Modding has long been a force of innovation and creativity in the games industry, but the emergence of cross-platform, premium mods is set to take modding to another level. Thanks to platforms like Overwolf’s CurseForge, studios and publishers can now enable all sorts of creators — even other professional studios — to build on top of their games and get rewarded for doing so. This new technical and economic unlock is poised to take UGC gaming to even higher heights and is a compelling growth opportunity for the entire industry.
To best discuss this trend, host and Naavik co-founder Aaron Bush is joined by Uri Marchand, CEO of Overwolf, Jeremy Stieglitz, Co-Founder of Studio Wildcard, and Patrick Moran, Founder and COO of Look North World. Look North World, a young UGC-focused publisher and studio, is building a premium DLC on top of Studio Wildcard’s popular ARK: Survival Ascended, which is all enabled thanks to Overwolf’s CurseForge platform. The crew discusses how to operationalize premium mods, why the economics can be compelling, what cross-platform enablement unlocks, and big predictions for the future.
We’d also like to thank Nexus for making this episode possible! Nexus’s creator program in-a-box makes it easy for game devs to build and manage a world-class creator program, driving significant growth in conversion, ARPPU, retention, and LTV. To learn more, go to http://nexus.gg/naavik
This transcript is machine-generated, and we apologize for any errors.
Aaron: Hi everyone, I'm your host Aaron Bush, and today we are going to explore an exciting emerging trend in our industry, premium mods. Obviously, modding has been a major driver of innovation and creativity in gaming for decades, but it's possible that we're entering a new era of modding.
One that will be defined by more easily accessible content, Cross platform support and incentive models that accelerate how great and premium mods can be in order to pull this off. It takes hard work from multiple people across the gaming value chain. So today I'm bringing together three business leaders to discuss how their teams are working together to pioneer the next steps in this movement, but first some quick context to start as you already may know Overwolf through its product Curse Forge has already supported hundreds of thousands of mods and mod authors and become a go to leader and partner in this space. One of the most popular games leveraging curse forge today.
is Ark Survival Ascended by Studio Wildcard, the super fun dinosaur infused next gen survival crafting game. This game launched in October 2023 and also launched with cross platform mods enabled on day one. But super interestingly, and as we'll dig into, the modding strategy is to also support premium DLCs made by professional studios, one of which is Look North World with its Enclave Survival Skyward expansion.
To discuss what all is going on here and what it means for the future, I'm delighted to welcome Uri Marchand, founder and CEO of Overwolf, Jeremy Stieglitz, co founder of Studio Wildcard, and Patrick Moran, founder and COO of Look North World. So thank you guys all for being here, and Uri, let me start with you to set the scene on all of this.
First of all what exactly does CurseForge enable here? And from Overwolf's perspective, Why is now the time to accelerate support for premium mods?
Uri: For studios that want to integrate creator communities within their game and make it in a way that is safe and profitable and easy, we're providing a one stop shop solution.
To do all that we built the tools and services in place to make it really easy for folks like studio wildcard to integrate that into the game, make sure that it's cross platform, make sure that it's safe and that it meets their guidelines, make sure that we work hand in hand with them to understand how they're thinking about the game of the future of the game of the future of the content for the game.
And facilitate this whole thing. So I think this is what we do and what brings us here. And I think we're the reason that it's very relevant and interesting these days is that if modding started 40 years ago and back then it was basically reverse engineering games. And then 20 years later we started having map editors and those kinds of things.
We're now in the evolution of. Kind of the third phase where in game creators, people creating mods can actually do that and make a living. And we can see that on platforms like Roblox, like Minecraft, obviously. And also a bunch of the creative platforms that we power, like GTA V, or creators around League of Legends, and now ARK.
So this is why, in my opinion, now is the time for in game creation and UTC platforms. This transition from being on the sidelines, but with a lot of adoption. To being front and center with a clear business model and with continuous adoption from both studios and basically all the other sides to the ecosystem.
Aaron: That's really exciting. And Jeremy, maybe to set some context from studio wildcards. Perspective, could you just quickly tell us about your company for those who might not be familiar unpack ARK's history so far with modding and then just tell us big picture what's going on in your premium DLC strategy.
Jeremy: Yeah Studio Wildcard was founded in 2014 we came up with ARK Survival Evolved, the precursor game to this in 2015, and from very early on it supported modding in the traditional sense, in the kind of prior generation of modding with It's a hacky standalone map that was specifically limited to Steam using Steam Workshop.
But that was a very popular feature of the game. It was clear on PC that greatly extended the lifespan of the game. It generated a lot of end user creativity and player engagement with the title and just led to a lot of great content created by users. But there was always this very significant limitation that it was limited to PC.
Not only even just to PC, but PC Steam. And out. It was pretty clearly never going to change as far as we could tell with Valve. But beyond that, the way in which we viewed modding at the time was a sideshow to the main game. Some of the tools upload and distribution process was very hacky.
Some of the processes were very esoteric and limited, and it was just more experimental in many ways. And on top of that, obviously for everybody doing it, it was a wonderful hobby, but there was no way to make a living out of it. At least not one that we supported. So with the new. said, how can we make this kind of less of a side show feature to the game and more of a main pillar of the game?
And we thought about it from many different angles, technology and business, but overall, when we did the research was the company kind of at the nexus of, Solving each of those problems. Cause there are, there are challenges on a technical side and on the business side, even just in terms of well, how do you compensate the users?
How do they choose how to be compensated? What does that look like in terms of payment processing on each of the platforms, which is very different depending on the platform and navigating all those waters. Thankfully we were able to part up with, oh very early in the kind of conceptual development process of archvile ascended, figure out how to.
Pull that off. And the real kind of key, I would say leap of faith is not just doing it on PC, which is challenging enough, but actually getting that kind of full UGC pipeline, including the payment processing and premium aspect of it onto the two major consoles, less far X Box and PlayStation. So it's been an exciting road to see that happen.
Aaron: Awesome. Yeah, as an ARK fan myself, I'm excited to see where this all goes, but Patrick, to set some context on your end, I know Look North World is a pretty new business, just a year old or so but maybe you could tell us what has been your focus so far? And why does building premium mods in general and on ARK specifically fit into that strategic vision?
Patrick: Yeah, thank you for asking. We're both a publisher and a developer. And last year when we started, we're a bunch of industry vets. So we've been at it. I've been in it for 24 years. Our CEO, Alex, famously founded Bungie, has been at it for over three decades. I think we all recognize that video games have gotten too expensive to make from start to finish took to take too long.
They're the risk profiles, massive. And really, if we were signing up to make a big triple a game, we'd have one or two left in our career. And I think that a, we saw some movement with Fortnight and UEFN and a real desire to turn Fortnite into a whole ecosystem. But we recognize a larger opportunity.
Because they were not the first, you obviously have Roblox and we also looked across the industry and thought it only makes sense that when you can operate in these like tens of thousands or hundreds of thousands of dollars in terms of budgets, and you can release something every month or two and you can move quickly and take greater risks and you can have strategic partners and doing this felt like a growth vector, especially last year when we were seeing massive layoffs and massive pullback and VC pulling back from investing in traditional games.
An arc when it came up, I was very excited because I actually was on the Amazon new world team, a game that was deeply inspired by the incredible work done at a studio wildcard, as well as its predecessors in the genre. And that was an eight year project from start to finish and costs upwards of 400 million.
And that is not within reach for any startup. And not most game publishers and you compare that to releasing Enclave the premium mod we just released in ARK which is 1, 000th, less than 1, 000th of the cost and was made in nine months with four or five people. And that, and you can take a concept from start to finish, prove it out within a community that likes that kind of game, gain some validation or not.
And reinvest or move on. And I think like that in terms of a game making proposition, there's nothing like it right now today. And if you can do that, we now have 13 things in development at once. And to be able to have that many things, have that release cadence, it's really unheard of for traditional game publishers or developers.
So we're really excited about the future. And. I think Overwolf, it has really tapped into something here because there's lots of games with main really engaged audiences that would really benefit from maybe offloading a lot of the, the need for an insatiable appetite for content to offload that to a community who love that game and give them the tools to do it and give them a financial incentive.
It gets me up in the morning. It's, It's what makes games really interesting again for me.
Jeremy: Aaron, if you have a moment, I want to follow up on a point Patrick made that I think is really important to where video games are right now with service type games, with service type games, which is most online games at this point, have trended in that direction over the last couple of years.
There is this insatiable appetite for content among players and it's definitely Not blaming players. So gaming dollars and they want to have, endless fun with their game, but it's very difficult for most mid sized developers to keep up with that. If not impossible. Even Epic games has difficulty keeping up with that.
And UGC high quality GC is a real kind of safety valve relief, release mechanism in a way for there to be fresh content in the game. Indefinitely, and without the developer having to make all that themselves, or at least the core game developer. UGC is far more than that, but among many other things, it is a way to keep the game continually fresh, leveraging the creativity both of professional developers and of end users.
And I think for these kinds of games it is a great advantage, the ones that really leverage that. Versus the ones that don't and players run through content and they are, they're done. And I'm going to give you a specific example of one. And I'm, I'm not knocking their success, but but power world, went from 2.
2 million concurrent users down to 25, 000 concurrent users in the span of two months. And I would argue that a large part of that is because they have not, at least today, I think they will fully leverage the creativity potentially of a community that could, they ran out of content, basically, you read most of the reviews like, Oh, that's fun.
And I played it. And after a couple of weeks, there was something else to do. So I think games that really find a way to build out an endless content cycle with with the creativity of the users are going to find a less pressure. To feed that, that content that content treadmills that otherwise is necessary.
And that, that kind of was one of the things flying over there.
Aaron: Yeah. And let me double click into that a little bit too, and just try to understand like how this actually came together and like, how are you guys actually managing building Premium DLCs, and we can use Ark as an example?
Can anyone build a premium DLC? Does it take deeper collaboration between teams far ahead of time to plan out? Are there unique quirks, on the relationship and planning side that are new here? To work through Jeremy, maybe I'll throw this back to you and maybe you can just talk about some of the realities and actually bringing premium DLCs from other studios to life.
Jeremy: So I think it really firstly comes down to what scope of premium DLC do you want to make? You can make something that's almost like a standalone game, very advanced, like the stuff Look North world is doing, and it has a higher value point, higher price point, if you're going to sell it. Or you can make something that's like a dollar or two and it's much more simple and maybe more in reach of, a standalone individual in a short period of time.
Something that is like that might be more along the lines of a cosmetic edition or a little utility edition that kind of does one thing that might be amusing or useful to the player. Whereas the things that Look North World has thus far been working on are more like, Almost standalone games. They take arc as a starting point, but then they add tons of new gameplay, new game ideas, and they sit as a unique self contained experience and that's not the higher.
And within that, there's a spectrum, they're moving up the value chain from, Hey, a small little utility or cosmetic addition, there's mods that just add like a new dinosaur to the game. It's not a whole new standalone experience like Ellen W stuff per se. But it's not just as simple as a little utility thing.
It's like a new, significant gameplay addition to the existing game. One of the unique things about the way modding has been structured in ARK is that for many mods, not all of them, some of the mods are constructed as stand alone experiences like Enclave, but many mods are actually what you might call stackable.
And meaning players can pick and choose to enable an arbitrary number of mods. And customize, create their own custom game experience along the way based on which ones they enable. Obviously one of the downsides of that is there's no guarantee those mods will be balanced well together.
Or even in some cases interoperate properly together. So it's a bit of a, bit of an unknown depending on how many you enable. But it does put a lot of power in the hands of the player to Find their own custom experience. And if they play on a server, the server operator can decide which mods they want to enable to customize that experience in that way.
But but I think for teams, it does provide a spectrum of. Options in terms of just how hardcore they want to go with resource allocation and time allocation and the actual process thus far of creating a premium mod and how that you kind of apply to do that. I think uh, URI can better speak to the business side of that.
Uri: Sure. So first I think that we have examples of single creators mods. So to your question, definitely doable. We have one creator, for example, that created a mod that brings a new sort of prehistoric creature to arc, which you can then tame and play around with. And I think that was if I remember correctly, a $5 mod.
So they can definitely create the mod, but then in terms of scope and depth, I think would be determined. Things like that would impact things like pricing in terms of I think how we go about doing that. We're in this kind of environment right now where we feel like we want to both work with folks like Look North World, who are industry veterans.
They know their business and they're excited about the opportunity. So that would be on one end of the spectrum. And on the other end of the spectrum is going to be a single creator who's excited about developing in Unreal and has, an idea for something that we feel like, Is of high quality and it's going to entertain a lot of people and for that single creator, it may take maybe even two years to produce something that is worthy, but in their journey, it's, that thing that makes sense for them.
And, we have seen great game successes for games built by a single developers, and I think definitely we would see those things with mods. Particularly with the tools that both Studio Wildcard and MS provide for modders. So I think this covers your question from both kind of, can a single developer do that?
And how we're approaching content. I shared both ends of the spectrum, but it could be anything in between.
Aaron: Yeah. And Patrick from your side, looking at this, obviously, Look Northworld is still a pretty small team and I can imagine how working across different platforms and games can challenges, just as it may require like using different dev tools or skill sets, for different projects.
I'm curious what you learned operationally about taking the leap to build on someone else's game and any lessons learned that you took, that you just have as takeaways in the process of doing
Patrick: so. One is to spend time with the community, so actually play the games and that seems obvious, but a lot of premium developers might skip that step and come with a better idea of how to quote, fix the game or make a better game.
So I think you have to, as an industry vet, you have to reset. And actually just go play alongside this community and get to know them. We found a couple, our communities that run their own servers, chaos gaming and South division, and brought them on board. We brought some streamers from arc, small streamers, like 20, 25 people.
We had them play the game and give feedback before it was released. Finding validation paths before you come out as a key one. Yeah the tech and tools are challenging. So we have a pretty distributed model where we can look for, We produce everything, we direct everything, and we're pretty hands on.
We have tech director, I mean, we're a fully functioning game development studio with a couple teams. But we will look for expertise. We had, so we're always looking to fill gaps, so we were able to find a couple devs that had worked on the original Ark Survival Evolved, who knew the tools.
And that was a really good compliment to hit the ground running with Ark. And we even one question we get a lot is industry vet says, aren't you just going to get beat by the solo dev working in who's been in this community for a long time? They know it better. And the answer is yeah, probably.
And they're a resource. So we've actually, at the beginning of this year, we started a creator label. It's like a record label, but for creators. So like an artist friendly record label we give them a advanced guaranteed marketing budget. And we also do a and R so they, they embed with our team and they can shoot us questions like, Hey, how do I implement this?
Or can you do a little art here? We jump in and we help elevate their skill and their craft. We have two signings so far. So I think there's a lot of room for business model disruption when you have thousands of creators of varying skill levels, and there's a real opportunity. If you can build trust with them and credibility to partner with these folks as a resource so that now you can operate both at the creator level and the professional studio level.
So, that's operationally that's not just a publishing deal. If you're doing an artist repertoire, it's like a record industry term, and you're actually developing skill sets and leveling up these creators. That's a whole new. Way of doing business in the industry, we think. So, yeah, so I think there's a lot of operational bits and bobs.
Also, we don't specialize. It's hard to, we all wear a lot of hats. We jump in and help each other out. I'm the business person or the operations person at the studio. And yet I'm, I'll do audio or I'll do a creative pitch or draw from my background wherever I can to help pitch in. So there's not a lot of I only do this at the studio.
We all do a lot of things.
Jeremy: Yeah. For a moment to something really interesting, which is, I think that the kind of crazy thing about UGC right now is it is filling overall, I think, a real gap in the industry because there is this kind of nether realm between pure hobbyist dabbler who's just trying to decide if maybe even video games is something they want to do as a career, can do as a career to make a living.
And the professional veteran who has, made a career out of it and is, actually been doing that for years or whatever. And now that's what they are. They are a game developer. And then there is this, there's this kind of middle ground of like hobbyists who's maybe, capable, but isn't quite sure, or doesn't even have a job per se, typical job in the industry.
How do they make a living? And UGC is actually the answer to that. It is the only answer to that. And what's interesting is prior to very recently, last couple of years, there was no actual way, technically or otherwise, to do that. And, Roblox really, I think, was probably the first to really, at scale, demonstrate there's an economy here that can work for those kinds of creators.
And then Fortnite more recently has taken that, to a, I think, much in a different way. And I want to actually do a quick comparative analysis, if you don't mind, of Roblox, UEFN, and ARK, in terms of what they're bringing to the table, because I think this is very important. And I've thought a lot about this.
Sure. Sure. Uh, so. Roblox does let creators sell their content, of course. But in my opinion, and I'm speaking purely for myself here I think their tools are a very significant limiting factor for professional, for people who really want to create professional quality content. The tools are getting better, but in game tools are always going to be very limited.
No matter how good those in game tools are, because what's interesting about ARK and also UEFN is when you make content using Unreal in that way, you're actually using the final tools of game development, like there's no soft coding that there's, it's not abstracted out, you're actually learning as you make this content, how you make A game of any degree of complexity and a degree of professionalism.
That's just simply not the case with roadblocks. So I think it's a great stepping stone, but I think as somebody who maybe wants to move from that and to making a full end to end game, You can't really, at some point you would outgrow that or you become very frustrated with the limitations of that.
No, people are very clever and they work around those limitations, but they are limitations. So let's be clear. And so I think for me, that is where Roblox ends is where okay, you want to make the leap from that to doing something even more complex. UEFN is a little different in that regard.
You are using the full tools of Unreal when you make content for Fortnite in that way, but there are two downsides. And again, getting pretty granular here. Epic has deliberately hobbled the engine in certain ways. Not going to short coat that. They disable aspects of the engine that they consider too risky for the stability of Fortnite.
One of those things, but not the only one, is they don't allow access to the lower level virtual machine that operates most of Unreal Logic called Blueprint. And they try to abstract it out to a higher level text scripting language called Burst. Which lets them sandbox performance and functionality for stability and presentational purposes.
I get why they do that, but I think, for developers who are looking to make something of Epic's own quality, that's not in the near term cards, maybe eventually, but I'm going to tell you from a technical standpoint, Verse has. Like a 50 X performance differential relative to blueprint. So it's not even in blueprint itself has like a 10 or 15 X performance differential relative to native C plus code.
So it's just like you're like dealing with layers and layers of just performance degradation and limited functionality. I know Epic would say it doesn't matter. Most of the hard systems that need that low performance we've written for you. You'll be fine. Huh. Yeah. When they, one of the things they said, they're going to rewrite Fortnite on To demonstrate how powerful versus going to be going forward.
Sure. Fortnite, a relatively simple game. Simple in terms of its mechanics. When someone writes a total, a war hammer, total war style game in verse, then call me because like games that need a lot of performance with respect to their logic operations, it'd be like trying to write a really complicated game in JavaScript and have it perform.
So verse I think is, I understand why Vegas done it, but I do think it kind It puts a very strict sandbox on what you can do with Unreal. And the second thing is Epic's business model. Which again, they can change at any time. And again, I speak for myself here in regards to analysis of this. Right now they don't let creators directly sell their content.
They have compensation mechanism that is view based and engagement based. And I would argue that's like trying to sell, that's like trying to make it on TikTok. It's maybe you do, but like 0. 1 percent of people are going to make a really good living that way. And everybody else is going to make no money because it's very hard to appeal to a niche audience and make money that way, like with direct sale, you can have a thousand users that really love your stuff or 5, 000 years.
This is really love your stuff. And you're catering to them. But if it's view and engagement based 5, 000 users, I'm going to put you into the top 10, 000, in terms of the content ranking. So there's almost no point in making niche content with that kind of model. And, at least if you're trying to make a living.
So I think they could change that right now. I think that is a business model that will lead to certain kinds of things and not the other kinds of things. And so we with arc, at least we want it to go with a more traditional model of, look, you set the price you want to sell something at, and, if people are willing to pay that, then great, if there's an audience for that, no matter how small that can support what you need to keep making stuff and that's your call as a creator, we're not going to make that decision for you.
But also outside of the business aspect, the technical aspects, when you make content with the ARC development kit and distribute it with with Curse Forge and Overwolf you're actually like basically using the full game development tools, the same tools that we use to make ARC itself. With pretty much nothing held back.
The only thing we can't let you do is only change the C code by the game. But outside of that, you can change anything inside the game, remake anything inside the game, make even a whole new game. We made a platformer demonstration just to show it doesn't even have to look or play anything like Arc.
It can be completely different than Arc. And I think access to those tools does something else for creator. It lets them find out if they really like making games as a developer. Using the tools of a developer, not some kind of abstracted watered down in game tool set and not some kind of limited version of Unreal.
And they can use ultimately a business model that's much more similar to say, selling a game on Steam. And I think the key here for us to think about is, how can we fill that gap of somebody who maybe wants to Dip their toe into the realm of making a career out of this without necessarily, having to go and form a studio and raise capital and all that, though it can work for that scale too.
And I think beyond even arc, this is an area where there's obviously so many talented people out there just go on YouTube and look at the infinite number of great game demos, but how many of those developers. Really those individuals, cause that's what they are. How many of them are ready to, raise a hundred thousand dollars, get an office, form an incorporated company, get development hardware for consoles, and support a software life cycle, by the way.
If you release a standalone application, you're now like responsible for like technical support on that standalone application and all kinds of just technical errata that I think are. Not really what a hobbyist wants to be dealing with. And so I think this is a UGC and essentially creating content within an existing game framework.
Is a real solution to for a lot of these creators to see what they want to do with their careers.
Aaron: Yeah. So much of that was really well said. Jeremy, and there's a lot of places we could go from that, but one observation I have, looking at this, and you know, Roblox, UFN they're all great.
There's room for multiple winners of multiple types of platforms, multiple types of business models. But one really compelling aspect of this premium mod, modding in general, Realm, is that it really is just unleashing more collaboration. And really interesting ways. And so even just looking at, who all is here on this call right now like Uri at Overwolf, you guys are enabling all sorts of publishers and studios more like at an infrastructural level to enable them to partner and all sorts of ways to build these capabilities.
You have large studios like Studio Wildcard with these large successful games that can enable a very large range of creators and now other studios to build on top of their games. And now we're seeing, teams like Look North World that are building on top of these games.
Now also, Patrick, as you were saying, finding ways to work with individual standalone creators. And so it's like This interconnected branching of all of the layers of creativity in the gaming industry, like being brought together. In one spot, maybe for the first time. I don't know. But either way that seems like A really big idea.
That is getting unleashed right now that will probably have very large ramifications over time, one aspect I do want to Double down on for the moment is just understanding the economic side because for years the ethos around modding has been pretty like anti monetization and You due to, the tools being built today, the tide seems to be turning but Patrick I kind of want to, ask this question to you because you're putting, your team is still pretty small.
You're putting limited time, limited resources into building a premium DLC on another studio's game. Whereas you could be putting those, that time and resources into building on UEFN instead or on Roblox instead. And I know you, you do some of that. But could you maybe just talk about like the.
economic tradeoffs here that make building on yeah, make building these like premium DLCs possible. I don't know how specific you guys are comfortable getting with like the actual Revenue splits. I think that would be interesting to our audience who will be thinking about these things for themselves.
But maybe whatever you can share, just walk through.
Patrick: Well, Yeah maybe we'll let Uri touch on any revenue splits. Yeah, that's not on my, that's not my, my, my prerogative. But I will say that like I shared those numbers earlier, like 400 million to launch a premium game that sold for what, 40 bucks.
And less than a thousandth of that. Less than a one thousandth of that to build something inside of arc that sells for 10 bucks, that's a quarter, but it's not less than one thousandth of 40 bucks. So those economics, it returns to what health looks like in the industry where you can get disproportionate rewards for success and not just trying to scrape out a 15, 20 percent EBITDA margin that we see.
As success now in traditional game publishing. And I like, I know a lot of studios may be listening to this or are in the survive to 25 bandwagon. I am not, I think there's a fundamental business model shift that has to happen in the industry and it is happening. And it is UGC and we're just at the tip of the iceberg and we're going to see nine or yeah, nine to 10 figure revenue growth year over year, probably this next year in UGC and I expect that to continue for a while.
I don't see it's supplanting or maybe it will, I don't know how long it will take to supplant console or PC revenue, but. It's very compelling and the economics and the ROI ratios and the hit ratio, like a successful DLC for us, we'll have a 90 to 95 percent EBITDA margin. It, the scale is so good.
So economically the upside is what drives us to keep. building new things, keep trying new things, because we can make 20, 30 things and have one hit and make good money. And I suspect that anyone that's funding a of UGC economy within a game or a number of games is still looking at a portfolio mix as well.
And collecting lessons and data along the way that helped them. Maximize that outcome. I'm going to pause there because I, Uri is the one who should be talking about business model here.
Uri: Yeah, I have to take that from here. I think I'd start off with saying we're the guild for in game creators.
So if you go to our homepage hey, we're the guild for in game creators and here are the different creative categories that we empower. And the reason it's guild is because we do believe that in game creation should be a profession. And you touched, Aaron, on the fact that in the past, modding was like this thing that is supposed to be created voluntarily, for free, and for the community.
And that's true, and that is always going to continue. But, the third generation, this period that we live in right now, is a period in which, for those that choose to, and that have the talents, and that can create something entertaining and of high quality, we want to give them the opportunity to also And I think, there is obviously the Roblox business model and the UFM business model and the Minecraft marketplace and, GTA 5 roleplay, the 5M ecosystem, which was recently acquired through Rockstar.
So there are existing business models out there with predefined terms. I would say that specifically with Studio Wildcard, we've been public on Our approach, which is it's going to be a rev share and it's always a rev share. This is why our services are a rev share as well, because we want to make sure that at any given point, our interests are aligned with both the studio and the creators of the content and specifically with arc it's 50 percent for.
The creator after, for example, first party fees, if we're talking about Xbox and PlayStation. I think moving forward the way we looked at our business from how we're supporting different studios, we feel like because we're the guild, because our North star as a company is how much we've helped creators earn.
Every company should have a North star. This is ours so that every person that's working. With us in Overwolf understand how their role in whether that's QA or marketing or development is eventually contributing to a creator's ability to basically generate revenue. So long story short, this is how it is with a studio wildcard, but for different games, it could be different.
Like we could work with a studio that would say, Hey, for me, this doesn't make sense, I want a different number. And we would just go with what they want because they feel like the studios, the IP owner has the. Sort of the veto right for these terms. I would just encourage them to make sure that it's, continuously based on rep share that makes sense and continuously incentivize the creator to not create, imbalances or situations where creators aren't really incentivized to keep on building content or even come in the first place.
Aaron: Gotcha. And Jeremy from your side of this, typically, traditionally, studios are building their own DLCs and such, but you guys are, pioneering the approach of letting other teams build DLCs. And, so instead of getting the full revenue yourself from making it yourself, there's some type of revenue split going on here.
What is the logic on your end, like how you think through the trade offs here that kind of led you to the conclusion that this made sense, that other studios out there that haven't made this type of jump would find interesting?
Jeremy: Yeah three things. We still do make DLCs, just it gives us a little bit more time to make them, and that really leads to the other point, which is that it's a massive release on relief on, um, the content treadmill, like it, it's a way to ensure or help ensure anyway, that there is fun new stuff to play the game because people are making it and users and other crews and teams are making it and it's.
It isn't all on our internal team then to add fresh content to the game on a regular basis. But ultimately, it really is interesting because the year had in the past, and I think maybe still was, you alluded to earlier, a bit of a taboo around creators selling their content as mods, premium mods and games has been a taboo within the PC industry for a while.
But I think as mods got more and more ambitious, and as mods became higher and higher quality that it's really ridiculous to expect all of those creators who have that talent, have that capability and want to, devote all their time and energy to this say, Oh yeah, but you always have to do it for free.
What are you asking to do then? Just die in a fire, basically. If they want to do that, okay, go ahead. But I think it's not reasonable, is the quality became higher and some people really want to devote all their time to it, have an option to say, you know what, this thing's good enough that I actually want to sell it.
And what's interesting is they can dabble in making a free version. And if they see there's enough promise in the free version, they can, Make a more ambitious paid version subsequently. So it's not like an either or prospect either for a creator. And uh, and I, and I think, again, we weren't the ones to, I would say, break that taboo.
I think Roblox and Fortnite kind of, and other names at Minecraft as well, of course, it knocked at that taboo over the last three or four years. But I think it's just about the last wall there has fallen. And I think it's the benefit of the mass talent that's out there. And I want to give a little credit to the console platforms for gradually loosening their kind of way in which they view content on their platforms.
Previously it was, no, if we haven't seen everything ourselves, Microsoft and Sony will never let it be released. And then it was. Okay, only if it's an official DLC and then it was okay, as long as certain checks and processes are followed, we'll allow and get end user content to be on these platforms.
And finally, we'll even allow that content to be monetized. And so I think they have shifted over time. Those console platforms, how they view content on those devices and users creating content and and, more specifically modding as relates to those platforms and that has enabled this as well.
Aaron: I want to talk about that a bit more because the cross platform element of modding here seems like a very big deal and Uri. i'll ask you about this because you're you see it across multiple games across the spectrum what has been the impact of enabling mods to be Cross platform, like what is the impact that you've seen be on engagement on creativity or anything else that's interesting here?
Uri: I would share a very interesting stat statistics specifically about art and that is that we had, something that a lot of folks probably would not expect more than 65 percent of our downloads actually came from PlayStation X Box. You would think that the PC as a traditional, very kind of mod significant market would be accountable for most of the downloads because, I don't know, maybe the players over there are more receptive towards third party content, but the fact is that no we, with Studio Wildcard made it so easy to discover mods on a console that people end up discovering A lot of content, consuming a lot of content.
And we expect that to also then as we go ahead and monetize and launch our monetization features impact revenue significantly, also because of the purchase flow, that is really easy, just a matter of a few clicks and you have the mod that you can play. So I think having mods be cross platform supported, is absolutely critical for, The future growth of UGC in general, specifically with ARC.
Jeremy: I also want to speak to it a little bit as a developer. I actually started as a modder before I became a professional developer. I honestly wished something like this had existed. I was just starting out my career because it was extremely difficult to make that leap. It involved life savings from multiple family members, basically to make the jump from from hobbyist to professional.
And because there was no middle ground, basically. There was no way to say, you know what? Let me try and make a living on this before I just like fund a development studio, because for example, just. Buying a console development hardware, specifically the specialized development hardware sold by the first parties is very expensive and they do not sell it to you unless you have significant capitalization.
And what overwhelms technology has enabled creators to do is actually develop on the PCs and the PC tools, but run their content on the retail units, like the regular Xbox, the regular PlayStation, and test it out. Using the regular console hardware that you can just, pick up at any store.
And that is really awesome because as a developer, it allows you to like, get used to what it means to like, see your content on console, learn a little bit more about the console performance characteristics, some of the quirks of the. Running properly and looking correct on each individual console and get used to the flow of being a multi platform developer without having, needing to have six figures or more in your funding bank account.
You could have 0 in your funding bank account. All you need is a, is an X Box or PlayStation that you got at Best Buy. And a TV and a PC of some sort. It really I think, levels out the playing field and acts as an equalizer for people who, especially for consoles, which has traditionally been like, I would say, the final frontier of traders, who want to make Cool stuff and getting it out to that kind of an audience.
And so that, that is a real revolution which, which is starting to take place in terms of how you GC where it's going versus where it's been.
Aaron: Gotcha. Uri, maybe you can play this out for me. How big could this premium mod movement really become? For the industry and maybe even just bigger picture for philosophical, like what are the ramifications on the industry if this really takes off and takes hold?
Uri: So I think starting with numbers I think if you look at UEFN 2023 numbers we were talking about half a billion dollars created in Fortnite creative and UEFN, half of it probably for first party content. Either, UEFN or Fortnite Creative Experience is created by Epic themselves and have created by third parties.
And if you compare that to Overwolf we were at just a little bit over $200 million for creators. And this is where we are right now, where I think in terms of adoption, where just at, we're just scratching the surface. If you look at which big titles out there. supports creative communities to the level that ARC does it.
I would argue that nearly none. But as this becomes more and more a phenomena that is more popular, that is becomes the standard, I think it's going to become a big game changer. And if we kind of look at the example of video consumption, right? The transition from linear to VOD.
To now UGC and, probably most of the consumed content out there is on YouTube and surround as well as tick tock, compared to Netflix and definitely compared to linear TV. And I think something similar is about to happen in games just because the barriers are much greater and the cycles a lot longer, it's going to take a lot more time.
So it's definitely going to be a while. And we're not talking about like an overnight revolution that, Oh shit, we got to be real, really, Fast to operate because we're going to lose the trend if we don't operate by next year. No, definitely not. I think this is just going to be this evolutionary process versus a revolution that is going to continue to gain mass.
And, we already see communities in which this is what people do. If you look at the Minecraft community, this is pretty much what people do, particularly on Jettla, but also on Bedrock. And again I don't have numbers, but in GTA V, if you could Twitch content, roleplay is huge versus.
The more sort of vanilla gameplay, and if you look at gameplay, I'm sure it's huge as well. And I think, with time, it's going to capture more and more value, from the games industry. And, I definitely think that, Unlike maybe some other sort of trends that may come and go in games and people like being really hyped about specific domains, but that so a little bit disappointed.
What's that? NFTs cough. Yeah, sure. So unlike that, this is not really, an invention from the last couple of years. This is something that existed for 40 years, where it's just Gradually evolving it into something a lot more magnificent. And so I think it's only going to grow.
And I think it's only going to become more and more mainstream. And I think a lot of developers are actually going to start their careers. They already do that right now, but it's going to be more common to actually start your career. I mean, How amazing is it to be able to download your favorite game, download a creation kit with all of the assets, get the same tools that if you were working with studio wildcard in the studio, you'd be getting the same tools.
And now you can play around with them. This could be a great job interview, but it could also be a great, independent initiative that allows you to continue doing your thing from your own house and, make a living building that content. It's difficult to say numbers, but I think this is where we are right now.
And I think we're just going to grow with time and uh, become more and more like a significant business model for the industry.
Aaron: Yeah well, maybe you could remind us of your big hairy audacious goal and maybe how like where you are on your journey to that and how this fits into that.
Uri: Yeah, so our goal is a billion dollars for creators by 2030.
We're at about 20 percent of the way right now, but we're making. Pretty good I would say stronger than linear progress in how we're pacing towards that goal. I don't know if we're going to get there in 2030 or 2035 or 2040 or in four years, I really don't know.
I know that this is the trend and I'm very confident that we would be able to meet that at some point.
Patrick: I had a couple I agree with Uri on it being a long term thing. Look, North has taken a long term approach on it as well. We believe this is going to grow to a significant chunk of the industry.
We're in it for the long haul and we're excited to, find new ways to be part of it and add value and also just champion it. And and help the industry invest more into creators into players of these communities. A couple notes on the numbers, though I hear the numbers quoted around fortnight a lot and think.
I feel like they're understated. Roblox reported 700 million last year in 2023, but that includes their 71 percent cut because they have a double taxation. You get dinged on every transaction and then you get dinged when you fee it out, when you take, when you convert Robux to dollars and you end up paying 71 percent tax.
Now it works. People are still making money. It's growing. And they reinvest heavily into user acquisition and the economy. So it over time, is net positive for night reported 320 million in its first year. However, that does not include epics. participation in the creator pool. And Epic's own participation is roughly 60%.
And so if you were to compare Apple's to Apple's Roblox to Fortnite, UEFN did over 800 million in its total economy, but it, but Epic collected about 60 percent of that just as its share of engagement. And that's more than the first year of the iPhone app or the app store. And That's adding nearly a billion dollars year over year to the whole economy, and that's one game.
And as more games come in, Ark has a massive audience. And you add another game like GTA and you add another game like Sims and you're adding billion by billion dollar economy, potentially, I don't know if arcs usually you'll get to a billion, but you're adding big chunks because it's, the audience is already there.
They're not going to acquiring players. The players are already there. So it's a switch that a dial turns right on the moment you start making content. We're going to see these like very staggered jumps up. It's inevitable. It's going to happen. And then you think about kids who, in UEFN, Creative 1.0 is not a game designer toolset. You are just in first person playing Fortnite and you hold a tool and you place things down. That was Fortnite 1. 0. And that accessibility of playing within a first person experience and making mops and mods, and like that is an initial onboard for a kid who wants to make games.
That's conditioning a whole generation, 250 million players a month to making UGC. And as soon as you're conditioned to making it, you become conditioned to this is a lot of work. Maybe I should pay for it. And then they go play new things. That have premium content in them. And then game pass allows the game to be free.
And so I haven't paid anything and I've gotten so much out of this game. I'm going to go buy this deal. So like the business model is going to evolve quickly. The play, the number of creators is going to ramp up very steeply. The tools are getting better and better at all levels of skill and people can ascend up that ladder.
And it is going to take a while, the video game industry is massive. So it's going to take a while to become significant. But when I look at EA's financials, where, what, two thirds of its revenue. Is live service content on their sports games. Can you imagine, and so much of our industry revenue is live service.
Can you imagine I think that's the end state, I don't know how long that is, but the end state probably is the majority of ongoing revenue, recurring revenue in the industry being UGC. That's significant.
Aaron: Yeah that's a really big deal. And one thing that was really interesting to me from just GDC this past year is it seemed like maybe the biggest thing everyone was talking about was, whether they're like a mobile team or some other type of team that's, seeing stagnation or just difficulty and wherever their traditional business has been.
Thinking about oh, how do we start building on Roblox? How should we start thinking about building on UEFN? And there, there wasn't really from what I saw like, that much talk yet about, oh, how could we start building on other people's games? What do you guys think the over under is for that being the next big conversation topic at GDC?
Are we talking two years? Five years? What do you think?
Patrick: We're already seeing it happen behind the scenes.
Uri: Yeah. Like, I came back from conference that happened after GDC in London. It's a conference called LVP summit, something that London venture partners sort of hosts and had a nice panel with Alex Luke North world, and I think UGC was one of the common themes and when the audience was asked, Hey, what should we talk about next year when we're doing our next LVP?
Yeah, UGC was quite there very prominent. So I think it is very interesting for a lot of folks even right now. Um, I don't know when it could be the sort of the big thing behind GDC, but I think it's gradually getting there.
Jeremy: And to the point about, whether it would ultimately just condense down to a handful of titles, I think it ultimately just comes down to where the paying users are, meaning, again, if there's a, if there's a critical mass of players playing something and they want more content in that game and they're willing to pay for it, then I would assume that will be of interest to, Enterprising developers assuming that, the game supports UGC and premium UGC.
I think ARK is in that position, but I'm sure other games will be as well as this kind of idea gets more established as a real way for a game to be bigger and better and for players to become a little bit more content fed within the title. Um, but it's really important to remember.
It's just this for business and technical reasons was not even possible or, short of a year or two ago. Like this literally last two years style viability. Thanks to oval for curse fortune and and Epic and the and the console platforms themselves.
Aaron: Yeah, it's a big deal.
We've had a great hour talking about premium mods. As we wrap up I just want to give you guys a chance to shout out anything else that's interesting going on in your businesses that are, our audience could find interesting or wants to learn from.
Jeremy: I want to mention something that LNW has worked out something else really cool that we're not going to be able to reveal.
Here but keep an eye out in the coming weeks, and there's something that's really exciting at UGC, specifically, that they're creating, that is yet to be revealed, that I know they've had a lot of fun with, and I think it's gonna be very very popular for a lot of people when it's revealed and it spreads well beyond what ARC is traditionally.
So that'll be revealed soon, but I don't want to take any other thunder. I'm just, as a fan very happy that they've made this thing.
Aaron: I'm excited to see what that is. Patrick, anything else in your business that you want to give a shout out for?
Patrick: We have a lot going on. We have 13 approaching 15 things happening at once.
We're always open to conversations, but I would say that in general, like the, and just the games industry right now is very challenging for a lot of people. And this is a space where there's a lot of positivity, a lot of forward momentum. I know a lot of studios might, who are in dire straits, might be thinking about pivoting to UGC.
And I both encourage it, but also say don't wait too long, because the, the trains are running out of the station. And I encourage everyone to jump in. And also don't be afraid of it. It's not an existential threat to stand alone. AAA, AA games, it's additive, and if anything, it gives you a monetizable path to prospecting for new ideas and validation along the way.
And I just think it's in so net positive for the stu for the whole industry. I think the work that Overwolf is doing is gonna be so My cat's joining the podcast, sorry. I think that it's very net positive to be able to give paths to these these audiences and these teams to have a live service component.
And I really appreciate WowCard for the courage to take this on. I know there's a lot on their plate. Holy cow. It's a big game. They got a lot of things going on and it's been a big endeavor for them. And the support that we receive could, on a daily basis from that team and from Overwolf the, the I don't know.
It's just been, it's been a really good opportunity. And It's been a real source of joy during otherwise challenging times in the industry. So thank you to both people on the panel for that, and also for the chance to spread the word that there are good things happening in the industry.
Jeremy: Oh, cheers, Patrick.
Patrick: Absolutely.
Aaron: You want to wrap it up, Uri?
Uri: Yeah I, I want to echo, what both of you said. And say that, with this upcoming announcement, apologies for being a little bit cryptic about it, but we're just adding another really important element that I think is going to be contributing to the success of UGC.
And you could, Probably yes, but it's, something pretty critical that has been a core pillar in making game franchises succeed. So I'm very excited about that. We really enjoy working with you both Look North World and Studio Wildcard. I think. Studio Wildcard, you guys are such visionaries of the space and it's been amazing to go through this journey and Look North World, the team could not stress enough on how convenient and fun and effective it is to work with you.
I know there was some feature creep recently with some of our projects and you guys were very positive with that and in it for the mission. So we really appreciate that because some things, we couldn't really anticipate. So yeah, just, wanted to say thank you to both Patrick and Jeremy.
Jeremy: Awesome. Thank you, Aaron, for this wonderful podcast and the great questions.
Aaron: Yeah, absolutely. Yeah, this has been, this has been a bunch of fun. We'll go ahead and wrap it up here, guys. But thank you all so much for joining me today and to all of our amazing listeners. Thank you, as always, for tuning in. We'll see you next time.
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