The long-term value proposition of Web3 games

Surviving the current downturn and the Web3 gaming market is a tough order. And it makes sense to absorb some lessons from veterans in the blockchain gaming market. And one of the things to remember, they said, is that Web3 games have long-term value propositions.

For instance, they offer the promise that you’ll own something and continue to own it thanks to blockchain verification as we enter a world where, thanks to things like AI, nothing is as real as it seems to be.

I thought I’d take a moment to catch up on our recent GamesBeat Next event and share such insights from one of our panels from our October 23-24 event for folks who didn’t see it. The panel included moderator Neil Young, executive chairman of N3twork Studios; investor at Edenic; and a leader at Forte, the Web3 gaming infrastructure company. The panelists also included Josh Williams, CEO of Forte; Matt Wolf, head of Web3 gaming at Zynga; and Johnny Casamassina, chief creative officer at Plai Labs.

Young pointed out that the Web3 game industry still needs to reach its “zero to one” moment where games can become better for players through ownership, which is what Web3 gaming can deliver via non-fungible tokens on the blockchain.

Young has been building games at the edge of innovation for a long time, including when he launched Majestic in 2001 as a sci-fi thriller where you had to uncover a government conspiracy in an alternate reality game played on the web, instant messenger, email and phones. After a few years in the Web3 market, Young said he said that the experience is not without its pitfalls but is a “very exciting place to be.”

Casamassina said he has been building games for decades and while at Jam City he helped conceptualize the Web3 game Champions Ascension, a Web3 creature arena fighting game, before it was spun off into Plai Labs. He was skeptical of Web3 at first but tried to understand it and eventually saw it as a way to evolve how players interacted with games.

Wolf, a former esports and games leader for Coca-Cola, signed up at Zynga (before its merger with Take-Two) to create its first Web3 game, Sugar Town, which launched in August. Wolf also worked at Electronic Arts and Sega.

He and the leadership team at Zynga wanted to explore the future of games when it came to asset consumption, usage and ownership. Wolf asked the crowd if they were Web3 believers or skeptics, and he was surprised to see there were more believers.

“We touched on this idea of ownership, and personally I have become obsessed by that idea,” Young said. “It’s not just ownership in terms of the economic sense of ownership, like owning an asset. It’s the emotional impact that ownership rights have. It fundamentally changes how you engage with something.”

If a house needs repair, as an owner you do what you can to repair it. Or you build yourself a deck and invite people over to enjoy it. That’s a fundamental state change to Young.

“Seeing as games are largely an exercise in human psychology, whenever there’s an opportunity to change the nature of that, applying psychology, there’s an opportunity to better redefine the industry. And engagement is sort of this fundamental fuel of our industry.”

Williams, who previously ran firms like Kontagent, said he is interested in really interesting and powerful changes coming to games. He agreed that ownership changes how much time and energy you’re willing to spend with something like a house.

That’s true for players as blockchains, which transparently grant rights to players for goods and assets inside games. The economic opportunities that can open up for players and communities around ownership and participation are going to be transformative, Williams said.

Casamassina said that the game industry started experimenting with digital assets through minting NFTs, which established a basic ownership right. But for game makers who are building interactive experiences for players, some of the most powerful components of ownership are created by the players themselves. They get ownership over engagement, identity and contributions to the social connectivity of the game.

They also get to purchase critical components that can help them feel more emotionally connected to what they own in that experience, Casamassina said.

“In the grand scheme of things, some of the biggest and most successful games, particularly multiplayer games, grow their brand and their imprint themselves on people’s lives through gameplay that is contributed by the players themselves,” Casamassina said. “At the end of the day, when you go and play one of those games, a multiplayer game, a lot of what you’re experiencing is the actions and the contributions of other players feeding into it. That participation adds extreme value to the experience. And ultimately, it should be recognized because that investment that you’re putting in. It is not about the extraction of that investment.”

In Champions Ascension, the players contributions and their exploits will be recorded for all to see. Viewing the assets and protecting the assets is like preserving a sense of the player’s history in the game.

Wolf said provenance lets companies track an asset back to its origin. So it’s about establishing authenticity in a digital world.

“So much of what we consume is digital that it’s hard to know what’s real, and not real. What’s the genuine, actual article and what’s not?” Wolf said. “And so whether you believe in blockchain or not today, whether you see a use case or not — obviously this room does except for Barry — provenance is important for digital collectibles. If you’re running a game that has something collectible that’s owned by the audience, it’s easy to write and make a copy.”

Wolf added, “And the utility that we all build around our digital collectibles allows the actual owner to go in and consume whatever we created. And so it’s really important that provenance is there. And provenance happens in the blockchain. And the blockchain is something that is decentralized, it’s trustless. So it allows the nodes and all of the people that operate the blockchain around the world constantly as they solve these equations and creative blocks to verify that this is an actual transaction.”

And it’s not just for games, he said. As digital tech gets more real, it will be hard to figure out what’s real and what’s not, what’s fake or fake news, and the only way to know if it is genuine is if we move toward technologies like the blockchain, Wolf said.

“That’s why I’m so bullish on the blockchain as it relates to provenance,” Wolf said.

He also said that it helps with the top of the funnel and bottom of the funnel for getting users engaged in games over time.

Making sure blockchain games are compliant with laws

Williams said that blockchains fit with distributed public trust technologies, open systems, and transparent, globally scalable technologies that track the contributions that people make to that system.

These are long-term benefits, and it’s important for developers to look beyond the early days of the technology — which got financialized early and that resulted in scams — and see it’s a way to embrace an open and transparent system for your community.

Developers should look for ways the tech tracks what players contribute and how they transform assets in a game that makes the game better.

He said you should look beyond the near-term ways to make a fast buck and look for the long term and think about games and gameplay that improve the value proposition for players and reward individual actions as players contribute their time or skill to a game. If you participate in a guild, that’s a contribution to a game’s community.

Young said the complexity of the compliance landscape is something that developers have to think about and that’s a huge value proposition that Forte offers for developers so that developers can focus on making a fun game.

Williams said it is early in the days of crypto and blockchain, but eventually it will reach hundreds of millions of people create trillions of dollars in value. It’s just not true that this won’t be regulated or untouched by laws. It will be regulated and it’s going to be critical to comply with the laws around the world, he said.

“It’s incredibly complex with regulations that apply to different markets and marketplaces in general and applying to people’s information and privacy,” Williams said. “You just want to work with a system and partners that make it easy for you to just know that compliance is baked in, and that you’re doing the right things in the world. You’re protecting users and staying compliant with the laws of the land as individuals and as businesses.”

Casamassina said it’s easy to get distracted by buzzwords, but he said the key to success is staying flexible and be willing to experiment with the technology and ideas behind Web3 gaming.

Wolf said it was a great time to be a developer and to build, and that bear markets are historically a good time to get a company off the ground. While Web3 isn’t the trendiest market right now, it is still a chance to invest in a part of the market where there is real opportunity.

“This is the time to build if you believe in it,” he said. “It’s going to happen. Take it seriously.”

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