The State of Web3 Gaming with Game7

[Music] welcome to the navic gaming podcast where it is our mission to explore the business and future of video games we bring together the industry's brightest Builders investors and thinkers to keep a pulse on current events dissect emerging Trends and games share Lessons Learned and have a great time this podcast is also part of novic growing ecosystem which ranges from free and premium research to Consulting and AD advisory services for more information visit [Music] www.nic.edu overwolf is the guild for in-game creators whether you're a gamer Creator or game studio overwolf is the ultimate destination for integrating ugc in games

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most exciting and favorite topics from last year the state of web 3 gaming our podcast episodes written articles and game deconstructs in the web3 space have been some of the most consumed content we've released and produced and we are always excited to come back for more so almost exactly a year ago mid November 2023 we explored game s's groundbreaking report which gave us the first objective look 30,000 foot view look at web 3 Gaming's first six years now game s has released their second installment a year later expanding their analysis with fresh data on platform Trends player engagement models and the overall health of the web3 gaming ecosystem so joining us today again a year ago uh George isos a core contributor to game seven and one of the authors behind this year's 2024 report so we'll be exploring the emerging shifts in blockchain game development the latest on funding and platform Dynamics and how these insights could shape the future of gaming so without further Ado George welcome back to the pod

thanks for having me nio excited to be back awesome awesome well as we were just joking a year in web 3 is like 100 years in almost any industry so um why don't we start with just a quick uh background on you and then we're going to dive into the report and all the data so who are you and what is game seven absolutely so yeah I'm a for game seven I've been with the team for the past um two and a half almost three years um and yeah I'm a contributor mainly spending my time within that we use to either Drive decisions internally for projects across our ecosystem or produce some of these external facing reports this year with the great support of navic by the way we we miss this part in the beginning that's right that's right yeah navic is a is a partner on this on this report sorry I was very remiss of me to to mention that but I'm glad you brought it up of course of course yeah it was actually super fun working with the team um yeah about myself I have been lucky to start playing within the blockchain gaming ecosystem from 2018 of course

different were back then tremendously different different brands different Trends different beliefs different Ambitions but regardless an exciting Journey um game seven talking about of course about game seven is a is a fantastic ecosystem I'm I'm proud to to go home we um yeah we used to say we try to you know build an ecosystem where both developers and and and and Gamers can both win but I think it's a it's a unique place across the we fre gaming space that covers a number of initiative across research across building products and incubating initiatives investing and you know building some ground Bing technology over the next year so yeah I'm really excited about it um yeah I think we covered everything sorry okay no that's a good good intro there so nice nice little overview okay and let's do the same thing same kind of overview for um the web 3 gaming ecosystem again a year is a really long time in in web 3 and crypto moves at lightning speed I mean just the last today we're recording on November 15th which of course is post uh Donald Trump's election and of course

Bitcoin has like sared to 990,000 um which is insane in just a matter of days uh so this space moves very quickly it goes up and it goes down um tell me and tell our listeners a bit about what the last year has looked like uh compared to last year uh what has happened at the high level 30,000 foot level how would you summarize of course and by the way this we try to optimize the report as a very light read that you don't necessarily through the messay across every category and just give you the high level look and then if you have questions we're here to to provide more data so high level picture of course many non-gaming things uh impacted significantly the space us election and certainly about the the US regulation environment for sure many game developers not sure about launching a token launching a project what to do what should they P my company to all these things while not necessarily stly speaking gaming related definitely impacted the ecosystem um I I would say some very

interesting growth not amazing but definitely promising growth across all the indicators across the net contribution of new games the the Investments token launches we had some uh great grow there we had um some new key themes play to a drop you know try to be a play to earn uh V2 definitely learn us learn us a few things but we also I have a few things to to work on we have significant launches of projects of the GD you have Ubisoft doing two more experiments you have maple story announcing a blockchain network you have um you know Nexon Konami bandam called doing small experiments and and a few other great Web projects uh and we continue to also focus a bit too much on maybe gaming infrastructure instead of gaming content I think we at the point where we really looking out for experiences but yeah we we have the chance quick note on that I I I always thought this I was like there's there's more picks and shovels than there are gold mines to mine uh

this was true last year too actually so it's really interesting to say that it's continuing that trend is continuing yes uh it's it's getting worse I mean look we can see this in a number of ways of course having a robust experimentation about the infrastructure for games it's super important of course at the same time I think also the market is looking definitely for more actual experiences that you can play um and have fun with and also developers are looking for this to to learn more get data you know there's no way to experiment about economic models with presentations and white papers you need rounding gaming round economies right okay well thanks for that George that was a a very nice overview um I think one of the big trends that I've seen is uh you never know what's going to happen that's always the trend and I think one of the most interesting things that I've seen in in recent certainly in recent months uh and it hasn't even really existed for a full year is Telegram and telegram's role in web three gaming we actually did an episode not too long ago with Simon Davis of Mighty bear games uh he's building out there uh in the wild wild

wild west of telegram meets web 3 so tell me a little bit about what has happened there why has this particular platform gained traction among developers and what are we going to see here as it you know tries to support gaming telegram famously has very few employees and so how are they able to support an ecosystem and tooling for all these developers yeah yeah I think telegram definitely was one of the key developments of last year um I think is worth starting with a A minor definition like telegram when talking about tegram we're talking about two things number one is the application the very wellknown messaging platform that can act as a distribution in a sense for your game already our application and then there are the underlying networks that the telegram as a company uh what you might have seen the term ton operate which were like one announced and one running a network these two things are the main proposition of telegram to the web free gaming space they're not necessarily the same because sometimes we might see you know someone using telegram but with

another chain and vice versa but telegram definitely happened uh for wi gaming last year many um many ways to explain this right let me try in a very rough way to try to think of the main drivers number one it's a it's a year where we still don't have either a friendly or a deer framework for mobile game developers to practically monetize their games through main distribution platforms yes there has been some progress uh but you know we're far from the ideal space where games can really you know compete with the web to equivalence web games can one B right so developers want to find Alternatives they have good content they know like you know um timing is important they had they want to go live for a number of reasons and telegram provided to many of those um alterative path to do this we also had some major successes by telegram T related projects we all see the numbers some of them might be you know even too ambitious but we definitely seen some fantastic num

even if you don't necessarily believe the active user metric which we can argue about that is not ideal for for a thousand reasons we also show you know big exchanges saying this game brought us x million of of kyc users so at this point it becomes relevant even if someone is a nonbeliever sales okay we got something there uh so yeah um again you have a very unfriendly distribution landscape for mobile game developers of web free games you have some those fantastic numbers that developers say okay I want this for my game too uh you also have some exchanges that they prioritize you know potentially listings or they were definitely more friendly in a very um calm year for gaming tokens for exchange listings they were more positive and again game developer said maybe this is an interesting path for me to grow uh and also you have the the value probe of the core application right while there are many things to talk about from an infa perspective the the um the great experience of opening up your message apps and as we talk on

telegram I can start a game I can buy tokens I can do some kind of commercial transactions in a simless way the value prop is Big right so I think these were the two the the the key drivers for interest to the telegram value prop for we3 game developers last year yeah we're gonna get into um uh Geographic differences here but when again Simon Davis from mighty bear games just a few weeks ago actually was on on the uh the podcast he was saying that he was genuinely surprised by the skew of the distribution uh of his player base as it relates to his products uh he speculated that that would be similar across the board which he had a huge audience from Nigeria for example and and Africa in general South America Latin America um and uh uh kind of for lack of a better phrase not as affluent parts of Asia um so very interesting skew there he he didn't I mean he knew he had theories around it you know because play to earn play to airdrop we're going to get to that in a second as well but what do your thoughts on this uh geographic

distribution has that changed over this last year has telgar moved the needle in that sense or are we still seeing the same kind of breakdown where it's mostly still North America United States then you've got uh you know Korea Asia and then it's kind of rest of world yeah I mean first of all what what Simon mentioned yes it's consistent with the feedback we're hearing from other game developers I don't think this is a surprise right uh you do expect Emerging Markets to drive initially like know um alternatives to the mainstream solution across any kind of of tech theme so that's not a surprise I do think there is a massive potential to on board bigger part of the world and for me it's also a big opportunity to apply pressure to potentially the the big players to try to reconsider maybe accelerate their their approach so I would say this at this point no one should argue that telegram will give you your target um um Target player base in 10 minutes but with a lack of a better audience or a better path to market for mobile game developers this is very this remains very interesting even if it's not your

target audience from day one yeah yeah but what do you think it means for web 3 gaming Innovation you know we we we had this big phase last year the year before where we saw you know well last year we haven't seen a lot of funding going in but originally we saw a lot of fun going in and when there was like a this big rush of developers coming into web 3 it was all about you know AAA AAA AAA um you know you can't do AAA on telegram you can't do AAA targeting uh you know Africa yeah Latin America what do you think that means for both the existing players who have raised ungodly sums of money and still presumably have some kind of warchest to sit on and then new developers coming in who are like oh wow there's this exciting new space called telegram combined with web 3 we can do some really cool stuff but we can't do web three uh we can't do triaa yes yes and this ties to so many other points of the report uh your point there but I would say this based on the experience we have so far with the games that are actively experimenting on Telegram it feels like it's not a binary choice or

I'm G to move my stuff from Android or iOS to telegram or vice versa it's more about I'm building a mobile game I'm building a PC game I'm building whatever uh let me build a companion up let me build something that I can you know try to capture this uh growing user base so we definitely see a trend of telegram being used as um you know a platform to complement existing efforts rather than replace ones the existing ones and until we see I know there are a couple of allow me to say more advanced games being developed on telegram right now until we we can see the the um the gameplay experience and how this plays in the market I don't think we're going to see many team saying I'm fully pivoting on telegram but mainly I'm going to use telegram to explore this to be first mover and why not bring my Gamers back bring this uh user base back to my PC game my console game my whatever it is yeah yeah yeah I mean that's what Simon was saying as well it was really interesting this is a classic one of those where you've got it's it's

the perfect place for smaller developers to do some experimentation the big guys are going to be nervous about touching it telegram obviously has its content moderation problem P durov getting arrested and you know having quite a colorful personality I'm sure it doesn't help with kind of the reputation risk for the larger companies so so this is a perfect world for smaller developers who are also can't afford even if mobile was more friendly even if Android and or you know Google Play and iOS were more friendly you'd still be competing against all the other developers you're still competing against supercell and you can't the cpis regardless of how much your web 3 audience actually raises your LTV so it's it's a very interesting space I think where it combines distribution for free essentially um Scrappy and lenient platform rules at least as of right now on telegram um and an ability to monetize in a way that is unique to this ecosystem you know the web 3 monez piece so it feels like a

really interesting Kind of Perfect Storm this is certainly one that I'm going to be watching let's put it that way I'm going to be watching Telegram and how this evolves who knows what's going to happen but I find it's a it's a really fascinating space that seems to be moving very quickly TBD how it plays out so I'm curious to hear your thoughts there like you know Zinga as longtime listeners will know I will always bring up Zinga at least once in an episode um but you know zingle was of course built on the back of free Distribution on Facebook canvas right and so my big question of course then they shut it down and you know you live by the platform you die by the platform it's a saying of mine across the years so this I think feels to me a similar one where it's like well telegram for now is allowing this to play out essentially as like an experiment that has big scale a billion users but where does it go when telegram either wants to monetize his audience which they may not because pav durov doesn't need the money uh and runs telegram as his personal Pet Project or they introduce some kind of content moderation or rules or guidelines or whatever where it becomes much more difficult compete anyway long question

but telegram I think deserves more conversation than it's getting in the mainstream gaming press and that's why I'm so glad that because you're looking at it I'm going to use every opportunity to dig into this even further with you look obviously super super relevant question for so many builders in the space um there are a couple of of um of ideas and beliefs there number one is you know you draw the the parallel between Zinga Facebook and tegram and most let me call um most experienced mobile game developer saying there's no way that telegram will really optimized for gaming because doesn't make sense from a business perspective right the same way Facebook would never become you know a ridiculously gaming optimized platform they they they did this they then they they set it down because it's not a gaming platform right so one of the big um question marks for telegram is whether telegram can remain telegram a popular messaging app while also becoming a very specialized gaming platform and then of course course you have the Dual nature of telegram as an

app t as a network or any other chain in their position and then all the other surrounding infrastructure while telegram has a very open and very friendly bot approach overall you know it's very easy very convenient to use Bots for so many use cases what we've heard so far and through our own experiments is that it's not very easy for example to capture information or learn more about your user base I think those challenges will be familiar with a pain point of of a game developer like you know 15 years back with Facebook so you know this is a challenge and I would say the success of early projects on on telegram will in my opinion dictate the base of um that telegram will move moving forward um as you said telegram does not need strictly speaking web free gaming to become relevant but it's definitely an area that you can really differentiate especially as long as um the big mobile players are saying we will see about web fre games yes so yeah we listen okay we will see famous famous

uh sitting on the fence words there but that's fine I I I happen to agree with you I think we will see this is one of those where you can't predict what's going to happen because it's a secondary use case that happens to have blown up I don't know if they planed for it to blow up like this but it has and now it's a question of okay let's see what they do about it do they lean into it or do they step out of it that's really the big question okay well let's move away from mobile and and telegram let's move on to uh other platforms um epic games store I think they add according to your report they added 81 new web 3 titles over the last year or so um what why do you think they're leaning in so much when Steam for example is leaning out it's a it's a curious dichotomy that hasn't really I I haven't had it well explained to me um up until this point yeah so the big picture is that obviously epic is if I want to be 100% um accurate with you I would say I'm not sure whether epic is BR we free but is definitely not against it so you know

we've seen both from Tim swiy a couple of swings being being metaverse friendly then saying no no no then yes we're happy to play with we free or at some point we will see not in times soon you won see skins on fortnite but we will see in the future so and and I think big part of the the number you seen on these charts while of course we want as a web space we want to outline the the good developments and this remains a good development because epic is definitely a key part for a key path for into the market for many web free games it's also a number influenced by the self- application change of of epex approach that happened like close to one and a half years back right so it's easier it became easier to self tablish games and this of course partially influenced the number of of web three games trying to do this now again question marks we haven't seen the the will of Epic to optimize their their stack their apis and all the surrounding toing to web three even if it's not allowing as aggressively other tools we haven't seen

um how open they are the idea of customizing their infrastructure for web games to allow for you know eer um you know acquisition of assets directly of crypto assets or trading or like adding native capability for web free use cases inside the platform but again in the absence of a friendlier steam um stance I think epic is a must for PC games we also seen with of the grid yes of the grid was popular because of console but having also epic and been seeing as in a trending games um um for one two weeks I think this was an important moment for them to really you know try to get interest from average Gamers saying okay cool Battle Royale game let me play exraction what so yeah epic is while we cannot be sure that epic loves with three I think I'm glad that epic exists and it's an option for web free games uh this time around yeah and I think I think the interesting thing for me is you need to have places to experiment

right web 3 is still somewhat unproven in terms of you know actually being a mainstream thing and you know you could play around on mobile and now it's great that there's telegram right so you've got an option you know an option to experiment epic you know there's an option there for PC games um it's nice that there are options and that the more of these options there are the more developers can experiment with business models and gameplay Styles and genres and what have you form factors in a way that was was somewhat limiting in the early days of web 3 certainly because it was like you know web only essentially right like desktop web only open web and while that has its affordances it's completely you can do whatever you want it also has its its its drawbacks so is that is that a trend you're thinking is going to continue into the next year now where we're going to have a bit more acceptance even if it's not mainstream acceptance even it's not like the you know Apple and Google level of ACS they move very slowly do we do you see more of these popping up um and if so whereare where would these opportunities

come from um yes I think I think it would be a way better year from a distribution perspective there are many developments in a sense bigger than gaming that could drive changes in this in this area including of course again uh potentially the new regulatory environment in the in the US a new approach overall against crypto we we start seeing discussions about the Bitcoin is a strategic asset for reserves I'm not saying this is relevant to the average game developer strictly speaking but if if um Bitcoin necessarily has a new role in this world I do expect other crypto asset to definitely find the find it space across the the mainam text stack for for web for for games uh even web free um we also seeing you know today we're seeing active experimentation of many uh teams in the space so some people say oh Microsoft has been investing we free of course Microsoft invested to so many topics so I don't think it's many areas it's not super important that one other fans like deploying Capal web free but

you have Sony for example Sony uh playing around with a concept again one small part of Sony most likely but still playing playing with the concept of having my own layer to that means they understand what the theum is they understand that the need for salability they understand what the EDM means they understand what Z technology or whatever means so I think overall this um can make us optimistic that at least those big platforms will will stop kick kick games right so it's one thing to say not support your we plans that's that's borderline acceptable but I think it's very bad if they don't even allow games to access the the user base we saw this with the grid right of the grid does not have any web free features on on console and still relatively speaking restrictive experience yet console was important I think many many many users uh learn about this game through console and will potentially convert to web free so yeah um I think again looking into regulation the the USL looking into telegram's growth looking into the

active experimentation of many really big players in web fre I think we won't see anymore the the you know the typical view of a game being suddenly removed from a platform um but yeah we will see how deep the the level of technical degradation will go yeah yeah interesting okay all right well let's shift gears uh your report calls out and I'm excited by this because it's it's rare that you get kind of new mechanics that seem to be adopted you know play to earn was the the meta as as we call it in web 3 uh was The Meta for the longest time you know on the back of Axia Infinity of course in the early days and that's basically the model that everybody copied for a long time um some experimentation with other things you know play to um play to own was a thing for a while and what have you play and ear yes play and ear yeah there was I had a whole episode a while back where I just I went through every acronym I could find or every like version of it and they were all kind of a take on the same thing but now we've got this thing called play to airdrop and it's been mentioned by multiple gas a web 3 guas that I've had over the last you know

four to six months call it um tell tell us more about what play to aird drop actually means and what are the kind of advantages and challenges of this approach how is it air quotes better um than play to earn or some of the other models that have come before yes of course so you know the concept of the adrop is not doesn't come from gaming yes it's not new and it's not coming from gaming but I think started from pixels and I don't want to be unfair to other projects but definitely was the one that really you know um we had Luke on the show not that long ago actually he was a great episode really interesting and he's doing some really experimental stuff there so yeah again if we abstract the the all the details eventually instead of saying to people yes we're gonna give you um magic internet money regard if you just play you you tie this to some meaningful play experience some results you in this case hopefully you uh minimize the inflationary pressure on your game economy and this supp to to make a a close to paranoid economic

model work like like playw so and I think play to air drop really worked out because it it uh it tied very well with some developments in the defi space we had some projects with a fantastic airdrop um performance for the people that they that they played so people make money or at least realize some some some uh um profits at the time and then they show oh my God I can I can play my game I can have fun I can compete I can do all the things that make me play games and potentially um getting something back so I think this is definitely a healthier iteration of player because you're not like okay we're gonna drop our jobs and and start playing axi it will be more about I'm gonna play I'm G to compete and guess what if I'm good or if I if I spent so many hours I might get something out of it um obviously the key limitation is which is a strategic limitation for the web free space is the distinction between a human being a wallet an AI agent whatever it is so you know try to to to

to mix a different Trends so we still have the pressure of uh of um the uh of bots being part of the game and how they can potentially alter the economic results and also the the numbers that are being reported I don't think we have found a a good solution to that but to be fair this is not the role of the economic model the economic model will always have limitations I think try to navigate the difference between uh a human being an AI agent a bot or a farm of bots it's something we will have to solve or accept for certain people we don't even have to solve this as a problem uh but it's something we will have to navigate separately uh but yeah I think the drop was definitely a positive addition uh last year after all it incentivized people to actually play games for many hours this gave some good data uh so yeah despite the limitations I think it was definitely a positive um thing and you know it's also a bigger ecos system behind this that comes up so you know play communities and games create the need for robust questing

platforms that they go beyond the streak I'm calling the API of a game you need to merge with pre achievements Web Two achievements your history whatever so it definitely opened up many opportunities for uh engagement platforms to to play a role and try to complement this experience do I mean do you think it's a big enough thing thing I use thing here kind of a it's a very broad word Encompass a lot but do you think play to airdrop has a potential to be one of the drivers of more mainstream through adoption or is this more of a okay these games are now more sustainable and not massively inflationary uh and so they they can work on their own two feet but it's not necessarily a driver of mass web3 adoption and and by the way our web3 developers still trying to drive web3 adoption crypto adoption through gaming uh that was one of the big things in the early days which is like well gaming is going to bring us the next billion you know consumers into crypto is that actually a belief that's widely held still yeah made a very good point and I will I will address this let's say

personally not even as game seven I don't think so I I think play W drop is a great way to optimize for engagement looking some people call it a bare market growth strategy like okay if you have to work with the existing user base how do you engage them how do you make them part of your economy sure but you know in a world where you have access to funding great games building a FR regulator environment you want of the GDs right you want the high bit more of the GD try to to to bring users that don't really really have to care about everything they just want to have fun and potentially be a part of the economy in a number of ways so with that being said I do think R Europe will continue to be a key part of of the growth strategy for all war three games whether it's going to be the main thing or one of the 10 things who they're doing to grow their their game it's up to them and obviously yes as as game developers become more confident on the the quality of the experience and the content they produce I don't think they will rely too much into having this economical narrative to drive attention in the same

way that you know those people never played off the GD because they they saw some Financial incentive by by killing or by winning tournaments now we've seen they're going to do this and I wouldn't be surprised if they also have a play to drop campaign to the rest of the war through of the grid but yeah as again as game developers are more confident and as we see better experiences closer to the you know larg theaa triaa um uh quality categories as we try to to estimate this I think we will rely Less on play drad Drop and we will we will find new ways potentially by changing a few things in keeping the core of play yeah yeah uh you mentioned Bots a couple of times and of course Bots are always a problem in gaming they're even bigger problem in gaming if there's economic value transfer and the reason I'm asking this question right on the heels of that previous one which is if PL to airdrop is not necessarily going to be a big driver web three adoption which I I agree with you by the way I don't think it on its own it's going to drive lot of consumers like oh okay cool I'm going to come and play this game now um but there

is still nevertheless so so the the there isn't the upside of driving lots of users there's the upside of driving engagement but then there's also the downside that there is there is economic value in plates airdrop if you can go and trade these things right and so whenever there's economic value you're gonna have Bots whenever you have a popular game you have Bots regardless if you have a economic value situation even a smaller game is going to have Bots coming in try and exploit that right and of course the bigger they get the more Bots you're going to have so this is a huge problem and I think everybody in the space knows that it is a huge problem what are you seeing happen in the space what how are we measuring bot influence in games how are we measuring real engagement you in in consumers and users and players versus what is inflating these numbers through Bots uh how do players even know that they're playing against Real players or AI agents or or Bots I I think that's going to be a bigger problem with AI in particular going forward right yeah I mean look I I probably have

10% of your experience building games but I I would respectfully disagree that BS are a problem for game developers BS can be misleading if you if we rely on the same metrics to raise money to do marketing then it becomes literally Li right so I think given the rise of AI agents of llms I can't see a world where we we can get rid of BS if I'm being honest so in this sense maybe we just have to accept it and try to meaningfully try to make them part of the gameplay experience and find new ways or improve the ways we capture uh uh activity and engagement because again this is borderl unacceptable it's one thing to say I have a economy where you can play with a bot or with a human player might this might be acceptable for game for many game genres but if you are reporting human users based on B numbers this is not good so again I think we're going to see a trend of of games of course capitalizing on the attention to AI to say okay let's try to use e AG as much as possible you've seen

so many Twitter accounts being run by by by agents that they can also learn and try to adjust how they react to the world based on some parameters so yeah for me it's I want to say a lost battle but I don't think we should really try to get rid of bots but maybe try to meaningfully integrate BS in specific parts of the gameplay experience uh and on the side try to find new ways to capture engagement this whole active wallet total volume like these metrics yeah they they can mean everything or nothing sometimes yeah it's fair fair for you to push back I'm gonna push back on your push back um and that is that Bots that's why we're here that's why we're here exactly uh bots in traditional air quotes traditional gaming here in any game if if they are perceived as giving uh others like human players an edge this is why like fortnite they boot cheaters immediately as soon as they realize they're using an AI agent or or whatever they have all kinds of tools to detect this kind of

stuff it's not so much for the economic extraction of value which does you know is an extra layer in web 3 it's more around the this game sucks because the Bots are cheating and winning and like I'm not going to play this game because you know I'm not having any fun and that as soon as your best players especially games that rely on streamers and personalities and creators ugc things like that as soon as you start to see that that drop it's it's a Snowball Effect right and the the whole thing compiles on itself compounds on itself and so that's the question I'm asking more about here yes there's the economic piece as well I don't know if leaning into Bots is going to give you an ecosystem or any game whether Web Two or web three that is actually going to be able to grow to mass Market scale right and I I I know we're not specifically talking about that for web three we're not talking like here is the web 3 environment and by the way we're going Mass Market next year um it's more around games are they have the hardest time growing regardless if you are perceived as being a cheating game where

Bots are like R and running around and you as a player can't really compete meaningfully you're not gonna want to play that game there's lots of gam so that's that's the point I'm trying to make here right and I think that's particularly R in in web 3 because there is that extra layer of economic value there was even more incentive to try and the system 100% right look I don't want to change anything of what you said in my scenario let me say this in my scenario you enable through allowing theoretically any gamer to build their own customized BS right that's that's the whole point it's not so yes if if I'm competing against a b that I cannot create or have access to myself that's yes that's cheating I don't want to play this game uh there's no point but I'm talking about scenarios where you know we can have this concept of clever NPCs that work for us in the game for doing things and potentially these NPCs can become better based on myself being a good trainer or not a good developer because again in this case you're an edge to technical people not to the average gamer but I think through again

the rise of of of of AI tools that could could um allow people non technical trible to do more we can Envision a future where we have a mix of human players and their own Bots or their optimized uh AI agents I know what I'm seeing is probably too stretched and a couple of years from now but yeah this was the the future I could potentially see a a role for BS inside games right interesting I know many many teams especially small super Innovative team they try to do some uh some experiments on that and yeah I'm I'm very pleased to see this in the market but yeah we will see it's it's obviously super early to talk about any impact interesting interesting okay all right now so I buy that arguments so I think we both kind of agree with each other and slightly disagree with each other um but that's fine that's the way it should be we don't know what's going to happen so um uh we will see as with so many things in web 3 um okay let's shift gears a little bit and talk about uh funding landscape and and toen so kind of the financial aspect the funding aspect of how this uh

entire ecosystem you know it everything requires Capital right and some way should perform so let's start first with funding landscape in general kind of traditional VC funding um yes I think the report states that g uh it grew in web 3 by about 177% in 2024 compared to 2023 but of course those numbers were tiny it's like a low base compared to what it was in the go- go days of 2020 2021 and first half of 22 I think so um investors are coming back but I think you note also that it's a shift towards smaller rounds not so many of these Mega rounds where they're putting like you know here's a hundred million dollar for you know pre pre- proof of concept kind of team um what's going on what do you seeing uh yes so while as you said numbers are up I think the bigger picture is that we're looking into anual reality for funding investors are there investors are willing to support I would argue that the investors I find I try to find the new axi or the

the new thing to make them super excited right I think this is a common pattern we doging to investors they say yes we're still deploying we're happy to deploy but let's do something different right in 2021 and 2022 with of course like multiples of the of the annual funding we had today there was a big part big part of ambiguity in a creative way people did not actually know how all this infrastructure going will deploy they were investing in gaming now we have tried a few things we know that certain things they might still work but they will they cannot produce super normal returns so I think some investors uh expect from the market to be more ambitious and more Innovative um and this also comes en ties very well with the the the lack of playable games again if you don't have playable games you cannot actively experiment you can do you can't do all these crazy things that one of them will be the new axi moment as we had this uh this AA moment moment like three years back uh but yeah I think again investors are optimistic

investors are are Shar to support but they are looking for uh new models new approaches New Perspective um the rounds are smaller indeed I think the market correction that started November December this year uh for for a brief period that definitely brought some excitement back to a few project that said okay you know what there is a potential for us to still grow so uh routes become smaller there is a clear path to DG for many teams in the next let's say 12 to 18 months so there is no need for these me rounds for 5e long developments the plan is take some money work on the or meta work on something that you can differentiate try to launch your token and and find your place in the market which is a slightly different um proposition than investing in 2021 where it was like yeah we need to like really support it to do all the good things in the market now the TG is a big part of the the grow strategy are we still seeing that are exclusively going after web 3 being

raised uh that was the big Trend not that long ago three I mean you know back in the the Heyday obviously you know you'd see uh you know Andre re would raise their giant gaming fund and then they'd have a separate like crypto gaming fund you know play Ventures which was a backer of ours back in the day they had their kind of mainstream fund and then they raised their future fund uh which was focused on web 3 are we still seeing that uh are funds still investing out of their original funds is that still happening or are they done the powder is gone uh are they raising new new funds curious to hear what that Dynamic looks like as well on the investor side of things not the investment side yeah sure sure even though we don't uh report always the difference between Venture round and and a fundraising money I think while we've seen some um renewed interest over the past few months especially again as we're looking for a as we all optimistic about 2025 this is also reflected into the fundraising of investors um I do you also think that there is a partner in the market of of um merging sometimes

web free with AI which might make sense and not make sense to you to a few other people but you know you're seeing as these two options are the potential helps in your pitch Teck helps you in your pitch Teck it how about if we combine web 3 plus AI Ah that's the diff that's what's going to make it work so yeah you we we've seen sometimes investors trying to you know saying that you know we're investing to whatever is innovative sometimes it's AI sometimes we free sometimes it's something in the middle um and yeah with AI being definitely a priority let's say for investors this is to be expected um but yeah I don't think we've seen this need for web free specific funds today because again I think as an industry we're looking for the next theme is it the Off the Grid or the off the grids of the future sure is it uh AI agents and autonomous games that do whatever players that they can do whatever they want maybe is it some kind of an infr playay spec

optimized for gaming we will see so unless we know exactly what the key theme will be for uh the next 18 months I don't see the need to necessarily investors try to specialize their efforts into a very specific for to go got it that makes total sense okay but yeah back in the go- go days of uh the the heady crypto bull run you know you could raise a token launch or do a token launch and raise an ungodly amount of money you note in your report that gaming token launches increase by about 200% year-over a year so that's a big increase correct but how are they comparing how much are they raising U compared to back in the day uh so yeah I think talking launch as the term describes a different thing than what it did in the Ico era or or other faces of of web free so yes we've seen more projects actually going live with tokens um but in a totally new model now you're talking about a way more

um okay let's cut this give one more so on this so yeah now we have a different approach for for projects trying to launch a token you have you start by play Trad drop you build a community then you potentially getting the exchange listing then you're trying to uh to add utility and add demand so very different from the more aggressive let's say Ico era for for tokens I do I still think that the number of tokens launching uh the number of tokens launching is relatively speaking low yes it's doubled up since last year as expected because the year before was a very Qui year and still trying the ecosystem trying to heal from the Luna the FDX the you know the the regulatory uncertainty so um we're definitely going to see more launches next year now the big question mark is what centralized exchanges will do because this has been a key bolnick for many projects so we we have two paths either we're going to see you know

as as more people joining crypto and as prices go up and as demand goes up potentially exchanges will allow again a big part of those projects to launch or we're going to try to see as we we we've seen already Alternatives into launching a token that does not necessarily go through the big guys giving their blessing uh many people are saying okay this is definitely a big opportunity it's also ridiculously challenging technically financially legally you know uh so so many so many um um uh challenges there but yeah I've heard many game developers saying it would be great if we can find new ways to launch our tokens in the market that is more uh you know aligned with uh um the structure of a of of a gaming token not necessarily defy or something else we will see we will see I think def without this change in the again the the optimism in the market um for 2025 I would I would give higher chances of alternative models um uh growing now I

also think there is a good chance that uh exchange listing will normalize and all the teams that they want to launch and they're just waiting for the right time will have the chance to do so gotcha okay uh natural followon question is obviously we're going to have presumably who knows uh a different regulatory environment under a trump presidency than we would have seen under a Harris presidency you know Biden went after crypto pretty hard Gary Gensler is no uh hero shall we say to the crypto Community if this changes if there truly is a okay you know what do what you want it's a free-for-all like we're gonna do a light the lightest of touches if if any regulation on this space do you see that changing the token launch Dynamics I think that's ambition yes that's expectation in the market and let's be clear the biggest problem of uh regulatory uncertainty is how to launch a token right should I do this in this

way should I incorporate otherwise should I try to follow any kind of practice that I don't really have to but I don't really need to but I have to to to navigate this complexity so yes I I definitely see toing launches as the first problem to try to tackle and I think the key word as we try to say is not necessarily A positive environment but is a predictable a stable environment right no one requests for necessarily good terms but they they expect clear rules on how to play the game um this is the biggest requests from crypto projects and we can also specify this for um for gaming U but yeah again I think there is there is hope in the market and I don't think we have any reason not to be optimistic at this point of the year yeah okay uh shifting gears again then from the financials to to more the ecosystem stuff uh this first question is is really around who are the teams that are building your report note that over 90% of games in 2024 came from

Indie teams I don't know how you define Indie but you know smaller teams um that presumably means they're not doing AAA we already touched on that briefly earlier on on the telegram segment what does this reveal to you about the ecosystem is it is it mature is it growing is it scary place for larger teams you know uh and invest with larger checks all of these things seem to go hand in hand you know smaller checks no new web3 Focus funds lots of Indies all the games are essentially smaller um yeah it's a it's an interesting Dynamic it is it is uh and it can be both right uh for me it's a sign of maturity and uh it's a sign that maybe triaa at this point is not the best fit but let me explain why so first of all we do understand that you know classifying per production quality as we as we as we name it because triaa or double A does not necessarily describe

the quality of an experience you can have fun with a the simplest game in the world or you you might find the the most polished experience very boring so we're talking about production quality we're talking about the resources available to each team to really do their thing and um so yeah for another year based on our methodology and in contrast to sometimes the marketing material of the space we we identify that indd comprises by far the the biggest bucket into um the teams entering the space this number refers to the new the percentage of new games uh PA their production quality um again I think this is a sign of maturity the mainstream market is primarily comprised of IND developers Indie is not a bad thing it's not we sometimes have Ito saying IND these like okay why not triaa because triaa has specific um problems that and we we have our own problems as web free so maybe let's try to work one problem at a time so yes for me back to your point is a sign of maturity it's perfectly fine I think Indies have uh

shorter development Cycles the mentality the the risk appetite to really try to do all these quote unquote stupid in the beginning marvelous after uh experiments that could give this breakthrough to the space and we can also see this with the big Publishers being present in in in we right with Ubisoft with Nexon with um with Konami with bandano with Square Enix even these projects these teams they don't they won't say okay here's my my triaa um best title in the the flx title right now in the market let's web free let's put web free in it they they start with smaller projects I think it's important to understand that as a game developer of triaa game you need so much money more than you would expect you have so many difficulties and you have to also cope with the challenges of mainstream game development around themes around Trends so that's one complexity now imagine this alongside the decision such as should I have my own chain or not should

I use ZK or optimistic should I use Solana or evbm should they have one token three tokens or five tokens should they do play to play to ear so my point is every few months in crypto we are getting obsessed with different things and it's very hard to optimize for this um you know uh um for this ecosystem as you try to build something that is really a triaa game um and guess what when you are ready to deploy a to play game the technical landscape might be significantly different so unless there is consensus on what is the high level structure of um the gaming stack it's unrealistic to expect that Tria games we'll start now we will build for five years we'll spend 200 million and we'll still be able to keep up with web free Innovation there are exceptions of course and you know sometimes when I say this people say what about of the GRE what about other projects there are AAA worthy teams that have been already building for a couple of years but I do

think the teams that going to that they're going to really make the Breakthrough are the teams that are while big enough and have enough funding and previous triaa experience for me that's a must they also have been in the web to space for quite some time it's very hard to start competing from day one and it's also very hard to try to Outsource the web free Innovation Department to a different party it is to be part of the DNA the team uh of the leadership team it's very hard to just say oh I'm using this partner and they will make sure they're going to add web fre in our game I don't think it's uh it's working like that actually yeah yeah that's right okay let's talk more about technology then I think the big trend from even I think this was true even last year is that developers are really switching more towards of a layer two even a layer three strategy as opposed to an L1 um immutable has been on the show multiple times including founder and CEO Robbie Ferguson and we've had multiple guests um uh in conjunction with game launches some big moments it seems like immutable is the big player um that's making the big push

truly in gaming uh and have been from the very beginning so they've been very like focused on on on this and they've had a lot of technical uh Innovation around you know wallet management and seamless onboarding flows and what have yous uh and your report calls out that I think most of the game launches uh involving in L2 last year were on immutable uh talk us a little bit about the big the the big Winners the big losers uh over the last year in this L2 L3 space and and why they move away from from l1s I know the answer to this because du it's technically very challenging why do all that hard work um but tell us any other reasons that that might be uh playing into this trend yes I think there are a couple of Dynamics some of them or technical nature some of them of commercial nature of fundraising nature so yeah big picture for the biggest gaming ecosystems IM mutable grew a lot um effectively to number two spot behind only polygon the existing polygon POS Network um polygon represent

um inable represent sorry the the idea that you know you're building a performance uh gaming optimized Layer Two for all the games in the world we've seen the likes of avalance and arbitrum arbitrum grew um also like um a lot over the past years with a different proposition like you know build you go to either other gaming ecosystems and you say launch your own chain or or like specific titles do you want your own network so we're talking about two different value propositions from this ecosystem similar to avalance avalance have their own men layer one network but they also have a custom environment for shnell for of the GD for all these games they have on their portfolio um we also saw running grew a lot of course running follows a different approach right running double up games but no one will say wow because the number is still low because running has a very selective approach right people should not just do a oneto one um comparison there's no point but I I can launch 100 games and call it a leading ecosystem that's not the point so ronning has a very

selective um very curated approach trying to to grow the portfolio in a different way than the likes of again arbitral mutable or avalance um now when it comes to technical themes you said why not layer one and I do think I think I think we're past this Obsession of layers uh in the beginning yes it was layer one at some point we realize simple chain will most likely not be able to provide space for all of us uh and the concept of layer tws that we still part of the wider Metropolitan eum ecosystem but you you have your own space you can potentially have your own token as a as a as a gas token you can do a number of customization to potentially help your economy and your valuation if you're going to raise money by the way so that's why I said it's not always the technical need yes I remember in 2021 or two when when Ronin said you know what AI cannot survive anymore on ethereum we're going to launch our own layer one uh but yeah my point is today I don't think we should see things in the concept of layer one to Layer Two or layer three because also we have a very

mature ecosystem of abstraction solutions to messaging so put simply it's the question is do you need the main chain where everything is on there do you need a gaming ecosystem a gaming city to live on or do you want to build your own City you want your own chain um so far we've seen that layer twos layer threes from popular Frameworks like you know the arbitrum orbit or the op stack of of optimism have been a popular choice for teams that they want to either launch their own um gaming ecosystem or their own um or or an up chain for their own titles but we will see I think until we have good metrics from usage it's a bit too early to call winners but last year we've seen it became very easy to deploy custom environments through again the rise of these Frameworks and this roll up as a service providers either for for Avalanche right it's very easy to deploy this network so I think it's early to call winners but we definitely saw a clear preference to arbitrum aalan and

op stack for people that do want to build new ecosystems like inmutable uh for their own games nice okay so that was a trend I think we had last year so that trend is really continuing um the yeah and also for layer 3es we're seeing a very strong growth like layer 3es weren't even an option one year and a half and now yeah that's true that's true okay um I have a final question we've me uh actually have a couple couple of final questions but this is a very specific final question uh you've mentioned Off the Grid a couple of times and we shouldn't assume that our audience actually knows that I probably should have brought this up earlier uh tell us more about what is Off the Grid why why are web 3 enthusiasts excited about this uh this game and what do you think it means for the future of web 3 like this is a path that web 3 developers could go that is showing some traction with this one title called off the grid tell us more about this yeah so in simple terms Off the Grid is a very funter game right uh that people can have fun by playing um it is using um

sorry using blockchain technology it would be using an Evidence Network that at some point would be part of the process without the users knowing it um and it has been a game that while web free they had a very successful launch campaign um um of uh you know collaborating with key streamers that you would see in the forets of this world not on world three games so and this led that to you know a significant game base that they saw this game and they were very excited about it I think from uh so the question is why web free really lost um of the grid and I do think we need to embrace and support any of the grid of this world like of the grid is not about avalance it's not about specific technology of the grid represents that content is enough to really on board people to we free games and you don't really have to either promise something that doesn't make sense and is unsustainable or talk about technical dragon all the time so yeah for me the rise of G and for many

other people represents a healthier option to user acquisition obviously for those that are close to the team it's not of the not like you know that the gonzilla team is not um a random team out there they have significant experience significant funding many years of development and these are things that you cannot really um you know you can really uh um get out of the way you need to do this the proper way uh but yeah I think of the grid brought back some optimism in the space for people that believe that there's no way a web free game would be fun enough to really compete with other games on the charts of you know epic games or maybe uh Sony or or Xbox charts um and yeah we need to bring this confidence back to the world pre development teams we can make good games yes given good time given sufficient time given good funding I think we need to be optimistic that game play on its own is enough to be a demand driver for web free games yeah yeah absolutely and you know people

have been saying that for the longest time well the game has to stand on S two Fe has to be a fun game games are designed to be fun games are entertainment you have lots of games to choose from you know just because it has web 3 doesn't mean you're going to go play it so uh that that has been true since the very beginning um and so continues to be true I guess is is what we're saying here um okay uh my final question really um before we get to the the fun final one which is um what do you see the trends being next over the next 12 months I know this is a Fool's errand because this is web 3 and this you know in space moves really fast and because the regulation is still unclear that you know more so than than in traditional air codes traditional gaming that has an impact and there's certain things you can and can't do depending on what the regulatory environment looks like so what do you think the big trend is going to be over the next year are we going to look back and like we there was no way we could have looked forward last year and said hey telegram is going to be a huge story absolutely you know so what do you think we're going to be talking about next year by the way I hope you come back next year and we talk about this all over again absolutely so

yeah I think this is a very important disclaimer you made you need to start by seeing there's close to not zero but less than 10% chance you will be able to actively predict what's going to happen we can talk about the progress of what has happened already and the difference of those but it's very hard to really try to understand the the trends that are coming or they will be saved throughout the year I think you need to start by that to you know if we just try to really predict the future we need to understand the limitations of this process um looking into next year I do think themes that they will definitely say what we know I think tegram will continue to be this because we know many teams have committed or they have announced a plans to do more things on telegram I don't know exactly what this telegram content strategy uh will include but it will be a big surprise for me if we don't see more companion apps more side engagements more full titles especially titles that are like you know typical mobile genres if we don't see these

implemented on a on telegram environment I think we will have to see some experimentation and I do think we will see more experimentation when it comes to the economic side of things with the assumtion we're talking about a more um relaxed regulatory environment the next hypothesis I would make would be that you know we're going to see teams try to to do more try to do different things try to rethink how they can their token economies because it's the tokens and I mean the business models we have right now while they have made some progress we still don't have the answer to the question how you can make money as a web free game publisher as a web free game studio so these simple fundamental questions they still remain unanswered um last thing I would say and I will not talk about infrastructure because I think we talk a lot about infrastructure over the past years and I don't think it would really make a difference INF is something it needs to exist but will not necessarily make you win in the market MH um definitely an area that people are

excited and we've seen some very interesting experimentation are AI agents for AI agents again let's domestify for a minute because it can mean so many things as you know we've seen this environment through LMS we we all use jbt perplexity CL whatever like um whatever your flavor is my point is what happens if you take the logic of that allowed these tools to exist and you add some sense of autonomy and the tools for third parties like Gamers to customize them um we've seen trains with you know Twitter accounts now trying to do cool social things uh autonomously we might see this in the future side games um and there are many shapes of this autonomy could look like inside the gaming environment but yeah I I do think this definitely would uh Drive big part of both investment and experimentation um maybe looking at the fourth one I I do expect more teams trying to really uh go after the off

Tobit Playbook and you know get ready for a very good game play experience don't talk too much about what pre go live try to uh try to become popular and then make use of this user base to slightly try to convert them to web3 um I think it's I think we're lucky that of the we really turn out well and we had um this great um um reaction by streamers and The Gaming Community because it opens up another um another option in the growth playbook for web fre games but yeah that's why my best take the honest answer is we don't know and we can discuss this not we will see we don't know yeah all right well we'll come back next year I'll I'll play back your predictions I should have done that uh last year I should have recorded your predictions and played them back this year but okay great and then I I have but one final question for all of our guests we are gaming podcast for all what three games are you playing at the moment or are you most excited by whether Web Two web 3 mobile console

whatever okay um I'm I'm soccer or football um big gamer for the past you know 30 years of my life so I will start with FIFA Ora Sports yeah it's a bit boring but I had to say this um also agre yes it's it's important we try to to H keep coming back to those we fre games and by the way it's a it's something we need to all do more we're talking about what pre games let's also try to play them yeah uh and of course lastly coming back to a fantastic project we have on the game s ecosystem a very interesting project um Market wor which is um you know a m version of a make of of World of Warcraft it's it's an experiment it's a radical experiment and it's definitely something to keep an eye uh for the next year but yeah Big Picture let's try to play more we free games and not just only talk about them because it's it's very hard to really be in touch with their pains and and everything if you don't ever play those games right totally totally all right well that's a great place to end um George thank you so much for coming on

the Pod again I look forward to seeing you again in a year uh or sooner if you have exciting news to share along the way uh where can our listeners and our viewers go and check out this report from game seven yeah um we will have the link it's on the website on the research Tab and it's the state of we free gaming 2024 uh otherwis they can see on across on all our socials there will be plenty of opportunities to download the report perfect and we obviously put a link in the show notes as well so with that um another great episode thank you so much George again and of course 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 gaming so until next time friends feel free to send questions guests recommendations and comments to me my email is nikvik.com if you enjoyed today's episode whether on YouTube or your favorite podcast app make sure to like subcribe comment and if you want to out or provide feed

us. on TT and L plus if you want to learn more about what has offer make sure to check out our website www.n you can sign up for the number one games industry newsletter dig or contact us to learn about our wide ranging Consulting and advisory Services that's how we it's not like a certain number of players it's not a c number number if