Introduction

The hosts introduce themselves and their special guest for the podcast episode.

Introductions

• Felix Brauberg is the Director of Monetization at Network, a gaming company recently acquired by Forte, a crypto company.

• Jacob (Jakub) is the Head of Monetization at Traplight, a free-to-play gaming company from Tampere, Finland. He has experience in both free-to-play and VR gaming.

• Nico is an investor in crypto gaming VC at Bitcraft and also hosts his own podcast. He learned about crypto gaming from a previous conversation with Mate.

• Mate is an independent UA consultant working on free-to-play games and exploring the world of crypto gaming.

Crypto Games and Blockchain Gaming

The discussion focuses on the current state of crypto games, blockchain gaming, NFTs, and the changing buzzwords associated with play-to-earn models.

Changing Buzzwords

• The term "play to earn" is evolving into "play and earn" or even "play to own" as people question the sustainability of play-to-earn models like Axie Infinity's economy.

• Axiom Zen's research suggests that Axie Infinity's economy may not be financially sustainable in the long run.

Challenges in Analyzing Crypto Games

• Traditional analytics tools like Sensor Tower or App Annie are not suitable for analyzing crypto games due to their decentralized nature.

• Platforms like DappRadar provide more accurate data by directly accessing blockchain information.

• However, some crypto games are not fully decentralized, making it difficult to calculate accurate numbers.

Ownership in Crypto Games

• In Axie Infinity, players need to own Axies (digital pets) to play the game. However, through scholarship programs, some players can play without owning Axies themselves.

• Scholars play with someone else's Axies and don't need to connect their own wallet to accumulate in-game rewards.

The Role of Wallets in Crypto Games

The discussion revolves around the role of wallets in crypto games and how they affect ownership and gameplay.

Wallets and Ownership

• Wallets are necessary for retrieving winnings (SLP) in Axie Infinity.

• Scholars may not need a wallet if they are playing with someone else's Axies, as the winnings do not go to their own wallets.

Accuracy of Data from DappRadar

• DappRadar provides accurate data on blockchain activities but may not capture all players who are scholars or playing without connecting their wallets.

• The number of active wallets may be lower than the reported number of daily or monthly active users.

Conclusion

The conversation concludes with a brief discussion about ownership and wallets in crypto games.

Ownership and Wallets

• In Axie Infinity, ownership of Axies determines what is stored in a player's wallet. If an Axie is owned by someone else, it does not appear in the player's wallet.

• Scholars can play without needing to connect their own wallet because they are using someone else's Axies.

The Impact of Minimum Wage on Player Retention

The speaker discusses how the increase in minimum wage in November affected player retention. They question whether the graph accurately reflects the decrease in users.

• The minimum wage in the Philippines surpassed the current earnings from playing Axie Infinity, leading to many players leaving.

• The graph indicates a significant decrease in users over the past month, which surprises the speaker.

• The narrative around Axie Infinity is shifting from "play to earn" to "play and earn a bit."

• Another game, Tetanarena, experienced a decline in revenue and downloads, suggesting it may be dying.

Analysis of Phillip Levin's Article

The speaker discusses an article by Phillip Levin and highlights key points regarding sustainable game design and balancing game economies.

• Phillip Levin states that optimizing games for short-term returns is not sustainable.

• Creating a balanced game economy with proper sources and sync is crucial.

• The speaker expresses concern about the friction involved in purchasing axes and going through wallet processes.

• Scholarship programs were introduced as a temporary solution but may not be a long-term solution.

• Other games are also exploring non-crypto layers as their primary interaction point.

Comparison to VR Space Evolution

The speaker draws parallels between the evolution of VR controllers and the current state of play-to-earn games. They discuss their personal excitement about different aspects of play-to-earn models.

• Similar to how Oculus made other VR controllers obsolete, there may be a consolidation or standardization within play-to-earn games.

• When asked about personal excitement, the speaker sees no difference between "play to own" or "play and earn," considering them different names for the same concept.

• Innovation is seen as important, particularly what Three brings to the table.

The transcript is already in English, so there is no need to respond in a different language.

New Section

In this section, the speaker discusses the value that blockchain brings to games and how it allows players to capture the value they bring inside the game.

Excitement for Blockchain Games

• When playing a multiplayer game, players add value by grinding materials and selling them to others.

• Blockchain games add a value layer that allows players to capture the value they bring inside the game.

• This paradigm will lead to the development of new types of games designed with blockchain technology integrated.

• Some people may be skeptical about blockchain games because they are looking at existing games and wondering what blockchain adds. However, new types of games will be designed specifically for this technology.

Perspectives on Play-to-Earn

• Free-to-play gamers and developers may have concerns about blockchain gaming.

• The free-to-play model is often criticized because players invest time and money but receive nothing in return.

• In contrast, blockchain games offer opportunities for players to earn money within the game.

• Simply adding blockchain technology to existing free-to-play games would not change much. The real potential lies in reducing friction and redistributing revenue back to players.

New Section

In this section, the speaker discusses different perspectives on play-to-earn models in gaming and reflects on Axie Infinity as a pioneer in the space.

Play-to-Earn Concerns

• Some people criticize play-to-earn models, claiming they are detrimental to traditional free-to-play gamers or developers.

• However, adding blockchain technology does not fundamentally change existing free-to-play models.

• The potential benefit lies in reducing friction and redistributing revenue back to players.

Axie Infinity as a Pioneer

• Axie Infinity is considered one of the pioneers in the blockchain gaming space.

• The game introduced a play-to-earn model, which gained popularity unexpectedly due to external factors like the COVID-19 pandemic.

• The economy of Axie Infinity was not designed to sustain the high demand for grinding and cashing out in-game currency (SLP).

• While Axie Infinity is not considered a failed game, it faced challenges that were not initially anticipated.

New Section

In this section, the speaker discusses the potential applications and challenges of blockchain gaming, using examples from trading card games.

Applications and Challenges

• Blockchain technology offers potential applications in preserving digital assets and enabling trade even if a game shuts down.

• However, some projects have made mistakes by simply slapping blockchain onto existing games without adding value to the NFTs.

• The speaker mentions Hex TCG as an example where cards became useless when the game shut down.

• Despite some missteps, there are still opportunities for blockchain gaming to provide value and enable trade.

New Section

In this section, the speaker reflects on Axie Infinity as a pioneer in blockchain gaming and acknowledges both its successes and unexpected challenges.

Axie Infinity's Impact

• Axie Infinity is recognized as a pioneer in the blockchain gaming space.

• The team did not originally plan for their play-to-earn model but embraced it due to external factors like COVID-19.

• However, unforeseen challenges arose as players heavily engaged in grinding and cashing out in-game currency (SLP).

• While Axie Infinity may not reach the level of success comparable to Facebook overtaking MySpace, it remains an important project in pushing boundaries within the industry.

The Impact of Hype and Unexpected Challenges

This section discusses the impact of hype and unexpected challenges faced by the game developers.

The Unforeseen Outcome of Hype

• The game experienced a surge in popularity due to hype, with many people joining.

• There is a possibility that the development team made all the right decisions, but things got out of hand faster than expected.

• Looking back, they see the current game as an alpha or beta version still in development.

• Despite the crash in value and economic challenges, they successfully onboarded hundreds of thousands of players onto one blockchain platform.

Evaluating Success and Future Ambitions

• In retrospect, they acknowledge that unexpected events occurred but would make the same decisions again.

• They have a large player base with wallets and assets, which gives them an advantage for future developments.

• The speaker predicts that Sky Mavis (Infinity) will be the most successful crypto game due to its existing community base.

• The CEO has ambitious plans for land gameplay and deploying mini-games on top of owned land.

Assessing Axie Infinity's Ambitions

This section explores Axie Infinity's ambitions and potential success compared to other games.

Comparing Axie Infinity's Ambitions

• Axie Infinity aims to create a unique gaming experience similar to Warcraft 3 custom maps or tower defense games.

• The CEO mentioned plans for land ownership and deploying mini-games on owned land.

• While there are significant ambitions, it is uncertain if they can successfully execute all their plans.

• The speaker believes there is less than a 50% chance that Axie will be the most successful game but still considers them a strong contender.

Friction in Blockchain Gaming Adoption

This section discusses the challenges of connecting wallets and purchasing assets in blockchain games.

Challenges in Connecting Wallets

• The speaker personally faces difficulties in connecting a wallet and buying Axies.

• They are looking for games with lower friction and easier onboarding processes.

• Examples of current market possibilities include Axie Infinity, games with mobile clients, and hidden crypto layers within the game.

Different Approaches to Blockchain Gaming Adoption

This section explores different approaches to blockchain gaming adoption.

Current Market Possibilities

• Axie Infinity represents one approach where players need to connect a wallet, transfer currency, and then purchase game assets.

• Other games have mobile clients available on app stores, with the crypto layer integrated into the gameplay.

• Some games require users to connect their wallets through the website before accessing assets in the game client.

New Section

The speaker discusses the concept of combining a free-to-play in-game economy with a crypto layer on top, and the challenges and possibilities it presents.

Exploring New Territory

• The speaker mentions that they have experienced a smooth decentralized game running on Polygon.

• They discuss the idea of combining a free-to-play in-game economy with a crypto layer on top.

• The goal is to have players download and play the game without initially knowing about any crypto involvement, but eventually integrating it into the core game loop.

• There are concerns about how app stores will handle this type of game and how revenue will be counted.

Existing Examples

• Chromatic, Golden Boys Game from Net Marble, and Axie Origin are mentioned as examples of games representing this combined free-to-play and crypto layer category.

• Animoka's Crazy Defense Heroes is also highlighted as an example where an old game was updated with crypto functionality.

Different Levels of Crypto Integration

• The speaker emphasizes the importance of understanding different levels of crypto integration within games.

• Some games may not require a wallet or blockchain interaction until players choose to export their assets onto the blockchain.

• On the other end of the spectrum, there are fully on-chain games where every move happens on the blockchain itself.

Gas Fees and Sustainability

• Gas fees for fully on-chain games can be high, making them unsustainable for frequent gameplay.

• However, it is believed that gas fees will decrease significantly in the future, making blockchain integration more feasible for gaming applications.

New Section

The discussion continues regarding gas fees in relation to blockchain integration in gaming applications.

Future Outlook for Gas Fees

• The speaker predicts that gas fees will become fractions of cents within the next few years.

• This reduction in gas fees is crucial for the sustainability and widespread adoption of blockchain integration in games.

Different Chains and Decentralization

• The speaker mentions that different chains have varying levels of decentralization, which affects transaction fees.

• There will be chains with higher transaction fees but more decentralization, as well as chains with lower transaction fees but less decentralization.

• It is important to consider these factors when choosing a blockchain for gaming applications.

The transcript provided does not specify the language used. Therefore, the summary has been written in English.

City Management Games and Web 3

The speaker discusses the concept of city management games in the context of web 3, where players can submit various tasks for villagers to perform.

City Management Games and Web 3

• In city management games, players can list tasks for villagers to perform.

• This concept can be applied to web 3 games, where players can submit tasks and actions for characters or entities within the game world.

• The speaker mentions that some people exaggerate the capabilities of web 3, claiming that it allows anything that was not possible in web 2.

• However, the speaker points out that similar actions and concepts exist in both web 2 and web 3 games, just with different names.

Challenges with Web 3 Marketing

The speaker discusses challenges related to marketing in the context of web 3 games. They express skepticism towards claims made by some crypto enthusiasts about the uniqueness of web 3 marketing.

Challenges with Web 3 Marketing

• The speaker expresses frustration with crypto enthusiasts who claim that web 3 marketing is revolutionary compared to traditional marketing methods.

• They highlight examples such as hiring a community manager on Discord or using freelancers for other types of jobs, which have existed before in different contexts.

• The speaker suggests being cautious about how activities are measured in web 3 marketing.

• They mention different avenues for directing users into the game, including browsers, mobile clients, social media platforms like Facebook and Google Ads, as well as growing communities on platforms like Discord.

Building Community and Pre-Launch Activities

The speaker discusses the importance of building a community before launching a blockchain game. They draw parallels between this process and community-building in AAA games.

Building Community and Pre-Launch Activities

• Before launching a blockchain game, it is crucial to build a community.

• The speaker compares this process to building a community for an AAA game, where developers share development notes, assets, and engage with the community.

• They mention the concept of soft launch, where selected members from the community are invited to test playable builds of the game.

• The speaker emphasizes that building a community is just one part of the overall activities involved in marketing and growing a blockchain game.

Cross-Domain Attribution and Tracking

The speaker discusses challenges related to cross-domain attribution and tracking in web 3 games. They mention previous experiences with cross-domain attribution at Pixel Federation.

Cross-Domain Attribution and Tracking

• The speaker mentions previous challenges faced at Pixel Federation regarding cross-domain attribution when sending players to their web portal with multiple domains.

• They highlight that analytics solutions like Google Analytics can help with cross-domain attribution.

• Different platforms such as Facebook also provide tracking capabilities through tools like Facebook pixels.

• The speaker suggests that tracking revenue from crypto transactions could be possible by pairing wallets and transaction IDs but acknowledges that it may not be easy.

Shifting Revenue Models in Web 3 Games

The speaker discusses how revenue models in web 3 games may differ from traditional models. They mention examples of games relying on token value appreciation rather than marketplace fees for generating revenue.

Shifting Revenue Models in Web 3 Games

• Some web 3 games do not rely on marketplace fees for revenue but instead design their economies around tokens that have utility within the game.

• These tokens are expected to increase in value over time, allowing the company to generate cash through token sales or other means.

• The speaker raises questions about how to calculate revenue attribution in such cases.

• They suggest that game economists will be in high demand in the web 3 industry, along with blockchain developers and community managers.

The transcript provided is already in English.

New Section

In this section, the speaker discusses the complexity of calculating the value of something within a specific industry and how it is influenced by the free market economy. They also mention the potential for in-app networks for crypto games and different revenue sources in the gaming industry.

Calculating Value and Complexity (0:39:57s)

• The speaker explains that comparing the value of one company within an industry to another outside of that industry is not feasible due to the complexity involved.

• They highlight that when there is actual value in something, such as utility within a game, it becomes even more complex to calculate its overall worth.

• The speaker mentions that the value of a company is heavily dependent on the free market economy.

In-App Networks for Crypto Games (0:40:37s)

• The speaker predicts that as blockchain games reach critical mass, there will likely be someone who creates an in-app network for crypto games.

• They suggest that in-game ads could also become a source of revenue once a critical mass of games is reached.

Free-to-play Game Traffic and Revenue (0:40:57s)

• The speaker discusses how some companies aim to drive traffic from free-to-play games to other platforms where players can earn money.

• They mention AXE as an example of a game trying to build a free-to-play model with traffic directed towards other crypto-related places.

Mobile Clients Driving Revenue (0:41:19s)

• The speaker references Fortnite's strategy of driving revenue from mobile clients into console and PC platforms.

• They explain that players who engage with mobile versions have a higher chance of making purchases on other platforms.

New Section

In this section, the speaker delves into their thoughts on monetization and game design in the context of free-to-play games. They also discuss the revenue sources and business models for new generation crypto free-to-play hybrid games.

Monetization and Game Design (0:42:04s)

• The speaker emphasizes that when designing a game, monetization is an integral part of game design, particularly in free-to-play models.

• They express their concern about the increasing complexity and expertise required for game designers to handle game economies and economics.

Revenue Sources for Crypto Free-to-play Games (0:42:35s)

• The speaker identifies four potential revenue sources for new generation crypto free-to-play games: in-app and ad revenue, marketplace fees, direct sales of NFTs, and cryptocurrency control.

• They inquire if there are any other revenue sources beyond these four.

New Section

In this section, the speaker discusses the challenges of sustaining a crypto business model based solely on marketplace fees. They explore how scaling such a model within the crypto industry would require addressing issues related to marketing expenses and organic growth.

Sustaining Marketplace Fees (0:44:25s)

• The speaker expresses doubt about relying solely on marketplace fees as a sustainable source of revenue.

• They highlight that marketplace fees alone may not be sufficient to cover expenses if a significant portion of the budget goes towards marketing.

Challenges with Scaling (0:45:05s)

• The speaker raises concerns about scaling the current model within the crypto industry in terms of continuous growth.

• They mention that many games reach a critical mass but then plateau due to limitations in user acquisition (UA) strategies.

• The speaker questions how this scaling challenge can be addressed within the long-term perspective of crypto game models.

The Future of Blockchain Games

In this section, the speaker discusses the potential future of blockchain games and how they may evolve compared to traditional free-to-play games.

Convergence towards Free-to-Play Model

• All types of games may converge towards the current free-to-play model.

• This convergence is likely to happen within crypto games as well.

• Blockchain games have the potential to become ever-evolving and long-lasting due to their nature.

Eternal Blockchain Games

• Some blockchain games can be considered eternal as they live as long as the underlying blockchain exists.

• Even if a new version of the game is released, players can still continue playing the original version.

• The community's involvement and ownership of tokens and assets contribute to the longevity of these games.

Ecosystems within Blockchain Games

• Blockchain games like Axie Infinity can create ecosystems where new games are built on top of existing ones.

• Players who are invested in the ecosystem will continue to explore new games within that ecosystem.

• This creates a world-like experience similar to Marvel, where new content keeps being created.

Higher Lifetime Value (LTV) in Crypto Games

• LTV in crypto games is expected to be higher than in traditional free-to-play games.

• Previously, spending money on games was seen as an expense, but with blockchain technology, it can be seen as an investment.

• Owning valuable in-game assets that can potentially be sold for profit increases players' willingness to spend money on these games.

Player Retention and NFT Design

In this section, the speaker discusses how player retention may be affected by NFT design and interoperability between blockchain games.

Holding Players in Current Game

• In traditional free-to-play models, players may switch between games easily.

• However, in more demanding games, players invest significant time and money, making it harder to justify switching to a new game.

• The ability to sell the value and progress they have achieved in their current game could incentivize players to switch.

Interoperability and Game Economy

• Interoperability between blockchain games allows players to transfer their progress and assets from one game to another.

• This could potentially impact the economy of previous games if many players decide to switch.

• Fun and engaging gameplay will always be crucial for the success of any game, regardless of its design or interoperability.

The Concept of "Fun-tier"

In this section, the speaker introduces the concept of "fun-tier" coined by Packy McCormick, which combines fun and frontier in the context of blockchain games.

Fun-tier Games

• Fun-tier games refer to games that are both fun and innovative.

• These types of games are expected to perform well within the web 3.0 ecosystem.

• The combination of enjoyable gameplay and cutting-edge technology will attract players.

The transcript provided does not contain enough content for additional sections.

The Evolution of Sustainable Games

In this section, the speaker discusses how sustainable games evolve through asymmetric gameplay and the potential for higher earning potential in less fun activities.

Asymmetric Gameplay and Earning Potential

• Sustainable games often have asymmetric gameplay, where different players have different responsibilities.

• Less fun activities within the game can have higher earning potential because fewer people want to do them.

• Balancing the earning potential between fun and less fun activities is crucial.

• Individual players make decisions based on their skills, preferences, and desired earnings.

Impact of New Games on the Frontier

This section explores how new games can impact the gaming frontier by offering more fun for the same earning power.

New Games Driving Frontier Upwards

• New games with more enjoyable experiences for similar earning potential will attract players.

• Players may switch between games based on their preferences and desired earnings.

• The introduction of new games raises the frontier by providing better experiences for players.

Player Exodus and Game Impact

This section discusses the potential impact of a player exodus on a game's economy and overall experience.

Player Exodus Effects

• If a significant number of players cash out and leave a game, it can disrupt transaction volume and decrease player count.

• The impact depends on whether there is a steady influx of new players to compensate for those leaving.

• If demand remains constant while supply decreases (e.g., breeding materials), prices may increase, affecting earning potential positively.

Balancing Fun and Economy Crash

This section explores how maintaining a balance between fun gameplay and economic stability is essential to prevent an economy crash.

Fun Gameplay and Economy Stability

• A game can still be enjoyable even if players leave or the economy crashes.

• Designing a game to ensure the fun part doesn't die is crucial for maintaining player engagement.

• The example of Diablo's auction house highlights the negative impact of prioritizing trading over gameplay.

• Path of Exile's economy serves as a great example of balancing mechanics, temporary leagues, and avoiding an auction house.

NFTs in Gaming

This section focuses on the speaker's interest in NFTs (Non-Fungible Tokens) and their potential role in gaming economies.

Interest in NFTs

• The speaker finds NFTs fascinating but currently does not own any.

• Preserving long-term value in a game economy is uncommon due to inflationary mechanics used to introduce new content.

• World of Warcraft expansions and their impact on gear progression serve as an example of sacrificing old content for new additions.

Game Economy and Inflation

This section delves into the relationship between game economies, inflation, and preserving value through NFTs.

Game Economy and Inflation

• Inflation can be a useful tool for introducing new content in games by sacrificing older items or gear progression.

• The speaker mentions how World of Warcraft's Burning Crusade expansion affected gear progression for lower-level players.

• Path of Exile's temporary leagues rely on player spikes during each league cycle, with players switching between standard leagues and temporary leagues.

• Trading within games can be challenging but is intentionally not facilitated to avoid potential problems similar to Diablo's auction house.

The Concept of Destroyable NFTs and NFDS

In this section, the speaker discusses the concept of destroyable NFTs (Non-Fungible Tokens) and NFDS (Non-Fungible Digital Assets) as a gameplay mechanic in crypto games. They explore how these temporary assets can bring value to players and contribute to the overall gaming experience.

Destroyable NFTs and NFDS

• Destroyable NFTs and NFDS are gameplay mechanics used in crypto games.

• These assets are not permanent and can be destroyed or consumed during gameplay.

• The current implementation of destroyable NFTs was observed in Crypto Riders.

• In Tetanarena, heroes have internal energy that adds an interesting dynamic to the game.

• The speaker sees this concept as a normal progression in play-to-own games where temporary assets hold value through engagement and fun.

• Players can trade energy within the game and receive cryptocurrency in return.

• This model also encourages speculation as players buy new heroes, farm cryptocurrency, and sell them when they reach a desirable energy level.

Speculation in Crypto Games

In this section, the discussion revolves around speculation within crypto games. The speaker acknowledges that speculation is prevalent in the industry but believes it is not necessarily a bad thing. They highlight its impact on adoption rates while acknowledging its negative perception among traditional gamers.

Speculation as a Game Element

• Speculation is still a significant aspect of crypto games.

• Some individuals deny its influence, but most people recognize that speculative behavior exists within the industry.

• Traditional gamers and game developers often criticize crypto games due to excessive speculation, scams, and misleading promotions by certain individuals ("crypto bros").

Negative Perception vs Adoption Rates

• Excessive speculation gives rise to negative perceptions about crypto games among traditional gamers and game developers.

• The speaker believes that while speculation is not helpful for adoption, it is not the biggest threat to widespread adoption of crypto games.

• They consider regulation as a potential hindrance to mass adoption, rather than speculation itself.

• The speaker cites Axie Infinity as an example where speculation actually accelerated adoption.

Threats to Crypto Game Adoption

In this section, the speaker discusses the potential threats to widespread adoption of crypto games. They emphasize that massive crypto adoption is inevitable but identify regulation as a significant factor that could delay its progress.

Regulation as a Potential Threat

• The speaker believes that regulation poses a significant threat to the mass adoption of crypto games.

• While speculation exists within the industry, they do not consider it the biggest threat.

• The internet was once considered the "Wild West," and blockchain technology adds another layer of value exchange, leading to scams and speculative behavior.

Expectation for Future Value

• The speaker expects that more than 99% of current NFTs will decrease in value over time, similar to traditional games.

• Excessive speculation creates a negative perception but does not deter them from believing in inevitable mass adoption.

Conclusion and Farewell

In this final section, the speaker concludes the discussion by expressing gratitude for the informative session on crypto knowledge. They thank both participants and listeners before signing off.

Gratitude and Farewell

• The speaker expresses their appreciation for everyone's participation in this session filled with crypto knowledge.

• They extend thanks to both participants and listeners.

• A reminder is given to subscribe to their YouTube channel for future content.

Timestamps are provided at relevant points throughout the transcript.