Missing my WoW days..

For the past few years of my web3 career, I have been fortunate enough to be working in web3 gaming, easily the most fun and interesting vertical in the crypto industry! (My own opinion :P)

In 2023 I had the chance to work for a gaming company called Wemade with 1800 colleagues and the 4th largest gaming company listed on the KOSDAQ. They started a blockchain subsidiary called Wemix, a EVM compatible L1 which they used to host their Web3 enabled games like Mir4 and Night Crows which were commercially very successful titles and also created an ecosystem to help other studios increase their revenue with blockchain technology.

Fast forward to 2024 I am now at immutable, a Web3 gaming focused company that is spearheading adoption of blockchain games by the masses with the largest Web3 Gaming ecosystem. They recently launched their zkEVM L2 with Polygon and made amazing partnerships with the likes of Netmarble, Korea’s largest listed game company, Ubisoft who are famous for titles like Assassin’s Creed and many more amazing game companies.

In both these companies, my job was to form commercial partnerships with Web2 and Web3 game studios to convince them to work with Wemix and Immutable. After speaking to about 100 game studios, here is what I have learned!

I think that sometimes game studios get too excited at all the cool stuff that web3 brings such as Tokenomics and NFTs that they forget why they are doing all this in the first place (other than trying to fundraise). The key focus must always be on user experience. Once that becomes the focus, everything falls into place. Do your players benefit from you having a token? How does the NFT system change the gameplay? Are you increasing retention rates unsustainably by handing out token (temporary incentivisation) or increasing it organically with Web3 features like providing ownership?

To be fair, there are dozens of game genres and every game has their own economies and mechanics, it is not always very clear what are the best ways to introduce web3 features and how to do it well. However the best studios I have spoken to all had one thing In common, they actually cared about their players and I could clearly see the USP they were presenting because it is easy to understand why this all needs to exist from a player’s perspective. 

Some studios use web3 as a strategy to grow their web2 revenue while for some studios, web3 is the core revenue generator. For example, Mir4 allows players to convert their characters into NFTs to be listed in a public marketplace. This is not a new feature, people have been selling accounts of their favourite games in the blackmarket since forever but by letting users sell via proper channels actually reduce scams and incentivises them to see their characters as legitimate assets, the stronger their character, the more valuable they become. This opens the floodgates to increased web2 spending habits for in game purchases.

Other titles like Gods Unchained deploy NFTs as their core business model, focusing on ownership, creating new expansions, and allowing users to discover new metas to create demand for their collection and taking a small cut on all sales for a sustainable revenue stream, GU has amassed $400million of volume since 2021 and is still going strong.

Tokenomics makes more sense for certain genres and less for others. Based on my assessment, the more gameplay loops that exist within a game, the better the tokenomics will have a chance of surviving long term. This is because it gives more meaningful choices to users to decide what they can do with the token. Meaningful choice create a balance between buyers and sellers, it means that players have to think of how holding or selling the token will benefit them in the short or long term.

Let’s say your token is a key resource needed to upgrade your weapons, the stronger your weapon, the more content you can clear and the more content you can clear, the more tokens you can acquire. Users are now faced with a choice, to sell the tokens for short term gain or to invest in their character so they can farm tokens more efficiently in the future. This is an organic process which is seen in games like World of Warcraft, with the natural introductions of gold farmers purely because of demand from actual players.
 
 There must be a strong economy within a game that fuels and facilitates growth. I personally feel MMORPGs as a genre has really good fit with tokenomics but it is yet to be proven!

Game studios must ensure that the introduction of web3 features like Tokenomics and NFTs directly enhances the gameplay and benefits players. This means focusing on aspects such as increased ownership, reduced fraud, and fostering a robust in-game economy.

Successful examples like Mir4 and Gods Unchained demonstrate how NFTs can transform player engagement and revenue models, whether by enabling character trading or establishing NFTs as core assets. For studios considering tokenomics, the key lies in creating meaningful gameplay loops that incentivize player investment and decision-making, similar to traditional game economies but now enhanced through blockchain.

Lastly, the potential for tokenomics is particularly promising in genres like MMORPGs, where the concept of in-game economies is well-established. However, the effectiveness of these features ultimately hinges on maintaining balance and aligning incentives between players and developers. By focusing on these principles, game studios can leverage blockchain technology not only to innovate but also to create lasting value for their gaming communities.

I really enjoy my job as it gives me the chance to explore many different ideas of how web3 technology is helping to improve various parts of the gaming experience and also how they help increase revenue streams for game studios while increase user retention. I can honestly say that Web3 gaming is maturing in a very fast pace as we see lots of polished and high quality games coming into the space. I hope that these 3 simple points gave some insight to you, let me know if it was helpful and would love to chat with any game studio or individual exploring web3 gaming!

lets connect on linkedin: https://www.linkedin.com/in/malcolmchangcy/