The challenging state of the game industry has triggered a lot of conversations, and on the eve of the Game Developers Conference, we assembled an all-star roundtable of thinkers to address the game industry’s struggles and how to solve them. OK, I admit it. Owen Mahoney, former CEO of Nexon, assembled the panel and I tagged along as the moderator.
One of the things that came up was the 224-slide deck posted by Matthew Ball, CEO of Epyllion, who tried to analyze the state of games in 2025. In our conversation about the, we talked for about 90 minutes about the problems and possible solutions in a lively, unscripted conversation.
You can also watch the video on YouTube.
Our crew included Mitch Lasky, retired from the job of general partner at Benchmark Capital; and Tynan Sylvester, founder of Ludeon and the developer who gave us the game RimWorld. We also heard from Bing Gordon, retired from Kleiner Perkins, joined us a bit late as his plane was delayed in landing.
It was a treat to be able to quiz this crew of thought leaders on the struggles of gaming. Lasky was a general partner at Benchmark from 2007 to 2019. Over his career, he had big roles at Activision, Jamdat Mobile (a pioneer of mobile gaming), Electronic Arts and Benchmark. He made bets on investments into Riot Games, Twitter, Snapchat, Instagram, Uber, Discord and more. Those investments generated billions in profits for Benchmark’s limited partners. He is now the co-host of the GameCraft podcast with Blake Robbins.
Sylvester’s RimWorld generated well over $100 million in revenue and it has a team of 30 people. Sylvester also wrote a book on game design, Designing Games: A Guide to Engineering Experiences. And Mahoney spent a decade as CFO and later CEO of Nexon, the Asian online game company that invented free-to-play and has giant hits like MapleStory, Dungeon & Fighter, KartRider, Sudden Attack and my favorite Dave the Diver. When Mahoney retired in March 2024, Nexon was valued at $23 billion.
Gordon spent 26 years at Electronic Arts before he became a venture capitalist. He had just about every job at EA, and he closed his time there as chief creative officer. Then he became a general partner and chief product officer at Kleiner Perkins Caufield & Byers. He invested in game startups like Zynga and N3twork.
Lasky and Mahoney did a fireside chat at our GamesBeat Summit event in 2022, where Mahoney warned about investing in the hype around VR, blockchain and the metaverse. And Mahoney noted in our last fireside chat in December 2023 that so many CEOs of game companies were afraid to make big bets on original intellectual properties. He rang the alarm bell as the smoke started to appear, and now we’re looking back on the ashes.
Here’s an edited transcript of our podcast roundtable.
Dean Takahashi: I’m here with a few very interesting folks in the games business. My name is Dean Takahashi. I’m the lead writer for GamesBeat at VentureBeat. I’ve been covering games at VentureBeat for 17 years under the GamesBeat banner, but I’ve also covered games for about 27 years altogether. There’s nothing else I want to do or am qualified to do. I’m happy to have our guests here introduce themselves.
Owen Mahoney: I’ve been in the industry for about 20 years. I just retired as the CEO of Nexon, a Korean-founded Japanese-listed–when I retired it was about a $23 billion market cap company with offices around the world. I was there about a decade. Before that I was at Electronic Arts for also about a decade.
Tynan Sylvester: I started making games when I was a teenager, basically. 12 years ago I started my company, Ludeon Studios. We made a game called RimWorld that was just me at the start. It’s grown up since then. Now it’s about 30 people. I wrote a game design book called Designing Games.
Mitch Lasky: I’ve been in and around the games business for about 35 years now. Don’t laugh. That’s unkind. Worked at a number of big companies, including the Walt Disney Company, Activision, and Electronic Arts. I’ve also done a couple of startups, including the first mobile game company to go public on NASDAQ, Jamdat. Most recently I’ve been a venture capitalist with a portfolio that consisted mostly of games, entertainment, and social media companies. I’ve recently retired as well. I’m now just working on some individual products, including a podcast called Game Craft about the business history of the video game business.
Takahashi: One interesting thing happening now is that the games industry has gone through a difficult couple of years here. We’re going to try to analyze some of that and figure out what’s going on. One of the things that was fun for one of our GamesBeat conferences was Mitch and Owen did a fireside chat in the online-only virtual days, where they talked about a lot of the issues in the game industry. Things like the metaverse and blockchain. VR came up. We got some good analysis from them a short few years ago, but it’s nice to have you here again to maybe refresh us on that conversation.
Lasky: It’s been a tough two and a half years since we had that conversation.
Mahoney: It’s gotten even more acute since we last talked about it.
Lasky: I think so. At that time there was still some growth left in mobile. There was still some growth left in some of the online PC businesses. There wasn’t this glut of venture-funded live service games on the market that we’re now in the midst of. It’s a lot more dire today than it was perhaps two and a half, three years ago when we had that conversation in this room.
Mahoney: We were getting tail winds from COVID as well. There were a lot of people coming into games, particularly virtual worlds online, because of COVID.
Takahashi: A lot more dire, though. I thought everyone was saying “survive until 25.” Now it’s 2025. We’re supposed to be in a better position, given that we had two and a half bad years.
Lasky: People said that because it rhymes, not because it made any sense.
Mahoney: The point we were making at the time was that the table stakes for a triple-A game, a new one, was about $100 million. It was actually more by then. But call it that in 2018 or 2019. Imagine–at the time Nexon was about a $20 billion market cap. I was CEO. You want to put out a new game that is really interesting. Imagine being in that position, greenlighting that game. But let’s roll forward and look at the numbers today, to show how more acute it is. Triple-A game, table stakes is about $300 million to develop a new game. Imagine it doesn’t work out. You’re going to have a hard discussion with your board of directors about how you managed to drill a $300 million hole in your $20 billion game company. It’s not an easy one. If you do it a second time, they’re probably calling for your head. By the third time you have at least one activist investor asking what the hell you’re doing with their money. It’s pretty acute.
What does everybody do when they’re in that situation? Not everybody, but show me the incentive and I’ll show you the action. You end up trying not to have that happen. You think about, is this a genre I know will sell? Are there a lot of customers for it? How do I mitigate my risk? A lot of companies ended up in a real red ocean. When we had that conversation two and a half years ago, it was $150 million, the cost. Today it’s been exploding. It’s on a log scale, basically, going straight up. It’s even more acute now.
Takahashi: What you did instead was put that money into sequels.
Mahoney: Well, I didn’t do it this way, but a lot of the industry did. We identified this as a problem. We knew it was going to have a bad ending. We navigated to different solutions.
Lasky: Sequels and brand licensing. They’re both late stage, low growth solutions to this problem.
Mahoney: Sequels, copycats, brand licensing is how I would phrase it.
Sylvester: On developments since COVID–they covered the business case. There’s also been more creative expansion, which has covered some areas that were not completely mined out at that point. In some ways it looks like the tech has slowed down in terms of the new kinds of things that it can do. It used to be we could do totally new things every year, especially going back to the ‘90s. But even in the 2000s–since five or 10 years ago, you kind of do the same thing from year to year. It stands to reason that in an environment like that, there’s a certain set of game structures that are obvious, semi-obvious, easy to make, and work well. People are going to hit on those one after the other. There’s a filling in the slots effect that goes on.
Lasky: That’s an important point. In particular, the slowing down of technological innovation piece. This business has been driven historically by these stair step functions in technology development. You had the introduction of the GPU in the ‘90s, which got us from Donkey Kong to DOOM basically. You had the online explosion in the late ‘90s, early 2000s. That enabled companies like Nexon, which was really the child of the Internet. Couldn’t have existed without it. All the MMOs and MOBAs and other online games that were predicated on internet play. More recently you had the mobile explosion. That was another massive stair step function. From its humble roots where we were doing it on little Motorola flip phones to the present day, where it’s $100 billion of the $200 billion revenue generated in the business.
Coming out of COVID, we had these three pretenders for that next stair step function. Those were the things we talked about in the last episode. Metaverse, VR, and web3. You could throw esports in that bucket as well. None of those pretenders supplied that growth step function that these previous technologies had. That brings us to AI, which is the new pretender, and one that maybe we have a bit more optimism about than perhaps those three that we dismissed back two and a half years ago.
Mahoney: A couple of things have been clear if you look at the analysis of those technology waves. First, games, compared to other forms of entertainment, respond to real new technology much better than–the CD-ROM was not good for music, for linear media. Streaming certainly isn’t good for music, the music business. I heard from someone the other day that the music business has just gotten back to where they were in 1998 or something like that. You may have told me that. That’s quite amazing. Whereas online was a huge thing, as you said.
If you look through the numbers, each of those waves you mentioned–GPU plus CD-ROM is one wave. Internet, another wave. Mobile is another wave. Basically triples the size of the industry.
Takahashi: Do you add free-to-play into that?
Mahoney: Free-to-play is a part of online.
Lasky: It’s a business model/marketing strategy particularly around online gaming.
Mahoney: Nexon invented the free-to-play model, but it was very differently conceived than the way it’s done these days. But it basically tripled the size of the industry. The other interesting thing about those waves that Mitch was talking about–number one, they couldn’t have existed before. It took a whole new crew of people to conceive of what an online game was. It took a whole new crew of people to make the first-person shooter or the CD-based game. Same with mobile. I remember being at EA. It did not compute. The stuff Zynga was doing–when EA bought Jamdat, you guys thought completely differently about the games business than EA at the time. Same with online. It enabled a new class of companies that couldn’t have existed before. The whole Korean industry came with the Internet. Same with China. Same with southeast Asia.
Sylvester: I think about free-to-play and where it came from. A lot of these waves–they open up new things you can do creatively, but also with distribution. Free-to-play was driven by online payments, the entire security infrastructure around that, which didn’t exist in 1997. You couldn’t have done it. It’s not just about compute. It’s also about structure.
Lasky: id tried to do it with shareware in the early ‘90s.
Sylvester: Ziploc bags don’t work that well. They don’t scale.
Lasky: Ziploc bags and 1-800 numbers to type in your credit card. If id had happened 10 years later, it would have been a multi-billion-dollar company.
Takahashi: Apple had amassed a lot of credit cards you could put in your Apple wallet. It became easy to pay for things on a phone.
Sylvester: There’s a third factor, which might also be relevant, which is just market penetration demographically. You go back to the ‘70s, you see more and more computing and more technology, which opens up new creative space and new distribution models. But also, this has been accompanied by an expansion of the number of people with access to games. Originally it was a group of nerds in Europe and the U.S. Now everyone in India and China and Africa and so on has a phone. There is a sense that–numerically there’s a certain saturation happening there.
Takahashi: Now we have our special mystery guest. Just in time. Bing Gordon, everyone.
Bing Gordon: Just like a lifetime in games. Always late.
Takahashi: This is not a bad time to add a little context into the conversation. Matthew Ball dropped 224 slides that helped explain everything, or made the attempt to explain everything that’s happened to the game industry and caused some of the 34,000 layoffs in two and a half years of stalled growth. He had 10 things that drove games for a decade, drove them forward. There were eight things that were supposed to rescue games and provide more growth. They didn’t work out, those eight things. Fifteen things are challenges at the moment. He had 11 possible solutions that could deliver growth in the future.
What are some of your reactions, whether to the explanations here or the causes? What do you feel we should try to zero in on more among this cornucopia of things we could talk about?
Lasky: Matthew does a good job in that deck of laying out the reality on the ground. The reality on the ground is something that often doesn’t get a lot of attention in the games business, which is where we really are in terms of things like real revenue growth, real share of day versus linear media, real aggregation of audience, and the kinds of numbers that are the macro numbers driving that $200 billion number that everyone likes to focus on. The fact is that that $200 billion number is under some threat. A lot of the engines of growth that we’ve relied on for the last 25 years have slowed down considerably.
Mahoney: The numbers are under threat, or the growth rate is under threat?
Lasky: The growth rate is under threat. Definitely under threat. The top line number is under threat. We could see actual negative growth in the video game business at some point. He does an excellent job of that, and he also does a good job of laying out ideas, I would call them, for potential growth accelerants. I would argue that one of his eight, for example, as I recall–it was pricing Grand Theft Auto VI at $100 or $120 a unit. I would beg to differ in terms of whether I consider that to be something that will respark growth in the video game business. I agree with his overall point, which is that pricing in the video game business hasn’t kept up with inflation and so on. I also feel like the surfeit of games that are available on platforms like the iOS App Store or on Valve’s Steam has a limiting factor in terms of how much you can charge. There are many substitutes.
Mahoney: Within the games industry, yeah.
Gordon: I start with minutes played or hours played. My sense is, people are doing more gaming, broadly speaking, than ever before. But I’m also spending time in other gamification areas – in health care, in fitness. The issue right now is the monetization in all media has been screwed up. Screwed up in movies in TV. It got screwed up temporarily in music. Everyone I know in the music business was wringing their hands, and then they found out that 99 cents wasn’t so bad after all. Their artists could make money touring. The music business hit rock bottom first and found a way to climb out of it. It’s still not as robust as it could be. As long as people are putting minutes into games and game-like experiences, the money will take care of itself.
Sylvester: Focusing on the experience is the right approach. If you look at other media, like music or film, in some way they are our future. There are new technical advances, new distribution advances, and new design advances that open up new experiences we can offer people. New products. It’s like a new food they’ve never had before. The most valuable thing you can put into the market is something that a lot of people want, but nobody can get anywhere else, because it’s never been made. But there is a point of saturation where you’ve explored everything.
If you look at film, for example, the early history of film, they were coming up with new technologies. Computer graphics and so on and so forth. They had their own false starts like 3D movies. But at this point we understand that linear is linear. Those sorts of shows and films are made the way they’re made. It’s hard to say when this will happen, but it stands to reason that gaming would hit a similar point.
Lasky: I think it’s already happening. We’ve already seen the bifurcation we’ve seen in Hollywood, where the middle of Hollywood has hollowed out. Nobody makes $30-50-75-80 million films anymore. It’s only massive franchise Marvel movies on the one hand and then Anora for $6 million or whatever on the other end. That’s happening in the video game business at this very moment, as we speak.
Sylvester: That’s a problem. For us it’s a mistake.
Lasky: When headcounts are being reduced at the big publishers, those middle-class products are being wiped out. Nobody’s cancelling Call of Duty or Grand Theft Auto or Assassin’s Creed. They’re cancelling the experimental things that are medium budget. Then you have the stuff at the lower end, the Zeekerss games that came out of Roblox, stuff like that. Things that occupy that indie realm and are popping into the $100-200-300 million in revenue generation as indie hits. But the middle has been hollowed out, just like you said.
Takahashi: What was interesting about Ball’s analysis there was that you have people playing all these games, but they’re playing these games for so much longer now. They’re playing GTA Online and staying there. I’m staying in Warzone a few years later. The reality of how much time any given gamer has to try a new game–it’s so much less than you think it is. Maybe 10% of their time or less.
Mahoney: To offer you some perspective on that, Nexon has a game called Maple Story. Maple Story has been in existence for about 23 years now. The last year that I ran Nexon, we grew that game around 30% year over year. That’s 20 years in, 21 years at the time. That’s astounding when you think about it. It was double-digit up for several years before that. It wasn’t like that was a fluke.
You could play a lot of those games for a long time and a lot in any play session. In one respect you’re hitting something important. On the other–I’ll tell you, I looked at 100 proposals for game development a year from inside or outside. Mostly from outside. Easily 95 of those looked very similar to something that came out before. The idea was, you’ll put up a bunch of money and have it under development and end up right in the middle of a red ocean. Our industry, in some respects, does a lot of that.
Takahashi: There are 17,000 titles coming out a year on Steam.
Mahoney: To the point we said before, you’re going to put a lot of money into developing a triple-A game. I’m not talking about casual. For all that work and that effort, all the difficulty of hiring talented people, you end up in a red ocean. It doesn’t work. That explains a lot of the hollowing out. Back to the days of EA, some people who were running studios at the time said, “Fewer bigger hits.” It made economic sense to do that, because the costs were going up.
Lasky: But you’re mortgaging your future.
Mahoney: You’re mortgaging your future. You’re playing a smart short-term game and one that doesn’t work out over the long term.
Takahashi: There was a time when you could look at the time you’re in and look back in time for lessons that would help you. I remember doing an interview with Kabam. They said that mobile games had come to the point where the top 100 titles were not where you wanted to land your game. You wanted to land in the top 10, because those were the only ones making money. The fewer, better games notion that PC and console got to a long time ago was coming to mobile. You could pull that lesson from the past and change your strategy. But I don’t know where we are right now. Does anything really help explain the last two and a half years we’ve had?
Gordon: When Electronic Arts started, three weeks after we raised the Series A, Atari announced they wouldn’t make their quarter because E.T. got more returns than they originally shipped. The games business has been uninvestable for four out of every six years since 1982. Mitch is saying there might be negative revenue. In the year right before a new console came out, we had negative revenue. One of the things that EA had to do was double down on PC at the time, which was counter-cyclical to the console. If you look back, if you can find an authoritative source of global revenue, I bet there’s probably–every six years since 1982, there’s been one to two negative years. The answer has always been new stuff and new platforms, one way or another.
Lasky: I think distribution is broken. I think that’s one of the problems. The reason we’re at this moment that I would consider maybe more of a crisis than Bing would, given his last comment, is that we have very little technological innovation. We have very little distribution innovation. We have very little creative innovation simultaneously. That’s a rare trifecta in the games business that we haven’t historically seen that frequently.
What’s going on with Steam and what’s going on with the iOS and Google Play stores is frightening to me. Just the consolidation at the top, the lack of movement, the lack of new products entering. Matthew has one really interesting slide where he shows the top products for each year. The lack of mobility is frightening.
Gordon: The average of the top 10 in the two major markets in the last four years, they’re franchises introduced nine years ago. We have become addicted to franchises as an industry.
Lasky: You’re now seeing the dark pattern behavior that you saw in mobile for the last 10 years or so showing up on Steam. People are paying now to get listed on wishlists. Which have almost no purchase intent to them. You don’t get an email address. You don’t get anything. But people have figured out that Valve uses the velocity of wishlisting as an early metric that they use to promote before they get actual sales data that they can then replace and use to promote. People are paying marketers to get wishlisting for their games. That’s terrifying to me. When we started to see that kind of stuff happen in mobile, it was the beginning of the end.
Gordon: However, back when we both used to be venture capitalists–we depend on incumbents being lazy. Just because incumbents are lazy doesn’t mean that newcomers always win, but we depend on incumbents being lazy.
Takahashi: Or maybe timid, as Owen would say.
Lasky: And slow to new platforms.
Mahoney: I can tell you–you guys have all run big companies. You spend 100% of your day just trying to keep the wheels on the bus and keep growing. Everybody is hammering you at all times. If you have one bad quarter, it’s not fun. If you have two in a row it’s really not fun. You spend a lot of time just delivering on today’s business. The trick is, you have to have a balance between delivering today’s numbers and delivering tomorrow’s numbers. The CEOs I think we all admire at big companies are the ones who are able to keep that dynamic in balance. The games industry has gotten challenged at that. I thought about this all the time. Whereas from the venture community, you can do something completely new and different.
Going back to your question before about what’s going on, I think about this when I look at–You mentioned Zeekerss, or Minecraft. It reminds me a lot of the Sims. I don’t think we talk enough about some of these games and what happened. The Sims was totally different than anything that appeared before. You have a very differentiated game. But we were able to launch it on distribution with Madden, because we had big leverage in the channels.
Lasky: EA controlled the channel. Everyone looks back at EA historically and looks at the products and whatever, looks at Madden, looks at the licensing. But it was their control of the channel. At Activision in the late ‘90s we would sit around the conference table at the senior management level and Bobby and Brian would complain that EA could put 30% more of any product into commerce than we could. That was an enormous advantage.
Mahoney: And that has gone away. Completely gone away. The channel has taken over.
Takahashi: I’m curious about what this means on the ground level. We’ve been talking a lot about CEO problems. For people working in the game industry, what signals can they look forward to to make themselves survive this rough patch? Two and a half years, 34,000 layoffs. This fellow Amir Satvat who is on LinkedIn, he’s become a sort of game jobs champion, because he has put up all the resources for all the jobs in games that are open in the world in a spreadsheet. You can see all the artist jobs available and figure out what city you want to move to for the best chance of getting a job. He’s doing this part-time in his off hours, trying to keep up with 3,000 game companies around the world, and doing an admirable job. He’s kind of a quant. But still, the game industry doesn’t seem to have been able to take care of its people very well. What can those people look forward to, if anything?
Sylvester: That’s tricky, because if the industry is contracting in general, if 20,000 people are being employed overall, then someone is going to lose that competition. From an individual’s point of view, that grand problem isn’t one they can immediately solve. It’s ultimately–it feels like a zero-sum competition at that point.
Lasky: I think it gets worse before it gets better, and I think it gets worse because of AI. And then I think it will get better. In the short term, though–it’s a mistake that is being made in entertainment industries across the board, in various fields, whether it’s film or music or TV or the games business. That is to view AI purely as a labor problem, as a job loss problem. Because I do think that it has an opportunity to be that next stair step platform enabler that will start creating jobs.
Gordon: I’m reminded–I did time at USC in the beginning of the games program. About a third of the kids would take triple-A labor jobs. Then there was Jenova Chen. You saw Jenova early on. This cat was marching to the beat of a different drummer. I don’t know if it will work or not, but let’s jump in and see. He zigged when everyone else was zagging, or zagged when everyone else was zigging. He got offered a fine job at Maxis to go be Will Wright’s mobile leader, and just thought, “I think I want to zag.” Not a lot of people zagging now.
Lasky: He and I joined forces about 10 years ago and he made Sky. It’s become one of the most popular games in China. He’s made hundreds of millions dollars in revenue and profit. Unimaginable compared to what he was working with when he was making Journey with a small team. Now he has a much larger team. The problem is that as the market potentially shrinks at the top, or growth seems to be slowing down, the venture dollars start drying up. You have this vicious cycle where there may be great ideas out there to be financed, but those ideas are essentially starved of capital. You don’t have those engines of potential hiring that you might have had in the more flush days when Bing and I were operating as venture capitalists.
Gordon: There are plenty of other media publishing businesses where the career path is gone. There’s not really a career path in book publishing anymore. Certainly not a career path in Hollywood studios anymore. It’s all about entrepreneurship. Danny Bilsen introduced us to a couple of producers with Oscars, bankable producers. They said there’s no career path anymore. You have to find a script champion and figure out how to get made. That’s the unbundling of the entertainment business in general. You have to find an idea and stick with it. But it can’t be an idea that requires $100 million. You don’t get to zag and get $100 million out the gate.
Takahashi: I like your point about AI in that it can have that effect of maybe a 1,000-person company can get the same stuff done now with 100 people. But the good thing about it is that a one-person company can maybe do the work of 10 people now. The results you get out of that could be amazing.
Mahoney: And then what happens? Think if you’re running a game team, or you’re in a game team. You have to spin up a lot of people. It becomes an industrial exercise, basically. The best game development that I’ve ever known or seen comes from a process of iteration in some form. It goes a lot deeper than that. Iteration is hard when you have a huge budget, a lot of people, a set of processes that you can’t change that much, and a whole bunch of timelines to go meet. With smaller teams, what you do is you get back to smart people arguing in front of a whiteboard about what the game mechanics are. It’s important to get to. That’s the lesson of the indie world.
Lasky: I would ask you about that. Your nimbleness, your agility with 30 or 50 people compared to 300 or 500 people–with that many people you need layers of management to make it work. You need an HR department. You need benefits and payroll that you can sell to people. All of that takes time away from design.
Sylvester: It’s the management burden that takes away your nimbleness, as you said, but there’s a creative side to it as well. There’s a lot of stuff that you just can’t do creatively at scale. I’ve found this a lot leading the team. For any general concept, there tends to be a gravity well default idea that everyone is pulled toward, because that’s the normal thing. If you do a fantasy game it has to have elves and dwarves and sparkly magic. Sci-fi has to have something like Star Trek or Star Wars. It’s hard to do something really different. If you look at examples that do break out of this, it tends to come from tiny teams, like Zeekerss with Lethal Company. It has a really weird tone, strange art. It can’t imagine trying to get 20 people on board with that idea and actually getting them to make it, much less 200. It would be completely impossible.
If we’re looking past this year and next year into the deeper future with AI and new tooling and so on, it could restructure the industry in such a way where there’s a lot more people making a lot more different games with smaller audiences. As opposed to, oh, there’s 12 huge games a year, everyone plays one of those, and they each had a $200 million budget. Now there’s going to be–if you think there are lots of indie games now, imagine there’s 5,000 games coming out every year and they’re all really nicely produced with all these AI tools, but they’re all made for very narrow audiences. If you have a team of two or three or five or 10 or 20 people, you don’t need to sell many copies to do pretty well. You could just fragment the entire industry in that way. The people who would thrive in that environment would be people who can use those tools and run a creative process, not the kind of person who’s a small piece of a much larger structure.
Mahoney: It would be a much better use of the talent that goes into the game industry. You have to be enormously talented to be in any part of the value chain of making a video game.
Takahashi: I like the notion that people respond when they hit barriers. They find other solutions. The whole Deepseek thing, where the Chinese developers couldn’t get enough GPUs. That’s a barrier and they dealt with it.
Lasky: Stressed grapes make the best wine.
Takahashi: I wonder what you guys think of this, where–Amir Satvat again, with his stats, believes that more hiring is happening as of January than firing in the game industry, for the first time in 30 months. We have one month as a hopeful data point. He think that it’s not evident, because the growth around the world in jobs is not even. Places like China, on the success of Black Myth Wukong, they’re more confident that their developers, who are cheaper, are just as capable as others.
For all the people pouring out of these American game schools, according to Satvat they have a 1% of getting a job in their first year of looking for a job in games. So what happens? The solution I see is going toward making games for Minecraft, Fortnite, and Roblox. That’s the new ground floor for getting into games. What do you think?
Sylvester: That’s been around for a long time. People have been making indie games, and before that it was mods. I started in mods. You can still make interesting games. You don’t have to be doing it in Roblox and Minecraft. We have good tooling these days. You can do a lot with Unity and one person.
Lasky: Early mobile games had 10- or 15-person teams.
Sylvester: Or less. You can get a lot by being tiny. It gives you a lot of freedom. For a certain type of person, that’s still a tremendous opportunity.
Lasky: We have to rethink triple-A. That’s a real conclusion.
Mahoney: What is the definition of triple-A?
Lasky: I do think the model the industry has operated under historically–I call it the campaign nature of triple-A, where you raise an army and go on the march. I did a fireside chat with the Riot founders at one of their management offsites, on the 15th anniversary of my investment in League of Legends. I think they expected me to come in and tell stories from the good old days. I came in and said, “The way these businesses are currently being run is unsustainable and untenable. This idea of needing 500 people and five to 10 years to make a product is no longer a viable strategy.”
Mahoney: What did they say when you said that?
Lasky: I think they agreed, broadly. They’ve felt some stress around their limited product release slate. They’ve essentially gotten three products out in the last 12 years.
Takahashi: I was noticing Bioware and EA. When EA bought Bioware they were able to make seven games at a time. They just announced, after shipping a lackluster Dragon Age game, that they were going to go down to making one game at a time. I’m pretty sure they have a lot more people working for them than when they were making seven at a time. It’s crazy and it’s sad. That’s a dose of reality, I think.
Sylvester: It’s pretty wild to note that some of these modern ultra-triple-A games that are being made with hundreds of people for five years are still being compared directly, and not always favorably, with games like Skyrim that came out more than 10 years ago, that were made in a few years with 100 people. What did we get for all of that? I ask that question on the creative side. Skyrim has some jank. It doesn’t look as pixel-perfect as some modern games. But it’s still an amazing experience. It’s super fun. It gives you stuff that you don’t get in this modern environment where we demand that everything has to be perfectly animated. You take away the player’s freedom to screw with whatever’s going on there.
Lasky: I don’t think consumers are as concerned about it as they used to be. It’s a small group of vocal people in the games industry who are still pixel-focused, who are still paying for pixels.
Sylvester: It’s always been an issue with the way decisions are made in these corporations. They’ve learned to optimize these games for demo value instead of play value. Demo as in, what can we show in three, five, 10 minutes to a decision-maker in a board meeting somewhere?
Mahoney: The demo starts the greenlight process.
Sylvester: The demo starts, and then you see this rabbit. It animates perfectly. It sniffs and looks around. But the player can’t touch the rabbit because if they did, everything would break. Interactivity goes down. Twenty years ago the rabbit would look like crap, but you could do whatever you want to it. That’s actually more valuable to the player. Creatively there’s a place for perfectly rendered everything, but accepting some jank–it doesn’t look good on a demo screen, but it feels great when you’re playing.
Lasky: Look at Minecraft and Roblox.
Sylvester: Those are way more extreme examples.
Lasky: But still, they’re extraordinarily janky in the sense of–they’re Lego-like, very blocky, 8-bit-era retro. They don’t skip a beat. People love them.
Mahoney: That goes to, why does the game industry exist? What are we trying to do? We’re trying to have fun. All the other stuff that you talked about is all the stuff that we spend a lot of money and time and effort thinking about, but it doesn’t do the one thing that we all want, and why we play games, which is to have fun. Triple-A is not defined by the polygons on the screen. It’s defined by how fun it is to play for a long time. Lethal Company is a really good recent example of that. But Minecraft is the ultimate example. It looked like it came out in 1988, and it was insanely fun.
Sylvester: There’s this cognitive bias that happens when people evaluate a game. I call it choice blindness. When you’re playing the game, you’re having this psychological experience of playing. You feel like, “I’m this character. I’m here.” You’re thinking about all the things you could do. All those possibilities that you could do, but didn’t do, they still have an effect on your experience. You still feel the emotions. This could have happened, but it didn’t happen. I didn’t choose to do that. That’s important. You’re going to play through and create what essentially looks like a single-threaded video — A happened, then B, then C — but the experience of creating that with full choice to go in a million directions is much different than playing something that’s super railroaded. I think that gets lost a lot of the time.
Now we have these games that look amazing because they’re railroaded, but they lose that vibrancy. Also, they demand this incredible level of production, because they’re trying to make that video look so good. They’re not obsessed, at the corporate level, about how to make this more and more interactive. Imagine you made Skyrim, but put 10 times the budget in it, and spent none of it on any kind of visual improvement. All of it on interactivity and psychology and AI, how you can affect the world. I don’t know if that’s ever been done at that scale. But it would be fascinating to try that.
Lasky: The dragons look so cool in the ad, though!
Gordon: If you want to look for metaphors, think about commerce. Within Amazon, there was a bunch of consternation because jobs were lost in shopping malls. People kept buying stuff. They actually bought more stuff and it got to be cheaper. To some degree, the game publishers that are most famous, the big ones, are kind of like shopping malls. Maybe the mobile business was Amazon. Roblox is Shopify. Nobody in commerce believed in Shopify along the way. As a matter of fact, Jeff Wilke at Amazon even shut down Amazon’s “web store by Amazon” and told all the customers to go to this crappy little company called Shopify, because they weren’t going to support that.
Technology has a way of obsoleting old business models. We’re looking at the beginning of the obsolescence of a particular business model. Maybe the second business model. The first was the packaged goods business. We saw that get started. Mobile–within EA there was no belief that mobile was going to matter. There was no belief that casual web games were going to matter. The company suffered for about five years because of that. This is a normal pattern.
Takahashi: I like how we’re all circling in on fun as a solution to a lot of these problems. We’re business folks here. Owen, I think you feel like we’re often pitting business interests against creativity. Do you feel like that’s a false dichotomy?
Mahoney: I definitely think it’s a false dichotomy. I agree 100% with the distribution issues and the reconstruction of the industry that needs to happen on the distribution side, but one of the reasons why I’m actually very excited about the future is I think we’re starting to talk seriously about this exact problem in the industry. New technology is enabling this.
Two big things are happening right now. One is the rise of AI, which I think represents huge opportunities to grow our industry. It enables small teams to do so much more than they could before. That’s sincere. I think it’s going to be huge. It also enables games to become–to scale the whole team. For example, in a live online game you can scale that much better because you have AI. We experimented with this a lot.
But I think when you can have smaller teams, it brings creativity back into the process. As a customer, I wish there were more really good and interesting games that made me think. The thing where you sort of squeeze the situation–the situation looks really pressed. That point is where you start to get creative about how you do things. Taking out this archaic idea that we need an industrial process to create a triple-A game because that’s how they do it in Hollywood–that’s archaic, and we’re finding ourselves at the end of that. We can do it in a different way. We’ve seen enough good examples that happen anywhere between the one person to 70-person level where you get really good games. That’s going to be a renaissance for the industry.
Lasky: I do think that business and fun are not antithetical. At all.
Sylvester: You’re selling fun.
Mahoney: You’re in that business. If you don’t deliver that–
Lasky: You can’t sell it if it isn’t fun. I remember when we were friendly competitors as venture capitalists. I remember talking to you about Clash of Clans. You were obsessed with Clash of Clans. It wasn’t even an investment of yours. You were trying to think through, deeply, how it worked and why.
Gordon: I was happy to keep paying for things.
Lasky: Exactly. People like us, who were operating successfully in the business doing landmark deals like Zynga and others, we were obsessed with fun. Trying to figure out ways we could make that more scalable and more available and to take advantage of these new opportunities, arbitrage opportunities in the market to get these things distributed to people that historically–little companies would have been completely priced out of the market because they would have had to go to a big publisher and give up 70% of their revenue to get access to the shelf. That doesn’t happen anymore.
Again, I think that maybe in really big companies, where they’re playing the spreadsheet for lack of a better term, there is a bit of a greater gulf. But at the level of investment we were operating at, fun was the most important part.
Takahashi: I remember you saying a lot that the most creative people in your company would pitch you, as the CEO, and they would pitch you the game they thought you wanted to see.
Mahoney: They would definitely do that, and I would say, “Don’t give me that. I want to know what we should be playing and what we want to play.”
Lasky: As venture has gotten more diluted, there are more new people in the business. There are more game-specific funds. Some of that has started to happen in venture. Toward the end of my venture career, before I retired, I was starting to see what looked like internal pitches.
Mahoney: Fundable games, rather than fun games.
Lasky: Exactly. Low stakes. Reasons why this was a lower risk. I would always say, “I’m a risk seeker.” If I can’t take a big risk I’m not going to be able to get out of your red ocean.
Sylvester: Sometimes you can find those opportunities that look like a bag of gold sitting on the ground. Something that you feel very confident is going to work, and for some reason no one else has done it in the way you think you can. Those are what I’m looking for all the time.
Lasky: I only see this now through my friends, who occasionally show me stuff and ask for my opinion. Friends in the venture business. They’re getting pitched by former senior executives at companies that have been laid off. They’ve had a dream game in their drawer for years. They’re now out looking for $30 million to $100 million in funding in order to bring that game to market. To me, that’s just radioactive. I wouldn’t go anywhere near that stuff.
Mahoney: They’ll end up in the same red ocean. Same big budgets, same massive organization, same industrial process.
Lasky: And also a real misunderstanding of where value is created. The reason publisher funding exists and works is because the publisher, through their own public equity, aggregates value from the revenue generated by the products that they acquire or license. When you’re independent and you’ve raised venture, the product isn’t what makes your company valuable. It’s the company that’s meant to be valuable. You have to look for a way to create value in the equity of your company, and then potentially get it liquid. That distinction is utterly lost on a lot of creatives who are pitching to venture capital.
Takahashi: We’ve talked a lot about red ocean. Where is the blue ocean, from your perspectives?
Lasky: Roblox is producing a lot of interesting blue ocean. I haven’t seen as much come out of UEFN as I hoped. Most of the content I’ve seen come out of UEFN has been pretty mundane. I don’t know if you guys have experienced anything different.
Mahoney: It’s been exactly the same. I think they’re pretty limited creatively.
Takahashi: One of the interesting things on UEFN, a lot of the creators were getting into financing their own games. They’re collecting their own teams and doing so well–Typical Gamer was one with 25 million followers. He’s hired his own team to make a bunch of UEFN games.
Mahoney: To go back to your point, what is a blue ocean? The ultimate example is Cirque du Soleil. One thing they did, they took the animals out of the circus. It turns out animals were both the most expensive part of the circus and the part that turned the most people off. They brought in the jugglers and acrobats, who everybody loves more than anything.
Lasky: And they glammed it up. They turned it into theater, as opposed to this grim smelly thing that you associated with Barnum and Bailey era.
Gordon: Scary clowns.
Lasky: They turned it into an event.
Gordon: The animals commiserated. “Lot of us are losing our jobs.” Nobody told the lions to learn to juggle.
Mahoney: So what do they do? They reconstructed the whole thing. Why do people really come here? What’s really fun about this experience? Again, thankfully we’re starting to have this conversation more. When you and I last talked, we needed a lot more of this. We needed to spend more time thinking about the Sims, Minecraft, GTA3. I’d put Rimworld on that list, Lethal Company. We did this at Nexon. Stuff that’s way out there, as far out there as you can get, either within your genre or creating a whole new genre. Focus on the fun part. Then put it out there. You not only don’t need a lot of money to do that. You also don’t want a lot of money, to Tynan’s point. That’s the Cirque du Soleil blue ocean opportunity for our industry.
Lasky: I think we’re going to see, coming out of what I’ll call the platform aspect of AI–just to set the table a bit, there are three ways I think AI is going to show up in the games business. The first way, and the most mundane way, is that it’s going to create better versions of things we already see in games.
Gordon: The new outsourcing. Cheaper outsourcing.
Lasky: Well, no. That’s the second one. The first one is basically hyper-intelligent NPCs or help systems that guide you through the game with AI, that are context-aware, that you can talk to. That stuff is not that interesting to me, frankly. I think we’re going to see a ton of it. The second thing is what Bing’s talking about, which is this idea where you can see AI as a force multiplier. It’s going to create a real productivity enhancement in games at the production level. Maybe even at the live ops level. Coding tools. Art generators.
Sylvester: What’s interesting about that is not that it lets you make the same games cheaper, but it lets you do more experimental things. You have more shots on goal, more chances of finding that blue ocean.
Lasky: But I think the blue ocean–there’s a third bucket. That’s the bucket where we’ll really see the blue ocean break out. That is the thing that you couldn’t do before that you can now do with AI. Some of those things may look really weird to us. Some of those things have in the past, when we’ve had those inflections. They may look interactive, but not like conventional games. Those are the things that I’m looking for, that I think are going to be exciting, and that may produce those kinds of real blue ocean opportunities to create completely new companies.
Mahoney: The analogy to what you’re saying is what happened at the dawn of the internet. It was the mid-’90s. Most people couldn’t get their heads around what hypertext was. It was hard for them to compute what the Internet really meant. Take a newspaper and just throw it up on the screen. You have a pixelated New York Times or Wall Street Journal. In those days you couldn’t imagine social networking or streaming video or Wikipedia.
Gordon: Couldn’t imagine UGC.
Lasky: Think about this. Unboxing videos on YouTube are a multi-hundred-million-dollar advertising–
Mahoney: Who would have thought unboxing videos would be a form of entertainment?
Lasky: Exactly! If you had gone to somebody in 2000, five years before the launch of YouTube, and said, “In five years unboxing videos will be a source of advertising revenue,” people would think you were insane.
Gordon: A guy named Kevin Kelly, who I like a lot, was an early writer for Wired. In 2005 he looked back at 1995 and all the headlines about the Internet. He said that in 1995, wags correctly predicted all the categories of businesses that would happen. They didn’t predict the size. But the one thing nobody predicted was the B-roll. In 2005 more than half of web page views were amateur created. UGC has been a shocking aspect of internet usage over the last 30 years.
Sylvester: The general principle is that when there’s new tech, and you can see it coming–if you go back to the ’80s, or earlier in science fiction, people could imagine that you would have a global communications network. You could read the newspaper on it. There are straightforward things that they understood, and those did turn out to be true. We do have Zoom calls and video calls. You can read the newspaper. But those didn’t turn out to be the stuff that was important. The stuff that was important was social networking, these sorts of second-order–search turned out to be incredibly important.
Gordon: Probably the best business model since religion.
Sylvester: When I first heard about video game streaming, I thought, “Why do you want to watch someone else play a game?” It turned out to be tremendously important. It’s a mixture of–the stuff that is obvious will be true, but it probably won’t be the big, important thing. It’ll be something else that will have multiple layers of indirection from here to there.
Gordon: But the answer is that the blue ocean is new shit.
Sylvester: New shit that people actually want.
Mahoney: New shit from a new group of people, in most cases.
Takahashi: There’s one hopeful thing about the growth of the external development industry. Keywords has 12,000 people now. Virtuos has 4,000. They can be applied to whatever is good and fun and interesting, no matter who it’s coming from. EA can use these people if they have a game they need to get even more people behind. But so can smaller companies. They can tap lots of humans who probably are not going to be eliminated by AI. They can be brought into a game to finish that game and make it shine. That’s a positive thing. I do wonder if, in the solution space, we have a way to get to positivity about the game industry. I don’t know if there are more things you think of that maybe are helpful, like the modularity of the external development industry.
Mahoney: I think it’s a good point. I think there’s a sort of uber-point on top, or a meta-point, where it’s really easy to see how things change and new technology makes bad news for the existing structure. What’s harder, for the reasons we were just talking about, is to anticipate all the new stuff that comes out, the second- and third-order effects. We can’t predict what the unboxing video equivalent will be thanks to the dawn of AI. We don’t see all the people who are making unboxing videos. We don’t see that today. What we do see is what’s at risk in the existing system.
Lasky: When me and Eric Goldberg and Ilkka and all these people were making WAP games in 2000 on Motorola flip phones and Nokia candy bar phones, the idea that that would become half of the video game business’s $200 billion in revenue is insane. People I knew in the video game business when I quit my extraordinarily high-paying and very important job as head of studios at Activision to go start an idiotic mobile game company–it did not compute. And yet that’s what happened. That’s the glimmer of hope that I have for the video game business. We can’t anticipate these things. These things are black swan-like events.
Mahoney: It creates a whole new class of people. Let’s remember. The dawn of the Internet tripled the size of the industry. The dawn of mobile tripled the size of the industry. It became a lot bigger, with a lot more people. You just couldn’t see exactly how it was going to play out.
Takahashi: My definition of back to good times for the industry would be, we see revenue growth. We’ve stalled on that. We want to have that revenue growth. We also want to see job growth at game developers. People who are happy, who want to be in this industry, rather than deciding that they have to get out and go into something stable. And then acceptance of new technology. AI, other things. Rather than rejected, automatically assuming that blockchain is just out there to scam you–
Lasky: That’s the general perception. You’re absolutely right.
Takahashi: If we can get to these things growing at the same time, that feels like success.
Lasky: The only piece of that I would take issue with is the labor piece. Again, I’ve seen this in Hollywood as well. There’s a real fleeing from Hollywood at the moment. I was talking to a friend of mine who I’m working on a company with. He’s a very well-known producer in Hollywood. I said, “You need to hire some development executives, because we’re not getting scripts through fast enough to production.” He said, “They’ve all gone to games in the last five years. They’re all gone from Hollywood.” Games is now experiencing its own flight.
It may be that we were overstaffed coming out of the pandemic, perhaps, when we reached peak old-school triple-A games, where 300- to 500-person teams were the norm and dinosaurs roamed the earth. It may be that the period we’re going to go through now will result in an overall smaller, but healthier industry from a labor perspective.
Gordon: You want to DOGE the games business.
Lasky: No, I don’t. Please don’t.
Takahashi: The idea, at least, that these people are useful is a good one. One of the companies that’s coming to recruit at GDC is Duolingo. They’re adjacent to the game industry, because they need people who understand game engines and fun ways to engage and entertain their learners, so that they stick around longer. Who’s better at that than game developers? I would hope that as this game technology spreads everywhere, people can then find that work. If not in the game industry, then adjacent places.
Mahoney: Imagine an industry that’s empowered to do the work that’s the hardest, but requires the most amount of people, thanks to new technology. You can empower small teams to do very creative stuff and be very close to the development of the product. That seems like a better job for people than the factory work that ends up being a lot of what the existing game industry is doing on a 500-person triple-A game.
Sylvester: A lot of that work could take forms that don’t seem obvious from the point of view now. The analogy I might use–we could say the film industry is a certain size, but if you add all the YouTube creators and Twitch streamers and all these people, they’re creating video entertainment. Maybe that’s a new area. People are making more video than ever. They’re not making what we could call movies, or that we would recognize as such.
Mahoney: But it’s sure entertaining.
Sylvester: If you look at gaming, if you imagine that some level of future technology will permit people to create experiences very cheaply and very customizably, that are compelling to interact with, then you could see a tremendous variation of people doing Duolingo-type products all across the spectrum, whether it’s something that connects you with your pets or helps you learn a language or puts you together personally with your grandma. If it gets cheap enough, you’re at a point where you’re hiring a wedding photographer to make a game just for you to hang out with your wife. You want a personalized adventure to go on? As the production costs go down, the demand comes up to meet it, to some degree. It’s restructured very aggressively.
Takahashi: I might amend my comment to be then, not just creating jobs for the sake of creating jobs, filling up the rosters of very large companies, but creating satisfying jobs.
Lasky: Tynan’s point is super important in that regard. I do think that’s exactly what happened in linear. A whole new class of people entered and built bottom-up businesses as individuals, or as small companies, because they took advantage of–I would say the enabling technology there was distribution. That’s the one thing I have a bit of fear around, because distribution has so consolidated in the video game business to date. Valve has gotten to be, I think, overly important to the launch of PC products. Obviously the moats that have been built around the consoles create distribution barriers. iOS and the Google Play store are just a dog’s breakfast when it comes to trying to get noticed above the thousands of products launched every month. I believe that as well as innovation on the interactive side, on the product side, we absolutely need to accompany that with innovation on the distribution side in order to see that happen.
Takahashi: Does anyone have something they really wanted to get across left in them?
Gordon: Talking about the oligopoly of distribution right now, there are still five players who are grinding all the profits out of the creators. Back in the early EA days, Toys R Us accounted for 22%. Radio Shack/Tandy only carried five games a year. If you wanted to be a top five PC game you had to get in there. I’m always nervous about blaming distribution for the creator’s problem. Distribution ends up taking 30%. It used to be 50%, until they priced down to take 35%. With Amazon it’s maybe 25%. Somebody’s going to build a business and take 30%. You can go direct to some people if you have those kinds of skills. That being said, Reid Hoffman looks at every business that starts out with distribution, and he’s smarter than me.
Takahashi: Are you saying that we have a creativity problem?
Gordon: The very first GDC that I went to was Chris Crawford and about 40 people in a bad hotel ballroom. Every developer there complained, “Retail is screwing me up. They don’t sell my product.” I said, “You don’t understand. That’s not the way retail works.” What retail does, you can go in on spec and they’ll pay you when they want a new shipment. It’s not retail’s job to sell your stuff. We had a little time at the beginning of the app stores where they actually tried to give free promotion, and they got rid off all that. Facebook, when it launched, gave away free promotion and drowned it all out. Distribution is always going to be a grind for creative people. It’s kind of their job to try to get more than their fair share of the profits.
The issue that the Internet solved for us is to get customers to pay for hours, which didn’t work in packaged goods. We have this whole new business model of connected games with downstream monetization, or mobile with downstream monetization.
Lasky: It’s an elasticity problem. Historically the packaged goods part of the games business was this inelastic thing where if I wanted to play a game for 10 hours, I paid $60, and if Bing wanted to play it for 15,000 hours he paid $60 too. We fixed that with the internet and with free-to-play by and large.
Sonic the Hedgehog has done a billion dollars so far with the films and other properties. What would you say about the craziness of something like that or Zelda or these other properties, and then the generational effect? I showed my three-year-old Sonic and he’s super into it. My 13-year-old nephew is super into it. When you talk about long-term value creation and IP being so critical to that–
Lasky: It’s interesting that in the year Barbenheimer happened, the number three-grossing film globally was Mario.
Gordon: By the way, talking about Disney franchises, I remember when Michael Eisner came in. Everybody could prove that Disney properties had no forward value. He didn’t change distribution. He did windowing.
Lasky: I was going to say, that kind of changed distribution a bit. I was there during that era. I can tell you, the windowing helped a lot.
Gordon: But that was a marketing trick. They still had to sell it through the same stores as everyone else.
Mahoney: Describe windowing for us.
Lasky: They would put out Bambi, for example, and have it on the shelves. They would announce that they were going to take it down and not offer it again for seven years. If you had a child, you either bought it or they would never see it while they were still a child.
Gordon: It was a marketing hack. They didn’t get rid of Wal-Mart.
Takahashi: If you fast-forward to Disney now, last year Bob Iger got on the phone to explain why he was putting $1.5 billion into Epic. He said that someone came to him with a demographics chart and said, “Gen Z isn’t doing Disney. They’re in Roblox all the time. They’re not watching TV. They don’t know who Disney is. In a generation from now, we are gone. As a brand nobody will know us.” That’s the reason they invested in Fortnite.
Mahoney: That might be the right framing of the problem, but not necessarily the right solution.
Gordon: Do 10-year-olds no longer care about Frozen?
Mahoney: I’m not sure about that.
Takahashi: But you have to continuously pay attention and change.
GamesBeat: Talking about job creation, if you look at a guy like Speed who’s made $10 million as a streamer–with this smaller studio model, maybe you have a studio of a few people, and you go partner with someone like that to bring games forward. There are new ways to create that marketing push that didn’t exist before.
Lasky: We’ve seen it happen. That’s how Apex Legends launched, with a very clever influencer campaign based around streamers.
Mahoney: You made that point about Minecraft. It launched concurrently with YouTube, essentially.
Lasky: There have been 1 trillion views of videos associated with Minecraft since its launch. Minecraft video creators have generated–there are hundreds of millionaires who have been coined out of just being a linear streamer of Minecraft.
Gordon: The total market cap of all the creators on Roblox probably doesn’t add up to the market cap of Minecraft YouTube videos.
Lasky: It’s an astonishing phenomenon. You think of all the free marketing, the free tutorials, the enablement that was generated by the community around this product, that the product benefited from. It’s absolutely Nirvana from a business perspective.
GamesBeat: That’s what I was going to say about the Lego movie. It grossed $450 million, but it also boosted Lego sales 25%. You have this entire new way to make money off of the people who are playing, and then also want to consume in other ways. That seems pretty exciting.
Mahoney: That’s what they call the media flywheel. Walt Disney was the first person to really hack that up. Disney under Iger 1.0 was really good at that. You’d go on the boat, stay in the hotel, go to the theme park, watch the movie. In the old days you’d buy the record. That still exists. It’s just in different forms.
Gordon: Everyone thought the original Disneyland was crazy. He couldn’t raise money for it. The TV show he did also seemed out of the box.
Sylvester: And that made it a multigenerational thing. Now you have the entire family, from grandpa down to the baby, consuming all these products together. That’s powerful.
Lasky: As a former employee, the theme park experience is vital to synergy. Synergy is the big concept at Disney, the thing that links together all these disparate elements. The theme park is the center of all of it.
Gordon: Pokemon Go Fest is also really important to the sustainability of Pokemon Go.
Takahashi: The encouraging thing, as we bring this to a close, is that it’s still possible out there for a solo creator to be the next Disney.
Sylvester: There’s that. I think there’s another encouraging thing in the long term, which is the general expansion of the audience of games. As it stands, it’s really just people roughly 45 and under who were young when games became a widespread, playable thing. That’s only the west. In the east they’re even younger than that, or in other countries. You’re seeing this wavefront of age that’s moving up. By the time the people who are 45 now hit 80 and 85 and they’re in retirement homes, they’ll still be playing games.
Lasky: I’m 63. When I started gaming it was a fringe nerd activity. You had to build your own PC. Now it’s utterly mainstream.
Gordon: Boys that turned 16 after 1987 when Nintendo started working, and girls that turned 16 after 1999-2000, when things like the Sims started coming in.
Sylvester: People are living longer and longer, and that wavefront is moving forward. Old people aren’t always that quick. Sometimes they want to sit around with their friends and have some fun in a relaxed environment.
Mahoney: And they’re looking to do things with their kids, too.
Sylvester: I think that’s going to be a multi-decade driver of growth.
Takahashi: Some of you have retired. I wonder if you’re getting through your piles of shame, playing everything you ever wanted to play.
Lasky: I’m playing fewer things longer than I used to.
Sylvester: I never had any shame.
Mahoney: Yeah, I never had any shame. Shameless gaming.
Lasky: I was more of an omnivore when I was younger. I would play things a bit and get a taste of them. I find myself gravitating toward fewer, but longer-term projects.
Sylvester: I’m more social now. Almost everything I play, I try to play with other people I know.
Mahoney: I play a lot with my kids, so if they’re playing it–but going back to your point before about multi-generational–I’ll tell you a story that really speaks to this. The best single gift I ever got in my life was Father’s Day when I was traveling a lot. I was at Nexon. I missed my kids a lot. My son texted me. He was about eight at the time. He said, “Dad, I have a present for you. Go on our Minecraft server.” He made this house that said “Daddy’s House” on the outside. It’s kind of a corny story, but it illustrates what you’re saying. It was meaningful to me because I really missed him, and he missed me. He made his house right next to it. It had books on it, because he knew I like books. It had a railroad that went off into the hills in our server, so that we could play together. That was his way of getting agency in his world.
Source link
