Hey folks. Well, it's been a little over a year since we started this week in game segment on the deconstructor at fund podcast. And since that time we've used a bunch of different services and tools to help us manage the podcast from time to time. We do get questions about the type of services and tools that we use and so let me talk to you about one of the tools that we use which is Anchor and anchor is a really easy way to sort of make and distribute your podcast. It's free. There's a bunch of creation tools that allow you to record and Edit the podcast and anchor will basically the main value is it will distribute your podcast for you, so it can be heard on Spotify Apple podcast and bunch of other services and it can also be used to help you make money by creating ads like this one with no minimum listenership. So if you are interested in making a podcast, definitely suggest that you check out incre you can download the free incre app or go to incurred on FM to get started. Thanks. Happy New Year, and welcome to this week in games. Your hosts are as always myself Mishka can't cough and Joseph Kim. We're also joined by our favorite or one of our favorites, mr. Air Crest principal and gossamer Consulting and today in our first episode for 2019. We are talking about predictions for 2019 most importantly or more accurately. We're looking at other people's predictions and seeing how accurate they are before we come up with our own predictions. Now as always leave a comment, please do subscribe and most importantly do enjoy Hey everybody. Welcome to Twig 19 here in 2019. Happy New Year to everyone before we jump in. Just wanted to ask you guys Michigan and Eric. How was your New Year's and I know we got a lot of material to cover. So probably just discover real real briefly. Yeah. I mean dude. I II think I fell asleep. I'd like 10 p.m. We just we just returned from from from overseas and everything and we're you know, it wasn't a party. That's what I'm saying I'm saying. I'm lame that's that's basically what I'm saying. So I hope Eric had a much better New Year's Eve. Well, I have two kids so but this is the second year in which we all stayed up till midnight and suffered the next day because of it, but it's really fun to hang out with the kids till midnight. It's kind of a new thing but it was good all good grass JK. Yeah for me. I didn't do anything and I also didn't stay up. But I did see some of your vacation pictures, Michigan, which look pretty Epic so that looked like you had an awesome time there. Yeah, it was it was good. It was good. We are so depressing we can't do this small talk of talking about our New Year's where nothing literally happened like one fell asleep by the to hung out with their kids. It's just like this is not given it a good stuff. So yeah. Yeah, let's talk about that. We're not partying anymore. So maybe we could kick it off with Mishka and talk. About some of the deconstructor fun upcoming predictions articles. Yeah. Yeah. So before we start reviewing the predictions or making the predictions on the predictions, we're actually working on predictions on deconstruction of fun site. So or the blog and we did we did some last year as well. We the way the way we do our predictions is a little bit more database. So what we do is we basically divide the market into genres categories and subcategories. And this is something we we work with game refinery. To create and then we pull the data from the top 500 grossing games from about last three years and categorize them or not categorize will basically put them into those into that Texana me and that allows us to go through the development of each not only to each other but each category as well as each each subcategory and based on this historical data, we're making predictions and last year. We didn't have this amount of data. We had the normal sensor Tower data. Which we didn't really break down into into too deep of a subcategory were broken down into categories and I have to say we were kind of we were quite accurate despite the lack of lack of such a detailed data. So for example, we did talk about Pete games really solidifying themselves as the third largest puzzle game company and they have done that they have they have grown the most in the puzzle category out of the large players. We talked about Jam cities. We structured that Will was in our predictions going to happen and you know towards the end of the year sadly enough it did happen and it did affect quite significantly tinyco which we kind of, you know, predicted based on the data. We had we talked about Township overthrowing Heyday as as the number one simulation game that happened last year. We're talking about EA, you know sun setting some of their simulation games basically saying that the Sims mobile will not fair. As well and we required quite right there. And and yeah, so a lot of right ones but a lot of wrong ones too. We were pretty bald on the messenger games which was you know, it hasn't flown in as as it has as it as it was supposed to and one of the most interesting pieces that we're now going through the data and we'll come in with with the with the blog post soon is the simulation game. So traditionally those crafting games like hey days and townships and SimCity and Sims we come. I predicted that that is sort of has been category kind of like a cow. If you will in the way that it's you know, it's just a cash cow and there's nothing new coming in. There's just old games but that category has been actually growing significantly with games like Klondike. If you haven't played you should check it out. But you know hustle Castle is another one and it's just really Ferring extremely well and and another another couple of ones that we really fail I shouldn't talk about too much of a failure. But another one was was definitely the Empires and puzzles. So we talked about that game declining due to a lot of copycats and direct competition comment its way and boy, were we wrong? Yeah, they they put the pedal on the metal and then they kind of left everybody in the dust which is really interesting too to kind of, you know, take a step back and realize why that happened and how gaming Market is different because normally when you have a competition and you have a you know, a good product and a lot of you No, similar products come in like let's say Android phones, you know, it kind of levels it down like Samsung is not the big at because of Huawei and these, you know, whatever whatever phones they are, but in mobile games seems to be different. It's like once you hit that growth you really hit that growth and it doesn't matter who comes in whether they have a better product in terms of how it looks how it plays how it loads the IP. It does not matter if you're the first one in your able to to seize the market you're going to run with it. And then final one was we were predicting super Celtic cancel cancel brawl stars, and and I'm actually really really happy that they didn't I was playing the game lasts, you know today and and I'm just happy that they lost this game because it's fun. It is a fun game. It's always been a fun game. And and that's the only prediction that I'm really happy that we got wrong. So that's that's that's me kind of like buffing the upcoming post. It's going to be amazing, but you know, we'll talk about that. Later. Great, so no preview on what the predictions you have for this year or you're going to hold preview no preview the but they're going to be the only previewed I'm going to give is that they're going to be extremely accurate. I mean, I mean, I mean it's like they're they're they're golden. So so we have actually a lot of a lot of a lot of folks who have written previously on the instructor fun writing their predictions. So it's going to be it's going to be interesting. It's not only you know, Adam and I like Last time or atom in the Neil and then when you know, we were only few writing last year, but this time around it's a it's a it's a nice group everybody riding everybody commenting. So hopefully it kind of dilutes those, you know, strong opinions and were able to be more accurate. Yeah. I think it's great that you, you know providing a lot more data context. I mean just kind of and we'll talk about it later. But one of the things that I noticed from a lot of these predictions is that they're just completely like out of batak. You know I'm saying like I people just making predictions without any data context at all. What so great to see that but yeah, maybe we can jump right into some of the predictions themselves Eric. You want to kick it off? Yeah. Sure. I just one caveat here is the fact sure how lazy are we that we have to comment on other people's predictions rather than making predictions on our own just we are making its English. Just coming up with his leaders. Okay? All right. Opposite of lazy we're saying that we're going to so the thing is like we're gonna get everybody their shot before we come in with the real thing. So our My article is from Super data Juiced vendor and runin or whatever. His name is I've spoken to him a couple of times and been on panels with him for the last couple years and really nice guy and he basically does this top 10 trends for 19 and what he does in a cheeky way doesn't take themselves so seriously, but what's really interesting about juices he has a He kind of unique perspective because he has a proprietary data set of digital sales and what I like about his predictions is that kind of you know, they hit the big trends that I'm kind of seeing for next year and what I'm trying to track for, you know, the big Publishers for my hedge fund clients. So anyway the first one and then there's ten right so we'll try to run through these pretty quickly as possible. So the first thing is cloud games emerges a new frontier and brings about unlikely Partnerships. I think this is a reasonably safe. Prediction, you know clear it's clear that cloud gaming will be a product this year most likely from Google and maybe Microsoft this year, you know, I continue to believe that we are in the very early Innings here and it may get some Traction in terms of trial but I think conversion is going to be a big challenge, you know somewhere to what the challenges that Sony's having with their with their offering so that's the first one. Yeah, maybe I could just chime in or we could chime in as well after each prediction, but I kind of agree with you that it's a safe prediction. Ian at least the first part, right and in terms of cloud gaming emerging as New Frontier, we certainly covered Microsoft X cloud and Google project stream and previous podcast and have noted that it's definitely going to be a big push in 2019. So it's kind of a big initiative that the second part of his particular prediction though. That's the part that I'm not quite certain about in terms of what are these unlikely Partnerships and one that he references in particular is, you know tencent and Google in China. You know that Certainly cloud gaming. It's a big initiative. A lot of big companies are trying to push it and we'll see in 2019, but the unlikely Partnerships part is just the part that I don't understand. All right, the next one is players win as the PC game Market breaks into pieces. Now. This is obviously a reference to Epic and other store fronts coming up. You know, I'm not sure I agree with this one valve has kind of been dominant in the Lindy's but not AAA for a quite a while, you know Publishers been kind of going on their own EA Activision Ubisoft. And this is actually likely kept pressing up for AAA. Right as they don't get much price competition if they're running on their own service. Yeah. And again, I don't think the cost savings are necessarily going to Consumer but likely going to the publisher. So if they do get it twelve percent versus a 30% commission charged for the platform. I don't know. How much is that actually is going to go to the consumer? Yeah. They made me We better for consumers, but I don't know. I don't think so and and fundamentally, I just don't think there's much an incremental change to the PC market by these new entrants and maybe I'm just old school or something, but it's more like a market share move potential for for some of these games to other services outside of the valve. I do think valve is someone in trouble in their dominant position, but I don't know how it actually incrementally changes or as a better for players per se. Yeah, I agree with you on that valve and certainly in the short. ERM I think there will be some additional fragmentation the valves kind of in trouble both from here and from the cloud gaming services, but I think longer term for me. It'll come down to Content. Right? Like it just depends on where the key content creators are going to go. So again, I go exclusive on different platforms and I think that fragmentation can can can happen and continue to exist but otherwise, you know, generally speaking I think you know, this is this this is a market that like other markets like so You know, it's kind of a winner-takes-all sort of sort of Market to some degree so I can also sing, you know, seeing seeing consolidation in the long term as well. Yeah, and my only comment on this was was basically they're saying but the break into pieces good for the consumer and I kind of I kind of disagree because because you know as these different platforms will try to keep on to their players or to their you know, their payers. Let's put it this way. They will Implement different kind of of subscription services and that will kind of limit your ability or you know, some people's ability to be To be the other members of several stores and and that kind of you know, well basically it will it will lock people to specific stores and that will limit the amount of games who are able to play and then we're kind of end up in a situation of like PS3 and Xbox that kind of thing. So one game Uncharted comes on PS3 and or PS4 and then your own able to play because you'd have different device. So that's kind of like my worried that that will happen with this one. Interesting Okay, the third prediction was that walled Gardens will be broken down enabling cross-platform play with anyone anywhere. Actually repeat something I probably said already in the podcast historically, you know, call me old-school, but I'm not sure if this is as big a driver. It seems to others your console games will always be better on Console because they're built for controls and playing on a big screen while mobile games work better with mobile because they're built for small touchscreens pretty fundamental in my view. But you know, obviously there's a few games that work cross-platform like Fortnight, you know, Hearthstone Minecraft some degree, but You can see it is that in a streaming world in the far future, you know development of these new cross-platform experiences will help adoption of those type of services, but I don't know if I believe that the existing console mobile and PC franchises really need dedicated resources to build caught found cross platform capabilities. I think more custom development for a future in which cloud gaming is the reality is probably more where the big Publishers at least should focus there. investment Yeah from my perspective. I think that there's you know, there's a strong value proposition with respect to cross platform, especially when you're talking about multiplayer games that are sensitive to CCU and where you know higher levels of CC you are just you know a lot better for the game. But I agree with you Eric on the point like with respect to cross play across devices meaning like console PC relative to like mobile. I think that there seems To be just a over generalization in the industry from Fortnight. So probably drawing a little bit too much of a trend from that single data point. But yeah II certainly hope that there will be more cross-platform at least between consoles consoles and PC. But yeah what we'll see how that plays out Mishka. Yeah. This is cross cross play and cross-platform is again and talks. I remember back in the days, you know working on Facebook Games Social Facebook games and everybody was talking about cross-platform how we're going to do, you know beyond on PC. We're going to be on mobile and everything is going to work perfectly and maybe at a console there and and you know, nothing really happened. I think that's just because just it's because building a good game is really really really difficult. And now if you add the fact that you have to build a good game that will be good game on multiple different platform you basically exponentially you make it exponentially more difficult and expensive. Actually more expensive and harder to produce. So what we're seeing kind of right now is that that you know Fortnight is if I'm correct for tonight is when you're playing for tonight on mobile, you're not playing against players who play it on Console or PC? So, so essentially it's not really a cross-platform it you kind of, you know, you're that you have the same account you make progress there, but you're not really playing it cross-platform. So it's not real cross-platform and I just I feel like this is again something that is really juicy. Because it you know, it opens up one game for multiple platform that makes potentially increase your revenues looking for tonight. But in the sense, that's that's the only example and that's not really a cross-platform game. Another one would be of course hard Stone, which I think is a real cross-platform game. Anyway vainglory the game by Super Evil megacorp is going full plan cross-platform. I believe they're launching on console and on PC the mobile game that they've made so so, you know, we'll see what happens. And you will follow closely what what's going on there, but I would say that you know, I just I just don't think I mean making game on one platform is difficult enough. That's that's my opinion. Yeah, Miss guy. I think the way the algorithm works from from what I've read is that if you have a cross platform team, you play a different cross platform team, but if you have a single platform team You'll Play the same platform team or something something like that. Got it. Got it. Yeah, so I'm not a I'm not a bigger for time. So I'm not a fortnight player. Let's put it this way. I'm not can't say I'm not big because I don't play it. So thank you for for for getting the other details. All right, the the fourth prediction he has subscriptions and bundles content will drive sales in 1900 actually totally disagree on this one. You know, I know that Publishers are continue to struggle to make this work, you know, Microsoft isn't unique position to create a subscription service because they own their own content and their own. But I have not seen, you know other big AAA companies clamoring to join their service. There's rumors that the Publishers are not bully signing up with Google because with technology and business model issues, I continue to believe you know, the Publishers business models cannot really support these deep discounts on new games that were required for subscription Services, you know, I think it will choir unique content built for these platforms to draw audiences both for casual core. But ultimately, The Publishers are going to protect their existing business models while investigating development for maybe for these new subscription platforms. And so I think they'll continue to support with catalog and and not Frontline titles. I think just it makes it really tough particularly in 19 in this early stages of subscription to really kind of Drive sales as he's is he suggesting so just kind of disagree with this one? Yeah, I agree with you in the sense that you know, I'm not sure that it drives sales but it does feel like more companies will try. This you know Nintendo for example rumored to be doing something along these lines. But yeah, it feels like this is something where there's going to be more effort but not necessarily leading to you know, driving significant amount of sales. Great. All right, the fifth one is video games will face more and new regulation with a focus on kids. Well, I think this is inevitable, you know gaming actually it's kind of been off the radar for a while given kind of what I think is the Soul generation is so core that it's more adult related so that it just has not gotten as much scrutiny as during the time with the Wii and which you know tons of kids were playing mobile continues to get scrutiny because that's a lot were the younger players are but now that Fortnight is such a big phenomenon. It's definitely you know in the discussion and how it's a damage to Youth and Society Etc. But to some degree the u.s. Kind of has his hands full with the social media Giants, you know Google Facebook. Google so I gaming is kind of been out of the crosshairs for a bit. But that will that will change, you know, you know quick rant here. You know, I everyone is kind of using these loot boxes and skate as Escape boat for bad monetization to design and you know, the mimicking of gambling cetera, which I totally agree with, you know, Loop watches are kind of egregious from this perspective, but for and I can't get a pass, you know, I mean isn't there mechanic this is addicting, you know for kids and adults, you know, like you buy a pass allows you to unlock the new things every day. If you can't spend the time you can spend the money for the rewards. Meanwhile, you can buy new things every day, you know, as it refreshes at five o'clock at the shop, you know, I watched my 11 year old son loses frickin mind every time the store changes in newest skins axes emotes Etc come up. He's addicted to Fortnight is a 65 year old lady in the slot machines in Reno, you know, and maybe this is a testimony to my bad parenting perhaps but you know when you start throwing stones at these monetization models, you know, Maybe mobilize against all free-to-play design, you know, and I don't think anyone really is that innocent in the free-to-play business in terms of their predatory monetization practices. I mean, they build these games to be addictive right and then they build the systems to make them addictive too young and old people, you know, so anyway, that's my little quick rant. And so when they come after the gaming space, they're not going to go after you know, these like obscure, you know, small games are going to come after things like Fortnight. So, you know, be careful these Pundants that are going after these loot box stuff, you know, it's a slippery slope when they're going to go after all these, you know, free-to-play monetization design. Yeah, and I think in terms of this prediction, it seems like it's already happening. So it's kind of a safe prediction to some degree with, you know, there's there's already stuff happening along the lines of like gdpr and I think it's pronounced kaeru or car or whatever that is in terms of the advertising and so and with respect to Fortnight, I think there's there's been a lot of criticism around Fortnight, but At least it doesn't seem like anything has really kind of broken through with respect to anything. That's big that's going to happen specifically with Fortnight. But you know to your point Eric, I do think that you know, ultimately I feel like parents do need to take more responsibility and not you know, sort of look to governments to raise their kids. So I do think there's there's sort of some, you know personal responsibility from that many to exist alongside of that the regulation and things like that that are happening. Yeah. Yeah, and I mean China has been ahead with this one. I mean, they're kind of you know ration and fastened in the decision. So they just totally bounded but I think then they open up the store again for new games, but they were very harsh in it. And and the thing is like there's two sides to this and just like Eric pointed out is like I totally understand it from the other consumers perspective is you know, we want we want something that is fair something that had that, you know, you know what you're paying for and something that is not as Addictive like that element should be that addictive as as the as the core gameplay, you know, you're not buying a game because it has a tremendous gotcha mechanic, you're buying the game for the game. But at the same time you have the you have the developer the publisher side and then the goddamn Battle of cpi's ltvs. And the and the CPI is it cost increasing because the ltvs are increasing and and with that we just need we just eat more and more mechanics where we push the envelope on monetization and the fact is the ARB. House of today are just multiplied of what they were five years ago and then even even a year or two ago. So so that kind of you know pushes the developers to to to work on these elements were gone the gotcha mechanics work on the monetization. So, you know, if I was kind of thinking like, you know, one of the one of the predictions your you have here later on is about the platform and bend and kind of games leaving the platform. So so maybe the platform should should take a lead on this and spend part of the the cost parted part of that. 30% on on hiring lobbyists to to push it to the other direction. Maybe that's the the added value they can have but you know, I understand both the sides. All right, the sixth one is further consolidation is imminent for the games industry. Well, this is another safe one. I think you know the amount of viable m&a candidate is getting smaller and smaller as kind of a VC Investments of kind of dried up over the last couple of years my big prediction, which is a bit of a 180 from the last time we spoke about Zynga is that they may not stay independent for very long primarily because this acquisition of small giant we were so big they're out of Rose, right. So they're basically are operating on what they're going to operate on for a while. Maybe it will maybe it'll do some other small Acquisitions, but this is it so maybe a good time to look for a buyer, but that could happen the next couple of years, but you know, but maybe maybe actually even as soon as 2019 nice I like the the prediction on the sub prediction on the bridging with me. But yeah, you know, I think with this prediction in terms of further. Obligation, yeah, you know it's been happening and kind of agree with it that the part that I didn't quite understand was his specific prediction also about Amazon buying GameStop, you know, so, you know, he's probably from my understanding kind of extrapolating from Whole Foods, but you know, when I think about that specifically you know for me Whole Foods is a completely different Beast it, you know serves as a last mile sort of point of distribution against a product category. That's that's Evergreen because people won't ever stop having to eat physical Distribution on dis that's kind of you know in its last or almost last generation. And in my opinion Gang Stop is a dog and doesn't make any sense. So that specific sub prediction in terms of Amazon buying GameStop that part I think is totally false. Yeah and this consolidation. It's almost coming in a little bit late because you know, they've been they've been rumored about this for a couple of A couple of years I've been but hearing about the nuclear winter. It's like it's you know, either you're growing or you're getting eaten and and we are you know, finally seeing this prediction coming to life like we've seen a lot of sort of a top midsize developers being picked up by by by the bigger players. And of course, the thing that I think has been pretty hungry now, so small giant Graham games and you know before that Jam City grab the tinyco plate take a grab Wooga. What's the play Fish the sea? Little developer by artistic rat and we fish big fish. Yeah play fish was the one the EA grabbed like eight years ago. So but that was that was a previous cycle of consolidation. So I think I think Eric is right. It's just a matter of time till the the big ones are being picked up. So Zynga, of course, one of the big ones that that is rumored to be a target of acquisition. So we'll see what happens. Alright, the next one is the you know, the coming winter brings the slowdown in growth and possibly in revenue and Innovation. So speaking from the console perspective, you know, it seems pretty clear that transition is upon us based upon some of the declines. We saw on FIFA Madden assassins called Duty NBA 2K in 18 all kind of had softer years than kind of expected Hardware was exceptionally strong though in 18, which is kind of a opposite indicator. Probably driven by Fortnight, right? So as people realize that playing on the mobile devices suck they're asking their parents for a console for a Christmas. We saw a big uptick particularly on PlayStation 4 and holiday, the biggest problem is that there's no big titles coming out in nineteen to comp Red Dead red was a huge title this year kind of I think it out actually outpaced Call of Duty and next year. We just don't have that kind of big game, you know, but as is out some of these other big They're just not coming. So as And this is but this is exactly what happens during the transition is that people kind of shoot all their wad on on these big games and there's just nothing left to come out. Meanwhile, they're kind of focusing on next-gen development. And so they just don't have as have many games coming out. So I do expect a big gear down next year in terms of hardware and software. Also, we have a terrible Nintendo comp, you know switches going to not going to do nearly as well as next year as in nineteen is a didn't 18, so it's going to be a rough year. But I think it's just part of the transition. I don't know if it's anything else besides that on the mobile front. I'm actually shocked at how strong Mobile Market has continued to be as we saw the strategy genre got decimated. But machine zone is in the toilet supercells kind of in the toilet as well relative to you know their heights, but other genres are just coming up RPG and and simulation and particularly puzzle. So I expect the out. Probably the mobile business will be fine next year, but the consul business is going to have a tough time. Right, you know for me personally, I'm a little unhappy with this prediction. And because I just feel like when you talk about a coming winter, what does that specifically mean? And then he's talking more about a sort of slow down in growth, you know, and sure slowdown in growth is not hard to believe but you know if I just feel like there should have been a better definition in terms of what's what's happening here. But so so not much comment on you know on. On a prediction that I was hoping would have been a little bit better to find. Yeah, and I just have to agree with Eric. It's just mobile. Yeah, all the numbers on mobile are pointing pointing up even they would the the Old Guard kind of changing and that's that's the part of a prediction we did last year is kind of like even with strategy we kind of thought that would machine Zone going down. Everybody will go down. But nope that even even that category grew with the puzzle grew in it and the old ones like simulation categories are are growing so double-digit growth overall in Mobile and I Back the same to continue this year as well. The next prediction which I would prefer to ignore is live streamers and in floors influencers embark on a drama binge. I think you know, I think he's suggesting that ninja expands his brand by creating a WWE style drama to his feeds. I mean, can you shoot me now? Please watch any more of this guy with more boxing? Seriously. I mean the prediction itself kind of makes sense, right like live streaming is now somewhat mature kind of competitive so finding new ways to Attention through dramas sort of make sense, but you know, not much other comment from you besides that. Yeah, and and you know, I try to follow the streaming a little bit more closer. I'm just very curious about the streamers as a growth Channel and especially especially the brawl starts case is kind of like it feels like they really used influencers as as a key growth channel for them and especially with their launch. So so I think I think there's you know, I can't say there's something to it because there's definitely a lot to it, but I expect the market of Dreamers to organize more itself. So we have services like match made and others that are that are doing this and then organizing it in a more way that that companies can use them because it's still a little bit of a wild west if you want to work with a famous streamer. It's basically, you know quarter million up front and you'll get a cool video and a lot of use and so so what then so I think it's just going to it's going to move to to be more more tracked more more more metrics based. Yeah, I mean, let me be clear here. I mean Ninja was a huge thing for excuse me was a huge thing for Call of Duty black out when it came out. He was there day one during the beta and was playing the game and that it shot up interest in that game dramatically. I mean they're going to have their impact. I this this drama thing is what kind of irritates me. I mean, I don't think my children can watch any more of this nonsense, you know, not to take off YouTube off my iTunes and everywhere else and like house if this going to continue anyway moving on enough My bad, parenting Electronic Arts takes a hit in 2019. Now this is really interesting because they've taken an absolutely massive hit in 18, so I don't know exactly what he's talking about 419, you know, they got annihilated the stock is down like almost 50% So is Activision and frankly, I think Activision isn't upper shaping 19. And so this is kind of my business. So this is you know close to me but you know Activision basically has nothing this year. I mean they have a you know, Call of Duty game from the B team at Infinity Ward on the flip side. I think EA has actually a much better line up in 19. So I think he's off a year. I'm not really quite sure exactly what he's seeing Fourier, but they've already taken a hit. They are going to take another hit by the you know, by the end of this fiscal. Maybe that's what he's talking about, but I think next year is much better for you. Yeah, and for me, I don't have a strong opinion on this. I just wish there was sort of a better articulation and more rationale behind behind the prediction. But otherwise don't have any, you know, any any any other thoughts. I mean, I don't follow Electronic Arts or activation as a whole I'm more of on their mobile side, but but definitely on the mobile side EA has been trailing behind quite significantly and and the last two games that they launched. In 2018. I think they have been pretty much a disappointments like Sims mobile and and command & Conquer. I don't think they are faring as well as the company wished. So yeah, I mean totally there's no one at the helm right now. Like they have no one leading the charge they've lost their key, you know management personnel and now it's back up to one of the senior execs that's in charge of like things like BioWare right Which is far more of a strategic importance to them. I say a I continually say this and I'm going to say it again. I really honestly don't think the CEO gives a crap about mobile and and it's kind of evident in the type of people that they're doing and how they're managing that business. It's just an addendum to the rest of what they're doing. So I'll continue to believe that the next one and then final one is GameStop cells, but it's not a party we talked about this a little bit but you know this could happen, you know, there's a lot of rumors the stock was up like 15% the other day because of Is that the Pease private Equity firms are coming after them? I got you know from a value perspective. I don't get it, you know as an investor like I'm sure you can make the numbers work on paper, but their terminal value is almost zero, right? The use game sales is like continues to deteriorate as digital continues to be adopted and that's how they make the profits right the can't really survive without use game sales. And this trend is just going to get worse as you know, the next gen consoles are going to be, you know, see. Ste 70% digital out of the box, right? And you know, there's Amazon rumor which you alluded to last time make sense. But you know if they really want to increase their footprint of small stores in the US sure that makes sense. But GameStop doesn't own any real estate. They're just leasing or renting these places. So why would an Amazon just pick up the ones that they want rather than you know, picking up the entire network of stores, so I don't know II think GameStop is ultimately doomed and there's they're going to have to start closing stores, but they are you know by divesting some of their assets particularly in the mobile space. They are making themselves a much cleaner company to be bought. Right? So I do agree with that. But but I don't know if there's gonna be any buyers ultimately. Yeah, I agree with you Eric. I think I think this is I think game stop selling it all is going to be super difficult and then the Amazon speculation. Came up again here. We just look at how you know how much like it coming. Like Sears has been struggling to get sold and you know, it's been very difficult for them and GameStop again has a two-fold struggle because not only are they being dissed intermediated from Amazon which you know is happening to both Sears and GameStop. But GameStop is also struggling against, you know, dying product category on top of what you alluded to which is like the the used used video games Market is sort of going away with digital so I think games It will be a massive struggle to sell and even if they do it's going to be you know, super tough sledding because they're likely going to have to just completely re-envision the kind of company. They are are they going to be like a you know, digital lifestyle company or something. I mean, it's going to have to be something different than what they are today. And with that, I think we're all done with that article, right? Yeah, we're all good. Okay, so moving to the next article we've got limited time here. So we're going to have to kind of jump through this stuff pretty quickly. But the next article is mobile game insiders predict. The biggest trends of 2019 and this was published by a pleven and in this article. They asked a number of mobile game industry folks about their 2019 predictions. So let's break those down one by one. The first prediction was by Sebastian Borgia. I'm not sure if I'm pronouncing that correctly who is the CEO of picks out and he makes three predictions predictions first. He's predicting fewer more massive hits. So basically that players will be spending more time on a smaller number of titles such as Fortnight Roblox Clash Royale Etc. His second prediction is he predicts Discovery will play a smaller role in an environment that favors IP in this is specifically with respect to mobile and finally that crypto gaming breaks through in 2019 and my quick take on this is you know one I really wish that there were, you know, just similar to what Michigan is going to be doing with it deconstructive fun predictions provide a little more data, right? So like if we're predicting, you know fewer more massive hits, you know, it would have been nice to show like sort of top ten grossing Revenue concentration for the past few years. See the trends things like that. And so to some degree, you know, I am a little bit disappointed with some of these In the sense that it would be nice to have more data. But I also think that you know this kind of swings one way or the other based on, you know, big title. So, you know, if you know certainly a game like Fortnight which is, you know, drawing massive amounts of time from from people, you know, if that happens, you know, the I think the market can swing one way or the other but I think in more, you know sort of recent history we've seen at least on mobile. There was a Anger concentration in top 10 grossing titles and they got a little bit better and I'm not sure what that what the current you know state of the market is with with respect to concentration based upon Fortnight. But yeah, so it would have been nice to see that data his second prediction. I think depends from my perspective working for a Nike company. I hope it's true. But if we're talking from, you know from an installs rather than Revenue perspective certainly hyper casual games. I'm with original Ip dominating that case and finally his last prediction. You know, I haven't seen anything from at least the people I know and seeing stuff in development with respect to crypto and it's been a little bit of it's been a little while since crypto Kitty. So I'm kind of scratching my head on this one with respect to his his crypto prediction. Yeah my quick take I actually did the kind of analysis from sensor Tower data. Is that the top 20 games in the US? Us have gone from 44% in calendar 16 to around 30% So it's actually declined in terms of concentration. Another way to look at it is like the top 10 publisher is represented like 56% of colander 16 and now has 36 percent of total and I think part of this is the fall of the big players like machine Zone and supercell kind of has created numerous opportunities for the smaller developers to make sure games like play tricks on plus epic obviously with With I'm blanking on the name Fortnight and Warner and and Roblox to is also come up a lot too. So it's like he's actually wrong and I don't think that this trend is going to change all that much and I'm not speaking to Japan Korea Etc. But particularly in the US and the Western markets, I would say that he's wrong. The second one is about IP. So, you know, I think Joseph's right, you know, it's kind of a broad. Relation, you know the store is changing and it seems like the established players Publishers have a huge Advantage, you know many big IPS. I've been hearing about Marvel Strike Force this Lord of the Rings game while back there RPG have a really disappointed and download volumes like significantly below expectations and Below what they did done before on the flipside supercell and King's new games are just getting insane amounts of downloads right from from there. Either their player. Work or their efforts and to your point, you know, the hyper guys will games are taking over download and download them like crazy right now. So I know it's a mixed bag with that one as well and though the crypto stuff way too soon here, you know few my old co-workers at Kabam are working on Project like this, but and there's a lot of other things but I'm not aware of any big developer publisher working on these types of games yet, but we will see how that involves that will not be a 19 story though for sure. Okay, the next prediction comes from Nimrod Klinger as senior you a manager from tap tail, and he predicts in 29 what he predicts that 2019 will be the year of hyper casual maturation and convergence. So he expect to see larger and more experienced gaming companies get into hyper casual and expects to see acquisition Acquisitions a smaller companies to get into the space. So again wish wish there were more data to kind of show where the market is and Trends but my take is that Nimrod is one year too late. So, you know, I feel like 2018 was that year of hyper casual maturation and convergent? So it's sort of already happened certainly back in 2017. Just looking at high-level data points. You have like three out of the top 15 games by downloads as hyper casual games and that's already shifted in. T-to, you know 10 of the top 15 for at least the full back half of the Year where we're hypo and Hyper casual games further companies like Voodoo raised a ton of money. I think there is like two hundred million dollars and bigger companies with distribution Advantage like a pleven jumped in and with their publishing unit line Studios. So while I do agree that larger companies are going to try to get into this space, especially, you know companies that are kind of viewing this as an attractive. Of Market from an installs perspective. You got to think this is a super difficult problem and it will be you know, very difficult for new players to get any meaningful share here and the other disadvantage for a lot of the bigger companies trying to get in here is that you know, they can't leverage sort of Black Ops from a you a perspective which puts them in a pretty distinct disadvantage. My only comment is this this is the type of thing that's kind of race to zero. So this is one of those Transit Fizzles out pretty I wouldn't Chase my tail on this one, but that's me for the big players, you know for you can make some money in a small way but not not from like a big publisher perspective. That's kind of the Zynga Mantra EA or whoever else I would talk to you on this. Yeah, I agree with with with with JK that this this prediction is like a year late. So, hence, it's not really a predictions like a recollection. But the Casual hyper casual games are making a little less than 200 million dollars on. Average a month in ad Revenue. So it is a quite the sizable Market. It's actually or subcategory. It's actually like I think fourth-largest or third largest in the in casual games overall. So so pretty huge and we have wudu and lion Studios and Miniclip that are already on the top like those those three are the biggest ones and the market is it's not open for that much for new publisher, but it's open for new games so we can constantly see new top 10 games emerging all the time and Essentially, it's really easy to enter but it's but getting but getting more tougher to enter and it's extremely hard to stay on top. And that even that is getting more tougher. So the installs have been on decline overall when we talk about hyper casual game. So the sort of a like the the the rush that happen mid-year and even in the first or the second quarter second quarter has kind of ended where a lot of us smaller developers made their their jump amid core create a couple of games some of them succeeded but they weren't really able to stay on top. And then since then they installed have been in declining but the kind of level often in December and most importantly we're seeing that the market has matured because the biggest player would do they're already moving to other genres as well. So they're not only concentrating on on on these hyper casual launch bro forget or add monetize game, but they're already investing into Into other Studios that are making in-app purchase driven games. So that kind of tells you that they've kind of conquered this Market they have over 10 percent probably 20 percent of monthly revenues and now they're investing into others. So ya got next is Peggy and salts a lead analyst from mobile Groove and Peggy predicts a greater emphasis on machine learning against user acquisition where additional types of data are user behavior is used to get higher performance. He then talks about moving beyond dowse and Mao's to calculate hourly active users and then talks about refined LTV calculations. So my take on this is that the integration of machine learning in you a has already been happening in 2018 and easy, you know, it's pretty easy to say it'll continue in 2019. So I think this prediction is a hundred percent right? I guess the point what I think that one thing That I didn't like about this prediction is that it kind of feels like maybe you know Peggy is not likely a practitioner, but someone just kind of steady things at a high level just based on her comment on downs and nails and you know refined all TV. So it's sort of no fence that these aren't the sort of Frontier types of analysis or research that's happening right now. And I think a big part of machine learning is, you know, being able to take you know, whatever signals 300 different signals and see sort of what happened. So I do think that the high-level Action is right. But you know, I think it would have been nice if this prediction would have gone a little bit deeper and to provide specific, you know, sort of application areas and examples. yeah, you guys have any thoughts on this this is this difficult since since we don't work in and user acquisition, but I feel like she's talking like I read what she was talking about and then feel like she's and referring to user level data and programmatic mediation which have been, you know, kind of like the focus and then the future in use our position especially in Ad Revenue so with the user level later data, I mean you guys know what it means but it's essentially data that that will trigger or actions that will trigger based on players reaching certain truck targets or doing certain things and game and and you know the you a costs and then you I decisions will be made on that automatically and the programmatic mediation is basically just a more sophisticated waterfall of ads with multiple line items. So so this is Of them ad monetization approach and how they're using machine learning in that and it naturally triggers quickly back to to do user acquisition because you know ad monetization user acquisition kind of go hand in hand. Since one is Supply. The other one is demand plus with the effect of of LTV. But yeah, I'm not sure there wasn't a ton of detail that the she was saying is basically machine learning and that's kind of like covers it all. Yeah, I got an opinion here. Next is neat Barker a Biz Dev manager from calibri games and it predicts we are in store for massive number of Battle Royale copycats and trying to play the trend of taking traditional PC and console Games to free to play so my take on this is that this is likely right in terms of Battle Royale. I think that this trend continues in the sense that we're going to continue to see people take shots at this. And then I think he's other particular prediction with respect to trying to take PC console to mobile via free to play. I think that's also right in terms of like the attempt right like they tempt to kind of do that. But yeah, that's that's all I have on that. Yeah for my purse. I mean last I counted there was like almost 30 Battle Royale games out there in one form or another it seems like there's room for about three right Pub G rules of survival and for night kind of geographic. Quickly locked as well. 9,000 is having Japan. What's that? Oh, yeah. What is out? Yeah knives I forgot times out. Right? I forgot to put that on there Activision is having challenges with Call of Duty. It's not getting as much traction, you know, EA couldn't get their shit together with Battlefield. So that's coming on April so easily and then you know you have Survived way what is it? Survival Royale Garena Darwin project H1Z1 calling ring of Elysium. So there's a ton of them out there. I just don't know if there's enough room or an audience for it. I mean, these are built upon big audiences and if you don't have a big audience and the interest it's gonna be really tough to get any traction, you know, the free-to-play on consoles actually really interesting. These systems are not really set up to do that. Even Microsoft and Sony although they've gotten better. But that is it is kind of a risk is that We get a bunch of like double a single a type free to play games that take away mind share from the big Publishers and the big games like FIFA mad and Etc. We'll see. I mean, there's good. I think there can be a lot of attempts whether or not they'll get traction with the you know, the core gaming audience on Console. That's another thing but that is an interesting Trend that should continue in 19 and 20. Yeah, overall the whole battle reality. It's just like it's not a healthy competition. And in a way what I mean by that it starts to remind that sort of a the ages of MMO when when everybody was trying to create a follow-up or some something that could take a piece out of World of Warcraft revenues or the MOBA race where everybody was trying to make a MOBA that could compete with League of Legends and they were thinking they were looking at their numbers like well if we can get 20% we're good and nobody was really able unless we're talking about those that had unique access to to cheap players. Valve, I mean it fail anyway, so so the way I see this Punchy and Fortnight are phenomena, it's there's no other way to put it and why it's really so hard to compete against them is not only because they're phenomena, but because they're playing the the pricing game the ARP down those those are extremely low just the same way as as the ARP taoism League of Legends and DOTA is were extremely low. So it's almost impossible to to enter now because It's not only your fighting against against the competitors with such a vast amount of data that they're able to price themselves really low, but you are also battling ever-growing switching cost Eric as you were saying your kid is, you know going bananas with all these skins that are coming out. So the switching cost is constantly going higher as you know, as he's getting more and more of those skins. So I just it's not it's not really a market you can come in and compete though. They have been some smaller mobas that that have Fair. Well enough for a very small developer to do well, but you know, it's nobody's getting the Fortnight money not even half of it. Not even a quarter of it. So right next is Eric Seifert from mobile Dev Namo who has two predictions for the first hyper casual hits a saturation point and plateaus. And secondly, we will see companies Spring up to facilitate off App Store distribution, and I think in particular he's probably Referencing What epic is doing? So agree with Eric super on his first prediction. We've already kind of covered that and with respect to the second, you know epic has already announced intent for for that one, but I'll disagree that I don't think many others besides epic make a move here. Mmm, basically because no one else has a fortnight and a user base like they do so I think it would be pretty crazy to try and do that. I was I was thinking, you know you when you when you mention that I was thinking like in super so take its games out of Play Store. Would it mean they have pretty pretty good user base. They have a lot of Revenue and they have they have their portfolio. They've been investing like crazy and all the other developers so they can take them with them. So and plus every developer wants to work with supercell almost everybody but you know, they could do it. That's your I think I would believe that a little bit more if they were actually publishing doing like I don't know she was all but a totally different organization, but you would put your game to The SuperStore would you I actually liked that name if you're so yeah big games basketball teams. Boom. I have it. Next is Farhan haq who heads you a at? NAB it he's got two predictions one users will get sick of hyper casual. Although I would I wish you'd be a little bit more specific about what that actually means in the number two that 2019 will be the year for more narrative games blending other mechanics such as puzzle or RPG for me. Not a lot to say here besides that I agree on both think this is already happening and a lot in development and various places, I think. You know implies a little higher cost of development, but I think there's a market for these style games not tapped. Not really fully been tapped in the west. So yeah, there are a lot of people working on this sort of thing. Okay. Next is shreyas rajagopal on a VP of marketing and revenue from Green Panda games. His prediction is at casual add Focus games will shift include IAP and subscription. So with this one I actually don't necessarily agree with this it's you know, basically because it's just really hard to convert free players to be paid player. So while it's easy to say, hey, let's just increase the revenue mix, you know free works for a reason and so I think this One's going to be pretty agreed. Good luck. You made your dirty little advertising bed. Now, you're stuck. Sorry. Okay, and finally, our final prediction is from Karem alemdar, a you a manager for gram games. He predicts a shift of mobile inventory to be more black box where campaigns are Auto optimized with less visibility and control this shifts Focus to creative processes and areas to optimize and so I think Karem Has right on with this prediction Google UAC is largely there on the Facebook side, you know machine learning based bidding Alder algorithms are increasingly performing better with broad-based targeting. We're seeing that on the Facebook side as well. So yeah creative or other areas will gain competitive Advantage moving forward and I think what we're also going to see which he does not allude to is that user acquisition teams are probably going to start to get smaller. And so there's going to probably be a structural reorganization across you a teams. In the longer term. Yeah, not my expertise at all. But I keep hearing that uh becoming more and more automated and likely will not be as big as a competitive Advantage going forward. That's kind of a consistent system agreeing right? And so that's that's it. You know, I was going to add a bunch of follow-up questions, but given time and Eric, I know you gotta jump so I think for ya for us, I think that we ran our end so we did it and thank you guys for waking up at 6:00. JM to do this, it's a you know, it's a cool for p.m. 7 p.m. Right now no 5 p.m. Here. So so you guys are monsters, but let's let's get Eric out of here. All right. All right. Thank you. Bye. Thank you folks for listening to this episode as always. Please do leave a comment. Please. Do send a node. We I mean, I personally really enjoy getting getting all the all the messages from you truly powerful stuff. And please do rate this podcast And subscribe to It Whatever platform you're using and most importantly please do keep in mind that all the opinions literally all the opinions expressed in this podcast are our own. And do not reflect those of our employers. So Joseph came works at the NBC Universal and I work at the powerful Rovio entertainment and whatever we say is definitely our own opinion. So that's it tune in next week. Hope you enjoyed the this episode and and the next next one will be always better. Thanks guys.
Experts and analysts are throwing their predictions for this year. Who is using sound analysis for their predictions and who’s just winging it? Let us tell you... In the latest TWIG we discuss: #1 Here's what 2019 will be like for the game biz #2 Mobile game insiders predict the biggest trends of 2019 Hit us up on Twitter (@m_katkoff & @jokim1) to let us know, which news topics you want us to talk about next or more in-depth. Or to just let us know how we can improve. Also, hit the subscribe button to get notified when we deconstruct the latest news in games. And finally, please do subscribe and rate, if you enjoy the podcast. 