On not misreading the mini-map

The $200 billion games business isn’t one industry. It’s four.

Two classics of the real-time strategy genre are Age of Empires and StarCraft. In both, winning requires seeing the map clearly — where the bases are, where the resources are, where the chokepoints lie. If you misread the map, you lose — either fast (you get blindsided) or slow (you bleed out by wasting your resources). What’s true in RTS games is just as true in any arena where strategy and analysis are required to succeed. So if you’re in the business of games the question is: “Am I fully understanding the map?”

Game software is a $200 billion industry that is widely misunderstood — because it isn’t one industry, it’s four. And those distinct businesses work almost entirely differently. Understanding those differences is crucial — whether you're building or investing.

Here’s one way to think about the industry we found useful:

This graphic didn’t come from an expensive consulting engagement — it’s from a white board at Nexon in 2019. We were having a very difficult conversation about a company-wide reorganization we were doing, and we needed to decide what projects we would continue and what we were going to step away from. 

Here’s how the map looks when you break it down:

• Upper Left: Deep, single-player games — the original mode of modern gaming. These are solitary experiences crafted entirely by developers, with no other players in sight. The Sims and Europa Universalis both follow the same basic model: you versus the system. This quadrant dominated until the mid-1990s, when the Internet redrew the boundaries of what games could be, but it remains vibrant.
• Upper Right — Around 1994, the Internet created a new frontier — online-native games — pioneered mostly by Korean and then Chinese developers who had early, cheap, fast broadband. Nexon, NCSoft, and Tencent built player-to-player economies, combat systems, and social hierarchies that simply couldn’t exist before. Graphics mattered less than interactions between players. Western and Japanese developers struggled to adapt, mistaking better visuals and physics for the features that mattered most to online gamers.
• Lower Left and Lower Right: Casual Games — Then Facebook and the iPhone exploded onto the scene (2007–2009), unlocking mass-market casual gaming. Previously, casual games were limited to the PC and clunky feature phones — now they went mainstream. On mobile, technical limitations meant early casual games were often single-player or asynchronous multiplayer. Over time, deeper online experiences emerged — but most early casual players preferred short sessions, and designers gave them fast dopamine loops instead of deep strategy or social complexity.

Once you spend just a few minutes recognizing how different the user experiences of these four quadrants are, it becomes easy to recognize the $200B “games business” is actually 4 highly distinct industries.  They differ in nearly every way.  To name just a few:

• User experience and customer expectations vary wildly. In a single-player game like SimCity or Civilization I am playing a complex, interlocking set of rules managed entirely by the local computer.   An online game like Eve Online is primarily  about interacting with and against other players in real time. In a hyper-casual or casino mobile game the player’s expectation is about frictionless dopamine loops more than complex challenges. These are not the same medium.
• Developer skills — What does it actually take to build the game? Western and Japanese AAA studios excelled at graphics and linear storytelling — perfect for single-player. Korean studios, by contrast, optimized for systems, balance, and social dynamics – needed for multiplayer. The skillsets didn’t transfer easily. 
• How you manage the game: Live ops demands a different mindset entirely: player balance, content cadence, cheater mitigation, and managing a virtual economy at scale.
• Monetization Model:  A “packaged goods” game is a one-time payment.  An online game may be a subscription, or it may be free-to-play, pay-to-play, or some hybrid.   
• Metrics and tracking:  A packaged goods business depends on new launches to generate revenue, selling products or expansions through a channel. An online-first business in the upper right quadrant obsesses over retention, measured in monthly retention rates. By contrast, many casual games companies recognize they have few ways to hold onto customers for long, so they monetize as fast as possible before those customers spin out, so they look closely at metrics like ARPDAU (average revenue per daily active user).

At Nexon, getting clear on these four industries helped us to make hard choices based on our strengths and weaknesses. Nexon benefitted from having some of the very best live game operators in the world – led by Junghun Lee (who later became my successor as CEO/President) and Daehyun Kang, surrounded by a small army of the best in online virtual worlds. 

So we stopped trying to be good at everything. We exited projects that didn’t fit — even when it was painful — and focused entirely on the areas where we knew we could win. Clear thinking gave us clear strategy, and clear strategy helped us to align our teams, our board, and our investors.

For example, we quickly determined casual (the lower half of the map) didn’t play to our strengths, while it was also overflowing with sophisticated casual games companies for whom acquiring customers for pennies and/or monetizing them rapidly before they churned out was their core strength. So for the most part we exited those businesses by selling them off or shutting them down and moving those developers to other projects that were higher-and-better use of their talents.  As in any situation that involves saying “no”, a lot of people disagreed with this decision, but it enabled us to focus our limited attention to the area where we felt we were world-beating.

USING THE MAP

So is there a useful takeaway for game developers in this map?  I would argue it’s important in two ways.

• Skills matter: Old mental models die hard. When Facebook games exploded on the scene (2008–2010), many highly talented AAA developers jumped into casual gaming, assuming their skills would transfer easily. Most found out the hard way they didn’t. Many struggled badly, not because they weren’t good, but because they hadn’t realized they were playing a completely different game.

• Interest and enjoyment matters: The best work usually comes from people who genuinely enjoy the kind of game they’re building. Some love crafting single-player narratives. Others obsess over systems, balance, and player dynamics. These aren’t just different skills — they’re different instincts. You’re unlikely to think deeply about a genre you don’t actually enjoy.

And smart investors frequently get lost on the map. Analysts trained in one quadrant often misapply its rules to the others.  These mistakes create some of the best investing opportunities I know.

A simple example: Analysts trained on the “packaged goods” model (upper-left quadrant) expect a classic Product Lifecycle: a game launches, sells well for a quarter or two, then steadily declines. They fixate on where a game sits on that curve. But online games — especially live services — don’t behave that way. Revenues often dip, then grow again as new content launches, developers fix balance issues, or communities deepen.

The wrong model makes analysts panic at the first dip, dump the stock, and miss the next wave. Investors with the right map see the dip for what it is: a buying opportunity.

In the real world this happened frequently while I was at Nexon.  The smart money would ask us some difficult questions (usually about retention, our content plan, etc), knowing that our game would do well if we were on top of these issues. They’d happily buy the newly-cheaper stock from the panic sellers.

Even today, many analysts struggle to understand online games. That misunderstanding continues to destroy value — and create opportunity. They look at product launches as all-important catalysts, even though a well-managed online game company can double its revenue over a few years without ever launching a new game. Some of the strongest games didn’t explode onto the scene — they grew patiently, compounding users and revenue over years. RimWorld, Warframe, Path of Exile and even Minecraft were examples of this phenomenon. Understanding that difference is where the real money is made.

Misreading the situation leads to wasted years, missed opportunities — and sometimes disaster. When people talk about strategy, they usually start with ambition. But real strategy starts with clarity — clarity about your resources, and how they match the world around you. That clarity is what a good map gives you.