Former Nexon boss who took a risk on Arc Raiders says "the AAA industry is structurally at its end" and "it’s going to end in more disaster than it has already" without a "serious rewrite"

Owen Mahoney, the former Nexon CEO who took a risk saying 'yes' to the company's acquisition of Arc Raiders studio Embark, has extremely dire words for the future of AAA game development.

Mahoney recently sat down with The Game Business and reflected on risk in the industry and how the perception of risk could be contributing to the potential demise of AAA development and publishing as we know it. As CEO and president of Nexon from 2014 to 2024, Mahoney was the one who decided to invest and ultimately fully acquire Embark in 2021, even as he faced "a lot of pushback" from the company's investors and Board members.

Although he was around for the launch of Embark's moderately successful free-to-play shooter The Finals, he ultimately wouldn't be with the company to celebrate the more decisive success of Arc Raiders, as it released the year after he left Nexon. Regardless, there's no denying it was a risk buying a studio led by a team of veteran developers working on a live-service shooter when those kind of studios and games were, and still are, dropping like flies.

But that's one of the core problems challenging the industry's livelihood, according to Mahoney: there are too many risk-averse CEOs who only want to greenlight projects they view as familiar and safe, only to learn the hard way that, apparently, players instead want something fresh and new.

"Let's play game company tycoon," Mahoney said. "You're sitting in the CEO seat. You're running a $23 billion company. And you have to make a decision, in a very short period of time, to greenlight a project. And you know, if that new project doesn't do well, you're going to be explaining to your Board why you burnt $300 million in company cash.

"You get one of those mistakes with a Board of a company that size. If you do it again, they're going to be calling openly for your head, and by the third time you'll have an activist investor. Every CEO who runs a public game company is in that exact situation."

It's tricky sympathizing with CEOs of $23 billion companies, but from the outside looking in, that does sound like a tremendous amount of pressure, and it seems natural to lean back on ideas and formulas that have proven to be reliable, but according to Mahoney, that's precisely the issue.

"I think that the AAA industry is structurally at its end," Mohoney added. "And without a serious rewrite of the ways we go about making games, it's going to end in more disaster than it has already."

For his part, Mahoney said he was willing to take a risk on Embark and Arc Raiders because he could tell the former Battlefield developers had "something to prove." Still, he admitted it wasn't guaranteed to be a hit until around launch.

"How come it was so unobvious that Embark was a great deal for Nexon until about three weeks ago? What does it say about the industry?" Mahoney said. "It reminds me of when Minecraft came out of nowhere and every single belief, bromide and cliche that we had about high-fidelity graphics was blown out of the water once again. Clash Royale came out and suddenly everybody realized that you could have synchronous online PVP play, whereas the day before people said: 'Nobody wants that on mobile'.

"These are the things that the industry grapples with. They believe one thing until someone shows them different. That is an indication of where the industry's head is at right now. Everybody's so busy trying to execute on today's business, they're having a real hard time thinking about tomorrow's business."

Of course, knowing in advance what particular bolt of lightning will be bottled is impossible, as has always been the case, and that leaves individual game developers with a difficult decision: stay in the indie space and deal with all of the funding issues that poses, or take the chance with AAA. In either case, Mahoney doesn't sound hopeful.

"They can either build something as an indie without much experience, or go work in a factory, which is essentially what working for those big AAA developers looks like," he said. "It's a terrible choice. And then you go work in a factory and work on one tiny piece of a game, and it's not fun. Structurally the industry is in really bad shape. We're sort of at the end-of-days."

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