With Consensus 2023 concluded, we’re taking a look at a few more themes that we heard panelists discussing on the metaverse and gaming throughout the conference. We’ve heard from Web3-native builders, as well as game developers and creatives coming from Web2, and collected their insights about the direction of Web3 gaming.
On the final day, many of the themes we discussed in Part 1 of our coverage, such as the power of community in Web3 gaming and the emergent role of AI in the space, were still top of mind. But there were also a number of new trends that came up. Let’s dive in.
Shifting focus off the technology
In our coverage of the Game Developer Conference (GDC) and NFT NYC 2023, game developers working in Web3 consistently cited the need for the industry to shift focus away from the underlying blockchain technology and onto core gameplay and end-user benefits.
This sentiment manifests itself in several ways. Some see it as a terminology issue, advocating for developers in the space to avoid using terms like “NFT” and “blockchain” that create reluctance among potential users.
“If you talk to players about NFT, it has this negative connotation,” said Spencer Tucker, chief gaming officer at Yuga Labs. “But if you just talk about the benefits of digital ownership, they’re much more receptive.”
Max Rabinovitch, CSO at Chiliz, shared a similar experience while discussing his interactions with major sports teams in the digital collectibles space.
“Teams aren’t interested in fan tokens just because I explain what an NFT is,” said Rabinovitch. “They’re interested in ‘How does it plug into the ecosystem and what does it unlock for the fans?’”
Others in the space see it more as a fundamental issue with the philosophy behind products and how teams are thinking about game design. Jason Lake, founder and CEO of Complexity Gaming, observed that “One of the bigger mistakes game developers in Web3 have made is building a game around the technology. You need to first focus on building a really good game and then integrating the Web3 tech as a level-up.”
That idea aligns with our position on Web3 gaming. Forte adheres to the principle that players deserve real ownership over the value they create and put into games. Blockchain technology and tokenized assets are a way to enable players to pursue that goal, but they aren’t the goal themselves.
Careful economy design
Another topic that permeated the conversation at Consensus 2023 was the importance of sustainable economy design in Web3 games. Developers cited failures in economy design as a key factor in the collapse of early Web3 games and discussed how they are thinking about moving past the play-to-earn (P2E) model to set their economies up for long-term success.
During a panel on creating Web3 games that are ready for mainstream adoption, Travis Boatman, founder of game studio Carbonated, explained his team’s initial research into economy design and the lessons learned: “We came away with a fair amount of caution around how play-to-earn and poor tokenomics can poison the enjoyment of the core game.”
It’s an important point. Until now, most Web3 games have centered on financial mechanisms and generating an economy. But every economy needs to be connected to the gameplay itself and support player enjoyment. Poor economy design in Web3 not only results in revenue loss but also directly affects the playability of the game.
Economist and founder of Economics Design Lisa JY Tan stressed the importance of that connection between the economy and the core game loop, saying, “When people think about economies, they think about the secondary market. But for an economy to be successful, there has to be intrinsic value first that is then transacted on those secondary markets.”
Other panelists discussed the complexities of launching in-game tokens and the risks that they introduce to game economies. Some, like Carlos Pereira, partner at BITKRAFT Ventures, see tokenized game assets built on NFTs as a safer first step, with on-chain game currencies requiring more caution and time.
“We’re much more comfortable with NFTs in the early stage of a game,” said Pereira. “We’re quite hesitant to incentivize our portfolio companies to launch a token. You need the right tools, data, experimentation, and a few years of economy design and learning before rolling out a token.”
When asked what they were most excited about in Web3 gaming, or why they decided to move from Web2 to Web3, a common response from panelists was just three letters: UGC. While user-generated content has been part of gaming since the very early days, it has seen a huge surge in popularity over the past decade. Minecraft and Roblox have hundreds of thousands of creators and have found massive success by enabling them.
The digital ownership and automated revenue sharing enabled by Web3 are a perfect fit for games looking to introduce UGC. Creators can maintain full ownership over their creations, licensing them to developers or the community and earning automatic revenue when they are used or traded. The developers at Consensus 2023 were all exploring the potential for Web3 to supercharge UGC in some way or another.
“For me the most exciting aspect is UGC,” said Katrina Wolf, product director at Laguna Games. “That was when blockchain in games really clicked for me. There are so many creative people that don’t work for games companies, but could be contributing to the industry.”
For most of the developers, the excitement around UGC wasn’t driven by the idea of earning a share of the total revenue generated by creators. Instead, it was about being more connected to their communities and having them feel more invested and engaged with the game and its IP.
“I’m really interested in the social aspect of Web3 in gaming,” said Colin Brady, COO of AMGI Studios. “We have community members creating for us and engaging, and we’re actually writing them into our stories and bringing them into the production process as partners.”
Web3’s ability to drive not just economic alignment, but end-to-end alignment between developers and player communities is exactly why Forte is building in the space. Early on, we saw the potential for digital ownership to bring developers, creators, and players together in completely new and exciting ways that benefit everyone.