Why hasn’t there been a hit blockchain game in this bull market?

I have been at the 2024 Hong Kong WEB3 Carnival for almost a week, and I was packed with various meetings and face-to-face meetings. I envy those great people who can attend seven or eight events a day. I have basically entered a state of face blindness after three or four events, and I am still a little dizzy on the plane now.

Flight mode is the best time to sort out ideas. This time, W Labs and COMBO jointly organized a special Game House event for blockchain games. I originally thought that I could speak longer in my own field, but I didn’t expect that as soon as I started to shake my head on the stage, the host kept pointing to the watch to remind me that it had been 5 minutes. Huh? I haven’t even finished my warm-up activities, and it’s over like this? Hahahaha, fortunately, this melon still has the Buff skill of text output, so I wrote down the thoughts that I started but didn’t finish, for the reference of melon friends.  

The first question: Has the WEB3 game track been falsified?

This time, in addition to the activities organized by Guatian, I also participated in several panels with my friends. Everyone is still struggling about whether the future of the blockchain game track has prospects, because as of now, this round of bull market has not yet produced a phenomenal blockchain game similar to Axie and StepN in the previous bull market.

But my opinion remains unchanged: if you are optimistic about WEB3, then firmly look at WEB3 games. History has proved that games are the entry foundation for an emerging industry to enter the application layer (C-end).

For example, the development of the computer industry relies on chip upgrades. In the past 50 years, the most important driving factor for computer chips is the game industry. 50 years ago, the popularity of Atari game consoles and the popularity of Pac-Man PACMAN games around the world directly led to the emergence of the chip industry. At that time, Jobs was working at Atari for the only time in his life.

Another example is NVIDIA in recent years. Under the AI ​​trend, it has become the world's most outstanding high-tech handsome guy. However, NVIDIA was originally a game graphics card GPU. It was the money in the pockets of hardcore gamers around the world that contributed to NVIDIA's earliest cash flow.

Games are props for the general public to seek happiness and excitement. Those who get the C-end must first get the game.

The second question: So why haven't WEB3 games developed yet?

The answer is simple: too early + off track.

If you don't consider Crypto Kitty, which came out in 2017, the real chain game began to form a cluster effect from the Axie, which became popular in early 2021. It has only been a few years, which is too short. Let's first look at the transformation and iteration process of the first two stages of electronic games.

The first transformation: 25 years ago, Atari and Japanese Famicom transformed from selling hardware to selling software, because personal computers became popular. PC games became popular, and the payment for buying game software was changed to paying for online games or time. Companies like Steam that switched to distribution made a lot of money.

The second transformation: 15 years ago, mobile phones and pads became popular, and heavy computers were no longer needed. People started to play games for free and pay to play. If we continue to use the one-time purchase model of PC games, we will be outdated. Game-as-a-Service (GaaS) has become the mainstream business model for mobile games.

The second transformation actually changed the development model of the entire industry: for example, the cost of personnel. After the PC game was launched, the software was sold and layoffs began. Mobile games need to be developed continuously, and the personnel cost needs to be continuously increased. At the same time, the customer service staff needs to be continuously increased to continuously stimulate players to continue to pay. For example, more casual games and 5-minute games have emerged, because everyone has mobile phones and has fragmented time, so playing games or a 5-minute game is very suitable.

 What might be the third transformation in the future? Some companies are betting on the metaverse, and Facebook has even changed its name to Meta. The metaverse is very good. Everyone has seen "Ready Player One" and is excited, but it requires a lot of money, and the infrastructure must continue to improve. For example, many players will feel dizzy when wearing ordinary VR. Now Apple VR is said to be able to solve this problem.

In my opinion, WEB3 games, which are still in the early stages, may also be a direction. Have you ever thought about what the biggest difference between WEB3 games and WEB2 games will be in terms of the ultimate goal? If the game playability, entry threshold, project operation and talent reserve are all raised to the same level, what are the differences? That's right, it's circulation and payment!

WEB3 games must be combined with the greatest feature of WEB3, which is to improve the convenience of payment and transaction. Whether it is payment in the game or payment outside the game, it can be operated smoothly without having to involve the strict restrictions on various countries and regions on various distribution platforms. Meta must have thought of this, but its stablecoin Libra was soon stillborn, probably because it touched too many external interests. Libra died, but the Libra team wanted to get rich, so Sui and Aptos were born.

As I said before, the current WEB3 games have gone astray because the first hit chain game Axie gave everyone a Play to Earn paradigm, so everyone thinks that chain games can only be Play to Earn, so basically all projects are copying Axie's model, because after all, Axie makes a lot of money. Sometimes I have been wondering if the first hit chain game is a casual chess and card game, a project that is closer to circulation and payment, would the current situation of the WEB3 game track be healthier?

But it is better to go astray than not to go at all. It is normal for a big trend to start with naked Earn. For example, the beginning of the Age of Exploration attracted so many navigators to take risks to become Pirate Kings, not because everyone still insisted on getting rich through trade (finding India and China to smuggle spices and silk), but because they happened to discover large silver mines and lucrative human trafficking in South America, and they needed to have the first wave of profits that were eye-catching enough.

In the future, the greater wealth-creating effect will guide more teams to evolve in the direction of circulation and payment, so I firmly believe that the real bull market of WEB3 games has not yet arrived. The current situation of a lack of successors is a good opportunity for start-up teams that are still preparing to enter the market. When competitors have already expanded their territory and conquered cities, it will be really late to enter.

The third question: How can circulation and payment be embedded in WEB3 games?

The answer to this question is big. We are not capable of discussing legal and regulatory matters. This requires bosses who have top-level resources to show their skills in different countries and regions.

Let's analyze it from the perspective of economic models. If we can build an economic model for a WEB3 game, regardless of the effect, it can basically reach the level of a graduate student in the Department of Economics. Circulation and payment itself involve the operation of the entire economic system, just like how a real economy designs its fiscal and financial systems. It is necessary to first consider the basic level of the economy, the future direction of industrial development, the culture and cognitive level of citizens, and international relations, and then determine the tax and monetary system, and then see how to adjust hard expenditures such as national defense, infrastructure, bureaucracy, education and medical care.

The economic model design of WEB3 games is different from that of WEB2 games. Many parameters in WEB2 games can have a large tolerance because they are difficult to cash out and circulate. WEB3 games are different. They involve tokens that can be quickly cashed out, such as "currency standard" or "gold standard". The imbalance of various parameter designs can easily collapse. Imagine that so many economists and financial experts find it difficult to design a perfect economic model for a country, let alone us?

But it is still very tempting to be a keyboard warrior. Why were there so many knowledgeable big Vs on Tianya and Zhihu willing to give advice in the early years? Because it is a very pleasant process to put your thoughts into practice, even if it is on paper. At present, WEB3 games can allow you to build such a system. You don't need to fantasize about traveling through time, just come.

Of course, 100 economists have 101 economic theories, and even W labs has different understandings of the design of the game economic model. I can only talk about my own views in general.

1. First, compared with the friends of the Muslim sect who insist on decentralization, I prefer that the project needs to be regulated by visible hands at the beginning. Western free economics originated from Adam Smith's "The Wealth of Nations", which revealed the magical effect of free market economy on human nature and self-healing. Later scholars such as David Ricardo pointed out that under free trade, socialized division of labor and exchange can create higher value.

   But even Hamilton, one of the founding fathers of the United States, did not adopt the ideas in "The Wealth of Nations" when he served as the first Secretary of the Treasury of the United States. Instead, he used the theory of German Liszt, that is, an economy needs strong trade protection at the beginning, and strong tariff barriers are needed to protect the fragile industrial development of the country, and it is not released until it matures to compete with other countries' products. Don't look at the developed countries such as the United States and Britain shouting about free trade every day. When they just started, they protected their own industries more fiercely than anyone else. Slater, the father of the American textile machine, brought textile technology from Britain to the United States and is still called a traitor to Britain.

   It is the same in the WEB3 game model. At the beginning, various tokens cannot be allowed to circulate too freely, and a group of hungry wolves like Soros are eyeing them. Whether it is centralized regulation or guidance of internal mechanisms, let them mature in the system first.

2. Second, when the domestic industry gradually matures, whether to adopt the way of deep state involvement in economic circulation when Germany, Japan and South Korea rose in modern history, or the mechanism of small government and large market in the United States, Britain and France, depends on the style of the operation team. There are successful cases in both systems. The first one rises quickly and can be effective in a short time, while the second one has long stamina and a healthy fiscal model. The two models can actually be transformed at different stages of development. For example, the New Deal of Roosevelt in the United States after World War II adopted the first model, which was actually a replica of the Soviet Union's five-year plan at that time, but the effect was very significant.

   From the perspective of WEB3's economic model, the first model is based on asset appreciation, which can drive the GDP (FDV) of the economy to the top in a short time and attract more and more people to join; the second model is to use the established tax collection mechanism in the circulation link, and the main income of the economy depends on taxation, which is similar to the casino operation model. The perfect strategy is "first one, then two", but it is easier said than done. If you can achieve "one", you are already a rare talent. You also have to control your greed and force yourself to give up the wealth that you may earn in a short time. For the sake of the illusory future, I guess most of the team members will not agree.

   This actually answers the title question of this article. The popular blockchain games in this round of bull market should at least have achieved unprecedented innovation in some aspects, otherwise users who are already aesthetically fatigued by various Earn will not pay for it, or the innovation may have already appeared in a certain project, just waiting for a detonation point.

3. Third, if a project is lucky enough to enter the "two" stage, then it is a competition of circulation and payment methods. Who is more awesome. In the past few decades, the change in user consumption patterns has proved that whoever can improve the convenience of circulation and payment can lead the transformation of the industry: swiping a credit card can promote consumption more than withdrawing cash from a wallet, and using Paypal or Alipay can promote consumption more than swiping a credit card. It is difficult to change the user's habitual inertia. For example, it is difficult to get users who are used to Alipay and WeChat payment to go back to the era of cash or credit cards. In the future, if WEB3 can lower the threshold of user consumption behavior more than WEB2, then WEB3 games will definitely be able to make a breakthrough.

   
   How can WEB3 games continue to develop steadily in the "second" stage? The current economically developed systems in the world generally achieve three points: a limited free market economy, a social operation system with consensus, and the forward iteration of science and technology. Corresponding to WEB3 games, there are actually three points: eliminating barriers to circulation and payment, a decentralized contract mechanism that allows players to establish consensus, and synchronize the development of new technologies in the game industry (such as AI and VR).