Just if you add up all the steps and Microsoft is taking.

And just knowing Microsoft as a whole, right? What they're best at. Because we often talk about these pieces of is it a hardware company? Is it a software company? Which one leads the strategy for the particular business? Microsoft, historically, like the last X decades It's been software first, right?

Like they're okay having their software run on all sorts of hardware. Like they've never been like darlings about controlling that way, like too much. And on, on console, like the Xbox is actually an exception of how. Microsoft operates first and foremost of we just want our software being like everywhere and being like the software of the top dog.

And basically like it's everywhere. It's ubiquitous with whatever segment they're tackling. So I think that what we're seeing is, Gaming getting moved and like slowly pushed much more towards that strategy. Like that Microsoft strategy of software being the leading strategy and not as much on the hardware side.

And it, it just feels like, the console piece it's hard to pull the plug on it having had such a long history with it. I'd say. There's pros and cons on this strategy where you'd be like, Hey, let's not even do the next generation of console. That would be pretty shocking, but I think that we are going to see it whittled down and probably this feels almost like they're trying to like slowly let Xbox wind down on its own.

As a console and it's a pretty bold statement saying Hey, they're just like letting it die on its own so that we don't have to pull the plug, but almost feels like that from just like adding all these like strategy sets that they've been taking in the last 2, 3 years.

Devin: I think it was worth at this point, just thinking of Xbox as a platform and not necessarily.

Just a hardware thing. I think the amount they've integrated just even the term X Box into windows apps and shoehorning it into more and more parts of windows and making it good game service platform on windows, like obviously it doesn't compete with steam the same way, but it's clearly they're moving that direction.

Look at how much they've invested in cloud stuff. And obviously that's not a consumer level hardware platform, right? That's enterprise level hardware at best. And it's something they've also shown that they're willing to sometimes back away from hardware when they're just like, eh, we're not going to be leader in this anymore.

The clear example being windows phone, right? Where they were just like, okay, we're not going to win this. Like we'll just at this point. And now you have them trying to be like, can we just. Do our own app store on something or trying to figure out some way to still have their platform service, but not necessarily control the hardware.

And you think about even in consoles, a lot of people don't know this, but Dreamcast was actually running on windows CE modified. So it was like, they've actually had the service of the software level in consoles that they weren't even controlling before. And they're willing to do that kind of stuff.

Like they even compromised on when Microsoft edge and brought that over to Chromium because they clearly weren't working or winning with their own engine. So they're willing to make those shifts. So I think if they've, they just lost. At this point to Sony, but at this point, when it comes to platforms and all that we've got Epic with some interesting updates, because we've talked about that a lot and it keeps going.

Tammy: Yeah. I think I'm speaking of app stores and whatnot. I think that it's very interesting to see even Microsoft there with what you were saying, Devin, they're trying to almost have Xbox become synonymous in some way with. a gaming platform, gaming ecosystem. And another company that's going after that as well is Epic.

Of course they have the Epic Game Store. They had this push and pull battle with App, Apple and Google. And last week they released their year in review. Block posts for 2023. And there's two main call outs in that blog post that are worth just briefly touching on one is they're clouded around their year over year growth, just in their overall Epic game store, both from the consumer spending side, as well as a user base.

One thing I'd say is if you look at the numbers, they're almost. like similar percentages growth. So you could largely say that the revenue growth could be driven mostly by new users. So not, nothing like crazy here, just like more users, more revenue. Epic Games is not huge or in a place where it can dethrone.

Steam at this point, they do release their DAU and MAU numbers, which on the DAU side, it's about 30 million or so. If you try to like estimate where Steam is, like this pales in comparison to Steam, it's at least half of it, if not smaller than that. And really the Epic game store is still very much driven by their own games.

So the top ones being Fortnite, Rocket League. So nothing really surprising there. The second call out is the one that was a little bit more surprising and it's that Epic is going to be back on iOS but only in Europe. So right now it's a caveated a lot. They have their. Apple developer account back up and running.

They confirmed that they'll be launching an iOS app store in Europe this year. And they explicitly say like 2024, we're going to launch our own app store. And they're really writing the digital markets act from the European regulators. Where Apple explicitly has to open iOS to third party stores, which includes Epic Games Store and back to Xbox, like that also opens the door for Xbox, right?

So it's, I think that Epic is in a very interesting place where they're pushing the market a lot. And they're pushing like the limits of what comfortable with and they're writing the regulators and just it's a lot more political than tangible progress, but I think it might or might not change the overall ecosystem dynamics in general.

And Sweeney, the very vocal CEO, he posted right away on, on Twitter that I'll quote, I'll be the first to acknowledge a good faith move from Apple in granting Epic Games Sweden, a developer account for operating game, Epic Games Store and Fortnite in Europe under the Digital Marks Act. So that's like the latest news there.

I think that by next year, we could be looking at having two to three mobile app stores. On running on iOS, is that actually going to change the dynamics or not? I'm going to be make a boat claim. I'm skeptical. It will because it just comes with also like a whole set of like issues. First of all, we're talking about.

So none of this translates to the rest of world, right? So it's a portion of the market. Second, from like the player side, it's fragmented offerings to the player. And players will continue to favor ease of user experience. So where can I more easily get my game library? Where can I more easily download and update my games?

Then from the developer side. To Seb's point of it's easier than ever to build games that can be pretty much published everywhere. That's definitely true. On the other side, it's a huge burden as a developer to manage publishing and updating your app on two app stores, three stores, five stores, something's going to give for developers and developers are going to go where players are.

So it's a little bit of a chicken and egg problem here that is going to be Interesting and see how it all shakes out in the next two to three years as Epic takes a swing at their app store, Microsoft takes a swing at their app store, and Apple and Google need to ease control a little bit. But I'm wondering what your guys take is.

Aaron: In terms of the, Like Epic’s year in review. I think the story like it really is boiled down into two data points, which is on the whole platform players spent 950 million in 2023, which was up 16%. But if you just look at third party applications, players spent 310 million, which is about a third of the total, which was down 13%.

And so that's not new. That's been the story of the past two, three years. It's continuing. I love Epic. I love the crusade that Tim Sweeney is on to boss monopolies, be more developer friendly and Epic, certainly like the Epic Game Store has its place with its own advantages, like in web three and such.

But yeah, it makes you wonder how much longer they'll go down this path in this way. In terms of the mobile app store, I think the big unlock there is just Fortnite. Like fortnight getting back on mobile and more ways, and that in and of itself will make it worthwhile. Also in terms of like how it was structured, I think apple is still finding ways to take like a crazy cut, even though it's in an alternative app store.

And so we'll see. Where regulations fall on that and continue to change over time. But really this just enables Fortnite to come back, but also maybe UEFN coming to mobile in its own way, which is also a big deal, brings it more head to head with Roblox on mobile too, which is cool. I'm not that bullish on these alternative app stores really at all.

But I think what I would be more bullish on is more like what you see with Roblox, these platforms with many games within them in a single app, not really a, it's own store and seeing what Fortnite with UEFN can become on mobile. That will be really interesting. And maybe there'll be a couple other examples like that game pass, if it comes up with its own platform.

App, maybe it'll be in its own store, but really whatever that app is, will be where a lot of the action can be in terms of streaming games. It's more like that area that I'm more curious about how it will unfold, but definitely more bearish on alternative app stores right now. Also wonder if Roblox would ever consider going on an alternative app store if the terms were more favorable and app and regulators kept Apple from taking still it's 27%.

Devin: Yeah, most of the financialization is off of the Robux being bought right now. I imagine people buying Robux on the iOS platform, Apple gets their cut of that. Whereas on PC, they're like payment processor gets their cut, probably. And that's it like two, 3%, whatever it is. So that's a pretty significant difference just to expand the platform.

You got to imagine they're like, Hey, can you please buy those Robux when you're on PC? Bring them over so you don't have to steer as much, right? Cause people probably are playing. We're playing on PC first because it took a while to get over to mobile, took a while to get over to VR and things like that.

So it was still like a PC was home for it. Same with Fortnite. So maybe, it's not as big a deal, but yeah, it's the same situation Fortnite was in. You got to wonder too, like what's. The business model long term going to be for UEFN in terms of how, they're going to make money if that takes over from Fortnite and people aren't spending on Fortnite stuff and it's UEFN instead it's like, is there going to be business model around that?

Then we do that favors like developers where it's like developers getting paid out of it, or it's like the developer still in the current model, but then Epic getting money out of purchases in the games you look at something like core that tried to do what Roblox is doing. Roblox was doing too, but just like a more favorable cut.

Doesn't necessarily work. And so that's the difficulty there is it's gonna be hard for it to find the right place for these that isn't just wherever it's easiest for people. 'cause unfortunately, at the end of the day, as Asbe said, that tends to win. And I think it, they're probably the best opportunity for this kinda stuff for the alternative app store is like an alliance of companies all jumping over to it.

Otherwise I don't think it works. Like you can't just be like fortnight's over here and it's like no one's gonna download a whole other app store just for Fortnite. Unfortunately, I guess they kind of did on PC, right?

Tammy: They'll do it, right? They'll do it just for Fortnite. They're probably already installed.

Devin: So it's like, they're not going to have to, unless they're new players.

Tammy: Unless, yeah, unless they're new players and they're coming on mobile when they really want to play Fortnite.

Sebastian: I think to Tami's point, that's to take a step back, games are great for user acquisition in terms of platformization of products and users just do not give a crap, excuse my French.

Whether or not the developer gets a hundred percent of their money or 17 percent of their money, they care a lot more about parody in terms of how much value they get for their money. There are mechanisms to onboard people onto new platforms. I cannot stress enough. That's a really big deal. That there is the ability for other app stores or other ecosystems to effectively user acquire and then set their own terms.

I think net this is great for people who are operators and developers and folks who are doing some interesting things. I agree with Devin in that the cut alone won't move developers over to the new ecosystem doing that's going to move them. Our users and if we'll see some really cool users, they'll come over the way you can then incentivize people to bring users over is if you're a fortnight is if you have this like large audience already one perhaps dark pattern, but one that we saw historically inside of the Android ecosystem is that if you.

Think about who generates or creates the majority of Android phones in the world. It's Samsung, it's Huawei, it's, are these companies that have the ability to like preload quote unquote bloatware, but their own app stores in there. There is distribution that way. The two things that I'm keeping an eye on for the next six to 12 months are one, people making Inroads on distribution into these new app stores and two, whether we see a response in terms of the ability to test or whatnot, Apple, as far as I can tell, and please correct me if I'm wrong, if anyone knows, still doesn't have a really robust way to AB test apps in their app store.

Like 10 years, 12 years after the app store launched, Google does, let's see if there's more competition and the ability for people to acquire better users has an effect on it.

Devin: It'd be nice. If they're charging people that 27 percent that they start providing more value for that. They're just fighting it.

That's the other thing too, is you have to keep in mind I agree with a lot of what you're saying, Sebastian, but you also have to keep in mind, Apple's a pretty hostile environment to launch an app store in. Even if you can manage to pull people over, you've got to deal with a lot of Barbed wire, they're throwing in your way to try and drag people through that.

And we have had on Android to your point. Yeah. On Android, people can preload stuff. We had, there was a period of time where the Amazon app store was actually preloaded on a lot of devices. And that was not enough to get traction. And again, that's on Android, but it's situation where no one controls iPhone, but Apple.

I feel like, yeah, maybe Android's more valuable environment, but iOS is just super, super hostile for that stuff. And I hope I'm wrong. I really do. Cause I would love to see that take it down to at least a reasonably even playing field. I guess we'll have to wait and see, right? This is definitely going to be a year.

Or two of shakeups around that. And I hope I keep fighting the good fight and I hope find some good allies besides just fortnight. Hey, imagine if roadblocks did it too, just to pull that make sure they don't lose their 30%. That'd be pretty interesting. But speaking of developers trying to make pivots and then hopefully getting some things going supercell with their annual letter of fun.

I always love hearing their thoughts. They share their most recent one.

Tammy: Yeah, as you said, it's the now the super sale tradition. I think Ilka the CEO started publishing these now famous long text letters or blog posts back in 2018, where he shares like a deep look into his latest thinking around.

Whether it's strategy, process, culture, product, whatever else at Supercell. And he started doing this because Finnish law requires them to release their revenue, EBITDA, and tax numbers. So even though they're not a public company, They actually have to release their annual figures every year. So you can tell like it's a little bit of also storytelling a narrative around the numbers, just so that it's, it has more context, at least in what he's thinking.

And I think it's just fascinating that it's become like this highly anticipated post across the industry. As soon as it goes out, folks, Repost, dissect, analyze, and many people taking it as the gospel and was the key to making great games. Which, a huge nod to Supercell. Unlike many studios, they're not a one hit wonder, they've been able to do this multiple times.

Several games have been huge hits, but on the other side, they've also struggled to do it since Brawl Stars launched, which was six years ago now. So you can see a lot of that same narrative from the letter last year talking about this and really acknowledging it. And this year acknowledging again that they're, they have huge revenue, but even then like their revenue is down year over year, 4%, their EBITDA is down 8%, you can see how they're investing a little bit more, their EBITDA is down.

I do appreciate that there was a nod at other companies and teams that are doing much better or that they're super sell. Is acknowledging that other companies are tackling the mobile market today in a much from a stronger position or from a different position that is working out as opposed to what they've been trying.

There's 22 big themes in this year's letter. One is the side of the level games and the other one's side of new game teams, and that's how they split. They're talking about splitting. Focus and the company and their strategy and their operations in general. So LiveOps Games, even since last year, they acknowledged that they've been understaffed, underoperated, underleveraged.

I think there was a quote in there that said, we got too in love with our small teams to the detriment of the games. So they started making changes last year. Leaning into a more traditional game studio model where you have bigger teams, you have managers, GMs, you have, they're calling it their cells, but it's a lot of teams run on like these pods where it's like multidisciplinary pod with your producer, your PM, your designer, your engineers that are focused on like a set of features.

Like it's nothing groundbreaking or crazy. Like none of it is new. And it. If you've been in one of those companies, it sounds like fairly obviously that's a good way to run a live ops studio. So it's good to see supercell, like embracing that. And they are seeing results already from at least how the bros from.

Brawl Stars team has been operating, they've been making some pretty big changes, releasing changes to their battle pass, their content cadence, and the revenue is showing. It's coming, it's been growing very impressively and moving in the right direction. So that's on the LiveOps side. I think it's pretty straightforward on the new game side, they've also talked about not having been very rigorous with the new game teams, letting them just meander for a bunch of time, not having they're a little bit allergic to any kind of process or a green light process, which it works for Supercell at the same time, it hasn't worked because they haven't really been able to be a little bit more rigorous and have this sense of narrowing down into.

A game that is working well and resonating with their audience, they fleshed out like this new way that they're going to be operating much more around like a startup model. And really like letting new game teams like opt out from even like company slacks and best practices. And they're using their engine, like they can prototype however they want.

They can opt out of being in the office. Like they can move. They still have to work in like same location as a team, but they can move to a different office that is not like the main supercell office. So it's pretty interesting, like this big shift of trying to preserve their like startup energy in a bigger company.

What I've seen is, folks, some being very skeptical about this move, some people celebrating that kind of pivot and that shift. What I'll say is that it really comes down to how each company operates. What I found very interesting is that, as I was saying, it's like people take a lot of what Supercell does as a gospel and like, how you should be operating.

It's not a formula, right? It's not oh, this is guaranteed to be the right approach. You have to have the right team. And the right management around team, the team and the route, right. Dynamic. And all of that coming together to get a great game. So it's not like a formula and they're like, what I'd say I respect a lot.

He's like the constant, like pivot and trying to change their, how they operate to figure out how they can scale their success and find their next big success. But I would say just I would. I'm interested to see if this actually produces better, faster successes for Supercell. Not better, but like faster successes and they can find like the next big game.

I don't know if you guys got any other takeaways from that, this year's letter.

Aaron: Not really. I think you summarized it pretty well. To me, just as a broader observation, it seems like Every year I read these, the tone becomes more humble and more flexible and how they're being open to work, which I think is good.

This is a business that definitely had really strong views on what it stood for and how it were to operate. And it worked for a while, but yeah, the letters are interesting. I maybe don't take them with the same weight as some other people that dissect every word of them. I'm more curious to dissect their actions in this case and like the new games and stuff than a letter, but yeah.

Obviously, I wish them all the best and can't wait to play whatever games they spin up.

Sebastian: We see this in poker a lot, where, and this is something I see all the time, which is people who are really bad and really good both can't escape the fact that there's a lot of luck involved. There is a, there's a great, even better quote from Maria Konnikova in The Biggest Bluff, but there, it's like one of those funny memed bell curves.

Where here you're like, Oh, everything is luck. And there's like the middle where everyone's upset. Everything is skill. And at the end, it's like, everyone's going, everything's a luck, making a super hit game, new IP out of nowhere. It is a, is an exercise in hard work, a lot of really cool structuring, and then a lot of luck.

And I think that's something that when I read these letters, you see a healthy respect for over and over again, there are different mechanisms to try to generate that luck. There's different mechanisms to try to stay alive long enough to generate that luck. It's the various bands are so large. It makes sense that people don't want him to change, right?

It makes sense that Supercell could continue to operate in the same way and attribute this to variants. They clearly aren't doing that. They're clearly looking at updates to the model and differences in what happens. You have to adapt in order to get better and succeed in new worlds. And that I think is really awesome to see.

Super excited to see the games they put out. From a Bayesian perspective, the likelihood of Supercell having a bigger hit than Clash Royale or Clash of Clans is zero. However, at the same time, if you told me that they were going to have a Clash Royale hit after Clash of Clans, that probability was incredibly low, too.

And that's really the industry we're in, right? One of the downsides that we don't talk enough about in games is that we are in a hits driven industry, and hits driven industries inherently mean that there's going to be a lot of failures. And I think that term and model is something that we often mistake because as humans, we have a really hard time understanding probabilities and the structure, as long as you have a structured approach and you're tackling it in a reasonable way, you'll see a lot of different outcomes I'd imagine.

So best of luck to the supercell super excited to see what they do. It's a huge fan of their games. Let's see what happens next.

Devin: Yeah, the problem I have with all of these letters is they don't talk about the one issue really Supercell has. They're fantastic at making games. Like they make great games, polish them really well, do a great job.

They're innovative. They're really great at simplifying genres, doing cool things with it. What they're not great at very clearly is monetization, like from a having good principles and ideas around how you do it, because they seem to, if they can't figure it out, they just fumble. I think that the prime example of that is Clash Mini that's been in softwash for almost three years at this point.

And it's all because they can't figure out how to monetize properly, partially because they picked a genre that's extremely difficult to monetize well as generally across most of the markets as a genre just died because it's very difficult to monetize without breaking other rules. And I think just not having.

Good foundations across the company and how monetization should work before you're even starting to make a game, leads them down this path. And they don't seem to just have like good, they're letting people run rampant there, and then they're changing that up and then changing this up. And they seem to be changing stuff around structure and process without really like having the fundamentals laid across the company of like, Hey, here's why we've been successful across these games.

Here's how we start to think about from like these principles of how we design whatever we're doing. So that everyone in the company understands if you're doing a new game, keep this stuff in mind. So you don't go into soft launch for three years off. What's a great game because you did a great job developing it, but you just could never figure out how to make good money from it.

And I even think about it. They're not even always good about knowing what's their own good games because brawl stars just. Barely made it because it was going to get killed pretty early on. It had to do huge pivot in the early days, literally pivot from portrait to landscape. And that was a huge change.

And they had to go through all these things. They nearly killed it, I think multiple times. And so they wouldn't have had a hit game since 2016. How they not like just barely squeaked that out. And so there's just all these, they've killed way more games than they've released, and I think that's continuing.

And they've tried these weird different release strategies, but what I don't see them really doing, honestly, and having played like all of the games they continue to try and push out, except for maybe squad busters. I didn't get a chance to, but other than that, I never see them really thinking about the structure of monetization first.

And I didn't know what haste it sucks to think like business first as a game developer, you don't really want to, you want to think creative first, but it's clearly showing years and years on that. That's the biggest problem super size. And I only bring this up. Cause I never see this really talked about in these letters.

They just talk about structure and process, but they're never like just up front Hey, we just need to figure out how to make money better from our games, because that's honestly the metric we're using. I think that's just the honest upfront truth as a company. That's why these are killed. Oh, retention.

Yeah. And it was retention because you need to keep making money off of it. So anyways, I really hope they figured that out because I think that as a game developer, they've got mad skills as a monetizer, they seem to be struggling. And you can see that very clearly with brawl stars, not that they haven't been successful, but they've had to try very extreme changes even after launch to keep it going.

And I hope they're learning a ton. That's really the thing is I hope they're learning a ton and the new games teams, whether they do them as these weird startup founders or whatever they're going to do, whatever's in the letter next year, that they just figure out how to make money. And I'd love to see Clash Mini actually make it work because it's a great game.

Tammy: But anyways, That's a very fair point Dan and I think it's spot on. I think what's interesting is that they're bringing a lot of people with live ops experience and that comes with Much more better understanding around monetization and these long term seeing it, like looking for a sustainable business long term from a monetization point of view.

I think the challenges that we're going to see is that they are taking like this very disparate approach to okay, let's get good at making money with the games that are alive and the games that are not alive. We're just. They can even not talk to anyone else at the company. So I do think that there's going to be like, a lot of learnings in one side, the other side.

It's going to be a lot more challenging to see them, like even integrate those learnings into what they're doing. So we'll see what I do think is that Supercell has a really good business in terms of just being profitable, having enough money to experiment and keep running. Keep iterating and try to find the next big hit, but the market has also changed.

So they haven't launched a hit game since 2018 and the market has changed a lot since 2018. So that's another curve ball there that they're going to have to figure out for sure.

Sebastian: Just to be clear, by the way, Supercell did make like 1. 9 billion last year, right? In terms of revenues, they did make 600 million in terms of profit.

I think it's unfair to say they're bad at monetization. They are one of the most profitable game companies of all time.

Devin: Definitely not saying that, just to be clear. I just mean about transferring that to new games.

Sebastian: The thing that I will say specifically about Supercell, which I think Is not an indictment on Supercell, but a question we have to ask ourselves is there are multiple phases of a startup, and this is something that the games industry, especially the one that's evolved in the last 10 years, has never dealt with before, which is there is the growth phase where you invest heavily into R& D, where you're putting like 50%, if not 100 percent of all revenues into development of new games.

Then there is the live ops model that came around the idea. They can make, we're going to stay in game over and over again. And that's shifted the model to allow for more ventures to come in because people are like, Oh, these are like sustainable ecosystems. One open question that we don't know the answer to is one.

Is it repeatable? Can you make more and more games and it's success to, if it is repeatable, are the revenues repeatable? And three, if those three things are true, how much R and D should you be doing? And there's a strong argument from the oil sector, which is oil. As you guys know, it's incredibly profitable, but we're going to run out of it.

There's a lot of both societal and real reasons to use less of it every year. And so in a lot of ways, if you're an oil company, like you should probably either dividend out your money. Because any investment in oil you do is going to be, have upward pressure, downward pressure, rather in terms of price, or you invest into renewables, but that might not be your expertise.

This is fundamental to where companies find themselves often. And I actually don't know of a company that's able to succeed in this regard. It takes something very special to get beyond that. And so the Helsinki guys. I have a lot of respect for them. I think they're really cool, but remember, there, there's, there is no exit anymore, right?

If you're an employee there, they already sold to Tencent, right? There is no, none of that upside anymore. If you love working on mobile games, the mobile game industry, to your point, Devin, has changed a ton, right? Hyper casual is king in a lot of ways. Hyper casual and turning into more the mid core casual or what's the word people are using nowadays?

Hyper casual? Hybrid casual. Yeah, that's super hard and super different. And that I think is why that ecosystem is so weird, because in some ways, there's a strong argument that they should lay off 80 percent of the people. And print revenues. Cause there's no guarantee that there's going to be a new game that comes out.

And that's often what's other companies are doing, right? They're like, Hey, we're not sure there's going to be a new hit. Let's make some sequels. That's like actually increased profitability by extra 5 million and let it long tail out. I have a lot of respect for what they're trying to do here. I don't know if they're going to be successful.

The guts, the bets should be that they're not because that's just base rates. It does. Yeah. Tail into why making live up games is so weird and so different than everything else.

Devin: But I thought the strategy was not even sequels, now it's remasters, right? You don't even have to make a new game, you just remake the same game.

Literally. Hopefully that Clash of Clans Remastered. HD or whatever, yeah, it's 4K. Next, next

Tammy: Next, next hit game.

Devin: Yeah it's I hope that doesn't end up the case with mobile. That would be pretty sad. But you saw like the, even the struggle they had with trying to get people from Angry Birds 1 to Angry Birds 2 at Rovio.

Like the difficulty there is would they have been better off making Angry Birds remastered? I don't know. That's an open question. But anyways, like a lot of a lot of interesting stuff going on. Obviously this is a big year. For all of gaming, whether it be console or mobile or PC, we're seeing shifts everywhere.

So I think a lot of cool stuff to talk about continued, definitely an interesting start to the year. Not always good, but definitely interesting. So hopefully you look forward to many more interesting things with at least a fair bit of them being good news. We started out with the beginning with a, a.

Double a developer just managing, just knock it out of the park. And we've actually seen a lot of that already this year. So hopefully at least that continues into the new year, but anyways, thanks everyone for tuning in, of course, and continue to do so, and hopefully been long time listeners, but if not continue to do so and make sure to check out our other podcasts and of course, our digest podcast.

And make sure to go to naavik.co and subscribe to all that. And if you're not already, it's again, lots of cool stuff coming out there. And I want to, of course, thank the panelists for awesome conversation as usual, and we'll see you guys next week.

If you enjoyed today's episode, whether on YouTube or your favorite podcast app, make sure to like, subscribe, comment, or give a five-star review. And if you wanna reach out or provide feedback, shoot us a note at [email protected] or find us on Twitter and LinkedIn. Plus, if you wanna learn more about what Naavik has to offer, make sure to check out our website www.naavik.co. There, you can sign up for the number one games industry newsletter, Naavik Digest, or contact us to learn about our wide-ranging consulting and advisory services.

Again, that is www.naavik.co. Thanks for listening and we'll catch you in the next episode.