The Game of Thrones of Content Making
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The summer can be slow for most in the crypto universe, but not for gamers. Many are still digesting 3XP, while some are already getting ready for PlayGG. Content is king, but “uneasy lies the head that wears a crown”:
- Twitch stands on the verge of a content creator revolt
- AI technology seamlessly synergizes with web3
- Star Wars’ Nix highlights the possibilities for game companions
- Nicolas Cage is becoming a staple in gaming worlds
- Rockstar flexes in GTA by hiding cars behind a paywall
- Epic Games and Apple get ready for a final (legal) battle
Let’s dive in!
Content Creators Stand Up to Twitch
xQC’s $70M dollar (could go up to $100M with incentives) agreement with Kick looks like a signal from streamers that they’ve had enough. Félix Lengyel’s deal is just the latest “L” for Twitch as it deals with content creator outrage.
Tensions over Twitch’s revenue share strategy have been building up for some time. The recently attempted ad policy was particularly egregious, and the company had to scrap it quickly following a negative response by the users.
The awkward interaction between a streamer Harris Heller and Seth Hedrix from Twitch presents as an anecdotal example of the company’s inability to handle criticism. Monetization has been an issue for both the company and its users.
The new Partner Plus program offers to give streamers a 70/30 split, but still falls short of the competition.
Twitch has been one of the premier destinations for gaming content creators. With streaming becoming a key engine for game discovery and distribution, gamers are not willing to settle for predatory terms.
However, not unlike esports, the content creation business has struggled with monetization. Moreover, the aggressive revenue share splits offered by competition, set up a race to the bottom, which may make the business unsustainable.
We’ve seen similar challenges with other social media platforms, such as Twitter, and there are speculations that the company will look to web3 in its attempt to evolve. Curiously, its potential competitor from Meta is also rumored to be utilizing distributed infrastructure.
I expect content creator platforms to start embracing web3 as well. Already, AI based tools help streamers create highlight reel collectibles, that is only the beginning. Esports companies are experimenting with web3, and while there have been missteps the potential is evident.
AI Infused NFTs Are Here
Alethea AI has developed iNFTs, which are empowered by ChatGPT to support a variety of AI enabled services. The concept itself has been around for a few years, but now Alethea AI is allowing users to enhance their NFTs with AI through a process called Open Fusion.
The AI boom has been in full swing, but a lot of attention has fallen on the development optimizations AI can provide. From studio tooling to projects like Roleverse, which allows users to build games without scripting skills, the design side of AI has captured a lot of mindshare.
Nevertheless, intelligent NPCs remain an alluring target. The ability to populate gaming worlds with creative non-human personalities would be able to dramatically enhance personalization of gameplay, increase replay-ability, and reduce churn.
NFTs enable AI agents to obtain uniqueness and ownership structure (through something like ERC-6551). This could potentially dramatically increase the value of companions and also revolutionize single player gaming.
Nix Highlights The Crucial Role of Companions
The gaming world has been buzzing about a new Stars Wars gaming after the drop of the Outlaws trailer. Part of the reason seems to be Nix, the cute companion of the main character.
Companions have been a staple of RPG worlds, but web3 opens up a ton of possibilities for their evolution. NFT technology enables provable uniqueness, meaning that, in theory, if Ubisoft was open to it, you could have your very own Merqaal.
The property of uniqueness brings a lot of value to customization choices, and even if your pet companion looks similar to someone else the attachment level would be much higher.
Moreover, companions have a lot of potential for interoperability and omniportability (credit to Sam Peurifoy for highlighting the distinction) in games. Companions can start out similar to skins, in that they don’t need to affect combat but can follow your character and keep you entertained.
Moders have been experimenting with companions for a long time, just check out what’s happening around Skyrim. AI can make these more intelligent and also capable of better adapting to the personalities of gamers.
Thus, even if two companions look exactly the same, the experience of playing with each would be completely different. In web3 we’ve seen projects like Petaverese start to make headway in this area. So, the time of professional companion trainers may not be too far away.
Movies Stars Are Jumping Into Gaming Worlds
If you’re not thrilled to be running around a virtual world with your own fantastical friend, maybe you would be more excited playing with Nicolas Cage. While having a movie star companion is not in the cards just yet, you may see the A lister in the new Death Stranding 2 game.
Nicolas Cage is fast becoming a video game regular. In fact when describing his Dead by Daylight role he said: “I want you to know when you’re playing the Nic Cage survivor, I want you to know that we’re one, that we’re fused”.
He’s not the only one. For instance, you may recognize Will Smith as Trey Jones in Undawn. It seems pretty clear that actors are getting excited about jumping into the gaming universe, and here web3 can be quite valuable as well.
As actors populate gaming worlds with look alike NPCs that (through the power of AI) may be imbued with an extensive array of characteristics, they may be interested in owning and protecting these characters and/or IP, as well as royalties that stem from them.
Moreover, actor trained NPCs may open a new avenue for actor-fan interaction as well as a new revenue stream for the creatives. We have seen how in multiple creative verticals (take music for example) publishers dictate everything and take the lion share of the profits.
It would be interesting if actors get ahead of the curve on this one, and usher in a whole new generation of unique in-game characters and companions.
Rockstar Continues The Trend of Publishers Flexing on Gamers
The last few weeks I have been highlighting the increasingly disrespectful behavior of game publishers towards esports players. However, the pattern is not isolated to just the pros. Rockstar just hid nearly 200 cars from GTA San Andreas Mercenaries behind a paywall.
As you may know this is not a new game, and serves to highlight that the publishers can change the rules of the world the gamers live in at any time. To be fair Rockstar did not take the cars away from those who already acquired them, but the point is that they can.
Incentives in the gaming universe are utterly misaligned. Gamers populate worlds and make them prosperous, but no one looks out for their interests. Publishers are there to make money for their shareholders, whatever it takes.
This is why we see the gamer-citizen paradigm that is enabled by web3 technology so important. The closed economy ecosystem encourages studios to abuse their power, open economy systems turn them into service providers to the worlds they maintain.
From esports pros, to streamers to regular gamers, there is a growing outrage over publisher mistreatment. There is a search for alternatives, and these new solutions will have to be powered by web3 in order to create a lasting difference.
Epic Games and Apple Gear Up For Another Battle
While most of the crypto world has been watching the SEC v Coinbase and Binance drama, there has been another legal fight in the works.
Epic Games and Apple have clashed in the courtroom before, but neither has come out entirely satisfied. Apple is threatened by Epic Games circumventing its payment system (and fees), and the gaming giant sees Apple as a monopolist that needs to be stopped.
Apple’s App Store has become a prime distribution channel for mobile games, something that the company has used to levy tremendous fees on in-app purchases. This has made it difficult for many web3 enabled games to deploy there.
The workaround that many use is to separate the web3 elements from the mobile game and host them separately on a web portal. While this is a functional solution it is hardly ideal as it creates a fragmented user experience and further complicates web3 onboarding.
If Epic and Apple get their wish and there is a more comprehensive ruling, it may have important implications for the web3 space as well.
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.
