Crafting web3 games

In the early days of gaming, most console games focused on solitary play. Initial hints of multiplayer gaming were present, but it was Massively Multiplayer Online Games (MMOs) that upended the gaming world with their community-centric design. These games spurred player interactions, fostering collective quests, team co-ordination, and work for the greater good. It was the dynamic social aspect of MMOs that transformed gaming from a solitary pursuit into a social and cultural sensation.

With blockchain games, games can use the core tenets of blockchains - ownership, decentralization and transparency. Gamers can truly own their game characters and items, use these assets to craft skins and trade them for assets they need, take their assets to other games with interoperability of assets.

The community economics of web3 unlocks:

1. Fairness and Transparency
   Blockchain games offer a new level of fairness and transparency that is impossible with traditional, centralised games. In conventional web2 games, developers control the game economy and host the assets on their servers. They set the game's rules, and they can change them at any time. If the game decides to nerf weapons and skills, the assets you earnt or purchased disappear. This is unfair to players, as they may have invested much time and effort into the game only to have the developers yank it away from them.
2. No walled gardens
   If you observe gaming history, distribution platforms have always dominated the space. In the early days of console gaming, the console makers Sony and Nintendo controlled which game developers they would support. Steam, the digital distribution service, cornered the PC market as the only way to download Valve’s games - Half-life, CS: GO, and Team Fortress. Once they became the defacto distributor, they became rent extractors forcing indie developers to pay a higher cut of their revenue. Apple and Android are notorious for skimming 30% off every transaction: whether you buy a 20c skin or a monthly game pass.
3. Community interactions
   Blockchain games bring a new level of interoperability. Imagine if you could take the Spiderman skin you bought on Fortnite to your Call of Duty game. This integration is complex and requires standards between games on asset interoperability and revenue-sharing. However, we are at the cusp of these interactions as NFTs can act as IP representations and track every use precisely without requiring prior agreements. Developers can mod web3 games, create new levels, and add new characters.

Powering Games as Services

Even though the ‘picks and shovels’ play is famous in investing, companies completely missed out on Infrastructure during the early days of web2. Amazon started AWS in 2003 and reinvented the way businesses bought compute. When asked about the reason for AWS’s dominance, Jeff Bezos remarked - “The greatest piece of luck in business history-we faced no competition for seven years”. During those years, AWS observed how developers used AWS and tackled adjacent spaces important to developers, including storage, media, end-user computing, load balancing, etc. to become the de facto infrastructure provider to the world.

AWS CEO Andy Jassy said that startups and businesses Amazon’s offer to do the non-differentiated heavy lifting has an enormous appeal as it frees up time for developers to innovate. According to him, Innovation requires two things-

1. The ability to try a lot of experiments
2. Not having to live with the collateral damage of failed experiments.

The ability to experiment with low setup costs increases the number of attempts startups can take at hitting PMF. While startups can iterate quickly after learning from their failures, games can know if they made it only after releasing the game. If the game fails to succeed, the game studio is left with a massive budget hole with nothing to show.

It's tough to come up with a fantastic game that’s new, unique and original and something that also sells. Users might never try if it’s too different or similar to other games in the market. Game development requires massive upfront costs, and revenues are heavily reliant on the success of their games. Revenues fall off as games lose their novelty period, and the game gets repetitive and boring. Creativity can strike from any source, but it needs a massive budget and a brilliant team to bring this vision to life.

PUBG creator Brendan Greene initially developed a Battle Royale mod for a game called ARMA2. But to convert his idea into a fully-fledged game, he joined Bluehole Studio as the creative director and worked with a team for two years to create a beautiful, realistic, action-packed game. His dedication paid off, and Battle Royale took multiplayer gaming to unprecedented heights with PUBG achieving a peak concurrency of 3.2 Mn gamers. AAA Games with a typical $50 Million budget take 3-5 years to build with a team of 100-200 developers. These developers burn the midnight oil through stringent timelines to ensure that they make a game that delights fans. It is challenging to anticipate what will be popular in the future and game developers try to iterate on new ideas that change the genre, create immersive experiences, and shatter old ways of developing games.

One failure can set back a studio regarding financial impact, revenues, and resources. The much-awaited Cyberpunk 2077 from Projekt Red was in the works for over five years with over 500+ people working on it. Cyberpunk drew interest with a dystopian open-world game that gave GTA vibes with an expansive open world, interactive NPC characters, and a storyline with multiple sidequests. The game had 8M preorders because fans banked on the reputation of Projekt Red’s Witcher, a game known for storytelling ingenuity and technical innovation. When it finally launched after multiple delays, the launch was so disastrous that Sony pulled it from their stores and offered a refund. The gameplay was buggy; character progression was half-baked, and the story consisted of only 24 hours of gameplay at launch—the game launched on 10th December, marking CD Project’s share price peak. CD Projekt still has the very successful Witcher franchise but this failure set them down.

In the olden days, gamers would buy a game, download it, play it from start to finish and try to resell it after completing the game. The industry's move towards games as a service model is changing the monetisation towards micropayments and subscriptions. Games that can hold users' attention require new content, scalable game servers, and global CDN infrastructure to manage game traffic and deliver a smooth experience. This infrastructure is critical to every gaming company if they want to deliver the best performance, uptick and frame rate. Take Akamai, a CDN that most gaming companies use to provide gaming experiences to users worldwide through edge computing and ensure that gaming connections have low latency.

LiveOps is a style of game management that treats games as a live service and continually delivers new features, updates, promotions, in-game events to improve the experience for gamers. LiveOps teams focus on providing consistent improvements to the game to engage and retain users. Teams can add new features and new modes such as multiplayer, matchmaking, exclusive content, cosmetic items that get unlocked after players reach a certain level, holiday live events, and leaderboard challenges.

Asia has always led this model of releasing games for free and charging for stuff within the game- F2P + LiveOps. Fortnite popularized this model across the world with Season pass. Gamers who buy the season pass get new cosmetics when new maps and content are launched. This has considerably extended the lifespan of games and increased game revenue. By keeping content fresh, Fortnite has consistently made $5 Bn in revenue every year since it launched in 2018 (except for a small dip to $4 Bn in 2019.)  

Web2 Gaming Stack

Web2 and Web3 gaming stacks largely remain the same. From a technical standpoint, blockchains are a new type of backend for games. Web3 games sync with blockchains to enable new functionality of ownership, decentralized game building, and interoperability.

We can split web2 gaming infrastructure into three modules - Development, Deployment and Distribution.

Game engines provide a framework for creating games, and include tools for designing levels, characters, and other game assets, as well as scripting and other features that are useful for game development. Game engines take care of rendering, handling user input, AI logic, and multiplayer networking.

Game deployment stack is used to deploy and run a game on the internet. This includes a variety of components such as Game servers, database servers, load balancers, monitoring tools, and deployment automation tools.

Game distribution stack is used to distribute the game to players and handles the game clients, game stores, CDNs to deliver game assets efficiently and payment processing systems to handle transactions while purchasing games and game assets.

Blockchain Gaming Infrastructure Stack

Web3 gaming Infrastructure makes it easy for developers to design, develop, ship, maintain and grow games that sync with blockchains. Web3 gaming infrastructure simplifies game development, reduces costs, and enables seamless integration with blockchains. Acting as a transport layer for intangibles, infrastructure providers handle blockchain-game interactions, freeing developers from headaches.

Blockchains

Porting gaming assets such as weapons, characters, abilities, and levels from web2 to web3 can give users the freedom to manage their assets, join and leave games as they please. Gamers can purchase an NFT from the marketplace to start playing and sell the NFT back to the market once they are bored with the game. Blockchains can manage game state for on-chain games or prove fairness and transparency through Verifiable functions. Blockchain-based marketplaces can act as new ways of accessing games rather than be closed through a proprietary ecosystem of iOS Store, Play Store, PS, and Xbox Stores.

Gamers can choose from multiple blockchains to build their games. Polygon and Solana have high transaction throughput which makes them suitable for games that require fast real-time gameplay and low transaction costs so that gamers don’t need to worry about the cost of every transaction. Some L2 chains such as Immutable and Myria are focused on gaming-specific needs to attract game developers. For example, Immutable X is the official marketplace for all gaming NFTs to make trading easy. Myria is working on Morphing NFTs , every Myria NFT seamlessly integrates as a playable character that becomes your avatar across every Myria game.

All-in-one SDKs

Purpose-built gaming APIs such as Sequence, Nefta, and Ankr cater to comprehensive gaming requirements, facilitating gaming asset management as NFTs, NFT distribution, and NFT ownership transfer. Gaming SDKs such as Sequence make it easy to integrate with multiple blockchains as well as handle the wallet experience on the user end. Users don’t need to download a non custodial wallet and can pay with fiat. Interestingly Sequence’s makers -Horizon Blockchain games are also the creators of Skyweaver, one of the most successful web3 games, and Niftyswap, an NFT swapping protocol. They seem to be taking a leaf out of Epic Sweeney’s Unreal playbook: create a game and release the software for others to build on.

As tooling is built out, it increases the chances for game developers to mix and match new genres to create new experiences, formats, and game designs. Once a particular model is established, game infrastructure providers build the infra needed to remix this format and create your own game. Many games such as PUBG and LoL started out as mods but now have infrastructure providers that can help you create full-fledged games with ready-made game kits.

SDKs provide the easiest way for developers to start building web3 games as they abstract the difficulty of integrating with blockchains and also integrate with web3 wallets directly, making it easy for gamers to own assets and enjoy web3 experiences.

Creator Tools

Most of the tools used for creating games belong to the web2 gaming stack. There is a lot of scope for creator tools to rethink gaming development. The current explosion of AI is seeping into gaming tools and will drastically cut down development time. Truth be told, AI has already seeped into games. Elden Ring’s director Miyazaki mentioned in a pre-release interview: “We automated everything we could—to make sure that our team had plenty of time to make the game more fun to play too. Some asset construction and placement, AI base creation, and even a bit of debugging were all automated.” With the democratization of AI tools, these tools will be available to anyone. Create photorealistic worlds with just a prompt on Runway. Anything.world is an animation system that integrates with Unity and Unreal engines. It rigs characters automatically using AI. The explosion of mobiles + data created a world where everyone is a gamer. Generative AI + ownership will make a world where anyone can create a game. The more people can handle the brush; the more creators can create unique and immersive games.

Tools such as Blender and Unity have pre-made assets, materials, lights, scripts, and even full-fledged cities that you can import into your workflow, slashing creation time. There are some free assets, but you’ll need to purchase most of them on their marketplace before importing them into your game. That’s because there’s no model for incentive alignment. On AWS, you can pay per your usage because AWS can reliably measure how much internet you are consuming. Let’s say you build a script for the shooting and reload gun action which games want to reuse. Figuring out how to split the revenue fairly and legally is a hard problem. The first step to finding an answer is recording how these assets are being used vis-a-vis game revenue. If we can NFTize each asset and track usage, we can develop a pay-as-you-earn model.

Playable Worlds is building the infrastructure for gamers to create dynamic worlds with on-the-fly updates and two-way connections between UGC and gamers. Users' ability to modify and create content increases their participation and unlocks new game models that focus on creativity. In the words of Ralph Koster the CEO, “You cannot disentangle the notion of ownership from the fundamental fact that somebody else owns the server that embodies all of the ownership data,”. He believes that games should allow ownership but were limited by the lack of technology till blockchains came about. Yuga labs partnered with Improbable, a Metaverse software company to create the Otherside’s metaverse. In their first test run, 4500 Bored Apes jumped into the Otherside together and had a seamless experience where they could hear and play concurrently without lag.

Moonstream lets you add minigames, in-game items, airdrops, lootboxes, loyalty programs, leaderboards, crafting, and other mechanics into your game with ready-made recipes.

Another tool that helps gamers design games is Machinations. Machinations helps you model your game economy(including tokenomics and NFTs), simulate different player scenarios and target specified outcomes of retention, game enjoyment, and user earnings. Check out this model developed for Kaiju kings, which helps you calculate earnings after n number of turns using Monte Carlo Simulation. What's exciting about Machinations is that they follow a similar pricing model to Dune. As a new designer, whatever you design is Public by default unless you subscribe and make it private. This democratises game economics by allowing developers to observe other games, fork their mechanics, and observe how they can change these variables to create new game designs.

Tokens & NFT Issuance

Stardust is building custodial wallets that make it easy for web2 games to integrate NFTs into the game. Gamers don’t need to download a wallet like Metamask and learn the ups and downs of signing transactions. Eliminating this is crucial to onboarding more users. Reddit followed the same approach where they didn’t specify that their Reddit avatars are web3 assets on the blockchain, but they got an insane interest in users purchasing avatars. Stardust makes it seamless for developers to add web3 functionality without hiring blockchain engineers.

Metajuice is converting Avatars into NFTs and focuses explicitly on Fashion. Gamers can purchase NFTs such as shoes and jackets to equip their characters. Metajuice comes from the IMVU team; IMVU is one of the avatar-based game giants with 1Mn+ daily users. Gamers become creators, whipping up new dresses and selling them to other gamers who want to ensure that they dress up where it matters- in the metaverse.

Engines and Backend

Game engines are GUI-based building blocks for developers to create games, 2D and 3D renders, graphics, physics, sound, network, scripting and memory management. “This allows developers to utilise pre-made functionality that is common to most games when creating their own, and only create the parts that make the game unique,” according to Godot’s lead Linietsky. Godot is an open-source engine taking on the established game engines Unity and Unreal. Unity and Unreal became incredibly popular because they are platform agnostic and support console, PC, mobile, VR/AR games.

Unity started as an open-source graphics tool, is relatively easier to use, and has large community of developers who share resources and provide support for one another. Indie developers use Unity to create games as they can find a ton of pre-made assets. Unity is a classic case study of Clayton Christensen’s theory of disruptive innovation. While other game engines targeted the big AAA game makers at the top of the console and PC markets, Unity went after independent developers with a less robust product better suited to their needs and budget. Before Unity, it was virtually impossible as you needed to code up every action yourself. AAA studios typically use Unreal to develop immersive 3d games. Since these engines have become almost industry standards, web3 gaming infra products usually hook on to either.

Web3.unity is an SDK developed by Chainsafe labs that connects the Unity game engine with EVM blockchains. The SDK supports seamless web3 sign-in, NFT minting and selling support, and custom smart contract calls. Ready Games is building an SDK to integrate with Unity to build web3 mobile games. In-game assets and avatars are built as NFTs that can be ported over cross-chain. Joyride is similar to Ready games, acting as a Unity SDK plugin; it also supports modules for Esports, hypercasual and social mini-competitions. Their wallet has inbuilt payment rails with KYC and tools to airdrop NFTs for engagement and rewards.

While these engines are working on adding web3 functionality to web2 game engines, what we are really excited about are native game engines that can create fully on-chain games.

Metaengine is working on a collaborative game engine that integrates natively with blockchain infrastructure and an inbuilt publishing platform. The team has previously built Hero Engine, a cloud collaboration engine for FPS and RPG games powering 30Mn+ active MMO players. Developers can use built-in blockchain interactions & decentralized storage to crate games as well as use the blockchain to distribute games.

These SDKs have to support player actions at low latency. Imagine you are running around and picking loot from your opponent. If these are onchain actions, the lag you can potentially face breaks the whole game experience. So developers have to strike the right balance in figuring out how many of these should be on chain actions. Teams like BreederDAO are working on establishing these standards to simplify NFT asset creation.

Livops and Analytics

Homa is a gaming lab that scopes trends and analyzes your game data to iterate and come up with new ideas to improve revenue. They test different creative assets to optimise discovery on the app store, ad campaigns to target new customers, product recommendations, and UI changes to improve player LTV.

Telescope Labs, MetaOne, and Nami are building analytics products to help web3 game devs monitor and optimise game economies. The stack combines in-game data with on-chain wallet actions to monitor user acquisition and retention. Based on this, they generate unique insights to increase retention, and suggest improvements to manage inflation and liquidity of game assets. Spindl measures user attribution across web2 and web3 social to observe campaign effectiveness and drive users through the funnel to the desired action.

Studios can use analytics to observe how their titles compare against other games, investors can evaluate what games have the best earning potential and invest in assets with the highest ROI.

Wallets & Identity

Lysto is working on bringing gamer credentials on-chain using what they call ‘Proof of Play protocol’. Checking what level someone’s at is as easy as checking their address on Lysto. Hopefully, once we are able to measure gamer reputation accurately, it will no longer be possible for gamers to claim expertise and end up destroying billions of dollars. Lens, the web3 social protocol is also entering gaming with its acquisition of Sonar to power decentralized social identities.

Luxon reads users' transactions on chain to identify their playing style and help them utilise the right game heroes and employ the right strategies. For example, Luxon identifies traders interested in earning from the game rather than playing. It directs them to the best method to stake their NFTs and make the most profit. Players get strategies on how to improve their game character and earn rewards.

Soulbound is building a universal identity for gamers to maintain their reputation across all experiences. Top-tier players can find other top-rated players and build teams to compete in quests and Esports competitions.

Marketplaces

Aqua is a web3 gaming marketplace acting as the discovery tool for many games including Gods Unchained, Guild of Guardians, Delysium. Aqua is also working on an embedded marketplace so that gamers can buy, sell, and trade assets in the game itself. Many games are following this route to control gamer experiences than send them to a marketplace like Blur which don’t pay any royalties to the game.

One trend that’s going on is the advancement of cloud gaming. Even though Stadia shutting down is bad news, games are working on cross platform accessibility. What better way to access games than just jumping into the game without downloading? Check out MagicEden, where you can instantly start playing any of their 20+ games. Complex games will still require massive downloads and user-end rendering, but we are on the way to seeing instantly playable AAA games.

Distribution

Sesame Labs is a marketing platform to drive gamer engagement with powerful campaign management tools and incentive management via quests.

Xternity makes it easy for web3 games to target non-cryptonative gamers through a web3 CRM solution. Developers can engage users by launching NFT drops, and running special events.

FreedomGames partners with web3 game studios to help them port their games to consoles. They have relationships with the major consoles and inform games of any changes that they need to make for getting approval for consoles. Community Gaming is a live Esports platform where gaming brands can run tournaments to encourage users to compete and win rewards.

The Choice lies with you

Now that you have a good understanding of how blockchain gaming infrastructure landscape, the next step is understanding what are the right tools you should add to your workflow. It comes down to identifying what type of game you are trying to build and what actions you want to enable on-chain.

If you are a web2 studio entering the web3 gaming landscape for the first time, we suggest making a list of the features that you want to implement and finalize on a Blockchain+Gaming SDK that enables the functionality you need. You can also check out Polygon’s Blueprint guide which details the benefits and drawbacks of different game choices.

If you are a crypto-native gaming studio that has experience building games, you can go beyond the SDK layer and interact with specific infra. For example, if you are building on-chain games, you can use Metaengine to convert all your game actions into on-chain immutable actions. For distribution, partnering with the most famous gaming launchpads will give you a boost in getting your game in front of web3 gamers.

If you are a gaming infra provider laying the foundation for the future of gaming, we would love to talk to you and support your journey with help from our inhouse gaming experts!

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