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What it really means to transition from web2 to web3 games
Looking back at the transition from Web 1.0 to Web 2.0
New technologies are never used properly when they are first discovered.
This is because they are often used to solve pre-existing problems, rather than to unlock new opportunities.
We have seen this time and time again. In the early days of the internet when we were transitioning from web1 to web2, the most popular ideas were digital “yellow pages” or digital “newspapers”. While useful, they did not really make use of the technology.
But we now know that the internet is much more than that. Digital “Yellow pages” became user-driven search engines like Google or Yelp, while digital “newspapers” became user-driven content like Youtube.
What is the Web3 version of this? Well we’re probably seeing it right now.
I’ve had conversations with founders who are transitioning into the web3 space recently, many of whom come with lots of experience in the traditional gaming space. Based on these conversations as well as observations on what various studios are doing, I would like to share my perspective of what the transition from web2 to web3 gaming really looks like.
This will 100% be wrong, as I believe we don’t quite know yet how to best use this technology. But let’s have a go…
Level 1: Ownership & Tradability
It’s intuitive that the most obvious application of web3 to gaming is also the easiest to understand - ownership & tradability.
“Imagine playing Fortnite, but you could re-sell any of the skins you had purchased, or even earn skins that you could sell for real money!”
The most powerful idea right now in the gaming industry is that, all other things equal, player ownership of assets is better than non-ownership of assets. It’s the idea that players shouldn’t just “sink” time and money into a video game, but should get something back for their efforts while having fun.
I think this is amazing and by itself can disrupt the industry! But it’s not enough.
It doesn’t really embrace the full ethos of web3. It’s our equivalent of “let’s put Yellow pages on the internet”.
So let’s look at level 2.
Level 2: Improved player experience
Games compete for attention. Time is limited, and ultimately people make a choice between playing games, watching a movie, going out with friends, etc.
Some difficult questions to answer include: How can blockchain actually improve the game for the player? What does this technology offer which can’t be done in existing games today? And why does it matter at all vs using a centralised database?
“Imagine playing Fortnite, but their maps are so much more fun because their community members create them, controls the curation, and get paid whenever people play them”
Now we’re looking at the better version of a web2 game that cannot be replicated.
Let’s take a look at Guild of Guardians, a mobile team action RPG where players play in guilds and battle through dungeons to earn loot. How does blockchain make it better for players?
Strategy - Players in this type of game love the strategic depth of hero synergies, their abilities, equipment and how this all impacts their overall progression & success. Adding another consideration of economic strategy actually increases strategic depth and makes the game more fun.
Collectability - Players in this type of game love collecting, gacha rolling for heroes and building out their collections. Making these collectibles digital assets, and giving players the opportunity to show-off their collection makes this part of the game more satisfying.
Social - Players often stay active in these games when they are interacting with others in their ‘guild’ or ‘clan’. Playing with friends and fostering social connections are massively positive for gamers. The guild-focused gameplay and cooperative economy in Guild of Guardians emphasises the teamwork element of the game, and makes the game more social and interactive.
You will notice that Guild of Guardians does not just copy an existing game, and instead the design innovation is focused on the premise of making this type of game better with blockchain.
Level 3: Economic Incentive Alignment
One of the core principles of web 3 is incentive alignment. It’s the idea that any individual or business should be financially incentivised to positively contribute to an ecosystem, in a manner that results in a net-benefit for that ecosystem.
“Imagine playing Fortnite, but any content creator in the world got paid exactly 50% of the ‘value’ that they bring to the game, whether that’s new players who spend money or increased brand recognition.”
The buzz-word that gets thrown around right now is ‘play-to-earn’ or ‘play-and-earn’. Both concepts revolve around the idea that players are valuable, and just by playing the game you should be rewarded for contributing to the game’s success.
As the web3 space develops, we will see much more data-driven and strategic approaches to incentive alignment. Just like how PayPal paid $10 to each new sign-up to reach a critical mass of their first 1m users, we will likely see this same idea used to bootstrap new blockchain games.
However, it’s super important that incentive alignment doesn’t just end with players. Web 3 means everyone, and there are many participants in a gaming ecosystem which contribute to its success, each of whom should be empowered and incentivised to perform different actions. This is why Guild of Guardians is so-focused on finding ways to empower & reward the community, as we believe the community is key to our long-term success and valuable contributors.
See sample image below on the ‘types’ of participants that typically exist in the industry:
Level 4: Revenue, Distribution & Publishing Models
Web3 unlocks brand new business models. We are seeing it most prevalent right now in the democratisation of fundraising. Many teams are able to do NFT or token sales to bootstrap capital to then produce a game, which is very different to the traditional model where teams raise funding after getting to each milestone (i.e. pre-production, vertical slice, etc).
We’re also going to see this apply to all other aspects of the game development and publishing business.
“Imagine Apple, but instead of them taking 30% of all in-app-purchases, they take a % of NFT secondary trading fees that occur in their app.”
Let’s look at some more examples. Imagine…
Distribution of games being done by millions of micro-influencers rather than big agencies
Big esport teams actually competing in games and making a living that is not reliant on advertisements or sponsorship
Never spending a dollar on Facebook paid advertising, and instead giving this as sign-up rewards for new players
Watching your favourite steamer player a game, and earning NFT drops for engaging with them and the game
Voting on how much the development team should get paid based on the success of the game
Open sourcing the code and paying any developer who submits an PR that get’s approved
The opportunities here are almost limitless. What might seem like a strange idea now could end up being the “way things are done” in the future.
Web3 innovation must occur outside of the game itself.
Level 5: Decentralised Ownership & Development
Blockchain is by its nature decentralised. This is the opposite of what the gaming industry is today, as decisions over a game are typically all internal and made by few individuals.
This makes sense. Game development is part art and part science, and extremely difficult. Steam publishes around 8000 games per year, and almost all of them fail. Experts are those that will understand the game the best and make the best decisions, rather than relying on “majority rules” or “Reddit experts”.
But does it have to be centralised? Can we have game models or development approaches that are actually decentralised? And set-up the right systems, processes and incentives so that this becomes a better way of building games?
We’ve seen some games begin to attempt this via DAOs (Decentralised Autonomous Organisations), and many claim to switch to being decentralised later. But the organisation of DAOs is still in its primitive stages and isn’t yet more efficient than a company. It’s proven challenging to create the proper organisational structure, decision making processes and incentive mechanisms to unlock the potential of a DAO (although luckily there are many smart people working on this).
Regardless, this is a big blue ocean of opportunity. Most importantly, there is the big opportunity to leverage a decentralised structure and achieve things that a single company could not replicate.
“Imagine a game that is fully-owned and run by 1 million community members, including everything from development, to marketing, to design. Imagine it was easy to contribute, make the right decisions, and that the biggest contributors got rewarded. What kind of individual company could compete with this pace and scale?”
Decentralised games are an area to consider which will flip traditional game development on its head.
Level 6: ???
I’m sure there is more and that we are barely scratching the surface. Would love to hear ideas that haven’t been listed here.
We are super early. No-one really knows how the industry is going to change yet. And we need to focus more on innovation rather than ‘copying’ existing models and thinking that ‘slapping in’ blockchain or NFTs will make it better. Hoping this article inspires exactly that.
About me: I founded and am leading the team at Guild of Guardians, a mobile RPG that is owned and published by Immutable Studios and built on Immutable X. We are hiring! I’m available via Twitter and interested in all things web3 & gaming.