Crypto Skepticism: PC Blizzard Dev vs. Free to Play Web3 Game Designer - The Metcast by Naavik

[Music] GM friends and welcome to the Miracast brought to you by navic my name is Nico and today is another special episode last week you already heard me say this but this is the second time we do this um yeah it's another torch passing so as you might know I am stepping away from hosting the crypto burners and we have two absolutely fantastic hosts taking over so we had Nico worry hosting an episode last week and now we have a new one which is Alex okay welcome Alex hello how are you I'm fantastic this is this is is mixed feelings right because you know I there's like the hosting the cryptocurrence meant a lot for me had a lot of fun doing it um by the way some of you longtime listeners will recognize Alex because she was already on because she did a breakdown of gods Unchained and came on the episode with

um the game director I'm blanking on his dress clay Chris Clay it's a good name yeah all the way from uh anyway so yeah all right so maybe let's uh yeah let's talk a bit about you about you Alex who are you yeah sure um hello audience um I know I'm a new voice for you uh but yeah I'm one of the two Heir parents to to Nico um unfortunately my name is not Nico like the other Nico yeah um but I uh so defying the the protocol there um I began my career uh in games read out of undergrad at blizzard on OverWatch which feels good to really OverWatch one which feels really good to say now given the launch of OverWatch 2 last week um played several roles in economy Revenue strategy business model Studio Finance across the blizzard portfolio on Hearthstone Diablo 4 Heroes and Starcraft I did some wheeling and dealing on the Activision Blizzard Partnerships team for a while before joining an indie studio called system era softworks if

you haven't heard of them they're in x343 studio building a space exploration came called astroneer and then now I'm currently at Stanford getting my MBA at the GSB exciting and so you're you're trying to balance the podcasting with an MBA which is kind of tough yes um we've definitely had to make some room in the schedule uh for podcasting recording sessions and prep time but I think it'll be really fun it's a great way to stay connected to the industry and talk about things that I like so fantastic fantastic good third question for you Alex what's your favorite game um okay so I think I think I'm gonna give you I'm going to cheat and give you two answers I'm gonna tell you about the game that's probably had the most impact on my life and then I'll share a game that I've recently played in the past like year or two that I found to be particularly profound the

game that's had the most impact in my life is probably Kingdom Hearts I started playing Kingdom Hearts when I was like maybe 10 or 12. um it has had a lot of um influence on the kind of genres and animes that I've been attracted to and like to watch as a viewer um it's also been pretty influential on the kind of combat that I like to engage in which is that kind of heavy hack and slash um like twitch your gameplay so things like that when we cry or [Music] um uh what else is there um Bayonetta stuff like that so the Kingdom Hearts franchise had a really big impact on um you know my childhood and I've played almost all the games except for that mobile one called like Kingdom Hearts Kai recently uh I've been really impressed by disco Elysium which is just a pen and paper RPG um it's sort of grounded in French existentialism and there's not a lot of combat you're mostly just scroll texting

but it's a fascinating story and unfolds in a myriad of different ways depending on the type of kit that you choose and the actions and behavior that you um decide to take as the detective uh it's a pretty cool game um it's actually built by a narrative writer as opposed to an initial game designer it's built by a studio called zom Studios so if anybody's interested in pen and paper RPGs you should check that out people of that and what I also love is that how different it is from first what I would choose and also what Nico chose for his game um for him he chose a um a football management simulator I think it's called Football manager exactly so which I think is really good right different different uh aspects I think you guys are very complimentary so um yeah love that and what I also like about you uh is that you're you're I guess less ret built about wet tree than I am so you're definitely going to be

one of the more critical voices uh here yeah potentially less red pill um I think cautiously optimistic is how I would position my opinions on web3 and gaming I think that's uh probably the best way to uh to host the podcast like this um so great and then finally um given that you're cautiously optimistic could you also give us a bold prediction but with three in games yeah so I think that this prediction is anchored in reason and so is somewhat bold but backed by rationale I think that in the next five to eight years a lot of the idol and incremental games so like resource Farmers clicker Games Etc will all be on chain and their logic also might be all all in chain I think one of the biggest pushbacks from at least the AAA world for web 3 games is there's just a lot of disruption when you have something Unchained because

you're constantly approving transactions in some sort of other interface and I think for the games that are less immersive to start with um they may lend themselves better to being entirely on chain and therefore that audience is already I guess accustomed to not necessarily being immersed in this like World narrative and this world design um so that's my kind of bold theory is that a lot of uh clicker games Auto Battlers resource farmers will be on chain in the next five to eight years as long as the chain speeds get you know can can handle it and that can handle that kind of transaction volume and that logic got it big if does make sense but I can definitely see if a world where that doesn't happen at all so bold enough love it good well um it was well great you know passing the torch to you I look very much forwards to hearing you and your voice and the you know enlightening discussions you will have on this podcast

um yeah thank you for doing this yeah of course it's uh thank you for spending a year of your time you're more probably uh hosting the crypto corner I'm very used to having you be in my ear in the car and in my headphones so you will definitely be missed um but I will be tuning into the work that you continue to do on fog dial as well so podcasting's not over for you true that's true this is where I will continue my journey good and with that I would say uh future Alex take it away okay thanks all right GM friends welcome to another session of the metacast cryptocorner brought to you by navic um I'm a new voice for you guys one of two error parents to Nico Alexandra Takei but you can call me to K for short and today today we're talking about one of my favorite questions are we Pro Krypton games or are we anti-crypton games and I'm joined by two people I have great admiration for first Ethan Levy the crypto kid and podcast host of

tokonomics I'm the instructor of fun who is building his own web3 Studio as we speak and Tim Morton founder and CEO of frostgiant whom I worked with on the Starcraft franchise back in the blizzard day we also have a surprise guest the original Nico who after one week of not hosting the crypto corner is having second thoughts clearly and major fomo and has decided to join us and in this philosophical sojourn welcome guys thank you Alex hello all right so before we kick it off um maybe some intros would be good I'm gonna go first since no one listening has any idea who I am I began my current games right out of undergrad at blizzard on OverWatch one which feels freaking good to say now that OverWatch 2's came out last week God bless the servers man um played several economy Revenue strategy business model and Studio Finance roles across the blizzard portfolio on Hearthstone Diablo 4 Heroes and Starcraft I did some wheeling and dealing on the Activision Partnerships

team for a while before joining an indie studio called system era softworks working on a Sandbox Survival game called astroneer I'm currently at Stanford getting my MBA at the GSB I also spent some time this summer at bigcraft um on web 2 and web3 Investments Nico is there anything else they should they should know about me that you're a good host but uh you'll prove yourself cool um so before we start going down the rabbit hole on the existential question of to crypto or to not crypto I think it might behoove us to briefly recap what blockchain gaming means and the intended value proposition it has so should should we also introduce ourselves yes absolutely go okay I can go first so if this is not the first time listening to the medical scripter corner you might recognize my voice my name is Nico um my main job is I'm an investor at bitcroft where I focus on the intersection of web3 and games

um and so that's what excites me I regrettably do not have a background in the games industry which is held against me more than once or has been held against me more than once um but I have some experience in the crypto space building businesses there um and so that's my angle and an interesting bit of context I just came back from a conference gaming conference here in Belgium I had a very similar panel discussion where I was at and I asked the audience two questions first who have you owns an nft and I think about one-third raise their hand and then I asked who of you will never own an nft and half the room raise their hands so I think this is top of mind for a lot of people and um I think that is going to be an amazing discussion so you want to go sure I'll I'll go next uh so I'm Tim Horton I'm uh the co-founder of frost giant Studios which is a startup located in Southern California uh that bitcraft led the seed round for so thank you viccraft uh we are comprised of a whole

bunch of former blizzard developers and now also developers from another of a number of other companies who have come together to build a new real-time strategy game for PC and uh yeah I guess the relevance for me is just that we have a number of different investors including good crafts who are involved in blockchain and crypto at various points every single one of them has come to us and asked us for our thoughts on the space um admittedly with a bias from their part around encouraging us to get involved in the space and so you know we had to do a bit of a deep dive to understand what can these Technologies really do for players and I think that's maybe a question that's not asked enough so I'm eager to to get into the discussion around that uh but yeah very excited to be here and

uh thanks Alex for inviting me to participate so of course we're ready to hear the PC hardcore gaming perspective so Ethan hi I'm um Ethan Levy uh I am currently in stealth mode uh founding my own web3 game Studio I've been designing and producing games for about 20 years at this point worked on over 80 ship titles my specialty is uh game monetization being a the designer who understands and and advocates for where you make money so kind of half mixing design marketing product management I um you know my my most notable uh contributions are probably as executive producer of Tetris franchise at Network for a couple years did a couple different skus including a uh number one uh Apple arcade game called Tetris beat I was the lead designer on a game called legendary Game Heroes uh where I worked

with a really great team a lot of great collaborators and you know that game um the public figure from 2019 is that game is done uh over uh 250 million in in-app purchases uh still going live you know over six years so quite a bit more since then uh but I left a network at the beginning of the year uh to to do something new and if you recognize my voice it's probably being the crypto kid and being told to shut the [ __ ] up on the deconstructor of fun podcast or you know interviewing Nico on uh tokenomics which uh he came on in a really uh great episode just the other week yeah as Chris says I'm gonna drop this podcast in and because you're defending your honor against web for web 3 for Valor um but thank you guys for for joining us um and then we'll kind of kick it off here and so going back to sort of the the state of play for blockchain right um you know in the 1990s you know RAF

Coster star long and Richard Gary and a team of others released the first major MMORPG Ultima Online uh this year is The Game's 25th anniversary I was barely alive then but I like to respect our elders and what they've done for for bringing games into the into the world so that I can work on them and have a vocation but video games have been monetizing in creative ways for over two decades via elaborate in-game economies selling digital items like utility assets via many set virtual currencies and thus in a way for me video games are actually the birthplace for digital currency AKA internet money and in some sense web3 economies which are just open economies built on the blockchain with virtual currencies are merely just the decentralization and expansion of something that already existed and so I think the value proposition from the blockchain side for web3 gaming is the four following core ideas one true digital asset ownership expand the purview of ownership from you know my account at Riot owns this to me Alex

Takei owns this on the internet everywhere to interoperability the idea that digital assets can be used in many worlds not just video games or that at least I can sell these assets for coin and use other coin to go buy different Assets in different worlds three governance so Community Driven decision making and then four the concept of a thousand fans you know this idea that you can save many businesses from The Perils and unprofitability that are typically concomitant with low user numbers and so our question for this discussion is a is the proposed ideological value going to actually be true once we obstacle course our way through the technical challenges and then B is there a market of consumers and or players that actually care about these values with a profit margin that warrants the investment that we poured into the space and C is this actually the right thing to do for players in terms of bringing them value in the entertainment experience so I think that's kind of the lay of the land

um let me know if I missed anything but from with that I think maybe we just kick it off with volleys each side sort of lobster grenade I can kick us off Tim if you want to lead off of that um disagree agree Etc yeah I guess um I I hadn't heard your four pillars before um so I think those are thought-provoking it might be interesting just to talk about each of those uh I have opinions and uh you know be happy to to talk through them but I you know I think the let's even just take the first two I mean it kind of talked about digital ownership separate from a central Authority and you talked about portability of goods between uh programs I guess is is maybe the the best way to put it um and uh yeah I I really uh I think ownership is something we've been able

to do through a central Authority for a long time uh I think uh you know we talked briefly before the podcast started about all of these other mediums books music uh Video Entertainment film uh that similarly had ownership but have moved more towards licensed models where we're all using Kindle we're all using spotify we're all using uh Netflix and Amazon streaming um you know I think as consumers we certainly recognize the value of uh having in past days been able to loan a DVD or a book to a friend and we kind of lament that loss yet we are all I I suspect every single person uh who's on this podcast and probably most of the folks who are listening subscribers of those Services uh or equivalent services so I I would argue that we have already voted uh in all of these other mediums and uh

that games certainly with Game Pass are also moving in a similar Direction I think most of us consume our games digitally now anyhow like physical Goods or largely a thing of the past uh yeah I I won't disagree about the uh you know value of being able to learn things to others but but I think we've all moved on uh so I'm curious to hear how you three feel about that well um I think the thing you know something that comes to mind because and you can correct me if I'm wrong uh on what you're doing with with frost giant but it it seems like you're building premium titles um probably not with in-app purchases like good old days you buy a thing and then you buy some DLC for it is that an accurate representation of of what you're doing uh I guess what's publicly

known about what you're doing no worries we've talked a lot about this as well so Starcraft 2 actually went free to play in 2017 and so Frost Giants gonna follow a very similar model uh where the client itself is free certain amount of content uh is consumable for free but as players find types of content that they like there's an opportunity for them to purchase more of that type of content okay got it so I was I was mistaken there yeah I I apologize because the reason I asked was um you know if if you if if one is pursuing a premium strategy and is um aware of how important Game Pass and PlayStation Plus are to the consoles and how they're making these giant um Acquisitions to to bolster their own media libraries they move more towards this Netflix type model um I think uh entrepreneurs like us are

going to have a really hard time building Venture scale businesses if the end purchaser is Microsoft Activision and anyone else who's doing a Netflix of games right like I think as content creators we might be able to make really amazing great content on the right budget for the opportunity um but I don't think those will be VC scaled businesses right so just businesses that I'd love to work at but not ones that I think bitcraft is gonna fund for us so just just to jump in on that though I I mean uh internet cafes or internet game rooms igrs have been a component of the games business for many years and so they're they're a very similar model in that they're effectively uh consumer expectation in that setting is to come in and have access to content obviously free to play microtransactions have been a thing for a while so so I think what you're

describing is a solved problem what we do in those circumstances and what we're planning to do if we're ever part of a service like Game Pass is to provide an initial bundle of content that you get access to by nature of the subscription uh and still provide you the opportunity to microtransact past that Baseline and so that's still a very viable business it's proven it's a model we used at Blizzards for many years and it's still to your point uh it has the potential to grow to a scale that's interesting to venture capital right so you know Alex had her four points on on why um kind of her crypto games hypothesis actually no almost none of those are my points for crypto game hypothesis like uh I think a lot of those are pretty utopian and that's not why I believe in the opportunity right like I uh I know how hard it will be for

a a character or a unit that I made in my game to appear in Tim's game right like either Tim has had to pre- uh produce a standard that I choose to follow so that my asset could possibly appear in his game or I make my asset and it has to be so popular that other developers decide to do the bespoke work to allow that asset to be imported into the game right like the interoperability thing is um of the seamless Ready Player one metaverse is um such a big difficult intractable problem to solve that and I don't think that's necessarily what Gamers want um what I do think people want is to own their stuff and to be able to profit from it right and and I think that what they also want is to not be work uh

investing their time money and energy into economies that the game developer then uh ruins in the in order to force them to buy new things which is a pretty common free-to-play tactic right um if you play any game any popular free to play mobile game that has a power based economy not a Cosmetics based economy which is a lot of them for as much as we like to talk about fortnite and Apex like there's a lot of games out there that just sell Power in one form or another and as a player it kind of um it really stinks when I buy something because it's the best thing in the game or I open 100 gotchas to get something and then six weeks later the developer releases something that makes that that hero or weapon or whatever inconsequential and to force me to buy new things so um what I think I think that there's a very long road to get there

um and I know you know the pedigree of the frost giant developers I've played many of the games that they've worked on I literally have the manuals and in my tiny room and I loved them and still loved them and I expect a great game out of frost giant that'll be super fun to play and that people will love and and will give them all the war and feelings of of Starcraft 2 and all the blizzard pedigree games if I had a game that was as good as easy to play and as frictionless as that game will be to to get into as a new player who doesn't know anything about blockchain and in Frost Giants game I could spend money to get units um but I have no ability to sell those units to other players or trade them to other players and then there's an equivalent game where I do own those units and I do have the ability to sell them to other people or trade them to other people just like

I do with my magic cards or my Pokemon cards why would I choose the game um where I don't own my assets where the developer faces no penalty if they power creep my stuff out of existence instead of ruining their own royalty Revenue when players leave the game um so I think you know it's it's a long road to the point where these things uh can compete in terms of quality and friction um but when we get there um why wouldn't I want to own the things you know games I've worked on people spend hundreds of thousands to millions of dollars on IEP right why would they choose a game where they could spend that money and not own their things versus one where after they're done playing with their toys they can sell them to somebody else and recoup 70 of what they spent on them yeah so I I mean basically what you're bringing up is item trading item trading

is something that's been possible in games yep item trading and sales it's been possible uh in games for a very long time and there are games that are designed around it and that do support it and there are games that aren't and the reality is consumers have been able to make the vote that you just described between those two types of games for a very long time uh CS go item trading uh you know valorant is doing just fine uh it's it's not the case that one of these is inherently superior to the other they're just different and uh will there be games that that enable that with and without blockchain sure absolutely does that revolutionize the industry no it's not even new uh is my opinion but if I may jump if I may jump in there I think Ethan's also pointing to something different I think first he's also talked one he's thinking about it's sure the developer makes the game but the beauty of league and wow and

Starcraft is that it's the community that fills the world the developer makes right and so there's obviously a bunch of consumers there that have invested a lot of their time basically capital and labor right um in the production function into your game right and Ethan's kind of saying that it's like wouldn't it doesn't it not seem more appropriate that they would be able to be compensated for that and not only have free trading amongst that universe but Capital flows in and out right I think that's the difference let's go sure you're in one world trading in one world right um and if you don't have to trap or trick the player into staying and locking up their capital in that one game and you instead just have to build a great experience then you have to actually then you actually have an alignment of incentives such that the developer has to just keep on building a great experience because they know that if they don't build a great experience everybody will just take their capital will tokenize it and move it out right and I think that's actually a very unique proposition versus something like Hearthstone which has all my wild Warrior cards that I cannot do anything

with right I don't think any of us are picking our games on the criteria of capitalizing them we're picking our games to be entertained we are literally paying for entertainment value and I think the hypothesis that I'm hearing from you guys is yeah okay it's about entertainment but what if I could take my Capital out and again I go back to there are games that have made this possible for a long time without blockchain and it wasn't revolutionary consumers didn't flock to those games because of it I think consumers like it but it's incidental consumers play game to get entertained and consumers will continue to pick games on the strength of what brings them the most entertainment and this hypothesis that if we make it about money it's going to be even better I reject I don't think that's true so I I I I don't um I wouldn't necessarily say better as much as May given marketing advantage that allows someone on the blockchain

side to uh out uh grow someone on the non-block Chain side right like to me it's just it's really just about marketing right I'm not I'm not trying to be offensive but you've been at blizzard for a very long time and blizzard has pedigree blizzard doesn't really need to do user acquisition the way others of us in the industry have blizzard gets all its games covered by everybody all the time for free right you've been in rarified air you haven't been in a world where you need to worry about the 180 day payback uh window and LTV of your ads that ran on apps flyer yesterday right in order to make your Revenue full you're about to be there and luckily you have that incredible pedigree that'll bring a lot of attention to your game but if I figure out a business model that let me advertise a similar game to

the tune of 50 million dollars a month every month uh and you were coasting off of we used to work on blizzard and we're Reviving Starcraft too I'm going to be able to make a lot more players aware of my game so that means it's just like I'm just gonna it's a marketing advantage in my opinion and and one other thing I'd say is that um my hypothesis is that anywhere there's a gray Market it uh points out a big consumer demand and need and so an example of this might be before there was Netflix uh me and everyone my age used to download movies on uh uh uTorrent right uh and and other similar torrent services and steal all our music on Napster and that tank the revenues in the industry that gray market and caused uh created the opportunity for this uh Netflix's the Amazon Prime videos the

spotifys of the world so if people have been selling accounts and selling gold in World of Warcraft in a gray market for years uh one response is to say well that's something that's against our policies our our Eula and we need to clamp down on that and and kill those gray markets and punish those people but on the other side it tells me there's an opportunity to completely disrupt the business model because if people are selling accounts that means uh that means there's a real demand for the purchasing of items to save time so yeah I go to work and reverse order here but yeah sorry I know that was a bunch of different yeah um I I mean there's a gray market for stolen cars too it doesn't mean there's a great disruptive opportunity there there's a reason why there's there's something like uber where you can call a car on your phone instantly and there's a vision like if I could just rent a car from Tesla seamlessly I would not be

spending fifty thousand dollars on a car if my cars were lowered to only rent it so let me rephrase I think the actual opportunity from the stolen IP uh which is uh what you're describing with downloading illegally content that others have created is a rental market and I think we're seeing that rental market at emerge I don't think we need blockchain for rental I I want to talk about the wow example because people bring this up a lot there is no reason over the last two decades that uh we couldn't have enabled account sales and wow we choose not to for design reasons and just like the Diablo auction house uh enabling players to skip gameplay enabling players to pay to win Earth thing says game creators that we don't want to do consciously but this isn't about blockchain this is about a design decision that we make as game makers now there are other games that make different decisions and those again without blockchain have been out there for a long time but you're not giving me

a new Option here with blockchain this is technology that we've had for a very long time and last one just just to jump in so I I actually only spent about five and a half years at blizzard I I did a bunch of my career at startups and at other places so I I very much no worries but I I bring it up just because I I'm very sympathetic to the uh especially sitting where I'm sitting today to the need to reach users and to appeal to users but I really sincerely believe that the way we do that isn't about the finances and this business it's about how much entertainment value we're bringing them and I think that's where our headspace has to be we have to make a viable business out of it I'm totally with you there uh you know good Craft's not going to back us otherwise but uh but making a viable business to me really means thinking about how do we bring more joy to Consumers like like that is the bottom line of our job

yeah so I'll I'll I my uh my belief is that the financialization of gaming will actually broaden the market and bring a level of heightened emotion that I experience naturally and is the reason why Gaming's my number one Hobby and I spend thousands of dollars a year buying games and hardware and other uh uh spend you know countless hours reading articles on IGN and Kotaku like I'm in the I'm in the core I'm in the hardcore um but there are millions of people who aren't right and uh these people will you know to me something like a fantasy league for football or betting uh doing squares in the Super Bowl um these are things you could look at it as like oh it's gambling and it just ruins the sport for people it's it's dumb uh or like it doesn't you know it

doesn't do anything for the sport to me as a game designer adding that element of uh Financial Stakes heightens the emotions and makes many matches which I may have absolutely no context or care about gives me a reason to care and experience joy and emotional ups and downs along the way um so I think financialization of games um through uh blockchain through player ownership of assets and tokens gives people who aren't currently hardcore Gamers a lot of things to be excited about and kind of juices the experience in a way that might um you know people are as excited about today's digidaigaku marketing announcements as they are about a new character trailer release in OverWatch right it's a different it's a different audience but like people totally super jazzed about it yeah and and I'm I'm gonna agree with you here uh and it is

uh there is an audience for gambling uh basically I mean what we're talking about is I I could gamble on the future value of an asset like there are a lot of ways that blockchain can be used to empower gambling and gambling brings Joy uh it's a completely different set of motivations from the kind of joy that we try to bring as game creators and so I I again talking to Alex uh previously like slot machines are a thing and and there is a whole audience that loves the you know pavlovian possibility of getting a reward for pulling this handle or pressing this button these days and it's a market it's a very lucrative Market um and I think web3 could Empower gambling at games in in much the same way that slot machines exist as a separate Market from the kind of games that we built but if your motive is to make money slot machines are the place to go if

your motive is to get joy from entertainment uh traditional games are the way to go and I mean I definition do you would you call opening a magic the Gathering booster pack gambling right I wouldn't consider that gambling but do you I I mean I guess ask Belgium but uh you know there are there are a variety of opinions on this I I think it's arguable both ways loot boxes gotcha mechanics um I I think they are widely being perceived as gambling at this point so I I just I mean I just disagree I think I disagree there is a there is a lot of Journalism uh and loud voices on the internet uh that consider it gambling or say it's gambling but I mean I've actually worked a lot in exploring the definition uh in many countries around the world of what makes something a skill based game for money versus gambling and these there's there's an

important distinction there and so you know opening opening a gotcha pack is not gambling in most jurisdictions whether it's digital or physical and yeah I think it meets I think I I mean the reason I'm it's actually kind of important if you're working on blockchain to be very clear that like I'm not making gambling games and I'm not making games for the purposes of speculation I believe that when players own the Assets in the games that I make uh it will force me as the Creator to make better choices that are in their best interests it will give me a reason to Market them and bring them to my game and it's not about speculation it's not about um gambling that's not why I'm here and I don't believe that's what uh I'll be doing with the games I'm designing yeah but I I guess when we say owned assets we should probably double click because uh you know when you conduct a

transaction with a traditional game developer to get an asset in their game um you know I I would contend that you do own that asset and the only utility of that asset is in that game uh I think we we both agree that portability across games is kind of a false uh hope that's being held up by web3 it's not real I don't think it's gonna be real for anything besides simple cut Cosmetics so really what we're talking about is an item that has use and one ecosystem and so if you have bought it in the blizzard terms if you've got the entitlement for that digital item it shares to do with as you please within that game and if we decide that trading is a good thing as briefly was the case at Diablo uh that'll be possible if if we decide that that undermines the game and takes away from the joy causes play to win mechanics Etc maybe it's not possible but uh you know if that's going to be on

us as game makers to uh to decide and that's for good reason but but I would argue that the value is not only in that game if you have a tokenized economy and you can get paid for being excellent at what you do right I think there are tons of potentials for their best players in wow in order to get paid for playing wow or to see some sort of benefit of my you know maxed out warlock right blizzard has all of that I can't give my legendary warlock that won this PVP tournament to somebody else I can't but they're crazy being good right the reason you can't is because it undermines the game experience so if we design a game like CS go where item trading makes sense then you can't um and in the circumstances Ray again whether blockchain is there or not is incidental like it's an enabling technology but I I come back to we've been able to create the opportunity for players to trade items and even for players to take money out of that ecosystem for a very long time we don't

need blockchain to do it um it it has not been revolutionary to games there are games that use it and there are use cases for it but it's it's an option that we have as as game makers it's not something that fundamentally changes the fabric of the landscape of games can I uh quickly well not quickly actually from what I've heard until now in the discussion we focus the conversation around first monetization and then later ownership and resellability and it was all centered around the fact that nfts or crypto based assets are like something you can sell and that have value Tim have you thought about non-financial use cases to build better games with blockchain technology so like Taos for example as one example yes yeah I I actually uh I think they're really fascinating and again uh like don't eat blockchain to power them I think it's about accumulating influence

and how that influence gets exerted uh particularly in things like Guild management uh you know I can think of all kinds of interesting uh sort of community influence driven mechanics uh so so have thought about it a bit I think to me it is one of the more interesting potential applications I do come back to I think the use cases for it are somewhat narrow they're there uh but I I do think the use cases are somewhat narrow would I would I notice sorry if not to interrupt you but what I noticed with a lot of very experienced game developers um I had a discussion with with uh Rami Ismail today he's a very well he's a well-known Indie developer and he tends to look at blockchain technology with the glasses of what games do I know and what games do I know will benefit from this technology and what I'm trying to do as a venture capital investor is I'm trying to talk

well I'm speaking to teams and I'm looking for teams building games that would not be possible without this technology and so I think this is this is very hard right it's hard to think about something that that doesn't exist yet it's it's it's the the principle of innovation um and so I guess my perspective here and I'd love your thoughts on this team is that I see blockchain and what three more broadly as a toolbox with a bunch of things in there including a very flexible way to do monetization a way to offer your players ownership but also other things right the concept of you know the moment you own something on a blockchain um actually the developer can actually stop you from trading it so you can have an nft that is that you can't sell which takes away the speculative speculation asset but you have proof that you own this in a decentralized database which makes it so that I can start building a club of people that own a certain item within the game right and it facilitates all of that um and could lead to new experiences that we we couldn't see before

yeah no I I love that you bring this up because from a developer perspective I look at under the covers what is blockchain really Empower and it empowers decentralized trading with lower friction cash outs I mean that that's kind of what the tech does the decentralized part is a game developer doesn't really have value to me like we can solve what blockchain does with the database the lower friction cash out uh you know there are some use cases where uh maybe that's interesting we've had the ability to Cache players out uh you know typology is a system we used at blizzard to pay out players you look at ugc systems user generated content systems like mod IO and overwolf today that are uh facilitating cash outs for players on their content like these these are all things we've been able to do for a while um I I kind of come back to what what are the new things that this empowers

how does does this change my toolkit to design games and it's it's not that revolutionary I hate to say it let me tell you why I think that's a very short-sighted argument to make okay I I feel like you're saying you know we've had the ability to rent cars short term for years and if I need a car to for a couple days I can go to Hertz and if I need it for 20 minutes I can call this thing called a taxi company and a car will show up at my door and take me to a place there's nothing revolutionary about Uber it is not doing anything I'm not capable of doing right now therefore it will not change the world and the thing that I would say is just because something isn't uh revolutionary in terms of new capabilities doesn't mean it won't change the world right like that's that's kind of the argument I feel like you're making being on the other side of

it cool I I mean show me the show me the Uber use case and I'm all all ears like as a game maker if if that's there I I want to see it but like you know prepaid taxis on your phone the low friction was revolutionary uh so cool like you you guys tell me what that is and I'm all ears I I keep asking this question to every blockchain person that I meet and I I still haven't heard it I still haven't heard the Revolutionary thing that's going to make me as a game maker the Revolutionary thing the Revolutionary thing I'll tell you and uh in 10 years we'll see if I'm right or not the Revolutionary things that normal people believe that they own digital assets that is the most important and only thing of value that blockchain Tech brings belief belief among normal people I know normal people here in South Carolina who don't read Venture beat who bought into NBA Top Shot because they believed that they owned a digital card and that belief was what gave them the confidence to spend their money and

invest and collect and then resell those things so that's that's where I believe that's the revolution is consumer belief I want to go back to what Nico opened with and uh it's very resonant with me you talk about belief belief implies that there is a massive audience out there that believes this and they don't I I mean I will tell you from my personal experience that our player base is not saying Frost giant give us nfts they're saying keep nfts out of our game uh and those 50 percent of hands that went up with Nico are telling of that exact same phenomenon consumers are not asking for this I've lived through this all before this is exactly what it was 12 years ago when I started getting into free to play and you said it yourself Starcraft 2 went free to play free play though so I this is this like people I hear this brought up people hated me they hated free to play journalists told me to go to hell game developers told me

to go to hell told me to go to hell and guess what Call of Duty is making more money on free to play than it is on its boxed products here's the difference it's revolutionize everything here's the difference this is like the go-to for blockchain Advocates there was this other thing that consumers didn't like and it worked out but let's look at that other thing that consumers didn't like what it actually did was take away payment as a barrier for players to play games like there's clear evident value to players in that the clear evident value here doesn't exist like we we've been talking for this whole time and I still don't have conversated free to play I think the hardcore tribal Gamers one would which I consider myself right they hated it and that is most journalists most game developers most people who play console and PC games yeah you know what I agree people who play Candy Crush and spend a billion dollars in a year in it every year for 10 years don't give a [ __ ] about PlayStation versus Xbox or any of these

other things that the people who write for kataku and read Kotaku care about the gaming business is so much bigger than people who play console games or people who play Lao or people who play WoW like I mean if so I first off I'll say I agree like I think it was the core audience that didn't believe in a free to play um and there are reasons why they didn't it's because free to play was designed initially around frustration mechanics and we figured out how to move past that but I I think in making this analogy what you're trying to apply is that there's this massive unheard audience that's saying we want nfts and I just like look at the nft trading graphs and I I think you have your let me ask you another thing it's not that I think there's a massive unheard audience I think that there is a business potential that will allow blockchain game developers to out market and make more aware and bring more people to their games than to you know what is currently traditional gaming but so we've already established okay good may push back on the idea that

there's no indication of Demand right I think we always go back to that same Henry Ford phrase you know if you'd ask people what they wanted then they would have set a faster horse right they don't know necessarily the value that potentially digital ownership might have they're rejecting it because nobody likes change it's a fundamental Human Condition right right I think it's not just only about belief but it's also about trust right I think it's belief that I own this thing but it's also trust in the protocol such that you know twitch right now just change their developer Creator payouts from 70 30 for the top 20 10 um uh craters to 50 50. right and I think when you make a contract with the studio I think many gamers um have felt betrayed in the past and I think the anger that people feel towards Studios right it's a very passionate Community is actually an indication that they want more say and want more control over what happens to the products right now you may disagree with whether or not that's okay I think going to the point of like the welfare state right are you a designer and therefore you know better than the players or to the players have

an opportunity to actually influence the game design and the game direction right but I think that it's more just about it's more than just about belief um it's about so too yeah I I think you made two points there and I want to talk about both of them the first one is the implication that somehow blockchain changes the Dynamics of a platform holder to uh be able to set their own terms on the platform it doesn't if I'm a platform holder I'm going to control the terms on my platform like that's the way platforms work so the twitch example doesn't make sense to me uh the the first point though about people not knowing what they want absolutely but all that's saying is what I keep hearing from blockchain Advocates which is we don't know what this is really going to revolutionize but someday it's going to happen and uh and we'll all look back and say wow this was really cool Tech I I'm prepared for there to be something cool that comes out of this but I'm still asking the question of what is it like free to play getting to play a game

for free totally get it that makes sense uh blockchain it's a slow decentralized distributed database whose transactions can't easily be reversed that doesn't really provide anything new in terms of functionality for a game creator uh I I'm just not seeing what's what's the Revolutionary thing that's going to come out of that and I I mean I think the assertion that we just got to is well people have faith in it or people believe in it and I'm I'm not meeting those people those people are the people who are in the blockchain industry attesting that something great is going to come out of this but the average person on the street I don't I don't think they're asking for this can I uh then [ __ ] you something absolutely you've you've dug into what the blockchain does at a basis level right you just mentioned that the blockchain is a database but ethereum if you look up like the original original idea of ethereum is that it's the world computer right and so actually you can program that

database and you can actually run programs on it and so what I'm seeing today is that some people are saying Hey what if we instead of building a server to run our game what if we use this blockchain to run our game what if he builds write a bunch of smaller contracts that together constitute a game and start experimenting with that because that means that suddenly the game lives forever as long as the ethereum blockchain is alive the games that are built on their our life and are operational um it means that anyone can interact with the game provisionlessly anyone can build on top of the game permissionlessly anyone can take pieces of the game and use it in their own game no one can stop them um is that something that you would consider something you we can all we can already do or is it something that you would consider useless and and stupid effort uh I I think the problems surrounding that kind of development are huge like

with without doing a real deconstruction of the implications of what you're describing but um I you know I it makes me want to go back to talk about web 1.0 uh you know there was this vision of web 1.0 where everybody's got a computer uh they can spin up a web page on that computer and you know we'll just have this amazing uh world where everybody is able to share stuff from their own PCS and um you know you look at what actually happened and it wound up getting centralized because there were a lot of benefits to hosting from the same place there were a lot of benefits to standardizing on the technologies that we use to power those web pages and the interactivity on those web pages uh I you know the reality is web 1.0 started decentralized and it moved centralized

and I I think what you're describing now I think there are a lot of cool Concepts there and I've talked to some other game developers interestingly not using blockchain but uh who are empowering the kind of thing that you're talking about but doing it in a centralized way and I think there are some very interesting use cases there for MMOs for example and I think developers will absolutely do that but I think they'll do it in a centralized way and I think for Speed reasons and for efficiency reasons they probably won't use blockchain to back it up maybe some will uh but but anyhow it's it is a really cool uh concept and it is something that I see people kind of actively exploring today with and without blockchain yeah I think one of the challenges Nika with that is that we pay on the developer side massive server costs that are completely hidden to the player and every single player for your paid incurs meaningful costs to us and

if you're talking about developing in a serverless environment we're all server-side work happens on the blockchain that actually turns it more into an arcade where people have to do so in some fashion put those server costs in up front in order to run thing and like I mean I've I have had the experience of going to pay for something with the credit card at that rare store that says uh credit card fees are passed on to the user instead of eating them like most stores do and I pull out cash and so like again to user friction if I could play one MMO that was free and one that was an equivalent experience but I had to pay for all my server costs uh why would I pay for all my server costs right there's I would say there's there's ways to to abstract it away we've also seen in in the web free space people are willing to pay quite a bit of

money for you know true ownership and I think having ownership of an asset of which the game actually lives on chain cannot be shut down I guess gives another additional level of true ownership right um and then I guess my final point would be when it comes to like transaction and speed so I was always critical of this but I have now with my own eyes seen two different blockchain based Solutions building different blockchains where literal Minecraft was happening on the blockchain where every time you you can mine like the block like you could in Minecraft that was a transaction on the blockchain um and so this was quite recent this is all very early still um but I think um that's something I'm keeping my eyes on yeah I I mean I think uh this this comes back to uh the potential for something cool to come out of all of this and and I'm I'm with you guys in that uh we we don't know the answer yet uh it it does like I I hate to be the the skeptic and all of this but but

that's my role on this episode so I'm gonna do it but it kind of uh just underscores though the solution looking for a problem part like we we haven't actually figured out what is the compelling problem for players that this is going to solve um and is it possible that we'll come up with something yes totally it's possible but it's also possible we won't uh so I guess we'll see so Tim I have a question oh sorry go ahead Ethan I mean it's just it it um it feels to me I again like I'm a rare game designer in that I spent 10 years designing games and then I spent the next 10 years focusing on the business models of those games right and so to me it when I hear Tim these arguments and and I've heard them from many people before uh and will for for many years

until I'm unless and until I'm able to prove it wrong with my own games but I feel like it's people looking at Farmville and saying uh well this is never going to be better than what Call of Duty always give already gives me I'm only ever going to buy a 60 box of Call of Duty and I hate it that they've now started taking things that I used to buy for 60 bucks and selling them to me on top of it like it's I think the business model's power to change everything about what games are made and funded and why is extremely profound and and the reason I found it or am in the process of starting a web 3 startup is because I believe this new business model is going to eat the entire free to play business which by revenue is the largest segment of all gaming right now so everything that's

currently free to play everything that's in IAP that people don't own you know my prediction is that within 15 years the majority of it will be nfts and uh uh because of the benefits that owning that asset and being able to sell it to someone else will be that doesn't mean that that all game assets are going to the Moon most of them are going to be worthless the same way that like when I went home most of the baseball cards that were in my uh room were worthless all of the Marvel trading cards were worthless the Marvel overpower cards were worthless the only thing that had any value were the magic cards that I stupidly sold like 10 years ago right I wish I still had all those unlimited cards but I think that um uh we have a thing which is very large by Revenue um which is in-app purchases and I think this is a better way to do in-app purchases because uh I can

because now there's competition right the price isn't only what the game developer wants to sell it for but if somebody else is willing to sell me something they already bought for cheaper than what the game developer wants to sell it to me for you know through gotcha or battle pass or whatever obfuscation mechanic they have yeah I I was going to ask the question of what is the new business model but I I think hearing you talk just now your answer is uh it's in-app purchases but I can sell my stuff outside the game and and I go back to the Cs go example I go back to others like this this has existed and it did revolutionize the industry it's um the the new business or the importance of the business model is um that the royalty rate from secondary sales will be more important to game companies than their primary sales and yeah what's interesting about that so like when you work on a gotcha game um

I'm the the developer needs to find a new reason to make people buy new things in gotcha this week and that normally means making last week's things that we just sold less useful in the game uh and it's and and this is uh something that's very common in in uh games that don't have a purely cosmetic um economy and so in a world where uh your Revenue comes from royalties and if you devalue the things that players own like in a way they can measure if they owned a sword that was worth fifty thousand dollars and now it's worth five thousand dollars there's gonna be a mass Exodus and an economic crash in your game and that's actually I think a positive not a negative for the game industry as a whole that it will align uh valuing it'll align the

players incentives with the developers incentives and force us on the developer side and the product management side to make better more long-term more player focused uh decisions than what many of us experience when we're working within companies that are VC funded and going for a big exit or a big listing right yeah I I think there are uh some obvious flaws with with that example in that's presuming this sword that we're paying money for uh has gameplay impact it's pretty important for game designers to be able to balance their games without backlash from their players because of the economic impact but because the right thing to do for the game is to balance the object I mean I can see all kinds of detrimental outcomes from what you're describing but but I want to rewind to the point where you said you believe the royalties from secondary sales of items is going to become so

significant to game Publishers game developers that that becomes our primary business I I just don't see evidence for that in any of the ecosystem systems around item trading that exists today I I think as developers we would have to come up with some kind of game design that so motivated secondary item trading that that became a meaningful portion of the business and that's that's just not a mainstream design maybe there's a game designer I think that's I think that's the idea though so so yeah the ideas that I'm trying to revolutionize game design so like for you but I'm not going to talk about it in public but but here's the thing here here's here's a super important aspect of what we're talking about you're trying to create Financial incentives and those financial incentives are a completely different goal from entertainment incentives and in fact in many cases creating systems let's look at axi uh that are about

financial incentives specifically motivate unenjoyable gameplay to inflate value and to justify value and just like a slot machine is all about about extracting monetary value but the game isn't very fun that's exactly where this heads and so I think it'll be a category I'm with you but is it going to revolutionize what I do absolutely not I I don't think anybody uh who is at a mainstream large game developer or publisher is going to consider this their Core Business I think they're going to consider this a secondary business like slot machines I I I agree that maybe that that that's true but I think when you bring up the axi example I think that there are actually some pretty cool Financial nudges that you can install as a game designer because right from my from my understanding game designers are masters of human psychology right and they're Masters I don't know if they're all masters of humans the best ones they like to imagine that or like they oh sure let's just do let's just let's just throw it on the bone they're the masters

of human psychology let's say game designers attempt to manipulate your emotions professionally to create something that we call Joy sure right and potentially why is financial incentive not a part of that lever right you have narrative you have like you know like visceral reactions to you know gritty combat right you know the animation of you know kratos's ax and God of War right but I think that the financial incentive could be an interesting thing and an interesting emotion to sort of play with in my opinion right so let's just take the axi example right their economy suffers from sort of some sort of obviously massive inflationary problems right that's a flaw with the initial design of the economy right but perhaps there's actually some very cool way that you can include narrative for example like in goodness I forget I think it's called lunacia is the land of the axes right every three months in lunasia there's a catastrophic meteor that wipes out half the axi population all nfts gone right and I think that's a very interesting thing right when we think about something like a Hunger Games where we

want to watch people play through real danger and real um real life potential for loss I think it will change players Behavior more than we think right and so I think that there's actually an opportunity when you have Financial incentives for it to be a lever to drive player Behavior which could lead to new types of genres Now is it going to become of this mainstream thing right where you know all of Call of Duty is going to be operating the blockchain I'm not sure but I think that there is an indication that people actually like to play the economy game like if you look at an economy like cryptic unicorns people are having a very good kick out of figuring out the exchange rates between you know unicorn coin and the tether and figuring out whether or not now is the right time to harvest their carrots or not so I think that it's um you know there's some there's there's fun to be had there it's kind of what I'm trying to say yeah I I mean absolutely there's fun to be had I I mean are day Traders Gamers yeah I guess arguably they are

um the stock market's a great game um so can that game exist yes uh is it what I'm gonna make as a game maker who's focused on entertainment value absolutely not uh these are different things um and I you know I'm not an economist but if if we get into all of the aspects of play to earn or play and earn or whatever the fashionable thing to call it today is uh I mean fundamentally these are closed economies where for every winner there has to be a loser and uh you know Financial loss is not a thing that brings Joy uh I I think the other challenge with these is that unlike the stock market where uh it makes sense that there can be an open-ended increase in value and an open-ended growth all game populations Peak and decline like this is the way of things and so as soon as a population declines like the economy also has to decline I just I yeah this is this is at

odds with what I do uh this is not this is not building games this is something else it's the stock market you know to me well the the thing about like um no mainstream game developer is gonna get on board right uh 12 years ago within Activision Blizzard or other EA or other Publishers you probably could have at least started a pitch if not gotten a product greenlit prototype for a new premium RTS with DLC uh you know using the heritage of either Starcraft Warcraft or command and conquer uh and nowadays you absolutely could not and you guys are making a free to play game right because the uh investors and Central Studios and the people whose job it is to mine the stock

price uh care about uh making money and making the stock price go up and so they control the purse strings and they no longer uh fund the old type of media or if they do you know if you were to make one of those games nowadays it would be with a significantly lower budget and it would probably be because Sony or Microsoft are prepaying for it right you're making a free to play game now so like I think that the same forces that over time make it that you're making a free-to-play game and not a premium PC game with DLC you know it's my prediction that the same forces will change from the investment layer on down the types of games we're able to make a decade from now yeah I guess I'll uh so I love that you used RTS as an example thank you bless you yeah yeah I think uh that the real backstory of the journey with this product was sort of less about the

free-to-play part and just about uh size of Market I I think historically RTS games uh whatever business model they use whether it's premium or free to play uh you know the total lifetime value of a game might approach half a billion uh versus you know a shooter or an arpg or an MMO uh where it's a billion plus and so having pitched RTS new RTS games both premium and free to play uh within big Publishers and got shot down it was kind of about that calculus of what they expected the lifetime value to be I think going out to venture uh and thank you again bitcraft uh you know has uh there's more appetite for risk there and I think they're willing to give us a chance to prove that we can exceed that that lifetime value but but I think your core uh you know your core point was your business models can change Dynamics and uh the market and and I totally agree with

you there I think I'm still struggling to just understand the the Revolutionary part of of this business model uh items that can be sold like that's that's a thing we've had pre-block chain and it just wasn't revolutionary yeah I get it and and you know just from from where I am it's not something I can convince you of in an interview the only way for me to convince you of it is within the next five years to have a game that does a billion dollars a year in royalty Revenue right if I if if Ethan Coe incepts a game that does a billion dollars a year or more in Royal secondary royalty revenue on nfts you know the Nicos of the world are going to be chasing after that the Activision blizzards of the world are going to be buying those Studios and forcing internal developers to take on that new business model over their cries moans uh friction hatred for it and

eventually we'll get to gentian impact in Call of Duty mobile but for blockchain like that's that's gonna happen but it's I'm I'm fully aware like it's I can't convince you of this in an argument uh and and I could maybe change your mind if I was willing to show you some game design and spreadsheets um that I won't air publicly but I even I I know that even if I showed that to you you would probably say this is some interesting game design good good luck I look forward to seeing where it Nets out right like the the only way to change Minds is is with um with uh you know action and uh it's it's kind of my my Spider Sense or or the bet that I'm taking with my career at this Junction is that um axi Infinities rise and fall told us something really interesting about the power of this business model to attract attention um and that is what I'm betting on right

and for what it's worth uh I'm genuinely rooting for your success here too I think I please uh please take that away no but this has been this is a great well-intentioned friendly debate on all sides absolutely right like I think this is uh this is what public discourse uh should be when when people disagree right totally and what I also think um you know Tim you're obviously representing like the the PC base of the West right when you talk to you know I was talking to a classmate of mine from the Philippines right and who's telling us the story about axi infinity and he was like this is actually crazy right like with this type of vehicle we've actually made people who would never consider themselves Gamers to become Gamers and you know I think for some people they need a different kind of nudge to get into something and potentially blockchain is a way to expand the gaming demographic right I think there are even people who play mobile games or whatever don't consider themselves Gamers when in reality like going to the action of

learning a system and getting better at it is a game right and I think that for you know for for blockchain in in maybe different parts of the world it's being seen extremely differently than than it was in the west because that entertainment value is there for them they find the potential to to earn and be paid if they're good to be um valuable and more important than being told an incredible story or to play through you know an incredibly deep combat system right like that's the thing that drives them right so we think about player cohorting and we you know we do this all the time and Hearthstone and heroes like the rank standard player versus like the the Casual player there could be a space for a financial incentivized player in a balanced ecosystem where somebody is playing for fun and the others are playing for monetary gain and what ratio that is I don't know you know there's a you know mobile there's a it's a whale business mostly right you have five ten percent whales 90 freeloaders right maybe that's the same situation right where you have you know the uh the five five ten

percent payers payers payers sorry payers well no just because like I I don't really like the term whales but whales are not all payers whales are a small percentage of the small percentage of pairs absolutely yeah I'm saying that there's I think there's potential for that so I I guess I want to be careful analogizing blockchain uh with financial incentive for playing games because I I think it's got a lot of applications and of course uh there are ways to pay players without blockchain for for playing games but but I think the core question you're asking is if if we create Financial incentive for players to play games um is that a good thing uh it could be I I think part of the uh challenge there is to come up with financial incentives that don't cause others Financial harm and also to come up with financial assist incentives that are sustainable and that don't fall apart when a game's

popularity starts to go down and are those solvable problems I'm not an economist so I can't say definitively that they're not but they they do seem like pretty big problems like blockchain or no blockchain if we're going to pay people to play games it feels like we've got to solve those and and I mean I think that goes back to your entertainment like I I didn't get into game design to get rich I got into it because I love video games and I'm an Entertainer and I love entertaining people and so like I think that um Everybody profits is not the goal nor is it possible Right the the goal is to make something people love give people their new hobby in their new community uh and I don't I don't think um there's no such thing as a Perpetual never-ending economy I think like to me the gold standard is Magic the Gathering right something that's well managed that grows in popularity

um over time uh that has a collectible element to it and that collectible element to it adds uh depth for some people and other people don't care about it like that that I think is kind of the best you can do with the digital economy if I told people that I could make a digital currency in a token that will only ever go up in value and that won't have we'll only have winners and no losers I would be uh an idiot right but I think the the thing I would say or the analogy I use is like professional basketball or football or any any sport right many people spend many hours with basketball as their primary hobby or one of the hobbies in their Suite of hobbies in their life they spend a lot of time and money and they get a lot of enjoyment out of it a very small percentage of the people involved in the many aspects of the sport of basketball make a living and an even smaller percentage are rock

stars right and and by make a living I'm talking about like people who work concessions at a basketball stadium that is someone who is involved in the basketball economy and and it's you know it's not the goal that everybody involved in the hobby of basketball is as rich as LeBron James but the idea that some people can become LeBron is part of what brings attention and uh interest to the sport yeah and I I think the magic example is a great one to highlight that um there are types of games where collectibility and trading are successfully and inherently woven into the fabric of the game and I think blockchain is a choice those games could make again you could do that stuff without blockchain but blockchain is a choice those games could make so you know I think there will be examples uh you know there's developers working on a

game that's essentially uh tarkov with Goods that you can trade and sell um you know I I I can think of places where blockchain or no blockchain uh item trading for money could be interesting I I don't think it moves the whole industry there uh I don't think it takes over uh but I I think there are examples of games uh that could benefit from uh from that and again they might still do it with a central database but blockchain's a choice they could make you know it would be a cool follow-up discussion a topic or an episode called why not the blockchain because right now we're trying to prove why blockchain makes sense for certain applications and you're always saying like it doesn't need the blockchain um but I think Fair argument would be that you know blockchain although you know a year ago it was expensive right the cost of using the blockchain or going down tremendously and so at certain points even if it's a marginal benefit the cost actually is worth it

yeah it's an interesting I I love the why not the blockchain idea uh how much time have we got we got 20 minutes so I yeah I think uh I could I could lab some things out and and see what you guys say um I I think the customer service experience around uh transactions that cannot be reversed or around transactions that are very difficult to reverse is terrible uh and it opens things up to scamming in a way that is so damaging to user experience but even without the scamming I mean on a daily basis blizzard I I can't even tell you how many support calls came in from people who their kid made a transaction that they didn't want made or they misclicked or they had misgivings about that like to not be able to unwind that stuff wow I mean that's uh that's a problem uh I and I maybe there's an

answer to that but I'm curious uh how you guys feel about that or if you have thoughts um so I think this is um it's both a curse and a blessing right I used to work in the payments industry um and if you as a merchant accepts a credit card payments there's some high fees because transactions can be reversed and so for a lot of Merchants you know they they were happy that there's irreversible transactions because because of that the trend transaction fee that they have to pay um because Visa or any credit card providers often incurs the risk um is way lower and so I think um for me the blockchain is this programmable database where we can program the transfer value and so oh like for now we have decided that the any blockchain transaction is immutable and irreversible um but that doesn't mean that we cannot

find Solutions around this where you know payments or transactions go into some kind of escrow or you can you know have accounts that have limited balance that cannot transact more than certain amounts and so for me the cool thing about the blockchain is that we can all together work to build a solution for the problems that you describe right you know if I make something that actually works then if you're building a game you can actually include that in your game as well and into your payment system um and so for me I agree that today this is not ready to be used by you know the hundreds of millions of players um but the foundation is there to make it way more user friendly than whatever ways to transact value we have today yeah this one scares me just because you know it's so inherent to the ideology of blockchain uh that these transactions are immutable uh it it feels sort of directly contradictory to the ability to

unwind transactions and an unwinding transactions uh you know but it's absolutely a thing um commercially that we have to to uh I don't know I I I'm with you that if a solution comes around it's cool that it's deployed globally uh but I this one does feel inherently challenging I think I mean the most likely um solution is going to be a competition to be the primary platform or sales place that has the best customer service right so you know all these final records behind me I bought on discogs and on eBay and you know I'm making an independent purchase through a platform with a stranger in another country or another city and uh if I you know once I give them the money I can't if they don't send me the thing the transaction isn't reversed right what happens is the

platform eats the cost and compensates me and they do that because that's part of the cost of doing business to be the best option for auctions for peer-to-peer auctions right so I can imagine a an equivalent a solution like why might magic Eden or Aqua overtake open scene the long term maybe if they have better customer service and this is part of the um a solution around it or another thing you know you you one could imagine a uh something like a sales that happen with an escrow with the cool that you know like a reapproval of sale 48 Hours afterwards that you could opt into you know I could imagine something like that I don't think I would take take part in that necessarily but I could see it being an experiment worth running uh but mostly I think that um there might be a winning Marketplace and part of what makes it the winning Marketplace is uh having lower profit

margins because of being Willy to compensate uh people for um transactions they regret or that they claim that their children made yeah I guess it gets uglier when it comes to fraud though I think uh you know what we saw happen with axi um you know though we can argue that they should have been more secure et cetera et cetera like you know they're always going to be bad actors out there looking for vulnerabilities and not having the ability to unwind that kind of stuff I I it's talking about the bridge hack yeah the bridge social engineering hack it's a credit to that that they weathered the losses that they did but um I mean a lot of businesses that that would have been the end of the road uh yeah I mean again like that's no different than or that's similar to the many class action lawsuits and um uh data privacy hacks and like I mean I feel like every other week I get some

stupid letter where I'm gonna get four cents because GE was forced to pay 500 million dollars to a billion people because of a light bulb I bought 18 years ago or some stuff like that like you know it's not like fraud doesn't happen in I mean unless you agree that the fraud and the lack of security and the like that the social engineering hack of the axi bridge would be like someone stealing 600 million dollars from JP Morgan's uh balance sheet right like that's that's the type of thing we don't see uh in the modern world or if we if it happens we don't know about it um but uh it used to happen you know before Banks were what they were today so yeah but I I guess I would argue that uh like until there is a way to unwind fraud uh and this goes back to these transactions effective being immutable though to be fair I think some of that money has been recovered uh you know

hundreds of millions of dollars went to a hostile Nation trying to build nukes to reach our Shores like uh you know I think if traditional Financial transactions had been used there would be protections against that and more ability for us both both to trace those transactions and to unwind them uh the immutable nature of blockchain means that a fair chunk of that money that was taken in fact landed in North Korea this is kind of fundamental to blockchain I I don't know I I believe you guys that maybe somebody will come up with solutions for these down the road but like today it kind of suggests that this Tech is not ready for prime time yeah I mean I my I think I've said on on a previous podcast like I think the long-term solution is going to be that every bridge is going to be forced by an insurance product and that insurance product will be the thing that compensate like I don't think there's

going to be loss prevention or recovery it's just going to be that every single uh validator network is going to be in a position where they buy insurance from AIG and then AIG has priced it ideally such that they make a profit but have enough money to make investors and companies and end users whole when there are these giant hacks like that's the direction I think the world's going in which is big but so we just landed back exactly where traditional transactions are in that there's a tax that we pay to cover the possibility of fraud yeah so I think we just neutralized one of the reasons why to use blockchain sure yeah yeah I mean I like I I um I'm I'm basically saying uh I I agree with you that all of these problems are true problems and the solution to them is going to look just as crappy as it is with traditional Financial products and running businesses and Services I uh I'm a unique uh person on on the web 3 side

and that I'm not a d gen and I'm not a utopian like I have a very specific use case uh for gaming entertainment products that I think blockchain is amazing at right and the rest of the other stuff um that's not me I'm not a crypto native person right I haven't been reading the ethereum white paper since whenever whenever right did you hear that market opportunity there's a gap you need an AIG of blockchain that's a that's a problem space said that before on your podcast you do these and and I and I told you or you told me that your roots are actually perfect to build a business like that so once inevitably your blockchain game fails because you know we don't we know now that it doesn't make sense at all yeah um right that's that's where I'm gonna end up blockchain insurance salesman that'll be a dramatic downfall from

someone who just wanted to make things but to be fair I want to go back to uh something Ethan said in there which is uh you know that there's a very specific use case that you're thinking about um and just like the magic example like I I actually do believe those use cases exist and I think blockchain's a choice that developers could make for those use cases so uh so I I don't think you're destined to fail by any means it's more we're we're kind of arguing about the scope of business more than anything yeah um and so on that note I know that guys were running running up on time but we wanted to close out our discussion with one of um novik's you know signature or Nico's rather signature questions um on asking for bold predictions so I know that we kind of hash this out Tim your opinions have been clearly made known Ethan as well um but if you guys could just go through and maybe say like what is your boldest prediction that reflects your Optimist

or pessimistic stance when it comes to crypto think about like you know from the pessimist Sans The Darkest Day or optimistically Ethan you know you're telling me that your your game's gonna have a one billion in secondary royalties sort of what is Tim what's your most pessimistic stance in terms of boldest prediction of what happens if games and crypto crypto gaming becomes like a thing oh uh wait let me make sure I understood the question am I painting a dystopian world is that what you're saying I see uh if you want to that's that all right now yeah I can do it I I I'm gonna preface this by saying I I think my my real opinion is um I I think the game industry will continue as it has and be just fine and I think there will be some games that use crypto that wind up being good games but I don't think it's transformational um and that a lot of the capital that's poured in uh was disproportionate to the opportunity so so that's my my real opinion but uh the dystopian world is uh

blockchain gaming takes over and everything is about creating Financial incentives for players to play games and we effectively degenerate to uh building slot machines that are just about uh the pavlovian money response rather than actually building good games that's that's the dystopian outcome I guess uh let's see my um my prediction is that by the start of 2024 we will see a new crypto games bull market on the back of great games great crypto games that are being built right now by the people who have the belief in it to stick with it despite crypto winter uh and we'll see great games that are great that are also great businesses start to emerge by the end of next year and that will cause a rally and Resurgence and renewed interest in crypto gaming

so build now join me build now join me and build now Ethan wants more competitors it seems like um so um you know again says all pushing the same Rock up a hill and then once we get near the top we can start shoving each other off the top off the top of the mountain right let's all get the rock up there right and then we can pull out the sharp Elder I mean you might be right and in the beginning of the internet it was all cooperation let's build this glorious thing and then it was capitalism so that is potentially what may happen um but in the case again that you do want to be like Ethan and Bill now this is again Ethan Levy um you can get in touch with him uh via LinkedIn you can join the deconstructor fun slack group and and message me as Alex has and uh listen to the podcast

I'm I'm a very internet person nowadays um gotcha and if you want to align yourself with the guardian of traditional PC gaming um and you want to get in touch with Tim you can find him uh let's see uh Frost giant uh.com is our our main website I'm also on LinkedIn I guess can I wish list uh your debut game yet anywhere please yeah that is uh you can wishlist stormgate on uh Steam and there's also a beta sign up page at playstoremgate.com awesome awesome and then Nico we'll be able to find you in a Dao fog Dao correct in the future if you're tokenized economy for podcast creators so if you'd like to get in touch with Nico you can on Twitter I'm also hanging out on LinkedIn and you also find me kicking

Ethan's ass in storm Gates when the betas are I've never been good at rts's I would say yes it wasn't very good but I do miss Lan parties oh my goodness this one's for you guys because it's got Co-op against AI so you don't even have to fight each other you can just fight and if someone tells me that I need to create more pylons like I'm out I'm out man I'm like I'm out like there's just no chance don't take it all right thanks guys this was awesome um and with that we're we're out [Music]