Jacob Navok

I’ve spoken a lot about certain industry problems from the last few years: 1. The increase in cost relative to revenue. US costs now compete with tech industry salaries- if you’re a worker in Bellevue or Redwood City working for Bungie or EA your housing costs compete with people working for OpenAI or Meta which means your cost of living is outgrowing the industry’s ability to cover your salary. 2. The increase in outsourcing and acceleration of talent worldwide. In the 1970s and 1980s when the industry was being born the west coast had the highest concentration of the world’s programming talent. Now game engines spread that talent everywhere and AI coding accelerates the ability for anyone to generate code at the same level. (Of course reading and modifying that code still requires specialized skill.) But I haven’t spent as much time talking about the challenge of SELLING games. There are a few things unique to Marathon and Sony’s live service strategy that aren’t globally applicable but we can still extract some lessons from it. The first is that Sony traditionally excels at package disc sales where trailers, in store standees and billboards move units. It’s parallel to a movie theater film rollout. But their live service titles don’t have traditional rollouts this way which means they don’t have the muscle memory to flex. Worse, these games are reliant on algorithms that put Sony at the mercy of competition in ways that Sony isn’t used to. Marathon competes with the tens of thousands of new games releasing on Steam annually. Steam will give Sony an account manager but otherwise its titles are not treated different from other publishers. Games sinking or swimming based on algorithms are old hat for mobile. Mobile has mostly moved to an LTV/CAC arbitrage model; the better your ML algorithm the more money you can make. But this is new for AAA. I would place a bet that when the original budgets for many of the live service titles were made, in the days when only a few hundred titles launched on Steam a year, the notion that they'd be competing on an algorithm that Sony doesn't control against titles like Slay the Spire 2 wasn't being discussed as a possibility. It puts the marketing departments responsible for the success of these titles in a bind. They have limited means to influence Steam success. There are no Steam ad slots you can buy, and Facebook ads haven't proven success to convert users to buy a $40 Steam game. In the past you marketed regionally. You could place billboards in Times Square, major cities, on bus routes, and get people to pre order in their local Gamestop. Meanwhile, the Steam algorithm is globally driven. You can put billboards in Times Square but a rush of users buying Crimson Desert in Korea will push that title up the charts and your title down the charts. You can't control for all the factors, and the success of titles with large Chinese userbases that are opaque to your marketing team mean that the best laid plans can be pushed aside. There is no known gameplan of success for AAA publishers for Steam. Many are relying on really high quality word of mouth and discounts/sales. Some are starting to understand that Discord + international player bases help sustain. The AA publishers who have learned to game the system rely on gimmicks (friendslop) or quirks and memes that drive influencers to talk about a game. Gimmicks and memes aren't really repeatable for AAA publishers, or at least in most cases it won't drive the level of revenues needed. Perhaps the most interesting thing about the recent GAAS launches is seeing how bad Sony is at Steam marketing. It's only going to get worse now that Sony is pulling back first party. It's also unlikely that Steam gets weaker over time, which is going to put Sony in a bind going forward for anything that isn't single player, especially when we've seen consistently that console sales rarely eclipse Steam with these multiplayer titles. (I would bet that if Fortnite was on Steam, its PC base would be bigger than its Playstation base.) Microsoft will have to learn these lessons too. Unclear how they do better than Sony on Steam, which is why you saw them try different strategies around Gamepass. No platform wants to be a rent payer on another's land, hence Epic and EGS. But Steam is a continent unto itself.

To legally sell a game in China you must: 1. Have it registered with the government 2. Have a local development partner These are very costly. As a result most developers do not do this. And as a result they cannot market or promote their games in China. Chinese gamers are great purchasers of western content. I am very happy for them to do so. I wish the market was actually open, but it is not. The current size of Chinese AAA is a result of a grey market that isn't actually legal, and is a loophole the government can close at any time.

The below game, which features brainrots that are AI creations, made more money (nearly $200m) than 99% of all games last year, is dollar for dollar the most profitable (cost to revenue, less than a dozen people work at the studio) game of all time, and holds the world record for peak concurrency (25.8m concurrent players) of any game ever made. More people at at McDonalds each week than any other restaurant. Consumer taste is actually broad and in most cases very different from what you seem to believe is true.

It is abhorrent for Apple to block competing stores and then arbitrarily refuse to carry perfectly fine and lawful third-party apps on their monopoly store. Apple is playing games with the livelihoods of 1M developers and the freedom of access for 1B consumers.

PlayStation fan Jason Schreier says that Gears of War: E-Day cost $500 million to make. What makes much more sense is that 500 million is what was spent on Studio operations/projects and staff over the last 7 years. ▪️Work on Fable. ▪️Work on Forza. ▪️Work on the Matrix Unreal Tech Demo. ▪️Work on Gears of War Reloaded. ▪️Engine work and support for other teams via ATG. ▪️Salary for the 300 or so devs and, of course, E-Day.

Former XBOX Senior Product Manager, Derek Reese sheds light on The Coalition studio expenses🚀 “So much of that cost is The Coalition being on the hook for the Microsoft branch of Unreal and one of the flagship titles. I should know, I tried to get leadership to support a plan to have other studios adopt it and write off the support costs. Same problem with Turn10 and ForzaTech.” Source: Derek Reese on BSKY