App Talk with Upptic: Web3 and the Future of Gaming
Upptic’s Warren Woodward is joined by Gabby Dizon of YGG, Sebastien Borget of The Sandbox, Atif Khan of Stardust, and Cedric Gamelin of Arrivant, to discuss the current state of the gaming industry.
App Talk with Upptic explores the fundamentals of developing mobile apps and games, speaking with industry experts about the tools and strategies they use to find success in the space. The podcast is produced by Upptic, a growth consultancy that provides services and automation tools to scale mobile apps and businesses.
This episode is a rebroadcast of Upptic’s webinar, “Web3 and the Future of Gaming,” where Upptic’s co-founder and chief growth officer, Warren Woodward, was joined by Gabby Dizon, co-founder of Yield Guild Games (YGG); Sebastien Borget, co-founder and COO of The Sandbox; Atif Khan, COO of Stardust; and Cedric Gamelin, founder, and CEO of Arrivant.
The panelists shared their perspectives on the convergence of free-to-play and play-to-earn mobile gaming while considering the current state of the industry and the implications of integrating blockchain technology in mobile games.
The following is an excerpt from the webinar. Listen to the full session here.
Web3 and the Future of Gaming - App Talk with Upptic
Warren (07:46): I’d like to go to something that's come up a lot for me in my conversations with friends that are either gamers or work in the games industry, which is the current stigma against all things NFT and blockchain in gaming. I'd love to get some of our panelists' thoughts on where this stigma comes from and what it’s going to actually take to evolve past some of the disdain in mainstream gaming for all things NFT and blockchain.
Atif (08:22): If you look back to free-to-play in late 2010 — or early 2010 — there was a very similar sentiment in the market that free-to-play gaming is a scam, it's arbitrage, and it's not something that’s a great user experience, so there's a historical context here from the previous gaming revolution in terms of people's thought processes. And I think part of it is justified, like if you look at the nature of the market, currently, part of it is speculative.
And so I think for the blockchain gaming space to take the next level for traditional gamers, its two things. One, which is the most important thing, is to increase the addressable audience in gaming. That's what mobile did, that’s what PC did, and that's what console did before that. And so, how can you open this up to more people to bring them into gaming? And then the most important thing is, it's a game. How do you build an experience that drives utility to the users in that game? And I think the reason that we haven’t seen that is there’s just not a lot of games that are out there live outside of Axie.
Now, I think, in 2022, as we see more games go live and people actually see really great user experiences, we'll start to see that narrative turn a little bit. It’s a new thing. And the easiest thing if you don't understand it is to hate it. And so I think that's part of it. The other part of it is the speculative nature of where we are at the moment.
Gabby (09:46): If you look at the key innovations that have happened over the last two decades, there have been new pieces of technology that have been able to form some gameplay. I also hear a lot about blockchain being a solution in search of a problem.
But what these new pieces of technology do is basically allow for new gameplay elements that haven’t existed before. It was the database that allowed for multiplayer gaming and certainly gave rise to MMOs. It was mobile phones that gave rise to mobile and especially mobile free-to-play. And now, with blockchain and NFTs, you have player-owned assets in a global database that anyone can read. There is this new mechanic that, I think, people are still figuring out how to tap into, the different types of play, especially assets that can be freely traded with players for each other. So this means that any asset in the game can have a marketplace aspect that is built-in. I think this is very exciting and presents a lot of new possibilities.
Sebastien (11:47): Overall, we're seeing a greater shift towards developers adopting the technology not just for the financial nature of it, but for the right reason, because it's actually empowering the players first. It's helping to design new games with this mindset of community-driven first.
The video game industry has been almost stalling for 25 years in terms of innovation. It was in search of VR and AR to try to make new immersive experiences that didn't take off, and many people are still looking for what will be the killer app for that. Mobile free-to-play is a market where the top-grossing hasn't been moving for such a long time. We know that gaming is the biggest industry above the movie and music industries combined. And yet, it's only reaching 2.5 billion players, and it's not really topping beyond.
While there is a technology that has been the greatest driver of innovation and experimentation for the past four years and has already shown back on the premise of empowering new kinds of users that we can allow the market to gather 10 billion gamers differently. It's been enabling access to new possibilities for large gaming markets that were, up to now, largely ignored in the free-to-play economies, like India, Indonesia, Thailand, Philippines, et cetera. But going beyond, it's actually also been — and we’re seeing that with The Sandbox — we’re seeing top-tier countries Korea, US, Canada, Europe, Hong Kong, and Japan also now moving deeply into that.
The power of network effect, with community-driven based games, games that have a player-owned economy — it's just hard to get in. Well, there will always be friction, but I think, overall, once you're in, it's impossible to go back. It's like not being able to sell anything in the real world, on which ground has been established, just the lack of technology for it.
Cedric (19:41): I think it's fair to have a lot of skepticism from gamers and game companies about NFTs, and one of the reasons is we're seeing a lot of big incumbents coming into the space, and basically, what they're creating with NFTs is microtransactions 2.0. Especially knowing that microtransactions 1.0 were already very disliked. And the thing to think about here is that NFTs are already new. They have a new language. If you try to take what worked in the past into this new medium, it's just not going to work, and that's what people are seeing right now.
The idea with NFTs is you're designing new opportunities for peers to transact with each other. And so it's moving away from micro transactions, but the other thing that we're seeing and that we're going to see more and more with NFTs is that it's not just a medium for transacting money, but a medium for transacting experience. I'm going to give you an example. In our company, we launched an NFT, and basically, it was a free airdrop that we sent to all our users, called “The Eye of Eleriah.” And you got it for free in your wallet, and the idea is that it's dynamic, and every week, it transforms into something. And the cool thing here is that we give the power to the user to decide if they want to lock this NFT or not, each week. If they lock it, then it's not going to transform again. If they don't lock it, it will never come back to that transformation. And so what that creates is that you have two days in the week where everybody comes together in the Discord, and they converse. It creates conversation. It creates engagement, where people are making a decision together.
And so the idea here is that NFTs enable a new kind of game design, especially for here because you're going from a top-down developer to find experience to basically a grassroots fan-to-fan experience. And I think that's one of the things that NFTs are really great at.
Gabby (25:57): I think the biggest difference, and especially as it relates to the business model of free-to-play, is that you have to be a lot more community-centric. So a lot of marketing and free-to-play is basically performance marketing, very algorithmic, and it's completely turned around where you have to serve individual humans as communities in play-to-earn NFT blockchain gaming.
With a lot of the business models, you're moving from a direct sales model where you're selling things to people to letting players create the value of these games in virtual worlds, whether via like things like breeding or crafting or doing work inside the game that can earn them tokens, and then letting the players trade these with each other with a company underneath it, basically orchestrating the economy and taking a cut out of the value. I liken it to a time when Amazon shifted its primary business model from selling books and other items directly to being a marketplace where their margins were much smaller, but they facilitated so much more turnover and many more customers and basically supported small businesses, which became large businesses inside their marketplace.
If you get people in the game that are breeding, crafting, playing, doing esports, becoming streamers, and all getting a slice of the value pie, then you enable really long-term retention. We see a stat from Axie where I think their 30-day retention is something in the order of 40%. And their 90-day retention is the same as their 30-day retention because people are doing things that have value, and they trade that value with other players in the ecosystem. And that is the biggest primary consideration that you have in your business model.
You can listen to the full webinar here.
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