The Portal to the New, Open Internet.

MaskTalk EP1: Gaming Industry in the Web 3.0 era

Listen to the full recap.

Guests:


Jihoz provided a brief introduction on Axie Infinity:

The core idea behind Axie is to introduce the world to something that’s new, exciting but a little bit scary — blockchain — through something that’s fun, relatable, and a little bit nostalgic. So Axie is a fantasy digital pet. You can battle them, you can collect them. But the secret sauce is that we’ve used NFT technology and crypto to really empower our players and give them more control over the in-game economy. So 95% of all in-game spend goes to our player base, and basically, this is a new model where rather than taking a hundred percent of all the revenue generated by the game, we’re only taking a small sliver of that as the game developers and this basically creates economic freedom and property rights within our game.

I think causing a lot of excitement and people are starting to realize that this is an amazing new way for games to function. You can kind of think of it as us lowering tax rates in our digital world. Most games are lowering them down to 4.25% and we’ve also gone a step further by basically decentralizing ownership of the game through the access governance tokens. So even those 4.25% marketplace fees, are going to the community treasury. So you know Sky Mavis, we only have exposure to that treasury through ownership of the access governance token. So that’s Axie, it’s basically people have gotten really excited about this new model called play-to-earn. Some people see Axie as the Clash of Clans or the Angry Birds of P2E where you know we’re kind of a genre-defining game. It’s a little bit early but we have 960 000 users, hopefully, we’ll hit a million in the next couple of days. I think you know we’re one of the largest most used crypto applications, I believe probably the most used on-chain crypto application right now, we generated the Axie Protocol, which generated over 200 million dollars last month. Things are going really well.

D shares some insight about the gaming industry:

Basically, we look at a new industry trend, especially frontier tech that can enable new kinds of interactive activities. We will also spend a lot of time studying how the new generation is thinking and their behavior patterns, the psychology, and how they spend their time in real life and online. So I’ve met with Jihoz a few times to discuss Axie as well. So definitely a very interesting project. I think they’re definitely the best model in the market right now which kind of exemplifies the play-to-earn model and so for us, for Web 3.0 or for blockchain, I think there are a few assumptions behind our belief and how we see the consumer patterns that will be changing. So maybe I can briefly talk about those at the beginning as well.

Firstly, the rising and evolving need for digital asset ownership and property rights. One of the key assumptions we have is that, as we have better networks, we have AR, VR which assist us for immersive experiences, and we have better computing power, in the long haul people definitely will be spending more time online. In immersive environments, it’s very natural for them to treasure their digital assets and digital property in similar ways they’re treasuring their physical properties in the real world. So that’s definitely one of the key psychological drivers for the rise of NFT and it’s people want to hold up to their digital property and have true ownership rights.

Second of all, it is related to the younger generation’s behavior pattern. For Gen Z, we’ve noticed that they’re really a generation that likes making money while playing, meaning that for any kind of entertainment for them, it’s not just purely for fun. They always look for some kind of investment opportunity or financial resources. They want to get some kind of return. It’s not just evident in blockchain games but also for any kind of collectible trading such as sneaker, clothing, or second-hand trading. We think blockchain technology and the Play-To-Earn model accelerated this consumer behavior pattern and we think blockchain will change how people collaborate to create. Think about the traditional IP world. If you want to collaborate with existing IP or licensed, existing IPC, Pokémon, to create your own game, it’s a really extensive process. You have to do a lot of the business development talks to get IP, etc. But with the interoperability and composability of NFTs, you can imagine the future, creators and developers can build new gameplay completely based on other existing digital assets. Everything can be done on Ethereum or other smart protocols.

Lastly, we really look forward to seeing more blockchain native gameplay. So blockchain-native meaning that it’s something that only exists on the blockchain and cannot be achieved with other kinds of technology. I think Play-to-Earn is definitely one of the models, but at the same time, we look forward to seeing more blockchain native gameplay in which enhance the player experiences and how they can really incentivize massive kinds of combat and how the players can structure and organize themselves into communities better. That’s a relatively long intro, look forward to chatting more.


Then the three guests talked about Metaverse, Web 3.0 & decentralization, and the shifting earning model (from Free-to-Play to Play-to-Earn).

About Metaverse

Suji: So regarding the metaverse, I believe there are lots of podcasts or articles about the origin of the word from a sci-fi novel, and how it evolved from today. I would like to add some personal comment that, in 1996 at the same era that of this sci-fi novel 1996, EFF ( Electronic Frontier Foundation ) founder John Peter Barlow, wrote a declaration, called declaration of the independence of cyberspace. This is a little bit revolutionary. It’s not really only about gaming but basically describes a potential future of cyberspace that is governed by the people of this cyberspace. So we call them cyber citizens. And this is something very similar to my view of Metaverse, not only gaming, not only finance but also in a place that you can live there just like how you live in my country or in your country in the physical world. There are hierarchies, organizations, and friends. You have meant every day, you probably work with the team to earn your $AXS every day, battle with your lovely pets. That’s my feeling about the metaverse. From Mask perspective, we’re not that close to the traditional view of the metaverse, we don’t provide games, we don’t have land to buy but one thing I find very interesting is how active people are talking about this decentralized metaverse or the future of the internet, and one example is the Crypto Tree. No matter the CryptoPunk or any kind of NFT including Axie it’s being discussed a lot on Twitter, in the traditional non-metaverse internet. What we are interested in is how to bridge the two worlds together. This might be a little bit early but I think the future will be, I can send my favorite Axie to my friends on Twitter, and then we will create a group chat on Twitter. This group chat could become something like YGG, we can farm, battle together in this group chat on Twitter but simultaneously we still have physical jobs. But we have less and less time spent in the physical world and more and more time spent in the decentralized or metaverse world. We have this connection in between. That’s what we’re trying to do and actually will be one of the great content to see.

Jihoz: I think metaverse is a loaded term, a lot of people were talking about it recently. But I think it’s still difficult for us to really know exactly what it will look like. Like pop culture can determine what we have like a preconceived notion in our heads. I think we’re starting to get closer though. We’re starting to see online digital economies where people are forming really deep social connections, having fun, and forming culture, but also migrating for new sources of work and income. The idea behind the net metaverse perhaps is that it’s a digital world that also has significance. It’s something that can improve your actual life by engaging with this world. With Axie, what we’re seeing is complex social groups forming right our own culture, our own customs. People are starting to feel more aligned with the Axie nation than they are with their own countries that they come from. Obviously, we’re starting to see things that we believe might be aspects of the metaverse emerging; it’s still quite early.

About Web 3.0 & Decentralization

Suji: Web 3.0 is actually a buzzword. I actually couldn’t tell what it really is, even right now I’m the founder of Mask Network, which is considered as one of the leading projects. If we want to talk about what’s Web 2.0 and as the metaverse, contradict with the physical universe, we have the not-so-interesting traditional broken web 2.0. And not everyone lives happily there. But we have to use it because everyone’s on it, like Twitter, Facebook, and Instagram or traditional games maybe. we’re not happy with it but since all your friends are there, you have to use it. Then Web 3.0 came in. It was first referred to as the semantic web which is like a better way of integration for the web infrastructure, not really something like the freedom of the web. But if you watch the HBO show Silicon Valley, then you would realize around 2014 to 2016, the crypto industry started to be involved in this concept. The first is Ethereum, then gaming itself. Other founders started to talk about Web 3.0 which is a better and more open and free internet. Those applications can allow you to bypass the current minor censorship, jurisdiction, nationality or your gender, almost everything. You’re basically being framed today. But you can interact with your true friend in the Axie world. Maybe not really a human friend but maybe an AI friend or a digital pet friend. That’s something I regard as the definition of Web 3.0. There’s a lot of attempts, building an alternative solution similar to the current Web 2.0 one. There’s an attempt to build a better Twitter on the Ethereum blockchain. There’s an attempt to build a specific blockchain for a better social network like Steemit. There’s also an attempt to build games. There’s a mode on Minecraft that tries to connect cryptocurrency into it but eventually, this fades away. But these years it’s quite different than these things become interchangeable or have the possibility. So you put a stable coin with the landing protocol together on the DeFi world, it gets stronger because we have many more use cases. You can attract real people from the real world to put their bank money into your stable coin and then earn the interest. That’s for DeFi. And Axie is the perfect example of GameFi. And if you put other things like Mask into it, I don’t know what’s going to happen but there’s definitely more possibility. We have a stronger alliance. The alliance we have, it’s actually going to change how people live fundamentally in their own country. People living in South Asia may spend currency for a living but likely all their social connections are on Mask Network and the income source are from Axie. They display and show off their best NFT on decentralized social networks just like the trophy of gathering society. One of the fundamental changes in human history since we have the internet will be that because all of these protocols become stronger and stronger with compatibility, we won’t need to have a traditional bank or physical id. We can live a decent and happy life afterward and like Jihoz mentioned, this Play-to-Earn revolution can become a major income source for these players. I actually wrote several articles about that years ago but not really about the game. I use the terminology called digital labor. This time it’s the play labor. You play but you actually work for this game system, this Web 3.0 gamification world, and this word actually feeds you. And just like how you immigrate from a European country. You take the mayflower and it just lands up in the new continent. And this time we start from everywhere and then we end up in the Metaverse and this time we’re taking the Axie Infinity to the metaverse. And sometimes we have other protocols to help you. This is my feeling. We are really happy to see what other investment we can do with that. Eventually it will be something game changing. That’s my opinion and expectation for Web 3.0 gaming in the next three to five three years.

Jihoz: I think it’s gonna be super interesting. We’ve decentralized certain aspects of the game like the player in-game economy as well as a lot of the work, a lot of content marketing, onboarding of new users. This is all basically done with the community and done by the community for the most part. But right now Sky Mavis, we are still developing the gameplay for the game. I think long term in order for us to service the needs and the tastes of hundreds of millions of people, maybe, hopefully, billions of people, we will also have to open up the IP to allow community developers, third-party developers to come into the ecosystem and build things on top of Axie as well.

D: This is a very big topic and I think it’s a very revolutionary one for traditional gaming companies and game developers, especially for any companies that have a business model based on free-to-play, live ops of the operational model. Because if your business model is a subscription-based or one-time purchase, then it might be easier to just add digital assets that can be purchased based on NFTs or other non-utility driven, non-competitiveness driven assets, convert them into the decentralized concept. But I think for any company that lives heavily upon the free-to-play live ops model, it will be a long path of adoption from the traditional gaming world and go obviously. But as we are watching the market today, there are companies testing the water already and maybe the path to adoption can happen in three stages.

Firstly you will see companies selling NFT-based digital schemes and digital cosmetics for their games. They’re not utility competitiveness driven so it doesn’t really change the core economy and ecosystem of the game. It’s just adding the actual layer of the item onto the game itself.

The second stage, I think, is that more companies acknowledge the property rights of digital assets. One example of that, more encouragement and at least higher tolerance of free trading of digital assets. Because currently it’s actually prohibited or at least disencourage right now for players to trade their properties of the game.

The third stage is what we call the final opening up of the economic system, which will be a very painful and long process. It’s basically transitioning from a 100% plan economy to a free market. So from the fundamental design, how you organize your game in the past, all the supply and demand is completely controlled by you, and you can change based on the consumer behavior pattern. But in the free market, basically, you’re only designing the rules. Once the rules are set, you cannot put extra supply or extra demand. So I think that definitely requires a lot of thinking from the game design level. What will be very interesting to see is how the traditional gaming companies can finally adapt to it. But I think from the innovation angle, we think that the first innovation will mostly occur from the crypto native team because they’re not really bound by the traditional rules or the old legacy, etc. So innovation might come from smaller to medium-sized entrepreneur startup teams in the crypto world. But the traditional gaming company still has advantages. From the utility and productivity point of view, they still have something to offer. So once they see something has been validated and it is really catering to the new customer trend. A decent amount of gaming companies will convert to the crypto world and open up their economic system.

About the earning model: Free-to-Play v.s. Play-to-Earn

Suji: The free-to-play model is not a new thing. The Free-to-Play model is very similar to some internet businesses, such as Youtube, Twitter, Facebook. There is a saying that if the product is free that you’re actually the product. Although we try our best to not be stuck by the system, not pay too much but actually we still pay. So that’s how traditional game companies earn which is not a bad thing. There’s a lot of great games. I’m a big fan of the genshin impact. These games are very unrealistic. You don’t have real business, real partners. You probably have real friendship but you don’t have real business with partnership and real organizations in the game, even though the game is pretty much like the real world. And every time you purchase, you remind yourself, hey dude the only reason the game developer wants us to do is let us pay more. If the Play-to-Earn model could apply to different scenes, then it could create a DAO society. Although today’s game or DAO community looks less fancy, it would eventually be self-involved. And I think there’s no academic paper pointing out this yet but the Play-to-Earn basically is from the left-wing economist’s perspective. It’s very interesting that a new kind of union is forming and it could be a little bit like the labor union. It’s real and very unique. And then comes the Zuck-verse. The book came out every four year with the new crypto thing. The very early days of Mask Network, the original name was massbook. This is an ironic word on facebook, everyone knows that. Then we are upgraded to Mask Network. Now we want to be a metaverse company. Not only do you talk to your friends through social networks but work on the social network. But without real organization, without a real business, without real hierarchy, without a real labor union like YGG involved, eventually it’s still 100% armed by the company right. This is very interesting. This Play-to-Earn model, even though the game is maybe not as amazing as the Genshin impact from the MiHoYo but I personally very interested in how this economy actually works inside it and has real world impact. It feeds people and we are not a product, we are gamers now. We actually become the people who contribute to the system. We pay our effort and we get something. Since Facebook wants to be a metaverse company, I think eventually all those traditional Web 2.0 platforms will become something into a better social network.

Jihoz: The way that I see this is, I was never really interested in bitcoin and cryptocurrency. As a non-technical person, I have actually watched cryptocurrency since 2011. But I always think, why do I have to buy it, when somebody can just set up a company, set up a computer to solve math problems and earn it for electricity cost. So I’ve always felt like as a non-technical person, crypto wasn’t for me. But then I found NFTs. It seemed like a system where I could use my background as a gamer, as a collector, my understanding of scarcity and aesthetics, my grit, my ability to work hard as a gamer to actually improve my financial situation.

So we got a taste of this with CryptoKitties where for the first month growth was so fast that you could actually breed and sell cats and make money. But it was just kind of a taste, a lot of the Axie co-founders, we got this idea where if we’re gonna build something that’s actually sustainable and could constantly get new users, increase the top of the funnel while also retaining people, what kind of game would that look like? It would have to be fun enough, the in-game economy would have to be really balanced, and would have to be a system where people could turn their time and effort into real value. So those are the key parameters, those are the requirements when we were building the product. So I think Play-to-Earn really makes sense, right? So far blockchain is really secure and there’s a lot of developers. Why? Because we’ve created these systems to incentivize security. It’s very easy to fundraise and because there’s a lot of demand from investors and speculators for tokens but the thing that we’ve been missing, the missing link is that we need to actually create eternal summer of adoption is for everyday users to actually use and enjoy these products. So to me, Play-to-Earn is the missing link that we needed for blockchain adoption because it’s the first time that non-technical people, everyday people can experience the benefits of being owners of these platforms, and being rewarded for the work that they do. We’ve already rewarded lots of different types of work in blockchain but we haven’t rewarded the most important thing which is actual usage. You can say that DeFi did this to a certain extent but still, DeFi has a high barrier of entry. If you have a lot of money then DeFi is useful but if you’re starting for nothing, if you’re starting as an interested explorer, it’s not that cool.

D: Actually I don’t think Free-to-Play and Play-to-Earn are totally exclusive concepts. So first of all, from the different definition levels, if you consider Free-to-play meaning free access, in exchange for your digital autonomy and digital rights, this concept or business model is not going to work in this decentralized blockchain world. But if you consider Free-to-Play as a business model lowering the cost of a barrier for entry thus acquiring more users and having better adoption, then it can be integrated with the Play-to-Earn model. Maybe it’s free to play at first, but after you join the game there’s like a development path you can follow and you can finally gain some value. Another thing about Play-to-Earn, as both Suji and Jihoz mentioned, it really enables a real economic organization inside the game. In the traditional gaming world, we have guilds, or what we call the MCNs or organizations similar to YGG exist in traditional games as well.

But they don’t have the tools or the infrastructure to enable them to do massive organizations in traditional gaming. Sometimes when they cross the line they will be prohibited. Definitely, Play-to-Earn can create actual incentives for creators and developers to develop user-generated content inside of the main game portal which is also great. In traditional gaming, the developer or the CP and the user are the 2-end of the economy. But I think to really energize the system by introducing an interesting extra and intricate layer of stakeholders in the system, you have the organizers, creators, the community developers. So with a blockchain-empowered system, other stakeholders can work cohesively in a system, they can collaborate and contribute to it.

Finally, I want to emphasize that while Play-to-Earn will be a very important revolution in the gaming world, Play-to-fun players, they’re gonna be very vital as well. Because if you think about your Play-to-Earn, you will finally end up with the question — if everybody is earning money, where are the values coming from? So in the traditional world, you have a job to make a living but you also have entertainment and you have consumption. So the Play-for-Fun players, if that user base can be enlarged in the blockchain game, people whose incentives are more for fun, their behavior patterns are more entertainment-driven and more consumption-driven instead of financial-driven, then you have an even healthier and larger ecosystem, you have people contribute on the workforce, you have enough consumer, user who consume the values being created.

Questions from the community:

(For Jihoz) Is Axie developed to attract gamers from specific locations?

That’s a good question. Axie is developed to be universally appealing. There are actually players in every single country on earth except for the Central African Republic. We have Axie players everywhere. It is definitely especially popular in Southeast Asia, South America. These are places where a lot of emerging nations the minimum wage is typically quite low. I think the first immigrants to the metaverse or to these Play-to-Earn game economies, they’re definitely coming from emerging countries but I also want to say that a lot of the volume is coming from collectors and people who are just spending for fun in developed markets. So it’s kind of like a very interesting synergy. [Then we lost Jihoz due to some technical issues.] We have players from all over the world, the adoption has been strong in emerging markets. But I must say we have amazing community leaders, and there’s a lot of volume coming from the developed markets as well, like North America, Europe, Korea, Japan.

(For D) Is this decentralized web 3.0 trend going to shift your view or the way you perform in the gaming industry? Is it going to shift your investment strategy?

I wouldn’t say it’s necessarily a shift, but I think it is definitely a new top priority area of interest. So when we look at blockchain and so in my personal opinion, I think blockchain is a fundamental change of social production relationships.It is restructuring how the society is organized, how a specific economy is organized, how different kinds of stakeholders can get incentives and how values are traded. To that end, we follow the markets very closely. As I mentioned in the introduction, blockchain native gameplay is another area of very strong interest to us. Innovative gameplay which utilizes the technology but also can attract mainstream players. Basically combining the change of social relation of productivity with enhancement on the productivity itself. For example, purely AI-driven based on AR. It offers a really new experience for everyone but at the same time, you know on the infrastructure level, it’s designed on the blockchain. So that’s something we think is going to be very very powerful. If you think about all the evolution in internet history, it was mostly driven by productivity. But productivity itself is still very important. Because you really enhance utility and offer new experiences. So if you combine the change of social productivity relationships and empowerment of the economic system and community, combine that with the productivity enhancement itself, then we think that would be really like a deadly force, having very high potential for mass-market adoption and it will be something we really look forward to in the Web 3.0.


Above is everything in the first episode of MaskTalk. If you enjoy the conversation, you could follow Mask Network’s Twitter account @realmaskbook, more exciting and informative MaskTalk episodes will be on the way.




Dimension Official Website

https://dimension.im

Products

https://mask.io

https://tessercube.com

Social Media

Github https://github.com/DimensionDev

Twitter https://twitter.com/realMaskNetwork

Facebook https://www.facebook.com/masknetwork

Discord https://discord.com/invite/cKGW45g

Telegram (English) https://t.me/maskbook_group

Telegram (中文) https://t.me/masknetwork_cn

Feel free to share!