Web3 Gaming and the Path Towards an Open Metaverse

Transcript

Thank you for joining us tonight. Gentlemen, um so we had a lovely intro, but uh I guess I would like to start things off today by hearing a little bit about whether or not the motivations that first brought you into Web3 and why you wanted to integrate some of this technology into the gaming context, uh and whether or not that thesis has changed over time. Yeah, we'll start with you. For us, the thesis has completely unchanged in terms of it was all about digital property rights. Basically, the idea that we can have true ownership of the assets that we basically use inside games. Obviously, the evolution of Web3 gaming has changed in terms of maybe its utility, but actually the main principles are still underlying. It's a basic human need, you

could almost say. Back in the days of World of Warcraft, people were trading gold. People are trading accounts today. People want to do that. So, nothing's really changed in terms of the core thesis from our perspective. Lovely. Sure, thank you. Um so now it's been close to 6 years since we got started at Sky Mavis, uh and I don't think much has changed. Uh the reason I got attracted to the crypto in the first place is because it's about ownership. It's about freedom. And to me, even using platforms like Facebook, I always felt that the user should own their own data. And when I compare that to, let's say, game items, I think it's a very natural fit uh that people should own their own game game items and be able to use them for what they want. And the key for us at Sky

Mavis and Axie is that it's not only about money, so being able to sell your asset. It's about being able to prove that something is real in an internet that's increasingly fake. So, let's say that when you do something in a game, you get that ascribed to your NFT item. And then that is a part of your online history. That should belong to you. And I still I that still rings true uh close to 6 years later. Okay. Yeah, look, what I would say first, thank you thank you for having me. And uh I'm only 6 months into Yuga Labs, but uh you know, when I when I was at Activision Blizzard, I looked at uh the overall ecosystem and and, you know, gaming has obviously become a social platform that's connected the world's

players in ways that um that one could never have imagined. But, if you are a social platform, the way game and the game ecosystem is is created is counter to this idea of of social connection. You know, you're actually tied to a specific game. And uh when I saw some of the games that Yuga Labs was creating, including Dookey Dash, we're now in the middle of uh Heavy Metal Forge, uh you see this level of excitement and connectivity from our holders and our community that um that has actually uh has been beyond what I could have expected, and that connection and the aperture to bring in new entrants into the Web3

has not let me down whatsoever. Yeah, uh personally, the reason that I got into Web3 gaming was I've I've been in blockchain since 2014. Uh I kind of like Bitcoin, I was completely obsessed with Ethereum, and NFT usage for in-game items was the first use case of blockchain to me that was not speculative and not reliant on some future use case being built out. Back then in 2017, 80 billion dollars was spent on in-game items every year. Now, it's closer to 150 billion US dollars. And if you look at even Counter-Strike Go alone, players have been trading 33 billion US dollars of CS:GO skins in the last 3 years, and they have absolutely zilch to show for it. They can't off-ramp those

funds, they have the ability for Valve to limit trades to once per week with impunity on a whim, they have a rake imposed by a centralized server. For us it is there's this centralized demand analog and blockchain can immediately and profoundly provide vastly more value. Um and I think it's about giving property rights to those people. Yeah. No, I think consensus is sort of uh you know, shared across the board here that we're we're all still here and still excited. Um we're at Token 2049.

Some people have flown over 20 hours to get here. It's a big event. It's a great turnout. Many of us were also at Korean Blockchain Week. So, what is it about the East, about the Asian region that is getting so many people excited, especially in the context of gaming? Um yeah, you're intimately familiar. Yeah, I mean I'll start off. First of all, I mean in the West and particularly in the US, I find that a lot of this sort of antipathy towards things like NFTs and crypto has a little to do with the capitalist narrative from our perspective. Meaning, you know, there was a recent I mean not that recent, but the Pew study basically showed that 60% of young Americans under the age of 30 actually prefer the form of socialism than capitalism. I sometimes joke that

the American dream is more alive and well in Asia than it is in US, but I think that's generally true. Unless you live in California or in Florida, specifically Miami, uh which happens to also be the crypto capital of the US. Uh I think I think that's one narrative, right? Well, people are worried about that. The other thing also I think has to do with Asia, you know, capitalism has worked very well here, but also there's a higher degree of financial literacy. I mean, people are sort of thinking about investments differently, you know, they think about sort of you know, uh even you know, real estate differently or sort of stock markets. There's a higher engagement of financial engagement at all levels, and I think that's important as well because to be in the Web3 space, you need to have a degree of financial literacy. You need

to have knowledge of capitalism or at least an interest in it. So, I think that's that's sort of a a part of that big bridge. The other thing is, you know, I mean and maybe the panel has there's things to offer on this one is, gaming companies have historically, many of them, abused the sort of their trust with their players. They've taken advantage of them as well, right? They in terms of, you know, creating essentially sort of nerfing value of items, doing that kind of stuff. So, when they see a system like NFTs, they worry about that. They say, "Is this Is this another way to sort of make more money from us and not giving us anything in return?" Um but in the East, for instance, um this idea that you can actually pay your way, that you can actually spend money to have a better outcome, you know, isn't

actually that negative. It's kind of It's It's appreciated as well. So, there's a little bit of that culture culture difference as well. But, I think it all comes down to, from our perspective, financial literacy and perspectives on capitalism between the two. Yeah, Sky Mavis um is headquartered in Vietnam. Um and we've been focused on the Southeast Asian markets in particular. Of course, we uh Philippines being where we had our stronghold uh for Axie. Uh and what we found there is that there is a lot of excitement around trying out new technologies if the incentives are there. And the incentives don't actually have to be as high as in the West for people to to take the leap.

Um so, it makes more sense to me that the users would be there um to to try out this new technology. And the same also goes, I guess, then for for the other uh investors uh that are more curious because, you know, my belief has always been that it This has to be a ground-up revolution, so to say. This is for the people. The power uh belongs to the people, right? And they When they own something, it's scary for the establishment. Um but but uh the people then again uh will want it and demand it. And then again uh the the the people on top will start to to take notice. Uh so, to me, that that that also makes sense. But but overall, I I feel like uh Asia is is fertile ground uh for crypto in general.

Um and also, yeah, it's it's about freedom. Look, uh for us uh at Yuga, one of the first conversations I had about thinking about the Asia Pacific region was actually with this esteemed gentleman here, Yat. And he he said something very basic. He said, "Look, you know, look to the Asia Pacific region because you have a very very strong community and very passionate about what what Yuga Labs is doing." And as a result, one of the first things that I did when I became CEO 6 months ago, I said, "Our Our next Sorry, our next Ape Fest event, which is our annual global community, is going to be in Asia Pacific." And and we were dedicated doing it in Hong Kong and we're excited

to do it in in November in Hong Kong. Um you know, my my experience in Asia Pacific dates to many decades from the early days of Google to now here here at Yuga Labs. And what I've seen uh in addition to what what what Yat said, not only is there this level of entrepreneurship, but there's a level of forward thinking and reinvention. Um you know, you you you mentioned Korea. The fact that some of the largest Korean gaming companies are looking to leverage their Web 2 core crown jewel IP and evolve it to a Web 3 environment is something that's not happening in the United States.

And when you really think about what the experience has to be to really engage players in Web 3, you have to fundamentally think of the overall infrastructure of the game from the ground up. Cuz to your point, Yat, Web 2 players, they they see through it. You know, if all you attach is a Web 3 component to make money, they look at it with suspicion. But if you think about the fundamental gameplay with Web 3 at its core, that's where the really unique experiences are happening. And the investment and forward thinking that I've seen here in Asia Pacific with some of the smallest all the way to some of the largest gaming companies is unparalleled

anywhere in the world. I think it's pretty interesting. Three of the portfolio companies here are actually based in Asia, right? So, that there's a really interesting kind of bottoms-up insight, but I think part of the reason why is Western game development companies, especially the largest incumbents in today, will approach Web3 gaming as a hedge. They know that one day they will be disrupted and they want to know precisely how to build and successfully compete in that environment when that occurs. The Asian giant game students studios see it as their role to actually usher in these new worlds of gaming. They were at the frontier of free-to-play when it first came in and felt the resistance from players in the industry when that first happened. They ushered in social gaming with a bunch of stuff on on on

the social graph. They ushered in mobile gaming. And so, I think they see this identity as we're not just going to hedge, we're actually going to take massive steps. One of the most interesting points is you literally have the Japanese Prime Minister right now, Fumio Kishida, saying Web3 is a new form of capitalism. NFTs are one of five core areas of national business interest. So, of course game developers are going to look there because you have top-down instead of operation chokehold, the Prime Minister literally gilding the path that is game devs to build. So, yeah, I we're incredibly bullish on on Asia. I wanted to just echo an additional point here because you make a great point in Japan, but also if you think of it in Hong Kong has really sort of put forward basically Web3 and it's part of the agenda. They've got a task force

there basically including people like Masahiro from the industry advising government what to do in Web3. And of course, the fintech event that's happening here, Token 2049 is in Singapore. Singapore has been one of the most forward places in the world when it comes to crypto. Indonesia, Hong Kong, Taiwan, these places actually have retail trading of crypto. Japan is in fact one of the very few countries in the world where you can actually have legalized IEOs and ICOs through the actual exchanges. So, these These the that most people don't actually talk about cuz they don't know when they're not in Asia, but that's already happening. And that gives confidence because the regulators are saying, "This is real and you know, you can trust it." Uh which is of course helps as well.

Yeah. I think your point on on cultural differences and and the changes in player behavior is really is worth emphasis uh emphasizing. That said, a lot of naysayers will say that in the West, it's the regulatory environment that's holding Web3 back. Um I would counter that by saying you can look at Korea and it's definitely an adverse regulatory environment there. However, we still see so much like passion for building in Web3.

As more of these titles are brought into the space and adopting blockchain rails in one way or another, how do we see that impact other markets? Is it going to be a change in player behavior or will we see more Western studios um start to target an Eastern audience? Robbie, maybe we can start with you. Yeah, I The first thing I'd say is although uh it is very difficult to publish a Web3 game in Korea right now, you probably won't go to jail for creating one or issuing a token. And that's a big fundamental difference. And Korea is a very different market to Japan. Japan's a very insular market.

They have the highest spend per user in the world. Korea is used to global publishing. Um and so actually the two biggest countries that are looking at exporting Web3 games right now is Korea and China where obviously in China you can't even get a license to publish a game. And so that you have these huge kind of cottage industries of people building them looking to publish to to global audiences. Um but ultimately I think the that's why it comes down to what are the identity of these companies. Reg is one really important thing, but as long as you you know, you're not going to go to jail, I think where people see there's a business model to be made here and it's very likely that reg changes at some point in Korea in the next 12-18 months. They view themselves as hey, there's a tremendous humanization

opportunity here. Uh I think ultimately, what's going to happen is that the West will be forced to catch up once you have the first hits emerge in these nations. Um you even have Web2 games with tens of millions of users looking at somehow converting that user base to Web3. Look, I I It's It's just amazing to hear uh you you you can you can launch a game and you may not go to jail. You know, like what what kind of environment are we in, you know, that that you actually even have to have that little attach for something that is as a basic human right as being able to play a game.

Um I don't know if that's in the US Constitution, the right right to play games. Um but I I I couldn't agree with you more, you know, the the the regulatory environment is an accelerator, um but also can be an impediment. Underlying though, there has to be this entrepreneurship culture that exists. You know, and for instance, we we talk about Korea. Korea has entrepreneurship at all levels, from some of the largest chaebols who are actually really forward-thinking about what their play is going to be with NFT, all the way to the to the startup mentality. But where you have the perfect storm is where that connection and evolution happens and the

government says, "Got it. Okay, I'm going to invest and I'm going to help accelerate this." Um and we're seeing in the United States, you know, the the regulatory environment is is not as friendly as it is elsewhere in the world, but it's starting to change. And for the obvious reason, one, that they see that this there's actually good that can come out of this, that the experiences and the investment that can happen and the employment that can happen if you do it right, would only benefit uh the economy.

And um you know, there's this global competition. Does the US really want to fall behind to Hong Kong and London as a global trading hub for for for crypto? And I'm seeing, you know, it's changing slowly, but I'm seeing actually a a shift in the mindset of some of the largest um, politician, the most influential politicians about saying, "No, all right. We we went way to the extreme after FTX. We need to start embracing this cuz there's actually something viable as a as an industry and as an economic builder for the country."

Yeah, I mean, we can't really blame the regulators, right, for taking an aggressive stance at the moment looking at yeah, what you said FTX, but even in Korea, right, with with Luna. Um, I don't know I don't think, you know, some might have predicted that, but obviously not in Korea, right? I think there was massive amounts of money lost there. Um, but going back in time, some of these questions have been asked, I think, even back in 2017, 2018 after the ICO bubble where everyone was like, "Oh, crypto is just a scam.

Uh, you know, you shouldn't launch any tokens. You shouldn't do anything." But it's the entrepreneurs' responsibility to innovate and to ship benefits to the end user, which then changes perceptions, which then updates their I say mental firmware so that they can actually take a better decision because they see the benefits. Uh, and I think that's actually on us as game developers to be able to ship these higher quality games which are fun and entertaining and then also showcases the benefits of Web3, not only the financial aspects, which is oftentimes what gets the most attention.

So, I can only look back at Axie and when we blew up, I think we had about 2.7 million daily active players at the maximum. And a lot of those players have been educated by other players as to what kind of game this was. And it's not the same thing that we as the main developers had maybe intended it for, right? So, that's another challenge that you have when there is massive hyper growth. And it obviously that's going to happen again, but that's really when you get regulatory scrutiny, for example. So, we were in touch with the with the Filipino authority because so many people were living off Axie in the Philippines that they needed to pay taxes, right? So, how do you enforce taxes in basically the metaverse as as you know what was being

called then. So, it's quite a unique situation to actually live in that situation where you have to deal with regulators in in real time. And now we are kind of back to the to to the 2017-2018 point of view where the regulator are skeptical because they have yet to see real use cases, I guess after Axie which was for just a flicker in time, but I think showcased what was possible. I mean, I think one thing to look at if you think of the advantages of a web 3 game, digital property rights, is the benefit of capital formation, and ultimately the kind of earning power that both the studio and also the end users have. The one thing that often is forgotten about owning a proper digital property is that once it's owned by a

person, the majority of its value actually transfers to the owner, right? So, last year for instance, NFT sales was $24 billion generally not including just gaming items, PFPs, Bored Apes especially, right? Um the important factor isn't the $24 billion. The important factor is that 90% of that value went to creators and owners of these NFTs. In contrast, when you look at something like Spotify, only $8 billion was paid to creators. So, basically no creator can actually make money from the art of creating in web 2 anyway. So, it's just such a better business model in the web 3 world. If you you can be a small indie game developer and you can make a sustainable game with only tens of thousands of players. You don't need to have 10 million players to be a big game. Eventually, we'll get there. So, I

think that itself is actually going to sort of breed essentially sort of new business models and ideas. And to your to to your to your point, Alexander, as well, is that the game developers who are innovating are coming up with these new ideas, new token models, new NFT models. Is it Is it free drops? Is it paid? Is it this? Is it that? Right? And eventually, through this innovative process, we're going to sort of come up with something where people around the world will say, "Oh, that's interesting." Or that could work. Or that might be okay with the regulator, right? These are all happening and they're actually happening very, very quickly. The amount of money and resources and intellectual capital that is being spent around the world that is trying to sort of innovate around these issues, including the regulatory ones,

is immense. It is in the billions and billions of dollars in total. So, you know, in this sense, we have trust in the process that we'll get there because sufficient capital is being deployed to make it work. I want to put you on the spot here, yeah. Um So, we've seen, obviously, as uh Robbie pointed out, a lot of bullish sentiment from uh Japanese authorities. We also um saw the excitement from builders in Korea. I know you've done a lot of work in Hong Kong with the Web3 initiative. What can we expect over the next 5 to 10 years?

Well, I mean, I think when you think about Hong Kong's role, the thing is to think about Hong Kong is not just to think of it in terms of Hong Kong, right? I mean, whatever Web3 policy, crypto policy, digital asset policy comes from Hong Kong, comes from a higher power as well. And to give you sort of some sort of examples, in the same week when Hong Kong announced retail trading of 16 different tokens, which included some gaming tokens, gave exchange licenses under the new regime for the first time, and previously launched basically a, you know, crypto ETFs, in the mainland in China, uh basically, Beijing issued a Web3 strategy paper talking about basically how Web3 is the future of the internet. That's interesting. Um Then, of Of in the same week, CCTV, which is the national broadcaster, talked about how

you can buy Bitcoin in Hong Kong, right? So, a lot of people got excited about that. Is it a coincidence? Well, we can speculate, but either way, I think there's a strong connection. The thing we shouldn't expect though is that, you know, just like Hong Kong today is a financial intermediary for China, we shouldn't be expecting to look at sort of someone suddenly trading Bitcoin in China. I don't think that's likely to happen. More likely it's to have it's what Hong Kong has always been, the intermediary for China. So, if you want to enter the world of crypto, you do it through Hong Kong because it's safe, it's secure, it's the one gateway in which you can do all the things internationally. It's somewhat of a regulatory sandbox for China as well. Uh so, I see the Hong Kong opportunity as more than just Hong Kong as an

international hub, but basically the gateway to and from China. The number of people that are active, you know, Chinese overseas and Chinese in China that sort of are interested in the space is very, very high. Um and the number of game developers actually that have come from China that have moved to Hong Kong or Singapore building web 3 games is also tremendous. So, we see that as a as a growing opportunity. And of course, Hong Kong is providing such a friendly framework that is attracting lots of talent to come there. So, I see Hong Kong also as a great place to sort of build from as well. In the same way that it's been Singapore or Dubai, and of course, Tokyo is trying to do the same as well.

Yeah, a lot to be excited for. I think with small to medium-sized developers like miHoYo, you know, taking over the industry of Genshin and and Honkai, and then also Tencent with its many arms and many different gaming it's an exciting space for sure. I want to switch lanes a little bit and start talking about this year and and in the coming 6 to 12 months, a lot of people are excited because it's when we will start to see many of the higher quality uh games come to launch.

Um and there's many reasons to be excited about that. But, I also see the number of existing like quote-unquote Web 2 companies moving into the space increasing. I think IMVU is a very good example of that where um they have something like 20 million transactions per month on their on their Web 2 business, and now they're slowly porting that over to Web 3. how does the underlying infrastructure manage that sudden shock? And what can we expect in the next, you know, 12 to 24 months? Robbie, maybe?

Yeah, I often get this question of timelines. You know, when first hit. And the thing I always kind of say is like first off, we couldn't have expected a hit today. There's no way, even if we had the best games in the world building over the last 2 years. You even see this with FriendTech. It has a K factor of greater than one, a viral coefficient within Web 3, and it stalls as soon as you have to onboard users onto MetaMask or whatever wallet. The experience is not sufficiently high converting for it to translate to a mainstream audience. That infrastructure is now finally getting there. Literally, you have things like Immutable Passport or many other products built where you can sign on and onboard in 5 seconds completely invisibly. Things as easy as Apple Pay.

We have a lot of the biggest third-party app stores in the world looking at how they can embrace Web 3, and kind of you have EU forcing side loading on iPhone devices. So, I think there's a lot of pressure here. Epic Store being, you know, a big proponent of of Web 3 as is Google Play. And so, I think what the question now is when will these timelines start to emerge? It's obviously a bell curve in terms of launches. And the reality is Web 3 gaming has had an absurd amount of investment. We we have the capital and the games here ready to go. But, unlike DeFi, where a DeFi project gets a hundred million dollars in funding, and the next month they're turning out something in production uh by Andre Cronje, it's uh it actually takes time for these games to be built. Typically,

you know, 2 to 4 years, or sometimes six or seven. Baldur's Gate 3 uh was in pre-production in alpha for 3 years. That's why it was so high-quality out of the gate. Um and we basically think 40 to 50% of all of these funded games are going live next year. 90% of them will fail. But the 10% or the 5% that work will completely redefine the industry and do more volume than the rest of them combined. Gaming is power law driven. Web3 gaming we expect to be even more so, but that will catalyze the entire industry and provide the playbook for everyone else to copy. Yeah, look what I would add to that if I look at for instance the portfolio of games that I was managing at Activision Blizzard, you know, you went all the way from Call of Duty that to

your point would take 3 years plus to to make and hundreds of millions of dollars of investment all the way to incubation that happened at King from Candy Crush to um some of the games that you could actually iterate relatively quickly. this this space is moving so so fast. And you know, if I look out into the audience and I say like if this is if this is crypto winter, you know, I can only imagine how hot the summer's going to be. Um and and what I mean by that is I'm reminded of the early days of YouTube where YouTube was a core infrastructure that had user-generated content video that was being created, but everyone thought that the the play for YouTube was going to be licensed content from

some of the major IP IP creators. And you know, if you couldn't get Paramount and Universal and then then all all the top creators to license, then YouTube was dead. And what I'm seeing at least as it relates to the Bored Ape Yacht Club community is that if you actually seed the community with a a connection and an IP ownership a bunch of business models are going to start creating on top of it. You know, we have the Made by Apes which we have now more than 900 Apes who are actually creating businesses or offline businesses leveraging the IP, but we're also now starting to see, similar to what you what you saw in YouTube, businesses that are actually evolving

around the IP, which could be casual games that are being made quickly. Many of them will fail. Some of them will be successful. All the way to bigger investments in in IP collaborations that we and some of our holders are going to do to foment the ecosystem. And this flywheel of investment of people realizing that there is an opportunity here to create ancillary businesses off of the IP ownership of a decentralized community brand like like the Bored Ape Yacht Club bodes very well for innovation and and the growth of the space.

at Sky Mavis, um we built Ronin to scale Axie. Um and Axie was not a AAA title uh with fancy graphics uh by my by any means. Uh I think our thesis on this is that to find out the real business models in Web3, you will really need innovation and you will need experimentation. That means you will need many games that can go to market fast, that are more likely mid-core than AAA amazing extraction shooters, you know, at $100 million of uh go-to-market, right? Um so, at Sky Mavis, we're very focused on partnering

with studios that that that have a similar type of mentality, you know, such as we just announced working with another studio called Pixels. Um they are uh also very focused on on kind of iterating fast rather than focusing on the the the exceptional graphical qualities of the game. Uh so, I think that to me, that's a little bit of a meme, where people are very focused on the next AAA title. I think that's almost pandering to crypto Twitter um uh kind of the people who are buying the tokens, um rather than looking at the real numbers. So, one of the most successful games is Candy Crush.

Like, it's not fancy to look at, but it caters to a specific crowd of users, like moms. Like, those people need to be playing Web3 games as well, and you need much innovation. And that's kind of what we are focusing on. So, I think we have a little bit of a different approach there. But, of course, to go to market with these games, you require, to Robby's point, like very easy onboarding. And, you know, we are there now. And I think it's just a matter of time until we have these games that will be able to onboard hundreds of millions of users, but it does require much, much experimentation, and that requires many games, rather than one shot on goal with a $150 million kind of gambling, right? To me, that that doesn't make sense from a hedge

portfolio even, either. Yeah, maybe just to add to the Sorry, you want to go? No, please. Yeah, maybe just to add on this is the one shot on goal. I mean, Animoca itself has made over 140 investments in game companies. Uh, and we certainly think that more than a few of them will succeed. And they're in all sorts of categories. They're in casual, as you say. Some of them are mid-core. Some of them are triple-A type titles. Um, you know, billions of dollars was invested in the space over the last few years. And many of them took two or three years to make, and they're about to come out. So, for instance, Wreck League, which is a very high-quality fighting game, is about to come out actually within the next month or so, for instance.

Uh, and then you've got sort of, you know, deliveries and things with with you in Otherdeed, and new games coming out from Immutable. Um, so, these these titles that people cuz there's a little bit of a narrative as well, right? It's It's like actually is a perfect example of Candy Crush or Angry Birds in terms of mobile. Really important for mass adoption, but that doesn't mean that that's the entire industry, either, right? Uh, and the person who loves the Angry Birds and the person who loves Candy Crush is not the same person who's going to be Call of Duty. It's not the same audience. But, it's still just as relevant. But, the narrative is often driven by the hardcore gamer, because they're the most vocal. They're the ones who hang out on Kotaku, right? They're the ones who are basically making these comments. And they're the ones driving

the narrative because the casual gamer just likes to play games, but isn't actually out there sort of complaining and talking or maybe even reading on those same websites. So, I think we need to understand that this negative narrative that we're sometimes hearing comes from actually a relatively small but super dedicated base of players. But the AAA games actually will help change their narrative, too, because now they can say, "Oh, wait a second. Actually, this, you know, web3 title is actually a lot of fun and actually is quite good. Uh, maybe we need to change our opinion." In the same way that those same players have to change their opinions about mobile games, right? In the beginning, they would they would thought that you would play Call of Duty or, you know, any high-quality game on mobile, and now they do. So, I think I think it's just a matter of time.

Look, I think it it it it all comes down to the experience, but the reality is it is going to take time to evolve to a AAA engagement. You know, there's there's a lot of skepticism, as we mentioned in the beginning, from some of the hardcore players of what is this web3? Am I going to invest my time? Is this game going to continue? Uh, are they really only trying to monetize? So, I think to to what I think you were saying, the the path of least resistance is a casual game where you can onboard and offboard really quick and say, "I like it, I don't like it."

Um, the development cycles are faster. You can iterate faster, you know, like Candy Crush style games, like uh Dookey Dash that that Yuga Labs launched. We learned a lot from it, you know? Um, and it actually didn't take 3 years to develop. But this whole ecosystem is going to evolve and eventually you're going to get to a world where those, you know, uh AAA experiences are going to attract the hardcore gamers to say, "Okay, yeah, I really want that." I think it's just an evolutionary time. Um, at the core, it has to be an entertaining experience and easy to onboard. And that's the biggest challenge, in my view.

Comment on this one is I actually think now is the perfect time to build an IP. And by I mean that launch many experiences around one specific IP and then see what sticks and then eventually uh all those users they build a connection exactly what you guys are doing at at Bored Apes and exactly what we are doing with Axies is the idea is that people have their main character, the one that they want to emotionally connect with and go on many different experiences. The real issue is making a unified progression system which then again makes it so that people have a high degree of emotional connection so they don't want to sell their asset. And I think that's where a lot of innovation uh will happen and what we are very focused on at Axie which is, you know, Axie uh experience points. Keeping it

very simple. Earn experience points whenever you visit one of the, you know, 15 different Axie games that are there and then you level up your Axie. Okay, now it looks different and you can use that different looking Axie in any of the Axie games that are out there. I think to me that is uh where I expect to see a lot of innovation. I want to just add also one thing. Uh unlike for instance in closed ecosystems in Web3, it's a shared network which means the benefits are shared across the network. So it really only takes one of these titles to really take off. And I think we've seen some early examples with Axie cuz when Axie really took off, what actually happened was the entire ecosystem started to rise because even though it wasn't fully portable, the ecosystem of the token economies were

transferable which means value could move around which would assets could move around which means the ecosystem would grow. Now the network effects inherent weren't as strong yet because Ronin still needed to mature. But I think the point is that we're getting to this point where the ecosystems are ready, people can compose on Ronin, on Immutable and so on very freely. And I think uh the next titles that are going to come out will create I think this sort of uh sort of network effect where others will then come in and then those players will actually say, "Oh, I like this game and what are the other games that I could be using? What are the other titles I should be experiencing?

This is kind of what happened to console gaming as well. People joined for Candy Crush and ended up with filling PlayStation, right? But it wasn't 100% of them. It was a small percentage of them that came down who became hardcore gamers because of a casual experience. And I think one of the interesting areas where this is going to be different from the web two experience is the interoperability. And I'm actually really curious to see how this is going to evolve where you're going to have non-traditional partnerships of what you would normally see as competitors who are saying, "Hey, there's actually value in an interoperability uh of of the game and the game experiences and the token and the token exchanges." Which something that's actually very hard to obviously very hard if not impossible to do in the web

two space. And I think that the reason why you have what in normal circumstances would be competitors looking at each other and saying, "Hey, how are we going to be able to collaborate and make this a unique interoperable experience?" Um I think you should fast fasten your seat belts. This is going to be a wild ride. But you'll also see not just the interop- interoperable experiences is where you'll see new game experiences built on the assets of others. That's right. And I like what you see in the market, right? Yeah, so meaning that someone I mean imagine if Fortnite actually had their assets on chain. You're going to have Fortnite Fashion Week, Fortnite racing, all that kind of stuff using the assets of the game and actually Epic can't really do anything about it. And that's the other thing.

The permissionless nature actually allows it to sort of grow. And I think Axie's kind of going in that same direction as well, right? That's right. Yeah. Yeah. I think we could probably talk for another two hours on the you know challenges and and opportunities in interoperability versus composability. But in the yeah, being conscious of time, I would like us to sort of end on a positive note. We're right in the deep into the belly of the bear. But I think there's many reasons to be optimistic or at least that's what I tell everybody that continues to ask.

Daniel, I know you have an exciting announcement um and I would also like to give time for everyone else to sort of highlight something that's exciting um that we should be able to tangibly feel or see or interact with over the next 12 months or so. Sure, I think thank you. Um you know, I mentioned that we're going to have ApeFest in in uh in Hong Kong in the beginning of November. Um and we've decided that we're actually going to add one extra day to ApeFest where we're going to invite collaborators, creators um to experience what the Bored Ape Yacht Club really is and what that community is. To you know, what we really care about is to bring more uh Web3 participants into the space and

uh we're going to create a a really unique experience on that on that extra day um to bring in new people and have them experience what that's going to be and we're going to announce that tomorrow. I don't want to be surprised uh news, but what I will say is we will be announcing uh the biggest game ever to onboard to Immutable uh at at some point in the next month or two. So, more to come. There we go. Really? You're leaving me hungry. I guess that's that's that's the exclusivity of this game, you know. Keep them hungry and wanting more. I love bear markets.

Sky Mavis was built in a bear market, we thrive in bear markets. I think the best thing here is that you can see who is consistently shipping, who actually has real users, real community, real IP. I'm very excited about building out the unified progression system with Axie uh experience points, building up a a more deeper connection with your Axies, and of course onboarding more partners uh to run the network, which then get the very curated experience from working with us, kind of uh learning from us, uh so they don't have to make some of the mistakes uh that we did. Uh so, yeah, very excited about continuing that uh trend.

I guess, you know, for us the next 12 months is going to be the release of many of the games that we've invested in or help us publish or create such as Reckoning for instance, Phantom Galaxies, and then even Sandbox which is kind of basically a Minecraft sort of Roblox version of I guess Web3 sort of really sort of was probably responsible capturing people's imagination about sort of what the metaverse could be. That's sort of an intangible short-term sign. I think what really excites me though is that when a person onboards from Web2 to Web3 and they start to understand what ownership means, that actually is where the magic begins. The first time they make a little bit of money or the first time they understand that they have sovereign rights on this one. The first time they actually maybe get introduced to financial literacy, to me that's

actually super exciting and we see that onboarding take place. Kind of like what happened in the Philippines for instance, all the people who didn't have bank accounts basically got introduced to financial kind of a financial inclusion with that. And to me I see Web3 Web3 gaming in particular as the anchor to help really bring financial literacy to the next generation in a mass way. Thank you everyone for your time. Um, Robbie, how can people find you on socials? Uh, immutable.com or 0xferg on Twitter. Daniel, you've done a line. Uh, you can find me at DLA Gray on on Twitter.

My tag is @cygout86 on Twitter. I true gamer. Mine is on Twitter is YSIU. Okay, and I'm Jackal J A C L underscore E9. Thank you everyone for your time. Thank you.