Yuga Labs vs. Bungie – finding the Web3 delta | Hacker News Reader

Yuga Labs vs. Bungie – finding the Web3 delta

credistick.com

37 pointsjreacher23 comments

> Bungie, who were acquired by Sony at a $3.6B valuation in February, seem like a reasonable comparison; not too far off Yuga’s $4B valuation from their raise in March.

This kind of thinking is a problem, especially when the basis for the article is drawing equivalence between the valuation of a longstanding games company, vs. a fly-by-night lifestyle brand that is now dipping its toes into games and movies.

Bungie's valuation is based on the intrinsic value of its assets and the potential cash flow from creating franchises from its IP which goes back 20 years and is supported by hundreds of millions of cumulative unit sales to end-users. Sony would also have done significant due diligence around their financials, skeletons in closets, and other things.

Yuga's 'valuation' is based on whatever private investors paid for a slice of its equity, hoping that they'll 10X it when the company goes public. The intrinsic value seems to come down to whether they can find a bigger fool to dump their holdings on. Remember that WeWork went from being "valued at $50bn" by insiders, to less than $10bn when they submitted their laughable S-1 for public scrutiny.

I mention WeWork because A16Z, the VC fund that led the Yuga raise, also handed WeWork charlatan Adam Neumann $70m for some blockchain project:

https://techcrunch.com/2022/05/24/flowcarbon-wework-adam-neu...

I was shocked to see that most of the “web3” “games/worlds” that are hyped and have a billion dollar valuation have a daily active user count around 1000. Completely abysmal and any sane studio would kill off such a title immediately as a complete embarrassment

I see it as accounting trickery in the Web3 space. Rather than these games having a valuation that is based on active player base, in game purchases and other "traditional" metrics, they instead value the company based on the Market Cap of the coin they own.

A game might have 100 players but it worth $10B because they have a warchest of coins that they minted.

Coin market cap is also a made up term for alt coins. They equate it to how MV of a company is share price * outstanding shares. For a coin you can mint a million coins, and sell 5 of them for 10$ (to yourself most likely), and boom crypto exchanges list it as having a 100M Mkt cap, despite liquidity being zero. If it was truly liquid market all of these are worthless.

these projects not pulling their weight from launch are able to sustain that based on the hopium of ongoing competitive edge / bigger value being delivered based on current potential. the coins are worth that much mostly based on speculation that the project will pull off bigger wins with their investment into it, even if it seems there's value (however questionable to you) coming from a few directions already for holders.

so when the bigger studios, better independent teams, and big platforms that aren't rushing to market this early, even regardless of whether or not these studios are involved in nfts, i expect coin value will drop if they become obviously behind these adjacent products/experiences

sustained shitcoins that play their cards early on delivery of half baked projects will see their hopium veil evaporate

i think some studios can pull this off though, the aaa metaverses suffer from a blandness that comes as a cost of having so many players involved in one shared world. and it's easy for a shitcoin to buy a studio

If we were on Twitter, Chris Dixon at A16Z would have popped into the comment section to remind you that akshually, play-to-earn garbage like Axie Infinity is solving poverty in the Philippines.

For what it's worth, a lot builders in the web3 space are also skeptical of Yuga Labs' valuation and strategy, including myself.

I think this is a pretty good, simple to understand argument for why a metaverse with such an "exclusive" customer set seems... off -- which is a good argument for why many "PFP" NFT projects seem like just artifacts of a crazy bull market, at the end of the day.

The problem I have with all these Web3 games is they are incredibly expensive to participate in. The core problem seem to be that they use real world crypto currency as in-game currency, which leads to in game items like plot of land, going for $300k [1].

All these games are going to run into a brick wall eventually unless they figure out their own in-game currencies that are detached from crypto. They will always retain a playerbase in some regard of folks that are willing to dump insane amounts of money into a game, but IMO any sort of scale for these games is out of the question until in game items stop costing thousands of dollars.

Last thing I will say on this is it seems that all these blockchain/crypto games are confused about what they are. Take Axie Infinity, it's a game, but it also sells itself as a way for people to make money, and also sells itself as an investment vehicle via those expensive in game items. All this sounds really great on a landing page until you start thinking about it. Is Axie trying to be a game? Are they trying to be a job? Or are they trying to be a form of investment? What I think will happen is the communities of these confused games will rot, the first group of "gamers" will swiftly exit because of the prohibitive cost, the other two groups will stay to try and make a buck but without the first group in the picture, demand for the thing they are producing, flipping, minting, etc will fall through.

[1]: https://marketplace.axieinfinity.com/land/-78/17/

> The problem I have with all these Web3 games is they are incredibly expensive to participate in.

That's certainly one problem. I think a bigger one, if the price ever becomes a non issue, is that the games just kind of suck.

Exactly. They totally suck, and the tokens don't add value. The "metaverse" in the context of crypto is bullshit and I believe it will ultimately be a market fail. Those promoting this crap are only interested in selling the tokens, they don't care about building the world.

I like cryptocurrency. An NFT can be a nice way to hold a position in a liquidity pool or some type of debt.

A game designed for entertainment purposes is different. If you're making a game, and you want to sell items, just sell them for dollars, cryptocurrency, gold coins or whatever money you want to accept. The value is in the game engine and running the server hosting the world, not in some tokens. The tokens mean nothing outside of the game engine, so why bother.

It is very similar to how most MLM products are of really awful quality.

The "product" is actually the investors themselves. That is how the people at the top of the pyramid make money

At the risk of being downvoted, I think it's important to mention this wherever Yuga is being brought up: www.gordangoner.com

I think you mean https://gordongoner.com

Very interesting.

I know "emperor tomato ketchup" irl and I'm 100% confident he is named after the stereolab album, not the experimental 1971 japanese film. Not even mentioning the more likely source of the name makes me pretty suspicious of this whole endeavor.

Yuga labs came up with several NFT projects that were well received and they have brand recognition all over the world, and these folks managed to create an exclusive club a lot of people want to be part of.

There's many people including celebrities who are willing to pay huge sums of money to be part of that exclusive club. So the value of yuga lab's is not only in them coming up with some web3 game, it definitely isn't going to be their "endgame" as the author claims. Their brand they have so much more opportunities to add value to their eco-system.

[edit] To the ones who are down-voting this post, maybe explain why you are down-voting this, so I can understand what exactly I said that's wrong here.

Is there any sense about which celebrities are actually buying NFTs? For example, I know Seth Green is big into NFTs, but a lot of the others (Gwyneth Paltrow, Jimmy Fallon, etc.) are likely to have gotten NFTs for free as part of a promotional campaign for Moonpay and BAYC[1].

[1] https://www.youtube.com/watch?v=luAXOfcg-dY

I'm actually surprised people still look at celebrities as some type of moral authority.

For example, I like Adam Sandler, if Adam Sandler started selling his own Adam Sandler coin, I still wouldn't buy it.

>> I'm actually surprised people still look at celebrities as some type of moral authority.

Agreed. But in the context of a brand-name I guess celebrity endorsements helps increase the number of people who know about your project.

As for the Adam Sandler coin HA!, but I bet there will be many who will buy this on the promise of getting rich quick by loading off on the greater fool sort of way.

Ironic then that Reese Witherspoon and other celebs who were pumping NFTs hard on Twitter, quietly change their profile pics when the NFT market collapsed.

Right, that's really logical with something like Vitamin Water.

At worst your out 3$.

I don't get an actor convincing a rational person to blow 3k on a fictional abstraction.

> There's many people including celebrities who are willing to pay huge sums of money to be part of that exclusive club.

Fatal error.

Celebrities don't purchase this "exclusivity" garbage. Why would they need that when they're already famous? If anything, they will get it for free and get paid to promote it, by the people that actually make it.

The kind of exclusive club you're envisioning is closer to Fyre Fest than the Viper Room, or some other exclusive celebrity owned club/restaurant.

All this is well and good for short term pump and dumps. But it is not going to work as a sustainable business.

What are you going to do, mint an endless supply of "exclusive" NFTs every month? The problem is fundamental, you will run out of greater fools one day.

It is better that you start your own BAYC clone. You'd be at the top of the pyramid and it barely costs anything

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