Watch Out For The Giants
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I am off to Gamescom, but before I fully immerse myself in this gamer’s paradise, I want to share some thoughts about the events of the past week. There were a lot of tense moment involving the industry’s heavyweights:
- Yuga Labs clashes with OpenSea over creator royalties
- To ban or not to blocks — Twitch and Twitter find different answers
- Take Two went after a GTA 5 modder utilizes AI
- Axie Infinity introduces social features with Project T
- Zynga reveals Sugartown as the first Web3 Title
- Samsung uses the cloud to improve gamer onboarding
Let’s dive in!
OpenSea Draws The Ire of The NFT Community
OpenSea shift towards optional creator royalties has resulted in an uproar. After the initially questionable implementation of the Operator Filter, the once prominent marketplace will deprecate the feature in an attempt to stay competitive with Blur and other marketplaces.
Yuga Labs came out with the strongest negative response so far, announcing that it will be ending support for OpenSea’s Seaport. Given Yuga Lab’s clout in the community some have speculated that this may force OpenSea to rollback the change.
However, the community may be overestimating how much trading of Yuga’s assets happens on OpenSea. Furthermore, with the NFT market as a whole facing challenging times, the creators and studios may have limited influence.
Twitch And Twitter Take Opposite Stands on Blocking
Twitter has made waves after it was announced that the block feature will be removed from the application. The mute feature may as a result take on some of the functionality of blocking when the latter becomes deprecated.
Twitch has taken an opposite approach. Soon, banned users will not be able to view the streams of the person that banned them. This is a much more conservative stance on moderation, but one that may resonate better with creators.
Twitch has become a key channel for studios, as gamers learn and stay engaged with the content by viewing streams. Twitch, on the other hand, has been vital for web3 gaming community. It will be important to note the changes as teams try to foster healthy communities.
Modders Can’t Catch a Break Dealing with Publishers
Bloc is the latest developer to catch the heat, as Take-Two went after his Sentient Street mod of GTA 5. The mod enhanced NPCs with AI to create a richer experience for gamers, but the big studio wasn’t interested.
Take-Two used a copyright claim to bring down the project, in yet another example that web3 quest for gamer ownership goes far beyond simply enabling asset trading. In a web2 world the studios own everything and are, at best, open to M&As, but are not willing to share.
Meanwhile, the quest for intelligent NPCs found a big supporter in OpenAI. The company recently acquired Global Illumination, the makers of Biomes. While the purpose may ultimately be to enhance ChatGPT’s data resources, it may accelerate NPC evolution in the process.
Axie Infinity Introduces Social Features
Axie Infinity announced Project T, which promises to introduce the opportunity for players and axies to interact with each other. While details remain scant, it is another step towards a broader gaming ecosystem for one of the oldest gaming brands in web3.
Axie Infinity is doubling down on its renewed focus on building attachments for players to their axies, and to broadening the Ronin ecosystem through additional games and features. While the original games had its ups and down the IP itself remained strong.
Sky Mavis’ strategy for Ronin is becoming an interesting blueprint for web3 gaming. The team has built recognizable IP, developed base layer infrastructure, introduced supporting services including defi and now has brought over new IP. Axie Infinity remains a brand worth watching.
Zynga Will Enter Web3 Through Sugartown
The mobile gaming giant is set to enter the web3 space in spite of the turbulent environment of the past year. Notably, Sugartown will be an original title and not a migration or a riskinning of an existing game.
Sugartown is slated to be a free-to-play game with NFTs used as access passes and staking. The emergence of Zynga in web3 is a welcome sign, particularly at a time when traditional brands have had disappointing outcomes introducing their IP through parties like RECUR.
The NFTs in Zynga’s title are expected to have limited use cases. I am wondering when studios will start using NFTs for DLCs and collectors items in a thoughtful way. The current demand for Bladur’s Gate 3 sets indicates this is a rich avenue to tap into.
Samsung Uses The Cloud to Improve Gamer Onboarding
Samsung released a beta version of its new game launcher, which utilizes the cloud to enable players to get straight into the gaming, removing the need for downloads from the gaming experience.
Popularity for cloud gaming has come and gone, and now has returned once more. The nuance of what Samsung is doing is focusing on improving conversion numbers for games, as opposed to accessibility or advanced game features.
Sanctor Capital recently backed Aethir, a team focused on distributed cloud gaming infrastructure for gaming and AI. The technology should become a vital piece of the gaming stack as studios try to increase the complexity of their games without sacrificing reach.
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.
