two & a half gamers session #50 - Deep analysis of the current web3 market, implications & future

[Music] welcome welcome everyone this is no [ __ ] gaming podcast two and a half gamer session number 50 man 50 okay we are sharing ex insights dropping Knowledge from our day-to-day user acquisition game design and AD monetization drops we're definitely not talking about uh latest industry news because nobody cares but we we are having so much fun let's not forget this is still 400 a.m. conference discussion Vibe but let's not take it so seriously and today we have a special guest last week we had two special guests now we have one Nico welcome back on the show thank you so uh Nico is uh working at bcrafty

sure who are you and how uh amazing you are oh [ __ ] I thought I thought this was a no [ __ ] podcast come on Howes that work we love you we love you by the way super honored that I'm here for the 50th episode I didn't know you like you so you waited to get me on today this recording I really appreciate that um so a bit more about you asked about the podcasting I do actually now do two podcasts one is me and a buddy we read books and then we talk about it on a podcast which is really fun and it forces us to read books that we otherwise wouldn't that's less relevant obviously um the other one is um I few months ago started a da a decentralized autonom autonomous organization which I think you know is related to the topic of the day yeah um and it's basically a bunch of people that are building games with new technologies and um we have a podcast called the fog cost future of gaming podcast where we discuss um how new technologies can be used to build

better games that's the essence of it um and then apart from that I am also um I would say I spent most of my time as an investor at bit craft Ventures I'm there um on our crypto team and so I I look at you know everything that uses web three Technologies in a cool way to do something uh interesting with games nice so that's why we're going to talk about some web3 fun stuff yakob was talking about this episode for a week at least it's already really hyped up but we are as well uh before we do that uh again thanks for such an amazing feedback during the PGC special kudos to Z from mini clip he approached me on the actual dance floor and said hey let's do Ager bombs 3:00 a.m. best [ __ ] idea ever so uh good this to you special mention to him and then uh yeah I guess see you next week in Barcelona uh we are attending games Forum well I guess uh it's going to be maybe this week depends

on when I'm going to publish this but definitely 8th of 8th of February we have a live session after the day one so come on in grab a drink have have fun and listen to No [ __ ] insights we are going to talk about well we don't know what we are going to talk about yet we'll prepare something good though yeah yeah feeling sick as [ __ ] so hopefully uh you will be uh in a better shape yeah also well I forgot to actually introduce you guys so it's not only Nico here but yakob Felix and myself mate so The Usual Suspects uh and I'm gonna hand it over to yakob because he's eager to start talking about the web 3 even camera zoomed in on zo on the face this is even better a love it I'm scared now yeah anyway um for those who didn't listen last year we did this really

really nice episode with Nico when we went over the web three stuff that was happening by then and it was pretty much after the big peak and like we were talking what's what's happening now what's going to happen next especially focus on some stuff as product stuff how web3 was changing its kind of business model more from play to earn to play to own to whatever some kind of a new term that's currently running on the Block uh special attention paid to AI infinity and then we are here back again after a lot of stuff happened in the meantime I would say also one thing quick thing can you actually when you ask a question can you leave a little bit of space yeah this time like like if you don't like take a break after asking questions this time around I'm going to stop you I I I listen to the to the to the episode today just remind myself what what had happened so don't worry okay this one will be better

okay perfect but let's let's start with like some of the like big things and just go through some of the points that were happening throughout the year and then we can pretty much comment on those and like put them into context so I would say like one of the big of course let's start would be the collapse of Tera and ft ecosystems Tera would be kind of more closer to gaming I would say or at least I know more project that were like dependent on that and I guess they switch to polygon or something and then of course the FTX which is is the yeah as as as written by the auditor guy worse than Enron and like very very big big lawsuit happening currently with the guy and like pretty much everything that you can imagine being pretty much the next per in Med off so we'll see what happens there but uh I guess it put a lot of shade on the whole crypto ecosystem and yeah let's talk about that what are the implications of that sure this yeah yeah no um I think

these are important and relevant discussions to have so let's start with Tera um I'll approach this in a like what can we take away from what happened right um I think with Tera one of the conclusions we can we can make and it's I'm not I'm sure this is not new to many people uh to a lot of people that that you know with crypto um when you take the essence of what this new technology this blockchain technology does it's we've now added a way to create scarcity on the internet something that we couldn't do before right this might be something that I talked about last time we we sat together as well but before c before blockchain there was no way for me to send you an email with something in it um and when I sent that email like I wouldn't have it myself anymore right there was no way to really ensure scarcity at least not trustless right if I wanted to do that we had to rely on a third party like a PayPal or like a bank um in order to facilitate such a transaction we now have a way to do that in a decentralized way uh fashion where

we don't have to rely on like one one thrust a third party and so what's happening now especially in the defi space is we're essentially speedrunning the development of a New Economic and financial system so we're looking at how The Current financial system in the traditional World works or trafy as as a crypto buroughs call it and we're trying to rebuild all that and more using a decentralized infrastructure and because we're speedrunning things we're making a lot of mistakes and I think that's what's happened with Terra so we built a way to have a stable coin and we build it in like we tried to keep that coin stable using an algorithm and yeah that didn't work right through a bunch of outside forces um the peg or that algorithm broke got exploited and it went all the way down to zero so wasn't that the case that the this the the founder of Tera just took all the money and then just ran away no no that that

was least that was a different case in in in web three okay it was definitely a rumor as as are often rumors like that and obviously the guy is still pretty well off but I if I'm not mistaken he either faces jail time charges or might already South Korea yeah he faces that yeah so you know like this was definitely not his doing like everything was going fine until it wasn't um and so as many of these things are anyway so I guess one of the learnings there is um like okay we're speedrunning a new Financial system and we're going to make a lot of mistakes right there's going to be more of these busts I I can I can assure you that the second conclusion we can draw the second lesson we can take from that is if you're building a game realize that the blockchain partner that you choose is a risk right and we now see a lot of these blockchains having big like they raise a [ __ ] ton of money in the bull run when when times were good um because they know that this this whole um ecosystem is cyclical right there's huge booms and huge buz

and if it feels like everyone's really bullish on that stuff it's a good time to raise money and then you know make sure you have that when times get tougher and so um there's a lot of money out there and so now I see a lot of game developers being incentivized to build on certain ecosystems certain platforms by grants that are provided by these you know these these platforms these blockchains um I think it's you know depending on your situation as a games Builder it's something to take into account and know that you know unproven systems unpr blockchains are are still risky um I think you know there's a lot of examples I think now we we saw that there was a major shock with Solana which brings us to the whole FTX collapse um something that no one really expected again and it shows that even the more established blockchains are not that safe or secure well then what what what developers do in that case it looks like everything is super risky well I would say that there's a few Solutions I would say the older the blockchain and well maybe not the older but um if you go to ethereum layer one for example

that's that's in in terms of blockchain after Bitcoin the safest right that's one where the chances of ethereum going down is is very very low especially compared to any any other um blockchain built on top of it so that's solution number one I would also say that um if if you're a game if if I would be building a game a blockchain based game right now I would probably um postpone the decision of what blockchain I would build on as long as I can right obvious obviously a lot of teams decide to already sell tokens early which is a practice that I'm not sure like I think is a good practice in in every case I think sometimes it makes sense I'm not sure if it does always usually there's no other way to get funding keep that in mind it is true it is true especially today but then it today just getting funding from anyone even even you know the public is is not easy um but yeah so in general I would say postpone your decision to choose a blockchain to build on um as long as you can because you know time will tell which ecosystems uh

prove themselves to be you know more scalable and and anti fragile and survive exactly yeah so N I just want to like ask as well like these grants that you get for building on different blockchains like what's the whisper number like what kind of amounts are we talking about right now because you know we're facing a recession like what are the yeah you must know what are the amounts so I think um last year the amounts that I saw being thrown around was ranging from like 50 to 250k so these were the numbers that I was seeing um sometimes those were cash sometimes those were tokens that were locked up and sometimes those were in sort of um like uh delayed payment or like you don't you didn't have to pay that much of the the first fees that you have to play to pay for transactions um recently we have not seen these players be super active in in rounds um but if they were it was in lower amounts so I didn't see more than 150 I believe over the past few months is that for a tie up as well

so like you're tied to that chain for x amount of time or is it just I can take one and then go to another one the next day and then just you know like make my through all of them collecting grants these these people I know I know you guys might think so but they're not so stupid right so there's there is some kind of nobody said that you no no I I see all of you looking at me like you know no no so there is no I think um uh there's the teams that we speak to obviously there are um you know hundreds of teams building in this space um we don't speak to all of them we we already have a kind of filter I I see Decks that I would you know I think it would be a waste of time for the entrepreneur and for me to to hop on a call just because it's not a fit with what we do um but the ones that we end up speaking to generally they realize that signing up for one blockchain for eternity or like more than let's say one to two years is dangerous and so they they avoid that so exclusivity um generally they avoid it and if if it's there it's it's pretty short short

shorter cool so it's like the mediation Wars I guess a bit the same but yeah some companies don't even offer like a tie in there so yeah it does happen and moving on or let's say one last tidbit I would add to the Tera think when we're finishing that one was that if I understood correctly duon the founder already did the same thing before with basic cash where he also created one failed stable coin and then the amounts that he was like the percentage of your kind of rewards it was something like within like 20% or something so I wouldn't totally call it a mistake rather than like a scheme going through and you're not kind of doing your research well here which like unfortunately during the Bull Run that's the like default attitude of people throwing money into it but just just saying that I wouldn't say like the whole thing was kind of unpredictable and it like failed because of some kind of magic thing or like like they said that was a citadel attack or like other

big funds got together and just attacked the ecosystem and everything it's it was more of a like in the end like something like a Ponzi scheme so yeah exactly yeah one of the major selling propositions you're right was at 20% return on your stable tokens USD um sound to could to be true so well exactly and you know if it sounds too good to be true it probably is too good to be true and it clearly was too good to be true in retrospect so yeah it's it's something that you know there is no such thing as a free lunch right there's no such thing as easy money and if you think you're getting easy money um they're probably in some way taking advantage of you or you just don't realize the risk of what you're doing you are the product usually that's yeah 100% yeah okay so moving on uh do we see even bigger Fallout out of FTX because if I get that right FTX kind of the collapse of it can of puts gaming into kind of a more legit category I would say because I guess this takes much more shap towards crypto Defi and

like all the other kind of financial based applications or you know the genra there whereas gaming kind I would say avoided a little bit still suffers from the aftershocks but is like FTX isn't part of the gaming ecosystem or like web three uh gaming ecosystem so what what do you think about that or like what are we kind of facing because I guess the immediate implications here are that regulation is coming much more faster than before mhm yeah which which is not necessarily a bad thing I think one of the other um downsides that I wrote about specifically for FDX is that you know Tera was already relatively Niche and already I would say relatively Deen right if you were doing something with Tera you were like you were a bit of a Dean right you knew what you were doing you understood the space and you were willing to you know Venture away from the safety of ethereum for like whatever that's worth I think one of the major issues with what happened with FTX was

that it was such a trusted and perceived safe um player in the ecosystem and because of that there's a lot of people you know Gamers who are like hey you know there are like pretty interesting games being built on this space or maybe not or they just wanted to like get a taste of it and then they make an account with the like some company they see um an advertisement from on the at the Super Bowl and they just send send some a bit of money and then they buy some Bitcoin they get see see it go up see it go down um but they're essentially doing nothing wrong right and essentially the only risk that they should be taking is the risk of their assets that they buy going to zero but they ended up having counterparty risk which is the risk of the platform that they're using actually you know defrauding them and you know misusing their funds which is what happened and so I think the perceived safety of crypto by the general public I think that's probably one of the major down or major negative effects from what

happened with FDX um I also know that um we currently see quite a few companies that actually had a lot of their treasury on FTX that are now signifant like in trouble um we saw the Solana ecosystem getting a like a significant hit because with the very close ties between FTX and Alam and the Solana ecosystem um and so it it did have quite an impact we could if I understood correctly sorry L it literally halfed at that time if I understood correctly price although I would say that you know for me the the price of an asset doesn't really necessarily or like if the price of a token halves doesn't really ma mean that that ecosystem is suddenly halfed in in its value or whatever right it's there's there's there's obviously a long-term correlation between the strength of an ecosystem and the price of its underly underlying core assets um but I would say that you know similarly to between like that there's a relation between the stock price of a company and the actual Financial viability and

health of that company um these things are not perfectly correlated um so yeah I think a lot of companies um are getting in trouble now right and I think we haven't seen the full Fallout yet we over the past weeks have seen like a little bit of a green week I would say in the crypto markets um and you know people are like oh yeah the Bull Run is back you know it wouldn't surprise me if this is a is is a longer thing and I'm I'm personally I don't think we'll we'll get the the High Spirits um during 2023 my coinbase portfolio is increasing in the last couple of weeks so we we are back on I'm very much in the red so yeah do you think it's because there's like assumption that fed will stop tightening so much and actually start cutting race that this whole thing is kind of based on could be I'm I'm I don't consider myself a macro guy I there's there's too much going on in the world and I I just try to focus on what's in front of me which are like small early stage web 3 gaming companies yeah yeah okay so let's

move on then axi Infinity yes uh he said with a smile on his face yeah you want to beat the dead horse of course no no like I'm not beating the dead horse like uh last time when we were talking about it uh I know you said that like you said axi would be if you had to pick like the best uh pepo crypto game of last year uh which I think still holds through in a way that everything else either died or heav material realized yet so I guess that checks out the question is what's axi doing now because if I if I was looking around let's say there just those two charts that I put there to kind of see like what's the current engagement on their Reddit against their Community because I I often went to their redit and it was really good in a way to kind of see what's the mood most's the why what problems people are currently getting like what's the problems between Scholars and the ones that are pretty much having the the rents and stuff like that but if I understood it's kind of died down and the free to-play version of the game didn't really catch up so my

guess is I know that uh Sky M announc A lot of these kind of Partnerships and like pretty much we have the money you bring us content and we give you axi IP stuff like that but also if I understood like it's either stuff is being built up or haven't materialized yet so what what's the current state of axi infinity MH um so from my perspective I think I I believe there's a like a 120,000 daus I believe on um playing axi Infinity yes if I'm not mistaken it could be that it's Maus and it's like 40K but I yeah yeah that sounds pretty that sounds pretty high yeah the stop stop kind of giving the numbers in the EXO sheet at some point when they turn off the so so it's I would say it's at least 120 because I know the 120k L I just I'm not 100% sure if it's daus or meus um anyway so which I would say in in like what you guys are used to it's nothing it's peanuts right but for the

web three gaming space it's okay sorry mice nuts is mice nuts yeah that's that's the the gaming uh um the gaming industry term for not a lot of yeah small amount M nuts so um okay so in terms of but in terms of like from the the perspective of web three games it's actually pretty decent um I do think that the sky Mavis team so Sky Mavis company behind X um I think their perspective has opened up and so they're building two things I think they're building a uh the AI Infinity like IP and ecosystem not essentially around one core game which is the the like battle game that they have now the card battle game that they have now um but there will be no more games around that and around that IP um they're so they're building games themselves they are also working with third parties to build axi IP and So axi based games and they're also

working with third parties to build non axi related games that live on the Ron in blockchain so you know one of the big shifts that they did which was ended up being a good decision was that they spun up their own side chain which is called the Ronin blockchain which allowed them to avoid um scalability problems on other uh blockchains so wasn't that exploited yeah the bridge was exploited correct so um exactly so in the end the blockchain actually never really uh stopped working in a way it was just a a hack of like a non-blockchain related hack essentially interestingly FDX um the sky Mavis Ronin hack and Terra all were um mistakes that were non-blockchain related so there was never like the blockchain actually at any point has ever stopped human factor human of course I still believe some of the like uh founders of Sky MAV just

stole that that money still think okay of course that's a pure speculation obviously I don't think so but but that would just I'll let you believe it m yeah it would be great plot for a for a movie if Nico if you would have to guess what would be the state of axi infinity by the end of this year like like let say we were doing last year so we know what we're talking about next year is that is that going to be my yearly bet axi Infinity um if if I would open up my Can can I open up my guessing to like the more broad Sky Mavis Rin ecosystem sure sure then I think so you know I've had conversations public conversation podcast recordings with some of their um growth Leets and so I think one of the challenges and that's I guess where where the three of you might have some insights is that user acquisition within the web fre space is challenging all right and you know they've they are like

months or maybe like six months ahead of anyone else when it comes to understanding you know how to on board people and how to turn that into a sort of um publishing play I would say almost like profitable UA it's not what I'm saying but I would say that um that would be very close to yeah I mean I I I believe that um part of what web 3 brings to games is increasing um willing to spend of players so people are are increas like willing to spend more on assets that they could either potentially sell or that they could you know do more things with than they could in in in you know centralized let's let's call it additional um component of the LTV I guess yeah I would say from marketer's point of view definitely yeah and so you know if if if we can imagine a world where web 3 games have higher ltvs then then you know then if you're building within that space and you can compete against companies that don't have that high ltvs then obviously you're you're in a good position so that's that's why

I think that you know they there might be some potential there if that like comes to fruition within this year I don't know but I do think that the people there were smart smarter than people think because everyone just looks at what happened to x infinity was like oh these guys are are idiots and they don't know what they're doing and and there's there's self cooking there of course uh but uh to the point or to your point that about web 3 UA is challenging of course it's challenging and it's more challenging to to people who who never worked in UA in in mobile games uh and now they're building web free company so I'm dead Ah that's like super hard for them MH so uh if you work if you work in UA in games then you figure it out quite easily by the way to be fair I spoke to their growth lead who's called Quinn I'm liking on his last name you familiar have you spoken to of course yeah he at least to me because but I'm a Noob right he seems to know what he's do it yeah there are different people who

who think or uh you know seem that they they know what they are doing but just uh let's let's say some of the companies out there uh and their growth leads asked me to to be there for a one month uh crash course for uh how to be a a director of UA without zero experience before so yeah let's let's let's yeah let's call it that way no why not well because uh no no no no no well first of all of course you can't just progress or just kind of uh get 10 years of experience into one month it's not going to happen M and then uh this person wanted me to pay for this from his pocket and not the company's pocket so it was expensive for him or her nobody knows who the person is yeah yeah but that's like kind of part of the I think the thing we were

talking last time on the podcast that uh if you building web three games of course you're bringing like sweat of Knowledge from the web three ecosystem and like crypto and stuff like that but keep in mind that you're still building games in the end you still need to have the expertise that all these other people were evolving through 20 years or something and it's shifting so fast so it's yeah as M said like for somebody without zero experience it's double hard so yeah you need to speak up Remo I'm having trouble hearing yeah okay you need to increase your decibels in the post production it's not going to be me it's not now it's going to be you who suck okay anyway uh moving on and when we were talking about the ecosystem there were the new guidelines from IOS and uh we we all read them and to me at least uh like a web three let's say medeor person not like a super senior it sounds to me like they pretty much killed the whole thing their tracks regarding the let's say secondary

Marketplace features or like any other meaningful features with uh integration to Mobile stores where they pretty much plainly said that you can just brow the nfds and that's it and uh to me it sounds like the usual that all you thoughts we're going to give you our 30% cut no we won't forget it and that's it yeah um so as you guys might know I'm I'm strong believer in you know the potential of this technology and I don't think it's going anywhere right and I think you know as as we've done in the past we'll find ways around this and I think if you listen to someone like Gabe Bladen um you know he says if there's a 30% fee then there's there's a 30% fees fee I'll pay 30% fees on my nft initial sales and also pay 30% on the royalties I get from people trading um you know if that's the way it is that's the way it is so I guess that's probably the worst well I guess the worst case scenario is 10 years of Apple not allowing any what three activity you know on on iOS which won't

happen which will happen no it won't happen man I'm pretty sure it won't happen yeah I don't know I I don't know I think Plan B is that they they enforce their 30% cut and I I guess best case scenario is that you know at some point this 30% cut gets lowered by you know in broader industry pressures and um it that's the thing that's not going to happen yeah that's what I'm saying like the only thing that can force them is US Regulators which of course like all the lawsuits and everything are ongoing but it will be what like 5 years six years seven years don't know yeah so so and and and actually speaking about that this is next item on our list uh Super Bowl is the ring uh in 10 days and there's going to be an ad by the forementioned uh dig gaku which they I think they even throwing in the number it was like 7.2 million something for the advertising yeah yeah and uh yeah they're going to

run dig daku Super Bowl at during the match so I guess of course as machine Zone like CEO like they ran this machine Zone multiple times before they did that of course he's first burns like first name basis with everyone who sells the ads he knows them all yeah like just just to frame this a little bit like this seems to me like one of those like big hopes companies that are like they have senior people from free to play gaming or like gaming whatsoever and seems like they know what they're doing uh to me it seems that their marketing is working pretty well just by looking at the floor price of the dakus they still holding around 11 eat which is like 18K dollar so no you know no shame in saying that that these seems that work pretty well for them but the question is what will happen afterwards because they still haven't exited the the usual cycle of like propping up the hype yet whereas we need to see the product cuz we also have another Contender down the line and yeah want to

talk about that more but yeah let's let's talk about machine Zone a little bit or X machine Zone I think um there's a lot to like about their approach if I would summarize what I understand from gab bladen's thesis is that one of his frustrations at machine Zone was that there was a cap of how much people could spend at once good thing about web3 is there's no cap you can do whatever the hell you want and so you know this could also potentially be a a sort of solution to the whole iOS problem if you can incentivize a very small minority of your players to be willing to go to other platforms and transact there then and you can get them to to pay thousands of dollars for certain assets um you know that's a way to to to make a living or to make a successful game and so um I think that's probably gab bladen's main thesis and and why he's so bullish on on this new technology um whether it will play out that that way I don't know there there's another thing that I really like about his approach um I'm one of my

frustrations is is that you know as what I said in the beginning was that for me blockchain technology is a we've invented a new way to transact value over the internet and it's actually super interesting because we can transact a value through fungible tokens which are just similar to you know dollars or Euros or whatever all right it's easy for us to count and it's easy for us to to to measure how much value we transact but you can also now transact value in nonf funable assets like you know a painting or like a piece of art or an in-game asset and so you know historically game makers have always been super creative when it comes to you know finding new ways to monetize and create value and you know new ways to create new businesses or business models in games and especially mobile ones yeah no that's true absolutely and so one of my frustrations is that I see a lot of experienced web 2 games teams come into the space and just saying okay I'm going

to take the concept of an nft and I'm going to just take it and and use it in my game and so I'm going to have my game and then my some of my assets are going to be nfts and what I would love it I would love it if these um these teams that are inherently Super Creative would be willing to not only innovate in terms of game design but also innovate in terms of nft design so you know right now we're taking nfts as is which is is you can send an nft you can sell an nft for every any price you want you can you know hold your nft as long as you want and there's essentially almost no limitations but the cool thing is that you can actually program logic inside of your nft which could mean that oh you want to buy an nft to support the creation of this game um I'm concerned that you might be a Speculator so what I'm going to do is I'm going to make it so that you can't sell the NF that you buy with like if you've not spent 100 hours inside my game like that's something that you can actually program into an nft without a problem and so um

Gabe Laden is actually like he has been like putting logic inside the game assets I believe he has added a way to um enforce a minimum uh floor price so you can't sell this asset for less than you know x amount of of of eth and so um you know he is willing to experiment with these new technologies on top of experimenting with game design and that's something I I would love to see more gaming teams teams do yeah but I think this comes from uh his and his team's experience in in games because yeah because a lot of a lot of these web three companies have no idea how to build a game is great I I I've heard about this like I think multiple times even about stuff like let's say the nft pretty much can be leveled up can be changed can be grown as you progress like I remember back back in the days it was called hex TCG like this other TCG that split from um World of Warcraft guys there and they run this kind of a

concept of the cards themselves would have stats like how many other cards you killed and like it would be all written on that one card and they would sell them on their internal Marketplace and I think like this would be like the closest to that concept that whereas like it grows and moves and lives and it's this one entity that can be sold over and you know that's like really good because in the end uh yeah I also agree that in order for something to work that needs to be not only gaming Innovation but like business model nft SL whatever you want there Innovation which would in the end need to enable new functionality otherwise if you're still using the same functionality it kind of defeats the purpose in my opinion so it's more of a like kind of desperate pivot into web 3 or you know haven't really work out something and you SL web three on it which won't work out anyway these days especially now that the market fundraising is switching to AI which is going to vacuum clean all the web three funding in the end uh but yeah enabling new functionality and experimenting with this I would say is the closest way to go that I can see this work out in the short term also

yesterday we we discussed uh with the yop on our Slovak podcast obviously because we are love we love doing podcasts uh the the fact that Apex Legends now uh is being closed people spent epex Legends mobile epex Legends mobile yes Fu ton of money so players spend Fu ton of money to buy different things they can go [ __ ] themselves and I said look so this wouldn't happen on the blockchain because they would actually own those those things would it or well I I can I can already tell you now that the counterargument of of web 2 Gaming people that hate web 3 would be that you know if the game is shut down well why the hell would I want to buy your skins mate true yeah that's what the aqu always said so if you know if axi Infinity dies what why would I have the A and my answer to that would be well of course it's useless now but you never know what who is going to build anything on top of what uh what is there so I

guess of course yeah you have you have at least something you can you can wipe your ass with it of course but then at least you have you have it it's yours man you're a no [ __ ] podcast like you have nothing I'm sorry of course you have nothing but at least you have it at least you have it I I'll I'll give you one more answer to that um and that is this concept of decentralized games or games where the games State actually lives on top of a blockchain and the game logic lives on top of a blockchain another name for that are crypto native games or onchain games um obviously because they live on the blockchain they're extremely slow right you can't build extremely pricey on gas fees exactly so you know we're definitely not in the stage where we can have a mass you know game on on on the blockchain but you know one of the interesting things is like a game like Dark Forest which is the first you know big onchain game lives forever so you can't never no one can stop it it's there and you can play it and so if you own an asset in

that game you can play it whenever you want and no one can stop you yeah but then you need to have a game on chain that leaves there if you don't then yeah okay but still you can at least you can at least look at that the NFD or whatever you have your wallet next next interesting uh thing that happened and I'm kind of very surprised by this is that Voodoo said it's kind of moving into crypto and they actually said that they have 10 games in development which sounds to me like hyper casual games because usually like you would focus on one two games not 10 sounds to me like they were kind of more easier done so implies that they are probably hyper casuals or something closer to that and they said they're launching their own Voodoo coin by the summer this summer this year so this seems like an interesting development here mhm you guys probably have better insights here than me but as far as I see um Performance Marketing is becoming hard and expensive and so the more

casual side of mobile games is you know trying to figure out ways to either reduce customer acquisition costs or increase ltvs and you know I think a lot of these more casual um Publishers are trying to see how they could potentially do that within web3 where you know find a way to have players buy into your ecosystem so when they are sick of one game they move to the next but within your ecosystem so you keep profiting from them um I would say that you know I I I can't give details about what Voodoo is doing but that seems like a something that I think a lot of Publishers are thinking about it's it's so interesting about the voodoo because they just had a um a talk casual Studio Clos PGC yeah that's first thing casual Studio close but then they they had a talk at PGC last week uh about hyper casual being dead basically hyper casual publisher talking about hyper casual being that and why is this happening well they're

moving into web three they're trying to move into casual and then to beat core as well so now they're trying to cover their SES because uh they want new uh studios in these all segments rather than just uh getting more hyper casual Studios so it's just it's so funny I mean hyper casual them saying that they're probably still earning like a million a day in ad at least really dead yet but you know maybe they're seeing the writing on the wall is is that they're not growing and remember they have Goldman Sachs as their investor in VI the understand correctly but even even if if they uh they are growing or or staying flat this is just again the uh the terminology towards the the new companies or to to get more casual or midore companies to get into their publishing uh wheelhouse rather than just more yeah rather there's more hyper casual could be like the I I think I

heard the number it was in one game industry article where uh forgot the name the head of Berlin Studio from Voodoo Mr willink forgot the Sur name but he said that they go through 100 prototypes every month so I guess they kill like 99 games and one one goes to sounds about right yeah yeah so it's it's very very kind of you know you need to have the inflow of content going into it so yeah very very big this funny is because uh you read these articles out there different blogs from different agencies and they they tell you the the best tips for UA creatives whatever and everybody's uh is reading that and say oh wow this is great so I need I just you know say an example I need different creativ for different U channels and they say the the agency say say this because they want more uh fees and they you know they want to squeeze the the game developers more uh because they need to now create more creatives for different channels so they earn more

money and this is exactly the same thing so they are now saying oh well hypercal is dead but you know maybe casual or my midore might be the the way to go now or you know we just open up web free uh publishing arm talk to us this is exactly the same so you know the motivation behind them behind this like them saying hyper casual is dead it's just like ah come on yeah next next thing on the Block is Square Enix which to me is much more interesting in a way because these guys are kind of a big big name here in the industry and I think it's the only let's say triaa developer that's really going in all guns blazing into the segment they pretty much sold of their whole Montreal or Canada Division and I think like for 300 million or something and they are multiple blockchain or crypto games in development and uh don't know if there's anyone else like I know there's been of course Ubisoft Zinga said that they have

like a big team working on crypto it's pretty quiet from Zinga yeah nothing's come out of it there yet same as with Ubisoft I think they Ubisoft AED that whole thing but yeah like this is the last man standing I guess in this kind of a triaa uh field so what do we think of that I would say I don't have any like specific insights what I have noticed is that the perception of blockchain and games between the west and the East is kind of different and I've noticed that in the East you know consumers are like more open to it or more used to it um you know here like if if you see too much pay to win you know people get really angry and there it's just normal um or it seems to be right um and so that's why Diablo Immortal makes 100 million in China there you go so you know not super surprising that the the main triaa player is is from from the East um but I don't know exactly like

their plans um yeah I don't have much to much at there yeah I would say together with Voodoo uh they are pretty much like kind of a this kind of kind of in the C mine to watch what will happen with it and others will either follow or not follow based on that yeah go ahead Felix no I just wanted to ask like do you think like the first web three like absolute like hit that's going to go and actually be like really big do you think it's going to come from like a AAA Studio like from web 2 or do you think it's going to come from a brand new team that's just starting fresh for web 3 I think the ladder so I think is going to be from a a brand new studio I think we're going to see a lot of failed experiments I think you know everyone's scrabbling to figure out how exactly you know this technology adds most value and I think the you need like a fresh way of thinking and I like I think gods are that's it's not like especially the first will not come from a from a triple A they're not going to be the the innovators here and I also don't don't think that AAA quality games is what's going to differentiate web 3 from from

web two games or like the big Advantage is going to be the web3 technology brings something that you couldn't have in a web through world and you know that's I think something that web 2 or like a AAA company doesn't necessarily have any advantage with functionality pretty much new one I think so yeah okay uh yeah there's b b CL game that was recently released called uh dookie Dash if I read that right and it's about you going down uh sewer and finding Keys which you can upgrade your nfts with or if I understand correctly is more of a kind of a keeping the community hype up uh product so it's kind of for the fan base not really like their output of their uh famous MMO that they're working on uh but still like of course like I the thing that I put there from Kotaku so the main main gaming press is not not

impressed let's say of course slightly not impressed by by mobile games as well so yeah yeah but that's just for illustrations but these guys are never happy man yeah but for me it seems that this is kind of even too simplish for me in a way that like of course you need to throw some bone to the community to like uh tell them that you're still living you're doing something with it but still like I guess you could go a little bit more with that big of a budget that you have at your disposal don't know why why this is I guess this is enough for the community maybe it's not enough but it's just something that they can play around with and then you know wait for the the big lunch you mean the like prolonging time until the big crash yeah come on dude no man stop I think um I'm not a big fan of of board apes and and what they're doing I think it's too much predicated around you know buy assets and then maximize value and it's too much speculative and

and the games focused I think their uh dooky Dash is I would call it a gamified um wh list so they have a mint upcoming and instead of being like a a first Comer served that could potentially be boted or you know essentially abused I think they've you know just slapped a game on it a simple game um where it's about you know if you perform well you you make a chance to be on the W uh the the white list so you know I think in in in essence I don't have anything against it I haven't tried the game myself um but yeah I I I don't think it's it's necessarily an attempt that for them to like keep their price up although they they should I think you know keeping their price up is probably like more done by hype and Promises than by actually putting a game out there um but I do like the fact that you know there at least using games to do something else than than you know oh you know engage in our Discord and and like typ type a lot of GMS every morning um so

yeah yeah yeah that's I agree with that um yeah the big question that I already had on my mind for the whole thing was like where will all the raised money go from last year and this is like the very big one for me because just some numbers uh I found this kind of footprint analytics thing that was done 30th of December last year where they they had some kind of like really nice write up and some of the prominent names even in the recent history what they erased but the like one of the big numbers was that in 2021 there were around 5.5 billion invested into the space and now it decreased in 3.7 billion in 2022 which is still a lot of money yeah which is still a lot of money don't get me wrong but yeah it's going a little bit down uh biggest uh kind of a VCS that they mentioned that are stuff like animoca brands with like 61 projects Infinity Adventure Cryptor 30 projects Shima Capital 29 projects and then the latest

kind of raises were Theory craft with 50 million B round Horizon blockchain games with 40 million round and Phoenix games which if I understood split from mid mythical games like the whole C C team pretty much founded that and get like 150 million and I think they're in the lwuit with the yeah but still like this was done like what December or November yeah yeah it's pretty fresh at the end 150 million so that's pretty big and there's of course like a lot of uh I wouldn't even games and different gaming companies and those are not not gaming founds like like the biggest one for instance the Hound Ventures from like KT H the founder of coin coinbase with like 1.5 billion and the least goes on with pretty much like ridiculously high numbers so where's this where's this capita flowing currently where you know it cannot sit there because there's big inflation currently happening what do you mean we are in the uh markets everybody's building everybody's building everything are they I don't

know everybody's talking about it now is the time to build now is the time to build I can tell you as an as an investor there are still Founders that are you know starting new companies and raising early stage runs there are still Founders needing follow-up Capital actually quite a few and a lot of them are struggling so you know there's definitely places to deploy this Capital um and I would say that all of these funds probably in a pretty good place because they have the money and the valuations are significantly lower than they where they were a year or a year and a half ago one thing to keep in mind is that um you know there has been an enormous amount of wealth creation within the crypto space right lot of people suddenly got really rich just because they were lucky enough to discover Bitcoin and eth early right and exactly and the other half got kind of poor yes exactly the ones that were too late got poor the ones that made some stupid decision got poor inly a lot of these people that you know got into Bitcoin early are like are are

not willing to admit to themselves that they were just lucky right and they think they're really smart they're like oh I saw this and I held this and I'm I'm a good investor you know and so the there's a lot of these I mean I want to like not everyone in space is like this right but a lot of a lot of people suddenly saw themselves become Millionaires and I think a lot of them actually like committed Capital to these funds because these funds like if you say oh I raised a$1 billion fund it doesn't mean that you have a billion in your bank account you know you do Capital calls over certain period of time exactly and so usually that's like two years three years something like that and then every quarter you you ask for a bit of money until you get your your total amount and so um there is a risk and I'm sure that you know if we sum up all of the funds that were raised within crypto especially the more crypto native funds that will be invested in by the more or you know the D that got really lucky um those might struggle

like getting all of the capital that was committed and I I I think you know every realistic crypto native fund will probably have to Discount you know their funds by you know a good margin nice like I would say it's it's kind of a like yeah definitely some some as M said like some people are still building like gab Bladen and like all these other kind of prominent games but I would say a lot of lot of people are kind of struggling that didn't kind of cover cover their uh budgets through for the winter or let's say didn't ra enough so there will be I guess lot of consolidation problem yeah yeah but the the interesting part that I see here is that if you look at all these races the latest ones they are all either kind of X AAA people or triaa is behind the the races so that's like one of the big questions for me that if triaa is still kind of you know holding their ticket that this Lottery can still go on let's let's let's still put allocate money

into it because I guess they're struggling still in a way for instance like like we saw this week where EA pretty much uh canceled Apex battle battle field and like a lot of their mobile inventory so they are still kind of looking for that new platform but uh yeah it seems to me that it's more of a like I wouldn't say that people should be waiting for some kind of a big CR or something it's more of like this thing will die down rather than move up because I still don't see any kind of like fundamental that will move this especially now that we have the new guidelines which prohibits the biggest distribution channels which are mobiles Felix do you want to stop him or should I because he already yeah I was just about to cut off two questions and like he already was trying to answer like and then course sorry little around there yeah what do you wanna what do you want to talk about yob yeah like do you think that this this this kind of a whole triaa move into it as you said

like if it's not coming from Tria so let's let's buy someone that will do it for us as triaa like if this is so warranteed you know um if if you look at for example bit Craft's portfolio and the companies that we invested in in our crypto um fund you'll see that you know 90% plus of them actually have like AAA or at least like a deep experience within the games industry and so you know I think saying that AAA is not what what will be making the big innovation here by that when I say that I mean that the AAA the Publishers themselves or the the companies themselves will not do that um but you know people that worked in AAA might be the ones that really understand game design and really know what they can do or are inspired by you know what this new technology brings I also feel and this is you know surprising to me because I felt like you know during these months just after the FTX crash when the general public was really down on what web three can bring to games um we would see the whole

industry follow but I'm like I'm still surprised with how many crypto things I see at G um at parket gamer in London GDC is still going to have like a significant web 3 presence and so it seems like the the industry themselves maybe had some sort of allergic reaction to all the hype and is now just just more chill about it than just be like oh yeah we might be able to do something cool here no 100% uh it was like all about about the hyp and speculation last year now when the Ft crashed like people start to realize okay well we might be uh a little bit cautious uh but it's still happening like I said at the beginning like this is not going anywhere uh this here uh and it's it's with it yeah yeah I don't I don't think so it will go anywhere I think it will stay because it's kind of the technology works it's like how you use it that that's the main thing around it the the the bigger problem now that I would see is that it can can get over shouted by other more prominent technology such as AI this year because that's the buzz

word to go to sure of course but it's again if you're speculating uh then you will find just another buzz word next year yeah and I would say just like over the past couple of years we've seen blockchain pushed into things where it didn't belong over the next year we'll see AI being pushed into places where it doesn't belong right 100% 100% yeah absolutely and that's just just people being stupid and and try and [ __ ] they shouldn't right but you know but they can there the problem they can I mean yeah they can do whatever the hell they want I'm just not going to give my money you know yeah yeah yeah I'm understand should we uh we're coming close to an hour should we wrap up yeah yeah no I think yeah yeah I think uh there's like one uh interesting question that was uh in the in the prep doc which is in 2023 we should be seeing some like really interesting blockchain games Global launches because well that's what you should mention the aqu also uh companies raised by money they worked on the game now we should be seeing first and well

let's see how many of them so is there any any game you're actually excited uh about the most such a hard question I know like it's a bit like like what's your favorite child you know right true no I think I think there's there's there's a bunch um I'm so okay I'll give you one and it's okay one of the companies that we invested in is company called Magik cave and they're I don't know if you saw that um again gaming industry veterans and they're building a games ecosystem rounds like nfts that are um like toys and so they're initially working with like dice nfts that you can use within different games and what they're doing is is really cool and it's it looks beautiful and it's these things where you know you you would want to have them physically because they look so good and and you truly own them because they're blockchain based so that's uh that's one of them that I'm really excited about nice sounds like Skylanders a little bit to me the I have no idea I have no idea the

Activision one the toys one that are kind of physical and Bol digital yes I think yeah I think I know what you mean it is uh yeah I would say it it is similar although I don't think they're starting with ar any anyway soon um and it's it's more like Dungeons and Dragons focused where it's like it's not like D6 but you have like yeah Dungeons and Dragons that's a good Niche to go after yeah oh yeah there go 100% yeah yeah all right all right I think we could uh we could be here for another hour uh at least and talk about roasting me and asking me all these stuff questions very good ansers like I learned I no it's a it's great super good session yeah yeah yeah even better than the last one also well we improved as well as a as a podcast a little bit uh yeah okay let's uh yeah uh let's call it here uh thank you very much for listening guys uh please uh continue subscribing uh put Niko's um email address in the show note so you can you know text him about getting an

investment and uh see you next week in Barcelona thanks ni for coming thanks pleasure [Music]