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