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Newsletter #2: Metastasis of the Metaverse, Epic, Open AI, Problems with Web3 Games

October 27, 2022
6 min read

AI that generates realistic images through text input, Web2 gatekeepers wanting their pound of flesh, and more.

From The Editor

A little birdy told us if you say GM 420 times on the coming 4/20, you’ll be able to buy the entire Twitter stock using Dogecoin.

Did we catch you rolling your eyes at the nonsensical nature of the opening sentence? Well, we did it to prep you for what we have to say next.

Meta. 47.5%. If you haven’t yet heard, Meta is planning to charge a fee of 47.5% from creators for all virtual goods sold on its virtual reality platform - Meta Quest. Talking about nonsensical, this blows everything else out of the park.

Web2 led to the rise of gatekeepers. Web3 aims to break the stronghold. Such moves, in which the imposition of crippling percentages stifle creators, are a surefire way to hurt the ecosystem.

On another note, we promised to talk about the current issues plaguing Web3 games. We’re in the midst of putting together a deep read that has already exceed 2000 words. We’ll be dropping it later in the week. But to keep things exciting, here’s broadly the issues we see.

Broadly, the problems could be broken down into a few key areas:

Ecosystem Problems

  1. Barriers to entry: Try getting your mom to setup a wallet; unless we make entry into the ecosystem easier, games will struggle to gain mass adoption
  2. Suboptimal Performance: High gas fees, low transaction rates, lack of interoperability are still points of friction

Game Design

  1. Shallow Gameplay: Let’s be honest. Most Web3 games can’t hold a candle to Web2 games. The primary reason is that these games aren’t being built by folks who’ve ever built games before. Further, the goal is to ship fast lest one misses the gravy train.
  2. Cookie-cutter Approach: Slapping on a crypto angle to an existing Web2 game model doesn’t make for a sustainable game.

Unsustainable Economics

  1. Over-reliance on NFTs: It might sound as if we don’t like NFTs. Not true. Truth be told, we don’t think they ought to be the centre of the universe when it comes to a game’s economy. They aren’t highly liquid, don’t scale well for high-frequency trading, and aren’t easy to value.
  2. Unbalanced Incentives: Today’s games aren’t keeping in mind the needs of players, investors, and traders. This has led to economic systems that see inflation, plunging ROI, and other phenomena detrimental to longevity.
  3. Ignoring History and the Real World: Web3 games needn’t reinvent economics. Instead, learning from the wealth of information that has played out in the real world can help developers build robust economies. For example, digital land recession isn’t too different from the effect of speculation in the global real estate market as posited by Lars Doucet on the Game Developer website.

You’ll see the deepdive article drop later in the week, so follow the Tegro Twitter account.

Now, over to the happenings in the wonderful world of Web3 gaming.

At A Glance

The Google x Deconstructor of Fun Instanbul Event that took place a few weeks ago is a treasure trove of content for anyone building games. You can catch highlights and videos on the DoF website.

In particular, we’d recommend watch the session by Javier Barnes (King) covering ‘Principles of Game Economy’.

Some of the topics he touches upon:

  • Purpose: Consistently give players new resources and new uses for existing resources
  • Scarcity: Rewards have to be meaningful and goals have to be satisfying
  • Predictability and analysis: The simpler an economy is, the easier it is to analyze
  • Internal consistency: Focus in-game activities on features that foster engagement, retention, or monetization.
  • Control mechanisms: Add points in the economy you can control so you can rebalance the game more easily
  • Depth and expansion: Consider balancing both horizontal expansion (owning and collecting stuff) and vertical expansion (upgrading and adding system depth)
Google x Deconstructor of Fun Istanbul Gaming Event

Google x Deconstructor of Fun Istanbul Gaming Event


Metastasis Of The Metaverse

The idea of the metaverse isn’t new. But the sudden fascination among ordinary folks is evidenced from the sudden rise in search volume generated by Facebook’s announcement of a rebrand to Meta on Oct 28, 2021.

Source: Google Trends for the term 'Metaverse' worldwide for last 12 months
Source: Google Trends for the term 'Metaverse' worldwide for last 12 months

While Meta builds its closed world, there are many others drawn to the opportunities presented by a digital world.

Epic, the company behind Fortnite and Unreal Engine, recently announced a $2B fundraise from Sony and Kirkbi (parent company of LEGO).

With Unreal Engine 5, they continue to push the boundaries of not just game development, but for folks in film production too. Their official announcement is worth the watch.

Unreal Engine 5 Release | The State of Unreal 2022 Keynote Presentation
Unreal Engine 5 Release | The State of Unreal 2022 Keynote Presentation

Open AI has been busy. DALL·E 2 released earlier this month to surprisingly less fanfare that we expected. The sheer power of such a tool ought to have made more news. And maybe some memes too?

As described by Open AI, ‘DALL·E 2 can create original, realistic images and art from a text description. It can combine concepts, attributes, and styles.

To paint a picture of this, here’s an example. Hold your horses!

An astronaut, riding a horse, in a photorealistic style.

That’s it. That’s all the input required for DALL·E 2 to generate the image. Head over to the website and play around with it. Generate teddy bears mixing chemicals in 90’s cartoon style, or steampunk art.

The future is fascinating and the metaverse is nearer than we imagine.

Web3 Gaming & Community News

  • DappRadar’s weekly games tracker is always an interesting way to get an idea of rising stars. Splinterlands continues to dominate while Sunflower Land on Polygon is seeing rapid growth. Read here.
  • IndiGG, a sub-DAO of Yield Guild Games (YGG), released their Q1 2022 Community Report. It gives a fair insight into how they are thinking about the P2E ecosystem in India from a player point of view.

Funding, Partnerships

Web2 -> Web3

  • Blizzard says they aren’t planning to give NFTs & P2E a shot just yet but they did run poll amongst gamers.
  • NBA is jumping through the hoops to cement themselves as a forward-thinking professional sports organization. Following hot on the heels of NBA Top Shot is the NBAxNFT which has yet to be detailed out.
  • Atari brings back fond memories every time. Now, the iconic video game company wants to put a Crypto Casino in Decentraland. Unimaginatively, it will be located in “Vegas City”.
  • Richard Garriott, the founding producer of Dungeons & Dragons and the Ultima series, is working on a new project. It will be an online Ultima-like RPG that uses blockchain and NFT technology.

Thought For Food

Here’s what we’ve been consuming this week:

And That's A Wrap

This week’s newsletter is longer than last weeks’. That’s some progress :). As the weeks go by, we’ll improve our coverage of this emerging and fast-moving space.

If you have feedback on what you’d like to read or have us cover, holler. You can hit reply or just tweet to us.

Until next week, GM.