Home Technology Web3 games don’t need to attract players profitably – TechCrunch

Web3 games don’t need to attract players profitably – TechCrunch

Web3 games don’t need to attract players profitably – TechCrunch

Top crypto-VCs consistently tout the potential of video games as one of the most compelling use cases for blockchain technology. Andreessen Horowitz’s partner Arianna Simpson, for example, who led the firm’s investment in crypto game Axie Infinity, gave countless interviews citing the play-to-earn model as a key catalyst for attracting”hundreds of millions” people in the web3.

Axie, the most high-profile play-to-earn video game, suffered one of the biggest crypto heists to date last March when North Korean hacker organization Lazarus Group drained ~$625 million of the game’s Ethereum-based Ronin sidechain. Since then, the crypto markets as a whole have seen a severe price decline and subsequent recovery over the past month. So where does that leave Web3 gaming and the gaming business model to win?

TechCrunch spoke to Justin Kan, co-founder of Twitch and more recently, Solana Fractal Based Gaming NFT Marketplace, for his thoughts on what it will take for this web3 subsector to live up to the hype. Kan said Web3 games still have a long way to go – while there are about 3 billion players worldwideincluding those who play mobile games, he noted, far fewer have purchased or interacted with any type of blockchain-based gaming asset.

Kan sees this gap as an opportunity for blockchain technology to fundamentally change the way video game studios operate.

“I think the idea of ​​creating digital assets and then taxing everyone for all the transactions around them is a good model,” Kan said.

In some ways, Web3 gaming was created in response to the success of games such as Fortnite which were able to open a lucrative monetization avenue for game studios through micro-transactions of users purchasing personalized items such as outfits. and weapons. Web3 game developers hope to take this vision one step further by allowing players to take these personalized digital assets between different games, turning the game into an interoperable and immersive ecosystem, Kan explained.

Kan has made about 10 angel investments in Web3 game startups, including the studio behind NFT-based shooter Bravo Ready, he said. Still, he admitted that building this interoperable ecosystem, which he sees as the future of video games in general, technically doesn’t require blockchain technology at all.

“Blockchain is just the way it’s going to be, I think, because there’s a lot of cultural momentum around people equating blockchain with openness and trusting things that are decentralized on blockchain.”

The vision of interoperability has yet to be realized in the traditional gaming world, as many incumbent studios have been loath to encourage third parties to rely on their APIs, Kan said. He attributed their reluctance to the “innovator’s dilemma”, in which large game companies with already working business models are reluctant to take new risks.

Gamers, however, seem to appreciate the openness and economic participation offered by blockchain-based startups, Kan said. Yet, he added, the appeal of an open gaming ecosystem is more about the principle of the matter than about making a living.

“I actually think people equate NFTs and games to this model of game-to-win where people make money and do their jobs. [by gaming]and I think it’s completely unnecessary,” Kan said.

“Having digital assets in your game can work and be valuable, even if no one is making money and there is no speculative appreciation or price appreciation of your assets,” he said. he adds.

It is common for popular games to attract new development in addition to their existing intellectual property. Kan shared the example of Counter-Strike: Global Offensive (CSGO), a video game in which custom “skins” have sold for up to $150,000 each.

“I funded a business that relies on CSGO skins,” he said. “CSGO changed the rules on what was allowed and actually confiscated over a million dollars from this company alone – so yeah, I don’t want to build on these unopened platforms anymore.”

Many top studios disagree with Kan’s thesis that an open gaming ecosystem monetized through blockchain technology is the future of the gaming industry. Minecraft, one of the most popular games of all time, made waves last month when it announced that it would not support NFTs on its platform, citing concerns about the “speculative price and investment mentality” in web3 and arguing that NFTs would go against the promoting an inclusive environment for players.

Despite this, it drew the line to NFTs, Minecraft is currently making money from micro-transactions on its in-game marketplace. The decision leaves existing businesses that were already selling Minecraft-based NFTs and developing play -to-earn using its open source code.

Kan sees blockchain-based games as just a “more economically immersive” version of the marketplaces that already exist in video games. However, he doesn’t think users will flock to on-chain games just to make money.

“Gambling to win was associated with people doing this kind of menial work in third world or developing countries,” Kan said. “I don’t particularly think the model is sustainable, so I think that interest will kind of wane.”

Instead, he believes the growth of Web3 games will be driven by developers creating genuinely fun games on the blockchain rather than focusing on creating economic incentives within the play-to-win paradigm.

“I think Web3 games are just more open and say, instead of being a black market, we’re going to make it a real market and the economic participation of people is going to vary at different levels. There will be people who don’t play only at the game and will never buy things with money. There will be people who will earn money because they are really good at the game, and they get things in the game that they sell [or trading].”

Kan predicts the space will evolve similarly to mobile gaming, with a handful of startups initially taking off. Their success will encourage major game companies to leverage their existing intellectual property to enter the fray “five years later”, despite their initial misgivings about the technology, he added.

Yet the nascent blockchain gaming industry still has miles to go before it can garner widespread attention.

“For that market to be really big, it’s going to have to be that normal people who want to play games for fun are playing those games. That doesn’t exist yet. I think most of the market today is made up of crypto-native people,” Kan said.


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