Taking The Good With The Bad

Sanctor Capital
6 min readDec 19, 2023

The authors or their affiliates have ownership or other economic interests or intend to have interests in BTC, ETH, SOL Mighty Action Heroes and associated tokens, Big Bear Syndicate 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.

The GAM3 Awards took place last week, and we are incredibly proud of our portfolio game, Mighty Action Heroes, winning in the best mobile game category. On other fronts, the industry had to deal with a mixed bag of news:

  • Epic win against Google could open up the app stores
  • Gods Unchained delisted from Epic Games Store
  • Arbitrum’s outage raises questions of compatibility for games
  • E3 is canceled for good
  • Anticipated games suffering through difficult launches
  • NFT Trader Exploited

Let’s dive in!

Jury Rules for Epic in Antitrust Case

Google was found engaging in monopolistic behavior as far as its operation of the Google Play Store. Although the victory will be challenged with an appeal by Google, it offers some hope that app distribution on mobile will become easier over time.

Source: https://www.epicgames.com/site/en-US/news/epic-v-google-trial-verdict-a-win-for-all-developers

One of the key issues for Google was that it apparently made deals with potential competitors to not launch their own application stores. Apple and Google control the key distribution points for mobile apps, but there are some signs that their hold on the industry may start to ease.

For studios working with web3 technology this trend is very important. Google has started to allow web3 enabled games with recent policy changes, and some games found their way on the Apple App Store, but further competition on the distribution side may reduce fee requirements.

AO Rating May Hinder Listings on Epic Games Store

Decrypt has recently shined a light on the delisting of Gods Unchained from the Epic Games Store. The reason appears to be the Adult Only rating tag, the game was hit with for its utilization of NFTs and crypto assets.

Source: https://store.epicgames.com/en-US/browse?q=blockchain&sortBy=relevancy&sortDir=DESC&count=40

Since the game utilizes the assets and crypto currencies in very standard ways, the rating and as such as subsequent delisting, could be a threat for any web3 enabled game. This is a real threat, and it is surprising that it hasn’t been discussed more throughout the space.

The silver lining here is that web3 native launchers like HyperPlay may find greater utility if the delistings become more frequent. There were concerns that web3 native launchers could be displaced over time by Steam and Epic, but for now they may again distance themselves.

Arbitrum Goes Down

Arbitrum struggled to handle the increased volume coming from inscriptions and suffered another outage. This is a big concern because it is one of the key L2 networks in the greater Ethereum ecosystem, and also a big gaming hub.

Source: https://app.treasure.lol/games

With the autonomous world thesis picking up steam over the past few months, the need for efficient, high volume throughput has resurfaced as a major area of concerns for games. If we are ever to move forward from web 2.5, the infrastructure needs to be able to support it.

Of course, not everything needs to be onchain, and the ability for games to run their own custom chain and/or L2s may address many of the challenges, but pitfalls like these remind us just how nascent the space still is.

E3 is Gone For Good

It is now official that E3 will not be making a comeback. The storied conference is being sunset amidst a lack of big brand interest in supporting the event. The industry has been suffering through a tough period of restructuring, and it looks like E3 is yet another victim of it.

Source: https://twitter.com/E3/status/1734583493592498437

Big brands are focused on their own events and there is less desire for sharing the spotlight with others. This may, at least partially, be a product of the changing distribution landscape, and while big studios develop their own stages, it is unclear how the indie sector will move forward.

With that being said, it may be that something else replaces E3 on the calendar. In his interview for GamesBeat, Stanley Pierre-Louis, CEO of ESA, hinted multiple times at the potential of other initiatives that better address the current needs of gaming companies.

Anticipated Titles Falter on Release

Fntastic is shutting down following struggles of The Day Before, and Creative Assembly is refunding users after disappointment from Total War: Pharaoh. In parallel, Naughty Dog announced the cancellation of The Last of Us online multiplayer game.

Source: https://www.totalwar.com/blog/message-from-total-war-leadership-dec-2023/

The last two are particularly worrisome, as they follow the trend of studios struggling to satisfy consumer’s content demand and expectations. Studios are having trouble providing enough captivating hours of gameplay to satisfy lofty price tags.

Combined with the popularity of casual and hyper casual games, it may push more studios to explore the Fortnite and Roblox experience paths. According to Gamefam, brand activations and engagement on Roblox are rapidly growing, and studios pay attention to traffic.

Another Week Another Hack

Old NFT Trader contracts have been exploited to steal blue chip NFTs from users. The attacker appears to be willing to return the assets, but the nature of the attack raises questions about the scope of the attack space coming from legacy contracts and applications.

Source: https://twitter.com/dingalingts/status/1735994403422928972

Security does not appear to be top of mind in the NFT space, and that seems to be extending to the gaming space as far as web3 is concerned. The recent;y discovered vulnerabilities should prompt gaming teams to revisit their security standards.

Incorporating web3 into the tech stack and introducing open economy principles dramatically increases the potential attack surface. It is important for gaming teams to understand this and take greater care as far as their security practices go.

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.



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