Lessons Learned
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It feels like gaming in web3 is back, complete with token talk, ranking lists and irritating terms like gamefi. Euphoria levels are rising quickly, and it’s as if we didn’t just go through two years of pain, full of ugly playtests and studio shutdowns. So, did we learn anything?
- Ubisoft partnerships are all the rage
- Physical merch is the way to a gamer’s heart
- Blast shows strong token game
- In game ads are coming
- Cross-overs are stealing “interoperability” thunder
- Dealing with matchmaking
Web3 is Back in Style
The recent gaming revival in web3 has coincided, curiously, with an uptick in partnerships with traditional brands. Ubisoft in particular has been filling headlines all over the place. Already teaming up with ImmutableX, they will also be collaborating with Animoca around Mocaverse.
The gaming giant isn’t the only one making friends on the web3 side, as Amazon, for instance, recently joined Animoca and Polygon Labs to support the MoonRealm Express Accelerator. With a clearly web3 themed name, the program will focus on web3 social, identity and growth.
The uptick in traditional brands showing interest in gaming using web3, may indicate changing sentiment in the space. However, it is important not to fall for PR stunts our space is well known for. There is something so 2018–2019 about some of these announcements.
Physical Merch May Onboard Gamers
With games getting closer to open alphas and betas, the question of onboarding players has become very pertinent. With influencers and paid advertising demonstrating limited progress to this point some may be looking to switch to physical merchandise as the way forward.
Most recently, Axie unveiled its merch store, and now it feels like a trend is forming. After Pudgy Penguins demonstrated their success with toys, Claynosaurz and Neo Tokyo followed suit with merch. The approach provides a revenue source and brand awareness all in one.
Games that have approachable (from a visual perspective) IP may find it easier to connect with their audiences through physical toys and fashion and use that as a bridge to get them into their ecosystems. It also makes it easier for community members to act as brand ambassadors.
Blast Shows How to Onboard Liquidity
Pacman, the creator of Blur, knows that what web3 users want is yield. So, Pacman gave them more yield with the new L2 Blast, which offers native yield through rebasing and RWAs. Pre-testnet, the network has attracted over $540M TVL to its multisig on this promise of yield.
Besides a TVL counter, the L2’s website also shows a tally of over 60K users, which is curious since the product is months away from even a testnet. Still, Blur’s season 3 will be on Blast, and apparently, that’s all, the excitement starved, web3 community needs to see to start depositing.
In other infrastructure news, Sky Strife’s season pass system launched on Lattice’s Redstone testent. The data availability layer for games could be a major infrastructure piece particularly for autonomous worlds. Unfortunately, CT cares a lot less, since there is no staking play yet.
In-Game Ads Are Coming
Assassin Creed players found themselves staring at ads for a Black Friday sale, until Ubisoft addressed what they claim to be a “technical error”. If I had to guess, the publisher is developing tech for in game ads, and accidentally pushed it into production way too soon.
With gaming teams looking for additional revenue streams, given the recent hard times, it is no wonder in game ads are part of the conversation. However, publishers will need to find more tasteful ways to do it if they want them in games like Assassin’s Creed.
Studios working with web3 have explored introducing ad space into virtual worlds, so that gamers would encounter them like they would strolling through a physical street. However, that is something that requires much greater DAU figures than currently found in web3.
Interoperability or Cross-over
Fortnite has been famous for incorporating skins from various different franchises, and cultural icons, but most recently Destiny 2 has teased a crossover with The Witcher. These offerings are usually cosmetic and have limited gameplay effects, but that can evolve as well.
The question is, do gamers need and want more. True ownership implies the persistence and control of an item’s data. In the digital space, data is what defines an item. However, with many web3 teams storing game data on centralized BE, do gamers get more with NFTs right now?
Studios in web3 cannot compete on skins integrations because they cannot partner (at least yet) with flashy IPs. So, they need to identify and showcase things that are only possible with real ownership, and that requires much deeper web3 integrations than we often see.
The Matchmaking Paradox
A recent opinion piece by Dashiell Wood, sparked some debate last week about the right approach to matchmaking. For multiplayer games, the type of team you get put into and matched up against has a large impact on the type of experience you will have in the game.
Closely matched opponents may need to grind, then tire out and churn or reduce game time. If the skill range is too wide, matches can become so uneven, lower skilled players could get disheartened and also churn.The challenge is particularly pertinent for web3 teams.
Teams are trying to balance gamer engagement, appeal for streamers, and are also dealing with low gamer counts, which lead to longer queueing times for narrow skill ranges. Personally, I think studios should opt for wider skill ranges, at least in the beginning.
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.
