Justin Kan: Web3 games don’t need to lure players with profit
techcrunch.com
techcrunch.com
Imagine this, there's a neat little space pirates game. You buy an NFT ship, you buy some space missles, some fuel, contract a crew, and you go out. Maybe the dollar cost of all this was $60. Cool. You go out, you blow up the first ship you found. You spent 3 missles at a cost of $10 each, but you got a whole ships worth of minerals worth $60, and some more missles. There's some capital gains! Now you keep going, and you blow up another ship (hey doing good buddy!) how do you calculate the cost basis for the missles you used? Your looted missles are mixed in with your purchased missles. You keep going, your ship is blown up, and now you need to write it off, fortunately you were able to recover some of your stuff because after your last battle you put some in storage.
You had a great time, but now it's January and you have literally all the same tax problems as a legimite space pirate business.
1 - https://fortune.com/2022/05/04/axie-infinity-sky-mavis-vietn...
Your only hope in this situation is some tax software add on for the game. I’ve used current crypto tax software, and it’s a complete joke. You might as well just assume you’re going to be audited if you do anything with crypto.
If you're building a web3 game, and you don't offer a tool to export your in-game transactions to an easily importable turbotax format. US players can't play it.
But the problem is more complicated, everything in crypto is composable. So I could build a business off in-game assets, and the tool creator might have no clue that exists. So for example, in my space game example.... I might be able to use my minerals as collateral for a loan to buy another space ship. That loan might exist on a platform not developed by the game developers, and if it was the game devs that built the tax tool you're using... it might not properly capture that event. Maybe another platform offers insurance on that ship, and I need to pay a premium. The tool might not caputre THAT. The posssibilities for building a really cool space game are infinite, but these in-game events have real-world tax implications.
And much like with Axie infinity, it's a job that can only keep paying as long as there is either VC capital to burn or an influx of new people willing to pay your salary.
It's why I think every p2e game idea I've ever seen get proposed has had completely asinine sounding game play but plenty of opportunities to (in theory) make money off of taking advantage of lower sophistication players. The game play itself is secondary. What no one seems to recognize is that if the game itself isn't fun, there won't be any "normal" players around for them to fleece.
Every time a company comes around mentioning buying NFT's in games it sounds more dystopic than innovative, and games in general which require you to spend actual money on every little thing in game.
But here's the catch: it doesn't stop there. Any of these games where progression is only gated by in-game money and player trading is enabled, will eventually grow an underground market of RMT (real-money trading). The second you're aware of this, it becomes impossible to think of the in-game money in a vacuum. Suddenly you go from playing for 8 hours to make 10 Million Mesos / Zenny / Alz / Whatever to working for 8 hours to make less than half you would working at McDonalds and trading that money for in-game money. This absolutely destroys any enjoyment you could possibly get out of the game, as it is no longer a game.
This isn't even to mention the people who literally automate the game to play itself to make passive income through hacks / bots, though admittedly that can be fun if you're the type of person who's drawn to breaking computers.
Tangent: my latest discovery solves this by just completely axing trading between players. You can collaborate in bosses for loot that gets split between everyone, but you can't just give anyone money directly. It's great!
But why do you ask? Did it go this route too? With Amazon money behind it I figured they'd be ruthless in stopping RMT.
By your logic nobody should go on a vacation because the ROI is negative.
The ROI for a vacation isn't negative, because you're usually paid during those. In the situation that you're not, it just strengthens the point I'm trying to make. I personally took a 1 month sabbatical between jobs and it was one of the hardest decisions I've had to make. I knew I needed a vacation, but the thought of skipping an entire month's paycheck for that ate me up inside for the first week or so. And from what I've gathered, including talking about it on therapy, it's a common sentiment.
The point being that once money gets involved in a hobby activity, it infects every other aspect. It's no longer about having fun, it's about maximizing what you get out of it.
Note that I'm not saying this is a universal experience, but I've observed it in the situations I described in my original comment.
> Imagine this, there's a neat little space pirates game. You buy an NFT ship, you buy some space missles, some fuel, contract a crew, and you go out. Maybe the dollar cost of all this was $60. Cool.
More likely is you go out and encounter someone with a $600 ship and you lose $60. This is so much more insidious than pay to win games. This is paying to steal other people's money, and is going to be quickly optimized by anyone if there's actual profit volume to be captured.
What's actually happening is ecosystems with minor trades, not really any stealing, and everyone just banking on the pyramid growing larger with new base layers at the bottom so the older players earn more
EVE Online already sort of worked like this a decade ago. It wasn't blockchain, but in-game currency was heavily laundered for RMT (real-money trading) purposes, and eventually became real money—largely via way of sales to casual players looking for a leg up.
What you'd end up with is these elaborate power structures, with elite players at the top who would fly ships worth thousands each (supercapitals). These ships would typically comprise their own fleet elements, with separate comms, intel and command structure. A single Titan used to be worth about $10,000 USD, but by the time B-R5RB happened, that was no longer the case.
"Total forces involved 7,548 participants. Damages amounted to an approximate real-currency value of $300,000-330,000 USD." [0]
All of this was for control of territory called soverign nullsec space or 0.0, which would reap massive amounts of profit for whoever controlled it. These profits owed to the mining of rare elements on planetary moons that were later sold, which in turn drove a large portion of the game's economy.
Leaders of these power blocs had crazy opportunities laid before them to turn their in-game wealth into real wealth. External gambling sites using in-game currency were huge for a while, and were probably central to some laundering operations.
The dollar to ISK conversion comes from the sale of PLEX (https://secure.eveonline.com/plex) which was initially just a way to let people buy ISK by selling game time vouchers to in-game wealthy people. Essentially people were buying money from time rich players who then didn't have to pay to play the game. Now it's a bit more complex and MTX based as CCP have tried a few things to reinvigorate the player base.
But the key difference is that you can put real money in and get ISK but there is no legitimate way to take it back out again. So there is no capital gain and so on and the money you "lose" was already intentionally spent in that knowledge rather than being an investment it would be possible to recoup on and taking part in that eco-system is voluntary rather than mandatory.
(Disclaimer: I worked on EVE for four years quite a while ago.)
Okay, but where does this money come from? Obviously, the $60 ultimately comes from your bank account, but how does the game stay in business if you can spend $30 (you said only three missiles were fired) and get $60 worth of in-game resources, which you can then sell and convert back into real currency?
If the answer is "other players", then what happens when the player base stops growing, or begins to shrink?
None of this stuff works without a continuous stream of new marks^H^H^H^Husers.
Some people don’t mind spending $2000 to build an endgame character that’s only worth $1000 by the time they’re done with it.
We don’t call automotive hobbyists “marks” if they pay a mechanic to tune their car and devalue its resale price. Professionals/careerists exist in every hobby industry.
Same for arena titles.
It also funded the guilds raiding expenses and external costs.
I feel like a lot of people that have opinions about blockchain and gaming, just weren't exposed or never got involved in these underground economies.
Are you really certain of this? Grinding and acquiring valuable inventory in a game is not necessarily the same kind of taxable event as buying/selling/trading.
If so, why would this not be equally true for any digital game (see: any currently active MMO) with currency or items which can be sold between players in the exact same way? See Kaze404's sibling comment.
I'm skeptic that it having blockchain/NFT components really changes anything at all wrt the legal tax situation.
I'd think that in most jurisdictions you could technically incur capital gains through any kind of online game with a secondary market for in-game items but also have minimum thresholds under which reporting is not required ($60 in a year would generally fall under such limits).
Far from it, actually.
> the IRS will know your address
How easy it is to get caught if you neglect it is orthogonal to if it's required or not.
It is already kind of true in non-blockchain games, but most of the accounting complexity is on the game company's end. This is described quite entertainingly in "Accounting for SaaS and swords" https://bam.kalzumeus.com/archive/accounting-for-saas-and-sw...
But it probably helps if trading in-game items for real money is not an officialy supported feature of the game, so only items you actually bought come with an extra service contract attached that the company needs to honor.
It's like a normal space game, but now you have to pay 10 dollar to shoot a missile. Doesn't seem very cool
Each modern military war is also an economic war between the belligerents economies to sustain the fighting.
So in a way spending 10$ to shoot a missile and going on "war economy" (aka reducing other activities in your life to fund the game) to keep the war going is quite realistic.
Also that some of your opponents will simply outspend you without breaking a sweat is accurate (see the US support of Ukraine as an example)
Minting fees for NFTs range from $70 to $300. I'd expect to pay $1000 minimum for a ship that's actually good.
I don't think he has the slightest idea what players want, because this isn't it. This is exactly what players are raging against: games optimized for the creators' greed, not for the players' enjoyment.
It doesn't sound like more fun than an existing game by that description, and we know from Axie's collapse that no one plays these games for fun.
Once gamers see how much they've dumped into things that will never produce anything of value, they're a bit ticked. Gamers who know other gamers who have done it I suspect are also ticked if they don't feel the short term peer pressure.
At some point the distribution will lean, but I think we're a ways away from that.
I question how desirable that even is. So like some rich kid buys a golden suit and can wear it in a bunch of games...I mean, sure, ok? Not really groundbreaking stuff. Would you buy a game because it lets you do that? Assuming the total cost is the same, I'd just as soon buy different skins in each of my games...assuming I care about skins at all.
And that's setting aside the really significant implementation challenges.
As a player I think I would find it less than desirable to be playing Darkest Dungeon and view Halo content next to cartoon Fallguys. The NFT owner probably wants more than their NFT transformed into bytes and used as a random seed to determine the grain on their wooden shield. They almost certainly want a direct map to their resource.
The developer still needs to implement how this skin or texture is applied in their specific game, so there's still net additional work per skin or texture. You don't just get it for free as soon as someone else implements it in one game.
I'd be curious if even that would be so simple. There could be competing blockchains or types of NFTs. You might also get into the situation where instead of every company building the software to verify ownership they just pay specialized companies.In that situation Web3 technology isn't really all that different than a company building a virtual shop API. A company like Valve could probably do this better than Opensea could and without all the extra Web3 technology.
I am with you, but I am a bit more cynical after watching my 6-10 year old nephews get into gaming. All they care about are the skins, it's insane to me but they really like it. Knowing that makes me dislike this angle more because I feel like their entire market vertical will be 6-10 years olds with their parents money. Not to mention the whole, creating addicts out of kids in the name of digital consumerism.
I agree, and would go even further - is this even desirable to the creators of the game? Sounds a lot like shooting themselves into the foot. They profit off having closed ecosystems and kids having to buy skins instead of already owning them from somewhere else
Nevermind the technical and practical concerns. What does it even mean to apply a Fortnite skin to a battleship or a racecar?
(This is of course assuming some theoretical process where the NFT has a bunch of data attached that makes it Just Work, instead of it requiring Capcom to sink a bunch of development time into making assets for characters that can only be unlocked by having paid money to another company entirely.)
There's this idea of the "metaverse" which I think is informed entirely from fiction and hype. It's very detached from the actual incentives at play.
Is this even viable? Can a skin from say an Unreal engine game be copied over to and used in a Unity engine game?
The technical problem is probably the smaller issue. The larger issue is that the publishers of the respective games have to allow this type of cross-usage, and they do not have an incentive to make their games interoperable with other games.
Even in business software, where there are practical incentives to interop, compatibility at the level of asset sharing remains very rare.
With difficulty, yes. If you have the asset in the creator tools, rather than just inside the game as a game user, it's straightforward. There's some standardization in this area, and it's getting better. There are now open formats. Look up "GLTF" and "USD" formats. Until about two years ago, most content was interchanged in proprietary formats, but we're now past that. The Khronos Group, which standardized Vulkan, is behind this standardization effort.
Currently, you can usually move rigid objects from one platform to another, but articulated skeletons and scripted objects need manual rework to port.
"Ripping" models from games is a thing. There are tools.
NFTs do not enable asset portability. They are part of a DRM system. The goal of the DRM is to prevent more asset portability than someone wants. This only works if the receiving system pays attention to the DRM. There's no technical obstacle right now to finding the JPEG for a Bored Ape Yacht Club and printing it as a poster for your wall. But you won't be able to mint it as a new NFT and sell it on OpenSea, because OpenSea checks.
We had fbx for decades, only difference is that it wasn't open source. Even better USD is an art format, nearly every concept it supports is for art direction, comparison of various designs, hiding of details that may get in the way of some modellers work. It isn't dynamic, it doesn't even have the concept of level of detail, so it will render a 10 million poly model even if all you see is a three pixel wide spot on the screen.
Items are inherently centralized and cannot be decentralized because games can choose to stop supporting them.
What's the difference? I'm not asking about the technology, I'm asking about the user experience.
that’s exactly the point. this adds nothing new or interesting for any party involved (except the scammer and their marketing people)
Yes. So what? That's already possible without crypto. The game developer decides which player owns what items, and they can charge for item transfers if they want to.
> Players happily pay the price.
This has nothing to do with what I said, and I didn't dispute it. Digital assets are valuable (and have been for decades), and players certainly are happy to pay for them.
> It's the perfect counterexample to your claim that players rage against taxing digital assets on each transaction.
Counterexample != data. Most players don't want crypto in their games. A few players who tolerate it don't mean anything.
But really, I've conflated two points I was making, which is my bad.
Point 1: Crypto adds nothing to digital assets in gaming. They are inherently centralized and can't be decentralized.
Point 2: Games like Axie Infinity, where the gameplay is terrible and serves only as a thin veneer over a speculative market, are not something gamers want. They only serve the creators.
> When you can't see something so blatantly obvious
If it's obvious, why can't you make an argument beyond, "People buy digital assets"?
What value does crypto add?
What are some games that people would not play if they weren't crypto-enabled?
As a player, what benefit does crypto provide me? How does it make the game better or more fun?
Sure, but web3 gives you access to a giant ecosystem that you can just plug right in to. You can safely create trades including items from multiple games. To say that this ecosystem adds 0 value to me is a stretch.
It seems like I would focus on creating items myself and selling them to players, since I can't profit from them otherwise.
Unless there is an after sales market I (and anybody else) am incentiviced to reduce the inflow of external NFTs as much as possible.
If I'm developing a game that has value by itself (aka is fun) it's very unlikely that players would put enough pressure on me to care (they could do that now without crypto but so far it didn't happen. Would be much easier and cheaper to implement).
If players are in it for the financial gain, I'm not really developing a game after all.
I never suggested you had to. Other websites could upstart support handling items from different games so you can focus your development resources on building the game and not on building a trading ecosystem.
>It seems like I would focus on creating items myself and selling them to players
You would be the only one able to mint new items. You can sell new items to players.
>If players are in it for the financial gain, I'm not really developing a game after all.
Wanting to have something that emulates physical ownership closer is not really being in it for financial gain. It's much better for players if they can sell all of their skins to some other player when they are done with the game instead of having a ton of expensive items locked up into their account.
And the idea that they'd buy into a cross-game shared-asset economy is just ludicrous and is a fundamental misunderstanding of P&L at a studio level. There is absolutely zero chance of, say, EA and Activision collaborating on a spec to share assets across brands. Zero, no matter how much you could spin it to executives. "So a BF player could use COD skins?" would get you laughed out of your pitch.
We're seeing the startup mentality being applied to generate these new markets within gaming and people just aren't buying it. It's such an intellectually dishonest argument to make that players want to be able to share assets across games as you point out, yet we're seeing these highly-respected tech leaders try to convince us that such a brain-dead idea is visionary. Why? Because they stand to make another fortune on it and they have absolutely no problem lying to our faces about it.
Call of Duty should implement all the various potions from World of Warcraft? What does a Mario Kart powerup do in your Halo game?
"You could have artificial scarcity of Rivers of Blood*! Imagine that only 1000 people could own it, and could auction it off, and you'd make a percentage of every single transaction! You'd have a brand new monetary stream in-game!"
Alright. Now try to wrap your head around a scenario in which, for a primarily single-player game, people wouldn't completely excoriate Fromsoftware for doing that. It breaks the story. It breaks the sense of achievement in-game. It breaks even the loose sense of community that the game has. It breaks the fundamental nature of the game itself, which is "you have the freedom to build your character how you want as long as you git gud**".
I just don't see the value added at all. There's zero point to it. There used to be games that allowed you to import your characters from older games in the series, for example Ultima. That was interesting for a minute as a bit of a novelty, but that quickly died off because it turns out that people really just want to start out at zero and work their way up. The idea of paying for it is just wildly crazy.
* note to reader: massively overpowered weapon that you get later in the game which takes your character to a completely other level.
** learn the game mechanics, enemies, strengths/weaknesses of weapons, armor, etc. An artificially scarce weapon would never get used.
I like these game based experiments of adding real economic elements into a game and seeing exactly where and why it is going wrong because games haven't been politicized to death with partisan interest groups defending their ideology. No, most developers are focused on providing good entertainment and a lot of real world business practices are openly hostile to enjoying yourself which is exactly how many feel about the real world economy but any discussion about improving it will then be thrown into one of the left right baskets, people are more concerned whether something could be called communism or socialism or not than if it is an effective policy that helps both the country and the people.
Oh, it's possible, with significant limitations. It would just be such a huge pain in the ass that no one is going to do it, except for cryptobros trying to con people into playing their own awful games.
Why would I accept a car bought in some other game as a developer trying to make money?
How would that even work? Need for speed and Forza for example have dramatically different driving models. Does sharing stats between those even make sense?
What about licensing deals? Money exchanges hands when real life brands are used in games. Not sure they'd be thrilled about some random other game using it all of a sudden.
Because in the game it's for it actually does something.
>How would that even work?
They would need to come up with some kind of standard.
>Need for speed and Forza for example have dramatically different driving models.
You would want to standardize on one to try and keep things consistent.
>Does sharing stats between those even make sense?
Having the car you paid for be separate from the simulator you use to drive it makes sense.
>What about licensing deals?
Whoever is selling you the car NFT would license it instead of the game.
Technically, no, but in reality, it's never going to happen.
You have a fundamental misunderstanding of what motivates game studios.
Again - you have a fundamental misunderstanding of what drives game development. It is neither useful nor desirable for a studio to immediately have to work through balance issues in a game before they have even written one line of code. Think about this for half a second. You don't get to wave your arms and just magically get a functioning, workable in-game economy. There is a huge amount of real world capital and human overhead to make sure this magical spec of yours doesn't completely wreck people's enjoyment of playing, which is, you know, the entire point of a game.
The moment that people recognize "oh, I can get a +1% health bump by going into game X and doing some mundane task, then go into game Y where a 1% health bump is the difference between winning and losing a PVP battle" guess what's going to happen over and over and over and over again. You are talking about a fractal amount of complexity for a game designer, developer, product manager, design team, the list just goes on and on. Nobody who wanted their game to be successful would ever latch onto this.
Later in the chain I explained how it would be possible for their to be items which could be shared between many games and the appeal for doing so.
>make sure this magical spec of yours doesn't completely wreck people's enjoyment of playing
In an open more simulator single player game there wouldn't be that much of an issue. If someone has a car that goes 1000 mph then that's what they get. As a game designer your physics system way not be able to handle that or for multiplayer the balance wouldn't work. This can be solved by putting limits on the stats.
They are clearly wrong, but I think much of the time they aren't lying so much as ignorant.
They aren't gamers, and the logic makes sense to them but they are missing the details that actual gamers care about.
You should've listened then:
The whole thing is ridiculous. The cynical view would be that this is trying to quickly get retail gamers/"investors" to subsidize VC returns, before the crypto market fully tanks.
Otherwise yeah, it'd be an absolute nightmare, like you said.
And the unfortunate thing (for them that is), is that they haven't even figured out how do to that yet. Nobody buys web3 games, and it's been ~2 years. Until they figure out the MVP of it enhancing digital consumerism, all other promises are just a marketing spin.
Which makes it the quintessential example of the modern AAA skinnerbox game. Polished gameplay, a good initial hook, and an addictive gameplay loop.
Which is what Justin Kan and Co. are trying to create, but have been largely unsuccessful in doing so.
Something more realistic is can a player trade BF skins for COD skins. There doesn't need to be compatibility built into the game. Just having them as NFTs on the same chain unlocks new possibilities. For example instead of trading a BF player could lock up an expensive skin and borrow some cheaper COD skins to use for a weekend to show off at an esports tournament. After the weekend is over he returns the COD skins and gets his BF skin back.
The usual problem type I seem to see is something along the lines of: "to make this work, you need to introduce some trusted party, and then if you're going to trust them anyway you might as well have just had them run a database." For games the more salient point is that to have your "cross-game transferable items" system work, you need buy-in from the developers, who generally all already have jealously-guarded disconnected microtransaction systems that they're making enormous profits off of and they're not really incentivized at all to let other people play in their sandbox. Let's ignore for the time being the mechanics of actually making cross-game, cross-engine, cross-genre items work at all in the first place.
The hope for proponents would seem to be to jump-start the ecosystem in games they create and create a groundswell of gamers who demand that big titles work with the blockchain system, but that just doesn't seem realistic for a variety of reasons. Even within the hypothetical universe of NFT-ized games, the same kinds of incentives (and technical issues) are likely to throw up similar barriers to interoperability between different games.
Having some elements of centralization does not negate some of the benefits of building on an open source and permissionless blockchain. I wrote a little more in a sibling comment:
The solution to it is to move away from centrally coordinated definitions. This also means central currencies built on on a decentralized computation of some kind (i.e. blockchains).
You can see why that is not compatible with the narrative coming from the sky... there'd be no safe store of value.. how to become rich with no metric?
Question is (for me at least) who is going to be the first giant to betray the current economic system as the real world collapse becomes too obvious to ignore (hint: they'll probably be actually competent).
Axie Infinity is a Ponzi scheme in the collapse stage. It has two tokens - AXS (peak around US$150, today US$18), and SLP, the one gamers earn (peak around US$0.36, today $0.0048.) Anybody plugging Axie at this late date is either clueless or in on the scam. Probably the latter.
“There’s a lot of cultural momentum around people equating blockchain with openness and trusting things that are decentralized on the blockchain.”
Now that's an insightful remark. The blockchain crowd has convinced many people that they have something decentralized when, in fact, it's usually very centralized. Try, as Moxie Marlinspike did, to do something with NFTs that OpenSea doesn't like. The people buying "virtual land" don't get anything that can't be taken from them by the system operator. It's possible to host NFT images on IPFS, which is distributed, but someone usually has to keep up the payments on the IPFS bill.
As for trust, that ship has sailed.
I'm much less against CSGO way, where it really didn't change how models looked.
Maybe if I have anything to add, it's that gamers already dislike cosmetics without any blockchain nonsense. Cosmetics hurt esports and other competitive gaming by messing with the trained instincts around color/silhouette, and thats before we talk about any actual pay to win mechanics.
* 2017 - the year of 3D TV.
* 2019 - the year of VR.
* 2021 - the year of Web3.
Let's check the meme department. Looking at Google Trends (US) for "NFT", "Web3", and "metaverse", they all peaked in late 2021 and are way down since then.
There are still people talking about Decentraland as if it were a big deal.[1] Right now, 401 connected users. Sominium Space is in single digits. Sandbox and Facebook/Meta Horizon don't give out numbers, but they're not huge and are probably shrinking.
I'm very interested in metaverse technology, but it's not coming from the "Web3" crowd. In China, virtual worlds on mobile are big, but they don't involve crypto.
AR goggles, as a phone replacement, though... Glassholes 3.0?
There was a similar debate on potential interoperability between the dominant social networks and Youtube etc, people wanted an open source, open-governance transfer standard that various networks could plug in to. They didn't want Facebook to own that standard, and now that has evolved into the ownership question of the "metaverse".
It definitely could. But as a society do we want 1 private company deciding how commerce in video games is done and governing its participants and potentially taking a cut from everyone. Web3 supporters think the platform that provides this should be decentralized and not controlled by a single entity.
That's work.
> “I think the idea of creating digital assets, and then taxing everyone for all the transactions around them is a good model,” Kan said.
No way is there a large enough work & player base that would want this.
-There's a virtual marketplace of skins/clothes that can be used from game to game motivated by a creator economy (basically NFTs)
-Game devs can make money from in-game purchases
A pro of this system would be more ownership of the IP holders, wherein they aren't getting extremely unfavorable rates like in the case of young devs for Roblox.
Living outside of the central authority of Roblox Inc would be a positive and a negative.
this whole web3/crypto craze is bizarre. just literally reinventing words for what we had since the beginning of the internet in hopes of raising funds by shoving buzzwords at VCs who are probably not going to make it by next year when interest rates shoot up
> he admitted that building this interoperable ecosystem, which he sees as the future of video games overall, doesn’t technically require blockchain technology at all.
>
> “Blockchain is just the way that it’s going to happen, I think, because there’s a lot of cultural momentum around people equating blockchain with openness and trusting things that are decentralized on the blockchain.”
(actually I think he's understating the case here, representing ownership is a real use case for blockchains)
I guess the argument boils down to "it's web3 because it has blockchain, and it has blockchain because that's a good marketing buzzword." Which, fair enough, I guess. That could be right.
Blockchain-backed or not, I think it's pretty unlikely that a bunch of competing game companies are going to come up with a system that lets you share items between games. That sounds technically and politically very hard, and for not a lot of benefit.
And even if it is, why would we need The Blockchain to solve it?
The bigger question is to whom will customers pay for a skin that works in multiple games.
If they'll pay to the first game where they bought that skin, then that's a strong incentive for most games to prevent this from working and avoid or disrupt the ecosystem, because they would rather have the player re-buy the same skin on their platform (i.e. "this thing will allow free transfer of skins from A to B" is a property that works against the proposal, not for it)
If they'll pay to every game, then the blockchain solution needs to solve that very difficult problem of revenue allocation between all the stakeholders, ensuring that every company involved feels certain that they'll be able to extract a revenue stream from the process, instead of being permissionless, full ownership of your items, etc.
Let me ask you this, if this wasn't complete farts, why would you need to call it 'web3 games'?
What do games have to do with the web, and the so called "future of the web"?
Games provide value through entertainment. They can have a line connection to other people but it's not the premise.
“I think the idea of creating digital assets, and then taxing everyone for all the transactions around them is a good model,” Kan said.
Here is the reality... Huge amount of excitement and false tales of freedom being meddled into just about anything they can, for the benefit of snake oil artists.
I think it opens a lot of doors, but gaming is definitely not a door I’m excited to open.
This might just be "old man yelling at cloud" stuff, but to me the "best time" in the internet was when people were just using it to genuinely share their weird interests, before monetization came along and ruined it.
I'd rather not have monetization ruin more stuff. Why does everything always have to be commercialized?
I don't agree. There's not one "need" for the internet. The internet, as any technology, enables use cases by being more flexible. Enabling the money feature for the internet will lead to more use cases.
> This might just be "old man yelling at cloud" stuff, but to me the "best time" in the internet was when people were just using it to genuinely share their weird interests, before monetization came along and ruined it.
Looking at how big open source is today, or content sharing (youtube, blogs, etc.), I don't think I can agree with you
There's plenty of "weird interests" on the Internet. More of it than ever. It's harder to find your specific thing... but not that hard. If the centaur furries and left-handed pickleball players can do it, so can you.
The answer?
It was full of people like Justin Kan that look into the future of gaming and had such miserable imaginations that all they could envision larger, more predatory monetization models instead of yah know... new games and new experiences.
Maybe crypto bullshit is the future of video games, but that will only be because capitalism burned out and exploited every last passionate game developer who wanted to make a good game because they love games.
There’s two areas of blockchain gaming I think are interesting to explore:
1. Decentralized games like Dark Forest that allow a game developer to set rules in smart contracts, and users to build around that game permissionlessly.[1]
2. A new model for marketplaces, particularly user generated content. This could be for a game (eg: mods), or game engine (eg: unity assets), or just an app (eg: Figma plugins). The primary benefit here is minimizing the 2-30% take-rates of current intermediaries, adding interoperability across ecosystems (such as ownership of an asset across multiple competing app stores), faster settlements, and trustless withdrawals. This is probably another couple years away from happening as it requires robust zkEVM/zkRollup tech and better privacy features, which are currently constrained by computation & regulation. I wrote about this idea here.[2]
[2] https://gist.github.com/mattdesl/ec2bf085b19407695b23cb90f6f...
Why would said intermediaries spend R&D time and money implementing a system that reduces their take rate??
> to set rules in smart contracts
Why exactly does this need to run on a generic chain like ETH with unnecessary overhead and fees, to function?
This should not run on ETH mainnet, it should run on a L2 rollup that allows transactions to be submitted with fees that are in fractions of a cent. The L2 can be built atop ETH to allow users to permissionlessly withdraw tokens to it and to inherit the security of that chain.
Why do you need a roll up? What security do you need if the L2 itself is able to manage a simple ledger…
There are also plenty of indie game developers who are happy to publish games for free, without taking profit.
> Why do you need a roll up? What security do you need if the L2 itself is able to manage a simple ledger…
The main benefit of the roll up compared to a simple ledger is that you can still use all the same blockchain features such as issuing ERC20/ERC721 assets, creating decentralized markets, escrowed auctions, and so forth. The benefit of a rollup compared to a side-chain like Polygon is that it is theoretically more secure. At no point can the rollup owner control user funds, and they also cannot block a user from withdrawing their assets from the L2 back to ETH mainnet.
The roll up part makes no sense at all, I think you’re missing my point entirely.
An "Ethereum Rollup" is just a "fast blockchain" that has very similar security guarantees as Ethereum. If you wanted to take payments, create UGC markets, and record asset ownership without a blockchain, you are back to centralized services and their constraints.
I do play and develop games and have spent $ on games, and would like more of my $ to go toward the game publisher and content creators rather than intermediaries and app stores. I also would like to own digital assets that are more composable, and not tied to a single company's servers or app stores. This is the model that Dark Forest[1] is exploring.
Owners of major franchises definitely don't want their assets to be able to be used permissionlessly, that's effectively a taboo word - they have strong interests and will (demonstrated by investments, declined deals, legal action) to ensure that they keep effective control over how their assets will be used.
It's not about technical features enabling interoperability, it's about Disney saying that they will permit Vader skins that can be transferred to game B only if it is clear that this will increase total revenue i.e. if someone pays them a significant amount of money corresponding to what users might have spent on re-buying these skins if interoperability wasn't possible (and IMHO no one in the ecosystem would be willing to pay that) and under conditions that they will be able to control further interoperability to some future game C.
Sure, if users 'actually owned' these skins, that wouldn't be an issue - so that's why content owners would never ever permit users to actually own these skins, not at any reasonable price, since that would permanently harm their long-term potential of extracting more money from that IP. Licensing their usage for everything from toys to other company advertisements is their core business, and they are very much aware of the value of control. They'll license it for a limited time for a limited use under terms that they'll control, that's it.
And for the many platforms that thrive on user-generated content, asserting at least some control over that content (again, contrary to being permissionless and interoperable) is their key value proposition; being a privileged unavoidable intermediary is their whole business model which they would harm by adopting your proposals, so they won't.
> This is unlikely to ever feature in Minecraft, but may used by experimental indie game publishers who are interested in decentralized networks.
And also:
> allowing users to create unregulated and uncontrolled crypto markets on [Minecraft] could eaisly divert funds and profits away from Microsoft and their App Store partners.
Thankfully there are many indie and experimental game developers that are not Disney and Microsoft. If you want a specific example of a game that answers “Who is this for?” look at Dark Forest developers and players, and anybody else that wants to build or play a similar game.
> And for the many platforms that thrive on user-generated content, asserting at least some control over that content .. is their key value proposition
This is not the case with LooksRare, SudoSwap and even to some extent OpenSea. The key value proposition of these platforms is a marketplace that easily allows you to sell and trade assets that the platform itself does not own the IP rights to. Similar types of businesses: Gumroad, second hand book shops, Turbosquid, art auction houses.
It’s understandable that this world seems appealing to venture capitalists and others whose lives revolve around finance. It’s completely unclear why anyone else should want it.
We should do our best not to let it come to pass.
I think he's totally right, though I don't think he does a great job of explaining why blockchain tech can be beneficial for gamers. Here's some of my quick thoughts on potential benefits:
- Credibly neutral in-game item marketplaces: I think this will take a long time to get any traction, to be honest, because while these marketplaces are super centralized around Steam (Valve) and Epic today, gamers don't currently face any major issues with those marketplaces.
I think the way this tech takes off is when more marketplaces die because EA decides to start and then kill one, and everyone loses their items they paid money for, because they don't have any sovereignty over their purchase. There is already discomfort among gamers about the current world of DRM, where a game can become unusable because the company decides to shut down a server 5-10 years later.
- Sustainable game server hosting: on that note, it's becoming less common that people are able to host their own servers for multiplayer online games. When you are able to, funding those servers has usually been either donation based, or in the modern day perhaps requiring a Patreon subscription.
Tying in the easy value-moving crypto provides, it is possible to make games that make it really easy for players to "pay" for the servers they use, and smart contracts can be used to coordinate incentivizing and compensating people/services who run servers for those games, in transparent ways and perhaps using value capture that is built into the game (ie. if you buy a hat, maybe a % automatically goes to a fund that pays out to servers you play on).
This could make it possible for game servers to essentially always exist as long as 1 player wants to play it, any time in the future. In other words, we can have the convenience of online games, but with the permanence and resilience of DOOM.
- Interoperability of digital items: when people talk about this, they usually talk about being able to use a gun from one game and bring it into another game. I think that's suuuuupeerrr far off, if a good idea ever at all.
The much more straightforward, and I think cool, idea around this is basically: if your special skins are NFTs, that makes them automatically compatible with any and all apps and protocols that support NFTs out of the box. So you can stake them in an online poker game that supports NFTs, sell them in any NFT marketplace/auction house, and sure, bring it to your metaverse house or whatever and keep it in your virtual house.
Compute-level interoperability is the most powerful aspect of crypto/blockchain, imo.
I also think Justin is wrong about not needing blockchain. I agree that in theory, some other solution could provide the right incentives and interfaces to support this ecosystem of composability and interoperability with native value transfer, but I think you'll just end up re-inventing something that looks kinda like blockchains we have today.
This has also been proven time and time again by new alternative chains that strip off the parts they find "pointless" and expensive, and end up realizing why they need it later.
Overall: Headline is correct, in my opinion, and I think a lot if not most of the web3 builder world is on the same page today. I wouldn't over-index on the other stuff he said, though.
How does blockchain help with this? The problem isn't that there isn't a record of your purchase on a ledger somewhere, the problem is that the software environment in which your purchase is meaningful is no longer running.
> Interoperability of digital items: when people talk about this, they usually talk about being able to use a gun from one game and bring it into another game. I think that's suuuuupeerrr far off, if a good idea ever at all.
Your "much more straightforward idea" can be summarized as "use them to make money".
The reason that environment no longer runs is because the company decides it's no longer profitable to run it. Blockchains build incentives to run that environment into the operation, so as long as there are users willing to pay, and the environment is efficient enough, in theory the environment should never not be running.
This gets stronger if you share that environment with multiple games.
> Your "much more straightforward idea" can be summarized as "use them to make money".
Playing poker with friends and being able to use any game's purchased assets in that game doesn't have to be about money. It certainly wouldn't be for me, cause I suck at poker.
It's that the entire game is gone and its servers are offline.
So why would that need blockchain? If this is a viable model to run the game, why wouldn't game companies have a direct 'pay us to keep up the servers online' model now?
Erm, no. It really, really doesn't. There's a mass of technical reasons that skins are not easily portable between games already, well beyond the licensing problems.
Sure, you could trade them, but actually using them is a huge technical problem. At an absolute minimum there would have to be some insane sort of asset meta-standard that allowed each game to dynamically apply a skin to diverse 3d models in very different worlds.
As for the rest, it's monetization where gamers usually don't want monetization. What you describe is generally a set of net negatives for gamers.