Seeds of change
There’s been a lot of hoo-ha around crypto-gaming as of late and as a resident pseudo-expert on all subjects crypto in my neck of the woods, I often get asked questions by family, friends and colleagues enquiring just what the fuss is all about. I have to say that, in the beginning, my response was more or less “I wish I knew”. I often wondered about crypto and blockchain-based games myself yet never ventured in that direction, not even remotely, despite being part of the target audience. You see, I grew up in the Golden Age of PC gaming. By the time I graduated high school, I and most friends I kept company with had each spent tens of thousands of dollars on game titles and PC upgrades. Yet, crypto-games never really took off for the vast majority of gamers in my demographic.
As CEO of Cypherpunk and adviser to the Investment Committee, one of my responsibilities is to apply a first-principles approach toward dealflow analysis and provide frameed recommendations. The past week has been clarifying to say the least — it’s amazing how a couple days research into a subject matter can change a person’s entire perspective toward an industry. Let me save you the hassle of repeating that journey and give you a rundown of what I, and many before me, have concluded is a literal game-changer without any intention for pun.
Humans as social beings love being social and we are constantly reinventing ways to better structure and participate in different forms of group dynamics. Radical innovations in socialisation are often triggered by the adoption of technology. So what is the metaverse and what makes it so compelling that even Facebook couldn’t resist rebranding itself as such?
The use of the prefix ‘meta’ is intended to be self-referential, either as a reference to oneself physically or to a set of beliefs, values or ideas we subscribe to. Metaphor, for example, is an expression used to replace the original with an analog for comparative purposes. Metamorphosis, likewise, is a process that abruptly and radically changes the state of an object. Metaverse, by extension, is a transmutation of the physical world (or universe) around us in a manner that reinterprets and reimagines that reality. It is very much a fourth industrial revolution phenomenon.
Virtual Reality (VR) is an instantiation of the metaverse concept where real world features and functions are virtualized, manipulated and perhaps even exaggerated to create a unique yet relatable experience for the user. More recently, Augmented Reality (AR) has entered the metaverse phraseology which describe the amalgamation of the physical with the reimagined (digital) as a new cohesive whole. The grafting of electrode dot matrices onto the retina of the blind to create synthetic vision is one life-changing example. The use of holography and interactive surfaces at scale to render virtualized dashboards and simulated artefacts on top of physical environments is yet another application of AR.
These are examples of the metaverse where user experiences are enhanced through the application of technology to alter and manipulate the physical environment thereby creating a hybrid digital-physical ecosystem if you will. It is essentially our physical universe undergoing forced and intentional metamorphosis — from universe to metaverse. The end goal is to exponentially expand socialisation and radically alter social dynamics in the way we work and, perhaps more recently, the way we play.
The way we play
In 2016 a trilateral collaboration between Nintendo, The Pokémon Company and software developer Niantic saw the release of Pokémon Go, a live action augmented reality title that thrusted the venerable Pokémon series deep into the metaverse. Players ranging from hardcore Pokéfanatics to newbies downloaded the game app enmass and took to the literal streets to hunt for these mythical and coveted creatures which can be trained to do battle. For those in the dark, Pokémon is basically virtual and bloodless cockfighting but with the breeding and brawling of fictional creatures in lieu of taloned game. Pokémon Go makes use of the phone’s nav system and superimposes its game environment and assets onto the physical world. Players go about their daily business — whether that be work, school or shopping — and the app will alert them if (1) the game spawns a Pokémon near their location or (2) another human player is in close proximity and has challenged them to a duel.
According to Wikipedia, “The game had over 147 million monthly active users by May 2018, over a billion global downloads by early 2019, and grossed more than $6 billion in revenue as of 2020.” The game’s internal logic contained rules for impassable and restricted areas so that players aren’t sent down a ravine to chase a Pokémon and Pokémons won’t spawn inside, say, the Pentagon or a sensitive government installation where trespassing is liable to get one shot. Otherwise, the game is largely restricted to public spaces and players can have at it running around chasing virtual creatures, battling other players and trading Pokémons. So sudden was the success of the game’s initial launch it “may have contributed to nearly 150,000 traffic accidents, 256 deaths and economic costs of $2 billion to $7.3 billion in the first 148 days after its introduction to the US”. The merging of metaverses with physi-verses can be jarring and abrupt — cognitive dissonances can result. Nonetheless, Pokémon Go is a successful case study of fourth industrial revolution phenomena that radically altered social dynamics and undeniably reshaped the physical landscape.
More importantly however the success of the title, and also its failings, helped to set the scene for a crypto-fuelled metaverse…
The way we got played
Pokémon Go suffered from a number of intrinsic design limitations which stalled and stunted its growth in popularity in the years following its release. After the novelty had worn off, the gameplay soon became stale. Developers tried to implement a host of new features but that introduced unintended consequences and issues such as gameplay-crippling latencies and platform-specific bugs which all served to erode end-user experience.
And then there’s the biggest sin of them all…
Source: Google Play Store
Pokémon Go, as an example of Metaverse v0.1 alpha release if you will, had a constant cost of carry which required users to pay-to-play … and it wasn’t cheap either. Players had to spend their hard-earned real world fiat to procure an in-game resource called ‘stardust’ to train their Pokémons. Worst of all, painstakingly nurtured and curated in-game assets are locked and localised entirely within the game environment — there is no way to monetise and integrate player efforts and achievements with the real world. In effect, what one did in Pokémon Go could never translate into paying off one’s bills.
The absence of positive economics in metaversal products like Pokémon Go proved to be their ultimate death knell.
The way we play: 2.0
What Pokémon Go had lacked was the express recognition of players’ efforts — countless hours of training, battling and running around physical spaces to accumulate a formidable set of Pokémons to do battle against other human competitors. The Player-vs-Player (PvP) format had a competitive element to it that was taxing on the user — a phenomenon which was largely mitigated in single player games where gamers can play at their own leisure, save progress and really enjoy the sights, sounds and narratives of the game environment’s built world. In PvP settings, the competition is real-time, fast-paced and where mistakes and errors carry immutable and irrevocable consequences. To not only have their efforts unrecognised and unrewarded but then be charged for the privilege of toiling and suffering through the ordeal of building in-game value — that, quite frankly, was just too much.
Gamers need to feel a sense of accomplishment. In immersive single player titles, that sense of accomplishment is attained through the completion of story arcs and challenging battles which the gamer can experience at their OWN PACE and OWN LEISURE. In PvP, the reward centers are slightly altered. It is hard to justify building and training to become a competitive gamer and defeating gamers of more casual ilk with nothing other than a high score display to show for it. Meanwhile, those casual gamers have paying day jobs with concrete financial and personal reward centers to justify those efforts. The game means nothing to them over and above an avenue for relaxation. The metaverse and its experiment of radical socialisation is dead in the water if there is no way to connect commensurate effort with a commensurate reward system.
Witness the rise of Pay-to-Play.
Please stay tuned next week for the second and final instalment where we will attempt to answer the question: “where to from here?”