Gaming on the Bleeding Edge
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It was a quiet end of May in the gaming world. The web3 space started gearing up for 3XP in LA, as the conference circuit prepared to get into full gear on the West Coast. Still, there were plenty of things that happened that are worth discussing:
- EA partnered with Nike, as another big studio got enticed by the prospects of digital collectibles.
- Riot dealt with turmoil in the league, but a new brand looked to embrace web3.
- AI remained a hot topic as new tools were unveiled, but not everyone was happy.
- Meta and Apple unveiled their respective AR/VR headsets.
- Games based on Celtic and Aztec lore appeared on the horizon to diversify the gaming IP pool.
- A potential attack vector on Blur was discovered to have positive qualities.
Let’s dive in!
Gaming Companies Become Lifestyle Brands
The recent EA partnership with Nike around its .SWOOSH initiative is certainly a win for the web3 space. The western gaming audience appears to be the most skeptical when it comes to web3 and games, so getting another big name publisher on board is a big deal.
However, the excitement may be hiding a bigger story. This may be the way EA transforms its gaming experiences into gaming worlds. Gamers will be able to bring their real world fashion choices into the games they play. That is the path to a persistent digital existence.
We already know EA is aiming to develop a platform strategy, and Nike has been one of the most successful traditional brands when it comes to web3 integration. Digital fashion is a growing sector, and it could be immensely synergetic with gaming.
Gaming can also impact fashion, as the aesthetics of the virtual worlds are an important part of what captivates players’ attention. You can see how designer Charli Cohen was looking to capture that with her Diablo IV inspired collection.
Interestingly, the project will incorporate AR activations, once again strengthening the link between the physical and digital worlds. Web3 can play a big role in making digital fashion real through ownership, provenance and economic properties. Don’t sleep on it!
Esports Brands Warm up to Web3 Amidst Crisis
Esports teams have long been looking at becoming lifestyle brands as a way forward, but few have found success doing so. PR nightmares like the ones plaguing Faze Clan certainly do not help, but the industry has endured a few rough years now.
A lot of the blame may be assigned to the publishers, whose conduct has become reminiscent of the monopolists of the early 20th century. Most recently, Riot’s disregard for the League of Legends pros inspired a walkout by the player association.
Without gamers, gaming worlds would lose their purpose. Yet, publishers continue to treat players as subservient inhabitants. Gamers deserve to be citizens of the worlds they populate. This is something web3 makes possible, and something that will reshape the industry.
In the meantime, M80 announced a $3M round to help grow its esports organization. The team is openly discussing opportunities within the web3 space that include a potential formation of a DAO and digital goods.
M80’s affinity for web3 may still be a novelty for the esports space, but should not come as a shock given its roots. The founders hail from XSET, another esports brand that recently announced its signing of Brycent, a popular content creator working in the web3 space.
Esports teams are starting to see the benefits of web3 technology, and the unfair conduct of traditional gaming publishers may only accelerate adoption, as gamers understand the web3 ethos.
AI Continues to Both Captivate and Repel in Gaming
Seemingly every week, there is a new leader in the AI race, and while OpenAI and Alphabet continue to one-up each other, no one should discount NVIDIA. The chip giant has been the beneficiary of the new technological race.
The recent speech from Jensen Huang suggests that the company will look to expand its presence in the vertical, including developing its own supercomputer, Helios. Separately, the company’s researchers demonstrated Neuralangelo’s ability to transform 2D assets into 3D.
The opportunity to reduce time and cost of asset development can be extremely attractive to gaming teams, especially during challenging economic times. Now, Unity has released a beta version of its AI engine.
However, not everyone is happy with the implementation of AI in the space. Blaze Entertainment issued an apology because of an AI generated image used for a recent Duke Nukem promotion.
Also, David Gaider questioned the ability of AI to create quality narratives and content. I think the skepticism is healthy, but uncompromising opposition is ultimately shortsighted. As AI tooling and capabilities improve AI will be able to replicate and likely surpass a lot of human skills.
This does not mean that human input will not be needed. However, as AI gets closer to creative thought, it will become more than just a drafting tool. It will both help shape the worlds gamers play in and also bring to life the non-human elements within them.
Opposition is natural, and there is a lot of precedent for fear of new technology when one looks back at past industrial revolutions. However, it’s unwise to hide behind “human” skill categorizations. AI is coming, let’s just hope it doesn’t see us as a threat.
The New Quest Sets up an Epic Battle
Meta showcased its Quest 3, as the latest iteration of its AR/VR lineup. It just so happens that Assasin’s Creed should have a franchise installment that will run on Meta’s hardware by the end of the year.
However, many are more excited about Apple’s reveal of its headset. The latter is expected to be significantly more expensive ($3499 vs $499), which limits its immediate market impact.
AR/VR seems like a natural evolutionary step for the virtual world, but to this point it has had a limited effect on the gaming space. Prohibitive price, battery limitations, and somewhat clumsy hardware have relegated AR/VR to frontier technology status.
More and more games are appearing in the space, but the size of the audience makes it difficult for any studio to create a hit title focusing on AR/VR. There is hope that Apple’s reputation for consumer focus will carry to its headset, but the price will continue to be a barrier.
There have been a few attempts in web3 at making AR/VR games, however they have not received much attention. So far art and community based experiences, such as those that can be found in Somnium Space, have been more popular.
AR/VR crossover with web3 is inevitable, given its application for virtual worlds. Considering that it is still an emerging technology, AR/VR’s current users may be more open to other not widely adopted technology. So, the next truly massive AR/VR title could arrive web3 enabled.
The Gaming World Can Use New IP
If you scroll through the Steam library, you may notice how many titles look like carbon copies of each other, granted the obvious differences in quality. A lot of that has to do with the type of worlds game developers are creating.
There are hundreds of medieval environments and modern combat simulations. Those looking for inspiration in mythology appear to focus on Nordic, Roman, Greek and maybe Egyption stories.
There are obviously other themes, but the point I am trying to make is that despite the growing multitude of games, choice is limited. This is why I am so interested in the upcoming Kromlech and Ecumene Aztec titles.
The first, utilizes Celtic mythology, which I am a big fan of. In fact, at one point I purposely went looking for games exploring it, and could not find much. The second, enables gamers to play for an Aztec warrior.
While it’s too early to say much about the possible success of these games, it’s encouraging to see studios get off the beaten path. Gamers are looking for new experiences, and competing against major titles in a similar setting is a tall order.
This is especially pertinent for web3. I often hear studios say they are building a web3 version of CS:GO/LoL/Genshin Impact or some other well known title. It is a tough proposition, and it offers gamers little new in terms of a world experience.
Studios working with web3 need to be bold in order to draw gamers’ attention. So, why not explore the mythologies of other cultures, look into a book series that hasn’t been covered, throw in a little steampunk instead of cyberpunk.
That last one is more of a personal preference. Still, studios talk of creating new IP, but often end up following the footsteps of the old ones. Let’s try something different!
A Threat Becomes an Opportunity
In an attempt to realize the profits of phishing scams, malicious actors seem to have found a workaround for creating private listings on Blur. The attacker sets the royalties on a listing to 100% pointing at a smart contract that will revert if anyone but the assailant tries to buy.
The same technique can be used to implement private listings. It’s unclear if Blur’s team was aware of the approach, or if they plan to use it, but this is one time the phrase “this is a feature not a bug” makes sense.
The battle between security teams and hackers will never be over, so it is nice to see something constructive coming from it in this particular case.
This wraps it up for this entry. As always, if you are working on something exciting in the web3 gaming space, or are a traditional gaming team looking to explore the possibilities, don’t hesitate to reach out to any of us at Sanctor Capital. Have a great rest of your week!
Ilya Abugov (@AbugovIlya)
Disclaimer: This commentary is not investment advice. It does not purport to include any recommendation as to any particular investment, transaction or investment strategy, or any recommendation to buy or sell any investment. It does not reflect any attempt to effect any transactions or render any investment advice.
This post is solely for informational and entertainment purposes. It is inherently limited and does not purport to be a complete discussion of the issues presented or the risks involved. Readers should seek their own independent legal, tax, accounting, and investment advice from professional advisors. The views reflected in this commentary are subject to change at any time without notice.
