Direct-to-consumer: building the infrastructure that makes it real

[SPLASH] Everyone logs in for their own reason. Some for the games. Some for the competition. But the real ones, they're here for control. Welcome to the Directverse. Identity Unwut. Store. Hester Mized. Payments Direct. And Unity Online. No gatekeepers. No middle layers. Just developers. And players. Connected. In this world, studios don't just launch games. They build universes. Where every purchase, every login, every moment belongs to them. Direct to consumer isn't just tech. It's the ultimate unlock. New objective available. Build your connection. Bone your players. Entrull your feature. You ready? Always. This is the Business of Games. Welcome to the Business of Games podcast. Powered by Exola. Where we explore the strategies and behaviors shaping how games are developed, marketed and monetized. I'm Leah Valentine. And I'm Chris Hewish. This episode is part of our ongoing series on Direct to Consumer Strategies in the games industry. We've spent time in the series looking at the why of Direct to Consumer. Why studios are moving closer to players. Why marketing changes when you own the relationship. Why monetization looks different when it's built on trust. Today, we're going a layer deeper. Because here's something we've noticed across every Direct to Consumer conversation we've had. The strategy is usually clear. The intent is there. Studios want to own the player relationship. They understand why it matters. But then something goes wrong. The Direct channel exists, but the relationship doesn't feel any more direct. And the reason almost every time isn't strategy. It's infrastructure. Adding Direct to Consumer as part of your business strategy is more than just a business model decision. It's an architectural one. The player relationship you promise is only as real as the systems you build to support it. Identity, payments, data pipelines, commerce, infrastructure, communication systems. Each one is a decision point. And each one either enables the relationship or quietly undermines it. In this episode, we're talking to two industry leaders who live inside those decisions. One has been building at the intersection of Web 3 and Direct to Consumer infrastructure, looking at how emerging ownership tools fit into the broader stack. The other has been working at the commerce and technology layer, helping studios understand what they actually need to build and in what order. What they've both seen is the same thing. The studios getting Direct to Consumer right aren't necessarily the biggest or the most technically sophisticated. They're the ones who made the right architectural decisions early and built their player relationships on infrastructure they actually own. Let's start with the layer most studios hit first and underestimate the fastest. The stack itself. There's a version of the Direct to Consumer conversation that sounds almost simple. Own the player relationship. Control your commerce. Build Direct channels. The logic is clean. The benefits are real. But there's a gap between the principle and the practice that most studios don't fully see until they're already inside it. Because going Direct requires more than simply adding a checkout flow or launching a web shop, it means taking ownership of the infrastructure that gatekeepers used to manage for you. And that infrastructure is more complex than most teams realize. In our Direct to Consumer Series Foundation episode, we talked about five structural principles. Relationship, commerce, intelligence, trust, and long-term value over time. Every one of those principles has a technology requirement underneath it. Relationship requires identity infrastructure. Commerce requires payments and pricing systems. Intelligence requires data pipelines. Trust requires operational reliability, such as fraud prevention, support, and compliance. And long-term value compounds over time. That's not one stack. That's five. And the clearest example of a studio that understood that early and built accordingly is Epic with Fortnite. They didn't just launch an online store. They built their own launcher, their own account system, their own payment rails. And when Apple tried to limit how they could use those rails, they took them to court. That's not a preference. That's a signal that infrastructure ownership is a strategic imperative. And the Epic account system now spans multiple games, creating a cross-title identity layer that deepens with every new title they release. The relationship compounds because the infrastructure was built to compound. But Epic is the exception. Most studios don't start there. And the mistake most studios make? They solve one layer. And assume the others will sort themselves out. They launch the webshop, which is the commerce layer, but they haven't built identity infrastructure. So they're transacting without knowing who they're transacting with. Or they invest in the data layer. But they haven't solved communication permissioning. So the data exist. But they can't act on it without going back through a platform. They were trying to bypass. It's not a failure of vision. It's that the full scope of the stack is easy to underestimate when you're looking at it from the outside. Aaron Goalsbee is chief operating officer at Mythical Games. For Aaron, direct to consumer isn't about just one thing. It's about an ecosystem. There's a couple of different components. One is understanding that it's not just the webshop. It's ownership of identity, it's ownership of payments. And I don't mean doing all this yourself. When I say ownership is a company, I don't mean build it from scratch. I think we're way beyond the world in which we have to build everything that we think is required for this. In fact, I think that there are lots of very high-quality commercial grade solutions out there that where you can pretty much stitch them all together. But in some cases, there are companies that provide them. As a software service. But it's really owning identity and payments and in gaming in particular, it's inventory and its communication and its social, its community. Those are the components of building this direct to consumer ecosystem, at least in my view. I'd say foundationally, I think it's identity and its payments and it's inventory. I think if you get those three things right as the foundational tech, I think that really sets you up to be able to own the next set of layers on top of that in terms of making sure that that ecosystem is properly constructed. And it's unified. If it's unified, then it becomes this compounding system, almost a flywheel. Forgive me, I have very simple ideas about how things work and flywheel is one of them. And I think that when you do unify those foundational pieces, you do create this virtuous flywheel because you have that full 360-degree view of your consumer and what they do and what they enjoy. And that's good feedback for your product. And so it does feed back into itself. What that points to is something we hear consistently across the industry. The stack isn't one decision. It's a sequence of interconnected decisions and the order matters enormously. When you get the sequence wrong, you end up with what looks like a direct to consumer setup, but functions like a platform dependent one. The channel is direct. The relationship isn't. And players notice. Even if they can't name it. They notice when the experience feels fragmented. When an offer doesn't match what they actually do in the game or when support can't find their account history. That's not a product failure. That's infrastructure failure showing up at the relationship layer. Which is why the studios who get this right tend to build differently. They architect with the relationship in mind from the start, not the transaction. According to Aaron. It's interesting to note that the technology hasn't always been there to own all four corners of that relationship. I do think though that today that does exist. I do think today you can in fact own all four corners of your customer relationship if you choose to. It's a business strategy that requires extra work, extra resources. It's a business strategy that can be very rewarding though if you are successful with it. That's a useful frame. Because the question evolves from do we have the technology to whose technology is it and who does it actually serve. A payment processor that sits between you and your player isn't neutral infrastructure. An analytics platform that aggregates your player data without giving you first party access isn't neutral either. Every layer of the stack is either building your relationship with players or mediating it on someone else's terms. and then direct. to consumer, that distinction is the whole game. Now there's one part of this infrastructure conversation that the industry keeps treating as a separate topic. A different track, a different team, almost a different business. But it isn't. It's just another layer of the same stack, one that touches the direct to consumer question more directly than most people realize. And it's Web 3. Let's reframe something. Web 3 has had a complicated few years in games. It's been treated as a platform unto itself, leading to an overblown hype cycle met with intense backlash. NFT drops, play to earn collapse, speculation dressed up as innovation. And for a lot of studios, the result was, "We'll wait and see." Which is understandable, but it's also led to a framing problem. Instead of viewing Web 3 as a platform unto itself, Web 3 should be approached as a feature that unlocks new capabilities for and improves upon things we're already doing. Because the question most teams are asking is, "Should we do Web 3?" When the more useful question is, what new capabilities and features can it unlock for our existing infrastructure? And when you ask it that way, the conversation shifts. Because at its core, Web 3 tooling is an answer to an infrastructure question. Who owns the digital asset? How is that ownership verified? Can it move with a player or is it locked to your servers, your platform, your terms of service? Those are direct to consumer questions. They're the same questions we ask about identity, about data, about commerce control, just applied to the asset layer. And that reframe matters because it separates the speculation from the structural. The speculation tokenized assets as financial instruments, play to earn schemes, NFT flipping, that is not direct to consumer. That's financialization wearing direct to consumer language. But the structural question can a player own a digital item in a way that's provable, portable and not dependent on a single company's continued existence? A genuine direct to player question. And it's one that blockchain infrastructure done right can actually answer. Yon Rosner is co-founder and CEO of One Earth Rising, a company building onable game assets that connect game experiences across platforms and into the real world. For Yon, the connection between Web 3 tooling and the broader direct to player architecture wasn't obvious at first. But once you see it, it's hard to unsee. I draw the comparison to a car dealership. So the current world in gaming specifically is set up, you go to your car dealership of choice Mercedes Toyota, you name it and you buy a new car. In this current gaming world, you can only drive your car on the dealerships lot and you cannot leave the premise. It's kind of like fenced off. That's what we are today. It's the Fortnite environment, this is row blocks, whatever it is. The future of what blockchain allows us is that we can open that gate and we can drive around the city anywhere we want, can stop anywhere and if anyone stops us and say like, hey, is this really your car? Sure, I can show my papers, my ID and verify that this is my own car. So this opens the world also to move between different servers because we don't need the service structure, the networks of a specific company to transfer goods between users. We can use the blockchain, which is owned by everyone and transfer goods around. That really opens up our technology opportunity where we can now leverage that ownership transfer. What that points to is the same principle we've seen across every layer of direct to consumer infrastructure. The question is always who controls the relationship. In traditional gaming, a studio builds a game, a player buys an item and the item lives on the studio's servers. The player has licensed access. They don't own anything. Which, for most players, most of the time, they don't think about until the servers go down or the game sunsets or the studio changes its terms. And suddenly, the hundreds of hours and hundreds of dollars a player invested are just gone. Web 3 infrastructure in its most useful form is a way to change that architectural dependency. To give the player a provable claim to what they've earned or purchased, one that doesn't require trusting the studio's goodwill or the platform's continued support. That's a direct to consumer value, not a crypto value. The technology is the vehicle. Player ownership is the destination. But it's worth being honest about where the technology is mature and where it isn't. Because the gap between the principle and the practice is still significant, but closing quickly. Here's Yon on where Web 3 infrastructure genuinely adds direct to player value and where the complexity still outweighs the benefit. We try to avoid dimensioning of Web 3 as much as possible, not because we want to hide something, but because not necessary. Let's say if I sell a publisher user acquisition solutions, and I don't need to tell them or they're not interested in like, okay, on what server does this run, right? Or is your app built on Ruby on Rails? Or is it, you know, what does it use as a back coding? Is it Python? It's not, normally they don't care as long as I deliver the solution they're looking for. If I deliver them 500,000 and a million new gamers, cool. I don't really care as a publisher how you do that, right? As long as it's all legal and everything. And that's really also what kept us, like transition to conversation more and more now away from talking about blockchain because it doesn't really matter. How it works, it does not matter. If you onboard on our platforms here, you'd never touch setting up a wallet. You never touch quick occurrences or anything of that sort. Luckily in that industry piece, we are far beyond that. So there's no need for doing these things. These very cumbersome, I mean, frankly, also kind of like scary setup processes where you can lose everything or pay something and then it's gone or send something and it's gone. So we want to avoid all of that and we do avoid all of that. So things that have to use blockchain to identify you in a different server structure will do that by just doing it in the backend. I guess no need for you to get into that. And so for the majority of cases, we don't need to talk about it. If people ask, of course, we tell them how we use blockchain in the backend, but that's why we also not refer to ourselves as a blockchain company. We use blockchain as a solution layer, but it's really just one of the many tools that we use in our building process. That's the kind of honesty you only get from someone who's actually built in the space. Not just watched it from the outside. It's the right lens because the same test applies to Web3 as to any infrastructure decision indirect to consumer. Does this actually deepen the player relationship? Does it give the player more ownership, more trust, more continuity with the game? Or does it just move the intermediary? Replace the platform with the blockchain, but leave the player with the same borrowed relationship just with different branding. If it's the latter, it's not direct to consumer. It's a different set of constraints, wearing the same language. The studios building well in this space are the ones asking the former question, starting with the player relationship and working backwards to the technology, not the other way around. Which it turns out is the right way to approach every layer of this stack. Especially the one that makes all the others useful, which is the data layer. Here's a version of going direct that looks correct from the outside. You have a webshop, you have a CRM, you have analytics dashboards, you're collecting data, you're sending emails, you have direct channels. And then a player turns and you don't know why. Or you want to run a personalized offer and you realize your segmentation is based on age and platform, not behavior. Or you want to close the loop on a support issue and the support team is looking at a different data set than the marketing team, which is looking at a different set than the product team. And the direct relationship you thought you had turns out to be a series of disconnected systems that each know part of the player, but none of them know all of them. That's not a tools problem, it's an architecture problem. First party data, data you own that you've collected with player consent that lives in your systems and can be acted on directly is what makes direct to consumer intelligence real. Without it, personalization is a promise you can't keep. You're working off platform aggregates, delayed reports, incomplete signals. You know what players did last month, not what they're doing right now. And in a direct to consumer model, right now is the whole point. Because the advantage of owning the relationship is the ability to respond, to serve the right offer to the right player at the right moment. To notice when someone's engagement is dropping before they churn. To know your players, not just count them. That's the intelligence engine that direct to consumer unlocks. But only if the data architecture is built correctly. For Erin, the difference between studios that use data well and those that don't usually isn't tooling. It's a decision that was made or not made much earlier. Data is important. It's structurally required if you're going to run this type of an ecosystem and you want to create a flywheel that's compounding. But data is not dashboards. I'm talking about decision systems. The information that you receive, a lot of companies say they're data driven, maybe they are. I don't think that's as valuable as being data informed. The data is there and you want to make sure that you have wide access to it and deep access to it because it's going to help you unlock your decisions. What decisions can we make about our game? What decisions can we make about our business? What decisions can we make about the player experience? That is a system and data powers that system. It's very important that you treat it as such. It's an engine. It's a core component of what you do. You're not just there to deliver cool content for your games. You're there to listen to how that content is being consumed in house performing. The retrofitting problem is real because data architecture decisions compound. If you build your player identity on platform IDs, you don't own the identity. If your behavioral data flows through an intermediary before it reaches you, you're always working from a lagged filtered picture. And the instinct is to solve it later. Once you have a few more players, once you have more revenue, once you have a bigger data team. But by then you've already made commitments to platforms, to vendors, to integrations that make the foundation very hard to change. The studios that do this right build for data ownership before they need it. Not because they're already processing millions of events a day, but because they know that when they get there, they need to own what's flowing through the system. Platica is a good example of what that looks like over time. They've been investing in first-party data, loyalty systems, and VIP player programs for years, long before the current D to C wave made it fashionable. Today, 27% of their game sales flow through directly owned platforms, up from 14% in 2020. That's not a pivot. That's a compounding advantage built on decisions made much earlier. And that number tells you something important. The gap between 14% and 27% isn't a marketing decision. It's an infrastructure decision that was made years before the revenue showed up. Roblox takes that logic to its furthest conclusion. For them, the data layer and the player relationship aren't just connected. They're the same thing. The Robux economy, the creator monetization layer, the identity system, none of that is back office infrastructure. It's the product, which is why it's worth holding up as a contrast. Most studios are trying to bolt a data layer onto a game. Roblox built the game around the data layer from day one. For Yahn, first-party data changes more than what you know about players. It changes the quality of the questions you're able to ask. Developers with this technology have a direct connection now to users across the board. And the users, you know, there is the opportunity to connect now even further, not just through the game, but through other means. And what do I mean with that? So we just launched a campaign with a candy brand called Final Bussower in Walmart. So here you, Final Bussower for the ones who are not aware of them. They're a sour patch kid, much more healthy and better. And from the get-go, they started putting these little 8-bit 16-bit game characters on their packaging. So every flavor is connected to a character. So we thought, okay, that's cool. When we met them, they're like, hey, what are you ever thought about bringing these characters into games? So your fans can, they have a very loyal fan base, can also interact with them in other games. So that was the plan, with the launch of their Walmart kickoff. Basically, we did that. So now you can buy them in 1,900 Walmart across the country. And when you do, you can unlock the game characters on this and bring it into two games that are currently running on PlayStation 5 and on Steam. So that's now an ability to where you have a consumer brand, a CPG brand that directly connects with consumer in a storefront. And the games have a way of now communicating with new demographics and new consumers, bring them into their worlds. And then also bring the assets that they have still available inside of their games directly to their consumers and communicate with them. Have a direct connection to them. Even if you're a smaller game, in our world, we can hook you up with our user accounts. Everybody can see the different assets you scroll in your friends library, inventory system, you see, oh, that's cool. Leah, where did you get that character from? Awesome. Can you lend us to me? Can we trade it? I want to check out this game as a completely new way to communicate, to discover and to acquire users. What if you take your game A or GA and bring it into game B? What could that unlock? Or maybe that unlocks an Easter egg in game A? All of these things are now possible because you can track interactions across multiple game bodies. And that's really fascinating. As a game developer, former game developer myself, the storytelling element that exceeds now the foundational level that we have before is insane. It's a fantastic new world. And for Aaron, persistent identity is an absolute unlock when it comes to these systems. If you do not have a single view of your customer, data becomes far less valuable to you because you cannot complete the ecosystem cycle. You cannot make that flywheel work if you cannot see the journey that your customer is having through the ecosystem. That shift in question quality is what separates reactive direct to consumer from strategic direct to consumer. Reactive direct to consumer is we saw engagement drop. Let's push and offer. Strategic direct to consumer is we can see at the segment level which players are two sessions away from churning and we can intervene before they get there. One is using the channel. The other is using the relationship and that difference between channel and relationship runs through everything we've talked about today. The identity layer determines who you're talking to. The data layer determines what you know about them. The intelligence built on top of that determines how well you can serve them. Get those three right and the player relationship becomes a compounding asset. Each interaction makes the next one better. Get them wrong or build them on borrowed infrastructure. In the channel exists. The relationship doesn't. But there's one more layer. The one that's easiest to treat as an afterthought. And the most expensive to get wrong. And it's not data, it's not identity, it's not even payments. It's trust. Here's something worth saying plainly. Payments infrastructure, fraud prevention, refund systems, compliance, customer support, most organizations file these under operations. It's back office, necessary, but not strategic. And in a platform mediated model, that's mostly fine because the platform carries a lot of that weight. Players know who to call when something goes wrong and it's usually not the studio. But in a direct to consumer model, that changes completely. When a player buys directly from you on your web shop through your subscription, in your commerce layer, every part of that experience reflects on you. The checkout, the confirmation, the refund if they need one, the support ticket if something breaks. Players don't separate those moments from the game. They don't think, "Oh, the payment processor had an outage." No, they think this studio doesn't have its act together. Or worse, I don't trust these people with my money. And trust, once lost in a direct relationship, is very hard to recover because there's no platform buffer between the player and the experience. Relationship is direct, so is the damage. For Aaron, the moment a technical failure becomes a trust failure is rarely dramatic. It's usually quiet and cumulative. Have zero pride in decision make because it's a gift. When you receive this new information, it's an absolute gift and it'll pass you by if you don't embrace it. What makes this particularly hard is that trust infrastructure failures don't always show up immediately. A player who had a rough checkout experience doesn't always complain. Sometimes they just spend less, engage less, or start looking for somewhere else to play. And by the time you see it in the data, the relationship has already eroded. Which is why the studio's building durable direct to consumer businesses treat operational reliability as a player relationship investment, not a cost center. Fraud Prevention isn't just about revenue protection. It's about ensuring that the players who do trust you with their payment information are protected. Support isn't just about resolving tickets. It's about demonstrating that the direct relationship has real value when something goes wrong. Done well, these moments aren't just damage control. They're proof of the relationship. So where does this all go from here? Because the honest question hanging over a lot of this conversation is how much of this is accessible. For a mid-sized studio, for a smaller team, for a developer who wants to build a real direct to consumer business, but doesn't have an enterprise engineering org. And the answer is more encouraging than it might seem. Look at a studio like Khabim. Marvel Contest of Champions, Shop Titans, not an Enterprise Scale operation. but they built their identity system to tie together progression, purchase history, and communication across devices. Something as simple as account creation as the entry point for cross-device tracking. That is a deliberate architectural choice, not a massive engineering investment, and it unlocks a first-party data layer that most studios at their size never achieve. Scopely is another good example at that tier. With Marvel Strike Force, they built a tight loop between identity, email communications, and web shop promotions. The same offer surfaced in-game and through direct channels simultaneously. That kind of coordination sounds simple, but it only works if the identity and commerce layers are actually connected underneath. Most mid-tier studios never get that integration right. And the market is starting to notice. Dream games built Royal Match on a deliberately lean stack. One title, deeply instrumented with a player lifecycle model that's among the most sophisticated and mobile. The result was one of the highest-grossing puzzle games in history and major investment, following shortly after. The single there is clear. Private capital is backing studios that have built data-competent infrastructure, not just hit games. Which means the road ahead isn't just about better tools. It's about studios recognizing that the infrastructure layer is where the durable value gets built. And that investors, players, and partners are all starting to see it that same way. Aaron has built direct-to-consumer infrastructure. At a scale, most studios will never reach. So when he talks about what the next generation of developers should do differently from day one, it's worth listening carefully. But if I were to take a step back and think about this from the next generation of game developers that are truly out there and that are making this huge impact, I would say that they do reach that lightning in the bottom moment where they're like, "Oh, here's the core game loop. I think this is going to be fun." I think that they should take a moment when they get that little spark in that bottle and have an ecosystem conversation with themselves and their co-workers. Like, "Okay, so what are we going to do to bring this to market?" The questions that they need to ask themselves are those foundational pieces. What is it that we need to put in place so that we can build that flywheel with this spark? And not get too far ahead on the spark, but at the same time, it can cause a fire. And that's exciting. But they need to ask themselves, "How are we going to handle identity? Architecturally? How are we going to handle identity? How are we going to handle inventory? How are we going to handle communications with our consumer? And how are we going to handle payments?" And if you get at least those four, you can talk about social, you can talk about community later, but like, these are the core four questions that they should ask themselves and have answers for. And I really want to hear everyone say we should go and look to see who else is doing it. The answer should not be we should build it ourselves. I take a hard position on this because I think that it's a capital intensive exercise to try to build all this stuff for yourself. And there's just no need anymore. In fact, there's so many advantages to finding partners out there, platforms that provide this. It can really jumpstart that spark and turn that into something really amazing if you make those very tight decisions early on in your process. That's the version of this story that's easy to miss when the conversation stays at the enterprise level. The stack is becoming composable, modular, API first, built to be assembled rather than built from scratch. Which means the architectural decisions that used to require a large engineering team, like identity infrastructure, first party data pipelines, payments and fraud at scale, are increasingly available to studios who are willing to make the right choices early. The bar isn't build everything yourself. The bar is understand what you need to own and partner deliberately for everything else. Own your identity, own your data, own your commerce logic, partner for the infrastructure that sits underneath it. And build it before you need it. Because here's the thing about direct to consumer infrastructure. It is not exciting. It doesn't ship as a feature. It doesn't have a launch trailer. But it's the thing that determines whether the player relationship you're building is real. Whether the ownership you're claiming is actual ownership. Whether the personalization you're promising is something you can actually deliver. And ultimately, whether the players who choose to go direct with you, to trust you with their identity, their money, their time, find a studio that deserves that trust. That's not an infrastructure question. It's a relationship question. That happens to require very good infrastructure to answer. Every direct to consumer conversation eventually comes back to the same question. Not, do we have the strategy? But, do we have the infrastructure to make it real? Identity, data, commerce, trust? Each layer is a decision about who the relationship actually belongs to. Get those decisions right and the player relationship compounds over time. And the direct channel exists without the direct relationship. And that's what today really comes down to. The studios building durable direct to consumer businesses aren't the ones with the biggest engineering teams. They're the ones who understood early that infrastructure isn't a back office problem. It's the foundation everything else is built on. The personalization you promise, the ownership you claim, the trust you are asking players to extend. None of it holds without the right architecture underneath it. Build it before you need it. Own what matters. And partner deliberately for everything else. And in the end, the player relationship you're promising is only as real as the systems you've built to support it. If you enjoyed today's episode, subscribe, share and leave us a review. You can find more episodes at exola.com/podcast and follow the Business of Games on LinkedIn. Thanks for listening to the Business of Games podcast powered by Xola, where we provide all the things for companies to launch, grow and monetize their games. This episode was produced by Kelly Tyson, executive produced by Ed Lynn and hosted by Chris, Hewish and me, Leah Ballantine. Special thanks to our guests, Jan Rosner, CEO of Warner of Rising, and Aaron Goolsbee, CEO of Smithical Games for joining us today. Until next time, enjoy the game.