Lightly edited transcript of the panel from Blockchain Ireland Week 2023

Note: This transcript is based off an audio recording taken during the talk at Trinity College Dublin on Tuesday 30th June 2023. It has been lightly edited to remove some repetition from speakers, and has been structured for ease of reading.

Panel – Will Gaming Level Up Blockchain Adoption?
Moderator: Jamie McCormick (JMC), Bitcoin Marketing Team
Speaker(s): Owen O’Donoghue (OO), InfiniGods; Rob O’Shaughnessy (RO), Switch Dimension

Jamie McCormick – Bitcoin Marketing Team – So today’s panel is “Will Gaming Level Up Blockchain Adoption”. So we’ll start with the intros. Maybe Owen if you want to go first, and give an intro, let’s say who you are, what your first game was and what you’re playing right now.

Owen O’Donoghue – Infinigods – Sure. Hey, Owen O’Donoghue, co-founder of InfiniGods. We’re a free-to-play game studio focused on web3. How that can actually increase retention and monetization for gamers. First game, probably Championship Manager 98. That was, that was pretty big and current game is actually a pretty random one. It’s a game called Bloons TD which is a big tower defense game on, on mobile.

JMC – Cool. And then over to you, Rob. So who are you? What was your first game? And what are you playing right now?

Rob O’Shaughnessy, Switch Dimension – Start with the fun one. So first game was a Centipede on the Atari 2600, almost broke my wrists with this ridiculous controller as a five or six year old. Playing Now, a gorgeous game called Stray, which is you’re navigating a cat around a future environment. And it’s absolutely relaxing.

So a little bit about myself, I suppose I’ve been in product management for about 20 years.

I’ve had a couple of startup – one successful exit. I spent the last year working on a project around bringing brands into web3gaming. And now I’m in consulting basically for any projects around emerging tech,web3.

JMC – Cool. Thank you.And just a little bit about myself. So I set up Bitcoin marketing team.Back in 2014, we turn nine, this August, which is a long time in Crypto.And prior to that, I worked for over 12 years in the Irish games industry.

In 2012, I published the games industry in Ireland report, a map of the Irish games industry in the timeline of the games industry, ironically told me I couldn’t get a job in the games in Ireland doing publishing.So that’s why I jumped into Crypto from freeto play.

So my first game was Monty on the run on Commodore 64, currently I’m playing Zelda new one on the switch with my wife and Metroid Dread. So I have a very nice gaming PC, but it’s used for Excel, unfortunately.
So, anyway, we, we kind of, we’re thinking for this talk, we’re going to do a little bit of a past present and future of Blockchain gaming.

So we’re going to define the past of basically to say the end of 2020 21 it’s kind of like the first wave, the current kind of last year into this year and kind of into the year ahead and then kind of into the far future there as well.

So, maybe I want, and I don’t wanna have you being all quiet there [Owen].

So, do you want to maybe give us your opinions on where Blockchain gaming was in the early days?

OO– Yeah. And it’s funny the early days for the last, you know, 3/4 years.

But I think the resounding, kind of resounding summaries, they were essentially financial products, hiding behind games.

And what we really saw the last, I suppose Axie [Infinity] was the big, where we kind of hit public consciousness where play to earn became this new gaming behavior and you could play games all day long and you could actually make a living and, we saw it for a period of time, particularly in like the Philippines where there was, you know, tens of thousands actually quitting their jobs to actually play Axie infinity and to earn the tokens primarily.

And that was actually their, the way they could actually live. And, you know, unfortunately when a lot of that model quickly fell apart because if nobody’s going to pay for this, nobody can earn.

So somebody has to, like, play it for fun and actually want to pay for that, for others to actually get paid and, and So, so we kind of have come through this play to earn this play earn, I suppose, model over the last few years and see how that’s actually worked out.

And the other side of what we’ve seen is we’ve seen a lot of I’d say white paper hype around potential games and we still see that actually going on and we see projects issuing N F T s or actually issuing tokens in ERC20’s and building a community which has really been about a community of speculators primarily and they’ve actually been able to generate a lot of revenue for the company, not for the project, but not actually deliver games or we see games that are still in pre-building mode, but they’ve raised tens and tens of millions of dollars via this white paper N F T token model to get that going.

And so the, the, the past somebody I spent, you know, 15 years in gaming. It’s been, it’s, it really has hid behind financial products and it hasn’t been about games or about actually fun experiences.And I don’t think that’s been a good thing at all. I think it’s actually really hurt the concept of ownership and interoperability of games. So maybe painting a bit of a dark past but that’s where I, where I see it’s come from.

JMC – Cool. Thank you very much.
So, Rob, where, where do you see blockchain gaming as coming from.

RO – Yeah, I mean, absolutely hitting all the points of the past and where we’ve come from. Now,I think we’re in a good state, albeit a quiet state.

So I think Ronit mentioned earlier on that there’s a huge amount of swell happening, particularly in Asia. There’s a lot more growth and a lot more things happening there that have not yet filtered down to the rest of Europe and into the US.

So we’re kind of moving past that phase where as Owened mentioned, it was very much a speculative game.
And if you went into any Discord, it was pretty much most people pumping a coin or, you know, they were in there for what they could get out of the coin and the project, not the actual game.
You want to be in a Discord or you want to be in communities that are there for the gaming, They don’t care about Blockchain.

And I think where we’re moving to now is we don’t talk about Blockchain, we don’t mention it as much. We talk about the things that the kids care about that us as gamers care about, which is just great games and oh, there’s a benefit of, you know, portability or that I’ve spent hundreds of hours within a game and that you actually get some benefit from that, that you’re accruing something or there’s a create to earn component of it where you’re actually creating user generated content and you’re benefiting the ecosystem and then you get paid back for that.

So I think the big publishers are generally taking it seriously. Most of the gaming community doesn’t care or they’re actually quite negative towards it. But I think, and maybe we’ll talk about the future in a while. There’s going to be some interesting metrics that kind of show why this is a good idea and why web3 can really benefit games in the background, not, not necessarily centrally as the key selling point.

So yeah, that’s where I feel like we’re right now, there’s a lot of quiet building going on. Publishers are taking it very seriously, they’re investing and because we had this bulk investment period, several years back, games take a ridiculously long time to build. I mean, we’re talking about five year cycles. So all that money that’s been invested, people are quietly building these games, they’re getting the infrastructure right. They’re getting the mechanics right?And I think over the next year to two years, it’s made for breakdown.

These are going to start hitting the market and it’s either going to take off or it’s going to be consigned into history or fit into a nice neat little infrastructure corner of the building world.

JMC – Cool.

So I suppose what I’ve seen from my point of view is I have two different hats. I kind of the games industry hats. So I still have a lot of friends who are working in that space in there.
The games media hates crypto games with a passion.

Now, by example, here, one of my former colleagues, he’s a good mate in Brighton.
They were one of the big pr agencies that are there in games. It’s been around for decades and they got out of this industry when it came to the crypto game and they actually said, look, if you’re doing a crypto game, we don’t want to speak to you.

The reason that they did that was because when they were pitching crypto games to the media, they were seeing, you know, there’s lots of misfires like Ubisoft cocked up, various different, lots of, lots of the big publishers have kind of tried to shoe horn in at N F T or something like that into the game and they got a massive push back because people were saying, ok, well, we don’t want this, they don’t want to build the game.

So there’s a difference between games we built from ground up, but the games media is super hostile towards it because they’re seeing that it’s really impacting on the purity of games.

You know, it’s why skill based gaming and gambling and all of that, like they’ve never really kind of taken off from that point of view.

So hostile media is one now out of that has emerged a giant big crypto gaming media landscape that’s just completely independent of that. Lots of coin listing sites and token listing sites and all these sales there as well and open sea.

But, I suppose really it’s, it’s against that backdrop of, you know, there’s money that’s been made in the past. You know, as Owen was saying, there’s lots of tokens and various different things people have done in the past.

Like we did a research project there last year for a French game studio who was getting into the space and 90% of the projects that we could see were just a white paper and a couple of screenshots. And when you look at the screenshot quality versus what they actually delivered, it’s like they promised playstation five and delivered like Super Nintendo.
But yeah, but they want to get the gameplay mechanics right? And then they’ll build it there.Like the graphics, like if a game isn’t fun and game is not good game playing and good controls, you can always improve the graphics and improve the sound. But if the game is still crap, then it’s going to be crap.

So obviously, fair few things in there that are happening in the past. So coming into the more recent past there. So Owen, obviously, maybe you want to talk a little bit about the portfolio of Infinigods Games. And you know, obviously you’re coming from Director of Gaming and Facebook and you worked with a lot of these games publishers that were selling games, you know, whether it was on Facebook canvas or any of the other games that are there as well.So you’ve taken a different approach. So you’re incorporating some of the crypto technologies there, but it’s game first. So maybe do you want to talk a little bit about some of your games and kind of why you’ve taken the angle that you have in your development cycle now?

OO – Yeah, for sure. And I suppose after that opening, why do you even bother with NFT’s and Web3? But the reason they’re actually super interesting when you have a product live. And so the way we’ve looked at it, we’ve said, how can actually the technology improve the experience for the gamer and you measure that in 2 ways

First, Retention. And so like they just spend longer in the game. For the majority of gaming, one of the key metrics are day 30 numbers. So is somebody coming back one month after they’ve started playing your game?

And then the 2nd piece is, is a lot more straightforward, it’s monetization. So actually, is the consumer actually willing to put their hand in their pocket either initially or multiple times to actually continue to, to play the experience.

And so what, what we found? So with our first title, we developed a sandbox game on web, a super casual game, anybody can play it. We actually have a few pretty, pretty good players in Ireland actually competing in there, but essentially it’s like Candy Crush.

And what we saw was pretty interesting is we put some elements as part of the game were NFT’s, so the non fungible tokens and they were like power ups in the game.

They could be anything, could be skins, whatever, but we decided certain power ups will be scarce. So we’ll have them on the Blockchain to validate that will keep them scarce. And they will have other elements that are off chain in the game as well. And so players can earn them in game and, and use them as other powers. Super simple in concept.
What we started to see after a few months of launching, we saw some pretty crazy statistics and we see other projects have seen this too. So if a gamer has a NFT in the game that they’re playing, their retention rates are about three times what you would normally see in free-to-play gaming.

And again, for context, free-to-play gaming is the vast majority of the gaming industry, which is the biggest entertainment industry on the planet. And so, we saw a 30%, I think it was a 28% Day 30 Retention Rate for people who had NFT’s in our game versus folks who didn’t but still played the game because it was free-to-play, there was no barriers, we saw them around the 10% rate, which again is more the industry standard.

The second is we saw the monetization rate of about 4x what you would normally see. And we saw that for two different reasons. One if somebody owns something and they believe it has value in a game and by being able to like spend more on that item in game to improve it or whatever, actually people really buy into that and they start to want to get their characters, we use character NFT’s and so they’ll want their characters to be stronger, perform better, etcetera, etcetera. So they’ll actually spend money on that.

And then, so we know that just straight up the side of Web3 and how that actually increases and engages the player a lot more.

The second piece we think is actually pretty is very, very interesting. We’ve built a platform around this now. And so that’s where you allow people to earn something off chain within a game and you don’t sell it as a developer, you say only players can actually earn this in game, it’s off chain. So it’s not something that could be traded, but then you give them the option to trade it on chain to other players. And so you create an imbalance where certain players will be able to earn more of these than others and players will need this. And so you allow trading that to happen between players. And so we have that in our game as well.

And so we saw a 3% of our player base, never bought any NFT’s, never did anything else like that, but they actually went and start and farm and really grind out these these off chain items that other players wanted and then they traded them via our platform to other players.

And what’s really interesting about that is that we would normally define those players as non-payers in free-to-play.

And so for context, the free-to-play gaming world is about $100 billion a year, but only 3% of people who play those games actually spend money. So you got this huge swath of 97% who never spend a penny. And so if there’s any way you can actually get them to start to monetarily participate in your game, that’s actually a really good thing, gives you a huge competitive edge.

And so we saw, we were able to eat into that number pretty significantly by just allowing that off-chain/on-chain trading to happen with certain elements in-game. And so, that takes an overall monetisation rates and retention rates up as well.

And so if you kind of peel back, get away from the white paper, the financial speculation, the the concept of somebody owning something is actually just very powerful in, in itself for gaming.

And then the second that how it can actually enable trading between players where the Blockchain revalidates that it’s a legitimate transaction. They’re like the two approaches that we really like. And where we believe if you actually integrate this into regular mobile, free-to-play games, regular console games, you can actually become very competitive with the top publishers in those in those categories as opposed to just the Web3 space.

JMC – Cool, so Rob, where are your thoughts then in terms of, maybe talk through some of the projects that you’ve been exposed to and kind of how they’re maybe prior to development, looking at when they’re building out their products, like which sort of elements are they looking at?

RO– In terms of product in terms of stickiness?

JMC – How are people using certain elements of Web3? What are maybe some of the barriers in and out of the system and then how they’re actually building up with Blockchain incorporated in it?

RO – Yeah, one particular project, they had a franchise and they had, like a particular, they had lots of different games within one particular ecosystem. And it was very interesting to them that each one of these games had their own coins and some didn’t have any at all. They just had points or, you know, traditional systems, they wanted to see how it would perform if they actually had a central coin that could work between, as a rewards and membership scheme, between all the different games.

So it had some success and some failure. There was a lot of assumptions that people playing certain games that have interest in other games. So that was one interoperability challenge. It’s great to have interoperability, but some people are just never going to go to another game. It’s part of a whole different ecosystem. Like gaming is huge, I play one particular type of games and you know, my kids play something else. There might not, we might not never need that interoperability.

So that was, that was one thing that was learned. Owen touched on a really great point, which was the ownership and that’s the one that was seen as interesting. That’s the one that did take off.People are very invested in games. They spend a lot of time playing them and there are times when games shut down and they move on and there’s a real sense of loss in the community that they don’t have ownership over what they’ve built or can control it.

So like DAO’s going to be interesting in the future where, you know, a company might decide to wind down, but the actual community takes control of the game and moves it forward or funds it.

But yeah, retention, the ownership is the biggest thing from a product perspective that I see is kind of hanging on because lots of people really don’t care about the financialization and the monetization aspects of it, the core gamers. But they do care about the membership, the community of what they’re building and having ownership and showing that and being able to display that. That’s key.

JMC – So that brings on a very interesting point. So I’m sure there’s a few PC Gamers in the house. Whether or not you’re playing the subscription game like World of Warcraft or any of these free-to-play games, when anybody signs up to these things, you’re agreeing to the terms of service. And basically they’re letting you rent your character.

Now, touching on that point there, we’ve been involved in games when I was publishing where at the end of life, the game went in, there might have been licensing thing that like a developer licenses to different publishers across the world and one service shuts down, somebody else comes in and there was no way to transfer in like your character from say, like a closing US server into like a Southeast Asian server there.

So I agree with you like we had pretty much funerals in the game, you know, where you have hundreds of people within the game will basically do sad face emoji and it’s over, you know. However, you know, you’ve also got scenarios, I’ve a good friend who worked in Blizzard in Cork for quite some time. And one of the biggest customer service issues that they had to deal with was people selling their characters. You know, so somebody’s played a game for 2/3/4 yeast, they’ve invested a large amount of their time to level up their character, get their gear, they probably paid a lot of money in terms of subscription across the time.
But they’re just done with the game and they resell it. Then two months later, that person has a problem and then they contact customer support and customer support says, you’re not Rob. And they shut down that account.

So they, you know, so they’ve purchased what they thought was the character, but they’ve lost access because their access has been revoked. So the ownership there is pretty interesting.

I always thought like, signing in with a crypto wallet address was a great way to kind of get around things. Now that does boil in towards another point, which is maybe some of the real frustrations that people have around getting into Blockchain gaming – Wallets, specifically Wallet connects.Ok. We see it regardless of what project that we’re working on, you know, whether it’s exchange, whether it’s an NFT, whether it’s a game there as well.

And I should, there’s one or two projects around here that are doing something pretty cool around it, but that is a big, big, big barrier to entry to non crypto users there as well.

So Owen I know that you guys found, you know, obviously you’re used to like Facebook connect or oAuth where you can login with your email and then you have your characters.

So how have you addressed that with the Infinigods metaverse to kind of really expand the potential player base beyond just crypto-heads?

OO – Yeah, then it’s the first thing is, you know, like the wallet friction in general is just, it’s pretty bad and friction is the enemy of any performance marketer or any funnel for a free-to-play game.

And so the way we’ve looked at it is that, you know, it’s very simple, we’re really looking at what works today and how do you apply it? And so what we currently do is you come into our games and you just play them normally, you download it for free, you actually go and you play the game, you get into what we call a flow state.

So that’s on a flow state of the game as you actually like it, you’re spending time and therefore you’re willing to spend more time to play the game, you’re maybe not even spending anything yet in there.

And at that point, it’s actually a typical level that we look at that a player gets to and then we start to incentivize data connection. And so this is actually very common in mobile games that are outside of Blockchain right now. And so it’s like, hey, if you want to re save your progress and give us your email or log in with Facebook, et cetera. And so it’s a one click connection for the consumer, so it’s pretty easy.

And what we then do is actually is in our games, certain parts of our game start to touch on web3. One part in particular, for example, a lot of our tournaments have web3 elements in there. And so a player still doesn’t need a wallet to participate. But if they do want to, for example, trade off chain items to other players and they try to find the Blockchain, they’ll need a wallet. And so what we do is very simply is that when they get to that point and they actually decide to go from the game to our platform to trade, if they don’t have a wallet, we’ll create one for them.

You can actually do that pretty seamlessly in the background for a consumer where you can say I’m just going to create this inventory wallet, just to allow you to trade in there as well. If you do want to go and get your keys, et cetera, absolutely you can do that.

But there’s a huge swaphe of infrastructure right now, we use a company called Third Web right now. There’s actually a lot of other amazing companies – paper XYZ springs to mind as well. Web3 Auth is actually driving alot of this too.

But essentially you can create that wallet where we’re essentially a custodial wallet and the gamer just needs it to trade this item from that point of view.

And the second is we always have a Fiat on-ramps as key, so, anybody who’s tried to bridge stuff, but we made this mistake where we had players trying to bridge from Eth to Polygon to trade in Matic on one of our games. It’s horrendous for the consumer.

And so we look at fiat on-ramps which again, you look at Stripe, you look at MoonPay and some other similar companies. We’re now doing very easy fiat on-ramps. And so the consumer just sees this item, if I want to mint it because I’m going to trade it to a player, here’s my mint fee, it’s a set fee.

I don’t see any crazy pricing or any gas fees, coming on there or if I’m a purchaser, I just see an all-in fee. And so what we try and do is like, make the wallet onboarding one click, seamless, if they don’t already have one, fiat on-ramp and then any gas costs we cover, it’s called sponsored gas.

It’s a funny term, but essentially there’s a lot of tools out there where the developer can actually cover the gas costs. And again, you’re operating on L2’s as opposed to Ethereum where, you know, the gas costs are a lot cheaper on the L2, s it’s a 1 or 2 cents on the transaction, so it’s very easy for a developer to cover it.

JMC – Cool, so we’ve, we’ve only got maybe two or three minutes left and hopefully just one or two Q&A’s. So the topic of this talk is, Will Gaming Level-Up Blockchain adoption?
What are your parting thoughts in terms of like, what do you see as the biggest barrier to entry to getting to the 10/50 million players that Ronit was talking about earlier on?

RO – I think what I won’t touch on really the wallets is one key component of it. I think we need to look realistically at what the likes of Starbucks and Reddit as an example have done.
They’ve onboarded millions of wallets purely from not talking about blockchain and web3 and having a 2.5 style wallet where exactly Owen was talking about. The gamers don’t care about this. So the block is the wallet, the Blockchain, all this terminology.It’s like let me play my game, let me enjoy it. Oh, you’ve got some nice functionality there and we’ll take advantage of that. So that’s one of the biggest hurdles I see.
The second is just like the gaming community in general. They, they’re set against it at the moment until they see and can be proven that it’s beneficial to them. So I think some of the interesting players in Asia are going to start to, and the likes of Owen and Infinigods are going to start, you know, proving those metrics. Once the publishers see the metrics work and it’s a win-win situation, then it’ll grow. But yeah, number one wallets, number two, the community themselves

JMC – I probably add to that personally, that the media as well. You know, once the game’s media gets behind it and they think actually hang on here’s a game instead of here’s an investment scam or, you know, a big Ponzi or any of these terms, like they’re going to be attached to it for some time.
Like we saw that introducing free-to-play to Europe where they thought it was like crappy web based flash games. You know, it took me having to go to like Edge Magazine and PC Gamer with a Gamer laptop and a Super Nintendo pad playing an arcade style game. They’re looking at it saying “I thought this was free-to-play?” It’s just like, “yeah, it is” just like, but it’s a game, you know, it’s that kind of like mind jump that goes in there.

And then from your point, I suppose Owen, like you’re, you’re kind of building the future and kind of like going through and hitting every tree along the way when it comes to this journey to kind of really carve your path through for your own business, what are the broader implications that you see and what are the barriers there that would stop you getting up to say 10 million users with your games?

OO – Actually, I think it’s a lot of things are cleared now. I think it’s getting a good game. Like this is the first thing that people like is, is the key.

The second I think it’s gonna be, it’s gonna be, I firmly believe free-to-play mobile is gonna be where Blockchain games scale. I think it’s just the easiest market to. And so in that world, it’s really about user acquisition and the virality of the mechanics you’ve built into the game.

And so you think of like a FarmVille type game or a Clash of Clans, or an Angry Birds type game that really launched free-to-play, particularly in the West. I think that’s what we’re going to see. And those games are all successful because they, you know, had a good game loop, they had good user acquisition, they understood their LTV versus cost of acquisition and were able to scale and then they had good virality. So players who played it wanted to tell their friends about it and get them in game too. And so I think we’re just facing the same things just with a different set of technology with web3.

JMC – Cool. So there’s just one final note I wanted to make myself here as well because I’m assuming quite a lot of the people in this room aren’t aware of this. So the games industry in Ireland fought for about 15 years to get tax credits similar in Section 22 in the games industry.

And Minister Pascal Donohue, who I actually met there when he was a Senator back in the early days about 2010, took him 15 years but sure he got it there in the end.

They have a digital gaming tax credit that’s actually worth up to 32% per game, up to €8 million for qualifying costs – that covers design, production and testing expenditure as well. I don’t see any reason why it can’t apply to a Blockchain game. And there’s four qualifications which are it’s certified by the Minister of Tourism and Sport, the Gaelteacht and the Media. And that is that the game has text, sound, still images and animated images. It has three of those four, it counts as a game.

So there’s nothing saying that there couldn’t be a Blockchain gaming company set up here in Ireland that could know that we can get up to 32% tax credit update, minimum production costs there as well. Maybe Owen get you back here and set up spin-out studio here.

Thanks Owen for dialing in from Arizona, thanks Rob for sharing the stage and thanks everyone for listening!