Game Economist Cast
What does the new wave of open economies mean for monetization? Will negative externalities overcome cosmetics economies in the long run? What exactly does a game economist do?
Game Economist Cast is a roundtable discussion of the latest developments in mobile, HD, and crypto games through a bunch of people figuring it out using the economic tool kit.
Game Economist Cast
E12: Bots, Battlebit, Brawl Stars, and Battlestar Galactica
Chris takes another swing at mid-2010 gaming with an update on his Brawl Stars experience. Eric takes us to Vietnam for League of Legends game patching while Phil laments the very slow, not-so-fast F2P Revolution. Battlebit made waves as a low-poly indie shooter at $15 -- should they have gone free-to-play?
[1] Battlebit utilizes Low-Poly to beat Battlefield at their own game
His background was in casino. He worked in Vegas. Oh interesting, so he's working the tables.
Speaker 2:Yeah, this is a man who must love his loot boxes. Yeah, no he was the most pro loot box, pro gambling guy.
Speaker 1:not like super legit he was still. I want the game to be good. He's like a gamer at heart and all that, Not just the extract as much money as possible kind.
Speaker 1:It was interesting because so there were two, two guys I worked with who came from the casino. One guy from casino, another guy from like mobile slot games. The mobile slot games guy was super anti monetization of any kind. He was super burned by it and he hated it and was like I did the work of the devil and I'm here, I'm on the other side now, whereas it was just like yeah, there's like definitely healthy ways to do loot boxes.
Speaker 2:I love it.
Speaker 1:Let's start with utility.
Speaker 2:I don't understand what it even means.
Speaker 3:Everybody has some kind of utils in their head that they're calibrated.
Speaker 1:There's hardly anything that hasn't been used for money In fact, there may be a fundamental problem in modeling, when we want to model.
Speaker 2:Here we go, episode 12. We're back in the saddle. It's almost as if we're shifting to a bi-weekly really schedule, almost if the usual cast of characters and crew is here. Hi, I'm Phil out of Game of Conims Consulting. I'm joined by my normal two usual all-star co-hosts. I'm joined by Eric, head of economy design at SuperLayer, and also Chris, head of economy at Star Atlas. You got promoted, that's right, is it? Head of?
Speaker 3:economy. Am I saying that right? I think it's like head of economics, head of economics.
Speaker 2:Congratulations on the promotion, thank you.
Speaker 3:Yeah, it's been a long time coming, so I'm pretty pumped about it. Eric, how are you.
Speaker 2:Hey, I'm doing all right.
Speaker 1:SuperLayer launched a couple tokens a token this week, so that's exciting. I finally got it onto CoinGecko.
Speaker 3:Is it an XRP ruling approved token or is an XRP not approved?
Speaker 1:It's a so small that the SEC doesn't care about it. Token. Does this replace the other SuperLayer?
Speaker 2:token. What was it was on the Socialist Rally token. Yeah, no, we're logic a whole bunch of tokens.
Speaker 1:They're all different projects, but Interesting.
Speaker 3:Life at Star Atlas is exciting, as always. Doing 10 different things at once, it seems like, which is great for me because I'm an impatient person and I like to work on multiple things at once. So it's exciting. Personal life is good. I've been drinking decaf for the last two days, so that's an idea Decaf, yeah that's how my life is going. It's like non-alcoholic beer.
Speaker 3:You can only wake up in the middle of the night with cold sweats, so many times before you try to make some sort of change? Is it just? Is it a placebo?
Speaker 2:Do you still get a little bit of a buzz?
Speaker 3:I don't, I just need something like I need something black and dark that I can drink during the day. I don't know it's like an addiction. It's probably an addiction, but I'm not getting headaches.
Speaker 1:It's like when people quit smoking they have to chew a bunch of gum because they have an oral sensation. Yeah, this is like your patch. Yeah, exactly.
Speaker 3:I also started working out again for the first time in probably nine months. What's the regulations? What? What exercise? Running and then like body weight stuff when I get home like push-ups, squats, pull-ups if I can pull it off.
Speaker 2:Have you tried going econ on this, trying to figure out like what is your min-max activity, my min-max activity?
Speaker 3:is lifting weights like I'm not going to do that. It's like I used to. So I used to be almost 300 pounds and I am now 225 pounds. This was back in early days of college and I just started. I started adding running to my lifting procedure, so I'd run in the morning and then I would lift at night and I just went really hardcore into kind of the calorie counting thing. For me the min-max is a schedule on a routine. I have off days have to be the odd day out and not the other way around. It can't be like, oh, today's a workout day, it has to be like today's a break day, or I just I can't get into a routine.
Speaker 2:We have two wonderful articles to talk about today, or at least some discussion topics. Chris will be talking about Web 3 botting. That'll be good. That is actually like a very serious issue. That is, excuse me, unsexy issue, but incredibly important for thinking about prices and thinking about how your Web 3 economy is going to play out. And I will be talking about the free-to-play revolution, or the very slow, not so fast free-to-play revolution that seems to be slowly sweeping HD developers. We just found out that Naraka Blade Point, which has been a top game on steam, will be transitioning from free-to-play. Let's take a look at what's happening in that revolution, but before we do, let's talk about what we've been playing. Got a selection of good things on sale stranger.
Speaker 3:Chris, what have you been up to? What are you even playing? I have been addicted to a game and it is not Fortnite, but it is a. It is an arena game, it's a battle royale, shrinking map, sweaty twitchy gameplay. But now I'm versing sweaty twitchy 12 year olds instead of sweaty twitchy 15 year olds Brawl Stars, a supercell game, completely addicted to it. So far they have not hooked me on monetization, whereas Fortnite has officially hooked me on monetization. I have purchased the Battle Pass. In Fortnite, let it be known, I was sick of being a no skin and I wanted that sweet skin. But Brawl Stars is way too nice. I get pretty much everything I want by just playing the games. I haven't had a real reason to purchase anything yet because I get skins, I get special abilities, I get progression relatively quickly. I get pretty much access to most of the really good characters, like some of the top tier characters that I've done a little bit of searching on the internet what's the best character for this game mode? And I have access to some of them already and I've been playing for maybe two weeks or a week, honestly. So I'm curious how that plays out in terms of monetization.
Speaker 3:Now, Brawl Stars think a mix of. So it's a top down kind of a MOBA, feels a little bit like a MOBA. There are team modes, there are there's like a soccer mode, there's a, there's an elimination mode, there's a solo mode. A bunch of different modes, but basically top down little map. You're fighting other people with heroes that have a unique set of abilities, unique characteristics, different health bars, different super moves, different gadgets, all this kind of stuff. You're using those to kill the other, the other guys. So I've had an absolute just blast.
Speaker 3:When I get bored with one game mode, I go switch to a different game mode. This game it has for me. It has two hours of gameplay every single day. In terms of the content, there's just so much I could be doing. Even when I'm run out of quests and I've run out of stuff to earn for my character and my progression, I keep playing because it's just fun to play. So it's been an incredible experience for me. Until Brawl Stars I had not played a mobile game that I enjoyed. I started to try it out the hyper casual stuff and was just infuriated by all the ads. So I switched to Brawl Stars and it was just really blown away by their monetization strategy, namely no ads, and I don't know if that's true for all Supercell games, but I get the impression that's got philosophy. I don't know, Phil, if you have anything to add there, are they pretty much ad free.
Speaker 2:Always. They just have, I would say, a blizzard mentality when it comes to mobile, which sounds kind of paradoxical dimension. But they have a sense of what they want the player experience to be and they don't like when things interfere with that. And I don't always think ads need to interfere with that, but they can sometimes be obtuse and you only have so much control over your ad provider and they just are not interested in that.
Speaker 3:Yeah, the experience on Brawl Stars is incredible. Eric, were you going to say something?
Speaker 1:Supercell. I feel like they're like the premium top of the line, like mobile game developers. I think all of their games are super high quality and Phil said it's very emphasis sized on the gameplay and the player experience and all that. Obviously they do use paper power stuff that some PC gamers get upset by. But yeah, they make a lot of my favorite mobile games. I definitely recommend Clash Royale. That's by far my favorite mobile game.
Speaker 3:Actually, I have that downloaded. I have not played it yet because I so. I downloaded Brawl Stars and Clash Royale at the same time and I just opened up Brawl Stars first and I was like this is awesome, this is exactly what I want. One to two minutes of gameplay. It's super quick. I'm still in the early levels, so I feel way overpowered.
Speaker 3:I'm mostly when most of my matches until I get ranked up. I would love to see how they're. I don't know if anybody has any information on their matchmaking, but it was super awkward. Early on I hit this wall where it was like my matches were taking a long time to find and once I got in I was getting absolutely a limit. The floor was being swept with me. Now I find super quick matches and the competition is pretty low, so I'm really curious how that works. Mame, mainly do you get matched with a specific hero so you can have a super high ranked hero, but your level, your overall account, is not that high ranked and I'm curious do you get matched based on the hero level or based on your overall level? If I go play a hero I've never played before, am I getting matched up with people who have low hero levels or am I getting matched with people that have my same like overall level?
Speaker 1:My guess is it's not hero based. I think the degree of hero specialization isn't as sharp as in say like a fighting game. But if I had to guess and this is the way League did it, I think a lot of games do it is early on. It's basically just based on how much you've played. So I don't know if the game uses levels but early and then at some point they put you into the MR system and you're in the same bucket as everyone else and just your MMR just goes up and down as you win or lose.
Speaker 3:Okay, that makes sense.
Speaker 2:I would disagree with you, eric, and the only reason I would disagree with you is because there's vertical progression, when each of the characters, like you, can actually upgrade the stats of the characters, and so I would assume that they are matching based on the stats of the characters, and they probably have a behind the scenes system similar to Clash Royale, where it's okay with your net win total. Let's put you against those players, because I assume that you'd have very different win rates between characters based on how much you've invested in them. That would probably be the limiting factor. Of course, like they do everything they can to diversify your investments, it's probably the game that's most clever at diversifying your investments, because your total account score correct me if I'm wrong is in some ways relates to the investments you make in individual characters, and because you face an escalating marginal cost curve to upgrade those characters at some point, it makes sense to spread your investments so you can maximize your account level and make sure that you're getting more and more levels from your lower tier characters.
Speaker 3:So the way the levels work, as far as I know, you get these points for every single match that you complete.
Speaker 3:If you complete it with a specific hero, you get points towards that hero's level and their progression. But if you but, then that that also goes towards your total account level. So it's not necessarily about did I upgrade this character. So one of the main ways that you upgrade a character is either through just purchasing special abilities that each character has or by just doing kind of a level improvement of their skills, so their health and their health and their attack. So you can basically just do this kind of nominal increase and that doesn't give you points, that doesn't progress your account at all, that just makes the character better. So now you some an account with a lot of points and a lot of wealth is going to be able to level all their characters up pretty much instantly. In that case you could have technically a really low level account with a really very powerful character because that, but a low level character because you can level your character up, as far as I'm concerned, without having to hit some sort of level cap.
Speaker 2:No, that makes sense to me. I would just say everything about this game should not work.
Speaker 3:Just monetization wise.
Speaker 2:Who would think, though, like a MOBA would succeed on mobile in the West with real time inputs? How many games have even come close to trying to fast follow against this? It's been very few.
Speaker 1:I think Vainglory is the only mobile MOBA that I know of besides Pearl Stars. And then obviously the mobile legends Bang, bang and Wild Rift, but those came much later and those were just copy pastive League of Legends.
Speaker 2:This almost feels more like Overwatch to me than it does like a traditional MOBA, like they've stripped away so many of those elements to simplify gameplay into your point. Chris. What is a match length? 30 seconds, maybe a minute?
Speaker 3:90 seconds.
Speaker 2:And the thing that's most impressive about this game is that it actually gets you to switch playlists, like you end up playing a lot of different modes because they put in such deep sinks for the missions, and the missions really direct you To play a variety of experiences to level up, and they don't like. Again, though, when I hear designers like talk about this and hey, we want to incentivize diversity, it's almost always a tax on a player, because the thing that I have to use that I don't normally use is such a burden or it's such a decrease in enjoyment. Oh, my god, I'm gonna have to go from using a machine gun to sniper rifle. That's a dramatically different experience and skill set, but somehow, when I play characters in brawl stars or different experiences in brawl stars, it feels like I have a legitimate shot at mastering this, and there isn't all of these barriers on hate. This is a preference thing. This is actually something that I personally can come to master, or maybe there's an accessibility point.
Speaker 3:It's low stakes, right. If I'm playing magic the gathering arena, I'm stuck in probably a 15 to 20 minute ordeal with a fucking blue black control player who's gonna make my life hell Versus brawl stars. If I suck, I'm dead at 30 seconds. It's just such a low fixed cost associated with brawl stars. That's not in other games.
Speaker 3:One thing I wanted to comment on that I'm and I think I expressed this early on and when I was talking about this it's a frustration with the ability to spend. I know I can spend. I know I could probably sink $300 into this game and not max out like all the characters, but I don't know how to do that and I want to do it in the best way right now. I know that I have about 12 characters and they're all pretty good. I like to use some of them. I don't know which characters that I haven't unlocked are better. If I should go for them, I can try them out, which is really cool. You can try out any character. You can't use it, but you can try it out in like a bot match.
Speaker 3:But I don't know where to spend my money and that's frustrating for me and this is an issue that you'll have really with any game that allows you to pay for progression. Okay, I don't want to go down the wrong path with my money because I can't go back, and I wonder if I wonder if this is a me prop or if, allowing for people to just take back what they have spent and put it in some somewhere else. So let's say I go down a path being able to recoup the cost by either unleveling the character or maybe I destroy Equipment and that gives me points back that I can use to go down another path. That's super powerful for me as a consumer. Supercell is doing really well, so whatever they're doing is working. So I'm not going to come in here and suggest this a massive mix change up to their policy. But that is one thing. As a user, I'm getting as much as I want out of Brawl Stars and I haven't had to pay a cent, and as a game economist, that's problematic. As a player, it's awesome.
Speaker 2:If there was almost a refund, that makes the initial purchase more likely, like the refund ability almost puts Puts grease on the marketplace and makes all the transactions more liquid.
Speaker 3:If I knew right now that I could take my money that I spent and move it around the board as I wish, I would have spent probably $20 by now.
Speaker 2:Personally, but isn't the trade-off that you can allocate your resources to their highest marginal use? And so if that's the case, then when you only allocate your upgrades to like a couple different characters, and I'm sure that's the issue.
Speaker 3:Right, if people are able to allocate exactly how much money you lose the loot box effect, spreading out the spend over a long period of time, over many different things. Now, that said, brawl Stars is pretty much a live service game. It is a live service game, so they're gonna keep having reasons for me to spend my money as they come out with new characters, as they come out with new maps, but I could definitely see there being a problem with me being able to just move my money from character to character and Never having to spend more than $20.
Speaker 1:Yeah, it's the other slot specific issue where, if you invest a bunch of one character and then a new character comes along that you like better, you restart all your progression, restart all your monetization on that character. This is something we talked a lot about at League, which is that if you could just buy the same content and reuse it on every character at, the spend depth is way lower, right. But with a hundred characters, you've got a hundred slots, each one with its own set of progression to purchase.
Speaker 2:Yeah, it's a. It's a matrices. It's like what's the length of what's the width, so how many things can I spend on it? Individual character what's my spend cap and how many characters are there?
Speaker 3:Definitely. But one thing I wanted to point out from the players perspective, it's like a multi arm bandit problem for the consumer. I pull on this lever, do I like that? Okay, then I keep pulling on that lever until I get a negative reward and then I switch to a different lever and start pulling on that one, each character being a different arm of the multi arm bandit problem.
Speaker 2:And I think that's what we observe. It's when you fail is when you start to experiment, like when you run up against a wall. It's okay. What are some alternative strategies here?
Speaker 3:And maybe that's why I'm frustrated with the monetization technique, because I'm like I know what a multi arm bandit problem is and I don't want to waste a bunch of money pulling on levers that aren't gonna give me a reward. And maybe a 15 year old, a 12 year old or 35 year old mom has a completely different View of this. Oh, I'm gonna throw five bucks at this and I didn't like that very much. I'm gonna throw five bucks at this. Maybe that's not as much about cognitive cost as it is for me.
Speaker 2:Let us know how you progress or doubt. On my end. I've been playing space apes new game called chrome valley. This is a developer that's out of the UK. Ironically enough, they're also owned by Supercell believe Supercell took a majority stick on them a couple years ago. They have gotten some of Supercell's hand me down IP and they were most known for running these really skinny live ops teams, so they were running a game that was similar to clash of clans on the team of three. It was unbelievable what they were doing. They've been struggling to find a new hit. I think that this is going to be it. They had another one out that was called beat star. That was a attempt to bring back tap revolution.
Speaker 2:If you remember that early paid iOS game, they actually had to do a really great pre-to-play mechanics on. It looks like it's doing well, but this one looks like it could do even better. It is a match three. They hired a bunch of king people, so the match three engine is Something to be marveled at.
Speaker 2:I know a lot of people when they start to look at these genres, they like oh my god, what could you possibly spend all of your time thinking about? Why does king have 10,000 employees. That's insane. What are they doing all day? You just match three gems. How complicated can this be? But when you start to peel back all the different layers of what makes a game or what makes a genre, you realize that match three is this Incredibly sophisticated industry and that's why not anyone can make a match three game.
Speaker 2:So to give you an example of things that can happen in this engine, you're able to make matches as the other tiles are already falling. You can. You have this ability to like speed up Just the absolute crack of match three and just have dopamine injected into your brain and this game is very good at doing that, just like royal match did when it came out. That was the key innovation is that the engine was always turning, but only that you've got to calculate things like okay, what gems should I drop after someone makes a match if I want to have my forecast of them having one move left Before they lose be true?
Speaker 2:So the engine is like constantly, constantly trying like harness all this RNG or randomness, and Optimized towards okay, what is the difference at the end of the level between how many moves the player has and how many they would have needed to win and that's how you can cause things like okay, this player is going to be one move short, those near miss moments, or this player is only going to have one move until they they lose. You got to have control of that engine. That's ultimately what you're trying to show, and a lot of game economy models too, is that, especially in skill-based games like brawl stars, you only have so much control over the players outcomes. You have to set targets and your model should have what you think are the main inputs to a player having a be given output, and the more you can control that, the more that you can control progression and control the experience you're going to get for players.
Speaker 1:So these it controlled what drops you have to like essentially ease the difficulty. Like if it knows you're struggling it gives you easier drops and vice versa.
Speaker 2:So all match three engines will make adjustments based on your matches, because they can run at At the time of a given match what gems should they drop quote from the clouds and so they have the ability for their forecasts to get more and more accurate as a player progresses in a level. As well, they can change what gems are dropping to increase or decrease certain types of probabilities so it's Is the idea like we want this person to spend money on an extra move.
Speaker 3:Let's force them to need an extra move.
Speaker 2:With some degree of probability. Yes, okay, the sum degree of probability, because you they only control so much.
Speaker 3:That's not completely deterministic so, phil, help me with this. Like Match three is seems like the most basic, boring like game that you could ever imagine. Why are there so many of them and why is this a genre that's still seeing innovation, at seeing new problems?
Speaker 2:So we just talking about the match three engine. So there's all like the core match three problems that all these different games face, like controlling the number of moves a player has left Versus how much do they're allotted. That's the key lever. But the other thing is just the input method really matters. So there's swiping, there's connecting, there's pushing, there's all these different input methods that some people like more than others. You're gonna remember these type of differences are really minute Fuck it.
Speaker 2:We're gamers who care about, like, the clicks of mechanical keyboards. These are people who are gonna spend hundreds of dollars on this experience. They care about the little things, like they care about how the tiles dissipate when they make a match. They care about what happens at the end of the match. Those are all different things that make significant changes to the player experience. They care about the IP.
Speaker 2:There's a very popular match three Harry Potter from Zynga that does very well, where you collect beasts. But it's all built around this matching core that people seem to go. We going back to it really just. It really just delivers this straight injection of dopamine. It feels good to play this game. It feels good to match things like it. It captures what I think what is it?
Speaker 2:The Germans are called the Geist. The sense of pattern recognition is really satisfying, and in some ways they've increased the amount of RNG. I think that's been. The success of this genre is they've increased the type of matches to. That's the other thing. We call it match three, but there's different types of matches that you can have. So, to give you an example, like one of the big innovations and you might laugh at this has been the corner match. So this is, when you put four tiles in a corner, it usually makes what they call propeller, at least in Chrome Valley, and so that is an additional type of a two by two square shape a two by two square shape, and so that instantly increases the amount of matches that you have, holding all else constant on a given game board, and so more shit can happen.
Speaker 2:Also, when you make a normal match three, there's more probabilities for that given match to have subsequent matches from the new gems that will fall down Because that new arrangement like so you can end up creating this casino effective, almost like I'm pulling a lever and like a dope shit Is happening in front of me. You've convinced me, like there, there is a study test and we've talked pretty like hard level labeling stuff. Okay, do I make a level hard that tends to increase spend players expect? Okay, I'm gonna spend boosters. But again, I think it all comes back to the core that that EA never realized was ahead of them. If you go back and play the jeweled, go back and play the jeweled on an airplane, if you're listening to this, and then open your phone and open Candy Crush, and the Difference and experience is vast. And again, it's not just the juiciness of the UX animations, it's also just the core difficulty of hey, am I gonna have a near miss here? Is this going to be exciting? They've gotten all the optimization stuff down to the level difficulty.
Speaker 1:Yeah, so I was pretty new to the match through genre. I played a whole bunch to do some research on a project I was working on and this stuff goes deep and like the variety is pretty, pretty impressive and personally a Royal match was the one I played the most and like you start thinking several moves ahead, you start they add all these different objectives and special block types and goals and it like it adds a whole lot more to than just the old bajuul of make matches and have the score go up. Yeah, it's pretty impressive. I think my first exposure to that really deep puzzle player was talking to some hardcore puzzle and dragon players and they're showing you all these like crazy combos you can do and set up sort of oh, we're setting up this move five moves ahead of time to do this giant combo to do a ton of damage to this boss.
Speaker 2:Yeah, I don't know it goes deep. Speaking of going deep, battle bit, battle bit is out and all three of us are playing it, but I think, eric, you've been playing perhaps the most of it.
Speaker 1:Yeah, so I'm not a huge wargamer, but a battle bit is a. It's like a battlefield clone or Star Wars Battlefront if you played that. So it's this big map, there's all these two teams of people like running at each other and different capture points, and it really creates that experience of being on a large scale chaotic battlefield with grenades and helicopters flying around and buildings getting destroyed. But what's particularly impressive about battle bit is it's a small indie shop. They the news articles always say three people. I'm sure they had contractors or something but very small dev effort but very popular on Steam right now. Last I checked it was like the top 15 game on Steam had about 80,000 concurrent players each day, which is very impressive for such a small game and four weeks in it's still holding steady player count wise.
Speaker 1:The big thing they did differently was it's low poly, like everything's blocky. It looks like Roblox or Minecraft. The graphics are super low res. The game is built in Unity, which is not known for being a high power game engine but known for being easy to develop in, and they make it work and they make these impressive technical feat of 127 players on each side 250 players total on these large battlefields with long draw distances, all sorts of terrain, destructible terrain effects and helicopters flying around, which surpasses even the original battlefield games. The original battlefield games, I think, peaked out at 64 versus 64. And I think currently they only support 32 versus 32 gameplay, whereas this doubles, quadruples that. And a lot of what I think enabled them to do this is the low poly element that, by reducing the polygon count. For those who don't know, low poly means essentially like PlayStation one or N64 era graphics where, like you can see all the triangles on all character models. By reducing the graphical requirements, they increase the rest of the capabilities of the engine. You can have a lot more players, you can have a lot more shit going on, you can have much longer draw distances, which is very important for a big battlefield shooter, so some snipers way up on the hills can see all the way into the city and snipe someone in a building, and that sense of scale is really crucial for the fantasy this game is creating. Right, this isn't just like a close quarters arena shooter, it's like a large battlefield and you need a lot of players to also create that chaotic, huge armies clashing experience.
Speaker 1:What stands out to me is you've seen a lot of more retro, nostalgic games use low graphics to accentuate gameplay. I think the clearest example of this is in 2D platformers with pixel art, where you get much tighter controls, much tighter visual clarity with pixel art than you do with 3D models and full animations. And a lot of these great games like Celeste, super Meat Boy, shovel Knight, all utilize pixel art to create that tight 2D platforming. Battlebit seems to be doing the same thing for 3D shooters. We're like by having lower poly they can make the rest of the engine run faster, they can show more stuff going on and, yeah, honestly, I think they deliver on that battlefield experience better than battlefield does by reducing the polygon count.
Speaker 1:League of Legends is a pretty low min-spec and they grew all over the world. But in some places they have particularly bad computers, like in Vietnam, and I heard this story about eight years ago, so I don't know if it's still true, but in Vietnam most people don't have computers at home, they play in PC cafes and their internet speed is too slow to download patches on the PCs. So what they would do is, when a new patch shipped, a courier on a bike would bike to all the local PC cafes with a USB stick that had the latest patch on it and they would use that to install on each computer one by one. And then you'd grab the USB sticks and bike to the next PC cafe and then install them on one by one.
Speaker 3:Talking about marginal cost. Jesus Christ Right.
Speaker 1:When we talk about toasters right, this is what I'm talking about where they can't even download the game patch.
Speaker 3:Can I give my? That is a beautiful, eloquent summary of what this team is doing. I wanna give you guys my experience of this game as someone who hates war games and was not fully prepared for this game. First of all, the UI like actual, like menu for one reason or another was not correctly adjusted to my computer parameters, so it was like blurry. It was so blurry that I couldn't see any of the buttons and I was like, okay, they're taking this retro thing way too far. I can't read any of this shit. I thought it was, that was the way it was supposed to be. And then I found out that I'm an idiot and so I adjusted it, adjusted the specs to my actual screen. You know how like you'll have these nightmares or these dreams where everything's dark and fuzzy, you can't really hear, you can't really see everything, and you're slow and you just wanna wake up. That was my entire experience with this game. Like the whole time everything was like a mush of brown and gray. I couldn't see anything. I couldn't tell if that was a box or a person. Here's my hot take I think that this is a fad and I don't think that people actually enjoy this.
Speaker 3:I would. I think people prefer Battlefront. I think they prefer Battlefield. They're playing this because everybody's playing it and it's cool and it's new. I just do not believe that this is the optimal version.
Speaker 2:Chris, come on, man, you gotta give us a little bit more than that. What is the attraction here?
Speaker 3:The novelty, it is purely novel. 2d platformers, pixlr, the old, these cute shovel knight like Eric was talking about. These are actually UIs that you can interact with, and that makes sense. This is, that's, a viable user experience.
Speaker 2:Why can't we view this as an extension of Roblox? Roblox has the same type of graphics.
Speaker 3:The new types of the new games that are coming out of Roblox. For example, what's this shooter that just came out? So front lines on Roblox right, we are talking about Roblox. You think of worse than Minecraft graphics, but that is an engine. Roblox is an engine and it's an environment where you can design games, and now we have games like front lines coming out that look really good.
Speaker 3:So I don't know like Roblox looks bad because of a technical constraint that team faced early on. In so far as that was their business strategy let's deliver a product that's manageable, that we can actually deliver they knew that they could only do that if the body was composed of six parts. Then they started to expand on it and now you have games like front lines coming out. So, functionally, you can see the Roblox graphics getting better and better in order to cater to front lines versus in this game, it's like we took the step backwards. I could be completely wrong on this. Battlebit might be the next big thing, but I do think that there's a bit of. There's a bit of. It's the new hot thing going on and people want to get in on it.
Speaker 1:So, I agree that it's probably at its peak, honestly, and it probably won't grow to take over the whole genre. But I do think this style has staying power of going low-poly and focusing on your computational power on other aspects of the game.
Speaker 3:But for a technically a game where skill is important and I guess it's all relative. Everybody has the same handicap, so it doesn't really matter. But I know that for me personally, I prefer to play a first-person shooter. I was playing Call of Duty the other day, like that, the kind of extraction loop that they have now. I was playing that and I was like this is so much nicer than that. It just feels like a breath of fresh air. So I just struggled to see what is this delivering to me that Call of Duty or Battlefield is not.
Speaker 2:I think there's Eric's point of they've been able to raise the count of players significantly, which I don't think that gets you. I don't think that gets you 70,000 PSU by itself. I think the network effects that you've talked about, chris, also important.
Speaker 2:I think there's something about accessibility that DICE probably lost out when it came to Battlefield. That is something that requires a basically top-of-the-line rig and even then, if you aren't able to meet those requirements but can meet them in spec, you're still having a subpar experience. And you can have a wonderful experience on Battlebit with very low level of graphical requirements. You can max everything out and, to your point, you're not at a disadvantage, as Eric was pointing out. Like draw distance can be a real factor and if you win or lose in many of these games and I don't have to make any of those sacrifices. So in some sense it's a game that's not only accessible. There's an element of equality that comes with it. I actually think that's what a lot of Roblox drives too, is that they have kind of minimum platform standards. You can't have that many differences in those type of experiences.
Speaker 3:Do you think the cloud gaming guys are jumping for joy right now with this low poly?
Speaker 2:evolution. But it's also what are you avoiding at that point? Like it's an eight gig download compared to 140 gigs on Battlefield. Like the streaming is supposed to save us from downloads. I don't think they're saving too much here.
Speaker 3:Yeah, that's fair, but I think a potato could run Battlebit.
Speaker 1:It's being of cloud gaming. There was this interesting story that Justin Smith over in the Discord mentioned, which is like there was this game that Microsoft was releasing called Crackdown 3, and to show off their cloud computing capabilities. They're like look at these fully destructible environments and this tech demo where someone they blow up a building and the building falls over and knocks over another building and it's great. It was all these like explosions and shit breaking everywhere, and that was to show off the computational power of Azure and CloudBund, what they could do.
Speaker 1:But Battlebit does this all locally. Battlebit does this all just on your computer and they don't need that cloud computing superpowers because they can run it all locally. And you can blow up a building and there's just a bunch of gray cubes that go flying and that's fine, whereas if you're gonna blow up a building in Battlefield or in a realistic way, you have to show like wood splinters and glass shattering and concrete rubble textures. It's just way more computationally intensive. And, to Bill's point right, anyone can play Battlebit. Anyone can see these gray cubes flying and they know the building blew up and that's fine. They don't have to cross the uncanny valley.
Speaker 3:Chris, you're ready to concede.
Speaker 2:I got tattoo of us.
Speaker 3:I will concede that it has proven a technical point, I'm not convinced that it's proved a product point, like I'm not convinced that this is a better version of I'm not convinced that a person who's playing Battlefield or even a person who's interested in a first person shooter is gonna say, oh, this product is better than that product. I think the arguments that I've heard thus far have been a story of equality, distributing gameplay that isn't necessarily accessible to everyone, to everyone, which is awesome and that is a value add. I think that is a product, win right.
Speaker 1:Someone on a toaster in Brazil can play this game. They definitely can't play Battlefield.
Speaker 3:No, you're right. Okay, so I guess you're saying like there's a?
Speaker 2:market. How does the toaster interface work? Eric?
Speaker 3:You press the button, the gun goes boom, but aren't those people playing like? Isn't that what mobile games are supposed to solve? Isn't that something they already have the market for that?
Speaker 1:This delivers a different gaming experience.
Speaker 3:I'm not convinced on it. I'm not convinced on Battlefield. I'll have to. I'll give you guys my verdict two years from now, when I'm wrong.
Speaker 1:I think the other thing that really stood out to me is like what they did with their social systems and you mentioned Chris, like you're hearing these people just screaming out in agony when they got shot. So the game really encouraged you to opt into voice chat and even when you die, your mic automatically turns on and it's great because you hear people involuntarily after you shoot them. They're like, oh fuck.
Speaker 2:I didn't know it automatically turns on. That's incredible. Yeah, that's such a great idea.
Speaker 1:Oh, who the fuck shot me? It creates this much more personal experience where you're like, oh, I really got that guy. Or when people get down on the game, a medic has to come and revive you and people will turn on their mics and some people just like, hey, medic, medic, help me. Oh, thanks, you feel good about helping someone, rather than someone who totally mutes, stranger. But sometimes people will really lean into it and they'll just start role playing and be like, well, my guts are falling out, medic, I'm dying here. And the medic comes over and he's oh, let me just stuff back in there for you. Oh, thanks, doc, you're an angel, you know. It just creates a much more lively interactive experience. I think a lot of AAA games are afraid to allow for this fidelity of communication because they're afraid people are just gonna start dropping racial slurs or whatever. But for my experience on Battlebit, they have a really robust reporting system for if someone does do anything offensive.
Speaker 3:I think was it Battlebit that I had to sign an agreement that they had the ability to edit my language like my voice as I was talking, or was that Call of Duty? I recently I can't remember what it was, but it was either Call of Duty or Battlebit. There was a ton. No, I had to have been Call of Duty because I had to sign like a fucking waiver the size of the declaration of no, the quality that's scrolled it. It was insane. They were like, do you agree to this? I was like, yes, it just kept scrolling. But one of them was do you agree to allow us to edit your voice in order to improve player experience? Basically, what I assume is if they detect you're about to say fuck, they cut you off before you can do that, and I know there's a whole bunch of interesting new technology that's coming out with respect to voice editing, voice chatting.
Speaker 2:The Chinese government will love this. We're sure they'll put all those things to good use. Speaking of the Chinese government putting things to good use, should we talk about web three botting?
Speaker 3:The transitions are just honest Web three botting.
Speaker 2:Does that Speaking of, Speaking of Chinese gold farming?
Speaker 3:No, that's better Speaking of Chinese gold farming. One of the topics we wanted to talk about today was web three, botting. This is a topic that I brought to the guys, but I think that everybody will probably have something interesting to say here, so I'll give a couple of my initial thoughts. I have two main points about botting and Web 3. And I guess what makes botting, at least right now, a bigger issue in Web 3, or why it's particularly interesting to talk about, and those are.
Speaker 3:The first thing is that blockchain games, especially right now, are relatively simple. So a blockchain game is pretty much a collection of a bunch of transactions. So you think about a first person shooter where somebody can turn 15 degrees and shoot somebody and jump all simultaneously. That's really difficult to completely capture on a blockchain. Blockchains are things that have address, unique, a unique identifier, whatever the program ID was. So what happened? What was the thing? And if you think about turning, jumping and shooting at the same time, it's really hard to capture that on a blockchain in this very transactional, very programmatic way. So a lot of blockchains are very simple. Okay, I'm gonna move from space A to space B, I'm gonna mine, I'm gonna scan, I'm gonna do these very simple activities.
Speaker 3:So that's my first point or observation with respect to botting in Web 3. It's that blockchain games, especially on-chain games, are very easy to bot because the mechanics are very easy. So you can think about automated botting, where you're just letting a bot do something, boring, some mundane task over and over again. Or you think about skill botting, where you have the bot participating in some sort of skilled activity, optimizing the play. If you're thinking about a card game, maybe the bot will be able to calculate the optimal play for you and execute that. So that's the simple blockchain game problem. They're easy to bot because they're simple. It's much easier to create a program that bots moving around a map, like in Star Atlas's recent test of blockchain movement, than it is to program a bot that can aim at somebody's head and call a duty and kill them instantly.
Speaker 3:The second issue that's particularly faced by blockchain games right now is the real money issue. So there's a huge incentive to cheat and to create bots in regular games Web 2 games for purely the joy of winning. I'm gonna bot because I wanna win. Or I'm gonna bot because I want a more powerful character. And runescape I wanna level my character up in wow. I'm gonna create a bot to do that for me. This is particularly problematic in Web 3 games because of the real money incentives. So you add on not only the gameplay layer, where people just want to win, but you also add in the fact that you get rewarded with money or at least some sort of cryptocurrency that has some inferred value on a secondary market somewhere. I have a phrase in here let's not forget the archaic term play to earn, which was, I think, probably maybe a year and a half ago.
Speaker 2:That's 2020, that's so 2020.
Speaker 3:Yeah, dude, you could be in this industry for three years and you will have experienced the entire life of play of Web 3 gaming. So I was there when play to earn was, then it was changed to play and earns, and then it was changed from play and earn to play and own and win and any combinations You're meant to play. Anyway, whatever you wanna say, the reality is one of the huge selling points of Web 3 gaming is that you get these assets that have value on a secondary marketplace. I don't care if you're talking about getting rewarded with a token. I don't care if we're talking about arbitrarily being rewarded for things that maybe shouldn't be rewarded for. I don't care if the value of that thing is $0. There is value to these things and they're traded for positive prices on a secondary market, which means that there are real money incentives. So this introduces an entire incentive mechanism on top of just the pure joy of winning and botting. So there are these two huge issues, that kind of blockchain games that are facing that regular games don't necessarily face.
Speaker 2:Could you talk? Do you mind just spending one moment talking about why botting is problematic for the developer? Okay, people might be coming on playing my game. What am I losing by that?
Speaker 3:happening. That's a really good point. So there is the most obvious point and then this is with I like to distinguish botting from problematic botting and automated botting. Automated botting is not super problematic in that you're just, they're just not. It's not the person playing, the person is not the one on the other end of the controller, it's a bot which is. I don't have anything wrong with that. I have problems with exploitative botting.
Speaker 3:So if you think about Call of Duty, somebody using a bot to manipulate the point of the game, changing the point of the game so from a game design point of view, this would be somebody who's breaking the rules essentially. So you have these two kinds of bots. So from a developer's point of view, that first bot, that automated bot, that can be problematic because those things can run 24 seven. And if they're churning out a shit ton of SFTs that all have market value, that market value is gonna plummet because the quantity of that thing has gone up. Classic quantity theory of money. If you just multiply the number of outstanding objects by 10, the price will presumably go down by some magnitude, probably close to 10. So that's the first issue. It's just this pure. We talk about inflation of assets in web three gaming all the time. Now, if you have proper sinks in place, that is not as big of an issue. It can still cause problems, but if you're burning as much as you're putting in, no matter what and the real value comes from the arbitrage opportunities. So you think about Eve online. But you're moving a good from this marketplace to that marketplace because there's a price discrepancy. That's fun, that's like the point of the game. That's where the value is generated for players, not necessarily in these like just produce asset, sell asset on the marketplace.
Speaker 3:The other issue is really just an issue of fairness 99% of your. You think about the Pareto rule 2080. So 20% of the population has 80% of the productivity or 80% of the wealth, like the Pareto principle. And you have the Pareto distribution which basically says that there's, like this very productive group of people, that's a minority of the economy and they're going to take over a majority share of that economy. So you have this issue where you go from a 2080 rule to a 199 rule where 1% who are using bots have 99% of the wealth. And that's problematic because it makes me feel like my contribution is trivial. And if we've got these huge hyperinflated assets. In terms of quantity, the price will be super low. So it's not really that interesting for me as a player. So I would say those are kind of the two issues. From a developer's point of view, it kills incentive to be a regular old player and also can kill your kind of financial side if all the prices are zero.
Speaker 3:One last thing I'll talk about before we open it up is mitigation. So how do you mitigate in blockchain games, the botting, it's pretty much you can use all the same principles that you can from web two gaming. Web three gaming provides a couple of interesting opportunities, namely the fact that you have this perfect transactional history of everything that ever happened on the blockchain. Now, if you have a good server and you have a good client, that's, and you're tracking your data very well, you can do this. On a web two server, you can look back at all the data. You know exactly what happened when it happened, but the blockchain gives you the opportunity to essentially see where the funds went. So if you see somebody do something, you can track where that NFT ended up. Which wallet did it end up in, which is an interesting caveat, one of the antibody kind of mechanisms that we ended up coming up with for Star Atlas's sort of demo or movement test on the blockchain, where players are moving from space A to space B and collecting some sort of prize on space B.
Speaker 3:One of the things we did was we introduced an entry fee. Now this entry fee was just held in escrow and then it was given back to the player when they exited. So it was basically saying you can't just spawn up one million bots and have them go at it. You need to back that up with a thousand Atlas per bot. Atlas is our cryptocurrency, so if you have a million bots, that's gonna cost you a billion Atlas, which is a ton of Atlas. So this was automatically just, for the most part, putting a pretty hard cap on scaling. Your bots is gonna scale cost wise, linearly. You get that money back, but you have to actually have that capital. So that's that helps to mitigate.
Speaker 3:We chose to not go with a upfront cost because we didn't feel like this was a product that was worth charging people to play. If it was, we may have gone with a thousand Atlas fee in order to spawn an asset. Now, in Star Atlas proper, or really any other web three game, you have to own an NFT to play the game. That's pretty much always a entry fee is to have an asset, so you can almost think of this as the premium model. You had to have spent money on the account in order to play the game. So if you wanna bring a million bots in, you have to bring a million ships in and that's gonna cost you a hundred million dollars. This addresses kind of the scale issue of botting, where you don't want your entire economy to be completely overrun by bots. Where there's 99.9% or bots because they can infinitely scale, this limits the amount of scale that a bot can get by linearly increasing the cost associated with that scale. That's one of the main ways that is very easy to implement as a block, as a blockchain game or as a web three game, because you have all everybody has this currency, there's a limited quantity of that currency and have an idea of what is the typical person going to be able to spend, because you know exactly what's sitting in people's wallets.
Speaker 3:Another option and I've heard mixed reviews of this option and this is pretty common in web two games as well is it Captcha. So, eric, you talked about Sunflowerland having a botting, anti-botting thing with a Captcha I've heard of. There's like a startup that does like very cute, sexy Captchas that are almost game play, and I think there's a Captchas involve just this constant cost where you have to constantly be updating your system. It's kind of like any security software where it's okay, we wrote this software, it's impossible to break. Now the technology increases, the botting technology increases. Okay, we've got to change our constantly having to update your Captchas to be more and more sophisticated, because every single time you update there's going to be a bot that can eventually solve that Captcha.
Speaker 3:There's probably a mix of traditional methods and these design choices that are going to ultimately mitigate botting. I want to say traditional methods. I'm really talking about making a game that's interesting, with non-trivial or non-choices that are not where there's not like an optimal choice. So you basically are indifferent between two options. So you're not. This is not this. Option A is not dominating option B. So as a player, as a bot, it's not obvious which options should I choose, and so you have this very complex strategy space. That's a little bit harder to write bots, but really bot mitigation and just bot discrimination is a powerful tool in and of itself in reducing the amount of botting behavior in a game.
Speaker 3:When we announced that we were implementing an anti-botting proceed measure in our escape velocity game, we saw a 75% reduction in activity period in the game overnight. So we had this scaling botting issue in the game. It was just getting over, it was rolling out of control. So we finally said, okay, we're gonna nip this in the bud and we saw a huge reduction just by announcing it. And then, once we actually did the botting, once we actually implemented it, we saw a spike again because all the people who didn't get caught were like, oh okay, they're gonna start their wallets back up. So it's really interesting sometimes just having it there. It's like law. I know there's a 25% chance that I get caught for this crime, so I'm not gonna do. It Doesn't really necessarily mean that they have some sort of really sophisticated way of catching you. It's just the fact that it's there is going to mitigate the botting behavior in and of itself.
Speaker 2:I don't think, chris, you can use the law and order economic playbook on this, because if you get caught in botting, the worst that can happen is your assets are seized and so you only lose whatever is in your account, and that's usually not much compared to going to jail for years.
Speaker 3:Yeah, that's fair and you bring up a really important point that enforcement is difficult. You could ban a wallet and that wallet can just transfer those assets to another wallet and use those assets. You can ban a mint from participating in your environment but for example with, like our ship NFTs, all of those ships have the same mint, so you can't ban one specific actual asset, which is ironic.
Speaker 1:But yeah, to your point, like law and order, you need some kind of punishment, some kind of penalty, and what Chris said about requiring a ship to play or, for example, twitter added like the blue checkmark you have to pay money to have a blue checkmark. Or maybe the game requires you to put in a deposit and you can get it back if you quit, as an honest player, but if you get banned, they seize your assets. Having some kind of thing to dangle in front of the player and say, look, if you do something bad, we'll take this away from you, is important. Yeah, leagues definitely struggle with that exact issue described. We're like, literally, you shut down a bot farm, they just set up another bot farm, right, there's no real consequence.
Speaker 2:I actually think Web3 has the answer to this and they've been sitting on it for a really long time which is real ID verification, especially when it comes to marketplaces, because if you do get caught, it's hard to copy another ID and there are platforms that have versions of this that are much weaker.
Speaker 2:So this is what Valve tries to do on two fronts. One is that you need two factor authentication enabled to be able to do trading and you see this in almost every MMO to Korean MMOs as well Because it's much harder to spin up a new email address once you've gotten caught or, excuse me, a new phone number which you've gotten caught for trading, and the other thing they'll do is they will have trading cooldowns, where you can't trade an item for so long, or there's a trading lock, because the other thing that was happening to your point, chris, is that sometimes people were dumping items into other accounts. This is when you start to play the hat game Okay, I'm gonna trade to this person, I'm gonna trade to this person. You're not quite sure who in the chain, even if you have perfect records, is real and which one is fake, because they're moving it so quickly.
Speaker 1:It's a trading cooldowns.
Speaker 2:Yeah, it's money laundering, like you can launder items in MMOs. It's extremely common. You can launder it on real accounts too. Right, like you can transfer it to it. You can have a real employee, can have 10 bots working underneath them, and so they can funnel this to a real account. So there's so much laundering that you can do. But almost all of the crypto web three platforms have real ID verification and this, I know, strikes at the heart of web three's anonymous decentralization. But let's be honest, that show was out the door months ago.
Speaker 3:What's really interesting about that is that was probably the biggest pushback we got was whoa, you guys are just like putting the hammer down. You're not supposed to be able to do that. This is decentralized. You're seizing my assets. Now we had the opportunity to seize those assets because we were doing this in a gumdrop, so basically, whatever they had accumulated up until that point, we dropped. And so this way, we just said don't drop X amount because that was botted. But if it's real time, you have to catch these things and you do have to go to the account level, which is much more problematic for some of these web three native folks.
Speaker 2:They'll get over it. They'll get over it. Lookie, if you want this shit to work, get over yourself.
Speaker 3:That's one of the things that I find so fascinating about the web 3 community is that they want control and they want Governance, but they also don't. But you also want a game, so we do need to produce the game in order for it to function. So there's definitely an awkwardness there, and I think that the entire community is gonna have to come to terms with that.
Speaker 1:The fact that we're game developers at the end of the day, that you mentioned real ID checks and those are like pretty effective I think in order of quality emails, probably the weakest then phone verification. But you can spoof phone numbers, you can do ID checks or they have these Liveness checks where they use a camera and just look at your face to make sure you're like a real face. But the thing is these are all expensive and maybe it's on the order of a few cents to a few dollars per user. If you're really getting attacked by bots, right, then you know you're paying a dollar per bot that just enters your system just to kick them out again. That can rack up pretty quick. But I know Counter-Strike go had a big smurfing problem and they used phone verification and that massively improved it. And to for the accessibility point there, okay, we're not gonna ban you if you don't phone verify, but you just cannot play certain ranked modes or you will can't match make with other verified players.
Speaker 2:I think phone verification is probably the cheapest, best ROI anti-botting technique and the only thing you need to do really is beat the average hourly wage relative to costs of the next best Option for the botter. You just have to make it so that CS go is not as much of a profitable activity as Going to star Atlas.
Speaker 3:So that's one of the that's one of the things that I pointed out. It's like so with botting, you have this issue where eventually, it's no longer profitable to bot in that environment. So you almost have this, this market for bots, and it's like the South African security system problem, where it's like you just want to have the best security, because the bots will come to your house if you have the worst security. So they just they go to the weakest link and that's where they're gonna get their wage. So you have to make it, you have to balance it so that they the wage of being a bot is poor compared.
Speaker 2:I think you use a lot of what we do when it comes to drug enforcement. There's a lot of economics that go into. Okay, if you end up taking out one of the largest cartels that sells drugs, what's going to happen? The price of whatever drug they were making is going to skyrocket because supply has now been Constrained quite a bit. The supply curve has moved inward because they were producing, like, tons of cocaine. All right, cocaine prices have gone up. What does that mean I actually incentivize is more people to go out and make cocaine, because the marginal benefit of making that cocaine that they were Making it is so high. And so I wonder if there's the same case with botting, where if you restrict a lot of bots, it's not going to impact the global price. So there's still this really hard marginal benefit for the first couple botters. But again, is that equilibrium lower than if you didn't have enforcement yet? Yeah, it is, but you still have this kind of recursive effect of the more I make enforcement on botting make sense, the more profitable is the bot.
Speaker 3:Yeah, that's true, very high marginal cost and then super like a very, very steep marginal cost curve.
Speaker 1:What is this South African security thing?
Speaker 3:I don't know if this is like common knowledge, but I just I remember in one of my econ classes one time, and I don't know what the topic was, but they were talking about security systems in South Africa. So South Africa crime is insane. It's like a different level. If you're in the US, you don't even know like South African crime is insane. You'll your house will pretty much get broken into it's at one point or another. The idea is that you want to have the best security system to mitigate. So you have option house a and house b. House a it the criminals gonna get into your house, no matter what. You want to have better security than your neighbor, so the criminal chooses house B because it has worse security than your house when I speed on the freeway, I try to be the second fastest car on the road.
Speaker 3:Exactly, and that's the point. Right. Like you don't, you are not gonna get rid of bots. You're not going to. You want to try to disincentivize botting and you want to try to make it so that there's other, more viable Places to put your botting expertise.
Speaker 2:So let me ask you this though if the way that bots ask act negatively for developers is that they lower global price and ultimately, like, they capture some of the gains of that lower price from the initial price without the bots, what do you think is the impact in terms of revenue? Do you think bots Produce or end up capturing, let's say, 5% of the revenue that developer might otherwise have, like in a good bot system? Because this is a tax that I guess every open marketplace would face. What do you think is the size of this tax?
Speaker 3:there's a discussion we can have about identifying Legitimate wallets as players. Hey, there's a huge issue in the web 3 community or web 3 industry in Calling a wallet a player, which is not necessarily true. You could have a hundred thousand daily active wallets. That doesn't mean you have a hundred thousand daily active players. Yep, there's that aspect. Right, if 99% of your activity is bots, like where, as long as I guess, as long as, as long as the revenue is coming in from the business's point of view, that's fine.
Speaker 3:But in video games industry we really care about customer attention. We care about people attention, person human attention and getting eyeballs. Because you think about some of the major free-to-play, for example, revenue strategies. Those revolve around getting eyeballs, specifically with ads, and I think that web 3 is definitely eyeing down Advertisements and partnership deals right now. That seems to be the direction that some of the bigger Protocols are going.
Speaker 3:Polygon has a lot of relation, some strong relationships with some of the biggest brands in the world and if 99% of your bots are Sorry, of your players or bots, that's not very attractive as a third-party advertiser, for example. It may not seem like a big deal right now because most of these companies are getting their money from either Primary purchases or secondary purchase fees, royalty fees, which doesn't get impacted by bots that much. But once we start to talk about, once we start to get into the actual money making part of this industry, where eyeballs are important, it'll become a problem. So, speaking of free-to-play and advertisements, phil has some degenerate thoughts that he would like to share with us. He's spreading the gospel of the free-to-play Bible.
Speaker 2:I have been trying to argue for this Bible everywhere I've gone. We have more news that another game has made the switch from a paid product to a free-to-play product. This is Naraka blade point super interesting game. It's done really well. On steam it's been a premium game. It's BR, it's battle royale 60 players, third-person martial arts. It has all the markings of a game from the east in terms of the type of font that exists within the game as a very particular Eastern font, and it also has a Loop box system that is very similar to what you might find in a lot of Eastern games. But it's done really well. It's been like an underground hit and it's finally announced that it's gonna go from a $20 premium product To a free-to-play game.
Speaker 2:And so, if we count the wins that the free-to-play Camp has had over the last couple years, it started with a lot of smaller titles, gathering steam, but we're talking about major franchises here. Halo infinite had their multiplayer go free to play. That's a huge watershed moment, in my opinion. That didn't get enough attention because ultimately the performance wasn't good. Again, that has nothing to do with free-to-play and has everything to do with Halo infinite's multiplayer content. I think you'd say the same thing for Overwatch 2, which went free to play. Again, it didn't have the greatest outcomes, but still that was a huge franchise that used to be a $40 launch product when it came out. Rocket League made a huge transition and it hasn't gotten a lot of attention because most of those stats are now on the epic game store. It's primary form of distribution. Destiny, has been a huge one that I don't think people have really taken into account. Remember that used to be paid. And of course, we have Fall Guys, which went free to play, and again, that seemed like a Last, desperate effort. But not only that. We've seen games like PUBG Go free to play as a defense mechanism when it came to battle royale, and so I think there's just this puzzle about why it's taking these franchises so long to turn to free to play and what's really holding them back.
Speaker 2:And so there was this really weird period in the 2010s when a bunch of companies tried to do free-to-play on HD and it just really never went anywhere. So there's Battlefield heroes that made some money here and there that was a game that was actually launched out of the browser. Call of Duty online was a product that Activision gave a shout at. This is mostly for the Chinese market and it was based on the modern warfare for Jin. And we also saw FIFA world, which was the attempt at taking FIFA ultimate team and making it free to play for a Western audience. And again, the other thing I want to mention here is that FIFA actually is free to play in the east. It's called FIFA online and actually does crazy business.
Speaker 2:No one talks about that, but I think there's been these scars that executives have had on K. We tried this HD thing for our franchises. It didn't really work out or really burned by this, and right now the only thing that really gets their hands, that really forces their hand on a free-to-play move, is when they start to see competition. I think that's exactly what you saw when it came to call duty warzone. They're just a simply no market for a paid battle royale game, even if just a feature add-on, and hey, let's make this thing free to play, and end up being one of the happy Accidents that they would have otherwise never had done have they not had competitive pressure. It's completely transformed their portfolio. Warzone is really the focus of so much of called duties development now, because not only Do you get some uplift on the HD version, but now you get uplift on the battle royale version as well. So it's a.
Speaker 2:I think the other thing that that you saw really happened, that prevented freedom play from spreading in HD Was just the digital physical divide. And again, that sounds very nuts and bolts and very brick and mortar, and of course it is, but you never have seen a free-to-play game distributed physically. It just doesn't make any sense because it's going to be connected to a live service. It's going to be connected to something that requires you to be always on, and so you think about where the market was in, say, 2013. You're looking at a 50-50 split between HD games that are distributed physically and HD games that are distributed digitally. Okay, you're gonna make a free-to-play game, half your audience has already gone and you haven't even launched the product yet, whereas today it's almost the inverse. If you want to game only physical, you're gonna lose out in so much of your audience. 90% of sales are digital in the West on HD, and only 10% are on a physical disc. So, like that, distribution has completely changed and I think it's made this so much more viable. It's now a sort like you can go after different studios once you have free-to-play.
Speaker 2:I'm most interested in Ubisoft's ex-defiant, which is going after Call of Duty. It's gonna be the free-to-play version and, eric, I know your fond of miHoYo's Ability to transform Nintendo franchises that are paid into free-to-play live services and then go after them. So the revolution is here. The question I start to ask is who's the next one? Who's gonna figure this out? Who's the next one who's gonna have either their competitive hand forced or some other publisher is gonna go knocking on some paid game and say, hey, you think you're gonna get 60 bucks a year out of this game. We're gonna launch a free-to-play version and we're gonna eat your lunch like this. This is coming and it has been coming for a while. It's just been slow moving.
Speaker 3:Are there any genres that Don't seem to jive well with free-to-play at this point?
Speaker 2:I don't think a single player. I don't think was it turmeric tunic. Whatever indie game stuff you play, chris, is probably not appropriate fit.
Speaker 3:Okay, that was my thought. Single player campaign doesn't make a lot of. You have a revenue tail.
Speaker 2:You have a revenue tail.
Speaker 3:You got to have a retention, no tension greater than one Did so I guess free-to-play and live service are those one in the same, like pretty much go hand-in-hand. You can't be live serve. You can't be free to play without live service. I agree with that. I.
Speaker 1:Not the other way around, though. In order to monetize free to play, you need to have some kind of ongoing long tail retention and more content pushes that you're adding more stuff for you players to buy. So free to gate play games necessarily need to be live service, but I don't think the inverse is true. A lot of these games that Phil mentioned, like Rocket League and Overwatch and StarCraft 2, that started with a box price and then transitioned to free to play, they had live services going on and they were monetizing that tail of engagement. I think it's an interesting question as to we're seeing all these games like Naraka, gate, blade Point Switch from box to free to play, and I think there's a few ways to interpret this right One is hey, maybe they should have been free to play from the beginning and they just made this late switch because their business executives weren't on the ball.
Speaker 1:Another perspective is that launching as box first and then transitioning to free to play is almost like a discounting mechanism later in the game's lifetime where, hey, people aren't buying this game anymore. But we need to extend our engagement, especially for our old players. We need to feed them more players to play against, and we can attract more new players with free to play and they'll keep feeding the old players who are continuing to monetize. I think it's without a counterfactual. It's hard to say whether free to play is a. Is it a desperate last grasp or is it a like what they should have done all along? But I do expect we'll continue to be seeing this trend.
Speaker 2:This is something that Miles Metzger, on the article, had pushed back on, is exactly that point, eric, is that perhaps this is actually optimal. This is an optimal strategy is to launch as a paid game and then dip into that price discrimination, that time-based price discrimination, when you only have the marginal highest valued users and get that 30 to 60 to 100, whatever it may be dollars at the point of sale. I guess my question to you would be do you actually believe that? Would you actually think that League of Legends would have made more money if Allerant was a paid game for, let's say, a given period of time? And I guess that's the second question is how long do you keep a game paid to maximize your revenue, to suck up all of the people that have those really high marginal benefits?
Speaker 1:Yeah. So there's one angle, which is the price competition. Like you mentioned, battle royales just cannot release box price these days and I think Warzone had their hand forced. But I think if you're making a new game, if you're not sure about the engagement tail, is this going to be a thousand hour game? Am I going to monetize these players a year out from now? I don't know, For those games it might make more sense to charge up front. If you're creating a more of a novelty game like Rocket League right, and you're not sure whether this is going to have sticking power, but people are excited by car soccer Maybe you charge them up front price. You've sunk millions of dollars into this game. The game is fun, but you're not sure if your monetization hooks work. Charging up front price it's the, I think, the lower risk option and especially if your game is innovating on gameplay or even innovating on the monetization model, it's the lower risk option. The key assumption is that long tail of engagement and that long tail is monetizable.
Speaker 1:And not all games know that for sure.
Speaker 2:So if I'm a developer, I'm thinking about my optimal strategy. You're saying one of the things I should do is consider my competition. Are there free to play alternatives to the product I'm producing? Do I have some sort of semi monopoly on the product I'm making? And if so, I should potentially go paid?
Speaker 2:Let me just actually inverse the question a little bit. Electronic Arts does paid early access for special editions, so you might have a week of early access to a game before other people get to access it, and so you might pay a $20 marginal premium on that. Could you imagine another model where the game is free to play but almost from a branding perspective, what you do is you actually sell a monthly pass before the game is released for, let's say, 20 to $40. Do you think there's anything to working backwards from a game being free to play in the box rather than from box to free to play? You start with the assumption that the game is free to play and then, before it's going to come out, you could sell passes for like $20, like sneak peek passes.
Speaker 1:I think some games and Miles's game from a spellcraft, I think it was they're planning for the game to be free to play, but in early access they charge $30 for it. I actually think this is pretty common for indie games that want to go free to play but don't have their monetization set up yet, and you can think of that as early access.
Speaker 3:It's interesting. It's like it's almost like a Kickstarter, except for those players end up funding it for everybody else to have it for free, which, to me, is weird, and I think that actually a lot of web three games will end up being something similar to this, where those early players are the ones who provided the support for their company to put out this sweet game and then eventually, through either a lending protocol or some sort of guild agreement, players are able to come into the environment for a much lower price entry cost than some of those early participants. One of the things that comes to mind when we talk about moving from premium to free to play and I'm still not quite grasping, phil you're this idea of moving from free to play to premium. Is that what you're saying?
Speaker 2:I'll start with all of the models that if you're going to go out and say I'm going to launch as a premium product, I'm free to play. There's very few people that do that as an outskim. There's actually only one that does it that I've seen do it, which is called a row company, which is a game from a studio in Alabama that's been around for a while called high res. They said, okay, we're going to be paid product, but we're going to have a founders pack that you can buy for $40 and it's going to be available for one month before we. The game goes free to play.
Speaker 2:Most of these transitions that we've been talking about when it's stumble guys, when it's Rocket League these are not the intention of these games, or at least they didn't have a date in Excel somewhere where they're like we go free to play and they haven't talked about or advertised it. This would be like, hey, this game is free to play, it's going to launch in the month, but if you want to get a sneak preview, pay $30 beforehand. I think that's much more similar to the EA model. You're already putting something down, that you're getting a small window of early access.
Speaker 3:One of the and it gets around, in my opinion an incentive. Not an incentive problem, but like an expectations problem with moving from premium to free to play. If everybody knows that a game is going to go free to play, you're just going to see lower user numbers early on until you guess. Why would I pay $30 if I know this game is going to go free to play in a year or six months?
Speaker 2:And almost to your point, eric. One of the things that lets Battlebit be a premium game is the fact there really isn't a free to play battlefield alternative. What is operating at that scale is like maybe Planetside too, but it's such a radically different experience. There still has been no one who's made a free to play battlefield alternative.
Speaker 3:So, going to this competition point that Eric made, I really like it right. It almost seems like competition is forcing certain game genres to go free to play. It still seems to me, though, that there is an ideal candidate for free to play. Fractionalize ability is the game. Does it have the ability for you to fractionalize it, sell it in little tiny chunks without it breaking the game system? I think, eric, you gave a really good reason for why the Overwatch campaign mode didn't really work.
Speaker 1:The way you monetize a PvE game versus PvP is pretty different, exactly.
Speaker 3:So this being able to fractionalize it in ways that doesn't ruin the progression and the gameplay experience is very important. It almost goes to is can it be loot, boxified? Is it fractional? Can I invest in one single character or do I have to invest in the entire game at once? Where I'm saying that ability to fractionalize is conducive for free to play. And then the other point I have written here is low marginal cost of production.
Speaker 3:We think about those old subscription model MMORPGs. They had to pretty much release like one tenth of the game every couple of months in order to keep and retain players. It was high marginal cost. So we have to deliver this new product pretty much every six months, every year. That was one of the issues, with not issues, but it was one of the things that World of Warcraft faced.
Speaker 3:Once people hit their level cap they were like how do we keep people playing this game? We'll release an update. That's much more expensive to create a new map in World of Warcraft than it is to create a new skin or have a new season, new battle, past. All this different integrations at Fortnite, for example, is able to do. They make one small map change to their map and I'm sure that's much less work than creating a new campaign for World of Warcraft. So, do you guys, do you think that's fair? These two principal components, or we're not doing a PCA. These two principal things. Am I wrong? Am I missing something? Is there something else that, like what makes a ripe free to play opportunity?
Speaker 1:Yeah, I think you nailed it. It's long tail engagement and monetizability of that engagement. And I think what you said about the fractionalization and can you dole out chunks of content yeah, can you monetize that tail effectively and some games just can't do that.
Speaker 2:I would maybe be a little bit more pointed in, like how you think about picking the paid premium fruit and transforming it into free to play once you bite into it. I think first of all, you have to avoid monopolies Like FIFA. You're never going to take down FIFA because FIFA has monopoly on licenses. So you're screwed. Stop trying to make a fucking non FIFA licensed soccer game. It's not going to happen. You're not going to work.
Speaker 2:I think Call of Duty is an interesting one to go after. You're trying to look for big franchises that pull in $60 every single year. You're looking for the ones that consistently make money year over year. What are the franchises? I think this is what Path of Exile did to Diablo we're talking about. There's a reverse Blizzard thesis, almost like you drop weird production values and you ramp supply, but the other piece of that is you go free to play. I actually don't think you need to do anything for supply.
Speaker 2:So I guess the question is what other big franchises are out there that could use make money year in, year out? That could use a challenger and I do think, like we saw, is a prime candidate of someone that just makes Assassin's Creed over and over again. I'd love to see an Assassin's Creed that is made with a lot more UGC content or AI content. I think there are what's a good way to describe how you weaponize this. There are I don't want to say Trojan horses. There are some sorts of Trojan horses you could use to get into a franchise that Ubisoft has owned and they've been playing it for a really long time and eat their lunch money. What other big franchises are there that's still $60 that sell in year in and year out?
Speaker 1:I feel like most of them have some kind of lower price alternative. I think Monster Hunter and Dawnless was like the free to play variant Monster Hunter.
Speaker 3:it depends on if you see that as a campaign game. Technically it's a campaign game, but I put that in the same category as I put Diablo in. That's a PPE experience that you can play indefinitely in game. I don't think that type of a studio would be interested in going free to play.
Speaker 2:I actually think it's a Nintendo. I think it's a Nintendo that we were talking about Mioho lately, and this is what I've heard to be their stated strategy, or at least what some podcasts are reporting. As their stated strategy is take Nintendo and live service free to play. There are a lot of people that want to experience those Nintendo piece. What have they?
Speaker 1:done besides the copied Breath of the Wild's art style, but it doesn't seem like they're going after Mario or Pokemon or anything.
Speaker 2:That's fair. I think it was very clear what the Zelda live service twist was, and I don't know if they've found out how to twist that yet. I think Mario Kart exists, called Car Rider, plasma makes a fuck ton of money. I think you can do it. You can do it. I think you're going to be in the next franchise. No, I think about Pikmin. I wonder if you can go after Pikmin.
Speaker 3:That's a tiny category I feel like you mentioned Pikmin way too much.
Speaker 1:All right, yeah, no, platformers have been hit. Kart riders have been hit, Fighting Smash Bros there's Brawlhalla is free to play clone, plus a bunch of other indie ones. Pokemon I'm sure there's a gotcha games are basically Pokemon.
Speaker 2:Episode 11 game economist cast in the can. We should teach this to our children.
Speaker 1:Economics. Everyone has to major in economics. Number one for personal survival economics. What a great subject, I think.
