The gaming industry is currently facing an identity crisis, with widespread layoffs, escalating budgets, and a flood of new games hitting the market. In light of these macro trends, game studios and platforms need to find ways to leverage their existing strengths or develop new strategies for long-term success.
Ben Feder, Managing Partner at Tirta and former CEO of Take-Two, and Ken Wee, former CSO of Activision Blizzard King, join host Alexandra Takei, Director at Ruckus Games, to delve into the strategies of four major players in the gaming industry: Microsoft, Sony, Valve, and Roblox. Given the dynamic and uncertain future of the gaming industry, this episode explores how these companies and platforms are approaching content discovery, the role of AI in game development, innovative business models, and future-proofing their businesses. If you want to gain insights into the strategies of these four companies from industry experts, this episode is for you!
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.
Alexandra: What's up everyone, and welcome to the Naavik Gaming Podcast. I'm your host, Alex Takei, and this is the Interview and Insight segment. 2024, and the game industry is in a bit of an identity crisis.
Or rather, many big players are trying to figure out what identities they should have in the remaining decade. In 2023 and into 2024, the industry has been bombarded with layoffs to date over 11, 000, with no clear pattern or exemption for studio scale or game success. With perhaps the only clear pattern being this is predominantly happening in the West versus with Eastern Studios.
Multiple small studios have closed or scaled back to skeleton crews, and the big AAA players have taken opportunities to right size their businesses and get back to fundamentals, offer retaliation of big budget games that weren't driving or weren't predicted to drive big budget profits. But in the wake of all this, the big guys still stand and are facing some big questions about what to do next.
And so today we're going to talk about platform Titans, the OGs, primarily being Sony, Microsoft, and Valve. And we're going to add Roblox to our list as well. We're going to discuss why these platforms have made the decisions they've made, what segment trends and market trends are exhorting them to do so, and very importantly, discuss whether or not this makes sense.
What I'm hoping folks walk away with today is a better understanding of what the existential threats to gaming are and why they're happening, and B, an opinion on whether what the major platform players are doing Sony, Microsoft, Valve, and Roblox, is smart. And positioning them for success over the next five years.
Of course, I'm never alone on air here. And it's my absolute honor to welcome two kings of strategy who will help us walk through how to make sense of all of this. So my first guest needs absolutely no introduction in this industry, but I'll do it anyway. I'm excited to welcome Ben Feder, Managing Partner at Twitter Ventures.
Ben, has had a very middling career in games with career credits such as being the CEO of Take Two and being a founding partner of ZMC with Strauss Zelnick. He sits on the boards of gaming companies we've totally never heard of, like Epic Games, Glue, and Bad Robot. And he spent six years as the president of international partnerships at Tencent.
I'll have him tell us a little bit more about Turta Ventures in a moment, but Ben, it is so awesome to have you join our show. My next guest. I'm personally lucky enough to have worked with on air on everyone's favorite work stream at Activision Blizzard King, the LRP and excited to welcome Ken Wee to the pod.
Ken has a background in consulting at the firm, also known as McKinsey, and was most recently the chief strategy officer at Activision Blizzard King. And he's currently toying around with his next move. Very excited to have you on, Ken. Welcome to the show.
Ken: Thanks for having me, Alex. Good to reconnect.
Alexandra:. At this point, you're probably like. 80 to 100 Bobby LRP decks older than me at this point, maybe more. So we've got a lot of of your knowledge to download. All right guys. So before we dive into our episode I want to give you guys some space to hit us with some quick intros. Ben, how about you kick us off?
We'd love to hear a little bit about what you're doing at Turta and any other background that maybe I failed to mention.
Ben: Thanks for that. So first of all, pronounce Turta. And it's a venture firm that I formed with my partner Justin, you on about two years ago. And we're focused on the video game exclusively on the video game industry games and related technologies.
It's early stage pre series a we've been in business two years. We have been an incredible pace. We have 16 companies in the portfolio just under about a, Deal just over about a deal a month. And we're really, we think this is really exciting time to be deploying capital in a really interesting area for not only venture capitalists, but also for LPs to be to be exploring.
It's an amazing industry. It's got a lot of growth ahead of it. It's a lot of change ahead of it as we'll talk about. And those are usually recipes for innovation and entrepreneurship. We focus on three buckets and I'll stop talking. One is content per se, the other is tools and technology. And the third is infrastructure all of which we think are right for disruption and an enormous amount of growth out of us.
Alexandra: Awesome. Terrific.
Ken: Yeah. Alex, I think you captured it. Recently left Activision Blizzard where I spent over the last five years. As a chief strategy officer, let's strategy have any corporate development and also built our external development function with a broader team to really expand the work that we do with external studios.
It's been a real rollercoaster ride there. Some fantastic success stories, really seeing the growth of franchises like Call of Duty, continued growth of Candy Crush on the mobile side. And really some of the the new generation of Blizzard games, some of the new changes there as well.
I'm still toying around with my next move and we'll have more more news to share on that shortly. I also joined the board of behavior interactive, one of the leading independent Canadian studios behind the. The smash hit dead by daylight. So pleasure to be on and Ben really privileged to spend the time with you here as well.
Alexandra: Congratulations. That sounds really fun. Dead by Daylight is a great franchise. So before we dive into the platforms I want to anchor us in some big macro trends that have hit the gaming industry over the past three to four years. And so not like the long term The rise of mobile, but more like the past midterm, maybe past, three to five years at some extent, I want to arrange this a little bit of a quarters, five forces sense, what has been going on with competition to, who are the new entrants in our industry that are shaking up the scene?
Three supplier power. This will lend greatly to our discussion of the platforms themselves and distribution power for, what gamers are doing changes in consumer behavior. And then five, substitution. External to games, what are games competing with? And Ken, I would love to tap your strategy mind for a quick download on the first three.
What is going on with competition? What is going on with new entrants in the gaming space? And then, what is going on with suppliers and distribution?
Ken: Absolutely, Alex. I think the first thing I'll say is it's never been a better time to be a gamer, and a gamer in the broader sense of the word.
Whether you're someone who casually plays with friends, or someone who's locked in your own man cave or woman cave jumping into the most hardcore games. If I have to reflect over the biggest changes, the last few years, I think it's really gaming going mainstream. And with a lot of the adoption that we normally see being pulled forward, especially during COVID.
And at least in my mind, three things have happened with that. The first is that gaming has become inherently more social. You are seeing games really innovate on social features. On the mobile side, you're seeing publishers really focus on K factor and greater virality in their mobile hit games. You've really seen Discord emerge as a platform with persistent social features outside of pure gameplay.
You've seen Twitch and, to a lesser extent, YouTube and others continue to grow, and streamers and content creators become an increasingly big part of new content discovery and game promotion. This has all been a part of gaming becoming more social. The corollary to that is that audience and engagement has concentrated even more in the largest franchises.
So you've seen, especially Fortnite during the pandemic really take off where gaming became a social place and people who may not have previously identified as being gamers. I'm now spending a lot of time in game, catching up with friends. The behavior is turning into more and more of a social hangout space.
I'm glad we include Roblox as a platform, because I think that best exemplifies this new behavior, especially with younger demographics for whom a gaming platform is the social hangout place of choice, as opposed to the mall or. The, the park by school or what have you. So I'd say that's the second big disruption.
The third one is you've just seen a lot of capital come into the space equally from strategics, whether they're in gaming or traditional media, employees and so forth as well as financial investors, especially on the early stage. I think, you've pointed out the challenges in the industry in the last year or so, the capital has pulled back in a pretty big way.
But we have seen a lot of new ideas, new studios get funded and given the game development cycles, I think that, the jury is still out on what some of these teams will be able to do.
Alexandra: Yeah, it's an interesting statistic. I was reading a Newsy report this morning that was I think 8 percent of new play times dedicated to newly released titles.
And so a lot of that mindshare, like you said, is dedicated towards, the same universes and ecosystems that have been alive for the past six years already. So really interesting point there. Ben, I'm curious, giving your vantage point on the content investing side, whether or not there's any of those behaviors on consumers and players wants and needs, and also on content that might be pulling them away from the games, as we know that average playtime and habits have changed dramatically over the past, five years.
Ben: Yeah. You hit the nail on the head in terms of like trends that we've seen that are really shaking up the industry. That's a big one. Players sticking with their old games. Something like six was a 60 percent of, I'm probably gonna get the stat wrong, but 60 percent of time spent on life service games for old games and those games.
And I think, you referenced the news report. I think they also, highlighted dips in live service games corresponding to new title releases that basically cannibalize console sales. PC is a little more resilient, but I think the reduction of capital, the capital coming out of the system, especially at the later stages with the strategics focusing on fewer beta titles, which I think is really a continuation of.
A very long cycle of that, of fewer, bigger, better titles does leave the door open for independent call it double a games. And I think there's less competition that, that for that area. A lot of triple eight. Projects have been canceled. So fewer games will be released. And I think it's a good for the industry.
Frankly, I think there's, has been a glut of both the studios that have been attempting to triple a, but also good triple a and double a titles. There's a lot of nuance between, among the the AA, the double a titles, but I think there's probably never been a better time to be an indie. Developer, mostly because of the supply side, not necessarily the demand side, but pal world and shrouded manual or these are all kind of great examples of opportunities for Indy and double a games.
And it's an area that we're, super focused on. It's not uncomplicated. It's a very crowded market, 15, 000 games released on. On Steam last year it's very difficult to break through, but if you do break through and you have the right stuff I think the opportunities are really great and it's a great time.
Alexandra: Yeah, interesting. I guess actually just I'm curious, before we jump into the platforms we've been having this overall conversation between AAA and AA, and those are things that in terms that have existed in the games industry for the past, you know. Five to 10 years.
Do you think that there's a difference or a distinct difference in definition today between double a and triple a that is different than maybe what it was in the past six years? I'm just curious to hear your thoughts on, what do you think? Besides the company that creates the game and maybe the scale of the project?
What is the difference between AA and AAA?
Ben: I think first of all, I hate the word label a because it doesn't the whole thing started with AAA and then People didn't have a word for something a little less than AA but I think that again, there's a lot of nuance in that indie doubly world.
There are games that have done fantastically well, that have two developers in the garage. And there are games that qualify as indie or double A that have large teams that are basically triple A aspirational, but not quite there yet and don't quite have the polish or the budget or whatever it is. And so there's a lot of nuance there.
I would say, the scope of some of the AAA games have gotten so large. But that in itself creates an opportunity, right? These are typical games, 80 hours plus. Um, the average user doesn't complete these games. The average user plays about 20 hours, 25 hours. And so there's a sweet spot for AA games and indie games to just basically give gamers what they want, which is about 20 to 30 hours of gameplay, high quality high engagement.
And. That sounds facile coming from, some level view, but the truth is, these things are incredibly difficult to create. It is so hard to find the fun, and it is so hard to find something that's truly innovative. Most of what we look at content wise is derivative, but when we see something that is truly innovative.
Get behind it in a big way because we think the opportunity is big to extrapolate from that and discuss all of double a and all of Indy is to miss the nuance of, what's required to make these things successful.
Alexandra: Yeah. Thank you for sharing that because there's also AAA.
So it's just to think you just come up with a bunch of terms to bucket things into.
Ben: It's fine that the industry is healthy, right? It's people ask me about the video game business. I was like, that's a video game is a big word. There's a lot that's going on underneath that title, that rubric.
And you said, you have to say what are you, which part of the video game business are you talking about? There's a lot of, there's a lot of nuance here.
Ken: I do think, one of the things you mentioned is just the scope creep or really the creep in production values of games.
Ben nailed it. Most gamers aren't looking for 50, a hundred plus or, thousand hour plus live games as the next thing that they pick up. But in addition to the length of the game, there's also the production value as well. Not every game should necessarily be investing in 4k ray tracing, highest fidelity graphics.
That's just on the graphical side, the same thing could easily apply to the depth of narrative or, some multiplayer systems as well. And I do think as painful as some of the cuts, the recent cuts are to our industry, a lot of it is warranted because there's a lot to what Ben said about finding the fun, which is the core part of it.
And then finding the right production budget, the right type of scope of the game around that, as opposed to always shooting for something that is going to be the highest production value game out there.
Alexandra: Got it. Yeah, it's also good context as well and probably folds into a lot of our discussion today around the platforms.
And so now that we have that context we're gonna start diving into the meat of our episode and start discussing those four platforms. And one thing I want to make very clear for our audience today is that we're going to do many deep dives onto only four platforms, Sony, Microsoft, Valve, and Roblox.
But want to delineate platform versus the hardware as we'll be discussing two platforms that lean console and two platforms that lean pc we're discussing platforms in the sense of their marketplaces and suppliers beyond the Hardware is obviously a facilitation to the platform, but not necessary to create it and I want to call out that we won't be discussing all the platforms that exist today.
We selected these for our conversation because these platforms have shown strong aptitude for excellence in development, so asymmetric growth, scalability, and homogenous supply on both sides of the platform. This means developers and players. And what these four platforms do particularly have an inordinate impact on the games industry.
In general. So we're gonna kick it off with our first platform, Microsoft. And so I'm gonna start with just a general book of business and then we're gonna dive in. So Microsoft's obviously a big business, can't break out the market cap necessarily for Xbox, but market cap is 3 trillion. Install base for Xbox is around 20 million units in this gen.
Gaming layoffs in 2024 stands around 1900 to 2000. Um, So recent gaming hits for Xbox have been Powell World the acquisition of Activision Blizzard King the sale of Tango Softworks the closure of Arkane Austin and other notable news events have been setting up a double A studio As you define double A inside blizzard raising the prices for Microsoft game pass and some of the Warcraft developers have unionized.
So Ben, I'm going to start with you. At is as a general macro level what do you think Xbox is doing to grapple with some of the existential threats that we've just discussed in gaming? And what are they doing to try to capitalize on the trends and the tailwinds that are currently existing inside game?
Ben: It's a great question. I think without question just look at the fat pattern, they are doubling down and investing heavily in exclusive games and content to differentiate themselves from PlayStation to Nintendo. Acquiring small studios, acquiring big studios, Bethesda, all the way to Activision Blizzard.
So that's thing one. Thing two again deep investment into Game Pass, expanding its library of titles many of which are cloud supported, including AAA titles like Starfield and a little less interesting, but I'm quite curious about it. It's the Xbox mobile store.
They've confirmed an upcoming release of its mobile store to capture a new segment of gamers. We'll see if that works, but I think they're clearly as I see it. I think they are leaning heavier and heavier into the software side of the business. And so much so that I sometimes I wonder, why they're focused on the console at all.
I'm not, I, I'm not privy to those conversations. I don't know if they're having them. So that's that's falls into the category of, what are they doing to position themselves? And then in terms of capitalizing on market trends, I think game pass subscriptions more important than ever than I think they're focusing on those versus console sales.
I think they've already publicly stated that they're porting first party titles to additional consoles. So I think they're very much focused on the software side. And I think platform games are platform only games are probably they're pushing us more towards cross platform and more cloud based, which I think is something Microsoft is very well positioned to capitalize on.
And I think that, the Activision Blizzard acquisition more than anything has made gaming a big part of the Microsoft business. And it's, gaming used to be a tiny piece of it and now it's significant. And so I think you can expect Microsoft to really focus on things. And I think there as you look at different business models and different platforms, it seems clear to me that they're focused on software businesses, focused on annuity businesses, subscription businesses, and I think those are great businesses to have.
And so we'll see if those subscription models work. But if they do, I think they're. They will take their market position, on, if you just look at them on the console side, I think they're not in a great position, but if you look at it more more generically and more generally just in terms of game portfolio, software subscriptions, every, all the elements that could make a great business.
I think they do have some great assets.
Alexandra: Do you on the subscription business itself so much of there are the MSOFT 365 and their software business is. Subscription base. Do you think that actually works for games? In the same way and at the in the way that the games are consumed today And the hive this like high clip of releasing new titles from a bunch of different studios Staggering those things into a game pass, but also the consumption tail that we just talked about where you know 60 of the hours is devoted to older titles supplying a subscription based pass with a bunch of new content, right?
You Don't those things maybe seem like non lined up with one, not lined up with one another in the sense that if players are always playing old titles. Does it really make sense to have a subscription game pass with lots of new titles in it? How do you see that kind of playing out for them?
Ben: First of all, it's not unusual for a large company to experiment with different strategies, even though they may look inconsistent to the outside world.
It's okay to experiment with different things and see what works and what doesn't work. Provided of course, that no one test can take down the company and nothing that Microsoft is doing in the game, but I think he's going to take that Microsoft. I think it's perfectly reasonable and rational for them to do that.
And I don't know, I think, my issue on the subscription business is first of all, it's great. And you have them, it's very hard to get people to sign up for subscriptions. And I think they were smart to come up with different tiers for different consumers. The issue for me is from third party publishers.
I think the large ones with great IP are going to fight tooth and nail. against putting their frontline titles into a subscription tier. And so you may end up seeing things. We're already beginning to see things like the movie business did with the windowing releases and to take advantage of different the timing of things.
So you can skim different segments of the market. You may see some of that you're highly unlikely to see, for example, a grand theft auto come out on, In a subscription business day one, maybe you'll see granted out of three in subscriptions today, but granted out of six is going to be a frontline title.
It's not going to be on the subscription business. So if you can imagine, for example, if you said, Oh, they should just be in the subscription business, they would lose out on all that. And that would not be a great strategy.
Alexandra: Yeah, so it sounds like so you have faith in this idea that they're going to the Microsoft Store and the Microsoft Game Pass is obviously which they already have a PC line.
And obviously now they're creating this mobile store. It's just going to be. It's going to be like hardware agnostic to the sense that they're going to basically Pass through the Xbox install base and expand onto potentially other platforms. If it's PC, et cetera, we could talk about maybe Sony in a second.
And you think that is basically what is their kind of their long range strategy, is to build up the subscription business and see an experiment with that kind of habituated behavior and that habituated payment style in games. Got it.
Ben: Yeah, I think so. On the hardware side, Both Xbox and Sony have this issue of conversion from the old, from, from the last generation to the current generation, the next generation.
That is a huge opportunity actually for Microsoft to take share from Sony while they have consoles out there. And I think GTA will probably be a big driver for converting those users onto the new platform because GTA is next gen only. And and I think it's jump ball. And that's a big user base.
I think it's something like for Sony, I saw something was like half of their user base is still on PS4. So that's a huge opportunity. I think it's jump ball for both Microsoft and Sony, and I'd expect them to compete pretty heavily for it.
Alexandra: Want to give Ken an opportunity to jump in here, but Ben, is there anything that you would do differently that Xbox is doing right now?
If you had to change something about their strategy, what do you, where do you think that they're misstepping? You mentioned the thing about being in hardware in general, but
Ben: hardware piece is a big question mark for me. But I think they're doing the right thing, honestly.
I think they're, doubling down on content, doubling down on cloud. Strategy is the intersection between, all the available opportunities that are out there in the world and the things, married against or intersecting against the the quote unquote unfair advantage that you have by the assets that you have.
And, Microsoft, as opposed to Sony has clear advantages, in my opinion, in cloud and subscription. And I think they're right to lean into that.
Alexandra: Got it. So the bet here is that potentially if cloud gaming were to be a thing. Which is us right now. It's obviously a smaller segment of the market, but if we trend that way, they're obviously going to be positioned for the long tail.
Over someone like Sony.
Ben: Yeah. And I think they are much more fierce competitors today than they were even five years ago. The one thing that I would look into if I were there would be where does the innovation come from? I think they have scale. I think they have scope, but where's, where does the innovation come from?
Where's some, somebody like an Annapurna, fit into this little ecosystem that they're building.
Alexandra: Yeah. Yeah. Okay. Got it. Ken, any thoughts?
Ken: Lots of thoughts. I need to be careful about what I say and can only really talk about what's being publicly disclosed given how close I've been on the Activision Blizzard side.
I think Ben has really nailed it though. For me, Xbox is in a extremely interesting position for two reasons. Now, one is just the scale of the content business they have. After spending almost 80 billion across Activision, Blizzard, and ZeniMax, that is single handed, that has catapulted them into pole position as far as the amount of first party studios, development capabilities, the content they have.
I think the second thing is really oh, and building on from that, one of the questions you asked earlier is almost distribution versus content. In most content businesses in the long run, it's a little bit of a pendulum shift. And I think what we've seen over the last couple of years in the medium term is really that pendulum shifting more towards the content side.
I think in particular during the pandemic, what Epic Games was able to drive with Fortnite to really enable true cross play, cross progression has really been a big driver of that and other games have followed suit, including Call of Duty. Which even though Microsoft acquired them, had they've all what call of duty has always been available on PlayStation and no signs of that is going to change anytime soon.
I think the other big disruptive thing, which everyone's eyes will be on, is what happens with Game Pass is the first thing that Xbox has really done that's been a clear leader in a sense that they've gone from being the number three player for the last couple of console cycles to the clear leader in all you can need subscription based offering.
They're already at 30 million subs, which kind of shows that this isn't just a console plate. This is very much expanding to become a PC plate. And if you look at what they've publicly stated about ambitions to cross a hundred million subs, the only way you get there is a robust PC and probably mobile offering as well.
And I think therein is probably the biggest challenge Microsoft faces with all of this amazing content studios. How'd you balance what is already a fantastic consumer value proposition, especially with day and date, as Ben points out with the need to run a business and kind of maintain. A robust business model on the content side as well, and I think that's going to be what the future really hinges on.
Can GamePass in particular see that level of growth in the subscriber base while maintaining the right type of model with the right type of content cadence? Time will tell, but a lot of things going well from them, given the mobile positioning, given their early positioning in cloud. Given the sheer kind of first party studios and content that they have.
Alexandra: Yeah. All right. Thank you. Yeah, that's, that was a great summary and closing thoughts to Xbox there. And we definitely want to, we'll keep talking about this. Is there a great one to start with? When was we've moved to the next deep dive on Sony? Which obviously also very similar to Xbox of similar pillars of businesses, except for the fact that they, They have different content cadence and different store style, etc.
So let's start with a little bit of a book of business for Sony. And then we'll dive in there. So market cap for them, 122 billion. Our hardware install base significantly higher than Xbox at around 55 million for PS5. But as Ben mentioned, also a huge IB for PlayStation 4 that tons of people are still Interacting with gaming layoffs at 900, 8 percent of the global PlayStation workforce.
Recent gaming hits have been games like Helldivers Elden Rings, Shadow of Erdtree, that DLC for Elden Ring that came out a couple years ago. Big investment in acquisition activities. So one billion into epic games in 2020 500 2021 and several minority investments into content studios by their venture arm the Sony ventures unit some notable news events PS five pro.
Sony is planning a mobile games platform. Sony adding Discord integration to the console, which Ken, you mentioned at the beginning, is a huge part of consumer and social behavior in games today. And most recently, even today, announcing that they shut Concord down only two weeks after launch. Ken, maybe I'll leave it to you to kick this one off, since Ben kicked off Xbox.
What are your kind of thoughts on what Sony is doing right now and how they're handling and capitalizing on some trends in the gaming industry?
Ken: Yeah, so I think the changes that we've discussed in the broader gaming space are definitely impacting Sony's strategy in a bigger way than Xbox.
So, What I mean by that is, If I think about Sony historically, they've been the leader on on kind of the console side relative to Xbox. I've invested a lot more in exclusive first party content, especially the type that, drives, drives a lot of interest in the platform. And so I think, when you look at everything that's coming with, in between the new competitors, in between changes in the publishing landscape, changes in consumer behavior.
I think that kind of calls into question more of what Sony is doing. Going back to Microsoft for a moment, we've already seen some of their titles move off Xbox exclusivity. We just heard a games com that Indiana Jones will eventually come to PlayStation. So Xbox in part because they've had less exclusive content is more embracing this more open kind of platform agnostic content led ecosystem.
It's still unclear if Sony is going to follow suit. And so that for me is the biggest question. You have a leadership transition at the same time as you have a continued effort to attach more PS fives into the installed base. We'll see what Sony does. I think if there is a type, that type of content that a platform should invest in and subsidize Sony is already in that category, what I'll call high production value narrative single player content.
If gamers are looking to play with their friends, if they're looking for that more immersive experience, it's easier to put that content as a platform exclusive and draw people there. And if you look at the big Sony franchises where they've, had a lot of acclaim, also had a lot of commercial success, Last of Us, God of War, Uncharted, the New Horizon franchise, all of those are in that vein that if you're going to make content exclusive to a platform, that's the type of content where players are less likely to be annoyed that they can't play with their friends and see some value in that platform business.
Now, whether or not as gaming gets more social engagement moves, more social spend moves towards multiplayer games. And continued free to play games as a service, whether or not Sony will see the financial benefits of that type of content investment remains to be seen. And I think that's going to be one of the interesting things to see how steadfast Sony remains in, their stated desire to keep a lot of this content.
Exclusive to PlayStation.
Alexandra: Yeah. I think going to Ben's point earlier of, a contraction from two, two into whatever double eye Indy, et cetera. Microsoft is building up that kind of content, arsenals, studios that are making that content to fill the game pass, and Sony is almost like on the opposite end of the barbell here, spending 300 million, 400 million on Spider Man. And but also still struggling with the unit economics over there on the, on that side of development. So what do you guys think about Sony's production costs and then the value of those games?
They obviously have tremendous power in IP, but I think one of the things that we're struggling with now is just the long tail development cycle and the cost of development in general. And if we think about all the games and even those IPs that were just mentioned, God of War. Spider Man, these are games with maybe, seven, seven to 10 years in between each one.
Do we think that Sony can compete with somebody like Xbox on, on, on the live service or the almost like games as a service inside a subscription model, if that makes sense?
Ken: I think eventually they'll have to, you will see a rationalization of how much you're spending on content. And by the way, if a game is going to be exclusive to a platform, It's going to be more single player narrative in nature.
I think you will need to figure out what is the right production budget and scope that fits that type of model. So I think we're already seeing some of that play out earlier on. Alex, you mentioned that there have been a lot of layoffs in the industry, a lot of projects being canceled. I that's actually not true just to say that's happening in the West.
It is happening in Japan. It's happening in China, the rest of the East as well. And so I think across the board, you are seeing a right sizing of studios and production budgets. Relative to what the opportunities are,
Ben: I would say, Ken, that, some of the publishers that I talked to can't figure out how to get outside that box that like, they can't figure out how to make a title of that quality for less than 300 million.
And I think a lot of them are looking to AI tools for example, to reduce the cost of. Because especially if you're exclusive onto a single console, there's no way to justify these kinds of costs on the one hand. And on the other hand. Can't manage their way out of that box of like, how do we do this and laying off people and canceling titles don't really do the trick, in my opinion.
Maybe you can reduce the scope from an 80 hour game to a 30 hour game. That might do it. But the the cost structure of some of these, or some of these organizations is just, they are what they are. And to make matters even more complicated, we're finding in the early stage of AI content development, because that's the things that we fund and we see differences.
Is that it's not just, plug in AI and your costs go down the way folks develop with artificial intelligence is fundamentally changing the workflows, fundamentally changing the way developers create. And it's hard to turn around a big ship, as and if you're if you're an incumbent studio and you're looking at that and you're looking and you're, and you've been, or you're an executive in those studios, a, you know how to make games the way you know how to make games and they don't, and it's hard to change a B you've got three years of development locked in today.
I mean that you can't just change it tomorrow. Again, I think leaving room for independent content creators, but if, if I were Sony, I would. And I've given this advice to some publishers, right? Could you set up a team? That's don't force AI onto your teams, but can you set up a team that sits next to your regular teams, have the AI team and say, look, you're, your goal is to make a triple A game for 10 or 20 million and have people look over your shoulder so they can say, how did you get the art to be?
Two cents instead of 200. I think they have to figure something like, I'm not saying that's the answer, but they're, they need a way to accelerate either, either to accelerate the implementation of AI into their studios, or somehow figure out a way to reduce costs from 300 million down to 100 million, because I don't think it's sustainable.
Ken: No I definitely agree, Ben. I think, look, one of the things you said earlier in this, and it's one thing that I truly believe as well, there is a real gap and opportunity for I really hate the term double A, so I'm going to say, games with a production budget, call it 10 to maybe 50, maybe 10 up to a hundred at most.
That kind of bit of an underserved place in the market right now, because you're not going to get a publishing deal from one of the large platforms that covers all of those development, suddenly not going to go exclusive, but there is an opportunity there. And I think we're going to see some really interesting games, but also new business models come out from opportunities in that segment.
I think AI is certainly very interesting. It's still very early days for us in between, developer pushback, consumer pushback, labor rules, copyright and IP issues. I think all of those are challenges that AI will face. I have seen some smaller studios think of AI as not really a cost saving as all, but as a way to just get that much more content to their players, especially for live games.
We always talk about the, you and I have talked about the content treadmill that free to play live games all run into. AI can help solve that. I do think over time, you are going to see a way that AI really does lower the cost, but that might be a little bit further out given all of the issues facing AI at the moment.
Ben: I do have a pet theory that I'll test out on you live on air. Which is, apropos of this whole hardware thing and Sony's position. I can imagine a world where having a, imagine a world that AI is integral to video games. But B, where does the AI sit? And that I can imagine a world where, Microsoft has it in the cloud and Sony has it on device on the console.
And I can see that. Leading to vastly different gameplay on a Sony console versus a Microsoft kind of cloud service. And I think that's thing one. And then thing two is it could be an answer to the question is is there another console cycle? If all of a sudden the console doesn't look, doesn't architect like a PC and is architected more an AI device could be pretty interesting.
Ken: I think that's definitely an interesting thing to consider, right? Right now for me, when I've looked at AI in games, it's been cost prohibitive to have the AI in the cloud. My crystal ball is as good as anybody else's probably is not as good as anybody else's when it comes to how much cloud costs are going to trend over the next five years.
When you look at the next generation of consumer devices, everyone's shipping local NPUs and Kind of slim LLMs that sit on device or maybe edge. I do feel the hybrid model is the way that it's going, but I think you're right in that Sony is going to lean on more local and Microsoft will, Xbox will leverage the strengths of parent company, Microsoft in a way that works best for that.
At the end of the day, though I've yet to see any true new core game loops or progression systems that fully require AI. The idea of smart NPCs or avatars that adapt to, whatever you want to do IRL sounds nice, but I'm not really seeing a much traction there in the market, either from publishers or from consumers fully expect that will be new core game loops and progression systems that are built on AI and will do phenomenally well.
I just haven't seen any of those yet. And, maybe given your vantage point in the early stage side, you've probably seen more promising ideas than I have.
Ben: Yeah, we see it. We see the ideas. We don't see the businesses yet, but that's what we found. So it's, so it works for us. We have to squint a little bit more than you do.
Alexandra: Yeah. Okay. Awesome. But I want to shift gears from talking about some of our console platforms Microsoft and Sony talking about PC. Because as we said, there's also expansion from Microsoft and Sony onto the PC front. And so I want to kick us off on Valve and just the big PC Titan here. Obviously no market cap, but generates around six and a half billion dollars a year.
In terms of the in terms of active users, maybe like sitting at 130 million active users with about 3 million Steam Deck sales. And no layoffs for Valve with anything we've learned how this year, how few people, Valve employees, it's like sub 400 or something like that in 2021. So recent gaming hits for Valve have been Paul world the banana clicking game.
And now Deadlock which just is, kicking butt, even though it never actually launched over 150K concurrence and is, was silently launched onto Steam, which is what you can do when you own the distribution platform. In terms of big investments and acquisition activity, obviously Valve's on the quieter side, a lot of the growth we've learned on Steam is coming from China.
And that has been, it's been flat in ROW and been growing in China. I would love to hear your guys perspective on whether or not you think any of the prior platforms that we've discussed, such as Sony or Microsoft could actually dethrone Valve in some way on the PC front, or are they just, passively going to ride along forever positioned for success?
Ben: So in terms of look, I actually, I think we'll get to it, but I think the bigger threats are from UEFN and from from Roblox. As new distribution platforms in terms of Microsoft, I feel like maybe obviously very strong and PC but, valve, I think of as, relatively passive company they've got a great market position.
They don't need to mess with it. Estimates are kind of 9 billion a year in turnover, 50 percent of that in profit. It's just it's a nutty, sizable, profitable business. But there are signs of deterioration, right? I think, conversion rates from wishlist to purchase as good as half from what it was a few years ago from 6 percent to something like 3% But where I think there is a chink in the armor is in the area of, discovery, conversion, marketing areas that a Microsoft or even an Amazon could really create some real damage to the platform.
I think that would be, if there were a chink, I think it would be there. And then separately, monolithic games that are available for download versus platforms like UEFN and Roblox, where all, it's all in one platform slash ecosystem, I think, is the other threat as things and I think the China business for, I've been involved in China for a long time.
It's a gray market that somehow. The authorities turn a blind eye to everybody keeps wondering when it's going to end and it just, it's still pretty, it's still flourishing and there's some great, maybe there's some great opportunities there, but it's surprising to me that steam is still as strong as it is in China.
Ken: I think Steam has always been for me, one of the enigmas in the gaming space. When I think about it from the publisher perspective, taking 20 to 30% honestly, what doesn't feel like a lot means. Publishers have not liked Steam, but they've gone there in order to get distribution. And historically, that was true for indies.
And it's even true for the largest companies as largest publishers as well. Call of Duty went on Steam. Apex Legends went on Steam. Even Microsoft's franchises Xbox franchises are also Steam. At the same time for the players it's not the best experience either. I think content curation and discovery is extremely challenged on the platform.
Social features while they, while the mode that they have around social graph is truly incredible. They haven't really innovated on a lot of social features. And when I think about where the innovation of social has come, a lot of it's happened on Twitch for discovery on discord for real time communications.
On platforms or forums like, Reddit for more persistent out of game dialogue on what's happening in the game. So I don't want to say that I've been beating the dead horse and saying Steam is ripe for disruption, but I am surprised that it has been as persistent as it has. Ben hit on really the content discovery and curation.
Uh, As being one issue, I would also argue that social features, UI and persistence have, are definitely weaker than what they've been in the past. And so there is a really interesting opportunity for somebody else or other players to come into the ecosystem. Ultimately, I don't know that there's one single winners, all of the publishers in between, Ubisoft connect EA play battle net EA desktop and origin.
Like we can name the number of competing. The riot launcher, the number of competing distribution platforms there are. And I don't think anybody's ever going to truly supplant steam, but I do see the market being more and more fragmented. And if I'm a larger publisher at the moment and in term along a smaller publisher, longer term, it may be less critical to be on steam.
That said, the mode that they have around social graph and around some of the technical porting requirements where it's real effort to make sure your game works on Steam as well is not trivial, and I think Steam will be around for a lot longer. I think Chide is an interesting example. I think we've all seen what Black Myth Wukong has done and how game science, which By the way, fantastic example of that smaller production budget.
Yet what feels like a high production value game is able to do has driven a lot of the growth there. Let's also keep in mind, you have both the gray market steam as well as the official licensed version of steam. Unfortunately, given where China's economy is going, I don't know that. They're about to take any measures to curb gaming, especially if foreign publishers, you look, they're still approving new licenses every month, almost at record numbers.
So I feel like there's even more growth to be had there. And more broadly, Steam is growing internationally as well.
Ben: I would say, I think that's a great Ken, I would say, I was talking about this with one of my partners earlier, and I said, if you were Steam and, you experienced, you felt like your position was threatened and you're experiencing more competition.
What would you do? You might see them, step in and, either buy or acquire, acquire, hire, hiring best in class, strong developers for new games. And then this morning we wake up to, an acquisition of Hope of Games. It may be that they feel like they.
At their moat is somehow not what it once was.
Alexandra: Yeah, and I think that's the pervasive trend with Steam is that they used to be a struggler not in creating fantastic IP and fantastic games with the TFT and, portal and all the others. And then now they've gotten rested on their laurels a little bit in becoming this huge distribution platform.
But then something like deadlock comes along and you're like, Oh, perhaps this is what they've been working on in the background. And so it's it's just, there's just an interesting. platform in the sense that they actually aren't really doing very much, like you said, towards curation discovery, even though they have this moat, they could be expanding it a lot further than they actually are.
I think they've actually intentionally tried to do some of those things around that inhibit discoveries. There's no ranking charts. You can't You know, pay to booster, you can't even pay to market your title. There's no like storefront placements, et cetera. So do you think that it would actually be to their benefit to lean into some of those things, or do you think that would actually be more deleterious to, to, to their brand in general, and maybe lose them a certain amount of customer base such that people would flock to different platforms?
I'm just curious.
Ken: I was just going to say, I think ultimately it's a very academic question, cause that's not a valve thing to do. Earlier I said that they are one of the enigmas in gaming, and I truly mean by, mean what I said there. The approach that they take to featuring and promoting content on the, on their platform is unlike any other.
Alex, you were right to mention that. If you're a publisher, you don't really have a robust dialogue with steam about promoting your game that they could easily make three X five X the money that they're making on that part of the business, but that's just not a priority for them. And it's one thing that works really well for them.
Yes, they could make more money. They might alienate some customers at the margin, but they're not going to do it. Cause that's not the way that they're set up to operate. It's not how decisions get made.
Ben: You said exactly what I was going to say, Ken. So I feel the same way. I saw a stat the other day that like they did 37 million concurrent users last month.
That's just, it's just like they have scale, they have scope. They have so much going for them. They don't need to do much.
Ken: Yeah. Yeah. You mentioned deadlock. The idea that they've done smaller acquisitions to support the potentially the development of that. I think that's interesting, but even looking at deadlock where they launched a closed access beta that they've scaled without really featuring it prominently on steam and really relying on the community to take it.
Something only valve would do. Yeah. Even the core of the game, which is this, I played it a bunch. I love the premise, but it is incredibly sweaty and complex. The idea that we will take a MOBA, which people already complain has a really high skill for combined shooter mechanics, make it a hero shooter, have item progression in the game.
So that even the guides embedded in the game so overwhelming. This is not something that people are thinking about. People would think of as a mass market, massively accessible game. But that's again, what, that's what valve does.
Alexandra: Yeah, I didn't even have a landing page for it. You literally just find it in the ether. Thankfully they didn't make it easier.
Ken: They did make it a lot easier to invite friends. So that is one, one positive improvement.
Alexandra: Okay. Let's actually flip, flip the book and go to the opposite side of the spectrum. Let's. You know, To Roblox, our final player for today.
And I wanna conclude with Roblox because although it's an actually an old company, it's a newer dominating platform of the past decade. And so for Roblox, they've got a market cap, 28 billion as of Q2, 2024, 80 million, DAU, and 70 billion hours of engagement. No notable restructurings necessarily at the company that I think have been publicly released.
Top gaming hits for Roblox are games like Adopt Me, Brookhaven, Bloxfruits. There was that Blade Ball slicing game that was really big a couple months ago. In terms of investment and acquisition activity they basically acquired a lot of things around infrastructure, Speechlead, Bloxlink Discord servers for gaming platforms, beefing up that side of the.
Do it yourself. You GC platform and some in terms of notable news and events. Netflix announced earlier this year. They plan to lend in license. Netflix owned IP to the robot platform. This is called next world. There's an e commerce plat partnership with Walmart. And Roblox is a little bit in the league of its own here.
On the piece on PC, but doesn't necessarily have storefront distribution. in the same way that Valve does, no hardware, etc. And I think, from my inclination, is to think that they're the best position to capitalize on new player behavior. But what do you guys think will be the challenges for Roblox looking ahead?
And are they positioned well for the next five to ten years? Or are there as you said Penn, chinks in the armor that we're missing?
Ben: Look, I I think roadblocks has some fundamental challenges that they've been struggling to overcome for a long time.
First and foremost is the demographic they have a high number of 12 and under which is both. It's a double issue. It's an issue in terms of scalability and getting to an older demographics and paying demographics, but also for kids under 13, there is some pretty stringent regulation worldwide and stringent and complex.
And the costs of falling out of compliance are much larger than anybody thought. And like much, much larger and Roblox as I understand it has, a problem on that front. So I think they need to fix that as just kind of table stakes moving to an older demographic, I think is, I think it's interesting. It's a challenge for Roblox, but it's an opportunity for the rest of the industry, frankly, because, I think Roblox and potentially UEFN are where the new users come from. These are kids that have grown up in a certain, with video games of a certain type.
But there are new users in the industry that's not growing, from a top line, not growing very much. I should say growing more moderately. I think it's that demographic is both a challenge and an opportunity for roadblocks and for the industry. And then just standard revenue drivers, use her up and up.
Okay. But I think, they have to do a little bit better. And then just on the developer side, I've always found that the economics for the developer need some sort of improvement, which is tough because without a better share, developers are not going to have the capital to develop great experiences and without great tools from Roblox Developers are going to have a tough time making great experiences.
And I say it's tough because a large part of Roblox is players come from mobile platforms. And so when you're, when a developer is done with the Apple tax and then done with the Roblox piece of it, there's not much left for the developer in the waterfall. And it's one of the reasons that, Epic was so active with Apple.
And. It's something that I think is, is an inherent problem in the industry, hard to deal with when you're a public company, a little bit easier to deal with when you're a private company. But to me, those are the kind of the fundamental challenges for Roblox. All that said, they've built an amazing business hats off to them.
I think it's a I think it's a, an incredible platform. They've done an incredible service to the industry, frankly. And And I think there, if they can sort some of the stuff out, I think they're going to be great. And I think there's room for both, both the roadblocks and the UEFN, frankly, and also, a Minecraft there's, this is an incredibly interesting part of the Liberty game business.
Ken: I think you're right, Ben. I, before we jump straight to some of the issues, I think we should take a step back and look at how incredible roadblocks has grown over the last couple of years. I think the conviction to build out. True cross play, cross development with a very simple kind of engine and interface was probably one of the most successful, highest conviction decisions in the gaming space that I'm aware of.
Dave and the team deserve all the credit that they've done for that. At the same time some very real challenges i'm not going to cover the child safety issues as much but when i think about their stated ambition to scale up the audience to grow the share of the audience and all the age groups.
I actually viewed as a vicious cycle with the economic model that they have right now if you think about most platforms you know paying out. Paying out 30%, keeping, sorry, keeping 30%, paying out 70%. Roblox is almost inverted. And I worry that if you think about what's needed to attract and retain all the players, if you think that's going to be higher, more professionally produced experience, deeper engagement, functionally better games you're not going to attract scale, professionalized developers while, only paying out 30%.
I think the economics are one part of that. The other thing that's also very challenging for traditional game publishers to do is what I'll call ownership of the audience. You don't really know who your audience is on Roblox but more importantly, you're not able to promote things off platform to them.
If I want to make a game for a large marquee AA or even AAA IP, I'm not able to actively encourage those users to go to an off platform game experience, or at least not without a lot of friction. And so I think that's the vicious cycle. Larger, more professionalized developers needed to build higher production value experiences or games that will then help robots age up their audience.
It's something that I think over time that they'll probably realize and make some changes in their approach. But that's the open issue facing robots as I see it today. . Uh, Companies like GameFam and BoldX are both consolidating the robots, create a space, professionalizing the developers.
So a lot of it is happening organically. I know of some teams in China with 30 plus developers trying to build higher end experiences on Roblox. I think it'd be interesting to see how that does, but ultimately, I think Roblox will need to revisit both the economics and how tightly control they control their ecosystem with respect to other publishers before they can really age up.
Alexandra: So it's, you guys both talked about this trend of aging up the audience. I'm curious to whether or not you guys think that Roblox has fundamentally changed. What you think young game, what young gamers expect out of a video game? I had this interesting conversation a couple podcasts ago with someone from the India gaming market.
And I asked this question, I'm like, why are all games in India based around betting? And, what is it with, what is it with the India gaming market that just love to bet? And I think the thesis was that some of the first games that were introduced were betting games. And so this kind of set the fundamental groundwork for this is what a video game is.
And this is what we expect. Do you think that, because we have so many eight year olds, 11 year olds, 12 year olds, et cetera, playing Roblox with all of these UGC free forming moments, that this is actually going to transmogrify what The femurs that are currently aging up into being 15, 16, 17, we'll actually expect from the development studios that are, the AA’s and the AAA’s that are positioned down the line, or do you think that they're going to basically grow up into God of War?
Ken: I think I would say yes and no, I think Roblox has done a phenomenal job expanding the gaming audience. And so when I think of Roblox, for me, the biggest breakthrough is just a social space where you look at a lot of the games or experiences on Roblox, a very simple Rooms where you just emote to your friends and communicate.
It's not even about building games or the user generated mods, which by the way, mods have been a thing in the gaming space for quite some time now, and the whole mobile genre came out of of mods to to Blizzard's Warcraft III. So no, in that I think that you've always had this mod community.
You've always had some people who want to be creators. And what Roblox has done is just given them some incredible tools, especially very accessible tools at a very young age to do it. That's not necessarily new, but yes, in that the sheer scale of it, but also very different. But when I look at what you can do in UEFN, I think the fidelity there, the audience, that the economics that are all trending more positive to more professionalized developers.
And so I, I would say that's a very big opportunity for Epic if they can continue to grow into and for Roblox to try to adjust their philosophy to do something.
Ben: Yeah, I think that's right. I think it's more likely that they navigate to a UEFN than they are to go play God of War, excuse me.
And seems like a more natural progression. Now, if I were at Roblox, I'd I feel like I, just creating higher fidelity tools. And a higher fidelity engine is very difficult. It's, a lot easier said than done. Even Epic that is starting with an Unreal Engine base is rolling out these tools, more slowly than a lot of developers want them to.
But there, and I know that they're, moving heaven and earth to get it all out as quickly as possible. But if I were Roblox, I'd, find ways for creators to produce content. Tailor to the 16 plus audience within the Roblox world. Older players may not want to associate with the platform that caters primarily to young kids and segmenting and branding the platform differently, along with, offering more mature or relevant content may help attract this larger age group.
And I think this goes hand in glove with the issue we mentioned at the top of this discussion, which is content moderation and and age gate it's more than age gating at this point, but if you can segment the platform itself into safe areas for kids under 13 and areas that are 13 to 16 plus, I think it would, and then find ways for creators to produce content with 16 plus audience, I think it would help Roblox a lot into maintaining, because that audience is theirs to lose.
And and I think you can say with a lot of confidence that those gamers will get older. So what are you going to do about it?
Alexandra: Yeah, I think it's, and you're actually pointing out something that's pretty interesting. I've also had this conversation with some folks and I'm like, Roblox to me is they're like the gateway.
To UGC, but then they're like the gateway drug a little bit, but then as you get older, like somehow like Legos are no longer enough for imagination, like as we when we were six or seven years old, we could play in our backyard with Legos and ponies and Lincoln logs and everything, and then as we got older, we expected the things of higher fidelity that were more mature.
And so it's like the gateway for something maybe like a UEFN where those tools are a bit more sophisticated and create those 16 plus experiences that someone who's eventually going to age will expect. Yeah, pretty interesting. Alright guys, so I completely lost track of time because I realized that we are this is such a fascinating conversation.
I want to move to our conclusion because I think we're, let's think about, who is actually positioned to be the winner here. In the next five years, this is obviously a pretty hard call. Who do you think comes out on top? Sony, Microsoft, Roblox, or Steam? Who's the long in this dynamic?
Maybe you can choose top two. Who are the top two? Ken, I'll have you go first.
Ken: Cheat a little bit and give an unsatisfying, but what I feel is truly the answer, which is the consumers will win. I do think that it's less about a single platform winning and being the de facto choice. It's not about the Xbox plus PlayStation console awards.
It's not about steam being the only distribution platform on PC. I think ultimately as a consumer, the choice to consume different types of content on different platforms with cross play cross progression is something that's here to stay. We'll only continue like we're seeing some of the regulatory shifts on the mobile side as well.
I think all of that is positive for consumer. With that said, I do want to answer the question. I think what Xbox has with Game Pass is truly disruptive. It gives them a way if they can figure out a way to make the economics work. It gives them a way to redefine the market from just console to all gamers across all platforms.
And again, big question on the long term business model there, but if they can solve that very interesting market for them I do think roadblocks as they figure out what they do with the younger audiences and the more professional developers will only grow, but if they're unable to do one of the companies that we didn't cover today.
Epic in between the continued, just persistent strength of fortnight as probably the closest thing to a metaverse there is combined with what they're doing with UEFN puts them in an extremely interesting position. And then lastly, I'll say, I don't think steam or legacy Xbox or legacy PlayStation are going any, They have great first party content.
They have strong social graphs, a lot of friends. I don't really view it as losing out because there's so much growth in the gaming space. I expect all of them to persist, all of them to do well. That's the, that's, I guess the not so hot take on it from my perspective.
Alexandra: Ben, what are your thoughts?
Ben: Again, a non satisfying answer, but I feel in today's regulatory antitrust environment, you lose by winning and, if you say, who's the winner, there's, if you, if there actually was a winner, you'd have the government knocking on your door pretty quickly.
And and as it turns out, I don't believe that there's a winner or loser, I think, everybody's got. Yep. Strengths and weaknesses. You started off with Michael Porter's, five forces. And if anything, I see this, the video game industry further balkanizing with different companies taking different territory, different positions.
With obvious intersections and bumping into each other and when that happens I think you see something like you see with big tech today, which is like the only way to grow is to take share from there from the other big tech company. I don't think that's the case today where you have to take sure from somebody else.
I think the industry is still growing in a healthy way. And you can. Any one of these players can carve out a place in the cells. We talked about Microsoft leaning into cloud. We talked about Sony leaning into console. And I think you can see that play out. I agree with Ken that, Steam is King on PC.
I don't see that going any place anytime soon. At the same time I'm very bullish on UEFN. I'm bullish on Roblox. I think that is an entirely new segment of the industry and is going to grow the industry. The one thing we haven't talked about is GTA as, another potentially emerging metaverse.
When that comes out, I think it's really going to shake a lot of the pieces. And both with respect to we talked about the conversion rates of folks that have not converted to next gen But also market share, I think it's a great opportunity in terms of wanting to grab more share between Microsoft and Sony.
But finally, to the extent, and I'm sure there is an online version of GTA, a persistent world of GTA that is, I think that is yet another game that's going to become a platform, and I think it's going to be a very powerful. Powerful platform and probably creates, more friction to the 16 plus audience for, somebody like a Roblox.
So I keep my eye very much on GTA and Take Two.
Alexandra: Awesome. It just sounds like what you're saying is that in a couple, maybe a year or something for now, you have to do this podcast again and add GTA 6 to the mix. Ken and Ben, this was so awesome. Thank you so much for coming on. I think that I hope, hopefully our audience now has a much better understanding.
how to think about these four platforms who are obviously playing such a big role in shaping the future of the games industry. So it was awesome to have you guys and as always for the audience and the guests, if you have feedback or ideas please hit me up at [email protected]. I'm always open.
And with that we'll be wrapping up our episode. Thanks for coming on Ben and Ken.
Ben: Thank you, Alex.
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