Nintendo or Steam? Analysis of the development path of the decentralized game platform

Original: ArkStream Capital

Written by: Warren

Decentralized games have always been a frequently discussed topic in the encryption market. Recently, the explosion of Magic, a decentralized game platform on Arbitrum, has also triggered many discussions in the market. Some people compare it to the "Nintendo" of the encryption world. Corresponding to it is the Gala games known as the "Web3 version of the Steam platform".

However, these are two completely different models, which begs the question: Which development path is suitable for a decentralized gaming platform?

Development of traditional game platforms

Before discussing the development of decentralized game platforms, we first need to understand the development history of traditional game industry platforms. Here, we divide game platforms into three types: studio model, development engine model, and distribution platform model.

The studio model starts from a game studio and gradually develops into a large company with multiple game IPs. These companies often attract players by continuously launching new games or sequels, and make corresponding adjustments and improvements according to the performance of the games. There are many examples of the studio model, the most representative of which is Blizzard Entertainment. Founded in 1991, Blizzard began as a computer game development studio, its first game being Warcraft. With the launch of World of Warcraft, Blizzard has become one of the leaders in the game industry. Today, Blizzard has become a part of the American game company Activision Blizzard, and has many well-known game IPs, including "World of Warcraft", "StarCraft", "Diablo" and so on.

The world's leading game company and its representative works

The studio model is one of the most common models in the traditional game industry. Today's world-renowned game studios all start with a hit game, and then gradually gain their own industry influence.

The development engine model is a relatively new game platform model, of which Roblox is one of the most famous examples. Roblox is a community-based virtual world gaming platform that allows users to design and create their own games, share and play on the platform. It provides an ecosystem for creating and sharing games, including game development tools, virtual currency system and commercialization functions.

*Roblox user data shows that it is a very popular gaming platform, especially among younger audiences. As of March 2021, Roblox had more than 180 million active users and has added nearly 40 million users over the past year. Additionally, Roblox raked in $2.96 billion in revenue in 2020, an 82% increase from 2019, according to Sensor Tower. This shows that game platforms based on the development engine model have very strong growth potential, especially among young users.

One of the strengths of the Roblox platform is that it provides an open set of tools and engines that make it relatively easy for developers to create their own games and share their games with other developers. This openness and interactivity inspires innovation and collaboration, and promotes more people to participate in game development. On the Roblox platform, users can write their own games using the Lua programming language, and design game elements such as scenes, characters, and props by using the visual development tools on the platform. This open creative approach makes games on the Roblox platform very diverse and creative.

However, one disadvantage of the development engine model is that it is difficult to ensure the consistency and standardization of game quality. Because games on the Roblox platform are created by a community of developers whose skill levels and design styles can vary widely. This could result in games of varying quality appearing on the platform, which could affect the platform's overall reputation and user experience.

• The distribution platform model, taking Steam as an example, started from its leading products (such as DOTA2 and CSGO) and gradually developed into a game distribution platform. The Steam platform provides players with convenient channels for game purchase and download, and also provides game developers with an extensive platform for promotion and distribution.

Nowadays, any game released on PC, you can find it on Steam, and they seem to have become a monopoly in this field.

As a distribution platform, Steam helps game developers handle game distribution and distribution, which allows game developers to focus on the development of the game itself without worrying about sales and distribution. At the same time, Steam also provides players with a convenient way to purchase and manage games, and can communicate and interact with other players through the Steam community. Steam also supports online multiplayer games and user content creation, which increases player interaction and participation. We have also seen that other game development teams will also launch their own game distribution platforms, such as Blizzard's Battle.net, EA's Origin, Ubisoft's Uplay, etc. For excellent development companies that continue to produce excellent works, they are even more important. Willing to hold the distribution power in their own hands, instead of sharing a share with the pure distribution platform.

Development Path of Blockchain Game Platform

We will now explore the correspondence of these three types in decentralized game platforms, and the development of corresponding products in the decentralized world.

Game studio model and public chain ecology

Studios usually have their own game engines and development teams to make their games. This model will generate many intermediate links in the game development process, involving many teams and individuals, so the cost is high, and it is an asset-heavy approach, but it is also possible to create a very successful game IP.

This path has gradually developed in the encrypted world to make explosive games first, and then release the public chain. Representatives include Flow public chain issued by Dapper, the production company of Cryptokitties, Ronin issued by Axie Infinity, and ImmutableX issued by God Unchained. As the "one-click release chain" technology is becoming more and more mature, products with traffic can send an Appchain or L2 by themselves, which may become the development path of blockchain games in the future.

In new products, many projects have begun to use this idea. Taking Fusionist as an example, they have launched their own main network Endurance, which improves the user binding, transparency, privacy and security of the entire system by storing the behavior and achievements of users on the chain. In Fusionist’s plan, they already have three games released on this new chain, Colonize, Conquer, and Unite, which will revolve around Endurance to create a decentralized game public chain ecosystem.

Endurance Block Explorer

Colonize by Fusionist

This kind of thinking relies on the influence of a single game, and requires the studio's first product to be detonated as soon as it is launched. This creates a problem. If the game is run on the public chain, the uncertainty of the popularity of the game may make it difficult for people to use the product for a long time. If the game is difficult to produce, the value of the public chain will also drop. **The core of the studio model may still lie in how to make a fun game, rather than tell a grand story. **

In addition, the transition from a single game to a public chain may become a "shackle" for a studio. Public chain nodes, cross-chain bridges, wallets and other infrastructures all have greater or lesser security risks. The Skymavis studio behind Axie can be described as a Ronin success or a Ronin failure. After Ronin was stolen, users lost their trust in this public chain, and other games or developers had to stay away from this public chain that carried all the ecology of Axie, which was a big blow to the development team behind them. hit.

Development Engine Mode

Roblox visualizes the concept of "Metaverse" through the game development engine. Unlike centralized development engines (such as Roblox), the decentralized development engine is built on the basis of blockchain technology, providing More degrees of freedom and creativity allow game developers and players to better participate. Fragnova (Fragcolor) and Cocos-CBX are two representative decentralized development engines, both of which are constantly promoting the development of decentralized game development engines.

Fragcolor

Fragnova's game engine provides a safe environment for game developers to freely create, build and share their game creations. Developers can create their own games on Fragnova Network and publish and distribute them through Fragnova Network's platform, which is similar to traditional centralized game engines, but Fragnova Network pays more attention to the concept of decentralization and provides developers with more More control and flexibility. For example, developers are free to choose their own game economic model and which public chain to run the game on. At the same time, Fragnova Network ensures the security and fairness of game data, as well as the authenticity and transferability of users' digital assets by running all games on the blockchain.

Decentralized game development engines have many advantages over centralized game engines. First, a decentralized game engine can better protect game data and users' digital assets. Secondly, the decentralized game engine provides developers with more freedom and control, which can better meet the needs of different games. Finally, by storing game data on the chain, a decentralized game engine can achieve a fairer and more transparent game ecology, attracting more users and developers to join.

However, this does not mean that decentralized game engines have no disadvantages. On the contrary, this is the most difficult of the three paths, because traditional game development engines are already good enough, and the competitors of these products are not only Roblox, but also UE, Unity and other development engines. Large engines such as UE and Unity have already occupied an important position in the market. They provide more complete tools and technical support, and have a more stable and mature ecosystem, so they are still the first choice of mainstream game developers. **The ecosystem and community of the decentralized platform are relatively small. Compared with large engines, they may lack some important resources such as tools, materials, and plug-ins. **Therefore, compared with the centralized platform, the decentralized game development engine still needs to be improved and perfected in terms of technology.

Distribution platform mode

The big one is Steam, and the small one is 4399. Due to light assets and heavy operation, the distribution platform model has become the entrepreneurial model of many decentralized game platforms. Taking TreasureDAO as an example, from Magic, the first income agreement in the Loot ecosystem, to the largest decentralized game platform on Arbitrum, after several searches, TreasureDAO has demonstrated a piece of web3 magic, and now it has become a representative of the distribution platform model.

TreasureDAO user data, data source: Dune in terms of profit model, traditional game platform It usually relies on game sales, virtual item sales, etc. to make profits. The decentralized game platform can make profits through token rewards, NFT transactions, platform handling fees, etc. In terms of user protection, traditional game platforms usually rely on intellectual property protection to protect users' rights and interests, while decentralized game platforms can protect users' rights and interests through technical means such as smart contracts.

Games on the TreasureDAO platform. However, although the narrative is beautiful, the reality is different, "Nintendo ” and 4399, separated by 100 Marios. From the list of 18 games launched by TreasureDAO, we can see that most games are still at the level of "small games". Compared with eye-catching games such as Zelda and Dongsen, there is a decades-long industrial gap , This is not something that can be compensated by the volume, not to mention top IPs such as Pokemon and Mario.

But from another perspective, **Frequent and low-cost trial and error is conducive to the mining of "popular models". Since the development path of blockchain games is not clear, small game platforms can release multiple games to test players' preferences. After finding the needs of the players, proceed with in-depth development. **Compared to investing a lot of money at the beginning to create a 3A game, but no one cares about it after release, this method is more capital-effective. The Beacon on Treasure has aroused a great response from the community after its launch, and they can use this as a starting point to further expand the universe of TreasureDAO.

Gala Games chose another mode of operation of the distribution platform. Compared with the asset on-chain and asset interoperability that are the main focus of decentralized games, they pay more attention to how to use tokens to motivate the community and perform governance. What a high-quality game, the decentralized node network is what sets Gala apart. According to official data from Gala Games, at its peak in 2021, its monthly active users have exceeded 1.3 million, and more than 26,000 NFTs have been sold. However, with the cooling of the GameFi market, after reaching a new high, the price of GALA tokens will gradually fall back in November 2021.

Games on Gala Games

From the official website of Gala Games, we can see that they have put 15 games on the shelves so far, from multiple game developers, and also covering multiple platforms such as PC/WEB/mobile, but only 3 of these games are actually launched The others are still under development, and the playability of the few games that have been launched is still low.

Game publishing platform and its representative works, data source: Bing We do A comparison shows that, compared with the mainstream game platforms currently on the market, there is a huge gap between the decentralized game platforms in terms of the number and quality of games. But fortunately, with the emergence of several explosive models such as Axie Infinity, the number of blockchain games has increased exponentially in the past two years. Judging from the projects included in our ArkStream Capital in the past year, the game category has accounted for 20% of the total, there are as many as 800, and on Footprint, which focuses on Gamefi data, it can be seen that the number of decentralized games has exceeded 2,000. Although most games still cannot be separated from the category of "mini games", with the further increase in quantity, quantitative changes lead to qualitative changes. At that time, the decentralized game distribution platform will become the gathering place for the traffic of these games by virtue of its advantages.

We believe that ** as a decentralized distribution platform, whether it can put a sufficient number of game products on the shelves will be a reflection of its competitiveness. Compared with the centralized platform, the current decentralized distribution platform, The easiest thing to catch up with is precisely the number of games. **Establishing an effective incentive mechanism, opening up upstream and downstream channels, and providing diversified peripheral services will all improve the competitiveness of these distribution platforms.

ArkStream Internal Database, Footprint.network

In addition, after gathering traffic, blockchain projects can also produce unique functional points, such as NFT marketplace or launchpad, which will bring greater profits to the platform, and also allow players to lead more Many players come in.

Expansion capacity

Among the three types of traditional game platforms, we can find corresponding decentralized platforms, bringing more innovations in the way of Web3. Whether it is a studio model or a distribution platform, the core is the need for explosive games to attract traffic. Therefore, how to create hit games, or attract hit games to be released on the platform, is the most critical issue.

We are optimistic about the development of the vertical public chain in the future, especially after the modular blockchain and Layer3 architecture are sufficiently perfect, building an exclusive Appchain for a single game can further improve the performance of decentralized games, and can also use Ethereum, etc. L1 network security. However, for a team dedicated to the development of a game public chain, the priority of creating a popular game may be far higher than that of building a public chain like a castle in the air, and it should not be confused.

As for the decentralized game platform that develops the engine and distribution platform, the most urgent task is to attract more game developers and studios, and win by "quantity".

Traditional game companies and Market Cap Comparison of Decentralized Gaming Platforms (March 9, 2023)

We compare the top game development companies with the top game public chains, and we can see that the decentralized game platform still has room for growth dozens of times, or even hundreds of times. If the following problems can be solved, the decentralized game platform will have the power to compete with the centralized platform:

• How to better protect the rights and interests of users with the help of blockchain technology in terms of user protection
• How to attract more players and developers to join the decentralized game platform to further improve the quality and quantity of games
• How to compete with traditional game platforms in terms of popular games and attract more traffic and users

The decentralized platform is to the centralized platform, just like the decentralized finance is to the centralized finance, it is not a supplement, but a subversion. When decentralized products are good enough in terms of user experience and security, their advantages in production relations will completely replace the centralized platform, returning more rights and interests to users and developers. We have a chance to see that day come.

in conclusion

In the next few years, the development of decentralized game platforms will face many challenges and opportunities. In terms of technology, decentralized game engines still need to be improved and perfected to meet the ever-changing needs of developers and players. In terms of the market, the decentralized game platform needs to create more popular games and attract more users and developers to join. In addition, decentralized game platforms also need to compete with traditional game platforms to gain more traffic and users. Therefore, decentralized game platforms need continuous innovation and development in order to achieve greater success in the fierce market competition.