Blockchain and games have an attractive future. Companies set up $ 100 million to attract developers to create games with blockchain, the secure and transparent decentralized Ledger technology that drives Bitcoin and other Cryptocurrencies.
But many game industry people are skeptical, given the sliding in the value of cryptography in the past year. A handful of jumps into it and tests the water. At Tron's last summit in January, I moderated a panel of three of these experiments: Taehoon Kim, CEO of Power Rangers mobile game maker nWay; Dan Chao, head of the start of the Rogue Nations Games and manufacturer of Crypto Assault; and Jared Psigoda, CEO of BitGuild.
"Our biggest problem right now is that most blockchain games are being sucked," Psigoda said.
Then it was a day when most mobile games out there, but entrepreneurs like Chao made themselves look great when they sold their startups to larger gaming companies. Ubisoft has become active in blockchain games, but many large companies are side by side. If they sit too long, they may have to pay a lot to acquire blockchain game startup. Or they start going to get them, Psigoda says, the tongue in the cheek.
I'll be moderating a squad chat with Tron CEO Justin Sun next week at Pocket Gamers Blockchain Games Next Event on March 1
Here is an edited transcript of our panel.
Taehoon Kim: My name is Taehoon Kim. People call me TK. I am the CEO of nWay. We make real games for new platforms, and the new platform is now blockchain, so that's where we go now.
Dan Chao: I have a small team just a half block from here. We've been working on a blockchain game called Crypto Assault, which is a kind of strategy MMO, where hundreds of thousands of players all live in a world that uses thoughts and jets together and kills each other.
Jared Psigoda: I'm CEO of BitGuild. We are a blockchain gaming company. We originally started building games at Ethereum, and later migrated to Tron. We also have Guild Chat, our social messenger, which lets you shop crypto, get crypto coin drops. We have a lot of other projects that we work on.
GamesBeat: Can you tell us what you do in blockchain and games and crypto? Why are you here? What did you get interested in blockchain?
Kim: I come back and talk about the blockchain gaming ecosystem right now. Currently, how I look at it is mainly people who are already crypto-holders. It is people who have all these cryptography courses and they all try to make money. It is not necessarily the gammer quantity yet. Of course, you see games that are more game-based, pyramid schemes, games that feel like lotteries. Real games have not yet come to blockchain.
We work near Tron to find out how we can get more mass market uptake. How do we get players to games that have blockchain elements for trading and real value in games? We do a little R&D right now, and we also work with a separate game that gives a whole new experience for this type of genre.
Chao: Like many people, CryptoKitties popped up on radar for me and I was really interested. I have always loved jumping to a new platform to see if anything relevant is there. When Facebook games, and then mobile games, came out, it was very interesting. I love to solve new problems and see what is the value of blockchain in games? Is there really something there? It was perhaps in April that we started to look at blockchain games and see if we could get a little different from what we already saw.
Psychoda: I've been a hardcore gamer as long as I can remember. Almost all the MMOs you can think of, I played them, from Ultima Online to EverQuest to World of Warcraft. All Diablos, all that. One of the interesting things I saw in these games was the most fun thing to do with shopping with other players. If I play Diablo as a stomach and you are a barbarian, if I pick up a really cool barbaric item – these were all built around being able to trade goods and trade currencies. One of my first companies was also a World of Warcraft gold farm in China. The concept of virtual currencies that are worth real money has been an obvious concept for me since I was 12 years old.
When I saw blockchain coming out, with the possibility that these virtual tokens have real value and for you to be able to trade them frictionlessly through the blockchain, there was this eureka moment. Hello, we can do some really cool games that make us feel like we were doing in the 90s when it was trading. It is not like mobile games where there is now, where you only spend money yourself, but you can never trade your stuff with another player. It's a pretty fascinating industry, and it's just up and running. We wanted to be part of it.
GamesBeat: Three to five years from now, the definition of success can be that we get the CEOs of Electronic Arts and Activision and Ubisoft is sitting here talking about blockchain games. What will we do to this kind of result, for that kind of future, where this meets its full potential?
Kim: It reminds me of the business model that is free to play. Long ago, the big publishers laughed and said it would never work, and now they are everywhere. It's just a matter of time before they understand this.
Chao: What really gets us there is to crack the game design that actually works with blockchain. I am not convinced that we have seen it yet. What I always say to people is that my depressing view of blockchain in the future – if it's just common to tokenize cosmetic skins in Fortnite, it's probably not the most exciting thing it can do. But also to find a game design that not only plays or a CCG, something like that, it will be the real thing that breaks it completely open. Whether it's something that looks like Roblox – there are many things to consider. It will have to be the game design that really bursts it.
Psychoda: I agree. Our biggest problem right now, to be sincere, is that most of the blockchain games are being sucked. 2018 was not too big for a year for blockchain games. It will take time. As you mentioned 10 years ago, when we were at the Game Developers Conference, we talked about this new thing called "free-to-play" play, where instead of going to Best Buy and spending $ 60 to buy one game, the game would be completely free, and you can only buy these things in the game for 99 cents or a few dollars – if you talked to Blizzard or Activision or EA or any of these companies then they would say "It is the stupidest thing I ever heard. We never do anything like that. "
But if you look now at the whole mobile gaming industry and much of the PC gaming industry, pretty much all the most popular games are free to play with micro-transactions. We found out that it is more profitable to make a game for free than to make people spend money for it at the front. Fortnite makes $ 10 million a day in revenue, something like that? When EA and those guys come back to talk about three years, new generations of game designs are always made by the scraggly startups. They are not made by the big guys. The big guys, if we are lucky, come in and buy us in a few years. Or we buy them. [laughs]
Kim: The term "blockchain game" will disappear. When we reach mass marketing, it will only be games, and they will have blockchain elements to them.
GamesBeat: What do you think about the choices you have to make now? Which platform do you choose, whether it's Tron or EOS or others? What are some important things that you must decide in the beginning? What decisions do you have to make right now about what to support?
Kim: If you make an app or a game that is exactly what is out there, it goes without saying that you go to Ethereum. But the reason we work with Tron is that they are very forward thinking. They work closely with us to make changes to the platform and create new experiences, which lowers the entry barrier for ordinary players. This is the main reason why we work with Tron.
Chao: When we first started, it came down to market caps and users. You would choose blockchain with most users. But now it changes a little. Of course there are Tron and EOS, which support games in a good way. They really help with marketing and visibility. On the technical side, transactions per second are a big thing, as well as gas prices. Really optimizing for lower gas prices is super important.
But you have to weigh it with how much users really care about having the whole game on the chain. For example, our game is mostly-99 percent of the chain. It's like playing a regular game with a centralized server. The units, the map, all the commands, all that is on the server when they move. But the purchase of the units is everything on the chain. When a new device is created, it is also made on the chain.
At first I was a little nervous because the users weren't okay with it, but in the end it doesn't seem like they care. They just want to play a fun game, and then they want to get some amount of their investment out of it. It's a kind of long-term way of saying, does transaction speed matter? When the transaction speed drops to less than a second, can you start doing everything on the chain, and is it really still the right choice? Of course there is the gas cost there. There is also a lot to do with free funding. Some of the other ecosystems that Tron also helps in that way. It can be very important when you start a new business.
Psychoda: For us, I summarize it in two points. The first point, as mentioned, is the question of centralization versus decentralization. I think it was CryptoKitties who had an interesting data point, that 99 percent of their traffic or something like that left their site when they saw that they needed to install MetaMask to play the game. I am not of the opinion that absolutely everything needs to be decentralized, because in the long run, the players care about playing a good game. It is not about our grand vision of decentralized products.
Number two is again the choice of your blockchain. As I mentioned, we started at Ethereum. We launched seven or eight games at Ethereum. For us it was not acceptable to spend a dollar in transaction fees to buy an item that costs 50 cents and then wait five minutes for the transaction to go through. The decision came down to which blockchain could really support games. EOS was one of them. Faith was one of them. We liked both very much. They are both fast. They both have little or no transaction fee.
The most important deciding factor in why we chose to move to Tron was society. There are many blockchains now that you can say that they can technically run a blockchain game. They have fast transaction speeds and so on. But the bigger question is, who should play the games? These games are played with the token of the blockchain. Tron games are played with TRX. If you have another blockchain that technically solves your problem, but they have 200 holders of their symbol, then you don't have a community to play your game.
We found with Tron-we have had the greatest support from the Tron Foundation and the community, and there are many people in the Tron community who really want to find out more ways to use their tokens. Games have been one of the most obvious ways for them to do so.
GamesBeat: We all remember how important whales were free to play space, for mobile games and social games. The society with many whales is perhaps what you want to be attracted to.
Psycho: Faith has some whales, yes.
GamesBeat: If you apply your imagination to it, what can happen to blockchain games? I didn't think much about blockchain and crypto until I talked to Tim Sweeney of Epic Games. He said this could be the metaverse, virtual world of virtual worlds that come up in stories like Snow Crash or Ready Player One. Is it one of the goals you think is possible?
Psychoda: Again, most have seen the Ready Player One again. If you didn't, I'd recommend it. When we talk about metaverse we almost think of a life in the future where we spend a large part of our time inside virtual worlds. I would almost argue that we are partly there. The reason I say it is sometimes if we stop and think and look at how many of us are glued to our screens every day, whether it's your cell phone or your computer or a tablet, just take you on a subway sometime and Look around you. When 99 percent of the people in a room are staring at a mobile screen, are they really here, or are they somewhere out there?
We continue to do so in the future, we are talking about things like how artificial intelligence is going to lead to far fewer jobs in some industries such as manufacturing. Even doctors, in the future, can be replaced by AI. To put virtual reality in it, how the virtual reality has evolved over the years, we look at a possible image sometime in the future where we all or a significant part of the population spend a lot of time inside the virtual reality, or inside those virtual worlds.
What happens is that there will be people who serve their lives in virtual spaces. People have done so in games like Second Life or Entropia Universe or EVE Online for years. In my opinion, blockchain will activate assets that you acquire in these video games or virtual worlds. You can convert them directly to a hamburger at your local McDonald's. Items that you acquire in these metaverses or virtual worlds, through blockchain's power, will be able to turn into real money in the real world. Nothing but blockchain can make it happen.
Chao: I'd say you might not be looking at Ready Player One. Maybe save yourself two hours there. [laughs] But that's not my point. My point is that I am a player first. I'm not a blockchain utopian thinker. I don't think it will solve everything. My thing I really wonder about blockchain articles, for them to have value, we can't give them away for free. There must be some initial costs to acquire these items.
Currently we have games – whether you are sitting there in ARK or Minecraft or whatever, punching a tree that gets wood out of it, the wood comes free, right? If it is eventually made in an object, it will be difficult for that item to be worth anything, for all that wood comes out of a non-zero sum economy. That's where I think, whether it's metaverse or anything – it will be the hard side to crack. Should we all be good with an economy where we nickle and dimmers for every single resource and object we create? That is why I think this works well with cosmetic objects, but it is difficult to work with functional objects, at least from a business point of view.