- The session is a fireside chat with Josh Williams, CEO of Forte, a blockchain gaming platform
- The chat is conducted by Jeff Tunnell, founder of Monster Ideas and game designer
- They discuss how blockchain technology can disrupt and change the gaming industry
- Blockchain can allow players to own assets in games, creating better game economies
- Blockchain enables the provenance of every item in a game, ensuring authenticity
- It can create rich marketplaces within games for trading and pricing assets
- Smart contracts on the blockchain can create incentive systems for players
- Ownership of assets in games can transform purchases into assets that players own
- Blockchain technology can make assets more unique and collectible
- Rich marketplaces can be created for trading assets and splitting up value
- Incentive structures can be designed to reward players for helpful actions in the game

- Blockchain technology can be used to reward senior players in games and create incentive mechanisms.
- A battle royale game is tokenizing skins and allowing players to own and trade them, creating a new revenue stream for the developer and giving players more ownership in the game.
- Free-to-play games often struggle with monetization and rely on a small percentage of players for revenue.
- Blockchain technology can align players and developers by creating a marketplace for in-game items and allowing players to trade them.
- Using blockchain can eliminate fraud and provide a secure way for players to trade items within the game.
- Incorporating blockchain into games offers new opportunities for developers to create virtual economies and benefit from their games.

- Developers can incorporate blockchain technology into their games to create a market economy for players.
- This shift allows developers to manage a virtual country and create a larger economy for players.
- Developers can still sell goods in the game, set up taxes and fees, and own assets on the blockchain.
- By designing the economy to benefit players, developers can align their interests and encourage more trading.
- Developers can also set a monetary policy, rewarding players for certain behaviors and participating in the rewards themselves.
- Incorporating blockchain technology can create a larger game economy and potentially generate significant revenue for developers.
- Trust is a key factor in adopting blockchain technology, as players may trust the broader marketplace represented by the blockchain more than individual developers.
- The transparency and interoperability of blockchain can enhance trust and lead to a larger economy.
- While smart contracts are transparent and interoperable, it does not mean that other developers can easily copy a game's economy and attract its players.

- The use of blockchain in gaming allows players to own their assets and transfer their value between games.
- This creates a larger game economy and gives players more control and ownership.
- Developers who embrace this model can attract more players and create a thriving market economy.
- The concept of identity in gaming can evolve with blockchain, allowing for both pseudonymous and verifiable identities.
- Developers who change the characteristics of assets too much risk losing player trust and the ability to sell assets.
- There is potential for off-chain systems to handle certain aspects of gameplay while still utilizing blockchain for asset ownership and transaction rules.

- The fireside chat discusses the potential impact of blockchain technology on the gaming industry.
- Blockchain can enable players to own assets in games, creating better game economies and rich marketplaces for trading.
- Smart contracts on the blockchain can create incentive systems for players and reward helpful actions.
- Tokenizing in-game items can create a new revenue stream for developers and give players more ownership in the game.
- Blockchain technology can align players and developers by creating a marketplace for in-game items and eliminating fraud.
- Incorporating blockchain into games offers new opportunities for developers to create virtual economies and benefit from their games.
- Trust, transparency, and interoperability are key factors in adopting blockchain technology in gaming.
- Players can own their assets and transfer their value between games, giving them more control and ownership.
- The concept of identity in gaming can evolve with blockchain, allowing for pseudonymous and verifiable identities.
- Developers need to be cautious about changing asset characteristics too much to maintain player trust and the ability to sell assets.
- Off-chain systems can complement blockchain technology for certain aspects of gameplay.

Forte cofounder and CEO Josh Williams does a deep dive on “Opportunities for Crypto and Gaming.” Williams explains that blockchain technology could have an even bigger impact on gaming than the internet because it's not just connecting people, but potentially changing business models by aligning the incentives of developers and players. It can do this by allowing players to truly own the assets in games and verify their provenance, and by enabling developers to code rich incentive systems and rewards into games. By incorporating these mechanisms, Williams believes, an already exploding gaming industry will grow and create multi-billion-dollar marketplaces within games that will truly benefit players and developers.

Andreessen Horowitz’s Crypto Startup School brought together 45 participants from around the U.S. and overseas in a seven-week course to learn how to build crypto companies. Andreessen Horowitz is partnering with TechCrunch to release the online version of the course over the next few weeks.

Find more Crypto Startup School videos plus additional reading and info: https://bit.ly/2ThsHen

Next up we're going to jump straight into next session, which is going to be a fireside chat with Josh Williams, who's the CEO and co-founder of Forte, which is a new blockchain gaming platform that aims to help align developers and players in how they earn economically.

And interviewing Josh is gonna be Jeff Tunnell, who is the founder of Monster Ideas and a number of other companies that he founded earlier where he designed, directed, produced hundreds of games.

Right, so in my long career as a game and game technology creator, I've seen lots of new platforms and new technologies come along that have totally changed the way we had to make games.

Probably the biggest 1 of those, well obviously the biggest 1, was the advent of the internet.

And it took our industry 10 years to figure it out.

And I think we're kind of still figuring it out, but that was when it really started to happen.

And 1 of the games that I created is called Tribes.

And it was a first person team-based shooter, kind of 1 of the first ones that really incorporated a lot of what was going on in the internet.

And it was kind of controversial for us inside the company at the time because it was a big project and we got to the end and we didn't have time to put a single player into it.

And So we launched it as multiplayer only.

And which seemed, it was really, that was really risky at the time.

Now it just seems really obvious that everybody releases a lot of multiplayer only games and they're all internet connected.

And I think in the future it's gonna be kind of similar for blockchain, it's going to really cause some big disruption in games.

And I think Josh is gonna tell us some what blockchain will be able to unleash for us in games.

Yeah, I think exactly as you said, Jeff, it's a good analogy.

Blockchain will disrupt and change gaming in, I think, a very similar way to the internet.

It might cause even bigger changes because the internet helped interconnect players and Tribes was really an example of a great innovative game designer, you know, you who embraced the bleeding-edge technology early on to create a game that was really revolutionary and I played Tribes a lot when I was a kid.

Blockchain will be similar and maybe bigger because it's not just interconnecting people but changing potentially the business model of games and creating the potential for a lot better game economies that align developers and players and work much better for both of them.

So the first way is by leveraging blockchain technology, games can allow players to really own the assets in their games.

Today players in games spend about a hundred 50000000000 dollars a year purchasing games and digital goods in games and the majority of that revenue actually is purchasing goods inside of games but players don't own any of them so That's the first 1.

When you introduce ownership, it could really change the way that the games are made and played and how the economies work.

The second 1 is blockchains enable you to have the provenance of every item and every asset in the game.

So that means you can know the history of every item in a game.

The third is games can create really rich marketplaces, or blockchain can create really rich marketplaces inside of games.

So when players own these assets and you can determine whether or not an asset is real, you know its history and provenance, you can create rich marketplaces around those items.

And the fourth is because blockchains can incorporate smart contracts, code that executes autonomously through the blockchain, you can create these rich incentive systems that reward players and participants in the game in different ways.

We're gonna delve into it a little bit more.

Let's talk about the ownership a little bit.

Yeah, so if you think about it, the ability for players to really own things inside of games, the virtual goods and virtual currencies inside of games, it transforms the purchases that players are making from pure expenditures, where again, players are taking over $100 billion a year out of their wallets to purchase these goods, it transforms them from expenditures to assets that the players own.

And so players could choose to, you know, resell assets if they if they own them.

They could choose to incorporate the assets into another asset that might be in the game.

And the thing about these assets being stored on blockchains is no 1 can take the asset away from the player.

The player truly owns it, and they don't have to trust a third party, including the game developer themselves, that they truly own the asset.

Yeah, and I think that's probably what most people think about when they think about crypto technologies or blockchain technologies and games.

But it really is important, you know, I'll just do like a pretty obvious example here, but imagine you've played WoW for a year and you take your rogue up to level 70 and you're tired of playing it and you want to become a warrior, if that was a blockchain-enabled game, then you could take that character and either give it to your friends so they can come back and play the game with you, or you can sell it to somebody and maybe get back a little bit of the money that you've paid in any subscription for the last year.

And when you play a game and you're really into it, you get to really care about the assets you have in the game.

You sometimes put a lot of money into those things.

And so To see real value and to truly own those things and to be able to do what you want with them as a player would be great as a player and transformative for games as a whole.

And touching on the second point, which is really the provenance of the items, of the assets in a game that blockchains enable, What that lets you do is know that when someone is claiming that they have an asset and they have the right to an asset, you can verify that that is true.

You don't have to trust anyone to do that.

So you can Imagine in the real world, outside of games, if someone was trying to sell you a basketball jersey and they said, hey, this is the jersey that Steph Curry wore in the final game of the 2015 NBA championships when they won, and so it's going to cost

you would just have to trust them that that's true or maybe find a third party to trust that has somehow certified that that's the real deal.

What's cool about games and blockchain is because the assets are digital, if they're stored on a blockchain, you don't have to trust anyone.

When someone says that, hey, this item, maybe it's a sword, this is the sword that was used by the first player to ever take down the biggest, baddest boss in the game, you could know that it's that collectible, unique item.

And maybe that it's got some special characteristics unlocked because it is that unique item.

Yeah, and that's actually, I mean, it might sound kind of trivial at first, but it does kind of, it can take an asset and make it more unique, more collectible.

And that's, again, kind of an obvious thing, but when you start really thinking deeply about this, it's pretty important.

And then you can also kind of start seeing how people could do things like, maybe there's an enterprising person that goes out and collects this open information from tons and tons of games and puts it all on 1 website.

And maybe it's kind of like an appraisal website so that you can go and you can check the value of your plus 18 sword in the game.

Yeah, and that leads to the third point, which is you can create these rich marketplaces in games, right?

So 1 player's own the assets and they're there for, they know they own it, and so they therefore ascribe value to them, and they can verify without trusting anyone that the history of the assets and its authenticity, You can start to price items, you can start to trade items together and create these rich marketplaces.

And the richness of the marketplaces can be not only enabling trading between players and the transfer of assets and value between players, but also pretty complex economic designs around how that value gets split up.

And this is where developers can start to benefit as well.

So that they might take a share of transactions.

If you had these assets that were owned by, that example we used of a sword that was used to take down the biggest boss in the game for the first time.

The player that killed that boss with that sword could always take a share, if the smart contracts were structured this way of every transaction, every trade of that sort of subsequently.

So you can open up all these new designs that were never possible prior to Blockchain or weren't possible without solely trusting the game developer themselves.

Yeah, and you could also use that kind of thing for incentives to move your players around to help them do things that you want them to do and also that they've kind of wanted to do anyway in the game.

It's designing incentive structures in the game.

So when you have a game that has an economy based on real asset values that players own, you can have currencies, you can have assets in that game, you could start to grant, you know, as a developer, you can write smart contracts that essentially incentivize or reward players through grants of currencies and assets and items when they do things that are helpful for the game and for other players.

So you could reward players for, maybe senior players who have experienced a lot of the game, you could give them currency.

You could drop into their account currency for helping new players get through a dungeon for the very first time.

And so you can create these really rich incentive mechanisms in a game in ways that, again, just weren't possible previously if you start to incorporate blockchain technology.

And there's a lot of cool stuff we're working with developers to do like that.

It kind of incorporates a bunch of the things we just talked about.

The skins, there are skins in the game right now, so those are cosmetics that you can equip on your character to make them look differently.

It doesn't affect the gameplay in this case, but it personalizes the character for you.

This developer that we're working with is tokenizing the skins in the game.

So they're putting the skins on the blockchain, they're letting players truly own them, and they're making the skins tradable within the game.

And that creates a new revenue stream for the developer, and it gives the players much more agency, much more ownership in the game.

And, you know, it makes the game more fun for the players because now they can benefit from the game, not only from it being fun, but by doing a good job, unlocking new skins and potentially earning an income from them.

Yeah, so I actually have some personal experience that where this would have helped me out tons on 1 of the games that we created.

We created a game for Disney and Playdom called Social City.

It was a social city building game that was on the Facebook platform back when that was going really big.

First time in my career that I had that happen.

But while the game was very successful, it was making a ton of money, we were really worried about the business model because it was really just selling digital goods.

You know, put a new building in, put a new road in, put a new sidewalk in.

And you could see where we were going to hit a wall in that.

So we were in the back room, just like squirrels running as fast as we could go, trying to figure out a way to make an economy.

But back then we just did not have the tools.

It would have been so wonderful to have these blockchain tools.

So I'd like maybe talk a little bit about how you build these community economies for these games.

Yeah, so you know, Social City was a big hit.

It was 1 of the earliest and most successful free-to-play games in the West.

And it kind of, Jeff, as you were talking about it, it hit the same problem that pretty much every free to play game today runs into as it grows.

And free to play games dominate the games industry today.

They kind of took the industry from 10 to $40 billion 20 years ago to $150 billion plus a year today.

Because what they do is they allowed players to play a game for free for the first time, and that aligned developers and players a little more than they had been in the past.

Prior to free-to-play games, players had to purchase a game up front without really getting a chance to see it, and so you couldn't get these, It was really hard to get these massive audiences in games.

And players, you were asking them to spend $50 or $60 in a game without even knowing what it was really like to play it.

With free-to-play games, you get a little closer to the player, a little bit more aligned with the player, in that, OK, you guys, you let the player come in for free, which is great.

But then you have to figure out how to monetize it, because you didn't monetize it up front.

And you run into this problem that Social City and every other major free-to-play game runs into, which is you constantly have to pump out new content as a developer.

You have to sell players more and more of these goods inside of a game because it's your only way to make revenue.

And the really pernicious thing that happens in this model, even though it's maybe friendlier in some ways to players than pure upfront purchases, is a small percentage of the audience ends up purchasing anything at all.

And our team and myself, we've seen some of the most successful free-to-play games in the world, and almost across the board, a very small percentage of the audience, 5% or less typically, makes any purchase whatsoever.

And very frequently, less than 1% of players in the top free-to-play games account for 80% or more of the revenue.

So what that means is you have a very small percentage of your audience that you end up catering to.

And those individual players often spend hundreds of thousands of dollars or millions of dollars a year even though it sounds crazy in these games.

And so you have to produce content that caters to them without somehow without alienating you know the rest of the players that don't do it.

And it's an incredible, they don't pay anything.

And that's an incredibly challenging design problem.

It's incredibly frustrating for players to feel like, you know, the people that spend the most might be able to get the coolest stuff in the game or be more powerful in the game.

And so there's still misalignment even in the free-to-play model.

What blockchain technology and those 4 new interaction models, economic models, new capabilities that blockchain enables for games can really do is align players and developers.

Where as a developer, you can start to pull a marketplace, the ownership that players have of the items in your game, you can start to pull a marketplace around those into the game and create win-wins with players, where players now own value, they can transact value, they can even earn an income from the game, and you as a developer can create a bigger economy without just having to create new content all the time.

If you allow players to trade, just as a simple example, you can earn a revenue stream from those trades as they occur over time.

So yeah, I mean, it might be kind of obvious, but 1 of the first things you would think about doing there if we talk about win-win or community economies would be a lot of the really big games nowadays, they have the gray market that's out there for buying World of Warcraft gold or different skins for different games or even trading accounts around will get you banned from the game nowadays, but now you could bring that economy into the game and get rid of a lot of the fraud and things like that that's happening out in the real world.

You know players want to be able to do this as we discussed earlier.

You know, when you invest a lot of time or money into your characters or assets or items in a game, you want to be able to trade them sometimes.

And sometimes, you know, a game might be designed to require you to spend a lot of time in order to get the cool stuff that you want and you would love as a player to be able to just go buy that thing sometimes.

There's massive kind of side economy outside of that $150 billion a year where players are just trading with each other outside of the games.

But it's problematic because the developers don't earn any revenue from those transactions.

And players are always subject to the risk of counter-party fraud, as Jeff said.

So if you're trying to buy a new item from another player in a game, and it's not sanctioned by the game itself, you've got to go to some third-party website, enter your credit card information, and risk someone stealing your identity or your credit card information, and maybe not even get the item that you were trying to purchase in the game, despite taking that risk.

When you leverage the blockchain to enable these marketplaces and economies inside of a game, you can do that in a secure, trustless fashion by leveraging the security of the blockchain itself.

Yeah, I mean, it's really just hard to express how powerful that is from a producer or designer of a game to have these tools.

I would like to, you know, I'm a convert now so I'm barely touching the ground, but when I first, when Josh first started talking to me about these blockchain, incorporating blockchain into the games, I went on and started doing my own research and probably many of you, if you went out and looked out there, you kind of feel like it's kind of scammy out there, Everything feels a little bit like a pyramid scheme.

And so I was like, I don't know about that.

But then the more you talk about it, when you get into it, there's just some, in addition to the 4 types of things that blockchain can unlock, it, it, that adds up to something way, way bigger.

And I'd like Josh to explain that because this is, this is the conversion moment right here.

I think, yeah, when we talk with developers about these systems, they can incorporate in their games.

What really starts to get compelling about it is, you know, when you think about it, games today, as Jeff said in examples like Social City, or the top, you know, most successful games today, developers are really just acting as merchants where they're selling goods to players and that's it.

When you start to really get deep on what blockchain technology could enable for games, you realize there's many more ways for developers to benefit from the games they create and to create games that are better for players as well.

And so it kind of shifts you from being just a merchant to managing, you can think about it like, creating in your virtual world that you create in your game, you're also creating an economy that's more real.

So the Alpha Wright's just like the real world, where we all in the real world, you know, we own assets, we earn income, we conduct commerce and trade with each other.

And blockchain can enable that inside the virtual worlds of games as well.

So developers kind of shift from being just a merchant selling goods to, it's almost like you're managing a little country and trying to create the biggest economy that you can for the citizens inside of your country.

And that unlocks new ways to earn revenue for the developer as well.

So, you know, there's again 4 things you can do with that.

So you can still continue to sell goods inside of the game just like you do now, and those goods don't have to be on the blockchain.

You can still sell goods that players don't own.

So you don't lose anything by incorporating blockchain into your game.

But you can also design around player ownership and the marketplaces we've talked about.

And so you can start to set up the equivalent of a fiscal policy, essentially, in the parlance of macroeconomics and governments.

You can think about what sorts of taxes and fees you want to operate in your economy.

So players own assets, and you can set up the rules for how people can trade with each other.

And you can also set up what the fees are and what the taxes might be as players start to trade with each other.

Maybe you as a developer take 5% or 10% or 30% of every transaction.

And it's really cool to think about how developers and players get aligned here because a simple-minded developer might think, well, I'll just make the fee as high as I can.

And you could do that, but your game probably would be less successful than another game that charges lower fees and is more beneficial to players and encourages more trading.

So what you really want to do is just, you design your economy, this kind of second portion of it with the fiscal policy to encourage the creation of the largest possible economy, which means players are benefiting more too because their owners in the economy as well So it really lines up players and developers the third way that developers can Benefit the third revenue stream can be so again You have a selling sale of goods you have taxes and fees like a fiscal policy.

The third way is you have assets in these games and players own them and developers can own them too.

So you could have a reserve of assets and the bigger you make your game, the better job you do in designing the game and making it fun and designing the economy, the more valuable the assets in your economy could be for both you and for the players.

And so you as a developer could sell off those assets.

They're not just virtual goods, they're the assets that are on the blockchain.

And so that's a third way that developers can benefit in a way they really couldn't prior to the introduction of blockchain.

Yeah, and it's actually really amazing if you start calculating this out and think of maybe the total addressable market here.

Yeah, I think, you know, well, and before we get to thinking about what the total macro picture could look like, the last way developers can make a revenue stream here is you can set a monetary policy too, just like you would in a country.

So you can have whatever macroeconomic design you think will work best or you kind of experiment and learn will work best inside of your game.

And you can, as we discussed at the beginning, you could reward players for different types of behaviors.

And That might deflate, that might inflate the economy by producing more currency when you're granting players maybe free gold or free coins for performing certain actions.

Maybe it's logging in every day, maybe it's helping other players.

But even despite that inflation, if it helps players contribute to the game or perform actions that help the economy overall, it could grow the total size of the economy.

And you as a developer can also participate in those rewards.

You write it in a smart contract so that you can't change the rules willy-nilly, but let's say you allow players to create content in your game.

Then you reward them through these inflationary monetary mechanisms for the content that gets used the most by other players.

So it might be a new dungeon that someone creates or a new script of dialogue that an NPC, a non-player character in the game says, and you might give more rewards to the most popular pieces of content for players.

You could do the same thing for yourself as a developer.

Maybe the new content you create also participates in those rewards.

And if it's popular with players, that's worth it because it grew the total size of the economy.

So if you step back and put all these pieces together, again, you're kind of creating a more market economy inside of games instead of a command and control economy or just a pure merchant economy, which is the case in games today.

And market economies are how the world works today.

And the world's economy is much bigger today than it was in the past and the same thing will happen in games and a simple way to understand that might be, you know, there are games like Fortnite today that have hundreds of millions of players that play them every single month and those games are wildly successful.

It's the most successful games that have ever been created are being created today.

But they do a couple billion dollars a year in revenue at their peak today, which is massive.

But if you think about it, if you had a game that incorporated blockchain technology to create a real market economy for players inside of the game, and you got just a million players that were earning just a minimum livable wage, like say $30, 000 a year inside of the game because you created this rich economy, then that game, a million players making $30, 000 a year from the game would have a $30 billion a year economy, which would be by far the biggest game that's ever created, with only a million players that are able to achieve that.

And that, you know, on its own would be larger than the entire global music industry.

And it's not difficult to imagine a game that could do that by incorporating these mechanisms.

I guess I'm still curious, but what's the material difference between having an SDK for implementing a lot of these economic type of interactions for games versus having it be blockchain related?

And if the issue is trusting the developer, I'm actually also curious, I'm just not that sure, but how big the trust issue between a game player and game developer actually is, and like, are there?

Yeah, yeah, so everybody could hear the question.

So the reason to put this on blockchain versus just having an SDK or a central database that, you know, tried to operate the economy is twofold.

1, it's that it's really hard to secure these things as an individual developer.

And by leveraging the public blockchains that exist, you're inheriting the hundreds of, literal hundreds of billions of dollars of security and stored value that exists on these blockchains today, instead of having to try to figure out how to secure your database from hackers or exploits, you know, from gamers.

So that's the first part and it's the simpler part, but it's still important.

The big thing is really the size of the economy you can create.

So your players might trust you as a developer, especially your ardent fans who have maybe been loyal to you for years, but a new player who comes into the game and doesn't know who you are as a developer and doesn't have a lot of investment and engagement in your game isn't gonna trust you as a developer as much as they will trust the broader marketplace that is represented by these blockchains and the assets that they live there.

If they know, hey, these assets live on a blockchain and the developer actually can't control it even if they wanted to, you're gonna have more trust than you would.

And the important point there is not just trust, it's that it creates a larger economy.

The reason we're able to conduct commerce today is because we have an idea of safety and soundness in an economy.

We think, even though we've seen it fail many times, you know, and there's been different financial crises, people believe in the dollar enough to conduct transactions.

And so basically the more you can, and the promise of blockchain is that it can be totally trustless and unlock all these new economic activities where people are more sovereign and can choose who to trust.

And so that just unlocks more economic activity and it's the same thing in games where if you can maximize trust you maximize the size of the economy.

And so you want to do everything you can to maximize basically the degree that players can trust the economy itself as opposed to any 1 actor, including the developer.

2 big properties of blockchain are interoperability and transparency.

Isn't it the case that actually undermine business models of game developers because actually any other team can instantly like take over the user base quite easily because it's all on the blockchain they can simply deploy some other solutions like do the airdrop or something like that.

So it starts to be a very competitive market.

Isn't it actually a threat for blockchain games?

So It's a good question, but there's a bit of a misconception there, right?

So if you think about it, just because it...

So totally, the smart contracts are open, they're transparent, they're interoperable, and that's a beneficial thing in that, again, you know as a player that you can transfer value from 1 game to another.

But that doesn't mean that you can just copy a game's smart contracts or the way it's designed its economy and somehow shift all of its players over.

Because if you're the developer of a game and You've published these smart contracts and you've set up the rules for your economy, and you've created a game that attracts a lot of players.

Those players then store value in that economy.

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Josh Williams: Opportunities for Crypto in Gaming