Podcast Summary
The Inspiration for Gamecraft - A Podcast on the Business Side of the Gaming Industry: Gamecraft provides a unique perspective on the gaming industry, highlighting the importance of collaboration between creative minds and business experts to build successful games.
The hosts of Acquired are trusted because they are able to tell a story that is actually close to true and accurate to the facts. Mitch Lasky and Blake Robbins joined the podcast to talk about their new podcast Gamecraft that chronicles the history of the gaming industry from a business perspective. Mitch explained that his inspiration came from The Genius of the System by Thomas Schatz which took the business side of the film industry back from the 20s to 50s and showed how a lot of what we understand to be the creative part of the business really was a collaboration between creative people and business people. In the same vein, Gamecraft shows what happens on the business side of the gaming industry and how it informs the creative aspect.
Collaboration and Innovation: The Keys to Success in the Video Game Industry and Beyond.: Collaboration between creators and businesses, innovation, and utilizing new mediums like podcasting are key to success in the creative industries. Engaging storytelling and unique perspectives can captivate audiences and lead to new opportunities.
Success in creative industries requires a collaborative approach between creators and businesses. The video game industry is a great example of balancing business models and creative content to keep consumers engaged. Limited inventory releases and planned obsolescence are tools that have been used successfully in the industry. The Gamecraft podcast used a unique approach to retell the history of the video game industry through different lenses, providing an interesting and engaging perspective for listeners. The collaboration between Mitch and Blake on the podcast was born out of their shared passion for the industry and their different generational perspectives. The podcasting medium has offered a new way to share and consume content, bringing new opportunities for creators and consumers alike.
The Evolution of Gaming and its Impact on Society: Gaming has evolved from its early days into a massive industry that includes consoles, PC games and casual games, becoming a part of daily life for people of all ages and backgrounds. The rise of free-to-play gaming has revolutionized the industry and changed how games are consumed, played, and made.
Gaming is not just for teenage boys; it has become a ubiquitous human activity that has evolved from its geeky beginnings to embrace casual gaming as a driving force in the industry. The rise of free-to-play gaming is also a revolution that has changed how people consume, play, and make games. Mitch's multi-generational perspective on the industry, starting from Disney Interactive and the early days of consoles, is a reminder of how much the industry has impacted entire generations. Gaming has become a massive industry that includes consoles, hardcore PC games and casual games like Candy Crush. It is an all-encompassing activity that has become a part of our daily lives.
The Impact of Forever Games and Platform-Based Publishing on the Video Game Industry: The use of persistent play patterns and internet platforms are disrupting the packaged goods industry. Emphasizing storytelling with improved graphics and depth over time makes games feel new yet familiar. Statsig provides real-time visibility to determine feature impact.
The video game industry has become more durable due to Forever Games and platform-based publishing. Forever Games involve persistent play patterns that are packaged differently, while platform-based publishing leverages internet platforms to massively disrupt the packaged goods industry. Miyamoto's genius was in telling the same story over and over again, improving graphics and depth each time to make it feel new and old at the same time. Grand Theft Auto 5, released years ago, is still played because it has a similar play pattern and story. Statsig is a modern version of Facebook's experimentation platform, providing real-time product observability to tie new features to core business metrics and determine their impact.
Statsig: A Platform for AI Feature Testing and Data Ingestion: Steam's success shows the potential for platform-based business models. Companies can still introduce new paradigms in the industry and potentially disrupt established players, such as Nintendo.
Statsig is a platform that companies of all sizes can use to test AI product features, roll out new features and ingest data from data warehouses. Steam was built as an updater for the Valve team's games, but they added features incrementally over the next decade such as a community, app store, and mods. Now, it's an $8 billion a year business. Many companies such as Activision and EA have their own launchers, but they still rely on Steam because it's the go-to place. There is still an opportunity for a new paradigm in the platform-based publishing business model. The next one to go could be Nintendo, who is waiting for their lead to boil off before entering the app store business in a meaningful way.
The Value of Cloud Gaming for Game Developers and Casual Gamers: Cloud gaming presents a new opportunity for game developers to expand their audience and lower customer acquisition costs, while also providing casual gamers with access to high fidelity games without owning expensive hardware. Successful implementation and platform-based publishing can lead to a competitive advantage.
Cloud gaming is finally becoming a reality, and it offers a compelling value proposition for gamers who do not have a gaming PC or do not want to go deep into specific ecosystems. With the expansion of the audience, cloud gaming presents a real opportunity to aggregate demand and lower customer acquisition costs for game developers. Cloud gaming can change the business model of the games industry by unlocking a new market of casual gamers who want to play high fidelity games without owning expensive hardware. The success of cloud gaming depends on successful implementation and matching user demands with technological opportunities. Nintendo is a good example of a platform-based publisher that can leverage its pre-qualified audience to give them a competitive advantage.
The Importance of Backwards Compatibility and Openness for Nintendo's Switch: To improve third-party revenue and create a compelling experience, Nintendo should focus on making their Switch super backwards compatible and open an app store. Embracing openness and leveraging assets are key to success in the console industry.
Nintendo needs to make their Switch super backwards compatible and open up an app store to improve third-party revenue on an active user basis. This will create a compelling thing for third-party developers and console users. Embracing openness and cross-platform play is the new Nintendo. The console industry hasn't had many revolutionary business models, but Nintendo's strategy of making incredible games has worked for them for the past 40 years and is something they should continue. Sony's dominant market share could lead to less embracing of openness, unlike Nintendo and Microsoft. The console business is essentially about selling physical hardware for a box, whereas revolutionary business models are more interesting. It's about leveraging assets to generate profit.
The Business Potential of Cross Play Console Games: Investing in platform-based publishing and committing to cross play can lead to greater monetization in console gaming, but understanding demographic preferences is crucial. Free-to-play games achieve high adoption rates, but may not guarantee sustainable revenue.
Console games with cross play have the potential to monetize better than non cross play games. Console games have highly committed user bases with easy payment rails and distribution making it a lucrative business. Companies that embrace being a platform-based publisher and invest deeply in it tend to be successful in the gaming industry, as seen with Tencent owning a significant percentage of successful gaming companies like Epic and Riot. Companies need to have credible plans and a commitment towards being a platform-based publisher to succeed in the gaming industry. Free-to-play games on console achieve high attach rates, but the willingness to pay cannot be compared to getting somebody from zero to one on a free-to-play game. Demographics play a crucial role in the success of console games.
The role of intentionality in platform-based publishing and the success of companies like Thatgamecompany: Intentional game design and platform-based publishing can lead to success, as demonstrated by Thatgamecompany. Investors can use PitchBook's new feature to assess a company's potential for a successful exit. The industry is shifting towards platform-based publishing.
Intentionality is crucial when setting out to become a platform-based publisher, as evidenced by the challenges faced by Discord and Epic in their attempts. However, companies like Thatgamecompany have shown promising signs of success by intentionally designing their games to be interconnected in a digital theme park-like manner. PitchBook's new Exit Predictor feature, based on machine learning, can help investors assess a company's likelihood of success and potential for a successful exit. While traditional studios like Blizzard aim to release a game every few years, the shift towards platform-based publishing is becoming increasingly prominent in the industry.
The Importance of a Sustainable Strategy in Funding Game Studios: Investing in content and game studios should go beyond just making and selling games. It should focus on sustainability, platform expansion, and the enrichment of human emotions. Venture capitalists should fund creative minds with transformative potential, like Jenova Chen.
Investing in content is not the end goal but a means to an end. It should have a strategy that transcends platforms and enriches the human emotional spectrum. Jenova Chen's pitch for 'Thatgamecompany' focused more on emotions and expanding the horizon of video games rather than just making a game for a specific platform. It took Riot Games 10 years to become a platform-based publisher, but they eventually got there by focusing on building a billion-dollar-plus annual revenue base and expanding their reach globally. Funding game studios should have a sustainable business strategy that promises value generation beyond making and selling games. Venture capitalists should aim to fund creative minds with the potential to change the industry, like Jenova Chen.
The Importance of Distribution Leverage for Profitable Game Studios: Creating a successful game is not just about having a great product, but also understanding your audience and having a solid distribution plan. To attract venture investment, focus on building a unique "forever game" with distribution leverage to justify the investment.
Distribution leverage is crucial in building a profitable venture-backed gaming studio. Even the best game ever built won't succeed without a solid distribution plan. Understanding the audience and identifying a pent-up demand for a product can be a valuable customer acquisition advantage, as demonstrated by Riot's growth hack of buying the Defense of the Ancients websites. Mitch advises against making the same thing over and over again, instead focusing on building a 'forever game' with a unique concept that can leverage distribution leverage. Personal investment may be feasible for smaller projects, but venture investment requires sufficient distribution leverage to justify the investment.
Importance of prioritizing product market fit, distribution advantage, and audience expansion for success.: Clear product market fit and reinvestment of profits are key to long-term success. Saying no to certain opportunities and leveraging distribution advantage can create dominance in the industry. These principles apply to investing strategies beyond gaming.
Clear product market fit does not always translate into success if the existing players fail to prioritize it. This creates an opportunity for a new company to come in and become the best in the world, as was the case with Spotify's dominance in the podcasting industry. Companies that can leverage distribution advantage and reinvest profits organically tend to be more successful in the long run than those that rely on paid customer acquisition, which can become addictive and unhealthy. It is also important to know what to say no to, as expanding audience is crucial for success. These principles are applicable beyond the gaming industry and can inform successful investing strategies.
Live Operations and eSports in Free-to-Play Games: For free-to-play games, keeping the game fresh through live operations is just as important as the initial game development. eSports serves as a powerful marketing tool for game studios and offers a sense of achievable progress for players.
For free-to-play games, live operations like adding fresh events and new cosmetics are key to reinvestment, and can cost as much or more on an annual basis than the development of the game. The focus is on keeping the game fresh and balanced, and companies like Riot update every two weeks. eSports is primarily a marketing engine for the game and keeping it fresh, which in turn benefits the game studios. Video games like League of Legends offer a clear sign of progression and the skill feels obtainable, akin to individual sports like golf or tennis.
The Rise of eSports and its Potential for Investment Opportunities: With low entry barriers and potential for high ROI, investing in successful forever games like League of Legends can generate significant value in the growing ecosystem of eSports. Platforms like Vouch provide insurance options for early-stage businesses.
eSports has opened up opportunities for people to go from participatory to professional levels with a low barrier to entry, giving rise to a world of endless possibilities. Publishers like League of Legends are running this like a sports league, reminiscent of the poker boom, creating a new dynamic that could accrue a lot of value. The investment in capital for eSports ecosystems will have a high ROI if done correctly. However, different approaches, such as the one taken by Counter Strike, vary from sanctioning events to owning leagues. But the key takeaway is that successful forever games have an edge over packaged goods like Overwatch League, and platforms like Vouch are perfect for early-stage businesses looking for an insurance coverage plan.
The Potential of Web3 and Crypto Gaming in the Gaming Industry: The integration of Web3 technology in the gaming industry can enhance gameplay, unlock new avenues for competition, and potentially lead to good games that are not scams. However, pay-to-win mechanisms can hinder competitive integrity. Vouch provides business insurance for Web3 and crypto gaming risks.
Vouch is the only business insurance provider that can really understand all the new frontiers of the tech world and anticipate risks. Web3 and crypto gaming have unlocked exciting possibilities for the gaming industry. While the best Web3 games follow conventional gaming models, they use blockchain to improve or enhance an older game. The crypto component can give players certain benefits in the game, enhance gameplay, and unlock new avenues for social competition. However, pay-to-win mechanisms hinder the goal of competitive integrity. Mitch, an OG gamer, was initially skeptical of this technology but now invests in a gaming company that has a component of Web3. The integration of Web3 technology with the gaming world might help us see good games that don't seem like scams.
The Revolutionary Potential of Web3 and Crypto in the Gaming Industry: Web3 and crypto elements can provide economic incentives to players and open up new areas of gameplay. Web3 allows peer-to-peer trading and incentivizes buying tokens for enhanced gaming experience. Web3 is the future of gaming and can be applied to broader platforms like Steam.
Web3 and crypto elements have potential to revolutionize the gaming industry by providing economic incentives to players and opening up new areas of gameplay. The gaming community can now use cryptocurrencies like tokens that function as a store of value and super currency. Incentivized to buy tokens, players can acquire certain benefits that enhance their gaming experience without making it competitively unbalanced. Web3 allows peer-to-peer trading, unlike in Web2 where players had to buy goods from gaming companies. Web3 is the future of gaming, and Roblox is proof that a viable gaming economy can exist without a Web3 component. The dream of the Web3 space is to apply its principles to more broad gaming platforms, Steam being a great example.
Solving the Bitcoin Pizza Problem to Improve the Gaming Industry: Incentivizing users and finding a balance between discouraging speculation and encouraging dynamic transactions is key to success in Web3 deals. The gaming industry has always been significant, and it's time to prioritize solutions to the Bitcoin pizza problem.
One key factor in the success of Web3 related deals is incentivizing users so they do not feel like fools for utilizing tokens during price increases. This is called the Bitcoin pizza problem. Solving this double problem of discouraging speculation and encouraging dynamic transactions can improve the gaming industry. While there are theories on how to solve this issue, it is yet unsolved. In the history of the gaming industry, there are seminal technology companies like Evans & Sutherland who had a big impact in the games community. The gaming industry has always been larger than TV and Hollywood if total coin drops in arcades are included. However, it is unclear what is included in the revenue counting of Hollywood and music industries.
The Evolution of Video Games from Classic Arcade to Modern Gaming Consoles: From classic arcade games to modern gaming consoles, the video game industry has come a long way. The rise of online multiplayer gaming has generated billions in revenue, but memories of the social aspect of arcade gaming still persist.
The arcade business was huge and persisted for a long time, making billions in revenue in the 70s. Console manufacturers like Sega were trying to protect their business by not risking it and this may be why they aren't what they used to be. Video game arcades were important social spots for kids in the past. Mitch's first video game was Spacewar played on a console at a Woolworths. Xbox and Halo changed Blake's life and Xbox Live became an incredible business proposition with its multiplayer play for a community that wanted it, generating billions of dollars in revenue even today.
The Evolution of Gaming as a Legitimate Career: Gaming is no longer just for kids and has become a viable career option with opportunities for people from different backgrounds. Partnerships and collaborations in the industry have led to its evolution and growth.
People may not realize that gaming can be a viable career, just like any other profession. There used to be a stigma around the gaming industry being for kids only, but it has evolved into a legitimate business. Many successful individuals in the industry have come from different backgrounds. They were once unaware that a career in gaming could be possible. Partnerships and collaborations are common in the gaming industry, as evidenced by legal and creative professionals teaming up to produce interactive games. Gaming has come a long way from simple hardware systems and has turned into a significant and lucrative industry, with new opportunities for everyone.
How Video Games Have Evolved as a Medium of Social Connections and Intellectual Property: Video games are not just for entertainment but also serve as a platform for socializing and intellectual growth, and niche industries like gaming can provide meaningful content.
The video game industry has evolved from being a toy business to supplying intellectual property to serious drama. Video games have become extremely social, connecting friends globally, and providing a medium for social connections. The industry has had to battle negative perceptions, with violent content being prevalent in their games. However, video games are a way to facilitate socializing and having fun. The success of Gamecraft showcases how niche industries can be explored, providing intellectually rigorous content. Malcolm Gladwell's endorsement of the podcast industry signals that this is the future. The feedback for Gamecraft has been amazing, with the most common feedback being that it leads to understanding the current context of the industry.
How AI is Revolutionizing the Gaming Industry: AI can save time and costs in creating art and help with quality assurance, balancing, playtesting, and live ops. While AI won't easily create a coherent narrative, investing in these areas early on can lead to a better overall gaming experience.
AI has been a part of the gaming industry for a long time, evolving to become more sophisticated. While making games is difficult and coherent narrative satisfying journey in a game context will not easily fall to AI, there are four interesting areas of investment early on. These include an art pipeline, quality assurance and balancing, playtesting and live ops. AI can help save costs and time in creating art by replacing the need for an artist to create 30 different variations of a chair, leading to a better art pipeline. Additionally, AI can be trained to play games, describe the experience as fun and find counters to arbitrage-like advantages, and play out game theory scenarios like hoarding resources to help in quality assurance, balancing, and live ops.
The democratization of game development through AI and UGC platforms.: AI and UGC platforms are democratizing game development, giving more individuals the opportunity to create new games and genres. AI also has the potential to revolutionize game experiences with real-time quest and narrative systems driven by AI assistants.
The use of AI in the games industry can revolutionize the way games are experienced by introducing real-time quest and narrative systems driven by AI assistants. UGC platforms like Fortnite creatives, Core, and Roblox will likely benefit the most from AI asset generation, as democratization and accessibility are crucial factors in making games. While innovation is being stifled due to the required resources and capital, democratization of game development is happening. This democratization will enable more individuals to create new games and genres, similar to the modding culture, but with UGC getting better, we're getting closer to new moments of innovation. Although there are limitations to how many game developers can create games like the Miyamotos, democratization can give opportunities for new people to contribute.
The Gamecraft Podcast: Inspiring Entrepreneurship in the Video Game Industry: The hosts of the Gamecraft podcast aim to inspire listeners to take the video game industry seriously as entrepreneurs. With guests sharing their paths, listeners can invest and enter the industry. Follow the hosts on Twitter, check out ACQ2 for more interviews, and become an LP to help pick future episodes.
The Gamecraft podcast can be a galvanizing force for people to take the video game industry more seriously, invest in it, and enter it as entrepreneurs. The hosts are trying to keep it a special project and not turn it into a job while still making it meaningful to the audience. They plan to bring in guests who can tell stories about their paths to the video game industry. People can follow Mitch and Blake on Twitter to stay updated. The Benchmark episode was a success, and the hosts thank the sponsors and guests for making it happen. The listeners are invited to check out ACQ2 for more interviews with founders and investors and become LP to help pick future episodes.