October 31, 2024 • 44 mins
Delphi Interactive is a new company licensing some of the biggest franchises in entertainment and partnering them with independent gaming studios to bring those properties to life as new AAA video games. CEO Casper Daugaard and President Andy Kleinman joined Strictly Business to discuss what they refer to as the “publishing industrial complex” and their plans to circumvent gaming’s biggest entities to deliver new experiences for the unpredictable console and PC gaming market.
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Episode Transcript
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Speaker 1 (00:07):
Welcome to another episode of Strictly Business, Variety's weekly podcasts
for conversations focusing on the business side of media and entertainment.
I'm Corey Erickson, media analyst for a variety intelligence platform.
Delphi Interactive is a new company licensing some of the
biggest franchises in entertainment and partnering them with independent gaming
studios to bring those properties to life as new Triple
(00:28):
A Video Games CEO Casper Dugarde and president Andy Kleinman
joined me to discuss what they refer to as the
publishing industrial complex and their plans to circumvent gaming's biggest
entities to deliver new experiences for the unpredictable console and
PC gaming market. Having hired former Nordis Game CEO Michael
Wider as Delphi's managing partner in Europe, who joins a
(00:49):
small staff of talent from leading publishers like Rockstar, EA
and Activision, Douguarde and Climate discuss their current issues with
Triple A Gaming and how they aim to follow Io
Interactive's Project Double seven with more games based on some
of traditional media's biggest franchises. Welcome back to Strictly Business.
(01:17):
I'm Corey Erickson, media analyst with Wariety Intelligence Platform, and
I'm joined today by the founder and CEO of Delphi
Interactive and its president. Why don't you to introduce yourselves.
Speaker 2 (01:28):
Thanks for having his own Corey. My name is Casper
Dougard and I'm the founder and CEO of Delphi.
Speaker 3 (01:34):
And I'm Andy Kleinman, President of Delphi.
Speaker 1 (01:37):
So how did Delphi get launched and how did the
two of you come together?
Speaker 2 (01:41):
I think the impetus for forming Delphi was when I
was working in Los Angeles in the film and TV
space with underutilized intellectual properties training, you know, into film
and TV projects, and one of the types of IP
that I was most interested in was gaming IP. I'd
(02:03):
always been a big gamer myself, and so I had
a chance to meet with a lot of Triple A
gaming studios and talk to them about adapting their games
and their IP into film or TV projects. But I
also learned a lot about the business of Triple A Games,
which is sort of this mysterious business that was huge
(02:25):
but also sort of hiding in plain sight, and I
didn't know much about it, and based on everything I learned,
I developed this sort of secret thesis about Triple A
games that became the genesis of Delphi. And the thesis
is that most people believe that if you want to
make a big Triple A game, you can only do
(02:47):
it if you involve one of the big traditional global
gaming publishers like EA or Ubisoft, one of these huge corporations.
But the truth is that nowadays, in the era of
digital game just tribution, we believe that if you have
access to a beloved global intellectual property, and you have
access to capital to develop and market a game, and
(03:10):
you have access to the best independent development talent, you
can actually make a successful triple A game outside of
what we now lovingly refer to as the publisher industrial
complex that sort of traditionally oligopolized the Triple A space.
So instead of turning games into film and TV, I
(03:33):
had this epiphany that I wanted to do the opposite
in reverse and turn the best film and TV into
games and use this new thesis. So long story short,
one of the studios that I met with was in
my hometown of Copenhagen, where I met Io Interactive. I
(03:53):
owe the creators of Hitman, which is one of the
most beloved stealth and espionage franchises and I'd been a
huge fan of Io since I was a teenager, and
they had recently done this really fearless management buyout to
become an independent Triple A studio, and we just really
hit it off and we were philosophically aligned and that
(04:14):
we wanted to work on something together. And so long
story boring. In twenty twenty, Delphi intered into an agreement
to license the rights from Dan Jack and MGM to
do a Triple A PC console James Bond Double seven game,
to be developed and published by Iro Interactive in association
(04:35):
with Delphi. And that's about all we can say right
now about Project Double oh seven other than what you
can read in the news. It's a stealthy project.
Speaker 3 (04:44):
And to answer the question about how we met, Corey
Casper and I met years ago in la and we
became friends and we were interested in a lot of
the same things, especially around entertainment and the evolution of
games and entertainment, and when he started putting the Chains
Bond project together, I became an advisor to the company.
(05:06):
I've been working with license ip and games over the years,
particularly at places like Scope, Lee, Disney, and Zinga, and
so as Project Double seven came together. We saw a
very clear opportunity to replicate the model with more games,
expand the Delphi team, and that's when I became fully
(05:27):
involved in the company.
Speaker 1 (05:29):
In terms of expanding the team. Who else of note
has been drawn into Delphi's orbit.
Speaker 2 (05:35):
Well, we're you know, we've been as we've been refining
and now also replicating the thesis that we developed for
Project Double seven. We've you know, we've we've encountered some
really great minds in the Triple A industry who've become
interested in what it is that we're doing. And we're
actually pretty excited to announce that Michael Weider has joined Delphi.
(06:00):
Mikael was the founder and CEO of Nordist Games, which
is one of the biggest gaming companies in Scandinavia. He
essentially blit scaled Nordis Games from one employee to thirteen
hundred in just a few years, and he acquired several
Triple A studios, including Avalanche in Sweden and Supermassive in
the UK. And he did all of that outside of
(06:23):
the traditional publisher system.
Speaker 3 (06:26):
Our team is about we're about a dozen people. We
believe in this idea of being very lean and hired
the best people for sort of the central Delphi team,
and then we worked with all these external partners. So
there's about two hundred and fifty people working on Delphi
games across our partners. And it's interesting, like when we
(06:50):
started talking to people and just getting validation on the
thesis and thinking about how do we scale this model,
we were talking to some of the most accomplished people,
talented people that we need you in Triple A games
just to get their opinions, just to get advice, and
we were quickly learning that those people were excited or
were doing to the point that they wanted to join.
And what we realized was that if you're an accomplished
(07:13):
person in triple A games like you don't have that
many options to do what you love. You either have
to have a long career inside one of these big publishers,
but if you want to be an entrepreneur, there's not
that many options. And so Delphi became the sort of
clear alternative to doing this independently. And so we've attracted
(07:34):
some great people into this core team. You know, people
that we were big fans of that came from Rockstar games,
from electronic cards, from Activision, who are now part of Delphi.
Speaker 1 (07:44):
Let's talk more about what you consider this publishing industrial complex.
What is it about triple A games that Delphi loves
and where are the major publishers in gaming going wrong
when it comes to triple A games today.
Speaker 2 (08:02):
Well, first we have to take a little bit of
step back to the past twenty or thirty years of
triple A gaming because they're really used to be significant
barriers to entry to make a triple A game, and
one of the biggest ones was physical distribution, which is
the primary mode of how to get your game out
(08:23):
to distribute to consumers. As if you wanted to make
a triple A game, you needed to have this complex
infrastructure to print the games on physical discs and create
manuals that to be translated into different languages and localized,
and had to drive the games around on trucks in
different countries and employ huge sales forces, and so it
(08:45):
required very complex and expensive infrastructure and economies of scale
that only this sort of oligopoly of large corporations like
EA could handle. So nowadays physical copies of games are
still thing. They're important for gift giving and collectors, editions
and stuff, but the vast majority of game sales are
(09:07):
now digital. So if you've developed a game and you're
ready to put it in the hands of consumers, you
essentially press upload to one of the platforms where people
can buy and download your game, and so that has
democratized the process somewhat. That's a very important thing that's
changed that's enabled a company like Delfi to come into existence.
(09:27):
But the other super important thing about our thesis on
the publisher industrial complex is that they've of course adapted
to this digital era and they're operating at an unprecedented
profitability and scale. But at the same time, something else
has happened. And then we believe that on average, the
(09:49):
legacy publishers have become fundamentally misaligned with the owners of
the world's biggest IP, and they've also become fundamentally misaligned
more and more with dependent Triple A developers. And that's
where Delphi saw an opportunity, a significant opportunity to step
in and offer an sort of very attractive alternative two
(10:12):
owners of IP and to Triple A developers. Very sort
of rationally, we believe the large gaming publishers have prioritized
their own internal fully owned IPS over third party ipis,
and some of them who even publicly acknowledged that by now,
and that means that they're no longer ideal partners for
(10:34):
the owners of the most iconic licensed I piece, and
everyone is slowly starting to realize that.
Speaker 1 (10:40):
Do you think some folks in the gaming community might
sometimes prefer that IP that's local to gaming be prioritized
over major third party IP from Hollywood or elsewhere.
Speaker 2 (10:53):
Well, we actually have given quite a bit of thought
to that as well. They this idea of licensed IP
means a lot of things. You know, it can be
from the world of Hollywood, it can be from the
world of sports, which is huge, but it also exists
across a spectrum of sort of different license experiences. One is,
(11:18):
you know, you have integrations of licensed IP and platforms
like Roadblocks or Fortnite, where the teenage mutant Ninja Turtles
show up in Fortnite and things go fucking crazy. And
then you have these licensed games that are sort of
like merchandising tie in experiences where if you have a
(11:39):
Star Wars or Harry Potter movie coming out, then there's
also this game that's made to coincide with the release
and the same thing that happens in the movie happens
in the game if it's a little different. And those
are not always critical hits, but historically have been sort
of very commercially successful. But then there's also a third
(12:00):
category of licensed game and that's the one that really
inspires us here at Delphi, and that's a rarer type
and we haven't really found a perfect term for it,
but we call them asynchronous licensed franchises. And some examples
of that are Knights of the Old Republic that byowhere
(12:22):
are made, or the Batman Arkham series from rock Steady,
or Marvel Spider Man from Insomniac and more recently Boulder
Skate three from Larian. These weren't based on any particular
movie actor, or movie or novel or anything. They were
they were carefully crafted, very patiently developed franchises that were
(12:45):
completely their own thing, and so we call those asynchronous franchises,
and those are the ones that the Delphi want to
make more of. And so it's also interesting to note
that all of the examples I mentioned were created by
Triple A studios that were at least of the time
completely independent. Triple A studios like I are interactive and
(13:07):
so as you can read in the news, project Double
O seven fits this model. It's the first ever Triple
A origin story of the James Bond character. It's a
completely original story, and it's not based on any particular
Bond film or actor. And we think fans will always
love those types of experiences.
Speaker 1 (13:27):
Speaking to this notion of you know, high quality Triple
A games license from third party ip that really resonate
with the market, it wasn't just Balder's Gage three in
twenty twenty three that fit those terms. It was also
Howkwarts Legacy coming from Warner Brothers in their own internal studio. However,
(13:49):
a year later, Suicide Squad Killed the Justice League comes
out and sort of has the opposite outcome with you know,
fans and critics alike than Hawkwarts Legacy did. And more recently,
we saw Ubisoft own up to Star Wars Outlaws, missing
their expectations, and now Tencent is reportedly circling Ubisoft as
(14:11):
an acquisition target. What do you think is defining such
missteps this year after we've seen other projects be it
Sony Spider Man or Howkwarts Legacy or Bouder's Gate three
really hit their marks.
Speaker 2 (14:26):
I'm very interested in two of the companies you mentioned
just there. You know, everybody's talking about Ubisoft and Rumors,
and you know what, I think that company maybe has
some specific problems to That company employs a lot of people,
The most successful IP franchises they have are starting to
(14:48):
show their age, and there may be some other endemic
problems that they're dealing with with their stock price and
ownership that we just simply don't know about. So I'm
cautious to derive specific conclusions about the industry based on Ubisoft.
Warner Brothers super interesting. They are one of the I
(15:09):
think only two traditional Hollywood Industrial complex members that have
their own internal gaming businesses. The other Hollywood studios that
had that have shut those down and transitioned to essentially
risk free and very lucrative licensing businesses. So Disney licenses
out there valuable IP to games developers and publishers instead
(15:33):
of making their own. Warner Brothers is different. They have
Warner Brothers Interactive Entertainment, and as you said, there is
a long cadence between the games they release, and you
can have a billion dollar success asynchronous success like Parkwards Legacy,
and then you can have something like Suicide Squad that
(15:58):
leads to a reported to our million or even dow
right off. And I think on a reason Earnings call
David Saslav, he said very wisely that given that Warner
Brothers own such shockun al Ip and you know, only
has as much bandwidth as they do inside of their
own game studio, and given that it takes four to
(16:21):
five years to make a triple A game, or nine
years in the case of Suicide Squad, it makes so
much sense for Warner Brothers Discovery to balance out that
cadence and risk profile by complementing their portfolio of games
with some licensed titles as well to external partners, where
Warner Brothers Discovery doesn't take the financial execution risk as much,
(16:45):
and that can solve a problem like the fact that
there literally hasn't been a triple A PC console Batman
game since twenty fifteen. It's almost ten years ago, and
that's not right. And I think brother Discoveries is discovering
the solution to that.
Speaker 3 (17:02):
And I think similarly to how they think about movies. Right,
we've been inspired a lot by companies like Legendary Entertainment,
which started back in the day producing Warner Brothers Movies
and Warner Brothers ip into blockbuster films and their whole
thesis was that they could you know, come in initially
with financing, but their plan was to try to make
(17:23):
these big blockbuster films outside of the legacy Hollywood studios.
They were one of the first to do. Its Guidance
came later and build a similar thesis which has now
become really big, and another taking over a legacy studio
to try to modernize it with their way of doing things.
But that doesn't exist in gaming, and especially in Triple
A gaming. And so that model of financing this big
(17:47):
blockbuster Triple A games outside of the system and creating
a Triple A slate of games work based on the
biggest brands in the world, it's something that doesn't exist
and that del Via is firing to create and be
inspired by legendary and Skidance.
Speaker 1 (18:05):
I want to expand a bit on how you make
that pitch to you know, a legacy Hollywood studio. As
we know, Skydance is trying to complete an acquisition of Paramount.
If that goes through, that's a third legacy major Hollywood
studio that is going to have you know, a full
(18:26):
fledged gaming division at its disposable if that completes, how
do you make the pitch to an entity like Paramount
or you know, the new iteration of sky Dance and
Paramount that they should be you know, licensing some of
the IP out as well, alongside whatever they're working on
with sky Dance Interactive or Skydance New Media.
Speaker 2 (18:46):
Yeah, I love talking about that stuff. It's I think,
first of all, bandwidth is always an issue, as we
see from Warner Brothers. They have a huge studio with
twenty two hundred employees, and there's still hasn't been a
Batman game, and at least not for PC and console
in Triple A for for nearly a decade. The other
(19:07):
thing way we look at that problem you're describing there
is that, you know, I think it's about having a proposition,
an opportunity for a licensed project that's just so good
that it doesn't matter what else the license or which
is what we call the Hollywood studio or sports franchise
or that that's giving you the license, no matter what
(19:29):
else they're working on with the IP. And I'm not
joking about that. When when Project Double O seven was
unveiled a few years ago, pc Gamer described it as
a match made in heaven between an IP and development talent,
and so we were obviously very proud of that reaction,
and since then we've tried to codify what it means
(19:50):
and why people would say that. And so one of
the Triple A developers were working with on one of
our upcoming projects that has not been announced yet, he
taught us this fascinating idea that if you're working on
adapting and established IP, you have.
Speaker 3 (20:08):
To be able to.
Speaker 2 (20:09):
Deconstruct the sort of wishful film and fantasy of that
particular IP, whether it's whether a film series or a
novel or a comic book, you have to sort of
deconstruct the wishful film and fantasy into its constituent parts,
and then you have to be skilled enough to organically
reassemble those elements in a different way, completely different way
(20:35):
that's suitable for the Triple A interactive medium, and of
course ideally in a sort of shock and all fashion
that will delight the fans. This is really no easy feat.
There is a real art to that kind of adaptation
and it requires patients and resources and the luxury of time.
And from what we've seen, when you have something like
(20:55):
that the license source or eager to do business.
Speaker 1 (21:00):
So this is maybe a little bit of a tough
but necessary question. Along those lines, we have live services
at play that you know, at sort of the top level,
whether it's Roadblocks, Fortnite, Minecraft, and then Grand Theft, Auto
and Call of Duty appealing to you know, more adult gamers.
(21:21):
Hollywood is very very friendly with a lot of these
live services, Fortnite and Roadblocks in particular. As we know,
Disney invested one point five billion into Epic Games, specifically
for many different IP partnerships spread throughout Fortnite. Let's say
Delphi knows a studio that can pull off a really
(21:44):
high quality Alien game that's IP you would have to
get from Disney. How do you convince an entity like
that that a game that could theoretically take four or
five years even more, if this, you know, wish fulfillment
deconstruction process takes a while, how do you sell Disney
on betting on the high quality Triple A game instead
(22:07):
of a Fortnite experience.
Speaker 3 (22:08):
We believe that the ips that we're going after, right
are some of the biggest brands in the world, right,
and so when Disney or orner Brothers or any of
these studios are thinking about the strategy for some of
the biggest IPS. It's not just one thing that they do, right,
They explore different ways to attract the different types of
fans that are engaged with that IP and who love
(22:29):
the IP. And so some of those fans are the
audiences that are within roadblocks on Fortnite and who want
to have those games. They're they engage with those games
and they love already the experience that they have and
the characters within Fortnite, and so integrating those IPS makes
a lot of sense, and those are huge businesses on
their own. There's also a lot of people, a lot
(22:51):
of those fans that want single player experiences, and you know,
many gamers, like us, they get overwhelmed, you know, when
when they have to go into an existing game to
play mode whe their favorite IP, or when a new
game is coming out and it's a you know, eighty
tow one hundred hour game that you know, feels intimidating.
(23:13):
And so we think both things can coexist, not perhaps
for every AP, but definitely for the things that are
you know, some of the biggest brands that have a
huge global fan base and that are sort of evergreen
franchises that you know, they're constantly thinking about what comes next, right,
and so our our philosophy in those cases is to
(23:35):
do something different. They may already be working with Fortnite,
or they may be working with other existing platforms, but
we think about the single player story driven experience, and
usually it starts with something that you know can be
played in twelve to sixteen hours as opposed to eighty
two hundred hours, and you feel a great sense of
(23:56):
accomplishment and satisfaction when you're playing it. It's almost like
you're bench watching your face or a new TV series
or movie franchise that you love, or you know, the
Lord of the Rings trilogy, and it has a beginning
in an it's very fulfilling and and they're highly replayable,
and then you know, you can have DLC content, and
you can have you know, new iterations and sequels that
(24:16):
come out after that continue that story.
Speaker 2 (24:19):
And so yeah, and and Corey, I think also that
there is a very interesting general debate happening at the
moment about live services games, which you mentioned. You know,
it's it's natural that everybody wants a fortnight. There is
there's an eleven or maybe even twelve figure upside to
that if you can pull that out as a company,
(24:41):
But it's also a very volatile proposition with a massive
downside and massive risk. You know, as we've seen, even
high quality life services games that are based on beloved
ip which you believe so much in, like Avengers or
Suicide Squad which we talk about earlier, can can be
(25:02):
born as live services experiences, but can really struggle to
pull away habitual users from the sort of the big
five titans that you have there and the network effects
they have. You know, you mentioned Roadblocks and Fortnite or
Minecraft or GTA Online or or or even FIFA, and
(25:23):
it's a it's very hard to take consumption time away
from those grain franchises and and and uh and inject
new life into a completely new ecosystem. And so we
thought about how you can get the best of both worlds,
and that a wiser and more risk managed approach to
live services is to to start with a hardcore, premium,
(25:49):
story driven, character driven single player experiences, and like io
Interactive has done with transforming Hitman into it's very successful
and durable world of assassination platform, or even how GGA
Online was created after GGA five. And what you do
(26:11):
is you sort of you have this strong core single
play experience, and then you carefully layer on live services
elements around this core, and then you expand in almost
concent these concentric circles from there and create a single
player as a service that can be a very very
good business and very durable. We think that is a
(26:32):
more organic approach than launching a super expensive, mega live
services game and hope that people will show up.
Speaker 1 (26:40):
Speaking of the single player experience, I do need to
clarify if any listeners were terrified by that alien hypothetical
creative assembly. And Sega did just confirm a sequel to
twenty fourteen's Alien Isolation is in the works, so you
know that is one win on the single player front, now,
I mean.
Speaker 2 (27:01):
Yeah, clarifying. We were worried for a second that Fortnite
would have you know, but I think I think such
ips is so iconic and beloved that they can absolutely
tolerate multiple incarnations to co exist at the same time.
I don't know about Aliens our rated franchise, but you
know where this the kids version or the Fortnite version
(27:21):
that stylized and fun and then there's the hardcore, story
driven R rated version. These can all co exist at
the same time. That's one of the one of the
beautiful things about Iconic IP that's lasted for a half
century or longer. Sometimes.
Speaker 1 (27:36):
Yeah, we're going to take a quick break, but when
we come back, we're going to talk more about some
of the financial headwinds the industry has been facing this
year through layoffs, as well as the mobile gaming element
of the industry and why that continues to remain relevant
despite the need for more high quality triple A gaming experiences.
(28:05):
Welcome back to strictly business. I'm here with Casper Delgard
from Delphi Interactive and Andy Cleman, also from Delphi. Now
I want to address, you know, what's sort of the
biggest elephant in the room for the year in gaming.
You know, as much as we want to talk about
positive developments in the industry and things people are really
(28:27):
excited over, this has simply been a devastating year for
the gaming workforce. There's one developer who goes by at
DECAF who dutifully tracks all of these gaming industry layoffs
across the globe. So far, it surpassed thirteen thousand in
twenty twenty four, which is, you know, pretty staggering. A
(28:49):
lot of that's come from the biggest publishers. We've seen
Microsoft Gaming, you know, layoff close to two thousand this year,
many from Activision Blizzard after that acquisition. When Delphi and
its business model is going to rely heavily on seeking
out independent studios, do you feel concerned over the degree
(29:11):
to which really capable independent studios are seeking new parents.
As you mentioned earlier with Nordis Games, we saw super
Massive go to them. Super Massive is responsible for Until Dawn,
which just got a remake through a different studio for Sony.
They also make the Dark Pictures games for Bandai Namco.
(29:32):
Another studio, tech Lund, which is known for Dying Light
and had recently moved into self publishing, ended up being
acquired by ten Cent. You know, do you still feel
there are plenty of studios for you to find and
work with and time is really of the essence and
getting them set up with good projects.
Speaker 3 (29:53):
Yeah. We thankfully we have partners already set up for
most of the Delphi projects we're working on. And it's
a it's an interesting debate right on one end, obviously,
it's it's devastating to see these layoffs and and you know,
this this sort of feeling of you know, what's happening
(30:13):
with the industry, and you know, it's a little bit
of a double ed sort because there's been incredible grow
over the past decade. Right, So there's all these jobs
in gaming that didn't really exist five years ago, ten
years ago, even you know, right before the pandemic, and
so a lot of these companies grew a lot, and
you know, budgets became really big, and you know, there's
(30:36):
a number of factors that sort of got us to
the situation through too many games, and so I think
it opens an opportunity for companies and studios and talent
that are trying to be more entrepreneurial. We are seeing
a lot of great independent talent that we want to
partner with, that want to partner with us, some because
(30:58):
they're looking for an alternative to these traditional publishers. Maybe
they're not as aligned with them economically or or creatively.
And our model is not just alignment around the economics,
but it's it's this idea of full transparency and collaboration
and working on something together from day one all the
(31:19):
way to you know, eventually becoming something that you know,
there's multiple sequels or you know, very long term project,
and so there's a more entrepreneurial alignment with them. And
also some of these studios, you know, they maybe left
the big publishers because they wanted to work on original
IP and some of those projects got you know, limited
(31:39):
capital or got you know cut because it's risky and
because the cost capital is higher. And so we're seeing
some of those studios and some of that talent now
interested in saying we have a great team that has
X skill sets and X experience for these genre of games,
or we have an idea for an original AP that's
(31:59):
very similar to the other i P that's an established
i P, and we want to partner with somebody that
can help us do that right. And that's our sweets
up spot in terms of the kinds of things we
want to do and find the right matches Made in Heaven,
as we mentioned, and so yes, there's there's challenges in
the industry and there's a lot of changes happening, but
we do think it's a really good opportunity for companies
(32:22):
that can be more entrepreneurial and try to sort of
bet on big things, but with the right risk profile
where you already know that there's an audience that's already
interested in this and this this game doesn't exist, and
if you can put the right pieces together of this
puzzle and make it, and you have the right DNA
to make it, then you know there's a big audience
(32:43):
for it at the other end.
Speaker 2 (32:45):
And I'll just add to that Corey that you know
Andy mentioned, it's like radical transparency that we try to
enforce with our with our partners, whether it's IP owners
or or Independent Triple A Talent, about the fire financying
about the revenue models, about everything. And we do that
because we are not a gig up publisher like Ubisoft,
(33:07):
which has twenty two thousand employees and such huge overhead
costs and diversification that they just have to capture a
massive share of the economic upside that's created by a game.
I'd dare say it's literally ninety or ninety five percent
of the upside after counting, and which can really misalign
them with Independent Triple A Talent, who simply, with very
(33:31):
few exceptions, don't receive a significant share of that upside,
and maybe the incentives are so misaligned sometimes that the
talent charges a man month rate with a cost plus
premium and that essentially paid more the longer they take
to make the game. It is creating real misalignment. So
we build our models because we don't have all that
(33:52):
overhead and baggage to create transformative outcomes for our independent
Triple A partners in success so where they will probably
never need a publisher again if we create something successful together,
and that's something we really believed in. We're transparent about
it and that I think significantly differentiates us from the
legacy system and try to create some positive I mean,
(34:14):
it's all this really sad stuff that we're seeing with
the layoffs in the industry.
Speaker 1 (34:19):
Speaking to the transparency and you know, the extent of
the costs of Triple A game development, is the current
sag after strike weighing on Delphi at all in terms
of evaluating how you want to approach major IP at
the independent studio level.
Speaker 3 (34:41):
Not really. You know, being an entrepreneur, you have to
understand all the challenges that an industry is going through
and you know all the strikes multiple stripes we've seen
in related to Hollywood and entertainment over the past few years.
Are a result of all these changes, right, a lot
of them, you know, because of the evolution of technology.
(35:03):
And my whole career, I started in early days of
digital music and went into film and TV and then gaming,
and so evolution of technology has always been something that
I've seen play a huge role on how these industries change.
And you know, you have to adapt and you have
to evolve. And so for us, you know, we we
believe creative talent is always hugely important, probably the most
(35:26):
important if you want to have great products that people
want to consume, great games, great movies, great TV shows,
great books, and so we're always aligned with the talent.
But at the same time, you have to think about
what's you know, how to create the best business model
and evolve the business model to something that's affordable and
that you can reach as many fans of the IP
(35:48):
or the or the talent as possible. Right. And so
sometimes that's the issue with big legacy companies that are
not able to move as quickly or adapt to changes
or change their business molle because they're not prepared and
they're big, and they have all these different departments, and
these departments may not even talk to each other, right,
and so it's hard for them to do those things.
But for us, we're very aligned with, you know, how
(36:11):
do we bring the best possible experiences to the fans,
And so we're watching what happens in the industry closely
and trying to evolve the models and be prepared for
whatever happens.
Speaker 1 (36:25):
So something like user generated content, and it's growing appeal
to publishers like EA, who have really come out in
favor of it. Is that something that similar to sort
of the heavy push to live services, you know, is
that something you think is getting in the way of
(36:47):
Delfi's you know, stated initiative to make really high quality
single player games.
Speaker 3 (36:52):
I wouldn't say it's getting in the way, because you know,
there's a huge audience and market for something that's much
more careful scripted. You know, it's early days, I think
for a lot of these UGC Continent games or you know,
chen Ai evolution of games, and again we're very interested
(37:12):
in that stuff as a as a big geek into
all these new emerging technologies. It's fascinating to see what
these things can do. I think when you're trying to
craft something for you know, finicky fans that love a
certain i P and that one a certain story told,
and that one really really high quality on everything that
they do. The technology is still somewhat limited and also
(37:34):
maybe not us accessible, but it's definitely going there. Right
So our model right now is very clear. We have
a slate of projects that are set up that we're
really excited about with great partners with RAYP, and we
believe fans will be super excited about the next generation
of games we make beyond that may be a little
different based on these changes, right. So it's it's something
(37:57):
that again when you're a startup and you're a a
lean company like we always aspired to be, right even
after we hopefully have many successes, like we always aspired
to be a very lean core of our team and
be able to work with the best partners. And so
if that means that some of our partners and some
of the both development parts of the technology partners have
(38:19):
you know, great emerging technologies that take great use cases
of AI or UGC content, like we will help you,
you know. That's that's that's part of how we are.
But it's not something that is a huge priority for
us in the stuff that we're already doing.
Speaker 1 (38:35):
So Andy, I want to focus a little bit on
your background in gaming as we close up here. You
you know, you're obviously passionate about the Triple A gaming
space and you know the sorts of games that are
you know, big enough to take years and years to make.
But you spent some time in your career at scope Ly.
(38:55):
Now scope Ly last year was acquired by Savvy Games
Group in Saudi Arabia for close to five billion. You know,
that's not quite as big as the sixty nine billion
for Activision Blizzard over at Microsoft, but that's still quite
a lot and sort of does reach the top of
(39:15):
the pinnacle of gaming acquisitions and other mobile companies Zinga,
which I also believe you worked with for some time,
that was acquired by Take two Interactive for over twelve
billion a couple of years ago. What caused this pivot
on your end to you know, switch from the very
(39:36):
scale driven mobile side of the industry, which for many
years now has accounted for half of the you know,
entire gaming market essentially over to a more traditional space
like console PC. The Triple A games defined that when
you know, there are as many fraud issues as we
have covered in this space.
Speaker 3 (39:56):
Yeah, It's a great question. I been in the industry
a long time, and one of the things I love
about games and the games industry is that it's it's
constantly growing and evolving, and every time there's been sort
of a new platform or technology, it doesn't necessarily replace
the older ones. It just keeps expanding and growing. So
(40:18):
I started, when I started, I was making downloadable PC games,
and then I went into online multiplayer games, and then
social games. That was a big part of Zinga and
UH and eventually mobile also with Zinga and Scope League.
And even at the time I remember, you know, we
were at Zinga and the E merging. Mobile platforms were growing,
and everybody was like, who's going to be the singer
(40:39):
of mobile? Right, and Zinga wanted to be the single
of mobile, uh and and and it was always, you know,
an opportunity for new companies like super Sell or Scope
Lead to be born. And and so I agree that
obviously most of the growth has come into mobile, and
most of the venture capital money and talent has focused
on on on mobile, which is now pretty crowded right
(41:01):
the free to play market, There's there's a lot of games.
There's probably a lot of games in general in the industry,
but particularly mobile for you to play, which is which
is hard because you know, it's it's not just about
making a great game, it's about you know, long term
retention and monetization and things that are harder to determine
even if you have a fun game until after you
(41:23):
you're done sort of building the core of the game.
And so when he came to Triple A Games, when
when when Casper started working on the Chickenspawn project, and
and I was helping him again as a as a
friend who knew a lot about games and IP, it
reminded me a lot of the similarities between the early
days of Scope League and what DELFI was aspiring to do.
(41:45):
Right Scope Lee, we started earlier looking at mobile market
that was getting quickly crowded and and harder to get
you know, discovered and to get you know, efficient user
requisition dollars spent. And that's when we say the opportunity
to partner with some big IP some of the biggest
brands at the time and make games. But our core
(42:07):
team for for Scopey at the time, which was a
small team as well, we didn't have the capability to
do all these different types of games we wanted to make,
and so we started partnering with third party developers that
were established that were really good in a particular type
of game and genre, and we would combine forces and
we would bring our secret sauce around marketing and distribution
(42:27):
and things that we did well. And and that's what
you know, was sort of the origin of of what
became a two pointed out a really successful company in Scopey.
Speaker 4 (42:39):
Right.
Speaker 3 (42:39):
So that's the similarity and the and the inspiration with
del Fi. Right. We see that, yes, the Triple A
is much more established and seems like more traditional, but
not in the way that we're doing it. The way
that we're doing it is it has never been done. Right,
This this analogy that I gave earlier about legendary or
you know, a company that's trying to do really big
(43:00):
Triple A games and a slate of multiple Triple A
games with the biggest ap outside of the traditional publisher
infrastructure that doesn't exist, and so we we aspire to
also do something new and innovative like that done before.
In my career with Delpha as well.
Speaker 1 (43:20):
Well, thank you so much Casper and Anti for you know,
giving us the vision of what Delphi Interactive is aspiring to.
Speaker 2 (43:28):
Thank you so much for having us on, Corey.
Speaker 3 (43:30):
It's great talking to you.
Speaker 1 (43:31):
Yeah, great talking to you too.
Speaker 4 (43:35):
Thanks for listening. Be sure to leave us a review
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forget to tune in next week for another episode of
Strictly Business
Welcome to another episode of Strictly Business, Variety's weekly podcasts
for conversations focusing on the business side of media and entertainment.
I'm Corey Erickson, media analyst for a variety intelligence platform.
Delphi Interactive is a new company licensing some of the
biggest franchises in entertainment and partnering them with independent gaming
studios to bring those properties to life as new Triple
(00:28):
A Video Games CEO Casper Dugarde and president Andy Kleinman
joined me to discuss what they refer to as the
publishing industrial complex and their plans to circumvent gaming's biggest
entities to deliver new experiences for the unpredictable console and
PC gaming market. Having hired former Nordis Game CEO Michael
Wider as Delphi's managing partner in Europe, who joins a
(00:49):
small staff of talent from leading publishers like Rockstar, EA
and Activision, Douguarde and Climate discuss their current issues with
Triple A Gaming and how they aim to follow Io
Interactive's Project Double seven with more games based on some
of traditional media's biggest franchises. Welcome back to Strictly Business.
(01:17):
I'm Corey Erickson, media analyst with Wariety Intelligence Platform, and
I'm joined today by the founder and CEO of Delphi
Interactive and its president. Why don't you to introduce yourselves.
Speaker 2 (01:28):
Thanks for having his own Corey. My name is Casper
Dougard and I'm the founder and CEO of Delphi.
Speaker 3 (01:34):
And I'm Andy Kleinman, President of Delphi.
Speaker 1 (01:37):
So how did Delphi get launched and how did the
two of you come together?
Speaker 2 (01:41):
I think the impetus for forming Delphi was when I
was working in Los Angeles in the film and TV
space with underutilized intellectual properties training, you know, into film
and TV projects, and one of the types of IP
that I was most interested in was gaming IP. I'd
(02:03):
always been a big gamer myself, and so I had
a chance to meet with a lot of Triple A
gaming studios and talk to them about adapting their games
and their IP into film or TV projects. But I
also learned a lot about the business of Triple A Games,
which is sort of this mysterious business that was huge
(02:25):
but also sort of hiding in plain sight, and I
didn't know much about it, and based on everything I learned,
I developed this sort of secret thesis about Triple A
games that became the genesis of Delphi. And the thesis
is that most people believe that if you want to
make a big Triple A game, you can only do
(02:47):
it if you involve one of the big traditional global
gaming publishers like EA or Ubisoft, one of these huge corporations.
But the truth is that nowadays, in the era of
digital game just tribution, we believe that if you have
access to a beloved global intellectual property, and you have
access to capital to develop and market a game, and
(03:10):
you have access to the best independent development talent, you
can actually make a successful triple A game outside of
what we now lovingly refer to as the publisher industrial
complex that sort of traditionally oligopolized the Triple A space.
So instead of turning games into film and TV, I
(03:33):
had this epiphany that I wanted to do the opposite
in reverse and turn the best film and TV into
games and use this new thesis. So long story short,
one of the studios that I met with was in
my hometown of Copenhagen, where I met Io Interactive. I
(03:53):
owe the creators of Hitman, which is one of the
most beloved stealth and espionage franchises and I'd been a
huge fan of Io since I was a teenager, and
they had recently done this really fearless management buyout to
become an independent Triple A studio, and we just really
hit it off and we were philosophically aligned and that
(04:14):
we wanted to work on something together. And so long
story boring. In twenty twenty, Delphi intered into an agreement
to license the rights from Dan Jack and MGM to
do a Triple A PC console James Bond Double seven game,
to be developed and published by Iro Interactive in association
(04:35):
with Delphi. And that's about all we can say right
now about Project Double oh seven other than what you
can read in the news. It's a stealthy project.
Speaker 3 (04:44):
And to answer the question about how we met, Corey
Casper and I met years ago in la and we
became friends and we were interested in a lot of
the same things, especially around entertainment and the evolution of
games and entertainment, and when he started putting the Chains
Bond project together, I became an advisor to the company.
(05:06):
I've been working with license ip and games over the years,
particularly at places like Scope, Lee, Disney, and Zinga, and
so as Project Double seven came together. We saw a
very clear opportunity to replicate the model with more games,
expand the Delphi team, and that's when I became fully
(05:27):
involved in the company.
Speaker 1 (05:29):
In terms of expanding the team. Who else of note
has been drawn into Delphi's orbit.
Speaker 2 (05:35):
Well, we're you know, we've been as we've been refining
and now also replicating the thesis that we developed for
Project Double seven. We've you know, we've we've encountered some
really great minds in the Triple A industry who've become
interested in what it is that we're doing. And we're
actually pretty excited to announce that Michael Weider has joined Delphi.
(06:00):
Mikael was the founder and CEO of Nordist Games, which
is one of the biggest gaming companies in Scandinavia. He
essentially blit scaled Nordis Games from one employee to thirteen
hundred in just a few years, and he acquired several
Triple A studios, including Avalanche in Sweden and Supermassive in
the UK. And he did all of that outside of
(06:23):
the traditional publisher system.
Speaker 3 (06:26):
Our team is about we're about a dozen people. We
believe in this idea of being very lean and hired
the best people for sort of the central Delphi team,
and then we worked with all these external partners. So
there's about two hundred and fifty people working on Delphi
games across our partners. And it's interesting, like when we
(06:50):
started talking to people and just getting validation on the
thesis and thinking about how do we scale this model,
we were talking to some of the most accomplished people,
talented people that we need you in Triple A games
just to get their opinions, just to get advice, and
we were quickly learning that those people were excited or
were doing to the point that they wanted to join.
And what we realized was that if you're an accomplished
(07:13):
person in triple A games like you don't have that
many options to do what you love. You either have
to have a long career inside one of these big publishers,
but if you want to be an entrepreneur, there's not
that many options. And so Delphi became the sort of
clear alternative to doing this independently. And so we've attracted
(07:34):
some great people into this core team. You know, people
that we were big fans of that came from Rockstar games,
from electronic cards, from Activision, who are now part of Delphi.
Speaker 1 (07:44):
Let's talk more about what you consider this publishing industrial complex.
What is it about triple A games that Delphi loves
and where are the major publishers in gaming going wrong
when it comes to triple A games today.
Speaker 2 (08:02):
Well, first we have to take a little bit of
step back to the past twenty or thirty years of
triple A gaming because they're really used to be significant
barriers to entry to make a triple A game, and
one of the biggest ones was physical distribution, which is
the primary mode of how to get your game out
(08:23):
to distribute to consumers. As if you wanted to make
a triple A game, you needed to have this complex
infrastructure to print the games on physical discs and create
manuals that to be translated into different languages and localized,
and had to drive the games around on trucks in
different countries and employ huge sales forces, and so it
(08:45):
required very complex and expensive infrastructure and economies of scale
that only this sort of oligopoly of large corporations like
EA could handle. So nowadays physical copies of games are
still thing. They're important for gift giving and collectors, editions
and stuff, but the vast majority of game sales are
(09:07):
now digital. So if you've developed a game and you're
ready to put it in the hands of consumers, you
essentially press upload to one of the platforms where people
can buy and download your game, and so that has
democratized the process somewhat. That's a very important thing that's
changed that's enabled a company like Delfi to come into existence.
(09:27):
But the other super important thing about our thesis on
the publisher industrial complex is that they've of course adapted
to this digital era and they're operating at an unprecedented
profitability and scale. But at the same time, something else
has happened. And then we believe that on average, the
(09:49):
legacy publishers have become fundamentally misaligned with the owners of
the world's biggest IP, and they've also become fundamentally misaligned
more and more with dependent Triple A developers. And that's
where Delphi saw an opportunity, a significant opportunity to step
in and offer an sort of very attractive alternative two
(10:12):
owners of IP and to Triple A developers. Very sort
of rationally, we believe the large gaming publishers have prioritized
their own internal fully owned IPS over third party ipis,
and some of them who even publicly acknowledged that by now,
and that means that they're no longer ideal partners for
(10:34):
the owners of the most iconic licensed I piece, and
everyone is slowly starting to realize that.
Speaker 1 (10:40):
Do you think some folks in the gaming community might
sometimes prefer that IP that's local to gaming be prioritized
over major third party IP from Hollywood or elsewhere.
Speaker 2 (10:53):
Well, we actually have given quite a bit of thought
to that as well. They this idea of licensed IP
means a lot of things. You know, it can be
from the world of Hollywood, it can be from the
world of sports, which is huge, but it also exists
across a spectrum of sort of different license experiences. One is,
(11:18):
you know, you have integrations of licensed IP and platforms
like Roadblocks or Fortnite, where the teenage mutant Ninja Turtles
show up in Fortnite and things go fucking crazy. And
then you have these licensed games that are sort of
like merchandising tie in experiences where if you have a
(11:39):
Star Wars or Harry Potter movie coming out, then there's
also this game that's made to coincide with the release
and the same thing that happens in the movie happens
in the game if it's a little different. And those
are not always critical hits, but historically have been sort
of very commercially successful. But then there's also a third
(12:00):
category of licensed game and that's the one that really
inspires us here at Delphi, and that's a rarer type
and we haven't really found a perfect term for it,
but we call them asynchronous licensed franchises. And some examples
of that are Knights of the Old Republic that byowhere
(12:22):
are made, or the Batman Arkham series from rock Steady,
or Marvel Spider Man from Insomniac and more recently Boulder
Skate three from Larian. These weren't based on any particular
movie actor, or movie or novel or anything. They were
they were carefully crafted, very patiently developed franchises that were
(12:45):
completely their own thing, and so we call those asynchronous franchises,
and those are the ones that the Delphi want to
make more of. And so it's also interesting to note
that all of the examples I mentioned were created by
Triple A studios that were at least of the time
completely independent. Triple A studios like I are interactive and
(13:07):
so as you can read in the news, project Double
O seven fits this model. It's the first ever Triple
A origin story of the James Bond character. It's a
completely original story, and it's not based on any particular
Bond film or actor. And we think fans will always
love those types of experiences.
Speaker 1 (13:27):
Speaking to this notion of you know, high quality Triple
A games license from third party ip that really resonate
with the market, it wasn't just Balder's Gage three in
twenty twenty three that fit those terms. It was also
Howkwarts Legacy coming from Warner Brothers in their own internal studio. However,
(13:49):
a year later, Suicide Squad Killed the Justice League comes
out and sort of has the opposite outcome with you know,
fans and critics alike than Hawkwarts Legacy did. And more recently,
we saw Ubisoft own up to Star Wars Outlaws, missing
their expectations, and now Tencent is reportedly circling Ubisoft as
(14:11):
an acquisition target. What do you think is defining such
missteps this year after we've seen other projects be it
Sony Spider Man or Howkwarts Legacy or Bouder's Gate three
really hit their marks.
Speaker 2 (14:26):
I'm very interested in two of the companies you mentioned
just there. You know, everybody's talking about Ubisoft and Rumors,
and you know what, I think that company maybe has
some specific problems to That company employs a lot of people,
The most successful IP franchises they have are starting to
(14:48):
show their age, and there may be some other endemic
problems that they're dealing with with their stock price and
ownership that we just simply don't know about. So I'm
cautious to derive specific conclusions about the industry based on Ubisoft.
Warner Brothers super interesting. They are one of the I
(15:09):
think only two traditional Hollywood Industrial complex members that have
their own internal gaming businesses. The other Hollywood studios that
had that have shut those down and transitioned to essentially
risk free and very lucrative licensing businesses. So Disney licenses
out there valuable IP to games developers and publishers instead
(15:33):
of making their own. Warner Brothers is different. They have
Warner Brothers Interactive Entertainment, and as you said, there is
a long cadence between the games they release, and you
can have a billion dollar success asynchronous success like Parkwards Legacy,
and then you can have something like Suicide Squad that
(15:58):
leads to a reported to our million or even dow
right off. And I think on a reason Earnings call
David Saslav, he said very wisely that given that Warner
Brothers own such shockun al Ip and you know, only
has as much bandwidth as they do inside of their
own game studio, and given that it takes four to
(16:21):
five years to make a triple A game, or nine
years in the case of Suicide Squad, it makes so
much sense for Warner Brothers Discovery to balance out that
cadence and risk profile by complementing their portfolio of games
with some licensed titles as well to external partners, where
Warner Brothers Discovery doesn't take the financial execution risk as much,
(16:45):
and that can solve a problem like the fact that
there literally hasn't been a triple A PC console Batman
game since twenty fifteen. It's almost ten years ago, and
that's not right. And I think brother Discoveries is discovering
the solution to that.
Speaker 3 (17:02):
And I think similarly to how they think about movies. Right,
we've been inspired a lot by companies like Legendary Entertainment,
which started back in the day producing Warner Brothers Movies
and Warner Brothers ip into blockbuster films and their whole
thesis was that they could you know, come in initially
with financing, but their plan was to try to make
(17:23):
these big blockbuster films outside of the legacy Hollywood studios.
They were one of the first to do. Its Guidance
came later and build a similar thesis which has now
become really big, and another taking over a legacy studio
to try to modernize it with their way of doing things.
But that doesn't exist in gaming, and especially in Triple
A gaming. And so that model of financing this big
(17:47):
blockbuster Triple A games outside of the system and creating
a Triple A slate of games work based on the
biggest brands in the world, it's something that doesn't exist
and that del Via is firing to create and be
inspired by legendary and Skidance.
Speaker 1 (18:05):
I want to expand a bit on how you make
that pitch to you know, a legacy Hollywood studio. As
we know, Skydance is trying to complete an acquisition of Paramount.
If that goes through, that's a third legacy major Hollywood
studio that is going to have you know, a full
(18:26):
fledged gaming division at its disposable if that completes, how
do you make the pitch to an entity like Paramount
or you know, the new iteration of sky Dance and
Paramount that they should be you know, licensing some of
the IP out as well, alongside whatever they're working on
with sky Dance Interactive or Skydance New Media.
Speaker 2 (18:46):
Yeah, I love talking about that stuff. It's I think,
first of all, bandwidth is always an issue, as we
see from Warner Brothers. They have a huge studio with
twenty two hundred employees, and there's still hasn't been a
Batman game, and at least not for PC and console
in Triple A for for nearly a decade. The other
(19:07):
thing way we look at that problem you're describing there
is that, you know, I think it's about having a proposition,
an opportunity for a licensed project that's just so good
that it doesn't matter what else the license or which
is what we call the Hollywood studio or sports franchise
or that that's giving you the license, no matter what
(19:29):
else they're working on with the IP. And I'm not
joking about that. When when Project Double O seven was
unveiled a few years ago, pc Gamer described it as
a match made in heaven between an IP and development talent,
and so we were obviously very proud of that reaction,
and since then we've tried to codify what it means
(19:50):
and why people would say that. And so one of
the Triple A developers were working with on one of
our upcoming projects that has not been announced yet, he
taught us this fascinating idea that if you're working on
adapting and established IP, you have.
Speaker 3 (20:08):
To be able to.
Speaker 2 (20:09):
Deconstruct the sort of wishful film and fantasy of that
particular IP, whether it's whether a film series or a
novel or a comic book, you have to sort of
deconstruct the wishful film and fantasy into its constituent parts,
and then you have to be skilled enough to organically
reassemble those elements in a different way, completely different way
(20:35):
that's suitable for the Triple A interactive medium, and of
course ideally in a sort of shock and all fashion
that will delight the fans. This is really no easy feat.
There is a real art to that kind of adaptation
and it requires patients and resources and the luxury of time.
And from what we've seen, when you have something like
(20:55):
that the license source or eager to do business.
Speaker 1 (21:00):
So this is maybe a little bit of a tough
but necessary question. Along those lines, we have live services
at play that you know, at sort of the top level,
whether it's Roadblocks, Fortnite, Minecraft, and then Grand Theft, Auto
and Call of Duty appealing to you know, more adult gamers.
(21:21):
Hollywood is very very friendly with a lot of these
live services, Fortnite and Roadblocks in particular. As we know,
Disney invested one point five billion into Epic Games, specifically
for many different IP partnerships spread throughout Fortnite. Let's say
Delphi knows a studio that can pull off a really
(21:44):
high quality Alien game that's IP you would have to
get from Disney. How do you convince an entity like
that that a game that could theoretically take four or
five years even more, if this, you know, wish fulfillment
deconstruction process takes a while, how do you sell Disney
on betting on the high quality Triple A game instead
(22:07):
of a Fortnite experience.
Speaker 3 (22:08):
We believe that the ips that we're going after, right
are some of the biggest brands in the world, right,
and so when Disney or orner Brothers or any of
these studios are thinking about the strategy for some of
the biggest IPS. It's not just one thing that they do, right,
They explore different ways to attract the different types of
fans that are engaged with that IP and who love
(22:29):
the IP. And so some of those fans are the
audiences that are within roadblocks on Fortnite and who want
to have those games. They're they engage with those games
and they love already the experience that they have and
the characters within Fortnite, and so integrating those IPS makes
a lot of sense, and those are huge businesses on
their own. There's also a lot of people, a lot
(22:51):
of those fans that want single player experiences, and you know,
many gamers, like us, they get overwhelmed, you know, when
when they have to go into an existing game to
play mode whe their favorite IP, or when a new
game is coming out and it's a you know, eighty
tow one hundred hour game that you know, feels intimidating.
(23:13):
And so we think both things can coexist, not perhaps
for every AP, but definitely for the things that are
you know, some of the biggest brands that have a
huge global fan base and that are sort of evergreen
franchises that you know, they're constantly thinking about what comes next, right,
and so our our philosophy in those cases is to
(23:35):
do something different. They may already be working with Fortnite,
or they may be working with other existing platforms, but
we think about the single player story driven experience, and
usually it starts with something that you know can be
played in twelve to sixteen hours as opposed to eighty
two hundred hours, and you feel a great sense of
(23:56):
accomplishment and satisfaction when you're playing it. It's almost like
you're bench watching your face or a new TV series
or movie franchise that you love, or you know, the
Lord of the Rings trilogy, and it has a beginning
in an it's very fulfilling and and they're highly replayable,
and then you know, you can have DLC content, and
you can have you know, new iterations and sequels that
(24:16):
come out after that continue that story.
Speaker 2 (24:19):
And so yeah, and and Corey, I think also that
there is a very interesting general debate happening at the
moment about live services games, which you mentioned. You know,
it's it's natural that everybody wants a fortnight. There is
there's an eleven or maybe even twelve figure upside to
that if you can pull that out as a company,
(24:41):
But it's also a very volatile proposition with a massive
downside and massive risk. You know, as we've seen, even
high quality life services games that are based on beloved
ip which you believe so much in, like Avengers or
Suicide Squad which we talk about earlier, can can be
(25:02):
born as live services experiences, but can really struggle to
pull away habitual users from the sort of the big
five titans that you have there and the network effects
they have. You know, you mentioned Roadblocks and Fortnite or
Minecraft or GTA Online or or or even FIFA, and
(25:23):
it's a it's very hard to take consumption time away
from those grain franchises and and and uh and inject
new life into a completely new ecosystem. And so we
thought about how you can get the best of both worlds,
and that a wiser and more risk managed approach to
live services is to to start with a hardcore, premium,
(25:49):
story driven, character driven single player experiences, and like io
Interactive has done with transforming Hitman into it's very successful
and durable world of assassination platform, or even how GGA
Online was created after GGA five. And what you do
(26:11):
is you sort of you have this strong core single
play experience, and then you carefully layer on live services
elements around this core, and then you expand in almost
concent these concentric circles from there and create a single
player as a service that can be a very very
good business and very durable. We think that is a
(26:32):
more organic approach than launching a super expensive, mega live
services game and hope that people will show up.
Speaker 1 (26:40):
Speaking of the single player experience, I do need to
clarify if any listeners were terrified by that alien hypothetical
creative assembly. And Sega did just confirm a sequel to
twenty fourteen's Alien Isolation is in the works, so you
know that is one win on the single player front, now,
I mean.
Speaker 2 (27:01):
Yeah, clarifying. We were worried for a second that Fortnite
would have you know, but I think I think such
ips is so iconic and beloved that they can absolutely
tolerate multiple incarnations to co exist at the same time.
I don't know about Aliens our rated franchise, but you
know where this the kids version or the Fortnite version
(27:21):
that stylized and fun and then there's the hardcore, story
driven R rated version. These can all co exist at
the same time. That's one of the one of the
beautiful things about Iconic IP that's lasted for a half
century or longer. Sometimes.
Speaker 1 (27:36):
Yeah, we're going to take a quick break, but when
we come back, we're going to talk more about some
of the financial headwinds the industry has been facing this
year through layoffs, as well as the mobile gaming element
of the industry and why that continues to remain relevant
despite the need for more high quality triple A gaming experiences.
(28:05):
Welcome back to strictly business. I'm here with Casper Delgard
from Delphi Interactive and Andy Cleman, also from Delphi. Now
I want to address, you know, what's sort of the
biggest elephant in the room for the year in gaming.
You know, as much as we want to talk about
positive developments in the industry and things people are really
(28:27):
excited over, this has simply been a devastating year for
the gaming workforce. There's one developer who goes by at
DECAF who dutifully tracks all of these gaming industry layoffs
across the globe. So far, it surpassed thirteen thousand in
twenty twenty four, which is, you know, pretty staggering. A
(28:49):
lot of that's come from the biggest publishers. We've seen
Microsoft Gaming, you know, layoff close to two thousand this year,
many from Activision Blizzard after that acquisition. When Delphi and
its business model is going to rely heavily on seeking
out independent studios, do you feel concerned over the degree
(29:11):
to which really capable independent studios are seeking new parents.
As you mentioned earlier with Nordis Games, we saw super
Massive go to them. Super Massive is responsible for Until Dawn,
which just got a remake through a different studio for Sony.
They also make the Dark Pictures games for Bandai Namco.
(29:32):
Another studio, tech Lund, which is known for Dying Light
and had recently moved into self publishing, ended up being
acquired by ten Cent. You know, do you still feel
there are plenty of studios for you to find and
work with and time is really of the essence and
getting them set up with good projects.
Speaker 3 (29:53):
Yeah. We thankfully we have partners already set up for
most of the Delphi projects we're working on. And it's
a it's an interesting debate right on one end, obviously,
it's it's devastating to see these layoffs and and you know,
this this sort of feeling of you know, what's happening
(30:13):
with the industry, and you know, it's a little bit
of a double ed sort because there's been incredible grow
over the past decade. Right, So there's all these jobs
in gaming that didn't really exist five years ago, ten
years ago, even you know, right before the pandemic, and
so a lot of these companies grew a lot, and
you know, budgets became really big, and you know, there's
(30:36):
a number of factors that sort of got us to
the situation through too many games, and so I think
it opens an opportunity for companies and studios and talent
that are trying to be more entrepreneurial. We are seeing
a lot of great independent talent that we want to
partner with, that want to partner with us, some because
(30:58):
they're looking for an alternative to these traditional publishers. Maybe
they're not as aligned with them economically or or creatively.
And our model is not just alignment around the economics,
but it's it's this idea of full transparency and collaboration
and working on something together from day one all the
(31:19):
way to you know, eventually becoming something that you know,
there's multiple sequels or you know, very long term project,
and so there's a more entrepreneurial alignment with them. And
also some of these studios, you know, they maybe left
the big publishers because they wanted to work on original
IP and some of those projects got you know, limited
(31:39):
capital or got you know cut because it's risky and
because the cost capital is higher. And so we're seeing
some of those studios and some of that talent now
interested in saying we have a great team that has
X skill sets and X experience for these genre of games,
or we have an idea for an original AP that's
(31:59):
very similar to the other i P that's an established
i P, and we want to partner with somebody that
can help us do that right. And that's our sweets
up spot in terms of the kinds of things we
want to do and find the right matches Made in Heaven,
as we mentioned, and so yes, there's there's challenges in
the industry and there's a lot of changes happening, but
we do think it's a really good opportunity for companies
(32:22):
that can be more entrepreneurial and try to sort of
bet on big things, but with the right risk profile
where you already know that there's an audience that's already
interested in this and this this game doesn't exist, and
if you can put the right pieces together of this
puzzle and make it, and you have the right DNA
to make it, then you know there's a big audience
(32:43):
for it at the other end.
Speaker 2 (32:45):
And I'll just add to that Corey that you know
Andy mentioned, it's like radical transparency that we try to
enforce with our with our partners, whether it's IP owners
or or Independent Triple A Talent, about the fire financying
about the revenue models, about everything. And we do that
because we are not a gig up publisher like Ubisoft,
(33:07):
which has twenty two thousand employees and such huge overhead
costs and diversification that they just have to capture a
massive share of the economic upside that's created by a game.
I'd dare say it's literally ninety or ninety five percent
of the upside after counting, and which can really misalign
them with Independent Triple A Talent, who simply, with very
(33:31):
few exceptions, don't receive a significant share of that upside,
and maybe the incentives are so misaligned sometimes that the
talent charges a man month rate with a cost plus
premium and that essentially paid more the longer they take
to make the game. It is creating real misalignment. So
we build our models because we don't have all that
(33:52):
overhead and baggage to create transformative outcomes for our independent
Triple A partners in success so where they will probably
never need a publisher again if we create something successful together,
and that's something we really believed in. We're transparent about
it and that I think significantly differentiates us from the
legacy system and try to create some positive I mean,
(34:14):
it's all this really sad stuff that we're seeing with
the layoffs in the industry.
Speaker 1 (34:19):
Speaking to the transparency and you know, the extent of
the costs of Triple A game development, is the current
sag after strike weighing on Delphi at all in terms
of evaluating how you want to approach major IP at
the independent studio level.
Speaker 3 (34:41):
Not really. You know, being an entrepreneur, you have to
understand all the challenges that an industry is going through
and you know all the strikes multiple stripes we've seen
in related to Hollywood and entertainment over the past few years.
Are a result of all these changes, right, a lot
of them, you know, because of the evolution of technology.
(35:03):
And my whole career, I started in early days of
digital music and went into film and TV and then gaming,
and so evolution of technology has always been something that
I've seen play a huge role on how these industries change.
And you know, you have to adapt and you have
to evolve. And so for us, you know, we we
believe creative talent is always hugely important, probably the most
(35:26):
important if you want to have great products that people
want to consume, great games, great movies, great TV shows,
great books, and so we're always aligned with the talent.
But at the same time, you have to think about
what's you know, how to create the best business model
and evolve the business model to something that's affordable and
that you can reach as many fans of the IP
(35:48):
or the or the talent as possible. Right. And so
sometimes that's the issue with big legacy companies that are
not able to move as quickly or adapt to changes
or change their business molle because they're not prepared and
they're big, and they have all these different departments, and
these departments may not even talk to each other, right,
and so it's hard for them to do those things.
But for us, we're very aligned with, you know, how
(36:11):
do we bring the best possible experiences to the fans,
And so we're watching what happens in the industry closely
and trying to evolve the models and be prepared for
whatever happens.
Speaker 1 (36:25):
So something like user generated content, and it's growing appeal
to publishers like EA, who have really come out in
favor of it. Is that something that similar to sort
of the heavy push to live services, you know, is
that something you think is getting in the way of
(36:47):
Delfi's you know, stated initiative to make really high quality
single player games.
Speaker 3 (36:52):
I wouldn't say it's getting in the way, because you know,
there's a huge audience and market for something that's much
more careful scripted. You know, it's early days, I think
for a lot of these UGC Continent games or you know,
chen Ai evolution of games, and again we're very interested
(37:12):
in that stuff as a as a big geek into
all these new emerging technologies. It's fascinating to see what
these things can do. I think when you're trying to
craft something for you know, finicky fans that love a
certain i P and that one a certain story told,
and that one really really high quality on everything that
they do. The technology is still somewhat limited and also
(37:34):
maybe not us accessible, but it's definitely going there. Right
So our model right now is very clear. We have
a slate of projects that are set up that we're
really excited about with great partners with RAYP, and we
believe fans will be super excited about the next generation
of games we make beyond that may be a little
different based on these changes, right. So it's it's something
(37:57):
that again when you're a startup and you're a a
lean company like we always aspired to be, right even
after we hopefully have many successes, like we always aspired
to be a very lean core of our team and
be able to work with the best partners. And so
if that means that some of our partners and some
of the both development parts of the technology partners have
(38:19):
you know, great emerging technologies that take great use cases
of AI or UGC content, like we will help you,
you know. That's that's that's part of how we are.
But it's not something that is a huge priority for
us in the stuff that we're already doing.
Speaker 1 (38:35):
So Andy, I want to focus a little bit on
your background in gaming as we close up here. You
you know, you're obviously passionate about the Triple A gaming
space and you know the sorts of games that are
you know, big enough to take years and years to make.
But you spent some time in your career at scope Ly.
(38:55):
Now scope Ly last year was acquired by Savvy Games
Group in Saudi Arabia for close to five billion. You know,
that's not quite as big as the sixty nine billion
for Activision Blizzard over at Microsoft, but that's still quite
a lot and sort of does reach the top of
(39:15):
the pinnacle of gaming acquisitions and other mobile companies Zinga,
which I also believe you worked with for some time,
that was acquired by Take two Interactive for over twelve
billion a couple of years ago. What caused this pivot
on your end to you know, switch from the very
(39:36):
scale driven mobile side of the industry, which for many
years now has accounted for half of the you know,
entire gaming market essentially over to a more traditional space
like console PC. The Triple A games defined that when
you know, there are as many fraud issues as we
have covered in this space.
Speaker 3 (39:56):
Yeah, It's a great question. I been in the industry
a long time, and one of the things I love
about games and the games industry is that it's it's
constantly growing and evolving, and every time there's been sort
of a new platform or technology, it doesn't necessarily replace
the older ones. It just keeps expanding and growing. So
(40:18):
I started, when I started, I was making downloadable PC games,
and then I went into online multiplayer games, and then
social games. That was a big part of Zinga and
UH and eventually mobile also with Zinga and Scope League.
And even at the time I remember, you know, we
were at Zinga and the E merging. Mobile platforms were growing,
and everybody was like, who's going to be the singer
(40:39):
of mobile? Right, and Zinga wanted to be the single
of mobile, uh and and and it was always, you know,
an opportunity for new companies like super Sell or Scope
Lead to be born. And and so I agree that
obviously most of the growth has come into mobile, and
most of the venture capital money and talent has focused
on on on mobile, which is now pretty crowded right
(41:01):
the free to play market, There's there's a lot of games.
There's probably a lot of games in general in the industry,
but particularly mobile for you to play, which is which
is hard because you know, it's it's not just about
making a great game, it's about you know, long term
retention and monetization and things that are harder to determine
even if you have a fun game until after you
(41:23):
you're done sort of building the core of the game.
And so when he came to Triple A Games, when
when when Casper started working on the Chickenspawn project, and
and I was helping him again as a as a
friend who knew a lot about games and IP, it
reminded me a lot of the similarities between the early
days of Scope League and what DELFI was aspiring to do.
(41:45):
Right Scope Lee, we started earlier looking at mobile market
that was getting quickly crowded and and harder to get
you know, discovered and to get you know, efficient user
requisition dollars spent. And that's when we say the opportunity
to partner with some big IP some of the biggest
brands at the time and make games. But our core
(42:07):
team for for Scopey at the time, which was a
small team as well, we didn't have the capability to
do all these different types of games we wanted to make,
and so we started partnering with third party developers that
were established that were really good in a particular type
of game and genre, and we would combine forces and
we would bring our secret sauce around marketing and distribution
(42:27):
and things that we did well. And and that's what
you know, was sort of the origin of of what
became a two pointed out a really successful company in Scopey.
Speaker 4 (42:39):
Right.
Speaker 3 (42:39):
So that's the similarity and the and the inspiration with
del Fi. Right. We see that, yes, the Triple A
is much more established and seems like more traditional, but
not in the way that we're doing it. The way
that we're doing it is it has never been done. Right,
This this analogy that I gave earlier about legendary or
you know, a company that's trying to do really big
(43:00):
Triple A games and a slate of multiple Triple A
games with the biggest ap outside of the traditional publisher
infrastructure that doesn't exist, and so we we aspire to
also do something new and innovative like that done before.
In my career with Delpha as well.
Speaker 1 (43:20):
Well, thank you so much Casper and Anti for you know,
giving us the vision of what Delphi Interactive is aspiring to.
Speaker 2 (43:28):
Thank you so much for having us on, Corey.
Speaker 3 (43:30):
It's great talking to you.
Speaker 1 (43:31):
Yeah, great talking to you too.
Speaker 4 (43:35):
Thanks for listening. Be sure to leave us a review
at Apple Podcasts or Amazon Music. We love to hear
from listeners. Please go to Variety dot com and sign
up for the free weekly Strictly Business newsletter, and don't
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