Owen Mahoney, CEO of Nexon, is back for another phenomenal conversation – this time on the heels of the announcement that Owen is soon stepping down from the CEO role after a decade of market-beating performance. He and host, Aaron Bush, discuss Owen’s legacy at Nexon, what he wished he knew about being CEO when he started, what goes into great succession planning, and more about Nexon’s next CEO, Junghun Lee. Then the duo discusses how AI-driven software is already enabling AAA games to be made with smaller creative teams (such as Embark Studios’ THE FINALS) and how that shifting reality will have a profound impact on AAA publishing in the coming years. Lastly, Owen and Aaron wrap up by discussing what Owen aims to spend more time doing post-Nexon.

Also, if you haven’t listened to our previous conversation with Owen, which covers how Nexon manages long-lasting virtual worlds and builds antifragility into its business, you can do so here: https://naavik.co/podcast/owen-mahoney/

And here are the book recommendations Owen mentioned during our conversation:


Overwolf

We’d also like to thank Overwolf for making this episode possible! Whether you're a gamer, creator, or game studio, Overwolf is the ultimate destination for integrating UGC in games! You can check out all Overwolf has to offer at https://www.overwolf.com/ 


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

Aaron: Hi everyone, I'm your host Aaron Bush, and today's episode, in many ways, is a part two to one of my favorite and one of our podcast's most popular episodes of 2023.

Today I'm chatting with Owen Mahoney, the CEO of Nexon. By now, you've probably heard the news that Owen is stepping away from the CEO role soon, which will mark an end to his decade long tenure of market beating performance at the company. It should be noted, though, that although he's sticking around as a board member and advisor, he's also handing over the reins.

Nexon is on top of its game. Whereas many large publishers are currently struggling with growth. Nexon's latest quarter showed revenue growth of 24 percent operating profit growth of 47 percent and even maple story, which is in its 20th year. Re accelerated to 46 percent growth over last year. In our last conversation, we talked about how Owen leads Nexon, how to foster long lasting virtual worlds, and how the company's leadership has built zones of innovation and anti fragility into Nexon's corporate fabric.

I'll link to that conversation in the show notes, and I really recommend checking it out if you haven't yet. But today we'll reflect on Owen's tenure, what goes into developing talent and double click into how Nexon and others can unleash more innovation in the games industry. So with all of that said, Owen, it's a pleasure to chat with you again. Welcome back to the pod.

Owen: Thanks, Aaron. Great to see you. Thanks for having me.

Aaron: Yeah. So really enjoyed our last conversation, really excited for today's, but I think just a good place to start is as you look back over your successful run as CEO and congrats on departing while on top, what imprint on Nexon do you hope you left as your legacy?

Owen: Yeah, that's a really good question. I think what I have tried to do is More than anything else, strike the balance, the dynamic balance that happens between managing large existing franchises for growth and then really developing a new business. And I think we talked about this a little bit last time, but I think any innovation company has this dilemma and the dilemma is I could just make today's business keep going.

And there's a huge need to do that because you have to make you have to hit growth and you have to hit your near term numbers. Your shareholders certainly expect it and everybody else does as well. But you also have to think 5 years out. Or more and you have to say, okay, where's the industry going?

Where's technology going? What's the company of the future really look like? And I have observed companies around the world and I'm from Silicon Valley. I've spent a lot of my adult life in Japan and Korea and in those three regions, there's been companies that have handled that question about near term growth versus longer term success.

Some have handled it very well. And so, and many have really struggled with it, meaning they've handled it badly, or they haven't really addressed it at all. And what we have tried to do during the 10 years that I was at Nexon was to make sure that our existing large franchises, like Maple Story, Dungeon Fighter, that you mentioned, and several others continue to do well, while at the same time, really investing far afield in things that are going to really move our company and our industry forward.

And an example of that was the investment that we made in the purchase we made of Embark Studios in Sweden. And we just launched the finals, which has done really well for us. But I can tell you when we made that investment and all three of the last five years since then, there were a lot of naysayers because it wasn't tangible to them.

And the innovations that we did around things like AI that we made five or six years ago that we were very vocal about at the time, most people in those days didn't want to hear about it at all. If you can believe that today, because everybody's talking about AI today, but so keeping those two things in balance.

Is a challenge, I can tell you and you can't just do one or you can't do the other. I grew up in Silicon Valley, and in those days, everybody in the 80s was very sure that Japanese electronics companies were going to roll over Silicon Valley the way they had rolled over Detroit 10 years ago. And they, and it didn't work out that way.

And I would respectfully submit that a lot of those companies were extremely well at executing the business that existed in consumer electronics or disc drives or displays or what have you, but they didn't think long, long and hard enough about what really the next generation was. And so as a result, they lost huge amounts of.

Market share and customer loyalty to companies like Apple and Google and Samsung, who were very much leaping ahead of them. And I don't want, I never wanted that to happen. So I think we've done of all the things that I think we're really happy about in the last 10 years. It would be that dynamic balance is something we've really strove for.

Aaron: Yeah. And it's nice to see the fruits of that labor start to pay off and bigger ways that others are paying attention to now. And we'll get to some of that later in this conversation, but I guess there's a follow up just as you reflect on all that you've learned and experienced as CEO. What would be a couple pieces of advice to new CEOs that you wish you had received 10 years ago, maybe on how to accomplish what you just said, because that can be tough, especially for non founder CEOs to navigate.

Company culture like that and get buy in or anything else. Just curious, a couple of pieces of advice.

Owen: I'd say a couple of things. Number one is the thing that happens when you become CEO is everybody stops talking to you. And I didn't really, I had a sense of this having talked to previous CEOs that I had worked for at other companies.

And I sometimes had better information than they did just because we would talk about it around the halls. Whereas. They had to rely on formal reporting from their direct reports. And of course, when you get direct reporting, everybody's got an agenda. Everybody wants you to approve their budget or approve their plan or convince you of something.

Whereas when you're just swapping stories around the hallways or over lunch, people really, you get better information that way. So I'd say one of the things that I've really gained an appreciation for is how hard you have to work for the truth and get to information. It's just true in life. These days as it is in a company, a lot of my meetings are about me asking questions, me asking the same question, multiple different ways of multiple different people over the course of a day or a week.

And you'd be surprised how hard it is to get to real information and everybody's got a framing of an issue. I think another piece of the advice would be where I've observed other CEOs get tripped up as they sometimes will say something different to their shareholders than they say to their employees or to their customers.

They'll talk about heavy monetization, for example, to their shareholders and then it appears on Reddit and customers read that and they get really ticked off. And I've seen that happen over and over again. I don't think it's a really good way to go about life, but also it's going to get you in trouble, of course, with your employees or with your customers, when you start talking that way to shareholders, I think if you have a strategy that is going to please shareholders, you, it has to be a strategy that please, pleases customers.

And therefore it pleases the type of employees that you want to get to do that great work, because this is all this stuff is really hard to do. If you can't tell a story, if you can't communicate with all three groups in the very same way, then it tells you, you probably have something wrong with your strategy.

Again, monetization, for example, is a good example of this. And I would say that would be another big thing. I, the rest is probably a thousand small things. I don't mean to be glib, but the one other thing I would say though, is there are trends that go throughout an industry. I think you and I talked about this before.

So if you think about the big trends that have happened in the last 10 years, so there's been in no, not necessarily an order, social games On Facebook and then social games on mobile, there has been e sports. There's been VR, there's been cloud gaming, i. e. Google stadia. Now we're in AI. Oh, we had metaverse, all those things.

And you get asked as a CEO, okay, what's your strategy for cloud gaming? What's your strategy? Cause obviously that's going to take over the world. And what's your strategy for metaverse? Because obviously it's going to take over the world. And typically those questions come most. Veciferously from investors or PR people or interviewers, not you, but people who interview you.

And they've decided that's the next big thing, that's the deus ex machina that's going to save us all. And that you have to have a strategy, but it doesn't mean you have to have a strategy because it certainly doesn't mean it is the next big thing. And we were very vocal about our opinions about the metaverse and e sports and VR and some other stuff that was out there.

And we just said, look, the experience in VR sucks. We have no strategy. We're not going to spend a dollar on it because we can't figure out. We certainly don't want to spend our days in a VR experience. As it exists today. So therefore we're not going to spend any money on it, really any meaningful amount of money on it.

And in the moment, it's hard to do in hindsight, of course, it's very easy to say, Hey, I told you, or what have you. But I think that the thing that I, that management teams of game companies and technology companies, they do get very tempted to jump on the bandwagon because in the near term, their shareholders really want to hear about that.

And I think it's a big mistake. I think you got to start with a product. You got to be all about the product. When things are broken with the product, you have to fix them. You have to think about what the product of the future is going to be five years out, 10 years out, and you have to go towards that and whether or not anybody applauds you for it is quite irrelevant.

In fact, if people are not applauding you for it, if they think that you're geeky and weird and there's laughing at you, then that's probably a good sign that you're ahead of the curve. And we have a senior exec at Nexon in our Korea group. It has a great saying. That he's repeated a couple of times and exact offsides where I've said, listen, everything we've ever done that we're really proud of today felt deeply weird and geeky at the time, meaning like in the lunch hall in high school, you got laughed at, but then it turned out to be exactly the right thing to do.

So I think keep your own counsel would be the advice or the summary of the advice.

Aaron: Those are great reflections and we could probably spend another hour just digging through some of what you've learned as CEO and even unpacking those a bit more, but I have so much that I want to get to with you that we'll have to shift gears a little bit, but maybe one last reflective question for you, the last time we talked, I got the impression.

That while your work experience is largely in gaming, you still learn from and study other things, whether it's books or something else. And I admire that because at times it feels like the games industry and even a lot of leaders in the industry, it's insular. People are learning from each other in the industry, but not actually.

Learning like actively learning and applying that much from other industries or lessons learned from elsewhere. And that doesn't apply to everyone, of course, but it's just a pattern that I've picked up on. And so as you look back over your CEO tenure, or really just your whole tenure in games, what were some resources you learned from that left a mark on you as a business leader or any habits you developed just to stay constantly learning and improving as a leader.

Owen: So we're all bombarded by news and information all the time. So I think you have to be really careful about what you let in the door. And when you see something that's good, it's worth exploring more. I didn't, I've only been in the games industry about a very long time.

It's been 20 years, but for the first. 10 years of my career, I was in broader technology. I started my career out in Apple in Japan. So I came from the tech business and the games industry works very differently and thinks about its business typically very differently than the broader tech industry.

And so I've always felt at least I've had one foot in metaphorically in, in the broader tech industry, but there's a couple of book. First of all, I'm very careful about newsletters and information that I read. And this sounds like you've teed me up to give an advertisement for what you do, but you're one of the few publications that I read really regularly.

You've got a lot. So it's a lot of work to keep up with the analysis that you guys do, but I find it very deep and very valuable. And I've learned a lot from it in terms of books. I was just thinking about this the other day. There were, there are a few books that I thought are phenomenal and really shaped the way that I think about video games.

Yeah. And really, they're about broader topics than just video games. The one was a book called Mindstorms by a guy named Seymour Papere. And Papere was one of the founders of the MIT Media Lab. And he talks about how kids learn, and specifically how they learn math. He was one of the creators of the Logo Computer Language that I learned from it.

It's a derivation of Lisp. And essentially you learn by doing by you learn math, for example, by pretending you're this thing they call the turtle. It was a robot actually that drew squares and circles and so on. You could tell the robot what to do. And therefore you learn geometry. You learn, you also learn computer programming and so on.

And it was very, it's a very easy read. It's very, but it's very deep and very interesting. There's another book called a flow by a guy named Mihaly Csikszentmihalyi. You may have heard of it. It's Pretty interesting. It's a, and he studied what makes people happy. And he noticed that people who are in prisons, for example, will sometimes report that they in fact almost sheepishly enjoyed big parts of their experience because they were in these states of flow or people who are in disasters of some sort of mountain climbers or surfers.

They all have a very similar experience. And typically it means that if you graph it, there's challenge on the Y axis and capability on the X axis. And if you're too challenged, you're going to get frustrated if you're. Too qualified against the challenge. You're going to get bored. But if you're on that diagonal line of the middle, you're going to find yourself in a state of flow.

And that's true in life. It's also true in video games. So that really shaped how I think about both how I want to spend my day personally, and also how video game makers make games and what we're really approaching here. So it was a very sophisticated, deep and a book that made me think a lot. And then the third is about the video game development process itself.

And it really goes through the process of defining what. A video game is, and it's a book by a guy named Tynan Sylvester. And Tynan made a game called RimWorld, which was one of my favorite games of all time. My son also plays a lot of it. And RimWorld is this fabulous game. And as Tynan was creating this game, he also was blogging about his experience and he turned it into a book.

And it's a fabulous book about the development of games and what it's really all about. So between those three, you're going to learn not only a lot about how your brain works, But also about how, about what games are all about. And I think one of the mistakes that the video games industry gets into is we get this obsession that we're like Hollywood and it's been that way as long as I've been in the video games business.

And we're not Hollywood because we're not linear entertainment and games are a different thing. They're typically made of systems. And the experiences you have a result of how you play those systems and if you design a system as well you can have you create whole new things you can create your own story and games are unique in that way whereas in movies or books you sit back and someone tells you a story and that's what I love about video games and so those books really.

I reread them every couple of years or so because I think that there were there's each of them in their own way or very have a lot of depth to them.

Aaron: I haven't read any of them. So I'll have to check them all out.

Owen: Fantastic books. Each one. Fantastic.

Aaron: Yeah. And I'll try to link to those in the show notes too.

So others can easily access them. So looking forward to that. Also, the flow book reminds me of something thing. That I learned when I used to compete in sports, which was the, the concept of like your trainings are like one third is going to be really hard. One third is going to feel like you're in the zone and you're doing well.

And one third will feel too easy. And if you're gradually improving. Then what used to be hard will feel easy. Sometimes you'll occasionally be like right where you should be to level up. And if things are hard, it just means that you still have area to improve. I don't know these days. I feel like everything is hard.

So some days, so I need to find a better flow myself, but maybe that book can help unleash it some. I want to talk about succession planning briefly and in an interview with games beat. You talked about the importance of having a deep bench and setting the next generation of leaders up for success.

And on the surface, that sounds pretty obvious, but weirdly the world, maybe especially in the West. Is seeing more leaders, whether it's political business, academic, you name it, cling to power at older and older ages, which is actually not setting the next generation up for success at all. And so I'm just curious, like what does quote unquote, setting the next generation up for success actually look like in and around the C suite at Nexon.

Owen: Look, companies are just groups of people. And so you're going to be, you make your life a lot harder if you don't surround yourself with good people and getting to have good people is an extraordinarily hard task. It's hard in multiple different ways. Finding good people is very difficult.

It takes a lot of time. It's very unrewarding in the near term, although it's massively rewarding the longer term. It can also be unrewarding because you have to get rid of people who are not doing a great job. And that's, most people don't want to go through that process. It's very hard and usually very unpleasant for everybody involved.

But if you have a good team. Then you've got the first and arguably the biggest step for having a lot of options for succession. But I think a mistake that a lot of companies not a lot necessarily, but the one, but there are several that I'm very familiar with. They make the following mistake. They say, okay, Joe, Sally, Fred.

You're the candidates for the next generation of being the leader. And one of you guys is going to do is going to get the top job. So if you do a good job, you will get the job and you think you're motivating your team by doing that. But what you're really doing is pitting them against each other.

You're making like a gladiator Academy. And. I've seen this with companies, including companies that are very big and very well known and that we all read about in the papers. And I just don't think that they're doing them any favors. And 1st of all, if you're 1 of those 3 people or 2 people or whatever the number is, it's it makes your life very unpleasant.

2nd of all, it doesn't do any favors to the organization because Joe's group might be pitted up against Sally's group and. One of those people is going to win and they're not going to work very well in the meantime, oftentimes. And then when one of them wins, the others will feel like losers. And so you've impaired your organization the minute you walk out the door.

So you're setting the next generation up for failure is what I'm saying. And I don't think that's a great way to do it. And. And then I think a third mistake that people make is they just postpone the decision for too long. If the company's doing well, being CEO is a very nice gig. You get a lot of kudos and you get paid well, and a lot of people want to talk to you and.

And it can be really fun. It's a horrible job when things are not going well, I can tell you that. And cause everybody's criticizing you and everybody takes pot shots at you. Fair or not fair. They may not see the bigger picture, but in any case, it stinks to be failing so publicly. So if things are going well, you're very reluctant to walk out the door, but if you don't do it, when things are going well, then you set your successors up for failure.

And so what I've observed is a lot of comp and what we've observed, and we've had a lot of discussions in the board about this is a lot of companies. They make multiple mistakes at the same time. They have an organization that makes it very difficult for the successor to come in, even though they may be very talented and then they do it at the wrong time.

They don't do it at the time when things are going well and people are working well together. They do it when things are, the companies may be a little bit on its heels. And that's a horrible thing to do. It's hard enough to be a new CEO. Anyway, it's hard enough to be, to have the CEO job. If you've been doing it for a while, but to be a new CEO, if it's the first time you're doing it, you're going to have to learn a lot of new things.

You're going to be definitionally unqualified for the job. So you're going to have to learn the job. And if you do that, when the company is not in great shape, boy, that's really hard. And I don't think that a management team that is serious or a board that is serious about. Long term shareholder returns, I don't think they're doing their shareholders any favor by not handling this.

Well, the problem is everybody talks a good game about shareholder returns. They talk a really good game about corporate governance, but when it comes time to do the one thing that you really have to nail for corporate governance, meaning make sure the management team is doing a good job on behalf of the owners of the company, the shareholders, the company after company falls down on us.

And we don't want to do that. We want to be doing it the right way and the way that we would wish that our capital would be handled well as shareholders.

Aaron: And you've been going publicly through this process for a month now. And I'm curious, maybe you could just share with our listeners. If, is there anything you've learned more from like the other side now of the announcement and going through the PR, all of that, that you've learned or appreciate more than maybe you thought you would previously?

Owen: I think it's. I was a little surprised people have been very complimentary. So that's been nice to hear when you're not about to retire, people are less complimentary. To a couple of our analysts, I was, Hey, it would have been nice to hear an attaboy of a year or two ago, but they were very nice. No, it was very nice to hear.

I think that I actually, the big surprise, if that's your question, the big surprises, people were very surprised by the timing that was more than anything is what we heard because it is unusual to be. Going out when the company's firing on all cylinders, or we feel like the company's doing very well.

So I was a little surprised by the number of questions we got about that, but that's okay. It was, I think everybody's happy.

Aaron: Yeah, it makes sense. Final question on this. How are you and Jung Hun Lee, Nexon's next CEO and the current head of Nexon Korea? How are you different? Does he have any superpowers as a leader that are different from your own that we should look forward to?

Owen: Junghwan and I have very different backgrounds and that's one of the things I've loved about working with him. Number one is we communicated across a vast cultural and linguistic gulf. I don't speak Korean. And he doesn't speak English or Japanese well, but he's learning both very quickly. So it's getting easier every month and he's a heck of a lot smarter in terms of raw brain power than I am for sure.

And I'm not just being falsely modest. The guy is really smart. And, but the big difference between he and I is we have very different professional backgrounds. He came through live game operations. And he's forgotten more in the last week about LiveOps than I have probably ever learned in LiveOps. He's done everything in LiveOps, and he's, he knows it very intuitively and very well.

And so one of the things I've really enjoyed, and I will certainly miss a lot about working with him, is we just have this very complimentary skill set. And, but we have a sort of fundamental view of the world that is very similar. We like to, Playing fun games. We think that's at the core of what we're here to do is deliver that.

We feel like if we keep doing that consistently over a long period of time, the business will build itself in a lot of ways. And he will take the long term win over the short term win any day of the week. So on fundamental things, we've never really conflicted and, but we've been able to teach each other a lot of things over the years.

And I'm, I've really enjoyed that. But his knowledge, one of the things that I've spent a ton of time doing, just cause I have to as CEO is investor relations. I deal with a lot of. I deal with a lot of shareholders and a lot of analysts and so on. And he hasn't had to bother with any of that. So I think he's feeling like that task is a little daunting, but I'm helping him understand that nothing in investor relations is nearly as difficult as making MapleStory grow 46 percent year over year on its 20th year.

So he's, so we're having those sorts of sharing of information.

Aaron: Cool. I look forward to seeing what he achieves. I'm glad you're sticking around at least as an advisor and board member in some capacity to help out probably transition on some of that. This has all been interesting. I feel like I've grilled you enough.

I'm looking backwards in succession. So let's shift gears and talk about some other fun stuff, which is technology, the future, where the heck the games industry is going with all of this stuff. And to start, oh, and you've done several interviews lately in which you spend a lot of time talking about how the games industry should be more innovative.

And how innovative software tooling like AI or back end infrastructure improvements can enable smaller teams to create AAA games. Embark Studios, which is majority owned by Nexon, did that with the finals. And that's a big deal. It's a big deal for Embark and Nexon, but also for what it signals is possible for the industry, right?

And this deflationary innovation, I guess you could call it sounds like a real trend and opportunity, but I got to ask, why are you the only prominent CEO talking about it? Why is this not like a bigger conversation, do you think?

Owen: Someone told me the other day, I sounded negative. I don't mean to sound negative at all.

I just, to me, the industry. Is it's a little bit like the taxi industry the year before Uber came on the scene. Nobody was happy about their taxi experience in the U S and Japan is very different. Taxi experience in Japan is fabulous. Other parts of the world, you get a great experience. But in North America, it used to be pretty grim to get a taxi from the airport to go somewhere.

And then Uber came along and just made all of our experiences a lot better. And I think the games industry is a bit in that situation. As I've said, I think Murder's Row this year was a big disappointment for a lot of gamers. Some of the biggest franchises. Underperformed certainly financially, but they also underperformed creatively.

And we've certainly heard fans being very vocal about that. And, but the reality is making good games is super hard for everybody involved. It's hard for developers and for development managers or development directors, it's hard for CEOs and many people are not happy about it. I, on the question of innovation though, here's a fundamental technology question.

Moore's law. You're familiar with Moore's law. Famously. It's introduced by a guy named Gordon Moore, who was one of the founders of Intel, posited that the number of circuits on a chip would double every 18 months, which would mean computing power would double at any given price point every 18 months.

And it's worked pretty well until very recent, maybe slowing down a little bit now, but it's been incredibly prescient forecast. So what does that mean at its core? It means that you get more toys for the same amount of money by double every 18 months. That's just incredible when you think the compounding of more and better stuff every 18 months at any given for a thousand bucks, let's call it.

That's rev, that's revolutionary. And it's guided everything that we have today. That the iPhone in your pocket is, A supercomputer from a few years ago. That's literally what it is today. Then let's take that back to the video games industry. What is the video games industry has done with Moore's law?

It's found a way to invert it. And give us less goodness for a lot more money. And development costs have been skyrocketing. They've gone up from 50 to 100 to 200. In one case, I know of a game that's going to be a billion dollars. And that's development teams of many hundreds of people. In some cases, over a thousand or more.

And okay something's desperately wrong here because fans are unhappy. And yet we throw more bodies at the problem. It's an inversion of Moore's law. So if you take a technologist approach to it and say, okay, can I get a better game experience for less costs? What would be the benefit? Obviously that the near term benefit would be less costs and shareholders immediately.

Like when you say that the cost where they immediately get excited. But really what it is, is if you could have game development of a great triple a game with a very small team, you're going to have something that's probably a lot more creative because you'll get creative people together, hacking up an idea and trying out stuff and saying wouldn't it be cool if X happened?

Wouldn't it be cool if Y happened? You're going to get a, you're probably going to get a better product. And frankly, that's. The reason we all got in the games business in the first place is because we want to make cool stuff and have great, have them make creative, interesting systems for us to play with.

And then we'll make, the game will emerge from the way that we play out those interesting systems. And every great game that I can think of that I've ever played has come from some small group of people. Sometimes one person in the case, for example, of Minecraft that has created these really interesting systems.

And they've then blown my mind with how deep I can go on those systems. And the games industry seems to have lost some of that. And I think that among other things, it's just decided that it could throw bodies at the problem more when in fact they could use, they could leverage software a lot more. And software is there to help creative people do more creative and interesting things.

And I think we should be empowering creative people to do more stuff because they're going to come up with things that blow our minds. And so I'm very excited about this idea. And I think we've proven it out in the case of Embark. The team that made the finals was 75 people, 75. It wasn't 500. It wasn't 1100.

It wasn't 2000. It was 75 people. And that's a triple A game. And it's super fun. I've been playing a ton of it myself. I will be playing a lot more next week with my kids. And I know a lot of other people are doing the same thing. So We ought to be doing a lot. We ought to be exploring that a lot more, but we sometimes have it, have a hard time in our industry, getting out of this rut that we're in of throwing bodies at the problem, which I think from a technologist perspective is a real mistake.

Aaron: Yeah. And why I asked you that question is because this isn't something that you're talking about could happen. This is something that you are already doing. Which is why it's weird to me that no one else is talking about it in that way. And maybe they are behind closed doors, but. Yeah, it's just been something, a nut that I've been trying to crack.

And maybe one, one part of the hypothesis of why that is is just, I don't know, the state of online culture or I guess you could say the media and social, the social media mob in particular is great at taking nuanced topics and forcing them into binary discussions. And the role of AI driven software in particular in game development has almost turned into a conversation between factions.

On one side are those who are excited to see how software improvements will empower individuals and teams to be more efficient and creative. And on the other side are those who view it as a threat to the status quo, and especially all the jobs that supposedly rely on that status quo. I'm sure that's true in some cases, less true in other cases.

But I guess my question, my follow up question for you is just, how do you think leaders can best manage this kind of change given the high tensions involved? Like, how can CEOs like you or other games industry leaders best set a direction around using new technologies? That are obviously beneficial, but stir up perhaps valid concerns about the employee or contractor impact of that change. Any thoughts on that?

Owen: That's probably a very long conversation. The way we got around it or with, in the case of Amberg and how the finals and got to see the light of day was didn't have to do with the things that you're touching on at all. It was, we said, listen, we've got these very large, very profitable franchises like MapleStory, Dungeon Fighter, Sudden Attack, and so on.

They generate cashflow. We're good at making them last and grow forever. So what, why don't we use that to feed? We have time because our business basically goes up every year. It could double without the introduction within a few years, without the introduction of any new major new projects. But let's feed, let's use some of the, frankly, the cash that we make from games like that, and let's use that to feed some innovation on the other side of our business.

And the Embar team really wanted to invest in software tools because they had a thesis going in that by investing in software tools early on, by the way, none of these had, some of them were AI, but a lot of them were not by investing a little bit upfront. And we could get out of this loop of. Our workflows that depend on Photoshop so much, generating art off of Photoshop.

And I can give you example after example of painting foliage onto mountains where the foliage, of course, is going to be different at 2, 000 feet up, virtual feet up, than it is going to be at sea level. Of course, that would be the case. Those are software problems that conceptually are not hard to do, and yet our industry typically doesn't do that very much.

You have to be a really good artist and know that. Foliage at 2000 feet is going to be different than at sea level. So Embark wanted to spend several months working on that. And they had a team that was doing technology, very directed towards the game development process. And that helped us a lot.

And they were happy to be in a place where, you know, frankly, we, or I could give them the room to go build some of those tools. And so it was a, really a function of our business model and our insistence again, on keeping that balance between today's business and the business five years out. But I think your question was maybe a little bit more about the sort of controversy or the concerns about AI taking our jobs.

And I think that those are real concerns that happen typically whenever you start automating things to empower a group of people. And that's a, that's an important topic. But what I would say about that is. Game developers come to the game development business typically, the ones that I know and I've interacted with a lot.

They've gotten into game development not because they want to work in a factory. And yet our industry asks them to work in effectively a factory. Like here, Mr. New game developer, Ms. New game developer, come work in this factory with this group of a bunch of other people sitting in cubicles and make art all day with Photoshop.

That's what we asked them to do. And they do it on, and in our industry is notorious. Spite. Our best efforts sometimes of giving this factory work is very uncreative. People keep coming into the games industry because they love video games. They grew up on them and they love the creative work. So if you can hand You know that group of people some tools that they can create better games and automate the work That's the grunt work of what they do.

I think that group of people is going to do better work So it's not about reducing people in the industry in the aggregate It's about those people having better tools that automate Things so that they can make a more fun experience. I want those people, those talented people to be much closer to the creative process.

But today they're not they work in a team of let's call it a thousand people or five hundred people if you're a development director, you've got to manage a team of five hundred or a thousand people. I can tell you, you're not spending a lot of time being creative. You spend a lot of time figuring out how you get a hundred people not to quit or how you've got to scoop up another 200 people in some area.

You've got to get 50 sound people. It is really hard work that has very little to do with creativity. And I think that we're seeing that situation. This is, I'm talking about the triple A world. And I think that's a very big problem. So if we can get better tools to help those people, I think we're going to get a lot more very differentiated games.

And so everybody will be happy for customers will be happier because they're going to get better toys to play with. I know I will as a customer. Game developers are gonna be happier because they're going to be having more fun making their work. Development directors will be much closer to the development process.

CEOs will be happier because guys like me won't have to green light 100 million dollar projects to get a really cool game. Maybe it'll be a 30 million dollar project, for example. And investors will be happier because our industry will be a lot healthier because customers will be happier. So everybody wins and I, and that's, that seems like a good future for us.

And so I think that's a way to think about it.

Aaron: Yeah. It also strikes me too, that this technology is more easily applied to smaller teams or teams that you can, that are starting from scratch in some kind of way, whether it's a startup or like maybe it's thornier when you have to. When you start thinking about how to apply it to larger teams.

But I also wanted to ask maybe last question.

Owen: By the way, there's one, sorry, there's one other thing on this. A lot of the, a lot of the people that large game companies have to employ have nothing to do with development. They're lawyers or business development people or administrative people or HR people or accountants to make this big.

People centric thing work, if you had smaller teams doing more creative work, those are the people who are going to have a hard time, the lawyers, but they're not the creative people. So I think an industry that is leaner and focused around the people that can actually make games and bring those games to customers is probably going to be a more healthy industry.

Aaron: Poor lawyers. The last question I wanted to ask about this. Is obviously this deflationary trend is fascinating and it's very likely a big deal, but can you help me understand how you think this will all play out longer term, but the second order effects are, because for example, if it becomes a pattern that smaller teams at lower budgets can make AAA games, then presumably there will be more AAA games competing for players attentions.

And there'll be maybe a rise in the number of AAA games faster than the rise of the number of. of players or the play time. So it just gets maybe more competitive, but also the basis of competition. It shifts from budget where, you know, as you mentioned today, very few companies can afford to green light nine figure projects.

And so the basis of competition shifts to something else like creative talent or beloved IP. I'm curious what you think, like how the notion of competition and competitive advantage in making games fundamentally changes if this Software driven deflationary trend makes better games possible with fewer people.

Owen: Well, today, again, we're talking about AAA games, right? So we're not talking about the indie scene, but AAA games are still required for, you have to make major investments to make a serious online game, or it has been true until very recently that you've had to do that. So we're talking mostly about AAA games, in your question.

Look, if you're going to make a AAA game, you're going to have a very big budget, which means you're going to have to bring your game to the light of day through the orifice of a very large game company that can afford to green light 100 million bucks. Let's call it round numbers. And as a result, we get a lot of games that are not very differentiated from other games.

We keep playing the same games over and over again in large part, or we play sequels. Now that's not because CEOs of game companies are evil. It's because to greenlight a hundred million bucks is a, I can tell you, it's a hair raising experience. And if you get it wrong, your shareholders will be calling for your head.

So it induces sleepless nights. So what do you do naturally? You try to lower the risk. You have a development, maybe a green light process with a lot of execs around the table and a lot of marketing people. Wouldn't it be great if that didn't happen? Wouldn't it be great if we just focused on fun? And the judge of fun was a group of people who are the target market rather than the execs who have to green light this stuff, who are caretakers of shareholder money, right?

At a more senior level, who, by the way, are terrible at figuring out whether a game's really cool or not, typically in most companies. So I would. Think that if you look down the future and we can build games that are triple a with smaller, much smaller teams, you're going to get, you're likely to get a much more different, you're going to get more cool ideas that come out of nowhere because the stakes will be lower.

And as a result, you're going to get more good games. And you may say the implication of your question included will that mean we don't have enough customers for all these cool new games, I would respectfully posit that everybody is a gamer. We all grow up playing games in some. And that we'd get a lot more customers for our business if we made better content.

And you see this constantly. Think about what happened with Fortnite or Minecraft. It brought all sorts of new people into games who had not played those genres of games before. Wasn't that great that all these new and different people came in to play Minecraft? Or the people who would never have touched a Milsim FPS before started playing Fortnite, which is an FPS of sorts.

And because fortnight had this interesting take on things and so I think the market could get a whole lot bigger. I think one of the problems about video game analysis is that it can look like a consumer package goods business like diapers or deodorant or something like that. It doesn't work that way at all.

Those markets are very defined. They do not grow or shrink much year over year. The games business expands and contracts like crazy, typically expands, but it also contracts based off the quality output. Of the industry. So I think we would have much better and more healthy industry and much bigger total addressable market.

If we had more differentiated new ideas coming into the games business, it's one of the reasons why these, why better tools is so important. It's not just about cost savings.

Aaron: Yeah, and I think that's a refreshing take. I suspect there will still very much be both a red ocean and a blue ocean.

There's always going to be new opportunities that come along that unlock new players or more time from certain players or however you slice it. But also, Yeah, I'm just curious. I feel like this changes, what does it mean to be a double A game and how does it empower others to be a triple A business that couldn't have been in the past and how does that shake up the industry?

And I think there's going to be interesting shakeups from this. Also, because as I mentioned a couple of questions back, some people are ahead of the curve here and others are not talking about it at all. And I feel like that probably has some implication on how certain companies at least partially play out over the next few years.

So it'll be interesting to see all of this unfold, but it's exciting to see the technological progress and see creative people figure out how to apply it and bigger and better ways. Lots to look forward to, I guess a couple. Last questions for you, Owen. I could talk to you all day, but I've got to narrow in on a couple final questions.

First of all, obviously, even though you're having conversations like this one about your departure from being CEO of Nexon, you're not done yet. You still have a few months left before you depart, I think in March, although of course you'll stay on some capacity. Is there any final act you want to get done before handing over the reins?

If you wanna paint the CEO office pink to prank your successor or get the. Official Owen Mahoney scan into the finals. Any final plans?

Owen: I wish I had a really cool sounding answer for you. I Aaron, but I don't, I just want to, I just want to have a good, smooth transition and make sure the company is set up well, but I know that makes me sound really boring, but that's about what it amounts to.

Aaron: That's fine. I encourage one, one final prank in there somehow. Yeah. Final question for you. What's one non Nexon thing in life that you look forward to doing more when your time frees up a bit?

Owen: I like to kiteboard a lot and I like to ski a lot. I'll probably miss the ski season this year, but I like to kiteboard a lot.

So I'm hoping to spend a little more time in Hawaii and catch up on some kiteboarding. But I also A little more seriously. I've always been a hobbyist coder since I was a kid, never serious. And I was never, I wasn't trained as an engineer, but I wish I was, I hope to spend some time.

I'm calling it my postgraduate year, but spend some time on three topics. Number one is really getting serious about Python. Number two is getting very serious about Swift. And number three is getting serious about AI tools that plug into Python. It's one of those things where you really. Don't understand it until you go deep.

And to go deep means you have to be able to build stuff. And so I'm hopeful that I'll spend, I'll be able to spend the time to really it's required to go deep enough on those because I find them both really fun and really valuable. I don't think it's, there's so much going on in the industry right now.

And I think it's going to be a year, I think maybe more like a quarter. So we'll see, but I'd like to do that if I can. And of course I need to spend a lot more time with my friend, my family and friends who I don't get to see nearly as much. That sounds kind of cliche, but that's really true.

Aaron: You've had a really great tenure, Owen, at Nexon and clearly have learned a lot throughout your career.

And so thank you for sharing your insights and learned wisdom with all of us. And I know you'll be sticking around in some capacity. You're still clearly You're going to be in the weeds of learning and thinking up whatever is next. So look forward to, to hopefully staying in touch and cheering you on or whatever's next, but thanks again for hopping on today and best wishes, Owen.

Owen: Thank you. I really appreciate it. It's always great talking to you.

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