Reflecting on 2023 in Gaming
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Happy Holidays Everyone! This will be the last Autosave for 2023, I’ll be taking some time off, and the first entry of 2024 will come out on January 9th. I thought to end the year by thinking of all the good things from the past year to take into 2024, and things we should leave behind:
Good Things to Take With Us Into 2024
- Autonomous Worlds
- Digital Fashion
- AI in Gaming
Things to Leave Behind in 2023
- AAA Game moniker
- The web2.5 excuse
- Improper use of metrics
Let’s dive in!
Autonomous World Revive Web3 Ideals
The concept of fully onchain games has been around for a long time. However, it wasn’t until the autonomous world term started catching on, about six months ago, that it started gaining steam. The ecosystems forming around Lattice’s MUD, Dojo, Argus, Topology and others are inspiring.
For one, teams working in these hubs are searching for gameplay mechanics that benefit from blockchain implementation, which gives hope that we will see something new in game design. They are also expanding the realm of the definition of onchain to the broader web3 vision.
Games using web3 technology need to unlock functionality and feature sets for gamers that are not available in the traditional gaming paradigm. Once that happens the other pieces will start falling into place. The autonomous worlds movement should be a major part of this.
Digital Fashion Makes The Virtual World Feel Real
The more time people spend in virtual worlds the more they will care how they look in them. Digital skins allow for customization, but they are limited in their uniqueness and range. Digital fashion opens up new possibilities and bridges the gamer’s avatar to his/her physical self.
We are already seeing fashion cross the digital border. Traditional companies are using virtual worlds to test products, while games like Diablo IV inspire physical collections. It’s not hard to draw a line between Nike buying RTFKT and then partnering with EA Sports.
There is still a lot left to do, with infrastructure and integrations remaining very raw, but fashion can be one of the first tangible examples of assets transferable between games, since it does not interfere with gaming logic.
AI Will Reduce Cost and Bring NPCs to Life
While there is a lot of skepticism and fear in the gaming community pertaining to AI, I believe it will be a net positive for the industry. The technology should help companies reduce the time and cost of development, opening up the playing field for smaller studios.
UGC tooling should also dramatically improve, and this should help companies keep up with the increasing demand for new content coming from gamers. Web3 has a big role to play in the ugc and modding verticals, both from a provenance preservation and composability perspectives.
AI should also make NPC truly intelligent, and this should make gaming worlds more dynamic, as well as fundamentally change the relationship of gamers with their virtual companions. Web3 has a big role to play here, especially when approaching the concept of persistent memory.
Stop Calling Every Other Game AAA
AAA indicates the magnitude of the production and distribution effort associated with a game, and is the domain of the big traditional studios. At this point, AAA titles cost north of $200M to make, and so it’s absurd that every other studio in the web3 space is claiming to be making one.
The moniker has been creating unrealistic expectations and confusion. Studios convinced themselves to hire as if they have AAA budgets, and have been prematurely building up their releases to community members despite the raw state of builds and shaky distribution rails.
I believe we will see some gaming giants grow out of the web3 space, but first we need successful titles. That means working within means, learning from AA and indie success stories, and building relationships with the traditional gaming space.
Stop Using Web2.5 as an Excuse
Web 2.5 was a term coined when the web3 infrastructure was nascent, to indicate a transition state while the technology was being built out. It was since picked up by teams looking to raise on web3 hype to excuse the lack of technical grasp and alignment with the web3 ethos.
The issue is particularly noticeable in gaming, where studios use the tack-on-a-token approach while hiding behind the 2.5 label. NFTs are still pointing to centralized backends, and decentralization remains minimal across the stack for many.
Web3 infrastructure is still being built out and integration with the rest of the gaming stack are only just beginning, so we are still in an in-between period. However, that should not be an excuse for abandoning the core principles of why we are looking to introduce this technology.
Vanity Metrics And Number Tricks Spell Danger
Despite web3 being a data heavy space, the industry participants still haven’t developed a healthy respect for it. This is felt particularly strongly in the gaming sector, where companies try to show traction any way they can.
This starts with social media numbers being used as a proxy for the number of gamers, unique active wallets being treated as users, and extends to the use of bots and market making. Bloated vanity metrics create a mirage that’s unlikely to translate when the game releases.
To that effect, it’s important that studios create proper test groups for early phases of the games. Testing on NFT holders often results in unrealistically high retention metrics because the holders may be expecting future rewards based on their participation.
This wraps it up for this entry and this year. It hasn’t been an easy one for the gaming industry, but it was nevertheless full of promise. If you are working on something exciting in the web3 gaming space, don’t hesitate to reach out. Happy Holidays!
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.
