Apr 26, 2023 · 2h 15m · acquired
Benchmark’s Mitch Lasky and Blake Robbins on The Art of Business in Gaming · Acquired
Mitch Lasky · 1h 6m spoken Blake Robbins · 25m spoken Ben Gilbert · 18m spoken David Rosenthal · 15m spoken Intro Theme Singer · 15s spoken
0:00 / 0:00
▶ Watch on YouTube →
gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
Benchmark venture capitalist Mitch Lasky and principal Blake Robbins join Acquired to dissect the business history, platform economics, and structural evolution of the global video game industry. Drawing from their podcast 'GameCraft,' the guests analyze how distribution power, live-service models, and emerging technologies shape modern interactive entertainment.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Ben and David hold 26.8% of the talking time here. How this is scored →
Ben and David as informed peer 5.0 Guest teaching 4.3 Guest disagreement 1.4 Ben and David pushing back 1.3
speaking balance: gold is Ben and David, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 1:14:27 Mitch dismisses esports team valuations as an obvious failure
Mitch bluntly interrupts the framing around esports investments, calling the standalone team business an obvious financial failure.
Hardest push from Ben and David ▶ 5:28 Ben challenges the creative-first narrativeBen pushes back on common industry wisdom, asserting that business models dictate where creativity flows rather than vice versa.
Biggest teaching moment ▶ 1:38:28 Mitch corrects Acquired's computer graphics timelineMitch educates the hosts on the history of Evans & Sutherland, pointing out Nolan Bushnell's senior timeline relative to the Utah graphics mafia.
Ben and David hold their own ▶ 18:30 Ben synthesizes platform publishers and forever gamesBen synthesizes complex concepts from GameCraft, drilling into how platform publishers achieve structural durability.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Ben and David as informed peer | Guest teaching | Guest disagreement | Ben and David pushing back | Why |
|---|---|---|---|---|---|---|
| Pre-Show Praise: Accuracy and Trust in Acquired | 3 | 1 | 0 | 0 | Mitch Lasky opens with effusive praise for the hosts' rigor and research accuracy. The hosts then introduce the guests and contextualize Benchmark's history. | |
| The Creative vs Business Dynamic and GameCraft Origins | 6 | 4 | 1 | 2 | Ben reframes Mitch's premise about creative geniuses being constrained by business models rather than defining them. Mitch illustrates with examples of planned obsolescence in packaged goods. | |
| From Book Manuscript to Multi-Generational Podcast | 4 | 3 | 0 | 1 | Mitch explains how a rejected 200-page manuscript turned into a podcast after advice from Malcolm Gladwell and partnering with Blake Robbins. | |
| The Evolution from Geek Culture to Mainstream Casual Gaming | 6 | 4 | 0 | 1 | The hosts and guests discuss the shift from niche hardcore gaming to mainstream casual gaming, noting casual gaming now accounts for over half the industry. | |
| GameCraft Themes: Free-to-Play, Forever Games, and Platform Publishers | 7 | 5 | 1 | 1 | Ben identifies two drivers of industry durability: forever games and platform-based publishers. Mitch details how platform publishers aggregate demand to collapse supply. | |
| Sponsor: Statsig Feature Management and Experimentation | 0 | 0 | 0 | 0 | Host sponsor read for Statsig feature management platform. | |
| Steam's Rise and the Shift in Platform-Based Publishing | 6 | 5 | 2 | 2 | Mitch details Valve's creation of Steam out of an updater tool and discusses Game Pass aggregating supply. David probes whether platform publishers have ossified. | |
| Cloud Gaming Realities and Nintendo's Next Strategic Crossroads | 6 | 4 | 1 | 1 | Mitch analyzes why early cloud gaming failed due to user-device mismatches and discusses Nintendo's looming decision on backward compatibility and app stores. | |
| Console Economics, Platform Exclusivity, and Cross-Platform Play | 6 | 6 | 3 | 2 | Mitch admits avoiding console discussions because the business model hasn't changed since 1985. The group debates Sony's walled garden versus cross-platform dynamics. | |
| Platform Execution: Why Tencent Succeeded Where US Tech Giants Failed | 5 | 6 | 3 | 2 | Ben asks why Tencent succeeded where Facebook failed in gaming distribution. Mitch explains Tencent fully embraced and invested in gaming rather than treating it like a sideshow. | |
| Sponsor: PitchBook Data Platform and Exit Predictor | 5 | 6 | 2 | 1 | Following the PitchBook ad read, Mitch tells the pitch story behind Thatgamecompany and why he normally avoids investing directly in content studios. | |
| Distribution Leverage and Riot Games' Growth Strategy | 6 | 5 | 2 | 2 | Mitch emphasizes that distribution leverage is king in venture-scale gaming and describes Riot's early strategy of buying Dota community websites. | |
| Genre Evolution, Organic Acquisition, and the Realities of LiveOps | 5 | 5 | 1 | 1 | The panel discusses genre evolution from mods to mainstream titles like Fortnite and Stumble Guys, and how LiveOps annual spending rivals initial development budgets. | |
| The Economic Reality of Esports: Marketing Tool vs Sustainable Business | 6 | 6 | 4 | 2 | Mitch dismisses independent esports team economics as an obvious failure while acknowledging their marketing power for underlying publishers. Blake outlines the player aspirational ladder. | |
| Sponsor: Vouch Specialized Business Insurance for Tech Startups | 0 | 0 | 0 | 0 | Host sponsor read for Vouch startup insurance with a case study on Seek AI. | |
| Web3 and Crypto Gaming: Sifting Signal from Speculation | 6 | 6 | 3 | 2 | Mitch critiques crypto tourism in gaming and describes the difference between early speculative NFT projects and genuine game developers using tokens for elder game mechanics. | |
| In-Game Economies, Secondary Markets, and the Bitcoin Pizza Problem | 6 | 5 | 1 | 1 | The guests explain the Bitcoin Pizza problem and why secondary marketplaces like Valve's Steam Market and Roblox take massive tax cuts on peer-to-peer volume. | |
| Computer Graphics History: Evans & Sutherland and the Arcade Era | 6 | 7 | 3 | 2 | Mitch adds historical context to Acquired's Nintendo episode regarding Evans & Sutherland at the University of Utah and how Nolan Bushnell was a decade senior to that group. | |
| Mitch and Blake's Gaming Roots and Non-Linear Career Paths | 5 | 3 | 0 | 1 | Mitch and Blake share their personal gaming histories, legal transitions, early Amiga use, and the launch of Xbox Live. | |
| Overcoming Industry Stigma and the Power of Shared Gaming | 5 | 4 | 1 | 1 | The group discusses historical moral stigma around video games and how gaming evolved from toy adjuncts into serious narrative IP and social infrastructure. | |
| AI in Video Games: Pipelines, QA Balancing, LiveOps, and Narrative | 6 | 6 | 2 | 2 | Mitch breaks down four key operational areas where AI will impact gaming: art pipelines, QA/balancing, dynamic LiveOps, and generative narrative/DMing. | |
| Democratization, Elite Game Design, and the Future of GameCraft | 5 | 4 | 1 | 1 | David and Mitch discuss the scarcity of elite designers like Miyamoto despite tooling democratization, closing with a pitch to continue GameCraft. |
Statements from this episode (41)
Lasky: Packaged-goods video games required planned obsolescence to sustain business
“In the packaged goods era, your goal was to sell a disc and then get somebody to come back a year later and buy another disc, and that's a business model choice, and therefore what you're going to put on that disc is going to be informed by that business model…”
Lasky: Nintendo engineered artificial Black Friday scarcity to create retail panic
“They were very clever about only releasing a limited amount of inventory for Black Friday, and then the parents would go because that was on the kids Christmas list, and they would go to buy the disc and it, and they would be sold out and panic would ensue. An…”
Lasky: Bobby Kotick crashed Cattleman's Ball to secure Steve Wynn's Activision financing
“Because he basically, Bobby crashed the cattleman's ball, and without an invite, and basically did it so that he could buttonhole Steve Wynn and get him to put the money up for the act to buy Activision out of bankruptcy. And it was a genius deal because they …”
Lasky: Casual Titles Make Up Over 50% of Modern Gaming Industry
“It's probably more than 50% of the video game business these days would be considered casual gaming by 19 nineties standards.”
Lasky: Platform publishers dominate gaming by aggregating demand to leverage supply
“Where you aggregate demand On an online platform, and then you utilize that demand to leverage the supply side of the, of whatever industry that you're entering. And I think you look at steam and steam shares many of those attributes. And I think that move, wh…”
Lasky: Valve generates eight billion dollars in annual revenue
“I mean, now it's an eight billion dollar a year business, right?”
Robbins: Major publishers are pushed by the market to sell on Steam
“They all have launchers, and they all are still forced well, not forced, but really pushed by the market to launch on Steam as well.”
Robbins: Epic Games Store has failed to make a meaningful dent in Steam
“And from my vantage point, it hasn't made nearly enough, like a dent, like relative to Steam.”
Lasky: Nintendo is about to meaningfully expand its app store business
“I think the next one to go is going to be Nintendo, right? I think they're, I think that's, if you're looking for a reason to invest in Nintendo as a company, it's, I think they're about to crack that nut, right? And enter the app store business in a meaningfu…”
Lasky: Nintendo's third-party revenue per active user drastically lags console rivals
“I mean, they have the lowest third party revenue per active user by like an incredible amount, right? I mean, like hundreds of dollars to like 25 dollars. Right? Like, versus the rest of their console competitors.”
Lasky: Microsoft's Activision deal mimics Netflix's exclusive content strategy
“And you look at the Activision deal, sixty-nine billion dollar acquisition of Activision. It's basically like, you know, Netflix or Apple or one of these other companies buying exclusive content.”
Lasky: Cloud game streaming is now viable due to bandwidth and scale
“So with the new xCloud platform, and I was a pioneering investor in this with Gaikai back in the day, and it wasn't really economically viable, but now with scale and, Moore's law and all these other things we, and bandwidth improvements, we can now really do …”
Lasky: Early cloud gaming failed due to audience-hardware mismatch
“So you could stream these games without owning a gaming PC, but all the games that were really viable to stream were the kinds of games that gamers who already owned a damn PC were wanted to play.”
Lasky: Cloud gaming's opportunity is casual-identifying hardcore mobile youth
“I do think, however, that the audience has expanded really in the last 12 to 15 years, and that this next generation of kids who've grown up on Fortnite, who've grown up on harder core games but are still casual in their self-identification, who don't think of…”
Lasky: Proprietary game launchers reduce customer acquisition costs to zero
“So you're, you've got this audience there that's pre-qualified where you've got their credit cards, hundreds of millions of users. And so you just use it as a way to lower your customer acquisition cost effectively to zero for the next products that you launch…”
Lasky: Nintendo will reveal its next-decade console strategy within 90 days
“I think we will learn a lot about what their strategy is gonna look like for the next decade in the next, like, 90 days.”
Lasky: Sony's resistance to cross-play will hurt it over time
“I think it's going to come back to bite him in the ass over time.”
Lasky: Startups should never launch games on consoles before finding product-market fit
“I would not counsel any of my portfolio companies to launch on the console because the hoops that you have to jump through for approvals, for manufacturing, et cetera, for just in general are dire, and they're not the kind of thing that I would sort of put in …”
Robbins: Tech giants fail in gaming because Valley executives aren't gamers
“And a lot of the executives in the Valley, they're just not gamers. And they're like, oh, we can maybe launch a game thing, but they're sort of dipping their foot in the water versus actually like really committed to it.”
Lasky: Pushing Discord to build a game store was my failure
“It's like we tried this at Discord. Right? And we tried to start a game store. This was obviously my failure, because I pushed them very hard toward becoming a platform-based publisher, because I thought, hey man, this is a great way to leverage this audience.”
Lasky: Gaming VCs must back durable platforms, not sequential game studios
“I invest in businesses, not in studios. Right? And the, and those businesses have to have a strategy that transcends, I want to make a game and put it on Steam, or I want to make a mobile game and put it in the App Store, right? And I'm really interested in th…”
Lasky: thatgamecompany's Sky generates hundreds of millions with over 30% margins
“It was, you know, in the fall, the number four grossing game in China by revenue. It's called Sky. Sky. And so we're talking about hundreds of millions of dollars in revenue, and he does it with a tiny team. So it's ludicrously profitable. I mean, I think it's…”
Lasky: Early Riot Games acquired DotA community websites to redirect player demand
“We bought the websites that we bought the Defense of the Ancients websites and just turned their editorial to-”
Lasky: Paid customer acquisition in gaming is a dangerous, addictive slippery slope
“I resist as long as possible going paid, although sometimes you're so profitable that you can with and not really mess your margins up too much, right? But I think once you start down the paid path for customer acquisition, it's kind of a slippery slope and it…”
Lasky: thatgamecompany rejected an Apple Arcade deal over strict exclusivity demands
“Apple wanted us in the arcade. We couldn't do it because we want it to be cross-platform, right? And they wanted exclusives.”
Lasky: Annual LiveOps spending matches or exceeds original yearly game development costs
“Like, I think you can expect to spend as much or more on an annual basis than you were spending in development in LiveOps.”
Robbins: Riot updates League of Legends biweekly, driving the game's P&L
“And Riot updates League of Legends every two weeks. And every two weeks they're putting out new content, they're balancing everything, and so that's pretty much the entire P&L of that game at this point is just keeping it fresh.”
Robbins: 100 Thieves built esports primarily as marketing for content and apparel
“No, I think, I actually think if you like for a hundred thieves, you know, which is an e-sports organization that has three pillars of it, which is, you know, content and immediate side. It has an apparel side, which is also a thriving business and then the e-…”
Lasky: A Chinese team winning Worlds created $150M revenue for Riot Games
“I mean, when the Chinese team won Worlds, the Riot guys were like throwing confetti because like when the Chinese win, it's like a hundred and fifty million dollar revenue opportunity in terms of increased, like, you know, unexpected sales of skins.”
Lasky: Traditional sports owners who bought franchised esports teams hold dead assets
“I spent five years talking those owners, like the existing sports owners who had terrible FOMO from like dumping money into these things, and some of them took my advice, and some of them didn't, and ended up in, you know, with some really dead assets. But tha…”
Robbins: EVE Online is the perfect vehicle for Web3 gaming
“Yeah, like it is a perfect application. There's a real question of, is this game still a viable game that people want to play in 2023? That's maybe a different question, but it is the perfect vehicle for Web three.”
Lasky: Roblox extracts a massive 60% aggregate gross tax on its developers
“I think the last time I calculated the total tax, the gross tax was somewhere close to 60%. It was like 57%.”
Lasky: Minecraft reached one trillion YouTube views entirely from community-made content
“Minecraft, for example, where they're, they just crossed the one trillion view mark on YouTube, right, of Minecraft-related videos. You know what? The company that made that Mojang didn't make any of those videos. They were a hundred percent made by the commun…”
Lasky: Web3 games must solve token-spending hesitation to succeed
“And so, when you're, when we're looking at web three related deals, like solving that problem, like incentivizing you so that you don't feel like an idiot for utilizing the token is a key, key factor in these games.”
Lasky: Evans & Sutherland was the Fairchild Semiconductor of graphics
“Because these guys were like the Fairchild Semiconductor of Computer graphics.”
Gilbert: Gaming revenue historically surpassed Hollywood and TV including arcade coin drops
“I was shocked to learn that the gaming industry has always been larger than TV and Hollywood, if you include the total coin drop in arcades, and I always just thought this was this new phenomenon of like, wow, video games have become so much a part of the fabr…”
Robbins: Sega fell behind Nintendo because it protected coin-op revenue
“And in a lot of ways, it's probably why Sega isn't what it was, or isn't Nintendo, is they were trying to protect what they had.”
Lasky: Hasbro made an acquisition run at Activision in the late 1990s
“Hasbro made a run at Activision, little known fact, right? In the late nineties, when I was running the studios there, and I remember going to Toy Fair in New York, which I, which is a trip, man.”
Lasky: AI will not easily generate complete, satisfying video games from prompts
“There's a train of thought that, that has been advanced that, oh wow, this is really going to democratize the game industry in, in a way where now, kind of like you're seeing with mid journey, for example, where you can just describe a piece of art and it magi…”
Robbins: UGC platforms like Roblox will capture the most value from AI assets
“Maybe like a working theory that I have is the UGC platforms like the Fortnite creatives or the core or the Roblox's of the world might actually be the ones that accrue the most value in this AI asset generation time where, you know, if you can spin up these t…”
Lasky: Rocket Science Games was valued based on its Silicon Graphics workstations
“When I started, companies were being valued on the basis, on the number of silicon graphics workstations that they had available to them. In fact, When I started, companies were being valued on the basis, on the number of silicon graphics workstations that the…”