What Doesn’t Break Us…
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Last week was a difficult one for the gaming world. From Unity’s revolting announcement to the regulators coming after a project utilizing NFTs, there was no shortage of news to reel from. Still as the old adage goes, the night is darkest before the dawn:
- Unity unveiled the Unity Runtime Fee causing an uproar
- Marvel Studios VFX workers are unionizing
- AI may not be able to bring the much needed production cost cuts
- Regulators went after Stoner Cats
- Fables is released into public domain
- RELIEF introduces a fusion of gaming and music
Let’s dive in!
Unity Enrages Developers With Runtime Fee
The new business model, slated to go into effect January 1, 2024, introduced a new per install fee for titles that meet certain install and revenue thresholds. Game developers felt like it threatened their livelihood and geared up for a fight.
Things have already turned ugly, as there have been death threats. Major game development studios are prepared to drop Unity Ads in an effort to force the company to reconsider the unpopular new fees. It appears that Unity is ready to at least amend its unpopular change.
While many understand that Unity is bleeding financially, the outrage comes from atrocious communication, retroactive nature, and unreasonable adjustment window. There is a lot of talk of switching engines, and while that is no easy feat, it may just be Godot’s time to shine.
VFX Workers Vote to Unionize
VFX professionals from Marvel Studios have decided to unionize with IATSE. While this does not come as much of a surprise, it puts further pressure on the industry. With SAG-AFTRA calling for a strike in the video game space things are becoming very tough.
On one hand, workers are facing challenging conditions, and it is reasonable for them to expect more from their employers. However, companies are facing a tough market. Ascendant Studios is the latest to announce massive layoffs while Gearbox Entertainment may be sold.
Western studios are facing shrinking margins while the unionization and strikes should push costs up. This may put pressure on management to look for cost cutting through outsourcing. The industry is in a difficult position, and there is a need for a serious reevaluation.
AI May Not Be The Cost-Cutting Savior
AI advancements have been permeating gaming, bringing both optimism and fear to the space. Proponents have touted optimization potential as well potential for a richer gaming experiences, while the opposition cautions against the threat of job loss and diminished creativity.
Bain’s published findings from its conversations with gaming executives suggests that while AI will have an increasingly larger role in the game development pipeline, this may not bring the anticipated financial relief.
Only 20% of surveyed executives expect that generative AI will reduce costs in the next 5–10 years. Moreover, 60% also do not foresee AI affecting the industry’s talent shortage. So, for workers, the challenging economic conditions may be a bigger threat than AI.
The SEC Goes After Stoner Cats
The SEC alleged that Stoner Cats 2 NFTs were unregistered securities, and the celebrity heavy project agreed to a cease and desist order, $1M fine, and the destruction of NFTs in its possession.
There is so much that feels wrong about this, from the fact that SEC looks to be picking off projects that are unable to or unwilling to fight back, to the term “Unregistered Offering of NFTs”, with which the project was charged.
The letter of dissent from the Commissioners Hester Peirce and Mark Uyeda offers hope in its reasonable take. Nevertheless, the SEC appears determined to proceed with regulation by enforcement, even in the face of recent victories for the web3 space.
Bill Willingham Makes Fables Public Domain
The conflict between the creator and DC Comics appears to have reached a critical point. It seems as though the studio was looking to leverage its size to bully around an individual creator, and not honor their agreement, and Bill Willingham finally had enough.
Typically, it’s nearly impossible for an individual to take on a powerhouse, but then there are the “principles of asymmetric warfare”. By making Fables part of the public domain, Bill Willingham took control of the IP’s future away from DC Comics without releasing them from obligations.
The situation highlights the need for a better system for IP management and royalties. Blockchain technology can be instrumental in the solution, especially pioneering attribution across different projects and industries.
Heno Unites Music And Gaming in RELIEF
I’ve previously written about the importance of music for creating an immersive gaming experience. However, gaming can also be used for engaging music fans around a certain track or album. This is where RELIEF comes in.
The game enables fans to play as Heno in a dystopian pixel-stylized environment as the artist’s latest single plays around them, offering an immersive experience. While the current version is NFT gated, it may serve as a blueprint for other artists and future free-to-play releases.
Just as music strengthens a game, a game can help a musical experience. Just imagine if Taylor Swift released a game in support of the Eras Tour. Again, web3 technology can be a very powerful tool for this, as long as it is seen as technology and not a business model.
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.
