Web2 giants are going Web3?

Gamified Episode #41 breakdown

Nov 20, 2023

A note from Gnoc

YES… this is a Monday morning episode of the Gamified Newsletter. I wanted to quickly thank you all for the patience with this one. I was unable to make the Gamified show last week and have been slow to get this out as a result.

There was one REALLY interesting topic re: Netflix x Games that I’m not covering here - make sure to follow on Twitter to get that piece later this week.

That said - I hope you enjoy it, this episode was an absolute banger. Sam continues to deliver insanely high quality each and every week.

You should consider voting for him as Creator of the year here!

Re listen to Episode #41 of Gamified!

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In Today’s Newsletter

NFTs in ROBLOX??
Ubisoft x IMX - Are we back?
How do chains ‘Win’ gaming?
Netflix and Crunchyroll take on gaming (Twitter exclusive content)

A quick note - I’ve removed State of the Market this week as this one’s action packed and data is a little old anyway. It’ll return for Episode #42.

NFTs are coming to ROBLOX??

Roblox seemingly came out of nowhere.

At first it was viewed as a sort of “Minecraft at home” (an incredible meme for the uninitiated). The user-created gaming platform actually predates Minecraft by half a decade but has exploded in the last few years.

Players are young, fanatical about their Roblox worlds, and willing to spend their… parents money (Roblox has had its fair share of legal issues related to protecting underage users).

That said - Roblox has been raking in the dough. As we’ve mentioned many times on Gamified, large gaming incumbents do NOT want to risk their revenue - NFTs have been seen as a MAJOR risk to gaming companies for years.

So what are the odds NFTs actually come to Roblox?

Panelists discuss:

Sinjin believes this is actually possible but probably not for at least 5 years. Roblox has a really young player base and has already been in the spotlight for all the wrong reasons. IF this happens says Sinjin, Roblox would be VERY careful about safeguarding their younger audience. Kun takes this a step further - 10 years or not at all… bearish beliefs from some major industry veterans.
Paul adds some nuance to the discussion; Roblox has spent over a decade doing the regulatory dance, figuring out the best ways to payout players and creators. That actually gives them a bit of a regulatory moat - do they want to risk that by potentially creating work arounds via NFTs and crypto? Kate echoes this regulatory concern. Tax implications, KYC procedures and a large under 18 audience complicate things.

(To me - this is the single most interesting piece of the conversation. The nature of crypto might actually hurt Roblox’s positioning in the space. If anyone can use NFTs to payout users, how long before someone eats Roblox’s lunch?)

Koko brings some hope to us web3 maxis with a bit of a contrarian take; NFTs are coming to gaming, the competitive landscape might actually force Roblox’s hand. If other games adopt an ownership model and it catches on - how long can Roblox hold out?

(I’m inclined to agree here. I think all incumbents will eventually have their hands forced. Whether that’s within 2 years or 10 years however is hard to know)

With all that said, why has there been so much discussion about this in the last few days?

It all starts with this video. Friend of the Gamified network - Kate Irwin discusses a little deeper here.

This all feels like a bit of an overreaction. Roblox has been noncommittal to say the least when it comes to crypto. Is it possible they’re considering this internally?

ABSOLUTELY.

All developers should at the very least be aware of web3 but integrating web3 tech into their existing cash cows is an entirely different story. It’s highly likely that traditional gaming giants will eventually add NFTs at some point - but that doesn’t mean it’ll be within existing IP.

Today, games like Roblox have a lot more to lose by playing the crypto game (see points from Paul and Kate above). The status quo is probably the path for the next 2-3 years, but beyond that it’s impossible to predict.

What’s your take here?

How Do Chains WIN?

Solana won, then Polygon won, then Ronin won, then Arbitrum won, then AVAX won…

The narrative on gaming chains has run wild over the last two years. It’s been really difficult to understand what ‘winning’ even means - especially in a space that’s so nascent.

Here’s what the narrative has looked like - I’ve included basic examples:

Win by signing the biggest/best games (Solana/Polygon)
Win by supporting the indie ecosystem (Arbitrum)
Win by becoming a publisher (Ronin)
Win by deeply integrating within the broader web3 gaming ecosystem (AVAX)

Disclaimer - the above is a very high level of previous public narratives. They are not indicative of each chain's entire approach; they are all doing a bit of all of it.

Alright, so that’s what’s happened in the past… but how do you win today?

Panelists discussed:

Koko sets the scene; you can’t determine a true winner. It’s too early in the race to really understand who’s set themselves apart. (Is this even a winner takes all type of game? Can there be multiple winners?)

Paul and others suggest that having solid technology is no longer a differentiator - it’s table stakes. We’ve matured, good tech is the absolute bare minimum. If you want to even think about ‘winning’ it starts with having industry standard tech.

Dub had an interesting take. Chains can win by identifying their niche or specialty. In his eyes - AVAX has won by signing AAA style games like Shrapnel and Off the Grid. Solana has won through the success of its many smaller teams. (This is counter to the public narrative examples above, but I understand Dub’s point here).

Kun takes a ground up approach. Chains need to attract real gamers, not just speculators. Who are these users and what are they playing? How do we profile these teams? Should chains do it themselves or is it their responsibility to work with teams like Forge to help? Either way, creating an environment gamers want to be in is key.

Paul, in my opinion, ends the conversation by stressing the importance of a holistic approach; it’s not about providing great technology, establishing deep support systems, funding teams, OR user acquisition. It’s about doing them all.

It’s pretty evident that ETH L1 and BTC are not feasible for any real multiplayer gaming experience.

L1s or L2s with more throughput will continue to become more developer friendly as the ecosystems develop (for more info, check out this piece from newsletter #1). With an even playing field re: tech, teams will need to find ways to differentiate.

Solana has done this through their Gameshift program, AVAX has done this by building public goodwill (they’re crushing this). Two strong examples of teams going above and beyond the tech - but this doesn’t mean that either of them will “win” outright.

Web3 gaming is so young, none of us (chains included) really know what's going to happen.

Gnoc’s take?

We’ll see all of the chains above have a majorly successful title in the next ~3 years
‘Winning’ isn’t a real thing

Web3 gaming will grow so fast that teams will NEED to have dedicated staff working in the social scene - if teams don’t know you exist, if they don’t trust you as people, they probably won’t launch on your chain.

Ubisoft x Web3 2.0

Ubisoft was to my knowledge, the first major traditional gaming company to enter the Web3 space in a meaningful way. They launched Quartz - an NFT marketplace for assets within their Ghost Recon games.

Unfortunately for Ubisoft (and Web3 fanatics)… it was a bit of a flop.

Web2 gamers HATED it - Web3 users didn’t get it. It was a bit of a disappointment but thankfully Ubisoft is ready to try again, announcing a partnership with IMX.

What do our panelists think?:

Kohji and Tony believe the partnership is actually a big deal. It serves as a positive sign that not only are Web2 giants willing to explore Web3 - they’re willing to make mistakes and iterate. (The fact that Ubisoft was not one and done is significant to me).
Koko, Kate and others commend Ubisoft for their experimental nature. This is a team who is getting their shots on goal. First with Ghost Recon, then with Reddit Avatars, now with this IMX partnership. (Part of being early to an ecosystem is understanding what does/doesn’t work. On that front - Ubisoft has the boots on the ground advantage)
Lemz and Kun have a slightly more pessimistic take. Without all the details this announcement feels like a bit of a PR play; a way to keep Ubisoft top of mind in Web3 circles. They point out that the partnership is actually with Ubisoft Strategic Innovation labs and stress the importance of being cautious. It’s exciting that Ubisoft is here at all, but we don’t yet know why, or with how much depth.
Fresco and Sinjin are worried. In their eyes, Ubisoft has aggressively monetized their games and they don’t seem to have a clear strategy. Is this an extraction play?

There’s a lot to unpack here but we’ll start with this.

There are things to be concerned about. Ubisoft is very good at maximising revenue. They’ve already launched something in the space with a less than ideal go to market strategy.

However, that does not mean they’ll continue to make the same mistakes.

Gaming is a hits driven business, meaning 1 or 2 major wins will outweigh 10 failures. Part of creating a hit is experimenting.

Previous success is NOT an indicator for future success. I know this is a bit of a complicated statement but people see 2 or 3 successful games from a developer and think everything that a studio ships will be successful. In reality - plenty of studios have a graveyard of “failed” titles.

The real key to success? TAKE SHOTS ON GOAL.

Studios need to understand what works, how to optimize the game loop, how to make more money of course… but what they really need is to understand what doesn’t work.

Ubisoft has already ‘failed’ in Web3. In my book - that’s a major plus. They’re one step closer to understanding what WILL work in this ecosystem.

For a long time people in Web3 have called failed projects “rugs”. I think that’s dangerous - we need to encourage responsible risk taking. It’s the only way we’ll see innovative games emerge.

We should all be rooting for the Ubisoft’s of the world to figure it out. More funding, more high quality games, more users for everyone in this space.

In Case You Missed It - A spotlight on our favorite content from the week.

Bonus - GTA 6

There was a discussion about whether or not GTA 6 will be a hit that I didn’t feel needed it’s own breakdown because… well of course it will be.

I do think it’s important to highlight a few things though:

GTA 5 has been live for a decade - it has a ridiculously loyal fan base
UGC in the form of mods and role playing servers has added depth
~190 millions copies shipped
~$8 billion USD in revenue

GTA 5 was one of the most successful games of ALL TIME.

Its successor WILL be a major hit - both in terms of player count and revenue. The question we should be asking is “will GTA 6 surpass” GTA 5?

Gaming is growing at an historic pace - in theory the loyal fans of the GTA franchise should translate into GTA 6.

I’m not entirely confident that happens in practice though.

Time will tell.

Gamified