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There are many people who want blockchain games to survive and deliver. And 2023 will likely be the year we get answers to whether high-quality games will come out using this technology.
Urvit Goel, vice president of gaming at Polygon, recently spoke to me about how the blockchain company is working hard to make that happen.
“Especially in gaming, 2023 will be the year where blockchain and gaming will be heavily judged on all the promises of great games,” said Goel. “We need to start watching some of these games. It will be enough to start determining the quality. Many of these stealth builders haven’t released any product yet.”
He notes that Polygon is at the forefront of Web3 gaming with its recent integration of the popular NFT marketplace Magic Eden, as well as industry-leading games like The Sandbox, Dencentral Games, and more.
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While the collapse of FTX set the industry back, DappRadar reported that the Blockchain Web3 gaming sector saw further investments north of $500 million between October and November, even after the FTX debacle.
“We’ll focus on helping these builders get to market, whether it’s through broad launch tools or new technology to scale,” Goel said.
Goel joined Polygon about a year ago, diving into Web3 for the first time after a decade at Amazon in gaming-related roles. He serves as the head of games at Polygon, a company whose goal is to support the adoption of blockchain technology by game developers. He reports to Ryan Wyatt, who previously led YouTube Gaming and now oversees all verticals at Polygon.
A $100 million fund
Goel’s job is to connect developers with technology and marketplace platforms to create better products. Polygon set up a $100 million fund to invest in Web3 games and other industries, using much of its own money since raising a $450 million funding round.
Goel believes that the blockchain gaming industry is coming of age. In the early years, during the blockchain and cryptocurrency boom, people offered very simple experiences that exploited financial opportunities, but were perceived by players as hype.
Goel believes that during a bear market, “real builders” who have been working for many years jostle and clear a lot of noise.
“What’s left are the high-end builders in this space who are committed to creating great and fun experiences for customers,” said Goel. “These are well-funded teams that have the catwalk to make great games. Or it’s the great Web2 developers who have Web3 initiatives and can continue to build. I don’t see a slowdown.”
When it comes to cross-blockchain competition, he believes we will see many successful blockchains. Does not see others as competition. Rather, the main task is to evangelize the technology so that more people will be ready to embrace Web3 games. Different blockchains are trying different experiments.
“The high tide lifts all the boats because we’re in that phase of the mission where there are a lot of trials,” he said. “We saw clearly what didn’t work. And if we keep trying, we might find what works. This is similar to how mobile gaming took off. We’ve only seen the first iteration. The number of strings is really helpful.”
The FTX crash is definitely a negative event looming over the industry, Goel said. He said it’s worth noting that there’s a difference between a centralized exchange and true blockchain inclusion. Fallout from FTX will take months to develop, he said.
The $100 million fund is an ecosystem fund that focuses on multiple industries, including gaming, where the company provides capital to game developers. The fund is still operational and the company is looking for builders to apply to it. Goel said the fund has made hundreds of investments so far.
“The thing is, there are a lot of native Web3 builders who need support and capital,” he said. “We are lucky to be able to use part of our vault to help the ecosystem. It gives builders confidence that we support them.”
Other funds are also investing money in blockchain gaming, which helps as Polygon has no plans to fund blockchain gaming studios on its own.
Goel said blockchain gaming is already going strong as the number of active wallets has steadily increased in recent months. According to DappRadar, gaming accounts for a large part of all blockchain transactions.
“The sector has gone down but is holding up quite strongly,” he said. “The thesis is that players will play games whether we are in a bull market or a bear market. The second element is that there are plenty of free digital collectibles ready to go to the top of the funnel.”
It reminds him of the early days of free-to-play, where players finally started making premium purchases.
“We are still in the early stages of blockchain-based gaming. So if you zoom out a little, it’s like you’re predicting mobile gaming in the 2000s [before the iPhone came along] It was difficult, he said. “The focus is on helping developers get to market. Consumers will tell us what they like.”
Negative reaction from players
Goel admits that many Western players have been vocal about their negative reaction to blockchain gaming as scams and financial games rather than fun.
“A lot of attention has been given to the technology and experience available,” said Goel.
He noted that there is a “cultural movement” around having profile pictures or JPEGs of monkeys that cost hundreds of thousands of dollars. He said people don’t want to spend that kind of money. However, he believes that players would rather own the assets they pay for than just rent them out. He said that if players are investing in their digital assets, they should be able to sell or trade them to get some benefits.
“The challenge today is that [blockchain] the games that the companies have been able to show are just not great,” he said. “You have to take a leap of faith and keep looking.”
He said that ten years ago there was a big backlash against free-to-play mobile games. However, he said that he opened up games to the gaming industry and is now the largest part of gaming revenue. He noted that free-to-play games have gained priority in Asia, where consumers do not have negative attitudes towards collectibles.
“Ultimately, it’s the great experiences that count,” he said. “No one cares about technology as a consumer. It’s about what you make possible for me. As an industry, we need to do a better job on this.”
A fledgling market
I wrote about the success of Million on Mars, which has a profitable hardcore Mars exploration simulation game with blockchain elements. But its player base is still small at around 10,000 players.
Goel said he is not yet thinking about different segments of the blockchain gaming population because the industry is still so small. There is a contingent of blockchain enthusiasts familiar with cryptocurrencies, and there are not enough blockchain games on the market yet. Goel believes that startups and independent game studios will lead the way in blockchain gaming because they are not afraid to adopt new technologies.
He said inventing new types of games is better than launching the blockchain equivalent of Call of Duty.
“I think you will continue to see disproportionate amounts of funding allocated to blockchain games,” he said. “I am optimistic for blockchain games. There are more shots on target at the end of the day.
Of course, not everything goes hand in hand. Square Enix CEO Yosuke Matsuda has announced that he will be stepping down and promoting the junior director to the top job in June. He was a big proponent of blockchain gaming and sold the company’s western studios to focus on new technologies. (It’s unclear if the new CEO will also focus on blockchain gaming.) The number of active wallets on the blockchain is still small. And funding could dry up if the economic downturn starts to hurt businesses even more.
Blockchain companies also compete with each other for game clients, with ImmutableX poaching studios from both Solana and Polygon and so on.
Goel noted that some of South Korea’s biggest companies and some of Japan’s biggest gaming companies are still moving their intellectual property into the blockchain space.
“We’re starting to see some of these dominoes fall over. And what does this mean for Western game developers? I think that remains to be seen. But this industry is very global,” Goel said.
Meanwhile, the industry needs to improve its infrastructure, whether it’s markets, data analytics, wallets or payment solutions. Gaming companies should not be forced to dedicate their internal staff to this kind of work.
“We want to work more closely with developers and help them,” he said.
Regarding the intersection of blockchain games with the metaverse, Goel said that games and the metaverse are very closely related because some of the earliest experiences of the metaverse are games where people want to stay engaged with the content for a long time.
“I think the metaverse trend will continue,” he said. “Of course there are big investments by companies that are investing tens of billions of dollars. There are also companies building Web3 where they believe in a decentralized metaverse. We’ll see more big companies enter this space and I believe gamified experiences and games will emerge in the metaverse. But we haven’t seen the real and impressive metaverse yet. It will take some time.
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