Why do you not make games but make platforms?

On the whole, the development of the GameFi track is still sluggish, which is in stark contrast to the enthusiasm in 2022. On the other hand, there is another very interesting phenomenon at present, that is, a considerable number of Crypto Game projects finally choose to platform themselves. **

Recently DeGame released the 2023 Q1 GameFi track analysis report. VeDAO Research Institute observed that there are some interesting data in the report, which reflects the current development status of the GameFi industry, and also makes a certain prospect for the future of the track. Therefore, in this article, VeDAO Research Institute will work with you, using DeGame’s report as an introduction, to explore the development of the GameFi track and its future direction.

Let me talk about the conclusion first. On the whole, the development of the GameFi track is still sluggish, which is in stark contrast to the enthusiasm in 2022. On the other hand, there is another very interesting phenomenon at present, that is, quite a few Crypto Game projects finally choose to platform themselves...

Current development of Crypto Game track

Although the market has been picking up, the concept of Crypto Game seems to be unsatisfactory. According to DeGame data, in Q1 of this year, the total transaction volume of the entire GameFi track is 420 billion US dollars, and the total number of players is about 700,000, and most of them are distributed on the traditional GameFi public chain WAX. , despite the large number of GameFi, the players and funds absorbed are extremely scarce.

This has a lot to do with the old concept of GameFi, the low quality of products, and the short life cycle of the economic flywheel. In view of the fact that GameFi products are full of mud and sand, investment institutions have gradually begun to look at the track rationally.

According to DeGame data, in Q2 of 2022, the GameFi track will raise US$1 billion for the entire quarter, of which independent game financing accounts for 40.06% (US$403 million) and game studio financing accounts for 30.64% (US$308 million). It is speculated that platform financing is about 30%, about 300 million US dollars.

Image source: DeGame 2023Q1 GameFi report

In the Q1 quarter of this year, under the premise that the overall financing amount has shrunk sharply, with the total amount only 481 million U.S. dollars, the financing amount of platform projects ranked second, accounting for 20.23%, close to 100 million U.S. dollars, while the financing amount of game studios accounted for 45.62%, which is 219.5 million US dollars, while the proportion of independent game financing has dropped to less than 25%.

In terms of the number of financings, the number of financings for independent games in Q1 this year is 22.22% (14). This is completely different from Q1 and Q2 in 2022. At that time, the most popular type of financing was independent games, which accounted for 61.17% (63 deals) and 52% (52 deals) of the number of financing deals at that time. It can be seen from this , Independent games are gradually losing the favor of capital. In contrast, the number of financing for game studios and platforms has increased significantly.

Game studios accounted for 26.21% and 11% of the number of financing in Q1 and Q2 in 2022, respectively, and 31.74% in Q1 this year; the proportion of financing in Q1 and Q2 in platform category in 2022 was 4.85% and 13%, respectively. compared to 20.63%.

Note: In the game context, a studio is generally a development team supported by a major Web2/Web3 manufacturer; the latter is an aggregated product with more than one game.

From the above data, we can clearly see that with the development of the GameFi concept, the capital market is less interested in single GameFi products with poor quality, simple gameplay and high risk. The interest in making game products is gradually increasing.

Not only that, but the current development of GameFi also reflects a phenomenon: most Web3 teams have begun to transform into game platforms.

The most intuitive example is Axie Infinity, a previously popular GameFi product, which chose to develop its own public chain and provide infrastructure services for third-party game distribution. In addition, Mirror world has also developed a mobile-based SDK toolkit, dedicated to optimizing user experience and gaining more Web2 and Web3 users. Cocos-BCX, the earlier metaverse public chain project, also announced its own GameFi platform plan at this year's Hong Kong Web3 Conference, and changed its name to COMBO to build the next generation of decentralized game infrastructure with a new name and a new image.

Even many traditional big manufacturers have chosen to enter as a platform. For example: Giant Network, which owns the classic IP "Zhengtu", launched the ZTimes platform. While releasing GameFi, it is also committed to building a game ecosystem; Wang Feng, one of the "Three Heroes of Jinshan", also launched his own Web3 game service platform NAGA.

Why are you keen on making a game platform?

In summary, there are three reasons: the natural demand for growth, the need to lower the barriers to entry for players/developers/funds outside the domain, and the need to tell a bigger story/consensus game.

First of all, whether it is for the entire Web3 industry or the major manufacturers in the industry, based on their own development needs, there is a natural motivation to continue to introduce external traffic/capital.

Since November 2021, when the total market value of cryptocurrencies reached an all-time high of US$2.8 trillion, until now, even though the market has picked up, it is still only about 30% of the high point, or about US$1.1 trillion. The long trough made the funds in the market flee one after another, and only when more money and people come in, can it be possible to make crypto great again. DeFi is too cold. Doing this in the name of a game can get twice the result with half the effort.

Not only that, a common problem in Web3 (and a problem that is difficult to break through), is the lack of universal application scenarios.

Taking BTC as an example, a BTC with no application has absorbed half of the market value of Crypto, while a copycat ecology with many applications can only absorb the remaining small part. As can be seen from the figure below, despite occasional twists and turns, the gap between the market value of BTC and other ecosystems is narrowing. This is one of the reasons why Ordinals will be valued and the BRC-20 agreement will appear.

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The same is true for manufacturers represented by exchanges. On the one hand, the implementation of application scenarios can complete the siphoning of traffic from the outside to the inside of the industry (this kind of external traffic often falls directly on specific companies); The import of traffic in the industry to the company.

For start-up teams, starting from the perspective of GameFi can bring a higher success rate of entrepreneurship. After all, in an ecology, only one DEX with the same function may survive in the end. But GameFi with similar gameplay and different content can survive at the same time. This also gives start-up teams more possibilities for success. Therefore, in the past two years, we can also see that the number of GameFi projects has emerged in an endless stream, and financing information has continued.

It seems that the blockchain game field is siphoning talents and funds from all aspects with unprecedented attractiveness. For example, the former CEO of Riot Asia Pacific and the former head of the game department of TikTok have founded blockchain game companies. But it is undeniable that there is a natural gap between traditional players and on-chain players in their perceptions and pursuits of games.

Traditional game manufacturers brutally implant Token and NFT in games; traditional game publishers believe that the on-chain of game assets is an act of plundering profits; traditional game players believe that the implantation of NFT elements destroys the game experience...

How to further eliminate differences and provide blockchain reform services for games may be a good idea. From the perspective of web2 game developers, it is quite difficult to enter web3. Putting data on the chain, issuing airdrops, tokens, managing nft, etc. all require a certain industry understanding and tedious work. Work. This is very unfriendly to developers.

The role of the platform is reflected here. Through the integration of Gamefi-related technologies and NFT/blind box issuance, management and sales; Token airdrop management, token lock-up, team token ownership lock-up and other related tools, these Functions can help developers quickly get started with some functions of web3, and achieve one-stop deployment of on-chain game management tools through convenient methods and interfaces. These functions effectively break down the barriers from web2 to web3, conveniently and quickly realize the on-chain of the game, and provide the possibility for the rapid transformation of traditional games.

Not only that, but with the entry of major traditional game companies, a new role has also been provided for Crypto Game: Web3 game publisher: an important pusher to help games promote and release, and go to the market. This task can often only be performed by a platform that aggregates multiple functions. Such as Gala, YGG and so on.

From the perspective of a game platform rather than a single game product, in addition to the above-mentioned objective factors, there is another factor that is most attractive to the market and capital, that is, compared to a single game, the platform itself has multiple games Relationships and a rich enough story can lead to a long tail of expectations.

Internal drive from game to platform

First of all, we cannot deny the deep financial attributes behind GameFi, and behind the finance is the game.

Participating in market behavior means participating in game behavior. After evaluating the average consensus of all participants in the market, the winner must perform an action below the average consensus to win. If a participant behaves above the average consensus, it is bound to fail.

Here, we need to talk about a small numbers game first.

In "Wrong Behavior" written by Richard Thaler, a Nobel laureate in economics, he proposed an interesting game: guess 2/3 of the mean value.

Each participant was asked to choose an integer from 0 to 100. The participant whose number is chosen closest to 2/3 of the average of all users wins the game. For example, suppose there are 3 contestants who guessed 20, 30 and 40 respectively, the average is 30, and 2/3 is 20. Then the person who guesses the number 20 is the winner.

In this game, if there are only two players in the game, there is a strictly dominated strategy (strictly dominated strategy, which means that no matter what strategy choices other players make, the best strategy for each player is unique. ). Picking 0 has a higher chance of winning than picking any number greater than 0.

For example, if both parties choose 0 and 100 respectively, then 2/3 of the mean is 50*2/3=33.3. 0 is closer to 33.3, so the player who chooses 0 wins. When there are more than 2 players in the game, we will face a more complicated situation, because the existence of new players will force all players to re-evaluate the psychology and behavior of other players. The dominant strategy changes from an absolutely dominant strategy to a relatively dominant strategy.

Compared with the essence of a two-player game, whose number is smaller, multiplayer game players have a higher degree of freedom in gaming. The essence of the game is that each player estimates the average number of others. Therefore, choosing 0 directly will not help you win. Therefore, in a multiplayer game, the crux of the matter is not the ultimate arrival of the game's Nash equilibrium. The crux of the matter is how close the current system is to reaching a Nash Equilibrium when all players in the game are considered.

For example, the group of users who play this game for the first time will have the following choice distribution map: more than 6% of the users choose 33, nearly 6% of the users choose 22, and the final winning number is 19. If these users play the game a second time, it is foreseeable that the winning number will be close to zero. And when all participants realize that the integer "0" is the final solution, no one will be the loser of the game. Ironically, the game was declared over at the same time, and there was no real winner.

As a classic game in the field of finance, the game paradigm of "guessing 2/3 of the mean value" is reflected in the game of blockchain players' cognition of project information, token price expectations, and future business operations.

As a result of the game, no matter the winner or loser, the Nash equilibrium will always come, but the GameFi equilibrium often comes too fast: a game with a 3-month life cycle basically falls into a death spiral.

This is the downside of a single game, a story is always told very quickly, and if you introduce other stories near the end of a story, or tell a complex story at the beginning, the expectation will be exponentially magnified .

To complicate a simple story, there are currently two ideas, one is to give more practical value to the game behavior, which is not the current mainstream. Such as SpartaDEX.

The more mainstream idea is platformization to create more possibilities. Still take Axie as an example. For the Axie development team and other participants with more complex identities in the community, they will have a clearer understanding of the direction and outcome of the project when they play games with other participants. At the same time, they have a panoramic view of the average consensus of players, which facilitates their consensus management: continuous introduction of external funds, creation of new game methods, transformation of speculators into value investors, and finding new usage scenarios for Token .

Axie Infinity is still actively exploring new identities. The launch of the Ronin sidechain and its native infrastructure, along with the development of several new projects, has transformed the identity of Sky Mavis (Axie Infinity's parent company) from an application developer to an infrastructure provider. In other words, gamers of the current "game" can seamlessly participate in the next round of the new consensus game.

Every consensus game will always have an ending, but at the same time, new consensus games will continue to emerge. This also provides a convenient idea for many GameFi project parties: transfer value to the platform, not the game. After all, the narrative of a game is very short, but if it is platformized and more games are connected to make the platform prosperous, then the story can be told for a long time.