The Future of Web3 Gaming with BITKRAFT

[upbeat music] All right. Welcome to another episode of 51 Insights. Uh, today with me, Carlos Pereira.

He's partner at Bitkraft Ventures. Hello, Carlos. Hey. How's it going? Doing well, thanks. How are you? Everything is great. Thank you for having me on. [chuckles] Thanks for, for being here. Thanks for tuning in.

If you like our show, please support us. You can subscribe on YouTube, um, Spotify and Apple Podcasts. Um, yeah, let's jump right in. Carlos, you're a partner at Bitkraft Ventures.

Uh, what is Bitkr- Bitkraft Ventures, and who are you? Sure. So Bitkraft Ventures is a global investment platform for video games, interactive entertainment, and technology.

We have about $900 million of assets under management, um, across six funds.

Um, and we're currently deploying out of three of those funds, so an opportunity fund focused on later stage venture, our core fund, um, which is what we started with in Web2 series seed and Series A venture, and then a Web3 fund, um, which is about one-third of our AUM of two Web3 funds in total, and we're currently deploying out of our second one.

[clears throat] In terms of who I am, I, uh, I've been in the investments business for about 10 years, um, and been focused on games for about five years, initially on the Web2 side, joined, uh, Bitkraft initially on the Web2 side as well.

But over the past three years or so have jumped into the crypto black hole and spend most of my time today thinking about the intersection of Web3 and gaming. Mm-hmm.

In, on, on the Bitkraft website, you say, "Where physical and digital worlds converge." You talk a lot about synthetic reality. Can you describe us a little bit more what, what do you mean by synthetic reality? Sure.

So for us, the amount of time that people are spending in virtual worlds or in digital worlds is progressively increasing, and that's not just the, the really the amount of time, but also the quality of time, the depth of time.

And so progressively, we have more friends and important relationships that are pri- perhaps primarily digital versus physical. And with it, we care more about what we look like.

We care more about the digital life as much as we do, or at least, you know, a lot, um, about our physical lives, right?

And so for us, the synthetic reality is this progressive merging of the physical and the digital space into one continuum of life, of which the digital life has a lot of value, meaning, and depth to it. Mm-hmm.

So you talk about synthetic reality. Two years ago, Meta, or, uh, formerly Facebook renamed to Meta, the metaverse hype, uh, went off. A lot of consumer brands jumped on that hype bandwagon.

And how would you compare those, compare those two concept, metaverse versus synthetic reality? Is that the same or, or is that different, or what do you think about the metaverse at all? I think that

when, when someone imagines the terminal vision of a metaverse, like the, the, the vision of it 10 years from now, 20 years from now at scale, and when we describe the synthetic reality, I think that we are seeing very similar things in our minds.

I think we probably used to say the word metaverse a lot more, then it just got too popular for us, um, and we wanted to carve out a little bit more of a discrete niche.

Um, and so I think that they're similar, but, but I think where we're different from the majority of people is, like, we see that, that terminal vision of the metaverse as something that's difficult to achieve and something that's very close to what video games provide today, or video games being at the base of something that ultimately becomes this, uh, digital society of sorts.

And so we're very careful in using the word metaverse.

Um, we know when talking about a new game or a new platform, you know, we don't, we don't tend to ascribe the title of, uh, a potential metaverse or a potential, um, key part of the metaverse to a lot of players in the space.

Mm-hmm. So gaming, metaverse, synthetic reality, that's obviously a, a very big space, and it got even bigger now with Web3 gaming coming in.

For our listeners, but also to the investors, uh, you talk to, you usually map that out. You know, we have gamified commerce.

A lot of, um, consumer brands are building on Roblox or building on games like Fortnite or Minecraft or Topato. And then you have the consoles, you have esports.

Like, how, how do you approach that space, and how do you think and structure gaming at Bitkraft?

So for us, gaming is a roughly $300 billion market a year, and that includes the content, so those are the games that everyone visits, and then all of the businesses that exist in and around content.

And I think that you guy- that you covered a lot of the businesses.

Um, I don't, I don't know that I have any categories to add, although we can s- certainly go, like, super deep into Web3 and, and, and sort of the individual subcategories there.

Probably one of the things that sets us apart is we are very passionate and very focused on the content side.

There are a number of funds, generalist and even more specialized, that invest in the broad, um, category of gaming, and then only a fraction of those are, are spending a lot of their time in the content space.

Um, and that is where we spend, you know, a lot of our time and, and, and something that we're deeply passionate about.

And so core content deals will comprise anywhere between 30% and 60% of our portfolio composition, depending on the fund, the Web2 and the Web3 funds, um, and all that. Mm-hmm.

Well, what, what do you mean by gaming content? Can you give us an example? Call of Duty, um, would be an example, or Last of Us, um, to pick, uh, you know, big names that are sort of out there right now.

Mario, Super Mario. So content and IP for us is the, the base layer. It's the game. It's what people log into and, and play. Mm-hmm.

Um, and when you, when you look at this space overall, where are the focus area for you- areas for you now? What do you think is most interesting, or where do you maybe see the most dyn- dynamics going on in this space?

Sure. So there's, there are a few categories that we pay attention to or that we, that we're spending more time on.

And these categories, um, or theses change depending, you know, depending on what's going on in the broader world around us. And so, for example,

mobile games is something that were very popular once upon a time with, uh, new distribution, um, uh, new distribution channels opening up on phones, um, and on social media, um, and also the new types of play, right?

So before we had the iPhone, um, we hadn't really thought about these games where you drag little characters around the screen, like, uh, something like Angry Birds, right?

And so that was super popular, and they were cheap to make, and then the world got really filled with a lot of them.

And then there's some, uh, discovery and, um, um, IDFA issues that affect your ability to market nowadays with mobile, and that caused like a big contraction in mobile.

And now perhaps mobile is back, or it's worth thinking about mobile in a world where through regulation, for example, in the EU, um, we're seeing alternative app stores which break the monopoly of Google and Apple, and maybe we can start thinking about emerging app stores which, um, have games and sort of create a new opportunity for games, right?

So that would be, for example, an idea, um, in how it's fluctuated over time between being very interesting, very saturated, very interesting again.

Another category of content IP that's, uh, progressively more and more interesting is what we would call transmedia. Um, so transmedia IP.

Um, last year, many of the hit, um, TV or movie, um, pieces of media, like Last of Us, came from games first. And we've seen

movies or TV shows that are coming from a game, Fallout is probably the latest example on, on Amazon, or yeah, on Amazon, where, uh, there's, there's clearly this opportunity to get a game and have it, have it have a second life with a TV show or a movie, and, and that second life in turn creates a third life for the game because you go and you watch the show and you miss playing the game and you go back right in.

Right? Um, League of Legends with Arcane, et cetera. So that's a category that's progressively interesting, especially as we start thinking about games that are made with that in mind.

Um, I don't know that the, the, The Last of Us, um, creators expected it to become a hit show, right?

But, like, now we can start thinking about the, what, what does an IP require from the cradle, and how do you approach game development and non-game IP development together in transmedia context to, to, um, to get this idea to, to, to be bigger, right?

To be more vertical across the amounts and types of people that it touch, touches. Um, so that would be, for example, uh, a, an idea that's becoming more and more interesting.

And then probably the third one to give you a taste for it would be

cooperative multiplayer, in particular games that allow people to play, instead of having like the classical Call of Duty or Counter-Strike or League of Legends setup where everyone has to hop on a lobby together, start a match together, stick through that 15 to 45 minute together in order to get to an end result.

There are games, for example, like Helldivers II, which came out earlier this year, and they make it much more easy for you to be playing a game and one of your friends drops in for a little bit and then hops out.

And if you think about the friction to go from playing alone to playing with friends, um, it significantly decreases that and it makes cooperative multiplayer easier.

And, and that's kind of like something cool to think about as well.

I could probably spend the entire, uh, time here and, and hopefully give you 51 insights alone just on types of content that are interesting, but I'll pause there just for a, a flavor. Yeah.

A, a lot, a lot of people are talking about the next generation of consumers in Gen Z and, like, how those consumers spend their time in virtual worlds and, and games.

Like, if you look at the numbers at, uh, from Roblox, Roblox has about 300 million monthly active users. About 50% of them are Generation Z. Uh, they spend on average 2.7 hours per day on that platform.

Consumer brands are jumping into the space. Everyone is talking about gamifying consumer experiences. Do you think gaming is a generational trend, or has gaming always been important for younger generations?

Gaming has always been important for some amount of younger generations for as long as games have been around.

But having platform proliferation and game type proliferation has allowed more people to find a game that they love.

Um, and so the slice of the world that becomes more attuned or, or that enjoys gaming, I think has certainly grown.

I remember once upon a time, I was probably in my mid-teens playing some online MMORPG and talking to some, you know, online friend or some online acquaintance that I had at the time, and the guy telling me that he was like 35 year old and was married with kids.

And I was like, "What?" Like, there's an adult playing this game.

It was like a super mind-blowing thing 'cause it was so foreign to me, given that my parents wanted absolutely nothing to do with video games, and at the time they were, I don't know, like 45 or something, right?

I mean, so I was like, there's this guy that's like almost my parents' age that, that loves gaming and does this, right? But it was rare.

And now as I approach sort of that guy's age, I mean, I spend probably the majority of my media time in video games, and that's common across a lot of my colleagues, and I don't think that I have to be embarrassed perhaps, or that it's as niche of an activity to be a 35-year-old or a 40-year-old, a 50-year-old that's like actively playing games that has been in the past, right?

And so I think these generations that have grown up really playing a lot of games, not occasionally in the arcade, but a lot in your home, in your PC, in your console, and then on your phone, that's just, uh, you acquire a taste for that media, and you stick with that media the same way That one would stick with cable TV or music or, or whatever, right?

It's just a media type that people stick with. And then, as I mentioned, with new types of platforms and new types of games, whole new segments of the market open up.

And so, for example, the largest player demographic for mobile games is actually women over the age of 30.

And when you look at, um, Candy Crush and that hyper-casual mobile gaming segment that really blew up, I don't know, 15 years ago or something, a lot of that growth was just opening up to this new category of gamers that were discovering themselves as gamers, right?

I...

One of my favorite things to do when I'm going in, um, to an airplane, especially if I get- if I'm boarding a little bit later and most people are already sitting down, is just as I'm walking down the, the, the aisle, looking back and seeing what people have on their phones, and it's, it's a lot of games and, you know, not all those people are kids, right?

As a matter of fact, the majority of them are not kids. Um, and so there's certainly a very strong demographic shift, um, going on. Um, and, um, and, and, and I think that that's here to stay with the gaming.

Let's dive a little bit deeper into, uh, Web3 gaming.

And wh- when we talk about Web3 or crypto or, you know, blockchain technology, a, a lot is also about decentralization, about user empowerment, bringing power back from platforms to user, from brands to consumers, um, and also financialization.

How do you see financialization or, you know, financial incentives playing a role in the, you know, the latest wave of games? Is this something that's important?

Is this something that crypto is driving, or is this still extremely niche? So financialization has been around games, um, for a very, very long time.

As a matter of fact, I think every time that we connect a great game to the internet, there's a, a parallel economy that emerges of varying sizes.

Um, a primarily single-player game like Elden Ring, um, will end up with the black market for gold and items online, um, that is basically

jerry-rigged by people using the PVP game mode in order to transact with each other and give items to one another.

And that, that will have sort of a, a smaller relative size of the black market to the, the main game really, which is this ex- exploration, player versus environment, single-player adventure.

And then you can go on the other end of the spectrum. A game like EVE Online, for example, has been around for over 20 years. It is primarily a game about war and thus, you know, about economy and politics.

Um, and that game, the, the black market of that game is about 100% the size on an estimated basis of the white market of that game because it's such a strong economic game.

Um, and so there's nothing new with the idea of, um, games being financialized. Like, you look at World of Warcraft, people would sell items, and again, like you, you can go across games and see that.

What Web3 does, um, in a lot of cases is, is instead of these black markets being black markets, um, you're developing games knowing that the portability, transferability, and thus commerce and property rights around the assets are a, a, a default yes, given that you have these assets on chain that people have custody of, that they can tra- transact with each other.

And so it's really about or it should be about developing games where the consequences of an open economy, um, are thought through from the very beginning, and they're not something that you're afraid of and actively trying to clamp down on, but rather that you think about how they can be core to the gaming experience, or at least be harnessed in a certain way that allows a part of the gaming experience or a part of the game's journey to be better.

Whether that is some, um, financial incentives for your early users that improves virality, that gets people talking about them and sort of over time these incentives decay, um, or whether you're trying to reward your best and most loyal whales who are spending a bunch of money in the game, um, and getting them to spend perhaps a little bit more because they have the, uh, the idea or the, the, the ambition to potentially sell their items down the line if they ever get tired from the game, right?

So it's like, what is your willingness to spend $100 on a digital asset if you expect to have some potential to recoup the value of it, or even to make a little bit more money on it because of speculative dynamics, um, versus if you're just putting that $100 in, you know, publishers' pockets and you're never having a chance to get it back, right?

And so games have been financialized for a very, very long time. It has generally been disincentivized from an o- from an economy perspective.

The publishers and the studios have wanted to, to have a very much a one-on-one monetization relationship.

And Web3 presents perhaps the opportunity to design new games that make this into a, a, a peer-to-peer marketplace, a decentralized and open marketplace, and with it improves some element of the gaming experience.

Mm-hmm. And, and nevertheless, uh, Web3 gaming studios have had a hard time creating games that actually break through in mainstream. Why do you think that's the case? Because there hasn't been enough time.

If you look across a venture portfolio of a gaming fund like ours, um, on the Web2 side, we always invest with the expectation that if we're investing in the seed stage right before the game is made, um, or as the game is just beginning to get made, we regularly expect three to seven years, um, for a good game to launch.

For example, one of our early, um, studio investments is this company called Frost Giant, which has a game called Stormgate.

Um, it's a game that sits in the real-time strategy space, which is, um, basically a spiritual successor to StarCraft II, which was a majorly successful RTS title, and the team behind Stormgate, um, was a senior team, or many of them were senior members behind, um, StarCraft.

StarCraft got canceled. It left a hole in the market. They're, they're chasing that opportunity, right? It's totally Web2, um, Web2 studio.

I don't know- Exactly how long they've been making the game for, I think it's about five years.

Um, and just, uh, recently in the last six months, they did a Kickstarter for it, and it was the most successful or one of the most successful gaming Kickstarters, um, ever.

And now they're talking about fully launching the game or doing, like, an open launch of the game in the next several months.

So that was a five-year journey to produce, um, to produce a good Web2 title, um, or a title that has the potential to be this, like, awesome breakthrough Web2 title.

When you think about where crypto has been over the last five years, um, the infrastructure stack has radically changed. Um, you know, there were-- the, the wallet experience was way more frictionful.

First you needed the, you needed to buy NFTs to get into the game.

Now we have sort of advancements both intellectually and infrastructure-wise around more free-to-play approaches where you can onboard the user without crypto being a front-end barrier and sort of try to monetize the crypto later on.

You've had major, um, funding disruptions. Um, you had a bull market, then you had FTX and Luna and all that.

You have had distribution point disruptions where only recently can you f- could you finally start using the Apple store and the Google store.

And so for us, the amount of time that most of the capital has come into gaming,

e-even if you didn't have to deal with any of the, the Web3-specific disruptions and necessary business model innovations and, you know, all the, the things that make Web3 special but also harder up front in many ways,

you wouldn't have had enough time to have those many titles, right?

Um, and so the fact that you have just the natural amount of time or a short amount of time, even for a Web2 title, plus the incremental burdens of Web3, um, we think that there's a very strong mismatch in the market between the, the, you know, the, the time that people expect things to take and the time that they actually take.

A lot of that disillusionment, or at least a lot of that expectation setting, has been improperly set, in our view, by people launching tokens much before a game is supposed to launch, and, and that's hard, right?

Because you launch a, a token today, and it takes three years, four years to ship a game. I mean, what can you give that audience to keep them excited?

In, in our view, those are generally not recipes for success, although, of course, exceptions exist.

And, you know, what we hope will happen is there's a bunch of studios, some in our portfolio, many not even in our portfolio, um, have been working patiently on product that is exciting for the last three to five years.

And that next wave of token launches is also a wave of token launches that has more games that come, that deliver with the token some type of excitable, exciting playable content for the player. Mm-hmm.

And one of those games that is in your portfolio and that includes crypto elements is Karate Combat. Karate Combat, um, is very well known in the crypto space itself.

You host events around the world, usually at, at crypto conferences. Why is Karate Combat interesting to you?

So, Karate Combat, we don't think of it as a content and IP bet, although there is, um, a game as part of the experience. Um, for us, that is more of a media property, a, a non, non-gaming content, right?

Basically, Karate Combat is this MMA league, um, competitive with, for example, UFC and, uh, One, uh, PFL, uh, the, the deceased, or I guess acquired, Bellator.

Um, and it uses crypto elements in that the entire league has been tokenized and, and basically all the assets, um, sit within this nonprofit foundation that is governed by the tokens.

And so for us, there is something that's interesting there both in the Web2 side and the Web3 side.

And the way that I would summarize what interests us about this opportunity is MMA is the fifth-largest sport category in the world. It's the one that's growing the fastest. The origins of MMA

are, um, very rooted around jujitsu combat, which mostly happens, um, on the ground, and a lot of audiences, new audiences have a hard time understanding what is going on.

As MMA grows, if you think about the incremental consumer of MMA versus the core consumer of MMA, who's been s- on average, someone thirty-five, 40-year-old male who really has been around for a long time and understands, like, all the elements of the game.

They're a deep consumer. If you think about the incremental consumer, either the next one that you have to acquire or the last consumer that you acquired, um, I think that we can make certain guesses about that consumer.

That consumer is still likely to be a male, um, but they are on average going to be younger.

On average, they're not going to want to see jujitsu and wrestling, which is why, um, if you're at a UFC event or if you read the recaps of whenever you have fights that go to the ground, as, as we would call it, for too long, people boo and people get unhappy.

What people want is knockouts and big kicks and just, like, a lot of action, right?

So you have younger audiences that are gonna be more conditioned to watching things on YouTube and Twitch, wanting more, um, more action, fast-paced fights, more striking, less jujitsu.

And on average, these audiences are gonna be more familiar with gaming elements.

Um, and what Karate does is it has effectively a striking-only rule set, three rounds of three minutes versus, um, UFC's five rounds of three minutes. No jujitsu, no grappling.

Um, it is shot in something that looks like a sunken pit, um, instead of a cage, and it uses these, um, Unreal Engine-based virtual, um, um, special effects where a lot of the fights look like they're happening inside of a video game.

And on top of that, it is streamed for free on YouTube and Twitch. And as a matter of fact, it actively encourages streamers to stream the media for free and be their own commentators.

Um, and we've had, for example, Michael Bisping, who does good work on Twitch streaming MMA content, simply decide on a Friday night, "Hey, I wanna stream the Karate Combat event to my fans," and just be an ad hoc commentator to his audience of six hundred thousand-plus subscribers.

And so we think that it's a very interesting opportunity in Web- Web2 because it's a highly differentiated, um, sports property versus the gorilla in the room, which is the UFC.

Which in our view will forever dominate that core consumer that, that, you know, sees the UFC rightfully so as the pinnacle of mixed martial arts.

And then on the Web3 side, uh, it's a, it's a really awesome opportunity to have a fan-controlled, uh, sport.

Um, for us, uh, we've seen the attractiveness of sports teams globally for, generally speaking, ultra-high net worth individuals, although a few of them are publicly traded.

Um, and this is really an opportunity to go to the crypto community and have a Web3 native sport, where the top token holders, um, can engage in this lossless betting mobile app available on iOS and Android.

And depending on how much of the token you own, um, you can get, uh, special rewards, you can get VIP tickets when you show up, you can get taken to the super VIP area that's by the pits and, and sort of watch the action from up close.

And if you're a top 10 holder, every now and then we'll pick a top 10 holder and fly them out to a fight, and they can have plenty of time with the athletes and the whole, whole experience of being a sports team owner.

Um, and so that's, that, that's basically what the crypto side is delivering. Um, and, and that's interesting on its own as well, right?

And so for us it's, it's really this combination of a truly endemic Web3 sports brand with something that's very interesting on a Web2 product basis alone. Mm-hmm.

A, a, a lot of corporates and, and brands look at gaming and try to incorporate gaming in their, like, consumer experience as part of a campaign or even as part of a brand experience.

Um, a lot of brands are now jumping into Roblox and trying to build games. What would you... What kind of advice would, would you give those corporate leaders and branders? How should they think about gaming?

Is gaming just an engagement tool? Is gaming something, like, an additional channel to gather consumer data? Is gaming much deeper than just a Roblox world? How, how should they approach this space?

Authentically, as brands know that they have to do most things in any new platform, right? Authenticity is always the, the first word you hear, I feel like, in these contexts.

Gaming can be a new channel, and it can be, um, a way of doing shorter, less meaningful interactions, like for example, simple sweepstakes that just get a game, get a brand in front of the consumer really quickly.

And games can also be extremely deep experiences. Making simple things is simpler and it tends to have less impact and less duration retention to it. And making really awesome deep experiences, um, is much harder.

Our view being on the synthetic reality and, and the fact that consumers are going to be spending more and more time online and, and games being a lot of the time where incremental time or the, a lot of the place where incremental time is spent, um, we certainly believe and see and continue hoping for brands to, to really engage the game with that authentic sense of, of, of passion for it and, and meeting the consumer where they are in the way that they want to be met.

Um, like for example, we have a, a portfolio company called Anzu, which is the leading advertising or a leading advertising platform where advertisers can purchase programmatic media inside of game environments.

Um, but if you think about the challenge of that, I don't know, let's say I'm playing, uh, Counter-Strike, um, and I said, you know, we can go and we can put an, an ad in Counter-Strike.

How can you put a, I don't know, a GM logo or even a Razer logo or whatever it may be in the middle of the map, depending on you don't wanna distract the player, and if you put it in, like, a bad corner, maybe something flashes at the wrong time and someone loses a match and they get really angry, right?

There would be a very non-endemic, non-authentic, um, negative i- interaction between, um, audience and brand.

Versus when you have context experts that are, that are really looking inside of these 3D environments and really thinking critically around where to put the media and what should a media look like in, in creating that ad unit in this authentic endemic way, and then making it programmatic in a way that the brands understand, right?

Um, and, and so perhaps it's, you know, when I'm driving down the street and there's a billboard, and instead of that billboard being something completely random, it's actually something that makes sense, and it's like, instead of it being the fake car brand, it's the real car brand, right?

And that's like, oh, that's, that's, like, cool. That's, uh, an interesting surprise for the player, and that's a, a good feeling of the interaction between brand and consumer, right?

Um, and so for us, uh, the, the, the importance is on depth and on respect for the player and in putting yourself in the player's shoes, um, which I think puts a lot of burden in whoever is the internal champion at these brands or whoever they're working with to have a deep consumer-first perspective, right?

I think part of what sets us apart as investors, um, is the fact that we're absolute gaming nerds, and that's how we like to spend our time, and we just play a lot of games.

Um, and I think that for the brands that are investing advertising dollars in the space, um, whether it's directly in-house or who they're working with, but you need to work with someone who can truly tell you how a gamer will feel about how, how that interaction might play out.

And, uh, lastly, before we jump into a very short lightning round is, where do you see the most impact out of all those emerging technologies, whether it's a blockchain, whether it's generative AI, whether it's VR, AR?

What will impact gaming most in the next couple of years, and why?

Prob- Of the three categories you gave me there, probably AI, and the reason for it is because gaming, there are so many places where AI can either make the experience better.

For example, a company in our portfolio called Inworld, which uses generative AI to make non-playable characters, so NPCs, smarter, so that when you're interacting with a virtual character that is giving you a mission, perhaps, um, instead of it being highly scripted dialogue, it's natural dialogue and you're like, "Hey, I'm lost," and they sort of know that they have to behave in a certain way and give you some clues.

And that it's like, "Oh, hi," like, "Where are you lost to?" And they can have this conversation with you, and it just becomes deeper. So you have the examples of where AI will make games better.

And then you have a lot of the faster and cheaper, and faster and cheaper a lot of times are just heavily interdependent, right?

If you think about the amount of time that is spent either in the concept phase trying to arrive at an art style, an art form, or after you've arrived there, you've shipped the game, and now you're doing what we call live services, which is giving the players continuous opportunities for microtransactions through different goods.

Instead of you having to make every sword one by one, you can sort of feed all of your existing assets that were handmade with a lot of time, a lot of artist time, into a model, train the model on that and, and put- basically have it replicate or, um, do adjustments and modifications to those assets in a much, much more scalable and then by consequence, faster and cheaper way.

And then you have, um, gaming engines that will be made AI first, and those will have their own advantages. And so there's just a lot of surface area for AI to, to impact games.

But beyond that, um, or, or when we think about games in the next five to 10 years, when, when we imagine a super robust, vibrant digital experience, whether you got there with AI or not, whether it is heavily using AI or not in the maintenance of that world, um, but you have a digital society at scale.

For thousands and thousands of years, um, societies have deeply cared and benefited from having commerce rights and property rights.

When we give people the ability to transact, to innovate, to be entrepreneurs, and we empower the individual with, with real rights versus a terms of service that delegates all the rights to a, to a publisher, economies grow.

And so in that context, when we imagine AI in service of better games or cheaper games or faster games or whatever it may be, and we imagine the apex of those hits, we see significant opportunity for blockchain to then, uh, be the basis of the economic layer of those games.

And not every game will be a deep economy game, but a lot of them will. And for those games, um, blockchain can really elevate the experience and allow those economies to be even bigger, more efficient, et cetera.

Um, and so we expect a lot of the times the two technologies to work together.

Um, we already see a lot of our Web3 studios actively using AI to build a product in crypto, but certainly the surface area of AI, um, I think across games and across everything is just so high, right? Mm-hmm, mm-hmm.

That's so interesting, Carlos. Uh, we're already at the half an hour mark. I would love to continue. Um, but before we, we end the show, a very quick lightning round. Those are short questions with very short answers.

And, uh, yeah, we'll just start with the first one. Uh, what was your first game? No idea, but I remember playing a lot of GoldenEye on Nintendo 64. Yeah, I remember that too. Yeah, played that too.

[chuckles] What was the best game you've ever played? Sekiro. Uh, what's one surprising or counter it- intuitive insight about the gaming market that you think most people don't know?

The average gamer is 35-year-old plus. [chuckles] What's one game everyone should play? Oh. Uh, oh, man. Angry Birds.

[chuckles] Um, then going from games to books, what's one book everyone should read? How to Win Friends and Influence People. What's the biggest opportunity of gaming?

Getting the other three and a half billion people to start playing games. [chuckles] All right. That was already it. Carlos, thanks a lot again for coming on the show. It was a pleasure. It was super interesting.

Where can people learn more about you, about Bitkraft? At our website, www.bitkraft.vc, Bitkraft with a K. And, uh, yeah, I'm on the website, and my email is [email protected]. Perfect.

Thank you, Carlos, and thank you our listeners. If you enjoyed this, please like it, please, please subscribe, um, and share. We're on YouTube, Spotify, and Apple Podcasts. Thanks a lot, Carlos, and talk soon.

Thank you so much. All right. [upbeat music]