Keep Your Guard Up
The authors or their affiliates have ownership or other economic interests or intend to have interests in BTC, ETH, SOL, Sec3, Mighty Action Heroes NFTs and tokens, Raini and associated tokens, MetalCore and associated tokens and NFTs, and may have ownership or other economic interests or intend to have interests in other organizations and/or crypto assets discussed as well as other crypto assets not referenced.
Last week brought a mixed bag of news. We entered Q4, which is expected to be launch heavy in the web3 gaming space. Many teams are wrapping up their playtests and gearing up to show off what they’ve been building. However, these are still turbulent times:
- Portfolio games are ready to shine: MetalCore, The Lords of Light, Mighty Action Heroes
- Creator League is banking on fan engagement for esports
- Niantic caught in AI controversy with Pokemon Go
- Legendary studios forced to shut down
- SEC went after NFTs
- Games serve as inspiration for music
Let’s dive in!
Tooting Our Own Horn
It takes hard work and care to build a good game, and we thank those who took part in the playtest, but now it’s time for some real fun. For those enjoying the new Armored Core VI, check out MetalCore. Pre-registration for GAM3 Awards Best Shooter is now open.
If card games are more to your liking give The Lords of Light a try. The game brings alive crypto lore with clean Hearthstone-like mechanics and beautiful animations. Rainiverse World Championships will be hosted throughout September. The game is available on Epic Games.
For those looking for some battle royale action with some old school flavor, there is Mighty Action Heroes. The game that lets you feel like a ’90s action hero is hosting the Mighty Cup as part of its open beta. You can play on browser or mobile.
Creators Are Looking to Revamp Esports
The Creator League was announced last week as a way to breathe life into the troubled esports sector. The endeavor aims to engage creators’ audiences by giving them a say in what happens in the league.
The move is in line with the growing trend of creators starting to wrestle with publishers for the control of the gamers’ attention and revenue. With direct to consumer distribution becoming more prevalent creators are wading into territories typically dominated by big industry players.
However, the initiative is already surrounded by controversy. The community passes sold to fanbases are NFTs, and it turns out not all of the marquee creators were aware of it. It turns out you can fumble your marketing campaign by not mentioning NFTs.
Niantic May Have Been Caught Using AI
AI is facing some similar adoption challenges to the NFTs. Fans are on the lookout for any potential signs of AI usage, and they aren’t exactly thrilled when they find them. Niantic is the latest to fall under suspicion with Pokemon Go, and its response did little to assuage concerns.
AI continues to offer great optimization and creativity potential to gaming. For instance, Ready Player Me unveiled Copilot to help with platform integrations. However, there is also a lack of guidelines, understanding and clarity which leads to fear.
SAG-AFTRA is looking to organize a strike against video game companies, with AI appearing as one of the biggest concerns. Interestingly, a US federal court sided with the USCO in denying AI generated pieces copyright protections. This may give gaming studios pause.
Legendary Gaming Studios Are Shutting Down
You may have noticed over the past few months the enormous wave of layoffs that has hit the gaming industry. The storm isn’t letting up just yet, and this time it has claimed Volition and Mimimi Games as its victims.
Economic conditions are tough and costs, especially for US studios, may actually go up, given the strikes and unionization talks. This is why it is incredibly important that the gaming space finds an adequate approach to AI, one that protects creatives, but also helps studios.
This is also a warning sign to gaming studios working in web3. Even companies who have had sizable funding rounds need to be careful. However, the silver lining here is that there may be a lot more available talent at the moment, which could help bolster teams.
The SEC Makes a Move Against NFTs
The SEC has met significant pushback with regards to its regulation by enforcement action. The latest example is Grayscale’s legal victory with respect to the denial for a Bitcoin ETF. Still, the SEC isn’t rushing to change its approach.
Impact Theory was fined approximately $6.1M as it settled the enforcement action from the SEC. Companies working with NFT technologies have, for some time now, been worried about the regulator turning its gaze on the gaming and collectibles sector.
Gaming companies, in particular, have been working on safeguarding their launches, but worries remain. PFP communities could face the greatest danger, as it is unclear how their initial sales will be looked upon and how far back the SEC may want to look.
Games Expand Musical Footprint
Growing up, a significant part of my playlist was filled with songs I heard in the games I was playing. In fact, I think music and sound in general are highly underrated by studios working with web3, and I think that’s a shame.
In traditional gaming, there are powerful examples of utilizing music for greater cultural appeal and also immersive effects. The most recent example is the Imagine Dragons’ song for Starfield. Jonah Blake also recently gave a shout out to Riot Games for their musical efforts.
A good amount of early NFT excitement formed around the creator economy. It would be interesting if games are able to incorporate music and visuals while maintaining attribution. It would give games additional content and provide creators with a great distribution channel.
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.
