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Mitch Lasky

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2022-09-06
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2022-09-06
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  1. “And then you can monetize them in an elastic manner. So the 10 hour person that we talked about earlier is going to pay you potentially or not pay you, as the case may be. But me, the thousand hour person, is going to pay you insane amounts of money and thus the rise of the modern whale. If you want to talk later about what's happening in the advertising business and the customer acquisition business right now with Apple and Facebook wars that are going on because it's having a devastating effect on that part of the video game business. That is a hugely important maneuver in the video game business. And again, it's something that when riot games pitched us at benchmark initially, the concept of doing a game for the core, League of Legends is not a casual product. League of Legends is a hardcore product. The concept of using the cartwrighter monetization method, which is give the whole game away for free and then virtual goods, virtual items to cosmetic items to new characters, et cetera, downstream.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “But people outside the industry haven't really paid that much attention to it or don't even really know about it. It was basically a Mario Kart-like cartoony racing game where the company gave the entire game away for free. It's not like shareware where you get three levels and then you have to unlock to continue to play. It wasn't crippleware. It wasn't any of these earlier paradigms. It was the whole enchilada. You got the entire game for free. And the way they monetized was they would sell you cosmetic items and other things to enhance your experience, to give you status within the world, other things like that. And it was a massive success. And it proved to the industry that you could use this giving the game away for free, which is one of the great marketing advantages of all time when you can basically say to your consumer, hey, you don't have to pay me and you can have every good part about this product and push the monetization downstream to a point where you've already hooked these people into the experience.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “This is, in my opinion, the key insight for understanding the modern games business. This change from an inelastic pricing model to an elastic pricing model. I'm a big soccer nut, and I'm going to every year go to Target or Best Buy or whatever and buy a copy of FIFA from Electronic Arts. And I'm going to put it in my PlayStation 5 or my Xbox, and I'm going to play it for a zillion hours. In the meantime, this has changed a little bit recently because electronic arts and some of the other console publishers.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “Lot of investment by the founding team to really get in there and hear both the good things and the bad things about their product.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “One of the key insights that Riot made early on was super service of their community. They got into their community early. The founders were present in the online communities. They did a lot of work listening to their consumers. And again, I don't think there's anything particularly novel about this. They really listen to what their consumers were telling them about their product, what their users were telling them, and they designed specifically to those requirements. I saw that as well with Discord, a company that I was lucky enough to invest in when it wasn't even Discord and to help pivot to the platform that it is today with all the success that it's had. But very early on, we were on Reddit. The founders were in there and they were having a dialogue with their audience. What is it that's going to make this more interesting to you? What is it that you don't like about it? And all businesses can benefit from that. Again, I don't think it's particularly insightful, but it was a key element and it required a lot.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Look at what Disney is doing in the streaming space. They're taking their Star Wars assets, their Marvel assets, et cetera, must have content, must see TV, basically, and they're aggregating it together on a platform. And it's the honeypot that's pulling users in. Investors have historically looked at that, wow, you need a hit game in order to build that aggregation and to see that as something somehow negative, that there's something wrong with that paradigm. I actually think it's very natural and I see it in other entertainment industries as well. It doesn't seem that weird to me that content is the pull that creates the initial aggregation.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “There's been two paths to the creation of these platform based publishers, one of them quite obviously, is take an existing aggregation and migrate it into the games domain. So I think Tencent is probably the world's most important example of this, where you have QQQ and WeChat and you have a billion users already aggregated on those things. Those people want to play games and you just create a games layer on top of an existing user aggregation. So I think that's fundamental and the success of Tencent in the game space was they're the largest video game publisher in the world by revenue. They are an obvious and important example of that taken existing aggregation of users and make them game users. But almost all of the other ones that we've seen have come from using a piece of must-have hit driven content to seed the aggregation. I can't think of an example where that hasn't been the case, where it hasn't been driven by a piece of content. And we shouldn't find that that weird.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Such that you now see Activision Electronic Arts publishing their games on Steam, something that would have been unheard of in a previous era because they want to fish where the fish are because Steam has been able to aggregate this massive audience of gamers who are already pre-qualified. You got to be there. That's my concept of platform-based publishing and it's not unique to me. It's pretty obvious to the community, but I don't think people have talked about it really enough in terms of its effect on the video game business broadly.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “That was the world we came from to use Ben Thompson's aggregation theory as a way to think about this. It was a world where control of the distribution end of things rolling up supply in order to create demand became the principal role of the publisher. But in the modern world where these platforms have now emerged online like the League of Legends environment, like Epics Game Store and Fortnite, like Steam, like Game Pass from Microsoft, there's a number of interesting modern examples. They're actually aggregating the demand. They're bringing a community of users together online. When that happens, it changes the nature of the supply side of the business. That's been one of the most interesting evolutions of the video game business over the last decade is the rise of these aggregation platforms that have managed to bring demand together online.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Hopefully you can manage to get them online so you can update them if there are bugs. And it's a very different world than the world we live in today where League of Legends is being updated daily or weekly. And every time you come online, you're getting a patch downloaded, et cetera.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “In order to really explain it, I'm going to have to explain a little bit about what it replaced. Historically, you were selling shiny disks. Originally, you were selling little plastic floppies. I remember buying some of the LucasArts games, the adventure games back in the 80s, and they would ship on 17 floppy disks, like the cost of goods was just ridiculous. But the CD-ROM was really the primary distribution vehicle for video games really up until this century. And even still, you're still buying some console games on shiny disks. And so the Shiny Disc, in order to get that into commerce, you got to press them. You got to fix the game in a moment in time when a gold master is actually possible. And then that gets imprinted on the disc and those get packaged and there's costs associated with that. It's an industrial process. And then those are shipped out to retailers and you have to build an advertising campaign that drives people into retail to purchase those units and then take them home and install them.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Location and become a platform based publisher, a concept that nobody really conceived of before. After that, World of Warcraft in 2004, you'd seen graphical, three-dimensional MMOs. But the first one to really spark the popular imagination and to become a real mass market phenomenon was World of Warcraft. So I think from a business perspective, enabling a subscription business around that was an incredibly important milestone. And then League of Legends.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “Thinking about it purely in terms of the business model, because that's my bailey look and that's what interests me about this. I would say half-life would be the next game that I would put on that list. And I would put it on the list not necessarily because I think it was a milestone of creativity, although it wasn't really a great game, but more that what Valve built around the game ended up becoming Steam, which is one of the most important distribution vectors in the history of the video game business. The first and still probably most successful online distributor of video games in the world, multi-billion dollar business at one point represented double digit percentage of industry revenues in terms of what was flowing through steam. And in many ways, Steam was originally an updater for Half-Life and Half-Life 2 and CSGO and a number of these other products that have come out of it were enabled and spawned by the fact that Steam existed and that they were the first to be able to bring that gaming community together in a single online.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Most independent of independence. And I think they set a model that was very different than a lot of what was going on in the rest of the industry. And I think a lot of what we see now with epic and riot and other companies is really a direct continuity with that flag, that it planted for the concept of independent development and creative control back in the mid-90s. That was another important component of their modernity, if you will. And then also they recognized John Carmack in particular, the power of multiplayer play and the importance of internet play even again in an era where the internet was poor in terms of its ability to support these kinds of games, but Quake 3 Arena was in many ways the first modern battle arena game along with Unreal Tournament and a couple of other games really prefigured a lot of what we now think of as the modern business.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “I do. I think that they are the first modern video game company in a lot of ways. I think there's a couple of components to that. First, they were very early to the idea of alternative distribution and a kind of free-to-play at the time we called it shareware, them and apogee in Texas had pioneered this model of giving away the first bit of a game for free and then upselling from there. I think they were a little early in that regard because they still relied on physical distribution on disk. So that made even the distribution of free software full of friction had they come 10 years later when the internet was more of a thing they could have been a radical transformer of the way that software was distributed given their proclivities, but they were just a little bit early in that regard. They were a fiercely independent developer. I was their publisher for part of their history, published Quake 3 Arena and several other of their games when I was at Activision. They were the most”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Design Nintendo executives came in and said, Here's the character, here's the controller, make the character fun to play with against a black screen. And once we feel like there's a delightful control mechanism where you can actually do fun things with the character, then we'll build the game. It's the focus on that key constant interactivity and making that fun and then building from there.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Absolutely. In fact, I think as a Hollywood producer or showrunner, you have a lot more control over the user's experience to the extent that movies are about time. They're an art form very much dedicated to time. That time is controlled, the maisons and the editing is something that you have a lot of control over as the creative and therefore that experience of time is very much within your control. You don't have that control at all in the games context. You can approximate it by putting the user on Rails and forcing them down a path, but still they're in control of the experience in a way that's much different than the experience of a linear narrative like a movie. I remember working at one point with a developer who had done some work with Nintendo with some of their key creatives. And one of these game directors came to the table and basically said they were going to make a game about anthropomorphic automobiles, kind of like Disney's cars, if you will. Instead of sending them a design book and saying, here, execute this.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “Trenches and then you're fighting and really try and drill down and say, okay, what's the first five minute experience? What am I doing constantly in the game that's creating that feedback loop of pleasure? That is a really key component of it because I think that most of the products I see that fail have a mismatch between the constancy of the activity and the pleasure of that activity.”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “I'll share one of them with you because I don't want to give away all my trade secrets. One of the things that I concentrate on that I think is overlooked quite a bit is what you do the most frequently in the game. So for example, what do you do in the game Doom, game that almost everybody of our age has played? They'll say it's a shooter. You run around and you shoot things. Yeah, you shoot things, but primarily what you do is you move in a three-dimensional environment through a maze, basically. You're moving through the maze and looking around. Then you're occasionally shooting things. You're occasionally finding keys, opening doors, finishing levels, and then progressing. For me, focusing on that high frequency activity, what is the thing in the game that you do the most frequently and is that pleasurable? Because a lot of times I will have teams come in and pitch me and they'll say, I want to make a game about World War I. And I'm like, okay, so what do you do in the game? And they're like, well, you know, it's World War I'm in the...”

    2022-09-06 · Invest Like the Best · Mitch Lasky - The Business of Gaming - [Invest Like the Best, EP.293] · IDENTIFIED FROM THE TRANSCRIPT · source