The Endgame of Web3 Gaming
The “final boss” of web3 gaming isn’t here yet. Games in the web3 space to-date have been experiments, largely loose collections of semi-baked ideas and brave studios collecting capital on the road towards an optimistically greater collective future.
But what’s endgame look like?
This topic was one of many discussed with David Johansson of Blocklords in the context of massively multiplayer online (MMO) games — watch here.
Exploding Spaceships, Pandemics, & $10k Girlfriends
The Battle of B-R5RB
When the Clusterf**k Coalition and their Russian allies warped into the B-R5RB system after the Pandemic Legion/N3 alliance let their guard slip, they weren’t playing with just table stakes. The year may have been 2014, but they were about to party like it’s 3099. The ensuing EVE Online battle lasted over 21 hours, saw over 7,500 player participants in combat, and racked up the dubious honor of being the most destructive virtual battle of all time, with a total of nearly $330,000 in real cash losses due to casualties on both sides after over ten thousand in-game ships were obliterated.
EVE Online, the legendary massively multiplayer online (MMO) space sim, was the foremost of the three harbingers of web3 gaming.¹ In-game currencies were semi-liquid with respect to secondary markets, inasmuch that you could buy in-game currency with real USD, and players frequently bought & traded in-game assets in gray market third-party OTC transactions, regardless of the EULA terms. This quality, in addition to the extraordinary complexity of a fully-fledged space simulator, lent EVE the nickname “spreadsheets in space.”
Some players made a living off of managing the assets of thousands of other players, coordinating “corporations” of individuals to execute high-risk maneuvers (a la the Battle of B-R5RB) in exchange for largely virtual rewards. They managed warchests of thousands of real dollars and made decisions based on smashing other virtual opponents or building complex spy networks to stay ahead of competitors. Starting to sound familiar?
And people spent years of their lives doing this. There wasn’t substantial income involved, and it was all done for the love of the game. Imbalance was expected. If your neighbor dropped $10,000 on enough ISK² to buy a titan-class ship, good for them. That’s a bold thing to do when that ship could get nuked the next time you make one risky maneuver too many.
It wasn’t “pay to win.” It was a risk spectrum. You chose where you felt comfortable, and you played that role. A social hierarchy was determined largely³ by individual’s choices and desire to chase risk, and it drove economic engines that fascinated millions of players for years and made CCP Games (the company behind EVE) into nearly a billion-dollar company.
That same risk spectrum is native to web3 gaming. When your virtual assets become real, so too does your risk. And what better way to post risk than to slingshot your spaceship around a collapsing black hole en route to capturing an undefended galactic mining outpost?
Corrupted Blood
World of Warcraft (WoW), as our second harbinger of web3 gaming, needs no introduction in the MMO halls of fame. It’s been the butt of jokes for decades, and we’ve all seen the legendary South Park episode. But in 2005, a certain viral explosion caught the eye of the US Center for Disease Control and Prevention (CDC) and would ultimately provide a loose modeling basis for understanding human behavior during the recent COVID-19 pandemic.
The story starts innocently, as many epic meltdowns in gaming do, with a simple software bug. The designers had mistakenly failed to force a certain disease debuff,⁴ called “Corrupted Blood,” to be removed from players’ pets after they had exited a quarantine location. The result was that players unintentionally brought the disease back to population centers, where it rapidly induced a global in-game pandemic and affected nearly 88% of the playerbase, decimating in-game populations and effectively bringing the entire supply chain of in-game goods to a halt.
The breadth of player responses was astonishing. Certain healer-class players became real “first responders,” trying to hold cities together through overwhelming labor. Other players became virtual bioterrorists, voluntarily divebombing sanctuaries and “griefing” other players into endless frustration. Many did exactly as most of us did during COVID-19, and self-isolated and tried to carry on as best they could.
The point, beyond being an incredible demonstration of human psychology in pandemic events, is that virtual worlds can be just as “real” as the real world. And when the assets that exist inside of those virtual spaces start to become “real” as well, the outcome will almost certainly be explosive.
Girlfriends, Gold, and Hiscores
“Buying gf, 10k gp” is a jarring thing to see if you’ve never played the two-decades old MMO classic Runescape. But in massively multiplayer online games, it’s common (some may even argue, mandatory) for adventurous players to collect resources just to return to social hubs and “flex” on others.
That act of arrogant socialization drives markets, both in-game and “irl” (in real life). Historically, game developers have enabled a modicum of social flexing in the form of microtransactions priced in the tens to hundreds of dollars, and, particularly in the free-to-play era, those microtransactions have become a substantial portion of revenue. It’s one of the biggest reasons why free-to-play gaming beat out the older style of boxed games for $40 a pop.
Today, buying a blue party hat in Runescape that’s been saved from a one-off holiday event back in 2001 will set you back over $10,000. That’s a pretty penny for a ten-pixel-sized flex, but today’s NFT traders wouldn’t bat an eye at dropping that cash on a casual weekday. The difference lies in liquidity and real digital ownership, both of which apply a premium, and neither of which the blue party hat has claim to.
In an alternate universe where Runescape was originally deployed as a web3 game, and such social collectibles were all instantiated as NFTs with secondary market trading character, it’s possible that their value to both the player and the game developer would be substantially higher. In a liquid and accessible market, I’d certainly choose to take a 4% royalty on secondary trades instead of selling locked cosmetics to players for $20 a pop. Then, my success would scale with the success of the game, instead of just incentivizing me to sell microtransactions and bail.
Access to markets is important, and you shouldn’t disregard that premium. As the social fabric of the world becomes more and more digital, and as generations migrate more deeply into virtual gaming, you should expect the next “blue party hat” to surprise you, to the upside.
Those prices aren’t irrational, they’re just socially dictated.
Web3 Gaming is Down, But Not Out
MMOs captured the imagination of two generations of gamers, despite the fact that MMOs we’ve seen in web2 to-date have been the earliest iterations of what is obviously a colossal story arc still playing out in realtime. Category-defining games that manage to stick the grisly landing of launching a comprehensive MMO in a web3 context will have the opportunity to set the course for the next two generations of adventurers, with substantial upside.
And, hopefully, this may be one of the last times I have to write “web3 gaming” instead of just “gaming.” The worlds are converging, and it’s coming sooner than you think. If you’re stuck on thinking that the sum of web3 gaming’s core potential is trading questionably valuable NFT JPEGs years before a game is live, or rolling your eyes at the thousandth Pokémon clone, then you’re going to be in for a big surprise in the next half decade.
Digital asset ownership is a paradigm shift, in every sense of that overused phrase.
This is more than “just a game” now.
¹EVE is still online (pardon the pun), and it’s still great, albeit dense. Give it a try but make sure you spend the dough to accelerate the in-game “years” of training time.
²Interstellar kredits (ISK) are the native game currency of EVE.
³Not everyone can just “opt in” to spending $10,000 on acquiring a ship, obviously, but there’s no hard rule preventing you from getting there.
⁴A “debuff” is the opposite of a “buff.” It makes you weaker or applies an ailment.
Sam is the CEO of Playground Labs, a web3 protocol dev organization, and Partner & Head of Interactive at Hivemind Capital, a crypto-focused multi-strategy fund. Follow him on Twitter.
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