Guild of Guardians on Immutable + Web3 Pulsecheck

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bya basis a simple two-step integration enables them to Drive Superior results for advertisers while increasing arpd for Publishers in a 100% privacy compliant way you can learn more about how nefta can boost your results at nefta doio now let's jump into the episode hello and welcome to the Nova gaming podcast I'm your host Nick oori we have a great episode for you today our topic is one of the most anticipated web 3 games of 2024 Guild of Guardians they recently announced a pivot from real-time RPG to autobattler and immutable also released a new white paper offering further insights into this pivot particularly on the web three front the game is in soft launch uh set for a May 15th Global release so we wanted to assess the updated design of immutable second game which is also one of the very first on its new ZK evm blockchain and in this episode we also wanted to take a little pause uh now that we're already a quarter of the way

through the year to evaluate where the web 3 gaming space really is with a fresh crypto bull well underway what does that mean for games and have we learned any lessons from 2021 2022 or is it just tulip Mania all over again so to dive into all of this we have naic's very own web three analyst Deon Becker who just published an in-depth look at Guild of Guardians which is a must read for anyone interested and I also had Robbie Ferguson who's the founder of immutable uh on the show on the January 24th Episode talking about the mutable road map for 2024 which is definitely also worth a listen to get a sense of what one of the biggest ecosystem players is up to and we'll put a link to both of those in the show notes so with that Devin welcome back to the Pod thanks thanks for having me always great to talk to you uh definitely you're staying on top a lot of this stuff so it's awesome keep these conversations right back at you right back at you so all right let's get into it and let's let's start um just like with the intro let's start with Guild of Guardians so why is it a big deal what is it um and

what are you seeing them doing that's interesting yeah I mean it's it's a big deal partially because there was only so many games that kind of survived that start a big boom in 2021 2022 when everyone got a lot of money and a lot of people just kind of silently burnt out and obviously big players like immutable can't really afford to do that and they you know they've had to sometimes make big refocuses like they did with um Gods Unchained which I think was pretty successful and so then they kind of had to do the same thing here which I think was is a pretty big deal to have to make a big pivot because uh the big downside of web 3 a lot of time the way it was run is you're getting people invested early you're giving a lot of promises you're putting out these white papers with all these design promises ahead of time and then you know reality hits and you've got to Pivot and that's the case here with guilda guardians they've got to like sort of make a little bit of a of an adjustment with people already invested in the game and I mean it's not just a little pivot I mean we're going from a real-time RPG to an auto battler which is a very very different type of gameplay arguably a different player

base entirely certainly in web 2 um there surely is overlap but it's not like a one to one and so to your point with all of these players already invested uh early on into a real-time RPG what's the sentiment like what's going on and why these pivots why did they feel they needed to do something this major drastic almost uh in in my opinion yeah it's definitely there will be people that are that are somewhat dissatisfied with this Al together I mean myself like I would definitely have much preferred to play a a real time I'm not really into the auto batt genre although you know there's plenty of RPGs that have Auto battling sort of as an option where you just kind of autoplay especially in asiia markets so it's like there is room for that sort of transition however that being said like it's definitely a pretty big change just in the game in general and I think that is going to be a struggle for them to do it but the it was it was one of those things that was kind of necessary because what basically happened and of course you know they they would know the details better than me because I'm going off what they've said publicly but they

basically ran into a situation where it was really not looking realistic for the deadlines that they had to try and put the game out their partner was not really keeping up with what they needed to do to to get the game releasable because you know they'd add some Alphas they had stuff somewhat working but it was just clearly not going to hit what they were trying to do so they had to pick up a new partner now whether it's coincidence or not but this new partner mind loader happens to be quite good at making autobattler games and this is sort of their Forte you know it seemed like it also might have been a simplification in terms of trying to get uh the the real-time combat into some sort of mode that they could make work because it's not easy to make something like that especially what they were trying to do was a squad-based system where you were kind of switching characters but also real time and what they were doing was very difficult to achieve reasonably honestly so uh they basically just pivoted that to being like well let's focus on the parts that are essential to web 3 which is getting different characters forming up the party and going through these dungeons so they kept that core but simplified the other parts so that mind loader could basically help them hit that those deadlines and so far they actually are

following that road map that they gave which was for a q uh Q2 2024 release which they're on target for right now and it's a soft laun at the moment in Canada so you can play it up there okay so let's talk a little bit about the actual changes um they they have nfts obviously and they have a single token economy the the Gog token Gog um what changes did they make to those uh and how do they play nice with the new uh game mode or the game play style that they've uh they've pivoted into I mean essentially what what the overall changes are is to basically focus more on appealing to the web 2 audience and making the web3 is a little more optional so they've kept you know the the stuff that that way existed in there as still existing in there just maybe isn't as important or as critical to the gameplay where you're not dependent on having nfts to be able to play for example they're not critical to the game play they're just better uh and I mean we'll see if that ends up working out for them but they definitely made it a lot more optional they also simplified a lot of the economy stuff which makes

sense considering the complexity before and not really anyone figuring out a great game plan for how to run this sort of open economy stuff so they basically simplified a lot of that down as well to make probably make quite a bit more of it not onchain although there's a lot of stuff they say in the white paper for example that you know nfts this nft is that where they don't really get into detail on what exactly will be there they leave a lot of stuff vague like the use of the term resources here and there without really defining what that means so they definitely left still a lot kind of open which given they've already pivoted once seems like the smart play to be like well you know we're going to have to figure this out as we go obviously they have some public display with that soft launch in Canada but they did have the one interesting element that they kept which was trying to go with merging being an important component around uh crafting and things like that which you know being a resource in economic uh driven game you know is still going to be a part of that we'll see how that works out because that's also still not super well defined but it's interesting and how do the web two and web 3 components work together now I think uh in Europe piece uh for

navic in the digest uh you noted that the nft holders could potentially be overpowering the web to players uh and of course you know pay to win is never popular with players in any genre of games doesn't matter if it's a real-time RPG or Auto Battle or anything else so uh what what in your view has happened to the web 2 and web 3 modes if you will and how well do they uh jive with each other from a player perspective right they kind of left themselves a little bit of problem because they sold a bunch of character nfts first right where they're like okay we sold all these nfts we promised that these are going to be super important to playing they have to have some value but at the same time like you said they can't be totally pay to win so they kind of had to find a balance where it's like okay they're going to be a little bit better we we're not going to shy away from that like there is a reason to upgrade towards this path there has to be some reason to justify doing this but at the same time like you could still play as a free-to-play player and participate uh and you don't have to touch the web3 economy but they're still giving additional benefits to the people that bought those Founders level uh nft so

they're going to get additional stuff whereas uh people coming in later you can basically do what you know I think a lot of games will do which is take your characters in the game and then turn them in nfts for a price right which and they haven't been super clear on whether or not you are spending say for example tokens to do that or just holding them or exactly that process in terms of cost things like that which I imagine they're actually going to have to adjust over time because you're dealing with a supply that they're going to have to manage of nfts um but they also set up a system where there's a reason to burn uh Heroes and nfts to sort of get resources back and upgrade your Heroes but they basically designed it to be very similar to most gotcha systems out there which is you know around collecting things and then burning duplicates uh but they just have this extra layer of when they become nfts then they're a little bit better because of course that that costs a little bit more maybe and they're a slightly more exclusive but there's still reasons to burn the duplicates and uh we'll see how high that goes but it is definitely going to encourage a little bit of pay to win element in the sense that of course nfts are more

likely to cost real money as opposed to just earning them through gameplay yeah and I think that also introduces a potential problem with the the major platforms you know if you want to be on mobile you know Google Apple um while they're loosening obviously their rules uh and and maybe loosening isn't quite the right world they're defining they're better defining their rules let's put it that way not loosening um and so it's always going to be a fine line with having nfts and gotcha systems and um things like that what do you see as the path that immutable has here to get to Mobile and to to be as broad you know as a web two game right and that that of course is always the goal we're going to talk about that in a second kind of more broadly but uh you know the web two piece needs to be super accessible and super accessible means it has to be mobile essentially um so talk a little bit about that and how are immutable navigating that that uh in your view there's I mean I think there's two easy ways to approach I mean to rules I guess of them to to appr it with one is around

the gambling sort of laws that that Google was trying to find and I imagine those probably apply to Apple at some point as well and so I think it's just a good process to follow which is that uh basically if you do anything where you're getting a random output that random output should not be an nft right then and so they they they kind of I think leave a little bit of wiggle room there by defining exactly why that's the case meaning they don't want something of a dollar value potentially coming out of one of those boxes now if you get something out of a loot box and then you can turn it into an nft later you're making a conscious Choice knowing the exact Financial value potentially of that thing when you make that conversion and at that case that that's just a transaction that I think everyone's kind of transparent on and it's not gambling anymore so I think that's actually pretty easy to understand uh application of the rule which is to say just make it so that people could turn things that they already know what they are in dfts and but they could still get random things prior to that process so they're doing that of course you could get your Goda characters and then you could turn them into an nft later and I think that process makes it pretty straightforward

the other thing is making sure people get their cut now that's more on Apple side which if you're making sure Apple gets their cut of things they're generally not going to complain and in this case if you are basically getting we're creating Heroes through some process that still involves Apple getting a cut of that now it's not going to be 100% right because you might be upgrading Heroes to nfts that you didn't uh purchase in any way you just ear through gameplay but that's probably not going to be something that's a big problem it's more you know hey if you paid to summon a car with the gotcha and you give an apple a 30% cut for that inapp purchase they're not going to care as much that you turn that to an IAP and that gets traded because it's not you know duplicating itself there's no breeding system outside of it where you're making more it's just swapping hands but they already got their 30% on that generation and I think fair is fair and obviously Apple could disagree the reviewers could be random but I think if you apply those rules where make sure they get their money and make sure people know what they're getting that's generally what these sort of Common Sense parts are about let's talk about the token uh the Gog token uh it's an

important part of this particular game not every game of course has a tokenized economy open economy uh open economies are notoriously hard to control um we talked about it many times on on this podcast with uh various other games as well and uh I'm just curious to hear your thoughts on on how this single token model it's both for utility and for governance um how do you see that playing out and then I have a whole bunch of questions around security and how how well well having this kind of Auto battler which really is automated gameplay essentially that makes it much easier to grind for or and to potentially manipulate um through Bots you know token generation token harvesting token mining whatever you want to call it so let's talk a little bit about the single token model first and then we're going to get into the security elements um of of how this uh actually works in real life yeah definitely like I mean first off I think the the easy answer about the single token model is that I don't see a world in where it makes a lot of sense to have it both act as governance and as a

utility token like I mean that's like that idea of voting with your dollar like it's right uh you're just two very different purposes one you were trying to use it as some sort of medium exchange or store of value or whatever and the other you're trying to use it as something where you're basically holding a vote with it and it there may be ways to like sort of abstract that out slightly where you're not literally using the token to do it but there's some other process that involves the token but again that that just looks like you're buying votes essentially and I've seen that in the past you know with many games that did have a governance token they still were if you could purchase that token then you're purchasing a vote and that doesn't really make sense but to be fair democracy hasn't really been figured out in the real world so I don't expect video games to figure it out any sooner I me dollars do vote technically right I mean c citizens united the you know the Supreme Court famous Supreme Court said corporations can spend unlimited amounts of money on uh you know on on essentially influence I mean dollars do vote here in this country at least so um but anyway we digress we digress absolutely but uh yeah and that's going to be problematic right they don't really get into that in the white paper

they kind of leave it vague like yeah it'll probably be used for some governance but they kind of leave it there because again no one's figured that out uh no one's really had like a model that really showed how that would work I mean some of the models are even just basically treasury claims and not really governance uh you know kind of the axi model was essentially sort of similar to that in the first place um but as far as the rest of the utility goes that they're in kind of a weird situation because uh they don't seem to want people to actually really truly spend the token they just want people to sort of like hold it for different reasons meaning holding it to be able to maybe mint more nfts or holding it in in terms of staking it to get more of the token so they don't seem to have any any like real way to drive people to spend it and that's the part that concerns me because in the system like where you're generating tokens or providing Supply over time now they have their supply you know chart and stuff like that obviously they' planed that well ahead of time this is not like a new token it's been out like they've had to deal with this and they already pre-planned that so they've got this whole curve that they're planning on Distributing this over time but I don't think that I've seen an adequate plan of how they're going to absorb that over time how

that's you know even if even if the game goes gangbusters in terms of people loving it and wanting to spend money on it do things they're not really showing away because everything's talking kind about holding with like one weird exception around this sort of uh web 3 on the web nft burning recipe system for other like it just sounds like this weird kind of thing that they have is a sort of plan to sort burn nfts or get rid of stuff or drive some sort of spending and I've seen that sort of in in late game models where they struggle with Supply like um many uh Nations sort of end up like fourth season doing that where they're like asking people to do all these different kinds of burning nfts to try and reduce the supply because it was out of control I I I mean I could see that desperate kind of bonfire move going here but you'd have to really incentivize people strongly because you have the situation where investors are going to be at some point dumping these tokens onto the market and then players are going to be doing the same and then people that Stak and get staking rewards are going to be doing the same everyone's Zing them on the market who's going to be scooping those up and where are those going to be going I don't think has been adequately answered for me to not be skeptical that

this is not a great plan so far yeah it sounds risky and it sounds like maybe there haven't been that many lessons learned from these types of single token models from from the past um okay let's talk about the security oh and actually before we get into the security element um you actually looked at the the price and obviously caveat this with the fact that obviously the game isn't live yet the game isn't broadly distributed yet so of course there's going to be uh downward pricing pressure unless you're speculating I mean you could argue that it should be going up in fact before launch because the more hype there is the more people want to buy into it but uh tell us a little bit about what you found by uh when you looked at the the the pricing moves over over time for the Gog token yeah I mean like most most things that came out you know in 2021 2022 and then sort of like the market just kind of crashed they pretty much just went down to a a sort of idle value where it just kind of sits there around a certain value that may or may not be kind of its true value uh it's hard to say right because we don't really know to price these things yet and when it's a game that's not even live yet what are

you trading it based off of it's just pure speculation and if there's no speculation happening the price isn't going to move which is exactly what you see happening with most of the tokens out there because there's no reason for it to move people still might be trading it but it's not going to be heavy now obviously like it started you know getting a little bit of movement around the pivot and the fact that this is sort of impending and coming so I do imagine like we'll start to see a little more volatility in it whether that be up or down I can't say for sure because it again they left a lot of stuff vag and I think again that was on purpose and it's probably like prudent at this point to be a little bit vague because that's game design like you can't really pre-plan everything and expect it to all go according the plan obviously you you want that to be a lot of it like happening in the studio level and not like in public but they're kind of in that point where they've already made a lot of public promises they have to keep at least partially and so I imagine like at first it might not be too bad for the token and I'm just totally speculating here and not really this is no investment advice of any kind but there may be some some positive interest in the token first only because like the

supply is going to be lower right now like the the full distribution hasn't hit people might be thinking oh this game takes off like I could take advantage of that with the token and so you might get some speculation there only because like the market right now is very back into speculating on crypto and so that could definitely lean into that obviously like there's not a ton of uses for the token yeah people I'm not sure if people can stake at the moment I'm not sure if they have those staking life but if if so people could scoop it up to just stake it all in there which just means kind of you get a dump later on uh you know in a big price crash but it really depends on how much they sort of have active I think when the game goes full launch how much you could do with this token uh they've got to deal with like even just launching onto a new blockchain and then dealing with all that migration stuff and I imagine they're hoping for maybe some web Tu success first before worrying so much about the web 3 but they still got a you know plenty of investment on that web 3 side like essentially player investors they've got answer to amongst like private investors they actually took money from yeah um lot to think about

there uh the the automated gameplay let's get on to the security aspect here I had uh the pixels. XYZ uh founder on the Pod I think last episode or the episode but one and uh we spent probably about a third of the episode talking about uh anti-bot detection fighting Bots uh and whenever you have something that acrs value um we know this even from web 2 games you know gold um farming and uh you know we just talked about Zing a poke before this call and how you know there's a gray economy around those those as well um the chips there so whenever you've got something that acues value in games whether it be real value especially when it's real value um you're going to have Bots you're going to have Bad actors coming in now maybe that's not a problem yet because again there's not a huge amount of value accruing to this Gog token but talk to me a little bit about um what is your view on having an auto bidler type gameplay which literally lends itself to bots like it's it as if by Design um and uh the token itself right I mean like

obviously the the the sort of idol genre or Auto Battle genre whatever you want to call it you know it's fairly popular and that's you know they side a lot of Market Research in the white paper and things like that to sort of justify the move is being a good one because it's a popular genre but of course as you as you rightly point out there's not monetary value to be gained from actually having Bots play that so obviously there can be some like if you're selling accounts things like that but that's a lot more difficult to make sort of a a bigger business out in this situation depending on how they do the distribution of tokens and the value tokens and things like that definitely could be a problem for them we definitely saw most of the web the sort of gen one web 3 games and and I depending on how we chop those up but pretty much most of the games we've seen so far like ended up with some sometimes very significant level of bots playing them um and you know it's in we saw situations where games like split lands try to go like well let's just make them good to economic participants things like that and and if you think about it like it makes sense where if you're treating a game like labor in some form then aut comes in to try and automate labor which is what we're seeing as a

thing going on in the real world outside of games pretty frequently these days especially with AI and so it only makes more sense like that that would be the problem and the the question that came down a lot of times in 2021 2022 is what are the players doing of value that justifies them getting something of value and that was you know how are they adding value to the game so that you're giving something sure and obviously there's like you know competitive models and things like that but if this is an auto battler there's not really like much skill to be had so it's kind of hard to justify like Hey we're rewarding the most skillful players they're they're talking about a model where they're sort of rewarding off leaderboards and stuff but if there I mean there certainly is some skill in terms of selecting the right the you know the right characters and adapting but considering there's not really a lot stopping you from sort of netdecking because there's no real interactivity people just pick whatever the meta is and therefore like that's their skill like unless they're keeping it secret uh pretty much everyone could do it and it's just who could spend the most to actually have those things similar to what you see sometimes in highend trading card game stuff where if the

meta is expensive then it's whoever can spend the most to actually have those decks will do the best and that's like an unfortunate reality of it then when you tokenize that stuff on top of it you're talking about like essentially prize money or something that you know has monetary value that's going to be very difficult for them to manage because there's no antibot technology that truly works and there's no reason for there to be as AI is evolving quite quickly and even more reason why it would be very difficult unless you're having AI try and detect and block other AI then maybe you know that sort of War could work out I guess better than us trying to fight it but uh that's you know it's it's not necessarily solvable problem and I do think it's better to just like accommodate for it in the economy design and I don't see that doing like a leaderboard model on an automated game is going to really do that I mean the that was a big problem in one of the the earlier experiments that I think it was a decent experiment which was like Mir 4 and Mir M they just got overrun by Bots like super bought Farms everywhere and the only way it was sort of manageable for it for the company was we made was basically to basically just charge $10 for those Bots

to be mining like per account and then just ban them in huge waves and then charge them at $10 again and it was like well this financially viable for the company at least because now they're just getting paid to do these bot wve banss and I mean that's not that's like an old model that goes back to like the something awful forums for just Banning people get their 10 bucks again but I don't think that helps the player base out and I I I I hope they have another answer for how they're going to distribute these tokens obviously there's Community rewards which are a little iier to give to humans I think yeah yeah yeah as I mentioned uh the pixels. XYZ founder a good third of that that interview is because they have they now have hundreds of thousands of of Da tens of thousands of um concurrence uh their token is going up a token go up and so whenever you have that situation you know you're going to have Bad actors entering the the the economy and you're going to have um Bots uh automation is going to be happening and so yeah good luck to these guys I think I mean if

anybody has the resources I suppose immutable does in the space but um sounds like it's a it's going to be a potentially an uphill battle okay well why don't we oh before we go into the kind of tldr what what are your your your views on the potential success or or or failure or middle of the ground for this game how big is the market for auto Battlers and uh even in web 2 and then what sliver of that do you think is going to if it's even knowable is going to migrate to the web three um component I mean overall the web 3 Market as a player base is not really that huge for like real like Gamers but there's this weird mix of like people that are not necessarily Gamers that are interested in this base but the problem is like we we kind of estimate a lot of the web 3 player base off of a mix of bots and people that are into it for the play to earn and it's not really like Gamers Gamers that they're trying to like get to play the game Gamers Gamers is it's actually not that huge of a of a player base yet but I think it's one of those things where where like everyone's open to convert players but if you think

about it like most like new business models don't really replace the old one and like they just kind of extend it a little bit like arcades are still a business like they're not as great a business as they used to be arcades are still around but every one of these business models consoles still exist you know like they don't go away they just kind of shift in terms of like player base things like that sometimes just new people being born that end up playing these things and so in this case like you're not going to convert a lot of web 2 to web 3 but you might get some people interested right now there's like a lot of negativity to overcome in it and a lot of it rightfully earned I mean we just had s SPF finally get slapped down uh so at least we're getting some public punishment for some of these Bad actors but it's definitely still a problem and I think uh it's going to be very hard sell to a lot of people and I think most of the people are going to be involved in the web 3 were the people that were already involved in the web 3 for this game uh and then some of those even might be like hey I don't want to do with an auto battler and just sold it off to someone else so the question is can they get enough people excited about it when they're also backing off from making it crucial to the game and that's

such a difficult needle to thread because you were like hey we got to make web 3 matter so web three matters but we also got to make it not matter so it doesn't matter to these people it's like how do you make both both play races happy and and you know you could just go the dramatic direction of like onchain games and extremes and like this is an nich audience we don't care and I think that works for that but like the the rest of it it's going to be it's going to be very difficult and I don't think going to an auto battler necessarily did the many favors in that sense uh because you already got these people sort of running this bot mentality sometimes in web 3 anyways uh that it's just going to be them sort of like almost like competing with the web two people in a way that might end up making the web two people kind of dis de demotivated because they're not really interested in the web three part that that is sort of outpacing them on the leaderboards or you know just like spending to win the way you see sort of pay to win games some really uh make the the free to playay players or the sort of dolphins uh disinterested in playing because they they can't spend that level so many of

these games that are trying to balance web 2 and web 3 uh you put it nicely there actually you know they need to make web through matter so that web through matters um but at the same time they need to appeal to a large enough audience you know meaning Web Two because everybody recognizes that this web 3 player base just is not big enough by in and of itself uh there just aren't enough people I think who really care about owning nfts like or you know digital ownership at this point in time maybe that'll change over time maybe that'll there'll be new PE new kids being born into it um you know skins and fortnite are a very very big business you know ugc content is a big business and it's mostly sk's younger right um but yeah I think converting that web 2 audience I think we've seen enough we've had enough years of enough shots on goal by enough companies that have had enough funding um and enough experience on their teams not succeed with that yet I'll caveat that with it yet um that it it is

an uphill battle I think so um okay let's with with all that said with all of this uh Preamble uh what is your view Devin of uh how Guild of Guardians uh what is what are his chances pros and cons so the hard part is like if I just completely ignore the web three side of things uh you know and just focus on the web two side I think it's kind of tricky uh in the sense that it's not totally original in a lot of ways the the core design is not terrible like they they you know a squad-based auto battler is is fine like there's there's a lot of those they seem to work okay they've got a sort of Rog light way of looking at the the dungeon and you know like essentially procedurally generating content but the question is like what's the hook to really make it interesting when you read the white paper it really just sounds like this blueprint for grinding um which you know from an e economy design that makes sense but if that's really what the game kind of comes down to like over time that kind of becomes not that interesting without like an IP

tie to it like I watched like something like uh the street fighter dual game right that was sort of this gotcha grindfest kind of game and you know people that in the street fighter interested in it for a while but the people it's it's not going to like sustain as a game that's you know fun in and of itself without that IP attached to in this case G the Guardians is is relatively generic fantasy and that's not really super appealing that being said people could still get excited about the game for the three side of things and sort of build up like a a player base around that sort of play to earn like enthusiasm that that probably isn't sustainable but I think like some people are hoping that the sort of a flywheel kind of effect as they like to call it which I think is kind of selling it probably a bit more than it usually is but you know getting that initial sort of network effect going uh they might be able to do that if you know we're in kind of a bull market right now and people are excited and you know flooding from especially other countries into just kind of jumping into that hopeful play to earn even if it's not realistic uh that might that might help

it going but that being said this is not really like a super multiplayer game to where that's going to like provide a lot of network effect to get people playing because it's still kind of semi- single player content from what I could tell I mean there might be some PVP but that doesn't seem like the core of the game so I I don't know like if they could find like a real I think a niche audience and grow from there they probably have more potential than trying to mass Market this I don't I don't really see we're not in a place right now where you could just launch a new mobile game and mass Market it without like a lot of luck and a lot of money and that's why you see even the companies that know how to do it stopping releasing games they're just like we we can't even do it so it makes you think you could do it because the one advantage is the web three side and that's the side they're basically semi- copping out on to to compromise for that so it's it's a big ask at that point yeah well we wish them good luck and I wish Obby forus good luck on the January 24th Episode and he is very excited and he acknowledged actually on that uh on that show that you know they have a lot of TI launching over the next year or two and he fully expects you know mo

most of them to be failures you know in failures in a kind of commercial sense um and that's that's games for you um but you know his hope and um I think expectation certainly uh was for there to be that 20 10 20% of games that launched that actually will have that and he believes there will be a mass Market audience for them so we wish them luck um and web 3 certainly needs that uh at this moment in time but with that I do think we need to so we said at the start we're going to take a little beat here a little pause and kind of look at where are we with web 3 because we are right smack in the middle of yet another crypto bullrun right and that's what launched web 3 last time around was a big crypto bullrun right so what have we learned in the interim and what is what are our expectations for what this crypto bull Ren is going to do um are some of the business models that we're seeing emerge this year uh are they any different to what they were in 2021 um

have we learned any lessons um are we in the middle of another tulip Mania is play to earn actually sustainable can you build a real play to earn game again if you listen to the pixels. XYZ episode um they're very bullish very bullish um to bring them back that word again from 2021 they're very bullish on play to earn and they're leaning into play to earn they truly saying like we are a play to earn game we believe we can control value creation um we believe that token price can go up essentially indefinitely um let's see if that holds true but with that I want to just uh you know Devon and I are just gonna kind of talk a little bit about where are we in this market and how do we think this is going to play out differently compared to last time so a lot to unpack there so why don't we start with Devon kind of just your views like we're at a crypt that's what launched the last web 3 wave are we going to see the same thing happen this time and if so how is it going to be different I mean like this

this is what I've been say during the entire sort of like short winter we had was that basically the the Western markets will be interested as soon as there's money to be made and that's exactly what happens is we had the ETFs happen and there was money to be made and now here we are interested again I don't know if I'd call this a bull market for games though like because if we're talking about what really kicked this off was Bitcoin ETFs that doesn't really have a lot of relevance to games as much as we like to outside of you know something like zebedy where there there's a tie directly to bitcoin uh and I don't think Bitcoin ordinals really count for this as something that's really game tied and so that makes it kind of questionable obviously ethereum goes up with Bitcoin and that's where it starts to impact games because as ethereum goes up that's where the games are generally run on in some form or another in a way like whether they be layer twos or tangential stuff or stuff that's similar to it and so obviously there's investment coming in and so that kind of perpetuates that cycle at least for a while longer right where you're seeing more money come in but you had a lot of failures in the beginning where there's a lot of people that just silent failed and then you have some of these games that are just not even released

yet getting kind of re-upped they're getting sort of extended Investments essentially and it's like is this just a well this double down on our potential losses or is it like we really believe this is going to happen or we we have to for the sake of our company really believe this is going to happen and I think right now I haven't seen any thesis on why this is different or better other than it it's different and better this time and and the fact that people are still kind of championing play to earn without really justifying why it's different is it leaves me pretty skeptical that this is like a long-lasting bll I feel like this is kind of a a sort of let's just get money going again and hope for the best uh wishful thinking I'm still kind of bullish on more of the Asian market not caring so much about this being a money play and more of an actual like exciting technology and design thing to be the real carrier forward and that this might unfortunately be shortlived but I would I mean for myself I would love for this to be you know BL indefinitely but I got to be realistic I

haven't seen any reason to believe that yet it strikes me that there are maybe three or four buckets um of web 3 development going on so there's your absolute purists um who are all onchain stuff like they're doing it because they believe that that is a type of gameplay that needs to exist and there is a a big enough audience they recognize mostly that it's a relatively small audience but a big enough audience that's prepared to spend significant amounts of money um real money and for that to be a thing so fully onchain games then you've got the kind of the middle mostly and this is where most people most developers fall is that middle you know web 2.5 where they're trying to straddle the web two and web three they're trying to be on mobile because that's where the players are on web two but then there's this extra value creation from web 3 um let's see if there are any successful examples of that coming out um and then you've got the The Rebirth of play to earn which is like no truly believe that there is this type of gameplay where I'm

grinding for tokens and those tokens will ACW value because there'll be more players and more participants in the in the ecosystem and the uh economy coming in than are taking value out right and those are kind of the three buckets and then there's this there's this hybrid Asian bucket I think which is um as you as you point out they're really interested in in the technology and they think that technology can actually apply to games and it's not really called even web 3 so much there it's it's you know it's just a it's it's a feature right it's a feature or it's a a set of technologies that can be applied to game design but not for financial reasons and not necessarily for tokenization would that be a fair assessment of where we are right now um and maybe talk a little bit about each of those those buckets in terms of how how you see those evolving and who are the interesting players in those three or four buckets yeah I mean on in the side of the the onchain game sort of thing I I think of it's similar to a lot of other emerging techn that don't really take off as a game platform

immediately like VR for example is in kind of weird Spa rle right where clearly there's potential no one like I think like discounts that there's potential some games could be amazing with it like there's really cool things you could do but clearly the Market's not there the technology maybe there's you know something just lacking in terms of getting people to really adopt it a lot of it's comfort and and sort of Technology needing to actually Advanced enough to make things more comfortable and and I mean you you even see that with like Apple's headset where people are just like this just too heavy it's like wearing a helmet all day uh and those kinds of problems like are not solved overnight and so the onchain stuff is the same kind of thing there's just a lot of hurdles and sort of problematic things I think it gets there eventually to some extent right it's it's a cool technology uh I think we know some cool things you could do with it that are that are amazing I think some of the stuff like David Amore is talking about Brown the sort of ideas of composition are fantastic but I think that's also like a little futuristic for where we are right now it's a little flying car for for where we're at where it's like yeah you could build but it's maybe it's not practical yet uh but someone's got to do it right someone's

got to lay that groundwork and I think I cheerlead those onchain people all day long I think that's awesome I think what they're doing is amazing but I don't see a commercial reality for that at the moment and that's only just because it's early and and I would love to forit to be otherwise but even the technology of blockchain itself as early that they're building on and evolving so expect that to shift now as far as the the the sort of play to earn bucket I think the the easy way to look at is like you keep talking about this these other people coming in to sort of like spend money right we like well then that if you could balance that out that's fine but if you're just talking about kicking the can to the next player who's going to earn and Kick the Can to the next player that's pretty much a Ponzi scheme or a pyment scheme at that point right like that's just hoping the next guy will fall for it that's where we end up with a lot of art nfts that are kind of falling that the value of this is is how much the next sucker will pay and that's not real value so if you're looking at it in terms of like a two-tiered economy where there's players that are essentially the gold farmers and there's players that are willing to pay for that gold as long as the Bots don't ruin that that that has some potential for some sustainability but that demand needs to

be there people need to be willing to buy that gold people need to be you know willing for that to to exist there was for example some success from the Diablo 3 auction house uh blizzard didn't shut it down because it was a financial failure for them they shut it down for a variety of other reasons but there is like some potential for that to work at least short term right but you have to have the demand there and that everyone keeps talking about the supply side of like hey we'll control how many tokens people get well yeah but can you control how many people tokens people buy like that's where the effort's not really being put I it I find it ironic because it's like we know how to get people to spend money because freeto play has been doing it like turning it into a science for the last decade plus I think I think we've got some ideas on how to get people to spend money but they do it this weird roundabout ways instead of just selling people stuff and I I don't know if that's really a good business model and so they find some way to make that work if you think about what that model actually is in real life you're actually you're you're flipping things on its head right you're not actually you're starting with the hey you can make money right yeah I mean there was a

great New York Times um article just last week uh which was all about how the bull you know crypto bull is has brought back internet cafes in the Philippines where you know people are going once again just like they did during the Axia days in you know 2020 2021 and are essentially just grinding for tokens that have some economic value and actually pixels. XYZ my guest from last week uh or last episode uh was mentioned by name uh in there and that's what that's what folks are playing they're playing these games they're earning tokens and they're cashing them out and there there's enough demand because token go up price go up um that you're always going to find those people but but but you're then going searching it's really interesting because you're like hey you can make money great everybody wants to make money of course that's something that people will do for sure it doesn't matter how awful the user experience is like if there's money to be made they're going to go and try and make money but then they they they wait to try and figure out like who's going to be buying these tokens other than future speculators and I think that's

just a really that's been always in my mind the biggest problem in the plate to earn space it's it's it starts with a financial motive and it then goes in search of the uh I want to spend on something for the pure joy of spending on that thing because I'm enjoying it yeah that's just how I mean give me any example in the history of human invention where that has worked out uh I I would struggle to think of something like that where you you go in with the profit motive and then you try to backfill that's most of tech right we we'll get we'll get a ton of investment we'll figure out how to make money later uh so that worked for Tech early on well but I would I would it they start with like we we want to create a we're going to make a product that people will want they're still starting with the demand side goal right exactly Market a goal they want to make a product that like everybody wants so much that eventually it'll start to make money right um and and here it's it never starts that way it starts with the financial it starts

with like hey I want to be able to make money and I want people to make money but I'm not going to figure out money just sell stuff to people in the game to allow people to trade it like you're actually making less money by asking people to trade your thing than just selling it to people because you're not selling it to people the other people are selling it to people and it's like you're actually kneecapping yourself if you haven't figured out how to make sure that that's going to work for you long term and it seems like you said pretty backwards I don't think it's like a unsolvable I just think people are kind of the way I've been putting it lately is I think people kind of look at all these weird obvious skated token systems other B curves and like as a cheat code for like uh we'll figure out how to make we'll figure it out at some point we're going to put out long white paper yeah yeah so no I I think that's you know and the word tokenomics is making a comeback as well um I've noticed that more and more in the pitches that we get for you know for guests to come on to the podcast like oh we have the best tokenomics like we figured out to a formula um tell that

or do tell don't keep it a secret like you know give it to all of us um okay so so I think we we seem to have a similar view of the play to earn I'm more than happy to have guests um on the show by the way and I'm I'm more than happy to always be proven wrong I think we we both are like we're come and be like hey we're gonna make you here's how it's going to work um but but so far I have yet to be convinced U by any of our guests or by any anything I've seen that you can make play to earn work um any in any other form other than during a crypto bull when all the prices are going up in Tandem and everybody thinks they can make money and leave somebody else holding the bag right like you can in a pay to pay to win sort of uh place where where that's okay I think that's why I think Asian markets are a little more suited for this stuff because it if pay to win's acceptable in in in like the player base it becomes a little more viable I think personally yeah and why do we talk about that that bucket then because that's uh and then we'll save the web 2.5 bucket for last I think I

know what you're going to say about that but let's go let's talk a little bit about the Asian uh Asian bucket because I think that is uh under discussed certainly on um certainly on this podcast um and I do hear from many guests who have uh exposure to to those markets that uh the technolog is further along or the the use of the technology uh is further along and it's much more accepted but it's not accepted for the reasons that we typically talk about here which is either play to earn or you know some kind of like nft ownership that the you know the the Holy Grail of monetization in a web two game right which we're again we'll talk about that in a second what what is what is differentiating the Asian markets um as it relates to blockchain technologies that are being used in in games I mean there's definitely still sort of lagging play to earn sort of the vibe that came on from the games that were developed earlier on when play to earn was like more of a thing and I think that's still considered sort of acceptable and sort of I think knowing that that that's not going to last forever like people just kind of write it out and then the game will be gone and then what ever they'll move on to the next game and I and I found talking to like South Korean

developers you know during Korea blockchain week things like that that Korea could be kind of like that where it could just be one hit game for a very short period of time that everyone's playing and then it just gets replaced and that's kind of okay there because they have a very kind of different Market whereas Japan specifically has been very bullish not on crypto per se but on nfts to the point where the government was like nfts are going to be great which you don't hear from most governments especially South Korea which is like hey don't touch crypto and games like they just don't want you to do it and so I think Japan has been very very Pro about that and obviously they have a lot of other Financial issues going on with their government right now that they're trying to deal with and I think maybe they're hoping that's that's part of what helps but you that's one of the places where you have the most AAA companies like in in the space where they're like willing to experiment willing to try stuff out and see what works and I think they they actually do believe and I think a lot of people are skeptical that that developers are often greedy and I think more often than not developers don't start out greedy unless they're like jumping into space where everyone's just greedy already and I think the a lot of times the people that

are like developers are like player ownership's really cool actually mean it like they think player owners is really cool or players being able to trade is really cool and and it was very difficult to deal with that before like you know as you saw with with blizzard and Dio and Val even I think is a great example because they've had to kind of figure out how to navigate that with their their Marketplace and so Asia just like hey this is a cool thing we want players to be able to do this we think this going to be fun for the games and interesting let's figure to make it work uh and obviously they experiment different ways like the subbio Genesis experiment from Square Enix is very kind of off-the-wall this sort of weird where's Waldo narrative Adventure that's it's very different and experimental and I think that's where they're they're not looking at it as a you know a Ponzi scheme how could we make this even harder to understand white paper it's like we're just gonna try some stuff and keep building up and and and figure out what works and get there hopefully eventually but I think focusing on the nfts is probably the smarter approach because that's thought of for reason as less about play to earn because the nfts

don't have like this simple fungible monetary value and I think that helps a lot in obious skating that on purpose okay so let's talk then about what is probably the biggest bucket certainly in the Western Market certainly the US market which is this you know straddling the web 2 and web 3 world some people call it web 2.5 um some people call it play and earn some people call it play and win there are a lot of euphemisms for for what is essentially somewhat of a financialization of a game right um talk to me a little bit about have you seen uh any examples recent examples in particular of people doing it well um because again it's it's not that it can't work it's just that it hasn't worked yet and I think it's just uh it'll be interesting to see if if somebody cracks the code who is in your mind closest to cracking that code and what are they doing that's perhaps different to what most others have done which is like we're going to slap some nfts in there for the whales and then we're going to have po a tokenized economy or some kind of token that's attached to this game for somewhat some

Financial speculation uh that's typically like if I'm being a bit brutal uh that's typically how that that works out in a in a nutshell for for most of these these games just different genres right and I think it's it's difficult to find good examples of like using the token well although I do think uh for example the the mirror games while they weren't great games in of themselves and that was part of the problem I think they did interesting things with the tokens where they made sense integrated into the economy around being a sort of resource for trading in and out of the game to a specific crafting resource that had a purpose in the game and I'm talking specifically about Mir M because I wasn't uh playing m four back when that was first started so I don't know how that changed over time necessarily but mm was designed with this idea of like this crafting material can be converted into like you know something you could sell on blockchain and then allows Wales to also be able to buy that resource without having to mine it themselves and that just helps them and that that made some sense right like I don't think it necessarily executed flawless but the concept wasn't terrible and the governance token they introduced

actually had governance stuff around servers and taking control of servers and things like that and I again not perfect execution but an interesting idea and then you look at uh like the Western Market I think something NFL Rivals was was a perfectly fine model it was like hey there's this gotcha stuff and uh you know if there's stuff that you have that you want to trade to other people you could do so and then they can do so and then we're actually going to profit a little bit from that and everyone wins because the stock going to break the game because we haven't designed this to be a system where that matters that much but it's still honestly still a little pay to win right like because you're able to buy these sort of players from outside and then bring them in and that can affect your ability to play well and uh you know I have a couple that I bought when the when the game first came out like when it was very first launched and sort of like I don't know if it was in beta or not but and I still get emails all the time about like my nfts that on the market because I put them on the market just to see and I I do see the price going up and down but it actually you know seems to actually sustain at a relatively decent price for stuff that I just got out of a a few dollar because

they were actually giving nfts out of the the the gotta boxes at the beginning sort of before uh and and you know that allowed me to see it in action and it seems to be fine uh because it's not game breing but again that's where if if pay to to win is like a little more acceptable then you're allowing outside trading and then the whales could now buy their way to like progress of some kind or or winning and if you're okay with that that's fine and the other side of it is you could go to the just fully C met route and I can just give a quick example of like csgo right where that's it's a closed ecosystem so it's not quite web 3 but it's still basically web three in a as if it was a a isolated blockchain where that you know there's just no bridging out and so people have been trading that stuff for a long time that's not that but that that works because the the game itself is again they they start all these examples are essentially uh with the possib exception of um of NFL go from was it mythical games we actually had John Lyon on the the the Pod last year but there are uh

csgo in particular is an example of a game that is so good and has such a dedicated player base already that you can essentially have this closed ecosystem on top and if they launched their own blockchain like it probably would work right like they literally could Pro probably do that so I'm just curious you know that straddling of the web 2 and web 3 where you're deliberately trying to say like hey we are trying to incorporate these elements instead of first making something amazing and then probably backing into blockchain Technologies backing into digital ownership backing into potentially some kind of trading or value transfer between players inside the ecosystem because they want to they want to be there in the first place that's kind of what I'm getting at here like have you seen examples of that really working um in in this space so far I mean no because it's it's just not a great plan to do it that way like to I think at the end of the day like if people are paying money for something you can't justify the value of that something that that's not a good idea like if you could be like yeah it's

worth this because like it does this in the game or people want it because of this that's not just a speculative reason that's it's not a hard answer like it's just make it valuable and people will buy it and I think that's been the history of purchases in games like that's it's not that hard but it is that hard right like to actually execute on that but it's not a it's not a hard concept to understand of just make some value and then sell that value and in this case you're involving the player base in part of that like the the Skins example was totally play to earn I don't you don't pay for skins in csgo you just get them randomly like I have something that have been just popped out was like worth like 30 bucks like whatever like I just you know and then that's for the box that's not even like opening it yet but they also found a way to monetize it they was like Hey we're going to charge you two bucks for a key and therefore like we're monetizing the thing that we're giving you for free and you could sell it back and forth all day long and we're going to get a Marketplace fee so they enforce royalties on the trading for their skins so it's like again it was not a hard system like you said they just they had value and they gave out

something as part of that value that didn't break the game and obviously they had a whole lot of other legal stuff they dealt with and I think that was a good precursor to some of the stuff we might have to deal with if w three is successful we we have a lot of barriers we have yet to to run headlong into that I think valve kind of pointed to to the point where you can't even trade Keys anymore they shut that down a while ago because it was like Hey people are using that for moneya laundering so what do you think we're we're gonna see happen if web 3 becomes popular I think you're gonna see that argument uh quite frequently yeah all right uh so final uh parting thoughts here from you um what do you think is is going to happen in 2024 now that the Crypt bull is is Raging um once again mostly I think most people attributed as you yourself put it uh to bitcoin ETFs um starting trading and so just making it a bit more accessible to get access to crypto at some point you would presume that would settle down you know once the kind of markets you know calibrate and reach an

equilibrium um but obviously there's going to be speculation always what does that mean for web3 gaming right like let's let's assume the Crypt bull keeps going throughout this year like what is that going to do for web through gaming and are we going to do things differently this time around compared to 2021 where everybody really mostly was just chasing a quick Buck Right like that's if if you're going to be brutal about it like that's not I don't think unfair to say um yeah your thoughts I mean I think in general and this is maybe a little bit wishful thinking that VCS are going to be a little bit more due diligence this time and a little bit more thinking uh how can we make this work but at the end of the day they also aren't necessarily in incentivized to make game successful they're incentivized for their return which means like even if that blows up the game like that's kind of still part of their business model and so it is a little tricky right because I I think generally the hope is that they're going to fund good games and then those good games will then become successful games but I think generally if we're looking

at it as token models being paid for by VCS the the chance of of them not being great ideas uh are pretty high unfortunately and so I think we might be able to see you know some good games potentially get funded this phase just because there will be some people who learned from last time but so far the indications are that like money needs to be spent somewhere and that if someone has an idea that passes enough of a smell test they'll go with it and even some reinvesting in games that haven't really proven anything yet uh so I I'm I'm hopeful that at least one good game comes out of it but I think at this point like I I'm still not even sure that that's going to be the case um because developing a good game itself is already hard doing that on the back of a token based model is about 10 times as hard so I mean I wish everyone the best luck and I I really I'm only skeptical because I want to point to the problems to make sure we solve them not because because I think they're unsolvable but I do think that maybe we're also just kind of running past them chasing after the

bucket I definitely don't want to see that happen because I think web 3 is really cool technology but also maybe we could think less about the money and more about what you could do with it and kind of go towards that more Asian mindset yeah and I'm exactly the same I think I do wish everybody the best of luck I mean game development is hard as is and creating any new product is hard doesn't you never mind you know games and so you know innovators who Embrace new technologies we should celebrate them we should salute them and and I certainly do and it sounds like you do as well um but yeah I think it is fair to point to the challenges that we face as developers and uh sometimes maybe those challenges you know is the juice worth the squeeze kind of thing you know at the end of the day that's that's really what I think we should be asking ourselves is like is the juice worth the squeeze for integrating all of these uh complicated Technologies and uh challenging user experience um hurdles that we're introducing because we are we're introducing more friction essentially through through web 3 and so we should always remember that the juice needs to be worth the squeeze um okay I

always ask our guests and I've already asked you this question um but I want to see if you have a different answer uh what are your favorite three games that you're playing at the moment or the three games you're or any games that you're most excited by yeah I mean I don't know if I have to I have to start with web three games or not because I definitely did get on the the hell divers 2 and the batro kick uh and I never really truly got sick of Marvel snap so that's still constantly in there and I and I did really really want to get into to war zone mobile but that really just did not not click at all um I did try and the web3 I tried you know to get a bit into shrapnel and playing some of that stuff but uh it's still pretty early and I think that's kind of the case for a lot of these web 3 games where I'm like excited about them for where they're going more than where they are right now which is you know like trapd and metal core and and a lot of these games like I think that look really cool I'm excited for um but I also think they're a little ways off right now and middle court seems maybe a little closer but I think the one I'm still the most excited about and this was kind of the top one in that sort of

web three games I was looking forward to which is the Off the Grid which I think they did it in a way that that makes me think that they actually have something you know worth playing but that being said I obviously haven't played it Hands-On but I am excited about that one the most because I think they showed you know it was probably scripted but still like what looked like actually good potential gameplay and they don't seem to be pushing web 3 first in it uh they seem to be pushing like hey there's all this cool game stuff like that we're doing I don't if they could pull it off because it looks pretty ambitious but I I'm I'm hopeful that that's going to be the one I'm I'm when you ask me this question next just cting that nice all right well that and I love the fact that you still have optimism for web 3 and you're excited to try web 3 games I think we all should be we should all be interested in in this industry to see Innovation happen like I said and and there's definitely Innovation happening uh in this space um there's some chasing the buck but there's definitely some Innovation too okay well um that is a great place I think to today Deon uh thank you so much for coming on the Pod as always uh real pleasure and it was a

lot of fun uh talking with you about uh kind of our unvarnished thoughts about where this industry is headed and and what we could potentially expect in in 2024 so thank you absolutely and a big thank you as always to all of our listeners we'll be back next week with more interviews more insights and more analysis from the weird and wonderful world of web 3 so until next time friends stay crypto curious and feel free to send questions guest recommendations and comments to me my email is nn. if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subscribe comment or give a five-star review and if you want to reach out or provide feedback shoot us a note at podcast nov. or find us on Twitter and Linkedin plus if you want to learn more about what novic has to offer make sure to check out our website www.nic.edu to learn about our wide ranging Consulting and advisory Services again that is www.nic.edu

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