Web3 Gaming Success: Pillars of Success (WOW Summit Keynote)

And today we're going to talk about Web3 Gaming. And I know a lot of you guys are very, very interested in Web3 Gaming. What I'm going to talk about is the pillars of success. So why this talk came about was because I've been investing in space for quite some time now. And my previous background prior to coming into crypto, prior to starting YouTube, was actually gaming. So I was actually based in Hong Kong and I did game design and localization. And we spotted a lot of interesting trends and we spotted a lot of kind of failures as well. And that's what's important. No one really talks about the failures in the space. And what I wanted to talk about and show you guys is that for gaming to succeed, we need to look at both the successes and the failures. And I call them pillars in this talk. So what are the key pillars of success for gaming in this space? And my objective, my goal is to make the space just a little bit better because I feel like there's a lot of potential here. So I just want to give you guys an idea of the industry size. So this is a revenue chart of the Web2 Gaming industry size. So right now we're sitting in 2023 and it's recently updated in March and it's at $365 billion. That's how big gaming is. It's a massive industry, right? $365 billion. But if you look at how big Web2 Gaming is compared to Web3 Gaming, we've got a little bit of a problem. Look at that. And to be honest, my graphics designer was a little bit liberal here. It's actually 1.5%. That little sliver there, that is Web3. All right? So yeah. So let's say my graphics designer, I think they made it a little bit bigger. But we're a puny market of the Web2 space. And to be fair, we had a good try at it. I've been to every single GDC since 2017. All right? We looked at game developers and they've been talking about gaming. They've been talking about Web3 Gaming. We had some time already. We have five years. Why isn't this bigger? All right? Why isn't this pie chart 40%, 50%? If this is like an upgrade from Web2 to Web3, it's almost like an upgrade from macOS 10 to 11. It should be super simple. All right? But it's not. So what I'm going to talk about in this talk are about the three core pillars that I regard as the most important aspects you should look at. And questions you should ask. So if you're an investor in a space, you should ask questions about trading as a gameplay mechanic. This is a must-have. All right? You also need to look at unique gameplay. I'm going to talk about why that is super important. And we're going to talk about game balance. So these three core main pillars are what my talk is going to be about today. Now, this is what currently Web3 looks like. All right? It's a decentralized. Sorry to, you know, talk about decentralized like this. But if you jump in a well in decentralized, this is the room you're greeted with. It's not very... It's a little bit empty. And the objective here is we want to ask these questions, use these core pillars, and become something like this. It's a world of Warcraft. It's exciting. It's full of people. It's packed with excitement. People are anticipating something's going to happen next. And, of course, this world is full of money. All right? I'm sure if you guys like money here, that's Hong Kong. We like money here. This world is full of money. Digital virtual asset trading is huge. And before we start, of course, I just want to make a small correction as well. Talk about, you know, let's understand gamers a little bit before we even, you know, start. Let's establish a background. So gamers are very spoiled for choice. All right? There's 295 games on iOS. 295,000 games on iOS. There's 10,000 games released on Steam in 2020. And Steam is a very big platform. This is for AAA games. All right? Some very good indie games too. But think about that. 10,000 games are being released on Steam 2020. This is actually increasing. And, of course, gamers value time. So they're not your six-year-old kids. All right? I've had so many talks with investors and I think, oh, gamers are like your little kids. You know, I have a little cousin who's a gamer. They're not your six-year-old kids. All right? That's the one take home. And something that's very important about gamers as well is gamers are very, very smart. They can spot problems. So let's say, for example, you go to Ikea. All right? There's a hot dog being sold for $19. Okay, great. A cheap hot dog. All right? Hong Kong, you can get the hot dog for $19. Not too bad. But if you go to the same store and you see a $19 million hot dog. All right? You got a problem. And this is a problem that we need to challenge and face and deal with before Web3 gaming can take off. Because that's what we have in crypto. We have NFTs that are worth millions of dollars. And gamers see that. They're like, why should I even pay for that? Why should I be in a world where a hot dog can cost a million dollars? All right? What if Whale Shark comes in? He's bringing, what is it, 400 million? Sorry, not 400 million. 400,000 NFTs. All of them very valuable. What is this impact going to be on my world? All right? So before I even talk about the three pillars, I want to just really talk about this. All right? This is something a lot of people approached me and said, you know, they pitched me and they say, oh, Michael, invest in this game. It's like Fortnite, but with Web3. I would usually say stop. And I want you guys to also say stop as well. So if you guys are investors in this space, if you guys are gamers in this space, if you guys are creating games in this space, if someone says a statement like that, you should say, hey, stop. Stop. All right? Let's talk about the three core questions you should start asking them. And just think about this question when I'm talking here. All right? So first of all, unique gameplay. All right? This is much easier said than done. All right? Let's have unique gameplay. In fact, there's full university courses about unique gameplay. But I would actually say that Sandbox actually does a really good job here about creating gameplay because they're allowing players to decide what gameplay they should have. This is super important. And this is something I think is very often overlooked. People say, oh, Sandbox, you know, it's an open world. But it's not just an open world. It's an open world where individual players, different players can create their own gameplay. And this is how a lot of unique gameplay experiences came about. So say, for example, if you're my generation, I'm a little bit old. I'll review my age here. But if you're my generation, we had Warcraft 3 maps. And from these maps, players created games like Dota. And this eventually evolved into League of Legends. So it was through this kind of trial by fire. Players, different players trying their hands and creating new gameplay, creating new types of games for people to play. That's where success came. And this is what Sandbox embraced. This is where I feel like that's their edge here. They embraced and gave tools to players, and they are giving tools to players. It's still not fully there yet. But I can see that it's going to Roblox right. It's going to a way where players can say, yeah, let me play a game where maybe I'm a midget and I'm attacking a giant praying mantis trying to steal food from them. That could be a fun gameplay. It doesn't have to be one single set of gameplay. And this is a big contrast for something like Gods Unchained. So if you look at Gods Unchained, I'm sorry I'm taking a little bit of this one here, but Gods Unchained, it looks exactly like Hearthstone. And in fact, the gameplay mechanic when the game first launched was exactly the same as Hearthstone. In fact, most of the cards were just copy-pastos. It was copy-paste, same stats, same mechanics. And that's why it didn't really succeed. Because players are saying, yeah, you know what? This looks familiar. This looks familiar. And if it looks so familiar, why don't I just play the original? So that's one thing to remember. When you guys see something very nice and very flashy, if it doesn't have any unique gameplay, it doesn't have any unique selling points, that's not going to succeed. There's a lot more talks about gameplay. I would definitely recommend you if you guys want to look at the talks on Game Developer Conference. They share a lot of different insights into what gameplays work and didn't work. But for now, we're still at the sandbox stage. We're still at a stage where we're giving players the tools to kind of explore gameplay. All right. Next one. This is the easy one to cover. So everyone in this conference, they're talking about trading in Web3. Trading in Web3 is super, super easy. We already know the rarity of items. We already have really great marketplaces. And it's super profitable because the projects that create these NFTs, they can collect, say, a 5% royalty. So as long as people trade and have millions of dollars of trade volume, great. Take 5% of that. That's amazing. All right. So we also have Web3 as true ownership. Web3 as cross-platform as well. So all these advantages, I'm pretty sure you know. But when it comes to gaming, trading in gaming isn't easy. All right. I think this is what most people forget. All right. They forget that trading in gaming, it's a lot easier said than done to make the trading gameplay fun. All right. That's a problem. So say, for example, Diablo 3 is a good example. They tried to embrace trading. They said, you know what? Let's make a real money auction house. All right. Let's let players trade items. But what happens? Oh, after a year, they had to close it down. It's because the gameplay wasn't fun because players, they decided, you know what? I want to kill monsters. And this game is telling me to go to an auction house and put them to eBay. That ain't fun. Right. Because they just slapped it in and they didn't make it really part, integral part of that game. So this is a new question. If you guys are into Diablo 3, Diablo 4, the new one's coming out and people are asking, is there a real money auction house or trading in Diablo 4? And then Rod Ferguson says, absolutely not. No, no. It's not going to happen. We have the tech for it. We don't want to implement it. So then the question means, how do we make trading fun? All right. If this is a core part of the gameplay, how do we make it fun? And I think a good example of this would be EVE Online. So EVE Online is a spaceship game MMO. And what they did super well there is that they had a full-on industry. So what happens in that world is that there's a lot of pilots in the world. Some pilots, they just go and harvest materials from asteroids. Then they go and sell them on the auction house. Then some entrepreneurs come along and say, let's convert those raw materials into industrial parts. Then the industrial guys, they convert them into battleships. So there was a huge kind of a supply chain being developed in EVE Online. And I had some really nerdy friends. They were thinking, oh, how do I build a ship for cheaper? How do I kind of improve the supply chain? And for them, when they were playing this game, they were so excited because they felt like they were solving world cancer or something. If they found a new route to make this sort of trading work and obtain these materials for cheaper, they felt, oh my god, it's so engaging and exciting. And that's what makes this good. Also, NFTs can be packed with different mechanics. This is something I think a lot of people did not see when they played Axie Infinity. They bound the cards into the Axies. So the Axies significantly changed the gameplay when different Axies were played. So this is also extremely important because all of a sudden now, by having a different Axie, you have unlocked a lot of different gameplay potential. And this is much more powerful than just simply trading cards. If you trade one card, it's boring. But if you trade a set of cards with a set of attributes, with a set of stats, that's a lot more gameplay. And that allows for a lot more room for the player to experiment. Lastly, of course, trading needs to be super safe. So you guys have a speech. I have a friend down there called Dima. He runs Hacken. And honestly, Web3 transactions cannot be reversed. So if you're not secure, there's something game developers don't know. Because I used to reverse transactions all the time. Oh, this doesn't happen. Okay, fine. This doesn't matter, right? But Web3 can't do that. So make sure, of course, trading is safe. Now, the last thing is balance. So this is really also, I kind of alluded to this last part. But because some particular items can cost millions of dollars, players need to feel balanced in this space. The easiest way to do this is with skins. So we have like CSGO, their skins, and they don't really modify gameplay. They just look cooler. I have a cooler gun. There's also profile pictures. Those are really hot right now on Twitter space. People love profile pictures. But they don't really change how you engage with Twitter. They don't even change the game. So this is the easiest way out. Or the slightly harder way out, and I think this is not explored. This is where the opportunities can be. Asymmetrical gameplay. I'm going to bring Eve Online back on here again. Eve Online, there were ships that were capital ships. They're gigantic. They can be like the size of 100,000 ships. All right? So imagine if Whale Shark comes in, and we all team up against them. That might be some, that's called asymmetrical gameplay. When we all team up against one player, just 1v4, 10v1, there can be 10,000v1, too. But that type of gameplay is actually super fun. And it's actually very, I actually feel like it's super undeveloped in this space. And it can suit this place, suit the scene as well. Because at the end of the day, the people who spend millions of dollars, they expect millions of dollars worth of fun. All right? And that's the hardest part to balance. And this is what I struggled with for the last 10 years. Giving people who pay a million dollars their bit of fun. But also preventing them from clicking one button and killing everyone. So asymmetrical gameplay. I definitely feel like this is something that should be looked into. So let's conclude everything here. So let's go back to that first question, you know. If someone comes up to you and says, hey, I'm making Fortnite, but with Web3. Now I'll give you three core pillars, three core questions. My voice is broken. Three questions to ask them. So first of all, how are they embracing trading as a core mechanic? All right? How deeply is that trading integrated into that game? And how are they making that trading fun? Is there fun and there's joy in trading in that game? Second of all, are they unique? All right? It's a little bit hard to check, but you can ask your cousin maybe or your kids to play it. And see if there's something out there that's similar. If there's something else that's similar, that's not good. And finally, how are they addressing balance? All right? There are NFTs that are worth hundreds of thousands of dollars. How are they going to balance that? Do they use asymmetrical game balance? All right? These are questions that you should ask them. And this is why you shouldn't just be fooled by a game that looks pretty. There are. I remind you guys, 10,000 games that are being launched on Steam that look amazing. How does this game stand out? And how do we build a better Web3? So thank you guys so much for listening to my talk. I'm available on YouTube at Box Mining. Sorry my voice is really broken. But I thank you guys all for listening to this talk. And I hope it provided you some valuable insight. Thank you, guys. Thank you. Bye. Bye. Bye.