 Good morning, everyone. So we're going to switch topic pretty drastically. I think one of the cool things about Slush is the diversity and the type of things that are brought here. And so going from sustainable food production to video games. Really excited to be here and shed some light on this vertical. So before we start, I just want to ask the audience, how many people here play games, like consider themselves a gamer? How many play PC games, mobile games? Any League of Legends players or e-sport fans? You are? OK. What about Fortnite? Well, not a lot of gamers. What about Candy Crush? OK. Cool. So I guess using that as a start off point, I wanted to ask you, Dan, very high level. What are the platforms, geographies that are most exciting to you and Tencent right now? Sure. Can I check? Thank you. Sure. Thanks. Great to be here back at Slush. Thanks for everybody joining us today, Jason. You know, honestly, I'm kind of playing to the crowd, but the Nordics is obviously one of the most exciting geographies for gaming globally. This is my fifth Slush and 20th or 30th trip to Finland in the past couple of years, and it's always impressive what comes out of not just Finland, but the rest of the Nordics as well. Europe in general is very exciting for games. America is also where we spend a lot of our time and focus. I think as a Chinese company, of course, we've been very lucky to be in the Chinese market, which has been growing very rapidly over the past few years. We're seeing some strong growth in other regions as well, but it seems like for us, at least, the US, China, Europe, sort of the main territories for games that we play in, we've less experienced some of the other territories, but that's a lot of fun. Got it. And so one of the first, I guess, trends that is on a lot of people's mind is this idea of gaming becoming more mainstream. It seems like more and more people are engaging actively with gaming content, playing games themselves. How do you see that kind of playing out? Yeah, I think I'm a little bit older than the average crowd, I suppose, but when I was growing up, it still wasn't really cool to play games in America. You did it, but it wasn't something that was very common. And one of the interesting things, I think, for kids these days is it is cool to be a gamer, and it's not something that you have to hide. And as nerd culture has taken over, being a dungeon master in D&D is now something that's cool. And so as the comic culture extends through Western society, just a lot more people end up playing into games. And you ask people to self-identify as a gamer, and we've got a lot of gamers here, and that's great, but there's a lot of people who won't raise their hand and say, I'm a gamer. But then if you ask them, if you look at their screen time for what they've been playing on their phone, what's been on their phone open or what's on their PC? And yeah, they've spent six hours or 12 hours in the last week playing this game, but they don't consider themselves a gamer. And so I think that's been good for the whole industry, is it gets more mainstream, you get a lot more people dropping into it, and you get a lot more sort of innovation emerging as it becomes more common for people. Yeah, and I think to your point, it does seem like it's not just a subculture anymore in different parts of the world, especially China, for example. I think League of Legends was actually the most watched sport of any kind. So more hours viewed last year than the NBA and then professional football. And so it's becoming more and more a part of people's lives outside of the actual in-game experience. I mean, just to add to that, I mean, we're very happy. This year, for the first time ever, Chinese team won the World Championships with League, and it was a cultural event in China. It wasn't quite like the train stop and everybody goes on the streets and celebrates, like if you win the World Cup, but it was an event. It was a major occurrence. And I think the West is also becoming, it's becoming more mainstream for those types of events when you have major streamers, television shows, the Fortnite phenomenon that's occurred recently. It's interesting to see how the new generation is so excited by all that. I think it's really good for the industry overall. Yeah, and to that point around these games that have really large global audience, the games like Fortnite League of Legends, it seems like it's becoming ever more important for companies to kind of build and engage communities as like a core strategy for launching games and running games. Like how do you see kind of the importance of communities impacting games going forward? Yeah, so we've always believed that, especially for a game as a service, or a game that's gone for a long time, the strength of communities is really strong and League is really, you know, Riot is really one of the preeminent examples of that. But we also see it in a lot of other areas where a community comes together and finds themselves online or offline in the old days. And they gravitate towards a certain experience and a shared social experience, and while League was a huge example, I mean, there's lots of other smaller examples, I mean, or more niche examples, I should say. There's a company in New Zealand called Grinding Gear Game to make a game called Path of Exile. I don't know if anybody here play Path of Exile. It's not a huge game, but those who play it are really hardcore. So thank you. So it drops a new season every quarter and when they drop a new season, they share it to their Reddit forum and Reddit at the front page of the internet and not every time, but every other time maybe, it makes it to the number one post on all of Reddit because it's kind of a small community of, I don't know, tens or hundreds of thousands of members in the Reddit sub-forum, but they're so excited about them and their game drops a new season that it becomes the most popular thing on the internet overall that day. And so it's really impressive to see sort of like the strength of these strong communities in the number of years that they will stay together and form friends and meet up offline and have gatherings. I mean, sorry, another example closer to home is, I don't know if everybody here's from Stockholm who plays Paradox games, but Paradox Interactive makes some really deep grand strategy games that are super popular amongst grand strategy fans. Very complex, very deep experiences that go for years and they have a gathering every summer in Stockholm. I think this year's actually in Berlin in October for PDXCon and it's great to see the offline support that comes from these communities that play the game for a long time online, but then will also gather offline and become real world friends, et cetera. Yeah, I think to that point, this idea of people playing games, becoming not necessarily just something they do in their off time or something they do behind closed doors, but it's something that becomes part of people's identity and extends outside of like when they're actually sitting in front of their computer or on their phone screen playing the games, they're actually using it as a way to connect with other people with obviously similar interests and yeah, seeing how it's driving a lot of different types of content and different forms of entertainment outside of the game itself. I think one other recent trend is this idea of operating game as a service, so no longer are companies just launching a product at retail with a big bang and then hoping that people will stick. How do you see this kind of shift in strategy impacting how game companies go moving forward? Yeah, I think this is a really good cross pollination that's kind of occurred between East and West. I must confess, I'm not actually a gamer. I'm not like, I'm not like a writer who is a hardcore gamer. I played some games growing up but I'm not a super hardcore gamer, so I won't even doing this for a few years, but when I started, when I joined the company five years ago and started interacting with more and more games companies, I noticed that in China and Korea and Asian games companies tended to be these free to play but operated for a very long time, live operations or games as a service, whereas the Western gaming market, mobile free to play was just sort of beginning, PC had a little bit of free play, not too much and console really didn't have much of anything at that time. And if you fast forward to today over the past five years, all of the Western sort of console and or mobile and or PC, there's still a great paid game ecosystem that exists, but on top of that has now been layered a great free to play games as a service, live operations type of business model that has allowed the Western gaming companies to just enjoy a tremendous success, continued success and greater success in recent years. And that cross-pollination sort of from East to West has worked very well. There's lots of things we've taken from West to East as well, but that's a great example of something that I saw sort of Western companies discover a new business model that can do really well for them there. Yeah, and along those lines, you see a lot of developers used to trust and trust third-party publishers with the ability to launch games because they had relationships at retail distribution, et cetera. And I think you see more and more Western developers considered self-publishing, building their own infrastructure to directly connect with gamers. And I think you see that now most obviously with like Blizzard for Overwatch, Riot for League of Legends and Epic for Fortnite. So let's talk a bit about a couple of the genres that have kind of blown up the past few years and then look forward to like what areas there might be opportunity for new gaming startups. I would say the last couple years was marked by a lot of people trying to create MOBA games to piggyback off of the engagement around League of Legends. I think last year saw a huge rise in the number of Battle Royale style games both on PC and then on mobile. How do you view these type of trends? Like what can you do to spot them and kind of what are you looking at going forward? Yeah, this is a tough one. And just so it's not too much inside baseball, but I assume the gamers in the audience all know, but for those who are not, like me, not as familiar with games, MOBA is a multiplayer online battle arena. Genre that League of Legends or Dota, these types of games, sort of emerged in the late O's I guess and really became super popular in the mid-teens I suppose. And it's been going strong for a decade and it's a great new genre. And then this new Battle Royale, which came out of a Japanese movie from the 1980s, I believe originally, and Hunger Games popularized as well. Hundred people drop onto an island and last man standing wins. Type of gameplay came out, there was Arma and then there was King of the Kill and then became PUBG player in Battle Grounds and then Fortnite and has now emerged as this huge new genre of growth. So one of the things that we look out for as a company and we think about is gaming to a non-gamer, it seems like one industry, but within the gaming industry, if you play MMOs, you don't necessarily play shooters. And if you play shooters, you don't necessarily play MOBAs. If you play MOBAs, you don't necessarily play match three. And so each of these genres is kind of distinct. They're almost like distinctive, interactive entertainment genres. And so when a new one gets created, actually layers on a whole new group of players come and drop into the industry, a whole new burst of revenue comes into the industry as well, all new burst of creativity comes into the industry. And so what we've seen over the years is as you layer on new types of genres into different platforms, you actually grow the pie exponentially because you have both new platforms, new geos and new genres coming out. So one of the things that we're really impressed by, or we see the health of the, a good indicator of the health of the ecosystem is that you do have these massive new genres like PUBG or Fortnite Battle Royale emerging and bringing a lot of new sort of players into the industry. The million dollar question that you're always, as an investor, you're always looking for, a billion dollar question is, what's that next new genre going to be? Or what innovations can you do within an existing genre to sort of emerge? And that's hard to answer. If I knew that, I'd be doing my own games company probably, but kudos to all the founders who are going after that. For sure. And I think one thing based on these last couple of trends is there's a lot of popularity around taking these existing game modes and trying to like port them to new platforms. So like taking a League of Legends, putting on style gameplay, putting on mobile, taking Battle Royale, putting on mobile. And I think one thing that game companies should be kind of cautious of is like, who is the target audience? What games are they playing? And like what experiences do they actually, like do they find fun? And I think in a lot of markets like people who'd play League of Legends on PC, it's tough to get them to switch to play the game on mobile. That doesn't mean there isn't an entirely different audience of people who would be interested in playing a mobile game on mobile as evidenced by Honor of Kings in China. And so I think thinking really carefully about the audience and what they're currently playing and what they find fun is important for developers. So taking a step back from the games themselves, we talked a little bit about a platform. So PC, mobile, like new app stores, et cetera. How do you look at kind of new platforms emerging as a potential opportunity or a potential challenge? Yeah, so when you think about platforms usually for distribution, after consoles, there's PCs. And after PCs, there's web games. And after web, there was mobile. And now there's a lot of talk around AR, VR. And I think the web gaming emergence in the West allowed it was a nice bump. But it paled in comparison to the growth of what happened when mobile games emerged in the emergence of the iOS and Android platforms. And when a new platform emerges, you actually have new emergent gameplay, because different controls, different habits. And that's when you have like small teams, like six guys in Helsinki can create a Supercell. Or a small team in Stockholm can create Candy Crush. Or these huge new companies that emerged, they all came out around when the mobile gaming platform came out. So when a new platform emerges, you have this great opportunity and a lot of innovation. And then as the platform gets bigger and bigger, sometimes it can be harder to get distribution. And so the channel becomes more important. And so I think 10 years ago, there were teams, 15 years ago, gamers would say, I want to build a console game. But then AAA became so expensive, you need $100 million to do the graphics right, and to do a AAA quality console game. And so web and then mobile immersion. So these small teams that didn't have $100 million, they wanted to try something new. If you're spending $100 million, you're probably not going to try some radically new concept and innovate some radically new idea. And so you have these smaller teams that are more willing to try new things. And they experiment and they come up with things. And then you have Clash of Clans emerges or something of that. But then now, if you fast forward to today, mobile has become a very difficult place to get distribution. It's very hard to break through. Finland has a small giant as one of the exceptions, approves the rule, recently emerged into the top-grossing mobile games. Kudos to them, they do a great job. But they are the exception, approves the rule. And so people are sort of looking for where's that innovation going to be. And in the past few years, a lot of people have dropped back into PC with Steam democratizing sort of the ability for a small team to make a game and publish it themselves and not have to buy a ton of traffic. Then that allows five or 10 or 15 smaller teams to break out and try new innovative things. We've seen a sort of renaissance in the PC gaming era. So I'm not so sure about VRAR right now. There's some really cool experiences out there but that maybe the distribution hasn't quite gotten to the scale. But there's some really new opportunities that emerge when you have a new platform coming out. And so whenever that time comes, it's a great time for new companies to emerge. Yeah, that actually dovetails nicely with one of the questions we got from the audience. What needs to happen for location-based or AR games to become mainstream? And I think that's an interesting one because if you think about it, one of the most played games in the world already is Pokemon Go. I think since Apple included Screen Time and iOS, people are realizing how much time they spend walking around catching Pokemon. But in your view, how do you look at kind of like AR as in addition to the mobile gaming experience or just that platform in general? Yeah, I think for location-based, obviously Pokemon's a cultural phenomenon and has encouraged a lot of people to get out and walk around in the real world. And that's a very successful example of location-based games. I think for AR, in a near term, there needs to be more distribution. So I assume that the major distribution platforms in the West would be looking at ways to get more ARs to be mentioned to Apple and there's several others that could get behind us in a really big way and really drive a lot of sort of adoption. I personally was fairly down on VR, AR, just because I'm not a gamer, so my opinion doesn't really matter, but it kind of made me dizzy and I wasn't sure I'd like to carry the headset. But then I heard Tim Sweeney from Epic gave a talk one time about sort of what their Unreal Engine can do and rendering in real time near perfect virtual reality and how that could be integrated into sort of mixed reality and augmented reality. And I came out, this is two or three years ago, he said it, and I don't know if it's five years or 10 years or 20 years or 30 years away, but it feels like, I think the catch phrase that we were joking about saying, matrix is coming, and it feels like in our lifetimes that will probably occur. I'm not sure it's going to be in the next couple of years, so if you're a startup who only has 18 months of runway, I'm not sure it's a great use of resources right now, but I think definitely in the next half decade, decade, a couple of decades it's gonna be huge. Yeah, and I think AR presents this unique opportunity where anybody who has a phone has the ability to be a gamer and a lot of these developers who, especially if you have IP that a lot of people recognize, like Niantic obviously with Pokemon and then Harry Potter, you can integrate AR experiences into any app and use game mechanics to turn people who think they're just playing something, like getting information on their phone into an actual gaming experience. And I think there's a really unique opportunity for generally app developers, not just game developers, to create gaming-like experiences within their environment through augmented reality. Well, I think we have time for one more question. It'll be an extension to what we talked about, the platforms. So Epic Games recently announced in Launcher Store and then Discord also has gone into using their platform to distribute new games. What do you think of, do you think it's a good thing, a bad thing for there to be like fragmentation in terms of like where people find games and how they develop and deliver games, et cetera? Yeah, I think it's a good thing to have more competition and I think it's a good thing. At the end of the day, I think that gamers will go where the really good content is going to be and if they have a game that they really want to play, they're going to, you know, I remember being on a 14.4 dial-up modem and having to leave things on overnight in order to download the game that you wanted to play. So you'll go through pretty, you'll jump through a lot of hoops in order to get to the content you want. And I'm reminded of, I think I was reading the Jaws biography and I remember when the iPhone came out, the introduction of a 30% commission was I think a drastic lowering of sort of what the distributors were able to be taking at the time. And now if you have more channels of distribution, you have some competition in that area, even publishers, people who are on their own platform but people who take other people's games and publish them, such as ourselves in China, we have kind of advantage in publishing games to China, but even in the West you have other developers, you have to work harder to prove that you're valuable if developers have the option to sort of go direct. And so I feel like whether it's for publishers or for platforms, you know, everybody having to work harder to sort of do a good job of distributing a developer's game, getting it to the right community, providing advice and or marketing support and or operation support. I feel like that's all a good thing for the upstream developers because it allows people who work harder to get more games, more interactive content into more people's hands, helps the illness to grow, helps, you know, all sorts of good things happen. Yeah, cool. Well, that's all the time we have this morning. Thank you guys very much for being here this early and listening to us talk about video games.