We're thrilled to announce the return of GamesBeat Summit Next, hosted in San Francisco this October, where we will explore the theme of "Playing the Edge." Apply to speak here and learn more about sponsorship opportunities here. Azra Games CEO Mark Otero has seen three generations of role-playing games in his decades in gaming. And now he foresees a fourth Generation of mobile RPGs with the company’s upcoming Project Legends for the PC and mobile platforms.In an exclusive interview with GamesBeat, Otero noted that RPGs are the highest-grossing gaming genre, making up 29% of game revenue, and RPG specialization drives the highest margins. In the last 15 years, the global games industry has seen three generations of RPGs, with the 4th being introduced in the East (with Genshin Impact and Honkai: Star Rail). Azra Games wants to build the first 4th generation of RPGs for Western audiences.Azra Games defines the 4th generation of RPGs as having 3D interactive battles, the RPG World as the interface (game as 2D menu), and monetizes by player-versus-environment (PvE), instead of player-versus-player (PvP).Otero believes Azra’s Project Legends will be a 4th gen RPG, but that’s theoretical for now, as the company plans to formally announce it in the first quarter of next year with its formal name. The game and its name are going to be provocative, he said.“One of the largest paradigm shifts in gaming is unfolding now,” Otero said. “Most people have no idea that it’s happening. And so there’s a window to really establish true leadership in the same way that previous generations of great game companies have gotten in early and established leadership.”He added, “RPG games are the highest-grossing gaming genre, making up about a third of all game revenue. And RPG specialization really drives some of the highest margins in the industry. In the last 10 to 15 years, the games industry, specifically on mobile, free to play has seen four generations. Four generational cycles. So we’re focused on the fourth generational cycle, and we’re at the early stage of this cycle. And I believe this to be the most profound paradigm shift in mobile gaming.”He noted that back in 2010 and 2011 saw the onset of the first generation of collectibles and combat RPGs, which are a subgenre. They were largely text-based games, in terms of the user interface. And underneath the user interface was a quant layer that controlled the rate at which the player gets to enjoy the rewards of the game. The titles included Mafia Wars and Mob Wars.That’s the first generation. The second generation improved the user interface with a 2D menu with icons and then introduced auto battles into the 3D model generation. That second generation lasted about two to three years, and it took about $3.5 million to $7 million to make them. The games included Brave Frontier and Heroes of Dragon Age. When it comes to generation three RPGs, smartphones had become more powerful and graphics were entirely 3D and the battles were also interactive, instead of being purely auto battle. The game still, however, took place mostly in menus. The generation three games included Summoners War, Star Wars Galaxy of Heroes and Marvel StrikeForce. That generation lasted about eight years. Third-generation games could cost $10 million to $20 million to build. The payoff could be huge, as Star Wars generated more than $1 billion in lifetime revenues, after Otero sold his previous studio to Electronic Arts.“The fourth generation is the one I’m most excited about. And the reason I’m most excited about this one is because I believe this generation is going to last 10 to 15 years,” said Otero. “And it will be the final generation for collectibles and combat RPGs and one of the largest genres in gaming. And so games like Genshin Impact and Honkai: Star Rail.”Instead of being 2D, the world itself becomes the interface to the camera. It changes from an isometric point of view to behind the head. You get instant immersion.“Why is that important? Do you remember what happened about two decades ago with console gaming, the camera angle change. That became an almost a common denominator for all games. Why? Because the hardware allowed for 3D graphics. And you have instant immersion for gameplay,” Otero said. “This is now beginning this cycle is now happening on mobile. These innovations are coming from the East. And what’s really fascinating about the maker of the whole Genshin Impact, their net income is greater than the two largest game companies in the West. That puts it in perspective.”Otero’s team at Azra has specialized in these collectible and combat RPGs, and they have built eight of them including Star Wars: Galaxy of Heroes, which is EA’s biggest mobile game. They have had a top-charting game in each generation of mobile RPGs, he said. “The fourth one is a unique market opportunity where we’re just entering the fourth generation of collectibles in combat RPGs right at the early cycle,” he said. “Azra g\Games is focused on that specific cycle. In our first RPG coming out of the studio, Project Legends will be a fourth-generation collectibles and combat RPG, specifically for a Western audience.”The game has to be competitive with any titles on the current market, and it has to use blockchaintechnology. “The good news is that this will be the most profitable and largest paradigm shift for the reasons that I’ve stated,” he said. “Your mobile phone is more powerful than the previous generation of consoles. That’s amazing.”The bad news? “These games are extremely expensive to make at $45 million to $55 million to make games as they have an extremely high learning curve for free-to-play economy design,” Otero said. “So if you haven’t done it before, you may not know what’s important. Thirdly, it takes approximately three to four years to build one of these games.”These games have a user-experience layer that players associate with the game like the battles, controls, the camera and the art. Layer two is the mathematical economy layer. The company has an early build of the first layer, and it has a lot of work to do to get that layer right.“It takes an enormous amount of attention to detail to get the physics right, the timing right, the feeling right,” he said. “You first have to master that. Once you’ve mastered the basics, you can then stack in more advanced things like abilities, combo attacks with different party members that you can swap into your game,” he said.By the end of the year the company will have a mostly functional build of our game — not content complete, but functional complete, and you’ll be able to control up to nine different legends and you get to pick from those nine and create a party of four. For Project Legends in the fourth generation, the quant layer itself still serves the purpose of having a balanced economy and progression.Asked about the blockchain, Otero said, “We see blockchain technology as a feature that can enhance fourth-generation RPGs just like it can previous generations of games – primarily by enabling player-owned assets thoughtfully and meaningfully in some areas of the game. It is not, however, the technology that’s driving these new gameplay innovations we’re so excited about.”Some games that are coming at the end of the cycle with a third-generation game are likely to fail, as the opportunity has already begun to shrink, he said. With the shift between Star Wars: Galaxy of Heroes and Genshin Impact, the production values and quality is much higher. You interact with the world and see from different camera angles. The fourth-generation games will focus more on player-versus-the-environment rather than player-versus-player. “When players initially engaged with a game, whether it’s a first, second, third or fourth generation, they first engage PvE content. Why? Because they have to learn how to play the game. So the number of users that you that are engaged in your game is at its widest at the user experience funnel,” he said. “In the first, second, and third, a fraction of players engage PvP, and even fewer spend money as PvP whales and dolphins. Why is that important? Because in the first, second or third generation, we largely monetized killers. In the fourth generation, we’re monetizing the top of the funnel, where PvE has the widest audience. In addition to that, these games are not pay-to-win games. And so this overcomes the stigma with the pay-to-win type of games that were at the core of the first, second or third generations.”The team sizes will be larger for the fourth generation. But AI will deliver some significant cost savings and de-risk the generation, Otero said. AI tools could reduce costs in some areas by 90%, but not so much in others, he said.Otero said he doesn’t think AI will take away jobs. It will give the right tools to the designers. While Azra Games uses AI extensively, no one has lost a job, he said. “It’s been a force multiplayer in some areas more than others,” he said. For art, the team can use AI to create thousands of pieces of content for a character, but once they decide on the attributes, then an illustrator will make it unique and finalize it.“The cost to polish still remains the same,” he said. “It still requires artists to make the art. This goes for 2D art and 3D art. And artists want to focus on the marquee items. AI does the boring work. We have lost zero jobs to AI.”Otero said it will take about three or four years to make fourth-generation mobile RPGs. Is it worth it? Well, RPGs make more than $60 billion across all platforms. And the greatest game companies, like Riot Games at the start of the MOBA cycle, are built at the beginning of these cycles, Otero said.“We’re right at the beginning here,” Otero said. “We are positioned with the right experience, the right understanding of what is happening, and I tell everything this is the chance of a lifetime to create one of the most beloved game companies. We’re right here at the beginning of this history, man.”GamesBeat's creed when covering the game industry is "where passion meets business." What does this mean? We want to tell you how the news matters to you -- not just as a decision-maker at a game studio, but also as a fan of games. Whether you read our articles, listen to our podcasts, or watch our videos, GamesBeat will help you learn about the industry and enjoy engaging with it. Discover our Briefings.Enjoy access to special events, private newsletters and more.© 2023 VentureBeat. All rights reserved.