🎙️#1 Power Lunch: Web3 Gaming’s Next Move

[upbeat music] All right. We are live with a little bit of delay. [laughs] Hello, everyone. Welcome to the show. Hi, David. Hi, Ryan. Great to have you here.

Excited to be here. Thank you for having us. Yeah, likewise. Excited to kick this off with you. We call this Power Launch, and we're gonna talk all about Web3 gaming today. And I'm- Nice...

privileged to, uh, have with me today David from Drakoon Ventures, and Ryan from Solana Labs. And before we start, guys, thanks for joining.

Uh, whatever pla- platform you're on, whether it's on X or LinkedIn, you can ask questions, uh, you can comment. We see that. We'll have a Q&A at the end of the session.

The session is, um, planned to go about 20, 30 minutes. And then we have a short Q&A. Please ask questions, and, uh, we'll happy to answer them. Um, yeah.

And to start right off, uh, why don't you introduce yourself, uh, starting, uh, with David. David, Drakoon Ventures. Who are you? Thank you. What are you doing? What brought- Thank you... you to Web3? Yeah.

[clears throat] So my name's David. I'm currently managing partner and founder of Drakoon Ventures. We do two things.

We're raising a Web3 game fund, and we're also, um, having a Web3 advisory arm, where we basically help, uh, Web3 startups with fundraising, tokenomics, getting listed, and any go-to-market and business related issues on the partnership side.

We help them grow. Um, um, I've been doing this advisory part for about a year now, and we're raising, since February, a pre-seed fund for Web3 games in particular.

And I've been previously a investment partner at Greenfield Capital, which is a crypto fund in Berlin.

And, uh, prior to that, I was, um, a head of business development, a business development director at Binance for the NFT marketplace in the previous cycle.

And then I was ba- basically 15 years, um, in, in the games industry, publishing games, sourcing games from Asia, um, to, to Western markets. Very cool. Cool. Great to have you here, David. Thank you.

And Ry- Ryan from Solana Labs. Yeah. Yeah. Yeah. So I'm, uh, I'm head of sales as a part of the Game Shift product, which is a single access API for games that wanna build on Solana.

So you don't need to know any Rust, and you can have your games up and running and ready to go in a couple weeks. So try and make it pretty straightforward.

How I fell into this, I actually was, I ran sales over at the, at Blockworks for a while.

Uh, and while they're focused on kinda institutional capital and, and DeFi, which is very fun and exciting, I just play a lot more video games than I do institutional investing.

So decided to jump onto the Web3 gaming side. Um, and, uh, ended up, uh, working on some projects like Owned and Battle Tech.

Uh, we ended up actually having the 11th and 18th most engaged Counter-Strike 2 community in the world all on chain.

Um, so trying to find different activations and ways that we can, um, actually, like, talk to the traditional gamers, or traditional is a strong word, but, like, gamers who are not only in it for the speculation, uh, to actually come on chain and, and do things.

And that's what Game Shift is trying to help games do as well. So here we are. That's cool. Uh, that, that, that's cool. Uh, Ryan, you also describe yourself as a mediocre gamer. Absolutely mediocre gamer.

I do not purport to be good at any video games, but I will show up and play- [laughs]... and I will be... It's all about the camaraderie that I'm a part of. Yeah, yeah. And you, David, you're gaming yourself as well, or?

Actually, yeah. These days I'm playing more mobile games still. Uh, well, I'm loyal. Well, I'm not gonna make a advertisement for any publisher here, but I'm still playing- [laughs]...

MMO games and RPG games and mobile, and, uh, strategy games on, on, on PC. Yeah. Yeah. Nice. Yeah. Cool.

Yo, hey, um, just to kick this off, I, I wanted to ask you a question that probably many people would ask you as well, and that's about the Web3 gaming. A lot of brands are entering the space.

Gaming is all across brands right now. Everyone wants to be in Roblox, everyone wants to be in Fortnite. It seems the gaming experience is a big boom.

Nevertheless, Web3 gaming is still kind of just, it seems it's always just around the corner, but it's not there yet. How do you see that? What would you answer those people?

What do you think about the state of the Web3 gaming market? You go for it first, David. Okay. Wow. Okay.

Um, so obviously, since we're raising a Web3 game fund, we're bullish on the overall future of Web3 games, or basically the usage of Web3 tools and tokens and NFTs in games.

So right now there's Web 2.5 games and Web3 games.

Especially on the fully on-chain game part, I'm very bullish and, and, um, uh, I, I think that there will be a lot of innovation coming, uh, in the next, uh, two quarters, four quarters, something like that, where we see games, game teams that basically make really, um, fantastic use of the, uh, fully on-chain game parts.

So assets being on-chain, it's fully permissionless, and basically assets that can wander potentially across other game networks. So those are issues that I, I'm particularly bullish.

Obviously, ownership also still a prevalent theme, meaning that, uh, you can own an NFT, and then you can bas- basically trade it in a secure environment.

In Web2 we have items, like for instance Last Hero, been sold in a very unsecure environment.

So even if you just apply the technology to make things better and more secure, I think that will drive the, the business and the industry quite a lot, without having, you know, complicated governance mechanisms or dual token, a mechanism, something like this.

But just using NFTs for the sake of allowing users to trade- Peer-to-peer in a secure environment, that alone will be a driving force.

For instance, in some, like for instance, Steam P2P marketplaces, it's already happening, but very centralized and very kind of like, uh, it's, it's not mainstream yet in a way that we hopefully think that Web3 will be.

But, um, if we have assets that are on chain, that are, they can, can wander across different games and, you know, uh, which can also be traded on, on third party, uh, marketplaces, this is definitely something that we're particularly bullish about.

Yeah. May- maybe Ryan, a follow-up question. Adding to this, um, you just talked about the interoperability of gaming assets.

David, and I mean the, the devil's advocate view on this would be, yeah, that's, that's all nice and good, but game developers and publishers need to work together, and there are a lot of parties involved to make this happen.

How do we solve this challenge? I, I think it will start smaller or small. We won't have interoperability across different chains, across different network layers.

I think if you just take a very simple use case, for instance, for meme tokens, what I would love to see is a game economy which would allow meme, meme community A to be able to deploy their NFTs as an identity mechanism or their tokens in order to play and use those tokens in that particular other game which was not developed by that meme community.

So I see, like, these kind of, I would say, cross collaboration, not only within one publisher network, let's say Ronin, there's game A, B, C, D, but there's also publisher network A, B, C, and then within this A, B, C, there are a couple of games.

And then there are other, let's say, communities which you will just let into those different publisher networks, and that will, uh, drive down, for instance, customer acquisition costs, which is a huge problem right now in Web2.

I hear of many studios who just shut down their business because they simply cannot afford the customer acquisition cost because the demand side and also the competition for, uh, new users on the traditional Web2 side is just going completely insane and crazy.

Unless you have a lot of cash or you are one of those big Web2 publishers who own, like, a lot of inventory, uh, through Messenger or whatever, uh, unless you have that, it's gonna be really hard to attract new users.

And so I think in Web3, that possibility to kind of have users that can wander from one property to another, uh, through collaboration is, is a simple use case that I would love to see more.

Uh, obviously it requires coordination, it requires coordination between different publishing networks, but I think it, it makes all a lot of sense and, and therefore we will see more of that activity in, in the future.

Mm-hmm. Yeah, I see actually a lot of that.

Like there's a lot of games that are, if I can del- like delicately put it on the more Degen side of things, that are looking to tap into, and they, they love, uh, chatting with us over at Solana, right?

Just tap into the meme coin culture and communities there, right? If you can have, there's this one game I'm, I'm chatting with right now, Hamster Racing. It's, [laughs] it's, it's wild. But

the whole concept, right, is that they can have these communities that are coming that have a very like-minded culture, and they can name a hamster that's gonna be racing, and so then you can start to tap into these things.

So it does take a bit of coordination, but at the underlying principle, right, it's like, oh, this is a really good asset.

There's a value here that can be spent into, in our game, and this token community is looking for more ways to give utility to the token.

So it becomes like this really interesting win-win scenario for, for both those parties that are playing, which I think is pretty fun. Um, and, and you, you, you just mentioned the game.

I think that's a hamster race, right? [laughs] Yeah. Yeah, yeah. It's a very- What platform does that run? So right now, so they do... It's kind of like a prediction.

It's a combination of prediction markets, but then they do live, they actually have like live hamster races where they're running races through things. So it's very interesting.

They have like these cars that are set up with a hamster wheel in the middle and they- Yes. It's, it's a wild world out there. Yeah. So we'll see. Yeah. Okay. Yeah.

So a, a recent trend we see is that very simple games are gaining a lot of tractions.

An example is, you know, Telegram, who launched a in-app, in-game, in-chat feature where publishers can create games within the Telegram chat and users can play this, and they had a lot of success with that.

There are games that attract 30, 40 millions of users- Wow... but they're very, very simple. And if you look at that, do you think,

is that maybe the Trojan horse to bring like the mass consumer to Web3 gaming, or will it be more sophisticated triple A games that will do that? I have so many thoughts about Ton in general in, not that I like...

Sure I'm a Solana maxi, right? They say that. But more generally speaking, like I, the, the Ton ecosystem, it really could be two ways, right?

I've heard a lot of people saying like, this could be the next Facebook gaming, like back in the day with like the- Mm...

FarmVille era where you have this built-in distribution network, which I think is really interesting. The, um, the drawback of what's happening with the Telegram games, I use Telegram every, like we live in crypto.

I use Telegram every day. I play games every day. I have not been given, other than my crypto Twitter feed, I've not, I have no idea how to download or play a Ton game on Telegram. Like- Mm-hmm...

it's like, so for me, like it seems like they're targeting a very specific type of individual, right?

Who's gonna be into trying to farm as much from a clicker game as pers- uh, although I have seen like, uh, Kuroro Ranch, um, they're the guys over at Kuroro Beasts. They're also on Arbitron.

They're doing a really, really good clicker game.

But it's just like it, to me, it doesn't seem like it'll get the market share that, um, it deserves, and I think when you have these really simple gameplay mechanics, what happens often is you get heavily botted numbers, which lead to overinflated numbers, overinflated unique active wallets, which is different than users, and then, uh, overinflated expectations, I think across the board.

And so I'm, I'm interested to see if there's some more dynamic games that can come out of it, um, where you can have a really good tight core gameplay loop that keeps people engaged without the possibility of like a future Airdrop or some sort of thing of that nature.

Um, and so that will be really interesting to see. And if people can figure it out and they can tap into Telegram and they're... I forget what numbers they're saying, 60 million users or something like that.

Uh, I'm just pulling numbers out of the air, but, uh, tap into that distribution network, I think that's really good. But they're not doing it to the level as, let's say, like what Netflix does with their gaming apps.

And I don't know if you guys have experienced this.

They have an amazing selection of games that you can just download, and usually they're paid games, but I can get them for free on any of my devices today, and like, it's advertised to me right in Netflix when I'm gonna go watch like Peaky Blinders or whatever it is that I'm gonna watch, right?

And so I think, like, the Telegram game, a section, has a long way to come if they're gonna figure out how to do it at that level. Um, and that's where I could see this really, really taking off. Mm.

And it would be like the next Facebook gaming kind of- Mm... thing. Can I say one word? Sorry, sorry, I'm- Yeah. Nah, jump in.

No, I, I think I completely agree in the sense that, um, this hopefully will help drive more users towards Web3 games.

Although the games that we are seeing now, the temp-to-earn games, there is some level of motivation that is behind those games, like people wanna earn tokens and so forth.

Although the potentiality of earning tokens in the future is something that potentially, you know, drives users towards it. And obviously there's a lot of bot farms and so forth, obviously also involved in that.

I think if, if we see it as a early steps in the evolution of more Web3 users, I'm all for it. I think it's, um, you know, those...

Some of the games that I have seen have a decent level of fun and a decent level of quality. I, I think that this is... We should be kind of like positive in that sense.

Whether it, it will help drive Web3 games is another yet to be seen phenomenon.

Like, like social games in, on Facebook were big in the early days and people were trying to use it, but then again, it, it nowadays social games is kind of like not so strong anymore.

And so I see it as a preliminary evolution towards a bigger mass adoption of Web3 games. We have a question here from the audience, um, and the question is, Solana, which other go-to blockchain...

Which, which is the other go-to blockchain for gaming besides Solana from your perspective, guys? [laughs] Well, it's really kind of you to say, 'cause you know I'm sitting right here.

Honestly, like, and, you know, I'll, I'll like gladly say this or like I've, I've said this to, to folks on the team, like I don't think, um, I think Solana's a really good L1 for gaming.

I don't think they've done a good job of like, um, bringing a bunch of games on. I think some other chains have been doing a lot of more recently and...

But I think the answer is less than like what chain should you go to if you build a game? It's more like what is your game trying to accomplish, and what do you need help with? And then you can choose the right game.

I think Ronin does a very good job if you really need like the more publishing type of chain help. They do a fantastic job of drawing users to your game, supporting you on your go-to-market.

Um, if you're looking for like really good tech and you're trying to spin up your own chain, right, then Avalanche L1 is fantastic.

If you wanna have your own ecosystem that you can, uh, build your own games on, I think Beam is doing a great job of this. Um, Godzilla is running their own chain for their game, uh, off the grid that's coming out.

If you really just are looking, uh, for like a Web 2.5 game, I think Solana's fantastic. Right? I know I'm supposed to say something besides Solana, but it, it really... It's a, it's a hard to answer question.

It really does a lot.

Like, figure out what your goals are for a game and where your kind of, um, weaknesses are, and then you can find a chain that will plug in and kind of support you in those things, is what my short answer would be. Yeah.

Yeah. Long short answer. So I think you, you gotta look at the geographics. What is the game that potentially appeals to, let's say, more Southeast Asian audience as opposed to, let's say, Western audience?

That's not one question. And then you might wanna take a look at which of the blockchain ecosystem has a stronger, stronger footprint in which geo. Then the second thing is wallet and the conversion rate.

Like, how is the user experience there? Most of the time it will still be a little bit cranky, but I think there are differences and, and so I think conversion rates is all that matters.

And then there were other factors, of course, obviously grants and so forth, but you should not, in my estimation, go to a blockchain or an ecosystem just because someone throws money at you.

That is not the best reason to choose a blockchain. And obviously there are more internally like driving factors such as language.

Is it hard for you to attract developers who, let's say, you know, you need to have that language, et cetera, and, and how robust is, are the tools there, et cetera, and so forth.

So I think those are kind of the components, but there is no one size fits all answer to that.

But if I were to kind of prioritize those different criterias, obviously like conversion and user experience is, is the most important. Okay. Uh, David, uh, I know you're also dealing a lot with the Asian market.

Is there any particular trend you see in Asia compared to Europe or the US or other regions in the world? Yeah.

So there, I think there is kind of like East, North Eastern Asia, like Korea and, and Japan, and then there is like Southeast Asia, and for me those two kind of, you know, regions are kind of different.

If you take a look at the Korean market, for instance, there is a lot of innovation coming from, you know, traditional publishers who are diving into this.

Usually they also have their own blockchain, and they also have their own ecosystem and their own IP, et cetera. And so innovation is less coming from smaller startup, which I think should be changed.

And so a lot of that is happening in like that, like that in Korea. So you have the traditional big brands getting into the space. And then in Japan there's also very, quite s- quite similar.

They're kind of like got together in a, um, formed even a, some sort of a L2 or L3 kind of blockchain where- Is that Oasis? Yeah. Um, yes. Yeah.

And so I, I think that that's kind of like a consortium idea, and I think that that has a lot of, um, challenges because you... It, it becomes highly political.

So I, I don't know exactly and I don't wanna comment on that, but that's kind of like what I see from Japan.

And also- Big incumbents still have a lot of revenue, and they're at this kind of like bifurcation of, should I develop another Web2 game, or should I kind of dive into Web3?

I don't understand Web3, let's maybe n- not do it. And then in Southeast Asia, you have a lot of the activity in, uh, driven by YGG and Ronin, et cetera.

I think that's very vibrant, and that's very good, and I, I completely like am bullish about, um, uh, you know, uh, the, the activity there.

Whether there is going to be like really highly qualitative games, I have not seen them yet, to be honest.

Um, but I'm super excited to see the next generation of entrepreneurs from Southeast Asia who develop the next Web3 games and, uh, especially fully on-chain, I would like to see more.

Uh, but I think, uh, you know, the teams that I see right now, it definitely points to the right direction. Ryan, do you have a view on that or do...

Does Solana Labs have, you know, and, and with Game Shift have different regional strategies around the world, or? Yes.

I actually think generally speaking, the Asian markets are just so much more welcoming to the idea of like Web3 gaming.

Like, you don't have the SuperCell or the Electronic Arts, right, looking at Web3 game and be like, "This is something we need to spend a lot of research and development time looking at," right?

But you have Nexon, which is building on Avalanche. You have Kom2us and- Kom2us, mm-hmm. Yeah. D- there's like a ton of very established studios from some of like Mc- Square Enix, right?

They put out their whole Symbiogenesis game, uh, in Web3. Like some of my favorite studios that I grew up playing all these games of are like dipping their toes in into this world.

I don't think, right, like for example, like Square Enix wasn't like, "Let's throw Final Fantasy at Web3 and see if it sticks," right? They're using like new IP. They're testing things out.

They're seeing how it works, trying to figure out what business models and revenue strategies work. Um, but it's, it's happening at a much larger and institutional level in A- in Asia versus elsewhere in the world.

And so I think that's a huge stretch. We're gonna be doing an, an entire APAC tour for, uh, Korean Blockchain Week, Token249, Tokyo Game Show, all those.

We really wanna go and try and start building our network there as much as possible because we do see that they're like the forefront of where Web3 gaming we think will be.

Um, and so I think it's very exciting to see this. Uh, they are a lot slower moving, at least in Southeast Asia, the younger startups, you know, they'll be a, a bit faster moving I think on a lot of this stuff.

But we're very excited to see what's happening, um, and are, are pouring a lot of time and effort into how we can bring a lot of these games to Solana if they don't wanna join a consortium of other chains. Yeah.

You, you, you're talking about we're doing a roadshow. When you say we're, you mean Solon- Solana Game Show? Solana, yeah. Yeah. So Game Shift will be going all over. Uh, Solana is gonna...

We actually have super teams in Tokyo and Korea as well, which are gonna be helping, uh, support, and they're doing a bunch of like gaming-oriented activations in those locations as well.

So it's been very cool to see a lot of the startups and younger studios that are coming up that are trying to build Web3 first products and IP. Um, so it's really, really cool to see what's happening there. Mm-hmm.

Can you quickly explain, uh, our listeners what is Solana Game Shift? Yes. Uh, so it, the easiest way to put it is you don't need to know a single line of code.

You don't need to write a program, which for all those out there, which I've learned recently, is not a smart contract on Solana. Um, and you can access all the, the beauty of Solana through APIs and Webhook.

And so it's really, really targeted.

We have a big strong belief that like we can build very great products for the Web2 studios that are stepping into Web3 when they feel the time is right, but they're not gonna want to figure out all of the smart contracting stuff that comes with like optimizing contracts, um, finding RPCs, figuring out which NFT standard to follow depending on which all...

You know, there's a whole bunch of stuff that goes into it, and we make it very straightforward, right? You want assets that your players can own. You want to store things on an immutable ledger.

You want the user experience to be super seamless and straightforward. You wanna be able to pay with your credit card.

You don't have to deposit ETH into some sort of thing and then bridge it over to another thing, and then open up a custodial account on an exchange, and go through a seven-day waiting period to make sure that you're not like some sort of terrorist or something like that, right?

You want a very easy user onboarding flow, and we build all of those things direct all through API.

So a lot of game studios that we're talking about, uh, are very keen on the fact that they can get in, and they don't have to hire blockchain developers to get something up and running.

They can just do it with their, the developers that they have on hand. So that's pretty nice. Mm-hmm. And yeah, you mentioned before also, uh, Web3 gaming 2.5 or Web3- Yes...

um, what do you, like what do you see as the more, uh, the more likely progression that we see, like established game studios enter the market in, in bringing out 2.5 games, or will it be fully on-chain games?

I'm interested to hear your take. You're seeing a lot more early stage stuff, David, than I probably am. Yeah. I'm usually like they've raised their pre-seed or seed round, and they're- Yeah...

figuring out like going live. Yeah. So I'm very interested to hear what you have to say.

So, so whe- when we see a history basically, you know, there was like, uh, uh, everyone hated free-to-play games 15, 16 years ago, like, "This is a scam." Yeah. Uh, sometimes...

And then there was sort of browser games, and those were like the most ugliest game you could ever imagine, right, in the early days, right? Think about the first, um, mobile apps, uh, you know, the, the Doodle Jump.

I mean, it was a decent game. I'm not s- [laughs]... negatively talking about it. But what I'm saying is it, it's also a fresh team that was doing that. SuperCell is also a fresh team.

It, you know, developed PC games before. King was a little bit kind of doing skill games, and then they kind of branched into like mobile games with Candy Crush and so forth. And I think that most like...

But, and then again you see like some of the PC games were really struggling hard, like for eight years, let's say. Take NCSoft for instance, who have been out there- Mm-hmm... in the PC side with Lineage.

And then we were like waiting for like a mobile game, and it took them like years and years and years. So I think you have a lot of path dependency when you are, uh, s- in, in existing ecosystem.

You have your business up and running. So it's not easy to branch out of that. So I think those companies will hopefully- Invest in fully on-chain game teams, we'll invest in Web 2.5 teams.

I'm personally more interested in fully on-chain game teams, although those, uh, games right now look really, really terrible. They look like pixel graphic games 30 years ago.

But I think some of the economics and some of the experiments that we see are really, really interest- interesting.

And so once the next evolution is coming, and then potentially we have a little bit of better graphics and still being on-chain, I think that there is, there is a lot of opportunity out there.

And so I think the traditional ones will be potentially the ones who are coming behind and, and n- not be at the forefront, and to be seen whether they will be able to catch up, yes or no.

But I hope that we will be able to invest, um, and that's also a bet, in teams that the world hasn't seen yet that... And we're talking to some teams that are game native and crypto native, and which is a complex task.

You need to develop not only the game, you have to be a good, a game designer, but you also need to understand blockchain and, and, and run a backend server, et cetera. It's a very complex task.

And, and so I think that, um, that breed of new teams will hopefully evolve some, I, I, in the next couple of 24 months, I think. Yeah. Yep. I was gonna say- Well, I don't think the... Yeah, yeah.

I don't think the, um, if anyone's on the fence about Web2 or Web3, I don't think the first thing that they're like, "Oh, let's go fully on-chain," right? Like- Mm. "Let's do that." Mm-hmm.

But I don't think that they're gonna... Yeah, I don't think they're gonna even go Web 2.5- Mm... until there's like a business revenue. Like, there's someone- Mm...

that sees like, "Oh, they're generating a new revenue- Yeah... stream that we didn't- Yeah... know was possible," and then they'll jump over. Yeah. And they'll, like, put NFTs on-chain, right?

And I think that'll happen for ve- for many of the major studios. But I think there's the idea of like, right now I think classification of Web 2.5, Web 3.0, right?

Is like, uh, you have NFTs that are skins, and then they have something to game. Or this like full on-game economy where you have like stackable assets or burnable, uh, uh, things. You can craft- Mm...

items, you can do all this fun stuff.

But I think even further, like some of the stuff that I think is really exciting, um, that I'm seeing coming down the pike is like game logic being on-chain, which is opens up a whole new realm of possibility that I see if you can get the...

Like, for example, there's like, there's, uh, Magic Block, which is building on Solana.

They, they showed two characters simultaneously running around a map, and all of the movements that are happening in real time- Mm-hmm...

it's not like laggy, it's not people signing transactions, are stored on-chain on the block. And so like it's really cool to see that because then if you get to a first-person shooter level, like Counter-Strike, right?

Then cheating becomes so much more difficult. Mm. Because now it's not... The, the game, the, like the logic of the server is actually running on-chain. So it's like validating- Mm... things in real time. And so- Mm...

cheating becomes a, a, a much like less. So you have like global level e-sports that are now storing this, these, these matches on-chain.

And it's not like Valve, who runs Counter-Strike 2, is just like, "Ah, you cheated in that game. You're banned." It's like no, like anyone- Mm...

on the planet can go like validate the entire match and see who used what bullet when, when it hit this character, what position they were on the map at one time. Mm-hmm. Mm-hmm.

And so you can have like the ZachXBTs of the world that are like not just chasing their money fraud, but like chasing the cheaters in game to call people out at like the worlds. Yeah.

And so I think like that stuff is really, really cool. Totally. And that's when Web3 and on-chain gaming becomes more than just like, "Oh, it's a financial asset that we're trading back and forth."

It's like, no, there's like tech behind this that can really fundamentally change, I think, a lot of very cool things. Mm. D- do you think that we'll be driven by independent producers or by the major game studios?

Mm-hmm. That's a good question. I think it'll be independent to start until- Yeah. Yeah... it's always the revenue- Total-... generation for those guys. Yeah. Yeah.

I give an example for, let's say, a, a different market that we- Yeah... like chess games. Mm. So there is this ELO score that you potentially could have.

So in the Web3 world, we could have a digital identity where, let's say you have an, a Soulbound token or NFT which stores all your history, which stores your ELO score, which could potentially work in different chess platforms.

I think that would be a brilliant idea. Are the traditional Web2 publishers, are the chess game publishers doing it? No, of course not. Because, you know, they, they want to protect their data, right?

So this is a perfect example of why it's not gonna happen, uh, with traditional ones, because they want to keep the users in there.

If you, if you have the history there, why have a player take that history and go into another game and, and play there? That's, that's heretic in, in their mind, right?

But in our mind, we're in an open, decentralized world and, and where we basically say, "Hey, man, let's collaborate." You know, you don't own the user, you shouldn't, and, and the user should own it him or herself.

And so this is, I think, an example of, um, to answer your question, it will be independent studios. All right. Uh, we're already 30 minutes in. Uh, listeners, please ask questions. Uh, we are open for the Q&A round now.

Um, you can just write it on LinkedIn or on Twitter. We see it here in the studio. Um, we have a question from Nauman. Just show it here on the screen.

Uh, as token economics continue to be very volatile, what are the kind of business models that Web3 gaming ecosystem needs to adopt to be sustainable and not rely on play-to-earn models? Up to you, Ryan. Please go first.

[laughs] If I, if I had a good answer to this, I'd be a lot, uh, more rich than I am today. But, um, the...

I mean, I think the, the, the long and short of it is, I think a lot of users see play-to-earn models very differently than a lot of the game developers or publishers see, uh, play-to-earn models, right?

And so players see this, this token price go up, go down, crazy volatile, crazy whatever. They're like, "I, I put money into this. I, you know, I'm, I'm trying to invest."

And there is like a new type of gamer that I think gamers, that game publishers need to start thinking about.

I have this whole idea about there's like the four traditional gamers, like hunters, completionists, socialites, whatever.

I think there's speculators and extractors, which are two different types of gamers that games need to start thinking about. Regardless of that, right?

Um, game publishers are looking at these kind of play to, uh, airdrop or play-to-earn models as a, uh, a means of user acquisition.

So as opposed to going to Google Play Store and spending my, you know- $22 customer acquisition cost. I don't know what it is these days. Um, but I can give out $22 of my token that I've essentially invented.

Um, and so you can acquire a customer that way. And so what's happening, right, is the game is using this kind of free marketing to an extent, um, to pull in new users.

And users are, for better or for worse, coming into the ecosystem at certain levels of where that customer acquisition cost is. And so they're at the same time kind of having to deal with that volatility.

If you could solve a thing there, my recommendation when games are launching today is don't launch a token- Mm-hmm... right now. Mm-hmm. Like, not even in this market. It's like wait until your game is developed.

There's been enough games that have been in the market now for so long where we've seen what happened.

If you pre-launch a token and then you wait two and a half years to launch a game, if you can get it done in two and a half years, and then you have all these NFTs that you're selling and y- there's a lot of monetary, like, moments that come in before a game's even live.

Um, so trying to do a little bit more of a traditional gaming development timeline- Mm... and then launching the token in a robust player-filled area I think is a much better solution nowadays. Yeah.

Granted, we have a hindsight- Yeah... of, yeah, three years of development now. Um, but that would be the current state is we're... Wait until you have the players first, which is kind of chicken and egg.

If I can comment on the question and give you a very quick answer. Yeah. If you have a tokenomics consultant who is only- Mm-hmm... talking about token release schedule, token supply, and so forth, fire him or her.

The fo- the first most important thing that you first have to figure out, what's the token demand? What's the token burn mechanism? What's the token spend?

Uh, the other stuff comes later, but I think you need to first talk about what is the utility of the token? Why should you have a token? Maybe you just don't need the token.

I completely agree with what Ryan said, like, maybe you just have, can have an off-chain token. It's completely fine.

And how are you able to balance the, the token demand that's happens in the game and also on third-party market places where you, where those tokens are traded? I mean, where is the demand coming from?

And obviously you wanna have a, a healthy game where the demand is coming from the game economy as opposed to just people who wanna trade it and speculators who wanna just make a quick buck out of it.

So I think that is the part which is super, um, hard. But at the end of the day, I think if you focus on a great game where the token is important and becomes some sort of a, a... At the end of...

A currency for demand, that's what a token is.

And then you can drive demand, uh, because you have a great game and you have something that people wanna have, own, trade and so- and so forth, then I think you're on the right path.

But I think it starts with tokenomics consultants educating Web2 people in a wrong way, talking about token release schedule all day, day and night, and asking for $400,000 of, of, uh, consulting fees is something where I think you should start.

Yeah. Is there a Web- Please. [laughs] Ag- agree with that. Is there a Web3 game that has nailed the economics in your opinion? Um, no, you tell me, but, um, I mean, I'm, I'm...

There, there is, let's say there's a couple of games, um, that I right now started playing that are not on main net yet. [laughs] Yeah. I would say... Like, honestly, I would say, um...

And it's only if you only look at the most, like, recent 12 months, but I would say Axie has done a good job, but that's because they've had to deal with everything that's happened before with their very volatile assets, right?

They've gone through it and they've been around for a few years, and now they have a really healthy community, right? It's not...

The, I think one of the things that happens, right, is, uh, you usually either have, one, the token price going crazy, and then you have all of the speculation, all these players that are coming in, and then you create this, like, really unhealthy, uh, balance between these two things.

And so Axie, right, it... Before Axie was Axie, right, it had 15,000 players that were playing this game every day that just love pick three strategy card games that were earning, like, less than 50 cents a day, right?

Versus like the 5 to 10 to $15 a day. And it was like, that was like the perfect ecosystem, right? And that Axie has found that again, right?

They found this, like, good equilibrium where they have the right amount of players, they have the right burn mechanisms and demand in place, like what David was saying. So I think- Mm...

that's, like, um, one I would call out. Outside of that though, like, what's awesome is there's so many games that are coming out that are launching tokens that are trying things.

I think very soon we'll see a pretty healthy go-to-market strategy on these tokens, um, which hopefully will then propagate and then the Web2 studios will start seeing like, "Oh, there is a healthy way to do this.

Let's go in and dive in headfirst." So I think it'll happen soon. And Harrison also commented here, just quickly show it, uh, "Good gameplay first."

Question back, is there a Web3 that you think has a very, very good gameplay, has nailed the gameplay? The Off The Grid by Gunzilla is... I am, I am uber excited about this game. It has, uh,

uh, I've played it. Uh, it feels like a Modern Warfare 2. It, it has things that are on chain that are completely obs- obfuscated in the background.

Players that are playing on PS5 and Xbox right now are, like, losing it. Um, they have, like, very large traditional Twitch streamers that are playing this game and getting very excited about it.

Um, it has, like, all the makings to be probably the breakout game of Web3. And I'm very, very hopeful for this, even though they're... You know, I love them and I love Avalanche.

Even though they're on Avalanche, not Solana, I'm very, very hopeful for this game, because if this game clicks the way that it seems like it's shaping up to, the rest of the ecosystem suddenly skyrockets.

Everyone's gonna be figuring out. They've, they've figured out a business model that works. How do we replicate that? How do we do it better?

And it'll be really, really exciting times, and so I have very, very high hopes. And the game is just... I mean, you're, you're a cyborg. You're running around shooting bad guys. You...

Like, your arm can get blown off, then you, like, run up, you kill a guy. Sorry if this is, like, crazy.

You, like, take their cybernetic arm and you put it on your arm, and then you run around and you have a new power with your new arm. It's amazing. Like, it's such- Mm... a cool concept. Uh, the game is amazing.

The storyline is gonna be amazing too. I'm just... So, um, yeah, I'm, I'm, I'm... I wanna quickly mention, you know, an OG game which has been out there, um, is- which is Upland. Um, and so Upland- Mm-hmm...

is a property trading game where you can own properties from the real world in a virtual environment. That community is still so sticky and so, like, like, into their properties that they own.

I, I think it's not a traditional, like, FPS or MMO game or something like that, but it is a property trading game s- similar to Monopoly, where you actually own, let's say Lombard Street on San Francisco, 51 or something like that, and, and you really own it because it's a part of the blockchain.

It's pa- it's an entry, it's an, it's an NFT in the blockchain, right? So that is, is, for instance for me, is like a hidden, uh, uh, champion, uh, in the, uh, in the Web3 game space. Yeah.

And then I would also say Fableborne on mobile. They're doing a pretty good job of, like, having a Supercell-like vibe, um, that's easily accessible. Another good game to check out. Yeah. Cool.

Hey guys, this discussion is so interesting. There are many questions in the audience that we haven't covered yet. One I would like to quickly cover before we wrap this up is the impact of AI.

And here someone mentioned that, you know, indies could use AI, indie game developers could use AI- Mm... to start building much better games. Mm. What's your opinion?

Uh, what's the impact of AI on, on gaming in general- Mm... and Web3 games? Yeah. Very quickly, production obviously, and content creation will be... obviously the production cost.

Let's say content creation cost will be lowered by AI. I also saw, like, an interesting, uh, startup where basically your gameplay is being modeled into an I- AI model.

So let's say Ryan plays Call of Duty, and then I could play against Ryan while he's working for Solana, but I play against his NPC in a way. So those kind of like... it's not a perfect, like...

I don't know how good you are, Ryan- I'm a mediocre gamer. We discussed this... on Call of Duty, right? [laughs] Okay. Yeah, yeah. But this, I think it's an interesting idea.

And so I think we will see on the production creation, content creation side as well as on these kind of completely disruptive things, uh, definitely interesting models. Yeah. I'm very excited.

I think also just like, you know, uh, games don't have to neces- this is, like, a crazy far out there thing, but games will no longer have to pay, like, large Twitch streamers.

You can just create, like, an AI-created content person who's just constantly putting out content about your game all day long. So it's gonna be even harder to cut through the noise in some capacity.

It'll be very, very interesting to see. Fun times ahead on that stuff. But I'm very excited about it. The AI stuff will be great. Yeah. Okay. Hey, cool. We're almost at the end.

Uh, usually in podcasts we do a lightning round, and that's a series of short questions with very short answers. But- Yeah... um, we're now, uh, more people, so I think we keep it very short.

I only have two questions for you, for both of you, uh, with short answers, and the first one is what, what was the first game you played? Ultima IV.

I mean, it was Pong, to be honest, on Atar- I'm a little bit older guy. [laughs] But the game where I played, like, a insane amount of time was Ultima IV on floppy disk. Mm. Uh, sorry. You go, you go.

Do you have a question? Yeah. W- w- what's Ultima IV? [laughs] It's like an- Oh, okay... it's an RPG game back on the Commodore 64. I'm sorry. [laughs] A classic. It's a classic.

Uh, the first game that I actually played was Mario Punch Out when I was, like, really young, uh, and on the original Nintendo. The game that got me into gaming was Final Fantasy IX.

That's why, uh, big, the same thing, ARPGs are, like, my thing. I love that stuff, so. Yeah. All about it. Okay. Cool. Uh, second one: What's your most favorite game? Still today? I mean, so my... okay.

Still today, yeah. Yeah, I, yeah, I still today. Um, so I still play Clash Royale, to be honest. Mm. Oh, you're a Clash Royale player as well? [laughs] Hey. I, I, I like that. You like Clash Royale? Okay.

Given the short time constraints, every now and then to just relax your mind, I think it's a great game. Yeah. It's, it's funny, the more you work in gaming, the less you actually have time for gaming, I feel like. Mm.

Um, and so Clash Royale has, like, two to three-minute matches. It's perfect. Um, the game that I absolutely adore right now, the replayability, I've played it too many times, is Stardew Valley.

It's, like, a cozy farming simulator where you're, like, fishing and you're, like, uh, taking care of this town and making sure- [laughs]... that they're, uh, good.

And each of these people have these, like, crazy, robust backstories. I don't know. Uh, it's an amazing game.

[laughs] I fully recommend to anyone who wants to lose suddenly 17 days of their life playing this game when they thought they were gonna sit down and play for a couple hours. [laughs] All right. Hey, so cool.

Uh, we got amazing insights, uh, into Web3 gaming, and also a lot of recommendations for great games. Thanks everyone who tuned in. We have a lot of questions still in the audience.

We'll try to answer them later in the comments. Thanks, David, for joining. Thanks, Ryan, for joining. If people wanna learn more about you or find you on socials, w- where do, where do they find you?

LinkedIn, Twitter, um, that's it. QR code on the left for DRKOON Ventures as well. Oh, nice. And- Yeah.

Rex_gg on Twitter, you'll see me screaming about Web3 video games, and how I think they're inevitable and all that good stuff. Solana Labs. Yeah, there you go. That too. Come check us out at GameShifts.

We'll help you build your game. Okay. Cool. Yeah. Hey, thanks for joining, and have a great day. Yeah, thanks guys. Thank you. Have, happy gaming. Mark, Ryan, it was great. Have a great day. Yeah.

We'll talk soon, all right? Bye-bye. Bye. [outro music]