Author: Fiona , IOSG Ventures
We are currently in the process of transitioning from focusing on Infra to focusing on users. The reasons are:
1) Just like DeFi and GameFi boomed in the past, the infrastructure is relatively mature for building vertical applications;
2) Many developers acquire users by building vertical DeFi/GameFi/SocialFi and other applications, but the user base is very small. Therefore, in the future, we need to think about how to acquire users and maintain a high retention rate.
GameFi is a fairly large ecosystem that encompasses more than just games and studios. Below we will describe GameFi users and their value transfer more clearly from the user’s perspective.
From a macro perspective, the entire GameFi consists of 8 parts - client aggregator, games, multi-game platforms/publishers, liquidity providers/financial instruments, blockchain solution providers, game engines, developers/workers room and chain. Based on Steam's classification of games and mobile game categories ranked by revenue, we have summarized 5 categories and 11 subcategories for specific games to cover the current types of crypto games.
Let us follow the industry overview in the figure below to take an in-depth look at these major categories:
Source: IOSG Ventures
chain
It is an interesting new trend for GameFi projects to migrate or be copied to a new chain, just like the previous DeFi situation. Currently, BSC/ETH/Polygon/Wax are leading the GameFi field, with more than 80% of on-chain games deployed on them. At the same time, Arbitrum and zkSync are ambitious new challengers. For example, Beacon on Arbitrum is an action rogue-like game. It reached 21,000 DAU in less than a month after its launch and gained a lot of attention. Tevaera, which is active on zkSync, is an arcade action game and is one of the first games just launched on its mainnet.
Game Engine
Before the advent of game engines, game developers had to write code from scratch again and again, and had to go through the game code line by line. But they cannot be run and tested at any time. But soon, developers realized that much of the code could be reused, including graphic material. This will help optimize the development process and save development time. Therefore, game developers gradually began to integrate the code and assets required for games into a set of development tools. This is the process in which game engines emerged.
Most games today, whether Web 2 or Web 3, are built on Unity and Unreal Engine. Just like the Unreal Engine developed by Epic Games, some Web 3 game studios, such as Planetarium Labs and Lattice, are also developing their own Web 3 game engines, allowing developers to write complex game logic and interactive content.
Blockchain solution provider
Once the gameplay is designed, the developer or publisher needs to integrate blockchain technology into the game, which includes selecting on-chain partners, embeddable wallets, NFT minting and markets, compliant solutions, and SDKs / API or other services built for token economics and management. As players grow, their needs gradually diversify. At the same time, with the addition of traditional game companies, this type of demand will be higher. Because most traditional game builders don’t know much about blockchain, they will be troubled in blockchain integration and economic model design.
Based on the different services provided by solution providers for game developers or publishers, we divide them into 8 industry types.
- One-stop service providers: They usually have the most comprehensive blockchain integration technology stack and provide related services to developers and publishers. For example, Forte includes almost all of the above features and helps offload blockchain technology work from AAA game studios to help them transition to blockchain games.
- Web 3 integrated SDK: basically includes most of the Web 3 development frameworks and tools. They have separated out a gaming suite specifically for games built on the blockchain. For example, Thirdweb offers a Unity SDK that provides ready-made contracts such as markets, NFT staking, and airdrops.
- Studio SDK: It is a service provided by game studios, including Bigtime's Open Loot, Horizon (skyweaver)'s Sequence, etc. They use their experience to help Web 2 developers and games get to market. Open Loot is also providing marketing support, payment support, comprehensive game analysis, and more.
- System Simulation: Popular in game design, especially in Web 3 games, because economic cycles are important to Web 3 games. Maintain a healthy game economy by simulating, testing and monitoring gamefi systems. Currently, more than 20 Web 3 games are cooperating with Machinations and announcing the cooperation on its official website.
- Certified suppliers: Use their Unity and Unreal Engine SDK to equip players, reduce friction and players’ learning costs, thereby accelerating the adoption of blockchain among mainstream audiences.
- Data API provider: builds web2 and/or web3 databases and allows developers to read and write user data in real time, such as outputting analytical data to websites and applications, creating in-game leaderboards, outputting wallet addresses for whitelisting, etc. wait.
- On/Off Ramps: Allows developers to integrate their SDK to buy and sell cryptocurrencies in games without worrying about KYC.
- Market/consulting services: including tokenomics design support, branding services, etc.
Multiple game platforms/publishers
They are to-C game publishers (some of them are also developers) that provide players with different types of games. Gala, Sandbox and TreasureDAO are the leaders in this field. TreasureDAO is building a decentralized gaming platform and distribution platform with a community of over 100,000 players and is the number one gaming and NFT ecosystem on Arbitrum. This kind of platform can establish a set of infrastructure and ecology to meet the needs of independent developers, and form an economy by accumulating player activity content. It will not be affected by the short-term impact of a single game, so it has stronger ecosystem resilience.
Liquidity/Financial Instruments
Financial instruments include lending, leasing, investment derivatives, association services, markets, etc. But most services are still in their early stages, as each game has its own independent financial model and the need for the service is unclear. For example, compared to loan agreements, lease agreements are not difficult to establish, so there are many projects in this field. However, the demand for this service is often questioned for several reasons:
1. Large game studios will establish their own rental systems (easy to create), while small games have a shorter lifespan and a smaller number of meaningful user bases, which cannot support the demand for rentals;
2. Many games are trying to lower the threshold for mainstream users, so in-game NFTs are becoming increasingly cheaper;
3. Most leasing agreements require the use of an escrow account to rent NFTs, but this must be approved and recognized by the game. Otherwise, NFTs will not be allowed into the game, which increases the difficulty of this business.
game
Based on Steam’s classification and the highest-grossing mobile game types, we summarized 5 categories and 11 subcategories to cover current crypto games. (Please see the explanation of terms at the bottom of the article for the definition of each type)
- RPG: MMORPG, Team Battle, for example, Bigtime is one of the first MMORPGs to be launched the fastest. Players can obtain nft and tokens by forming a team of 6 people to complete tasks in dungeons. It has the largest community of 3 players on the Web, with over 400,000 members in Discord.
- Strategy: Cards, Boards & Auto-Battle, Real-time Strategy & Tower Defense, Grand & 4X, DeFi & Gambling. For example, Illuvium is laying out and launching a series of closely connected and interoperable games. One of the core gameplays is open world exploration with an automatic combat mechanism core.
- Simulation categories: farming, space & science fiction, life & leisure & casino. For example, Castaways is a fishing game. Players will drift on the sea to find islands, collect resources, and fish to survive. It gained huge traffic 2 months ago, with more than 70,000 daily active accounts.
- Action: shooting, fighting and other action games. For example, ev.io is a very popular FPS game (first-person shooter) with 1.3 million visitors in April 2022 (the most recent quarter average was 550,000).
- Sports: For example, MixMob: Racer 1 is a very special card battle racing game, developed by experienced gamers who have participated in FIFA, Halo, Battlefield and other games.
According to the analysis of data.ai and SensorTower, in the past two years, the most popular Web 2 game types (mobile terminal) are: RPG games, strategy games, action games, simulation games and sports games.
To give a specific example, "Rise of Kingdoms" is the game with the most spending by players in 2021. Its gameplay is similar to "Rise of Kingdoms" and belongs to the strategic RTS sub-genre. The second-ranked game is "Lineage M", a multiplayer online role-playing game. The rest are: Fate/Grand Order (team battle RPG, Japanese fantasy style), Slotomania (casino, simulation), Homescapes & Candy Crush (competition, casual), PUBG (battle royale shooter, action), Monster Strike (Team Battle RPG), Professional Baseball Spirits A (Sports), Roblox (Sandbox, Simulation).
Our logic is that if a type of game does not appeal to players in the traditional gaming world, it will be more challenging for it to succeed in the context of Web 3. Based on this fact, Web 3 games can do this by improving the player experience, creating an effective secondary market for items, introducing a more attractive and healthy economic system, and allowing new content creators to join the ecosystem. Capturing the Web 2 gaming market.
client aggregator
In addition to viewers, there are three main types of GameFi users, ranging from reward-driven to fun-driven.
Web 3 Users (Cryptocurrency Native Users)
Web 3 Gamers (Cryptocurrency Native Gamers)
Web 2 users (traditional gamers)
Currently, 400,000 active addresses in Web 3 games (data source: Capital and talent flow behind Web3 Games) are still small compared to the 3 billion users in traditional games. In order to attract traditional gamers, client aggregators are crucial to provide a seamless experience, and there are 8 types of them:
P2E Guilds/Scholarships: Led by YGG and its child DAO, this type has become very popular due to the rise of Axie Infinity.
Esports/Tournaments: Some guilds are finding that the scholarship model may not be profitable in the future and are instead establishing tournaments for esports and gaming. This is still very early in Web 3, but it's mature and common in the traditional gaming world.
Incubator: For example, Everyrealm is incubating game-related businesses, including The Row, Fantasy Islands, and Narcos. Metaverse, and Hometopia. It also operates esports guild and competition platform Bedlam and manages a portfolio that includes holdings in more than 30 platforms and more than 4,000 gaming assets.
Launchpad: IGO and INO that help players or investors participate in the game. It is a gathering place for players to interact with the game and the metaverse, because usually players need to purchase NFT to obtain the right to use the game.
Player Credentials: A unified Web 3 gamer identity to maintain their reputation across different games and experiences, driving cross-game engagement and high player retention.
Content/community: Group game players and provide services to them, such as content distributors, streaming services, KOL or community, education, etc.
Thanks to TJ Kawamura (Co-founder at Everyrealm), Alex Qin (Founder at Ubiloan), Alex Liu (Game Studio Advisor), and Yele Bademosi (Founder at Metaverse Magna) for their strong support and valuable comments on this article.
Explanation of professional terms:
RPG: It is a role-playing game in which each participant plays a role, usually in a fantasy or science fiction setting, and players can interact in the imaginary world of the game.
MMORPG: Massively multiplayer online role-playing game is a role-playing game that can be played online by a large number of players at the same time.
Team Battle: In this type of game, players can play multiple characters, or be the commander of a team.
Strategy: In strategy games, players are not restricted and their independent decision-making ability has a greater impact on the outcome of the game.
Card & Board & Autobattler: A card game is any game that uses playing cards as a core element, whether traditional or specific.
Board Game: (such as checkers, chess, or backgammon) is played by placing or moving pieces on a board.
Autobattler Game: Autobattler games usually have chess-like elements. Players place their characters on a grid-like battlefield during the preparation phase, and then fight against the opponent's characters without the player having to input any information directly.
RTS and Tower Defense: Real-time strategy games allow all players to play in "real time" simultaneously, allowing players to participate in competitive economic activities and gain advantage by managing limited resources to expand multiple game elements. In tower defense games, players need to use strategy to build towers to defeat enemies.
Grand & 4X: The Grand Game is the most complex strategy game, taking into account politics, economics, war, diplomacy and more. 4X games (abbreviation for Explore, Expand, Exploit, Exterminate) mean that players have extensive control over their empire, including war, research, agriculture, and government.
DeFi & Gambling: This is a category specifically listed by the author. Its core is the Gambling strategy with simple gameplay.
Simulation: A simulation game is one in which the game simulates the activities the player would see in the real world.
Farming: A farming simulation game where players enjoy the growth and experience gained in the farming process.
Space & Sci-fi: A genre that takes self-invention, imagination, and narrative to the extreme. Science fiction pushes our current reality across the ocean, exploring the logical end of human endeavor.
Life & Hypercasual & Casino: Lifestyle games refer to any game type that takes the form of a hobby itself and deeply masters it. Hypercasual games are lightweight, instantly playable games that players often play over and over because of their short round lengths and fun.
Casino Game: A casino game is a type of game where players use chips to gamble on various possible random outcomes or combinations.
Action: is a fast-paced game genre that typically focuses on movement, combat, hand-eye coordination, and reaction time.
Shooter: Shooting games focus on the player using the weapons they have to defeat their enemies.
Fighting & Other action: Fighting & Other action games require players to control characters on the screen and engage in close combat with opponents.
Sports: Sports games simulate traditional sports practices and games.
Reference:
[1]https://store.steampowered.com/
[2]https://go.sensortower.com/rs/351-RWH-315/images/state-of-mobile-gaming-in-2021-full-final.pdf
[3]https://www.youxituoluo.com/529267.html
[4]https://www.data.ai/cn/go/state-of-mobile-gaming-2022
[5]https://www.gcores.com/articles/148053
[6]https://www.footprint.network/@Footprint/GameFi
[7]https://dune.com/larsbmo/reNFT-Analytics
[8]https://www.similarweb.com/website/ev.io/#traffic
[9]http://www.gamelook.com.cn/2022/04/479021
