We’re back for the second episode of our blockchain gaming mini-series - this time we’re exploring how online communities are set to shape the future of blockchain games. Join Melissa Zeloof, VP Marketing at ironSource, along with Anton Backman and Kenrick Drijoningen from Play Ventures, and our guest Jon Jordan, Consultant at Playmint, for the conversation.
Together they explore the ins and outs of Discord communities, the biggest challenge traditional game developers have in the space, and the dichotomy between performance marketing and community building.
Tune in here or keep reading for the edited highlights.
Jon: “In 2018, I was like, I'm most too late. All the interesting stuff happened, you know? Then nothing happened for about two years. From an individual sort of point of view, if you're interested in this, it’s never too late. There's always loads of interesting stuff sort of happening.
I don't really know in my head what I think mass market adoption is. So the moment, we've started to see projects with say like a million players. Axie Infinity was 2.5 million DAU a few months ago. To some degree, that’s mass adoption. Now the fact is, it was adopted by a certain sort of group of players, particularly from developing countries - Indonesia, Philippines, Brazil, places like that. Does that mean it's not mass market? Probably not for what we think of as mass market North American Western Europe adoption. It depends on your position, on what you see as mainstream.
Kenrick: “Do you see these games in the top 10 on an app store at any point in the near future?”
Jon: “No, because I don't think app stores allow them. When a disruption like this comes in, for it to be a disruption, that means that there's people who are doing very well out of the current situation and generally don't like it - because they spend their time building up a business or an ecosystem, and now something's coming along that's basically going to if not dethrone them, take away some of their power.
In the gaming space, we have some very big channels for games distribution. That’s Steam, which has said it doesn't want NFT games in there, and that's the App Store and the Google Play Store. Neither of which has formally said that they don't want that sort of stuff. There are blockchain enabled games on those channels and a lot of crypto stuff as well. But they're not openly adopting it yet.
There’s no real channel saying, yeah, we're going to really go through this. You've got quite a big infrastructure piece for a newcomer to come in and build. There are people trying to build blockchain app stores. There are people trying to build sort of blockchain versions of Steam.
Axie Infinity is a mobile app built on an APK - so there's people just downloading it and sideloading into their phones, which we don't do in Western Europe and North America, but that's what everyone does in Southeast Asia.
To that degree, that is an obstacle for mass market kind of usage in the West. Equally, play-to-earn games don't appeal to people in Western Europe, North America, because it doesn't really move the dial very much for us to spend six hours or eight hours a day earning $20 a day. Those things just don't work for us. On one level, a lot of the crypto focused stuff is focused on emerging markets.”
The role of community in blockchain games
Anton: “I think a great segue into the topic we have at hand here, which is the role of the community in these games when we talk about a user acquisition and distribution. Now we look at mobile free to play up until now, obviously there's been a big emphasis on performance marketing and for this and it's been the modus operandi of growing. At least on mobile free to play it’s been quite light touch to be involved in having people on Discord building through organic traction.
But now if we look at early games in this space, they're turning this acquisition model upside down and the predominant model for growing these communities has been tapping into the grassroots and aligning the early incentives with the community to make sure that they’re also invested in bringing more players and making more fun.
When we talk about community, what does it mean in context with blockchain gaming and where are these communities located and how do they operate in general?”
Jon: “So ultimately when people with blockchain projects say we've got a great community, it basically means they have a lot of people on Discord or maybe Telegram. Discord is the place where the games people tend to go. Unless you're doing something very clever, the first thing people do when they see a new blockchain game, they go to the Discord and try and see what's going on in there. How many active people are there? What are they people asking about?
Everything in blockchain and crypto has to have a speculative element to it. A lot of people looking from the outside looking in and see that as one of the reasons for the backlash. They see that it's all about gambling or it's all about Ponzi scheme type stuff. What I would disagree with - part of the reason people are interested in it is because you can either make money playing games or some of these assets have gone from literally zero to hundreds of thousands of dollars. There was a speculative element to that. That obviously feeds into the Discords because people are interested in meme type stuff. When's the token gonna come out? When's the in-game currency going to come out? How can I get access to the white list? So only people who are really supposedly committed to the project can mint the NFT or get to buy the token. But clearly a lot of that community's actually just driven by - can I make money off this?
Traditional game communities vs blockchain game communities
Kenrick: “That was actually my followup question here. Like community has always been a buzzword. Can you perhaps compare the traditional games community versus blockchain based game community? From there, can we distill how tokenomics actually plays a part in these communities versus people who are actually in it for the game?
Jon: “Even for people who are not necessarily interested in making a quick buck, I think it would be dishonest for us to say that that doesn't play into any of our incentive - because the whole point of having a blockchain connected to any project, certainly a game project, is the process by which the financial success of that project could be shared amongst the community members.
There’s a difficult balance between how you deal with pure, a hundred percent speculators who are going to come into your project and try and get what money that they can and then move to the next project.
It's never pleasant when crypto prices crash like they have done. But as we've seen in previous years, the shocks are quite good to filter out the community because if there's no promise of a quick buck or you've just spent $500 buying some tokens that are now worth $200, that's quite a good incentive for people who aren't interested in to get out. So I do think that community in essence is a dynamic group of people and the external shocks are actually really quite good at telling you what your community is actually about.
The problem that I find for a lot of blockchain game developers is if they come from the traditional game space, they’ve probably had communities, but it’s nothing like as busy or as deep as what we have with blockchain stuff for the reasons explained. But then those people are so busy doing the game, they don't spend time in the Discord. You try and tell them, can you spend an hour a day in the discord just to get a flavor of what's going on there? And they go, well, I haven't got time to spend an hour a day building this very complicated game and raising money and all this sort of stuff. But then you try to explain to them, no, that's the most important thing - you're trying to make a decentralized game in which you're giving control, financial control and other bits of control, potentially down the line, to the community. If you’re not in the Discord, seeing what your community members are talking about, then there's no point in you making a game. Cause you're going to make exactly the wrong game. You're bringing traditional game development heads into something totally different.
The community is only useful if the game development team are in the community with them and not just hiring a bunch of moderators who have no outward pressure. You need to have at least some of the management team spending time in the Discord. They really feel like they're just not selling some sort of bolt on thing that's happened - that people actually listen to them. As in many respects in blockchain games, there's just such a different way of doing things that people struggle with that.
Certainly if you're a game developer who's been making games for 20 years or 30 years, like some of the people I work with, that’s a really big ask for them to spend an hour on Discord talking to people with English as a second language or maybe crazy teenagers who just want to know when their token price is going to go up. That's really hard work. It really is.
Blockchain communities to watch out for
Kenrick: “You mentioned the Axis community, which is obviously on Discord. Any other good examples of blockchain gaming communities where you think maybe not even necessarily in terms of sheer size of the community, but where you saw this is a really active, engaged, community that is actually communicating with the developer also to work on the game, to actively change the game, to work on the tokenomics?”
Jon: “There's a game called Illuvium, which is pretty high profile in the space. It's come from the founders of the brothers of someone who's very famous in DeFi, decentralized finance. I think what's interesting there is they sort of tapped into an existing DeFi community with this family link. Then the one thing they had done, which is quite good, and definitely we'll see more of, is these things called DAOs.
DAOs are decentralized autonomous organizations and people talk about them a lot in blockchain at the moment. Basically what they attempt to do is a way of building a formal company structure that people who hold tokens or NFTs in a project actually have some sort of power in terms of voting around stuff. So Illuvium is one of the few game projects that has a DAO. The game’s not out yet. It has tokens out, don’t think it has NFTs out. It's still kind of very much a work in progress. They had set up this DAO, which has been running for six months or so, and I think they vote in people who are going to be representatives of the community base. Because the game's not live, they're not really got a lot of important decisions to make. You can imagine it sort of like a town hall meeting and everyone shouting at each other and the mayor comes in and says something and everyone listens and they get back to shouting with themselves.
You have a lot of energy there, but then you do need some more formal structures to actually organize people and actually put specific things to the vote, which could be something stupid like, what's the color of the character going to be, or it could be something quite serious, like, should we spend a million dollars employing this developer to build some mini game or something?
That will take many years, I think, for that structure between Discords and more formal DAO structures to play out. But potentially you could see a thing where companies themselves - we're already seeing this to some degree, certainly in the VC space - people are setting up blockchain communities, DAOs, and there is no sort of legal governmental structure behind them. So you can't go, this company is based in the U S and has US law behind it. Because these are just people who have organized themselves on a blockchain. They may have a formal legal framework or contract between them about how they're gonna do stuff, but then they’re just voting.
More of the elements of what a game is get passed on to the community, through things like DAOs and representatives from the community and people vote. Those votes are not legally binding from the sense that someone could sue them because there's no law attached to it, but in terms of like the structure of the project, those can make decisions about the project and about the assets that the project can contain.
We've already seen people running off with all the money and they're just very hard to do well, I think, but Illuvium is an interesting example of a project that’s trying to put some of these features quite early on into its roadmap for the future.”
Performance marketing in blockchain games
Anton: “Arguably these users are more on the hardcore side - the ones that are willing to go through all the hoops to understand how to participate in sales, how to trade NFTs, participate in staking programs. And obviously when acquiring those users, it's very important for the developers to have a very personal relationship with them. But how do you think this will develop as, as the market starts maturing, as we start moving up higher to acquire more casual users? And if the games also become more casual, they might not be as invested in the communities and participating as actively. Do you think that the current ad tech stack will also have a role and performance marketing as a whole, at some point, or will these games sort of forever keep growing organically? Or do you think at some point when we reach a certain type of user that the need for performance marketing will kick in?”
Jon: “This is the start of an ongoing debate now around this. In the free to play mobile space, last year was complicated by Apple changing how people could target, which obviously has an impact. We’re seeing people moving to Android, even though the expectation is that Google's gonna make some changes as well. In the non blockchain space, we've seen that the beautiful system that was built around user acquisition is now maybe not terminally broken, but that's certainly changed a lot.
To that degree, a lot of those ad tech companies are looking to what's coming next. They built up over a decade, these very clever algorithmic systems. How could they apply those to other things? There are a few people that I've spoken to who are sort of actively looking at repurposing traditional UA tech and moving it to blockchain.
Most blockchain games are not free to play - normally you need to buy an asset in order to experience the game and that's because if you don't do that, if you're giving people free things, and basically loads of bots come in and you run out of money. So there is this difficult thing that, and this is the genius of free to play mobile games, was basically, you were just giving everything away and you had this brilliant targeting system that could find out pretty much what anyone's tastes were, and you could combine those two things very well.
To go laterally to your question - equally the problem with free to play games was there was basically a very tiny amount of people who would spend a lot of money playing free to play games. And there was 99.99% of people who never paid for any games, maybe saw some ads.
That model sort of worked okay because the ad targeting system got good enough to actually work out who the people who were spending a thousand dollars a month playing free-to-play mobile games. So it worked. The different thing about blockchain games is, at the moment it's not free to play. The whales will still be there and have large amounts of assets in the system.
The role of the whale is always going to be there and they're going to be powerful. A lot of these whale wallets sitting on Ethereum are well-known - you actually know who these people are. So you don't need clever user acquisition tracking because we can just see who these people are.
It becomes harder for the mass audience. If you don't have free to play - and I think it will be quite a long time before we worked out the balance between doing free to play stuff in some gated way - it’s still going to be more complicated than traditional free to play games. So you've got this massive audience of 3 billion people who are just used to downloading games on their phones and playing them. We can't download games through the app store. So there's lots of those things that were all built into the free-to-play mobile success story that are just not there. And I don't think we'll be there for a while. It will be hard on the Candy Crush type game to link everything together.
Key challenges for free to play developers in community building
Anton: “What are the key challenges that free to play developers are facing when trying to figure out how to involve the communities more in the decision-making? I think a big part of the pitch, usually around governance tokens, and other ways for the community to become vested into these games is that they will have some kind of decision making power there. Now obviously, the community rarely knows better than the game designers, how the game actually should be designed. But what could it be some of the ways to involve them?”
Jon: “The thing that sort of worries me the most is when game developers come out and go, this is the game I'm going to make and it's just sort of the roadmap for 10 years. And then there's all these decisions already made. And you tell them, that's all well and good, but what you see now, compared to what you can see in six months time is going to be very, very different. So if something is very different in six months time, how are you going to deal with that? How are you going to have the flexibility and the fluidity to keep the core concept for what you want to do, which is the creative bit of the process, but maybe change loads of other stuff around it. And I think that also plays into the community. How can you build a community saying you’re going to make this product and then six months later go, well, we said we were going to on this blockchain and we said, it was going to be about this, and actually we're going to do this other blockchain and it's going to be your mobile as opposed to PC. There could be a lot of things that can change and that's hard to bring the community along with.
An openness to change stuff. Hopefully that sort of plays into developers not pretending too much that they know and are in control of the system. Paradoxically, that can help with community. It's a hard thing because the community just wants to know some basic things about when the game is coming out, when's the second going to go to the moon. You draw out the more thoughtful members of your community by having those discussions where you're saying these are the things we've got to nail down, and this is sort of the core of the product.
I think we will see a whole wave of other stuff, which is traditional game developers making traditional games, but with NFTs. I don't think those guys are going to be going down in 2022 down the route of DAOs or giving community a lot of power. They're just going to be a bit like Ubisoft at the moment. Here's a game. You play the game for many hours and you can get free NFT. There's nothing wrong with that. I don’t think in the long-term that's where we would hope to see blockchain gaming, of NFTs being this retention model you can collect. But clearly I think for a lot of companies who are more traditional, that's where they're going to be and that's fine.
We'll probably see a joining of these two extremes some point down the line. For most game developers who have been making games for a few years, you don't want to jump in and try and make an Axie Infinity because that game took three years, four years to make, and it still has a long way to go to fulfill its potential.”