RallyHere builds on the back of years of experience in Live Service, before the term was even coined, as Hi-Rez Studios under the leadership of CEO Stewart Chisam. RallyHere bottles this expertise into a toolset that can provide a huge edge for teams that want to leverage the power of live services in games. Hi-Rez Studios is behind many popular and long running live service games like Smite, Paladins, Tribes: Ascend, Rogue Company, Realm Royale. Not only is the expertise of Hi-Rez baked in, but Hi-Rez themselves use the service, ensuring it consistently delivers. What exactly does “live service” mean, why is it so hard to pull off, and why is it suddenly a hot topic? Join your host Devin Becker as he digs into these questions and more with Stewart Chisam.


This episode is brought to you by CleverTap Gaming, the all-in-one platform for creating personalized player experiences. Visit https://clevertap.com/gaming/ for more details. 

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

Devin: Hello everyone. I'm your host, Devin Becker. And today I'm delighted to be joined by Stu Chesson, the CEO of RallyHere, a platform for supporting live service games. Stew is also the CEO of High-Rez Studios with over a decade of live game experience, live services, game experience, rather.

So today we're going to go explore all of the areas of what live service really means and get into the nitty gritty there. Stew, why don't you just tell us a little bit about your background, the origin of RallyHere, and what you do today.

Stewart: Yeah, sure. First off, just, thanks for having me.

I'm a long time listener, first time caller, so I appreciate you having me on the show and enjoy the podcast. I've been in the gaming, games industry about 15 years, so since 2008. I really didn't join the gaming industry, though, until I was in my late 30s. I tell, I tend to tell people that, gaming for me was a third career, or at least a third stage of my career.

I started my career in New York in more finance. Worked for NatWest Bank for a little while, Viacom for a little while. In that role, kept drifting more and more towards technology. And it was an exciting time for technology in the mid nineties, obviously with the internet emerging and many other things.

So in the kind of mid-nineties, I got recruited to come to a little company in Atlanta that was a few months away from going public. And it was run by a man named Eris Gorin. Who's still the we'll, spoiler alert, is the, that still the chairman and original founder of High-Rez Studios.

So I worked for Ares for many years. We built two really successful companies. He built them, I helped him but one was ultimately sold to NCR and really focused on kind of the front end of retail and hospitality businesses like point of sale and things like that. The second company, which I was the CTO for, was a company called a Blue Cube software, which was one of the actually very first SAS companies before we need to call it SAS that time we called it something like application service provider or something like that.

But it was in that Company focused on also on kind of the retail hospitality business. We had some of the biggest, grocers worldwide, some of the biggest big box retailers like Home Depot and folks like that on board, as well as a lot of restaurant chains, Marriott folks like that use that software.

And at the same time that we were running that company, I was the CTO, Erez was the CEO. At that same time, Eris was playing City of Heroes, probably 40 hours a week, just really into City of Heroes at the time, this was in the early 2000s. And, he had done well, had built two very successful companies, and he said, I want to start a gaming studio.

So that was really the Genesis story of Hi-Rez. I actually stayed back and didn't join, that was in 2005. I stayed back and didn't really join Hi-Rez until 2008, which was once they had gotten far enough along to, to be starting to think about like, how do we get our first game to market?

And, drive some of the technology behind that, which is more of my expertise. But I joined the company in 2008. We, because of our background in enterprise software and kind of software as a service, we really only knew how to make games that were live services. The idea of a gold disc type arrangement for our games where we just shipped it once and forgot about it.

Was so daunting to us, it just wasn't the way we knew how to make software. So we just naturally started building games that were online and constantly updated live service. And it was good timing for that, I think what that allowed us to do at Hi Rez.

Was get fairly early into the wave of free to play especially for the Western market on PC and console. So we had the first game we shipped was a game only hardcore people even know it ever existed called global agenda that was a shooter. MMO. I say it was like destiny. If destiny was built by a 35-person team building its first game.

 But that set us up. We were actually started as a more of a classic MMO, but we with a classic MMO business model, but we converted it to free to play became one of the first free to play games on steam. That led us into, we, then we bought the tribes franchise. And from instant action who had it at that time.

And we made a game called tribe to send, which I think is really the game that probably put the studio on the map. And then released a game called smite, which was really perfectly time for the market to be, to establish itself as the third person MOBA right at the time that the MOBA genre was really exploding a great game for consoles.

Because of the third person perspective. Yeah. So we established that game as a probably number three on the PC platform in the West for the MOBA genre behind League of Legends and Dota, but number one on the console platforms as a MOBA and that game's had a long life is still just finished its world championship.

A few months ago, we just announced that we're releasing a Smite 2 soon. So that game's had a long life and had tens of millions of people play it. Then we made a few other games. We made a game called Paladins which has had, 60 plus million people play it and is still kicking. We made a game called Realm Royale, which is our Battle Royale spinoff of Paladins that had a moment in the sun, where it did well.

And then Rogue Company, which also had this point has had close to 30 million people play it. So made a bunch of games built, really built up the point where we were running multiple live services games. And the way we had done that just from our enterprise software background is we created a common technical platform that all at this point, now we had multiple games, multiple studios internally connecting to that technical platform.

And at some point, we actually in the, between kind of 2018 and 2021, 20, early 2022, we did a big project to massively invest in modernizing that platform, really bringing it fully up to date. And we realized we had something that no one else had in the market in terms of the completeness of what it did exactly where it focused on the market.

And we realized that software could support a lot more studios than Hi Rez could ever build, right? So we wanted to we thought it made sense to offer those same capabilities we've used for many years for Hi Rez to to other studios. We announced that publicly in February of 2023.

So at the DICE conference a little over a year ago. So we spent a year on that. We've been fortunate and have landed several several really good customers for that. We tend to at least the initial niche we've tended to focus on is a double A to triple A.

Publishers that are making, live service cross platform, live service games. And we've got a good collection of early customers that have really helped us come, further the product and we're continue to grow that. And it's a very good relationship, because the high res games are also using it.

These customers are making the platform better. That's good for high res is requirements are making it better. That's good for the customer. So it's been a really good situation to fill a niche in the market that I think is very valuable.

Devin: Awesome. Definitely you guys have been around, like you said, doing live service for a long time.

And it sounds like as long as the game is managing to find players, it's still continuing to be live service, which I think is obviously you validating for both. Level of experience, but also growing experience that you're still doing it with those games, I imagine evolves over time. But at the moment with Rally here being that service offering that you're talking about What is the current relationship between Hi Rez Studios and Rally here and why is it set up the way it's set up?

Stewart: Yeah, so we really think of Hi Rez now we almost think of it as Hi Rez Ventures instead of Hi Rez Studios if that makes sense and We really operate Hi Rez in three At the moment, we run Hi Rez in three pretty independent business operating units. Two of those are game studios. We have the Titanforge studio.

Which operates the SMITE franchise, so they're running 2 are their main focuses at the moment. And then we have the Evil Mojo studio, which is, runs our various, our portfolio of mainly shooter games. It's the connective tissue between those games. They run Paladins and Realm Royale and Rogue Company primarily at this point.

And have another game. And then we have rally here, right? And those run outside of me and, some G and a type folks we do share, obviously some finance people HR type stuff, things like that. So not to be redundant outside of that, we really operate those three divisions or operating units very independently rally.

Here's its own kind of Subsidiary and we have contracts between Titan forge and rally here. They look exactly like the same sort of contracts we're drawing up with the other customers of rally here that kind of govern how that works and keep, try to keep that in a arm's length relationship from that standpoint, although it's very.

Just the nature with all of our customers with Rally here, just the nature of the work is you're almost like extended team members for them because it's such a critical portion of, any game that uses our platform. Our platform is a very critical portion of that game.

Devin: Awesome. It sounds like it's working. Obviously, you guys are testing it out with your own games. Like it's not built from the ground up for those. Proof of the pudding, hopefully, as it continues to be, and from what it sounds like you dog fooding, it is probably making sure that you guys are hopefully making it relevant for other people, rather than just building something and then trying to find product market fit, as I say.

But I think it's important. We dig into what live service means because it's a, a term that gets thrown around a lot. And as you said earlier, like this is kind of SAS. In a way like, rally here is a SaaS tool, but then live services just means the gains version of SaaS, right?

It's still software as nervous. Very different service. Yeah. With live service being able to potentially mean a lot of different features or strategies, and especially across different platforms, things like that, how do you define and specifically approach live service as both a game studio and a service provider?

And what kind of expertise or skill set does that require?

Stewart: Yeah, it has become a really big umbrella, especially recently. I think we're apt to latch on to buzzwords in this industry, and then it becomes a really big umbrella that sometimes loses some of its meaning. For us, really a live service game is a game you're committing to iteratively develop alongside your community over many installments versus being dropped to the consumer at once.

So when I'm talking to my, friends outside of the industry and trying to explain this concept to them maybe overly simplistic, but useful analogy is to think of the difference between. A movie and a TV series, right? A movie is pretty much for the most part is right.

There's a creative team behind it and they may focus group the heck out of it. They may do whatever, but it's really, it's fully driven by the create, by the mind of the creator behind it. And it's mostly dropped. In one big installment, I might even, in order to take in some like some type of use cases that maybe you're calling themselves live services now, but I think even if it was.

A drop of, a Netflix series with eight episodes and you had made all eight episodes before you really launched it, to me, that's still in that same genre. The versus a live service game is more like a TV series. When you get into multiplayer PvP games and some games with user generated content, stuff like that, it's not even like a regular TV series.

It's more like a reality show or a sports type of thing where, you know, you, even the creators aren't able to predict exactly where it's going to go ahead of time. The players themselves are having a dynamic impact on how the game evolves over time. So to me, that's what really separates live service.

Now, beneath that has to underlie business model, right? So I think the business model definition that folks have migrated to for live services is it's a game that, tends to monetize itself over, outside of just that first initial payment and over many installments, but for us, it's much more around the philosophy for how you're building the game iteratively with your community.

If that makes sense at all.

Devin: Yeah, and it's funny that you mentioned, movies and in TV show comparison, although it is, it would be funny to see like the telltale episodic games today treated more as a live service build with the community as opposed to a Yeah. We're making it, ahead of time, but I mentioned the movie thing because, one company has made a big deal recently over talking about live service games, particularly for the monetization aspect is like Warner Brothers, for example, they were like, Hey, we're missing out on profits.

We saw we did great with Harry Potter, but we could have done so much better if you could have kept making money after that. And, they were successful with the game as it was, but then, They're one of their big first forays into live service after Mortal Kombat 1, which, had its own sort of ups and downs was Suicide Squad recently, which did not do super great, right?

And that was definitely a big risk. And the upside seems pretty obvious, especially to Warner Brothers. But what are the risks, especially as someone who's done this for a long time, of a game focused on live service versus just making some up revenue and then starting on the next game and just, taking that money and de risking or maybe even make it some DLC or expansion mentality.

And is there any particular stories that you could share around, what you've seen about it?

Stewart: Yeah, I could probably bore you to death on the stories, at this point, we've been around long enough to make, a lot of mistakes, as well as have a few successes. But I think it's, there's a lot of survivorship bias in live service, if that makes sense.

Because, if you look at the top 20 games on Steam It's letter, most of them are games we would consider live service games, right? And most of them print money to some degree, right? And investors love recurring revenue streams, right? For lots of really good reasons. If you can get a great recurring revenue business, that is a really strong business to have versus relying on having to put out new product with unpredictable demand.

And just getting one time hits from that. But it's hard as hell. It's what belies that top 20 list is one, go look at the release dates of a lot of it, right? There's, a lot of those games, that's 20 games that have, it's taken, 15 years to build that list of 20 games.

Once that, by the way, once a game really gets into a category and dominates it as a live service game, it's very hard to dethrone that game. So there's a lot of stickiness there. And now you have, and what you don't see, you see the top 20, you're like, wow, they're all live services games and they're all printing money.

What you don't see is the thousands and thousands of other games that tried and didn't make it. I think it's thing with a live service game is it's all about engagement, right? And and you really if you build a game, even a great game, right? There's a lot of great games, exceptionally crafted built by great teams, great ideas that have a really strong moment in the sun.

But can't hold, but can't keep players for hundreds of hours or thousands of hours, at least at the rate that you need to keep a live services game done. So I think that's what really differentiates a live service game is that it has to be something that has the capability of holding people for a very long time.

And some of that you can introduce outer loop systems for, to. Create that treadmill of kind of constant content and progression systems and other things to make that journey good. But the core, especially on PC console, where the play sessions tend to be a lot longer. So it's not just building a Skinner box, that's driving endorphins.

You've got a that core game loop has to have some magic fairy dust sprinkled on it, to be honest. And it's really hard. I think if you look at the I recently looked, Steam publishes every year, their top 100 games. I think out of the top 100 games, as you said, the top 20 was really skewed, skewed towards live services.

I think only one game was a new free to play game that was launched in 2023. And which I think I think, I'm going off of memory, I think that was the finals. Which came in pretty late and did, but even that, I think if you look at how well it's holding players over a long period of time.

It's not easy. It's tough. People, and I think people need to realize that. And it means as a developer, what I tell people is, You, it creates. A two pronged problem. One, you have to be prepared for success. The Harry Potter game is maybe a great example, right? What if those guys had been prepared for that level of success, so that they could follow up with the live services more easily when it's a success?

You also have to be steeled for failure, right? That means you can't necessarily have, before you even ship the game, invested another 150 million into creating the next follow ons and everything, yeah. Anticipating that, that it's going to be a success and that's going to be worth it.

So you have to be prepared for success, steeled for failure. And that kind of infuses into how you need to develop the games. Think about it. Think about the tech stack where things like rally here come into, but also think about how you do production on the game, how you build it out, where you make your investments.

When you bring the community into the game early to find out whether it has the magic fairy dust sprinkled on it or not. These are all kind of factors that come into play.

Devin: And you definitely make me think as you're talking about this, these ones that are hit miss or ones that have super long longevity.

It's interesting to think about the ones in the gray area and the one I think of with that is Destiny 2 where it seemed to have the magic fairy dust for a while, And now they're just being like, I don't know what happened having to lay off people, and it just doesn't seem, they admit that maybe they missed the mark on some stuff, but it is, maybe even some of the ones that have a good run may only just have a good run, not a great run, and so I, I'm curious, what are some of the games that you think are good examples of ones that Besides just the Steam Top 20, obviously, right?

Those are the obvious the Valve ones and things like that, that they serviced forever that did things the right way and even some of the ones that, that are more recent, like you mentioned, that have popped up I think Helldivers 2 is one a lot of people are talking about that, It's maybe an interesting example because it's very minimalistic live services, very unaggressive monetization.

What in general do you think supports the ones that you've seen be successful besides the Magic Fairy Dust that can support that longevity, that, you could maybe even plan for or design for? Specific games would be helpful. It's like, hey, this game does it right because of this, so on and so forth.

And do you think some of these games that maybe even have surprise success can transform that like Helldivers 2 potentially?

Stewart: Yeah, great question. Very deep question. I'll One, I think you're, One of the interesting things about live services games is you, there's, the middle isn't very big.

You know what I mean? I think even if you look at the the top Steam games since their data is public and other sorts of things. There's a certain element of binary, to this, like either you reach the threshold where you can make it and survive, or you don't, some of that is because of one of the things I always tend, remind our own teams, other customers that we have is, very often to run an effective live service game, you actually need a bigger team.

After you launch than before you launch, right? Which is just, not always. I think one thing Hi Rez has done, Hi Rez has hit a lot of singles and doubles, games like Paladins and Smite. Maybe Smite's a triple, it's made. Half a billion dollars plus of revenue over the years, not the billions a year, that a year that the top live service games might be able to generate I, what you have to do and and I think this is.

Actually, one of the things we're trying to help the market with services like rally here, you have to learn how to develop in order to survive in the middle where you are able to, sustain an audience, but maybe it's an audience of hundreds of thousands a month of MAU, which might translate to, relatively small CCU is You have to operate efficiently, right?

And you have to have a game design that supports you operating efficiently, right? Like you can't. You need to be able to add new content to your game in a way that is, is viable for you to do it on a constant treadmill. They and appealing to players but doesn't but is able to have an economic return.

You have to be able to operate you have to run servers. You have to do customer support. You have to do a lot of things just to operate your game. You have to get really efficient at that in order to survive in that middle space. I think that is an area Hi Rez has a lot of experience with, and we brought a lot of that to Rally here.

I think there's other games that you've done. You've mentioned, I think Helldivers is a really interesting example to dig into. I think, you also seem to get games like, Hunt Showdowns, an interesting game, right? Where If you look at its Steam chart as an example, right?

Okay, they started in 2018, pretty modest. , but it's been a little bit of a step ladder up over many years. Games like Path of Exile did very similar. Warframe is an older example now, but also started that way, started very modest, but just ramped up relentlessly over many years.

So it's a There's a lot there, right? In terms of how you get to that level of success. It's a lot of work and it's a lot of, operations capability, a lot of technical capability that is very time consuming to put in place. And like I said, that's part of what we're trying to solve with rally here is take some of those things, that we spent many years building up capabilities for.

And, package them in a way so that studios can take advantage of those capabilities much more easily.

Devin: Save all those years of learning. But obviously you've been successful enough to do it multiple times, so I think that's a good sign. Over a long period of time, right? You talk about the top 20 tends to stay, but then you guys have played in the middle, which is, as you said that harder area, stick around.

So I think that in itself is interesting, even if just looking at it from the outside and trying to learn from that. Obviously. Not every game has to appeal to every player, and there's plenty of niches and stuff, but when it comes to trying to reach big audiences and things like that and scale things quickly and try and stay at the top, mobile games, I think, are interesting in the sense that they seem to embrace live service models, I think, a little more frequently than PC and console, which I can imagine is somewhat tied to being free to play, right?

The monetary model, it, you have to keep updating the game. You have to keep people playing because that's the way you're making money. You're not making money on the way in. It's just as they stay there. So what do you think some of the important differences for live service games and approaches between mobile PC and console?

I know mobile or PC and console is a little bit more your focus, but that's why it'd be great to get your opinion on what really those differences are, especially when it comes to dealing with platform gatekeepers like Apple, Google, Valve, Microsoft, Sony, Nintendo. That, different people deal with that have different restrictions, requirements when it comes to live updating games.

Stewart: Yeah. And that, there are, some mobile games that I think. Look and feel and smell a lot like PC console games, and there are some PC console, more PC probably versus console. But there are games that probably look and smell mobile games in some way. So there's no one perfect answer to the question.

But I think, at a broad level, the biggest There's a few key differences between PC console and mobile. One, as you mentioned, is just player expectation, right? For whatever reason, ecosystems evolved in the way that they did, and there's different expectations around what's acceptable from a business model perspective.

It's really hard to get people to pay for a game, on mobile. Everyone pretty much expects the game to be free to play or maybe through one of the emerging subscription services. But then on the IAP side is a much higher degree of acceptance of kind of what on the PC console side we would call unfair mechanics or pay to win type mechanics, things like that.

It's a little more acceptable on the mobile side. So that's one. It's just kind of audience expectations. A second big difference is session length, which is maybe the most important thing again for a live service game where you have to. Live service games only work if you can hold players for a very long period of time, right?

So how you hold players tends to be a little different between PC console, you know Just as the way each of us game, right? Some of us will sit down, and say like I'm gonna spend the next two hours on my phone playing games But a lot of us instead are finding the spare 10 minutes You know when we can find it to mobile game much shorter session links And I think what that tends to do, while both are critically important on both mobile and PC console, Weighted wise, I think the in match kind of core game loop, Having to be really engaging for, for longer session lengths Is happens on PC console and then the outer loops, all the systems you put around for just the what keeps you on the treadmill, trying to get the next reward.

Wait's a little more important on mobile than it does for PC console. Again, not saying that those that it's, they're critically important for both and you have to have a successful life services game. You have to get both right on both platforms. But the weighting is a little different. And on PC console, you have to, if you can find a core game loop experience that's really engaging, you can have a lot of success even without all of the heft of some of the outer loop things, or the outer loop things are, What gets you long, very long term success, right?

Keeps the game relevant over many months and years versus what gets you that initial core audience. Helldivers is a great example of that, right? So we're, I think if you, there's a very brilliant game design. Took him a long time, by the way. I think they were, one, they, there was a hell divers one.

I know this one's innovated in a lot of ways, but they used the same engine, had the benefits of that. built a very different game over eight years with, 50 to 100 percent team, and they built a beautifully crafted inner game core loop, right? That wherever these big worlds you run many missions inside of one world, they all feel different.

The interactions you're having with as players and the things you're doing as players are infecting the world and all of that creates. A situation where you can play this thing for a long time without having to get, brought into a lot of outer loop systems beyond that. And I think that's so those game design, fundamentally, is different, I think, in terms of exactly where you have to focus on the game in order to enjoy long term success. At the same time, there's, it's still games. There's a lot of, there's as many similarities as there are differences. And then the last bit is user acquisition works different.

And so I think that's I think mobile user acquisition has become a little more, right? As barriers have come up that have made mobile user acquisition more and more difficult. That's actually probably gotten closer to PC console in terms of what it takes for user acquisition.

But. Obviously, if I'm trying to bring someone to an Xbox or a PlayStation, I can't just push a button on my phone and have that happen super easily. So user acquisition is different. And then and then in terms you're just you didn't mention just the differences between iOS, Android Xbox, PlayStations, Nintendo, each one of them had just have things, each one of them have their own unique things that you have to deal with.

And that's one of the things we try to help with Rally here, is we understand all of those different platform rules that have to be met, for, what rules, do you have to meet in order to enable cross platform play, how do you connect your, that Xbox or PlayStation or iOS social systems to each other how do you just meet long lists of rules by each platform.

We try to embed as much of that as we can into the technical platform to take some of that burden off of folks. And then they all have slightly different certification processes. Although that's largely gotten, that's gotten a lot, far from perfect, but a lot better.

Devin: Yeah, I definitely like a lot of stuff to deal with it. It's interesting you brought up the crossplay one too, because I think that was one of the interesting aspects of Helldivers 2, was that being a Sony game, it was the first one they had launched on both Playstation and PC, but that launch, you were talking about the social systems, they just, they force you even on Steam to set up an hour login with your Playstation account, and therefore they've already taken care of that part.

And the hardest certifications on their side, not on valve side, right? So they I think maybe found an easier approach that seemed to work quite well, but it's interesting to as well. You bring up the set, the session length thing, and it is interesting to see that there may be a little more of a gray area in the future.

If things like Steam Deck continued to take a hold, obviously the switch has done pretty well at being a very high end portable. You've got the Sony the portal trying to do sort of. connected thing, cloud stuff. There's a lot of gray area now putting in there where the phone, obviously we're not going to get an N Gage again, but we may still have this kind of gray area where suddenly maybe session lasts a little longer.

And I've noticed, for example, people spike on Saturdays a lot of times, even for mobile games to find that sit down session, but that's once a week, right? But I wanted to dig a bit more into something else you're talking about. around the business model, especially around expectations. So when it comes to a lot of this monetization stuff, especially on mobile, but also looking at the live service angle of things, one of the more common criticisms you'll see from players when you like bring up live service game and they start groaning is this idea that you're shipping a unfinished game or worse that you're stripping pieces out just to sell them to them later that like you're basically taking content like 1 as an example because that was a recent release from a company that transitioned from Mortal Kombat X being a ship game with DLC to then going to a live service model where they clearly did take stuff out to make it part of the live service model rather than just DLC as part of whether it be some progression or gotcha or selling things in pieces.

And that makes, it's, that combined with the full game price seems to be the thing that irks a lot of people. And you're talking about, user acquisition, and having to deal with the non free to play model. Obviously, production costs have gone up, and people aren't willing to pay. Inflation adjusted like 150 a game or something.

Unless this is in Australian dollars, which unfortunately they've always had to do that. So that's obviously part of it, right? And then finding a way to adjust that. But what should game developers approach be to designing games for live service? In a way that's beneficial to players, right? So that players are happy about it, but also beneficial to the company.

So everyone's like, oh, I'm glad this is live service, because that means they're going to keep this game going, and I'm supporting it, but also I'm not getting taken advantage of.

Stewart: Yeah it's a meaty question. I think The first question as a game developer, you have to be able to answer, in the, quiet room where no one else is around is there a compelling reason to make this game a live service other than to make my investors happy?

And sometimes by the way, you have to make investors happy, right? And that's what you need to do to get a game made. And that happens. And you can't always fault it because, people want to make their games, but I think you really do need to look deep in your soul and say like why is this beneficial to the player to be a live service game?

And then you do have to mat and then I think and there's lots of compelling reasons, by the way, there's lots of answers to that. It's tends to be more genre and game specific, right? I think if first of all, multiplayer social games are great for live services. It's really great for free to play.

One of the reasons why I think free to play is so popular is it reduces the barrier for you to play with your friends. You don't have to convince your friend to spend 40 to play with you. And if it's a cross platform free to play game, you don't have to convince your friend to buy an Xbox to play with you.

They can play on their PC or they can play on their PlayStation or whatever. I think and those players Are beneficial to the paying players, right? Cause in order for especially like a PVP game to be successful, you need to have players to play against, right? And you want to play with your friends.

So that's content that's there for the people who are paying. And then those type of games tend to, and if you're going to play them for a very long time, you need constant. Content updates, and someone's got to pay for that, that's gotta that costs money to deliver constant content updates.

Somehow there's gotta be an economic model that supports that. And I think, we've been iterating now for over a decade on this live services on how to do that. But you have to say, is there a compelling reason to do this? Or am I just breaking it up artificially? Yeah, then I think you have to get, I think everyone's trying Figure out the costs in the industry have gone up a ton.

And that is Like you say, not reflected in the 60 or 70 price. I remember in the 80s paying, you could pay 50, 60 for a game on the television. You know what I mean? Pretend that was wild. That'd be like paying 200 for a game today. And those games were made by, small teams in their mom's basement.

And these are, games made by giant teams. And so I think this is it's a problem in the industry. But you have to ultimately, if it's not good for the player, it's gonna, if you have to, any. For anything to survive over a long time, it has to be a good, economic trade off for the player, right?

And a lot of that is also just in when you commit to live services, you're committing, you're. More or less you're committing to tie your revenue to the number of hours that people are playing. And you have to make sure that people, that the content you're delivering are going to get them to play more hours.

And that tends to be everything we've seen over, that's a very linear relationship. And live service games, and what really matters is can you create compelling experiences that people are willing to play. You probably get somewhere between, most games you're going to get, if you're lucky, 30 to 50 cents an hour.

From that gross, and of course, platforms are going to take a hefty bit of that. And you're going to have you're going to have costs of sales and you're going to have all, advertising costs that get that. So what's left out of that 30 to 50 cents an hour gets whittled down pretty quickly.

If you're trying to do a lot more than that, you're probably, you need the right game and the right audience. There are some games that do that. It's harder on PC console than I think it is in mobile. But but yeah, anyways, I don't know. I rambled a little, but I think it's a it's a good question, but you have to go back to, is this fundamentally good for the, does this make sense?

Is this good for the player? And are you delivering the value that justifies it?

Devin: On that topic, you guys have seen the evolution, right? Where you started back when their live service certainly wasn't a term and it was just multiplayer games that you patch, which, went from being kind of like, Hey, that's nice.

They do it. To a, it's important to do that, especially if you release your game. The old day one patch or day zero patch, right? Where it's just, everything's not really good. Gold is not the master anymore. The gold is the, Oh that's what we shipped. And so having seen the evolution both into free to play, as well as different live service models, digital sales, interconnected stuff, the ability to have platforms that can handle the updating stuff like that, but also into monetization models.

You're talking about the iterative design you've seen over the years. Obviously, the monetization aspect has iterated towards, how do we monetize these updates in a way that's maybe a little more financially viable, like going forward to where we could scale this and things like that with loot boxes, grinding and free to play games, things like that.

So I'm curious, having witnessed a lot of that, and being maybe on the more generous side of things and less on the over aggressively monetizing side of things, What do you see as the future of where it might be going, at least in some of the evolutions? Especially now that we're in this kind of tougher landscape where we're doing these layoffs.

People still aren't willing to pay more for the boxed side of things, and when they do, they're certainly expecting not to be monetized after that. This is a somewhat untenable situation we're in right now, combined with mobile also being in a tough situation. Where do you see us going from here?

Stewart: It's tough. You know what I mean? Which is, we're all struggling with it. I think we the I think there's other dynamics at play as well, which you mentioned earlier, which I tell people, the great land grab is over, like we've benefited as an industry for a long period of time.

One, just in terms of the number of gamers coming on board in the world was a huge, every year was a hugely growing number for a long time. It started as mostly an. In the late 90s or 2000s, it was mostly for nerds and North America and Western Europe, rich nerds in North America and Western Europe.

And then, of course, there was console, but, I include Japan in the West and the I think that's, But, through the 2000s, you had one, all of the developing world came online. China came online, which, is now practically half the industry. You have mobile phones were released, which, put, a gaming console in everyone's pocket.

So added billions, literally billions of gamers to the world. And all these factors that were growing this pie constantly. And then especially as live services developed as a model. There was this great land grab for a while around the top genres, right? And there's a, is a challenge that once a genre, once an incumbent comes into a specific genre, it's very hard to unseat that incumbent, right?

You can, the best of the best can make a big dent. And I think Valorant's a great example of a game that came in pretty late to a genre with an exceptional focus on competitive integrity and eSports and established itself in a genre that That already had, some big established players in it many years later.

But outside of that, it's very who's gonna unseat Fortnite and PUBG and Apex from Battle Royale at this point? Someone might, but it's more likely that they're gonna have to create a brand new genre. Much like Battle Royale was. Yeah, much like Battle Royale was, right? And that's a great example of something that just emerged and created a new kind of land grab.

But that also, those big things soak up an enormous amount of the total attention of the, right? If you take the top eight genres and if you include in that kind of some of these platforms like Roblox, UEFN, things like that. But Battle Royale, MOBAs the key genres in the industry.

They're soaking up an enormous amount of the player hours. And the dynamics that kept that number of total player hours in the industry growing aren't there anymore, right? Actually, like Especially not COVID, right? Yeah, COVID artificially spiked it for a while. But, even just demographics.

We did some research in planning for SMITE 2. Yeah. A very interesting dynamics of spike to spike one launched in like 2013, 2014. And so I compare 2013 to 2023. This and if you look at the core demographic is age 20 to 30, right? In Europe, there's 20 percent less Europeans and the 20 to 30 demographic.

Today than there were in 2013. Now, the same people are still alive. They're just now 30 to 40 and they, there's a lot more gamers and the 30 to 40 demographic than there were 10 years ago, but but they're shrinking, there are some shrinking demographics, there's not that one platform yet, maybe something like VR, AR or whatever will introduce a new platform, but there's not nothing that's bringing on a hundred million new gamers a year, which is a dynamic industry had for a while.

So that's something we have to deal with. I think part of what you're seeing in the industry as an adjustment to some of those realities, I think the, and then I think to survive, you have to one, we have to get more efficient at building these games. I don't, the, I think.

Similar to movies where movies evolved to where, either people are spending 400 million making movies, that they know we're going to be blockbusters because they're from established franchises that, always get a billion dollars when they release them. Or people are having to make movies, or the, or people having to make movies a lot more efficiently.

And a few of those a year always break out and become really special movies. So I think we have to get more efficient. That's part of what we're trying to do with rally here. I think it's part, I think it's just ways that we have to make it affordable again, to put some of these bets on the table.

And we're trying to build, some capabilities and tech to make that possible. And then your game really has to distinguish itself, right? And I think that's Helldivers is a great example. That game probably would have done great no matter what business model they did on it because it's, it's a hell of a game, but that didn't come easy.

Like I said, they spent years on that with a very experienced team.

It wasn't just that game also, the Helldivers and Magicka games before it, like they've been building up that experience at a very specific level. Style of game for a long time.

 But I think that adjustment period for the industries I think the worst of the pains behind us, I think people are realizing it, I think new opportunities are going to emerge, I think it, because it always does, Industry tends to work in cycles and just new things develop.

Stewart: It's usually something we didn't quite predict, and it creates great moments of growth. Part of what I tell people as well as be ready for that.

Devin: Yeah. You mentioned movies and it's it's funny thinking back to the seventies were actually a reaction to a similar situation where movies turned into huge epics in the sixties.

And that couldn't scale indefinitely, right? It was like every movie was a Marvel movie, and then they had to go back the complete opposite direction in the 70s. So it's as you say, we've seen this in other industries. Games are a newer industry. Obviously this isn't like a ET landfill kind of moment, but it's still maybe more of a late sixties, early seventies kind of moment for the industry where it's like, yeah, you got to figure it out.

Stewart: Yeah, a hundred percent. And some of it is, part of the challenge in the industry. And this is why I also think in terms of reducing costs, you'd need to reduce the time that it takes to make a high quality game, because one of the challenges the industry has is there's a big lag between when there's a demand signal and when you can fill that demand.

Cause it takes. Three to eight years to make a high quality, live service game, right? And so that means there, even if you see an opportunity emerge it takes a long time to fill that opportunity. And by the time you fill it, maybe. The market has changed or maybe 10 other people also, also saw the demand signal and they're trying to fill the same demand, but it took them three years and they were working in stealth.

So you didn't know that they were doing it at the same time as you.

So I service make that easier to ship that out then with a, more of a like sort of MVP model and be able to keep. Update? Yeah. So you can get ahead of that?

I'm a huge believer in that, right? I'm a huge believer in For the right type of games.

There are certain games you should spend 400 million dollars making, and they should be awesome, and you know they're, if you make them awesome, they're gonna be great, and, whatever, GTA 6, make it awesome.

Devin: Which genres do you think make the most sense then?

Stewart: For a lot of genres, especially the genres that traditionally fall into live services, right? Shooter genres action, competitive action, PvP type games co-op games. I believe in getting something out fairly early, iterating with your community, right? And being You know and searching for that magic pixie dust, right?

And, it also means sometimes, not every idea is going to, that looks great on paper is going to make it, you're right. And you have to be, efficient at deal, at understanding when to your, you've gone down a cul de sac and you need to pull out and, try something new, go somewhere else.

But I do think that MVP model that works in other industries is, that's how we think about, tend to think about games. And it's much more of a community centric model for how you're making games and trying to be deliver very high quality. Thank you. But as efficiently as possible.

As far as a lot of technical and operational capabilities.

Devin: Yeah speaking of technology and things like that, what role, especially if we're stuck right now, do you see emerging, or I would call iterative, because most of these have come around before multiple times do you see cloud gaming, blockchain, VRAR, AI, how do these maybe play into, not just the future of games maybe, but the future of live service games or the broad, more the broad strokes of games.

Especially in terms of maybe getting us unstuck or new opportunities, or maybe even involved in production capabilities like you were talking about the trying to stay leaner, for example.

Stewart: Yeah, I think all of those I think you mentioned cloud gaming, blockchain, VR, AR, AI, maybe even user generated content, right?

I think all of those are slightly different answer and all of those will have an impact. I think Cloud gaming can make user acquisition, we were even talking before the show started, on how just being able to try games quickly with cloud gaming is such an advantage. The, so that could unstick us some and some of the user acquisition problems.

The challenge you have with cloud gaming is every marginal, minute that a player plays that game has a marginal cost, right? Which isn't necessarily true with hey, I own my PC or I own my console and I'm not really driving the same marginal cost. When I'm playing on that, whereas cloud gaming tends to drive a marginal cost, so the business model has to adapt to be able to handle that, which I think lots of people are trying to figure out how to do that.

But I think it could unstick us in some, it could make user acquisition a lot easier. It could open up. Some form factors, right? Like longer play experiences on your phone and other sorts of things along those lines to make them a lot easier. Blockchain's really interesting as a market. I think, right now, blockchain tends to most blockchain games are for a certain audience, right?

That is already embedded into the kind of that crypto universe understands it and is it's a Venn diagram intersection of those people that are really enjoy the crypto and really enjoy the kind of economy and trading aspects of games, right? It's the, that Venn diagram intersection is the super core for.

That type of game today. And I think there's an audience there and it's been growing. The question is, can someone make a breakout beyond that? That really reaches. The masses, if they do, it opens up some interesting use cases. VR, AR, I think is actually, has been, two years away for 20 years.

But this time may actually be different, I think if you equate it to like mobile type experiences, I think. You, we went through the Apple Newton and the Blackberry and the flip phones, and you eventually, found the iPhone that kind of took off.

I do think we're getting closer and closer to where. That especially augmented reality is becoming, those technologies are getting to a place that is much closer to having some breakout experiences. That's a totally different thing though for gaming, like probably whatever breaks out there will surprise us in terms of what breakout versus just translating our current gaming experiences to the medium and then AI, I think it will, AI in some ways, like cynically, like just imagine if something drives the cost of content creation towards zero.

And I'm not saying that's exactly what this technology is doing or when that would happen, but it's definitely changing the dynamics of how content creation is done as that, as you're driving that down it's gonna mean other things become a lot more important, right? The killer game design, the killer loops that You know, what's going to differentiate your game other than the fact that it's got a lot of content or it's got really beautiful content.

Stuff like that becomes even more important. And then I think the user generated content platforms are really interesting. I think what Epic's doing with UEFN and I think probably the Ready Player One vision that Tim likely has in his head, and is building towards is really interesting. Obviously Roblox is in that category. It's a lot of attention capture right now. A lot of the gaming hours in the industry on PC console and even mobile with Roblox are soaked up by those today and that's probably going to continue to grow, really interesting time at this, definitely the most interesting time in gaming, and since I, came into the industry 15 years ago and that means it's very challenging, but that's also usually when the new opportunity that's right, it's it's usually at this point that the next great companies get founded because you're at a transition stage.

Where a lot's up for grabs and there's a opportunity to disrupt. And I think that will happen here.

Devin: Yeah. I may not hear about it till next year cause they're working on it. It takes a while, but I think you're right. And that's why I feel bad for these sorts of situations for everyone who's in not the greatest position, but it is also exciting because the pressures on either the necessities, the mother of invention kind of thing.

Like we got to solve it somehow and it's not going to be, you know bearing games in a landfill and then hoping to pivot them as a toy later kind of thing We're not in that situation again so but lastly I just want to ask how people can find out a bit more About what you could do outside of just you know The website and go ahead and let everyone know as well for those aren't showing the show notes where that website is But what can people do to get a better idea of what rally here is able to do?

What maybe any games you've worked with? Success stories so they can get a better example of You're you're outside of High-Rez games, obviously.

Our website is rally here. gg. I, I think like the bullseye customer for us is someone trying to make a cross platform multiplayer game as a service.

Stewart: I think if that's you we offer a lot of interesting technology and capability that's been built up over many years. Go there, hit that Contact Us button. We'd love to chat with you, give you a demo help you get a proof of concept going. And see whether or not, what you're trying to achieve is a fit for what we have I think the in terms of yeah, obviously in terms of getting a view into the broader high res universe, there's a lot online now around Spike 2, which is coming up, and you'll be able to play that on some limited basis soon, I'll say stay on track for that, and you can really get a flavor, I think of of what's capable now, and we're really trying to take this old franchise and really modernize it, and, and Unreal Engine 5, and do some exciting things with it, stay on touch with that. And then I'm not really part of the development, but they are a customer of Rally here And it's one of my old time Love games and some old friends are doing the development this studio prophecy games Has picked up the tribes franchise and they're releasing tribes three early, very early access on steam next week.

So if you love going, 150 miles an hour with your hair on fire, shooting discs at other people going 150 miles an hour with their hair on fire jump in and play that game. And I think. Without going into it now that's, there's a story of, they were able to build that game very quickly because of the rally here, technology in many respects, as well as some other kind of interesting work they had done independently.

And I think it's just getting, like I say, it's an early access. It's just getting started. If you're on the boomer shooter market Love those are arena fast arena shooters. Give that a shot.

Devin: Definitely. Yeah, and obviously it's funny to take Decades to make a third game, but it makes sense when it's a live service game You don't really need sequels pumping out time after time.

That's why it took so long to get to csgo too, right? So yeah, any and you guys will be at gdc or no?

Stewart: Yeah, we'll be at gdc. So yeah, definitely. You can find me on linkedin Obviously just there aren't many other steward chisms in the world. Look me up on linkedin and I'd love to meet with anyone at gdc that's at gdc.

So we'll be there You We'll be at the develop conference in Dubrovnik in May, I think. So if you're more European audience and aren't able to make a GDC, but you make it to to that conference, a reboot, we'll we'll be there and we'll be at other shows through the course of the year.

Devin: Awesome. I hope to see there. I will be GDC as well as a lot of other Naavik people. And of course, anyone who can make it to the other stuff, definitely good. So they can pick your brain a little bit further in terms of both the stuff we talked about, but also in terms of what you could do with Rally here, that might be good.

Or heck, if Hi Rez is also acting as a publisher at times, maybe there's some overlap there even. But anyways, I wanted to thank you for coming on, Stu. It's been great to talk about LiveService in general. It is a bit of a topic at the moment, so I think it's good to see from and hear from someone.

Who's been there since before it was a buzzword. So definitely respect there.

Stewart: Yeah. But yeah, thanks for the time. I enjoyed it. And I'm sure we'll we'll run into each other again soon. So

Devin: Awesome. And thanks of course everyone tuning in and those who submitted questions and things like that as well.

We appreciate the extra engagement, but we'll catch you on the next interview.

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

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