We live in one of the most vibrant and exciting moments in history for gaming: The expansion of mobile gaming, the emergence of F2P and live operated business models, the democratization of game development, cloud gaming, disks to digital, and much, much more.
[/et_pb_text][/et_pb_column][/et_pb_row][et_pb_row _builder_version=”4.9.4″ _module_preset=”default”][et_pb_column _builder_version=”4.9.4″ _module_preset=”default” type=”4_4″][et_pb_video src=”https://youtu.be/_QT7O3Wxi2s” _builder_version=”4.9.4″ _module_preset=”default” hover_enabled=”0″ sticky_enabled=”0″][/et_pb_video][/et_pb_column][/et_pb_row][/et_pb_section][et_pb_section fb_built=”1″ admin_label=”section” _builder_version=”3.22″][et_pb_row admin_label=”row” _builder_version=”3.25″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” min_height=”26785.7px”][et_pb_column type=”4_4″ _builder_version=”3.25″ custom_padding=”|||” custom_padding__hover=”|||”][et_pb_text admin_label=”Text” _builder_version=”4.9.4″ background_size=”initial” background_position=”top_left” background_repeat=”repeat” hover_enabled=”0″ sticky_enabled=”0″]Amidst the massive changes occurring in the gaming industry, PC gaming has continued to thrive and grow.
In trying to understand the future outlook and what to expect, I asked some of the best people in the world about the future of PC gaming.
- David Brevik: Creator of Diablo, Founder of Condor/Blizzard North, Founder of Gazillion, and now President of Skystone Games as well as Founder of Graybeard Games.
- Sean Haran: Senior executive at a bunch of major companies like 20th Century Fox, Marvel, and Riot. Now Chief Business Officer at Gearbox.
- Tim Morten: Former Activision EA, and Santa Monica Studios. Worked on Starcraft and helped transition SC2 to live services. Currently CEO of Frost Giant Studios.
More specifically, we talked about:
- What are the key trends and opportunity areas?
- What is the state of PC games publishing?
- Impact of Cloud gaming?
- Cross-platform opportunities?
- What’s going on with Blizzard and Riot?
- How can PC devs embrace F2P and Liveops/GAAS?
- What about the emergence of China?
What follows is the transcript from a really incredible discussion with these world class industry experts:
Opportunity Areas
JK [00:00:04] Hey, everybody, and welcome. Today, we’ll be speaking about the future of PC gaming. And here with us to talk about this, we have three incredible speakers. First, we have David Brevik, famous, of course, for founding Blizzard North and for the little game known as Diablo, but then also founding a bunch of other game studios, including Gazillion and now president of SkyStone Games. Second, we have Sean Haran, who’s held senior executive roles at 20th Century Fox, Marvel, Riot and now as Chief Business Officer at Gearbox. Sean, I know you guys had a recent game launch as well, so congrats on that.
Sean Haran [00:00:39] Thank you.
JK [00:00:40] And finally, we have Tim Morten, who was at Activision, was CEO of Savage Entertainment, held executive positions at EA, Santa Monica, and Blizzard before starting Frost Giant as CEO. Welcome, guys. And again, thank you all for jumping on to this panel discussion. I am actually very, very excited and happy to have you all here with me today.
Tim Morten [00:01:01] Thanks for having me. This is awesome.
JK [00:01:03] So just kind of jumping right in. I thought we could start with the first question I have, which is really around, you know, so each of you have either started a new game studio or publisher or are publishing new games and IP. And so what are like the specific opportunities you’re seeing in the PC market and maybe starting with you, David?
David Brevik [00:01:23] Sure. Well, yes, I have both my own indie games studio as well as I’ve started a publisher just recently, Skystone Games, where we’re funding all sorts of different projects. I think one of the big things that we’re seeing is a trend in the video game industry, especially in the PC space, is the kind of emergence of teams worldwide. There’s been much more… like we’ve signed games with Skystone from all over the world: from Brazil, from El Salvador, from Spain, from China, you know. And so the the fact of the matter is that more so now than any time ever before, the PC market, the development market, is more of a global market than it’s ever been. And there’s just so many, so many teams out there and so much talent out there like that didn’t really exist years ago. And so it’s really kind of amazing how many teams there are out there making games, which is a good thing and a bad thing. I mean, it’s obviously, the good thing is that you get a lot of really diverse games and some really interesting perspectives and new ideas and that’s fantastic. But obviously with all those development teams comes a lot of games and it makes it super competitive. So it’s kind of a strange time in the video game industry for PC, for sure.
JK [00:02:49] And what about you, Sean?
Sean Haran [00:02:52] Yeah, so we’re a developer and a publisher. Gearbox Software has been making games for twenty one years and we’ve always been on PC dating back to the Halflife titles that we worked on with Valve. So I think in that space, the big opportunity is just more platforms and more opportunities to reach new gamers. The Epic Game Store is a great example of how PC can grow and find new audiences, and I’m excited to see how Tencent and other Chinese game companies are able to launch platforms that kind of cater to more premium experiences, which is kind of what we’re known for. And on the publishing side, both where our titles are and for third party games, the opportunity really is significant for publishers because there’s just more places to bring games and more gamers to reach. And it kind of creates an opportunity for what I call, mid-market publishers, to find exciting teams globally, like David said, that could create disruptive experiences that can shake up the game space and create great experiences for gamers. And they’ll need publishers more than ever. And I think we’re well-positioned to take advantage of that. And games like Godfall, Tribes of Midgard, and we’ve got a few others that we’re really excited about that kind of manifest from that.
JK [00:04:06] And maybe Tim, you could also speak to not only the opportunity you see, but also in terms of why did you start a new company to go after the opportunity that you’re seeing?
Tim Morten [00:04:16] Yeah, absolutely. Clearly, there’s a need for more great real-time strategy games. So that’s one very specific opportunity. But I was actually going to layer on because I think great observations already. But the importance of user generated content and just the impact that user generated content has had on PC and games as a whole really seems to be escalating. You know, you look at MOBA as a genre, you look at Battle Royale as a genre, you look at auto battler’s as a genre. Like there are so many significant trends in gaming that have come out of mods and certainly the popularity of ROBLOX, of Minecraft-like user generated content. It’s kind of been little paid attention to it, but ultimately it has had just this massive impact on the direction of popular genres. So RTS in addition to being my favorite genre and clearly something that I want to see more of has always been intertwined with user generated content and tools to create user generated content. Warcraft 3, for example, facilitated the creation of the Defense of the Ancients mod and the creation of MOBAs. So that’s definitely something that we’re going to try to continue with our game. But, real time strategy as a genre is one of those early PC genres that has continued to stay popular but has been underserved. And so we’re starting a new team and a new endeavor to to try to build the next great RTS.
Emerging Trends & Tech
JK [00:06:02] Maybe just as somewhat of a follow up question, we could actually dive a little bit deeper into whether its specific emerging trends or even emerging technologies that are going to potentially unlock new opportunities. So, in the past, there could be like some new 3D technology that enables a new type of game or, maybe, Tim, you could also speak to why you believe that RTS is a genre that will be re-popularized. But if you guys could speak to — or even like the emergence of frameworks like Unreal or Unity, things like that, are there any specific trends or technologies that we should be keying in on that would potentially unlock a broader market of some kind, maybe starting again with you, David?
David Brevik [00:06:51] Yeah, I think that obviously engines like Unreal or Unity and things like that have allowed people to make games easier than ever before. And that’s, you know, again, good and bad. It’s good because we’re getting I think in a lot of ways, we get a lot of high quality products that used to be like I remember 15, 20 years ago… Like it used to be, the mantra was if you make a good game, it’ll sell well. Because there were so many technical disasters back then that, like a good game is just a game that ran. So the… I think that we’ve come such a long ways now that most games are technically proficient. They run well, they install well, they’re easy to kind of use. They have decent interface and direction and stuff like that. So that kind of mantra of if you make a decent game, it’ll sell well is gone simply because with the engines and all of these kind of technologies, almost everything is at least decent, at least runs. And so I think that that’s changed a lot of the industry and I don’t see that ever going away. I see that as just being kind of a focus, even more so in the future. There are just too many conveniences associated with an engine. One of the big things is that being able to develop your game and put it on multiple platforms is just so paramount, so important these days, because it just increases your revenue so much that having an engine that does a lot of that for you is a huge time saver. And trust me, because in my latest game that I made called It Lurks Below, I made my own engine like a dummy and it was a big pain in the butt to make it work on all these different systems. So, I don’t really… Having that in the bag or having that capability right out of the gate has really helped the industry expand. And a lot of people make new games and new types of things. So I don’t know if that’s really an emerging thing. It’s more important now than it’s ever been and when you get new technologies like ray tracing or something like that, and these engines instantly have the ability to use these technologies, it’ll bring them to the forefront even faster. And I think that these kind of things will propel new types of experiences that we haven’t seen so far.
JK [00:09:26] Sean?
Sean Haran [00:09:27] This is probably not news, but cross play, cross platform, cross progression. I think taking game games as community and having the technology to facilitate that is the future. I think we’ve seen a lot of… Fortnite is probably the most visible example of that. But Genshin Impact and there’s, I think, 50, 60 some odd games that are taking advantage of that. And I think it’ll be table stakes in the future. We have a technology team and a suite of services called Spark. I think the manifestation of that externally is called Shift, but that is something that we built for our developers to create those connected experiences. And now it’s enabling us to kind of create connective tissue between all these disparate platforms and try to create one unified experience. And I think that’s just the ability not only to reach more gamers, but engage them. And then ultimately you find paths to monetize them. And I think that’s the trend that will be something that will be necessary for any game company to be competitive going into.
Tim Morten [00:10:25] Those were both great answers. This is another one that maybe isn’t new as an emerging trend. But I think games as a service, certainly from a developer perspective, has been hugely impactful and is still something that we’re figuring out how to best take advantage of and best service players through that model. When I was at Blizzard, we pivoted Starcraft 2 from more of a box model to constant content delivery. And I can say for a production team, that’s a shift that is very challenging. But I think for players the rewards are meaningful. And that’s definitely something that we’re going to continue to explore at Frost Giant. And I think the industry as a whole, there’s still a lot of innovation and player value that’s yet to be discovered there.
Sean Haran [00:11:14] Yeah Tim, one hundred percent. We’ve called it games as a hobby. That’s been something we’ve been doing for over a decade. It’s kind of the more consumer facing friendly version of that term. And like Borderlands 2 still has over a million monthly active users. And it doesn’t have a traditional GAAS model, but we continually fit content, I think we’ve got like 16 DLC packs. So it’s having the ability to engage players over time and then ultimately find paths and monetize them. I think is also going to be something that most companies need to figure out. Just the manifestation of it: is it loot boxes or subscription services or whatever? I think it’s depending on the customer you’re trying to serve, right? You’re looking at RTS customers. We’re creating Homeworld 3, which is a space RTS — that iconic franchise. So they’re going to react differently than, say, a Fortnite fan, to those types of mechanisms. So you really got to be thoughtful about who your customer is when you kind of deploy those models. But when you have an engaged fan base that loves your game, they want more of it. And you just want to find a great way of feeding them the content in a way that’s economical.
David Brevik [00:12:19] Yeah, I think it also goes beyond just that, though, is that because the industry is just so competitive right now when there are if you look at across mobile, console, PC, everything and whatever, there’s a thousand games released a week. And so. It’s hyper competitive and because of that, once you have customers, you’ve got to cling onto them for dear life simply because they’re you know, it’s just so hard to get customers because of the competition. So having more games as a service, having these kind of content updates that or things… reasons for people to come back to your game over and over and over again ensures your ability to have a customer to sell to and monetize in some kind of way. And it’s a lot easier to do that than it is to get new customers. And so it’s a lot less risky. And so it’s really important to make sure that in today’s kind of game that if you have a hit, that you have ways to kind of keep those people coming back because it it’s a lot easier and a lot more economical to focus on that than it is to try something new.
RTS and Other Genres
JK [00:13:30] And maybe Sean and Tim sounds like both of you guys are working on RTS. Is there… Can you guys speak to why we haven’t seen, like a big new RTS in a while? Tim? What are you specifically seeing as the opportunity for RTS right now?
Tim Morten [00:13:49] I’ll jump in first. It’s fascinating to me the perception around RTS, I guess having seen the back end numbers at Blizzard, there’s this tremendously engaged player base around RTS and they didn’t go anywhere like they have stayed with RTS. But what didn’t happen is other genres came along that surpassed the popularity of RTS. And so by comparison, there’s a perception that RTS declined when it really didn’t. Like, there is still an audience there that loves this genre and that still today, like Starcraft 2, is a 10 year old game and it has this amazingly engaged player base. But what did happen was the popularity of these other genres. It distracted publishers and developers to a great extent. There is a phenomenon of chasing the latest hot thing. And, you know, we’ve just seen it with Battle Royale. We see it with every new genre that crops up or even every new successful title that really breaks out. So I think what’s needed is somebody to make another great RTS. And I think that same attention and excitement will come back and we see that sort of cyclical nature with all kinds of other genres. So I absolutely think there’s an opportunity there for RTS.
JK [00:15:06] And then in terms of genre… Oh sorry Sean, do you want to also comment on that?
Sean Haran [00:15:10] It’s hard to argue at that point. I concur. You know, I think publishers will fall in love with the kind of big and sexy trends when there’s really large and significant engaged fan bases and genres that are left untapped. I mean, those from a business perspective actually sound really smart. But with Homeworld, there was something that, you know, most of the studio played back when it was created by Relic and and something we wanted to continue on. And when Blackbird and us got together and thought of what Homeworld 3 could be, it got us really excited. So made a ton of sense. And we know that fanbase is there and they’re still playing the classic title. So hopefully we’re able to bring something to the market that will justify its existence and hopefully we’re able to continue on that franchise. And we’re also pairing it with a mobile title, free to play mobile title, which is a new experience. So we’re not we’re trying to give them that premium experience that they’re going to get from the PC title, but also give them something new that they can take in on their phone. So I agree with Tim. His points were just spot on. So nothing more to add to that.
JK [00:16:14] Is Blackbird also doing the mobile SKU?
Sean Haran [00:16:16] No, no. We have a mobile first studio out of Germany called Stratosphere that we’re working with there. And there are huge Homeworld fans. You’d be surprised how many there are. So they were passionate about the IP as well as we were. And we thought, you know, setting up Homeworld 3 with a free to play game that can kind of lead into it, could bring broaden the audience and potentially get people excited about the launch for the sequel.
JK [00:16:41] And in terms of genres, are there any other sort of emerging genres like, you know, certainly it seems like Mafia is starting to get a little bit popular, but maybe other genres that will come back as well besides RTS.
Tim Morten [00:16:55] I think what’s going on with Star Citizen is it’s been playing out for a long time, but I think Space Sims are a thing that’s on the way back. I’m eager to see adventure games come back in new forms and certainly stuff has happened here and there. But yeah, what else? Tactical strategy games, XCOM style. I think there’s tons of opportunity there. There’s so many great genres like this that are fertile for updates and for growth.
Sean Haran [00:17:27] Yeah, I don’t think this would be count as a genre, but more narrative based experiences, ones that kind of lean forward on story and that pillar, I think it’s kind of left behind with a lot of the trends around free to play, GAAS games that have kind of very light meta. And it’s really about the gameplay. I think there’s games out there that can really win with with story, engaging people with that.
David Brevik [00:17:52] I think that reminds me… When we’re talking about, you know, “Oh RTS is dead,” which is kind of a joke. It reminds me a lot of the… long time ago when I was pitching Diablo to a bunch of publishers and they said “RPGs are dead.” So, it only just takes the right title to come around to make a genre kind of emerge or become popular again. And so I think that there’s a lot of great genres out there that are untapped and maybe we’ve experienced in the past for people that have been in the industry to play games for a long time, basically the old people in the industry and that we remember a lot of these titles that had just great creativity and and great reach, but are kind of untapped these days. And I think that, again, it just takes one title to make something super popular and that we see it happen all the time.
State of PC Publishing
JK [00:18:53] Right. And so I thought the next question I can ask you guys, and especially David and Sean, since you guys are also on the publishing side, but, certainly on the mobile side, mobile game publishing has been all over the place and hasn’t been very successful. But on the PC side, could you talk about how the model has changed? The current model? And what is it like in terms of the key value or why you would want to work with a publisher? Maybe David and Sean, you guys could talk about what you guys are doing. And then after that, maybe, Tim, you could talk about what would it take for you to go with a publisher instead of self publishing, but maybe starting with you, David.
David Brevik [00:19:32] Sure. I think that publishing in general is really important these days, because, like I said earlier, there are so many games released every week. It’s really hard to stand out. It’s really hard to get any kind of coverage. It’s really hard because a lot of the websites and a lot of the press coverage and things like that revolve around their numbers. And, you know, they have to do something that’s popular and the popular things are the things that generate revenue. So trying to break into that popular stance is really difficult as a small developer, an indie developer or things like that. Doing something, you know, having a publisher that is behind you, that allows you to to get to break through the noise and be able to hear, you know, be able to get attention on your game is just so, so important. There are so many great games that are that are kind of hidden gems because they’re because nobody knows about them and that happens all the time. So I think publishing right now as a game developer, publishing looks great because I believe that with publishers information, you know, they’re help. That they can sell more copies than the cut that they’re going to take or whatever. That’s the hope at least. And so I think that right now it’s really important also with the publishing company that I created, Skystone, we’re not just doing the regular traditional publishing things which are very helpful and really great. But also we’re doing something a little bit more and we’re making it kind of… Its first off, it’s kind of a developer led publisher. So that’s very different than a lot of publishers. I’ve been there. I go through it. I’ve been through it many times. I know how it works. I can give you… And that’s really the biggest thing is that I can give you tips, right? I go in and I get into the nitty gritty of the game and give feedback and know through my vast experience of just being in the industry so long, like pitfalls and things like that, especially younger developers run into. And I think that that’s something that I think could separate a lot of publishers in the future is their ability to have done that before and understand the entire process has a strong upper hand versus people that are that are maybe just looking at numbers and things like that, which happens a lot.
JK [00:22:04] Sean?
Sean Haran [00:22:05] Yeah, I think you probably saw a little bit of my thunder there, but the amplification is is a big part, right? Cutting through the clutter. Gearbox, the brand, carries some weight with it and people pay attention to the things we bring to market. And for example, when we announce Risk of Rain 2, the launch of that along with Borderlands 3, we were able to sell a million units in the first month and that game was already in incredible shape when we met the Hopoo guys, and they absolutely could have gone it alone because their first game was such a success. But they realized that we could help amplify their efforts and kind of reach more players. And the next piece is the reach, like getting into all the places where gamers are, you know, smaller publishers can’t do that. They don’t have the ability to put a game on a box on a shelf anymore. And we can. So that’s huge. And the second piece that David said is that we’re a publisher born of developers. Like our core team are all guys who have shipped triple-A games over the last three to five years. We have the ability to provide guidance and mentorship to these smaller, younger teams so they can focus purely on the game and help guide them through that process since they’ve done it. And a lot of publishers have folks that used to have done publishing, making games, but they’ve been in those seats not too long ago. And that’s a huge differentiation. And having that credibility with other developers helps us win the hearts and minds of some of great teams that could have gone with bigger publishers. So I think that’s a huge win for us and a differentiation factor and ultimately helps them focus on what they’re great at. And we’re able to to help amplify their efforts and bring it to other places and do portwork and all the things that they don’t need to worry about. So those are the two big pieces. So really just echoing a lot of what they’ve said.
JK [00:23:52] All right. And then, Tim, for you, like, what would it take for you to work with a publisher or what would you be looking for?
Tim Morten [00:24:01] I had a prior stint at an independent studio that was primarily advance against royalty funding, so publishing deals. And I still have PTSD from that, I won’t lie. But the world has changed. And I think the rise of developer led publishers is a tremendous thing. You know, both these guys are doing it. Epic is doing it. Dream Haven was just announced like it is a new approach and thought process for publishing to have developer led publishers. I’m really excited about that. I also think the rise of venture capital funding for game studios, which is a relatively recent thing, has changed the landscape a lot. That a lot of deals are… They’re almost more distribution deals than traditional publishing deals in that the product gets substantially finished before a publisher gets involved. But at the end of the day, like my core competency is as a developer, it is not doing go to market. And I’m used to working inside of big publishers where we have brand management, we have PR, we have CRM, you know, we have QA, localization, customer support. Like all of these services that a publisher provides typically. And those are not quick to build. They’re not inexpensive to build. They’re hard to build well. So I see a lot of value at the go to market phase from a developer perspective and working with a publisher, particularly with how global the market is now. So it’s not a tough sell to convince me that there are benefits to working with publishers. I think the nature of those deals and frankly, the economics of those deals have changed to be more developer favorable, both because of developer led publishers like these guys and because of the rise of venture capital funding for game studios. So I think it’s headed in a really good direction, but it is still kind of in a state of flux and in transition. So we’re interested to see how it evolves in the next few years while we’re still in development.
Sean Haran [00:26:10] Yeah, that’s spot on Tim. We get the benefit of having games that we can actually touch and play and when the team puts their dev goggles on, not me, but other people, they could see where that game is trending and really realize what, you know, what they think that could be. And then they’ll lean in. And since we’ve worked with a lot of publishers historically, we’re trying to give the developers better economics from dollar one that they wouldn’t find in any other place. Because we just think incentivizing the team and having them feel the success of their titles early is massively important. You know, we feel that when you’re at Gearbox every day when we create a title with 2K, you know, feeling the success of our game sooner means a lot for the talent. And so and then ultimately more transparency in the process and sales and everything. You know, we’re not a black box or an open book in that regard. So I think all those things, as you said, really create a great opportunity for publishers and find a great games and teams and hopefully giving them the upside they deserve from the creations that they make.
JK [00:27:11] And do you guys have any thoughts in terms of some of the other kind of third party publishers out there, whether it’s Epic and increasingly I’m hearing a lot about actually Chinese publishers who are pretty, from what I hear, aggressively funding. Is that a way… Should we be thinking about that as a potential way of unlocking the Chinese market? Or I don’t know if you guys have any thoughts on any of the other guys out there.
Tim Morten [00:27:48] It’s so hard to map out the landscape in other regions. And, you know, we just did our studio announce a month ago and we’ve been reached out to by various players in different regions and just learning the landscape and learning how things are evolving because things aren’t just evolving here in the US, they’re revolving around the world. We’re taking a very agnostic approach, though, because I think, for example, streaming… The streaming services that are competing with each other right now probably have some long term impact on game distribution, understanding what that looks like, understanding how this console generation is going to shake out. You know, there’s so much that is constantly changing. But reaching markets like China, Southeast Asia, Middle East, North Africa, Brazil, India, all of these markets that are exploding right now does take partners who have expertise in those regions and understanding that and understanding those landscapes like who are the best partners to have. It’s difficult for a small developer like us. So we’re trying to be circumspect and thoughtful about how we approach that. But, yeah, it’s it’s definitely a challenge.
JK [00:29:15] David or Sean?
Sean Haran [00:29:18] I’m trying to parse what part of the question I should answer, I think when we think of Asia and other markets it’s similar, right? We don’t have boots on the ground there. And that’s crucial even as a publisher in the West. And I think Chinese dominant game companies like Tencent and Netease are looking at our market and saying, should they build it or buy it or rent it or what’s the best path to tapping into our audience? Because, you know, capital doesn’t necessarily mean success. And so we’re happy to partner with them and find win wins. And we found games that have been funded or partially funded from Chinese companies that unlock that region that we get to participate in. And they get a team here in the West that’s going to help realize their investment with those teams. So there’s a lot of win wins there. But we’re not sitting there and seeing them as competition it’s just really finding the optimal path per product and seeing. And so we’re evaluating as it comes, because, as Tim said, the landscape is changing. There was a minute there where every Chinese publisher had a platform and they’re looking for content and they’re trying to fill that pipeline. And that pipeline got shut down and then everything stopped for a year. So it’s always changing. You just kind of have to just roll with it, I guess.
David Brevik [00:30:37] Yeah, I think that in general, the Chinese publishers have been here for a long time. They you know, they’ve been funding things for years and years and years. And so, I don’t think that it’s really any news. I mean, the big thing for me about Chinese game development in general is the fact that it’s finally starting to make some traction here in the U.S. I mean, there are now some hit games coming out of China, which hasn’t happened before. And I think that that’s more of an emergence out of China than any kind of funding or anything like that. The fact that there are going to be, I think, a wave of games that come out of China that are high quality, fun games that everybody is going to enjoy playing similar to what we’ve seen come out of early, very early in the eighties from Japan and then eventually Korea. And now I think China is just on the edge of really kind of breaking through and making a bunch of hit games here that are kind of worldwide hits.
Cloud Based Gaming Impact
JK [00:31:45] And Tim, you mentioned the streaming platforms and kind of these cloud based gaming platforms as potentially having an impact on the PC gaming market. So could maybe all of you but maybe starting with you, Tim, talk about what are your thoughts in terms of whether it’s Google Stadia or Amazon Luna, what do you guys think? Because it doesn’t seem like, at least currently, that any of those guys seem to have gotten any traction. But if you have any general thoughts on that and then to your point, Tim, what would be the potential impact to PC gaming if these things do become successful?
Tim Morten [00:32:18] Yeah, I think it’s it’s too soon to call. And obviously with OnLive and Gaikai, like there have been some past efforts in these directions. But you look at the players who are in this now, they have the necessary capital to deploy the infrastructure. In many cases, they already have the infrastructure there, but they also have the necessary capital to play the long game. And I think they will do that. And I know there’s been some skepticism, especially voiced by Take-Two, on just the future of streaming as being impactful. But I wouldn’t count these guys out. I also look at some of the assets that they have, you know, Amazon with Twitch, Google with YouTube. There are so many interesting connections that they can make and kind of seamless transitions from places where the community, the fan community around games are already inhabiting to seamlessly get into games from those platforms. Feels powerful to me. So, I think the days of a disc with a game demo coming with PC Gamer or Computer Gaming World, I mean, we’re entering an era now where you could watch a streamer who’s just exposed you to some interesting new game and immediately transition into trying that game. That’s powerful. So I think it will be very impactful. Who the winner is and exactly what’s the business model that strikes the right chord with consumers? Because that that seems to be a big part of what Stadia hasn’t figured out yet. I don’t know the answers to those, but but I think they will get answered. So it’ll be fascinating to see.
JK [00:34:16] Sean?.
Sean Haran [00:34:17] Yeah, I think Tim your assessment is pretty spot on with the way we think about it. We’re on Stadia. We’re already kind of experimenting in that space with Borderlands 3. And I think we’ll continue to as a developer, want to understand what it means to be on those platforms in terms of our business attitude towards it’s too early to tell. I think thinking them as a replacement for consoles and PCs today is probably the wrong thinking. And long term, as you said, their ability to potentially bring in new customers and a frictionless way through some of the unique attributes of their ecosystem is really exciting. The ability to try a game and then decide if you want to buy it or not on the fly instantly without having to have a rig is pretty powerful. And once they figure that part out, I think the mistake is thinking of it as a replacement for the current gen and next gen hardware and because gamers are going to ultimately critique it that way. But I think it has a long term benefit to the entire industry. So we definitely want to understand and be ready to take advantage of it as that kind of match arises.
JK [00:35:25] And maybe David and Sean, if you can also like you or others, are there any additional capabilities as well that streaming provides? And I know, Tim, you mentioned kind of YouTube or whatever, but, you know, I’ve heard of maybe like having like a thousand person battle royale or something like that. But if you have any thoughts on that as well, David?
David Brevik [00:35:45] Yeah, I think that that’s what I was going to say, is that I think that one of the things about the streaming services is the thing that’s going to separate it is the same kind of things that happen with like mobile games. You don’t… You can’t bring a console game exactly to a mobile game. You know, they have a different way that you use your mobile phone. And so the streaming services, I don’t know if there’s been a game yet that really takes advantage of it being a streaming service. And so if there is something out there that can be designed so that you can take advantage of the cool parts of a streaming service to make it integrated with the gameplay in such a way that, hey, I can take it from my desktop to my phone to whatever I want to do. And I, you know, without any kind of downtime or downloading or anything like that, there’s like all sorts of things that maybe that have this untapped potential that creates a new type of experience, that makes streaming a different way to deliver games to people. And that, I think, is one way that it could succeed if, besides the traditional, hey, we’re just going to, you know, not have your games installed, you know, which is a benefit, that’s for sure. But creating an experience that specifically takes advantage of some of the parts of a streaming service I think is the key to making it really kind of a long term business opportunity for game developers in general.
Sean Haran [00:37:18] I’m very curious to see how what Stadia and Amazon do with first party titles and how they leverage that technology to create something truly unique and that would then spur on other developers to take on the mantle.
Tim Morten [00:37:32] Yeah, I look at it just from a developer perspective, access to potentially more compute than a player has on their desk. There are interesting things with respect to AI and machine learning that could come out of that. If it’s a closed ecosystem streaming game where all the players are on a streaming service, it takes away client hacking is a risk for a competitive esport like an RTS, for example, there’s real value there. Client server model or even peer to peer model networking where all of the computers are in the same rack, like the low latency that you get out of that and the high bandwidth that you get out of that creates some really interesting game design potential. So I think there’s a lot that can come out of this down the road. There’s thinking to do about how exactly to take advantage of all those assets.
Sean Haran [00:38:34] Yeah, we’ll see what Mail.ru does to enter that market might be the first to get some traction there. So we’ll see.
Cross-Platform Opportunities
JK [00:38:45] And David, one of the things you mentioned earlier was cross platform, so I thought we could talk about that next in terms of, you know, how should whether it’s as publisher as a developer, how should we be thinking about cross platform opportunities? Certainly there’s kind of market expansion, but also the potential of, you know, one for some multiplayer games by being cross platform, you could potentially increase CCU matchmaking and things like that. But in terms of like where you see the the opportunities or how we should be thinking about cross platform, if you guys have any specific thoughts on that, that would be great. Maybe starting with you, David, since you first brought that up earlier.
David Brevik [00:39:23] Yeah, well, I think that was Sean that did it. But the way I I’m just trying to push off my answer because I don’t have one. But it’s really important, obviously. I think that the big problem always with cross platform has been getting all these different publishers to agree to each other. Right. Who is going to get the money or that’s what it comes down to. So as gamers, we all want this. Right. But then the businesses need to work out how it actually happens and that’s the biggest challenge. I think that technically it’s not that big of a challenge because a lot of times, like in a client server game, it doesn’t matter, you know, how the clients, what your client is, whether or not it’s, you know, a console or whether or not it’s PC or Mac or a phone or whatever, it’s like the same kind of packets are coming in and out then it’s not really that big of a deal. But it really just comes down to the business and how how that works. And that’s been the biggest prohibitive thing in the past traditionally.
Sean Haran [00:40:31] Sean?
Sean Haran [00:40:33] I think I already did my little diatribe on… haha. I think it’s crucially important for the industry to figure this out. Like, as David said, there’s a lot of business considerations, but this is great for gamers and it’s great for game makers and publishers. I can’t imagine it not being something that gets figured out in the near term. We’re assuming it is going to be. So we’re investing in more tools and technology on our end to make our experiences as connected as possible in the future like this. For us, it’s going to happen and we have to assume so in the future.
JK [00:41:08] And Tim, maybe for you and also maybe to the point about if you’re creating a competitive RTS, like how actually viable is the cross platform play just given the, you know, the amount of control and stuff you have against the different platforms?
Tim Morten [00:41:24] Yeah, I’m in kind of a crazy genre when it comes to cross platform because RTS has such a tie to the way that you control the game. And if you take away mouse and keyboard, it’s not clear that the experience is as compelling. And I think, you know, there were similar feelings about first person shooters back in the day and clearly shooters have successfully made the transition. But I don’t think anybody’s truly cracked the best way to adapt RTS to other platforms. And certainly there’s been, you know, Halo Wars 2 and EA had several titles that also came out on console. But just the performance relative to PC, RTS hasn’t been the same. And I think player perception hasn’t been as positive. So I’m not sure what the answer is in terms of the best way to adapt RTS. But from a player perspective, of course, and even from a developer perspective, just wanting to have the best experience, it’s clearly ideal to be able to connect across platform and have a fun experience without having to think about whether my friends own an Xbox or PlayStation or any other platform.
Concern About Blizzard, Riot
JK [00:42:47] So the next question I want to ask you, and hopefully it’s not too sensitive, but just as a, you know, really die hard old school Blizzard fan… Some of the folks I talked to and I’ve got some friends thaat work at Blizzard, but there has been, it seems, a lot of concern about Blizzard. And just to be clear, I mean, I am a diehard fan. There isn’t another company’s games I’ve played more than Blizzard. So the concern kind of comes from a good place. But, you know, in terms of like… David and TIm, both of you guys have have worked their and have history there, could you guys comment in terms of like what are your current thoughts in terms of Blizzard’s future prospects, things like that? And then maybe Sean I know you’ve worked it Riot. Maybe we can get your perspective in terms of Riot. But in terms of the Blizzard part, maybe starting with you, David, since you are the OG Blizzard guy.
David Brevik [00:43:40] Yeah, well, first off, I haven’t worked there in 20 years. So it’s a little bit weird, but the company itself is changed dramatically. And that’s just what happens. Often times over time, companies change. Most of the people that were there when I started the company are gone. It’s everybody from Mike Morhaime to, you know, et cetera, et cetera, myself, like everybody all the kind of the OG people, a great majority of them are gone. There are still some, but there are very few compared to the people that were there. So the company’s changed a lot. Is that a good thing? Is that a bad thing? I don’t know. I think that obviously there is concern. I would say that the fans are concerned, but that’s mainly because I think of the recent track record of Blizzard and the products that they put out. The Warcraft 3 expansion did not go well. It was not received well. It did not perform well. It did not. The consumers were really unhappy. And so I think that that, you know, being the last kind of taste in their mouth with what happened at Blizzard and, you know, just kind of reinforces this opinion of why of all these people left and why are, you know, when what’s coming out now and how can you know this is kind of a mess. And they’ve made some missteps between the Diablo Immortal announcement to the Warcraft 3 expansion… the remaster I’m sorry, not the expansion, the remaster. Those have been some missteps that we’ll see whether or not they can recover. I would imagine they can. They’re a massive force. So I wouldn’t count them out and they got a lot of talented people over there. But can they learn some of the lessons and put a better foot forward? I would guess they can, but time will tell.
JK [00:45:47] Tim?
Tim Morten [00:45:51] Yeah, worth calling out that I’m a more recent Blizzard person and left more recently, so I didn’t even get to see from the inside the era that David did. I actually started my career at Activision and Activision owns Blizzard now. And so I I had a chance to experience how Activision approaches game development. And Activision has had incredible business success and made really great games. So I take nothing away from Activision. They definitely do approach development differently than Blizzard. And even over the period of time that I was there, I think there were some changes. And those changes, they weren’t good, they weren’t bad, they were just changes. Blizzard is evolving like any company does. And so I think it’s fair to say that it is a different place, but it is still absolutely a place that has incredibly talented people. You know, just this legacy of great universe’s. Legacy of building player experiences that inspire fandom like very few other companies can. I don’t think that’s going to change. And I think the next Diablo, I think the next Overwatch, you know, the future of Hearthstone, World of Warcraft, these are things that excite me as a player. And I think there will absolutely be home runs there. So it’s totally fair to say that it’s different and there’s good and bad that comes with that. Certainly mistakes have been made. And I think everybody, you know, over the course of the evolution of their companies or their careers, for that matter, makes mistakes. The important thing is to learn from them. And I think Blizzard is trying very hard to do that. I really have just tremendous affection for Blizzard as a company. And that hasn’t changed with me being on the outside. I’m looking forward to playing everything to make.
JK [00:47:59] And before kind of jumping to you, Sean, with Riot… Maybe while we’re talking about, Blizzard, and Tim to your point about the differences between Blizzard and Activision, and this is just kind of one question I have… Maybe this is a dumb question, but it seems like part of the Activision formula is to create a more repeatable, predictable process in terms of revenue and game products. And so they’ve done that, for example, with the Call of Duty franchise, right. And they’ve got like.. or they had three studios. I don’t know if it’s now like two and a half where, you know, they’re working on three year pipelines basically. So every year you’ve got Call of Duty Modern Warfare, then Cold War or whatever. So every year you have something like that. But on the Blizzard side, is it a dumb question or kind of a dumb way to think about a franchise like Diablo where you could have, you know, Diablo Modern Warfare, Black Magic 1, 2, 3, 4 [note: A joke and play on Black Ops 1, 2, 3, 4] and having like a new Diablo every year or every other year or something like that? Or why would that not be the right way to think about it? I don’t know if you guys want to comment on that.
Tim Morten [00:49:07] Ties a little bit to the games as a service conversation too I think, and I don’t know the right answer here, but it is interesting that the Activision model does annualize new releases. To a certain extent WOW does that, not quite annualized, but maybe 18 to 24 month-ize. Is that better than one thing that evolves more granularly? I don’t know the answer, but they are distinctly different approaches. I know David was going to say something.
David Brevik [00:49:36] Oh, I was just going to say that… Blizzard still is working in kind of the traditional model in a lot of ways, that they have the: “Hey, let’s make the the game and then we’re going to sell an expansion or a second expansion.” And that’s kind of like the way that they go about their business. And I think that the industry has changed a lot and that most modern companies don’t go about it that way anymore. They do: “Oh, we’re going to have all sorts of DLC. So we’re going to have, you know, a game, more of a game as a service kind of thing and have quarterly updates.” And they’ve kind of done that with some of the things like having seasons and Diablo and stuff like that. But I think that that will definitely be a guide for the way that they make games in the future. It’s going to be, the things are going to be different. And I think that they can see that and everybody can see the way that the industry is changing. And so I think that, you know, I don’t necessarily expect them to kind of go about the business the same way they did in the past where it’s been, “Hey, we’re going to have this one game and it’s going to take us 10 years to make the next game” or whatever. I think that that things will change, but I don’t think they’ll ever get to the point where they’re going to do it annually. So, I mean, maybe they will, but it’ll be a long time from now if that did happen. So more likely, it’s doing things like having Diablo 4 and Diablo Immortal, where they’re giving different experiences on different platforms and things like that is more kind of the direction I see them going. But this is all speculation because I don’t work there and haven’t worked there in a long time.
JK [00:51:18] And then, Sean, in terms of future prospects for Riot, what are your thoughts and then maybe you could also speak to like this… It seemed like from whether it was this year or last year, there was a change, right? Where before you didn’t see… I know Riot was working on a lot of new games in terms of having them in development. But now they’re finally seeing like they’ve caught their stride in terms of launching stuff. But if you have any thoughts on Riot.
Sean Haran [00:51:43] Yeah, I was there a handful of years ago and I wasn’t there super long. But when I was there, I saw a lot of the products that are now in the market. So, you know, we’re very happy for my friends there to have put the “s” in Riot Games. And I think it was just a matter of time. They’re just so incredibly talented and passionate gamers that it was just a matter of time before they figure’d it out. You know what it would take to get one of those games out. And once they realized, OK, that wasn’t so bad, let’s go do it again. And now they’ve got a bunch of new products going to market. Got League on mobile and so many great ways in which they’re kind of expanding their brand and tapping into new geographies. So, you know, I think they’re just getting starte right now. I think they now figured out what it takes to create new IP, create new games and get it through their processes to get it to market right? It took us like five years to do Borderlands 3, you know, making games is hard, especially when you’re trying to innovate and top what the prior game was. And in our case it was Borderlands 2, which was a massively successful game. And expectations are incredibly high. So all those things are being factored in not only from a business perspective, but like, you know, the people who are making the game, which is the most important part. And so, yeah, I think I think Riot is on a tear right now, and I expect them to continue to be. So it’s such a great and talented place. So I’m rooting for them. I’m rooting for Blizzard as a fan as well. Right. The growing pains and the transition they’re going through, I think they have to and some of that’s going to be painful. But ultimately, hopefully, it leads to more great games for the industry. So definitely fans of both companies and root them on.
Tim Morten [00:53:18] Right. I want to echo that positivity about Riot as well. Riot’s one of the investors in Frost Giant. And I’ve had a chance to interact with some of the guys running their R&D group, specifically Tom Cadwell and John David Perry. And those are just incredibly smart and circumspect people. I have a lot of belief in the future of what Riot’s doing. I’m excited to see what comes from all of the work that they’re putting in.
Can PC Devs Embrace F2P?
JK [00:53:45] Awesome. I thought maybe a next topic to talk about would be this conversation that you kind of mentioned, Tim, in terms of the games as a service live operating model and associated with that typically, and I’m coming from more of the mobile side, is the kind of free to play model. And just speaking honestly, having worked at, when I was at SEGA before and meeting, a lot of the more the PC/console, the HD guys… at least in my experience, the kind of pushback I got a lot was that free to play was a little bit of a dirty word. Like how that model in terms of, you know, like if I mentioned that, oh, yeah, there are players that spend a thousand dollars or actually there were games I’ve worked on where players spend one hundred thousand dollars in a month. It’s like, oh my God, that’s you know, it’s like get away from me, you dirty, free to play person. But I thought maybe we could talk about that in terms of and especially since we’ve seen games like Genshin Impact and games from China that embraced the free to play model more. What are your thoughts in terms of both the shift in terms of PC games to more of a live operating model and just whether PC developers can embrace that or how they would be viewing free to play? And since, Tim, you brought it up, maybe we could start with you.
Tim Morten [00:55:09] Definitely, yeah. I have thoughts. So I had the experience of transitioning Starcraft 2 from traditional box model to free to play. And there was so much debate inside the company and inside the team over whether that was a desirable thing to do. I think there is negative baggage with free to play because there are some practices to encourage monetization that are not necessarily positive, introducing player frustration so that they’re encouraged to monetize to get past that frustration. Taking advantage of gambling mechanics is something that’s inspired a lot of debate. I don’t think I have a strong opinion one way or the other, but I think it’s clear that you have to approach these things very sensitively. Pay to win is a topic that you hear a lot about in the context of free to play when we transitioned Star 2 over, amazingly, the community was the source of the suggestion. Like they felt that lowering the barrier to entry would bring more players into the game, and it turns out they were right because absolutely the number of players in the game went up after we went free to play. So there are very good things about free to play. There’s even a theory that the success of games like Warcraft 3 was driven to a great extent by piracy, which effectively is the precursor to free to play. So just, you know, players being able to get access to your game as a game creator is desirable. It’s a thing that we want. We tried to approach the transition in a way that didn’t introduce new mechanics, that created frustration. It just took content that you used to pay for, made some of it available for free and some of it available for purchase. And I’m not sure that’s the exact best model for every game or the right way to approach free to play. But I think the key takeaway for me is it’s possible to implement free to play in a way that doesn’t feel bad to players and trying to approach it from the outset. Optimizing for the best player experience seems really important. Clearly, we still have to make money and it’s not in the player’s best interests if the game isn’t financially viable because they’re going to stop getting support and stop getting content. But there are ways to balance these two things. And yeah, we’re trying to be very thoughtful about that as we consider the business model for what we do next.
JK [00:57:51] Sean?
Sean Haran [00:57:51] Yeah, I think we’re we’re in the entertainment business, not the addiction business, so free to play gives us the ability to entertain more players. And if you’re player centric or player focused that gives our creators the opportunity to ultimately achieve their goals, which is to have more people playing the games they create and hopefully enjoying them. And so I think there’s a nuance to how you go about making those experiences great. We ultimately want to over deliver where people they do buy something we crave. They feel like they they got the better end of the bargain. And I think we’ve historically done that with our DLC packs and all the things we’ve done with the games we have where we put in way more value into the things we deliver. And we’re going to continue that ethos as we explore new business models. But, you know, I don’t think we’re allergic to it. I think at the end of the day, I think we’re embracing it and we’re excited for the opportunity to tap into new audiences and new gamers be it here, in the US, or globally that that business model provides as long as we do in a way that doesn’t feel icky, said it’s what should. There are great examples out there. And if you’re testing your game and being player focused that you’re going to find a path there. And, you know, thankfully, we’re a company that’s driven primarily for entertainment purposes, not for pure profit purposes or stock price, share, et cetera. So we’re able to kind of have a better balance there where we don’t feel too much pressure to be exploitive.
JK [00:59:18] If I’m hearing you guys correctly. Sean and Tim, it’s not so much free to play, but the specific mechanics and the way that you execute free to play monetization. Just so long as it’s in a friendly way, not like an addictive, bad way, then you guys are kind of fine with that.
Sean Haran [00:59:35] Who wouldn’t want millions and millions of people playing their game? And that’s awesome. I think we all want that right. The friction that you create with premium games limits that potential. So if you’re able to create a bigger funnel where more people can come and play your game and that’s ultimately the metric we care about, how many people do we reach and how many do we gratify by doing that? And that just gives us more opportunity to do so. So definitely not allergic to it. Just really about implementation of it.
JK [01:00:02] Got it. And David. And maybe like in terms of how you might perceive monetization in like a Fortnite or Clash Royale by Supercell, I mean, are those OK for you or are those kind of more on the too much?
David Brevik [01:00:21] This is a really complicated question because there are two hats here… Well, three. There’s one is a consumer, one is a developer, and one is a businessman. And the fact of the matter is, unfortunately, the revenue, the one that makes the most money is the worst in terms of like it has the most you know, the things that… The reason that these models, like the gambling ones exist is because they’re making a ton of money and people are literally making billions of dollars a year off of these kind of practices. And they aren’t going to go away as long as they’re making billions of dollars. And so I went through this, I went through this with… I created a game called Marvel Heroes. It was free to play. When we came out, people perceived us as being unfair. It was too expensive. And so we went through and we changed everything. We changed our prices. We listened to our audience. We made all these different ways to to earn the characters and things like that. And in the end, everybody felt like, hey, you guys really reached a great balance. It was you know, it was you could play the game. You could earn the characters. We got a lot of support. Our actual conversion rate was really high for people that were paying versus just free users was really high. Our lifetime value was really high and things like that. And but in the end, we didn’t make all that much money. Right. And eventually the company went out of business because maybe our practices weren’t good enough. They’re trying to find that right balance is really, really, really difficult. How much do you charge? How much do you listen to your audience? How much do you and like if you make an unpopular decision, oh, this character is going to be twenty dollars. You’re going to get tons of outrage. Oh my God. It’s twenty dollars. That’s an outrage. Blah, blah, blah. And then, you know, if it sells well then what was the lesson learned there. You’ve maybe pissed off some of your audience, but you’ve made a ton of money and there’s like this weird it’s a very difficult thing to do. And there’s a ton of pressure running a free to play game because it is, you know, under the microscope every day. It’s like, how are we doing on our revenue? You know, what’s this month? What are we doing? What do we doing to make sure that there’s something new for people to buy in the next month or the next week or whatever it is to try and keep this train going and keep it as a games as a service. So it’s a it’s a very difficult thing to do and the balance is almost impossible. And I’m not really sure whether or not if you make a game that’s really friendly to players, you’re really hurting your business. And then if you make something that’s really helped the business, you’re really hurting your players. So I don’t really know. The balance is very, very tricky. And it sounds in theory like you can do it. But in practice, it’s a very fine line that that you either have an upset audience or you have maybe not a business. So it’s tough.
Sean Haran [01:03:34] You just got to accept that you’re not going to make everyone happy. And that conclusion already made. And then it’s just really about like, where’s that balance? And I think each company and each product has to kind of make that call. And at the end of the day, if you’re not making enough money, you’re not going to be able to create content which the gamers want. So you have to have weight on that side of the equation.
David Brevik [01:03:53] Mm hmm.
Shifting to Live Ops / GAAS
JK [01:03:54] Maybe we could dig a little bit deeper in terms of the.. Kind of the shift to a live operating model and, you know, that aspect of this. And Tim, did you mention there was for you before there was more of a cultural shift in terms of like… Whether it’s capabilities or how you think about live operations versus kind of, units sold model, can you talk about whether… Because it does seem like a lot of, HD game studios are trying to make that shift. We haven’t seen a lot of great success cases except for maybe I don’t know Warframe, but I don’t know if Tim you have any thoughts on that.
Tim Morten [01:04:33] Yeah, I would talk about it first, maybe from a production side, just that. Imagine a culture that took seven and a half years to launch the original game and then two years to launch a couple of expansions each two years moving to delivering a new piece of content every month, like the production processes, the team structure, the strategic planning, the QA, the localization pipelines, like the amount of change that has to happen to accommodate going from traditional box model to continuous delivery of content, they’re massive. The live operations aspect of providing a high quality of uptime and service and not having to take the service down with every update for a long time, I mean, there’s just there’s so much involved in making this transition, but the benefit to players is palpable. You know, I love that I hadn’t heard games as a hobby, but I love the the spirit of what’s captured in that. I mean, we’ve all of us, I think on this call, probably the reason we’re making games at all is because games are our hobby. And so this is fulfilling that in a way that we haven’t been able to fulfill it before for players by giving them the ability to just constantly engage with content. So I think it’s really powerful. It’s also just really difficult. And we had a lot of learnings on the way. I’ve talked to other teams who have gone through this. You know, there’s some techniques like leapfrog development, having small sub teams that leapfrog each other to produce new content, having smaller content drops and then tentpole moments over the course of a year that are sort of reacquisition points, but bigger pieces of content or features that happen. It does take a lot of strategic planning and it also takes a belief in the long term viability of your game. And I look at, I think, Riot.. To call Riot out in a positive way again, deserves a lot of credit for the evolution of League of Legends. I mean, that game from when it started to what it is now, it’s just radically different and radically better. And this incremental, iterative approach of constant improvement, obviously constant content updates, has really made something that probably couldn’t have been made any other way. Like, I don’t think you could just raise funding and build League of Legends as it is today. I think it took that feedback loop of being out in the market and the time to observe how players are engaging with the game to get it to the point that it is today. So I see that is really beneficial and really powerful, not just on the business side and clearly Riot has done fantastically on the business side, but also from a qualitative perspective, from a player experience perspective.
Sean Haran [01:07:41] Joe I would push back a little bit on your first comment. Like there’s great examples of HD companies that have been able to make that transition. I mean, Rockstar is probably the best example of how they’ve been able to create hyper premium experiences and then have a GAAS model and both be extremely successful. Respawn with Apex Legends, Call of Duty where they now they have premium SKUs and a free to play SKU that then feeds more consumers into their premium experience. And so they’re in all of them have to have different approaches to doing it. And we made a conscious decision that Borderlands 3 was not going to be a GAAS game. There was a ton of pressure just from the industry to say, well, that has to be that’s the trend. But the expectations of what we thought our core fan base was for, at least for that particular product, was hyper premium, traditional model. And in terms of introducing something new to them, you need to be conscientious of the customer. And then ultimately you have to have the team that was ready to pull it off. And I think Tim kind of articulated what those challenges are so I don’t need to repeat them. But the transition from my console players become developers, going to mobile developers. I think the industry has experienced those transitions and paying multiple times, but ultimately came up with better teams and better solutions. So I’m confident that trend will continue, that traditional HD companies will be able to find their way to exploit different business models in a way that feels good to them, to the consumer.
JK [01:09:03] And Sean to your comment about pressure in terms of focusing on the live operated model, is there a bias or preference right now for live operated versus kind of units shipped more like the, you know, kind of single player experience type of game?
Sean Haran [01:09:17] At Gearbox or the industry over all?
JK [01:09:21] Both.
Sean Haran [01:09:22] No, we don’t have a bias. I mean, we’re we’re still making hyper premium games like Homeworld 3 and Borderlands 3 is a great experience. But we’re… but our aspirations go beyond that and we want to entertain more people. So we’re going to find new ways of doing that with like Homeworld Mobile is a great example of kind of trying out new business models. And we’re not allergic to any of those things. You know, the pressure, obviously, is to create profitable projects that then feed into new profitable projects and reward our teams along the way so that really our KPIs. And at the end of the day, if we don’t have a team that’s motivated to create the product doesn’t matter what metric you use. So there the pressure is to evolve and constantly grow, but not to drop what we’re doing and move on. We think there’s going to be a premium audience forever and we’re going to try to serve them through those types of games. And then we’re going to find new ones through different models and hopefully have to find a balance there between the two. But we’re definitely not abandoning those premium consumers because they’re there. And I think it’s going to continue to grow. I mean, we talked a bit about like, you know, Asia and other markets, like there’s more gamers being born today that are evolving into more premium experiences. Like we found that our back catalog on Steam China is like for our Borderlands games the second biggest market is China. And those are premium games. Right. So doesn’t mean you abandon things. You just I think there’s more audience just from the rising tide lifts all boats to where there’s no one overriding preference for us.
JK [01:10:52] All right, great and David?
David Brevik [01:10:55] Yeah, I agree, I think that it comes down to individual games, like if the game is designed to be kind of games as a service type of game, then those are the ones that fit the best. Right. Trying to transition something is the most difficult. It’s possible, but it’s the most difficult thing to do is to try and transition from a box product to a games as a service kind of thing. But I think that I think a lot of teams now or a lot of development companies, a lot of publishers, things like that, they’re thinking about, hey, before we get too far down the road with this project, what is the kind of the grand vision for whether or not this is going to be kind of a games as a service style game or not? And again, I think that there’s an audience for for any of these types of things. It’s just like I don’t know, it’s a little bit like the movie industry. You’re going to make games for your streaming service and you’re going to make games for the cinema. And then, you know, that’s OK. There’s an audience there for for both. And so making sure that you have whatever model fits the game the best, that’s that’s the important thing.
Competition from China
JK [01:12:09] All right, guys, final question. I want to thank you guys for hanging out with me this long, but I wanted to talk about actually some of the new games coming from China, probably most notably Black Myth Wukong and Genshin Impact. And there’s kind of like this narrative now and kind of this discussion in the industry about a new age of high end console and PC games coming from China and the advantage that China has because of lower cost structure, crunch culture, things like that. Can you guys speak in terms of, how are you guys viewing the rise… Potential rise of PC and console games coming from China? And then can you also make a case for us here in Western studios as well and maybe starting with you, David?
David Brevik [01:12:55] Sure. I think that, as I stated before, that like the rise of the Chinese game is going to be… Is here. And they’ve started to get their first hits. And it’s going to continue. There are going to be a lot of games coming out of China. And I don’t know if they necessarily have an advantage or disadvantage over other… There’s lots of other countries. It’s not just China that the kind of the game community is emerging. Game development out of Brazil or out of Eastern Europe or like there’s a bunch of other places that have lower cost structures and have and are going to have, you know, emerging titles. And it’s largely because you have things like the Unreal Engine or Unity and things like that that they’re able to kind of like leapfrog in their development timeline, as do how fast they can get things up and running. And they don’t need to be, as you know, technically savvy as we had to be like making our own development machines and making Sega Genesis cartridges. So I think that because of this, that you’re going to see an emergence not just out of China, but out of everywhere. And we’re going to see different types of games that we’ve never seen before. We’re going to see different perspectives and different kind of experiences. We’re going to see maybe we’ll see new business models. Who knows? There’s going to be a whole bunch of things that kind of come out of this. And it’s really going to be more of a global market than it’s ever been. That said, we do have a lot of advantages and name recognition and things like that here in the U.S. in particular in the West. Where we have games and Blizzard and Riot and like all of these giant companies have been around for a long time that have this advantage of being able to reach an audience that isn’t going to go away is continuing to grow here in the US and all around the world and are kind of pillars of the industry. And they’ll have a lot to lean on for a long time.
JK [01:15:05] All right. Great, Sean?
Sean Haran [01:15:09] Yeah, I think the opportunity is I don’t see much as a challenge, but an opportunity they still need to find audiences in markets outside of the ones that they’re being created from. So it gives companies like Gearbox and others the opportunity to to help realize new games from new markets. And we’ve got a couple in the pipeline that are not from North America that we’re excited about from markets that David’s mentioned, that they’re having talents popping up everywhere. I just see it as an opportunity. Of course, it’s going to be competitive. I mean, I think that’s just a given. But at the end of the day, it’s I think it’s an opportunity and the more reps they get at creating content, the better they’re going to get at it. We just have a head start. But I can imagine they’ll catch up pretty quickly.
JK [01:15:55] All right. And Tim?
Tim Morten [01:15:57] Yeah, I feel like a lot of things we touched on access to engine technologies in particular, kind of speak to the democratization of being able to create games. And I think that’s great for players in that content’s going to come definitely from China, but really from all over the world. But you look at film, ultimately, the films that resonate in any given region have to do more with cultural sensibilities and just resonance than they do about differences in labor costs or any of these other factors. And I think sometimes you get these crazy surprise sparks like Starcraft in Korea, for example, like that wasn’t planned. Blizzard wasn’t doing market research to figure out how to make the intellectual property that resonated the best in Korea. Just it happened. And sometimes you get lucky like that. And so I think some content from China really, you know, is starting to resonate here, which is awesome. And as a player, I’m excited to see these things happen. But it’s never going to be consistent. You know, one country dominating another country’s market from a cultural sensibility perspective, there’s a little bit of magic there. So I think we know our players the best. And so we have an inherent advantage. China absolutely has that advantage for their massive player base as well. But I think the democratization creates the potential for crossover, and that’s really exciting, both as a player and from a business perspective.
Final Words and Contact
JK [01:17:46] All right. Well, gentlemen, thank you very much for your time. Do you have any final words or if someone wanted to reach out to you any way that people can get in touch with with you guys?
Sean Haran [01:18:02] Gearbox is hiring. Check out our Website where we’re super ambitious. We want to entertain the world and we’re looking for folks who want to take that journey with us both on the software side and on the publishing side. You got to always find me on LinkedIn at Sean Haran or just look on our Websites. But great to have this opportunity. David, good to see you again. Tim, awesome meeting you. Joe, thanks for inviting me.
JK [01:18:26] David?
David Brevik [01:18:28] Yeah, you can reach me through a variety of ways, but probably the easiest way is on Twitter: @DavidBrevik. And I have websites and all sorts of stuff for both my Graybeard Games company as well as Skystone. And so, you know, you can get a hold of me there and we can talk about anything. Thank you again. It’s good to see you again, Sean, and nice to meet you, Tim. And thank you so much, Joseph, for for this.
JK [01:18:55] No problem! And Tim. And by the way, can you mention when your game’s coming out? Is it going to be a while?
Tim Morten [01:19:00] We are literally just at the beginning. So we’re three years out still from launching. But, yeah, anybody who’s interested in our game or Frost Giant as a company, we have a newsletter that you can sign up for at FrostGiant.com. We’ve also got pretty active community on the Frost Giant sub-reddit. But for any business stuff for to reach out to me directly, LinkedIn is the best way to do that. But yes, sincere thanks to you for hosting all this and getting it organized. And really great to meet you guys. Look forward to keeping in touch in the years to come.
JK [01:19:34] Awesome. Thanks again, gentlemen. Thank you very much for your time!
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