Web3 Game Opportunities Explained...

To the crypto-curious:

One of the best events during GDC is the Drake Star CEO Reception hosted every year by Michael Metzger. Although lacking general social skills, I somehow managed to join a pretty fascinating discussion with Jeremy Horn and Chris Ye at the event about Web3.

The discussion focused on how traditional F2P game companies can potentially take advantage of opportunities in Web3. 

Later, I stumbled upon a crew of ex-Zynga folks talking. Since I lack decorum, I awkwardly jumped into their conversation and met Niko Vuori. I felt he would be a great addition to this conversation around Web3 for Web2 game developers, so I asked him to join in a future discussion.

Now funny enough, despite my LinkedIn profile, I don’t know much about Web3:

It’s a joke, people! Stop spamming me with crypto and Metaverse offerings, lol.

Anyhoo, what follows is a fascinating discussion on how traditional game developers should be viewing the opportunity in Web3 gaming.

🎧 Listen on Spotify, Apple Podcasts, or Anchor

Speakers:

• Joseph Kim, CEO at LILA Games

• Jeremy Horn, VP of Innovation at FunPlus

• Niko Vuori, CEO at Blockstars

• Chris Ye, CEO at UKEN Games

Key Takeaways:

You definitely need to check out the full conversation as there were a lot of really great insights. But just as a teaser, I include some highlighted takeaways regarding a few specific topics discussed during the discussion below.

What is Web3?:

• Jeremy views Web3 as a tool that allows for ownership of digital assets. He also notes, that there is often criticism that everything you can do with Web3 you could do previously with standard Web2 technology. For example, in World of Warcraft with trading marketplaces and the like. While this is true, it was not a good system: full of fraud, cheating, and bugs. You couldn’t trust what you were acquiring and it wasn’t scalable. A small developer could never have built a World of Warcraft type of marketplace in a meaningful way.

• Chris thinks of Web3 as a new primitive that adds incentivization. He agrees with Jeremy’s perspective that ownership is at the core of Web3. You no longer have a marketplace in which the creators are selling all of the goods and controlling all of the supply. Once it’s out there it trades on the open market.

• Niko adds that a unique aspect of Web3 is that because of the sense of ownership, it drives much more meaningful community involvement. More in fact than Niko has ever seen in his career. At Blockstars, they did an initial token sale and are developing with the community and co-developing things like the product roadmap in Discord.

• Jeremy also adds that another important aspect to remember is the ability to continually monetize for creators. In F2P once you sell a character in a limited-time sale, once the sale is over that’s all the revenue that you will get as a creator. In the Web3 model, there is the opportunity to continuously monetize when game items are resold.

Specific Web3 Capabilities:

• Blockstars released a collection of 10K NFTs that are characters in their game. These characters though have skill progression which is stored outside of the blockchain on their gameplay servers. Hence, they are using a hybrid model, the NFT for ownership and layering on a gameplay component for upgrading.

• Chris believes the playbook for generating revenue to some degree has been proven through land sales, asset sales, PFPs (profile picture assets), collections, etc. There are some foundational parts to this as well like tokens and marketplaces. He believes the next phase will be transportability between games.

• Jeremy warns that similar to the Kickstarter craze when a lot of projects were easily funded and then failed, then funding became much more difficult, a similar thing may happen for crypto games.

Biggest Risks:

• Niko suggests it’s currently the Wild West right now and there are big technology platform risks similar to being on Facebook during the social gaming days or being at the mercy of app stores. So technology issues around the specific chain and platforms you use comprise a major risk.

• Jeremy agrees with a lot of tech platform risks, especially amongst the various blockchain technologies and bridging between them. There will likely be a lot of risk for the consumer.

• Chris says that unfortunately, the excitement about blockchain and the innovation in the space has attracted all sorts of actors, good and bad. Some of the negativity is associated with a neighbor who might buy an NFT that goes up by 100X and then you can buy one on the way down and lose all your money.

In Conclusion

You really should check out the entire discussion. There were many exciting takes, information about specific chains to use, key companies to watch out for, etc.

I left the discussion with a much deeper understanding of why many folks are excited about the opportunities in Web3. At the same time, we won’t move to Web3 just yet at our studio, but we definitely will explore more in the future after getting traction against F2P first.