Managing $1.5 billion in assets, Griffin Gaming Partners is a VC firm tailored to the video games space. Peter Levin, managing director and co-founder of Griffin, discusses the rush of AI interest into gaming, why emerging markets are so crucial to the industry and ongoing adaptations of gaming IP on the Hollywood side — all as the global games business gathers in San Francisco for GDC.
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Episode Transcript
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Speaker 1 (00:07):
Welcome to another episode of Strictly Business, the podcast in
which we speak with some of the brightest minds working
in the media business today. I'm Andrew Wallenstein, chief media
analyst at Variety Intelligence Platform. The annual Game Developers Conference
is under way this week in San Francisco. No better
time to take the temperature of the industry than with
(00:28):
some of the most informed people on gaming I know.
So it's my pleasure to have as my guest Peter Levin,
managing director and co founder of the Santa Monica based
venture capital firm Griffin Gaming Partners. He and his partners
Nick Twasto and Phil Sanderson have a mass more than
one billion in assets under management in the gaming sphere,
(00:50):
including Discord, Overwolf and fourte Games. Plus he knows the
world of entertainment quite well with stints at Lionsgate and
Legendary Entertainment, and has also had a hand in some
notable adaptations of gaming ip including Amazon's Fallout series. My
Variety Intelligence Platform colleague and gaming industry expert Corey Erickson
(01:13):
joins us for the discussion as well. We'll be back
with them in just a moment, and we are back
with Peter Levin and Corey Erickson. I know they're both
(01:33):
going to be at the Game Developers Conference, and so
I'm wondering what's on their mind in terms of what
is going to be the big theme or themes this week. Peter,
I want to start with you. Thanks for joining.
Speaker 2 (01:47):
Us, Thank you for having me. Guys. It's Peter.
Speaker 1 (01:51):
What do you think is going to be top of
mind for people assembled in San Francisco at the Game
Developers Conference?
Speaker 2 (01:58):
Thank you for having me, guys. I appreciate you making
the time. Excited to chat with you leading into this
week's Game Developers Conference. The GDC traditionally has been an
arena within which you can tackle the established trends within industry,
(02:18):
but also those that are emerging. There is a tendency
at times to gravitate towards a hype cycle. I think
there is an AI hype cycle now that I think
is somewhat plateaued versus perhaps over the last one to
two years, but nevertheless, it comes up in a majority
of the conversations you're having, whether that's with a content
(02:40):
company or a platform or infrastructure player. So I think
we're going to continue to see a bunch of conversations
around AI, its impact on games development, its impact on
the picks and shovels businesses in and around games development.
Speaker 3 (02:55):
Let's go into the AI of it all a little
bit more. In what way do you really see investors
taking an interest in generative AI's involvement in gaming versus
the sort of AI tech that's always been involved on
the gaming side of things.
Speaker 2 (03:11):
I think that's worth double clicking on. A gaming has
always been tip of the spear in terms of adapting
and adopting innovative technologies from enterprise software. So to your point,
AI has been prevalent in gaming for what fifteen plus years,
I mean just the non playable characters the NPCs within
Call of Duty alone, but in terms of how it
(03:34):
is being embraced and how we're seeing it play a
major role on the product roadmap going forward. Some of
the more obvious ways are the ability to limit some
of the resources you have to deploy in terms of
the creation of art assets. So you'll still have to
create a bible if you will, of art assets and
architecture a sandbox, if you will, but AI can add
(03:59):
to that instead of having perhaps dozens, if not hundreds
of artists that are creating art assets. AI can aid
and abet those efforts. Some of the ways we're very
excited about the practical application of AI are manifesting in
things like customer acquisition, the ability to lever which social
(04:20):
media platforms, for example, are the best environments within which
to market to a certain customer, Which day parts, which demographic,
which geography, ab testing those marketing strategies, leveraging AI things
like QA. You know, QA has been it's antiquated, it's
been deployed in the same form factor for almost thirty years.
(04:42):
Oftentimes it's a lot of kids in their twenties. Perhaps
they're tired, they're in a bad mood, they're a bit hungover,
they're coming in. Those are your QA testers. Oftentimes that's
your cohort. Well. Now, to be able to leverage AI
to create efficiencies there, to be able to connect those
dots in a more cost effective and efficient manner. Those
are the types of picks and shovels businesses that we're
(05:02):
also equally as excited about.
Speaker 3 (05:04):
Yeah, at g DC, it is a boon for a
lot of you know, teams of developers and independent developers
to come and seek funding. Do you think you know,
any given developers, you know, current use of AI for
a game they're working on is going to be integral
to getting you know, some of the financial interests involved.
Speaker 2 (05:22):
I think it's almost the converse. I think people will
look a bit sideways at you if you haven't baked
in you know, m L and AI into your product roadmap.
Because the tool sets are readily available, you have the
ability to a b tests so much that is out there.
And you're also at a time within the cycle where
if you're a developer or even a publisher, a lot
(05:43):
of these folks that are trying to raise capital on
the AI side of that conversation are offering you, you know,
very attractive onboarding costs because they're almost eating their own
young to be able to establish a customer base so
that they can create that escape velocity, that scale of
their business. So it's an optimal time to be a
(06:04):
developer or publisher and bake in the AI functionality withinto
your product roadmap. So I think you again, you would
get a lot of sideways glances if you hadn't contemplated
how can you leverage both the tools that are currently
offered within the marketplace and the prospective opportunity set going.
Speaker 3 (06:21):
Forward, extending that to you know, some of the largest
companies in the triple A space. Obviously, cost cutting and
layoffs were a big defining trend of twenty twenty four,
still somewhat of a defining trend, you know, in this
early part of twenty twenty five. Do you think, you know,
these use cases for AI are just as integral to
(06:42):
larger companies or is there you know, more of a
significant issue with working around copyrights, working around engineers and
game designers who might not be as crazy you know,
about incorporating AI into their systems.
Speaker 2 (06:56):
Well, I think if they're not crazy about it, I
that that's going to happen with or without their sentiment. Okay,
And one of the things I say this jently and
lightly and certainly not celebrating the eradication of anyone's jobs,
but gaming traditionally has been much more akin to enterprise
(07:16):
software with respect to recognizing when they need to trim
the fat, and legacy media has been horrible at that,
as evidenced by you can drive on any of the
lots right now and you're going to see high rise
buildings and you're going to scratch your head and say
what exactly do those thousands of people do within that building?
Or you drive by the music labels in Santa Monica
(07:36):
and oftentimes queer yourself, why exactly do they need that
many people to run a music business. In the current
state of play, I think gaming has been a bit
more self aware and quite frankly, a bit more mercenary
about the ability to shed that weight when necessary and
adopting those bleeding edge technologies. I think a lot of
that comes from in years past. Prior to now gaming
(08:00):
is somewhat king of the hill. In years past, it
had to be a scrappy industry. You know, margins were volatile.
You know, you never knew you know, where that quote
unquote next paycheck was going to come from. And so
being able to flex that muscle and to get lean
when you needed to came very naturally to the games industry.
I also do think again, some of that comes from
(08:22):
the crossover between enterprise software and the DNA of enterprise
software into gaming.
Speaker 3 (08:27):
Speaking to volatility, going into this GDC conference, you know,
what do you see as the more optimistic trains of
thoughts and trends that are going to be you know,
defining the experience, whether it is in you know, the
triple A console, PC sector or mobile.
Speaker 2 (08:43):
You know, I wear two hats, right, So there's part
of me that celebrates a bumpy market and when things
get more challenging because as an investor, that chases away
a lot of what we call tourist capital. And there
were years just coming out of COVID twenty one twenty two,
for example, there was so much taurus capital that got
attracted to gaming. It artificially inflated a lot of valuations,
(09:05):
and we found it very hard as an allocator to
underwrite businesses. We were not going to debase ourselves from
our discipline, and so the zenith moments at times are
more challenging as an investor. In terms of this year's GDC, however,
there's a lot of conversation around what's going on in
(09:26):
the console space. You know, we're between consoles yet at
the same time, depending on who you believe at any
given moment, you know, GTA six is coming out this year,
and you also have the launch of Switch to and
as someone who can't get enough of the Switch and
everything you know, Me, Moto and Nintendo bring to the market,
(09:47):
there's a tremendous amount of excitement around that console, that
piece of hardware as well. So I think there's a
lot of conversation on the triple A level around launch titles,
around DLC, around existing titles and what will that suite
of launch titles look like. There continues to be growth
in mobile. There continues to be growth in emerging markets,
(10:09):
you know that are less sexy to talk about, but
when you look at markets like the Indian subcontinent, Middle East,
North Africa, Southeast Asia for example, just continues to be explosive.
Africa proper, and even parts of Latin America. You've got
Brazil where regulation is lifting up for the first time
in a very long time. More attractive to external capital,
(10:30):
you know, certainly as again as an investor that's been
a gatekeeper no longer Mexico, Columbia, et cetera. So I
think emerging markets are incredibly exciting, but also the demographics
amount mobile doesn't get talked about enough in our opinion.
You know, females do comprise fifty percent of that cohort,
and they control actually more spend on the mobile platform.
(10:53):
So there's going to be more and more growth there,
more product offerings, to that consuming constituency being the female.
So I think there continues to be excitement around that more.
You know, venture dollars being deployed against female founders is.
Speaker 3 (11:08):
The basis of this mobile growth in emerging markets, you know,
tied to continued smartphone proliferation, i e. There still aren't
as many smartphones in places of the world as there
can be.
Speaker 2 (11:20):
Correct and I think India is a great example of that. Right,
So you've got Reliance and Geo who got in there
and really changed the contours of that market almost overnight.
So you traditionally had a demographic with very little disposable income,
you know, an inability to embrace a spending model that
would be attractive to developers and publishers. You know, turn
(11:41):
around and now you've got Geo and you've got Reliance
deploying a lot of dollars against attracting a younger demographic
with more disposable income. Product form factors are a rising
above the noise. Advertising is pay is playing a large
role there and so we see sim are signal coming
out of places like you know, North Africa and Africa proper.
(12:04):
I think that's a ways off, at least from being underwriteable,
but there's a lot of folks who kind of have
trained the eye of Saurron, if you will, towards that
market with a great deal of interest, because the numbers
are gob smacking, the demographics are gobsmacking, and that applies
to Middle East North Africa as well. There are markets
in the Middle East where seventy percent of the population
(12:25):
is under the age of thirty and they're all gaming.
Speaker 3 (12:28):
What about Europe, I've noticed within Griffin's investment portfolio you've
invested some money into both Finnish and Swedish gaming studios
as of late.
Speaker 2 (12:38):
Yeah, I mean we're all over Europe, Western Europe, Northern Europe. Look,
I've been to Finland fifty six times. Are One of
our most recent investments was a bit odd out of Helsinki,
las Lehento, who was one of the co founders of Supercel.
You know, he was one of the creative geniuses behind
Clash of Clans. You know, we'll continue to invest in
(13:00):
markets like that, you know, very bullish on the talent
that's coming out of the UK, Spain, Italy, France and
France is a little more challenging just because of labor laws.
But we've invested there as well, so we continue to
be excited about Western and Northern Europe.
Speaker 3 (13:18):
I want to bring up one finish company, Remedy Games,
just because they were the subject of one of the
more interesting deals in gaming to come about last year
where they struck a deal with an A Picture Anapurna
Pictures here in Hollywood to you know, invest money into
their own sequel, Control Too, in exchange for exclusive rights
to the Control and Alan wakeyps for the film and
(13:38):
TV side. Do you see a deal like that, as
you know, a more progressive example of how Hollywood and
gaming can work in tandem with each other.
Speaker 2 (13:47):
I think it's a great example of thinking outside of
the box, and I think you're going to continue to
see both communities trying to figure out how to play together.
I think a large driver of that is on the
more legacy media side. On the traditional media side, you
have folks who now grew up playing games, and they're
(14:09):
passionate about those games that they grew up playing, and
so there's a much deeper understanding about the media form
factor versus just an antiseptic look at oh wow, look
how many units that game sold, right, or look at
how many eyeballs are on this title, versus you've got
showrunners and writers and producers and directors and CEOs and
(14:31):
C suite management that grew up obsessed with games, you know,
as obsessed with the generation prior perhaps were with reading
books or comic books or graphic novels and whatnot. So
I think that's a huge driver of folks trying to
bridge the gap. You can't ignore the fact that gaming
is larger than music, movies, and publishing combined. And if
(14:54):
anyone is looking at that data, they're going to come
to the conclusion that, hey, this is a this is
a compelling demographic for us to engage. This is a
wonderful way to tell stories. And if you just look
at the track record over the past five years, everything
from you know, big titles like Super Mario Grand Turismo,
(15:16):
Five Nights at Freddy's, you know, to what is It
The Gangs of London, you know, and some of the
more indie titles that are out there. Sonic continues to perform.
You now have world class writers being attracted to these
ips because again they grew up obsessed playing the games.
You have talent, you know that just want to be
able to show their kids. Hey, I was in a
Sonic movie because they love the game or their kids,
(15:37):
you know, love the game. So I think there's a
genuine appetite to try to figure out how to play
together more holistically.
Speaker 1 (15:44):
We'll be back in just a moment with more with
Peter Levin.
Speaker 2 (15:48):
Stick around.
Speaker 1 (15:56):
And we are back with Peter Levin from Griffin Gaming Partners.
He's in conversation with Corey Erickson a variety intelligence platform
and we have been talking about the state of the
gaming business the occasion of the Game Developers Conference. Peter,
if you could talk a bit more, you've hopscotching the
(16:17):
globe with us talking about various markets. Give a sense
if you could, about the state of emerging markets out there.
What is catching your eye and how does it inform
your investing strategy.
Speaker 2 (16:31):
You knows as mentioned some of the markets that have
percolated to the top for US, Middle East, North Africa.
There's a tremendous amount of activity there, both from an
investing into the sector orientation, but also the demographics and
the consumption patterns cannot be ignored when you look at
(16:52):
and that's a cross platform by the way, that's not
discrete to mobile or PC or console, which is also
a fascinating pair of time. You've got an entire youth
that are engaged in gaming, many of whom would like
to pursue a career in gaming, many of whom currently
have to either attend university in Western Europe or North America.
(17:14):
So I think that's also changing. I think you're seeing
more and more of these markets embrace university curriculum so
that they can. Northern Europe is a great example of that,
as is Western Europe, but Northern Europe is a great
example of introducing the curriculum so that kids locally, students locally,
you know, find themselves with an option to a career
(17:35):
path within gaming. So you're seeing more and more of
that happen in markets like Middle East, North Africa and
again Africa proper. The year numbers are incredible. You've got
the telco players, whether that's the mittals or the mtns
or the vodaphones. You know, they're looking at what some
of the other carriers have done in markets like North
(17:56):
America where they've left a lot of money on the table.
You know the fact that these carriers really don't participate
in these markets in the economics you've got Google gobbling up,
and you've got obviously Apple and iOS gobbling up their share.
But at some point these carriers become self commoditizing, big
fat pipes. And that's a mistake that I think in
a lot of emerging markets they would like to fix.
(18:18):
So they're going to invest directly into content. They want
more skin in the game, they want a more intimate
relationship with that consuming demographic.
Speaker 3 (18:26):
And do you think the talent coming from emerging markets
is going to be you know, pivotal in getting you know,
some bigger companies back on track with more consistent release
pipelines and you know, instead of spending five or even
more years stuck in sort of endless development cycles for
you know, some of the bigger Triple A Games is
investing in smaller developers going to sort of be the
(18:50):
way to get a more bounced pipeline.
Speaker 2 (18:51):
Again, I think that's the hope, that's the aspiration. I
think part of the challenge. You can look at anomalist
you know, outlying markets like Turkey for example. This less
relevant for Triple A Corey, but you know, if you
look at Turkey and how they punch above their weight
and mobile just an incredible work ethic there. It's an
incredible talent pool, very much stemming from companies like Peak
(19:14):
and Graham Selling exiting to Zinga. You know, Peak for
one point eight billion. I believe those teams once their
non competes were up, you had the founding teams spinning
up new studios. We saw things very similar happen in
markets like Finland. Israel's another market where we see this
happen constantly. I think you are going to see that
start to happen more frequently with Triple A. But there's
(19:37):
a question mark in emerging markets because of the point
I brought up earlier, which is I think you do
have to have a path to learning at a local
university and so that kids can attend school. They can
they can hone their skills, whether that's on the development side,
the publishing side, the marketing side. They can start businesses
(19:58):
up locally, they can attract town because right now you
see a lot of expats in emerging markets, and I
think that's one way you know, to address the opportunity.
But at some point you have to have local talent.
It's less expensive. They understand not just the localization of content,
but the culturalization of content, which is a much harder
(20:20):
needle to threat.
Speaker 3 (20:22):
Speaking to gaming in the Middle East, one of the
biggest investors in the space is Savvy Games Group. You know,
they're part of Saudi Arabia's public investment fund. They acquired
scope Lee for close to five billion in twenty twenty three,
and scope Lee just of course, is in the process
of acquiring Niantics gaming assets, including Pokemon Go. Do you
(20:44):
see you know, MNA seeing more of a resurgence again
in the gaming space, you know, coming out of this
out of the past two years of extensive layoffs, similar
to sort of after twenty twenty when we saw a
lot of you know, very busy and high activity in
the space.
Speaker 2 (21:00):
Yeah, I don't. I'm not sure one has anything to
do with the other. I think you're going to continue
to see layoffs in the industry if the industry feels
like there are inefficiencies, and I think that's healthy. I
think again, as you know, as as I referenced, I
think gaming has always had a a self aware, healthy
lens through which it looks at kind of trimming the fat,
(21:21):
you know, the M and A. Depending on whether that's
early stage or growth or you know, at large scale,
you're going to continue to see M and A as
new actors entered the theater. Right You recently had Netflix
purchased their fifth game studio actually out of Helsinki, Next Games,
and by the way, Next Games two of their big titles,
(21:41):
two of their the two big titles they had in
their portfolio were The Walking Dead and Stranger Things, you know,
both established brand ips. I think Netflix bought them, you know,
for that reason. So you're going to continue to see
whether it's the netflixes of the world. You know, does
Roku jump into the fray? Will the other streaming platforms
have to jump into the fray? You know, they certainly
(22:03):
don't want to drive people off platform to engage gaming
elsewhere because the reacquisition of those customers is expensive. It's
prohibitive the telcos do they become a viable buyer down
the road. Certainly, Internationally, you're hearing more and more rumblings
along those lines. So you've got Discord, you know, as
announced I think it was yesterday or the day before
(22:25):
or at the end of last week, exploring the public
markets and interviewing bankers for a potential IPO. So you're
going to see potentially more liquidity there, you know that
they'll get to play with I mean, Scopoley is just
to look, we're investors in scope Lee. Full disclosure would
have been great if they waited a couple of months
to sell as Monopoly Goo came out, you know, just
(22:46):
a couple of months after that that sale closed. But
just a great story of a team that scaled intelligently,
some really sharp m and a along the way. So
I think you're going to continue to see that.
Speaker 3 (23:00):
Yes, you mentioned Netflix earlier. Yeah, Netflix has built out
its studios, you know, within its gaming division and a
launch into games around twenty twenty one. But in the
same breath, Netflix also shut down, you know, its own
Triple A IP it had been working on not too
long ago. Do you do you see that, as you know,
evidence of difficulty in the market to really get you know,
(23:22):
sort of top shelf Triple A games as well as
you know, some of the bigger live services out the door,
or you know, is this just a kind of typical
Netflix thing of them wanting to try to do everything
and you know, struggling to realize it's not that simple.
Speaker 2 (23:36):
Mike takes a little different I think if I look
at what Google did with Stadia for example. It didn't
work out. Was it a shot on goal worth taking? Absolutely?
Will they continue to take shots on goal and gaming
without a doubt They have to. It's just too big
of an audience. There's too much money on the table.
I think similarly with Netflix, I commend them for taking
(23:57):
the shot on goal. I think they and folks like
Google and folks like Microsoft again do a better job
of shelving projects if they're not working out and not
continuing to throw good money after bad and they'll continue
to try to problem solve. I think they have to,
you know, there's no way around it, and that's a
great thing for us in our position within the industry.
(24:20):
But I also think it's great for the consumer to
be able to be on platform and to you know,
stream longer form content, shorter form content, serialize content, and gaming.
It makes all the sense in the world. So I'm
not going to fault them for shutting down you know,
triple A first party intellectual property. I give them credit
(24:41):
for taking the shot on goal. I give them credit
for putting a bullet in the head you know of it,
you know, before it became a drag and I look
forward to, you know, what they're going to bring next.
They're smart folks over there. You know, there's a reason
why they've been able to do what they've been able
to do. So certainly not counting them out, and you know,
streating my master's degree in the obvious, it's also a
(25:02):
very good thing for someone in my position to have
another buyer out there in the market. So we're certainly
rooting for them.
Speaker 3 (25:08):
And it does help to have a three hundred million
global subscribers versus you know, Stadia having to start from scratch.
Speaker 2 (25:14):
It without a doubt. And I think that's what I
meant at the top of the call, where I at
the top of the conversation, where I think folks are
going to come at this with different form factors and
that's okay. I think there's going to be a lot
of ab testing in the market that as well is okay.
That is really good for the consumer. Let's find out
(25:35):
where there's going to be traction. You know, we never
know where that's going to come from. But having folks
like this getting active in our backyard is a good thing.
They're making the endemics look small, you know. I think
at the end of the day. That's really good for
the end user.
Speaker 3 (25:50):
I want to go back to, you know, the Hollywood
element of this current gaming moment we're in. You mentioned,
you know, Five Nights of Freddy's before as an example
of a successful trans of gaming IP to the movie space.
What was the process that led to Russell Binder, who
is involved extensively with that franchise, into joining Griffin as
(26:12):
a venture partner an IP advisor.
Speaker 2 (26:14):
That was a no brainer. I mean, I think we
strive to bring on whether they're venture partners, IP advisors,
operating partners, an elite class of human and he's, in
my eyes, he's kind of one of one. He's been
doing this for so very, very long. He really does
understand this hub spoke model. And traditionally that hub was
(26:35):
either a film or a television series, and the spoke
would be the toyatak adaptation, the licensing and merchandising, the podcast,
the comic book, the graphic novel, the game. The inversion
of that has taken place, and Russell has embraced it
quite frankly out of necessity, you know, more so than
out of opportunity, and I like that that scrappy nature
(26:58):
you know when I stumbled upon Rovio very early on,
before it was even known to be a thing here
in the States. Only because again I was one of
my fifty six trips over to Finland, I founded early on.
I was able to get introduced to the founders of
that company. They were kind enough to invite me in
as a small investor and advisor, And my first phone
(27:18):
call from Helsinki from Finland was to Russell Binder and
I said, Russell, I think I'm about to hand you
the biggest piece of business you've never heard of. And
within a year that guy had created a billion dollar
plus licensing a merchandise program. So I think having that fortitude,
that trust as well from those on the other side
(27:39):
of the conversation is mission critical. You know, when you've
spent decades as someone thriving in the licensing and merchandise
side of the business, that could be a swarmy end
of the pool. You know, that's where forensic accountants get involved.
And you know, Russell's a stand up person with a
reputation really unlike anyone else out there. But he also
now has a track record of creating unbelievably contemplative programs
(28:02):
around some of the world's biggest ip. We're talking Hunger
Games and Twilight and the Walking Dead and Angry Birds.
You know, what he's done with Five Nights is just
incredible and it's a great ip you know at the
heart of it, but it is a bit of that
inversion of the hub and spoke model.
Speaker 3 (28:19):
And it's also worth mentioning Five Nights at Freddy's does
have a sequel do this December again from Universal. But
before then we have April twenty twenty five, which is
going to be huge for adaptations of gaming IP. We
have a Minecraft movie from Warner Brothers out the first
weekend of April. That's I think pretty expensive. The budget
(28:39):
is reportedly around one hundred and fifty million, but it's
also with Jack Black comedy, so that's one example on
the film side at sort of the big budget level.
Then the next week, The Last of Us returns on
HBO with a little bit of a smaller season, seven
episodes this time instead of the nine episodes of the
debut season. And then towards the end of the month,
we have Sony's Until Dawn, which you know comes from
(29:01):
their own Until Dawn game in twenty fifteen. That was
also remade last year. Do you think between those three
adaptations that represents a pretty you know, diverse approach to
adapting different gaming ip at the Hollywood level, or do
you still think there's more that hasn't really been tapped
into yet.
Speaker 2 (29:20):
I think there's tons more that hasn't been tapped into yet,
which is super exciting, you know. I think a lot
of what has been where there has been energy deployed,
are the titles that we're all very familiar with, right,
So everybody knows Minecraft, you know, when you look at
the Last of Us, probably lesser known. I don't want
(29:41):
to put Minecraft and the Last of Us in the
same basket and bucket, but lots of folks familiar with
Last of Us. You know, if you were looking at, hey,
let's adapt you know, the top ten ips on a
given sales chart, you know back in the day, right,
that's why Warcraft the movie got made and almost watchable
movie back in the day, you know, but for China
(30:02):
that movie would have been write off. You know. The
Chinese saved that movie at the box office. But I'm
not dismissive of what you know, this year's slate of
adaptations can do. I think it's phenomenal. But to your question,
I think it's equally as exciting some of the genres
that have been untapped. You know, if you look at
(30:23):
again just the size of the female cohort on mobile
and the types of games that they're engaged in, some
of which have really rich stories and developed characters and
a menagerie of characters ensembles, if you will, that I
think these could be adapted, you know, whether those are
kind of late night rom comms or more you know,
(30:44):
evening soap opera type of fair that you find on
streaming platforms or podcasts, or adapted into you know, publishing vehicles.
You know, I think that's an area that's the less obvious,
less sexy, but the numbers are are tremendous and not
to be ignored. And I think that's just one of many,
many of the genres and even those kind of crossover
(31:08):
genres that I think you're going to continue to see
being tapped into. You know, I think what Netflix has
been able to do, you know, with its portfolio of
games intellectual property and how it plays with it even
from you know, the documentary side of some of the
vehicles that they've created, when you talk to, you know,
(31:32):
the execs out there from the legacy media side, again,
whether that's the showrunners or the producers, you know, writers, directors,
you know, executives, that there is a recognition now that
this is a force to be reckoned with. And I
do think the conversation around tapping into some of these
lesser explored geographies within the gaming landscape are going to
(31:56):
start to happen. And I know that just because even
within our own portfolio, we have companies that are being
approached by you know, traditional media companies that in years
past they never would have been. And these are left
of center eyps, you know that skew to a more
exotic demographic, if you will, then just middle of the
fair way, you know, kind of last of us look
(32:17):
fallout as someone who played a you know, a fun
role in helping to architect that that was a little
more obvious to play with. I think some of the
things you're going to see kind of round two, in
Round three and years going forward are going to be
some of these more quote unquote niche genres and sub
genres whose audience is actually eclipse, you know, some of
the more mainstream, you know, kind of testosterone injected ips
(32:42):
that we continue to see adapted.
Speaker 3 (32:44):
Lastly, let's touch upon the reverse of that. You know,
if you look at a company like Warner Brothers Games,
they're sort of the perfect example of the duality of
getting Hollywood IP into the gaming space successfully and unsuccessfully.
They had Hogwarts Legacy in twenty twenty three, success was
the best selling game of the year. It beat Call
of Duty, which typically only Rockstar games do that. Yeah,
(33:05):
but then a year later, of course we get Suicide
Squad killed. The Justice League lost about two hundred million
on the gaming side of Warner Brothers and of course
Warner Brothers Games has shut down three studios. What do
you think is crucial to working with Hollywood IP, you know,
tied around its own games in a way that doesn't
(33:26):
you know, drag things out in a year's long process,
and you know, scares Hollywood away from licensing games out.
Speaker 2 (33:33):
I think it's case by case. I think when you
look at you know, Warner Discovery, there's a lot of
debt there. The market is looking at that business through
a very discipline lens. When you see the success of
Hogwarts Legacy, that that game did eight hundred million in
the first week of launch, and so regardless of what
(33:55):
Suic's suicide squad was able to do, that division, if
you will, was very much in the black. They've done
an incredible job. What David hadad did there, you know,
during his tenure, during his reign was absolutely amazing. Both
some very very well thought out m and a over
the years, a ton of endemic development amongst the internal
(34:21):
studios that they had both grown and scaled, and then
coupled to some of the acquisitions that they had made
over the years. But so much of that corey early
on came from the support that they had from corporate
and you had guys like Jeff Pucus and Kevin Sujihara
who really believed in the future of gaming and allowed
for someone like David to build out a portfolio of
(34:42):
games and put him on par with the other parts
of that business, film and television and licensing and merchandise
and whatnot. I think now the rigor with which Warner
Discovery has to perform, you know, with that kind of
overhang of debt and the way the market is scrutinizing them,
(35:02):
that's just going to be a different look than you know, hopefully,
when David Ellison and his team close on paramount. You know,
David someone who cares greatly about games, and you know
they have been vocal about that, and they have that
d and they screamed that DNA. I think they're going
to have a much different orientation towards gaming. They're going
(35:24):
to have a longer runway to play with. I think
the market will look at them them differently, So I
don't think it's one size fits all. And I think
if you look at Disney, for example, just look at
the success of Disney Rivals, look at the success of
I'm Sorry, Marvel Rivals and Marvel Snap. You know, these
are both two incredible adaptations of the IP and much
(35:45):
different form factors. You look at their recent investment one
point five billion into Epic. You know, I think the
times have changed. There was twenty five ish years where
Disney was just licensing out. They were leaving billions of
potential revenue on the table because they didn't want to
take that risk. And you know, now I think you've
(36:06):
got legacy media looking at the opportunity set of being
able to engage with that that demographic, that end user,
having a relationship there, capturing the majority of those economics.
But I couldn't imagine being a steward of the IP
that Disney owns, right, Disney, Proper, Pixar, Lucasfilm, you know, Fox, Marvel,
(36:28):
and not just not only not capturing the line share
of those economics, but also not having any of that
data because you've licensed out to a third party. So
I think that dynamic is changing significantly. And again I
think that's going to in nerd of the benefit of
the end user, of the gamer, of the consumer and so.
But it's not a one size fits all, So it's
(36:49):
tough for me. I at least can't paint the industry
with a macro brush. Couldn't be more. Look as the
guy who helped get John Wick in to Fortnite, you know,
I had a blast doing that. I think it was
one of the earlier and better adaptations or integrations, I
should say, of a Hollywood ip quote unquote into a
gaming universe. But we were really self aware at Lion Skate,
(37:10):
like we knew we knew at that point in time
what Fortnite brought to the table was a lot more
valuable to us than what we were bringing to the
table for them with John Wick, right, that that generated
something like four hundred million hours of gameplay in the
week leading up to the release of John Wick three
for a studio the size Alliance Gate. You know, you
couldn't buy that kind of marketing, like you just didn't
(37:33):
have the budget to play. So I think these symbiotic relationships,
you know, these mutually aligned interest models going forward, are
going to be what you're going to see much more
of versus this traditional licensee license or dynamic where somebody
always felt like they were left holding the bag. And
(37:53):
I think those days, honestly are gaune and you have
folks that would love to, hey, let's put one plus
one together and maybe we'll get five, six or seven
out of it if we respect the brand equity, you
know that Hubspoke model again at the kernel of this,
and treat that audience with respect. You know, Let's not
push a game out, you know, before it's ready for primetime.
(38:14):
There's no need to do it. And I always reference
back to Nintendo sixty four Golden Eye. People forget that
game came out twenty months after the movie and it's
still regarded as one of the best license ips in
the history of licensed ip. And that was just Nintendo
having the confidence to say this thing ain't going live
until it's ready for primetime. Like the early days of Blizzard.
(38:34):
You know, that was their mantra. We're not going to
push it into the market until it's ready for primetime.
So I think you're seeing aligned interests in a way
we've never seen before, and I think that's going to
be fantastic for the end user.
Speaker 3 (38:47):
Well, thank you so much for joining Andy and I today, Peter,
it's been great.
Speaker 2 (38:51):
Thank you appreciate the time. Guys, 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 forget to tune in
(39:11):
next week for another episode of Strictly Business.
Welcome to another episode of Strictly Business, the podcast in
which we speak with some of the brightest minds working
in the media business today. I'm Andrew Wallenstein, chief media
analyst at Variety Intelligence Platform. The annual Game Developers Conference
is under way this week in San Francisco. No better
time to take the temperature of the industry than with
(00:28):
some of the most informed people on gaming I know.
So it's my pleasure to have as my guest Peter Levin,
managing director and co founder of the Santa Monica based
venture capital firm Griffin Gaming Partners. He and his partners
Nick Twasto and Phil Sanderson have a mass more than
one billion in assets under management in the gaming sphere,
(00:50):
including Discord, Overwolf and fourte Games. Plus he knows the
world of entertainment quite well with stints at Lionsgate and
Legendary Entertainment, and has also had a hand in some
notable adaptations of gaming ip including Amazon's Fallout series. My
Variety Intelligence Platform colleague and gaming industry expert Corey Erickson
(01:13):
joins us for the discussion as well. We'll be back
with them in just a moment, and we are back
with Peter Levin and Corey Erickson. I know they're both
(01:33):
going to be at the Game Developers Conference, and so
I'm wondering what's on their mind in terms of what
is going to be the big theme or themes this week. Peter,
I want to start with you. Thanks for joining.
Speaker 2 (01:47):
Us, Thank you for having me. Guys. It's Peter.
Speaker 1 (01:51):
What do you think is going to be top of
mind for people assembled in San Francisco at the Game
Developers Conference?
Speaker 2 (01:58):
Thank you for having me, guys. I appreciate you making
the time. Excited to chat with you leading into this
week's Game Developers Conference. The GDC traditionally has been an
arena within which you can tackle the established trends within industry,
(02:18):
but also those that are emerging. There is a tendency
at times to gravitate towards a hype cycle. I think
there is an AI hype cycle now that I think
is somewhat plateaued versus perhaps over the last one to
two years, but nevertheless, it comes up in a majority
of the conversations you're having, whether that's with a content
(02:40):
company or a platform or infrastructure player. So I think
we're going to continue to see a bunch of conversations
around AI, its impact on games development, its impact on
the picks and shovels businesses in and around games development.
Speaker 3 (02:55):
Let's go into the AI of it all a little
bit more. In what way do you really see investors
taking an interest in generative AI's involvement in gaming versus
the sort of AI tech that's always been involved on
the gaming side of things.
Speaker 2 (03:11):
I think that's worth double clicking on. A gaming has
always been tip of the spear in terms of adapting
and adopting innovative technologies from enterprise software. So to your point,
AI has been prevalent in gaming for what fifteen plus years,
I mean just the non playable characters the NPCs within
Call of Duty alone, but in terms of how it
(03:34):
is being embraced and how we're seeing it play a
major role on the product roadmap going forward. Some of
the more obvious ways are the ability to limit some
of the resources you have to deploy in terms of
the creation of art assets. So you'll still have to
create a bible if you will, of art assets and
architecture a sandbox, if you will, but AI can add
(03:59):
to that instead of having perhaps dozens, if not hundreds
of artists that are creating art assets. AI can aid
and abet those efforts. Some of the ways we're very
excited about the practical application of AI are manifesting in
things like customer acquisition, the ability to lever which social
(04:20):
media platforms, for example, are the best environments within which
to market to a certain customer, Which day parts, which demographic,
which geography, ab testing those marketing strategies, leveraging AI things
like QA. You know, QA has been it's antiquated, it's
been deployed in the same form factor for almost thirty years.
(04:42):
Oftentimes it's a lot of kids in their twenties. Perhaps
they're tired, they're in a bad mood, they're a bit hungover,
they're coming in. Those are your QA testers. Oftentimes that's
your cohort. Well. Now, to be able to leverage AI
to create efficiencies there, to be able to connect those
dots in a more cost effective and efficient manner. Those
are the types of picks and shovels businesses that we're
(05:02):
also equally as excited about.
Speaker 3 (05:04):
Yeah, at g DC, it is a boon for a
lot of you know, teams of developers and independent developers
to come and seek funding. Do you think you know,
any given developers, you know, current use of AI for
a game they're working on is going to be integral
to getting you know, some of the financial interests involved.
Speaker 2 (05:22):
I think it's almost the converse. I think people will
look a bit sideways at you if you haven't baked
in you know, m L and AI into your product roadmap.
Because the tool sets are readily available, you have the
ability to a b tests so much that is out there.
And you're also at a time within the cycle where
if you're a developer or even a publisher, a lot
(05:43):
of these folks that are trying to raise capital on
the AI side of that conversation are offering you, you know,
very attractive onboarding costs because they're almost eating their own
young to be able to establish a customer base so
that they can create that escape velocity, that scale of
their business. So it's an optimal time to be a
(06:04):
developer or publisher and bake in the AI functionality withinto
your product roadmap. So I think you again, you would
get a lot of sideways glances if you hadn't contemplated
how can you leverage both the tools that are currently
offered within the marketplace and the prospective opportunity set going.
Speaker 3 (06:21):
Forward, extending that to you know, some of the largest
companies in the triple A space. Obviously, cost cutting and
layoffs were a big defining trend of twenty twenty four,
still somewhat of a defining trend, you know, in this
early part of twenty twenty five. Do you think, you know,
these use cases for AI are just as integral to
(06:42):
larger companies or is there you know, more of a
significant issue with working around copyrights, working around engineers and
game designers who might not be as crazy you know,
about incorporating AI into their systems.
Speaker 2 (06:56):
Well, I think if they're not crazy about it, I
that that's going to happen with or without their sentiment. Okay,
And one of the things I say this jently and
lightly and certainly not celebrating the eradication of anyone's jobs,
but gaming traditionally has been much more akin to enterprise
(07:16):
software with respect to recognizing when they need to trim
the fat, and legacy media has been horrible at that,
as evidenced by you can drive on any of the
lots right now and you're going to see high rise
buildings and you're going to scratch your head and say
what exactly do those thousands of people do within that building?
Or you drive by the music labels in Santa Monica
(07:36):
and oftentimes queer yourself, why exactly do they need that
many people to run a music business. In the current
state of play, I think gaming has been a bit
more self aware and quite frankly, a bit more mercenary
about the ability to shed that weight when necessary and
adopting those bleeding edge technologies. I think a lot of
that comes from in years past. Prior to now gaming
(08:00):
is somewhat king of the hill. In years past, it
had to be a scrappy industry. You know, margins were volatile.
You know, you never knew you know, where that quote
unquote next paycheck was going to come from. And so
being able to flex that muscle and to get lean
when you needed to came very naturally to the games industry.
I also do think again, some of that comes from
(08:22):
the crossover between enterprise software and the DNA of enterprise
software into gaming.
Speaker 3 (08:27):
Speaking to volatility, going into this GDC conference, you know,
what do you see as the more optimistic trains of
thoughts and trends that are going to be you know,
defining the experience, whether it is in you know, the
triple A console, PC sector or mobile.
Speaker 2 (08:43):
You know, I wear two hats, right, So there's part
of me that celebrates a bumpy market and when things
get more challenging because as an investor, that chases away
a lot of what we call tourist capital. And there
were years just coming out of COVID twenty one twenty two,
for example, there was so much taurus capital that got
attracted to gaming. It artificially inflated a lot of valuations,
(09:05):
and we found it very hard as an allocator to
underwrite businesses. We were not going to debase ourselves from
our discipline, and so the zenith moments at times are
more challenging as an investor. In terms of this year's GDC, however,
there's a lot of conversation around what's going on in
(09:26):
the console space. You know, we're between consoles yet at
the same time, depending on who you believe at any
given moment, you know, GTA six is coming out this year,
and you also have the launch of Switch to and
as someone who can't get enough of the Switch and
everything you know, Me, Moto and Nintendo bring to the market,
(09:47):
there's a tremendous amount of excitement around that console, that
piece of hardware as well. So I think there's a
lot of conversation on the triple A level around launch titles,
around DLC, around existing titles and what will that suite
of launch titles look like. There continues to be growth
in mobile. There continues to be growth in emerging markets,
(10:09):
you know that are less sexy to talk about, but
when you look at markets like the Indian subcontinent, Middle East,
North Africa, Southeast Asia for example, just continues to be explosive.
Africa proper, and even parts of Latin America. You've got
Brazil where regulation is lifting up for the first time
in a very long time. More attractive to external capital,
(10:30):
you know, certainly as again as an investor that's been
a gatekeeper no longer Mexico, Columbia, et cetera. So I
think emerging markets are incredibly exciting, but also the demographics
amount mobile doesn't get talked about enough in our opinion.
You know, females do comprise fifty percent of that cohort,
and they control actually more spend on the mobile platform.
(10:53):
So there's going to be more and more growth there,
more product offerings, to that consuming constituency being the female.
So I think there continues to be excitement around that more.
You know, venture dollars being deployed against female founders is.
Speaker 3 (11:08):
The basis of this mobile growth in emerging markets, you know,
tied to continued smartphone proliferation, i e. There still aren't
as many smartphones in places of the world as there
can be.
Speaker 2 (11:20):
Correct and I think India is a great example of that. Right,
So you've got Reliance and Geo who got in there
and really changed the contours of that market almost overnight.
So you traditionally had a demographic with very little disposable income,
you know, an inability to embrace a spending model that
would be attractive to developers and publishers. You know, turn
(11:41):
around and now you've got Geo and you've got Reliance
deploying a lot of dollars against attracting a younger demographic
with more disposable income. Product form factors are a rising
above the noise. Advertising is pay is playing a large
role there and so we see sim are signal coming
out of places like you know, North Africa and Africa proper.
(12:04):
I think that's a ways off, at least from being underwriteable,
but there's a lot of folks who kind of have
trained the eye of Saurron, if you will, towards that
market with a great deal of interest, because the numbers
are gob smacking, the demographics are gobsmacking, and that applies
to Middle East North Africa as well. There are markets
in the Middle East where seventy percent of the population
(12:25):
is under the age of thirty and they're all gaming.
Speaker 3 (12:28):
What about Europe, I've noticed within Griffin's investment portfolio you've
invested some money into both Finnish and Swedish gaming studios
as of late.
Speaker 2 (12:38):
Yeah, I mean we're all over Europe, Western Europe, Northern Europe. Look,
I've been to Finland fifty six times. Are One of
our most recent investments was a bit odd out of Helsinki,
las Lehento, who was one of the co founders of Supercel.
You know, he was one of the creative geniuses behind
Clash of Clans. You know, we'll continue to invest in
(13:00):
markets like that, you know, very bullish on the talent
that's coming out of the UK, Spain, Italy, France and
France is a little more challenging just because of labor laws.
But we've invested there as well, so we continue to
be excited about Western and Northern Europe.
Speaker 3 (13:18):
I want to bring up one finish company, Remedy Games,
just because they were the subject of one of the
more interesting deals in gaming to come about last year
where they struck a deal with an A Picture Anapurna
Pictures here in Hollywood to you know, invest money into
their own sequel, Control Too, in exchange for exclusive rights
to the Control and Alan wakeyps for the film and
(13:38):
TV side. Do you see a deal like that, as
you know, a more progressive example of how Hollywood and
gaming can work in tandem with each other.
Speaker 2 (13:47):
I think it's a great example of thinking outside of
the box, and I think you're going to continue to
see both communities trying to figure out how to play together.
I think a large driver of that is on the
more legacy media side. On the traditional media side, you
have folks who now grew up playing games, and they're
(14:09):
passionate about those games that they grew up playing, and
so there's a much deeper understanding about the media form
factor versus just an antiseptic look at oh wow, look
how many units that game sold, right, or look at
how many eyeballs are on this title, versus you've got
showrunners and writers and producers and directors and CEOs and
(14:31):
C suite management that grew up obsessed with games, you know,
as obsessed with the generation prior perhaps were with reading
books or comic books or graphic novels and whatnot. So
I think that's a huge driver of folks trying to
bridge the gap. You can't ignore the fact that gaming
is larger than music, movies, and publishing combined. And if
(14:54):
anyone is looking at that data, they're going to come
to the conclusion that, hey, this is a this is
a compelling demographic for us to engage. This is a
wonderful way to tell stories. And if you just look
at the track record over the past five years, everything
from you know, big titles like Super Mario Grand Turismo,
(15:16):
Five Nights at Freddy's, you know, to what is It
The Gangs of London, you know, and some of the
more indie titles that are out there. Sonic continues to perform.
You now have world class writers being attracted to these
ips because again they grew up obsessed playing the games.
You have talent, you know that just want to be
able to show their kids. Hey, I was in a
Sonic movie because they love the game or their kids,
(15:37):
you know, love the game. So I think there's a
genuine appetite to try to figure out how to play
together more holistically.
Speaker 1 (15:44):
We'll be back in just a moment with more with
Peter Levin.
Speaker 2 (15:48):
Stick around.
Speaker 1 (15:56):
And we are back with Peter Levin from Griffin Gaming Partners.
He's in conversation with Corey Erickson a variety intelligence platform
and we have been talking about the state of the
gaming business the occasion of the Game Developers Conference. Peter,
if you could talk a bit more, you've hopscotching the
(16:17):
globe with us talking about various markets. Give a sense
if you could, about the state of emerging markets out there.
What is catching your eye and how does it inform
your investing strategy.
Speaker 2 (16:31):
You knows as mentioned some of the markets that have
percolated to the top for US, Middle East, North Africa.
There's a tremendous amount of activity there, both from an
investing into the sector orientation, but also the demographics and
the consumption patterns cannot be ignored when you look at
(16:52):
and that's a cross platform by the way, that's not
discrete to mobile or PC or console, which is also
a fascinating pair of time. You've got an entire youth
that are engaged in gaming, many of whom would like
to pursue a career in gaming, many of whom currently
have to either attend university in Western Europe or North America.
(17:14):
So I think that's also changing. I think you're seeing
more and more of these markets embrace university curriculum so
that they can. Northern Europe is a great example of that,
as is Western Europe, but Northern Europe is a great
example of introducing the curriculum so that kids locally, students locally,
you know, find themselves with an option to a career
(17:35):
path within gaming. So you're seeing more and more of
that happen in markets like Middle East, North Africa and
again Africa proper. The year numbers are incredible. You've got
the telco players, whether that's the mittals or the mtns
or the vodaphones. You know, they're looking at what some
of the other carriers have done in markets like North
(17:56):
America where they've left a lot of money on the table.
You know the fact that these carriers really don't participate
in these markets in the economics you've got Google gobbling up,
and you've got obviously Apple and iOS gobbling up their share.
But at some point these carriers become self commoditizing, big
fat pipes. And that's a mistake that I think in
a lot of emerging markets they would like to fix.
(18:18):
So they're going to invest directly into content. They want
more skin in the game, they want a more intimate
relationship with that consuming demographic.
Speaker 3 (18:26):
And do you think the talent coming from emerging markets
is going to be you know, pivotal in getting you know,
some bigger companies back on track with more consistent release
pipelines and you know, instead of spending five or even
more years stuck in sort of endless development cycles for
you know, some of the bigger Triple A Games is
investing in smaller developers going to sort of be the
(18:50):
way to get a more bounced pipeline.
Speaker 2 (18:51):
Again, I think that's the hope, that's the aspiration. I
think part of the challenge. You can look at anomalist
you know, outlying markets like Turkey for example. This less
relevant for Triple A Corey, but you know, if you
look at Turkey and how they punch above their weight
and mobile just an incredible work ethic there. It's an
incredible talent pool, very much stemming from companies like Peak
(19:14):
and Graham Selling exiting to Zinga. You know, Peak for
one point eight billion. I believe those teams once their
non competes were up, you had the founding teams spinning
up new studios. We saw things very similar happen in
markets like Finland. Israel's another market where we see this
happen constantly. I think you are going to see that
start to happen more frequently with Triple A. But there's
(19:37):
a question mark in emerging markets because of the point
I brought up earlier, which is I think you do
have to have a path to learning at a local
university and so that kids can attend school. They can
they can hone their skills, whether that's on the development side,
the publishing side, the marketing side. They can start businesses
(19:58):
up locally, they can attract town because right now you
see a lot of expats in emerging markets, and I
think that's one way you know, to address the opportunity.
But at some point you have to have local talent.
It's less expensive. They understand not just the localization of content,
but the culturalization of content, which is a much harder
(20:20):
needle to threat.
Speaker 3 (20:22):
Speaking to gaming in the Middle East, one of the
biggest investors in the space is Savvy Games Group. You know,
they're part of Saudi Arabia's public investment fund. They acquired
scope Lee for close to five billion in twenty twenty three,
and scope Lee just of course, is in the process
of acquiring Niantics gaming assets, including Pokemon Go. Do you
(20:44):
see you know, MNA seeing more of a resurgence again
in the gaming space, you know, coming out of this
out of the past two years of extensive layoffs, similar
to sort of after twenty twenty when we saw a
lot of you know, very busy and high activity in
the space.
Speaker 2 (21:00):
Yeah, I don't. I'm not sure one has anything to
do with the other. I think you're going to continue
to see layoffs in the industry if the industry feels
like there are inefficiencies, and I think that's healthy. I
think again, as you know, as as I referenced, I
think gaming has always had a a self aware, healthy
lens through which it looks at kind of trimming the fat,
(21:21):
you know, the M and A. Depending on whether that's
early stage or growth or you know, at large scale,
you're going to continue to see M and A as
new actors entered the theater. Right You recently had Netflix
purchased their fifth game studio actually out of Helsinki, Next Games,
and by the way, Next Games two of their big titles,
(21:41):
two of their the two big titles they had in
their portfolio were The Walking Dead and Stranger Things, you know,
both established brand ips. I think Netflix bought them, you know,
for that reason. So you're going to continue to see
whether it's the netflixes of the world. You know, does
Roku jump into the fray? Will the other streaming platforms
have to jump into the fray? You know, they certainly
(22:03):
don't want to drive people off platform to engage gaming
elsewhere because the reacquisition of those customers is expensive. It's
prohibitive the telcos do they become a viable buyer down
the road. Certainly, Internationally, you're hearing more and more rumblings
along those lines. So you've got Discord, you know, as
announced I think it was yesterday or the day before
(22:25):
or at the end of last week, exploring the public
markets and interviewing bankers for a potential IPO. So you're
going to see potentially more liquidity there, you know that
they'll get to play with I mean, Scopoley is just
to look, we're investors in scope Lee. Full disclosure would
have been great if they waited a couple of months
to sell as Monopoly Goo came out, you know, just
(22:46):
a couple of months after that that sale closed. But
just a great story of a team that scaled intelligently,
some really sharp m and a along the way. So
I think you're going to continue to see that.
Speaker 3 (23:00):
Yes, you mentioned Netflix earlier. Yeah, Netflix has built out
its studios, you know, within its gaming division and a
launch into games around twenty twenty one. But in the
same breath, Netflix also shut down, you know, its own
Triple A IP it had been working on not too
long ago. Do you do you see that, as you know,
evidence of difficulty in the market to really get you know,
(23:22):
sort of top shelf Triple A games as well as
you know, some of the bigger live services out the door,
or you know, is this just a kind of typical
Netflix thing of them wanting to try to do everything
and you know, struggling to realize it's not that simple.
Speaker 2 (23:36):
Mike takes a little different I think if I look
at what Google did with Stadia for example. It didn't
work out. Was it a shot on goal worth taking? Absolutely?
Will they continue to take shots on goal and gaming
without a doubt They have to. It's just too big
of an audience. There's too much money on the table.
I think similarly with Netflix, I commend them for taking
(23:57):
the shot on goal. I think they and folks like
Google and folks like Microsoft again do a better job
of shelving projects if they're not working out and not
continuing to throw good money after bad and they'll continue
to try to problem solve. I think they have to,
you know, there's no way around it, and that's a
great thing for us in our position within the industry.
(24:20):
But I also think it's great for the consumer to
be able to be on platform and to you know,
stream longer form content, shorter form content, serialize content, and gaming.
It makes all the sense in the world. So I'm
not going to fault them for shutting down you know,
triple A first party intellectual property. I give them credit
(24:41):
for taking the shot on goal. I give them credit
for putting a bullet in the head you know of it,
you know, before it became a drag and I look
forward to, you know, what they're going to bring next.
They're smart folks over there. You know, there's a reason
why they've been able to do what they've been able
to do. So certainly not counting them out, and you know,
streating my master's degree in the obvious, it's also a
(25:02):
very good thing for someone in my position to have
another buyer out there in the market. So we're certainly
rooting for them.
Speaker 3 (25:08):
And it does help to have a three hundred million
global subscribers versus you know, Stadia having to start from scratch.
Speaker 2 (25:14):
It without a doubt. And I think that's what I
meant at the top of the call, where I at
the top of the conversation, where I think folks are
going to come at this with different form factors and
that's okay. I think there's going to be a lot
of ab testing in the market that as well is okay.
That is really good for the consumer. Let's find out
(25:35):
where there's going to be traction. You know, we never
know where that's going to come from. But having folks
like this getting active in our backyard is a good thing.
They're making the endemics look small, you know. I think
at the end of the day. That's really good for
the end user.
Speaker 3 (25:50):
I want to go back to, you know, the Hollywood
element of this current gaming moment we're in. You mentioned,
you know, Five Nights of Freddy's before as an example
of a successful trans of gaming IP to the movie space.
What was the process that led to Russell Binder, who
is involved extensively with that franchise, into joining Griffin as
(26:12):
a venture partner an IP advisor.
Speaker 2 (26:14):
That was a no brainer. I mean, I think we
strive to bring on whether they're venture partners, IP advisors,
operating partners, an elite class of human and he's, in
my eyes, he's kind of one of one. He's been
doing this for so very, very long. He really does
understand this hub spoke model. And traditionally that hub was
(26:35):
either a film or a television series, and the spoke
would be the toyatak adaptation, the licensing and merchandising, the podcast,
the comic book, the graphic novel, the game. The inversion
of that has taken place, and Russell has embraced it
quite frankly out of necessity, you know, more so than
out of opportunity, and I like that that scrappy nature
(26:58):
you know when I stumbled upon Rovio very early on,
before it was even known to be a thing here
in the States. Only because again I was one of
my fifty six trips over to Finland, I founded early on.
I was able to get introduced to the founders of
that company. They were kind enough to invite me in
as a small investor and advisor, And my first phone
(27:18):
call from Helsinki from Finland was to Russell Binder and
I said, Russell, I think I'm about to hand you
the biggest piece of business you've never heard of. And
within a year that guy had created a billion dollar
plus licensing a merchandise program. So I think having that fortitude,
that trust as well from those on the other side
(27:39):
of the conversation is mission critical. You know, when you've
spent decades as someone thriving in the licensing and merchandise
side of the business, that could be a swarmy end
of the pool. You know, that's where forensic accountants get involved.
And you know, Russell's a stand up person with a
reputation really unlike anyone else out there. But he also
now has a track record of creating unbelievably contemplative programs
(28:02):
around some of the world's biggest ip. We're talking Hunger
Games and Twilight and the Walking Dead and Angry Birds.
You know, what he's done with Five Nights is just
incredible and it's a great ip you know at the
heart of it, but it is a bit of that
inversion of the hub and spoke model.
Speaker 3 (28:19):
And it's also worth mentioning Five Nights at Freddy's does
have a sequel do this December again from Universal. But
before then we have April twenty twenty five, which is
going to be huge for adaptations of gaming IP. We
have a Minecraft movie from Warner Brothers out the first
weekend of April. That's I think pretty expensive. The budget
(28:39):
is reportedly around one hundred and fifty million, but it's
also with Jack Black comedy, so that's one example on
the film side at sort of the big budget level.
Then the next week, The Last of Us returns on
HBO with a little bit of a smaller season, seven
episodes this time instead of the nine episodes of the
debut season. And then towards the end of the month,
we have Sony's Until Dawn, which you know comes from
(29:01):
their own Until Dawn game in twenty fifteen. That was
also remade last year. Do you think between those three
adaptations that represents a pretty you know, diverse approach to
adapting different gaming ip at the Hollywood level, or do
you still think there's more that hasn't really been tapped
into yet.
Speaker 2 (29:20):
I think there's tons more that hasn't been tapped into yet,
which is super exciting, you know. I think a lot
of what has been where there has been energy deployed,
are the titles that we're all very familiar with, right,
So everybody knows Minecraft, you know, when you look at
the Last of Us, probably lesser known. I don't want
(29:41):
to put Minecraft and the Last of Us in the
same basket and bucket, but lots of folks familiar with
Last of Us. You know, if you were looking at, hey,
let's adapt you know, the top ten ips on a
given sales chart, you know back in the day, right,
that's why Warcraft the movie got made and almost watchable
movie back in the day, you know, but for China
(30:02):
that movie would have been write off. You know. The
Chinese saved that movie at the box office. But I'm
not dismissive of what you know, this year's slate of
adaptations can do. I think it's phenomenal. But to your question,
I think it's equally as exciting some of the genres
that have been untapped. You know, if you look at
(30:23):
again just the size of the female cohort on mobile
and the types of games that they're engaged in, some
of which have really rich stories and developed characters and
a menagerie of characters ensembles, if you will, that I
think these could be adapted, you know, whether those are
kind of late night rom comms or more you know,
(30:44):
evening soap opera type of fair that you find on
streaming platforms or podcasts, or adapted into you know, publishing vehicles.
You know, I think that's an area that's the less obvious,
less sexy, but the numbers are are tremendous and not
to be ignored. And I think that's just one of many,
many of the genres and even those kind of crossover
(31:08):
genres that I think you're going to continue to see
being tapped into. You know, I think what Netflix has
been able to do, you know, with its portfolio of
games intellectual property and how it plays with it even
from you know, the documentary side of some of the
vehicles that they've created, when you talk to, you know,
(31:32):
the execs out there from the legacy media side, again,
whether that's the showrunners or the producers, you know, writers, directors,
you know, executives, that there is a recognition now that
this is a force to be reckoned with. And I
do think the conversation around tapping into some of these
lesser explored geographies within the gaming landscape are going to
(31:56):
start to happen. And I know that just because even
within our own portfolio, we have companies that are being
approached by you know, traditional media companies that in years
past they never would have been. And these are left
of center eyps, you know that skew to a more
exotic demographic, if you will, then just middle of the
fair way, you know, kind of last of us look
(32:17):
fallout as someone who played a you know, a fun
role in helping to architect that that was a little
more obvious to play with. I think some of the
things you're going to see kind of round two, in
Round three and years going forward are going to be
some of these more quote unquote niche genres and sub
genres whose audience is actually eclipse, you know, some of
the more mainstream, you know, kind of testosterone injected ips
(32:42):
that we continue to see adapted.
Speaker 3 (32:44):
Lastly, let's touch upon the reverse of that. You know,
if you look at a company like Warner Brothers Games,
they're sort of the perfect example of the duality of
getting Hollywood IP into the gaming space successfully and unsuccessfully.
They had Hogwarts Legacy in twenty twenty three, success was
the best selling game of the year. It beat Call
of Duty, which typically only Rockstar games do that. Yeah,
(33:05):
but then a year later, of course we get Suicide
Squad killed. The Justice League lost about two hundred million
on the gaming side of Warner Brothers and of course
Warner Brothers Games has shut down three studios. What do
you think is crucial to working with Hollywood IP, you know,
tied around its own games in a way that doesn't
(33:26):
you know, drag things out in a year's long process,
and you know, scares Hollywood away from licensing games out.
Speaker 2 (33:33):
I think it's case by case. I think when you
look at you know, Warner Discovery, there's a lot of
debt there. The market is looking at that business through
a very discipline lens. When you see the success of
Hogwarts Legacy, that that game did eight hundred million in
the first week of launch, and so regardless of what
(33:55):
Suic's suicide squad was able to do, that division, if
you will, was very much in the black. They've done
an incredible job. What David hadad did there, you know,
during his tenure, during his reign was absolutely amazing. Both
some very very well thought out m and a over
the years, a ton of endemic development amongst the internal
(34:21):
studios that they had both grown and scaled, and then
coupled to some of the acquisitions that they had made
over the years. But so much of that corey early
on came from the support that they had from corporate
and you had guys like Jeff Pucus and Kevin Sujihara
who really believed in the future of gaming and allowed
for someone like David to build out a portfolio of
(34:42):
games and put him on par with the other parts
of that business, film and television and licensing and merchandise
and whatnot. I think now the rigor with which Warner
Discovery has to perform, you know, with that kind of
overhang of debt and the way the market is scrutinizing them,
(35:02):
that's just going to be a different look than you know, hopefully,
when David Ellison and his team close on paramount. You know,
David someone who cares greatly about games, and you know
they have been vocal about that, and they have that
d and they screamed that DNA. I think they're going
to have a much different orientation towards gaming. They're going
(35:24):
to have a longer runway to play with. I think
the market will look at them them differently, So I
don't think it's one size fits all. And I think
if you look at Disney, for example, just look at
the success of Disney Rivals, look at the success of
I'm Sorry, Marvel Rivals and Marvel Snap. You know, these
are both two incredible adaptations of the IP and much
(35:45):
different form factors. You look at their recent investment one
point five billion into Epic. You know, I think the
times have changed. There was twenty five ish years where
Disney was just licensing out. They were leaving billions of
potential revenue on the table because they didn't want to
take that risk. And you know, now I think you've
(36:06):
got legacy media looking at the opportunity set of being
able to engage with that that demographic, that end user,
having a relationship there, capturing the majority of those economics.
But I couldn't imagine being a steward of the IP
that Disney owns, right, Disney, Proper, Pixar, Lucasfilm, you know, Fox, Marvel,
(36:28):
and not just not only not capturing the line share
of those economics, but also not having any of that
data because you've licensed out to a third party. So
I think that dynamic is changing significantly. And again I
think that's going to in nerd of the benefit of
the end user, of the gamer, of the consumer and so.
But it's not a one size fits all, So it's
(36:49):
tough for me. I at least can't paint the industry
with a macro brush. Couldn't be more. Look as the
guy who helped get John Wick in to Fortnite, you know,
I had a blast doing that. I think it was
one of the earlier and better adaptations or integrations, I
should say, of a Hollywood ip quote unquote into a
gaming universe. But we were really self aware at Lion Skate,
(37:10):
like we knew we knew at that point in time
what Fortnite brought to the table was a lot more
valuable to us than what we were bringing to the
table for them with John Wick, right, that that generated
something like four hundred million hours of gameplay in the
week leading up to the release of John Wick three
for a studio the size Alliance Gate. You know, you
couldn't buy that kind of marketing, like you just didn't
(37:33):
have the budget to play. So I think these symbiotic relationships,
you know, these mutually aligned interest models going forward, are
going to be what you're going to see much more
of versus this traditional licensee license or dynamic where somebody
always felt like they were left holding the bag. And
(37:53):
I think those days, honestly are gaune and you have
folks that would love to, hey, let's put one plus
one together and maybe we'll get five, six or seven
out of it if we respect the brand equity, you
know that Hubspoke model again at the kernel of this,
and treat that audience with respect. You know, Let's not
push a game out, you know, before it's ready for primetime.
(38:14):
There's no need to do it. And I always reference
back to Nintendo sixty four Golden Eye. People forget that
game came out twenty months after the movie and it's
still regarded as one of the best license ips in
the history of licensed ip. And that was just Nintendo
having the confidence to say this thing ain't going live
until it's ready for primetime. Like the early days of Blizzard.
(38:34):
You know, that was their mantra. We're not going to
push it into the market until it's ready for primetime.
So I think you're seeing aligned interests in a way
we've never seen before, and I think that's going to
be fantastic for the end user.
Speaker 3 (38:47):
Well, thank you so much for joining Andy and I today, Peter,
it's been great.
Speaker 2 (38:51):
Thank you appreciate the time. Guys, 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 forget to tune in
(39:11):
next week for another episode of Strictly Business.
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