Is AI-powered game piracy an existential threat?

0:00This week, how seriously should we be taking the AI piracy threat? And is now really the time to be talking about new video game consoles?

0:11Hello and welcome to the Game Business Show. Game Business is a reader-supported publication, so if you want to subscribe to us, you can do it for free at thegamebusiness.com and you'll get an alert every time we put out our big Tuesday and big Thursday episodes. if you're interested in becoming a paid subscriber you'll get an extra episode an extra newsletter as well every single monday called here's the drink the one we just did in fact have an exclusive interview with capcom in it so do consider becoming a paid subscriber if you would like to it does keep us going right this episode it is in fact episode 164 of the game business show which is somewhat serendipitous because today marks the launch of legend of zelda ocarina of time the remake which is of course based on the N64 classic from 1998.

0:56You see what I did there? That means yes it is the start of Ocarina of Crime which sees GTA and Zelda dominate the gaming landscape over the next few weeks. Otherwise people point out to me it is now not just Zelda and GTA. There's also World of Warcraft Forever which launched yesterday. Maybe that's what the of is in Ocarina of Crime. I think it could still work. It still works. Right. I have to say I am loving the campaign for Ocarina of Time, I don't know if you've seen the Google execution that Nintendo has done. So if you go onto Google and you put in Zelda or Ocarina of Time, a little sword appears in the corner and you press the sword and it takes you back to like a 1998 version of Google.

1:33Takes you back in time, a bit like you do in the game. It's a great little idea. And in fact, the whole thing is super nostalgic. I think Nintendo's an incredible job. The UK ad for the game is based on the UK ad for the original Ocarina of Time in 1998. It's very similar. And I've also just been to the midnight launch of the game in London. And at that midnight launch, they were giving out a special box for the game, which is based on the N64 box they released in 1998. Nintendo's done a really great job of tapping into the nostalgia. Midnight launches alone are nostalgic enough. And if I was Nintendo, I would certainly consider putting this up for the Game Business Marketing Awards.

2:08There's my plug. In just over a month, I will be revealing the greatest, innovative, most interesting market campaigns that we've seen so far in 2026 i think we've had about 30 entries already and i know that some people are still launching their games right now so they haven't quite taken part yet but they tell me they will i think it's going to be a really fun we're going to pick out a few games it's not going to be one winner we're going to pick a few winners we're going to select a few cool campaigns and we're going to highlight them and some of the people behind it so if you're going to take part celebrate your team that've done incredible work this year um there is a link in the newsletter and that's attached with this very show you can also find out more about it at thegamebusiness.com.

2:44So yes, do take part. We'd love you to take part. Right, this week's show, we have a slightly different structure for you. So of course, normally, I do my little introduction. We welcome our guests. We have a lovely chat. And then after that, we have a little another thing, basically. It could be an interview. It could be a new story. It tends to be something a little bit shorter. And the thing I have for you this week, I think is really fascinating. It's another major game publisher doing something in the classic game space and it's interesting it's a lovely interview what they've done is really cool however the embargo for the interview is four hours after we would normally put out an episode of the show so we debated what we do do we delay the episode do we run the interview like next week and then we'll run it late i don't know and in the end we decided we're going to spit this episode in two so in just a moment you're going to have the full chat including our guest and then a few hours later we're going to release the second part and depending when you listen to this both parts might already be out i generally think the interview that we're going to show you in a little bit is fun and a surprising one so do stay tuned for it but for this particular episode i've been diving into the conversation around ai and piracy so you may have been seeing these video games that have been playable in browsers or big games you can just now play in a browser we've seen people reverse engineering code recompile games in different ways mashing things together xbox has already acknowledged this and have launched something called xbox labs which is their effort to sort of work out they can capitalize on this rather than having to fight against it but it's clearly a potential challenge for game companies as they're seeing their games being distributed in ways that were not intended and potentially cracked uh faster than they were before so i've spoken to a number of trade bodies about this including the esa to find out how big of a concern is it what are they doing to combat it is it likely to cause major harm to the video game industry.

4:31And to help me discuss that, plus a few more things, including whether it makes any sense to launch new video game consoles next year, I was joined earlier on by Digital Foundry boss and founder Richard Ledbetter. And here he comes. Hello Richard, welcome to the show. Hi. Hello. Happy to be here. Well it's a year since we caught up and back then you were just going independent. Right. Well you'd just gone independent I think, and back at Gamescom, I believe. And yeah, how's it gone? What's been the full year been like as an independent digital foundry? It's been really, really interesting and liberating and empowering and we've got a lot done.

5:11And I'm really, really pleased the way everything's working out, to be honest with you. It's happy days. And ultimately, being a completely independent entity means that you make your own calls and you live and die by them. Yeah. You know, there's no blame anymore. We can't blame the other guys for not doing things because we're fully in control of our destiny and things have worked out pretty well. So I'm quite happy about that. But at the same time, being independent obviously gives you a certain degree of vulnerability because if we think about everything in the media space at the moment, you are essentially beholden to factors that are entirely out of your control.

5:52right so if we consider youtube as a platform for example um youtube can change anything they want google can change anything they want at any given point and you have no input into that and you're basically at their whim and it's a core component of the business you kind of think they don't want to muck things up but you know mistakes happen right yeah um in the in the web space obviously i think there's a we're not sort of massively invested we've got a website very very pleased with it. You know, our partners at Hookshot are pretty awesome, right? But at the same time, it's like, yeah, what's happening in the web space?

6:27It's very much a transitional change with the advent of AI search results and stuff like that. And the fact that basically your entire output is fodder for a whole bunch of AI models. So yeah, there's a lot going on there, but I think we're in a pretty good space overall because fundamentally our business is based on original content as opposed to taking what other people do and repurposing it, repackaging it, stuff like that. We aren't aggregators as such. So in that sense, we're kind of like, how can I say it? We're on a sort of a different tier, so to speak. So I'm quite happy about that. But yeah, I think this year has also been very, very interesting and potentially scary in a number of ways because of the amount of layoffs the fundamental restructuring that's happening in the games business at the moment.

7:21It's another factor over which you have no control. And obviously, you know, we're deeply connected with the games business. And to see so many people suffering, it's bad news, right? Well, I was putting it on for, I guess, a bunch of things that I wanted to talk about. But one of the subjects I've got that I talk about today is around, because I've been inundated by journalists and peers in the industry asked me to cover this rise of AI powered mods and ports and that kind of stuff. And we've seen games crop up inside of other games. I mean, I've seen that before, but I think it's happening a lot more prevalently now.

7:57We've seen ports of games like Call of Duty running in web browsers, all powered by Claude. Now, this prompted Xbox to launch an entire division to look at this tech. And just this week, Claude, you told me this, has stopped people being able to recreate games using its tech in a bit. So that's obviously a welcome piece of news for the industry. But this has prompted a bit of panic from some quarters. But before I get into that, because I'm not a technical expert, you are. Is this something you've looked into much and what's going on there? Is that something that's interesting to digital founder?

8:29The recompilation is not so much. On the more industry side, in terms of like the impact of it, I think there is definitely questions that need to be answered in terms of what we do. I don't really want to get too much into AI because I'm not a mega expert on AI, right? We do have a member of staff who is following the trends and understands the technology, tests out the technology, and has a much greater understanding, right? But I've basically spent an afternoon with Claude, right? And I basically just asked a bunch of questions because, you know, I know the stuff that happens in Digital Foundry.

9:06There is a massive workload. Let's say, you know, pixel counting, the native resolution of a game, right? because obviously upscaling is a thing for pretty much every game at this point. Very few games are actually full 4K, and the users want to know what it's upscaling from to what it's upscaling to, et cetera, et cetera. It's a massively intensive task for my staff to do because it's all about finding frames where the upscaling doesn't work properly, and then you can figure out what the native resolution is from there. For want of a better word, it's a phrase, it's donkey work. You don't, you know, I consider it to be a waste of time for the staff really.

9:42So, you know, I had a conversation with Claude about it. And what's surprising about it is that, you know, you give it a few clips, you say what you want and it goes away and it does it. It seems to have access to the sum total knowledge of what's out there on the internet and even more, you know, also has the ability to reason and to improve its work. So, you know, I was giving it some footage from machine learning based upscaling, which is very, very good, very difficult to track. And it actually sort of said, you know, actually explains its reasoning to you. And it was saying, I'm not seeing much of a signal here to work with.

10:19But if I bring in data from surrounding frames, then I get a much better picture. And it's like, I wouldn't have thought of that. That's crazy stuff. So, you know, just to give you a sort of idea of the level of my knowledge, I'm kind of once in awe of it. And secondly, I am very worried about what happens when it is so widely available to everyone. And I think that's kind of like what's happened with these recompilations where the people have discovered that Claude is exceptionally good at reverse engineering code, right? And then it's also very good within its bounds in coding. So it's like two steps and, you know, we've even got a supporter.

10:58I was looking at our Discord. One of our supporters wanted to play Final Fantasy 13 Lightning Returns on his phone. He just got called to do it. Wow. Right? So, you know, this is the scale of the problem here, where somebody who I assume has very little to no knowledge of coding was able to make a port of a game for their phone. This is obviously very, very dangerous, right? And I think beyond that, if it can do that, what else can it do? Yeah. Now, let's sort of focus in on the games business here because there's been a proliferation of recompiled games, right? And obviously, there's concern about the fact that, you know, properties, not even dormant properties, are being recompiled to run on different systems.

11:44So, for example, I guess the classic case in point, the most dangerous one, I guess, is, you know, people have got PlayStation 5 games running on PC in a world where Sony's strategy is basically to say, we tried this out we don't think it's what we want to do so we're going to move away from it well you know bad news everyone people are playing demon souls on pc and it's a playstation 5 exclusive it's choppy it looks horrible but marvel's wolverine is running on a pc so there's all of that to contend with i consider the fact that um anthropic have put a stop to it with a server side block essentially to be probably the result of legal pressures or a sudden realization that this is Wild West Frontier stuff that's got out of control.

12:28But let's be clear here, the genie's out of the bottle, and Anthropic isn't the only player in the game. They might sort of have issues with all of this stuff, but, you know, let's say that the Chinese models are eight months away from doing the same thing. You know, what's going to stop them? Open AI, what's going on there, you know? Yeah, I'd say it's problematic. Yeah. Well, I spoke to the trade bodies in the games industry, They all have like anti-piracy groups or IP infringement groups. I remember when I first joined MCV like 20 years ago, I did an interview with Sony, Microsoft, Nintendo side by side at one of these things.

13:05But it was all about like back then it was about stopping car boot sales, selling like copied discs of games. Right, okay. But I went to them and I'm quite surprised at how many people are still doing it. Like the head of anti-piracy at Nintendo is still the same person I spoke to 20 years ago. But I spoke to mostly, I spoke to the trade bodies. and they work with governments and police and all sorts to crack down on this stuff. And most of it was on background because, you know, that's the way they work. But I did do an interview with Pete. I'm not going to get this pronunciation wrong. I'm sorry, Pete.

13:35Pete Meharavari, he's Chief Council IP Protection and Security at ESA. Now, it's interesting because they are concerned about this, as you quite rightly pointed out. They are, you know, they are worried about it. But if you actually talk to them about what is preoccupying their minds at the moment, they've got their eye on that. but it's commercial cheats and it's bot farming and it's item harvesting and it's account trading is that's the kind of stuff that members are actually asking them to tackle because it's the stuff that's you know they can see how much money they're losing and that problem that's causing their player base and stuff when it comes to piracy it varies by platform holder and company one of the people i spoke to came from the music industry so he's in anti-piracy now in the uk in in sorry in games but he came from the music industry and he was surprised by just how not joined up the video game industry is on this subject.

14:22He told me that, you know, a couple like Nintendo, very much on it, you know, they're zero tolerance, they're very aggressive in the space. Whereas other platform holders, he didn't name names, but I might work that out, I guess, which is a little bit calmer, a little bit less aggressive. They're a little bit like, yeah, we're not so, it's not so much of a thing. And it was just interesting to hear. And it means that actually getting a consensus from the industry of going out together with one voice and, you know, to sort of combat this stuff, it's actually hard for them to do because there isn't a consensus.

14:50And that's not surprising in an industry like ours where some people just make free games and they're not too worried about it. And so it's just not as joined up as the music industry, the movie industry. I think probably Nintendo's stance maybe stems from the R4 card, which you must remember, which became a mainstream problem. Now here's a... I got an interesting anecdote actually about how some of this sort of works and I'm hoping I'm going to get this completely right because I wrote it down in notes because it's on background. But one of the problems they have when it comes to sort of stopping this stuff is you can go to an ISP.

15:24And a lot of the people, a lot of these pirates or whatever, they put it up on an ISP in another country, like the Philippines or whatever. And then you have to go to the ISP provider and ask them to take stuff down. And they sort of will to a point, but they make money from people accessing their servers from international markets. So they're actually not, they're kind of disincentivized to do it. And that's one of the things that I got from a trade body. my interview with the ESA uh he pointed out they'd like stronger cooperation across borders in order to forbid to stifle this so all that sounds concerning anyway uh and p at the ESA he did say ai has the ability to accelerate parts of the work involved in examining software identifying weaknesses and developing circumvention tools and so we take this possibility very seriously however i did have to ask myself how much of a problem is it from a bit you know from a sort of mainstream point of view because we know people can do it and you've at digital found you know someone on your readership you know getting final fans around on the phone all that kind of stuff um and we've had moments where piracy became a bit mainstream in the past we saw a playstation we've had it with a nintendo ds it can happen but it isn't really mainstream today and as that famous gave your quote which is piracy is almost always a service problem and not a pricing problem basically poor service from legitimate sources limited access is what drives people to piracy i think the example being wanting to play final fans on the phone actually is an example of of that being an access problem.

16:43So even if people can access stuff more easily and pirate more easily, will they? The football manager team shared stats years and years ago, to remember this, saying that they had a game that was cracked very quickly in a game that wasn't cracked at all. And they were able to compare how well their game sold if it didn't get cracked. And the answer was it did sell better. So there is money that's lost there. So we know it can be a problem. But generally, it is still a niche. All the people I spoke to on background were quite calm about it. They talked about how it's very much a thing the hardcore people to do it's not popular on consoles obviously we're talking about the ability to take console games and play among other platforms but console manufacturers you know ps5 has been cracked but you know if you're using illicit software on a console you know sony will shut you off right um and when i spoke to the esa you know i'm not saying they're being glase or they can't that's probably the better word about it you know they said you might be surprised to hear this but it's the passion of the players that gives us the most confidence players care about the games they love and recognize the creativity technical skill resources and years of work required to make them.

17:42Supporting those games helps sustain future releases, updates, and new experiences. Players also have a direct interest in fair competition, secure accounts, and communities. That shared interest between creators and players is a strong foundation protecting the industry's future. Basically, people don't want to steal it. I mean, obviously some people do, but it's a small group. Pete also talked about how AI can be used on the defensive side. So as well as it being used to reverse engineer and crack these things, game developers are already using AI-assisted tools to identify coding problems during development and security research so using ai discover vulnerabilities and help develop fixes i've done a lot of talking there um but it was um but the basically they are they said also some of this stuff's always already been possible be it not as easy as it is today and i think the concern is you know with the economy and people's finances being tricky and maybe people will not be able to access things like the playstation example you gave you know no longer be able to get something on pc you know there will be an element of well you know i used to be able to buy them and now I can't and how long will it be before that becomes an issue but it's not necessarily a priority for a lot of these trade bodies um or even the big publishers they're actually more concerned about you know the stop killing games movement and the kids act and the digital fairness act and all this that stuff's taking priority for them yeah yeah I couldn't see that but they're all I think they're all sort of keeping an eye on it over there but they've got other fires to put out first right okay well let's break it down I think there's basically reasons why they're probably quite calm, right?

19:08Let's talk about recompilations. Basically, you can distribute a recompilation, right? But you can't distribute the core game codes that it's needed to run it. So basically, there's the recompiled executable, and then there's all of the game assets, you know, the artwork, the audio, everything, the maps, the whole lot. You can only redistribute the executable. You can't redistribute the game. So basically you can grab hold of it and then you've got to source the other files or you've got to delve into the murky depths of the internet to find like a complete package somewhere that someone's put together.

19:45There's always going to be the worry of malware, viruses, et cetera, et cetera, embedded into that and quite rightfully so. So there's a certain level of distrust, I think, from users in in terms of like finding how to play all of this stuff. And certainly the quote unquote legal way to do it is basically to own the original game and to dump it. Let's say you've got a PlayStation 5 game or PlayStation 4 game. I think one title that's been widely talked about is like a recompilation of the Uncharted trilogy from PlayStation 4. So it was all of the PS3 games on PS4 was done by Bluepoint. And yeah, there's basically a recompilation of that available.

20:24Now, you can either source it from the internet and worry about the malware and that side of things, or you can dump it yourself. And to dump it yourself, you need an exploited console. So the barrier for actually getting a fully safe series of files is actually rather onerous. You need a PlayStation 5 under a specific firmware, and you need to have kept it there. And to do that, obviously, once you are on a specific firmware that's out of date, you can no longer play multiplayer games. you can no longer access the PlayStation Store. And, you know, actually the subset of games that don't already have PC versions is very, very low.

21:01It's basically the Sony ones, right? So it's a lot of faff to go through. You know, you basically need a second console that you're keeping on an older firmware in order to dump the files. And yeah, I suspect most people aren't going to do that except like a tiny sort of majority. Secondly, we've got to talk about the quality of the recompilations because I won't say it's like console secret sauce or whatever, but basically a console is a fixed platform and the code is designed for that platform. And to bring it to PC is fine. You can do that. But there's stuff like one of our big issues, Shader Compilation, where basically the graphics code needs to be recompiled for every single graphics card that's out there.

21:46And it can't be done. So it's done on the fly as you play and it causes stuttering. So the quality of the experience is much, much lower in that space, unless you've got somebody who plays it through for you to basically compile all the shaders and then you play it. It's just totally unworkable. So the quality of the experience can be pretty low. So, you know, on the PlayStation side of things, I can only think of one, you know, there's going to be certain first party titles that obviously people want to see on PC, like Marvel's Wolverine, for example, Demon's Souls, etc. It's actually quite a small amount of games though if we're thinking about it because there's a whole bunch of actually very good PC versions for pretty much everything else.

22:28Obviously with GTA 6 coming along, which won't have a PC version at launch, there's probably some level of panic there. And I actually think that there not being a physical disc for that has saved GTA 6 from any kind of experimentation with reverse engineering via AI because that disc would have been mastered with an older firmware. And I can well imagine that since all of this stuff kicked off, Rockstar has been speaking to Microsoft and Sony and saying, look, make sure your platform is fully secure before we put this out. And it will be sort of locked away behind a firmware where all of the files are encrypted and nobody can access them.

23:08The extent to which that will remain the case, we don't know. But yeah, there's that. So, you know, the console side of things, probably not too much of an issue. Microsoft, well, there's already like PC versions of literally everything they've done from midway through the Xbox One period going forward. Nintendo is the interesting one, right? Because they have been extremely litigious against emulation. And that's a problem because emulators are perfectly legal. Sony inadvertently helps to set that precedent and rightfully so right but nintendo has basically uh had a number of issues where they want their titles exclusive to their platform they don't want them anywhere else and they have taken action not against well on the face of it it seems as though it's action against the emulators but what it actually is is action against the piracy circles that have built built up around the emulators and and which in turn seem to have implicated the emulators and they've done a a bit of a job in terms of like shutting down emulation um but um they've just recently had an exploit of their own on the on the switch too and that has basically allowed people to get hold of decrypted files of pretty much every switch to game available now so there's been some crazy stuff that we've seen.

24:31People have got very badly running versions of Mario Kart World running on Switch 1 and that sort of thing. It kind of makes sense. It has the same graphics API. It's got far less memory and far less horsepower. So none of this surprises me. But you can well imagine that Nintendo are not happy about this and will be doing everything in its power to stop these various ports. So yeah, there's a lot going on here. I think the thing is, though, that the Anthropic can basically put in a server-side block for this sort of stuff. But I think to a certain extent, the genie is out of the bottle. And even with the new laws or rules on their servers, there are some issues.

25:17So, for example, NVIDIA DLSS has been pretty much the standout technology for NVIDIA pretty much since like 2020. The original DLSS 2018, not so good, but 2020 was like a quantum leap in quality for upscaling. And it's served them well to the point where they're talking about 85 % usage on their platforms. And it's a selling point for NVIDIA GeForce products. We've now reached the point where AI has reverse engineered DLSS and you can run it on an AMD graphics card. Now, the extent to which it's a fully verified great product is debatable, right? But that's basically what's happening with AI at the moment.

26:00So there's this kind of, I won't call it a poetic, or I suppose it is a poetic irony that it's probably NVIDIA GPU hardware that was used to decompile DLSS and make it run on other systems, on other platforms. I don't think that sort of stuff would be covered by the anthropic server side wall. but it's very much I think a sticking blaster anyway. But yeah, you're quite right. I think, you know, there's basically on the console side of things, things are relatively locked down or there's no impetus to actually want to bring an Xbox Series X game to PC because it's already there. Yeah. Nintendo, I'd be worried, and I think they're probably going to be bringing the hammer down at some point, you know, as they have in the past.

26:44PlayStation, it's all about securing the platform against further exploits and protecting the games that are to come. Everything that's out there beyond a certain firmware can be decrypted and it can be shared and it can be reverse engineered. Another thing which I think is quite interesting is like the, I was talking about the Uncharted recompilation there. It's recompiled to a certain point, but it's actually bundling in elements of an existing PS4 emulator. so it's it's kind of like half one thing half the other it's it's kind of weird but um yes i think there is a surface problem with that sort of stuff too in that um uh you know people want to play those old playstation 4 games uh higher resolutions um higher frame rates and um you know we've done some modding of our own one of you know our tools person has has done some modding and basically had Bloodborne running at 4K 30 frames per second or 1440p unlocked with VRR.

27:45All of this stuff, if a modder can do it, then Sony should be able to do it. And Bloodborne would sell millions of units again off the back of that, I think. So, you know, it's part service and part sort of Wild West AI adventures, I think. Yeah, I'm interested in the Nintendo stuff. I think when Nintendo, as part of its audience, likes the protection of being on a dedicated device, you know, this is my, this is the thing that I've not quite got to the bottom of. And I guess we'll have to wait to see it all pans out. But yes, it's a problem, obviously, if you can access these games on PC for Nintendo.

28:21But yeah, is that the majority of the 150 million people that, you know, have a Switch? You know, is that a, no, is that what they're likely to do? And I think even if you go back to the DS, though, And I did this thing, one of my first cover stories was off DS, The Shocking Truth. It was a very sensational headline. But I spoke to a bunch, I spoke to Square Enix and Square Enix and other companies, like how badly pirated GTA Chinatown Wars was. And their concern was, you know, it's fine if we're making games aimed at the broader audience of DS. But if we're trying to make games aimed at the super hardcore on that platform, we found they're just using the R4.

29:00and so that that and so towards the end of the ds life cycle those companies they said they told me they were actually actively deciding against making certain titles for ds they were they were making fewer of those sort of more hardcore games because they felt the platform they felt the piracy was too high on it and it was a problem and so that's where you you know you know i don't think switch sports resort is going to be heavily pirated on pc but then maybe metroid ravenous might be or something. And so that's where you've got those potential issues. Well, that's an interesting debate, right?

29:34Because the kind of hardware piracy solutions like the R4 card, they're basically locked out on Switch 2. They've got a pretty good job of being... I mean, they exist, but they don't particularly work or Nintendo locks them out or bans the user. Nintendo, all the platform holders have a huge amount of telemetry coming back from their consoles. they know what's going on you know it's like patrick stewart in extras he's seen everything i've been watching those clips as well so yeah i mean i'm i don't think from the hardware side it's too much of an issue i mean the the thing is that um you know um i don't think switch users want to pirate games i think is the bottom line at this point and the routes to doing so are no longer very easy no right it's the other side of thing, which is people on PC who want to play Switch 2 games and they want to play Tears of the Kingdom or the Ocarina of Time remake at 4K 120 frames per second.

30:35That's kind of like the stuff that was happening with the sort of piracy scene that was emerging around Switch 1 emulators, which I think they've managed to make big strides in shutting that down, but it's still out there, I think. And it could happen with Switch 2 based on the other exploits that have been happening recently. And potentially earlier than last time. Well, let's shift the topic a little bit because I'm aware of the time and I did want to, you touched up on it earlier, which is the futility of new consoles. I really, because we're somehow six years into this generation cycle. This is the point where, you know, new consoles are either about to be announced or stuff starting to get out there.

31:14and I know that your life would be what's Digital Foundry saying about Project Helix. What are they hearing about PlayStation 6? Right. But it doesn't feel like it's the right time to me for so many reasons. I don't think we've seen as much as we can from the current hardware. I don't think we've seen enough games. There's the price of the whole thing. This is your world more than mine. What's your take on whether we're going to see a new generation anytime soon? um well that's a very interesting question because fundamentally what is a console and it's um in theory it should be an inexpensive way to access really great games right and it's not anymore and um we've basically got um actually no let's be fair i mean price rises on switch two have been relatively uh modest compared to what's happened elsewhere wasn't it like 50 dollars or something that they've added to it so from that respect i'd still say the switch two is is okay.

32:11I mean, it's expensive compared to Switch 1, but I think the value is there. I don't think they're going to be having massive reductions in volume based on price rises. PlayStation and Xbox are in a different position because they've got more memory, they've got more expensive parts, and they use bigger SSDs. So they're really at the center of the storm, so to speak. And it's a big, big problem. Now, I think there was the will to produce consoles in 2027. We might still see them. It may not be the full-blooded successors to PlayStation 5 and Series X. I mean, Fortune article last week was quite remarkable, wasn't it?

32:57It seemed to be on background information gone mad or conjecture from the writer. But I note that the thing about the Xbox rebuttals we're seeing is that... And they don't rebut something, yeah. Yeah, you know, certain things they rebut. They've put themselves in a position where they're seemingly tackling minutiae. And then there's like things like, oh, we're going to be producing a handheld in 2027 and a full console in 2028, which is new information, which they're not rebutting. Yeah, yeah. And instead, they're talking about squabbles between different rebuttments of Microsoft. Yes. Anyway, yes.

33:31So the question is really what's going to happen there? And the cost of memory and storage in particular is so high now that the plans for the next generation of consoles are problematic because you can't make them cheaply. If you do, you're going to be subsidizing it to the tune of hundreds of dollars, which I don't think either Sony or Microsoft wants to do anymore. So there's that. So what are we dealing with? Like consoles that are going to cost well north of$1 ,000 at this point? And the other thing about the Fortune article was they were seemingly talking about a$1 ,200 to$1 ,800 Xbox. And it's kind of like the core Xbox audience are going to reject that, principally because the consoles they've got are still performing very, very well.

34:20And why should they be spending what is effectively PC money on a games machine? That's not a high volume device. That's really problematic because you can't make a console in same way that a console has been defined in the past as like a kind of accessible way to high-end gaming so to speak for Microsoft and Sony. So that's the lie of the LANs, they just can't get out a device that's going to be cheap. So what do you do, right? Seemingly Microsoft's strategy is to pivot to a handheld device which I assume will be low volume similar to what they've been doing with the ASUS collaborations, right?

34:55And probably quite expensive, that's just the way handhelds are at the moment. Sony, I don't know what they're going to do. They've got their own handheld, of course. We understand. So, you know, are they going to release that? I don't really know. PlayStation 6, I mean, Mark Cerny's always talked about it being years away. So maybe 2027 was never the plan, but we know the silicon exists. But I think the core point is, are those devices needed at the moment and um probably the answer is no i mean you saw what gta 6 extended look looked like and it was like things we've never really seen before running on a current generation piece of hardware and then you're seeing games like gears e day actually where features from unreal engine 5 which we were projecting to be seen in next generation games are actually arriving now at 60 frames per second on the series x and even a series s so this generation has got a lot of legs left in it.

35:53But let's say the next generation does come, right? The issue there is that you've still got to make Series X and PlayStation 5 versions of those games to make them commercially viable. So how do you approach development? Do you start next gen first and then downscale, or do you start with the majority of the market and then upscale everything for the new consoles? you know everything's shiny over age tracing path tracing i don't think that's probably viable enough for um uh to make a new purchase uh sort of um desirable i do sort of get the idea of the handheld idea you know because then you're effectively going it's we're going to continue the playstation 5 and continue the xbox series expert in a portable format yeah my bigger thing and i've always been this has been my pattern but sort of thing i've been banging on about the show for ages it really does come down to games and i think as much i think the playstation 5 and xbox series x generation generally speaking there's been great games on it but generally speaking has been one of the weakest generations i've ever encountered and right and i mean that partly because i haven't seen a naughty dog game not a new one anyway right and and we're not even had it yet but we're about to have one rock star title this whole generation and okay yeah we know that games taking longer to make and covid was in the middle of that as well which slowed things down But I just, I can't help but think the classic curve of the console.

37:15So you've gone through the peak, you're now on the bottom end of that curve. But I just think if we get to the point where we start, some of these big studios start turning out some really interesting and exciting games again, well, you can turn that curve up. You know, we've seen it happen. Nintendo has quite done it multiple times, actually. When you think that they're done, suddenly they get a big spike of interest in their platform because they dropped a Pokemon or something. And so I think there's lots of financial reasons why there's a justification to hold off on the next generation. But also, I think there's plenty of good stuff that this generation can do that doesn't require more advanced hardware.

37:49And also, there's the diminishing returns that we're seeing with each generation anyway, at least from a mainstream perspective. I'm sure your audience would hate to hear that kind of thing. No, no, no. You're quite right. This is true. There's no doubt about it. Basically, this console generation has actually solved most of the issues that the last one had. So what were those issues? First of all, everything was running off a laptop hard drive, which couldn't really produce enough more bandwidth to produce things like fast loading games. That would be nice, wouldn't it? That's basically been solved for this generation.

38:24Last generation, the CPUs were weak, so everything was 30 frames per second mostly. And that's been solved to a certain extent this generation. they're just much better balanced pieces of hardware and um you know putting the love to a console version of a game which is a fixed platform and it punches above its weight so that's that's you know that's fair enough right so yeah i mean from that perspective that the hardware is is is pretty good and it's good to last for a few more years yeah that's that's my take on it um yeah so i mean but you're quite right in terms of like things that have happened this generation where it's not a vintage as such, is it?

39:01So you're quite right, we haven't seen a new Naughty Dog game. I'm still waiting for Ken Levine to come back. It's been longer than but GTA 5 to see it fix. Right, yeah, there is that. But basically, we were discussing this on our podcast the other day. It's like, what is the legacy of this particular generation? And the legacy seems to have been in certain quarters, previously the focus has always been, let's say make some great gains and we're going to make some money from it. The focus this generation has been more like we're spending an awful lot of money to make gains. We've got to make sure that we make as much money as possible.

39:38And I think basically the money side of things, the ROI, the return on investment is probably more important to them than actually making the gain. So for example, is probably best exemplified by the fact we haven't seen a Naughty Dog game. And why haven't we? Because they spent years making a live service game, which they cancelled. That seems to be like the fundamental reason for that. So, yes, that's sort of one of the reasons why things haven't been particularly great for this particular generation. But my final point on that, sorry, is that basically we haven't seen the end of this generation, even as there has been the mooted arrival of new hardware.

40:16It is the case that GTA 6 is doing things we've never seen before on a console. Gears E-Day is taking graphics to the next level and you're just sort of sitting there thinking, yeah, maybe it is best to pause and leave things as they are. I've taken up too much of your time, I really have. I'm glad that things are going well for Digital Foundry. I know it's an uncertain time, but thank you for your time. Where can people find Digital Foundry if there's anyone who are listening to this that somehow doesn't know what it is? intub.com slash digital foundry should do the trick um digital foundry.net is the home of our website presence thank you for coming on cheers thank you to richard there lots and lots and lots to think about a little bit of a bleak outlook there for the hardware sector but hopefully at some point prices might fall maybe might be a few years yet right we do have a second part of the episode that's coming up in just a few hours or depending when you listen to this it might already be out so do make sure you don't miss that as i say it's a really fun little story so do come back for that.

41:14But in the meantime, let's do our news roundup, shall we? So this story, my goodness. So I don't know if you've seen this. Xbox's first COO, Helen Chang, left the company after only three months in the role. We reported on that last week. Now, there was a report on Eurogamer that she was let go due to policy violations. Now, I didn't report on that bit, not because I doubt Eurogamer's credibility, but because I'm aware of perhaps political motivations behind that story being out there well now helen chang has fired back a little bit on linkedin there's been some speculation about my abrupt departure from microsoft she wrote including claims that i was fired for a policy violation that's not accurate and while i won't turn this into a play-by-play silence should not be mistaken for agreement what has been said about my departure and what has been left unsaid has created a picture of me that i hardly recognize is important to me to set the record straight and doing the record straight she says she goes on to said that she didn't leak information to journalists she hasn't left xbox to go to a competitor i did note that she put xbox in all caps during this in this linkedin post so still sticking to the style guide third she did not engage in discrimination bullying harassment insider trading embezzlement or other fraudulent activity and she did not leave because she was passed over for a bigger role and that didn't really make much sense anyway because she's only just been made coo um she wrote i believe in fairness accountability and holding ourselves to the standard we expect of others those standards only mean something when they're applied because Consistently, I have serious concerns about how they were applied in my case, and I believe those concerns deserve to be taken seriously.

42:44This is not how I imagine my story here would end, and it's not the whole story. And there are many comments under there, including from former Xbox executive Shannon Loftus, that have fired quite fiery viewpoints at the current Xbox management. And I do get lots of texts and emails and the occasional phone call from within the walls of Xbox. and there are currently strong feelings about that new management team there. Not all negative, though, I must stress. Some field change was long overdue and they're excited by the change that's happening. I mean, obviously some of the change, some of the change is deeply negative, such as the job cuts and the Xbox studio closures.

43:20I think we all knew things needed to change at Xbox. Whether the changes that are being made now are the right ones, time will tell, but there were very strong feelings on both sides of that viewpoint internally at that company and and that sort of seems to be flowing out there from this rather surprising helen chang story i interviewed helen once um around mojang it was about five six years ago she was she was lovely i certainly didn't give me the impression of anybody that would do it have do anything wrong but uh and she says she didn't so there we are right next story newly released wuxia action rpg phantom blade zero has already surpassed four million copies sold in just three days another sales milestone stories the boardland franchise has now sold 100 million copies worldwide that's pretty impressive remedy has posted third quarter revenue of 39.6 million euros as a rise of 226 over the year before this follows the september launch of control resonant the game has sold 1 million copies which is the company's fastest selling game to date it's also the firm's second self-published game after its smaller live service launch last year fbc vibrate for me it's really their first major self-published game and the game still has some way to go of course it had 2.4 million wish lists going into launch they've still got plenty of people to reach whereas the original control is on six million sales there's there's certainly room for growth there for that title um polish developer ci games has secured a 32 million dollar loan from two lenders to fund the development and launch of lords of the fallen two it's going to self-publish that as well it will also refinance all the group's existing debt we thought this was coming but gang of dragon developer negotiate studio has closed down after chinese giant netis pulled its funding Games platform Itch has deleted a couple of terabytes of AI slop slash spam from its service.

44:57It's also introduced a filter that allows users to filter out games made with generative AI. You're supposed to disclose where you've got generative AI use in your game on that platform. Toy giant Tony, which is behind IP such as Beyblade and also designs Transformers, it sort of operates that franchise in partnership with Hasbro, has launched an indie publisher called Enjoying Games. Its first game is called Sack and Sus, a social deduction game about burgers and betrayal. Interesting. Dishonored developer Arkane has been given extra time to find a buyer by Xbox. The studio faced closure in mid-November and now has until mid-December to find a new home.

45:29Indie developer Maddy Makes Games has delisted Celeste and Towerfall from Xbox to support the pro-Palestinian boycott divestment sanctions movement. It's not the first company to do that. I'm sure it won't be the last. From Software has delayed Nintendo Switch 2 exclusive The Dustbloods into 2027. That's not much of a surprise there. A very odd game, The Dustbloods. I really wouldn't... I don't get it. um it looks cool but i don't i from software being on nintendo isn't that unusual because we just had you know elden ring and and we've had games like dark souls on there in the past and and you go all the way back to sort of the gamecube there was games like lost kingdoms but sort of a multiplayer-y dustbloods i don't know interesting investment firm denmu has closed its debut fund and exceeded its initial 15 million dollar target denmu has already backed companies and projects including styles galactic racer developer fused games upcoming racer clutch from Maverick Games Daba Land of Water Scar from Dark Star Games which is being published by PlayStation that one Well Dweller from Top Hat Studios Motorslice from Brazilian developer Regular Studio and there's loads more there so they've raised a lot of money that company and finally Bethesda has officially confirmed that the next game in the Elder Scrolls series will be called The Elder Scrolls 6 Sentinel it is the sequel to the 2011 game Elder Scrolls 5 Skyrim it's been a long time coming that one right that's it for today's episode of the Game Business Show, except it isn't.

46:47There is a part two that is to follow and it's a great story about long forgotten video games from our past coming back and indeed how those games were found. So join us back for that one. But if you're going to skip that, I really wish you wouldn't. But if you do, we will be back, of course, next week with more news analysis, insight and interviews into the video game industry. To make sure you don't miss anything, head to thegamebusiness.com, put in your email address and you'll get another every single time we put out an episode. Plus, you'll get a write-up of every episode that we do in newsletter form.

47:16But that's it from us, at least for the next few hours. Until next time, thank you for tuning in.