Questions for Web 2.5 Games
Summary of Maverick's Essay "Our Questions About Web 2.5 Gaming”
TL;DR
To achieve Web 2-level game quality, focusing excessively on aspects like gameplay, graphics, and story may lead to the failure of reaching Web 3 game goals, such as tokenomics and decentralization. This could result in the launch of ambiguously positioned Web 2.5 games.
Major gaming companies tend to concentrate on game genres like MMORPG (Massively Multiplayer Online Role Playing Game), FPS, and MOBA because the Total Addressable Market (TAM) is the largest in the existing gaming market.
However, transitioning complex in-game economies, like those in MMOs, to open token-based economies is challenging, and there aren't many proven success cases. Therefore, starting with less complex game genres and learning through trial-and-error may be more economically viable option for Web 3 game developers.
Introduction
Maverick is a research and investment platform company with a cryptocurrency-friendly nature. They have published an in-depth article titled "Our Questions About Web 2.5 Gaming," which addresses the issues faced by Web 2.5 games. However, Maverick aims for Ultra-Liquid Crypto Capitalism, which may lead to them expressing somewhat relatively radical opinions.
This report aims to summarize the more objective, game-related insights behind Maverick's philosophy. Please note that the content of this article may differ from the original claims. If you are interested in understanding Maverick's precise views, we recommend reading the original article.
Blockchain Games vs. Blockchain with Games
Historically, the gaming industry has been considered a fast adopter of new technologies and trends compared to other sectors (e.g., cloud computing, VFX). Furthermore, most current Web 3.0 participants agree that the gaming industry is the best fit for blockchain's utility and value. The relationship between blockchain and gaming has two main aspects:
Games powered by blockchain: The aim is to launch games that incorporate concepts like trustlessness and permissionless ness, using distributed ledger technology to decentralize the centralized gaming industry and grant digital property rights to gamers.
Blockchain powered by games: The goal is to partially address some of the problems in the current gaming industry by leveraging blockchain technology in a limited manner.
At first glance, these concepts might appear similar, but the former focuses on "games" at its core, while the latter centers around the "blockchain." Generally, we can consider advanced Web 3 games as "blockchain"-centric games, while Web 2.5 games are transitional concepts that still focus on "games" but incorporate elements of crypto.
Maverick visualizes the relationship between games and blockchain as described above. The X-axis represents game genres, while the Y-axis represents the elements required for Web 3 games. Additionally, the numbers in each cell represent the number of attempts made by relatively successful projects in the Web 3 industry. For example, the circle located in the bottom-left corner (P2E, Tokenomics) has a number 2, representing the combined successful attempts of Axie Infinity and StenN.
So far, the games that have been released have only been experimentally conducted in the fields of P2E, Fully On-chain, Casino, and Strategy games, without producing a sustainable model. However, many large and small Web 3 and Web 2.5 game companies continue to develop and launch games to secure more green circles on the diagram.
As collective know-how, talent, experience, best practices, and research accumulate from these efforts, it is expected that gradually successful, sustainable models will emerge. This expectation is not limited to the Web 3 industry but applies to all sectors.
As seen above, the major Web 2.5 games currently in development or slated for release are primarily focused on the yellow area. This indicates a concentration on popular genres like MMO, MOBA, and FPS, which are representative game genres in the traditional Web 2 industry that can achieve over a million users. Additionally, Web 2.5 game builders are focusing on gameplay and tokenomics in these genres while exploring possibilities related to managing and operating open economies within the games on a limited basis.
1. Over-Investment in safe zone
As mentioned earlier, Web 2.5 games are focusing on game genres such as MMO, RPG, FPS, and MOBA. However, these games tend to prioritize gameplay and tokenomics in their development, neglecting other essential Web 3 game elements like decentralization, ecosystem development, and GTM. This makes it challenging for them to become true Web 3 games, and they struggle to differentiate themselves from other Web 2 games in a highly competitive market (this is Maverick's opinion).
The reason they focus on genres like MMO, RPG, FPS, and MOBA is that these genres possess the largest Total Addressable Market (TAM). As a result, many crypto game studios and investors concentrate their resources on three key elements - data, artwork, and gameplay - to enhance the overall quality of the game and preemptively capture market share within the TAM.
However, not every game needs to have high-quality artwork and gameplay to be successful. In various genres, such as board games and strategy games, factors like economic viability and in-game economic design are considered more competitive than graphics. Moreover, these factors align well with crypto elements. As a result, Maverick suggests that it would be wiser to invest in genres that can test cryptocurrency economies and achieve gradual progress, rather than investing in and creating AAA games with ambiguous token economies by allocating limited resources.
2. Importance and Challenges of Open Economic Design
Web 2.5 games aim to create a sustainable economy, generating new revenue by collecting transaction fees within the game. This has the advantage of creating synergy, as both players and operators seek higher profits. Moreover, for publicly traded game companies that need to achieve continuous revenue growth, building an open economy hastily can be a somewhat risky decision. Particularly, MMO-related games have the characteristic of frequent transactions, making them ideal candidates for synergy if an open economic system is established. However, as indicated by the yellow-shaded area (Open Economy Frontier) below, there are several difficult challenges to overcome in order to achieve success.
Complexity: Creating a sustainable economy is not simple. It requires a variety of complex logic, including various tokens or NFTs at different levels or contexts.
Liquidity: To supply sufficient liquidity to the in-game market, there must be enough transaction activity. Securing enough players is essential, as transaction activity can be calculated by [DAU x average daily transaction volume].
Preventing Abuse: Open economies include the possibility of abusive behaviors such as exploitation and misuse. It is necessary to consider measures to prevent these actions and determine the responsible party.
Governance: In traditional economies, the central bank and national treasury department manage the country's economic system. However, in traditional games, the operating team manages the game's economy. A governance system is required that is agreeable to all parties involved and reconciles with the ultimate ideology of Web3.
The challenges mentioned above are not easily solved, but theoretically, there are many solutions available. Efforts are needed to apply various solutions such as AIGC (AI Generated Content) players, transaction time limits, DAOs, etc., through trial and error, in order to find the best possible approach.
However, for MMO games in particular, starting with simpler game genres (the orange shaded area, "More open economy frontiers") may be more economically viable and increase the likelihood of success, as the costs of trial and error can be prohibitively high. This could also provide users with time to adapt to Web3.
3. Shifts in Game Trends
Recently, the trend in games has shifted from immersive game worlds and storylines to fast-paced and quick-match games. According to a report by Unity, desktop, and console gaming are gradually transitioning into mobile gaming, and the average game session is getting shorter.
However, adding Web 3 elements to the game itself adds complexity to the game. If a tokenization layer is added to a game that already consists of several layers, the game may become more complex and longer, potentially causing dissatisfaction for modern gamers who prefer fast and simple experiences. In other words, it may be a choice that goes against the current trend of preferring simple games.
Conclusion
Many companies are currently focused on transitioning popular Web 2 game genres to Web 2.5 games. However, there are many challenges to making these games competitive with existing Web 2 games. In particular, applying token economics to Web 2.5 games or winning players to participate in them is proven to be difficult.
Therefore, Maverick suggests that developers should focus on simpler game genres and learn through repeated trial and error to develop successful models. Since there are no widely recognized success stories in the market yet, no one can provide a clear answer. Maverick also suggests that economic management is more important than Tokenomics and Gameplay and that it is necessary to consider how to reconstruct the entire game lifecycle through blockchain technology.
At Tiger Research, we partially believe it is important to go through a relatively economical trial-and-error phase through casual game genres. However, in the long run, it is necessary to create large-scale games that can provide true "fun" and can appeal to the utility and necessity of Web 3 games to achieve mass adoption of Web 3 games. Currently, more than 100 relatively casual games are onboarded on the Wemix platform, a blockchain platform in Korea, but except for Mir4, it is difficult to find meaningful concurrent users. Therefore, while learning lessons through trial and error is important, the need for a major AAA-level game that can represent the industry is also crucial (Somewhat like a iPhone’s debut).