Don't Blink! Web3 gaming is coming back

Transcript

Hello everyone. It's glad to be back at um HCC in can under this amazing sunny but hot weather. Um today I'm going to talk about like a topic which I'm very passionate about. Obviously it's about web free gaming. Before I jump in like a few words about myself. So if you're not familiar, I'm first of all known as a co-founder and CEO of the Sandbox. Sandbox which has grown as one of the largest uh decentralized virtual world and web free gaming project. I think we count now over 6.3 million users. We have over 400 major brands and partnership in gaming, in entertainment, in music, sport and so on. And we count more than 500,000 half a million token holders between all sand avatar. Maybe

you're not familiar that I'm also the president of the blockchain game alliance. It's an association that now counts over 600 members with a very simple mission. We are here to educate about uh the use of blockchain technology within the broader video game industry and how we educate by showcasing what like builders creators are doing using that technology in game allowing them to network present their work through various events and we often have like booth or side events so we will have one this afternoon as well in can which at treny so you're invited to it and I've been a longtime advocate for blockchain gaming So I started Sandbox as a mobile game in 2011, but I actually fell in love with uh my first NFTs and

blockchain gaming around 2017 and since then I've been traveling the world um to speak at various conference about it and uh I try to showcase and bring more uh builder in the space. So sometimes people make the joke like I'm actually living on a plane if you know me. All right. So uh first of all like before we actually uh deep dive into like what's the current status of blockchain gaming I wanted to look a little bit at like some of the top 10 reason why people think blockchain games have failed and it's true like if you look at the news like there's always like the news have been a little bit gloomy with a lot of headlines where like lot of games have been shutting down by lack of funding

lack of players and the top 10 reason like most of those game have failed is true. It's been for sometimes like the lack of fun, the poor game play, the overemphasizes over like the financial rewards versus the actual fun, the poor UX and on boarding. So I'm sure you all heard about like how difficult it is to bring users new users to web 3 and sometimes all the reason which has like just and that's something like I think we need to be careful about is like whenever there is a bad actor in our industry there is like an FTS events some scams some rugs we actually all lose as an industry uh about players also like some challenges around like fragmented ecosystem and sometimes the

lack of support of certain ecosystem that didn't really play their role to bring games to bring players to those game. But the truth is and I want to share a little bit a bigger perspective because quite often in the web free industry we're quite too much central about oursel and we don't look around and the thing is like I've been in gaming since 2011 almost like 14 years now and like success in web 3 is not necessarily lower uh than success in general in any other industry like entertainment and gaming. Gaming is one of the most competitive industry in the world. Just to put some numbers, they're not from me. They are from like super scale. Only 43% of the game that start development actually see the day and

launch to players. And out of those 43%, only 83% of them actually will still be updated and live 3 years later with live ops. Meaning like a great portion of games are unfortunately meant to be stopped, to die out of interest, out of money, out of funding. So when I look at those number, I don't necessarily think like web free gaming is in a bad situation. I do think it's just like a general situation. It's a general challenge that we have in our industry and gaming industry. I know again like looking at the news like 2024 and 25 have been some of the hardest years for the industry with like a great number of layoff across the whole industry for

many reason from the rise of AI that's been impacting cost and teams to actually the lack of players interest and players spending no matter the technology web two or web three our industry need a big reboot uh so now I look again at some data so here's like graph from DAP radar around like is web free gaming really declining. So if I look at DAP radar report, we can see there is less transaction. There's less unique uh active wallet. There's been literally no major new game that launched on Ethereum uh blockchain or or polygon that drove like user interest. Um and if you look at the transaction volume for most of

the NFTs around game like you look at OpenC, Magic Eden, Blur etc like the volume has quite dropped down as well. So some media as well even made a joke like on the play to earn play to zero like are there still players out there and well before I I show you like actually a much brighter picture I just want to say like we surveyed creators builders and every year the top three reason of why they want to use blockchain remains the same like they might shift at the top some reason whether it's about putting around asset ownership driving new revenue model or new engagement model rewarding players.

But there's a strong desire from the industry to actually implement blockchain to make a change. And there's been new new things under the sunshine like I'm pretty sure everyone of you started entering the space of blockchain through Ethereum. But if I ask you like nowadays where are you building? Are you still building on Ethereum or are you building raise your hand if you're building anywhere else than Ethereum at the moment? So okay, we're already at the FDC conference, but um when I travel those conferences, I can see like there is a much larger uh ecosystem of chains.

We call them the out layers, the L1, the L2 of the world. And some of those chains are actually done a better job to bring on like what game developers need in term of like smoother on boarding, faster and cheaper transaction. um a lot of like specific tools and SDK for developers to um to provide some like uh ease access to the user and muse function they need and even more uh marketing support and so today most of those game if you think about it they will launch on new L1s like Swiss Solana Avalanche Cardano base running or certain layer 2s like B3 the optain immutable X Ola and so on. So there is a greater fragmentation around all those

chain and the thing is like the space has been evolving even faster than ever. Like I took a snapshot from a year ago and today between trying to see like where are the users across the different gaming chains and there is not a lot of like similarity from one year to uh today like Ronin uh was the leading chain at some point with different game that they launched. probably pixels was driving and Solana was really low and now we have like new already still there but you have like Gonzilla the L1 on avalanche with a C chain you have like immutable the new ZKVM core sigh as well so the thing is like how

can you develop a game and it actually takes time when those ecosystem evolve so fast and you don't really know where you will find the right audience the other thing that I I looked at as to keep a bright side on how our industry is moving is like how the whole metaverse narrative is moving and uh between 2021 where we had roughly 300 million active user in metaverse today we're more than 700 million across three platform Fortnite Roblox and sandbox so I stay very positive and I think by 2030 we'll have 1 billion people playing in virtual world MMO RPG and so on and it doesn't matter if like the media thinks like all of this industry is dead the truth is like numbers are proving us

that we have now more audience and more transaction than back when they were saying like all the hype around it. So audience are growing. It's not just about the transaction on the chain. It's like about engagement. DA use adoption is happening behind the scenes and I believe like user generated content and brands will drive that future of adoption. Now looking at what are like some of the top uh games in web 3. So stats from two months ago. um many of those game I don't know if like maybe only Axi Infinity was there and Alien Worlds was there uh over a year ago. So there's a lot of newcomers and that new that series of newcomers are driving now the

top and unfortunately if you look at Ethereum only three out of 10 games are actually built on Ethereum or um or or L2s over Ethereum to to make it simple. The other thing that I noticed which is like um a challenge for the web free industry is the fact that we don't have yet a success model to copy in the mobile game industry freeto play. There's been a lot of copy past model where like some developer find a recipe for success and then everyone will kind of like deconstruct the game apply the same maybe put a little twist over the graphic theatic the story the lore and they will launch it and the result is

like there's been a billion dollar industry every year where like games that are the top top grossing revenue are almost the same from the icon to the kind of game play they are very similar and we're lacking that kind of success in web 3 that we can replicate. And that's why I feel like we're still early in web 3. We're in a huge experimentation mode, still searching for that successful business model. uh we went in the past four years we went from like game developers launching NFT pre-sales to fund initially uh the development like Kickstarter campaigns to having a game token even before the game was launched and then um having some challenges to sustain their economy from there on to the play to earn uh

business model which been uh really showcased by Axi Infinity the play and earn as we found like the tokconomics were not sustainable from there and the new narrative around like play to win or play to airdrop that for example telegram um ton network is pushing and the truth is like we've been focusing on the business model but we haven't been focusing enough on like who are the games meant for and like how do we on board new audiences into the space so to on board new audiences you have to first understand like who are we building games for at the moment like there is uh those different four segments the millennials the young genz the emerging play to earn uh players and then more broader and what is motivating them to

play games. So in a more mature market um where people have like still money to spend on digital asset, it's really about the ownership, the potentially the potential to actually make a revenue on top of them. While in some other market is more around like the feeling of like statues, how important it is to show your belong to certain communities. And in some other country like it's not really gaming. is more like it turned into a job and activities that provide them for food or for a living. It's called like economic empowerment through games and there are still markets and audience that have been largely untapped. So I'm also bullish on the fact that um there is not yet a sufficient offer from the all the great

uh web 3 game that we have to address audience mostly female audience and Gen Z audience in the mobile game industry. Once again like Gen Z has been and has been captured by the hyper casual segment and that's been pushing a massive uh boost of revenue and new actors in the space and female games were usually like resource management city builder match free game which I've never I don't really see in the web 3. So somehow developer are missing here a little bit the shot. We're still again iterating on uh the research for success business model. The latest I've seen uh is really called the play to air drop. The idea is like players are um the everyone can play for free the different game. They are

actually completing quests. They're engaging and afterwards like they will be receiving a portion of a prize pool based on an activity. However, um the games yet that offer that feature of play to air drop have also not yet implementing sufficient live ops, sufficient content, sufficient reason for people to keep playing afterward and spend the token that they earn. So basically that has led to this behavior where we see like swarm of players and I still call players not bots who are like extracting value from the economies from those game and not reinjecting it back into the games.

So that's really the kind of like the problem statement of the industry but there are solution like at least I've seen soul studios I'll talk about sandbox but I know other games like pixels and a few other have a similar approach like how do we build for engagement how do we uh ensure that people will keep coming back and spending again as they are playing and earning so in sandbox the model we applied something called a battle pass. It's a quite standard practice in the video game industry where anyone can start participating but the more you engage and you progress the more you earn rewards and there's usually different tiers based either on the NFTs that you own um and as well on um like your participation. So here everyone can

play for free. They can earn up to 10 if they do. But then to unlock additional reward they need either to own the NFT which is the alpha pass. they need and then we have extra rewards if there are certain token holders like land owners or and so on and those seasons are usually running over six to eight weeks. So as you progress and you level up in the battle pass you unlock more and more rewards which include tokens and NFT. That model has led to a great and greater engagement as we've been fine-tuning it across uh five different seasons now and we're now trying to push for some standardization around metrics and we call the industry to use one called the return on reward spend for

every single token that we distribute to a user for free. We are going to measure like how much of that token is actually reinjected back into the economy of the game. So, uh, in season 4, which was October, uh, we had only 11% of the token we were dropping or rewarding to the player after the end of the season that were spent back into the economy. Uh, around December, we've been tweaking with the launch of a great partnership, Attack on Titan, and we rise to 41%. In the latest season, we are n 98 re-engagement. So we have more quality user, more focused user who actually not just here to extract value but start

playing because they have fun and they spend in the game as they progress. So that's also important to not not just keep looking at higher and higher metric but typically engage now like there's a whole new wave of web 3 games that are pushing for adoption. Um, I'm pretty sure you you've noticed a new map of story of the grid by Godzilla with 17 million wallet cross the ages ax infinity big time craft world pixels and sandbox which already talked about. So I wanted to put some um videos to show a little bit.

Is it working? the video is not playing but like this one is really one of the game that has the highest potential like it's AAA game the first one that launched on console Sony and PlayStation uh they have at pick over close to a million DU 680 million transaction to date uh it's on the avalanche layer one NFL and FIFA revolt 7 million downloads already $1 million a month 99% of revenue comes from like fiat inapp transaction no uh NFTs But they are using blockchain actually on the marketplace. So as player collect those cards, they can swap with other players and they don't even know that blockchain behind uh is

helping with an automated market maker to provide liquidity on the cards. So it's very casual. One of the first web free mobile game approved by Apple and Google. Sunbox we already talked about so I'll skip a little bit. Pixels really interesting as well like the early model and how they evolving 7.5 million users 800,000 gau at peak and today after distributing over 10.65 pixels to their community they are introducing pixel staking and a new way to make sustainable economics using as well the same metric. I don't know if you heard about craft world new title recently launched already 670,000 users pre-registered 500,000 mus and people

have to collect item craft them and trade with each other the players into this resource management game so they can actually uh complete the game play. So there is collaboration through transaction between player and those transaction are supported by liquid liquidity pools that generate revenue from transaction fees. So there's already over $3 million worth of trades and starting to earn a great revenue. Maple Story like one of the most popular game ever. 250 million players in the world. They are launching a they launch already a new version called Universe with web 3. And like the numbers are just mind-blowing. Like we're already at $220 million worth of onchain activity.

76 players percent of players that are spending back again. and already great engagement. Axi Infinity the most popular number one uh crypto game ever according to them. So I took that slide from their presentation over 1.3 billion total dollar revenue. But today like what Axin Infinity has led to is a launch of Ronin which is like their own L1 blockchain that support 80 games and like the new title coming out has already 5 million pre-registration big time over 200 million revenue and they never launch a token for investors or teams like fair launch over $230 million in transaction and now working with seven

game studio on the same marketplace and mechanic cross the edges a great game a great trans media franchise with books, cards, 100% operable assets made 24 million revenue um in first primary sale, 35 in secondary sale. They're launching in a few months their new uh MMO RPG after the mobile TCG. quick overview. There's also other like blockchain now that are finally playing the role to drive new players to like basically um like grow the audience from the onto the game that people are building. Solana avalanche they have those new pass that you can uh download or mint for free and use to play. And

we've seen a lot of other innovation. So I'm starting to I feel I'm running out of time. Yes. So we wanted to share about like uh wagering and skill-based game play on telegram stable coin and fiat ramp up solution that's are really promising to bring more players removing the friction and where is web free gaming you decide I believe UGC blockchain a lot of innovation experimentation will drive the future of uh a game and as we push for uh token ownership that's my last slides uh I believe like we'll evolve from like just mini games and integrating brands and various loyalty system with uh tokens to like digital society, digital nation

powered by like ownership powered by a blockchain where like multiple actors can participate into liquidity pool, decentralized governance and a lot of collaboration with brands and other institution. That's it. Thank you very much. I hope that gave you a better picture of where web 3 is going. any question? Yeah, thank you. Um how much of the uh in a in a game where uh in this last step where where games are going so digital societies, shared gaming societies, how much of um the actual game state do you expect to be on actually on chain uh

versus having uh just some assets on chain and the game logic in the back end. uh you're right that saying like there's different ways to have to implement the blockchain just like the token the assets the full uh game play will be on chain and potentially like the governance and so on. I feel like right now there's still like certain uh limitation on like how much transaction can blockchain process and what is the cost for it. there is a cost not only for like the computing or the storage as well underlying and until like we we able to crack that to like a very unique metric that's super low I don't think there is a necessity yet to actually have everything stored on chain and all

the logic running on chain like uh so let's see how like the cost of resource of compute and storage evolve but don't let's not add more burden on the blockchain that they actually need to so maybe let's say 5 10 years that hopefully like we'll start to see more of those emerge. Thank you. Any other questions? Now we have a lunch time and see you. Thank you very much. 1 p.m. [Applause]