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Anonymous

Former Senior Director at NCSOFT and Take-Two Interactive Software

The Value of Gaming Intellectual Property

{audio:0:00:00} Martin, can you please provide an introduction to your background in gaming and what you are up to today?

{audio:0:00:08} My name is Martin Walfisz and my background in gaming really starts in the 80s, where I started to game and play on the Commodore 64. That really turned me onto computers and, I have to say, I really have a computer geek background. I may be less of a geek now but still, I identify as a computer geek. In the 90s, I studied software engineering at university and then, in 1997, I founded Massive Entertainment, which is one of the world’s largest game studios today.

Currently, I work at Nordisk Games, as an investor. I am a senior partner, investing in game studios and game developers, primarily, in Europe. Before I became an investor, I was a game developer for a good 23 years and I really have a background as a computer geek and a programmer. I love games and I play as many games as I can.

{audio:0:00:54} Can you provide some context to the gaming development landscape in the early 2000s, or even late 90s, when you started Massive?

{audio:0:01:06} We started Massive in Sweden and, back then, in the late 90s, there were not many game studios, at all, in Sweden. Maybe there were two or three. DICE already existed and then there was another studio called UDS, that doesn’t exist anymore. Then we founded Massive. Sweden was really a backwater for computer games, back in those days. Where it really happened was in the US and the UK and, to some extent, Germany and France. None of the people who started working at Massive, in those early years, had any experience doing games, including me, of course. Actually, to be honest, most of the people that started working at Massive didn’t even have experience working. We were mostly students or other people who had never really had a job before.

{audio:0:02:06} Were you producing mainly for PC or also for console?

{audio:0:02:09} We started on PC, just because it was so much easier. Everyone could buy a PC. We focused on PC games for the first seven, eight, 10 years of the company. Then eventually, the company moved more into console. I have to say, I stayed on board for about 12 years, so I focused mostly on PC. When I left, the company moved more to console.

{audio:0:02:41} How would you look at the major structural changes in the industry, over the last 20 years, for PC specifically?

{audio:0:02:50} PC has always been there and in the industry, we used to say that it was quite cyclical. When the new consoles came out, PC was a bit less interesting. Then when the current console generation started to feel old, PCs came back. I think that has shifted a bit in the last 10 years. The PC is its own living organism, regardless of the console cycles. It’s a bit like mobile games and mobile devices; it’s just there and quite ubiquitous. Also, as Asia has become more and more prominent in the gaming industry, PC has also picked up, because outside of Japan, consoles were never very popular in Asia.

{audio:0:03:50} How about the distribution strategy changes? Today you have Steam and Epic.

{audio:0:03:58} Yes, that is a huge shift. Digital distribution has really changed everything. It’s so much easier for developers to self-publish and have immediate access through their consumers, through the players, by using Steam and the other distribution channels.

{audio:0:04:20} How do you compare the ability to build an audience or drive engagement, in PC in the early 2000s, versus today?

{audio:0:04:31} 20 years ago, when you wanted to build a PC or a console game, it was really the same. You really needed a publisher and you needed someone who could put the game on the shelves. You needed someone who could take care of the marketing and the distribution and get it into the hands of retailers and consumers. It was a pretty set process. You build a game, you find a publisher and, maybe, the publisher finances parts of the game and then they do the marketing; they have distributors all over the world and then it makes its way to the retailers and consumers.

{audio:0:05:11} With digital distribution, that is very much short-circuited. Any developer can reach the consumers immediately. In many ways, it’s a much better world now.

{audio:0:05:26} Is it harder to get noticed by gamers or build a brand or audience, with this huge explosion of content online?

{audio:0:05:36} Absolutely. Previously, the challenge was to get noticed by publishers, so they would pick you up and help you get onto the shelves in stores. Nowadays, the competition is everywhere, so it’s definitely much harder to get noticed.

{audio:0:05:52} How has the economics of producing games changed over the last decade? Let’s take, firstly, the cost of producing the game.

{audio:0:06:00} I don’t know if the cost is 10x or 50x. If you look at big PC and console games, when they started, a good 20 years ago, if a game cost $2 or $3 million dollars, it was a relatively big game. Today, the really big games can cost $200 to $300 million. Basically, it’s 100x increase in production costs, for the top AAA games.

{audio:0:06:38} Although, the economic model or the monetization model has changed, where it is less hit driven and more recurring revenue, in-game monetization opportunities?

{audio:0:06:50} Absolutely. We still have a big portion of the industry that is still hit driven. Again, if we look at PC and console games, and especially console, they tend to lean towards the AAA or very large AA productions. I think the big change that we shouldn’t forget is that there are just so many more players. 20 years ago, the audience was very much a niche audience – computer geeks, like myself – whereas today, pretty much everyone plays games.

{audio:0:07:29} How do you look at this potential evolution, from being hit driven to a more sustainable, less seasonal business in gaming? There’s a view out there that the publishers are less risky or have more everlasting franchises. What’s your view on that?

{audio:0:07:50} Absolutely. What’s been happening over the past few years is that we are talking, more and more, about a game as a service. That is very much what you are saying, where there is recurrent revenue coming into one particular game, over a long period of time. Back in the days, almost 70% or 80% of the sales happened in the first three to six months. Whereas today, it’s very much spread out over many, many years, if it is a successful game.

{audio:0:08:24} It allows the publishers to have a more stable business, but it’s also a big reason why other kinds of money have come in. Investors have become more interested in the sector, because it’s not so hit driven. Again, we shouldn’t forget that it is hit driven; the big hits are the games that make the most money. But there is a stable base business, at a much higher level than it was before.

{audio:0:08:55} But you still think there is an implicit hit driven nature of, not only the consoles, when a new console gets released, but also the games?

{audio:0:09:03} Yes; I think that’s the same with any entertainment, be it music or movies. The consumers are fickle and you will never know what they get attached to, to some extent. Fortnite is a huge success now and has been for a few years, but even before it became a really big success, it was already out there and it wasn’t that successful. Then they shifted and rebuilt a new game mode into it and, suddenly, consumers started picking it up and it became this big, massive phenomenon that it is today.

{audio:0:09:51} How have the operations of a studio changed, to maintain that customer engagement and keep updating the game and producing new content?

{audio:0:10:03} I know my game developer friends are not going to like me saying this, but back in the days, in some ways, it was like a factory. You started a project; you had X number of months to work on it and X number of resources. At the end, you delivered a final product that you sent to the publisher and they started distributing. Of course, there was a lot of creativity going into that whole process, but there was a very clear start and end.

{audio:0:10:33} Today, it’s much more about being a service. The finalization of game which before, for the game developer, was the end, is now really the beginning. As a game developer, you really need to be in touch with your consumers, with your players, with the community. You need to plan to continuously work on and improve the game and just build it out as a service, for many years. It’s a huge change.

{audio:0:11:05} Is there an upfront capex cost to the game that is higher, because it takes a certain amount to get there, or is it lower because you push it to market quicker and then you iterate?

{audio:0:11:17} It’s quite different, actually. I would say, in the mobile space, most of the investment processes or production processes are more geared towards getting a core game experience out there, as quickly as possible, which means minimal investment. If is starts taking off, then the developer or publisher will put more money into it. We still have the big AA and really big AAA games. Obviously, with those games, even if they are built as services, a lot of the investment, the $100 million or more, will need to be put in upfront, before you see any revenue from it.

{audio:0:12:07} Why does a developer need a publisher today?

{audio:0:12:14} Technically, it is not needed as much as before, because the developer can reach the consumers directly, through the channels that exist. If we look at what a publisher does, in reality, they often do the funding and the developer still needs funding. Either they fund through a publisher or some other way, but funding is still needed. The publisher also does marketing. You still need to reach the audience. You still need to tell the audience about your game. In the end, the community management, taking care of the audience, is also something a publisher typically does.

{audio:0:13:03} Publishing, as a process, is still needed. Then the question is, does the developer do self-publishing, or do they go to an existing publisher that can, basically, do the publishing process for them? The need for publishing and the need for publishers is definitely still there.

{audio:0:13:24} Going back to the pre-digital age, was the funding or the marketing or dealing with the customers or players more important? Which was the real value add of the publisher, back then?

{audio:0:13:40} I think all of it was a value add but also, what was much more important back then, was the distribution. The bottleneck was shelf space. That’s where publishers were vital because, through their distribution channels, they controlled the shelf space. Today, shelf space is in abundance, so they have lost that unique aspect of their business.

{audio:0:14:15} So they had relationships with distributors or retailers that would be attracted to use a developer, to put your game in their channels. But today, obviously, you can self-publish on Epic or Steam. That specific distribution advantage is lower, but you still need the capital to run the studio and the marketing spend to push the game?

{audio:0:14:43} Yes, absolutely. I think, in most ways, the balance between developer and publisher has become much more healthy now. It really is about helping each other and creating a game and a business that is as good as possible for all involved parties. Previously, the publisher, since they had a monopoly in some way, on the shelf space, the balance was much more skewed in the publisher’s favor.

{audio:0:15:20} If we just walk through a typical self-publishing process, how would it work?

{audio:0:15:31} The developer needs to find funding. If it’s a start-up, maybe they get some start-up investors or they just fund it from what I call noodle financing, which is living at home, eating noodles. But the game needs some type of funding. It needs resources; it needs people to build it and those people need to eat and live. Some money is needed, either via an investor, or self-funded. If it is a developer that has done games before and has had some financial success, they can just decide to invest their previous profits into this game that they are building.

{audio:0:16:13} Then the game development process really takes off. That starts, very much, with a creative brainstorming and figuring out what creative box this game should be in. As that is more and more detailed and understood, the developer quite quickly moves into building a prototype or getting the gameplay and the important aspects of the game working. It’s also sometimes called a vertical slice, if a developer builds a part of the entire experience. Maybe they build one level or one mission in this particular game, that works from start to finish; that’s a typical vertical slice.

{audio:0:17:10} The developer then continues to build the game and, at some point, the developer says, okay, the game is finished enough to start testing it on consumers. I always recommend that developers do some user research. Let professional user researchers put the game in front of consumers and write up reports on the experience that the consumers have. Once those reports are gathered and the game is further improved, it’s time to do a soft launch. The developer decides on one geographical market or some other way of slicing it. It gets released to a few thousand or maybe 10,000 or 100,000 potential players and you start getting their feedback. That is both getting feedback on technical issues and bugs, but also on how the game is perceived. Is it a fun game or a boring game and how can it be improved?

{audio:0:18:20} Once the soft launch shows reasonable results, that’s when the developer puts it up for sale on Steam or wherever it is. Connected to that, there really needs to be a marketing plan and execution on that marketing plan. Again, self-publishing is very much publishing.

{audio:0:18:43} The development process and the investment process is quite different. Previously, you would be really pitching the game to publishers, so you wouldn’t have engagement pre-investment from publishers, so I guess the dynamic is slightly different?

{audio:0:19:02} One of the rationales for being a publisher is that you are supposed to be quite good at picking a team and a game design, even though it’s at a very early stage; maybe just a PowerPoint presentation. It’s a bit like a movie studio, picking what movie they should make, based on a script and nothing else. A publisher should have a pretty good idea about, okay, this game could be something special; let’s start funding it.

{audio:0:19:37} Whereas other ways of getting funding is, of course, via investors. Most investors, today, are not games investment experts. They have a harder time understanding if this proposal is a good one or not. They would tend to lean more on the experience and track record of the team that is pitching the investment proposal. Then, of course, we have some investors that are more focused on this sector and have clear expertise in games investments.

{audio:0:20:15} Do you see more opportunity for self-publishing or indie publishers taking market share from the larger players?

{audio:0:20:25} Absolutely. I think it’s a trend that has been going on for 10 years and it’s going to continue. It’s not an either/or. There will be an equilibrium and the balance always changes, but there will be a need for big publisher funded and publisher marketed games. Always. Who doesn’t want to play the next Uncharted or Star Wars game? Then, of course, a lot of players also want to play the next indie game, coming out of nowhere. We live in a wonderful world.

{audio:0:21:09} How do you look at the position of the publishers? They, obviously, have the AAA games, which are the strongest franchises. Then there is a huge long tail of indie publishers and studios, that are producing so much content. Do you think the new type of content is going to challenge those AAA franchises, or are they here to stay?

{audio:0:21:41} Yes, is the short answer. I think, what we’re seeing is a polarization of the industry. I’m not an expert in the movie industry but I think this is what we saw in the movie industry, as well. You have those big blockbusters, the movies that cost a few hundred million or more to make. Then you have the much smaller movies that cost tens of millions of dollars to make. And there isn’t much in between. I think we are seeing the same thing in the game space. We have the big blockbusters and the number of those that come out each year are quite limited. They are the games that cost $50 or $60 million, upwards, to create. Then, I’d say, going in the other direction, we have a bunch of AA games costing between $10 and $20 million, which is considerably less than a big AAA production.

{audio:0:22:35} Then, of course, you have everything going down from $10 million to a few thousand dollars, for the pure, home-made indie games. We’re seeing less of the in between the AAA and the smaller AA games.

{audio:0:22:55} What’s the biggest challenge for studios today?

{audio:0:23:04} I think the biggest challenge is figuring out monetization. Previously, it really was a situation where the players, the consumers, pay upfront and then the developer gets a part of that. Depending on how they negotiated or how much of the distribution channel they control, they will get a bigger or a smaller chunk of that.

{audio:0:23:30} Today, with free to play, with the subscription models coming and having different dynamics, the game design often needs to be much more influenced by the monetization model. Having the creative process, being really influenced by how the game is monetized, is definitely a much bigger challenge than it was, back in the days. This is very evident in mobile games today, but it’s also happening on PC and consoles, to a large extent.

{audio:0:24:04} When you are analyzing the game design, what do you look for that would imply or signal to you that there is a huge subscription or in-game monetization opportunity?

{audio:0:24:24} This is going to be a boring answer but, to some extent, there are so many good games out there in the free to play space or the service space that have already tried out different ways to monetize. In some ways, the challenge lies in taking the right monetization with the right gameplay and combining that in the right way. That’s a pattern to recognize. As an investor, something to look for is, have the designers of this game combined that properly? There is never, really, an easy answer to that, but it is something to look for.

{audio:0:25:07} Do you think every type of game or every franchise can be evolved or edited to include those types of in-game monetization?

{audio:0:25:18} No, absolutely not. There are a lot of game experiences that don’t lend themselves well to free to play or even, to some extent, subscription. These are, typically, game experiences that are linear or very story focused and that have a very clear start and finish; an example would be Monument Valley, from Ustwo. It is a fantastic game, but if they started introducing clear free to play mechanisms, I think the game would be much worse for the consumers.

{audio:0:25:54} In which games do you think the best opportunities are offered?

{audio:0:26:01} It’s the ever-going games. The games that have the type of gameplay that is quite systemic where, in a sense, you can just keep playing for hundreds and hundreds of hours. Hearthstone, from Blizzard, is an example. Then, of course, Candy Crush, from King, is a perfect example. The game just never ends. Those are the games that definitely monetize really well, in a service model or free to play model.

{audio:0:26:40} How do you look at a game like Fortnite, versus the more traditional franchises, like COD or Assassin’s Creed?

{audio:0:26:50} Fortnite had existed for a few years, before it became as big as it did. I think the key thing, with Fortnite and some other games on PC and console, is that they are free to play. Free to play disrupted mobile in 2012, 2013. Then it started disrupting PC and console two or three years ago, and it is still disrupting it. Call of Duty and Assassin’s Creed are built more on the AAA model, where you build a huge game and then sell it for a big upfront cost.

{audio:0:27:46} We’re going to have those games as well, but it’s hard to compete with free. To be honest, with Call of Duty, they released their mobile version and that is a free to play version and now they have a free to play PC version, as well. They are definitely moving in that direction.

{audio:0:28:03} What about COD makes it possible to make that transition to mobile or PC free to play?

{audio:0:28:15} The gameplay of Call of Duty and Fortnite is quite similar. They are both shooters, of course, but Call of Duty is also an endless game, especially in multiplayer. You can just play it for hundreds and thousands of hours, if you have the time. That was an easy shift. I don’t remember who developed the COD mobile game, but I’m pretty sure it was someone with really good experience in free to play monetization and services. When it comes to Assassin’s Creed, I don’t think Ubisoft has attempted to launch an Assassin’s Creed game, at least not a big one, as a service, yet. I guess that gameplay is a bit harder to immediately think how it can fit a service model. I’m sure they will figure it out. I’m sure every publisher is looking at all their big IPs and thinking, how can we adapt this to where the future is going?

{audio:0:29:28} When you are investing in the gaming industry, what exactly are you looking for?

{audio:0:29:37} At Nordisk Games, we are a games investor. I should say, we are not an early stage investor. We don’t invest in start-ups, typically. What we are looking for are game developers that have a nice core business. That core business could be work for hire, so that they work for a big publisher, or the big publishers finance the game and then the developer creates a game that the publisher then markets and sells. Of course, we also like developers that are building their own IP. So making investment into building games that they fully own themselves, where they are slowly, or quickly, moving into self-publishing. Those are the aspects that we like, as an investor, at Nordisk Games.

{audio:0:30:42} How do you analyze intellectual property in gaming?

{audio:0:30:48} That’s a very good question. What is the value of Call of Duty, as a brand? There are companies that do that kind of brand valuation but, from our perspective, as an investor in game companies and game developers, we really model the business, the cash flow, that we think the company can generate, over the next 10 years, and that brings us the value. It’s really hard to value intellectual property in itself.

{audio:0:31:19} But if I come to you with a game, you would be looking, specifically, at the game design, the gameplay and exactly what type of in-game monetization opportunities there are?

{audio:0:31:31} Right; we would definitely look at that. But probably even more so, we would look at the team. Who is coming with this proposal? Do they have any experience before? What is their track record? Anyone can have a great idea on paper. It really is the execution that matters. It’s a cliché, but it’s so true, especially for games. For business angels and very early-stage investors, maybe a game design on paper is enough. But for us, where we invest in the slightly later stage, we need much more data to go on.

{audio:0:32:16} Maybe getting a bit more specific about gameplay and game design, how exactly has Fortnite changed the industry in the way that they engage with users? The user has the ownership of where the game goes and owns that kind of IP, if you will. You have got companies, like Roblox, who are doing a similar thing. How do you look at this evolution of the way that gaming IP is moving?

{audio:0:32:50} I think it’s extremely exciting. To be honest, I’m not an expert on all things Fortnite. I think the key thing that Epic did was to find a core gameplay loop, or a gameplay concept, with the Battle Royale and, granted, they probably copied it from a few other games, but they developed and designed it in a really good way, so it is really fun to play. They added free to play, on top of that, as we all know. Everyone, including Epic, was surprised at the success of Fortnite Battle Royale.

{audio:0:33:38} The key they’ve done is that they have really nurtured that success and, as you said, started thinking outside the box and looking at how they can involve the community more. How can they use that success to build the game bigger and think differently? They’ve done it tremendously well. Not least, the Epic Store is also an outcome, to some extent, of the success of Fortnite.

{audio:0:34:07} You also mentioned Roblox. I’m a very big fan of user-created content; allowing the users, the players, to be part of the creation process. To that extent, that happens in the Fortnite community but, to a much bigger extent, in Roblox and Minecraft, for example. There are many futures of this industry, but this is a big part of a future of the industry; letting players be creative and express themselves to a much bigger extent than they can do today.

{audio:0:34:45} How do you look at those futures of the gaming industry? It’s clear that Roblox has over 100 million active users, who are likely to be highly skewed towards younger people. Therefore, if we do see younger demographics using games like Roblox and Fortnite, and, potentially, less AAA games, the engagement is zero sum, in a way. If you’re playing Roblox, you’re not playing another game. Do you see the younger generations are going to evolve more towards Roblox or this user-generated IP, versus the old AAA games?

{audio:0:35:31} Yes, to some extent. I think the younger generation, playing games today, they will expect some sort of self-expression or creation, as part of their experience, to a larger extent than traditional AAA games allow for. Yes, I think that is one thing that the big IPs, the big publishers, need to look at today. How do we cater for that? How do we take a 12-year-old Roblox player and, once five or six years have passed and that person is playing the next Call of Duty or the next GTA, how do we make sure that that person feels they have the same type of self-expression in those games?

{audio:0:36:26} Fundamentally, would that 12-year-old even be interested in that type of Call of Duty IP?

{audio:0:36:33} Absolutely; no question about it. As humans grow, our interests shift, on a personal level. Someone who is playing Roblox at 12, will be looking for different types of game experiences at 18 and, again, at 35. It will shift. We will definitely have room for, what is today, the traditional AAA, big shooter genre, for example.

{audio:0:37:09} If Roblox is taking eyeballs or engagement from the industry, who is it taking it from, exactly?

{audio:0:37:22} Again, it’s a zero sum if you count how many hours someone can spend. The Roblox demographic, I guess, is between eight and 14 or 16. What games did that demographic play previously? Nintendo games, I’m sure; a lot of Nintendo games are aimed at that demographic. We also have to keep in mind that, at least right now, and still probably for a few decades, the games industry is growing just because we are reaching more and more people. The pie in itself is growing. Of course, we are competing for the audience, but the industry, as a whole, will continue to grow.

{audio:0:38:14} When you are looking at the lifetime value, in the IPs of COD or these AAA games, they need to attract the younger generations as they mature, to hold their value?

{audio:0:38:26} Yes; absolutely. That means following the trends or even leading the trends and figuring out how they can change their game experience so that it feels fresher and more modern? To be honest, this always happens. Let’s look at what the first few Call of Dutys were; the first Call of Duty came out almost 20 years ago. If you play those games today, they are not nearly as fun and they are much more limited in every way, compared to modern games today. This has always been happening in this industry.

{audio:0:39:18} Such an interesting aspect of this industry is that it is ever-changing and it really affects the culture of the companies and the people in the industry. We always need to be on the lookout for change.

{audio:0:39:34} I guess, as the technology evolves and improves, that causes step changes in the landscape for gaming?

{audio:0:39:44} Technology, absolutely, but also consumer behavior. Everything that changes just forces us, as an industry, to change as well. That’s extremely positive. That’s the reason why we are so successful because, in some ways, we are forced to be. I guess, 20 or 30 years from now, there is a big risk that the change will slow down and the industry will go stale and then something else will surpass us as the prime form of entertainment, whatever that will be.

{audio:0:40:30} Even though the industry evolves pretty quickly, given as you said, technology and consumer behavior, those franchises, those top-grossing Pokémon, Mario, Nintendo IPs, but also COD and these other AAA games, such as the sports franchises, they are consistently the top 10 games.

{audio:0:40:58} Yes. That’s because the developers and the publishers of those games have managed to change and lead the trends properly. We don’t really talk about the games that fall off the top charts. I can’t come up with an example right now, but I’m sure there are many brands, many IPs, that 20 years ago or even 10 years ago, were in the top charts, that are nowhere near the top today, just because the developers couldn’t figure out how to make it work in a more modern world.

{audio:0:41:42} What would you say is the biggest risk to some of those IPs, in sustaining that value? Which type of IP do you think is at the most risk?

{audio:0:42:05} The answer is a bit boring and generic but I think that, if they stop experimenting, if they stop trying to figure out how to change the brands and the franchises, that’s when they start dying. Being a developer and a publisher can be very challenging at times. You have consumers who say, why couldn’t you make the sequel just like the first game? But if we don’t innovate, including in those big IPs, then they are going to die, slowly or quickly.

{audio:0:42:53} How do you look at the return on investment for the median studio? The profit pool, in the industry, is growing. There are more games; there are more gamers. The profits might be consolidated at the top-grossing games. How do you look at the ROI on spend or capex investment, in those smaller studios where, as you said, you have to self-publish, you have to produce the game, you have to keep maintaining the game and you even have to gain the audience? It seems very difficult to make the economics work.

{audio:0:43:28} It is really difficult. To be honest, I think that most small studios that pop up don’t succeed at all. Basically, they fold within a year or two. Then we have a big group of game studios that succeed enough to just sustain their business, to get enough money to live off it or just have a relatively small salary. It’s successful enough, but it doesn’t really make anyone rich and there is the constant risk of closure, of death.

{audio:0:44:11} Then you have a very small proportion of all game studios that are very, very successful and have managed to break through and really monetize and start building up their resources and cash pool. Those are also the studios that can invest more into innovation and into the future. The challenge is always, how do you break into that group? How do you become financially successful, so that you can build more future success on top of it?

{audio:0:44:45} Which publishers do you think are in the best position today?

{audio:0:44:55} I think there are a bunch of Asian, Chinese publishers that I don’t know very much about, but their success in the past decade is just amazing. The amount of money and business that they are doing in their home markets is amazing. Then they are using that success to invest into the West. I think we should definitely keep an eye on them and see what we can learn from them. But if we talk about publishers that are more well-known to me, in the Western markets, I am constantly impressed by Microsoft. I think their purchase of Bethesda and ZeniMax was a very interesting move. It’s clear that Microsoft wants to have a very strong stable of in-house studios, which is totally understandable. I think it’s the right strategy. But they also seem to keep working with external studios, which is great.

{audio:0:46:01} Activision and Ubisoft are also very good and interesting publishers, without a doubt.

{audio:0:46:13} When you look at Microsoft’s position, versus Sony, do you see any advantage that Xbox might have?

{audio:0:46:24} I think the Game Pass model, the subscription service, that Microsoft launched, they are now combining. If you buy an Xbox series S, the smaller version of the new Xbox, you can get that and a Game Pass Gold or Game Pass Ultimate, for about $25 per month, once it’s launched in a month or so. I think that is just tremendous value for money. That position is a very strong power move, to take an even stronger market position.

{audio:0:47:10} When it comes to Sony, they are always impressive. All the PlayStations, not least the PlayStation 4, have been tremendously successful and are great devices. What impressed me, when Sony announced their new console, was that they were doing two versions. One with a disc and one that is discless. That is something that I’ve been thinking about a lot. When will the shift happen when you move away from physical distribution, solely to digital? It’s so simple when you think about it, it’s so obvious, but Sony had a perfect solution. Let’s just have two versions of the console, one that is sold in markets that have very good bandwidth and who are happy with digital and one that is sold in market that still needs physical distribution. It’s brilliant.

{audio:0:47:57} As a developer, how do you look, today, at whether to produce for PC or the consoles? What’s the decision-making framework you take?

{audio:0:48:10} Most games, at least if they have a relatively high production cost and production value, are really aiming for both PC and console. For some games, the game design itself, the gameplay itself, does not lend itself very well to both gamepad and keyboard and mouse. But I think that most games and gameplay mechanisms work fine on both. So then, typically, you do the game for both PC and console.

Founder of Massive Entertainment, Ubisoft

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