Are Web3 games lying about user counts?
Gamified Episode #42 breakdown
A note from Gnoc
We’ve had some technical difficulties (I was too stupid to realize I hadn’t been sending these out).
BUT…
After a week of marinating in my Substack drafts episode #42 is finally here!
We’re testing a shorter format for this episode. Our newsletter usually come in at about an 11 minute read. This one is closer to 8 minutes!
I’d love to hear what you think!!
Re listen to Episode #42 of Gamified!
In Today’s Newsletter
Are Web3 gaming user numbers real?
Should NFTs be used to Gate-keep games?
ICYMI
Is everyone lying about Web3 user numbers?
Gaming has historically been a hits driven business - meaning 1 or 2 major successes can change the trajectory of entire companies. As a result of this, most teams take a very measured approach to game development in order to optimize for:
The largest number of new players possible
The highest retention rate (ie. how many of those new players stay for 30/60/90 days).
LTV or Life time value of those users (a very fancy term for “how much money can I extract from my players)
Teams NEED to show significant growth in terms of number of users in order to raise more money to finish their game.
Web3 amplifies this - teams face extra pressure because their burn rate is higher (how much money they spend per month), the tech is still new and there aren’t a ton of Web3 native players… or are there?
Plenty of teams are reporting 20,000 - 50,000 daily active users (DAU), surely they aren’t lying?
Panelists discuss:
Gnoc starts by mentioning the difficult task of decoupling the number of wallets from the number of actual users. Crypto users generally trade with multiple wallets; they’re only 1 person but are often reflected as multiple based on metrics like unique active wallets (UAW). Fresco adds on here - crypto has an issue with a relatively widespread acceptance of bots, calling for more accountability across the ecosystem.
OG plays the devil's advocate; many users in Web2 use multiple emails, adding to the total “unique” user count for many platforms and games.
Katy puts it bluntly. We NEED to define metrics of success. What matters to each individual project and how is it tracked? She pushes back on vanity metrics used only to impress potential investors.
(It’s incredibly important that we actually understand the methods in which teams report their metrics. I brought up “How to Lie with Statistics” by Darrell Huff - a book that details how easily people can “lie” while telling the truth, something that is rampant with user reporting in Web3).
Charlie expresses some frustration with the whole thing. Raising money as a Web2 start up is incredibly difficult, in part due to the more accurate reporting traditional markets have available to them. In Web2 a user is a user, but because of wallet-based authentication only, in Web3 1 actual user can be represented as 10.
Charlie hits the nail on the head. This is a MAJOR problem Web3 faces - we need to figure out how to decouple humans from wallets if we ever hope to accurately report user numbers and in turn add legitimacy to our industry.
To take things a step further - It’s up to us as users to ask questions and remain skeptical of reported metrics. Here’s an example of the different ways to track DAU assuming 10,000 unique wallets connected on a given day:
Game A - reports all 10,000 wallets as 10,000 DAU (this is what most teams do, especially during a funding round)
Game B - reports ONLY wallets that have connected and completed x action (ie. play a game or purchase an item) (this is what most of us assume a “user” to be). This team reports 7,500 DAU.
Game C - does something pretty nefarious but uncommon; they report the number of user sessions as DAU. In this case 10,000 unique wallets, some of which connect multiple times a day. Game C now reports 12,500 DAU - more than the number of wallets that were actually connected. (This actually happens - I’ve personally seen this on a number of occasions, teams fold pretty quickly when pressed on the method).
The tricky thing here is none of the methods above are really “lying”; they're different ways to report the same data, all of them telling their own truth.
I don’t have some magic solve all here - but I will leave you with this:
Think critically. Don’t take metrics (especially self-reported metrics) at face value. Ask questions.
And, as always…
DYOR (DO YOUR OWN RESEARCH).
Web3 is still the wild west, it’s up to you to educate and protect yourselves!
Are NFT locked games destined to fail?
One of the longest standing arguments against NFTs in gaming has been something along the lines of “how will you ever reach mass adoption if players need an expensive NFT to get access”.
On the surface this sounds ridiculous - you need to buy MOST games to get access, why would Web3 be any different?
Here’s what our panelists had to say:
Jonny wanted the total number to go way down. He referenced the abundance of free to play games in the Web2 world - if games in Web3 want to compete he argues, they need to make sense to traditional gamers.
(I tend to agree here - Fornite, LoL, Valorant etc are standout F2P games. Most games will never even sniff the player base they have however, and this requires teams to get more creative with monetization. You WILL NOT have success as a cosmetics only game if you do not have millions of players like they do.)Saint had a conflicting POV; he was actually surprised that G7 DAO reported that only 26% of games had NFT gated experiences. He mentions that while the idea of NFT-gates are not inherently bad he’s got some PTSD from the era where you needed a $1,000 NFT to get access to a BAD game. OG, Lemz and Hantao echos this sentiment, ultimately wanting to see the number drop further.
Fresco believes that there’s room for gated games in Web3 but teams need to understand that there has to be some type of structure or rationale. Dub adds to this, saying many teams completely lack a post-access plan for an NFT (ie. what does this thing do other than give me access to the game?).
Token gate experiences have always ruffled feathers in Web3 - I think a lot of that is rooted in (in my opinion) a misguided belief that the immediate goal for every game is mass adoption.
Games are hard to build and they’re even harder to make fun - full stop.
Some teams opt to use token gated experiences to limit test their game; Can my game even support 100 players? 1,000 players? What breaks? Until teams actually get their game in the hands of players they really don’t know what is going to happen - or if their game is even fun.
NFT gated experiences allow developers to:
Limit the total number of users in a given test window (ie. maximum is the number of NFTs) in turn, reducing stress on game infrastructure
Get a sense for what works, and more important what doesn’t work in a relatively low risk environment.
Create value either speculative, or through game play for early adopters.
It’s my belief that a well executed token gated experience is invaluable to both the developer and the players. Developers get the benefits above and more, and players get their hands on a game they’re excited about at an early stage - they get to feel like they’ve helped to shape the game.
Wildcard is a team that has been very open about adopting this strategy and they’re one of the most anticipated games in Web3.
I think the panelists bring up valid points. We should all have a bit of a lingering fear of eras past, where really bad games were locked behind $1,000 NFTs. We should hold teams accountable - they should have a plan to drive value to holders or to monetize in more sustainable ways.
I think that feeling apprehensive when you see a token gated game is warranted. I also think seeing a token gated experience as a bear signal in and of itself is foolish.
I do not believe that we need to see the number of gated experiences decrease. I’d actually argue we should see it increase.
Building in Web3 is unlike anything in Web2 - your audience has access to your game at a MUCH earlier stage than they would traditional. Leveraging Web3 tech and community to allow a select group of people get VERY early access is an awesome thing.
As players and as speculators, we need to do better. We should be asking questions. Why is a team doing this? What’s the plan long term? What are their goals in the short term? Long term?
DYOR is the theme of this episode.
Games come in all different shapes and sizes - don’t cheat yourself out of a potentially rewarding situation (financially or otherwise) because you have this preconceived notion that token gated = bad.
$MOJO