Braden (00:04)
Thanks for joining us today on the latest episode of Growth Stage Gaming, our podcast where we help game publishers and studios learn more about all the ins and outs of going DTC. today we have a special guest, Rachel Harding, our senior director of tax here at FastSpring, who’s going to break down what every developer and publisher needs to know about taxes as they are related to gaming from digital purchases like your skins or

Currencies or battle passes to D T C web shops and beyond will cover why tax treatment differs from region to region The biggest compliance risks that publishers face and what happens when you move from a marketplace to selling direct? Rachel is also going to share where most publishers get tripped up and ways that you can avoid those common pitfalls So if you’ve ever wondered how taxes actually apply to your game and how to navigate those global tax rules without a tax degree

This conversation is going to help you learn a little bit more. So Rachel, tell us a little about yourself and ⁓ what you do here at FastSpring.

Rachel (01:09)
Yeah, thanks, Braden. I know I’m sure taxes is everybody’s favorite subject, but it is mine. So I’ve been at Faspring for about five years now. ⁓ I am the senior director of tax here and responsible for anything kind of in the tax umbrella. I have about 15 years of corporate tax experience, specifically this kind of excise tax, which we talk about VAT sales and use tax.

which is kind of the focus of what we’re talking about today.

Braden (01:42)
Awesome. ⁓ So before we dive into taxes, do something a little more fun. What games do you play? Do you play any games? What do you enjoy? What’s your favorite game to play? ⁓

Rachel (01:53)
⁓ Pretty much it’s like limited to really like family holidays, but I love like the team games. Like I think it’s co-ops, but Overcooked is a family affair. We get everybody in, the nieces and nephews, ⁓ grandpa sucks, you know, like it’s kind of our, ⁓ we get everybody together and at least play a few times over the holidays.

Braden (02:17)
Overcooked is a great game. It’s a very chaotic, it’s a blast. And it makes or breaks relationships, sure. Maybe it’s a good thing you only play at the holidays because then you can leave the chaos.

Rachel (02:31)
There are some people that can’t be on a team anymore. It’s better for the relationship.

Braden (02:36)
That’s hilarious. I love it. ⁓ speaking of, you know, this teamwork and this cooperative work, Taxes can be complicated. It can be hectic and it can be a headache for teams that are working. And so I want to ask to begin, you know, for someone who is building a game today or a publisher who has games out in the market that are maybe considering going direct to consumer, opening a web shop, ⁓ why should they even care about…

taxes in the first place, what’s important.

Rachel (03:08)
Yeah, so I mean, we get this question a lot. ⁓ And there’s kind of a couple of subsections of what could actually happen. There’s like the real business risk that could happen when you’re looking at fines and penalties, ⁓ financial burdens. ⁓ There are cases that you’re at officers, depending on what country it is, can actually be put in jail. I’ve used that to mess with some of our officers here at FastSpring ⁓

So there’s that business side, but then there’s also things that could fall under, like if you were going to sell your company or get a minority majority investment, they’re going to look at your tax operations and see what you did right, what you did wrong. And a lot of times there could be an adjustment for all the things you did wrong, meaning they’re going to pay you less based on all the mistakes that you made. There’s also kind of this concept.

statute of limitations that applies. If you’ve never filed or haven’t done anything, taxing authorities have full jurisdiction. There’s no limit on what they can kind of do or come after. If you’ve applied and you your intent is good, the statute of limitation will apply, which is anywhere from three to four years. And that means that the taxing jurisdiction has three to four years to come after you for that year.

for example, 2020, that is a closed year. So if you filed and you’re good, it’s all water under the bridge. But if you haven’t filed, things will come after you.

Braden (04:49)
And does that apply every year? that something or is it like a checkpoint that you say, I started filing in 2020 and then I forgot to file in 2021 and then it’s 2022. How does that work?

Rachel (05:01)
Yeah, so you have to look at each year. So if you didn’t file in 2021, it’s unlimited again. So, and once the year closes, the year’s done, they can always come after you for that. So it’s really something that it’s better to always do something rather than nothing. That’s kind of what I recommend.

Braden (05:25)
Okay. So it sounds like, you know, there’s a lot of different rules, regulations that are applicable to this. ⁓ Why are the rules so different from, you know, region to region or country to country, you know, for things like your digital goods, like your skins or currencies or battle passes.

Rachel (05:45)
Yeah, honestly, your guess is good as much ⁓ like the states in the here in the states, we like to keep things really complex and do we always like to do things different, like not be on the metric system internationally. It’s based kind of at the country, the federal level. So it’s a little bit easier to determine what’s taxable ⁓ kind of on the broader international spectrum. It looks.

at B2B, B2C. When you’re looking at kind of the comp within gaming, it’s really B2C. So publisher to player, those are really going to be taxable in almost every foreign jurisdiction. ⁓ It’s a little more nuanced when you step into the US because it’s a state level taxing regime. It’s not done at the federal. Each state wants to do it their own way. ⁓ It gets kind of into the details when you start to looking at

of how the game is played. Like you mentioned, digital goods, those are kind of like an item or a non-physical good, and those are going to get taxed by about 20 different states. The more you move into streaming or a live service game, more states are going to tax that. You have around 30, think 33, 35 states that are going to tax that.

As far as kind of in-app purchases like skins, currencies, battle passes, most cases those are just going to default to the taxability of your game. So in this instance, your live service game that is going to be taxable in 33 states as well.

Braden (07:31)
Okay, so what happens then if I’m a publisher and I decide, you know what, I’m gonna go do this on my own and I file incorrectly. say, I’m a digital good. I’m not a ⁓ streaming or live service game. What’s gonna happen or what could happen to me? ⁓

Rachel (07:50)
Yeah, what if you, mean, outside of just making the wrong determination for your product, you will technically then have exposure in all of those states. Cause you, let’s say you’re filing in only 20, those 13 states, then it’s going to go back to that statute of limitations. And since you didn’t tax them and you didn’t file, it’s, they’re going to have jurisdiction to come after you.

Braden (08:17)
Wow. Yeah, that’s pretty wild. ⁓ How quickly that can change things and how intertwined all of this is. ⁓ So then what actually is making the determination? We’ve talked a lot about these taxes and these different states, how you need to file, when you should file, but what actually determines where a publisher owes taxes? Is it at the player location or where the developer is located or who the payment provider is, or is there something else entirely?

Rachel (08:46)
Yeah, one thing we do is that the good thing about kind of excise like indirect tax, ⁓ which is not the case with income tax, because your tax on that is that it’s technically not the publisher’s tax. They shouldn’t be paying out of pocket. The only time that they’re going to pay out of pocket is if they do it incorrectly. But if it’s done correctly, ultimately, it’s a tax that the customer, the player is going to be paying

It’s only if it’s done wrong that it’s then going to fall onto the publisher. where you tax, ⁓ you’re going to look at the location ⁓ where the service is kind of consumed. And what that equates to is where a player is actually playing the game. ⁓ Operationally, it’s your IP address, your billing address.

Those are really the only two kind of the main data points that companies kind of integrate and tax based on. There are some other like weird things you can look at, but ultimately those are going to be the two most sure ways of finding where a gamer is playing.

Braden (10:00)
So then if I’m a publisher doing this, does that mean I need to be collecting what their IP address is, where they live, all of this data in order to stay compliant?

Rachel (10:12)
Yes, you technically don’t need as much information ⁓ internationally because it’s a country level. However, every jurisdiction really wants you to have its two pieces of corroborating evidence in order to prove the location of a player. ⁓ What that means is that if you’re capturing one item, technically they could go back

and prove otherwise that wouldn’t be substantiated if you were to ever get into any kind of issue with the authorities. To be on the safe side, you want two pieces that can corroborate the exact location.

Braden (10:52)
Okay. ⁓ And so I know that like a lot of marketplaces do this for you today. You know, your app store or your place store, like they’re taking care of a lot of this for you. But as publishers start to move to this direct to consumer model, they build their web shops and other things. There may be they’re moving away from marketplaces or maybe there’s a difference there, but maybe you can perhaps you could just help help us understand what is a marketplace in the tax world and how is that.

delineation important as you think about direct-to-consumer payments and some of this data and other things.

Rachel (11:28)
Yeah, and this is kind of like going to be the biggest, like more complex area. ⁓ You know, since the changes that have happened with the Google store ⁓ and, you know, they’re a monopoly, they can no longer force people to sell. We have seen a lot of people kind of go start selling direct. ⁓ One of the biggest pieces that’s going to change is the tax implications, and it’s more so how it’s going to be facilitated.

If you’re currently selling or you were previously selling it on Google or Apple, those are going to be considered kind of marketplace and they’re going to follow marketplace facilitator rules. And what that means is, it’s a shared liability. Google is responsible for the liability, but so is the publisher. ⁓ So a lot of times in the more complex places, Google is just actually

handling that for on be on your behalf. The reporting can get complex because depending on the country, the marketplace has to report and pay or the vendor has to report and pay. It’s best to kind of like, I assume most publishers aren’t even really aware what’s getting done on their behalf until they download a report. And it’s like, what is this tax? Where did this pay? Some in the US we pull up

we follow marketplace facilitator rules. So what’s gonna happen is Apple Google is going to pay on your behalf. There are states where you actually have to file, meaning you have to go claim that tax that was paid on your behalf. ⁓ A lot like I live in Colorado, Colorado is one of those states that you have to go do that. ⁓ So migrating off of Apple or Google and marketplace, you’re gonna have to

basically start doing that on your own if you sell direct. There’s another option obviously selling through merchant record like FastSpring where we operate as a reseller, meaning you don’t have any of that responsibility at all. It’s actually less responsibility than what you had through Google or Apple as a marketplace. ⁓ The most responsibility is gonna be if you’re selling direct. You’re gonna be responsible for looking at kind of all the

⁓ where you sell into and figuring out what’s taxable and where you need to file.

Braden (13:58)
Okay, so if you wanted to do maybe, you know, in because steering is only allowed in the United States, can you still work with Google and Apple and also do some of this direct things, direct to consumer stuff through a merchant of record? Can you do them in tandem?

Rachel (14:21)
Meaning like partly sell through a market like through a marketplace and then partly sell through a more.

Braden (14:27)
Yeah, yeah, sell the same things in both places.

Rachel (14:30)
Yeah, that definitely that I would say that that’s fun for me and like being in the tax room like, that sounds like kind of fun because you’re going to get a little bit of variety and it’s going to be different for non tax people that probably sounds miserable because not only do you have to know what your requirements are with within each of those models, the marketplace and then the merchant of record, you are going to then have

just all these different things you’re gonna have to comply with. Either don’t do it or do it. ⁓ It depends kind of on the different jurisdictions that you’re in.

Braden (15:13)
Right. That’s fascinating. That’s, mean, again, just adds these layers of complexity that I’m not a tax person. So that sounds terrifying to me.

Rachel (15:22)
Most people aren’t.

like, you know, it’s one of those things like, Hey, if you want to deal with it, great, love it. ⁓ but it can, it can get complex. And if you don’t like it, it’s probably the last thing you want to deal with in terms of being a publisher. I don’t think many people are into tax there. That’s why they kind of went into being, ⁓ a publisher within the gaming world. And they like kind of the graphics and the experience very different than

very dry tax, whatever is their preference, but it is much easier to comply when you are using a merchant of record.

Braden (16:02)
Okay. ⁓ So we also have seen, you you’re talking about these options, maybe some publishers you’ve talked about like going direct, you know, differentiating from direct to consumer, right? Which is just selling directly to your player, but direct meaning I’m going to take on a lot of the liability. I want to either be a payment service provider or I want to partner with one that doesn’t operate as a merchant of record. What does that look like? And what’s the

Is there benefit to doing that from a tax perspective or is there an additional challenge that comes from taking that road?

Rachel (16:37)
Yeah, so when you look at it’s kind of like within the selling direct model, ⁓ most of the time you are going to need the help of ⁓ a PSP payment service provider to help you facilitate those payments. It really depends on the services that PSP is providing, because if they are providing kind of the full suite and more robust set of services, they are going to fall into that marketplace facilitator.

and then it will be more along the lines of what Google and Apple were doing. If it’s more of just a standalone PSP, ⁓ it’s going to be the liability of the publisher. ⁓ You really have to, hopefully they walk you through the criteria that shows you what you’re responsible for because it really is, I mean, this is kind of a real time thing that’s been changing and we’re

especially now as we’re seeing kind of this abandonment ⁓ off these marketplaces. ⁓ So as things do change, these rules are not set in stone. And I expect them to change as the dynamics and the selling structure kind of within the digital space does change. So right now at a point in time, this is what the rules are like now. It can change and it probably will change very soon.

Braden (18:03)
That’s so, wow. I mean, again, just so much nuance to all of this. Yeah. The nuance and the details. Yeah. So then we’ve talked a lot about these different ways that you can go liability risk that you take on. What are the most common tax mistakes or pitfalls that you see publishers making when they decide to ⁓ do this on their own or ⁓ sell those things globally?

Rachel (18:08)
We like contacts.

Yeah, I mean, the biggest, I think, mistakes we see is just not understanding how it’s taxed, meaning the nuances between a digital good and gaming. ⁓ But the other thing I see a lot is this concept of like a filing threshold. ⁓ Publishers, different companies will come back and say, we haven’t met the threshold. ⁓ What the threshold refers to is

the volume of sales that you have in a given jurisdiction. That kind of concept is really, it does exist internationally, but it’s a lot smaller. It’s maybe thresholds internationally have been moving to zero, but they maybe are like $10,000 internationally if there is a threshold. Within the US, can be, they’re around 100,000.

But those are also changing as well. Some states have a two-part test where it’s 100,000 and 200 or 100 transactions. What we are seeing is that it’s just moving to a single test and the thresholds are starting to come down. So what was 500,000 is now 100,000. And we just kind of expect that trend to continue.

along with what’s been happening internationally where the thresholds have been moving to zero. So what was once thought of, I’m okay because I don’t have enough sales. We’re on over the threshold is no longer the case just because the rules have been changing.

Braden (20:14)
Right. Okay. That makes sense. So it sounds like, I mean, there’s a lot of things that you know that I wouldn’t know, right? If we were to go out and make a game, right? I would probably need somebody like you benefit of using a merchant of record like FastSpring, because you get that expertise out of the box. ⁓ but you know, I thought we’ve got Chat GPT, we’ve got AI tools and you can ask them just about any question. You get at least some kind of answer.

how reliable may be questioned, like, is it possible to just use an AI service of some kind to get the answers I need rather than paying someone like you or using a merchant of record to do this?

Rachel (20:56)
Yeah, mean, trust me, I’m poking and prodding Chat GPT all the time just to see what it’ll give me. What I actually have seen in the past like year and a half ⁓ is that it’s starting to provide less and less. It’s starting to have a more conservative approach and give you that language of, hey, taxes are complex. You need to consult your tax advisor. ⁓ It’s really good if you just, you know exactly the question that you want and you understand the context of it.

Meaning like, hey, I have ⁓ a downloadable game and my player is based in Missouri. Is this product taxable? Yes or no. That kind of stuff is fine. But that’s assuming you understand, ⁓ you know, location of the player and what the game is. If you give it, if you just dump all your operations into a Chat GPT and say, hey, what’s my tax liability?

it’s not going to give you anything concrete. It’s going to say, hey, taxes are complex. ⁓ And it’s, there’s just a lot of nuances in that. But it’s like anything, the more, you know, AI starts to learn us, it might get better. However, what I have seen is that it’s starting to be more conservative and not giving you anything. And like, you’re trying to poke it to like, give me, make a yes, no determination. It’s starting to back off of that. And that’s

probably due to like just they don’t want to be, they don’t want that liability to then come back to them if companies do start using that as their tax advisor.

Braden (22:38)
That makes sense. Yeah. Well, this has been extremely illuminating for me and hopefully it is our viewers as well. But before we sign off, what other last minute advice would you give to a publisher or studio who’s interested in selling DTC and avoiding these tax pitfalls?

Rachel (23:00)
Yeah, the one thing is just I always recommend to do something rather than nothing. I understand that’s probably a lot harder, easier said than done, mean. ⁓ But I also want to just like hear, I mean, hear from kind of our publishers. I would love to hear kind of real world questions that they have. ⁓ It is similar to digital goods, but it’s a little more nuanced as well. So.

I would love if we could take some questions even at some point. ⁓ And hopefully that would give me a better kind of like, I can speak to anything, but understanding what some of the questions on their mind is would be great too.

Braden (23:43)
Yeah, I love that. Maybe we’ll have to get you out to an event and we’ll get you to have this conversation live with some people and get some live questions from our publishers. Or maybe we can find some folks online. If you’re hearing this podcast and you want to chat with Rachel, you can reach out to us. You can reach out to us either by filling out our demo form and letting them know, Hey, I want to hear from Rachel, put her on the phone. She can give my demo or you can probably send it to our support team as well as support at fastspring.com

and they can get that message routed over to her as well. But we definitely would love to hear from you. ⁓ Well, Rachel, thank you so much for joining us today on Growth Stage for Gaming. It’s been an absolute pleasure and again, super valuable information you’ve shared today.

Rachel (24:28)
Of course, thanks for having me. See you guys. Bye.

Braden (24:30)
guys.

David Vogelpohl (00:04)
Hello everyone and welcome to Growth Stage by FastSpring where we talk about how digital product companies can increase the value of their business. I’m your host David Vogelpohl. I support the digital product community through my role at FastSpring and I love to bring the best of the community to you here on Growth Stage. In this episode, we’re going to be talking about how to scale playable and interactive ad strategies and joining us is someone who knows quite a bit about that topic.

welcoming the CEO of Quicksave Elina Arponen. Elina, welcome to Growth Stage.

Elina Arponen (00:39)
Thank you, David. Thank you. It’s great to be here.

David Vogelpohl (00:42)
I’m so excited to have you to talk about this topic. And I know you were just kind of nerding out about this a little bit there at PocketGamer Connect in Helsinki with someone else who’s joining us here, Chip Thurston. Chip, you want to say hi? Chip’s head of gaming here at FastSpring.

Chip Thurston (00:58)
Yeah, hey David. Thank you. Hi Elina Happy to be here chatting with you today. I’m the as David mentioned, I’m the head of gaming here at fast spring really focused on helping our customers market monetize directed consumer. But before past spring I was at scope Lee for a few years and there I worked pretty closely with playable and interactive ads myself. So I hope I have some interesting thoughts to share here too.

David Vogelpohl (01:21)
Well, it’s such a cool topic and I think such an opportunity. And I think there’s a lot of folks out there who are thinking, like, how can I leverage playable and interactive ads in a scalable and really an effective way? And that’s what I’m really looking forward to talking about with both of you today. So for those listening and watching, really what we’re going to cover here are Elina’s thoughts on why playable interactive ads are so compelling to begin with. What makes them hard to produce?

how creative teams can accelerate the production of those ads and other insights into why WebGL is ⁓ revolutionizing ad production, publisher websites, web stores, and beyond. So it’s a bunch of topics here, but really focused on the interactive playable ad strategy. So really excited to kind of dig in here. Now, Elina, I’ve asked this question of Chip, so I’m not going to ask it of him this time, but I’m going to ask it of you as I ask many of our guests.

What was the first game or in game item that you bought with your own money? Not like a, you know, holiday gift or birthday gift, but like you took money that you had and spent money on a game. What was that game?

Elina Arponen (02:31)
This is actually a great question, although I’m going to dodge it a little bit because I don’t remember my own first purchase, I remember very vividly when I was talking to a person who had made their first purchase, because that was the first purchase that I ever heard anyone do. I was at Digital Chocolate and one of our colleagues had made a purchase. I think it was Zynga’s Mafia Wars game in Facebook. She had bought this virtual sword there.

And it was a lunch break and she comes in like, hey, I bought this weapon in this game. And everyone’s like, what, like shocked or confused or excited? And it was because it was a new thing. It was like the very beginning, like the very first games that introduced the in-game purchases. And so it became like this big rumor, like, did you hear, she actually made a purchase already? And like, have you done it? And then I guess we all started from, you know, soon after did our own purchases. But somehow that, because we were already in the industry, we were game developers.

And then it was like a massive thing to happen that someone had made a purchase. So that I remember very vividly. I think my own game sometime after. Yeah. Yeah.

David Vogelpohl (03:35)
Oh, that’s an interesting moment. I hadn’t really thought about when the first time I was exposed to in-game purchases was, you know, you just kind of shifted from like this premium game model to now all of a sudden, you know, in-app purchases are available. But I hadn’t thought about like the moment I might’ve discovered that. That’s super interesting.

What about you Chip? I’m just curious, do you remember the first in app? Your answer was the you’d spent a bunch of quarters on like some sort of like X-Men game and the arcade or something. But what about in app purchases? Do you remember the first time that you were exposed to that?

Chip Thurston (04:10)
You know the first place my mind goes with that is when they debuted Horse Armor as an additional purchase option in one of the Elder Scrolls games and there was this uproar about like, what? doesn’t even do anything! Why would people buy this cosmetic item?

They’re just trying to get more money out of their players. this was before, know, purchases obviously became such a common feature of games as they are today. But it’s funny looking back on that now and how that’s just so in a dime compared to anything that we see in gaming today. But I think that was the first moment I was like, there can be purchases within the game in addition to purchasing the game itself.

David Vogelpohl (04:48)
Yeah, I do remember my kids back in the day coming like, I want to go buy this skin or whatever. And I’m like, why would you pay money for design? And this is in a point in my career where I was really involved with like e-commerce and web store themes. And I’m like, wait a minute, I’m charging for designs on this front and they want to go pay for designs on that front. I felt a little disingenuous, but it’s so interesting how the world has changed. Of course I’ve spent plenty of my money on in game items since then. All right. Well,

Elina, next question is for you. ⁓ I kind of teed up Quicksave a little bit before we got started, but could you tell me about Quicksave and what you do there and what your role is at Quicksave?

Elina Arponen (05:29)
Yeah, yeah. So I’m one of the founders. We have three founding members in the company who’ve all been ⁓ in the gaming industry for quite a long time, like 20 plus years now. But right now what we are focused on is the tool. So what we have is the QS app tool. It’s a tool to do interactive ads without coding. So it’s kind of like a Photoshop for interactive content, you could say. And now what we’ve done lately is also we brought AI into it. So you can also prompt

for the interactive content. If you are not fully satisfied with what the AI did, you can still open it up in the editor and you can still manually perfect what you building, whether it’s an interactive ad or whether it’s something else. But now we are fully focused on this technology on how to bring interactive ads to be more accessible.

David Vogelpohl (06:21)
Yeah, it’s such an interesting point. And prior to tools like QS app, how would people create interactive ads? Is this like a hand coded thing? Help me understand that.

Elina Arponen (06:32)
Yeah, I mean, it is often a hand-coded thing. mean, when we talk about interactive content, is HTML5 or WebGL. I mean, technically it’s WebGL, but some people talk about HTML5, so either way. ⁓ And that is a technology that is available everywhere, like in your mobile, in your TV, in your car, a desktop. I mean, it’s available for the end user, but the actual creation of the WebGL content is often coding.

For interactive ads specifically, there are some tools that also offer kind of template-based solutions. So if the template has the interactive part that you are looking for, then that might be enough. But usually it’s coding. And even the kind of AI tools like Claude or ChatGPT or maybe Lovable they don’t work as well because of the ⁓ kind of formats that are required for interactive ads. Like you need to be specific format, specific size. So if you don’t do some massive coding project,

Even if it’s automated, it may not work in the end result.

David Vogelpohl (07:34)
Yeah, it’s kind of interesting, right? Because with AI, with a few prompts, you can potentially make these interactive experiences. And I kind of like how you’re merging in the AI aspect of that with the ability to, it sounds like, edit it and manipulate it. Because like, just producing AI slop is, I’m guessing, not good enough. You still need that kind of informed human hand. Is that why you’re merging the two together?

Elina Arponen (08:01)
Yeah, well, that’s one reason, but also ⁓ how the tool for us works is that it’s actually producing data. ⁓ So it’s not even doing code, which is like a data format for the interactive ads. And so now what we’ve done is we’ve the AI to use the same, build the same data format so that it kind of keeps the structure, it uses the same validators for the content that we have. And it’s kind of more structured and it’s easy to…

to do iterations and variations of it as well. It doesn’t get out of hand with that because you can modify certain components of yeah, mean, actually working with the AI has been a really fun and actually really fast process because something that we discovered while working with the AI and the tool is like if the AI doesn’t do something correctly, like it’s using some features or filter or something, like a shader incorrectly,

what it boils down to is that probably the inline help in the tool was missing something, like it wasn’t clear. So actually training the AI is pretty much the same as improving your tools documentation now. So which is good for the human user as well, you have better help texts and then the AI, know, the humans don’t always read all that, but the AI does. And then the AI can use that information quite efficiently.

And I do think we’re going to get actually quite good results, especially if you have your game assets and you give that as a starting point. And so the AI can be a massive help, but it’s definitely coming strong. And I don’t think there will be any tools left soon that don’t have a solid AI kind of assistance as well.

David Vogelpohl (09:41)
That makes a lot of sense. Sure. There’s a lot of opportunity there for you and other other platforms like like Quicksave . So let me kind of zoom out for a minute here though, a little bit. And I’m just curious, like why bother with things like playable and interactive ads? Like why not just have a static ad that links to an interactive landing page for my sake of example?

Elina Arponen (10:05)
Yeah, well, I can start, but I think she probably has a lot of info on this as well. I mean, it is pretty well researched that playable ads or interactive ads, work like three times better than video. So it goes for ⁓ the conversion, the retention, how memorable the content is. And it’s quite intuitive because if you get the person kind of interacting with the ad, it helps. You’re actually clicking or tapping the content, not just watching it passively.

Chip Thurston (10:31)
Yeah,

I agree with that. That’s well said. And I would say also it’s a few things about basically meeting players where they are. You’re giving them a native experience to whatever platform it is that they’re on, where they’re doing something and then they encounter this playable ad. They don’t need to go to a third party, like a landing page, to go engage with whatever it is they’re doing.

⁓ You’re giving them obviously an engaging experience. That’s something that’s a bit more than a traditional ad, so the playable nature of it is appealing. And the third part that I always thought of from the game development side is like, so much in game development, we talk about removing friction, right? Whether it’s friction for a new player and getting them into the game easily and installing the game, whether it’s friction through the UA process and the clicks it takes to get from a UA ad to the install to playing the game.

whether it’s friction in the purchase funnel and how you serve and offer in the game and get players through checkout and then back into the game. there’s all these ways we look at friction. Of course, we look at it in the direct-to-consumer space and getting players from the game to a direct-to-consumer purchase platform and then back into the game. But I think it extends to these playable ads as well. It’s really saying, is, you’re doing whatever it is you’re doing and you will experience this playable ad and it is right there.

you’re removing any friction from that process to get players that experience. And then that extends into the install and then playing the game and everything else. So I think it has a really nice role in aligning so much with the strategy of game development too.

Elina Arponen (12:08)
It’s true that you kind of give a piece of the fun, the experience already there in the ad so that you can get the kind of taste of it. ⁓ And although you were kind of comparing it to like landing pages, so I would say like on the websites and web stores, there should be more engaging content as well. That’s kind of another talking point then as well.

David Vogelpohl (12:32)
Yeah, I like that idea of meet the player where they’re at, removing friction. ⁓ I also was interested to hear you, Elina, talk about giving the player kind of a taste. ⁓ Are you do you think most of the people, publishers leveraging Quicksave to make playable ads, are they making like the WebGL, the playable ad version of the game like easier or in some way more enticing than they might experience in the full game? Kind of like how

Some games will make kind of those introductory levels super easy to kind of get you like hooked on playing the game. Is that a common strategy? You see publishers when they make these playable ads with Quicksave Elina.

Elina Arponen (13:14)
Yeah, well, I’d say that you might want to make it easy in the sense that the player needs to, or the person needs to understand the kind of rules of the game on what’s happening here. So playable ad is only like 15, 30 seconds snippet. But in that time, you should still give them a sense of like, what this game is about, how does it function?

And ideally like a little bit of sense of progress, like some kind of a-ha moment that, I achieved something and that kind of is a hook. And it might be that in the game, that kind of a-ha comes a little bit later than in the first 30 seconds, but it might not. It depends on the game and how fast it comes. So sometimes in the ad you might speed it up a little bit, but it definitely needs to be truthful to the game. So you don’t kind of do things that are not in the game.

David Vogelpohl (14:08)
player spending like a good amount of time. Like I walked up to my daughter the other day and she’d been messing around on this iPad for a little bit. like, what are you doing? And she goes, I’m playing an ad. And I was like, okay. but if she had been playing it for a while, like her people are these playable ads. You want to like engage with them for like a long period of time.

Chip Thurston (14:24)
Yeah,

think ⁓ strategically it can be the case where it really depends on how you build your ad. You could build a really closed loop playable ad and say like you step one, step two, step three, and then that’s it. And there’s nothing further to do or you could make it. So it is just this kind of endlessly engaging experience. It depends on what the goal is and the strategy of the game using that playable ad. But I think you’re keying in on a really important point here, David, which is ⁓ what makes a good

playable ad is sometimes different from what makes a good game, right, in terms of the gameplay. And so you do need to think about how you represent that. Sometimes it does need to be made easier or something where you streamline the process a little bit such that you can engage players through that playable ad, which is a much more bite-sized form of content, and then get them into the game where it’s this much more long tail, much more…

engaging over a longer period of time and experience. But Elina, what are your thoughts on the endless experience versus having a more closed loop system there?

Elina Arponen (15:31)
Yeah, no, I think I agree. It depends on a little bit on the game. And ⁓ I would actually, ⁓ with your particular game, who doing the ads, like test it out, like do iterations. Like in a true kind of performance marketing manner, you should have multiple, ⁓ always like ⁓ creatives in the testing. So if you are producing like, I don’t know, hundreds of images, hundreds of videos, why not have…

similarly a lot of playable ads to test that. you could also, I would kind of try different lengths if the gameplay seems to be some such that it kind of lends itself to either option. It’s more often short than long that I’ve discovered, but yeah, there are the long options as well.

David Vogelpohl (16:17)
Yeah, and I like your point about testing and making sure you’re leveraging strategies that work best for you, your game and your players. So let’s get back to like producing these ads. I often describe WebGL as like it’s the new flash. Basically, maybe that’s a bad way to frame it. But I’m just curious, like if you could do a double click, Elina, unlike

Why are the ads so hard to produce? mean, maybe you could like vibe code something, but like in general producing a good ad, why is that so hard to do ⁓ currently?

Elina Arponen (16:52)
I guess it’s to do with the process. If you are coding it, if it’s quite manual to produce the ad, like make a game snippet in WebGL, ⁓ then your iteration speed is also ⁓ slower. We want to bring the most value, like increasing the iteration speed, which means that you can also create more of the variations. And then you can…

actually do this performance marketing where you have a lot of options to test out. If it takes many weeks to do the ad and if it’s very costly, then you’re less likely to have multiple copies and so forth.

David Vogelpohl (17:37)
If I’m a UA specialist and I’m trying to get new players into my game and I have an idea for a new ad unit and it’s playable and I have developers and designers that are helping me create these WebGL interactive playable ads and I kind of give the idea to them, they go off, take a week or so to make the ad and then I can deploy it. This sounds like

what you’re describing is like this process can even just a couple of weeks can be way too slow and you’re not able to iterate and test different variations quickly. You’re kind of sitting around and like waiting on the backlog to get resolved. So your idea can be made a reality. ⁓ it sounds like what you’re saying is like when you’re manually creating them, relying heavily on designers and developers, it can be slow to produce.

and reduce the number of variations that you can test. Does that sound about right?

Elina Arponen (18:39)
Yeah, yeah. So with ⁓ like a good tool and a faster process, even if the first ad, let’s say the first ad, takes hours or even like, let’s say days to make the first one. But then if you are able to kind of iterate and make variations quickly, that can be a huge, benefit as well. And the wipe coding has been mentioned a few times, but that is kind of difficult with the, you cannot have… ⁓

But obviously, needs to be very error-free. It needs to be quite small packets that you are delivering to the ad network. So there are all these kind of ⁓ restrictions on the output, technically how the output needs to be, especially if you are doing the interactive ad for these ad networks. All right.

David Vogelpohl (19:25)
It sounds like what you’re saying is that when I create these ads or when my team creates them, if it’s this manual process, of course it can slow me down. But you also kind of pointed out that maybe if I’m using templates or reusing and iterating on assets, this might be one way where I can speed up the process. I could also, of course, use a platform like QS app by Quicksave .

QS app usable by non-technical or least non-developers? Like as a marketer, can I go in and create these ads?

Elina Arponen (19:57)
Yeah, that’s the aim of it. So it’s being developed for artists and designers to be used by them. It’s actually ⁓ coming out from our ⁓ game development ⁓ editor originally and then we’ve repackaged it. So it’s an editor that’s been built over actually many years to be usable by non-technical people. And now with AI, ⁓ it is ⁓ obviously becoming even easier to use.

because you can get that AI help. ⁓ Right now though, we also can help a team to get started and maybe even make the first ad and so forth. So if you are not looking to use the tool, but you just for now want to get the ad and we can help with that too. ⁓ But yeah, mean, this is the goal on making it so fast that it’s anyone’s…

⁓ Anyone can do it and it’s really accessible. Right now it is the most effective ad format, but it’s still not used by everyone. It’s kind of out of reach for smaller companies, for the public. That’s how I’ve ⁓ kind of discovered.

David Vogelpohl (21:09)
that’s an interesting point. So it’s not just like I’m a UA or whatever marketer inside a publisher and I’m stuck waiting on developers. So I might use something like QS app to free myself from the developers backlog jail, but it’s also for smaller publishers who just don’t even have the resources to facilitate that. It sounds like by providing this type of service, it allows you to open up the possibility of interactive playable ads to more folks.

That sounds really helpful. then you said this is how kind of Quicksave helps achieve this with QS app. sounds like you’re also like working with them to create their first ads. Is that correct?

Elina Arponen (21:51)
Yeah, we can also work on the ads and help the team to kind of get started or even like, yeah, just be the users of the tool either way. Yeah.

David Vogelpohl (22:05)
Awesome. Now Chip, at your time at Scopely and before that, I guess at SciPlay or whatever, ⁓ when you created or had interactive playable ads that you were leveraging for the games you were working on, ⁓ were these hand coded? mean, were you waiting in line for the developers to make the ads for you?

Chip Thurston (22:26)
Yeah, it was cumbersome. I would say we used a third party agency. When we would do that, we would send them the brief and here’s what we’re looking for from the playable ad, get that back. Effective UA requires iteration, right? So then we would have back and forth. And I think if you ask why do playable ads take so long, I would have to say like, I’m part of the problem here because whenever I would get that ad, would…

really poke holes in it and say, okay, we need to change this part, let’s change that part. I was working on a game ⁓ with ⁓ IP-based, very famous characters. So that meant these characters had to be represented effectively in line with that IP. Not only that, after I would go through my rounds of feedback and iteration, which to your point would take weeks of back and forth, we then have to go to the licensor.

say, okay, licensor, do you approve this creative? And they might say, this character needs to be doing that instead of this, right? So then we take that back to the agency. And so you just have all these feedback loops. So yeah, it would take a long time. And it was really an uphill battle for us to leverage playable ads, as opposed to more traditional static or video ads, where just the cycle was so much quicker. And so that’s where I kind of wish I would have known about Quicksave back then, because that would have streamlined so much of our processes.

Elina Arponen (23:46)
This is pretty new. I don’t think this tool existed with us back then. ⁓ At least for us like this has ⁓ become available this year only. ⁓ Actually since August. So it’s a pretty new thing.

David Vogelpohl (24:05)
So the value then it sounds like for you Chip is like there’s always going to be this back and forth, right? You’re always going to poke holes and whatever the thing is, the licensors are always going to have their point of view. And so by reducing some of the technical complexity, it can help just draft, you just drastically across the board, shorten the cycles, but you’re still going to have the cycles, but by enabling your creative teams to produce more of this content.

versus having to have developers or outsource much of it seems like it could be incredibly valuable.

Chip Thurston (24:39)
Yeah, yeah, absolutely. I would say the extension of that is also giving me more shots on goal, right? Like I’m able to crank out a lot more volume of playable ads because we are lessening those feedback cycles, right? So we’ll still have the iterations, we’ll have the cycles, but as a result, therefore I can crank out more playable ads and then I can optimize better. And that was the part that always fell short for me trying to leverage playable ads was I had this very mature

a static and video ad section of my user acquisition strategy. Then I playable ads where I was confident in the theory behind it and everything we talked about about meeting players where they are and the engaging experience you give them. But it takes time. It takes time to find the right creative, what resonates with your potential players, what works in what forums.

That takes a lot of iteration and cycles of running different types of ads. And so I think just the volume is a critical piece, but at the end of the day, being able to get more volume is a function of being able to do that more quickly, like you can with a Quicksave platform.

David Vogelpohl (25:47)
Yeah, Elina pointed this out as well, like the idea of like number of iterations and variations and the ability to produce more of them. And I think it’s kind of interesting because I often think of like the world of advertising has shifted away from kind of like the madman era where ⁓ advertising people go in a room and drink a bunch of scotch and smoke cigarettes and come out with the perfect idea.

to where now we can iterate and test and understand, then I still feel like in gaming writ large, you kind of have this moment of like, I’m going to spend a lot of time somewhere and come back with like the perfect thing. And I have less ability to iterate, especially if I’m like doing a big release, like it’s out there and people are playing it and being exposed to it. And it’s affecting my reputation in the long run. But it sounds like with these ads, have more abilities to iterate and play around.

⁓ Is that a fair way to look at it?

Chip Thurston (26:44)
Yeah, I think so. Because you don’t… I shouldn’t say you. I was surprised a lot of the time with what UA would tend to break through. I would say, okay, I have this ad, I’m very confident in, I love this concept. And then we have this other one that maybe it’s a spin-off of that or it’s taking some weird feature in our game and really putting the spotlight on that. And we’ll try and add around it, why not? And then we try that and for whatever reason it outperforms the other creative.

So we’ll go lean into that, right? But that’s so much of what UA strategy is about is just throwing so many different things against the wall, seeing what sticks and then running with that and iterating on that. And that’s the way to finding a very impactful UA strategy.

David Vogelpohl (27:29)
Excellent. All right, Elina, the last question is for you. ⁓ So we’ve talked about WebGL a lot in the context of playable and interactive ads, but what else can WebGL be used for?

Elina Arponen (27:43)
Yeah, this is great question. mean, as I said, the, yeah, we’ve been doing like the playable ads, like since, since August, but we’ve actually done other WebGL content since, since earlier. So if you have like a, well, any website really, but you have a web shop, you have a web store, you probably want to have the visitors that come there to be engaged and stay on the site longer.

So now that lot of mobile game companies are also building their kind of site stores, ⁓ I would see that they should be a little bit more of a destination so that the players going to that store would find it engaging, exciting, to be more like a continuation of the game experience as well. So you can definitely have WebGL content. mean, normal website builders.

⁓ don’t use WebGL, they use HTML. You can do a lot of nice things. You can have videos and can have sparkly images, but to use WebGL content, ⁓ you can make it more engaging and you can have a continuation of the stories or the games even there. And ⁓ I think that would be quite beneficial in the end. So definitely I see that using WebGL content.

elsewhere as well. Of course, you can build whole web apps, just embedding ⁓ smaller things, of like in the sense that it’s a playable ad is embedded inside an app where it’s being advertised. You can embed WebGL content on a website.

David Vogelpohl (29:16)
I like this idea of like a playable web store. Maybe that’s a topic for another time. I had not thought about the implications of things like that, but it is really interesting. And you know, when we optimize web experiences in general, I like to think of it as like the balance between suffering and joy, the joy of new experiences and interactive content and the suffering of page load time.

And meaning that the more we add, the slower the page will load. But there’s such an opportunity here, I feel with such an engaged user base of players who are interested in playing and interacting and bringing that to life in unique and interesting ways on the web. Now my brain is like twisting with ideas around this. I’m going to have to go play this on WebVue.

Elina Arponen (30:05)
long times can really be kind of worked around with, it doesn’t have to become an issue. ⁓

David Vogelpohl (30:10)
Yeah, maybe we’ll do a different episode on page load time with WebGL and otherwise. But this was super interesting. Thank you so much for joining us today, Elina.

Elina Arponen (30:20)
Thank you. Thank you for having me. mean, it was a great topic, conversation. And yeah, good times. Yeah.

David Vogelpohl (30:28)
And Chip, thanks for joining again as well.

Chip Thurston (30:32)
Always a pleasure.

David Vogelpohl (30:33)
Awesome. And thanks everyone else for watching and listening today. If you’d like to learn more about what Elina is up to, you can visit quicksave.fi. Thanks for joining the Growth Stage podcast. Again, I’m your host, David Vogelpohl I support the digital product community as part of my role at FastSpring . And I love to bring the best of the community to you here on Growth Stage.