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From the Vox Media Podcast Network, its channels with Peter Kafka, that's me. I am the chief correspondent or business insider where I write about tech and media and today's show is about both those things. And it's pretty good. I've got to say so. And first, a teeny tiny bit of meta commentary about this show, channels. This is the fifth episode of our newly relaunched show. And I've been looking at the numbers and they're pretty good, which
what I was hoping for. But you never know. Crucially, we've been able to keep a lot of the audience for the old show, which is great. And the real goal here is to expand this thing, because I think there are a lot of people who would enjoy channels if they knew about it. So we're going to work on that on our end. We do have to ask for you. If you like the show, my ask is that you tell someone else about it. You could tweet about it or thread about it.
Social media is great. But so is simply telling your friend who asked for a podcast recommendation or you can get really nervy and tell a friend who has not asked for a recommendation. You do you. But thanks for listening, regardless. Okay. So back to the actual programming. Today's show is a two-furt. First off, we are talking to Gabriel Sherman, the vanity fair writer who wrote and produced the most controversial movie of the year. It's called The Apprentice.
It's about Donald Trump in the 70s and 80s. It's not what you think it is. And I found it super compelling. But Justice compelling is the story behind it, which involves a billionaire Trump donor who funded the entire project until he didn't. And how this movie came close to never getting released. And then we check in on the state of the video games business, which is simultaneously huge and troubled, which is pretty confusing. So I asked Jason
Shryer who covers the industry for Bloomberg to explain what's going on. And also to tell us about his new project, which is a book about Blizzard Entertainment, a legendary games company that is now a division of a division of Microsoft. This is a good one. Okay. Here's me and Gabriel Sherman. I'm here with Gabriel Sherman who writes a lot of stuff, a lot of great stuff for vanity fair and has written and produced one of the more interesting movies I've seen in a long
time. It's called The Apprentice. You have probably heard about it at this point, but I'm going to let Gabe describe it to you himself. Welcome, Gabe. Thanks, Peter, for having me. You've covered Donald Trump for a long time at vanity fair. And now you produce this kind of extraordinary movie that has an extraordinary
backstory behind it. I want to hear the backstory. But first of all, describe the movie to people because I think if they hear there's a controversial Trump movie, they might be expecting something different than what you're giving them. Yeah. The inspiration for this movie really was like the gritty movies of the 1970s, the New York movies that I geek out on like midnight cowboy and dog day afternoon and French commission, marathon action and all those other.
Yeah, of course. It's really the origin story of how Roy Cohn, the notorious right wing lawyer and fixer, former aide to Senator Joe McCarthy turned New York power broker, mentored and groomed Donald Trump to become the figure that we all recognize today. But the movie takes place entirely in the 70s and mid 1980s. It doesn't touch anything to do with present day. So it's really the origin story of Donald Trump as we know him.
Yeah. So the origin story in this piece you wrote for vanity fair about the making of it, you call it a Frankenstein story, right? The idea that sort of Cohn grooms and creates Trump and then eventually Trump's discards and slash defeats Cohn. Yeah. And so it's fictional, but fact-based. Is that the right way to describe it? In fact, that's right. It's a dramatization. It's not a documentary. Incredible cast, Sebastian Stan plays young Donald Trump. Jeremy Strong from succession plays Roy Cohn.
But yes, it's incredibly rigorously researched. I did, you know, as much reporting to write the screenplay as I, you know, would put into any magazine article. But, you know, obviously, the conventions of dramas that you have to compress and play with time a little bit to tell one unified story. But no, it's very rigorously sourced. And yeah, that's really the, that was really the ideas that I thought, you know, just real quick that there have been
so much information about Donald Trump. Obviously, you know, he inundates our media diet every day. But I thought if I could write a movie that allows the audience to sort of spend time with him in a new way, that they might feel something that seeing a brilliant actor portray this role might make them feel something that could cut through the sort of information overload that we get. So I watched a screener of it. And again, I really liked it. And
I think you've discussed this a little bit. I mean, in some ways, you're humanizing Trump in a way that I think a lot of people who get very angry about Donald Trump might have a problem with because you describe you sort of create a three-dimensional character who has flaws and maybe even some upsides. And in some ways, he's very identifiable with
the current character of Donald Trump that we see now. But in some ways, different, how did you think about describing him as a person who might have positive attributes and how an audience might think about that in 2024? Well, first of all, I've really kind of been surprised that I've struggled to understand this discussion around why it would be controversial to humanize Donald Trump because... Yeah, really surprised, are you? I mean, same as people say you shouldn't platform Donald Trump.
But yeah, I guess what I would say is I disagree with that line of thinking because he's somebody that is in our lives. He's real. He's not an alien from out of space. He is a flesh and blood person. And to try to understand him as a person without shying away and white washing any of his flaws, I think is one of the necessary things of both journalism but also art and drama. And so I'm relentlessly curious about people that I might vehemently
disagree with. I mean, as you know, Peter, from my earlier writing, you know, I did extensive writing about Roger Ailes and Fox News. And, you know, obviously, I didn't share any of Ailes's politics, but I was obsessed with trying to understand how somebody like that could exist. And so I think it just comes out of my innate curiosity for maybe the darker sides of our culture. And then sort of secondly, I was struck by when I did the research for
this film. If you go back, I recommend people who listen to this. There's this awesome inter incredible interview on YouTube that actually we recreate a scene in it in the film. It's with the television personality, Rona Barrett. It's I think Donald Trump's first national TV interview. It's from 1980. And if you see the person interviewed then, if you see Trump then, he's soft spoken. He's articulate. He's charming. It has like almost no resemblance
to the character that we see today on our TV screens all the time. So I really got me thinking like, how did that person become this egomaniacal orange maniac that we see every day? And so I wanted to connect those dots. And I thought what Sebastian Stan did so brilliantly in this performance was, you know, the subtle transformation that when we meet Donald at the beginning of the film, he's really kind of a blank slate. And he's kind of looking
for his persona. And it's, you know, through Roy Cohn's mentorship that he kind of find this character of Donald Trump that he learns to play. Yeah, not that you really need help promoting this film, but I will say if you're someone who says, I don't want to spend time with Donald Trump. I don't need to watch this. Sebastian Stan's performance is great. It's great acting. And Jeremy Strong is Roy Cohn is amazing.
Second thing I'll say to that is that I want people to experience this as a movie. I mean, yes, people are going to bring their own politics to it. But when I wrote it and when we made it, this is first and foremost a feature film. It's entertainment. It's a wild kind of rollercoaster ride with these two larger than life crazy characters. And so that's what I hope people just get lost in the actual story because it's not what, it's not a two hour MSNBC segment
is what I guess I'm trying to. Yeah, it's also, it's also not vice the, no, the Dick Cheney movie. And I thought about it a lot because I did, I, one itchy feeling I had at the end, right? You cut it off sort of sort of mid ascent or maybe, you know, before his bankruptcies, it's real as bankruptcies. Right. And so you, there's characters who spend time saying, Donald Trump, you're moving too fast. You shouldn't expand in the Atlantic
city. This is going to bankrupt you. But if you don't know anything about Donald Trump, I mean, it's, it, at no point does anyone's ever say, Oh, and this led to one of his many bankruptcies, you know, sort of point out that he's about to collapse and really doesn't recover until the actual apprentice. How exactly how did you think about sort of not putting
in that context, leaving that for the viewer to either know or not know? Yeah, I mean, I was always the original idea of the film was to never really engage with present day. You know, I was, I remember the day I came up with the idea for the movie. It was the spring of 2017. And I was a correspondent for New York magazine. I was covering Trump, the Trump White House. I had covered the campaign for the magazine. And at the time I was adapting
my Roger Ailes biography into a limited series at showtime. So I was already, you know, working somewhat in Hollywood. And I had, you know, just sitting at my desk and I thought back to what people like Roger Stone told me during the campaign. And they said, you know, a version of like, you know, Donald was winning because he was using Roy Cohn's lessons or Donald sounded so much like Roy used to sound. And it came to me in a flash.
I was like, that's the movie. Like if you're going to do a movie about Trump, just focus on that one relationship and tell that story. And that tells you in a microcosm, everything else you need to know about Trump that comes after. I didn't, I didn't feel like a movie needed to, you know, engage at all with, you know, his rise in the politics. I thought, first of all, attempting in any way to dramatize a present day Trump would immediately run
into the danger of becoming an SNL sketch. I mean, even doing a historical movie about Trump where he's a 27 year old young man, even that is really risky. And I thought Sebastian Stan, like just pulled off a miracle because at no point was it ever feeling like an impersonation to me. But anyways, I, I just thought that the, the original and interesting Trump story is to look at him before he ever, you know, became a political person. And this will lead
into the backstory part, which it was fascinating. I want to get to, but one thing I've been telling folks who've been asking me what I thought of the movie is say, it's clearly not a pro Trump movie. They show him sexually assaulting a Vano Trump his first wife, which is something she had said and later recanted, but something she said. And everyone's sort of nods. And I say, and they spend a lot of time lingering on his, his plastic surgery and liposuction.
And it's, it's literally gross. And everyone says Donald Trump had plastic surgery. It's without, without fail. That is their reaction. And it's quite fascinating to be like, how could he have plastic surgery? I really want to know is why did I have to watch a liposuction procedure in this movie? Well, you, you mentioned the, the piece I wrote for Vanity Fair, kind of referencing Frankenstein and the building of this monster.
And, you know, this sort of visual metaphor of Donald becoming the person we see today. I mean, the movie is a progression, right? It's a development of the character. But the last, and again, I, I hope you, I hope you, I hope you te up the segment by saying their spoilers because I, I wouldn't want to ruin the movie for anybody, but just because the scene does fall towards the end of the movie. Sure. It's really the, the final transformation where
Sebastian is now becoming recognizable as the Donald Trump as we see him today. So it's the, it's literally the physical manifestation of this, this character. You know, it's like at the end of Star Wars where in the prequels when a Darth Vader gets his mask, you know, it's really the final. Yeah. It's the final moment where there's no turning back for this character. I did close my eyes during the plastic surgery stuff. I've just a little
weird. Well, and I think also the, the way, the way that scene was shot is a, you know, a testament to the filmmaker Ali Abasi, who directed the movie and, you know, he, he comes from somewhat the horror genre background. I mean, his, his first international film, Kelly was a, was a horror movie. And this most recent film was an Iranian serial killer of new kind of neo-noir drama. So he's drawn to really the darker aspects of filmmaking.
And I thought that was such an interesting, because I never, I never, you know, when I wrote the movie, I didn't connect the dots. And then when I started working with Ali, when we were developing the film before shooting, it's like, it really is an American horror story. It's, you know, this, this kind of zero sum culture that we live in and where truth is completely fungible. I thought that that was a great lens to look at this character
is almost as a horror movie character. So let's talk about how the movie made and, and almost didn't get released. Again, you have written about this in detail in Bounty Fair. So you should all go check that out. But the very brief story, right, is that you got a Trump supporter to fund this movie, which in no way is a movie that a Trump supporter would want to see let alone fund. Yes. How did that happen? Well, I just backing up, I think before, before we got financing to make this movie last
year, nobody would make this movie. I mean, we got so many rejections in Hollywood. None of the major studios would finance the production of the film. And we had to raise money, you know, as a totally independent feature, both through selling pre-sales, but then you have trying to find an equity investor to put up several million dollars. And as it has not super unusual for an indie movie, right? No, exactly. No, that's pretty standard.
I guess, you know, this subject matter made it even more difficult to raise the money. But to your point, so last year we, we partnered with a production company called Kinematics, which is run by a young producer named Mark Rappaport, which if that name doesn't mean anything to people, it's significant because he married the daughter of the Republican billionaire Dan Snyder. And known to most people as the former owner of the Washington, what were
that? Reskins turned command, commanders. Yes. Kind of a notorious figure in the NFL world. And so Dan Snyder loaned Mark Rappaport money to support his production company Kinematics. And so indirectly, you know, a Republican Trump donors money was paying for the production of this movie, which we were aware of. We were aware of and we obviously had many conversations
with with our finance years to make sure that there wouldn't be a conflict. I mean, of course, our the nightmare scenario would be that we we shoot this movie and then, you know, Dan Snyder hates the movie and somehow is able to block it, which, you know, basically
is what ended up happening now. Mark Rappaport and Kinematics's defense is that Dan hated the movie, but he doesn't have anything to do with the actual day to day operations of kinematics and that the disagreements between the filmmaker Ali Abasi and Mark Rappaport were strictly between them that this wasn't kind of Dan Snyder behind the scenes pulling
the strings. Regardless, the end result was that not only did no Hollywood studio buy our movie in the Cannes Film Festival after we, you know, premiered to an eight minute standing ovation, our finance year then said, well, there was one distributor who wanted to distribute it a very small company called Briarcliffe Entertainment and they wouldn't let us take that deal because they had kinematics had the, you know, right of approval over a domestic distribution deal.
Wait, I just want to slow this down. So Snyder gives his son and long money to fund this production company. Correct. His son in law says, I'm going to use some of that money to fund this Trump movie, which is not explicitly an anti-Trump movie, but it's definitely not a pro Trump movie. Do you think that Dan Snyder understood that he was funding that at the time, or was this a surprise to him at some point? Unclear. I know he did not read the script. So to the degree to which he understood the
substance of the movie, I'm just not clear on. I mean, I believe he was aware that there was a Trump project being made. Now I don't know if he thought it was a documentary or he did, like I don't, I don't really understand what he knew about it. Although I just, I do know for my own kind of reporting on my own movie that he did not read the script prior, prior to, prior to production.
And so somewhere in between you getting a standing ovation at Cannes and you try finding someone who's going to distribute the movie after most of all of Hollywood passes, then Dan Snyder slash his son and loss. Actually, this movie should never see the light of day. Actually, no, it happened before the Cannes Film Festival. So we wrapped production at the end of January of 2024 and Mark Rappaport, the kinematics owner, basically tried to
just block the movie. He didn't like the cut. He didn't like, especially the sexual assaults scene with Ivana. He showed it to his father-in-law, Dan Snyder, Dan walked out of the screening room. He hated the movie. So basically, this sort of cold war between us and our financier had started in the spring of 2024 before Cannes. You brought a movie to Cannes knowing that the people who were funding it didn't want it to be shown.
Yeah. And they almost, they tried to block us from going to Cannes. They didn't have the legal right because we had sold the movie to a French distributor who had the legal right to show it in France. So, but yeah, this was already playing out prior to Cannes. And so it just sort of snowballed after the festival. Once we finally did get an offer from Briarcliffe, they wouldn't let us accept it.
This seems like a true half-empty, half-full situation, right? On the one hand, the people who've literally put up the money to make the movie are trying their best to make it not happen now. And then this is all just controversy that sells the movie. How close we to the half-empty versus half-full take throughout the summer in spring when this was going to be? We were, I mean, the glass was basically, I would say, totally empty as of, you know,
the end of August. I went to the Tell Your Ride film festival over Labor Day, not even knowing if our movie would screen because if we did not close a deal, if we did not get kinematics to agree to back down and let us buy them out and move forward, they would have stopped the movie from being released in America before the election. And then it's unclear what commercial prospects after the election. I just, it would be so uncertain
who would ever want to buy the movie, you know, at that point. So I, all of us. I guess it's pretty cavalier for me, but it seems like, man, if it's an unseeable Trump movie, that is just going to just immediately, like, people demand to see it. Yeah, no, of course. I mean, I just, but, but it just felt to us, like, in the middle
of it that this was, you know, we had to take it day by day. I mean, my wife and I, it was like this emotional rollercoasters, like every single day for the month of August, I would be like, just try to like check in with my producers to be like, what's going on with the talks? What are the lawyers saying? You know, and it was all being done through the lawyers. So, you know, a lot of the negotiations I couldn't even really get in the mid. I didn't
really, what had no way to be involved in and hear about. So it just was such a nerve-wracking process because it was so out of my hands. And it's, I mean, yes, knocking wood, it all worked out and, and people will be able to see this movie. But I don't recommend if, if anyone wants to get into show business and make a movie, I don't recommend doing it this way. We'll be right back with Gabriel Sherman, but first a word from a sponsor.
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Just wish someone could do the research. Can we figure this out? Hey, y'all. I'm John Flanhill, and I'm hosting a new podcast at Vox called Explain It to Me. Here's how it works. You call our hotline with questions you can't quite answer on your own. We'll investigate and call you back to tell you what we found. We'll bring you the answers you need every Wednesday starting September 18th. So follow Explain It to Me, presented by Klavio. And we're back.
So you have bad in show business. Like you said, you did the Roger Ails show for show time. You know, you've been at Vanity Fair for a long time. You were not just off the turn up truck. You said you were surprised that none of the studios and distributors wanted to pick it up. Was that really just a full surprise to you? Or did you think one out of the entire constellation of Hollywood studios, the streamers would pick it up?
I thought somebody would. I mean, I thought, you know, maybe not, you know, a giant publicly traded media can glamorate, but there are, you know, really, you know, risk taking studios independently owned studios, you know, a 24 neon or some. I even thought Amazon MGM, you know, Jeff Bezos famously, you know, he owns the Washington Post. He doesn't really
have any tolerance for Trump's Michigas. Like I thought, you know, I just thought there were, there would be a deep pocketed buyer in, in Hollywood that, that would see this as a real moment to stand up for, you know, artistic freedom in. Yeah. And, and maybe even make some money, right? Exactly. Here's the thing. Here's the thing you can't see. Exactly. And then controversy, I mean, it's in this time of like media over saturation to have
a movie that has a built in storyline. And it felt like free press. I genuinely was surprised that there wasn't one buyer who, and you, and you think that is directly because people are afraid of repercussions from a future Trump administration or just the, you know, having a sort of Bud Light moment and, and yeah, I mean, I, I heard again, I wasn't
in the room. So I don't know what specific feedback, specific buyers had, but the general consensus I heard from all the people who were looking at acquiring the movie was a version of number one, they were worried about a Trump lawsuit because Trump sent me in the filmmaker a cease and desist letter, which again, I think, you know, Trump threatens to sue the mailman. So I don't, I don't think a cease and desist letter from Trump is
any reason not to, to, to acquire a movie. But I think the more troubling thing that I heard, and this is where it was, I was sort of chilled by it, is that they, these companies were worried that if Trump did become president, that he could use the regulatory power of the government, whether it's the FCC or the, the Justice Department or the FTC to punish, to go after their businesses in some way. And, you know, when we saw a precedent for this,
you know, I, you, I'm sure you maybe have covered this as well. Trump tried to block the AT&T time Warner merger during his first term because he was, you know, unhappy, reportedly unhappy with the way CNN, which is owned by time Warner was covering him. His, his DOJ antitrust guy insists up and down that was not the case and no one believes him. No one believes it. And so, regardless of whether that was true or not, the end result was that other companies in Hollywood
saw that precedent and basically said, this is not worth it to us. And I, I kind of, you know, even though it's, I, I, I'm disappointed by it, I can understand it. I mean, if you're running a company and you're thinking, well, I could acquire this one movie and, you know, maybe make some money, but then I'm going to have to be dealing with, you know, lawyers and regulatory bullshit for the next three years. I mean, I, I can understand it. And I think that's what's so kind of chilling as
the way Trump has weaponized, you know, he talks a lot about weapons, the nation of government. Well, this is a, this is a very specific case where he is now influenced the, the corporate creative decisions of these Hollywood companies to, you know, basically chill content that he would object to. But again, we, it all worked out, you know, Tom Morton Berg, who, who founded Breyercliffe, he's a kind of a legendary film executive. He, he's not scared of
political films. He released the Oscar-winning movie Spotlight in 2015. Prior to that, he did Oliver Stone's movie W. He did Bill Mars, a documentary, Religulous. So he's, I think he likes. More than 11 movie. Yeah. So he is this, he's like the rare, the rare example in Hollywood where he actually enjoys and, and embraces the controversy. Standard question, I'm actually stopped asking most movie makers now, but I'll ask you in this case. Do you care whether someone sees this in
a theater versus streaming it eventually? I actually think I want people to see this in a theater for two reasons. Number one, the, the music and the product, like, the filmmaking, the actual just, technical filmmaking is so exquisite. Like, art Casper, Tuxen, our DP or, or a cinematographer, shot this like a gritty 1970s movie. The first half is like all grainy. It looks like it's, you know, shot on film. And then in the second half, it shifts as Trump moves into the 80s into this
kind of VHS, low five. Yeah. And it just really transports you to that time. So being in a dark in theater, like, not at home where you're looking at your phone and the kids are coming in. I mean, being just in a dark theater to enjoy that filmmaking. And then the second thing is the soundtrack is just so kickass that being in a theater, I've seen it now probably three or four times in a theater. Like that loud booming soundtrack that only a movie theater can do. Like, I've seen it on my laptop
at home and it just doesn't have the same impact. And then the final thing I'll say about that is there's something really cathartic and powerful about experiencing this movie and this character with a group of people. You know, we all lived through the chaos of the of the Trump years. And there's something like, I don't know, cathartic that we all we experienced this movie. We see, we see like the train, you know, kind of the train coming down
the tracks together. And I found that to be, I was surprised by that. Yeah. And if it's a horror movie, you want to see a horror movie with other people. That's the best way to watch. Yeah, exactly. I just think there's a communal aspect to this film that really is best served by seeing it in a movie theater. All right. Here's your ex a question, Gabe. You've done a Roger Ailes mini series, a Trump movie. What kind of character are you going to make a video entertainment about next?
I've been asked if I'm going to do another Trump movie or sequel. The answer's no. I'm, I'm not, you know, I don't think there is a movie to make about Trump's, you know, later years. Because, hey, we don't know how the story ends. And I just, I feel like I've explored that subject. I don't know. I don't have a specific right wing, um, uh, right wing, tone of life. Okay. All right. So I don't have one. I will watch the next one regardless.
I will call you when I do. And we can, we can brainstorm together. Gabe Sherman. You can see his movie, the apprentice in a movie theater, which you should do. You can read his backstory about the movie in Vanity Fair, which you should also do. Thanks for coming on, Gabe. Thanks, Peter. Thanks to, again, to Gabe Sherman. In a minute, we're going to hear from Jason Shryer from Bloomberg. He's going to tell us about the video game business, but first a word from a sponsor.
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Fall, and Future of Blizzard Entertainment. Welcome back, Jason. A lot better. Thank you so much for having me on. Thank you for coming. I do want to talk to you about Blizzard Entertainment and the bookie burden, which is excellent. But I also wanted to pick your brain about the video game business in general, which seems to be going through a confusing slump. I've written a little bit about it, but you're the expert. I want you to explain what's going on. There are record layoffs
in the games industry this year. I think it's like up to 14,000. The previous record was set last year. I'm used to writing about seeing industries decline because of big changes in the way that sort of the internet's working and the way people are spending their time. We're watching the television industry sort of bottom out, movie industries in real trouble. Often people say one of the reasons those industries are in trouble is because people are spending more time playing video
games. But if the video game business is contracting, what is going on here? Yeah, it's funny. The video game business is not contracting. It is as big as it ever was, but the people involved are feeling pain and the layoffs are a record high, as you mentioned. I think there are a couple of reasons behind that. One is this is a post pandemic correction. Even though there have been 14,000 layoffs, the numbers are higher than ever, that is in large part because during the COVID days, the start
of COVID, the video game industry expanded in a humongous way. What happened was everyone was stuck at home. Many of us were playing video games because we didn't have anything else to do, who didn't play a mongous back then. Animal crossing came out in the middle of the pandemic, and sold a bazillion copies. Everyone was staying home playing video games, and so the games industry saw a crazy amount of growth that year. Of course, it hired to account for that growth.
The decision makers at the very top who were paid many millions of dollars did not stop and think, hey, wait a minute, maybe this growth is going to flatten out at some point. We should be. And we saw that across a bunch of industries, e-commerce, there was an enormous growth net, because people were staying at home and buying things online. There were a bunch of pandemic stocks like Peloton and Zoom. People said, oh, the usage is way up. It's going to go to the moon.
Those of all pulled back. Exactly. The video game industry is correcting for that. That's a large part of the equation here. But the other thing, and this is unique to the video game industry, is that some of the biggest games are no longer hitting like they once were because so many players, so many consumers, are sticking with their old games. And so the video game industry has kind
of, it's adopted this trend. It's followed this trend called, quote unquote, games as a service, which is this idea that a video game, you don't just pick it up once to play it through and then you're done with it. You keep playing it, and it's monetized forever, and ever. It's meant to be played for years after it comes out. It's online. It gets constant support. The team behind it is
just still working on it for many years to come. In fact, Blizzard, my book is about pioneered this in some ways with World of Warcraft, which is a game that is about to hit its 20th anniversary and has been played consistently since it came out in 2004. So what you have is instead of buying the new Star Wars game that just came out and the new Final Fantasy game that just came out. A lot of people are still playing Fortnite with their friends or Grand Theft Auto Online with
their friends. And so those games become kind of black holes where they're sucking up a lot of the revenue and a lot of the customers. And so the market isn't quite as big for the new games to be hits. So games usage is still sort of increasing or at least flat. It's sort of where it should be if you looked at sort of 2019 trends pre-pandemic. It's not that people are pulling back from playing video games. Exactly. People are just playing their old games. And this we can really see this most
kind of resoundedly in the console market. And so as anyone who plays games knows consoles are refreshed every few years. We're talking about Xbox PlayStation. Exactly. And right now we're in the era of the PlayStation 5, which came out in 2020. But the PlayStation 5 has not seen the growth that I think Sony in the company behind it has wanted to see. It's like on pace maybe even a little bit behind the trajectory of the PS4 last generation. And that is in large part once again because a lot of
people are still playing Fortnite on their PS4s and they don't see the reasons to get a PS5. If you can play your old games on your last console and that's where all your friends are and that's what you're doing every night after school or work, why do you need a new console? Why do you need to keep buying new games? You can just stick with the ones you like. It's interesting because I have thought a lot about the game's business has been very similar to the movie business where
they're reliant on sort of a handful of big blockbusters. They go back to them year after year. Like you've mentioned. And when you flop, you lose a lot of money. Warner Brothers said it lost $200 million this year on a suicide squad game. No one played. Sony put out a game this like a month ago. Apparently it was so bad they're offering refunds for it. Both of those games, it's worth noting we're both games that try to chase the trend of service games. Both of those games were
meant to be forever games. You just keep playing online forever. Do you think the industry is going to rethink that and say, well, maybe we shouldn't be trying to make the equivalent of Avatar every timeout. Maybe we should do smaller scale stuff, take more bets. I mean, I think I've been covering this industry for many years now. And I've never once seen them rethink chasing trends that they think will make them a lot of money. Ubisoft has been in the news recently because that's the
French gaming company behind games like Assassin's Creed. They're in a lot of trouble. They're stock as plummeted over the last year or so. And one of the things they did that got them to this point is non-stop trend chasing. They were making NFT games that's two years ago. Remember NFTs? These companies are just run by people who just see shiny things and then chase them. To be fair, that's a lot of industries. Oh, yeah, yeah, yeah, yeah. The video game industry
is no exception. This is just part of our system that we have. We're all seeing, I mean, now it's AI. Whatever buzz word is in the news is just, I mean, every game company last year was talking about meta-verses. I haven't heard that word in a long time. Now, it's all AI. Who knows what it will be two years from now? What does AI supposed to mean for video games? Is it supposed to mean awesome new things in your video games? Or we can make these things a lot cheaper because we don't
have to pay people to do art and rendering and the robots can do it for us? I think a video game industry would hope for the latter, but I think we've seen from the slop that has just been generated this year that it is not AI is not capable of delivering things that people actually want. So,
I think we're going to start seeing people pull back on that ambition pretty soon. You would think if there's any sort of creative industry where this would work, it would be games because obviously you need a lot of human creativity and ingenuity to make this stuff work, but there's just a lot of repetitive work, right? To do the animation and the programming and it seems like this is the kind of stuff where you could farm out some of it at a minimum of the lowest end of sort of wean,
but your lowest paid laborers you could then replace with robots. Yeah, and that's actually there have been AI tools in the gaming world for a very long time. People use kind of what's called procedural generation to generate, like if you're building a big open world map that is like thousands of digital virtual miles wide and deep, you can use an algorithm to figure out where trees and rocks should be placed instead of like having to make people go and place them by hand. So, that stuff
does exist and has existed for a long time. I think it's just this idea that instead of hiring an artist, you can just type in, make me cool video game art, like that, that is not going to happen. We'll be right back, Jason Shire from Bloomberg, but first a word from a sponsor. Your business deploys AI pilots everywhere, but are they going anywhere? Or are they stuck in silos, exhausting resources, unable to scale? Maybe you don't need hundreds of AI pilots,
you need a holistic strategy. IBM has 65,000 consultants with Gen AI expertise who can help you design, integrate and optimize AI solutions. So, you're not just deploying AI, you're scaling it across your business. Learn more at IBM.com slash consulting. IBM, let's create. Hello, I'm a step parallel, psychotherapist and host of the podcast, Where Should We Begin,
which delts into the multiple layers of relationships, mostly romantic. But in this special series, I focus on our relationships with our colleagues, business partners and managers. Listen in, as I talk to co-workers facing their own challenges with one another and get the real work done. Tune into housework, a special series from Where Should We Begin sponsored by Kleeview. And we're back. Your book is about Blizzard, which is primarily games based on the PC. We've
been talking about console games, again, Xbox Playstation. Gaming is also stuff you do on your phone, either because you're really into it or because you're just bored and killing time. I was talking about all this with my pal Matthew Ball, who follows this world pretty closely. He believes that one of the reasons gaming has had a problem on phones is because of this change Apple made in the way that people can can market games or anything, right? It's called ATT. That's a deal with privacy.
It's whenever you download a new app, there's a screen that says, do you want to allow this app to track you around the web? Almost everyone says no, which increases the cost for marketers to get anything to you on your phone. And so the theory is that is also impacting the game's business. I don't fully understand that theory. It seems like it's now more expensive to get a new version of Candy Crush to me. But you would think that the demand for me to play Candy Crush, my interest in
playing Candy Crush or a variant of it wouldn't be any difference. So the cost to the game's company should go up a little bit. I don't see how it decreases demand. Do you follow that argument? So a lot of game companies such as Unity that kind of operate in the space of in-game advertising are feeling the kind of the pain from those Apple changes. And we've seen that happen over the last couple of years. I mean, there are a lot of games that are released for free and rely
on in-game advertising as their revenue. Because if you're playing a game and you're not spending money on the mic transactions inside of it, then that's how those companies make money off of you. And that revenue is taking a big hit as a result of Apple's changes. So the mobile market, by the way, suffers from the same problem as the console market in that a lot of the market is just attracted to some of the biggest hits. Hollywood is kind of the same way, a little bit different,
but because in Hollywood it's still the newer stuff. So it's the Marvel movies every year, but it's new ones every year. Whereas in mobile, you're still playing Candy Crush. You're still playing some of these old games that have existed for years and years. And there's just no reason to stop, especially if that's where you can play with your friends. What's the most recent breakthrough hit in gaming? There have been a couple here and there. There was a big game earlier this year
called Hell Divers 2. They really cracked the market. There was also a game called Power World that was kind of best described as Pokemon with guns. Yeah, and they have some legal trouble now because of Pokemon. They do, yes, Nintendo is is suing them for patent infringement. So people still can break through with new stuff. They're still possible to find a new version of something people like or to give something give people something entirely new that that's still happening. Absolutely.
And something I didn't mention earlier is that one of the big problems associated with all this is kind of expectations. So for example, this new Star Wars game that just came out. It was a bit of a disappointment. I saw some reports saying that it has sold about a million copies, which is way under what Ubisoft the company behind it was hoping it would sell. But if you are an indie game developer and you sell a million copies, your life has changed. You are now suddenly set. You have
generational wealth. So it's all about expectations and the fact that these game budgets have gotten so high these days. These days we're talking about games that take five, six, seven years to make and budgets into the nine figures. That's one of the problems. And that means they have to sell a lot more copies to compensate for those. And most games are not going to sell 10 million copies. A couple of weeks ago I got to try on the new Microsoft goggles glasses. We're going to call them
Orion in the demo that that meto walked me through. They made a point of showing me a couple different games. Their Oculus slash quest devices are also game devices. Apple for every reason doesn't seem to be pursuing games with its Apple Vision Pro. Is any of this meaningful? Is any of the goggles virtual reality augmented reality? Are those devices currently meaningful to the games business and or are there a lot of people expecting that it will be?
No. I think a few years ago people had higher expectations for VR. People were more bullish on it. But that's just part of the trend chasing I'm talking about. People were bullish on blockchain being a part of games too. And I think that's the case anymore. Who knew that the gaming consumer was such a sort of so resistant to change? I mean, I don't know. I got two small children. It is hard to imagine ever wanting to isolate myself in a in a VR goggle bubble and not be able to.
Oh, I don't know. As someone who enjoys a cross-country flight for that very reason. That's no one can bother me. I might be a good differ. I want to come back to the games business. But let's dive into your book briefly. For people who are not hardcore gamers or even that, even maybe even casual gamers, what is Blizzard Entertainment and why was it something you wanted to spend a long time writing a book about? Sure. So I think I like to call it the Pixar
of video games. It's really it's the most beloved video game company in the world, not named in Tendo. Blizzard is a company behind. It's been around for 33 years. It's behind some games that people have probably heard of. Warcraft, Diablo, Starcraft, Heartstone, Overwatch. All of those are billion dollar franchises. All of those are hit franchises that have sold that have spawned sequels and spin-offs and generated many many many many many
dollars. So we're talking about a hit maker. And this is a company that has been around for a long time. Just like this beloved this kind of worshiped presence. I mean Blizzard has I open the book talking about this event called BlizzCon, which might seem a little silly if you're not a
gamer if you don't follow this world. But like this is a company so beloved by fans that it has a convention dedicated to it that people fly to Anaheim once a year to go dress up in their favorite warcraft costumes and meet up with their friends who they only see at this convention and line up to see developers talk and to let them sign autographs as if they're rock stars. So this is a company that has an enormous amount of power and brand power and sway over video game fans. And that I
mean that's just one of the many reasons that I wanted to write about. What really drew me to the story of Blizzard was learning a few years ago that there was this kind of corporate takeover going on and that a parent company the parent company Blizzard Activision was really taking a larger role in operations at Blizzard and really felt like Blizzard was making mistakes that it felt like
it could fix. And Bobby Kodak who is the well-known schmoozing businessman behind Activision Blizzard would go on to have a lot of battles with the people at Blizzard that drove a lot of Blizzard people out. And to me it felt like a hostile corporate takeover. And then from there the stories twists and turns just got even wilder. There was the California lawsuit where the government of California sued Activision Blizzard the entire parent company for sexual harassment and misconduct.
And a few months after that with its reputation and tatters, the division Blizzard sold itself to Microsoft for $69 billion of the B the biggest acquisition of video game history one of the biggest ever. So this is a story that is just full of bonkers, twists and turns and wild anecdotes and it's really really fascinating. Is there something you I mean Pixar has its interesting origin story and for a long time had
an unblemished record of hits. Been a little more blemished in the last few years but still sort of an amazing output. Is there some through line at Blizzard about why was able to produce so many hits right every every media company every entertainment company in the world has the strategy of let's just make hits. But Blizzard was able to do it. What was the special sauce?
There were a few factors. I think one of them and this is a little controversial. One of them is that the company would only hire hardcore gamers and back in the 90s there were a lot of gaming companies and some of them would just kind of hire anybody like it didn't matter if you were a gamer if you were just writing code or drawing art for a game. But Blizzard was a little bit different.
Blizzard was a company where they wanted every single person to understand the games to play the games to give feedback on the games and every day they are every every week or every month or so they would have these days called play test days where every single person of the company from
the CEO to the receptionist would stop everything they were doing and just play the game and they they would be able to tell like hey this is what I like this is what I don't like this is what we should change this is what we should evolve and by the end of the process like they could tell
if they had a hit because people were just playing it for fun like after work if they saw if they walked around and they saw people like out there desk even after work hours just still playing the game because they were enjoying it so much then they were like yeah this is this is going to be a
thing they could tell what was going to be good in that way of course only hiring parkour gamers has its challenges too because you wind up with a bunch of people who look just like you and I think later on they would have to deal with the repercussions of not opening up opening up their studio to
other demographics but at the time in the 90s I think a lot of people just like a lot of gaming or tech companies in that space weren't really thinking about that they weren't thinking about diversity they weren't thinking about what it means to be a boys club they were just thinking like hey we
want to hire people who know how to make great games so that's part of it I think another big part of their secret sauce is just a willingness to let games simmer take the time they needed release games when they're ready being willing to iterate and really value players above profits I think
that was a kind of another big part of their formula is really their belief was always like if you make games for players if you kind of prioritize what players want the profits will follow after that am I correct in thinking that the majority of those hits who were rattling off or either
PC only games or mostly PC games you are correct it wasn't until recently like 2013 or 2014 that Blizzard started putting all their games on consoles too but yes it was all the although Starcraft workraft all those OG games were all for the PC where they built a big enough
audience and you know it's interesting back in the day I think the borders have kind of changed these days pretty much everything comes to both PC and consoles but back in the day there was a big divide because people play games on consoles generally we're looking for simpler more more simplified
experiences and often directly at kids too yeah yeah kids also but PC games I mean I was a kid playing games on PC I think a lot of the people playing games back then were kids too it's a lot of people who are millennials I think are mostly the market the market for these games and those are people who grew up in the 90s yeah because PC games are definitely a blind spot for it because I'm a little older than a millennial and totally like the I can remember playing games on a pet computer
in a Commodore 64 but I really sort of missed the entire PC way which is why I've never really played any of those games you've you've listed ah yeah you missed out but yes it was all PC they actually they had a few console games way back in the day before they started releasing that like publishing
games on their own they release a few games with other publishers like interplay I don't know if you remember a game called like rock and roll racing or like the lost Vikings those are the some of the blizzards earliest console games but then yes it wasn't until Diablo 3 and then really
Overwatch when they really started hitting the console space pretty hard and nowadays all of their games are on both PC and consoles so blizzard ends up and you walk through this getting bought and sold multiple times right oh yeah it's it's now part of Activision which is now part of
Microsoft prior to that it had multiple owners before that but this is not a story where you're saying oh the the at least up until recently that that their problems are their owners I mean at one point they're owned by a French water utility but how were they able to keep that going even
though they were bought and sold many times yeah it's interesting I think there are a few reasons one is that a lot of their corporate parents kind of had their own problems they were part of a vending for a long time that's the French utilities company and Vivendi as part of a vending they
were really a small part of a bigger corporations so like when blizzard delayed a game it wasn't moving Vivendi stock and Vivendi also had its own all sorts of problems it was like heavily in debt it had to deal with the CEO who was accused of misappropriating funds and all sorts of stuff
like that but yeah I think that blizzard one of the reasons they were able to succeed for so long is that they were always able to say like Mike Mourheim who was the CEO and his kind of cadre of executives they were always able to meet with their corporate parents and say look you give us time
you give us autonomy you let us do what we want and we will deliver you hit after hit even if we have to delay it a couple times we will give you hits and that kept happening and they kept delivering on that promise up until World of Warcraft which was one of the most lucrative games ever made
that was like the ultimate hit that made everybody of a vending very very happy and then what happened is a little bit later when they were owned by Activision and started running into the problems a lot of that came through this game called Titan that blizzard had to cancel after seven years of
development and eighty million dollars lost and suddenly Bobby Codic who's the CEO of Activision looked over and he said hey you made us this promise that if you give if we give you autonomy we'll make it after hit and you just broke that promise so I think we need to step in here we
need to get some adults in the room to really wrangle things get things under control of blizzard Money Vault was one of my favorite movies of all time for whatever reason Bobby Codic has a cameo in there playing a version of the Oakland A's owner of and he's a really good actor surprisingly surprisingly good in that and is it do you think the idea why they put Bobby Codic in that movie and now I don't I know he's like so he moved to LA and he moved his company to LA in 1991 when he
was kind of salvaging Activision from bankruptcy and at the time he said in the press that like he hated it but over over the coming years he grew to like fall in love with Hollywood and he like impressing his Hollywood friends and just being a part of the Hollywood scene was a big part of his motivating his motivations as a businessman he wound up becoming good friends with people like Jeffrey Katzenberg even today there was just a picture a few weeks ago of him at the US Open sitting
us to Elon Musk and David Zazlov so he's like he's like he's a man he was in the mogul box he's still in the mogul box yes so you mentioned this the story sort of ends with Microsoft buying Activision one of the reasons they were able to buy it is the stock was getting hammered because
there were sexual harassment issues Bobby Codic was was blamed for some of them and he's sort of forced to sell it essentially it's huge deal that that no one really covered outside of the games business you know it's the equivalent of of Disney buying Fox right which was a giant deal with
everyone covered that deal finally went through I have two questions for you there one how does being owned by Microsoft change what Activision does there's a new version of Call of Duty which Activision owns slash Microsoft owns coming out this month is that going to be any different now
because because Microsoft owns it as opposed to Activision owning it no the game won't be different it'll still be Call of Duty still the same people running the thing I think long term nobody really knows because Microsoft is in a really interesting position right now last year so remember how I
said when Blizzard was part of the Vendee there was such a small fish that like it didn't matter if they delayed a game wouldn't affect Vendee's stock when they were part of Activision Blizzard it was the opposite they're like half of the title now when Blizzard delays a new Overwatch it it
affects shareholders Mike Marheim had to be on earnings calls like they were they were a big part of the revenue for that company the hope among Blizzard people was that now they were that they were coming back to the coming to Microsoft they were going back to that era of like we're so small
exactly like we're we're not going to have a big impact on the share share price of a company that is also making Microsoft Windows and like all this other stuff so that was the hope and there was a lot of optimism when the deal actually closed and then Microsoft came in and laid off hundreds of
people all across the organization and then Microsoft kept laying people off throughout this year and then Microsoft's Xbox started running into all sorts of like problems of its own that incidentally ironically you might say we're caused because Xbox and we've reported this at Bloomberg
Xbox has been under also to pressure this year from Saatina Dela and Amy Hood the kind of people run things at Microsoft because of the 69 billion dollar acquisition it's kind of like hey you you just spent this money you need to make these P&Ls look a little bit better so Xbox throughout all
of this year has been cutting costs they've been looking for ways to make a profit including putting their games on their biggest rivals platform on PlayStation platforms which was like unthinkable a few years ago and so yeah I wanted to ask you about that so there's this sort of
ongoing will they won't they about Xbox Xbox is the clear number two by a long distance in the console or maybe number three right PlayStation Nintendo Xbox and sometimes that seems like a problem for Xbox and sometimes they say it doesn't matter at all because we're selling games as a service
essentially like you said we're we're gonna have our version of Netflix where you can sort of get an unlimited subscription to our games and also we're just gonna sell our games wherever it doesn't really matter if it's on our console in fact maybe we don't really even need to be in the console
business anymore but then if you write that like I have you get you get a call for Microsoft saying we're absolutely in the console business that's wrong well like you just described that kind of like back and forth are just complete like chaos and confusion and ambiguity about what their plan
is like that is the case across the entire organization right now I think even internally people have no idea what they're doing what their long-term plan is and that is trickled down and I think a lot of people at Activision Blizzard right now are just kind of in this like weird purgatory where
they just don't know what their future looks like because nobody at Xbox nodes with their future looks like so they went from this like extreme optimism of being like yes we're getting away from the Activision C suite that many of us were unhappy with where we've got this new owner maybe
they'll give us more flexibility more autonomy more creativity and now it's just nothing but question marks so satchit and elah did this deal when when money was basically free all kinds of things actually sold when when there were 0% interest rates now it's not but also AI was not really
on people's radar now it obviously is they are obviously Microsoft is deeply invested in open AI and AI in general do you think they regret spending 70 billion dollars on a on a games company that they could have spent that money on something AI related instead I do I do not think that they
would admit that but I absolutely do I think that they I think they regretted it when the interest rates went up like the deal was made in January of 2022 and it didn't close until October of 2023 and a lot of things changed during that period and interest rates were one of the biggest yes I
think that site in a dollar grits that I think fell Spencer regrets it I don't think they would ever admit that but I think that for them this was a tactical error and it doesn't really make a lot of sense that said if you look at the numbers their Xbox division has been reporting growth
only because of the addition of activation Blizzard so I think when they're when they're kind of missing on other fronts and a lot of their games have been missing really for a long time now for almost a decade they've been missing on the software and the software front college duty and world
of warcraft and candy crush which are all part of Activision Blizzard those are all still guaranteed money makers so they do have that benefit one last meta question for you I've had you on the show a couple times you're great one of the reasons I had you on the couple on the show a couple times
is I can't find many folks who are seriously covering the games industry as a business like you do at Bloomberg almost all of the coverage I see when I look up any information about games is directed at people who play the games which is fine but it'd be like if no one covered the movie
industry and there were just reviews of movies with the old films yeah except for film blocks yeah you know it is an old idea at this point that the games business by depending on how you measure it is a bigger business than Hollywood and however you measure it it's a giant thing that lots of people
play a lot of people spend their time on we've talked about the council games but also people playing time on their spending time on their phones it's not just sort of you know 13 to 24 year old nerds doing and everyone does this stuff why doesn't the industry get serious coverage beyond
a handful of folks like yourself that is a great question I think there are a couple answers one is that I think a lot of outlets and publications are run by people who are either boomers or gen Xers and maybe didn't grow up playing games so they just don't get it I'm very my throat loudly no
no offense but if you don't get it it's hard to it's one of those industries it's really impenetrable if you don't know it and it's just a giant dollar signs attached to it and you know that I mean that's one thing if you say it's not for me but people like people care about this
hey man you're preaching to the choir I'm shocked every day that the New York Times does not have a full-time video game reporter I mean their video game beat they've been actually this year they've been bolstering freelance coverage in the arts section so they've been doing more games
reviews but they do not have a full-time reporter to cover the business their video game coverage has been handled over the last few years by people who just have it as a beat in addition to like other tech companies and I like like so they they barely cover it and yeah again you're preaching
to the choir fortunately at Bloomberg we realize how big it is and how serious we have to take it and we have two full-time games reporters as part of our entertainment team it's me and my colleagues Cecilia Donastazio and hopefully we're we're able to bring coverage of that industry
in a serious way even to people who do not play games religiously okay so in addition to plugging your book play nice the rise fall in future both entertainment I'm also plugging Bloomberg since they hire you shout out to make all right Jason Shryer thank you thanks Peter thanks for having me
see you around thanks thanks again to Jason Shryer thanks again to Gabriel Sherman thanks to Gellani Carter produces and edits this show thanks to our advertisers you know to advertisers do they make this show available to us for free and thanks to you guys for listening we back next
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