Introducing Gamecraft

[Music] Hello and welcome to the GameCraft podcast. I'm your host, Mitch Lasky. I'm Blake Robbins. And this is a podcast about the modern history of the video business. By that I mean, we're at a point now in the video game business where there are various kinds of games, various kinds of business models that have evolved over the last 20 years. That we sort of take for granted. And I want to explore through this podcast here with Blake the things that got us here, the weird connection of events in many cases that led from what seemed to be some very humble or inconspicuous beginnings to an endpoint that now we recognize as one of the pillars of the video game business. So we're going to look at a number of different themes and we're going to explore their roots in the early days of the video game business back in the 80s and to the mid 90s. And then we're going to explore how they evolved to become the very important components of the business that they are today. It's so interesting for me because I was born in the 90s and I grew up playing all these games or seeing these things happen. But it wasn't until I started spending a lot more time with you that I saw the early roots of these games, sort of the impact that it had on everything else. And it's sort of mind blowing for me and it's why I've enjoyed recording these so much. So let's talk about some of the themes that we are going to explore. So in the first episode, steel this game, we're going to talk about free to play and the rise of free to play out of what was a shareware business invented largely in Texas by a number of early video game developers who were looking for a way around the monolith of the packaged goods business at the time and how that evolved through many twists and turns into the most important business model we have in the video game business today. And how that starts in the US, but really we don't see that fully breakthrough until it emerges in other regions. Episode two is the fall and rise of publishing. In that episode, we're going to look at the real transition from the packaged goods business into the digital download business that we live in today where much of the content is available online and we no longer buy discs in boxes in stores like egghead software. We're going to look at what happened in that transition, who benefited and who was crushed. And we're going to offer some very interesting opinions, for example, my disappointment with Valve as a company will come out in that episode. But I think it's going to be one of the most important episodes for understanding the modern business. Episode three, the calculus of fun is about the rise of the casual game business and with it, the rise of the customer acquisition, customer lifetime value metric that has come to dominate the video game business during the modern era. And we're going to show how the casual business really evolved from some very unlikely characters, a buyer at Walmart and an engineer at Nokia back in the day. And how their contributions really led us into a world where casual games and mobile games represent the majority of the revenue generated by the video game business. Episode four is the forever games where we explore the concept of long-term engagement and specifically how games have evolved from this package good that was really focused on building a franchise in multiple games over time into more of a live operations gameplay and games as a service. For me, this is one of my favorite episodes because Mitch actually talks about which he's never really talks about publicly. His five rules of engagement and almost a framework of how he thinks about games and how certain games and what the characteristics of those games look like to become a forever game. Episode five is the playground and the stage. These represent two really important concepts in the modern use of user-generated content in games. So you have the playground on the one hand which is really the sandbox games, games that have evolved with these open-ended play patterns that allow the users to really create their own gameplay as the game emerges and then the stage which is games as performance which we see really on YouTube these days on Twitch and in some modern role-playing games. It's a fascinating episode about how games have evolved to allow users way more control over the experience than we saw early on in the video game business. Episode six is the console castles. In this episode we're going to talk about the persisting relevance of the console business in video games and why that's such an anomaly given what's happened around the console business. Why consoles remain relevant to this day? Starting back in the 1980s with the Magnavox Odyssey and the Atari consoles and leading all the way to the present, particularly paying attention to Nintendo and the relevance of Nintendo to the video game business despite all odds to the contrary. Episode seven, the failures and futures of virtual reality. Talks about the multiple times virtual reality has come up as a major source of hype in the video game business starting in the mid-1980s with VPL and the rise of virtual reality in its first instance through the 1990s with the first attempt to make it a mass market product and then finally with the launch of the Oculus Rift and Facebook's rebranding as meta. We're going to talk about why virtual reality has long been a dream in the video game business and also why it's largely been unrealized. And finally, Episode eight, the new Gold Rush where we look at the rise of virtual economies and at times they're crossover into real economies culminating in the introduction of the Web 3 game. So I've been an executive and an investor in the video game business for almost 30 years. I started my career at the Walt Disney Company working on their first attempt to build an internal games division. I started a failed massively multiplayer online game company in the mid-90s, three years before Ultima Online came on the scene. I ran the studios at Activision, taking it from a $60 million to a $600 million revenue company in the late 90s and publishing games like Tony Hock's Pro Skater and Quake 3 Arena. In the 2000s, I started the first sizeable mobile game company in the United States, Jammedat. And I scaled it to a couple hundred million dollars in revenue and an IPO on Nasdaq in 2004 during the same week as Google. That company was ultimately sold to electronic arts where I went and worked as the head of online and mobile for a couple of years before joining Benchmark Capital in 2007. And as a partner at Benchmark, I've made investments in companies like Riot Games, GuyKai, Natural Motion, Discord, that game company and others that have become incredibly relevant to the modern video game business. So I really feel like I've seen the video game business from its package goods roots all the way to its most modern implementations. I feel like I've got a lot to share in this regard about what I've seen during that 30-year history in the business. You're also one of the few that was an executive both EA and Activision during that time. Yeah, dubious distinction indeed. I've been a venture capitalist for seven years now. And actually, uniquely got into venture capital right out of college, which most people don't do. But when I was in college, I learned about startups and became obsessed with the idea of joining a company that can make real impact on the world. And when interned at SpaceX and Nest and a bunch of other tech companies, and as I've spent time in venture capital, I joined Benchmark about a year ago as a principal. Really become obsessed with gaming. I didn't really realize that gaming was as big of a business or a real opportunity when I was a kid to work in the field. But I've been a gamer my entire life. And I've always thought that there was something really magical happening there. And when I saw you know, Mitch and others talking about the game's business as being a real thing, I knew that I had to spend more time there. And I spend a lot of my time investing in looking at games companies these days. I also led the incubation of a major esports team in North America called 100Ds. And we're closely with them from both an esports side, but also a content side, which we'll touch on in later episodes as well. So I think this is going to be a fun conversation because you really have sort of the old bull and the young bull here at the table. I can bring a lot of context. I've seen a lot of stuff in my career in the video game business, a lot of success and a lot of failure. And I've gotten to meet so many of the relevant players. And I've been at the table when a lot of really key decisions have been made. But you you've grown up in a business that really we created. You've come of age with the background of all of these decisions that were made before you. And you've taken a lot of these things for granted. And so I think the dialogue that we have around these issues around these topics is particularly fascinating, given our different perspectives on the business. Yeah, I think in a lot of ways, I'm probably the perfect target listener of this podcast. And you know, I look at the space from a venture capital perspective, but there's so much that I still need to learn around the history of this business and games are in our form, which you and I talk about a lot. But the business really does have equal impact. You can't remove the art in the business in this industry. And you have really opened my eyes to that. And hopefully these episodes will open several other eyes to just how important the business side of gaming is. Yeah, you know, you think about it. The book publishing business, the music publishing business, the film and television businesses were largely stable for most of their histories. Now that's changed quite a bit lately with the introduction of the internet. But up until that point, up until Amazon, up until Netflix, up until the death of theatrical distribution. and largely those businesses were stable often for a hundred or more years. The business models were very stable. That is the exact opposite of what happened in the video game business. The video game business, the business models have been incredibly dynamic. They've changed year after year, sometimes month to month. And if you can't really understand how those business models evolved, you can't understand what happened creatively in the video game business. Because so much of the content we consume is a product of those business model changes. I won't share too much, but one of my favorite tidbits from some of our early episodes is around free to play. And specifically, a lot of people who are not familiar with the business side of games might look at free to play and just think it's pure greed. But in reality, that actually came because of a business problem. And that's what led to the creation of this. Yep, and we're going to talk about that in great detail. So if you have an interest in the video game business, if you're just interested in knowing how the games that you consume arrived on your doorstep and why they are the way they are, some of the motivations behind the decisions that were made to bring you the games that you love, I think you'll get a lot out of listening to these eight episodes. If you're in the business, or if you're an investor who's looking at video games as a potential category for investment, I think this is an essential eight episode podcast because you'll learn more in these eight episodes about not only what happened in the past, but what's going to happen in the future than you can really find in almost any other place. So anyway, thank you for listening to this introduction. And we hope you'll stick around and listen to episode one, steal this game.