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There are many people who want blockchain games to last and perform. And 2023 is likely to be the year we get answers about whether high-quality games will appear using the technology.
Urvit Goel, vice president of games at Polygon, recently spoke to me about how the blockchain protocol company is doing its best to make that happen.
“Specifically in gaming, 2023 will be the year when blockchain and gaming will be judged heavily for all the promises made about great games,” said Doel. “We need to start seeing some of those games. There will be enough to make a decision on quality. Many of these stealth-mode builders have not launched a product yet.”
He notes that Polygon is at the forefront of Web3 gaming with the recent integration of the popular NFT marketplace Magic Eden and top games in the industry like The Sandbox, Dencentral Games and more.
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As the collapse of FTX turned the industry back, DappRadar reported that the Web3 blockchain gaming sector has seen continued investment of more than $500 million between October and November, even after the FTX debacle.
“Our focus will be on helping these builders get to market, whether that be with broad tooling to make it easier to launch or new technology for scaling,” said Goel.
Goel joined Polygon about a year ago and first dived into Web3 after ten years of service at Amazon in gaming-related roles. He is head of games at Polygon, aiming to drive adoption of blockchain technology by game developers. He reports to Ryan Wyatt, who previously led YouTube Gaming and now oversees all vertical industries at Polygon.
A $100 million fund
Goel’s job is to connect developers with technology and marketplaces to build better products. Polygon has set up a $100 million fund to invest in Web3 gaming and other verticals, using much of its own money since it raised a $450 million round of funding.
Goel believes the blockchain game industry is moving closer to maturity. In the early years, during the bull run for blockchain and cryptocurrencies, people brought up very simple experiences that took advantage of the financial opportunity, but were considered a lot of noise by gamers.
With the bear market going, Goel believes the “real builders” who have been at work for several years will persevere and remove much of the noise.
“What’s left are the high-quality builders in the space who are committed to building great and fun experiences for customers,” said Doel. “These are well-funded teams that have the runway to build great games. Or it’s big Web2 developers who have Web3 initiatives and can continue to build. I don’t see any delay.”
Regarding the competition between blockchains, he believes we will see many successful blockchains. He does not view others as competitors. Rather, its main task is to evangelize the technology so that more people are willing to adopt Web3 gaming. Different blockchains try different experiments.
“A rising tide lifts all boats because we are in this phase of the mission where there are many trials,” he said. “We clearly saw what didn’t work. And as we continue through the trials, we can find out what it is that will work. It’s similar to how mobile games got off the ground. We’ve only seen the first iteration. The amount of chains there are actually helpful.
The FTX crash is definitely a negative event hanging over the industry, Goel said. He said it is worth noting that there is a difference between a centralized exchange versus enabling real blockchain technology. It will take months for the effects of FTX to unfold, he said.
The $100 million fund is an ecosystem fund that focuses on multiple industries, including gaming, where the company commits capital to game builders. The fund is still operational and the company is looking at the builders applying for it. Goel said the fund has made hundreds of investments to date.
“The thinking behind it is that there are a lot of Web3 native builders out there and they need support and capital,” he said. “We are in a fortunate position to be able to commit a portion of our treasury to help the ecosystem. It gives builders confidence to see that we support them.”
Other funds are also pouring money into blockchain games, which helps because Polygon does not intend to fund blockchain game studios entirely on its own.
Goel said that blockchain games are already going strong as the number of active wallets has consistently increased over the past few months. And games account for a large portion of all blockchain transactions, according to DappRadar.
“The industry is down, but it’s held up pretty strong,” he said. “The thesis is that players are going to play games whether we are in a bull market or a bear market. The other piece is that there are a lot of free digital collectibles ready to drive the top of the funnel.
It reminds him of the early days of free-to-play games, when players eventually started making premium purchases.
“We are still in the early stages of blockchain gaming. So if you zoom out a little bit, it’s like making predictions about mobile games in 2000 [before the iPhone came along] That was difficult,” he said. “The focus is on helping developers get to market. Consumers will tell us what they like.”
Negative gamer response
Goel acknowledges that many Western gamers have spoken out about their negative reaction to blockchain games as scams and financial games rather than fun.
“A lot of the focus has been on technology versus the available experiences,” said Doel.
He noted that there is a “cultural movement” around owning profile photos or JPEGs of monkeys that cost hundreds of thousands of dollars. He said people don’t want to spend that kind of money. But he does believe that players would rather own the assets they pay for than just rent them. If players invest in their digital assets, they should be able to sell or trade them to gain some benefit, he said.
“The challenge today lies in the fact that [blockchain] games that companies have been able to show are just not great,” he said. “You have to take a leap of faith and look further.”
Ten years ago, there was also a big backlash against free mobile games, he said. But it opened up games to the gaming industry and is now the bulk of gaming revenue, he said. He noted that free-to-play games first gained popularity in Asia, where consumers did not have a negative view of collectibles.
“At the end of the day, it’s the great experiences that matter,” he said. “No one cares about the technology as a consumer. It’s about what you make possible for me. As an industry, we need to be better at that.”
An emerging market
I wrote about the success of Million on Mars, which has a profitable hardcore Mars exploration simulation game with blockchain elements. But the player base is still small at around 10,000 players.
Goel said he’s not thinking about different segments of the blockchain gaming population just yet because the industry is still so small. There is a contingent of crypto savvy blockchain enthusiasts out there and not enough blockchain games on the market just yet. Goel believes that the game startups and indie studios will take the lead in blockchain games as they are the ones who are not afraid to adopt new technology.
And inventing new types of games is better than launching the blockchain equivalent of a Call of Duty game, he said.
“I think you will continue to see a disproportionate amount of money going into blockchain games,” he said. “I am optimistic about blockchain games. At the end of the day, there are more shots on target.”
Of course, not everything goes swimming. Square Enix CEO Yosuke Matsuda announced that in June he will step aside and promote a younger executive to the top position. He was a strong supporter of blockchain games and sold off the company’s western studios to focus on new technologies. (It is not clear whether the new CEO will also focus on blockchain games). The number of active wallets in the blockchain is still quite small. And funding could dry up if the economic downturn hurts companies even more.
The blockchain companies also compete with each other for gaming clients, with ImmutableX poaching studios from both Solana and Polygon and so on.
Goel noted that some of the largest companies in South Korea and some of the largest gaming companies in Japan are still taking their intellectual properties into the blockchain space.
“We are starting to see some of those dominoes falling. And what does that mean for Western game developers? I think that remains to be seen. But this industry is very global,” said Doel.
Meanwhile, the industry needs to improve its infrastructure, be it marketplaces, data analytics, wallets or payment solutions. Game companies shouldn’t have to commit their internal staff to that kind of work.
“We want to work more closely with developers and help them,” he said.
The blockchain metaverse
Regarding the intersection of blockchain gaming with the metaverse, Goel said that gaming and the metaverse are very closely related, as some of the earliest metaverse experiences are games where people are willing to engage with the content for a long time.
“I think the reverse trend will continue,” he said. “Of course there are big investments from companies that put in tens of billions of dollars. Then there are the companies building in Web3 where they believe in the decentralized metaverse. We will see more big companies coming into this space, and I believe there will be gamified experiences and games within the metaverse. But we haven’t seen a real and impactful metaverse yet. It’s going to take time.”
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