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Weekly News #181: Tencent Phone, Take-Two Zynga, Play To Earn Dominance, G2 Esports Music, Nexon Avengers, Sega NFT Doubts, Phil Spencer On Netflix
Episode 18114th January 2022 • Business of Esports • Paul Dawalibi
00:00:00 01:26:40

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In the latest weekly news and podcast after-show (sponsored by YouGov), we discuss Tencent reportedly acquiring BlackShark Gaming, Take-Two buying Zynga for more than $12 billion, the co-founder of Reddit saying that play-to-earn cryptocurrency games are the future, G2 Esports launching a record label, Razer unveiling a vibrating gaming chair, the topic of gaming dominating Twitter, Nexon investing in AGBO, Sega taking a cautious approach with NFTs, Phil Spencer complimenting Netflix's gaming endeavors, and so much more!

Transcripts

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From the keyboard to the boardroom, this is the business of esports.

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As the profit of esports I rely on trustworthy and meaningful data every day. Data from a research

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partner YouGov offers the most complete view of esports fans and gamers in the world, providing

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context to who they are, what they think the brands they buy, and things they do. You guvs

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connected insights and Research Services informed strategy at every level. If you're a team, a

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brand, agency or rights holder, you should be talking with you gov. Their partners measure and

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maximize ROI and are telling compelling stories with data. visit you gov.com/gaming-esports To

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learn more, from the keyboard to the boardroom. This is the business of esports weekly news show

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slash posts podcast live stream. I am Paul Dawalibi. I'm joined today by my friends and CO

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hosts, the Honorable Judge Jimmy brought Jeff the juice CO and Lindsey the boss pass. For those of

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you who are new here, welcome. What we do here is we cover all the most pressing gaming and esports

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topics and news of the week, but we look at all of it through a business and C suite lens. And the

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best part is we get to do it live with you guys. If it's your first time here, welcome. We

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encourage you to participate. I know so many of you who watch just lurk, but we really encourage

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you guys to get involved, ask questions, get in our faces. It makes it that much more fun for all

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of us.

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And if you're new here, welcome. If you're a regular here also welcome. How are you doing?

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Lindsey? How was your week?

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It's been a really good week, we've been recording a lot of episodes, and I've been meeting with a

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lot of really great people. And it's just been. It's been a good week. Yeah, I don't know. How's

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everyone else doing? Can you hear me? Yes.

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I'm doing good. I have so many things to say. I was muted in the pre room. Jimmy, I'm wearing your

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shirt. That was the first thing I was gonna say. Second thing. We just did an awesome episode of

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metal business. It really was the best one yet.

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Yeah. So I'm excited. I'm happy. And I'm drinking my hot chocolate as I do every week. We're

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worth noting that. I'm also wearing Jimmy's shirt.

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We're all wearing Jimmy's clothing, it seems. But I've got this beautiful jersey that was gifted to

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me by Jimmy that has

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met a TV on one side and the business of esports on the other side. And it says the profit on the

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back of course.

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But no, it's great point guys. Jeff and I co hosts the meta business podcast, which everyone's should

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subscribe to. And Lindsay

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hosts the metal woman podcast which you should absolutely also subscribe to and follow. I

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listened to the last episode. It was a lot of fun. So definitely, definitely go check that out. And

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Francois says Good evening Good evening plus are welcome.

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Jimmy since we're all wearing your clothes, how are you doing this week?

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Flattered I guess that everyone's wearing my clothing and likes and likes what they have?

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I don't know. I don't know. I'm doing alright feeling a little sleepier than normal this entire

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week. I hope it's not a trend for 2022 But But yeah, job COVID Right. No, I've tested I am one of

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those few few people that have never gotten COVID up into this point. So I just think I

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you know what it was was during the break. My fiancee Maria and I were watching a lot of late

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night movies or having late nights with family and I'm normally an Early To Bed kind of guy cuz you

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know I work. I'm from California and my all of our crew at holodecks in New York and I like to be up

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a little earlier. So at least the time differences in is drastic. And I think it's just re

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acclimating myself is probably what it is.

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Well here you go. Sign up says absolutely agree with Jimmy this week has been a drag. You've got

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you've got a friend there. I don't know who this is. But I'm guessing it's Robert because I feel

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like Robert comes in with the with the Hello. But LinkedIn users so I don't know who it is. Guys

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just to

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the podcast. This week we had Josh Otero from new trick gamer so they're they're you know they've

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got this really great

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It's not an energy drink. It's a, it's a drink for gamers to improve your performance, mental health,

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all those good things very healthy, not filled with sugar. And it's a very interesting product in

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the gamer space. And so lots of discussion around consumer packaged goods and the challenges,

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they're in the opportunities. They're very different, I think from our normal podcast, which

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is good, and a lot of good insights. So highly recommend checking that out, guys. Because there

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was a lot of a lot of good discussion. Do we want to jump into some news guys this week? I mean,

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that's what we do here. Right. We got I will say, let me just tease a lot of interesting news this

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week. And and we do have a chair review this week. So everyone's favorite segments. Jeff. I know Jeff

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asked specifically, he was upset that we didn't have a real a real chair review, but this week, we

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absolutely do.

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So let's let's talk about some business of gaming stuff, guys. And there was a lot a lot to unpack

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this week. And I want to start with a story that I felt did not get much play at all. I feel like

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this flew right under the radar. But it's one of those the profit was right stories. And and, and

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I'll share it here so you guys can see. The headline is Tencent to buy Xiao means Black Shark

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gaming division for $470 million. So this is a report claiming that Tencent games is about to

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acquire Chinese Black Shark gaming division, in a deal worth about 3 billion Chinese one yen.

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And that's about 470 million US dollars. Now, for those of you who don't know, Black Shark makes

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gaming phones primarily so Tencent, it says had struck partnerships with various smartphone

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makers, including a Seuss and Nubia with Black Shark, it says the company might be able to take

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its business overseas, as well as given the Japanese division has already penetrated some big

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markets. So

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this is a gaming phone manufacturer fundamentally, and Tencent. It's rumored This is a report it's

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not confirmed, is looking to buy it. So I think we can conclude assuming that the rumors in the

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reports are true. Tencent is going to be getting Tencent games specifically getting into the gaming

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phone business. Jeff, I know you have thoughts on this prophet was right. The Prophet has right.

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That should be the number.

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Yeah, I mean, it's interesting. I'm not I'm not entirely sure how Ted said, getting into the phone

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business makes a ton of sense for them like, I don't, man, and mainly because I don't see phones

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as kind of people don't buy phones, for gaming reasons like for games, you know, like, I can

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understand why a console manufacturer would get into building games, right? You need games to push

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exclusive content to move machines. However, with phones, like I just don't see that many people who

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buy their phones because there's a game on it.

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And maybe I'm wrong, maybe this is has certain specs, and there's this is the market that they're

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going after, but to me, you buy your phone, then again, was just something that's on there. So I

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don't necessarily see the industrial logic to vertically integrating hardware and software in

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that case, but I guess maybe I'm wrong.

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I mean, Jimmy, do you think this solves the fortnight in China question, right. And I know I'm

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like tying this to a much bigger problem here. But hear me out. Right, Tencent buys a game of gaming

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phone manufacturer, Tencent owns a big chunk of epic. Right now they can offer fortnight on their

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own phone on a 10 cent phone in China. And it's the only place place you can play fortnight in

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China. It's the only place maybe you can play pub, G and Asia right, which they are like, pick a

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number of games that are exclusive to Tencent, maybe league in China, right. Or like the what a

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wild drift. Right, which is their mobile version of league. I don't know. Could you not see

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exclusives driving mobile phone sales, especially in Asia?

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I think it depends on the Asian countries, right? Because there's also restrictions on the amount of

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game time that that you know, in China that they can play right now.

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garena free Fire and there's I mean, it's hard because we have such a Western western view of

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what games are popular. Right. And I just threw out garena free fire which is massive over there.

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And you mentioned wild rift. I get the question, right, which is hey, they have a lot of exclusive

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titles. Now they can pair it with this phone and drive phone sales.

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don't, I'm not a big fan of exclusivity. Because I think to get more users to play your product, you

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need to put it on as many platforms as you can. That's what music did. You know, they said, Hey,

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we're getting all of our songs pirated. And why don't we stop selling $17 CDs and instead put it

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on every single streaming service or release a bunch of free EPS. And that was a pretty

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successful model for them. So, I mean, the future, or at least a big part of the future of esports.

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And gaming in general is definitely mobile. So for that reason, I love it. There was an indication

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that this company had a lot of success overseas and outside countries. And for that reason, I

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think it's interesting. But if the question is, is this going to get fortnight back in China, that

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would be the reason that wouldn't be where my interest kind of stops. I just want to read

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Lynette says, Hello, everyone. Lynette, welcome. Great to see you here. And Christopher says, Good

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evening. Good evening, Christopher. I just want to read this comment, people will continue to buy

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phones for games, just because of mobile gaming growth and opportunity, especially once everything

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goes to AR in my humble opinion. I mean, I totally agree with that. I mean, Lindsay, my question for

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you is, and Jeff mentioned this, the Prophet was right. What did I say that, that the developers

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like Tencent, like epic, who were all fed up paying Apple, you know, apples tax for their

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marketplace, instead of complaining, could go make their own, make their own phones, make their own

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app stores, right, do all those things that they think is so trivial and not worth the 30%? Tax?

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I did that someone at Tencent just listened to me, Lindsay? Or do you think they're, they're out to

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lunch with this play? Do I totally think that the mobile game or the phone market in China is so

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different in the US, we're just so heavily dominated by Apple. And that the consumer

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preference there is kind of your the game companies like epic are sort of at the mercy of

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that preference in, especially in this market. But in Asia, it's completely different. I don't know

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if you all have seen but one plus is a different Chinese phone manufacturer that's gotten a lot of

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traction lately. It's been in a lot of YouTube ads. I know people who have bought Huawei phones

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and all kinds of stuff from like Chinese phone manufacturers. And they actually are, like, really

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interesting, super capable phones, but the American market is just so uninterested in that.

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So I don't know if this play would work for Epic. But I totally think it works for Tencent, where

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they're much more about software and hardware accessibility and applicability rather than brand

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awareness. There's just much different motivations there. And I think that this is going to be really

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successful. If epic did it in the US, I don't think that they would be able to overcome Apple's

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brand hold on most of the market here. Maybe not may, it may just be niche. If they come to the US,

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it's not clear. But I do think this is step one. And I love that they took this step because I

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think they have no other choice, because you either accept the apple toll, right? The to be on

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their marketplace to be on their store, because it gets you on to a billion phones, or you go make

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your own right. But the complaining about it to me was always the the criticism I had of epic because

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the I think what will happen, ironically enough, is this will most likely fail because making

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hardware is tip is difficult. It's not like making games. And you know, five years from now, we won't

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hear about Tencent in the phone business. But they will have learned an important lesson which is

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paying 30% to Apple probably is worth it. Right? Like they will have learned it the hard way. And

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it's already cost them half a billion dollars here. I will I will love to see how much they sink

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into trying to get around the apple tax. That's to me, what is that number is the most interesting

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part of this whole conversation.

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Do you think Clemson's worried about that, though? I wouldn't think that they would be as concerned

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about Apple in the 30% tax so much as they are about all the different Chinese restrictions and

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having their own hardware out there to be able to play the games. And it's their motivations seem

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quite different to me. I would think restrictions and what I like it gets them around any tax,

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right? Whether it's apple, whether it's Google, whether it's Chinese regulation, whether it's

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right, it gives them their own platform that they control. I just think they've massively

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underestimated how costly it is to build your own platform that you control. I think the only way it

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would be worth it is if they viewed this as them building basically an app store, right? Because

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just saving the 30% You're never going to be able to justify making smartphones and putting all that

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cost up. I do think if you're saying hey, we're going to be the apple of China, based on this

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phone, you know, because everyone wants to play the exclusive game so it becomes the most popular

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phone and then we create the monopoly App Store. Then it maybe the juice becomes worth the squeeze

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But I just think if you're just trying to save 30%, like, there's no way that that math makes

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sense. To your point. She's in the squeeze, I see what you did there.

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No, your point. Your point may be correct, Jeff, right. Like, I'd have to sort of think through the

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numbers. And I'm sure there's back of the envelope math we could do, right.

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In terms of, you know, what Tencent gives up on the 30%, just on fortnight, for example, when

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fortnight was on Apple.

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But, you know, I just, I feel like they've, they've consistently underestimated how difficult

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this is. And to sink half a billion dollars, I admire that conviction, at the very least, right,

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I admire that. This was the only path outside of, you know, walled gardens of any kind that you have

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is to go build your own platform. And maybe this is the start of that. So interesting one to watch.

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I just, I want to stay on the mobile side, guys, because there was another really big, really big

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mobile story. Actually, let me just get Greg's comment here. Before I move on, says Tencent is

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not naive enough to think this would get them around Chinese control. Tencent appears to be

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following President G's directives. I mean, Greg, that's been like a recurring question on this live

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stream, which is like, how much? How Rogue is Tencent within the Chinese regime? Right, like,

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are they immune? Because they're so big? Are they able to push back? Are they completely at the

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mercy of the regime?

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I feel like it's not clear, not to me, at least, I'm not sure I understand the point of how would

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this get them around the Chinese control? Wouldn't it be even worse? I mean, I would be your own

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hardware. If it's your own plot, if it's your own hardware platform, it may be more difficult to

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regulate them to like, actually physically control. But you're right. I mean, the Chinese

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government could do anything, could you tell them to stop selling phones could you know, could

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literally do anything they want?

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I just wonder if they think it gives them some kind of advantage? I don't know. It's a good

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point. And, and to Greg's point, I think they're probably not they probably know very well, what

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they can can't get away with. I really think this has more to do with the App Store taxes and walled

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gardens than Chinese control.

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But there is another really big mobile story, guys, and that is

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Zynga in the news. And the headline, this is directly from the press release. The headline

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here, take two and Zynga to combine bringing together best in class intellectual properties and

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a market leading diversified mobile plump publishing platform to enhance positioning as a

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global leader in interactive entertainment. Not exactly

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you know, rolling off the tongue title, they're not exactly the sink, but take to buying Zynga

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that's the the crux of it. And they're paying just just to be clear, $12.7 billion, so they're paying

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$9.86 per share for each Zynga stock, and they're they're, they're paying it partly in cash, partly

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and take to stock 1/3 Two thirds and total enterprise value on Zynga of 12 point 7 billion

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which is a 64% premium to Zynga is closing share price on January 7, I don't know what the share

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price is today. Maybe Jeff you can take a quick look

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but I'm curious what you guys think

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in terms of this is a huge acquisition

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you know, Activision Blizzard, but King, which I think is maybe the closest comparable.

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Jeff, I know you had some thoughts in terms of comparing those two because I think you follow

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Yeah, so I put the Yeah, so I put this idea and I covered Zynga cover take two this is obviously a

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massive deal. I think it's the biggest actually, it may be the biggest gaming acquisition of all

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time. Up there with the fez though which I think was 8 billion. Super so was was something in that

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region to this is the biggest of all time. Just for context zing take to pay 12 point 7 billion.

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That's about 17 and a half times next year's EBIT, da, it's a little less if you take into account

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some of the cost savings and synergies maybe it's around 15 times, decently heavy multiple but

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around what these companies are worth I mean, EA pay 22 times EBIT da for glue, which was

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essentially a, you know, Geek multiple, right, right before right at the peak of COVID.

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Whereas Activision back in 2015, paid 4.7 billion for King, which was doing basically the same

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amount of EBIT da so Zynga doing 725 million King was doing 700 million of EBIT da they paid 6.5

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times EBIT.

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So, basically less, you know, a third of other kind of on a multiple basis, what take two is

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paying. Now that doesn't mean take two is inherently overpaying. I think it's just a signal

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of Bobby in this case was very early buying King and it was very shrewd acquisition when people

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weren't really bought in on mobile and kind of the value some of these social the longevity really of

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some of these franchises I know. You know, at that point kings, Candy crushes ma us and da us it

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really plateaued. And people thought they were going to kind of fall off a cliff and monetization

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would disappear. That franchises obviously sustained much longer than people expected.

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Making that a great acquisition.

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For take two, it's an interesting one.

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The big question in my mind, one, it's a big strategy shift. You know, for the longest time

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take two has probably been the most focused on large kind of non recurring franchises, of course,

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we all know with Rockstar, they basically come out with a game once every seven years, and it sells a

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gajillion units. And they kind of live off that for the next five or six years. We know what

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they've done with GTA Online, read that online. So that's really been their model. And Strauss, their

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CEO for the longest time has sort of poo pooed mobile, like he's been very skeptical on

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conference calls really had never kind of bought into mobile prior to the last year or so. They had

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done a couple of decent size acquisitions over the last year. But this isn't a massive step. I mean,

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they're it's gonna be 50% of their business now coming from mobile. So just a really, you know, I

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think the word transformative is thrown around a lot in acquisitions, and it's a bit of a buzzword.

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I think, in this case, it really is transformative. The big question for whether this

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will be successful or not is is whether they're going to be able to use some of the Zynga mobile

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expertise to bring take two games to to mobile, which is something Activision did, obviously with

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Call of Duty with a lot of success. But, you know, they bought King in 2015. They didn't come out

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with Call of Duty mobile, I think until 2019. And Call of Duty mobile had nothing to do with King it

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was actually built externally by Tencent. So it's not it's not automatically clear that buying Zynga

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is going to all of a sudden mean, hey, we get grand theft auto mobile, which I think is what a

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lot of the kind of more rudimentary analysis has been around like, oh, this makes a ton of sense.

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Take two is great franchises. Mobile's massive, a lot of players, Bada bing, like, put it together.

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And this is a great acquisition, I don't think I think execution will be a little more challenging

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than that.

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But just taking a step back, I mean, it's a creative deal. It gives them scale, which is

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something they've been lacking, it'll help them catch up in terms of margin to their peers. And

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it'll smooth out all of their earnings variability, which has been a big problem for

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investors would take too, in terms of every year guessing was there going to be a GTA this year, if

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not, well, maybe I don't want to own the stock because they're not going to earn that much money.

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Now, with Zynga, they get a nice kind of smooth base of, of revenue and earnings that they can can

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live off of. So that's some of my takes. Let's see. I'm curious if you agree with Jeff, that

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there's nice synergies here, potentially, between, you know, the, the mobile kind of

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Candy Crush style game, right that Zynga makes, even though that's a king title, but you know,

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these hyper casual kind of games that that Zynga makes versus take two, they're really and Jeff

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made the point, like, when Strauss was on the podcast, he even talked about this, how, you know,

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this is about storytelling and experience. And, you know, they were never going to do, you know,

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necessarily games as a service, even that this was all, you know, about selling a $60 box copy

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because they're delivering something of value. Right. And, and I'm curious, if you think this

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now, seeming Sifton shifting strategy makes a lot of sense.

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I suppose it depends on what the mission of the company is. I think that this is a very growth

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focused move, that we've seen that from Activision as well that the mobile division obviously has

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been performing past, I think, a lot of people's expectations. And I think, as some of you have

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noticed, or have mentioned, when we first kind of talked about this story, this is a little bit of a

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late move. So I don't think that obviously those margins will be as big because they're having to

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pay a lot more for this acquisition, then.

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Activision Blizzard had to play for King at the time they made it. But I do think that it's

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possible to coexist with both having tape to stick to its core mission and producing story driven

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games, and having a wing of Zynga that is doing the hyper casual, mobile, mobile thing that's

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obviously been growing like crazy.

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So if Activision obviously hasn't preserved that as well, because they haven't put as much time and

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effort into making the storytelling gains in supporting blizzard and doing all of that, which

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presents its own problem. But I think it's totally possible to coexist in a world where both of these

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things are equally as well supported in both of them maintain or surpass their current growth

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expectations. It just depends on it'll, as it always does on how management really handles it.

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And I don't think that this takes away from the take to brand because it's not like the renaming

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and take to mobile. I don't know, I think it's so possible if you're going for a growth strategy to

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have two separate things that your company does, and I don't think that they have to commingle or

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that those, the perception of those two has to mix that much, as long as each one is equally

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supported and equally successful.

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You know, the, the businessman in me that loves seeing growth and profit and all these kinds of

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things. The capitalist in Me, says, I like this, it makes sense. You know, mobile does provide a

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good base of revenue, right? Like there's all kinds of good business reasons to creative all

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those good things. I just, I refuse to believe, like, if I were to pinpoint and Bobby I think Jeff

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gives Bobby too much credit Bobby codekit Activision Blizzard, like, oh, I don't know if he

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saw the future with King I think, you know, we could argue he got lucky but mobile when it was

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not nearly as possible as popular it could also have been total for site which i i Give him full

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credit if it was if it was for site truly.

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But But fundamentally, if we look at Activision Blizzard 10 or 15 years from now, I think we'll be

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having a different conversation, right? I think we'll look back and go when Bobby But King.

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Yes, it was a good business decision at the time. But in the long run, it fundamentally destroyed

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the company, because the culture was no longer the same, the focus wasn't the same. You know, no one

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cared about making great games anymore. It was about making the next slot machine. And, and, you

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know, ARPU, and all these kinds of things like metrics that before when it was about making great

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games didn't really matter. And I'm exaggerating to make a point. But, you know, is there a world

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where and Jimmy question to you, I guess, is there a world where take to one we're talking about take

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210 years from now, we'll be reminiscing, you know, remember the time take to use to actually

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make good games, and not just all this mobile crap.

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And I fear, and you know, call it a prophecy, that that is a conversation, we are gonna have 10 years

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from now. And well, they may make a lot of money. In the meantime, the 10 or 20 year story may be

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much less exciting as a result of sort of this mixed focus. I might be the wrong guy to ask with,

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just because the other way you phrase it mobile crap, because we all know Paul's not a big mobile

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fan. I am a mobile fan. And Tencent appears to be a mobile fan, right. And now take to clearly you

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know, I mean, even before this acquisition was already a mobile fan, and you know, what we're

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definitely seeing, you know, with the creation of the metaverse and with the, these different

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communities that are being built around esports. And and a similar conversation I had with an

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executive at Activision a number of months ago, his his excitement around mobile esports and

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around mobile gaming in general.

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And so this acquisition 1020 years in the future, I wouldn't call it mobile crap, maybe maybe the

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future of games are gonna start with mobile, and everything else would, will kind of follow suit,

Unknown:

right? Maybe the originals are going to come out on mobile, because that's where most gamers are

Unknown:

gonna be in the future. And then the PC version comes out, or the console version comes out, it

Unknown:

could totally flip on its head. So, you know, I don't know about mobile crap. I just, I see this

Unknown:

as two massive companies kind of combining forces, to Jeff's point, you know, probably the largest

Unknown:

acquisition in the space that we've seen.

Unknown:

I see it this isn't, this isn't some Babe Ruth calling his shot. You know, this is

Unknown:

undoubtedly the future of kind of where these things are headed and where these gamers are

Unknown:

trending. And, you know, I, you know, I'm probably going to disagree with that prophecy.

Unknown:

I don't I don't argue that there's a place for mobile games. I just, it's not take to strength

Unknown:

and making mobile like, again, all you guys talked about in terms of mobile was distill down versions

Unknown:

of their existing IP right, like maybe we'll see GTA on mobile, maybe we'll see read that on mobile

Unknown:

maybe, right. First of all, I can make the argument that take two could have saved a lot of

Unknown:

money and gone to Tencent and just developed mobile versions of those games, right if they

Unknown:

really believed in the mobile story.

Unknown:

And arguably, if you look at Activision Blizzard, that was what made Call of Duty a huge success.

Unknown:

Like, Jeff, to your point, it wasn't King that made Call of Duty mobile. So if I'm take two and I

Unknown:

really believe the world needs GTA in a mobile version, I could have just gone to Tencent and

Unknown:

done that right and not need to give up $12.7 billion.

Unknown:

And I do I do strongly believe that.

Unknown:

And we're seeing this trend where IP and original IP is what matters most not mobile versions of IP,

Unknown:

right, that that milking IP is not what's driving value. Long term for entertainment are the

Unknown:

metaverse, everyone's buying up and searching for like, really original IP. You know, it's why the

Unknown:

marvels of the world are worth what they are in the Disney's and these kinds of things. And so I

Unknown:

just don't see this as a smart acquisition long term I get. I get why they did it. It feels a

Unknown:

little knee jerk. A little desperation to me. I'm surprised given Strauss Zelnick position.

Unknown:

I wonder, you know, behind closed doors, if he thinks this is a great idea, or if there was just

Unknown:

a lot of shareholder pressure to do something like this.

Unknown:

As he said the stock went down a ton actually on the news part of that's because, of course, there

Unknown:

was a there's a stock component to the deal. So there's, you know, some some ARB selling but um,

Unknown:

yeah, there was, I mean, the stock was down, I think 15 or 20, almost 20%. At one point, it's

Unknown:

actually recovered a decent amount, but

Unknown:

it wasn't like immediate Hey, shareholders love this. It's just which is interesting. If you're

Unknown:

CEO of a gaming company, public gaming company, the last person I would say to emulate is Bobby

Unknown:

Kotick. Right? Like the, the, the train the massive railroad accidents coming right? This is

Unknown:

the train crash is coming for Activision Blizzard is coming. It's not here yet, but it's coming. And

Unknown:

I don't know why you'd want to set yourself on that same course like mortgaging the future of

Unknown:

your business for short term revenue. Want he says Hi, Lonnie? Hello, Happy New Year, everybody.

Unknown:

Happy New Year to you as well. Robert says Hello, Robert. How's it going? Great to have you here.

Unknown:

And LinkedIn user says mobile is a diamond.

Unknown:

Or a gym, I guess. I mean, look, I don't deny how profitable and how valuable mobile gaming is and

Unknown:

can be. I just, I just don't understand why when your core business is building great stories,

Unknown:

great experiences.

Unknown:

You know, all those things, when those things are the core of who you are as a company. It's just

Unknown:

feels wrong. It just this feels totally antithetical to everything you've tried to build

Unknown:

over the last, you know, 20 years.

Unknown:

And I can almost guarantee this will go down as a mistake.

Unknown:

Especially at the price they paid, which it's not crazy to just point but rich, still rich.

Unknown:

Guys, let's talk about unless anyone had any other thoughts on this, I want to move on.

Unknown:

Can we talk about

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a little bit of a I think

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this was an interesting story. And that's Jeetu esports in the news. And I think

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you guys will will appreciate or Jimmy will appreciate this especially having had some past in

Unknown:

the music industry. And the headline here was eye catching to me it says GE to esports announces a

Unknown:

record label launch with metal track Roa. The power metal track is the first of many songs from

Unknown:

GE to its first of many in quotes, quote from the company. It says Jeetu esports has expanded into

Unknown:

the music industry with the launch of its own record label and as mark the occasion by releasing

Unknown:

its first track titled our way.

Unknown:

It features several recognizable names in the metal genre. I'm not familiar with the metal

Unknown:

genre, so I don't know these names, but you guys might Jason Richardson, Luke Holland, Nora Liu

Unknown:

hemo, and features YouTuber Taylor Davis as well as Tina gwo. So,

Unknown:

g to esports launching a music label. Jimmy, I want to know, in your mind, is this completely

Unknown:

genius? Or is this esports team's just like, really confused about who they are? No. Well, you

Unknown:

know, the literally grasping at dollars wherever they can.

Unknown:

I'm just, I'm curious if you think this is truly visionary, or, or it's a mistake in your mind.

Unknown:

It's definitely not visionary. You know, I think it might be a little bit I think it might be a

Unknown:

little both. Who's to say that genius and crazy don't overlap, and oftentimes they do. What I'll

Unknown:

say is, you know, from a music perspective, you know, traditionally, in 90s, pre 2000s artists

Unknown:

were signed to

Unknown:

A series of deals depending on what the label believed them to be capable of, and they would

Unknown:

offer them advances which would be recouped against the album sales and recoup to get, you

Unknown:

know, and after the marketing budget spend. But But in essence, it was a very cut and dry, you

Unknown:

know, we think you're going to be big, or maybe you're a mid tier or a big artist. And here's a

Unknown:

certain check that correlates with your value and with what we think this album is going to do. And

Unknown:

then that all changed with Madonna and Jay Z and these 360 deals, where labels were realizing that

Unknown:

they were investing hundreds of millions into these names, and then only for those brands to go

Unknown:

create a clothing line or an alcohol line and do these things without them that the label didn't

Unknown:

get a piece of. So they started renegotiating for 360 deals, which were massive $500 million plus

Unknown:

deals depending on the artist. And that gave the label a cut of everything. No matter what that

Unknown:

artists did, you know, the label felt that they built that brand through the music, and that

Unknown:

entitle them to small percentages here and there of everything else. So what I see what she too, is

Unknown:

kind of flipping that, and also acknowledging that sooner than most, which is, hey, we're making

Unknown:

these, again, I don't know, really the nature of this, haven't heard the song, first of all, so I

Unknown:

don't know if it's any good. Not also not a metal fan. So I can't speak to the talent on that track.

Unknown:

But what I can say is, if I am any type of business, where I have talent on my roster, if

Unknown:

that talent becomes famous, because of my effort, promoting them, plugging them with sponsors,

Unknown:

giving them a platform to grow, especially in gaming, where they're probably smaller and younger

Unknown:

than most. And then that talent decides they're going to spend off and do music, or, or anything

Unknown:

else that really floats their boat, I'm probably going to want a piece of that or otherwise feel

Unknown:

like I spent a lot of money building this person up into not, you know, into something that I later

Unknown:

don't have a claim towards it also say that, especially in esports, where the lifespan of the

Unknown:

competitive side of things is much shorter. It's probably a brilliant thing to you know, we're

Unknown:

seeing a lot of gamers turn streamers just because, you know, it's a little bit of a more

Unknown:

accommodating schedule, or whatnot. So I think it's it shows good foresight from from, from the

Unknown:

orgs. That,

Unknown:

that, you know, hey, they're looking for the long term, I think, in terms of what they can do with

Unknown:

this talent. And also they're looking to make sure that if they spend all that money developing

Unknown:

somebody that they're not, you know, left high and dry after all of that. I mean,

Unknown:

Jimmy, you may be giving them too much credit. Like, I don't know if the article made it seem

Unknown:

like they had thought through sort of this music label as extensively as you already have.

Unknown:

But I guess for Lindsay, let me direct this at you. What there was this quote in in the article

Unknown:

specifically where it says, On the organization's decision to kick off its record label with a metal

Unknown:

song Jeetu esports founder Carlos Rodriguez said, epic power metal is my favorite genre. I don't

Unknown:

care about its marketability. It's coming from the heart, like everything else we do. And so, the the

Unknown:

business person in me looks that goes, this is a little scary, like, I appreciate that it's coming

Unknown:

from the heart, but like, it sounds like we've done no research. We don't know if metal is the

Unknown:

right thing for our audience, right? Like we, we we haven't looked at any YouGov data which Jeetu

Unknown:

if you're listening, you should go talk to you give you gov comm slash gaming dash esports and

Unknown:

figure out if there's overlap between your audience and

Unknown:

and metal. But Lindsey, does this scare you or do you? Do you love that sort of this seems more like

Unknown:

a gut decision, gut business decision here.

Unknown:

I totally think that if people I mean, we talk about this silly authenticity word all the time,

Unknown:

but I suppose I would rather see people who can really back up what they're doing with passion,

Unknown:

because I do think that then they'll be able to find, I would say I don't know if it's called a

Unknown:

niche or growing communities. But I will say I've been learning a lot more about metal in

Unknown:

particular, actually, as it relates to gaming and there is a pretty massive overlap. There's a super

Unknown:

popular streamer who's also the lead vocalist for the band trivia which is the big one. I also was a

Unknown:

huge falling in reverse fan and middle school. So shout out.

Unknown:

I definitely was part of that. And there is when we talk about things that are done from the heart

Unknown:

like he he is talking about. There's a certain appreciation in these more niche communities for

Unknown:

plays like that than there would be if they had just come out and like made up a maybe a pop song

Unknown:

or something that could have been kept more catchy or more popular. I don't think that this is a mega

Unknown:

billion dollar thing to start. But I do think that these kinds of passion projects can turn some type

Unknown:

of profit and help you grow a community

Unknown:

that's built on the same things that you value. I don't know if that makes sense. Like, this isn't a

Unknown:

knock it out of the park capitalists deal for sure. But I don't think it's a, I don't think it's

Unknown:

a net loss either somewhere in the middle, okay, but put your like investor hat on because all

Unknown:

these esports teams are spending someone else's money, right? Like, if you're CEO that you've,

Unknown:

you've invested a lot of money in their company, is spending time producing metal songs, when

Unknown:

really what you've paid him to do. And what you've invested in him to do is to build an esports. Org

Unknown:

does this like, again, if I'm the investor, I feel like I lose sleep on some things like this, I feel

Unknown:

like this would keep me up at night, and have to see more of the numbers. But to Jimmy's point,

Unknown:

it's it's the same thing as a singer saying that they're gonna start a clothing line, you'll just

Unknown:

never know what's going to be that thing that hits or what's going to be that community that kind of

Unknown:

provides you the tipping point.

Unknown:

In growing, what you're doing. There is there is a big crossover between metal and gaming, there is

Unknown:

an audience there that can be profitable. Is this a way of doing it? I don't know. But this is this

Unknown:

is at least a shot. And I hope it didn't cost too much. And I don't think it'll lose that much

Unknown:

either. But again, without knowing the numbers, I can't confidently say I would feel comfortable

Unknown:

with this. So hopefully they've whatever story they've given to their investors. Is it convincing

Unknown:

one?

Unknown:

Let me just read Christopher's commentary says grabbing friends from the community to compete in

Unknown:

online tournaments and esports has always made me think this is probably what it feels like to

Unknown:

create a GarageBand all the best Nordic rock I discovered gaming to Christopher it's a good

Unknown:

point.

Unknown:

It also doesn't mean that this was this was a good business decision.

Unknown:

But you're right. I mean, there's definitely overlap, I guess in that feeling like playing

Unknown:

competitive games with friends is must be what it's like to be in a garage band.

Unknown:

But I don't I don't I don't know if esports orgs should be directly in the music business. Jeff, I

Unknown:

don't know if you had any thoughts on this before we move on? Yeah, stupid microphone. No, I agree.

Unknown:

I agree with the Prophet entirely. I mean, Lindsey, you may be right that there may be

Unknown:

overlap between the grunge scene and esports. And that that may be true. But it's really scary as a

Unknown:

CEO just saying, well, we didn't even look into that. I'm just doing this because I want to screw

Unknown:

everyone out. It's like that is even if you're right, that's a that is not a process that's going

Unknown:

to work and I guarantee you that this this will fail and I would guess that this whole org will

Unknown:

fail if that's the way they're running their business. Right. It's just not just not good

Unknown:

business. You could do that. If you're caught like if your doctor disrespect, you could do that.

Unknown:

Because you're Yeah, yourself. And you're, you know, people might appreciate that authenticity.

Unknown:

But when you're running a business, and that business is to run an esports team, it's like, why

Unknown:

don't we just open a Chick fil A like that'll be fun. I always want to own a Chick fil A like it's

Unknown:

like, that's not really how.

Unknown:

Bobby Kotick though, because Bobby's like stock price up everything good. And just like, yeah,

Unknown:

that's as an investor. I mean, that's the way we want Jeff's analogy, like why not? Why should why

Unknown:

doesn't GE to open a Chick fil A? Like if if Carlos DISA G to Ocelot? You know, Carlos

Unknown:

Rodriguez, the CEO decides he really feels he really loves, you know, his hearts and chicken

Unknown:

sandwiches. Would you be okay, as the investor? I mean, I get music is closer to esports than

Unknown:

chicken sandwiches, but not by much my media talking about the difference between creative

Unknown:

pursuits and general business pursuits though, too. Yeah, yeah. But it's not a creative pursuit

Unknown:

once you take on millions of millions of investors. Yeah, you're not. I'm not saying you're

Unknown:

wrong, Jeff at all. I in fact, I like I largely agree with you. It's just I think that as, as

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Jimmy said, sometimes genius and crazy overlap. And sometimes it can work. So

Unknown:

Christopher here says, I think it shows the personality of the individual organization and

Unknown:

artistic side. So maybe, I mean, Christopher, it's true. And I like I said, I said at the beginning

Unknown:

when I brought that up that quote, I appreciate that he's doing this from the heart and that he

Unknown:

believes in it the whole bit. But that would be fine. If you hadn't raised outside money if you

Unknown:

were you know, didn't have investors who were expecting you to do one thing. I'm not I'm not I

Unknown:

think you make a lot of people nervous when you go this off script.

Unknown:

But we'll we'll see if what how that pans out. Guys, I want to I want to talk about a story here.

Unknown:

That was a super hot take and from someone quite famous in the tech industry. And I want to get

Unknown:

everyone's take on this including people in the chat. I think I'm most curious what everyone in

Unknown:

chat thinks of this, because I have a funny feeling. I know where everyone in this room stands

Unknown:

on this. But the quote here the take was from Alexis Ohanian Ohanian, who is the co founder of

Unknown:

Reddit and the headline

Unknown:

Here is Reddit co founder Alexis Ohanian predicts play to earn crypto will be the only type of games

Unknown:

people play in five years. Now, he says basically play to earn crypto will be the only type of game

Unknown:

most people play in five years 90% of people will not play a game. This is a direct quote, unless

Unknown:

they are being properly valued for that time. So in other words, unless you're getting compensation

Unknown:

for playing a game, most people will not play those games anymore in only five years is this

Unknown:

timeframe is five years. And I just want to go around the room here, including chat, guys. I'm

Unknown:

curious, do you agree with this or not? Will play to earn games be the only kind of game people will

Unknown:

want to play five years from now? Is this? And do you think, you know, he just raised just for some

Unknown:

context, he just raised the fund investing in blockchain based games, we covered it on the metal

Unknown:

business podcast, which everyone should go subscribe to.

Unknown:

But so he's a little biased, right? Obviously, he wants to see play to earn and blockchain based

Unknown:

games when.

Unknown:

But I'm really curious if you guys agree, if in five years, these will be like, people won't play

Unknown:

games unless they're being compensated for their time. Jeff, start with you. Know, I love the hot

Unknown:

take, I'm gonna go with no, however, I'm gonna qualify by saying I think that he is. He is

Unknown:

generally right. But raw, wrong and how extreme he's been. I think if he had said something like,

Unknown:

I think 40 You know, 30% of all game game, you know, gameplay time will be blockchain games or

Unknown:

paid earned games. I think I could get behind that number beat me meaning like, let me take a step

Unknown:

back and kind of like meaning right now, if you think about, we have three platforms. I know, this

Unknown:

isn't the perfect analogy, right? Your mobile console and PC and roughly, the amount of gamers

Unknown:

on each one is there, you know, about 33%, or sorry, it's about half on mobile 25% On console

Unknown:

25%. On PC, if you told me that at some point, it's going to be 25% of gamers will be playing,

Unknown:

played earn. And I know played earns not a platform. So it's not a perfect analogy. But if

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you told me it was going to make up a large portion of the player base, I'm like, I totally

Unknown:

buy that. I'm all in on that premise. To say 90%.

Unknown:

I think that's a bit crazy, especially within five years. I mean, we know five years now, people will

Unknown:

still be playing. Wow. So you know, unless Well, it goes played around. And I say that to dig at

Unknown:

Paul. But you know, I know is the answer. I just think it's a little extreme. But I think he's

Unknown:

right, and how bullish he is on blockchain gaming. So hold on. Can I just push back a little bit?

Unknown:

Jeff, if his timeframe was 10 years or 15 years? Do you believe we get to his 90% number? Is it

Unknown:

just a question of time in your mind? Or do you disagree with the premise completely? I think the

Unknown:

answer is yes. Because I think in the balance of time,

Unknown:

I think in the balance of time, we will come up with like blockchain games and paid her. I like

Unknown:

using the term pay and her earn. I heard this another podcast where basically it's like, it's

Unknown:

not play to earn it's pay and earn, meaning you're playing. And you can be earning not ever you're

Unknown:

not doing it just you're not only there to earn, and you're not automatically going to make money,

Unknown:

but it's just part of the ecosystem. I think eventually we'll get blockchain and play and earn

Unknown:

games that are interesting and exciting enough where it will look at it. People will look at and

Unknown:

be like, Why would I ever play a game that I don't earn money? Because they're both just as fun

Unknown:

right? Like every game, there will be an equivalent paying earn game playing earn game, to

Unknown:

every nonplanar in game, so it'd be like, Why would I play Madden? Where I don't earn money if I

Unknown:

could play, pay and play and earn version of Madden, which is just as fun, and I can make some

Unknown:

money while I'm doing it. Overtime. Sorry, that was really long winded. Jimmy or Lindsay I'm

Unknown:

curious to get your thoughts on this 90% and chat you guys like please chime in. I really want to

Unknown:

know if you guys think played earn will be 90% of the market in five years. That is what he's

Unknown:

saying. But people only 10% but 90% of people will only play games if they're being compensated

Unknown:

directly for their time. Jimmy, um, maybe a high percentage of Gen alpha and Gen Z but certainly

Unknown:

not millennials and older. You know, I think we have titles like Matt and Jeff mentioned and, and

Unknown:

others that we know and love. So 90% Seems wait way too high.

Unknown:

Maybe in you know, 50 years that I probably give that a more realistic time timeframe. Five years

Unknown:

way too aggressive and 90% way too high. So I would limit it again to the age demographic of the

Unknown:

younger gamers predominantly playing played earn sure I could see that. Lindsay I think it does

Unknown:

depends on the market. But I think in developing countries, this is absolutely true, especially

Unknown:

from what we seen with the Venezuela and written scapes, the perfect case study for that. So I

Unknown:

definitely think in lower income countries, this is probably absolutely accurate. Sign up says 90

Unknown:

Seems very high. I mean, Lindsey, no, I was gonna come out swinging with a very strong opinion on

Unknown:

this, you your your thought that it is more of a developing country product, maybe you could

Unknown:

convince me like, I could be convinced that it you know, it has higher penetration in a, in a, you

Unknown:

know, lower income kind of market. I just think Alexis Ohanian is totally out to lunch here, like,

Unknown:

actually, completely out to lunch. If I was an LP, in his new blockchain based fund, I'd be asking

Unknown:

for my money back. Like it shows a radical lack of understanding of the gaming market of the gaming

Unknown:

audience.

Unknown:

I mean, I'd love to have him on the podcast, because I'd love to ask him where he's getting

Unknown:

this prophecy from, we're clearly not talking to the same Oracle.

Unknown:

But he's just gonna be phenomenally wrong. He's just he couldn't be any more wrong about this

Unknown:

prediction. Five years is

Unknown:

completely wrong. And even if you told me the timeframe was 100 years, I still think he would be

Unknown:

completely wrong. Because I think the one thing, like he's fundamentally saying that human beings

Unknown:

are going to turn, everything that we do for fun, everything that we do for play becomes work,

Unknown:

essentially. And that we feel like no human being has gone out to throw a baseball or play

Unknown:

basketball with friends and been like, Man, I, you know, I should have been making money while I was

Unknown:

playing basketball with my friends, right? Like no one comes in frustrated that they're not

Unknown:

compensated for that time.

Unknown:

And so like, maybe Alexis is not from this planet, but I don't think most human beings think that

Unknown:

way. The the caveat, I guess, Paul, what if I could push back a little bit? Because I think I

Unknown:

think your premise is correct. But I think Greg makes a good point about it being too soon. And

Unknown:

then he says, we still don't have great Plater in games. I think that's the key. So the question is,

Unknown:

how quickly do you think that last part becomes not true? Or how quickly do we get great pleasure

Unknown:

and games? Because I'll say this to you, Paul, nobody, you are right. Nobody goes out in the

Unknown:

backyard and throws a baseball, you know, with their dad, and then comes in and says, Well, I

Unknown:

wish I got paid. But I guarantee you if someone said, if you go in your front yard and throw a

Unknown:

baseball with your dad, I'll give you 50 bucks. You go in your backyard and throw a baseball with

Unknown:

your dad, you get nothing. You would be like, Well, why on earth? Wouldn't we go in the front

Unknown:

yard and throw the baseball? That's crazy. I think that is kind of what? That's where he's coming

Unknown:

from, or at least that's my pushback. And how long does it take to get to that parody? I don't know.

Unknown:

It's so let me just bring Greg's comment on screen says it's way too soon. We still have great player

Unknown:

names. Jeff, your points such a good one. And

Unknown:

to me, this is the crux of why I know Alexis Ohanian doesn't understand the gaming market.

Unknown:

Because play to earn fundamentally, the free money doesn't get created. Okay? Like, this is not how

Unknown:

these games work. There's no, there's no just like, people who develop play to earn games.

Unknown:

They're not they haven't discovered money trees, and they make these money trees available to

Unknown:

people who play their game, right? They're fundamentally, for lack of a better term,

Unknown:

glorified pyramid schemes where a small number of players make a lot of money, and for the most

Unknown:

part, are funded by people who put money into the game, or, or pay for tokens or things like that,

Unknown:

right? And, and while that's good for the few who make money, it's not a free lunch. And it drives

Unknown:

the kinds of games that they are right, it has an effect on the kind of game that is created to be a

Unknown:

play to earn game because it has to have mechanisms to support what is fundamentally a

Unknown:

pyramid scheme. And so my thesis today, and this may change, but today is I don't think we will

Unknown:

ever see great played earn games, and most definitely not in the next five years. Because the

Unknown:

format dictates the kinds of games that we get. And this is why I don't think like it's I think

Unknown:

it's easy to say, well, we don't have great play to earn games. So you know, once we have great

Unknown:

ones, everyone will be doing this. I don't think we will ever have great played earn games or at

Unknown:

least there may be some better than others. But I don't think you're ever going to get you know,

Unknown:

Call of Duty level kind of great play to earn games not not in the next five years, probably not

Unknown:

in the next 10 years. Maybe at some point when

Unknown:

the the ecosystem changes dramatic

Unknown:

maybe in that Metaverse sort of universe where we're, you know, talking about gaming in a much

Unknown:

different way.

Unknown:

But to say it in five years, and to think that played earn has no impact on the gaming

Unknown:

experience, I think, I think he's wrong.

Unknown:

But it's a good point. I think that is the the best, strongest counter argument that, you know,

Unknown:

if you didn't make a great play to earn game, why would people play a game where you don't earn? So

Unknown:

and I guess, I'll give one more. Cuz I think your point about, you know, kind of the Ponzi scheme

Unknown:

piece, and everyone can make money, I think is inherently like, literally has to be true. If you

Unknown:

just think about it from a, from a, you know, mathematical and business standpoint, not everyone

Unknown:

can make money, just everyone can't be putting, you know, taking money out of the ecosystem and

Unknown:

nobody putting it in.

Unknown:

Having said that, I think you could see a world where every game moves to some sort of paid,

Unknown:

played earn model, but not everyone earns, does that make sense? Where the expectation is not,

Unknown:

hey, I'm going to go make money, it's that my items will have value. So maybe I go in and I buy

Unknown:

$10 worth of stuff. And when I leave at the end of the day, I sell $3 Worth, I sell it for $3 Like, I

Unknown:

didn't make money, but there you know, it has that element and that, you know, kind of decentralized

Unknown:

and you could sell your stuff. Like maybe that's a more sustainable ecosystem. Jeff, you again, such

Unknown:

a good point. And I think it brings up an interesting conversation in that I played the

Unknown:

greatest played earn game ever made. And you know what it was, was CS GO. Because I played, and I

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got cases. And I open those cases, and I got items. And those items, sometimes were worth money

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and I could sell them on, you know, on Steam for a lot of money and make money by playing CS GO. And

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I have some very valuable items and CS GO. The difference is I think and it's a subtle difference

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is when I think it's maybe a semantics thing. When we say a play to earn game, we really mean a game

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that was designed for earning, right that you go in to play to earn not a game where you play like

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CS GO where you may earn, right and it's not the point and it's not the goal. And it's not like

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it's a subtle difference. And Phoenix here, let me just read his comment, because I think I'll say

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agrees here but Diablo three had the Horadric hamburger and during the vanilla days, you could

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sell that via the auction house for a considerable amount of money about $200. They sold constantly

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to the whales of the game. I mean, I think Phoenix the question I would have for you is, I'm sure

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there were some people who played to farm that item, right so they could go sell it. But I think

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the vast majority probably earned items in the game that they sold. Because they were playing the

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game for fun, not because they were playing to earn.

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And maybe that's an important distinction. Maybe it's not signup says I like playing games to

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unwind and relax. I can see having some mix of play to earn but I cannot imagine myself only

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playing played earn items. I I agree with you. And I think most gamers probably feel that way. I

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think so. Let's, let's move on guys, can we, we do everyone's favorite segment,

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which I'm going to get to. But before I get to that, I just want to say that this live stream,

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this weekly news show very generously sponsored by YouGov. Guys, if you don't know you, Gov produces

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the absolutely best data on gamers, games, fans, esports fans all around the world. If you're at

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all working in the gaming space, if you're a brand, if you're a team, if you're even on the

Unknown:

outskirts of gaming, if you're thinking of selling something to the gaming audience, you absolutely

Unknown:

need to be talking to you. Gov, they really produce data that helps drive great decision

Unknown:

making. They have a bunch of free reports, you can find them at you gov.com/gaming-esports. I'm going

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to put that in the chat.

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But also I highly recommend two things one, going and checking out are on YouTube, you can find

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segments under the business of esports called YouGov Insights, where we talk about a lot of the

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data that they produce. And there are a lot of fun, some really interesting stats, I think you

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guys will learn a lot. So definitely go check that out. You have insights on business of esports on

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YouTube. And finally, if you need to reach out to anyone that you give directly, please feel free to

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talk to Jimmy Jeff Lindsay or me. We can all connect you with you. Gov. And we really

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appreciate their support. So alright, let's get let's get to everyone's absolutely favorite

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segment. If you don't know if you're new to the live stream, guys, we are not just the the most

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important news outlet for gaming business news. But we are also the leading the global sort of the

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most important

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chair gaming chair reviewers because nothing more important than a gaming chair when it comes to

Unknown:

gaming. And so we have a story, Jeff, you got to pay attention you're not going to get out of this

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one. And we already

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from CES actually, and this is a Razer gaming chair this time. And the headline here is razors

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first vibrating gaming chair is the Enki pro hypersense.

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This is following the release of the razor is skor. The company went big with is its vision for

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gaming chairs and ces 2021

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includes haptic feedback, thanks to a partnership with D box. There's this really cool video. But

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basically, the idea is the chairs going to cost about $2,000 They are going to release it q1 2022

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According to this, and basically, it has

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all the same features as the original Anki. But now it can do 65,000 haptic variations with a

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latency of five milliseconds. So it gives you that much more immersion into the game. Because your

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chair is vibrating. Guys, I know you you all love this. It's a razor gaming chair with haptic

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feedback.

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DI box very well known in the sim racing world. Any what Lindsay? Start with you? Where does this

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rank on your pantheon of chairs gaming chairs? What is haptic feedback? You know, like when you

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you press something on your phone screen, and it's it gives you sort of a little vibration so it

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makes it feel like you're pressing a button kind of thing. It's those vibrations that can simulate

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certain things or like an IMAX you were going to like an IMAX

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for those moves, like vibrate the chair and like blow wind on your legs if you're moving really

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fast. Exactly what this chair does. Yeah, this is the wind

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for me

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know what if they made a tiny version of it, then you'd like it. That's not Yeah, behind.

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Jamie, I know you like this come on. I think everyone's getting a little too cutesy with their

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chairs and a little to

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it just to kind of how we how can we make this bigger innovative. All I want is a chair that has

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a built in heater and a massager like that's that's it you know, maybe some led to a matches

Unknown:

the glow of a mouse and keyboard. But I don't I'm not a racing guy. So I wouldn't care for for to

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feel this way or that way or I don't know. I don't really like those IMAX chairs either. But maybe

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I'm just sounding old and cranky now. What do you wouldn't like playing Call of Duty or fortnight

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and when you get shot? You feel like the rumble in your seat? You know, you feel like that little

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haptic kind of feedback. I feel like the immersion is great. In a gaming chair. Yeah, and then and

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then I can put on a vest when I play Call of Duty and I could feel like I'm taking bullets in the

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chest whenever I get shot at next though.

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I'm just not that kind of guy. I guess I I like haptic on my phone. But I don't know if I need it

Unknown:

in my chair. Plus now how are we powering this? Like what does that look like? Am I gonna have to

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charge it every night plugged in? That's one less thing I want to worry about.

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An apple watch it. Yeah. So

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to be clear, all these chairs that have any kind of electronics they're plugged in. They're not

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battery power. Yeah. Now call me a boomer. That's a pass for me. Ah, I don't have it. I I like the

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haptics I think it's cool. You know, I'm playing my mat and it feels like I'm getting tackled. I'm

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in. Let's do it. We found one. Actually the juice likes. I will say you know, I will bring this up.

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Tom's guide also agrees with me it says they said this was the cooling gaming chair. We may never

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see it why we volution of gaming chairs. So I really like this I love razor razors innovation in

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the way they push the industry forward, just in general, just business sort of commentary. They

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really do great. Like they really have great ideas, whether all of them come to life or not

Unknown:

whether all of them are success or not. Sort of doesn't matter. They really do innovate. And I

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like that I end up says I turn that off on my controller. I'm not interested in my wheelchair

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vibrating.

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I mean, I'm it may you're right that may not be conducive to high performance gaming, but I could

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see the the immersion score being quite high on something like that.

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Alright guys, let's let's move on. Let's talk about

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we have a couple of stories here. I just want to mention this one. This is a quick one, because it

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matched an article we talked about last week. And we may get to a lightning round here in a second

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guys, but this one was Twitter reports gaming delivered 2.4 billion tweets and

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2021 So huge amount of tweets related to gaming on Twitter. But if you look at the most tweeted about

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games, you guys remember I don't have it up but the story we did last week about the the most the

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games that generated the most revenue on Steam and that were played the most and the whole bit

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Dension impact and an apex were up there are a few guys remember. And they were also number one in

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two in the most tweeted about games. Anyone surprised to see sort of the top five here most

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tweeted about games, or even the top 10? Anyone surprised that Call of Duty is not on here

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whatsoever? If it was it would have been for angry tweets. It's just thinking.

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I mean, that was my question that I mean, that's why I

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can

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see, sorry, I'll read the top 10 in the top 10 Ganeshan impact number one. Apex number two

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ensemble stars three Final Fantasy for FTO project. Five Animal Crossing six games game

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knives out seven Minecraft eight. PJ Sakai nine fortnight game fortnight 10.

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There's a lot that's not on this list. Jimmy Sorry. Go ahead. No, I mean, I think it speaks

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more towards the what gamers are using Twitter as opposed to what games are popular in general,

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right? This is just this speaks towards that overlap. Because if we were going to look at the

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most posted about on Instagram or on tick tock or YouTube,

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all these all these would change and I'm sure plenty would fall off. Interesting that

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fortnight's in that top 10 Still, you know, it's holding strong even though it's had a rough good

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three, three or four years now.

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Animal Crossing on Twitter, I always thought Twitter aged a little older because of all the

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news content there. So I don't know if that's people like my fiancee that are playing Animal

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Crossing who never let me play it because she was always using our switch. But But But honestly, the

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coolest thing about that list to me is Apex because I think apex is a great game. A lot of

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people were leaving cod for another another games that had a great resurgence this year. And you

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know, they need to look at that data and see that people are talking about them and figure out a way

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to capitalize and, and hold strong and not lose out to split gate and Halo and all these other

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titles that are really making FPS a competitive space. So I would just say that that's a Twitter's

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a list. Not anything else list. But it's still pretty cool to look at and analyze. I mean, this

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is why I was I was a little bit surprised because apex and fortnight on the on the top 10 And no

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call of duty to me Call of Duty was the big, like the one that you can because they have Call of

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Duty mobile also, you know, with 100 million whatever players, I might wrong to conclude that

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maybe I have my doubts about the Call of Duty numbers. I don't know if I'm jumping to into too

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big of a conclusion. It just the data doesn't seem to fit. You can see the call very easily right

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because it's they break out by segment and it's the only thing that Activision actually, it's

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reported by Activision Blizzard right? Well, it's like, it's like their SEC, GAAP reported, you

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know, revenue numbers, I don't think they're like, unless you're gonna call it like a company

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accounting scam? No, no, what I'm saying is I don't know, again, because it, especially in Asia,

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like it's easy to sort of play with user numbers and things like that, right? Like, someone who

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downloads Call of Duty, plays it once and then never plays it again. Like they call that a user.

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I'm just when I see no discussion around the game, which is really what this article is about. Right?

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That makes me a little worried that what's happening with the game in an underlying way?

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That's a good point. And certainly not it's a worrying trend. If you're, you know, you're

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Activision I would say, like to Jimmy's point or someone's joke earlier, it would be interesting to

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see sentiment around the like I forget, there's a bunch of these services where you could track

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sentiment, as in addition to mentions, it would be interesting to see if any of these were up there

Unknown:

because of for negative reasons. Nothing immediately comes to mind. But like, you know, to

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your point with the Vanguard launch, obviously there could have been some negative tweets about

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that same thing with Halo. A lot of these new worlds a lot of these negative, you know,

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launches. I know, as an interesting point here, which I think could be one of the reasons ces

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could be split between Vanguard Warzone mobile, all as separate games not being collected as one

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that's true. It could just be a case of you know, the chatter is split among among all those

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different properties.

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Alright guys, let's let's talk about something else. Let's talk about

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this was an interesting one.

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Hang on here.

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It's interesting. It actually let's do a lightning round guys. I think we have a few stories that I

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would be more fun to do in a lightning round kind of fashion.

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So I'm going to for those of you

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don't know I'm gonna bring up a few stories in rapid succession here guys, and we're gonna hit on

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them in everyone has about a minute to respond

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because I think there there's a few here I want to get to. And we won't have time if we do each one

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of them in depth here that's here. So

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let me start with this one.

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And we're gonna go in alternating order. I'm going to do Jimmy, Lindsey, Jeff and then Jeff Lindsey

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Jimmy.

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And the headline here Korean gaming giant next on buys $400 million stake in Avengers directors

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entertainment company. So this is next on which is South Korean gaming giant. They bought a 38% stake

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in entertainment company ag Bo ag Bo was founded by brothers Joe and Anthony Russo, who directed

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Avengers endgame, and they valued that valued HBO at $1.1 billion

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in 2020, HBO produced extraction. I have not seen it, but it's supposedly one of the most watched

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original Netflix films. And the quote here from Exxon says film and television have been proven to

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drive higher engagement and longevity for game franchises. And we are now partnered with the best

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creators and adapters of franchise IP in film and television $400 million stake next on buying into

Unknown:

a fundamentally an entertainment company. I want to get your guy's general thoughts obviously in

Unknown:

your minute. But also specifically as it relates to the conversation we had around

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take to buying Zynga and the comment I made on IP being maybe the most valuable to me this felt like

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a way better buy but I'm curious what you guys think Jimmy start with you. Immediately that

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comment that you had about IP is where my mind went. extractions a pretty good film on Netflix,

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if you haven't seen it, Chris Pine, I think we want to play for an Indian boy and some drug lord

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dispute in India in Bangladesh, really entertaining watch. But to me, what it really says

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is you have a gaming company here hiring to brilliant minds that are known for putting out big

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blockbuster type films.

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Always a tough line across, right, because we've seen it done poorly. We've seen it done really,

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really well. And this is not just a small investment, right? What do you say 38%. Massive,

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I'm gonna, I'm gonna appreciate the risk. And I'm also going to appreciate that they're going big on

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it. And I'm a fan of both of those films. And if you approach it as, hey, we want your minds

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because you come up with great storytelling. And we can incorporate that into a game, as opposed to

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them saying, Oh, they're going to create the extraction video game, I'd probably be less

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bullish on it. So I think this is pretty cool. I'm gonna, we need to have like a yes or no thing

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going on here. But I'm gonna say I think I'm gonna do that next week. Lindsey, go ahead.

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This is too bold. For me, I think that there's been a flood of recent gaming media content, like

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we have Last of Us and Uncharted coming out. There was just arcane, which is all been successful to

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its credit, but we're getting to a point where there's a lot of it, and I don't know that any of

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them. Other than are keen, like there's been a lot of, I mean, we all know a billion gaming movies

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that have also failed. So I don't know that I, I don't know that I am super confident that this is

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like a smash hit knock it out of the park. But like Jimmy said, I do appreciate the risk. And if

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you have the money, and you're gonna take the risk, you might as well go after one of the best

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studios, and really go for it. So it's it's a little bold for me, but I certainly hope it works

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out for them.

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I mean, this is the Russo brothers Right? Correct me if I'm wrong, these guys literally invented the

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Marvel Cinematic Universe, like whatever project they do is going to work. It's going to get bought

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by some, you know, Netflix or whoever, even if it's not very good, it's probably going to make

Unknown:

money. So I was thinking like,

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would you not if it was your own personal money like you would invest in this. I mean, I would be

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putting, I'll be putting as much as I could into this project, if I had the opportunity to do so. I

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think when you bet behind creatives like this, like you're, you're you're bound to win in this in

Unknown:

this world, just because I think you could win even if the project itself loses. Like I don't

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necessarily think the whatever content they create has to even be that good for this actual company

Unknown:

to make money and you to make money on your investment. And I would just know that this isn't

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the first time next ons done something like this. I had remembered that this was something they had

Unknown:

done in the past. So I google that quickly. And they actually have a history like last year in

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March, they invested $1.5 billion in Hatboro Bandai Namco, Konami and Sega and basically it's

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just they have a bunch of free cash flow and money laying around and they like to invest it kind of

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in companies with strong global IP that they think are undervalued. To me. That's a little bit more

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often.

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Like I would rather if I were an investor next on it rather than return that money to shareholders,

Unknown:

or reinvested in the business. But in terms of them investing here in a private round with the

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Russo brothers like I, this is this is a homerun to me, I think I agree. I really like this. And I

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think, you know,

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to your point, they only only needs a couple of one or two hits here not even hits. And the

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valuation seems very, very reasonable in a world, you know, where movies and games can easily

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generate billions of dollars and with necks on behind it. And you know, the Russo brothers and

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this kind of power behind them. I really like this. But you mentioned Sega, Jeff. So this is the

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next one I'm going to bring up at Sega in the news. And the headline here is Sega sites fan

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backlash, in surprisingly cautious take on gaming and fts. It says if it is perceived as simply as

Unknown:

simple money making, Sega would like not to proceed. So, you know, after the reaction, if you

Unknown:

remember to Ubisoft's kind of, you know, NFT integration into their games, Sega has taken a

Unknown:

more cautious approach. They've cited negative elements in quotes. It's they've said they need to

Unknown:

carefully assess what will be accepted and what will not be by the users.

Unknown:

They also said they would like to try out various experiments. And they've already started many

Unknown:

different studies and considerations in the space, including so called Play to earn games. We've

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talked at length about play to earn. Is Sega here taking the right approach, or, you know, Will

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history say that they were too cautious. Jeff, start with you. I think they're taking the right

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approach. I mean, we've seen this negative backlash a number of times. And if you're

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interested in this kind of topic, I mean, this is another plug for metal business. I mean, this is

Unknown:

this is what we talk about, for the most part on that podcast. So please check that out. I think

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we've discussed this on a couple of those podcasts, I'm starting to think you know that

Unknown:

there's sort of two separate communities and you have gamers and then kind of crypto enthusiast and

Unknown:

the early adopters of these new blockchain and web three games are going to be the crypto enthusiast

Unknown:

and not necessarily the hardcore gamers that are fans of Sega and play at Sonic, you know, 40 years

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ago. So I do think that they're probably smart to dip their toe in. And some of these bigger triple

Unknown:

A studios are going to have to either acquire teams and IP and content that resonates with this

Unknown:

other group of kind of crypto enthusiast or maybe create different brands like doing it in their

Unknown:

existing games like a Sonic or block blockchain web three version of Sonic is going to tank and

Unknown:

the community is going to hate it. So yeah. Lindsey, your thoughts on on Saygus tepid approach

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here. I don't think that taking a measured approach to such an amorphous space is necessarily

Unknown:

a bad thing. They're indicating that they're gonna put feelers out and try different things and see

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what works best for their community. I don't know why there would be such a backlash to that kind of

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thing. Jimmy the Sega just care more about their, their, you know, their gamers than Ubisoft, does.

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They care too much about their gamers, this is a very vocal, loud minority, and gamers make a stink

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about a lot of things. I think, if I'm a business, then I should do what makes my business money.

Unknown:

Right? I mean, I think what the joke here is that Sega is trying to say that they're not going to do

Unknown:

something in authentic which is another word that we hear often. But Sega there's a lot of money in

Unknown:

NF T's right now, there's a lot of hype and FOMO and all these things. We've seen we've Aton and

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Burberry do it pretty well and kind of interesting with those mobile games. And so Sega has has some

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really cool IP they on the sonic movie, The second one's coming out this year. So they're kind of on

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a relative hot streak. And I mean, relative to them. Why, you know, I just, I didn't care for

Unknown:

that comment, because just do what you think is going to appease your audience and, and generate,

Unknown:

I don't know, profit for your business. Why would you listen to like the one guy that's yelling,

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this sucks.

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Wow. I mean, you're right. It could be a very, very vocal, you know, very small minority. It's

Unknown:

good point. And maybe maybe they're making a mistake as a consequence, but you know, I don't

Unknown:

think anyone long term there's still so much opportunity. I don't know if anyone will fault

Unknown:

them for taking a more measured approach. They may not win as big right if this pans out to be the

Unknown:

next big thing. But you know, the cautious approach doesn't doesn't also doesn't seem like a

Unknown:

terrible terrible idea. Guys, one last one here and I love this one because it's another you know,

Unknown:

profit was right moment.

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And this is I was I feel Spencer I feel like has been on a tear with some of his commentary around

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gaming. Obviously, he's the head of Xbox at Microsoft. And And here he says the headline is

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Netflix is moving into games in a very smart way. Phil Spencer says so I'll just read the first

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sentence as Phil Spencer thinks Netflix is smart for leveraging its successful streaming business

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and jumping into video games.

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He says I think it's smart what Netflix is doing. They're buying some studios. They're learning

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about the creative process of interactive entertainment. And I think it's a very smart way

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for them to move into the space. He says,

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Xbox has taken a page from Netflix's book with Xbox Game Pass. He says from a streaming

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standpoint, Xbox Game Pass, which has long been popularly called the Netflix for games, something

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Spencer doesn't disagree with. He says from a streaming standpoint, it is in other words, the

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Netflix for games, I'd say the difference for us is in the business model of you can buy every game

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that's available on the subscription, which is a little different than a music subscription or a

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movie subscription. Spencer says the transactions business is still Xboxes biggest business and

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bigger than subscriptions though he says subscriptions are growing faster. So I'm curious

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what you guys think of Phil Spencer's evaluation of Netflix's approach to gaming. I know we had a

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conversation, long conversation on a previous live stream about you know, did we think Netflix was

Unknown:

being too careful not jumping in big enough not doing things big enough? Phil Spencer seems to

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think this again, more measured approach. Maybe that's the theme of these last two stories is the

Unknown:

right one. Jeff, what do you make of Phil's commentary here? Given that in some ways Netflix

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could become a competitor to Xbox Game Pass? Well, you so you sort of Stole Stole my thunder a little

Unknown:

bit. I won't get into too much about my thoughts on Netflix, because we have covered that a lot in

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the past, I was on the opposite side of you the profits. So I am in the position of disagreeing

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here with Phil Spencer, I don't think Netflix has done enough to make a big splash. Having said

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that, I am not surprised that Phil Spencer is saying this given that Netflix could potentially

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become a big competitor if say they went out and bought an Activision Blizzard or, you know, a Sony

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or something like that.

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So Phil Spencer's kind of praising them for not coming and competing with him.

Unknown:

So yeah, I mean, I think it's I generally agree with Phil Spencer, I think he's obviously a very

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well respected industry, I don't necessarily agree with him on this take Netflix going in big would

Unknown:

have been a riskier move. But I think ultimately, if they want to do anything really meaningful,

Unknown:

that impacts their actual business in game, you know, their overall enterprise value. What they're

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doing now is not going to make a make a difference. It's it's kind of nice, not so they

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need to make a bigger move. Lindsay, were you on the Phil Spencer view on Netflix here? Well, he

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clearly listened to our live stream when I said that it was great that Netflix really says games

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and can collect a bunch of data on the game industry in the users and try to figure out how

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they could make a big splash. So obviously, he's listening to me, which I very much appreciate.

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Phil, well,

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for Lindsay's consulting time, yeah. The invoice it will be sent to you. Please respond

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accordingly. Thank you.

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Jimmy. Hello, I thought was clever about this was, you know, seemingly an article about Netflix, but

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it just kind of goes on to praise a lot of Microsoft's products and approaches to things.

Unknown:

So, you know, I don't really have much more to say I don't think besides Jeff and Lindsey, other than

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we've talked about Netflix at length, I think they're different target audiences. And I just

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thought it was a funny way for him to be like, oh, yeah, they're doing it right. And by the way,

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here's everything that Microsoft does and why it's, you know, why we're different and why we're

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killing it to look, I obviously, it's nice to see him praise, what is a would be competitor. I think

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he's, he's always been well respected because he speaks you know, his mind. And I think he's just

Unknown:

very insightful in terms of the gaming industry in general, obviously, given how long he's been in

Unknown:

it, and what he's built.

Unknown:

But you want my tinfoil hat theory that we may see. Phil Spencer going to run Netflix's gaming

Unknown:

and build Netflix's gaming business? Just a tinfoil hat theory. But it's not an impossible,

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right? It's not a market down.

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Down. Okay. I think if he goes anywhere, if he goes to Activision, I think he's one of the few

Unknown:

guys that can can credibly take over from Bobby, and actually be an improvement.

Unknown:

Assume a challenge leaves or gets. Yeah, yes.

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And, you know, the challenge of a sinking ship might be might be an interesting one for him.

Unknown:

Right? So he you're right, that may be a very attractive move. But Netflix also has deep

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pockets, you know, could attract the guy like Phil, if they really get serious about gaming. So

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that's an interesting one to watch. guys, that wraps up this week's episode.

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All right, everyone.

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I hope everyone enjoyed it. A couple of reminders. We do this every Wednesday evening. We started at

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8:30pm. Eastern time. I

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would love for anyone who listens who watches if you watch it in as a VOD after the fact, bring

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your friends, bring your family bring your colleagues. The more the merrier here. We we'd

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love to see new faces here asking questions in the chat making comments getting in our faces. It

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makes it so much more fun at Stay tuned for the episode of business of esports, which comes up

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tomorrow. And every single week guys Monday and Tuesday, you get new episodes of meta business and

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met a woman. Make sure to subscribe to those two podcasts as well. They're completely different

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podcasts from the business of esports. So you have to subscribe to all three you can't be a fan of

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just one you have to subscribe to all three it's a package deal. So make sure you go and do that. I

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know it says great episode guys and gals appreciate it as always, signups thank you so much

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for coming. We really appreciate you having here all of you guys even if you're lurking. We really

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appreciate having you guys go follow us everywhere. Busy sports or business of esports on

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YouTube, on Facebook, on LinkedIn, on Twitter, on Instagram on tick tock. Literally every social

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platform under the sun we put all kinds of content out and some of its original content too that you

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don't get anywhere else. So make sure to follow all our socials. And as always guys, we will see

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