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The Future of Gaming DAO or FOGDAO is a decentralized, tokenized community exploring the future of the gaming industry.
Nico Vereecke:
GM friends and welcome to the future of gaming. You are listening to our weekly podcast. Today it is Phil and I, and we have a special guest, Philip La. Philip is a prolific person in the Web3 gaming space. He has spent time before Web3 at Pokemon Go and Facebook, then joined Axie Infinity and is currently the director of products at Roboto Games. The reason we're speaking with Phil is because Um, he's generally, um, very well informed and well-opinionated person about the intersection of blockchain and games. So it's always a pleasure to talk to him. But he recently brought out a piece where he went, he thought himself to be, um, a school teacher and is like, I'm going to grade Web3 and what it brings to games. Um, and so he wrote a piece where you looked at all of the different things that Web3 does for gaming and you essentially give the grade from A to F, which as an European, I find. Really annoying. Just do like one to 10, man. It's, it's really not that hard. Anyway. Um, one more thing about this podcast is going to be confusing because we have two Phillips here and
Philip Collins:
Ha!
Nico Vereecke:
I'll, I'll, we'll figure it out. Like, I'll, I'll, yeah, I'll, I'll try and make sure that, you know, you guys know who I'm addressing so we don't have these awkward moments where it's like, did he, did he ask that to me? Anyway, Philip Lah, sir, welcome to the show. Thank you for being here. Um, I would say, yeah,
Philip:
Thanks
Nico Vereecke:
feel
Philip:
for
Nico Vereecke:
free
Philip:
having
Nico Vereecke:
to
Philip:
me.
Nico Vereecke:
tell us a bit more about why you decided to write this piece. bit about your methodology and then we can dig in.
Philip:
Yeah, so after the crazy year and a half at Sky Mavis, learned a lot. It was really fun experience, challenging as well. And yeah, I just had all these learnings and thoughts around Web3 and gaming and areas where I saw it was very valuable and areas where I felt it was overstated. And I had a little bit of a break between the two companies and I wanted to share it. I was like, I think... there's some things that could be helpful to other developers, other people making Web3 games. And so, yeah, decide to share it. And a lot of it is based on the current state of Web3 and where it is now. And it's hard to predict the future, so I'm sure there'll be different challenges and different things that get a lot better too over time. But this is just looking at some of the current state of it and where it's really advantageous and where it falls short. And so my... My whole grading system is very much based on the incremental value that I see Web3 bringing to games, and that incorporates a couple components which are not just the, for each of these topics that I go over, not just the incremental value that Web3 provides this topic, but also you know, how important is this topic? You know, things like, you know, provable scarcity, sure. You know, Web3 makes it so you can really prove. if something is scarce and how scarce it is, but do people really care about that? So that's a big component of how I graded things as well. And yeah, so my North American bias definitely pushed me to do the A to F and yeah, I think we'll work with that.
Nico Vereecke:
Good. Yeah. I think it makes sense. A is good. F is really bad. Right. Should we, should we go maybe bottom to top? Like I have general thoughts about the approach that I'd love to discuss, but maybe let's just go through. So, you know, listeners can also that haven't read the piece, which by the way, obviously will be linked down below. So let's go through the, maybe we don't need to go through all of them because there's quite a few, but let's talk about maybe the ones that where you don't see what three adding any value at all.
Philip:
I mean, I don't think there's any of them where I don't see Web3 adding any value at all. I think there's ones that I think are much, much less. And I think, you know, a lot of it comes down to it depends. I think there's some of them where I have a low grade that I think could be extremely valuable to a particular product or company. But in the aggregate, I'm seeing it as less impactful. So you mentioned want to start from the bottom. So that's what user acquisition and community building. Yeah, all right. So with that one.
Nico Vereecke:
Oh, sorry, Phil. No, no. What I meant was the bottom as in the least impact or the least beneficial.
Philip:
Oh, least
Nico Vereecke:
That's
Philip:
impact.
Nico Vereecke:
what I meant.
Philip:
All right. All
Nico Vereecke:
So
Philip:
right.
Nico Vereecke:
imagine we have a class
Philip:
Yeah.
Nico Vereecke:
with very smart students like Philip
Philip:
Yeah.
Nico Vereecke:
Collins here and you as well. And then you have the D tier. That's me, you know, sitting
Philip:
Yeah.
Nico Vereecke:
in the back of the class, asking stupid
Philip:
Got
Nico Vereecke:
questions,
Philip:
it.
Nico Vereecke:
not understanding what's going on. Okay. So
Philip:
Yeah,
Nico Vereecke:
let's
Philip:
start
Nico Vereecke:
start
Philip:
with
Nico Vereecke:
with
Philip:
those.
Nico Vereecke:
the bad students. Yeah.
Philip:
Cool. Yeah, so, you know, one of the first ones was marketplaces and trading, right near the top of the post. I think this one's very overstated. A lot of, you know, Web3, I think, enthusiasts, and, you know, people supporting the ecosystem say, you know, Web3 unlocks marketplaces and trading, and now you can trade all your assets and do all these, you know, crazy... DeFi things or whatnot with them as well. So there's actually two things there. So that I've split into one to real money gameplay and one is marketplace and trading. And so when I talk about marketplaces and trading, I'm specifically talking about just exchange of in-game assets. And to me, that's been done in Web2. It's been done in many different ways in Web2 as well, from people having to barter goods in World of Warcraft to having full auction houses. games like Albion Online and many others. And they were, you know, people are able to exchange goods and I don't see, you know, that much value in, you know, having all of that activity in Web3 and actually there's disadvantages because a lot of times in Web3 you have to go the full basically auction house, you know, exchange system. You can't have these more interesting gameplay systems where... people actually have to find each other and socialize and have interesting interactions to trade. And so we actually saw that in one of the Axie Infinity games with Homeland. So we wanted to implement this trading feature in Axie Infinity Homeland that actually matters where your land is placed. And if we just made the trading all on chain, then people would just go on exchange and trade things. But because we put trading of these particular items in a way where... If you trade with your neighbor, it's super fast. If you trade with someone super far away, it's slow. And you can't do those types of things if everything's on chain. So that's why I think from a pure trading perspective, yeah, Web3 is relatively low and weak.
Nico Vereecke:
I think that's fair. Um, I'm going to, in doing this, try and be the advocate of the devil sometimes and try to steal man, you know, the case of what three, but to me, the way I'm thinking about this, and again, it's important to, to mention that your whole premise was that you're looking at how the technology works today and not necessarily like how it could become in the future, right? Uh, but even keeping that in mind, I think one of the benefits here, and I'd love to get your thoughts on that is. Essentially, um, trading is like one financial primitive that is, that has been built on top of the blockchain and it is the ability to exchange from one person to the next. But another example of a financial primitive would be lending. Another financial primitive would be fractionalization. And so to me, um, as the advocate of the devil here, there
Philip:
Hehehe
Nico Vereecke:
are, as a developer, if like I'm a game developer, um, you have, if you, once you use the blockchain, you In like in the box, it's all in there. Right. And all of the tooling that exists around the, um, the financialization of assets is there and it might make a lot of things easier that you don't have to build it in in-house yourself.
Philip:
Yeah, yeah. So I think the kind of existing systems argument makes a lot of sense. I think there's a reason why theoretically you can have these tools all built in web too as tools that developers can use to, you know, Unity can build out a trading system and lending and all of this for gamers to use, game developers to use. And there's a reason why it just hasn't been built out because people have in particular felt it was valuable to their game mechanics and their particular game. to have these or else all of those things, assuming it's not involving real money, can be built through Web2 and through platforms that provide engines and services. So I do see that right now, a lot of those exist more so in Web3 than in Web2 tools, but I don't know if that's a matter of the actual usefulness and necessity of them.
Philip Collins:
Thanks for watching! Yeah, and I think that's an important point because especially with the current state of Web3, the hurdle for adoption is, does this give me something net new? And
Philip:
Mm-hmm.
Philip Collins:
I feel like that's where your grades, which are kind of listed as Web3 value grading, marketplaces and trading would fall lower on my list as well, because we've seen examples where different variations of this can be done. And I do think there are certain advantages when done right to the player for having this more channels for buying and selling goods, but to your point, there are historical precedents for similar functionality. And just with the temperature of this space, how much incremental value does it actually unlock, or how many new features and capabilities does it unlock? I think this is where Web3 is a little bit more of a minor leap for both developers and players, even if there is value, which is, I think, why it's not an F here. I think it's lower compared to other features that we can talk about.
Nico Vereecke:
Awesome. Good. Um, let's, let's go to the next one and Philip, I'll leave it to you to perhaps skip ones that you think are slightly less interesting or, or skip towards ones that you think you really want to talk about.
Philip:
Cool. Yeah, so let's, yeah, I guess we're still working through the lower ones and then we'll go from, you know, pessimistic to more optimistic because a lot of things I still obviously really believe in and love about the Web3 gaming side. Yeah, we could talk about a very, so there's interoperability and user acquisition. I think both those are super interesting. Let's start with user acquisition and community building. So I was just thinking a lot about, okay, how much value does Web3 bring, but also detract from UA right now? And I think initially we were seeing, you know, during the upswing of Web3 in the market, that there was just a huge appetite, you know, you put out a token, you put out, you know, your Web3 game, and people flock into your Discord. and you get a bunch of initial players, which is really hard, especially for indie games, especially for people who don't have a big brand, people who haven't made games before. So that was a big advantage, which has obviously tapered off a bit now. But there's also a lot of the disadvantages with obviously not having distribution platforms easily accessible like Steam, like Apple, like Google on mobile. So that's kind of the high level of the UI. I think there is still... appetite and value for these types of mints and airdrops and we've still seen some of these free mints, you know, go pretty viral and pick up some steam. But that's also, you know, for a particular audience, right, which is for the existing Web3 audience, not necessarily pulling new people into the space. So that's why I have it as a lower grading. I think it's C, C was my grading and I gave it a plus because I think having that ability to bring in an initial audience still is still very valuable because having that, you know, people in your Discord makes it much easier to bring someone in and there's people who will explain the game to them, who will talk about it, who will evangelize it. So I think there still is value there, but in terms of the larger distribution getting it to millions and millions of players, it's not adding as much right now, in my opinion.
Philip Collins:
Yeah, and I think there's a maturity aspect of that because
Philip:
Mm-hmm.
Philip Collins:
the key word that I think of when it comes to Web3 UA is really on the targeting front. And outside of Web3 games, we've seen how difficult targeting new players has become, right? UA and marketing and advertising is kind of a mess right now. And Web3 does give you the transparency you need to find players and use actual data and proven demonstrations of interest to find the right people. I think to your point today, one of the problems is... a relatively small number, a relatively small but growing number of game developers are targeting a very small number of players. And so there's all this overlap where, you know, even if you know the right type of player, it's hard to actually get their attention. And so if Web3 adoption on the consumer side reaches critical mass and you have, you know, tens of millions of players or hundreds of millions of players to reach, I think that's where this... this targeting becomes extremely effective, but this is almost contingent on that user adoption of Web3, which is kind of solved by other factors.
Philip:
Yeah, and
Nico Vereecke:
Hmm.
Philip:
I think the part that I also missed was just that there is some power in being able to drop these assets with real money value to people to try out your game. Because, all right, I get 10 bucks, 50 bucks, hundreds of dollars of this NFT and someone just gave it to me. Yeah, sure, I'll play the game and I'll start advocating for it. But that has a lot of strings attached with how people view the game, how they look at it as more of an investment or how they see it. you know, look for ROI and things like that. So that has a larger effect on the culture. So it's something to be just super careful about.
Nico Vereecke:
So if I was asked to give a grading on this part is like, I would even give it a lower grading, probably a D or maybe
Philip:
Got
Nico Vereecke:
even
Philip:
it.
Nico Vereecke:
a D minus. Do you work with minuses? Do I see a minus?
Philip:
Yeah,
Nico Vereecke:
Yeah.
Philip:
we have we have
Nico Vereecke:
So
Philip:
minuses.
Nico Vereecke:
minus we can do minuses. All right. So to just make it a bit more complex. Thank you. Anyway, what I, as if you listen to this, you know that I'm very cynical and that's probably because I hang out in the wrong Twitter areas or whatever. But to me, it seems like 90 plus percent of the people that are into web three games are just here to speculate. And so on like on a purely community basis, choosing to go with three today, essentially, as you said, right, it gives you a maybe like a 500 to 1000 easy users. But it limits your growth significantly because there is a lot of platforms that you can't use to start targeting users. And you know, you can't be on the app stores or if you do, you have to go through like a ton of hoops. And so. Um, for that reason, I think that's, you know, I would say for, for, for the community and the user acquisition building, like web three is probably the worst thing you can do today. Um, and so that's, that's, and, and the, the community that you then build, if, if you decide to do it, I think is not like, I see them as having a negative LTV, which is something that I feel like we should probably have a discussion about someday because it's probably the first time I've expressed that opinion, but for me, they're like nets extracting or. extractors of value of the game and you know in the end every game is a business and to you need value created then you need Some you know money to flow into the game at some point So you want you need positive LTV players and to me the the golden or the first cohorts of the web 3 users Won't be that
Philip Collins:
And it's kind of problematic today too where the user acquisition cycle in the web 3 space over the last 2 years feels like it started so much earlier in the process of actually launching and building out a game where you're now trying to basically turn a lot of these players into quote unquote owners, whether through tokens or NFTs and air drops, where you want them to come to your game 6, 12, 18 months before the game is out. And so the UA cycle has been kind of illogical up to this point. And so you end up with those financially motivated, hopefully eventually players. But at the end of the day, it's not traditional UA where a game launches and the game is out and you can come play it and determine if it's a good product. You're getting acquired when you have no idea what you're getting acquired into.
Philip:
Yeah, I think there was basically this hypothesis where game developers felt that they can bring in these players, you know, with these kind of monetary incentives, basically, and then cross their fingers and hope, you know, they're going to convert to just love the game and spend for fun and all those things. And it's really hard to, you know, to really bridge that. to get people to switch that mindset of like, you know, I came here for, you know, financialization and now like the game is so good, I just want to play and spend money and put all my money into it without any, you know, expectations of ROI and things like that.
Philip Collins:
Yeah, it's like there's a sunk cost element. It's like, oh, I've already put so much money into this. I've already bought these assets. So I might as well try to force myself to enjoy the game.
Philip:
Yeah.
Philip Collins:
You're getting buy-in in a way that is counter to most games, where maybe a pre-order is the equivalent in traditional gaming. But that feels very different from the cycles and approaches we've seen in Web3.
Nico Vereecke:
Does this tie in with one of the other points Phil, around perhaps crowdfunding? So one thing that I think Web3 does pretty well, or like Web3 does pretty well, that sounds weird, is just giving your players
Philip:
Hehehe
Nico Vereecke:
an asset or a part of the game that has real world value. It becomes interesting that they do have skin in the game and they're more likely than players share things, to create things, to try to convince your friends to play, etc. Which one of the points do you talk about there?
Philip:
Yeah, crowdfunding is definitely related. I think it's all framing, right? So you have platforms like Kickstarter and Indiegogo that already exist and people crowdfund tons of games on those platforms. And when people put money into it, it's not with the expectation that they're getting money out. They want this game to exist, right? They want some perks, some benefits, maybe some in-game bonuses, things like that. And so... Getting an asset before you get the game, I think, is net positive for crowdfunding campaigns that have this type of expectation, have this type of narrative. So now I want this game to exist, so I put money into it, but I also get this digital asset that I get to own until it comes out. But as long as it's maintained that this is not something that... you're just getting so you can sell or you can flip and you can make money off of because for the most part you're not going to. And I think that's the main thing is that it's fine for all these things to have real money value. I have tons of collectibles and things that have that but that's not the primary driver within the market and within that ecosystem for those assets. So yeah, I think crowdfunding can really benefit from it as long as it's continued to be positioned in the right way.
Nico Vereecke:
Agreed. bold prediction here or spicy take here for me.
Philip:
Mm-hmm.
Nico Vereecke:
I think that's what three enabled gaming assets will go down specifically NFTs will go down in history as probably one of the worst asset classes to, you know, that people have ever like truly invested in and believed in probably like close to tulips in the Netherlands and like the 17th century.
Philip Collins:
I was thinking the exact same thing. Tulips are the comfier.
Nico Vereecke:
Yeah, good.
Philip:
Yeah, I think it's going to be few and far between. You know, most assets are going to go to zero. And yeah, there's going to be some that take off. And that, you know, for those people, maybe they'll say, you know, here's the proof. But yeah, no one should expect that. And I think, you know, if that does happen with certain assets, that the game, basically the game has to take off, right? So it goes back to, you know, you have to have a really good game to start. And. Yeah, maybe if there's a game that takes off, then the assets that people collect and people really care about will take off as well.
Philip Collins:
And the hard thing with the crowdfunding thing is not everyone should be a VC, right? And that's not because they can't think through it or process through it. It's that when you're a VC, you have LPs that have large diversified portfolios and these high-risk assets make sense for them. But for the average individual, taking venture style bets on individual pieces of content is just not for everyone. And that's not a bad thing. It's just fundamentally... not good for a lot of individuals for their situations. And so to need to take on that amount of risk to get into a video game, I think, is a uncommon and has been a bit of a negative thing for a lot of people. And there's probably a lot of people that have acted irresponsibly because they see the upside, but it's just a model that's not for everyone as an individual.
Philip:
Yeah, and that's one part I don't dig that much into in my post is just all the regulations and things that will change probably in the next few years around buying these assets and putting it into tokens or NFTs. Because yeah, in a lot of ways, there's a reason why people can't just buy stocks of private companies and they got to be accredited investors to put in a certain amount of money. There's all these regulations around it to protect. you know, your average consumer. So I think there'll be more of that over time.
Nico Vereecke:
Yeah, agreed. All right, next point, Phil.
Philip:
Onto the next. I think interoperability is a good one to go over. I gave it a lower score, although it is one that I do get excited about. But being in the games industry for a while now and feeling the very restrictive pressures of IPs, I just think it's very hard if people think, you know, I'm going to take this skin from Fortnite and use it in CSGO and... That type of interoperability, I think, is very far off and very difficult. So I don't see Web3 adding any value to do that type of thing. I think for the newer generation, we're seeing glimmers of this. I mentioned one of them with Nifty Island, who's bringing in a bunch of different Web3 projects. And because there is that culture within Web3 projects to just let their assets be used in other projects, I think if they gain more mainstream adoption and become larger mainstream brands, there is that opportunity to have really interesting interoperability plays. But for now I'm still seeing it's pretty difficult giving all the restrictions. And, you know, I'm hopeful that these new Web3 brands will be able to, you know, continue to allow their assets to be used in other games. But who knows, like in the future they might decide our brand is actually so awesome. We want to start having licensing fees and we want to protect it more. and we end up back where we are. So that's why it's really hard for me to predict where this is gonna go. And that's why I gave it a lower score to start, but with kind of some opportunity. I think one other area that, I don't know if it's really interoperability, but has potential is this idea of just being able to see the assets people own and giving them some value in another game, right? Which is what some of these products, I mentioned Million of Mars somewhere here. They will let people say, if you own a board ape, you get this quest experience in our game. And things like that. So it's not directly using the IP or assets, but giving them benefits for it. So yeah, that's kind of my take on Intraop.
Nico Vereecke:
I think that's a fair take. I sometimes get frustrated when I hear people that have decades of experience in the gaming space dismiss the concept of interoperability by saying that it's impossible to take a gun from, let's say Counter-Strike and take it to Call of Duty.
Philip:
Mm-hmm.
Nico Vereecke:
And that is such a terrible argument and such a narrow take on the concept of interoperability. And so you mentioned... skins and avatars. And I think those are probably like the, the, the, how should I describe it? Maybe the first step of what we know today and how this can, can be translated into true, like interoperable assets within a, what three enabled universe of games. Um, but you know, my take here is that I think we'll see more interoperability than, than pretty much anyone expects, but just not in the way that we think where it's like literally asset a And I'm going to take asset eight and it's going to be asset a in, in game, you know, in, in another game, right? It's going to be, you know, smartly designed is going to be maybe bottom up in a sort of Lute approach, or it's going to be, you know, it's going to be like items that don't have a inherent visual or tangible characteristic, but then that do have effects on your gaming experience within different games and universes and, and there's infinite ways how that can work. And so yeah, anyway, my take is don't straw man this by saying, you know, in today's AAA games that will never work. Um, but again, you're grading, I would say is correct because you're looking at today. So that's why, um, um, um, yeah. C C plus that's, um, I can see that.
Philip Collins:
Yeah, I also feel like we've seen a lot of platforms try to create their own identity around interoperability, where they're creating their own suite of games and one of their big hooks is, if you buy an asset in our ecosystem, it works across all of our games, natively, because they're our games and we've built them that way. I think of, I don't think of interoperability as like a compelling UA feature, where I want to go play those games because I can use my assets there. I think that if you're gonna think about it in UA, what Philip mentioned before, of you own a board ape and you can take that asset into Million on Mars. And it's almost like, hey, we know there's this big, massive channel of people that are looking for things to do with these items. Let's give them something to do. And it's not necessarily direct dollars into our pockets because they were still purchased outside of our platform. But because you have that, you can come get some benefits over here. So you might wanna give it a try. And hopefully that turns you into a retained sticky user that then decides to spend money on Million on Mars assets. And it's always been difficult because interoperability, based on what we've seen from startups, feels much more like a business problem than a technical problem, right? I think over time, the technical solutions will be there. And I don't know if that's 12 months, three years, five years, until it is done very well. But with the amount of smart people working on it, I have faith that it will be possible. But there's also an element of... Who does this benefit the most? And is it the big players that want their assets to be everywhere, that already have really strong IP? Or is it more of the smaller indie style devs that want to attract new players because they promise this great feature of interoperability? And I think this will continue to evolve, but just saying, oh, we're gonna be able to use our Call of Duty weapons in another game. It's like, what motivation does Call of Duty have? to share revenue with another game. And in that case, what value does the other game really have from pulling in these assets? I think there's a question of value accrual that becomes really, really important here. And I think that's ultimately what will dictate who is willing to experiment here, and which is why it might take a little bit longer than we're hoping, because I think there's a lot of room for incentive misalignment within our operability that we sometimes understate.
Philip:
Yeah, yeah, I totally agree. I think, you know, as, as, you know, a game with millions and millions of users, like, why do you want to drive some of those users to another platform or another game? And what is the benefits you're getting? And I think those need to be clear for people to allow it, you know, especially at a larger scale. But yeah, I think the the tech, as you mentioned, is there and then we'll develop I think the the really like the fundamental value for interop is just that you can very easily attribute an asset to any particular wallet or person. So anyone could just look on on chain, this person owns this asset. And so, I can give them an experience or let them use that asset somewhere else. And that's what does it exist in web two right now. You gotta build APIs, you gotta make connections, all that type of stuff. And yeah, that's why it makes it really easy within the same IP as you mentioned, for Axie Infinity, we had the same Axie can be used in. you know, three, four, five, six games. And so that was pretty powerful because you can keep creating more and more value with that same asset quite easily without having to build out those APIs and make sure they can function and be attributed to players in all those different games. And yeah, I think on your point on, you know, who's really benefiting, vampire attacks are obviously a thing within the space. And I think, you know, that's something that might actually make certain players less likely to go on chain, because now you can identify and target their players, and give them the benefits and try to lure them away. So I think there's benefits and disadvantages with that mechanic.
Nico Vereecke:
Yep. Agreed. Can we talk about ownership permanence or can you talk about ownership permanence? Because I think this
Philip:
Yeah.
Nico Vereecke:
is one that I'm just interested in talking about and get you guys' thoughts on.
Philip:
Yeah, so for ownership permanence, kind of what I refer to this as is just the idea that you can own a digital asset. Because it's on chain, there is this different sense and level of permanence that, you know, as long as, you know, there's some number of people decentralizing this chain, it'll exist forever, regardless of, you know, a company or a single entity or a single individual. this object will always exist and be attached to you. And I think this is beneficial as a whole for players to be able to own their assets from games in this way. I think it's probably less appreciated in the short term because you're like, oh, I have this asset. But in the long term, I feel like 10 years from now when I still own this item from this game I played 10 years ago, it feels great. That's how I feel about a lot of my collectibles from when I was a kid. didn't care as much about them and just owning them back then, but now I have them all displayed in my display case and I feel really glad that I still have them and I still own them. So I think that's something that will be appreciated more in the long term too. But obviously there's a lot of nuances with this with digital compared to physical. A lot of NFTs right now, for example, are pointers or pointing to a JPEG or a GIF or GIF, whatever you want to call it, in a database. And so theoretically it doesn't, it may not exist forever if it's just a pointer and the asset is not on chain or not decentralized. So I think there's some areas there. And then there's another argument that I have and it's just like, how much do people care about this? Which is actually why I have it lower than being an A and A plus or whatnot. It's, some people just play their game and then they leave it and then it's fine. I don't really care about owning those assets forever. I'm more of a collector, so I might be biased. Like I love. holding onto things and hoarding things, but yeah, not everyone cares about that.
Philip Collins:
Yeah, this is one that I would probably give a lower grade, just
Philip:
Mm-hmm.
Philip Collins:
given the fact that the permanence of assets as we think about NFTs and token IDs, I don't think is going to be correlated to an increase in the number of forever games that there are out there, where there's five, 10 plus year runs, where these games remain relevant, because I don't think that's driven by the asset level. And so for a lot of these games, even though the collectible will be permanent, I do think that the use case for many of these will eventually be very fleeting where after a couple years if the game's not doing that well the servers just get shut off and then you still own it in your wallet but that digital use case is gone and maybe there's some interesting comps and physical collectibles but I feel like when I think of physical collectibles a lot of the values and them being tangible and kind of in your real world. And so I don't know how if digital assets are going to hold the same kind of value when their use case is gone, because for a lot of physical collectibles, I feel like the use case is almost for the sake of collecting them. Whereas these digital assets for games, there is an actual tangible use case for them. And when that's gone, does the value of your emotional connection also go with the game? So that's something that I think is a little bit different here. But I think sometimes we also like to forget that games do, in fact, shut down. and servers go off. And there's so many great examples of that not happening that it's easy to forget about the long tail that it does happen to.
Nico Vereecke:
Mm hmm. Um, can we also, uh, well, Phil, I want to ask you, did you consider, um, or where did you consider the ability of players to resell their game assets? And this could be things that they purchased in games, which could be skins or anything else. Um, where does that fit within your framework?
Philip:
So I have that basically in, I think, real money gameplay, where you can, yeah, where assets have real value and, you know, they're tradable and you can basically cash them out if you want, in a way. So I can dive into that if we want now.
Nico Vereecke:
Yeah, let's go.
Philip:
Yeah, so real money gameplay, I think this is one of the big ones. I think this is, you know, one of the big differences that people are actually talking about when they talk about marketplaces and trading. This is really where Web3 makes a much larger impact. And so this is the idea that you can, all the assets in a game theoretically could have if they're on chain, they can have a real money value. And there could be this price discovery via exchanges or whatnot and marketplaces that give you that, how much it's worth. And not all games have that. Obviously a lot of games have gray markets, but the lack of liquidity and the grayness of it and terms of service, all those things limit the actual price discovery of these objects. And so, yeah, blockchain basically makes it really easy. for you to take any object minted on chain and have real money value and create this real money gameplay with their tokens and with currencies where you can have leaderboards, you can have wagering, you can have basically anything within the game that people exchange assets in some way, be either using them, getting reward for them, theoretically could become real money gameplay if that asset could be on chain. So that's a big unlock I think that Web3 provides that would be much harder in Web2. Regulations might change and make it super hard in Web3 in the future, but for now, it's way easier to just allow things to be unchained to create this type of gameplay that might make it a lot more exciting for a lot of people, because they have assets that they can own and have real money value. But there's also a lot of risks where we've seen in the space of people now focusing very much on the money part and less on progressing in the game, less on... actually collecting these assets for their intrinsic value. So that's why, although I think it's a huge unlog, I have it a bit lower because of those risks and because of those issues that have come up that are actually quite hard to avoid if you don't structure your positioning and your narrative properly around the game.
Nico Vereecke:
How do you think about as a
Philip:
Oh,
Nico Vereecke:
consequence
Philip:
come-
Nico Vereecke:
of this, you know, potential financialization or the, the essentially your ability to just sell whatever asset you have. Um, what do you think are the consequences of giving players essentially the ability to exit the game? Right. Um, in traditional web two games, once you own a game or you own game assets, those are a sunk cost because you're stuck with them and you might be able to sell your account, but that's like not really legal.
Philip:
Yeah.
Nico Vereecke:
once as a game developer, you commit yourself to, you know, building on top of a blockchain or with the blockchain or what they're enabled, you give players assets. But if you do something and players don't like it, they can now exit. And that's something that you have to keep in mind. So you're essentially making that commitment, which from a player perspective, like I prefer the ability to exit like I think in reality, I'd be interested to see those dynamics play out because I do feel like it's easier said than done because NFTs are not very liquid in many cases. And so the ability to exit, just trying to sell your asset below floor price on Open Sea and seeing the floor price go down and like,
Philip:
Hehehehe
Nico Vereecke:
fuck, I can't get this sold. It's not that simple, right? But my point being, as someone that has worked in game development, developed. or yeah, Game Devs before. How do you think about that?
Philip:
Yeah, so I think it just very much leans towards player value versus developer value. I think as a developer, you know, you almost want more of that friction to keep people in your ecosystem and, you know, you're incentivized to, you know, not let them cash out so they want to keep playing your game. But from a player perspective, it's amazing. Yeah, I totally agree as a player, it you want to be able to cash out and it even more so makes the developer work harder. and be more cognizant and be more persistent in making sure the game is awesome so that you stick around, not just because of that reason, but because you can cash out. They got to make sure they're putting out new content, they're making sure the game continues to be engaging. And so I think it's a huge win for players as a whole to be able to cash out of games. But yeah, much, much harder for developers. I think... you know, there is potentially some advantage if because players are are able to cash out, they're also willing to spend more initially, and they're also willing to invest more because they have this, you know, safety net almost of like, okay, I can always cash out so I can, you know, go a bit crazy with with my spending and getting more assets. So does that outweigh the the con of, you know, the potential cashing out hard to say depends on your game depends on your situation.
Nico Vereecke:
100%. Good. Um, we're, we're already past 40 minutes. And so I wanted to get your guys' stake on an observation I made while reading through this list. Um, and it was that it felt to me like the way you're thinking about this, and it is probably the most scientifically correct way to think about this is you're looking at all of these features that W3 brings, and then you're looking at essentially gaming today. and seeing like how does this apply and what benefits and advantages does this bring to the games and types of games I know. And during this conversation that we had until now, we already in a few times touched upon like, oh, they're doing this differently. And this is an interesting approach. But because this is still in such a nascent space, we haven't really seen any of these new approaches used in a fully non-skeu-morphic way. Like, you know, in a bottoms up approach versus a web two game, we're gonna plug this new web three tool into it.
Philip:
Mm-hmm.
Nico Vereecke:
And so we haven't really seen that get to scale and so get to true success. And for that reason, I feel like this approach almost by definition has as a result that you, like you've never given an A, your best score is a B plus.
Philip:
Yeah.
Nico Vereecke:
And to me, that's not really surprising. And it feels like the games that will like we will need to see games that use these elements that you mentioned in a new way that wouldn't be possible in the games you're projecting them on now to get convinced that there's actually more to be done there, engaged there.
Philip:
Yeah, and I also think a B plus in terms of incremental value that the tech provides, I think can be very substantial. And you think about some of the big shifts in tech from MySpace to Facebook or things like that. There was new tech that was needed for getting that type of scale and getting that type of behavior. But a lot of it, but that... kind of incremental value was able to make a big difference. So I do see that, you know, especially we didn't talk about it, but UGC is like, if you can make UGC a bit easier and a bit more accessible, I think the impact of that can be very large. And that's maybe not what people want. They want, you know, the one thing that's gonna be like the game changer for Web3 that's very clear, like this is adding significantly more value, but I don't think there is one. But I think, you know, there's a lot of impact that can be driven even from these things that, you know, make things not necessarily game-changingly better.
Philip Collins:
Yeah, and I do think it's a really interesting observation because Web3 to really be meaningful is gonna have to manifest itself earlier in the development process, right? I think we've talked
Philip:
Mm-hmm.
Philip Collins:
about this number of times where just throwing Web3 aspects into a traditional game and just layering it on top only provides so much value. And I think that's historically where we've seen people just write it off as useless, additional. tech being added onto things that are already running perfectly fine. I think
Philip:
Mm-hmm.
Philip Collins:
there's going to be an element of creativity that is going to manifest itself in some of the games. And maybe that's one of the positives as a biased person here talking about the Web 3 bull run and crypto VC because a lot of projects with very ambitious and creative visions got the funding they needed to pursue them. And I still think that a vast, vast, vast majority of them are going to fail. Maybe it only takes one to show some of these features that Philip wrote about working for other people and to build on top of it and for the risk profile of those types of investments of time and cash to really be a viable part of gaming. So I guess maybe the takeaway there is it only takes one person to do it really creatively to prove out the value. And maybe we'll start to see some of these Ds and Cs turn into Bs and B pluses.
Philip:
Yeah, totally.
Nico Vereecke:
Talking about that, Philip, you've created this looking at the state of how it is and the technology is today. Which of these are you most excited about? Do you feel like it has the most potential moving forward for games?
Philip:
Yeah, I think UGC is probably one of the top of my list. I just see there's a lot of potential to have these systems, you know, just managed through blockchain and being able to create incentive systems that give a lot more value to creators in whether that be in-game assets or tokens or, you know, different types of systems to reward them with things that also have real money value, and that they can cash out much more easily and have more deterministic ways to get those payouts. And I think one thing I saw that was interesting was, even Trapnol, they have really cool kind of system that they're building out and even rewarding curators and having an entire system around rewarding people who curate because UGC content, there's so much of it. And that's one of the big problems with it is you know, what's the, where are the gems in there? Like what are the, what are the things that you want to surface at the top and actually rewarding curation, it can be part of this system as well. And all of that would be much harder, I think, to build within Web2 with the existing, you know, cash out systems and, you know, you'd have to hold all this money that people can withdraw into their bank accounts and, you know, with Web3, I think it, it streamlines a lot of that. So that's where I see some of the biggest impact potentially, um, in, in the closer term. Uh, And then, yeah, longer term, potentially, the other one we didn't talk about was social coordination systems. I think, you know, the way I look at it now, it's not super powerful, but especially as more things potentially happen outside of a game as well, with governance and with different types of contribution programs, there could be a lot more there.
Nico Vereecke:
Gotcha. Phil. Sorry, Philip Collins. How about you?
Philip Collins:
Yeah, I actually think the UGC aspect of what Philip's talking about there is really interesting because I do find that one of the seemingly most compelling aspects of Web3 and games is being able to directly tie value creation to the delivery of value to that creator. And so that's somewhere where smart contracts in games are extremely compelling. If we just go purely on the smart contract side, more understanding what you are giving. and even down to the asset level, right? Like it's not creating full games or experiences, but providing 0.1% of an environment and being rewarded for that accordingly to your contribution. I do think there's a lot of interesting stuff around value exchange. I don't have as much of an opinion on the social coordination, I'd say, but on UGC, I definitely. I definitely think there's something interesting there, even though that's more of a derivative of successful integrations of UGC, which is an entire nother conversation that we could probably spend an hour on.
Nico Vereecke:
Mm-hmm. Yes. To add on to the point of UGC and it's something that's, I would say, I didn't really miss in here, but, um, something that not a lot of thought is given to right now, although it's increasing is the fact that the way we're looking at, um, Web3 or the way most people are looking at Web3 for games right now is, is as a digital ledger more than anything else where you it's, it's where you track ownership. And you have these assets on this ledger and then you can transfer them. And that's, if you look at all of the different points that the advantages or potential disadvantages that Web3 brings to games, that's where they are derived from. But the thing is that it's actually more than a ledger, it's also a computer. And so you can actually program logic on these. And that's, you know, when you mentioned Phil, that's, you know, there's smart contracts. And so you can, you can know that once you contribute something, you'll know that, you know, X like a fraction of any revenue that it generates comes to you. I think that's really interesting. And I think that's something I'm excited about. But it's so far out there that I don't think anyone has any idea about how this actually works at scale. It is once we start adding more logic of games to that decentralized computer, which is the blockchain. And so I'm talking to work on the spectrum from web 2.5 games on one end and fully on chain games on the other end. I'm just curious what we'll see emerge on the weird end. where there's more logic and, and we're making use of that decentralized computer more than is just a way to transact value and assets.
Philip:
Yeah, and
Nico Vereecke:
Here
Philip:
a big
Nico Vereecke:
I am,
Philip:
big advantage
Nico Vereecke:
random, random
Philip:
of that.
Nico Vereecke:
bot ghosts. Sorry. I'm shilling on chain games
Philip:
No.
Nico Vereecke:
again. Um, as I, as I tend to do, sorry, Phil, I interrupt you go ahead.
Philip:
Oh, yeah, no, I was just going to say, yeah, the transparency component, I think, is big, you know, especially for creators, like, you know, being able to see exactly how the payouts are going out. And with, you know, platforms like Roblox or Fortnite, you know, it's all controlled centrally, you know, they figure out how much you get paid out and, you know, in what ways and what the rules are around that. But, you know, if all of that that's on chain and transparent, it, you know, Hard to say how much people will care about it over time, but I think it is a value that creators get to have that transparency into the system that actually pays them out.
Nico Vereecke:
Mm-hmm. Good. As a final question for you, Philippe L'A. I would like from you two grades. One global,
Philip:
Hehehehe
Nico Vereecke:
what Web3 brings to games today, grade.
Philip:
Mm-hmm.
Nico Vereecke:
And I want to have the same grades, but in let's say five years from now.
Philip:
So right now, I'd give it on average a C, a C I would say. Five years from now, an A. I'm aiming for that A for five years from now. I think there's so much things being worked on right now. I think, yeah, as you said, only takes one and to really show the value. And I think a lot of these areas with onboarding and... and just the technology needing way more handholding to get things done. So much of that will improve. There's a million people working on wallets right now, just making wallets more seamless to use. So yeah, I think we'll get there.
Nico Vereecke:
I feel like C today and an A in five years is probably the summary of my whole thinking around this technology for games in general. I don't know if you agree, Phil Collins, but I feel like this is what we've been talking about the whole time or every time we talk about, or we discuss the concerns that a lot of traditional games people have about blockchain as a technology. What do you think?
Philip Collins:
Yeah, I think I'm roughly around that C range today. I'd maybe go slightly more negative towards the C minus, but within the same realm as you guys. And. I think in the future, if done right and everything, everything plays out as we've historically thought and hoped. My initial reaction was to say like B plus A minus. And honestly, like I don't say that lightly. Like I think a B plus or an A minus overall in five years, to Phillip's point before, is a lot of value, right? And so I'll stick around there. And that's not. That's not necessarily a knock. I just, I'm going to discount for just a little bit of skepticism. Uh, so I'll, I'll end at the B plus just to, to try to be, try to be a little bit conservative.
Nico Vereecke:
I think that's fair. Good. Awesome. Philip, where can people learn more? And sorry, when I say Philip now, I mean, Philip Law. This was confusing.
Philip:
haha
Nico Vereecke:
Phil, where can people find you and learn more about you and follow your writings and thoughts?
Philip:
Yeah, on Twitter I'm just at Philip Law. On LinkedIn I am Philip Law. Those are probably the two main places that I write. I have a blog as well, but that's linked in my Twitter sub stack. So yeah, I just started a new job so probably won't be writing or posting as much, but yeah, we'll try to get more thoughts out over time for any interesting learnings.
Nico Vereecke:
Fantastic. Cool. All right. Philip and Philip, awesome to have you. Philip, thanks for taking the time in your morning to join us. Philip Collins, as usual, great thoughts. Always such rational takes, but too conservative to my liking from time to time, but I'll accept it. Good. All right, listener, thank you for listening. If you enjoyed, let us know. Join the Discord if you haven't already. Philip is also in there, he's called the Green Ranger. So if you want to tell him he's wrong about his scoring, then come tell him there and we can have a productive discussion about it. And with that, we are out and we look forward to speaking to you in the next episode. Ciao.