What does Web3 mean for video gaming? Dialect

What does Web3 mean for video gaming?

BY COLIN CAMPBELL

NFTs, Metaverse, Blockchain … and all that. 

As a concept, Web3 is best thought of as medicine. Like a handful of multicolored pills, each solution is part of a larger diagnostic that aims to heal all that’s dysfunctional with today’s model of digital monetization.

According to Web3 boosters, the individual pharmaceuticals – Blockchain, NFTs, Metaverse, crypto etc. – collectively amount to a cure for the disease of centralized digital status quo, as represented in Web 2.0’s flawed titans like Amazon, Facebook, Twitter, and Google. 

In Web3, individuals have more power, and corporations have less power. Instead of pouring into the coffers of big companies, value flows to creators and innovators. Web3 is a promise of a hyper-healthy future in which you and I are stronger and better; freed from the toxic fumes of Big Tech. 

The reality is still a long way from the vision. Uncertainty and speculation is rife. But however this plays out, video games are sure to be a central part of Web3.

a Quick Game-Friendly Glossary

Here’s a quick back-of-the-bottle prescription-description of each element:

The Metaverse – a singular or a multitude of virtual worlds where we play video games, buy things, socialize, create art, make money, chase fame and self-idealize. For optimists, metaverses are decentralized, free, and owned by their users. For pessimists, they are very-much centralized, and owned by corporations. Facebook (aka Meta) is spending $1 billion to build its own metaverse, while the city of Seoul is building an online world in which citizens can wander around, and interact with services, like booking bus rides. 

Blockchain – You own some old packaged video games that you can sell on eBay. But you also have many digital games that you bought on Steam or Nintendo eshop, that you cannot ever sell because you don’t really and truly own them. Blockchain posits a situation in which you own digital assets that you can buy and sell. The word describes the technology that logs and regulates all these transactions and, in theory, negates a cut-taking middle-entity like eBay.

NFTs – The Collins Dictionary’s 2021 word of the year; NFTs are digital assets that can be bought and sold. Think of them as pieces of art. The most valuable are the true “originals,” ownership of which carries prestige and the potential for sell-on profitability. Others are limited editions which also have potential market value, or not. 

Gaming NFTs – Unique or limited edition upgrades, in-game weapons, outfits or player-cards. To take one theoretical example: in EA Sports’ FIFA, anyone can get hold of the Christiano Ronaldo card if they play for long enough, whereas in an NFT-version of FIFA, there might only be ten Ronaldos in existence. If you own one, it makes you look very cool, while also allowing you to win more games. This scarcity creates high levels of income for the game’s creators. 

Cryptocurrency – Alternative currencies, decoupled from national government and banking institutions. Metaverses in which NFTs are traded via Blockchain could make exclusive use of a single cryptocurrency, or a multitude of them, or plain old dollars and cents. 

the Skeptical Approach

To return to our medicinal analogy, Web3’s cocktail of fixes ought to be ingested with a tall glass of skepticism. 

Major problems dog this supposed cure-all. The first is that Web3 is most enthusiastically touted by a dubious motley of tech utopians and in-group profiteers. Extent NFTs and cryptocurrencies have taken on the cloud-like shape of a bubble or maybe it’s a pyramid, but either way, it’s ominous. The question stands: Is this pyramid an eternal fixture of the phenomenon, or is it just an early stage through which we are obliged to pass?

Web3’s more articulate boosters spend much of their time assuring us that the whole thing is going to be just marvelous and let’s not get hung up on all those irrelevant scammers and dreamers. 

Critics of Web3 say otherwise, and they abound, especially among the gaming media. They make reasonable points. A common pushback is that limited edition boosts will, by definition, be expensive, and will likely create imbalance in video games, thereby ruining the experience for everyone else. It’s notable that Steam has banned NFTs. 

To take an illustrative but unlikely scenario, say Epic auctions one single smart bomb for Fortnite. Elon Musk buys it for a million dollars. Musk can kill all opponents, instantly, at any point, any time he plays Fortnite. After a week or so, he tires of his latest toy, and sells the bomb to the next bored billionaire.

Boosters argue such scenarios are so much nay-saying. They make the case that existing games probably won’t accommodate in-game catalyst NFTs, but that games tailored for people who want to try to make money while they have fun will find massive audiences. 

The Minecrafts and Fortnites of the future will allow players to become rich and famous in their own right, as they create amazing in-game objects or attain notable achievements. Instead of game-adjacent streamers getting famous, in-game personalities will be the stars of tomorrow. 

For Web3’s evangelists, it’s not about limited-edition football cards or million dollar mega bombs. It’s about you and me being rewarded for creating stuff that the audience decides makes the game better.

Current play-for-profits

Video games and virtual play spaces that gesture towards Web3 exist already. Decentraland is a 3D world in which players can explore art galleries, museums and concert halls. They can also buy and develop parcels of land. When the game beta-launched in 2017, these parcels were selling for around $20. Last week, a large plot of land was bought for $2.4 million-worth of in-game crypto called Mana. 

The Sandbox is another world in which brands and video game designers can buy “Land” on which they place game experiences and dioramas which can be monetized, or used for marketing purposes. An in-game luxury yacht was recently sold for 149 Etherium, which was worth more than $650,000 at the time of purchase. Anyone can join and play elementary quests, but most activities are reserved for players who have spent $10,000 on an NFT Alpha Pass. 

The Sandbox (2014) [Pixowl]

Sorare is a fantasy football (soccer) online game in which players use cryptocurrency or credit cards to buy the cards of professional players. Scarcity is built into the game, so there are a limited number of cards for certain players. Winning tournaments yields financial prizes in the form of valuable cards, while players can sell cards to other buyers. As of September, Sorare reported $150 million of sales for the first nine months of this year. A unique Christiano Ronaldo card sold for more than $287 million.

Where next?

Although these video game worlds promise fun and profitability for smart players, their model still funnels much of the profits back to the game-maker. Their model is to take gameplay standards already out there, and add a for-profit motive and mechanic. They are boomtowns in which the hardware store owner is guaranteed to get rich, while incoming speculators are betting on their own smarts, and never-ending meta-growth. 

The reality is….a true Web3 game is yet to be invented. Its main features should be a genuine creative play-space in which individuals can invent, build, and sell things that others wish to buy, not merely as bubble investments, but as artefacts that make the game more engaging and enjoyable.

The game’s publisher must be prepared to allow the vast majority of revenues to stay within the ecosystem, taking a much smaller slice of income than the current model. As one publisher told me, “we have to stop squeezing the fruit for every last drop, and start building orchards.” The pay-off comes with scale. A game-world in which thousands of people are making a living, and millions of people are having fun, is something that can and should change the world for the better. 

As things stand, it’s not clear how this world can come into being. Investors are interested in returns based on existing models. When asked about Web3, current leaders in game publishing generally say it’s something they’re interested in pursuing, but it’s unclear as yet whether or not this line is a sop to shareholders, or the first inklings of actual products on the drawing board. It seems unlikely that the current generation of game publishers will spend lavishly on products that undermine their own business models. As with previous catalysts (the internet, digital retailing, esports), innovation will likely come from newcomers.

Some companies, especially those with a rich history of cool IP and a need for short term revenues (Atari comes to mind) are out there now, selling NFTs to fans and investors. But the sustainability of this line of business is unknown. It may turn out to be a Dutch tulip mania. Larger companies are understandably wary. 

Philip Rosedale is someone well-placed to make sense of the chaos. He created Second Life, an early metaverse precursor in which players were encouraged to hang out in a digital world. Launched 18 years ago, Second Life has long since passed its heyday, and Rosedale is no longer with publisher Linden Labs, but he has views on Web3. 

He says there are many obstacles, including human expectations, technology and scale. In an interview with IEEE.org, he noted that kids are growing up today who have spent a lot of time in creative virtual worlds like Roblox, but that “most adults are not yet comfortable engaging with new people, or engaging socially, in a multi-player context online.” 

He added: “For any of these metaverse ideas to pan out, the content, the avatars, the buildings, the experiences, the games, they need to be entirely buildable by a really large number of people in much the same way that websites were buildable in parallel by a lot of people at once. We have to do the same thing with the metaverse, and there are not, as yet, toolkits and systems that would enable that.”

Second Life (2021) [Linden Labs]

Few companies in gaming can afford to take on the kind of risk that Facebook is making, and even fewer have the kind of reach provided by the world’s leading social media platform. Given the obstacles of scale, of uncertainty, and of reputation, caution is the watchword in gaming circles. But it’s certain that various contingencies are being drawn up by industry bigwigs who are right to fear even the suggestion of a major re-shaping of the business.