Apr 26

Apr 26 🎮 Web3 Gaming Consolidates to Survive

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🚀 This week, in the changing economic environment, we take a look at the recent consolidation of blockchain gaming to weather tough times ahead.

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On the go? Listen to one of our podcasts from this week, we’ve got:
🎧 TWiG #228 Sega + Rovio = another case of two drunks holding each other up?
🎧 In Conversation: Riot SVP & League Studio Head Andrei van Roon

The Consolidation of Blockchain Gaming

The entire world is preparing for a possible economic downturn, and companies are trying to find ways to minimize the negative impact. Some do it by restructuring and laying off people which can be tracked through a list that is updated almost every day. Others do it by joining their forces to stand against the winter that is coming. One such example in the gaming industry was the merger between Unity and ironSource. Two behemoths of the business realized they needed to get ready for the inevitable impact of both the IDFA deprecation and the global recession. They even had to fend off AppLovin to complete the deal!

Of course, blockchain gaming was not immune to all that was happening. Even during better times, it had its own crises that crashed most of the crypto currencies and made lots of teams go bankrupt. One important distinction between the overall gaming industry and blockchain gaming was how the latter tried to differentiate itself in a distinct manner until recently. The majority of blockchain gaming teams, whether they were publishers or developers, were concentrating on decentralization and becoming independent from larger organizations. Self publishing and fully on chain activities were all the hype. Although there are teams still advocating for those values, most of the industry seems to have shifted to a more consolidated approach…

One of the examples for such a shift was Gala Games’ decision to publish a game on the Epic Games Store. They started their journey as a publisher focusing on bringing a pure blockchain experience: they sold nodes to their community, had them vote about decisions, and focused heavily on decentralization publicly. Then times changed, Luna happened, FTX happened, and they decided to partner up with the Epic Games Store. Of course, this shift didn’t happen just because of a couple of crypto crashes, but there is no denying the complete 180-degree shift. Although it goes against the “blockchain technology to the end” perspective, it is definitely a sound judgment on their side to have a larger market reach. Forcing your players to download a launcher for just one game can only go so far.

Another example of changing priorities and consolidating resources can be seen in the partnership between Polygon and IMX. Polygon has a huge ecosystem of games, art collections, big retail brands (like Starbucks), and so many more. IMX, on the other hand, has been a game-focused ecosystem that was working on games internally as well as with external developers. The details regarding whether this move was only a partnership or actually an acquisition are not clear, but one thing is for sure: Two major players in the blockchain industry, already leaders in their respective areas, have decided to join forces. Didn’t we already talk about it? Exactly…

Of course, when two public companies, each with over a decade of history, make such a decision, they cannot simply announce that they "partnered up". They have shareholders and analysts they need to answer to, so they structure a more solid deal that makes more noise. It is relatively easier to announce a partnership and see how things work out when both sides are still private and relatively small. But the reasoning behind both of those actions are quite similar. The worsening economic conditions are scary even for teams with the heaviest war chests. One sure way to handle the situation is through joining forces with another team that also has a heavy war chest.

Just when this year’s GDC was coming to a close, four companies announced a new initiative to create a wave of breakout blockchain games. To be more specific, each of these four teams partnering up cover different areas of blockchain gaming. Magic Eden is one of the leading NFT marketplaces increasing their reach everyday by including more chains. YGG is one of the leading guilds that coordinate gamers within their community to support their partner games. Game7 is a DAO (Decentralized Autonomous Organization) that brings investors together with startups within blockchain gaming through investments, grants, and other programs. Fenix Games is a recently founded publisher that aims at bringing more games into the blockchain industry.

What this partnership tells us is a lot of companies realized they will not be able to pull off what they initially thought they could. So, instead of fighting against the odds on their own, they are coming together to provide a very well rounded service. It’s not that Magic Eden could not have brought more gamers onto their platform or Fenix Games could not have built a nice marketplace. I think blockchain gaming is at a point where cooperation is better than competition for most of the teams.

And it’s the thing that every blockchain gaming team needs to start working on: the days of riding a 50,000 people Discord community through decentralization is over. It was working for a very brief time, because there was a lot of money up for grabs. Decentralize everything and you still have enough funding. Now the tables have turned and valuations are going down. Investors (both institutional and individual) are looking not just for great ideas, but also for security. They are asking for products and services with the least amount of flaws which is extremely hard for a single team to ensure.

I think this is just the beginning since blockchain gaming still has a long way to go. Companies need to either utilize larger corporations from traditional gaming (like Epic) or start teaming up with each other. It will give way to a more consolidated and centralized ecosystem where users will have a lower number of options. However, having 5 high quality options is certainly much better than having 25 mediocre options. Of course, it’s important not to reduce it to 1 or 2 like today’s mobile gaming, but I hope we can do better than that…

Written by Ahmetcan Demirel

🎙️ Deconstructor of Fun Podcast

🎧 TWiG 228 - Sega Buys Rovio! Monopoly Go feels the Love! CoD Warzone Goes P2W!

Sega buying Rovio for $775mm is just the tip of the iceberg in a jam packed episode. Phil explains how CoD's latest kerfluffle breaks the social contract with its players. Kress pull out the classic "two drunks holding each other up" catchphrase to describe the Rovio acquisition. Ethan implores you to remember Phantasy Star Online 2, and declares that Monster Hunter Go will be a surefire hit for Niantic. Laura cracks the code on both Makeover Match and Monopoly Go. And special guest Jayne Peressini makes her TWiG debut to break down what record breaking CS:GO skin sales do and do not say about the viability of marketplace royalties for web3 gaming. Just like the global box office dominating Super Mario Bros movie, this one is not to be missed!

🎧 In Conversation: Riot SVP & League Studio Head Andrei van Roon

12 years ago, Andrei van Roon was working in transportation modeling and analysis in New Zealand. But ever since seeing a job posting on the Riot Games forums, he has been on a meteoric ascent through the ranks of the League of Legends maker. Beginning as a Champion Designer, Andrei has worked his way up to his current post as a SVP and Head of the League Studio. In this wide ranger interview, Ethan and Andrei cover topics ranging from just how one runs a 700+ plus organization, the many considerations that go into creating and tuning Champions on one of the world's most popular live service games, the impact of the hit show Arcane on the League ecosystem, the lessons learned bringing LoL to mobile with Wild Rift and what Riot has learned about cross-platform development and play between LoL/Wild Rift and Teamfight Tactics. This insider look at what Andrei has learned from 12 years contributing to some of the biggest entertainment franchises in the world is one for the history books.