The video games most at risk from PlayStation’s physical switch-off

0:00This week, what would$1 ,000 game machines mean for the console sector? How should publishers prepare for a no-dis future? We speak to Gamescom on the eve of its 2026 show. Hello and welcome to the Game Business Show. This week's edition is sponsored by Keyword Studios. Keyword Studios calls itself the video game industry end-to-end partner and that means they help game developers make the games, launch the games and then support them afterwards. and they've got great technology they're strong partners they've got 13 000 people across 26 countries and they're all experts when it comes to the player experience one of the many things they do is around marketing and player engagement it's all about helping game companies understand their players more clearly and building strong relationships with them and keywords does this free player support trust and safety community insight building an engagement strategy and more it's all about responding to player needs with relevance care and impact you can find out more More about that on the Keyword Studios website, or alternatively, check out the newsletter attached with this episode.

1:04Now, back to the show. It's a bumper edition this week, but before we get to that, a quick note. We have a summer sale now on for paid subscribers to the game business. Paid subscribers get an extra weekly podcast and newsletter, which comes out on a Monday and reacts to breaking news stories going on in the industry. It's called Here's the Dring, which I think might be funny. Paid subscribers get that. They also get a monthly market report from me and they get access to the game business live in Los Angeles in June at no extra cost. Also, pay subscribers support everything we do. We do have some sponsors, as you've just heard, which helps a lot, but doesn't cover everything.

1:39So if you're interested in that, please do consider it. It's currently 25 % off until the end of August, less than a cup of coffee a month. And we've got quite a couple of weeks ahead as well. And it'd be great to get your support. And in fact, some of the interviews we've got coming up, we've got Unity, we've got Roblox, we've got CD Projekt. We've got a bunch of breaking stories. And those are just a couple of the names you can expect to hear from us in the next few weeks. Some of that is coming from Gamescom. And in a moment, I'm going to welcome Felix Falk, the Managing Director of the German Games Industry Association and Co-Organizer of Gamescom, to chat about this year's event.

2:11But before we get to that, we have a returning guest with a folder of data that looks at what might happen if video game consoles rise to$1 ,000. And also some insight into the potential immediate impact of PlayStation stopping disc production in January 2028. If you want to look at the data, I recommend looking at the newsletter because it's presented an easier way to read than hearing it on a podcast. But anyway, he is the Senior Director for Games at Ampere Analysis. His name is Piers Harding-Rolls. Hello, Piers. Welcome to the show. Hi, Chris. Lovely to be here again. It's always good to have you on.

2:44You've put our report that was pretty depressing reading. it was around the prospect of these$1 ,000 consoles, which might happen as a result of the component crisis and shortage that's impacting hardware prices. It was a kind of scenario, I would say. Yes, scenario. Kind of preempt it. Direct us away from that inevitability, I think. That's the idea behind it. I'm trying to be more positive, i.e. that it's going to drive innovation because our warning is if the next-gen consoles do launch at$1 ,000, that we'll see a significant drop-off in adoption because of that. We've already seen a$1 ,000 Steam machine, though, so it's not a completely unimaginable future.

3:24And the headline stat is, according to your scenario forecast, is we might end up with a potential 38 % drop in next-gen console sales volume over five years at a$1 ,000 launch price. You also did a, I thought it was quite funny, look, what happens if it was an$800 launch price or if it was a$700 launch price? And all of it's a drop. It's not like, oh, it's just that particular price point is the problem. It seems to be any. Yeah, I think the scenarios, they work out a bit different because the impact on the actual spending and longevity of the existing consoles that are in the market are different.

3:59And if you had obviously less people adopting next-gen consoles at a very high price point,$1 ,000, you'd get people hanging onto their devices and publishers would be supporting those devices for longer. and I think you don't go to cycle. So the actual impact on the market probably isn't heavily felt until at least three years into the next generation because eventually you've got people that are lapsed out of using their existing consoles and they're still not convinced to buy the next gen at a higher price point. So that's when you start to hit probably a negative impact on the market. So there is this window of opportunity, I think.

4:39you've got from now until, well, the current expected end of 28 launch of the next generation, you know, conceivably they might extend it out beyond that. But then even if they were to launch then, you've got another probably two or three years before you start to have an impact on the actual spending and scale of the market. So, you know, even in that sort of worst case scenario, very expensive consoles, you're going to get a situation where they've got this window of opportunity to try and make an impact and conceivably cost of components could come down by that point other strategies might be put in place to try and lower the price which is historically what we used to see yeah you know as the life cycle went through and you got into sort of year three and four we used to have price drops because we get back to that well you know we're at a very high price point because of the high pricing because of the component costs and stuff but in sort of four or five years time the situation may be significantly different i think the problem about the thousand dollar is i don't think either of the console manufacturers will be warning to price at that point you know at that price point no this is a kind of warning that if they do obviously and they just bring out you know incrementally improved graphically improved devices without much change that um we're going to end up with having a smaller adoption and a potentially smaller market after a few years.

6:05That's the flaw of any analysis, is we can't factor in innovation, can we? We have to assume that PS6 is going to be a PS5 that runs a bit better and looks a bit fancier. And the reality is it could be completely different. There's reports of it being handheld and all sorts of things, and that changes the whole picture entirely. It's inevitable that it's going to be more innovation, and that's being driven by the challenging economics of the situation. Without any change, keeping the status quo, we're going to head to a situation which is is not great for the market but if we do innovate and drive upgrades because you're bringing to something really interesting to the market there's going to be a distinct change from the current generation then i think got obviously got a good chance to to reestablish growth and stuff i think the challenge of innovation is that in this cross-gen world you know we talk about the fact that people are going to be holding on to their ps5s for a lot longer this time with this is what we think will happen you can't do like a we and completely break everything with the next gen because people want the games to run across devices.

7:04They also want it to run across multiple platforms as well. We got Sony with the DualSense, which is like it's quite an innovative controller in a way, but it was done in such a way that, you know, you can make a PS5 version, but you can still work on Xbox and PC. And I think that's probably the sticking point. I am going to I'm going to have to guess you can't do like a next playground and go, right, we're going to the camera will be the controller the next time around. Yeah, I don't think it will be that kind of technological disconnect from the previous generation. Like you say, it's very hard to do that because you want to be supporting the existing generation of users with the same content and being able to come across generational publish.

7:43So it could be something like a hybrid device, which is exactly what Nintendo did with the Switch. But it's not necessarily about outputting kind of more graphics and stuff. It's more about a similar kind of output, but that's achievable at a price point that is significantly below$1 ,000. I don't want to get back on my old normal soapbox of this, but actually innovation in anything comes down to games, really. Look, the PS4 wasn't a huge, it was visually very nice, but it wasn't a huge difference between PS3. What came with PS4, and I think back to that launch, is the games everyone was talking about wasn't Call of Duty.

8:28and it wasn't the next, you know, Gran Turismo or whatever. It was Destiny and Watch Dogs. Like, those are these two big new IPs that weren't as... Destiny was quite unique at the moment, but Watch Dogs wasn't quite as innovative as I think people expected it to be. But both of those games were different and new, and it was like, oh, this is exciting. This is what the next gen brings, something different and new. And I think when I look at the Switch that happened with the PS4, PS5, the games that launched that console, most of them played on the old one, even the big first party titles and in fact the ones that didn't were like remakes and an astrobot and i and i feel that when you talk about innovation it comes down to what is that game i've got to get a pier six because i need to play this game and i don't know if you're going to get that in the first three years i imagine you know that parties obviously they don't really do exclusivity anymore that much basically um so it comes down to investment in first party content in effect I think we've had some news this week about Sony looking to invest in new IP and stuff and build up some more franchises.

9:34The challenge of that is obviously risk-laden in the context of investment versus return because they cost so much to develop this content and stuff. So you have a whole kind of balance of investment risk that's got to be done across both the hardware and the software kind of proposition. I've talked to a lot of developers this last first time I've heard it and I've heard it a few times in the last couple of weeks now people telling me the cost of games has gone down it is because they're doing it with smaller teams it's not really AI that's done it but some people are talking about that it's smaller teams and it's being more focused and it's faster tools and making games quicker we've been talking about it for years but first I'm actually hearing people tell me no the cost of games are going down so it might be they'll be able to make these things faster But I don't necessarily talk about exclusivity.

10:26I mean more sort of generational exclusivity. You know what I mean? Like Watch Dogs and Destiny weren't exclusive to any particular platform, but they were cross-generation. But because they came at that moment between generation, it created this sort of... I think the costs involved mean that generational exclusivity for third party is hard. Yeah, but I think the example I was just giving, you know, Destiny was on PS3. And so it was, I think, someone's going to correct me. And I just think when you launch a new machine, hey, we're done this. We got it running on the old stuff, but look how good it runs on the new stuff.

11:03And I don't know if we really had that. Spider-Man and Miles Morales ran really well on the PS4. Ran better on the PS5, but it was the difference. It was that incremental improvement, really. and I don't you know PS5 and the X-World series are already really capable devices and then if you're going to step that up um you know what improvements are you going to have in the graphical department so higher frame rates potentially more reflections well yeah but I just think I just think I'm not sure I'm phrasing my I just think the innovation has to come from the games you can sit there and Kybrid's interesting that might do it but if you're going to go right we're going to launch a new generation and we're going to create some innovative things.

11:46You need the games to showcase the innovative things. That can come from third party, it can work cross-generation, but it still needs, you still need to say you could get Game X on the PS5 and it will run fine, but on the PS6... But you need the new device, yeah, yeah. It will allow you to do these extra things as well. Well, I think more of that probably would be GTA 6, you know, that would be a fundamental thing, which is, you know, would bring a version to the next generation of consoles, which will be fundamentally an improvement versus the PlayStation 5 Xbox Series version. So there are ways to build kind of demand and interest and kind of fear of missing out and wanting to upgrade.

12:29But fundamentally, if you've got a device that costs, I don't think it's for the early adopters necessarily, they probably won't mind about the price so much, even if it reaches up to those higher levels it's it's more that the uh the extension of the lack of adoptions happens after you know it gets extended out over those kind of opening years and it's it's after kind of year one and two that you start to see the divergence and i guess we're seeing these platform holders now trying to do things to improve margins elsewhere to potentially avoid these price points so um investment in ad-funded models from xbox and we've got obviously playstation dropping physical discs obviously i know that there's other companies thinking streaming might be the thing i'm not convinced by that but we are starting to see these efforts that's kind of incremental lose isn't it it's kind of chipping off at the block to try and get into a better position before you know um coming to market yeah well let's use that to segue into a chat about discs because um in january 2028 playstation will be dropping physical discs uh we've brought it up a few times on the show.

13:37We've shared some data. We're going to go a bit deeper this time and more on the potential impact for publishers and why they might need to be thinking about how to mitigate this. And Piers, you've been doing some data analysis. I have two, but not to your level. It shows that, yes, the market is mostly digital. We know that. But these sort of percentage figures that people are throwing around, the business is 90 % digital, et cetera. It doesn't really paint the full picture, does it? It's a much more nuanced situation, I would say. Yeah, because there is going to be some pain felt, particularly in certain markets and for certain genres.

14:08Anyway, you've got some figures. Yes, initially we looked at the PlayStation sales of some of the AAA titles that have come out in the recent 18 months or so. And you can see that there is a big variance between different types of games. So we had a discussion about Helldivers 2, for example, a live service title, online title. The share of physical for that sort of game is obviously much lower than the share of physical for something like a Capcom title like Resident Evil Requiem, which in total looks quite positive in the context of it's around 30 % or slightly above that in terms of total sales being physical.

14:58And that fits into the overall sort of analysis when you're looking at a company that's like Capcom that's saying 90 % of our business is digital and 10 % is physical across the whole portfolio. But there is a difference for new releases. So they have this kind of new release dynamic, which means for certain AAA get-ins, which means that the physical is higher. And then on top of that, you've got differences between different markets. So if you look at where obviously a significant volume takes place in the US, the digital share is much higher than, say, in France, for example, where it's quite common for it to be 50%.

15:49So you look at the US, it's around 20%. The UK is different again. Australia is different again. Japan is different again. So you have these different percentage shares in different markets where retail is obviously more effective or there is a more established games retail and there's more activity around physical sales. And that means publishers are going to have to develop strategies for different markets to try and educate the audience and convert that audience over to digital consumption. And that's going to take place probably over the next, as we run up to the removal of physical media of new games in January, 2020 through PlayStation, that's going to have to start taking place now to kind of mitigate any lost customer that A, isn't really up speed with digital purchase or just doesn't you know use those sales channels and be you know doesn't know how to necessarily you know go about scoring stuff digitally so there's there's this whole kind of educational and transitional period which needs to take place and companies with games which are more heavily physical obviously have to invest more in that and similarly you know I think there's going to be involvement with retail because that's where a lot of the awareness and of these titles, the awareness and kind of understanding that these games are available.

17:28You know, when you think about gifting and stuff like that, if you look at the Astro box figures, for example, you know, the digital, the physical share is significantly higher because a lot of that is the more kind of family casual audience, which has bought this as a gifting opportunity. So there's retailers that have to be involved and I also think slightly that Sony will be involved in conjunction with the publishers to implement a strategy of transitioning people across to the digital opportunity. I've talked about it a little bit on them. I love the most as I seem to have angered both groups of people.

18:03People that say that's not such a big deal and those that are very adamant that this is a big deal. I will say a statistic like I think 10 % is a lot of people right you know it's um i know we're saying oh it's not it's not the majority even you said 30 30 30 is low just a third of resident evil players bought the game physically there's a lot of players to suddenly lose um or risk losing i know you know that won't be the number but you are talking you know i think there's a few strategies here um you mentioned retail um it's interesting how willing retail are going to be i think that's the that's part of this because it used to be the model and there's always been this discomfort between retailers and publishers but um there is this used to be the model that you know retailer retailers would sell hardware for not a lot of money really they wouldn't not they wouldn't get much good margin on it the idea is they make the margin back on the software and that was the whole model of it and that's the whole model of the platform holders but it's the model of the retailers as well and we now live in a market we're expecting retailers to sell games where they're giving away customers that's specifically why sony and their announcement, they made this, you know, points about retailers and the availability of digital prepaid codes or boxed, you know, prepaid codes, which this is what we're getting with GTA 6.

19:21What was a little about GTA 6? Yeah. Yeah. I mean, that is part of the transition kind of management, but it means that retailers still have some skin in the game, so to speak, and will be, I think, more willing to, you know, take ownership of part of that with kind of understanding and awareness, education and stuff. So I don't, you know, I get your point, you know, but I think retailers will still want to get involved because they still have this opportunity to sell packaged or box games, even if they are digital codes and not the actual physical media. It is worth noting that I don't have the exact era stat here, but I'm not exaggerating it really.

20:07Something like 98 % of physical games are sold from online retailers like Amazon. They're not sold in actual shops. So even that element of it, yes, it's physical, but it's online physical. And that's a UK number, by the way. I guess GTA is going to be a big education moment, right? Because if there's one game that will teach everyone, oh, you should download your console games. you know it's get this is a good uh i say good depending on your point of view but from an educational point of view this is a good it's good that that's that's the game that's going to be doing this because it will teach loads of people that that this is what a physical game is it's a code in the box and um and if you can just download it um so i think that might be a key education i mean there'll be other other publishers will follow on with the same stretch once it once this day's place i'm sure it's going to happen are we really because of some games it's worth noting that we're talking about, you know, we're talking two years away and there's some companies will have, I'm not just talking the annual iterative sports games, but them as well, where they've got a year now to try and go, right, the next game, there will be a physical version of it, but maybe we can use that opportunity to pivot more players to digital.

21:23So the game I'm thinking about, because we're talking here, Resident Evil Requiem, right? Heavily digital, everly physical in some markets like france 40 in the uk right big big number um but there is a resident evil next year in fact they try and do a resident evil every year and then and you think well next year's resident evil they might want to get that number down as much as they can and that yeah so they it's all about you know the the physical they in a way they did it this year but it didn't really work so well because previous resident evils they used to do these really fancy collector's editions where you got like a box and a statue they didn't do that for requiem not really there was there was a few bits but um um a lot of the a lot of the extra goods you could get the physical goods you could get for requiem you had to buy separately they weren't part of a collector's edition what is interesting is the gta 6 um proposition is you know the kind of pre-order giveaway and stuff like that it's actually fairly uh minimal they're not giving early access because that's one of the key drivers is early access um you know surprising not see it's pretty consistent with their previous releases so i know it's all digital in effect but um you know actually driving people to that um higher higher price point pre-order um proposition is is is not actually giving away a huge amount because they you know they don't really need to um they're definitely is moves from other publishers and same with Xbox to drive people to digital kind of pre-ordering.

22:57And that's only going to accelerate the shift. So, you know, I wouldn't be surprised by the time we get to January 2028. There will have been a whole shift and transition of users across digital during this kind of educational period. And it's why Tony gave this amount of time and preparation. You know, you're thinking, why do they announce it? now. The reason was because they need to give the industry the time to educate the audience and make the transition, but get ready commercially to do that. There will need to be investment in terms of how do they get the buyer audience. For AAA games, which have a high propensity to have good physical sales at launch, how do you convert that audience and get them across so there's there's time and investment i wouldn't be surprised if this causes a drop in day one purchases i just think i think about you know and i think that's a bit of a that's where things get complicated because i i do believe there is an audience of people the most avid fans the most be biggest advocate for the people that want to go there day one um and that's fine they'll go digital but i do think there is this group of people of which i'm one of and i don't know if representative of a large group or a small group of people that goes i don't know if i like this i'm not sure it seems interesting it's i mean the trailer attracted me but it's not a game in my favorite franchise or something but i might give it a go i'll go give it i'll buy that you know i'll buy 007 first light or whatever um and i'm more inclined and i will get and i have a habit of just giving things a go if i can buy the physical copy because you know even though i never do i It's just a gate in my mind.

24:41I could give it away or sell it to someone, you know, if they don't like it. I'm willing to take a risk because if you're taking a risk on a$70 or$80 game and it's a digital game and you don't like it, that's$80 you've just lost, basically, or wasted. If you take a risk on an$80 game and it's a physical game, it might be, you know, I can sell that on and I've lost$30. And it's a different, it's just a different risk. But this debate, Chris, has been going on for two decades. Should we try and sort of stop the pre-owned market somehow? And what would the impact be on day one sales? Because obviously, you know, people that don't buy the pre-owned, are they shifted towards buying the new purchase?

25:31Or, in your kind of argument, is this going to drop and cannibalize, But in effect, it's going to drop day one sales because people are just not going to buy them because they're not physical. Well, I think it's the pre-owned stuff, I think, people bring this up on social media at the time. I think it's a pointless conversation in 2026. It absolutely was a major conversation 15 years ago. That's what I mean. It's been going on. But back then, everyone did pre-owned, right? They're actively saying to you, give the games back to us, we'll give you stuff, right? And I remember when I was at university, I would take four old FIFA games into the game and I would get the latest Ubisoft title for 99p.

26:10It was like I used to do that all the time. They didn't always accept FIFA games, but that's what I used to do. It was basically a dual-glorified rental system for me and certain people. I'd sit there and play a game. If I liked it, if I loved it, I kept it. I thought it was all right. It went on a pile of stuff that eventually I'd take back to games to get another one. And I do think, particularly at that time, when you think about the amount of physical games that came out every week, people talk about September being busy. I remember one week in November being twice the size of this entire year's AAA schedule, right?

26:41That was in 2008. It was like something like World of Warcraft, which was in a box back then, and Football Manager, and WWE, and Need for Speed, and a Call of Duty game. It was in the same week, Guitar Hero title. And Banjo-Kazooie, Gears of War, all of that within like seven days of each other. And that was normal back then. But I always felt that that pre-owned market benefited from that. And Gain used to have a statistic that said that 98, percent of people who traded in games traded against in-store credit so you they traded it in against things to buy against the next they weren't trading into cash now that was obviously an issue in a debate back then and it's important i think it's pointless that game don't do pre-owned back then argos asda did pre-owned asda don't do pre-owned cx still does yeah and you can still have ebay and all that kind of stuff it's more on ebay and stuff it's not much more than it used to be but i think it is like from a collector point of view or people that just want to own a tangible piece of media then um obviously it is uh it's um you know upsetting to understand that sony is not going to be producing yeah and if there's a thing i'm moving on from that conversation i think it's not the right call when i and i understand that ps6 won't have a hard drive and all this kind of stuff i think that there is an audience small cottage industry here that you can just allow to happen like it's not a case of supporting it you can just let it happen but um but that's a almost a that we've had that chat it's just like a like a playstation 6 i mean part of the reason might be because i think you're doing something you know how i grid or something like that i think a playstation 6 could be um you know could have a you know add-on drive like like they've done for the PlayStation 5, because people will still have physical kind of PlayStation 5 games that they want to play on there.

28:32So I don't, it's not necessarily the death of the obviously new games from January 20, 28, and not gonna have to, I don't think they're gonna reverse that decision anyway. I wouldn't be surprised, you know, I think Xbox is probably shifting, you know, wants to shift users progressively, obviously it benefits them both. around margin sales and all this kind of stuff. So I wouldn't be surprised if Xbox followed. But even I don't think it's a big deal. I used to do this when I used to report the GSD data all the time. I would go, I'd do a bit of digital analysis and I'd go like Nintendo's, sometimes Nintendo can be 70, 80 % physical in certain markets, even higher than that in certain cases, right this is switch not switch two and um um playstation would be 50 depending on the market like france it could be 50 60 physical right which is what we saw with resident evil requiem for instance so that can be heavily physical and then you get to xbox and it's like 10 right and um and and i think that's partly xbox series s being a very very popular platform you know particularly at the start like i'm not saying it's half now but it certainly was half for a long time of all sales for series s so half the owners of a of an xbox don't own i don't have a hard drive they don't have a disk drive and then you've also got things like game pass which i think trains its audience i also think the types of games that sell well on xbox like the hell divers 2 example we gave earlier are lean more heavily to the online digital world so i think that audience is a lot more digital savvy and they're not they're not that far off the pc numbers really in terms of digital so i think for xbox it's like if they drop discs i don't i think the probably a lot lot quieter um even even even when you know a lot of vocal yeah vocal people i guess um i'm aware that we sort of we sort of deviated off there a little bit but yeah i so i think from from if you're i think it depends on the publisher you've mentioned a couple of examples there so games like astrobots or kids games family games maybe nostalgia games actually a bit nostalgic single-story games.

30:38I mean, I think the point is you start off with a kind of portfolio analysis. You know, what is our overall percentage of digital? Which is kind of what Capcom announced in its earnings. You know, it shares how much in digital you can see in the earnings reports and stuff. And then, like, how many AAA games have we got coming? Are there AAA games? What are those like here that are going to be, you know, higher physical? How many of those games we've got as a portfolio? or how exposed are we to this? And then you start doing the country level stuff. So there is quite a lot of complexity to this in terms of managing your audience.

31:13And I think internally within publishers, they're already starting to discuss strategies to manage this basically. But luckily we've got this window of opportunities to do that. time. And GTA can train them all anyway. It'll be fine. Piers, I'm conscious of the time. Thank you, though. Are you going out to Gamescom? I will be at Gamescom, yes. Well, you might like my next guest then. We're about to welcome Felix Falk, who is the Managed Director of the German Games Industry Association and the co-organiser of Gamescom. So, Piers, thank you. And now over to Felix. Hello, Felix. Welcome to the show.

31:54Hi. Good to see you again. Wow. Great numbers. every year. Gamescom sold out for exhibitors. You can't fit any more exhibitors in. The numbers keep going up. Do you have any challenges? It just seems to be always everything's going in the right direction. Yeah, I mean, it's crazy and we're really delighted that it works like this. I mean, we as an association with all our members, we know how hard it's been in the past years for the games industry. So to see on the opposite that Gamescom is going really well and we are breaking records every year somehow feels, you know, strange. But on the other hand, it's great to see that Gamescom helps the industry to show what's the next new thing, to talk about investments, to talk about new ideas, new growth, new companies, new games.

32:40So I think for the international games industry, Gamescom is very important. And especially in tough times, it's even more important to think about the future. And that's what we do at Gamescom. So I'm really happy that we are able to provide this important stage. And this year, yes, if you ask for challenges, we are sold out for the first time. So of course, it will be a challenge to rearrange things for next year, but we're already in the middle of planning for 27 and the years afterwards. So I don't have any worries that we will be able to grow. And especially for me, when I saw the numbers for the country pavilions, which are growing this year from 40 to 47, so almost 20%.

33:24We have new country pavilions from Cyprus, from Morocco, from Nigeria. So it's great to see that all these countries come to Gamescom to do business, and that's the beauty of Gamescom. So all the challenges we have are challenges I can't complain about. Yeah, we've got good problems. Can you actually fit more people in? I know you can probably open more halls and get more exhibitors in, but can you actually fit more guests in? Is that a good idea? Yeah, we don't want to fit too many people in because Gamescom is not only about people on site. I mean, we have hundreds of thousands. So last year we had 357 ,000 people.

34:02It doesn't really matter if it's 10K more or less because the majority of growth has been in the digital reach. So we have massive reach in people tuning in from everywhere in the world for Gamescom, which is millions of people. We had more than a billion people last year. So that's more important than the people on site. But of course, we always try to find the good balance between as many people as possible, but not limiting the quality of stay for people. So that's why 2019, we had a situation where we had too many people. So the complaints were going up and people said it's too full and, you know, it's too busy.

34:46And, you know, it starts to feel squeezed. So we went down from there and we give less tickets to the market than we could do. Judesa already sold out because it's important for us that this day is perfect for everyone who's there and gets multiplicated into the world via digital. Well, let's talk about digital then, because obviously Gamescom is becoming a bigger destination for game reveals. And last year, I was really impressed with Lego Batman and Call of Duty and stuff like that. But it's still very much like the third place people go. It's like the Game Awards, Summer Game Fest, and then maybe it's Gamescom.

35:20Is it a European thing? Does that hold us back a little bit? I think it's, of course, the focus on community. So Gamescom is the heart of gaming for the community. And that's, of course, for them, at best to have also hands-on. So when you see the different marketing beats of games, it's quite normal that something you want to present with a hands-on demo at Gamescom. We had really nice examples where companies made it to announce it in opening night live and have it hands-on next day at Gamescom. But of course, you know, that's tough. And this also reduces the number of marketing beats for the companies.

36:01So we do see that the amount of marketing beats for a game is extended. So there are more marketing beats. So it's always a mix. And we do see a lot of announcements also this year at Gamescom. but the core is the community experience and the background stories and the discussions and the conversation and the dialogue, you know, from cosplay to esports, everything. I think it's a mixture of this. It's not like one event where it's always only about announcements. It's a 360-degree festival, which has everything in there. What I didn't know you did was this indie showcase, Open Night Live, I thought was the thing.

36:40I mean, you've got this indie one as well, which we teamed up with IGN this year. That's cool. And I guess, I'd hopefully give it a bigger reach and make that more of a thing for you. Yes, we are extending what we do for indies and with GAPESCOM Awesome Indie, the show which we had the last years, we want to make it bigger. We did more investment to get more reach for this and more people tuning in. because in the end, even for us as organizers, sometimes we meet for evaluation in September and people say, oh, have you seen this? And I say, oh, no, I haven't even noticed because it's so huge and so massive.

37:17So it is important with all these things happening to find more slots for also indies. And that's what we do this year. And by the way, the indie space is growing. we have 16 % plus from exhibitors in the indie space. So it's a core feature of what's happening at Gamescom is indies, which is great because the diversity and the, you know, how much is happening at Gamescom, this is one example for this. I don't know if you know this, Felix, but I obviously speak to a lot of event companies. I used to work at ReadPop as well, so things like Comic Cons and the PAXs and the stuff, and they're all looking at you and they hate you.

38:00Like, you know, it's just, they're really struggling and it's, I guess the scale of Gamescom is part of it. But one of the events that I've been following for years, ever since it was GDC Europe and then it became DevCom and now you've rebranded it to Gamescom Dev. Is it working? Is the rebrand sort of taking you in the right direction you want to do with that? Yeah, it's working really well. It's not only the new name, Gamescom DevFiles, it's also the closer integration into Gamescom. So, for example, for business tickets, we changed the whole business structure to make people aware of the fact that they can do five days, the whole week of business.

38:37So business is starting on the Monday at Gamescom Dev, you know, goes into Gamescom business area until Friday. So this helps a lot for better understanding what you actually can do and where you can do business and meetings. uh by the way um when it comes to other event organizers we are a great partnership as you know they they tell me and we have you know we invite them and they are gamescom and we learn from each other and so uh we do i don't really hate you i was only joking and nobody because um as it was with e3 in former days and also with gdc it's a partnership because it's not only you know there's not only space for one event that's also why we created gamescom asia and gamescom latam in sao paulo and in thailand in bangkok because um there are more places in the year calendar and also in the world which are in important for the games industry so um i think it's a partnership it's tough for smaller events and especially for mid-size events because a digital is so important that you can't as you know many companies don't decide for 10 events um but maybe only for one or two and so of course with this size of gamescom and this importance the global relevance of gamescom it's easier for us but we also work hard for this uh when you remember uh covet and when we did to just Digital Gamescom.

40:14That was no fun for the team and everyone, but we still did it because it's so important. So we invest a lot and do a lot to fulfill the needs of the industry and of the community. Showing us the topic a little bit, talk to me about this democracy theme because this is interesting. This is new. It's not new. It's part of the games industry and that topics of society and also political topics which are not directly connected to games are important for us because we are a massive factor for economy, for society, for culture. So I think there's also a responsibility. So at Gamescom, we do this with our program Gamescom Cares.

40:59And maybe you remember last year, Opening Night Live, where we had a Gamescom highlight, a Gamescom Cares highlight with the developer developing games for democracy. and presented a couple of them. So that was one of my highlights of the show. And this year, we have the chance for the first time that the highest representative of Germany, our president, is attending Gamescom. So that's on the Gamescom Thursday where we talk about the potentials of games for democracy because in broader society, there's still, and media, general interest media, there's still misunderstanding about games. So, I mean, you might remember how often there are articles about toxic behavior in games and, you know, gamers with a very narrow view on this community.

41:49And we want to, which studies actually tell in Germany as well, and we want to tell people that it's especially gamers in the gaming industry who have a great potential for things like democracy. and in our times right now, what you can see with all the problems GDC has, it's so important to show where we are standing and why diversity, why democracy, why all of these things are so important for the successful games industry and how we and our community can help democracy because what those studies have shown, the activism and the engagement of the community is much higher than in the rest of the society.

42:41So gamers are more willing to donate, to collect donations, to sign positions, to demonstrate, to engage for things like democracy. And that's a chance. I've just been reading this. you might have seen this but this is from one of my one of our regular guests and he's taught and the whole book is about how it's on my desk yeah yeah it says george and he and um it's all about how you know basically bad actors are using games well i'm not saying not all of the bad actors i wouldn't be careful of saying that but certainly certain different uh maybe non-democratic societies are using video games in trying to influence things and yeah i think it's an important education tool Yeah, and Josh will be at Gamescom Congress talking about this.

43:28So we use the reach and the importance of Gamescom to also shed a light on these important topics because I think we need to be aware of these movements and we need to hold back and fight back because, you know, all the international teams working creatively on the development of games, they're dependent on these values and it's why why we need to fight for this yeah well that's a bit very serious topic this is also quite important but you issued a political statement um for more support for european and the german game scene in particular you know what this speaks to something felix i went to see a uk developer a couple of weeks ago we actually did we did the last week with sumo and they've told me that they have had to reduce like a lot of studios cut back and they've cut staff in the uk but they haven't cut any stuff from their india office That worries me a little bit because Sumo was a UK independent company.

44:21I know this is not a European business, but it was a UK independent company, but it's now owned by Tencent. And that's not unusual. A lot of our top game companies are owned by Chinese or Japanese or American companies. But it was always sort of OK because at least that led to job creation and investment and stuff like that. But now we're seeing those jobs being outsourced to places like India, to China, to some places in Europe as well. but see the money is sort of flowing out and now the jobs are as well and i think it's more important than ever that you know the games industry gets backed and supported because in in not just in the us as well and canada and all the west really for me and maybe i'm over worrying about it um but there feels like a threat here that if we're not careful we might see this industries in these markets fall away quite fast.

45:12That wasn't a question. I thought the statement was important. Yeah, I mean, interesting optimization. I don't see this for our industry. Of course, there have been cuts everywhere in the past years in the games industry. But the difference for industries like a movie or other industry, the production is stronger than in other industry connected to the place where it happens because you can't, you know, there are some assets you can get from supporting studios in India or wherever, but the core creative team needs to be on side and needs to stay there for years and years. So that's why the effects for also a government are so positive and that's why so many countries support games production.

46:02Yeah, you get the core creative teams. So this is the thing everyone talks about. You get core creative teams of five, six people, 30 people, however big the team is. And then they scale up when they need to, scale back by using outsource companies. And increasingly, we're starting to see those outsource companies go into markets where it's cheaper. And that's where I'm a bit worried. In film and TV, the examples that you gave, in the UK, the film scene is huge. But that's because of tax support from governments, right? And that's helped that. That's made that an easy, you know, there's less of that sort of thing.

46:30So that's why, in a way i was agreeing in the sense that um i may be over worrying it but i'm i mean we there is a dynamic um evolution or dynamic development so we always need to see what's happening but yeah as well we can see now the cultural benefit of having a strong um games industry in europe in germany the cultural benefit is huge because other um regions um in the world are using games as political soft power. So it is important. There's the technology and the question of where does the technology, where the games industry has a big impact in where is this coming from in the future and who knows how to deal with artificial intelligence and whatever, where we are on the forefront as games industry.

47:22And the third is economy, which is important where the most important people sit. So, yeah, that's why I'm also looking forward to Hannah Virkinen, who's executive president, vice president of the European Commission. So for the first time at Gamescom, we also have the European perspective, and she's in preparation for a European game strategy. So this will be interesting also to talk to her, how can we as European games plays, how can we be better in the future? I think that's a good part of a positive competition. That's it. I got that. Well, I'm wearing the time, so I'll end on a Gamescom question.

48:14What are you most looking forward to from the event this year? Always the hardest question. I'm very much looking, not only this one, but I'm very much looking forward to a game start quick. so for the first time gd cure is a present in europe at gamescom and it's not only fun to see all these speed runs but also it's connected to um collecting donations for gaming for democracy so for good cause as well and i think this uh there comes together a lot of the strength in the unique strength of the community of the games community to be creative to be fun but also to do things for a better future.

48:57So I think that's a nice, one of the many nice examples of Gamescom 2026. I'm looking forward to it. We will, of course, be there. My whole team's going to be there, including Geoff. But thank you, Felix. Good luck next week. Thank you very much and see you in Cologne. So all that's left for me to do now is run through the news of the last week. And there's quite a few stories. I'll start with more recent stories. Human 4 Flat development leaders Zetari Schefter and Will Dudley have formed a new studio called Pretty Cool Games. They're UK-based, fully remote, and they received startup money from Chinese developer Hypergryph, which is best known for RPG Art Night Enfield.

49:34So Human 4 Flats is obviously a mega hit. It's been an absolute smash hit. That's an exciting new studio. Speaking of new studios, you've probably heard about this thing as I emailed you about it yesterday. Arcane studio leaders Harvey Smith, Ben Horne, and Riccardo Bear have formed Black Pony Mercer. This is a 23-person team. They've received publisher backing, although we're not sure who. they wouldn't tell us that it is working on a single-player immersive sim game the team have worked on major games in the past including dishonored prey deus ex they also worked on redfall which didn't go very well and it's a really fascinating story that one you can check out the full i think genuinely fantastic interview with smith and horn in yesterday's edition of the game business show and newsletter to give that a read i'm sticking with immersive sims another immersive sim legend this one but not such a happy story deus ex thief and epic mickey creator warren Spectre has announced his retirement after over 40 years making video games.

50:26The games legend says it's time to focus on writing books and maybe some consulting. He admits his personal enjoyment of making games has fallen away in recent years. A completely different story, this one. The US Senate Judiciary Subcommittee on Crime and Counterterrorism, they've been getting involved in Roblox. They're going to be investigating the platform. They've accused it of prioritizing revenue and engagement metrics over child safety. Roblox denies this and it has been pushing a lot on the child safety angle. but it continues to face criticism on that front. We covered these two stories in our, it's not called Microw anymore, it's called Here's the Drink that we do on Monday, but one of them was Netflix's closing Night School studio alongside Helsinki-based Moonloot Games.

51:04Moonloot has yet to release a game, whereas Night School is actually one of the most political and exciting studios that Netflix had. They made the recent horror hit Unhinged, and last year's Black Mirror tie-in Fronglet, to go further back, they did Oxenfree and Oxenfree 2, and they worked on the Mr. Robot mobile game, and I've always really liked them, so it's a real shame. I do hope that that team can stay together in some way. In a more positive news, 2K Games has opened a studio. That studio is called Small Axe. They're a new developer in Vancouver, Canada. So right on EA Sports' lawn and full of EA Sports people.

51:35Some of the leaders of the new studio include VP and executive producer Aaron McCarty. He's from EA Sports FC and Madden. Head of Design Gary Patterson, who's from FIFA and NBA Live. Head of Operations Tom Pan, who worked on FIFA, UFC and SSX. Head of Engineering Mike Thompson, who worked on NHL and UFC. and technical art director John Cruz who worked on FIFA, NBA and skate. Lots of the EA people. Other key hires include head of HR Tricia McGowan who was at Gloomobile, another EA related company, and animation director Brent Breedveld who was at Relic Entertainment. Oh, and art director Carl Grick who was at Blackbird Interactive.

52:05They are building a new blockbuster sports franchise and want to redefine the future of sports video games. It may be a football game. It may not be a football game. We'll find out soon. On to financials. Nexon sought Q2 revenues rise 2 % to$761 million, driven by continued success for Ark Raiders and MapleStory. Ark Raiders has now hit 16.3 million sales after selling a further 800 ,000 units during that second quarter. A large content update for Ark Raiders is coming in October. We should get them back on. I'd love to get them back on. Mattel has announced the formation of Mattel Games Studios, a global development organization that will create games based on the company's IP.

52:38It follows the acquisition of Mattel 163 in February. That was a joint venture that had with Nexon. They bought the full, they made it a single venture. The new group will oversee existing mobile games and upcoming titles coming to Roblox and Fortnite. That Pokemon spin-off game, do you remember it? Pokemon PokePS Switch 2 exclusive did really well in March. It's now sold 5 million copies worldwide. That's the latest update from Nintendo. And finally, CD Projekt has made some cuts to its Project Serious team. That's the new multiplayer spin-off to The Witcher series. Nine employees have been cut, but further nine to be offered roles elsewhere.

53:09The cuts were to reflect the project's needs at this stage of development. That's it for today's episode of the Game Business Show. We're going to be back next week with, well, lots and lots and lots of news because we're going to be out at Gamescom. So stay tuned for us for that. If you want to make sure you don't miss any of those shows or any of those newsletters, if you go to thegamebusiness.com, just put your email in there. You'll get an alert every time we do something. It's really handy. And also you can become a paid subscriber if you want to take us up on that 25 % offer. But that's it from us today.

53:37Until next time, thank you for tuning in.