Web3 Was a Failure…Will Gaming Save it? with Chris Hewish, President at Xsolla

(Chris Huish at 00:00:00) Today, we're talking to Chris Huish, President at Xsolla, about how Web3 tech is changing the video game industry. You're listening to Joel Beasley, Modern CTO.

(Joel Beasley at 00:00:15) The topic we have for today, though, is Web3 and what it's doing to the gaming industry. And so I'm super excited to talk about that. You're deep into the Web3 world. What's going on right now?

(Chris Huish at 00:00:26) So, as we know, Web3 has had a rocky road where there was a lot of hype a few years ago. There was a lot of investment that poured in, and people were really focused on trying to make that killer Web3 app or game or product, whatever it might be. But, unfortunately, people were really kind of focused on the wrong thing, in my opinion. They were focused on more of the speculative nature, the play-to-earn, make-a-quick-buck kind of approach, and no real fun game actually emerged. There was Axie Infinity, which was close, but that kind of collapsed as it was really play-to-earn. It turned out to be a bit of a pyramid scheme for players. And, you know, it's been a technology that initially people were really excited about and assumed that the technology itself could be stood up to kind of make its own market within the gaming ecosystem, forgetting the fact that at the end of the day, whenever there's a new technology, it needs to be paired with just some really fun gameplay in a way that the technology makes the gameplay additive, not that the gameplay is subservient to the technology. So I think, you know, the first round with Web3, they had that. It was technology first, gameplay second, and that just didn't fly. And there was also quite a bit of friction. I understand that you're familiar with the space, so you well know, probably better than I do and many people, that setting up a wallet was really difficult.

(Chris Huish at 00:02:12) Trying to figure out how to buy and use crypto was not easy for the average person. So all of this, there was a lot of friction to get in, and then once you got in, it wasn't really all that fun. So that's where it's been. And where it is now, what we see happening is there has been a shift. We're kind of coming out of that first phase, and people now recognize, like, hey.

(Chris Huish at 00:02:37) Web3 is this really cool technology that offers some really interesting capabilities when it comes to decentralized ownership, to DeFi, to new types of experiences within games and within marketing for games. So why don't we look at Web3 as a way to do some really cool things under the hood that's going to bring it instead of being front and center, bring it down below, focus on good gameplay, use Web3 to provide enhanced functionality, remove the friction, make it really easy to set up so that you don't even really realize you're using Web3. You're just getting cool new capabilities. And that's kind of directionally what we're seeing happening, which is reinvigorating, I think, the potential for this market.

(Joel Beasley at 00:03:30) And a lot of people in the SaaS world, when they hear Web3, they have a certain number of things that pop up in their mind. But you're in the gaming world mostly. So how does Web3 express itself in the gaming world?

(Chris Huish at 00:03:42) It is not NFTs. Okay, I mean, that was part of that initial hype where, again, it was very speculative, and it was like, oh, we'll get these NFTs that maybe don't really have any value. Or there were technology-driven ideas that just did not really have a market fit or didn't align with the reality of the market. What do I mean by that?

(Chris Huish at 00:04:08) I mean things like, oh, you're going to get an item in one game and be able to have portability and take that item from, you know, Fortnite over to League of Legends, right?

(Joel Beasley at 00:04:19) And—

(Chris Huish at 00:04:21) And it's like, come on. Epic and Riot are not going to create an interoperable system. You know, maybe someday, but not now. And the technology to make that happen easily just really, other than the portability of the digital asset, the technology within the games themselves to be able to use assets from other games just isn't there. So, you know, I think there were some big ideas, promises that really didn't work. And, you know, what does it mean now for games is, like I said, starting to unlock capabilities that are under the hood that reinforce existing gameplay that's fun.

(Chris Huish at 00:05:01) For example, creator economies. You know, you see on, for instance, Roblox, you have these creators that are making their own experiences, their own games, their own assets, and they're having great success on Roblox. Web3, if it were to be integrated, would allow them to take all of that and go to other platforms or, you know, get royalties as those assets move between players and things like that. So, you know, that's some of what we see coming. And then on the marketing tech side, offers and digital rewards and things like that are pretty exciting as well.

(Joel Beasley at 00:05:38) So is the Web3 component of the Roblox creator economy the fact that they have a creator economy, or is it the potential portability?

(Chris Huish at 00:05:46) So the fact that they have a creator economy affords the opportunity to introduce Web3 elements that could further enhance that already existing economy, right? Versus, hey, this is a Web3 company somewhere that's creating some product, and then they need to get a game that has a big user base that can take advantage of it. You know, I think what we're seeing is the future is let's look at existing user bases, existing game ecosystems that are doing cool things that could be further enhanced with the introduction of Web3 functionality, which players could engage with or not.

(Chris Huish at 00:06:30) They don't even really realize the difference. It's just a new function or capability within the game that they're already playing. And that, I think, is where the real opportunity lies.

(Joel Beasley at 00:06:41) And you're doing a series on this, a three-part series on your podcast. Is that right?

(Chris Huish at 00:06:45) We are. So The Business of Games is the podcast. Thank you for the opportunity to give a shout-out. And we, you know, we do look at different topics, different things that are impacting the business of games. And we wanted to do an episode on Web3, and we started working on it, and one of the people on my team, you know, he said to me, he said, this sounds really amazing. It's interesting, but I don't know half of what you're talking about. Like, I don't even know what these words mean. And he said it would be really great if you could do kind of an introduction or a 101 on Web3, and that led us to the point of saying, you know, maybe we should do a series where we'll do the first episode kind of just explaining what the heck it is because a lot of people don't know. You know, what is an NFT, a non-fungible token? What does that actually mean? And then do an episode about kind of what's currently happening and then another one on what's coming.

(Joel Beasley at 00:07:44) And is that three-part series already live?

(Chris Huish at 00:07:47) The first episode just dropped this week, and then we'll be dropping the others over the coming, the next couple of months. And then we surround each episode with one, two, sometimes three individual long-form interviews where we'll have guests that are on the main episode where we'll use their sound bites, but we'll record them separately in long-form interviews, kind of conversations like you and I are doing right now. So it creates for each, quote-unquote, podcast episode, there's usually three pieces of content: the main part, which is kind of a 30-minute overview on the topic with sound bites from guests, and then two or three 45-minute or so longer interviews with individuals who go deep.

(Joel Beasley at 00:08:37) Excellent. How can people find that again?

(Chris Huish at 00:08:39) You can find that on any of your favorite podcast spots like Spotify, Apple Podcasts. We have a page on xsolla.com/podcast that also links out to it, and we're on LinkedIn as well. So The Business of Games is the name.

(Joel Beasley at 00:08:56) What is the cold start problem?

(Chris Huish at 00:08:58) Oh, yeah. So the cold start problem is basically with Web3, and again, this is kind of what has happened to date. Companies create these cool new pieces of functionality, these new products, but there's nobody to use it, right? They're trying to put them into, they're trying to—it's a product that's trying to find a market.

(Chris Huish at 00:09:25) And what we mean by the cold start problem is if you create something really great and put it out there, that's the product side of it. But the go-to-market side of it is how do you get mass adoption, and how do you kind of cold start that process of mass adoption? And that's been a problem that really hasn't been addressed yet on the Web3 side, because the Web3 products or the Web3 games have really been focused on a very, very small segment of users, and there's not enough of a user base there to lead to a sustainable, sort of self-propelling market. And that's what we mean by the cold start problem. So we see that as another issue sort of facing this revitalization or the return of Web3, where you have people figuring out new use cases, removing the friction, making it something that is actually beneficial to the average player. That's all great.

(Chris Huish at 00:10:26) That's the product piece. But how do you get all of that into the hands of millions of players, right? Not just 50,000 players or 100,000, but how do you get it into millions of players' hands? And how do you encourage them to embrace it and use it for the first time and kind of cold start that whole ecosystem where we believe that there is some very, very valuable functionality that does improve players' experiences and lives as well as developers. It's just getting people to use it that first few times to get it, you know, self-sustaining.

(Joel Beasley at 00:11:02) And I'm assuming the way you do that is just magic.

(Chris Huish at 00:11:05) We have some ideas. We have some ideas. But I think whoever solves that is really going to be somebody that helps to move that market forward in a meaningful way. And part of that shift is, as I mentioned, how do you shift from building something that has no market to building something that serves an existing market? Because it's much easier. You don't need to cold start, really, if there's already an ecosystem in place that you're plugging into versus you're building something and you have to build your own ecosystem. You know, then you have a real cold start problem.

(Chris Huish at 00:11:46) So I think—

(Joel Beasley at 00:11:47) I learned that in startup world. So if you're trying to do something entirely new, there's not a budget line item for it. So you have to go through the effort of getting the company to actually carve out a budget for it. And that is incredibly difficult often, especially if you're only slightly better or slightly different. It's really hard to do that.

(Joel Beasley at 00:12:10) That's why I've always liked, how do we eliminate line items from the budget, or how do you make something that's so much better that people love to such a degree that they're just like, switch and take my money, you know?

(Chris Huish at 00:12:24) Absolutely.

(Joel Beasley at 00:12:25) Objects between games is the example I think that you gave for the Web3 thing, right? Is there any other examples that you've seen have this cold start problem or they've come out and they just didn't really take off?

(Chris Huish at 00:12:39) Well, I mean, you could almost say it about all of Web3 on the first time around.

(Joel Beasley at 00:12:45) The whole thing was a dumpster fire. Yeah.

(Chris Huish at 00:12:48) Well, it wasn't the technology itself. It was just the implementation. And, you know, I think because it was focused on these ideas that, you know, like portability of items between games from different companies, it's great in theory. You know?

(Chris Huish at 00:13:08) Ready Player One, you know, awesome. The reality, though, is that the market isn't there in the sense that, you know, companies are not incentivized to do that. The technology isn't there to, you know, automatically make an asset from one game work in another game, whatever it may be. So, you know, I think that certainly was something that didn't work.

(Chris Huish at 00:13:31) The idea of NFTs as just speculative investments versus, you know, if you make a unique item in a game that's portable, it still needs to be fun, and it still needs to be meaningful to the player. I think that was kind of a miss a lot of times the first time around. And then just the economies. The economies, you know, there were no real guardrails around them. There were no regulations in place to protect players.

(Chris Huish at 00:14:00) So you got things like rug pulls, and you got these unregulated markets that ended up being pyramid schemes or kind of collapsed once the limited user base was exhausted. So those were things that didn't work before, even though the underlying concepts, I think, are interesting. And if, you know, having unique items that you own is pretty cool, you know, when you can then potentially trade or sell them however you want on regulated marketplaces, you know, so that things are safe. That's pretty interesting. And we know that that already is of interest to players when you look at games like CS:GO where people are selling skins, you know, there, but not necessarily in a way that all games could emulate, you know, because not everybody's going to build their own marketplace and manage it, much less enforce, you know, fairness within it.

(Chris Huish at 00:14:57) So I think that's, you know, a big thing. And just the more and more that user-generated content continues to take off and become a bigger part of games—you know, even Battlefield 6 now has a UGC mode in it. And, you know, this really is a key component of games going forward. It's not just limited to Roblox and, you know, Fortnite and whatnot, but more and more games are embracing UGC.

(Chris Huish at 00:15:21) So, you know, Web3 has a lot of opportunity there to, you know, basically ensure creators get royalties for things that they create as they move throughout the ecosystem of a game. So I think that's all pretty interesting and, um, yeah. And there's much more, but I'll pause there.

(Joel Beasley at 00:15:41) So I'm from the outside, right? Because I was a gamer until I had kids, and now I play Sims essentially with children. But I got to see, you know, the past 20, 30 years of it.

(Joel Beasley at 00:15:55) And the biggest changes for me were online gaming that made everything different. And then from there, I guess the other two that I saw that were huge impacts—like, when I saw them, I say, oh my gosh, like, this is crazy. The cross-platform gaming, the fact that I could be on an Xbox or a PC or whatever it was. That was really interesting to me. And then the last one was watching my kids ask me, hey.

(Joel Beasley at 00:16:25) Can I have $5 a month to join this guy's Minecraft server because he built this special game inside of—and I'm like, I told him no, of course. But I'm sure you love that. But that was a huge—it was interesting. It was, like, really kind of cool because I told him, I said, what you can do is you can become a creator, you can make your own stuff, and you can use any of the money from your creations to buy other creations. But I'm not giving you money to buy creations.

(Joel Beasley at 00:16:55) And so that's what they're working on right now.

(Chris Huish at 00:16:57) Perfect. Exactly. And that's, you know, and that's a great example of a way that Web3 or blockchain, right, could enhance and create more opportunity around what they're doing. So, you know, right now, when you're doing that and you create the Minecraft server and you do everything, you know, it kind of lives within Minecraft. There's a whole gray area of secondary markets where, you know, people are buying and selling assets and doing all kinds of things that they've built for Minecraft outside of the main rules, right, of the game.

(Chris Huish at 00:17:32) So you could get banned, you could get scammed, any number of things. With Web3, you know, smart contracts and blockchain ledger and all of that and crypto, it becomes much safer. And then with some of the regulations that are pending out there, you know, you could suddenly have safe secondary markets where people can go and thrive, right, as creators and then ensure that whatever they create, they're continuing to get paid for and proper attribution sort of as it goes from player to player.

(Joel Beasley at 00:18:09) And then, I've got, I kind of want to sum all this up, this whole section up. But before I do, just one piece of clarification. Was the user generated content considered Web3?

(Chris Huish at 00:18:23) No. User generated content was not. So that was, okay, yeah, Web2 just on a traditional database, right, is where a lot of that is.

(Joel Beasley at 00:18:30) So if my wife asked me, which she won't after the interview, hey, what's Web3 all about? My current situation, which we may need to modify after I share it with you. My current understanding is it was this cluster of new technologies that mostly failed, but were really interesting to watch fail. Is that right?

(Chris Huish at 00:18:52) I would say that I would modify it slightly. Okay. The technology did not fail. The use cases, the go-to-market implementation of the tech.

(Joel Beasley at 00:19:02) Came out and were interesting. Yeah. And what were the technical, like, the actual pieces of, is that the concept of NFTs and the concept of blockchain, like, these things?

(Chris Huish at 00:19:13) Yeah. It was the way that they were used and implemented. Okay. And they were implemented in ways that were either not realistic, right, they just didn't were not adopted, or they were implemented in a way that was speculative and focused on making money versus how could this technology enhance what you're doing. So it just created a real, it was just a bad use case and implementation case across the board, you know, whereas people weren't really thinking about, I have a fun game already. How can Web3 enhance my players' enjoyment and the value they get from my game? And I think that's the paradigm shift that we're seeing now where it's like, okay, wait a minute. Blockchain is a really cool technology. Web3, all of that, which is just basically meaning that, you know, things are decentralized and people can have digital assets that they own versus the company that they acquired those assets from still owning them. And then that opens up the door for things you could do.

(Joel Beasley at 00:20:28) I'm tracking. Web3, great set of technologies, but the way they all got applied to gaming and the explosion of Web3 didn't quite work out.

(Chris Huish at 00:20:41) Correct. Correct.

(Joel Beasley at 00:20:45) Hey. I think we did it. I have achieved an understanding.

(Chris Huish at 00:20:47) Okay. Alright. Yeah. Yeah. Yeah.

(Joel Beasley at 00:20:49) I feel good about it because I was trying to, they kind of got blurred for me for a minute, and I was trying to really pick them apart. Now let's talk a little bit about the crypto legislation right now. There's the Clarity Act making its way through Congress. Are you familiar with that?

(Chris Huish at 00:21:04) I am. I actually went up to DC during Crypto Week a few months ago and sat in on the Senate Finance Committee hearing where they talked about it and went kind of on the policy walk side of things. So that was interesting. But, yes, definitely familiar with it.

(Joel Beasley at 00:21:22) Were you able to stay awake?

(Chris Huish at 00:21:25) It was tough. Oh, boy. Those senators, they can talk. Oh my goodness. When, you know, they're making their statements to get on the record, and it was, I mean, this is a sidebar, but it was very interesting to see the process where I went into this finance committee hearing, which was, you know, ostensibly, it was to discuss the Clarity Act, the bill, the language of it, and sort of get into the technicalities before that would be voted on and then presented to the full Senate for consideration. And what ended up happening is each senator kind of had a position that they kind of wanted to speak to, and it was very much almost like campaign trail stuff where they weren't really talking very much about the substance of the bill. Some of them did, but a lot of them were using it as a platform to bash the other party. And it was, it was our government in action, man. It was something. No. It's not. Up getting through. So.

(Joel Beasley at 00:22:30) It did, did what you want to happen go through?

(Chris Huish at 00:22:33) It passed the Finance Committee. So the Clarity Act itself, just to back up, is a bipartisan House bill that was passed in July. And it's designed to provide a clear regulatory framework for digital assets. And, basically, it'll help regulators understand what to do in the world of crypto. It'll help investors understand what they can invest in safely, what they can't. It'll help developers and players understand how to use crypto and Web3 in ways that are compliant. And what I mean by that is, you know, without treading into the world of getting into securities and, you know, speculative kind of financial models where you need to be licensed to do that. And a lot of Web3 is not that, and we need these regulations to identify, like, hey. A digital asset in a game is very much different than a stock, right, for a company. So if you're selling a digital, if you're selling a stock, you need to be licensed. And if you're selling just a digital asset, a sword in a game, well, you don't, you shouldn't need to be licensed for that. Right? So it's this kind of ambiguity, which has also tripped up that first implementation a little bit, and some companies were fined. There were, you know, people got kind of smacked down by the, was it the SEC or the FTC? All of them. You know? Yep. Yeah. So, so, it's passed the House. It was voted on on the floor, and it's over in the Senate. It passed their Senate Finance Committee or Banking Committee, and it's up for a vote on the Senate floor, which, at one point, everyone thought that would happen in December. But with the government shutdown and some last minute stuff behind the scenes, because it was bipartisan, but there's, I believe, 13, the Republican party fully supports it. There were 13 Democratic senators that supported it, but they just want to ensure that once it gets passed, that when the rules get translated from, you know, these regulations to actually written out, that it's a bipartisan group that does that. So there's still some wrangling that's going on there. So it may push into Q1 of next year, but the understanding is once it passes the Senate, it'll get signed immediately into law by the President.

(Joel Beasley at 00:25:00) That is wonderful. I mean, this is something that I'm not necessarily surprised that it affects you, but it was something we've been looking at for a long time because we own the Bitcoin mines. And you can't, the banks are all really finicky about, like, we want to scale. We want to scale up the mines and you need, like, lots of capital to do it. And if we were building a 20-story building, that's completely standard normal thing. The bank's like, good. Your math checks out. You have the industry expertise. You've got the collateral. Here you go. Not the case with a Bitcoin mine. The banks are, like, scared. They're, like, we would love to. Like, the math looks great, and this looks like a good idea, but we can't do it because we're just not sure. Or the ones that are have programs that are backed by the SBA or the USDA or the energy, even the green energy credits because we're, like, reducing ethane from being burned and instead putting it to work. All those institutions are still like, hey. We're waiting on this thing to pass.

(Chris Huish at 00:26:04) Yeah. Yeah. You hit the head on the nail. There's that, that is a great example of how the lack of clarity around, you know, how to work with cryptocurrencies and blockchain and all of that from a regulatory standpoint impacts the business side of things. And, you know, what we've seen in games, and perhaps this is the case with mining as well, is investors are still investing. It's just going offshore, and it's going to places, you know, that do have regulations that are clear and create a safe environment to be able to, you know, work in. And, or if it's not going offshore, there's offshore money that's not coming here. It's going somewhere else to build up this, you know, to build businesses. So that's a big hit just on jobs and investment and innovation here, you know, within the US that, you know, we're missing out on.

(Joel Beasley at 00:26:58) Absolutely. Yeah. So, I mean, get back to work, guys. Yes.

(Chris Huish at 00:27:04) Act late.

(Joel Beasley at 00:27:05) Their jobs are so easy.

(Chris Huish at 00:27:07) Yes. I need.

(Joel Beasley at 00:27:08) They're so easy.

(Chris Huish at 00:27:09) So easy. And I need another excuse to wear a suit in front of the Capitol Building and take a selfie and post it. So.

(Joel Beasley at 00:27:14) But congratulations on staying awake. Yes. That's like those things are dry. I could just see you, like, post interview, like, wearing a Red Bull sweater. Be like, we did it. Thanks to Red Bull. We stayed awake through the entire Finance Committee sub meeting.

(Chris Huish at 00:27:29) It was, it was supposed to be, like, two hours, and I think it ended up being close to six. It was just, wow. And they took a break in between. It was just, I was like, wow. And, you know, you guys are just trying to get your sound bites and get your stuff on the record, and not, you know, there was not much roll up your sleeves, and let's figure this out, which was, it's the process. Right? You know?

(Joel Beasley at 00:27:52) Well, it is the process now. And speaking of which, oddly enough, this technology could be the backbone technology that allows us to move from an elected representative type of democracy to, you know, like a direct, I'm not saying if that's good or bad. I'm saying that the technology would be there, like it used to be we would elect these people because it was wagon days and we weren't going all the way up there and we needed someone to represent all of our interests in the town. Now, we all have these devices in our hand where we can represent our interests and it's like maybe there's a better, I'm not advocating for a specific system. I'm saying maybe there's a better system than what we have today.

(Chris Huish at 00:28:29) Yeah. I mean, look. That's the whole idea of the House of Representatives. Right? You have the Senate, which is a smaller group, but the House of Representatives is supposed to be the people. Right? And to your point, all the people were not able to participate in real time. You know, now we are. And, right, having blockchain and having your vote or position on the ledger or, you know, even gathering consensus from constituents if people have it. You know, you're voting with a digital, you know, unique digital token that's your vote. You know, that there's so much.

(Joel Beasley at 00:29:04) Absolutely.

(Chris Huish at 00:29:05) Right? There's so much that could come into play there. And then having, you know, history and provenance around that as well to kind of, you know, this is where it gets interesting from a, you know, when you start to talk about user acquisition and marketing, you know, the fact that people's digital identities can have, you know, history to them now that, you know, you don't have to guess about what somebody's interests are. You can just see that from their, you know, their digital profile if you go that, if if we, you know, go that far, because you could see a ledger-based history of, you know, what they've engaged with or not. And that's a whole ad tech side of it.

(Joel Beasley at 00:29:42) Dude, the ad, the data, the ad tech companies have on you is wild. It is so much more than you think.

(Chris Huish at 00:29:51) It is. It is. And you can't get access to that, whereas, you know, with, you know, getting into a Web3 environment, you know, technically, you could have your own digital, you know, profile that has everything, and you would have all of that information as well, at least. But that's starting to get out there into next gen land.

(Joel Beasley at 00:30:14) Yeah. It is. It is. There's a good interview I did a few years ago with Sir Tim Berners-Lee, creator of the World Wide Web, where he described what the future looks like, and it was very similar to what you just said. So you're tracking. Let's talk about the Google Play Store. The government is bringing the hammer down on them. They're going to open it up, I think. Well, that's tomorrow, isn't it? For the 22nd.

(Chris Huish at 00:30:40) It was supposed to be tomorrow, but, last minute.

(Joel Beasley at 00:30:45) Did Google shut down the government to avoid this?

(Chris Huish at 00:30:48) You know, there have been some, I mean, they're AWS outages, so they're not necessarily Google, but you never know what's going on. But, here on the East Coast, we've had some outages this yesterday. But no. It, yeah. We did. There was a judge that granted, I believe yesterday, they granted Google a one-week extension to comply. So the new deadline is October 29, and these were changes that were mandated by a court ruling in the Epic versus Apple case. And it's meant to allow developers to be able to finally bypass Google Play billing, set their own prices, enable alternative app stores, steer users outside of the apps. What that means is the ability to tell a user of your app that they could go to your website to get a better offer, a lower price, a bundle, something unique that they can't get in the app even. So really opening up, you know, the full app ecosystem similar to what has happened to a lesser degree, because the case was ruled on differently. But with Apple, with Google, it was opened up much more to get into the alternative billing and everything as well. But they've been granted this one-week extension, which happens to coincide with, they, Google had appealed to or had not appealed. They had reached out to the Supreme Court. They had petitioned the Supreme Court for an emergency hearing, which was denied. That was a few weeks ago, but the Supreme Court gave them until October 27 to appeal that denial. So now they have time to appeal their denial, and we'll see where this goes.

(Joel Beasley at 00:32:33) But, oh, so it's ongoing.

(Chris Huish at 00:32:35) It's ongoing.

(Joel Beasley at 00:32:35) What about Apple? Did they make the same thing with the Apple billing? Because it gets pretty crazy with the way they run their in-app purchases.

(Chris Huish at 00:32:42) Oh my goodness. It does. So Apple was a little different where they only lost here in the US. They only lost on the anti-steering part of it, and that meant that they have to allow app developers to let players or users know that they can leave the app to go to a website to get more, to engage, also that they can collect information about those players, like their email addresses. You do now have direct link out buttons to purchase from within apps within the App Store. And what that means is, if you're an app developer, you could put a little button in there that says, hey. Buy this item, and that link would connect you to a payment transaction outside of the App Store versus having to use Apple Pay or Apple billing. And then similarly, but excuse me.

(Joel Beasley at 00:33:43) Oh, so people will have to do that. That will be an option then.

(Chris Huish at 00:33:46) It is an option now. And then, oh, it's out now. Yeah. So we actually launched a buy button where you can do that within your app. And web shops are the things that you can go out to to actually see a whole online store and do more. So it's opening up more and more, and this will be a real big shift once the Google enforcement goes into effect.

(Joel Beasley at 00:34:11) Yeah. I think this is a good time to bring up what you guys actually do.

(Chris Huish at 00:34:17) So we do all the things that a game company would need to basically conduct a direct-to-consumer business, and that includes things like we have a payments API that aggregates over a thousand different payment methods from all over the world so you have maximum payment coverage. We have a whole host of technologies to support going direct-to-consumer, like in-game stores, website builders, player identity systems, login systems, player inventory, you know, on and on. And then we also have a number of other products that, we have one called Partner Network that allows you to work with influencers at scale where it's a platform where you have developers on one side, influencers on the other, campaigns are posted on the platform, and people can engage on the platform. We take care of all of that and the payouts and everything. We have marketing technologies like our Offer Wall that allow you to basically put offers out there to either acquire new users, like, "Hey, download this app and get a reward," or to perform quests and actions within a game to get more to help with engagement and retention, and you get special offers for that. So basically, everything you need.

(Chris Huish at 00:35:27) And then behind all of that, we work as your merchant of record, and that means that we're able to handle all that back office paperwork. So taxes, VAT, digital compliance, KYC, which is know your customer, doing things like payouts, doing things like making sure that you're compliant with whatever privacy rules are going on, customer support, chargeback disputes, all the boring back office stuff. So we do all of these things so that our partners can just focus on making great games.

(Joel Beasley at 00:36:19) That's awesome. You remind me of like a Stripe with like a LaunchDarkly type deal. Like, you got feature management type stuff, being able to, you got billing. That's really interesting.

(Chris Huish at 00:36:29) Yeah. Thank you. I mean, it's a great business, and you know, we love it. And we work globally, and it means that I still get to, you know, hang out with the really cool game developers. So I'm happy about that.

(Joel Beasley at 00:36:42) That's what you enjoy doing?

(Chris Huish at 00:36:44) Definitely. Definitely. I'm still a gamer myself.

(Joel Beasley at 00:36:48) You get all the behind the scenes Easter egg knowledge for sure. EA got acquired, $58 billion. That's wild, man.

(Chris Huish at 00:36:57) Wow. That is wild. It really is. It reminds me of early on in my career, I worked with somebody who had been, I believe he was employee number three at EA. This is a long time ago.

(Chris Huish at 00:37:12) And he had gotten fed up and sort of rage quit and forever regretted the stock that was lost. So I'm sure it's, I'm sure this news was particularly painful. But no, EA got acquired by the Saudi Sovereign Wealth Fund, the pension fund, I believe it was. And as you mentioned, $58 billion, which is just amazing. And you know, I think it's, it's an interesting time for these big game publishers. We saw Activision get acquired by Microsoft, and you know, we've seen other game companies get acquired as the industry consolidates at the top. But this one, this one is a little bit different.

(Chris Huish at 00:37:56) Having, you know, the fact it's a sovereign wealth fund is pretty unique.

(Joel Beasley at 00:38:01) Do you think they're gonna buy and hold, or do you think they're gonna make changes? What did Microsoft do with Activision?

(Chris Huish at 00:38:06) So Microsoft, it's not a laughing matter. It's kind of a sad thing, honestly. But they, you know, they chopped it up to some degree where they, you know, look, this is what happens when you consolidate and you go bigger and bigger. You know, the balance sheet, the initiatives on the balance sheet that move the needle on the balance sheet, you know, become bigger and bigger ticket items. And I think what happened with Activision, well, I think there were a number of studios that were closed. There were a lot of layoffs. And I believe that was partially due to the fact that once they were part of Microsoft, you know, your game needed to be a billion dollar a year game just to move the needle, right, on the balance sheet. And if your game's making $100 million, even if it's profitable, what's $10 million or $20 million in profit, right, versus the opportunity cost or the distraction for a company like that? So, you know, the consolidation leads to fewer bigger titles. And love it or hate it, that's just, you know, that's business, right? That's a natural part of business.

(Chris Huish at 00:39:14) So I think that's what has happened there. Also, just, we saw with Call of Duty, it was available day one on Game Pass, which is Microsoft's subscription service. There's some arguments that that may have actually hurt the overall sales of the game even though plenty of people were playing it, but they were playing it off a subscription, which was maybe, yeah, I'm gonna use round numbers here, call it $20 a month versus buying a $60 or $80 copy of the game. So there were some economic impacts. You can argue that those were okay for a company like Microsoft because you were getting more consistent subscription revenue or users that were engaged, whatever. But it did shift the business model. So that's kind of what has happened over at Activision.

(Joel Beasley at 00:40:02) I mean, they're not stupid. They got a lot of money, and they got a lot of smart people over there. They probably saw the, okay, you know, they did the math. They did the math, and they were like, this is the right move, I'm sure.

(Chris Huish at 00:40:14) Exactly.

(Joel Beasley at 00:40:15) Yeah. And then the Saudi sovereign wealth fund, you think they're just gonna hold? It's just an asset in the group, and they're not gonna really tinker with it.

(Chris Huish at 00:40:22) Yeah, I do, actually, Joel. I do think they're gonna hold. Everything that I've heard, and I've been over to Saudi Arabia a few times and great, it really, I was impressed, actually. You know, Riyadh, in the whole country really is evolving pretty rapidly, which is a whole separate conversation. But from my interactions with folks over there, they very much do take an acquire and hold approach. And these acquisitions, I think, they're obviously financial. They're obviously pedigree. You know, there is a desire to be the best and to acquire and work with the best, but there's also strategic elements here. And you know, there's the one piece of it is Saudi Arabia, as many countries who have a single sort of product economy, in this case oil, you know, they're looking to diversify and set their economies up for the future.

(Chris Huish at 00:41:15) And they have identified technology and video games as a market segment that, you know, could grow into something that could be meaningful for their country from an employment and revenue standpoint. So, you know, there is a desire to build a sustainable business, to get companies that are top tier companies that have talent and knowledge that can help build up the homegrown talent. So I think there's a lot that goes on there. But there's also with EA, Electronic Arts, there's the whole esports and sports part of it. And Saudi Arabia has been very active in both esports. They are the only country that I know of in the world that has a government-led initiative and mandate around esports. And they've acquired some esports companies. They're having, they have a huge Esports World Cup event there every year, and I think Esports Olympics are gonna be there. So there's a lot on that front. But then also regular sports, they've been very big when it comes to, you know, F1 and soccer or football, golf, right, other sports.

(Chris Huish at 00:42:29) And EA is a company that is big both in esports and regular sports with games like Apex Legends on the esports side, you know, EA Football, which used to be FIFA, you know, Madden, all of that are big sports games. So I think all of this affords an opportunity for this to be strategic and leverage these things to help other parts of their initiatives for growing their economy beyond just a, you know, "Hey, let's grab an asset and get dividends," right?

(Joel Beasley at 00:43:02) Apex Legends, that's your game of choice.

(Chris Huish at 00:43:04) That is my game of choice. That's right.

(Joel Beasley at 00:43:04) I remember. I remember how to work it in there.

(Chris Huish at 00:43:07) Yep. You gotta get it in there.

(Joel Beasley at 00:43:07) I think that's smart though because they're, yeah, they're single product economy essentially. It's oil. But, you know, with, I'm pretty invested in nuclear. I think we're talking time scales that are like grandchildren type deal right now. You know what I'm saying? Like, I'm not in the short term in the next five years that oil is not gonna be needed. But I do think if you look at things on the fifty to a hundred to two hundred year scale, which when you're a sovereign wealth fund with trillions of dollars, that is how you think. You do think multi-generationally when you're executing strategy and getting involved in other types of energy and making interesting investments that you're passionate about. That's very smart move. Better than just keeping it all as cash, which appreciates, you know?

(Joel Beasley at 00:43:59) Those Americans over there are just printing, just devaluing those dollars.

(Chris Huish at 00:44:02) Yeah. You know, people are still buying the treasury bonds, but we'll see how that goes.

(Joel Beasley at 00:44:07) Bitcoin will save us all. That's the hope. Oh my goodness. Okay. Let's plug that Business of Games podcast one more time. That's just the title. People can type that into Spotify, and your beautiful face will come up, and they can hear all about what you guys are doing in the space.

(Chris Huish at 00:44:24) Absolutely. So the Business of Games, myself and my co-host, Leah Ballantine, you know, yes. So just type it into Spotify or type it in online and you'll find us.

(Joel Beasley at 00:44:36) Awesome. Got a hypothetical question for you. Let's say you're driving down the road and you're at a stoplight and pulls up next to you, Elon Musk. He rolls down his window. He says, "Hey, Chris, I wanna show you something at the rocket factory." You go to the rocket factory. He's got a time machine. This time machine will take you back to your last day of high school where you can give yourself one piece of advice in ten seconds. What would it be?

(Chris Huish at 00:44:59) Buy Bitcoin.

(Joel Beasley at 00:45:01) It can't be buy Bitcoin. Alright. Alright. I'll accept that answer. That's some good advice.

(Chris Huish at 00:45:12) No. I mean, if I had to give myself one piece of advice, it honestly, it would be, as good as things are now, Joel, and I'm very fortunate, and I've had a great career, I think it would be to have, you know, taken the career a little bit more seriously in the early days. And, um, you know, I had a lot of fun when I was younger and burned the candle at both ends. So I think, you know, I've seen some other peers who kind of, you know, took things a little more seriously, and I was a little late to that party, which is fine. You know, it served me well, and it's made me who I am. But I think, you know, I took that for granted that, you know, some of the grind. You know, it's kind of like, it's kind of like your 401(k) or a long term investment with compounding interest. You know, the grind that you do or don't do in your early twenties or through your twenties can pay off, right, long term. So that would be generally kind of, I think, the advice I'd give myself.

(Joel Beasley at 00:46:16) When did you really start to shape up?

(Chris Huish at 00:46:19) Oh my goodness. Alright. So I really started to shape up when I moved over to Activision, and there was a real decision point there where I was working at a game company in Maryland, and I had an offer from this company called Activision, which was only about a hundred people at the time. I also DJ'd at night, as many people do that, but I had an offer from a pretty big club down in DC to go in and be their house DJ. And I had these two offers in my hand. I said, "Okay. Which way do I go?" And to this day, I have no idea why, the thought of this, I was like, you know, the DJ thing is fun. I love it. But I think this video game thing is probably more of a career, and the DJ thing probably isn't really a career. And, you know, so I went that path, and that's where I really started to take things seriously and worked with amazing people in the early days and over thirteen years at Activision, which really was foundational in forming who I am and got me on my career path.

(Joel Beasley at 00:47:26) You've got some good discernment there.

(Chris Huish at 00:47:29) Yeah. Yep. Yeah. For a 20, you know, 25-year-old, I don't know how you make that decision, but thank God I did.

(Joel Beasley at 00:47:36) I don't know. Dude, I've screwed up so much. And honestly, I do get moments where I kinda like look back and I'm like, I should've done this a little bit differently. But I've gotten pretty good at recognizing when I'm in that pattern and just being like, stop it, dude. Go back to the gratitude strategy. Look at what you do have. Be grateful for that, and that will reset me pretty quick.

(Chris Huish at 00:47:59) Yeah. Exactly. Exactly. And that is the right way to look at it because, you know, we can't change the past, and the past is who made us who we are today. And it's our, you know, it's up to us to, you know, how we choose to work with that. And, you know, there's always opportunity.

(Joel Beasley at 00:48:16) Well, Chris, we made a podcast. How do you feel?

(Chris Huish at 00:48:18) I feel great, Joel. I always appreciate talking with you. You've got great energy, and I love the opportunity to come on. So thank you.

(Joel Beasley at 00:48:25) Thank you so much for listening. And if you found this episode useful, please share it with a friend or colleague who you think would get value from it. And if you have topics that you'd like to hear discussed on the podcast, either add me on LinkedIn, or send me an email, [email protected]. Every time I get an email or LinkedIn message, it absolutely makes my day and inspires me to keep going.