VC Funding Down / Fortnite Kid Safety / OpenAI Drama / Embracer Restructure

[MUSIC PLAYING] Welcome to the Novit Gaming Podcast, where it is our mission to explore the business and future of video games. We bring together the industry's brightest builders, investors, and thinkers to keep a false on current events, dissect emerging trends in games, share lessons learned, and have a great time. This podcast is also part of Novix growing ecosystem, which ranges from free and premium research as a consulting and advisory services. For more information, visit www.novic.co. This episode is brought to you by Lake Star, one of the leading European venture capital firms. Lake Star's mission is to find, fund, and grow disruptive businesses that are enabled by technology and founded by exceptional entrepreneurs in Europe and beyond. Founded by Klaus Ombles, the team's early investments include Skype, Spotify, Facebook, and Airbnb. And since raising its first fund in 2012, Lake Star now manages an aggregated volume of over 2.8 billion euros across their early and growth stage funds. The team actively advises and supports portfolio companies and marketing, recruitment, technology, product development, and regulatory insight accompanying founders from seed to early stage, growth stage, or exit. Lake Star's games and media team has made 18 investments, including 1047 games, Zebidi, Modulate, and Trace. If you're interested in learning more or getting in contact with the Lake Star team, simply go to LakeStar.com or check out the details in the show notes. And with that, let's jump into the episode. Hello everyone, welcome to another Novik Roundtable. I'm your host, Devon Becker, and with me, I have great panelists as always, including a new face here. We've got Anil and Dave, who you should know pretty well by now. And then Taylor, Hurst, coming over here from Convoy, how you guys look? A little pre-Turkey day here for some of us. Yeah, we're happily not celebrating Thanksgiving day. It was the only free people in the world, four people in the world who want. Well, here in Canada, we've already did our Thanksgiving celebration. We do celebrate it in October. Go ahead of the curve. Thank you a lot faster than Americans do. Well, you're welcome, Dave. So Taylor, why don't you tell us about yourself? Yeah, yeah. So yeah, we do celebrate Thanksgiving tomorrow. So I guess we have three separate Thanksgiving celebrations. But I'm the principal at Convoy. We're an early stage gaming fund focusing on pre-seed series and investments, predominantly in the technology infrastructure and platform side. So the main difference is we do not invest in games studios specifically. But it had been there for five years now. And we are on our third fund, which was the most recent, one for $150 million. And have now done about seven investments out of that one. And we'll be continuing to invest in the gaming space going forward. Awesome. I'm sure everyone will look forward hitting you up now. If you want to throw out your email and ask for that spam. Yeah, my email is Taylor at convoy.vc. Please feel free for anybody to reach out, always looking to chat with more people in space. Awesome. Well, obviously we'll be chatting today. And we've got some great topics. We haven't been short on topics lately. It's been actually pretty busy somehow going into the winter here. We've got some stuff around games vc funding, which unfortunately isn't great news. Not all of this is good news. Epic has been going through some interesting times as well with Fortnite and kids playing the game, obviously. So that should be interesting to dig into a bit. Open AI. If you've been paying attention over the weekend, a lot of fun there. We're just going to kind of sum it up and get into what that might mean. Some good thoughts here from Dave on live operations, because he was followed from last week. That should be a good tie on. If you didn't catch last week, of course, make sure to do that as well so you can catch what he's talking about. And then Embracer with good news is always unfortunately, Aaron not here to cheer them on, but we'll definitely get into it. Why don't we just kick off with the games vc funding here? According to pitch book and their Q3 gaming report, last quarter, vc firms closed 113 deals for disclosed 857 million. And this is unfortunately another decline as compared to both previous quarter and Q3 of 2022. So quarter on quarter, we see a decrease of a 10% year on year, about 50%. And really looking also at the deal value, the value decreased to fair chunk, about 35% compared to Q2 and 68% compared to this time last year. So as a quick recap in Q2, there actually was a slight increase in the total value of deals, but the total number of deals decreased to 29%. And one of the things I was actually curious to do is take a look back at when it comes to the interest rates. Because one of the comments has always been, well, the cost of money is a lot more expensive these days as compared to what it has been. And so one of the things I did was I took a look back at 2018, which was approximately when interest rates were fairly close to where we are today. And took a look at where the deal values were, the number of deals were happening. And it was actually some fairly close similarities between the two. So I'm starting to wonder, as we get into the real normal, which is probably where our interest rates are today, maybe a slight decrease over the next coming quarters in that, but I'm not really seeing a huge decrease. We're not most likely not going to go back to the days of almost free money. I wonder if we're also now looking at probably the new normal in terms of deal transactions, value of deals. And I'm really happy that Taylor's here, because I'd love to get his take on this, being the experts. And instead of myself just commenting from the sideline. Where's the money, Taylor? Yeah, so what I would add to this-- so Convoy also releases a report on the private markets and games funding. And it goes a little bit farther back than focusing on that last year. And the way we actually view this is funding is actually just returning to that pre-COVID level, instead of moving off of all that hype, which-- I mean, I think it was warranted during COVID. Obviously, everyone was at home. The only good news you were really getting was on any news channel was everyone's seems to be playing video games. And so that was really great for the market. Anybody could go in-- honestly, with that and low interest rates, it was a perfect storm for being able to raise capital. I think, alongside of these more hyped up IPOs, like your robots, your Unity, your app love, and everyone going public, it seemed like gaming was that area we had to invest in. And what I think really happened here was-- and this is going to be, I would say, a hot opinion or a hot topic here is-- I don't think games investing on the studio side is actually a truly a venture-fundable model. It requires a lot of capital. And when it comes to the VC space, generally, you're looking for these milestones that allow you to get to that next stage. And when it comes to games, going from initial funding to an alpha to your beta to then finally releasing a product, and we're talking about four or five years where you may be waiting for any significant revenue or attraction. And to me, I don't think that is actually how games should be judged. But the issue is, is that doesn't align with how VC's fund companies. And so anecdotally, we are seeing a lot of generalist firms pointing back. And so I think that is the majority of this funding decreases. The game's funds and your entertainment funds are still interested in this space. But there's not that support from the general side or at that growth level anymore, because it's not warranting that valuation increase or that extra funding you truly do need to get to that next stage. And so I do believe a lot of this, the concern around this decrease in funding is partially due to just this uptick in funding that COVID had and allowed for. And obviously, like Dave mentioned, zero percent interest rates, capital was cheap. Not only for startups before VC's as well who needed to deploy this capital, you can't sit on the silence and just collect management fees forever. And so it is definitely getting tougher. And I think games companies are being hit the hardest out of a lot of other sectors, because it's just-- To me, not a safe bet. And no one knows what games are going to be successful. I don't think the majority of people would have chosen or would have predicted the among us hype, or fall guys getting as popular as it did. But everyone did chase this. Who's going to be funding the next fortnight? And I think we quickly found out. People that are going to do that are the publishers. The publishers have the money to do it. They have the balance sheet. They have the wherewithal to understand that waiting for five years is actually worth it. And it's not only worth it, but it's necessary. And so we are seeing a lot of capital within the games industry, shift from content over to more scalable technologies and platforms that people are looking for. But those don't warrant the amount of funding that games studios did. So we're at a point now where all of this is depressed. And I think we're going to continue to see this. But when I think we do zoom out a little bit more, it's not as bad of a view as the data shows over the last year, even two years. But when you go back to pre-COVID, we are pretty in line with where that was. And I do think we're going to see a lot of VCs that are not focused on gaming, really take a step back and be comfortable waiting for those Series A, Series B. the rounds when companies are able to really prove that they have the ability to maybe reach scale. - Yeah, and I think you're absolutely right. I think we're returning to what the actual normal is. I think too many people unfortunately took the levels that we were seeing during COVID as the new normal when, as you said, it was really just a blip. You know, I think it would do a lot of people really a lot of good if we kind of took our industry growth curve just locked off the COVID bump that we saw. We'd still see a nice actual curve overall going up. I think we'd still see growth in the industry overall, but at a much steadier rate rather than sort of at a control rates. And I think we will still see, I personally still think that content is investible, but we can have that conversation, I think another time to learn, but yeah, it certainly is a lot more challenging, especially as everyone's kind of pulling back. If the sentiment amongst the developers and publishers is, oh wow, things have really hit a downturn, then that's gonna be a sentiment that's echoed, pretty far and wide, if publishers aren't able to go up to these seasons and say, hey, we see a huge hockey stick in terms of our revenue growth over where we were, then like, oh, why would we find something that is most likely just gonna be fairly flat? - Taylor's point about the general VCs, I think it's also especially true, because some of these funds will have been around now for maybe six, seven, eight years, right? And that's when you'd expect that fund to return its investment. So if some of these general VCs have just got burned and not seen any return on their original fund, then particularly given today's climate, they're not gonna be for it. And I think if you look at the general VC community, rather than the more specialized ones, how many of them really did manage to make a good return? There's not so many, right? If you invested early in someone who got by Zinger or one of these other sort of mobile big ones, sure, you've done well, but for every one of those, there's probably 10 that got nothing to talk. And I think that's one of the reasons too. I would also imagine that the lack of follow-on rounds for existing companies is also partially responsible for this, because it seems to me that anything that we get funded right now is things that just started up right at the very beginning. It's not those that lived with further along their life, but interesting tips are there anyway. - Yeah, and I think one other thing to add here is, I think investors are becoming more cognizant of the exit multiples at a content company justifies. And I think that's a little bit tougher to swallow for a lot of them because it's great. You can, if you build a game that generates $100 million in revenue, that's fantastic for the game. And that's an absolute win, but on that exit multiple side, you're not gonna see the same that you're gonna get from a general B2B SaaS business. You don't have that growth multiple that can be layered on top of this to warrant a, then exit that also is aligned with venture skill returns. And then I think another area that just isn't talked about that doesn't need to be like, hearted on too much is a lot of that COVID hype as well. And even the year following was a lot of blockchain hype as well. Everyone seemed to be going to new blockchain game. It was getting overly funded because everyone, VCs and investors wanted those tokens. They were seeing these tokens skyrocket due to a low flow that was probably, was artificially heightened due to just, I would say some almost like scarcity mechanisms within that token. And I think that a lot of investors had to throw a lot of cash at it, which is also being taken into account in a lot of these reports for games funding because yeah, they were blockchain companies, but they were games companies as well. And I think there's a lot of things today that are being looked at in a negative light that is just going to probably affect non-games investors from or impact non-games investors for making investments in the space going forward. - Well, I think at this point that it's pretty much just cozy up with the Saudis or someone else that's flush with cash. I think at this point that's still really into games. I mean, I am kind of curious too, like if it's studios that are risky, then you start to look at publishers or start to move up the layers into bigger companies. Obviously, hey, I'm invested in Microsoft, I'm not invested in a game company. Like those kind of things where you're looking at companies with hedges of other kinds that you can return on potentially. I imagine there's a potential there, but speaking of people throwing around money and now having to cut back a little bit, Epic games, although in this case, they're cutting back I think a little bit more on certain types of content. If we're going to get to that. - Yeah, so on this point, I think it's not just an Epic problem. It's just Epic, I think is the most recent headline story around trying to age restrict skins for kids under 13. And this is just a much larger problem in the game space when you're building products for a spectrum of age groups. And the content itself isn't going to be built for each individual age group. You're not going to build four or five different games for your zero to seven years, your seven to 13, 13 to 18 plus. And then even older, the game is the game. And this is becoming a much larger problem because there's content within these games that is not suitable for each of those age groups. And then on top of that, you have the issue of the advertising side of this. This goes into like Roblox, where Roblox has kind of got back and forth on their advertising policies. Are we going to allow you to advertise the kids under 13? Are we not? We don't want to have to try to build these silos for each specific age group. But I mean, we also Epic was, you know, fined $500 million for the practices that they were engaging. And I think there are issues around this when it comes to any sort of like dark space type of processes that you're going with. You know, it shouldn't be, you shouldn't be engaging with any user with these practices. But the bigger issue is, is how do you engage with your, you know, these more, these younger age groups that are much more suitable to falling into traps. You know, we've heard about this a loop box in the past and now advertising and how you sell and try to monetize users. And with this, it's interesting because they got the fine, they had excess spending. They've now rolled off their super awesome, which was obviously their child safety and kids tech product. But the actual separation of these entities is now focused on the advertising side. And I think a lot of companies are not going to want to be engaging in any advertising practices to miners. It's just, they don't want to take that risk, even if it is safe. And that's, you know, now we have super awesome buying back or acquiring the advertising tech while Epic's going to continue to manage their, their age verification service, which is still a necessary, a necessary product. But this, this to me is one of the biggest problems that we're going to face in the next three, two to five years, is how are we going to solve the problem that kids are becoming more digital so they're going to be within your ecosystems and they're going to be engaging within these ecosystems with age groups that can be advertised to, can engage in these practices, have the ability to make their own decisions. But it's, it's this constant question of, is this a, is this a, is a developer's problem? Or can this be solved with, with some sort of technology to make this more safe for kids and have, and allow parents to have more confidence that their kids are engaging with the content that is suitable to them? And so we're, I, I'm really interested to see how this plays out because I think we're, we're just seeing the back and forth of the, we have robots of, of Epic. We'll see it with Activision and the, you know, the Microsoft ecosystem and PlayStation and Sony's ecosystem and how do you manage the, you know, the, the business side of the company where we need to monetize our users and make the most money as possible, but also make sure that we're not going to be allowing these children or any, anybody to access content that is not suitable to them. Yeah, and I think this is a fun one and that, we'll use Fortnite as an example. So Fortnite's rated team. They're supposed to be 13 in the up, in order to play it. I can guarantee you there's a huge number of people that are playing Fortnite that are not 13. My kid's played Fortnite before they were 13. My son still plays it. He's not 13 yet. So I think there's going to be that question of, there is the, what the game was rated. So they went through the proper channels in terms of getting their games rated through the ESRB, but what is the reality of who's actually playing? And I think when you start looking at, you know, the reality of who's actually playing, that's when groups outside of the games industry are really going to want to start getting involved. You know, there's certainly a level of responsibility on the part of the publisher, but at what point, you know, as the publisher is going to say, look, we've made a game for a 13 year old and older. We've told everyone that you should be 13 and older in order to play it. Are they responsible for that six year old that's playing the game because their parents said, yes, you can go and play this game. And I think that's a big challenge for publishers because they're saying, you know, we're doing everything right, but it's not, it's the parents and the kids themselves that are making the decisions to play. So it is the publisher at fault for that. Because at some point, you know, then comes in the question for, you know, first person shooters that are rated, you know, mature, as you start putting in advertising methodology. or tracking of data that you're not supposed to be doing with minors, but those games are played by minors. At what point does that transition from a publisher's responsibility to the parent's responsibility? - Don't the app stores have controls for this stuff? Anyways, to block parental restrictions, you'd be like, hey, you can't install games that are for adults. And teens, I would imagine. - 100%, yeah, you can go on to the console and you can set up this parental controls, you cannot play. Not the Fortnite's on the app store, but in general. - What do I get but on consoles though? - Yeah, on console. - It's a Oscar PlayStation. You can set those parental controls up. I can guarantee you that little Timmy will be saying, all of my classmates are playing Fortnite. You have to let me play Fortnite. Otherwise, they will make fun of me. I'll be ostracized by the class. No one will play with me. Everyone's playing that, so I'm missing out on that. - Just for that GTA 6 trailer hits. - Well, yeah, I mean, I'm sure I'll get requests for GTA and that still will be the same answer. No. - Thoughts and no? - Yeah, I was gonna say there, the feeling of tech is it can't always solve everything, right? Even if you did think, oh, this game looks innocuous enough and I'll allow my child to play the game, who's to say that then later on, there isn't some content that you weren't aware of, that's also an issue. I was gonna mention though, that is it not so near someone who's experimenting using facial recognitions if you're playing the game and it recognizes that you're not the person who said you are. Wow, I don't know if they've done it. No, no, I believe there was a patent or something that we discussed it in the previous round table that you could do something like that. Or as Patelist Point, perhaps you need to get off certain games. With Epic, it's very notable how they put more and more content that is targeting different audiences within the same product. There's this festival mode that they've announced coming out soon, which is they brought harmonics a few years ago. It's basically gonna have like a rock band type thing in their game. That's probably the sort of thing that you're okay with your kids playing, or do I suppose it depends on the music, could be like the 50s or lower again. Don't you be listening to that rock and roll? You, you nipers, right? But then you could have it that way. But then you might be happy for your child to experience as that part of the game, but you don't like the kind of hardcore battle or else aspects of it. So it is hard and where does the responsibility lie? I actually don't think it lies with the publisher so much as long as they adhere to the guidelines because what else can you do? You know, if it's not your fault, you've got to be legal with things, but perhaps I'm saying that as someone who comes from the development side. So maybe I'm biased. Yeah, and this is the issue is the publishers, I do believe are doing what they can to be aligned with whatever regulatory body they need to be. But the issue is, I think the regulatory bodies just are looking at this as, it's not on us. It is on you all, people are going to get around this. This doesn't change the fact that you're collecting data from a minor. And then the other side of this is, there's so many regulatory bodies across, on the local side of this where you may have the ESRB kind of managing this from a high level perspective, but every country or organization has their ability to say, well, we're going to change a little bit. We want, we want to actually want a little bit more. And gaming inherently is global. That is the best way to monetize your product. It doesn't give you as many people as possible. But when you're talking about going to dozens, if not over 100 different countries, you may have 50 plus different regulatory bodies. You have to try to manage and be aligned with and understand where is that child or where is that player based? What is their age? What are the rules that I have to follow there? How does that affect the game content that they have access to? And what we're actually seeing more of is game publishers that are usually on the, I would say, double A to single A side, just saying, we're not going to allow anybody under 17 or under 18. No one can play this game. We're actually not even going to go into markets that are, I would say a little bit more blurry on their regulations because we're just not even going to risk it. I would rather lose out on that potential revenue than take the risk of getting the fine that would come with breaking these rules. And so this is just becoming, I think extremely messy. And I think publishers are just going to be forced to either say, hey, we're just going to, we're, we're big enough to be able to eat the fine and we're just going to, we're just going to proceed the way we're doing this, which we do believe is the, the right way. We do believe we are putting up a correct guardrails, but if a kid uses a VPN or uses their parents credit card or lies about who they are, like we really can't do anything about it. And we're going to try to manage what data we are collecting or what advertising we're allowing on the platform, what type of content is. And it's just, we're just going to take that risk or it's just, hey, we're going to cut off 50% of our market and we're just going to focus on the one that we can control. And it's just, it's not, it's just not as straightforward as I think most people would want it to be. And I think this is going to come down to there's going to need to be some agreement that's like, this is the baseline. As long as you're doing this, we're all good. Lord is not there yet. It's whoever's seen, yeah, Roblox and Epic in just the last few months, issuing new policies, rolling back these policies, trying to figure out some middle ground and it's just not clear where we're going to end because gaming, gaming is already where it's at. Kids are going to, kids are going to play. - Yeah, I mean, I think at this point too, it's obviously the UGC stuff that's really exacerbating the problem in the sense that would a game's rated normally, like you know what the content is going to be and therefore it's rated according to that. I mean, in theory, right, life service games could technically be a problem as well, right? Because they introduced new content over time that could be violating the spirit of what they were rated on near, for example, if they wanted to trans-neak something in. Because we're talking about like, you've written something later, but at the same time, like UGC stuff's the big problem. And I do remember Roblox was trying to introduce a thing to where they were like, oh, we're going to have a section for like the older kids. I don't know if that ever even went through. I feel like that just flopped immediately. People were just like, no, I want to play with the older kids. And that's the problem is kids generally want to be older and want to act older. And that's going to drive them to always kind of like find ways to violate that, right? And it's always going to be a problem. But like, you know, it's going to be government. It's going to be publisher's end. It's going to be parents and everyone's going to have to like have a partner, right? Like no one's going to really be able to get off Scott free out. Hopefully the fines that are paid go towards improving the situation and not just towards like, you know, government find treasuries, essentially. But speaking of things shaking up because of safety issues potentially, Open AI had a real fun weekend for a lot of people. I imagine a lot of people really kind of worried about their future there just to recap kind of what happened in Open AI for those of you that weren't glued to X this weekend. And all the drama that came from that essentially what happened was the board, which you know, separate from the shareholders. Basically fired Sam Holman to CEO was like, no, you're out. See you like it with almost no notice to anyone like very, very short notice to all the shareholders to the staff to Sam Holman, it sounded like itself like it was, I think it was announced over like a Google hangout was like, you know, peace out. You're gone. And that's it. Like, and so, you know, obviously that was a pretty dramatic firing. But what followed was even more dramatic in the sense that the people that wanted to come with him turn to do much, much bigger situation where you know, the president also left. And about 90 plus percent of the staff was like, they volunteered to just resign. Like they signed a letter saying we like, we're out if he's out. Like, we're going to go ahead of the jobs because what happened was Microsoft was like, we're happy to have more of Open AI than 49% we're happy to just take the brains with us and offer jobs to everyone. Even Salesforce was offering jobs like pretty much was everyone was like, yeah, dude, we'd love a piece of that. Like, please bring your brains over here. And so the board was kind of like, oh, that's not a good plan. And pretty much tried to like, finally negotiate and be kind of like, we're sorry. And then it started to look like that was falling through. And he was just in Microsoft basically was like, cool, they're starting a new company, both Sam Altman and the former president. Greg, I don't remember his exact last name. We're just going to come over, start a new company and whoever wants to come over here. Cool. Like they're going to be a big part of that. And then it didn't eventually getting negotiated, whereas basically like, tell you what, I'll come back if you pretty much wipe the board. And just like, now just get rid of them because they're the problem. At least in, I mean, we don't know a lot of the details terms of what went down, and supposedly had to do with like, Sam Altman, not being like totally like transparent about stuff. Pretty exact terminology. He was kind of weird terminology, but basically saying like, oh, you know, he wasn't, he wasn't being transparent with this kind of thing. And it could have been over for profit stuff. It could have been over ethical stuff. SAC stuff. There's a lot of, you know, things being thrown around. But basically they ended up agreeing to that. Microsoft was like, okay, that's fine with us. Like, because we know now we're going to be super tight with OpenAI at this point, because we did that. Everyone's going to be like our homies. And therefore like, this is a good thing for us. So that's fine. And so basically, Sam Altman's back, president's back, and everyone wiped off the board except for one person, which is Adam D'Angelo, got to stay. And they brought in a former Salesforce co-CEO, Pret Taylor, who's like a Silicon Valley guy who's been around for a long time. And interestingly, an economist and former Treasury Secretary back in like 1999, 2001, Larry Summers. So it's like those two and Adam D'Angelo. So, so, so, Eliah, Helen and Tasha are all out of the board, which are the ones that we're definitely having conflicts with, it seems like. So yeah, big, big change up there, but even bigger for Microsoft. Because now they're in a position where like they were up to 49%. This is the company that's still kind of leading the pack. And they're still up against Google. And I'm being perfectly honest, Google stuff is terrible in comparison to most of what we've seen from OpenAI so far. Like even in the, being in both mutations. Personal opinion of course, but generally like an in benchmark test is just not up to par yet where Google wants to be so this is a huge win I think for Microsoft, even if it like didn't ultimately end up in their camp and I think you're relevant for gaming because Microsoft even more evolved than gaming now after they finally acquired the unicorn that was getting shot out from every direction and managed to pull that in and obviously you know like Activision Blizzard didn't announce they're using anything with AI I believe it's be real it's going to be involved in game production they're going to look to get costs and things as people are getting laid off from all of these companies AI will be involved in that and Microsoft will now be much more positioned to have a piece of that. Blizzard did mention that well but just quickly in your game things saying Microsoft not looking at it Blizzard did have something they reported that they were looking to use it to generate assets for world of warcraft so yeah yeah because it kind of makes sense with the kind of don't necessarily have to support the highest of art style you need to make loads of content all the time so you might see something come out of this I got feeling they probably already went down some other route already but you know now you can bring everything can house so don't be too surprised if you see things in game even quite soon as a result of this. I do think that overall the end scenario is probably the best it possibly could be for Microsoft with the one exception and I'm sure Microsoft would love to have someone on the board now um not sure how much of a warning they even though they're you know 49% shareholder that they got that Sam was being fired. It sounded like they didn't get hard the Indian that's why Tio was really really pissed off from at least from public things. It was a fun tennis match to watch just all the things that were happening going back and forth between where is he where is he where is he but I do think in the end it is actually probably the best uh end scenario for Microsoft. You know there is still a lot of controversy there's still a lot of risk around AI and this gives Microsoft still you know open access to everything at open AI but they don't have to necessarily take any of the reputational risk of if things do go south and they don't have to have all of those things on necessarily directly on on their servers and on their stomachs on the being side of things right they got to worry about. They still are able to do a bit of an arms length you know being able to hold open AI at an arms length and what they're doing so if it goes well they're able to take full advantage of it you know just as they are right now they're integration inside Bing and if it goes south and while it's separate from Microsoft and a little bit safer for them. Yeah and I would just say I want I mean it was super fun to watch obviously just sitting you know being able to watch from the sidelines I don't think we'll ever know what really happened at least in the short term of you know how this happened so quickly to the you know the the the golden child of of AI being being open AI but yeah this it seems like the winner is Microsoft here they they obviously have they're they're now seen as more valuable I think they're honestly getting a lot of respect from from the AI community so I think there was always that concern of oh big tech companies acquiring you know our you know there's AI golden child. There's a CEO standing up for him right and standing up for all the employees. Yeah and so it is it seems like just like a massive misstep from the board I think it's really clear now you know with hindsight obviously it was a massive misstep but how quickly this happened and from all of I think our assumption was this happened you know within like a 24 48 hour period of just some decision-making fired release the statement and everyone's just caught off guard for it but yeah you have Sam Alman and Greg Brockman back back with the company full steam ahead without the board that seemed to be there's this counterweight to to what they wanted to do and it's it's very clear that yeah Microsoft came out on top but I think there is some interesting aspects of this that are over the next you know let's say year we'll we'll see how this gets integrated into anything within the you know Xbox games studios and the that larger ecosystem because I think there are there you know now they have the they they have the resources they have the capital they have the you know I think it gosh if I remember correctly I really hope it's close this isn't wrong but it was like Microsoft Alakay like 50 50 billion dollars worth of computing to so Benaddy continue to train these models I mean that's not just going to go into to Chad GPT and and and Dolly I mean this is probably going to go into how how do you you fix the the frameworks and processes they use in the game side and you know if we can we're talking about 10 20% at a minimum decreases in costs and this is huge for Microsoft they they they control it they they they're gonna have access to everything before anybody else does and it's it it's funny how we we joke about like or how we all talked about you know how upset Sony was with the Activision Microsoft acquisition but I mean this this seems like a leg up on Sony now so I mean Sony's not anywhere anywhere near her any major you know AI companies you obviously have Google who was kind of you know step back from gaming but now you have Microsoft with arguably the most powerful and successful games are or AI company in history and well I think that's going to be really really interesting from just I think our perspective on on this on this call is just how does this change Xbox game studios how does this change Microsoft's game strategy going forward because Microsoft's at the wheel now and they they they they they have access to stuff that no other games company has and I do think that the actions by Microsoft over the weekend in in trying to hire Sam was as much defensive as it was in support of the open eye open AI team if Sam had gone to a competitive Sam had gone to Google if Sam had gone to Salesforce of Sam had gone to another competitor to Microsoft that would have been a big thing you know and I I really do think that as much of you know very publicly it was we love open AI we're going to support everyone there behind the scenes it was oh my god if they take their technology know how to somebody else we're actually a big loser right here so I do think it was as much defensive as it was supportive absolutely there was another twist I did actually forget to mention that I wanted to bring it as well which was like a kind of one of the last minute twists where the board actually tried to see about merging with Anthropic for for their Claude model and Anthropic was just like nah we're good and just rebuffed them and so there was like some some potential conflict of interest where some of the board members had written papers for example that had been saying that Anthropic was doing like better from a you know an ethical safety standpoint then open AI kind of bashing open AI bit publicly I mean there's some some of course in the way that everything is set up with open AI is very complicated when it comes conflicts of interest and missions and profit and everything like that so that was kind of an interesting twist from Anthropic especially Anthropic you know kind of going like now we don't we don't want to get involved in this and so you know so it's good though because we still have some competition then right like that would obviously not been great for Anthropic in open AI to be one thing we need like competition here between these different tools that may be good at different things especially for games but I do wonder if you know even if Microsoft's not involved as much in the future if they started to you know shape things a little bit in terms of like hey here's what we want to use open AI for and obviously a GPT-5 was in the work supposedly and they needed a whole bunch of power to do a bunch of the training for that to the point where I heard rumors that they were even like Tim Altman was even looking at trying to get chips made and kind of bypassing video for for having enough processing power for this stuff and obviously the compute credits from Microsoft are making huge difference as well but I do wonder if like games might get a little bit more benefit out of GPT-5 now that they've seen that use case right that they've seen they put you at GPT out there they saw how everyone used it which was part of the point of doing that and now they can be like well games are a use case and we can make sure that some things in there for games as well when we train GPT-5 like some possibility that we could see like AI shaping towards some more specific use cases or just incorporating more the general ones that people happen to like find a use for chat GPT with. Yeah the anthropic news or rumor was extremely interesting because I as I understand and again I always want to preface this with we're just pontificating on a lot of stuff and a lot of rumors but as far as I understand the initial issue with the board had with Sam or Sam had with the board was one of the board members had written that research paper you know judging the the safety and alignment of models of different companies and you know they're you know kind of rating them and obviously putting an anthropic at the top in open AI but behind them and I was obviously a concern where you have a board member essentially writing a skating research piece about how how far behind you are on what they believe was important which was the safety and alignment side and then you know when you lose a CEO you try to do the merger to try to bring in and Dorio to become the new CEO of this product but now you have you have two you've two products and two companies that are going after this problem differently and it seemed like that was trying to that that was almost like we have to save ourselves we have to bring in you know what we consider the next best and we have to bring in the next best that aligns with the reason why we fired the CEO of open AI being Sam and that was you know this it just seemed like the board wanted to take over they they whether or not the the issues they saw were were true they wanted to they wanted to push the company in the direction they wanted to go and the one they felt was the right direction and and yeah it was it seemed like that was that was shut down very quickly by an anthropic which is no where we're on our own path we're going to do what we want to do when I hear the statement. all. I think the end of the day, the repercussions of this probably won't be obvious for a while. Like you said, we want to know the whole story. But also like, why this happened is likely to have some kind of impact of the future, right? Like if, if saved, for example, like the board had a good reason or not for what they did, now they're not there. And therefore, whatever Sam was going to do or wants to do, like it's likely to continue to happen possibly, depending on the new board. So I think, you know, we may be subtle. It may not be, but we will likely see repercussions down the road. Whether that be on safety, ethics or for profit motives or something like that, who knows, right? Like you said, we're participating. We're all getting like just little bits of news. It was interesting as well, like catching Elon's commentary, of course. You know, as kind of as sort of more publicly rivalous nature with OpenAI in the current state. And some of the other people involved and all that. So interesting takes there if you're bored and want to look at more of the drama for fun. Till we get the sort of Tiger King style Netflix special on this, but I mean, we'll find out right. Hopefully in the end, though, I think we're all hoping this is going to be good for games and not SkyNet, but we don't really know, right? This is kind of cats out of the bag at this point. So we'll see. But I think Dave had some interesting continuing thoughts on live operations because of course, you know, that discussion in itself is now a live-ops. There we go. It just keeps on going on. Yeah. And I just want to add Bill to pond some of the points that were made last week. I think there was a fantastic discussion that was going on around live operations. And I really just want to take my opportunity to add in some of my own thoughts. For me, some of the points that I look at in terms of what's going on today. And I'm speaking a little bit more towards the console and PC side of live operations than mobile. If you look back to when, you know, a lot of the games or a lot of the plans for games were being made, which was, you know, probably two or three years ago, it was a different time. It was a different place. People were seeing how much money that mobile was bringing in and people looked towards live operations as being the main driver for that. And you know, if you look at when companies are putting together, there are roadmaps in terms of here's when the games are coming through, especially when it comes to the larger companies, Capcom, for example, I was responsible for five year rolling roadmap for mobile. But the console and PC side does the same thing. What that meant, I think at that point where people were seeing a lot of money, a lot of revenue, a lot of attention towards live operations and said, okay, let's bring that into the console world into the PC world without doing enough of a deep dive in terms of what that actually means to actually do that. So I remember when EA, for example, we're starting to make the switch from pure console and PC or package goods. It started making moves, not just DLC, but moving towards the games of a service model where it really is a different thought process in terms of how a game is made, how a game is built, how a game is designed. And it, there were people that, you know, in the initial, we're like, hey, you know, free to play, very interesting. I don't understand how to design a game for that. I don't understand how to actually make a game that where you'd actually block content off, make it behind paywalls versus building something that's an experience where someone paid their money in the beginning and we're going to give everything to them. There are people that at a hard time understanding the differences in designing games, that fashion. And it's the same thing as the difference between building DLC content and running live operations. They are not the same thing. DLC content is really just an extension of your development time period. You are building a chunk of content and you're plopping it in place. But you're not going through the same process as you are with live operations where you, not only are generating content, but you're also getting those feedback loops really good live operations are ones where you're always listening to the, what the consumers are doing on a day-to-day basis. Not, I'm planning out six, you know, six months worth of work and then plopping it down. It is looking at that data from a day-to-day perspective. What can we do to improve going, you know, from a day-to-day perspective? What do we do to build content that's in reaction to the consumers? And so that really is a much different mindset. And I think as people start looking at, well, let's add in live operations, they weren't taking an account that is not only a switch in terms of what the business model is, but it's also switch in terms of how do you staff that group of people? How do you, and then going all the way to the beginning of how do you design a game to allow for proper live operations to happen right from the get go? Because that does require you to set up the game from the start in terms of how you build your core loops, how you build all of the the onion lairs of the game to allow for live operations. Everything about a lot of this is almost extending MMO design from back of the day, right? Because the thing, the other thing that I think doesn't give mention off that enough about these is this is generally not single-player games we're talking about is generally multiplayer game environments. And I think that's also a big factor that running long running multiplayer game environments, even if they're not live ops, is difficult to do and managing an economy in there or even if it's not an economy, just people are acting with each other in some way or another. It's difficult to do over like even a six month span. It is. It is. And you're even adjusting, you know, what features you're paying attention to, what features you decide you're going to double down on. Other ones where I like, look, you know, people are just not playing this. They're not digging this. The retention is not there and the engagement is in there. So let's refocus and move to a different feature set. Now the other part that I think also gets a little bit lost at times is the cost of content. And if you look at mobile games where people are building out their live operations schedules, unless you are something like a Genshin impact, where you are throwing literally thousands of people at building content, trying to build content to a certain scale of visual quality, visual fidelity, your costs become almost on an exponential curve. So as you look at trying to build out, you know, if I'm building out new content for a hyper casual, a hybrid casual, I can build out a new level in a day or two. If I'm trying to do that for a level of quality that is a Sony level of quality, a Microsoft level of quality and Activision EA, that is a ton of people, a ton of time and a ton of cost. And you're not able to get to that same level of ability to react to what your consumer is feeding to you on those charts, you know, that your KPIs that you're looking at on a daily basis. So you're not able to react as quickly and the cost of doing those reactions is a lot more as compared to what you're seeing inside the mobile space. So I think as so there's the comments about, you know, there are, you know, major companies that are now starting to pull back on the live operation side of things for their games. And I think that is actually in recognition of, it's not as simple as just saying, hey, we're going to do live operations on our games now. It's recognition of the games need to be built so that it can have effective live ops. The cost structure is different. And how you're staffing out your team is different. And I think that's, people are now starting to recognize that those are a lot of compounding factors in trying to get live operations right. And the risk, the risk profile on the console PC side when that cost of content is that much higher is also now that, you know, that much higher risk as well. So I think those are some of my thoughts, concerns of, you know, some of the reasons why there's some of that step back. And part of me now wonders is, and this is interesting, as we get into some of the embrace of discussion, our mid-size publishers potentially in a better place to be able to do live operations if their visual fidelity isn't necessary at the same level. Their cost and risk structure isn't the same as trying to do live operations for God of War, for Activision, you know, for Call of Duty. Or, you know, any of those that wear the really high level quality of fidelity. I'll throw in the one final twist too before I throw it over to a nil, which is that the other thing is the tech infrastructure on these in dealing with publishers, I mean, that publishers, but they get keepers of consoles or the app stores in that if you want to change content, you either have to have a very complex tech infrastructure to be able to do that without shipping an update, or you have to go through the process shipping an update on console. You're going through certification processes, and all that complicated stuff to ship an update on the app store. You're still dealing with like, every time, you know, you go to ship an update to Apple, you're rolling the dice, and hoping they don't deny it for some random reason on Google site as well. There's, you know, delays. You don't know exactly what that update might go live. And all these things like just extra complicate the stuff. If you don't have the tech infrastructure necessary to push like over the the air update. So they've seen like, you know, companies have to learn that on the flywheel. They're like, oh, we're slowly shifting some more of this data to be like in the cloud or to be like in a way that we could push out. But then you've got to worry about like safety and security. You can't have that client side where people can get to it. All that kind of stuff. Then you have people data mining because you're trying to ship stuff out early and like, there's just so much to that. But then you have some saying, and it was well. I was going to touch on what you just said there. And actually, it was a question for Dave. Does it surprise you though that they're pulling back so in such significant ways, given the time it takes to get there? Because I was going to say someone who's experienced both those worlds, both the kind of console PC side and the mobile side, that mobile didn't just start as kind of live service and having these amazing feedback loops, right? It started of just kind of being the same kind of box products. And let's try the occasion to update all these that work in quite well. Maybe we should do more updates. Oh, hear me out. What if we did these updates like every every two weeks? What about every week? What about every day? That's what they're doing on Facebook, right? And it took time and then the tech that you've just mentioned building their demand. And I guess it doesn't surprise me, for example, they're like, you know, if you had a portfolio of 12 games, that whoa, whoa, that's way too many. But I kind of feel that like you can see that the returns are there and you've got to kind of tough it out, right? Like how many failed mobile products were there before a company actually get the one that becomes like the cash cow for the company. So it does surprise me a little bit if they're like completely pulling back on the strategy because yeah, I just feel that like, you know, you know, the rewards are there. It's not going to be something you saw when you literally got to build up that experience and know how and everyone always underestimates it from both sides. Like people on a console side don't realize how fast you're supposed to go. Then you might start hiring people from the mobile world who think they know everything. They're like, well, why does it take so long because they're not used to the quality? And so, you know, you almost have to get this new team together, you know, make them a nucleus of them and then try and get it. But I do find it very interesting what you said about the mid-size publishers. That is quite possible. I think if you've got a strong product that the community really likes, I often reference about this game, even though that game did take a long time to make, but it's maybe not as AAA as like, you know, a superstar game, maybe on console PC could be done. But if you take something that players actually like and then you can start building it and then that may actually not hold you back. So that's quite an interesting point. But I've ran with a lot of the other people to see what you think about things. Just leave some room then for contractors to maybe be live-ops experts in a situation where you're like, "Hey, we don't have like, we're great at developing the initial game, we're great at developing content, we're not great at live-ops side, you know, we'll work with a contractor who's great at managing that and to be a managed service." Like I remember, for example, when Rainbow Six was like having trouble constantly scaling the, keeping the game updated while also managing the people on other projects to the point where they're like, "Hey, Ubisoft Barcelona, you're not doing enough right now. Why don't you help us with our game balance?" We'll just task you with just that where like they start to piecemail out certain areas that require certain amounts of time and stuff they just don't have the staff capacity for or maybe the technical capacity or maybe they know how. Like you're talking about like, you know, smaller level people, maybe not having, you know, the same level of skills or people that are pulling back, maybe they could pull back and contract it out to someone else because, you know, there's a lot of companies struggling for cash right now that I'm sure would love to be contracted out to and leverage that expertise that they have. Yeah, I'm certainly would. I think that for some of the larger ones, I think you are going to get into the challenge of what your pipeline actually looks like. So when it comes to mid-size or smaller companies, you know, they're probably going to be working inside tech stacks. It's very familiar. You're working inside Unity. You're working inside Unreal. For some of the larger companies, you're going to be dealing in proprietary tech stacks. So, you know, Cross-Bite for EA as an example. So there will be some elements that you will be able to put out, but I think in other cases, there will be a bit of a challenge. A hundred percent right that, you know, the tech stack needs to be designed with the game upfront. Devon, so yeah, those decisions in terms of how you're going to distribute content has to be made early on. It's again, something you can't just bolt on, bolt on at the end. And I think even companies that have both the mobile side and the console side, I know at least in some of the earlier days, there was a little bit of the, you know, we make real games, we make console games. You mobile people, you don't make real games. You're just making-- >>Till they got jealous of the money. >>I think you can fluff. I think even today, when people look at, you know, mobile makes over 50 percent of the overall revenue inside the games industry, I think there still is, in many cases, a pretty hard to find line between the real games of console and PC and then the mobile stuff. >>I think it's weird too, when we're very US-centric in terms of like, not only that point of you, but also where a lot of the stuff happens, right? Because the US is such a big part of the game's industry as it is, and we are like a very kind of like, you know, like us versus them when it comes to gamers versus mobile people, and we're not one of those nations that's like very mobile first kind of thing. I think that crisis kind of weird dichotomy. And so we're like almost going through these weird growing pains as games are like starting to try and get there. Like, you know, with Apple trying to show off like, hey, we can have real games on our phones now. Like that sort of thing, like we're trying to get parity, right? Like obviously, we're obviously not getting the Nokia in-gauge again anytime soon, hopefully. But that's sort of like idea of like, well, we want to bring it down to that level. You know, we tried to do tablets that didn't really kind of fill that game space. We haven't really found like a good in between. And there's people trying to release like PlayStation Portal or, you know, I've got the handhelds like the Steam Deck. They're trying to kind of be that in between. So real gamers can still play games on the go and then cloud, you know, trying to make its way in there and stuff like that. So it seems like we're trying to find that middle ground. But with the US kind of being a big part of that, whereas like I think if Japan was like, you know, running this all day, be like, yeah, I mean, mobile games are just fine. Like handhelds are great part of it. Like we don't have this dichotomy here. And I think the big part of that though, even a lot of this even goes back to how gaming started in each of the regions. So I think where you look at in terms of that that divide between console and PC exists more at North America and in Europe. Because if you look at how games grew inside both of those areas, it was very much, you know, North America console package goods, Europe, PC, but still package goods. Asia as you look at how their game infrastructure raised up. In many cases, it was server based. It was free to play. And so, you know, the easiest way to access games, in many cases outside of, you know, some of the cafes was on your mobile device. So certainly, you know, looking at how how game cultures grew up, certainly how to influence on that. But yeah, but I'm really, I am interested, especially as I start seeing more mid-sized publishers start popping up, I am curious to see, you know, what the difference is. And I guess we'll just wait till games as a service is mixed with the blockchain. It just only gets crazier, right? And you've got to figure out that tech stack too. But that speed of huge mismatches of game culture and what that embraceer, you know, unfortunately going through some more is a growing pains or shrinking pains at this point, I know. Oh, that is a low blow. I feel that well, firstly, commiserations to anyone as effective and never nice to say about this. But I think this is the one interesting topic because embraceer group is something that we talk about the round table quite a lot because of their kind of strategy and last company is in badgie. Having Taylor here would be pretty good to get his take on it. I have to say, so this is going through the bad news first. So they're laying off 900 people, which is 5% of its total work. But I'll see if you remember, they went on a huge acquisition spree over the last couple of years and built up quite the portfolio. They have said that since the end of due to they have been working on restructuring and that has something that has been ongoing over the last sort of two years. But you know, they say that, you know, they're not going to comment on specifics, but further restructuring closures buyouts are in process and, you know, that can lead to additional head count reductions. But potentially that means they're maybe not done in terms of buying also, but who are affected? It's been rumored that the free radicals devs who make time split as has been closed. That'll be very sad. That's a very beloved game. Crystal Dynamics, we make two raiders. They've lost 10% of its workforce. There's layoffs at Beam Dogg who make night to the old Republic. If we're ever going to see that version of the game, you know, which is something that we're waiting for, send studios who make pinball effects. There's allegedly up to 15 projects that they say have been written down. I'm not quite sure what that means. They claim that's not the same as being, you know, written off that something else. I don't know. Some accounts and speak maybe we can look into what exactly that means. But I guess they're going to see the light of day. And perhaps the biggest news is that gearboxes are allegedly up for sale, of course, make a borderland, which would be huge. So there's a lot to kind of take on there. You know, for me, like I say, I do, I wonder, especially given that, you know, I like it when our round tables sort of do come full circles. They're starting from the top of the show to kind of now without the VC funding scenario. Is this just because maybe they were over zealous in the early days and, you know, I think the feeling at a time was they were buying a lot of companies at the very top of what their valuation was compared to what they were. Is this more that they thought that they can extract more out of it with a better more more conservative strategy? And what does this mean for like the overall industry going forward? Yeah, it's clear that it's clear to me. I believe it's clear that what's happening in the game's history is it's just getting more competitive. It's extremely hard to consistently release games now that are going to be these massive hits. Obviously, if you look at kind of some of these larger, the largest companies like your Sony's, your Microsoft's, your EAs, they have these ongoing franchises that are, they're ingrained into the game ecosystem. And, you know, they're going to come out every single year at the exact same time. They're going to be adopted by the exact same users. As much as we all tell ourselves, I'm not buying the next call duty. I bought the next call duty the day it was available every time. And I think When we look at embrace and structure, they do have a lot of love titles. They have a lot of these developers and publishers that are absolutely loved by their community. But what I get concerned about is those communities aren't growing in the same way that other franchises are. And it's just making it extremely hard to justify investment going forward. And I mean, we obviously, I don't know if you have talked about it before yet, Saviom can pull it out of their deal, which I mean, that might even just be more so the issue here. I mean, we go back to the discussion of our beginning of that, that's an investment. That's an investment in the growth of embrace or in their ability to continue to release content. And it seems like Saviom may have either, you know, whether or not it has to do with anything internally at Saviom, probably looked at that and said, the investment at return opportunity is not as clear as we were hoping for. These games are not going to probably be the call of duty live-ops type of experience or the or fortnight where we're going to be generating billions of revenue a year off of them. They'll get released, hopefully be successful at launch, but just like a lot of the games I think within their portfolio, those first 30 days are what's most important for them. And I think it's getting to that point now where the portfolio of the embraceer has built is not in line with what the market is looking for, especially from an investment perspective. And it's just, yeah, like you said, we never want to, we're never celebrating layoffs, but it does seem like this is a necessary concern. You cannot support that many games that I think are too reliant on initial game sales. Could you do Borderlands as a full-life service game in the last 10 years? Maybe, but I don't think you can. I really just, I don't think the game's built for that. It's built for that, you know, 2000s early early 2000s, you know, 2010s time frame works. I'm going to buy a game, I'm going to get a full game and that's it. And you're going to sell 50 million copies of it for 70 bucks and fantastic. But that's not what the game industry wants anymore. Or at least like what the consumers want anymore. They want a game that's going to be changing over time. You may be able to do this on a one-off, like I think God of Wars always a great example of this. It's a game not built for live service, but every year or every five, seven years, it'll sell just like Grand Gubs Auto. But you got to put so much capital behind that. And I just don't know who's taking the risk on Embracer's portfolio that they'll be able to invest in those game titles and see a return that's worth it. I think part of the other challenge that Embracer is having, I think really in many cases just come down to expectations around marketplace, is there organic growth is just not there, not to the levels where it really needs to be. I think if you look at that strategy of bringing together portfolio of companies and games, it makes sense that they were always increasing the value of the company, but they were doing it through M&A, but there was the expectation that organic growth was going to be the thing that once you've got that jive boulder rolling down the hill, the organic growth was going to be the thing that helped keep it moving. And as more and more reports have come back in terms of what Embracer games have been able to do, that organic growth hasn't been at the level that it required, especially as the cost of their debt has been increasing that much more. It's not being offset by the organic growth that the company is seeing. So that is a big part of it. I think interestingly if you look at what other big companies have been through in the past as well, and I'm going to point out both EA and Activision in this particular case. There was a time when EA and Activision, they published a ton of games, a lot of games, but these are games that were doing a million units, two million units, half million units, and what they came to the realization was, you know, it's not worth us doing all of these games. Instead of us having a very large portfolio of a bunch of games that made me do a million units and sales, two million units and sales, let's make sure that all the games we do are 5, 10, 15, 20 million unit sales and only do those. What happened at both Activision and EA and when they came to that realization, they only shed the titles. They unfortunately also laid off a good chunk of people because they realized that they're spreading a whole bunch of people across the number titles. Let's just concentrate on a few. It makes me wonder, like, you know, we're talking about the bigger companies that embrace your picked up and what their fate might be, but I worry about the smaller companies underneath those companies. So there was a lot of these companies they bought had a lot of subsidiaries and other companies they picked up along the way. Like, you know, Asmode, which is even in video games, has like a ton of like board game companies underneath it. And then a lot of these other game companies also have subsidiaries. It's like, what happens is into those kind of ones, I don't think they get piecemailed off. Like, do they just get, oh, sorry, we got to make internal cuts at your company, which means cutting that subsidiary and things like that. Like this is not just like a problem for those bigger acquisitions that were announced so much as even the ones within them I would worry about. Yeah. And I actually really think it's a good point that Dave brought up on this, the M&A strategy as a business and why this works for some companies and doesn't work for other ones. Like it's, it's, it's, you know, I know you brought this up. I bet far more people know who Gearbox is than Embracer is, but Embracer owns Gearbox. And, but when you think about this from like a ecosystem perspective, it, it works, the M&A strategy works if your plan is to keep as many people within your ecosystem as possible. This is why Xbox and Sony strategy is either, we're going to have our first party studios. We're going to go acquire studios, but you want to keep people in the PlayStation or Xbox ecosystem respectively. And that, and that's extremely valuable. But Embracer isn't having ecosystem. The ecosystem is just, it's, we just own a bunch of studios. We're going to hope, we're going to fund them. We're going to hopefully distribute these games into other ecosystems, but there's, there's almost no way to keep these users within your ecosystem, which then helps with this, like Dave brought up the organic growth of your other games. You can, you know, Activision getting acquired by Blizzard is great for, I'm sorry, Activision getting acquired by Microsoft is great because now this game is going to be, you know, mechanized in the Microsoft ecosystem. Obviously, Dave, Dave mentioned they're not going to take it out of other ones, but getting people to play in that ecosystem allows you to discover other games in the ecosystem, which then increases the value of your entire portfolio games. Gearbox is probably not helping Embracer increase the revenue or users of other games. And that is just, the strategy does not work. You become, you just become a holding company. And with, yeah, with, with debt becoming more expensive, how do you continue to fund all these companies? You have, these are each individual siloed projects that you have to be, that have to be successful on their own. There's no, there's no crop, there's very little cross pollination. Obviously, they probably do some through a hill, email marketing or whatever it is of, yeah, these are all my customers in this game. I'm just going to send them that we have another, you know, they should download this game, but that she doesn't work from a consumer perspective. That's why platforms are, are an important key to the success of these largest games companies, Nintendo, Sony, Microsoft. Like, they're, they're big because they're, they're not just a game company, they're platform. They, they're, their brand is at the top of that, not, not these individual subsidiaries that, yeah, your hardware gamers understand, but the majority of it just say, yeah, I have an Xbox, I play the Xbox games. No one's saying I play in Bracer games and that is an issue. It's just, there's, there's, there's no, there's no brand value behind the, the overall organization. It's all in these individual subsidiaries that can be successful on their own, but can also fail on their own and drastically affect the bottom line of that, of that parent organization. This last bit of question is, is that an opportunity for Sony to, to step it in me like, hey, maybe we can pick up some of these kind of cheap that, you know, we've been kind of slow on picking up companies outside of bungee and stuff like that, especially when you've got former Square Enix properties mixed in there, right? Where that's, that's an opportunity for them because those obviously align well with the customer base of PlayStation. Right, maybe they pick some of this stuff up, maybe this is an opportunity to be like, cool, we'll go hit the bargain bid in Bracer and start to shore up our competitive, you know, nature against Microsoft now that they've got, you know, all of Activision Blizzard and everything else going on. I think there may be a couple inside there, but I mean, if you look at where Bracer was purchasing their, their companies was more, more than mid-tier level. And I think it would take a bit, it would take more than just investment inside purchasing the company. I think it would be an investment inside the company and the teams themselves to ramp them up to something that is the equivalent of, okay, now you guys are making God of War. So I think it would be a bit of an expensive purchase, not just on initial price, but what the secondary cost would be. But there's certainly some interesting games in there. I mean, one of the things that loves Sony 4 is their single player games and, you know, Tomb Raider has been in the past and I think that, you know, that is an example of a game that could be that again. Well, now they've got the portals so you could play it from another room in your house. There we go. But lots lots of great stuff going on today, you know obviously good news about I think it's going to be kind of that for a while here. I think we're going to have kind of some ups and downs as the game business goes through a bit of a shake out Which is you know, it sounds like a little bit necessary, but obviously painful and we always hope that everyone here You know, and the involved in these ends up in the right places some good places or you know, maybe panelists on the show It's very least you know, so they got something to do But you know lots lots of stuff coming forward. I imagine as well for Embracer and all the companies underneath it I imagine some games might get canceled some games might get pushed forward Hopefully not kicked out prematurely, but I guess we'll have to wait and see hopefully they'll be able to like stabilize And in your future we won't have to talk about layoffs. Hopefully too much more into 2024 I mean, I hope we're kind of hitting the end of that because obviously it's something we've talked about a lot and That's because it's a big part of the industry right now unfortunately But we hope all of you out there listening especially if you have been affected by those layoffs are doing well and Managing to find some way to to have a happy holidays and move into that Positively that if it's through some contract work or something else like that But you know do your best and I just wanted to think our panels of course and we've got our you know You've been on this here Taylor. Thank you for coming on and and our fill-in panelists as well coming in from the non-thanksgiving countries So appreciate that as well and of course listeners You're probably catching this a little after turkey day. So you know, thanks for listening Hopefully, you know, maybe maybe taking a break away from the the family for a minute to tune in hopefully But anyways have a happy holidays. I want to go for listening and we will catch you go next week If you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe Comment or give a five star review and if you want to reach out or provide feedback Shoot us a note at podcast at novice.co or find us on Twitter and LinkedIn Plus if you want to learn more about what Novice has to offer make sure to check out our website www.novic.co there you can sign up for the number one games industry newsletter Novic digest or contact us to learn about our wide-ranging consulting and advisory services Again, that is www.novic.co Thanks for listening and we'll catch you in the next episode