Dossier: What's Wrong with Crypto Gaming
The Current Crypto Gaming Landscape is Stupid, Let’s Explore How it Could Potentially Be Not Stupid in the Future
A painfully honest letter about Crypto gaming:
If people were honest with themselves, they started to care about Cryptocurrency, blockchains, consensus models, or any other underlying tech and buzzwords in this space because of the financial incentive. People are hoping to strike it rich! Filthy rich. Let’s be honest. Just like the gold rushes of days long past, what we’ve witnessed over the past decade of Crypto’s history is a massively impressive speculative rush - with many having made life-changing wealth. We’ve seen narratives and stories rise and fall cyclically regarding what makes this technology special and how it will one day change the world. We’ve seen projects gain meteoric growth and “success” in such short periods, as well as an influx of capital, talent, and attention into the Cryptocurrency sector. Many believe that Crypto gaming will be the future. Will it, though? The short version answer is yes - but we are nowhere near close to the endgame, and the current landscape is a joke. We explore the state of Crypto gaming and attempt to peer into the past and future to create a vision of what may organically and naturally “win” this race.
Before we get started...this letter serves as a preface to our extended Crypto Gaming Thesis report that will be released soon! Subscribe to the M6 Labs publication to be the first to be notified when the full report is released.
Done? Now let's dive in!
Questions are healthy. It’s essential to question the world around us. Here are some primer questions to consider throughout:
Do your best to tap into the psychology of current, potential, and future users
- Who are they?
- How do they feel about gaming and Crypto?
- What do they think about NFTs/microtransactions?
- Play to win?
- Customizable skins and aesthetic add-ons?
- What are their demographics?
- Genuine question - why will any of this need a token to work? Crucial - does a token NEED to exist?
- What role can a token play that isn’t just ponzinomics, useless governance, or gas fees?
- What are healthy incentives to fuel an in-game economy?
- What lessons can we learn from the current gaming industry - both successes and failures?
- What does history tell us?
- Technical considerations?
- What blockchains are developers building on?
- What do developers and builders have to say?
- Can a blockchain handle the transactions?
- Is self-custody important to users?
- Is decentralization important?
- What scaling solutions are they using?
- Does privacy matter to users?
- How do payments tie into this?
- What wallets will win the race?
- What role will marketplaces play?
- What are good and bad business models?
- Tokenomics Design?
- Will AAA games be the ones to succeed or indie games?
The Cold Harsh Truth: Crypto Gaming is Stupid - At Least For Now
Unless you’ve been living under a rock, you’ve probably heard countless people rave about how Crypto gaming is the future, how it will revolutionize the industry, and how the Metaverse will become the next paradigm and evolution of the internet!
You can lump Web 3, decentralization, and all the other buzzwords into this category. However, the cold, harsh truth is that the current landscape of the Crypto gaming sector is dumb, like really dumb. It’s almost laughable when you consider the multibillion-dollar valuations some of these games and projects reached during the 2022 bull run. We've seen that many of these “games” look like they were made decades ago. They are essentially hyped-up versions of annoying mobile free-to-play games with pay-to-play mechanics and truthfully boring idle gameplay. It’s complete buffoonery that some of these games and projects were able to reach multibillion-dollar market caps. It’s laughable in retrospect, but Axie Infinity, The Sandbox, Decentraland, DeFi Kingdoms, Crabada, and a few others all pumped massively during the last bull run. Their fully diluted values are still massively inflated. How many people actually bothered playing them to see if it’s worth it?
The same can be said for profile picture NFT projects. Nothing but silly JPEGs worth hundreds, thousands, tens of thousands, and sometimes hundreds of thousands of dollars. It’s a clown world, and we’re living in it. All of this together - NFTs and Crypto gaming are supposed to be the next step? This will be the future? Do you really expect normal users will be spending hundreds or thousands on a JPEG so that they can play a boring game filled with ponzinomic mechanics? Your family, friends, neighbors, acquaintances, “normies” as we affectionately call them - will they ever see this and consider it the new normal? What’s the point of it all? Is it to have fun and create genuinely enjoyable user experiences? Nope, people have been buying, playing, and shilling the current iteration of Crypto gaming projects because they saw an opportunity to make money. Let’s also be fair; there were plenty of opportunities to profit along the way. Up until now, it’s only been about financial gain and speculation. If you invest early enough, you’ll be the next millionaire minted.
So to recap, people rushed into this space with stars in their eyes, dreams of riches, and following narratives and stories woven to capture the imagination. We saw primarily vaporware, cheap versions of crappy games, ponzis, and straight-up bad ideas of what gamers want or need.
So does this mean that there is no future for Crypto Gaming? Not at all! In fact, there’s crazy untapped potential. Let’s explore how we may achieve this:
It is insufficient and incorrect to call the following just a “gaming thesis''. It’s so much more than that. This is a human psychology thesis, which happens to overlap highly with Crypto, gaming, social experiences, and entertainment. As previously discussed, Crypto and blockchain technology has taken the world by storm over the last decade. The most likely avenue by which Crypto may come to have a successful future and an actual shot at mainstream adoption will be the intersection of gaming, entertainment, music, sports, gambling, collectibles, art, and most importantly - social interaction—some amalgamation of these popular and established genres and sectors.
If Crypto ever has a chance of going mainstream, it will likely be through the enormous potential gaming and entertainment industry market, the so-called Metaverse. Proponents of this technology haven’t been wrong in the potential of the metaverse and Crypto gaming, just in the implementation up until now. The future of gaming will be a seamless, effortless mix of blockchain technology, NFT technology, and immersive metaverse experiences. The key will be blending real life with digital experiences in such a way that the user doesn’t know or care that they’re interacting with Crypto. It’s vital to keep psychology in mind and understand that humans inherently want to socialize and interact online - we can historically see this with social media's monumental rise and success. Tapping into the vein of popular culture and huge mainstream brands such as Disney, Star Wars, Marvel, Hollywood, AAA games, music artists, sports teams, and celebrities will be the key to this technology's success. The groundwork is already laid.
Imagine being able to deliver all of these global fan favorite IP brands to people in new and revolutionary ways. Imagine tapping into already successful fandoms such as Kpop and mainstream brands. Enter the Metaverse. We are already seeing a massive rush of companies and brands filing patents, trademarks, and copyrights to secure their eventual entry into the metaverse. What is the metaverse, though? There’s no official definition yet. More of a hazy general catch-all term for what people think the future of gaming will be one day. The most generic image most people might imagine is everyone living in virtual reality with headsets - similar to the book/film Ready Player One. Overall, it makes sense to look toward booming sectors and try to imagine how they may pivot with a Crypto focus. We’ve already seen tons of celebrities and brands attempt to leverage their name to sell NFTs. For the most part, this has been nothing but empty and shallow cash grabs. Unless you believe the new future normal is people buying NFTs from their favorite brands for hundreds or thousands of dollars? Seems unlikely. So the question we really care about is how Crypto and blockchain to tie into all of this in a sustainable, natural, and organic way that makes sense.
This exploration is intended to make you think, wonder, and imagine what the future of Crypto gaming or any other sectors might look like. The point is to highlight potential technology and innovations in a way that stirs the imagination and feels natural to the user.
Natural paths include a mobile-centric focus as well as a focus on super apps. Approaches that will allow the user experience to blur the intersection of the digital world, entertainment and real life. Imagine someone using Crypto without knowing they’re using Crypto. It’s not so much that we’ll be all living in a digital online world with avatars, just that the barrier between real life and how we consume entertainment will become more and more blurred seamlessly and enjoyably. As far as the focus on super apps - you can think of this as “what will the next iPhone be and what features will it have?” How will it solve problems we don’t realize we need solved yet? Trying to create a vision years ahead of its time. Whichever projects are able to successfully pull this off will be the next big thing in Crypto that will onboard the next generation of users.
It’ll have to be something exciting and revolutionary.
Combining Entertainment and Social Experiences with Digital Technology: The Human Need for Connection
One aspect that makes the internet and the digital world so appealing to so many people is that it provides social experiences and the ability to fulfill that human need for socialization. Well-designed and successful metaverse and gaming experiences must feel effortless and exciting. It’ll have the same draw that the GameBoy did in the 90s, the Playstation and Xbox had in the early 2000s, and that instant messaging and chat rooms did when they first became popular in the early days of the internet. Everyone willingly wanted to participate, to be able to play with their friends, and experience this new revolutionary technology. It was exciting, unique, and fun and didn’t require anyone shilling some narrative about why it was special. We see the same nowadays with popular games such as Fortnight, Minecraft, Roblox, and others - users organically flocked to them - it wasn’t forced.
Mobile-centric: One crucial point is that mobile-friendly solutions are vital. Everyday users don’t want to deal with the hassle of various wallets, bridging, self-custody of funds, and all the complicated steps that currently embody the typical on-chain Crypto experience. People are already used to their lives being in the palm of their hands - Crypto needs to follow this trend.
Potential scenario: Imagine receiving a special NFT for the next big blockbuster hit and this granting you access to a variety of special access features such as in-game collectibles, skins, special fan experiences, access to special content, concerts, music videos, and social settings to interact with other fans.
Recall that we’ve seen primarily boring and tedious play-to-earn and idle-style games, microtransactions, play-to-earn, and blocky and cheap-looking games. None of which is new, revolutionary, or game-changing.
Which sectors actually have potential?
Move to Earn, Augmented, and Virtual Reality - combining health, fun, outdoors, and interacting with the real world. A mix of immersive augmented reality with the digital and real world. Think of Pokemon GO back in 2016 - it caused a cultural storm. People of all ages and backgrounds found themselves outside to catch these silly little monsters on their phones. Why? Because it was something fun and popular that they heard their friends and family talking about. It was simple and free to download on their phones and start playing immediately. It also contained a positive feedback loop that would get people coming back for more. Give users a little dopamine bump, and they’ll want to return for more.
The games that let users trek out into the real world and sync in-game with real-world locations are also fascinating (GPS based). Traveling to a location IRL will get you special in-game perks. This is reminiscent of the 90s and 2000s when there would be special tournaments that offered limited edition special perks and collectibles. Back then, you’d travel to your local mall and receive a special Pokemon for your Game Boy game. At the time, it was magical.
Needless to say, Play-AND-Earn will have to replace Play-TO-Earn. Real gamers have a strong distaste for microtransactions and NFTs by association. The common perception by gamers is that NFTs are just ponzis and money grabs. Pay-to-win is also another pitfall to avoid - you don’t want to create games where whales dominate - it is a massive turnoff for normal users. NFTs must mostly be cosmetic or provide other functionality not directly tied to game performance. Imagine transferring items seamlessly between games. You could wear your favorite Batman cape in various games, your favorite wizard hat, jetpack, or t-rex suit.
Augmented and virtual reality - This is a curious one. The imagination quickly goes to something like Ready Player One - where all varieties of popular culture are intertwined in one digital interface. Something out of a true sci-fi movie. Virtual reality headsets can unfortunately be uncomfortable and still not quite where the technology needs to be yet.
However, this medium seems attractive in the sense of concerts, music experiences, sports events, and other viewing experiences that can be enhanced with immersive digital experiences—adding multiple senses and levels to an experience.
Trading card games - Pokemon, Yugioh, Magic the Gathering, Dungeons and Dragons, Hearthstone, tabletop games, comics, and sports trading cards are another highly interesting area. Being able to own, trade, collect, and battle. These collectible types of franchises have lasted over the decades, and there are secondary markets where these could transact to create in-game economies. Newer games have attempted to recreate these trading card-style collectibles but let’s be honest - why would people invest crazy amounts of money into these new and obscure things versus proven brands? I’m betting on Pokemon staying relevant and ingrained into the popular culture lexicon.
The intersection of Crypto and gaming truly does hold massive potential. People are ravenous when it comes to consuming entertainment; all we have to do is look towards the grip gaming and entertainment have on popular culture. People are already online, connected, and have become accustomed to consuming their entertainment digitally. The missing piece is developing the technology so that it is more than the massive speculative bubble that we’ve seen up until now. We must move away from cash grabs, empty, shallow promises, and straight-up dumb ideas. The technology needs to reach an economically viable and straightforward stage to use and interact with.
To conclude, we’ll leave you with an analogy. The current stage that we’re at is similar to the early days of smartphones - we saw countless versions of failed phones before the genuine winners arose - such as the iPhone. The iPhone fundamentally changed the game; users suddenly had everything in their pocket they didn’t know they already wanted. It was this essence that so strongly led to the success of the Apple iPhone. So the question you need to take away from this thought exploration is - what will be the next innovation in the Crypto gaming space that will blend the intersection of social interaction, gaming, entertainment, music, sports, gambling, collectibles, and art? That will be where you want to look.
To be continued…stay tuned for our full Crypto Gaming Thesis soon!
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