Gamecraft

• Cycles & Survival (Ep. 17)

  Mitch and Blake kick off Season 3 of the podcast with a high-level look at the current moment in the video game business, critiquing both the idea that the business is cyclical and we are in a downward phase of the cycle (and the naïve notion of "survive 'till '25"), as well as the idea that the business has simply matured, suggesting we are in a new phase of low growth and consolidation. Instead, they propose a framework for thinking about the games business that argues for the continuous interplay of three innovation forces: content, distribution, and technology. They outline how each of the three forces have played out historically, and offer some examples of the discontinuous inflections that have occured along these three vectors of innovation. They also try to explain why innovation is currently stalled, and how that creates a downward spiral that affects valuations, risk-taking, and ultimately what kinds of games get made.  Show Notes: Matthew Ball's state-of-the-games-business deck Joost van Dreunen's newsletter  Live Service Games The Demise of Mid-Budget Cinema Sideloading apps on IOS Discord's new ad units

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• Artificial Intelligence (Ep. 16)

  In their final episode of Season 2, Mitch and Blake take on the complex and highly speculative topic of the impact of recent improvements in artificial intelligence on the games business. Your hosts acknowledge that the sector is moving so quickly that this episode could be obsolete by the time it airs, and warn that it's difficult at this early moment to look too far into the future. Mitch offers a loose framework for thinking about AI in game production, mapping this framework to specific areas of game creation and publishing that could be effected by AI. They discuss in particular the disruption that could be caused by massively increased efficiencies in the creative pipeline, the impact on the game labor force, and how the incumbents may be more vulnerable in games than in other software spaces. Mitch tells the story of his first meeting with then-game developer Demis Hassabis (today the CEO of Google DeepMind). Mitch and Blake look at the unpleasant prospect of what behavioral analysis, population clustering, and dynamic ad personalization may mean for the dark arts of paid customer acquisition. After a look at what AI-enabled game creation might augur for distribution platforms already choked with content, they look at the bull and bear cases for game AI, and its implications for the future of the games business.

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• Intellectual Property (Ep. 15)

  Mitch and Blake look at the ins and outs of intellectual property licensing in games. After discussing the checkered history of the practice, they look at the creative and business reasons why licensed IP continues to be valuable to game creators.  After a quick look at how IP licenses actually function and what to expect from licensors, Mitch and Blake discuss IP arbitrages -- finding gems in the rough that can be licensed at lower cost but with considerable customer acquisition lift, using the examples of Tony Hawk, Kim Kardashian, and Sponge Bob. They draw an important distinction between celebrity endorsement and IP licensing. The move on to a deep dive on EA Sports, one of the great IP licensing-based businesses ever created in video games. They talk about the EA "house style" of realism based on actual teams and players, and what that meant from an IP acquisition standpoint. Mitch explains their high-priced exclusive licenses with the NFL as well as their complex clockwork licensing regime for the product formerly known as FIFA, which was so resilient it allowed them to cease licensing the master IP itself. They also talk about the sports where EA lost -- like baseball and basketball. Your hosts turn to the topic of the recently-announced Epic/Disney deal. They present their outsiders' view of Epic's IP partnership strategy, and how Epic has tried to weave media IP, celebrities/influencers, and music licensing into a massive re-engagement scheme of on-going eventfulness for their "forever game" Fortnite. This leads to a discussion of Disney's struggles in gaming and comparisons to the game strategies of their studio competitors Universal and Warner Bros. They conclude the episode with a look at outbound licensing from game IP -- so-called "transmedia." They look at some early examples, then turn to the recent break-out hits like Super Mario Brothers, Five Nights At Freddy's, The Last of Us, and Arcane. With dozens of new game projects in development in Hollywood after the success of these properties, Mitch and Blake wonder whether outbound licensing will add a new revenue stream for developers who take the risk to develop original IP.  

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• Distribution (Ep. 14)

  In perhaps their most important episode of the series, Mitch and Blake explain what they mean when they use the term "distribution" and why it is so important to their understanding of how the video games business functions. Like they did with the term "publishing" last season, they try to recontextualize distribution as a much larger and more important concept than simply moving atoms or bits into commerce. Your hosts define distribution as the myriad of systems that exist in between the developer of a game and the ultimate end-user of that game, all intended to enable access to the game. They explain how every choice of system extracts a cost, how the sum of these costs -- both monetary and non-monetary -- effects enterprise value creation, and how the colloquial notion that "distribution is a commodity" is incredibly naive. They provide many examples of how this concept actually functions in the real world of the games business, including how packaged goods distribution worked, why customer acquisition is almost always an arbitrage, and what happens when a distribution system breaks.

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• Going Global (Ep. 13)

  Mitch and Blake discuss the massive expansion of gaming in emerging markets around the world. The begin with a discussion of the big-picture factors driving this expansion -- primarily mobile technology, but also new business models, payment systems, and demographics.  They then take a closer look at the Middle East and North Africa, and how the different approaches that companies are taking in Turkey, Israel, and Saudi Arabia are making that region one of the fastest growing in the world. They contrast it with the Latin American market, which has had a longer history but which operates quite differently.  They turn to Southeast Asia, why it's so interesting as a gaming market, and then discuss the explosive growth of Sea Ltd. They discuss the imporance of Singapore as a trade and banking hub, and how it's attracted investors and operators to the region. After a quick look at the Sub-Saharan African market, they discuss India, the sleeping giant of gaming markets, and why it has failed to deliver on its promise for the last several decades. Mitch shares some personal anecdotes about doing business in India, and traveling to a remote area that has become the flash point in a geo-political rivalry. They conclude with a discussion of developments in the Chinese game market since 2020, and consider why the market has stalled. They look at the impacts on economic issues and intervention by the Chinese Communist Party, and the toll that the latter has taken on China's largest domestic publishers and on the perception of the market in the West.

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