Five things we’ve learned about Japan’s games industry, plus how GTA 6 influenced Valor Mortis’ $40 price point

0:00Dr Serkan Toto: This week we investigate the Japanese video games market. Lyrical Games explains its$40 price tag for Valor Mortis and Next Playground secures more funding. Hello and welcome to the Game Business Show. This week's edition is sponsored by Unreal Engine. Were you perhaps too busy making the next hit video game to make it to Unreal Fest Chicago? Don't worry, it's not too late for your team to benefit from the wealth of free technical content that was featured there. There are well over 60 sessions available now on the Unreal Engine YouTube playlist, ready to watch on demand, with more arriving every day.

0:37Dr Serkan Toto: Delivered by both Epix devs and your peers in the industry, including Halo Studios, Unknown Worlds and Riot Games, these sessions cover everything from world building and characters, to optimisation and profiling, and even more. Plus, you can take a good look at what just arrived in Unreal Engine 5.8 and see what's next for the technology. You can watch more of this on the Unworld Engine YouTube channel or check out the links in the newsletter associated with this show. Speaking of which, let's get back to it. So you probably can't tell, but I've just landed in Tokyo for Tokyo Game Show 2026. I've never been to Japan before.

1:16Dr Serkan Toto: I've not seen much of it, but it's a lovely country so far. And we've got a bit of a Japan special for you today. we've got Dr. Sir Kuntoto, a Japan Games consultant and analyst from Canton Games, to chat about all things related to the Japanese video games market and industry. Now, when I think about Japanese video game companies in 2026, two businesses immediately spring to mind, Capcom and Nintendo. Both of them have become poster children of how to do console video games in 2026. Both of them are growing companies who consistently deliver hit after hit after hit. That's no mean feat in this industry.

1:51and i think a lot of that comes down to consistency and let's take nintendo for a moment i really love

1:57Dr Serkan Toto: their zelda direct they did last week and i'm bound to say that because i'm a big fan of zelda but what was interesting to me was how similar the plans for zelda's 40th anniversary are to zelda's 25th anniversary i was there during the 25th anniversary of zelda i did a special edition zelda magazine of mcv i interviewed zelda williams robin williams's daughter who was named after the game during that time and back then nintendo did a big concert they had a game they had merchandise had a lot of activity around their old zelda tiles as well and when i look at what they're doing this time well it's sort of the same stuff there's a concert and there's a game and there's a lot of activity around the old zelda games but they've added to it obviously there's now a partnership with lego there's even more collaborations with other merchandise companies there's now of course a movie you don't get bigger than that as well as some stuff around the museum the nintendo have increased the touch points over the years to become a bigger organization its brands have grown but crucially it's still doing much of the same stuff there's a consistency to it the plans it has this time aren't radically different to the plans it had last time there's just more of it and it goes deeper and Capcom is sort of similar in a way each of its games are bigger and more ambitious and trying new things but they're also very consistent with what's come before so fans know what to expect and they know that they're going to typically deliver and I think there's a safety and a confidence in those businesses as a result of that consistency well as you look at some of the big companies in the west let's take Xbox which seem to radically change their strategy year after year and yes hopefully the plans they've got now are going to stick to you for quite some time but the company keeps changing with each new leadership and that's hard to sort of get your head around both from my point of view from an employee's point of view and from a fan's point of view now leadership is part of that having people in charge that have been there for a while nintendo's leadership hasn't actually changed that much many of the top game makers there were there in the 80s capcom is still run by the same people sony's a bit of an interesting one though and they're also largely a very consistent business with consistent leadership although lately fans have started to feel a bit lost on them and their message used to always be you know for the players that was their big thing but right now whether it's the news around stopping manufacturing discs or the pivot towards and away from live service games or hideo kojima going to xbox a lot of fans are feeling a bit unsettled this isn't the playstation they know that previously consistent company is starting to behave a little bit against what they would expect now these a lot of these are temporary issues i'm sure but i think consistency is more important that people give it credit and i think japan in many ways represents consistency in the video games business but but what do i know i'm just a westerner a gaijin let's talk to somebody who does know his name is dr serkan toto he's a video game analyst and specializes in the japanese video games market you may have seen his name crop up in various articles down the years mostly about japan and i spoke to him about what's really going on in the country and here he is welcome welcome to the show thank you for having me chris is tgs a busy time for you uh one of the busiest times of the year you can say yeah what's it look like what do you do what do you get up to There's clients coming in from finance.

5:03Dr Serkan Toto: They're interested in the publicly traded game companies that we have in Japan. I think it's a record number, globally speaking, even including China. 40 to 50 mobile console game companies are publicly traded in Japan of all sorts, of all sizes. and then the other client group that I have are basically game companies that visit Japan to make business contacts and explore the market, etc, etc. Why is that a thing? Why so many companies in Japan are public? Is it just the age of the industry over there? Yeah, that's one point. I mean, as you will know, the game industry in Japan is extremely mature and there's been a big mobile gaming boom in the middle of the 2010s that basically spawned, like triggered a wave of IPOs.

5:53Dr Serkan Toto: And for Japanese companies, one very popular, maybe the most popular exit strategy is actually going IPO instead of getting into an M &A for several reasons. Actually, I'm naive. Give me some of those reasons. Yeah, I mean, you know, I think one of the biggest reasons is probably the very conservative nature of the big Japanese corporations. they're not as aggressive as European or especially American game studios that want to grow fast that you know want to make sure that the next two three quarters are looking good etc etc so I think that's probably the biggest reason that big game companies are shying away from investing their money into buying other smaller studios.

6:43Dr Serkan Toto: Japan at least from my perspective it seems to be doing very well at the moment. You know, Capcom is reporting record numbers. Nintendo continues to perform incredibly strongly. There's even signs of life at Square Enix. Not really a huge amount of layoffs. In fact, a lot of places seem to be hiring. Is that a fair assessment? Is it all rosy? Yeah, pretty much. Yeah, I think that, you know, if you look at the top eight, you know, the top two are game platform providers, Sony and Nintendo. And then, you know, the six big ones on the software side. Apart from Square Enix and Sega, if you just look at the stock market as an indicator of the stock at the market cap of these companies, six out of the 10 were either near their all-time highs or actually are very, very near their all-time highs right now as we speak right now.

7:38Dr Serkan Toto: So the Japanese console game industry, not so much the mobile gaming industry, but the console gaming industry is doing exceptionally well at the moment. I thought mobile was doing well as well. Isn't it like 70, did you say 70 in every 100 yen is spent on smartphone games? Yeah, so if you look at the Japanese market, a lot of people think about Sega, Nintendo, Sony, the big console players and the big franchises that we have here in Japan. But actually the mobile gaming market is a lot, lot bigger. So Japan is a$17 billion market. At the moment, the yen is very weak, so the dollar size sounds a little bit small.

8:21Dr Serkan Toto: And of that, at the moment, it's around$3.5 billion roundabout are console and over$12 billion are mobile. So in Japan, smartphone is absolutely king. But is it Japanese smartphone games that are doing the business? Because I think you said something like, you know, Chinese-made games are starting to really outmaneuver locally made stuff. Yeah, it has become really one of these stereotypical red ocean markets for the local game makers that we have on mobile. So the market, the addressable market is not really growing that quickly anymore as it used to 10, 15 years ago. And now on top of that, the Japanese mobile gaming providers that we have here, And we have a couple of them that are large cap companies.

9:08Dr Serkan Toto: They are increasingly threatened or, you know, you can even say now overtaken, especially by Chinese smartphone game studios that come here, you know, guns blazing. They take no prisoners and they not only generate downloads, but they also capture a lot of the market share in terms of revenue and profits. Did you say Japan's number one grossing game over the last 12 months was from China? Yes, correct. It's a so-called 4X game, like base building, a little bit action, a little bit strategy called Last War Survival. Oh, wow. So, yeah. That should burst big everywhere. Correct, correct, correct.

9:49Dr Serkan Toto: It's interesting because the China thing is quite interesting because obviously Tokyo Game Show, they don't seem to be present in the same way they were last year. I'm told there's political reasons because of the timings and that kind of stuff, but I don't know anything more to that. yeah since since last year there's been a little bit like of geopolitical tension between the two nations but i think that it does play a factor but i think the bigger factor is that the tokyo game show is really very much focused on console and pc gaming and of course chinese games game companies are increasingly getting into these two platforms also also also in japan but i would say though their biggest impact so far is definitely on the smartphone gaming side.

10:35Dr Serkan Toto: And that side is not really represented at Tokyo Game Show. I think that's probably the bigger reason. Ah, the topic on the show quite a bit has been Chinese games made for PC and console and the shift that's happening there and the impacts having on the global market. And I actually assumed, because a lot of the games are anime style games, that they would be having a more outsized impact on the Japanese sector. Is that what's happening? Is something like that happening? Or is that more of a just a threat on the horizon? Yeah, it is happening. It is happening. I mean, you know, on the smartphone game side, it already happened, I think a few years ago, and it's still ongoing.

11:10Dr Serkan Toto: I think that more and more Chinese game studios, they look at the limited market that they have in China, huge, but ultimately, even the Chinese market is limited. and they look at other markets and one of the biggest ones in the world is the neighboring one, Japan. So that, I think, was the first wave. But I think that now you see also more and more console and PC game makers from China taking Japan very, very seriously. I would say until now, probably also in Japan, the biggest hit, multi-platform hit, you have to say, is still probably, I think, Genshin Impact. at this point in time. But there are others too that are getting increasingly popular.

11:55Dr Serkan Toto: Well, I think as China was investing in, particularly Tencent and NetEase, were investing quite a lot in setting up new Japanese teams with established talent. And it seems they've changed their minds. And maybe, I mean, I know that they might be getting incentivized to support their local industry a bit more. But does that create any destabilization? Because it seemed to happen quite quickly. There seemed to be a lot of investment and suddenly it disappeared. Yeah, it's China speed. to me it's not only when they when they go in it's also when they get out um and uh you know uh you might have seen the news how they uh fired the marble rivals team in the u.s once the t once the game was up and running and they said hey you know we don't we don't need you anymore and they just uh fired them so it's not only limited to japan i would say but yeah in japan there was a little bit of a like a kind of how can i say this like a blood trail of uh game companies that have been exited by uh chinese companies and they make very very fast decisions um and uh what is new now is a little bit of um this kind of like cluster phenomenon right so it's a lot of studios in a very very limited uh amount of time and uh yeah so i think that it's a it's a very very clear that netties and tencent are not as interested in the japanese market as they used to uh three or four years ago what's caused that is it the because it's you know i understand it's quite hard to to sort of fire people in japan and sort of you know it's you know you can't necessarily move fast in japan like you can in other markets is that what it is what's giving them cold feet um yeah so i think that it's ultimately the commercial performance of these games that that really didn't convince uh the higher ups at tencent at net ease i think they didn't manage their expectations.

13:36Dr Serkan Toto: And it was a lot of, I would say, pedigree chasing involved there. You know, don't get me wrong, you know, the people who got poached, they are like incredible game makers. Nagoshi, for example, from Sega, right? I mean, these guys know how to make games, how to ship games, et cetera, et cetera. But I think the expectations were too high. I think that the China speed that they are ultimately expecting kind of at least from their Asian counterparts is not really there um and uh this uh this uh led i think uh nettees and tencent uh to the conclusion that they better you know um get out of the market uh quickly instead of like burning burning more money the games the games didn't perform that's the ultimate reason does it cause a bit of damage though these people are probably you know to see we've seen people from are established, who've been part of companies for decades, suddenly get enticed away by maybe some Chinese money or whatever, and then suddenly find themselves and some of the talent they probably brought with them out on their ear.

14:37Dr Serkan Toto: And I don't know, when you feel about a country like Japan and the market like Japan, where everything's, you know, people get job for life and all that kind of stuff. And then you find people, I don't know, has it caused any damage in that regard? It's a little bit of a trend, you know, that these big names. Harada-san is now working for SNK. Yeah, that's a big one. Which is controlled by Saudi Arabia. So it's not only China. Yeah, I mean, I think that now people got a little bit sour, I think, when they think about quick Chinese money or easy Chinese money, so-called easy Chinese money, or, you know, things of that nature.

15:18Dr Serkan Toto: but I don't think that it's now it ultimately shook the Japanese gaming industry. A lot of people are saying well we told you so right these companies are foreigners they don't really understand the Japanese process of game making and you know what really drives the creators here etc etc but again I think that the effect the overall effect is probably pretty limited. yeah well i wasn't going to ask quite so much about china it's just become a bit of a topic lately didn't you say to me there's pc starting to grow as well in japan yeah so if you look at the overall market the pc uh has now captured as of last year about 12 percent 20 12 and a half percent of the entire market and in 2019 uh that number was five percent oh wow so it's not unbelievably exploding like you know the smartphone game industry exploded in in the 2010s but it's pretty sizable right now and uh what i should also add is that the pc is now finally respected game platform in japan whereas before even the big companies like capcom sega etc etc looked at the pc as a little as a little bit of a kind of like a stepson as a little bit of like this kind of like gaijin gamer platform that is not really popular or not really even relevant in japan but uh that um tide has uh turned was anything particularly triggered that or it's just time i think one big uh trigger was uh the corona um pandemic the second one was very strongly associated with that uh the non-availability of the playstation 5 during that time so if people were to play high-fidelity games.

17:08Dr Serkan Toto: They either would have to reactivate or continue to use their PlayStation 4, their PlayStation 4 Pro, and a lot of them started using gaming PCs instead. Third reason is PUBG became really, really big several years ago in Japan, and the PC was the first platform that particular game was available on. And as another reason, a lot of the Japanese game companies In recent years, Capcom, probably being the first among the biggest ones, started seeing the potential of the PC platform as a game's sales channel and distribution channel. And now you have a lot more Japanese games on the PC, which wasn't the case in 2017, 2018, and before.

17:56Dr Serkan Toto: and that of course motivated local users to say, hey, before I buy a PlayStation 5, or chase a PlayStation 5 during Corona, why don't I just go and buy a gaming PC? That's readily available. And that's what a lot of people did. That's interesting. So sort of Japanese companies trying to reach Western audiences via PC has in turn had an impact upon player behaviors in Japan as well. That's interesting. Okay, let's talk about console. It just seems to be every time I get the Famitsu charts come in, it's just Nintendo. Can anyone challenge that? Not at the moment. I think it's very, very difficult.

18:34Dr Serkan Toto: So Nintendo has an iron grip on the Japanese console market since 2017 when the Switch 1 came out. And I would actually phrase it a little bit differently. I would say that if Nintendo produced another flop like the Wii U, and if the Switch wasn't the super hit it turned out to be, I think the Japanese console game market would have been completely eliminated. Oh, really? As kind of like a segment of the market. I think that even more people would have turned to smartphones and maybe even the PC. And in that sense, I think Nintendo not only completely dominates the console gaming segment here in Japan, with 70 % I think is the market share for all gaming content, but they also saved it back around 10 years ago now.

19:23Dr Serkan Toto: Nintendo fans get very cross with me, even though I am quite a, obviously a Nintendo fan. But they often, because I always look at the lineup for the Switch too, and I think it's missing certain Western appealing games. Nintendo's biggest Western IP is not here. When I look at it, if I try and take it from a Japan point of view, and I look at games like Splatoon and Kirby and some of the big brands they've been pushing, and it actually feels like the opposite. It feels like actually the lineup for Switch 2, from a Japanese fan's perspective, potentially, is actually pretty very strong. Yeah, they know the Japanese market very well.

19:59Dr Serkan Toto: They know the American market very well. Nintendo of America is a very, very old company. And here in Japan, I would say that Nintendo has really found the taste of, especially families, younger people etc etc i mean apart from the franchises that you mentioned pikmin is really big here much much bigger than in the west uh rhythm heaven was a big big hit in japan you know people don't really take these games so seriously especially in the west but these are really big sellers in japan they actually move units too another one is komodachi life i know it's also popular outside japan but here in japan it's particularly popular and i think that nintendo really knows very well, especially during this generation and the Switch 1 generation, what the average mainstream Japanese console user wants.

20:48Dr Serkan Toto: But isn't it all going to change now that Hideo Kojima is making two games for Xbox? Isn't that going to... So talk about that, because that's been one of the stories of the last week. I don't know if it's going to be an Xbox exclusive games or not. It's hard to tell of anything with Microsoft at the moment. But do you think it'd help Xbox in Japan at all? and they tried so many things in the last um 20 years i think it's now it's over 20 years um i think uh that one hideo kojima game will probably not uh sway japanese consumers you know don't get me wrong so i love him so i know a lot of people you know look at him in a certain way about i love his games i love absolutely i'm a big hideo kojima fan but i don't I think that the average, even the high-fidelity, hardcore gamer will probably be swayed when a Hideo Kojima game is exclusive to the Xbox.

21:45Dr Serkan Toto: It will help, but you will probably need a lot more than that. Yeah, I can't imagine the goal is specifically to win over Japanese players, because Kojima's a global... Well, I say big. I mean, Death Stranding didn't do especially well. But then I think Death Stranding was quite a niche thing. It's a weird game. Yeah. you know yeah and um and i and i and i think fizz and od i think are probably a little bit more that's the stuff that people when he was coming out konami when he was making a silent hill game in metal gear solid it feels more like that's the stuff that you know fans have wanted from him from the moment he he well from that point onwards really so the fact that both of them and they're sort of tied with xbox but uh brand wise when i think about the consoles i think about nintendo as being very much the family brand.

22:31Dr Serkan Toto: Like dads love it, mums love it, kids love it. It's very family friendly. And you think about Xbox, I always think very neon green and very online shooters. And I think gamer brand. It's a very gamer brand. And PlayStation's always been sort of like a lifestyle brand, like a cool brand. And Kojima, for me, if I think about it from a branding perspective, fits very well with PlayStation. He's a cool guy, right? He makes cool games. He does that kind of thing. So yeah, I find there's an audience disconnect maybe with Xbox. So I'm more interested in whether or not it can attract some of the cool kids over to Microsoft or if, rather than, let's say, the Japanese audience.

23:09Dr Serkan Toto: Yeah, it will take a few years, but we will see. Yeah. I've actually gone through, rattled through my points I was going to hit in our conversation. Is there anything about the, I mean, obviously, whenever we talk about Japan at the moment, we tend a lot to talk about Nintendo and Capcom, obviously, who are sort of become the sort of poster child on how to do AAA video games. in 2026. But is there anything else about the Japanese market that you think is noteworthy and something that's happening at the moment? There's a ton of things. But I would say that maybe one interesting point is how gamer culture is different here in Japan from everywhere else.

23:46Dr Serkan Toto: For instance, the big waves that we had in the online gamer culture over the last couple of years like you know gamergate uh woke gaming anti-ai um you know sony removing physical discs from the from from their offerings of course you know these things um also play do play a role in in in the japanese in the japanese gaming culture uh but uh it's much much smaller than in the west so what i'm trying to say is that the average japanese gamer is really pretty much disconnected from what their Western counterparts think about, worry about, or what they look forward to in terms of games or anything that is associated with games.

24:37Dr Serkan Toto: So if you are a game developer that is looking at the Japanese market, I think it's really absolutely critical to understand that Japanese mobile gamer, console gamer, PC gamer thinks about the world differently than the audience that you're serving in the US and in Europe, for instance. That quite sounds like a gamer culture I can get on board with, to be honest. Is that a media thing? Because I always find it quite interesting how whenever I interview somebody from Japan, there seems to be a level of expectation around me sharing what I'm going to be printing and what I'm going to be including, which I think is quite common practice in certain Japan media and not so much in the Western media.

25:23Dr Serkan Toto: Is it a media thing? Yeah, I mean, don't get me wrong. They're like angry gamers in Japan too, right? I mean, you know, they take to X especially. So X is gigantic in Japan. It's by far the biggest social network. They are angry people that are venting on X and other platforms. But I think that the media does play a role and the gaming media in japan uh you know when they write a review for example they are kind of like more sharing the their view of the game and they're not really rating um the individual like elements of the game if that makes any sense of course you know game magazines like famitsu they give away scores at the end so they do give a judgment but it's much less analytical i think it's a little bit more emotional and it again it really gets into the personal opinion of the author um and they're trying to not be generally speaking not be too critical unless the game is really really bad um and uh so this kind of like um very uh critical in-depth analysis when it comes to reviewing games is not really there in japan I think it's a lot more consensus-driven than in the West.

26:43Dr Serkan Toto: It's really, really a different culture also in terms of game media. And there's also the phenomenon of paid articles. So you can start sponsoring certain game media under a certain financial arrangement, and they will cover your games. They will write strategy guides for you, and they will make a whole PR and marketing and press package for you if you want. Oh, wow. I did not know that. Well, I'm out of time. Thank you, Sirkent. And yeah, I'll see you out there. Anytime. Cheers. Thank you, Dr. Sirkentoto. Now, before I move on to our next segment, we have a new story for you to share. It's just broken.

27:27Dr Serkan Toto: Next Playground, we've featured on the show a couple of times. They've just secured$150 million in its latest Series E investment. round the funding is designed to bolster its global expansion so the camera based console is currently only available in the us canada uk and ireland there's a german release coming later this year and a japan and korean release plan for 2027 so this investment they're getting is going to help them market the console is going to help them sort out the supply chain around launch as well in addition to that former niantic cfo jeff shoga is joining next in the same role shoga is also joining the next board alongside games industry veteran bin gordon now next they say they've got nearly 1 million subscribers to its game service so next games you have to subscribe to the service to get hold of them and they've got nearly a million subscribers and they've signed some big games have recently added a pac-man title from bandai namco they've added a sonic game from sega it already features ip like bluey and teenage mutant ninja turtles and peppa pig and sesame street and the series e-funding is co-led by bale gifford and bai capital with participation from nba investments logitech the rain group and medici capital in addition to a new credit facility with jp morgan now i actually had a very very very brief back and forth with next playground about this deal and i was interested a little bit more on how they're going to localize these consoles for these markets and david litier who's in charge of next he said we enter every international market with love and respect that means investing in localization local ip local music local developers and local teams most importantly it means listening closely to local customers so we can keep making the product better at serving the needs of their families that's the next playground there just got a big bit of funding as it looks to try and make a name for itself this christmas right now let's move on to our second interview of the show what a treat you've got loads of stuff in this episode um lyrical games you may have heard of them you may not have heard of them they're the publisher behind the upcoming valamortis which is the first person and Souls-like game.

29:22Dr Serkan Toto: It's generating a bit of interest at the moment. It's doing quite well with wishlists. Now, Lyrical Games was founded by Blake Rushkind, the former head of business development at Private Division, with the intention, you know, the studio at this publisher is all about funding mid-tier AA, or they like to use the term triple-I, video games. Now, Valor Mortis was due for release on September 24th, but the firm delayed it due to the number of major titles that are coming out that day, including Control Resonant and Silent Hill Downfall. The game is now due October 13th and the game business can exclusively reveal the game will be priced at$40.

29:56Dr Serkan Toto: Now I had the chance to chat with Blake about this price point and trying to find a place for an ambitious double A new IP in a hyper competitive moment for the video game business particularly with GTA 6 casting a long shadow over the release calendar. We also had a chat about the potential of those mid-tier video games in general too. It's a good chat, and here it comes. Hello, Blake. Welcome to the show. Hey, thanks for having me. Big fan. Oh, thank you. Is it a year since Lyrical Games has sort of officially formed?

30:26Blake Rochkind: We announced ourselves in August of last year, right ahead of Valor Martis' reveal, which was obviously quite intentional. We officially started in March of last year. In fact, our first day was GDC of last year.

30:39Dr Serkan Toto: That's when I started.

30:40Blake Rochkind: There you go.

30:41Dr Serkan Toto: There we are. You said at the time you felt there was a new cycle emerging. I've read some of your pieces. You rejected the idea of the lost middle and how you're seeking a real opportunity with AA. So, sort of gets over a year now. Has those theories held for you?

30:59Blake Rochkind: Yeah, we have two proof points, right? We've announced two games. One is Valor Mortis. The other is Erosion. I would say Valor Mortis is much more of a game in the quote unquote middle. and, you know, we've had pretty much a dream run since we've announced the game. It was one of the biggest announcements at last year's opening night live. It remains one of the most wishlisted games on Steam and we're gearing up to launch it in about a month from now.

31:23Dr Serkan Toto: So you're not doubting, you're not going to actually, maybe the middle is more challenging than I thought?

31:28Blake Rochkind: No, certainly not. If anything, I think our experience with Valimortis has been validating of the thesis for sure, yeah.

31:34Dr Serkan Toto: One thing I'm worried about is when everyone saw Klerovsky, I mean, hang on, look at this. You can spend less than$50 million making a game and it could do really well. Is there a risk for something going to get an avalanche of these?

31:45Blake Rochkind: I would say no, and not to be argumentative, but certainly this was not a Claire Obscure did well and therefore that's going to be part of our strategy. And I would say, of course, Claire Obscure is, I think, one of the better games ever made, one of the more successful independent games ever made. But there's a bunch of games that are sort of in this, what we consider to be the middle. I think that's the other thing to think about is that when people talk about the middle, there's like upper middle class and lower middle class. Right. And so I think for us, relatively speaking, when we talk about the middle, I guess it's that lower middle class, which is roughly ten million dollar budget games.

32:18Blake Rochkind: I think the cleric scare folks have been pretty open about what their budget was, so I don't want to talk about anything sort of private, but I think they've been fairly open about that. But there's other games like Stray, Pacific Drive, Hard Space Shipbreaker, these games that are sort of in that$40 to$50 price point. Maybe they don't do as well as Clear Obscure, which I think, like I said, is probably on track to sell over 10 million units, but sell a million, 2 million, 3 million units and make a very nice ROI on that investment. And I think that's one of the most vibrant places of the industry.

32:51Blake Rochkind: I think it has been for the last six or so years. But frankly, and one of the reasons why Lyrical Games is in that space is money is hard to come by in this industry, and we're fortunate to have substantial backing from a larger media company that allows us to play that space. But I'm not that worried about people all of a sudden, like tons of competition being in that area, no.

33:09Dr Serkan Toto: Sabre obviously sort of play in that area and they keep their budgets low and you've got Dispatch is one of my favorites.

33:16Blake Rochkind: I don't know where that fits. I think Dispatch would be a perfect example of the type of game that we would love to be a part of and I know the guys in AdHoc well.

33:23Dr Serkan Toto: Yeah, well, and they're working with Sony on Until Dawn too. But when you're looking for games in that area, I guess these games have to take more risks than perhaps... Is that what you look for? Are you looking for games that are quite striking and original or perhaps things we haven't seen for a while?

33:37Blake Rochkind: Well, yeah, without a doubt. I mean, I think for us, it's almost a cliche, but we're looking for... I used to be an agent who represented game developers and I used to have a client who who would get frustrated with publishers who would say they want like proven innovation, which is of course like a bit of an oxymoron. So I want to be careful to not say that we want proven innovation. But I would say what we are looking for are innovative twists on tried and true genres, right? So we're not chasing trends here. I don't think we're ever going to do, you know, I don't think we're going to be in the friend slot business or anything like that.

34:13Blake Rochkind: But there are, just like in movies or anything else, right? There are genres in this business that are evergreen. They're, you know, just to continue with the movie analogy, there are always going to be science fiction movies. There are always going to be drama movies. There are always going to be, you know, there are always going to be horror movies. And I think same thing in games, right? There's always going to be, and sometimes new genres form, right? So souls-like is a relatively new genre in the grand scheme of things for the games business. But I would say, like, it's not a trend. There are always going to be souls-like.

34:40Blake Rochkind: So at this point. And so when we see a game like Valimortis, which is, yes, it's a Souls-like, but it is a risk, like you said, right? I would also argue where the risk is is also where the innovation is, which is it's a first-person Souls-like, which from the second we announced it, that was the big bet we were making, right? It's not just another Souls-like, it's this innovative twist on the genre, I would say a very bold twist on the genre, that helped it break through the noise from the second we announced it. Of course, also being from the developers of a game like Ghostrunner helped a lot, and I think we very intentionally started our trailer for Valor Mortis, our opening trailer from the creators of Ghostrunner.

35:18Blake Rochkind: I think that's something we think about a lot when we look at games and who we're partnering with. How can we make people in a world where tons of games are coming out, I don't need to tell you that, you know, I don't know, I think the latest number is like 7 ,000 Steam games a year or something like that. In that environment, you know, you got to play the cards you've been dealt. In that environment, how can we have something where people immediately snap and take notice? So for instance, from the creators of Ghostrunner, Ghostrunner is not a household name, it's not Call of Duty, but it's still a few million units.

35:46Blake Rochkind: It's probably been played by even more people than that on Game Pass, PlayStation Plus, et cetera. And so ultimately for us, that sort of combination of developer that sort of makes you take notice, genre that you know, twist that excites you, and then of course, one thing that actually has surprised me quite a bit with Valor Mortis, has sort of been this like Napoleonic theme, and how much people... I thought that that was something cool, but I've been surprised by how much that has been a pillar of what has made the game exciting to people.

36:15Dr Serkan Toto: It's interesting. My next question was going to be, tell us about Valamortis, but you've just basically done it there.

36:19Blake Rochkind: I basically just did, yes.

36:20Dr Serkan Toto: And that Polionic first-person soulslike.

36:24Blake Rochkind: Put that on the box, Chris. Thank you.

36:27Dr Serkan Toto: Yeah. And then I was going to ask, are you concerned about soulslike fatigue? And you've also answered that question. You've just smashed my next day questions.

36:34Blake Rochkind: Yeah, I would say it is still a concern. I mean, it is, I think that that's one of the reasons to not just do another Soulslike. And I think, I mean, Mortal Shell 2 just had a lot of success.

36:44Dr Serkan Toto: Of course.

36:45Blake Rochkind: But they have innovation, right, with the Shell system. And so I think the worst thing we can do is be safe. That is by far the worst thing any publisher or developer could do. And candidly, the vast majority of the pitches we see are fairly safe. And I think we're looking for that combination of talent, but also risk, excitement, innovation, et cetera, when we sign a game. Easier said than done. What keeps me up the most at night is not finding enough games that we believe in can break through the noise.

37:14Dr Serkan Toto: Well, one of the things I guess helps break through the noise is talk about this price point because you're going in at$40. Is that right with Alamartis?

37:19Blake Rochkind: Yes, we are. That's one of the reasons why we're talking today. I would say as a publisher, you don't have that much decision making. That's 100 % in your control. Pricing is one of those things. Timing is by virtue of the development schedule. And of course, you could hypothetically hold a game and not release it when it's ready. But generally speaking, you want to release games when they're done. But pricing is 100 % under control. And this is something we've really agonized over. I personally agonized over it briefly. And my biggest concern was that it would send the wrong message about the game.

37:55Blake Rochkind: So we wanted to make sure that whether it's this interview with you or whether we're going to be putting out posts on our social feed kind of explaining why this game is$40, we We wanted to make sure that we sort of send the right message to the consumer about why this is, and hopefully help them understand that this is a decision we're making out of confidence for the game. We find ourselves in a situation where we are one of the only new IPs launching in what is, I think, objectively the craziest fall in the history of this business. You know, not only do you have GTA, Loon and Large in November, now you have the Zelda remake, which I'm very excited for.

38:33Blake Rochkind: you've got Control Resonant coming out in a couple weeks you've got Silent Hill Homecoming you've got Phantom Blade Zero Gears of War we are, again, by virtue of the development schedule it just is what it is the cards we've been dealt is we are one of the only new IPs launching this fall we are pretty confident in Valimortis it is a great game I'm very, very excited for people to play it but ultimately I think the worst thing we could do is not push our chips in and say, we want this to be a game that you can pick up alongside these other great games. The idea that people are going to pick Valimortis over some of the other games, I'm sure some gamers will.

39:13Blake Rochkind: I hope they will, of course. But there was a developer we spoke to recently who had a lot of success with their game. At the time, it was a$30 game. I think if it had launched in today's world, it would be a$40 game. And one of the things they said that really stuck with me and kind of helped me wrap my head around this is we never regretted being an and game. We never regretted pricing our game as something that you can pick up when you're picking up other games. And I think when we're launching in the fall that we're launching in, going with this price point will help us be an endgame.

39:41Dr Serkan Toto: I think a lot of people are like that. And actually, you know what? We've just had two new IPs come out, War Dogs and Blood of the Dawnwalker, that both sold a million copies in like a day, in two days.

39:49Blake Rochkind: Yeah, but I'm playing Blood of the Dawnwalker now. It's a great game.

39:52Dr Serkan Toto: Oh, good. It's interesting about the$40 thing, because I always assume it's a good thing. You know, fans will like it. It's a lot more reasonable. but I remember somebody from Capcom years and years ago when everyone raised their price to$70 and Capcom didn't immediately. I think they stuck at$60 for their Resident Evil. And the guy I was talking to was worried that fans would think it's a lesser game because it was$60 while everyone else was$70. And I always don't ever think that's the concern, but it is, that is the concern.

40:17Blake Rochkind: I think it is certainly the concern for the publisher. If I'm being honest with you, I think gamers, I think gamers like, it's brackets, right? So I think 40 and 50 are its own bracket in today's world, right? and the difference between 40 and 50 is relatively small. And so that you may ask, well, Blake, you just said that, why don't you charge 50 for Val Morris? I think it goes to this sort of idea of like, it's this fall specifically, it's crazy.

40:41Dr Serkan Toto: Yes, you've got a lot of competition.

40:43Blake Rochkind: Yes, I think 60 and 70 is its own band. I mean, obviously, Dawn Walker is a new IP. They launched at$70. Credit to them. They're crushing it. But I think 70 is reserved for, you know, the Titans, the Titans of this business, primarily. Who Dawn Walker is, is the Witcher folks, isn't it? Yes.

40:59Dr Serkan Toto: I guess there's got a bit of clout there, but yeah, carry on.

41:02Blake Rochkind: So I think it is a concern that I think publishers have. I don't know if gamers see it the same way. Now, I do think what they do see that, and this is ripple effects, and this is something we think about, is like it impacts Steam reviews, right? It impacts how they talk about the game. And so that's something we think about a lot is we want, you want as positive a sentiment about your game as possible. And there's a relation between sentiment of their game and how much people spent on the game.

41:25Dr Serkan Toto: I feel they've got good value. I mean, what do you think? What do fans expect it for?

41:29Blake Rochkind: I think$40 is when, I mean, if I had the perfect answer to all these questions, it wouldn't have been a decision that we agonized over as much as we did. So I think my hope is that at$40, they see Valor Mortis as an incredible value, as a quote-unquote full game that just happens to be$40, because it is. This is a 20-hour known voice cast. We've announced Vincent Cassell as the voice of Napoleon. We have some more announcements coming soon about who's in the voice cast that we're very excited to share. It's from a, I would say, a marquee independent studio in this business in one more level. It's beautiful graphics.

42:06Blake Rochkind: There's really nothing about it that's like, quote unquote, budget. And I think that's always a place that we want to avoid at Lyrical Games. I think we want to be careful. There's like triple I and there's double A. And I think the line between triple I and double A is very, very small. The way I think about it is double A is like a lesser than triple A, right? So it's a game in a genre that typically has a lot of budget behind it, but they didn't have the budget for whatever reason, and they're sort of... You can kind of feel it. And I think for us, we want to be in the IIII business, which is like, holy crap, this game's amazing.

42:37Blake Rochkind: I can't believe I got this for 40 bucks. I can't believe that an independent developer made this game. That's sort of the space we want to be in. And so I hope that at$40, people will pick it up this fall, and that's how they'll feel. I find it fascinating how people work in their brains, what double A,

42:51Dr Serkan Toto: and some people don't see triple i and double a is anything different either correct i actually very specific view on it in that um i use double a triple a and indie to sort of describe budgets brackets very broad budget brackets because and i've honestly people who have listened to this show loads have heard me say this a lot but i often see um for me a a good double a game is a game that's not actually double a it's it's triple a at what it does it's just like it's very focused you know when i think about clear obscures i think about dispatch like dispatch is the best at what it does. There's nothing out there.

43:22Dr Serkan Toto: Like for that kind of game, it's triple A. But obviously that game's smaller in scope and ambition. To you, is that triple I or is that double A? For me, it's a term I don't use. It's the same. But in my head, I say it's just a triple, it's a focused triple A game. Like it just does a thing.

43:38Blake Rochkind: I think for me, that to me, that's the, we think about it very similarly. I label that as triple I. To me, that's exactly the other space we want to be is like, this is the best for, I mean, that happens to be basically the only person still is like, but I want people to feel like this is the best person still is like that exists and therefore it's triple i whereas i think double a you feel oftentimes people are striving for something that really maybe i don't want to say they shouldn't be because that's the wrong way of phrasing it but they don't really have

44:02Dr Serkan Toto: the budget to support yeah i think the terms are i think as we're discovering this conversation sort of meaningless but i i i think i think in terms of articulating what it is you're looking

44:11Blake Rochkind: forward to and they are meaningless and by and and i bet you there are many many gamers who don't know what triple i is it's sort of an industry it's an industry phrase yeah it's day and day in game pass isn't it anamortis is that right it is yes does that influence the pricing decision at all um no not significantly no um i would say it's on the list of things that went into the decision it was a very low on the list i think we are i want to be careful because game pass is microsoft's Oh, yeah. We have a great partnership with Microsoft. I want to not say anything about their business. I would say my perception is that Game Pass has reached a maturity point in this business where there are Game Pass gamers, and there are people who play games on Game Pass, and they're very excited about Game Pass, and we were unlikely to sell to those customers at least day and day anyway, and so we're happy to be in Game Pass.

45:07Blake Rochkind: That's interesting. But I'm not really that concerned about cannibalization. There's been a lot of discourse about Game Pass over the past few years. I think for every game that is, quote unquote, cannibalized from Game Pass, there's another game that got amazing word of mouth because, partially because it was in Game Pass. I mean, Cleric Square launched into Game Pass, and we've talked about that a bunch already.

45:26Dr Serkan Toto: And it found its audience. It's interesting. I know that we had Alex Hutchinson on, talking about Revenge of the Savage Planet, and he talked about how loads of people discovered the game because of Game Pass. But what he found is Game Pass customers don't necessarily spend money. So he was hoping for DLCs and add-ons and stuff to be sold in it. And that isn't actually what happened. People who bought the DLC and add-ons are the people that bought the game in the first place and wasn't necessarily the subscription. I find it really interesting. It's like a different psychology of audience, I guess.

45:55Dr Serkan Toto: On Contra, we've really rattled through some topics I thought we'd spend a lot more time on. You've announced two games. How many games can you handle, Lyrical, in terms of how many are you looking for?

46:07Blake Rochkind: Yeah, it's a great question. I would...

46:08Dr Serkan Toto: You said you were keeping you up at night trying to find them.

46:11Blake Rochkind: Yeah, I think that's a really important part of our philosophy is like, we, you know, I worked at Private Division before I ran business development there. And I don't want to talk too much about the Private Division business, but I would just say, generally speaking, when you're at a large company, that you can sometimes feel like you're signing games to support your headcount as a publisher. And nobody ever says it so explicitly, to be clear, but it's something that I personally felt pressure on. Like, oh, what are we doing Q3, 2028, when we have all these people around? And I think for us at Lyrical, and for me personally, I always want to be feeling like we are building the team here to support games we believe in.

46:46Blake Rochkind: So we don't have... Right now, we're only seven employees at Lyrical Games. We can grow. I think we probably will inevitably grow. I'm sure we'll learn a lot in the next few months about how ValorMurse launch went, and I have no doubt there will be some things where we're like, oh, it would have been nice if we had somebody here. It would have been nice if we had somebody there. We'll figure that stuff out. We've signed six games so far. We've announced two. We can't talk about the other four, except for I can say, because we have announced that we have a partnership with Blackbird Interactive.

47:14Blake Rochkind: We have another partnership with The Chinese Room. These are two developers that are fairly storied and in business. And that's absolutely part of our strategy here. And the other two, very excited to unveil ones from a new team, ones from an established team a little lesser known.

47:35Blake Rochkind: But for us, the thing we say internally is it's not a hell yeah to know. Um, and finding the hell yeah is really hard. I mean, if I'm being honest with you, we've probably seen over 500. I don't, we don't count. I would guess we've seen somewhere between 500 and a thousand games since we started Lyricom games. And I'm including the pitches that come to our inbox that we ignore, of course. But I would say in that time, we've probably seen eight or nine or 10 that we really believe in and that were hell yeah to us. And then we signed six of those. So, yeah, I mean, I'm happy to talk about sort of like what the types of games that we look for.

48:09Dr Serkan Toto: Yeah, tell us. Well, let's end on that. You mentioned storage studios, people at the Chinese room.

48:13Blake Rochkind: I think for us, the number one thing with a bullet is to partner with developers who get it. We like to say internally who have the sauce. For us, the sauce is developers who are that perfect mix of art and commerce. They understand why they're making the game they're making, who it's for, how the game can break through the noise and have baked the breaking through the noise dynamic that is so fundamental to today's business. They've baked that sort of into the pitch and into the game design itself, right? So again, just to use Valor Mortis as a prime example, it's from the creators of Ghostrunner and it's a first-person sales like.

48:53Blake Rochkind: Those are two pillars that we've used throughout the marketing and it's been very successful. Those are hard to find, of course. So that's number one with the bullet is sort of a strong developer who is sort of a business unto themselves. And that business employs artists, but is not art for the sake of art type of developer. The other thing that we look for is sort of, and that's sort of pressing our advantage. I spoke about earlier being part of a larger media company. We do have a good amount of resources behind us as a label. We are looking to back games that are of a certain budget type because we think that does help us break through the noise by virtue of fidelity, by virtue of ambition you know even erosion the the other game that we've announced besides valamortis it's a roguelike but it's voxel based it's it's open world semi-open world depending on how you want to look at it it is a very ambitious roguelike it is not if you look at some of the stuff we put out is this is not like a standard bog indie roguelike there's and and the budget um for the genre is on the is on the higher side and i think um generally speaking something we talk about is like, we want the games that we back to be games that you would be quite surprised.

50:00Blake Rochkind: I don't want to say it's impossible, but you'd be quite surprised if they were self-published and also to be games that we can go to a Microsoft, a Sony, a Nintendo, a Jeff Keighley, a triple I initiative, some of these great showcases. And with a straight face say, these should be alongside, you know, the other big reveals. It doesn't feel like these games that we back would be in sort of like the indie section of those things, right? Sometimes, You know, there's like a part of the Keeley stuff where all of a sudden there's like a really, really indie game. And some of those are great. I'm not casting aspersions.

50:29Blake Rochkind: But we wanted to be like, oh, yeah, like Valimortis looks totally fine being the trailer after Gears of War, for instance.

50:37Blake Rochkind: And yeah, I would say genre, we don't have like genres that we are looking to play in, right? I think you're increasingly seeing specialist publishers. For us, it's probably easier to say the genres that we would not work in versus the ones that we would. That's sort of the combination. It's a little bit of alchemy, I would say. We as a team are usually always on the same page. We see a pitch and the ones that we've decided to go for, we're all nodding to each other. You see the eyes around the room nodding like, yeah, this is it.

51:10Dr Serkan Toto: It does seem to be an interesting space to play in. It's where a lot of the more fast big games are coming from at the moment, or a lot of the more interesting ones. And I think, you know, those things can become AAA games in time. I'm sure if Falamortis is a hit, Falamortis 2 will probably have a bigger budget.

51:23Blake Rochkind: Oh, most certainly, yes.

51:24Dr Serkan Toto: Yeah. Blake, thank you so much for your time. Yeah, thank you. Good luck with the launch of the game. I know it's a busy time, but I do think it stands out. So hopefully it'll do very well for you. And yeah, thank you for your time.

51:32Blake Rochkind: Yeah, really appreciate it. Thank you, Chris.

51:34Dr Serkan Toto: Thank you to Blake there. I actually learned quite a lot from that interview. All that's left for us to do is to wrap up the news from the last week. And let's begin with Sega. I've just come from the Sega Party. And Sega has signed a deal with Netflix. for movie and tv series based on crazy taxi stranger than heaven and sonic the hedgehog the first project will be based on crazy taxi with dan gregor and doug mand they're the people behind the 2025 naked gun reboot on scripting they're on scripting duty sonic producers neil h maritz and toby asher and turu nagahara will produce it blizzard had a big event last week blizzcon was on and they loads of stuff was announced there um they announced that diablo 5 is coming out in 2029 as an open world starcraft shooter coming out in 2030 quite far away those games a little bit closer there's a new world of warcraft variant called world of warcraft forever which will run alongside the classic and the vanilla game that's june november 4th the firm also announced it is also partnering with netflix on a diablo animated series and let's move over to team 17 they've had a good week with their uh with the game they published War Dogs doing so well and they actually reported half year revenue being down eight percent to 66.9 million pounds this is for the six months ending June 30th profit is down 29 percent to 23.9 million pounds however Team 17 pair and Everplay expect strong four-year results due to the success of yet Bulkhead's War Dogs and Expression Games' Hell Let Loose Vietnam.

52:59Dr Serkan Toto: Everplay says it actually increased its stake in Bulkhead but proves he had a 20 percent stake they don't know how big their stake is now but they've increased their stake from the launch of war dogs war dogs has of course sold two million copies you can watch i interview with um the war dogs ceo the bulkhead ceo who made war dogs now on the game business.com elsewhere valve has opened a waiting list for its new vr system steam frame there are two versions with a cheaper 250 gigabyte model on sale for just over a grand thousand dollars and the one terabyte model coming in at 1299 so pretty pricey as you would expect with the current component challenges robots creators will be able to publish their games on mobile pc and console through the roblox everywhere initiative specifically robots creators can make their games available as standalone apps on multiple platforms there's a lot so i don't quite know how that's going to work and i'll be talking to roblox soon to hopefully get a little bit more of an understanding around that most developer polyarc games will close down after 12 years the seattle-based company which which also worked in VR, done a lot of stuff in VR, announced on LinkedIn it'll be winding down active developments.

54:00Dr Serkan Toto: A shame, Moss is a great game. A couple of final stories, GTA 6 extended look on Netflix, generated over 100 ,000 signups to the service in the US, that's according to Ampere Analysis. And finally, Nintendo Life and Push Square publisher Hookshot has launched Steam Hype, which is a new PC-focused media outlet. UK-based company also operates Pure Xbox and Time Extension. Time Extension is a retro games brand that I love very, very much. Wow. Big addition this week. Thank you all for tuning in. we will be back next week for all sorts of interviews and analysis including one with Ubisoft's Rainbow 16.

54:30Dr Serkan Toto: I'm now going to enjoy the sights of Tokyo but until next time thank you for tuning in