How do first-tier practitioners view opportunities in the Web3 gaming industry? | Highlights of the SevenX New Trends Summit in Hong Kong

On April 7, the “New Trends Summit” hosted by SevenX Ventures and co-hosted by YGG, Immutable and Beam was officially held at JW Marriott Hong Kong. The theme of this summit is “Web3 Game: The Next Big Thing”. Many practitioners from various links of the industry chain, including game content, distribution, traffic, service, platform, and infrastructure projects, and guests from VC institutions, Chinese KOLs, and game unions who have been deeply involved in the game track for many years enthusiastically shared many observations and insights on the industry and projects, and jointly discussed many cutting-edge topics that are of great concern in the current game track.

As the exclusive co-host media of this summit, Odaily Planet Daily will lead everyone to understand the insights and wonderful speeches of the guests of this summit.

The past, present and future of Web3 games

In the opening speech, Eraser, the founding partner of SevenX Ventures, first gave a brief introduction to SevenX and its past portfolios, and then affirmed the role of games in social life and the extremely long life cycle of this industry. He believes that the game industry has a huge driving force for the entire IT industry and can interact with infrastructure construction, and the two complement each other. Finally, Eraser shared his thoughts on the hierarchical structure of the game industry, which mainly includes: underlying blockchain network, decentralized storage, cross-chain and chain abstraction solutions, developer tools, distribution channel platform, content and traffic, game subdivision, finance and services. Among them, finance and services include 4 sectors: data services, game-related finance, e-sports, and predictive markets. Finally, he mentioned that in the next 2 to 3 years, full-chain games, game-integrated social platforms, data-driven services, “game + AI” and “game AI +” will become the focus of industry development.

Roundtable: The past, present and future of Web3 games • Chapter 1

At the roundtable hosted by SevenX investor Yinghao, four Web3 game industry practitioners had an in-depth exchange on their entrepreneurial experiences and related experiences in Web3 game projects.

Ray Zhao, co-founder of innovative cultural and entertainment platform MATR1X, believes that the Web3 game market has broad prospects. Based on the current global game industry’s revenue of US$150 billion, 5% of revenue is expected to shift from game props to game NFTs. He believes this is a major trend. In addition, global operations, creator economy and a strong money-making effect are crucial to the subsequent development of Web3 games.

Alan Tan, founder of MMO platform MetaCene, said based on his own experience that high-quality Web3 games or those with more Web2.5 attributes are gradually being recognized by players and the capital market, and the play-to-earn business model will partially replace the item base business model. In the future, the understanding of the needs of Web3 players and the demand for asset appreciation will be strengthened, and more users will be attracted to join based on the confirmation of virtual asset ownership and trading rights.

Nicky Li, co-founder of the strategy game BLOCKLORDS, also resonated that the continued advancement of early testing has prompted continuous iteration of the game and inspired the team to think about and practice on-chain game content and NFTization of game assets. In addition, play to own (goal achievement) and fun conquer (game playability) are crucial.

Jeff Li, CEO of CASTILE, a AAA ARPG card game, expressed strong confidence in the future development of the Web3 game industry. He mentioned that, on the one hand, with the maturity of various infrastructures, the Web3 game track has entered a new era of navigation, and the key lies in tapping new traffic or user channels; on the other hand, the “IP problem” is essentially the homogenization of assets and narratives, and new breakthroughs need to be sought in user operations in the future. The asset fission properties of Web3 games and the establishment of game value-added models deserve long-term attention.

Roundtable: The Past, Present and Future of Web3 Games • Chapter 2

In the second roundtable meeting, Roger, investment director of Xterio, a Web3 gaming ecosystem and infrastructure platform, served as the host and discussed with a group of guests on topics such as changes in the Web3 gaming industry.

Space Nation CEO Jerome Wu pointed out that the previous GameFi game was more like a DeFi product in the guise of a game, and now he prefers to call his project a Web3 game. As a Web3 space opera MMORPG, Space Nation uses Web3 technology and tools to enhance the gaming experience rather than emphasizing all content related to assets or income.

Geezee, the game director of Mantle, combined with his own experience in the industry, mentioned that looking back at the mobile game industry and the large-scale online game industry, once a new and truly sustainable business model emerges, the golden age of the game industry will arrive. Based on the emergence and continuous development of successful projects in the past, Web3 games are now in a transition period between the third and fourth stages of a lot of trial and error, and their own golden age is coming.

Nick, head of asset acquisition at YGG, mentioned that one of the biggest changes in the entire industry is the shift in consumer perspectives - from play-to-earn to play-and-earn to play-and-own, people are paying more and more attention to the game itself. Therefore, YGG has gradually transformed from a union to an ecosystem, and then used data protocols to serve players and data contributors.

Manfred Pack, project leader of DAR Open Network, concluded that the Web3 gaming industry has gradually shifted from initial technological enthusiasm and speculative imitation to more rational and in-depth discussions, from focusing on revenue to focusing on the game itself. As the infrastructure continues to improve, more innovative experiments in game design and gameplay are also worth looking forward to.

Roundtable: Decoding the full-chain game

At this roundtable meeting hosted by Gink Chen, chief researcher of AW Research, relevant practitioners exchanged views and discussed the current situation, development trends and future directions of full-chain games.

Mike Lin, founder of Gabby World, believes that games can be divided into broad and narrow categories. Broad games are centered on game theory, and then packaged around narrow games. Web3 games are not only entertainment, but also provide educational value, strategic thinking and social interaction, and also provide a persistent decentralized way of running games. AI technology also opens up new possibilities for enhancing player immersion and participation as well as game design.

ARPA Network CEO Felix Xu mentioned that we are trying to build something different from traditional games, such as an autonomous world. To do this, we must deeply understand smart contracts and use tools, and then build on tools like MUD v2, which will be a combination of asset trading and game theory, just like something built by numbers.

Sinka Gao, founder of Delphinus Lab, said that when switching from Web2 games to Web3 games, we need to clearly understand who the audience is, and then use Web3 trusted computing methods to provide a trustless and fairer value system to produce high-quality content and high-quality games.

Eric, a core contributor of Cellula, summarized many viewpoints from the development history of DeFi. He believes that the current state of full-chain games is very similar to the initial state of DeFi in 2019. The previous order book was only a phased state, just as the emergence of Uniswap and MakerDAO later replaced it, so the full-chain game may take a completely different path in the future.

Curio CEO Yijia Chen agreed, saying that financialization may be one of the most important innovations a vertical should embrace, as it allows in-game assets and transactions to have real economic value. This economic value not only adds depth and complexity to the game, but also provides players with new ways to participate and interact. In addition, there is still a lot of room for the combination of social and games, such as in Friend.tech, where people can speculate on top players in the ecosystem.

Roundtable: Exploration and Imagination of AI+Web3 Applications

In this roundtable on AI + Web3 applications, FD, founding partner of Gam 3 Girl Ventures, as the host, asked many interesting questions to practitioners in the AI + Web3 application industry, such as whether they think the current AI market and Web3 market are over-hyped? What is the real utility of AI in the blockchain world? What is the valuation framework of an AI project? Let’s listen to the guests’ answers.

MyShell co-founder Ethan Sun believes that AI and Web3 are indeed over-hyped. However, generative AI technology has truly lowered the threshold for creators to build interactive, high-value applications, and as a flexible financial market, the crypto industry can help creators raise funds and launch market strategies. Traditional equity-based product and company valuations may gradually shift to token-based construction.

Delysium founder Xiankun Wu put forward a different view. For example, his consultant Cece believes that AI is not over-hyped, but underestimated. He agreed and said that we have not really realized the potential of AI. Blockchain technology may become an important tool for interaction and transactions between AI in the process of AI development. What we want to do is to become the Memecoin of AI agent.

EvilPlan CEO Jacob Rapoport is optimistic about this. He pointed out that most of the current investment has ultimately entered the highly commoditized service field, and only a few companies actually control the training data. On the other hand, the content produced by AI has the dynamic and open nature it brings, which will have far-reaching impacts. The future market will be much broader than the current early situation.

Masa co-founder Calanthia Mei expressed her views from a data perspective, pointing out that AI, especially AI tokens, may be overhyped in the short term, but in the long run, they are seriously underestimated. On the one hand, as of the end of February, AI tokens accounted for approximately $39 billion in the total market value; on the other hand, global venture capital inflows into AI in 2022 were only $4 billion, but in 2023 this figure increased fivefold. AI is fundamentally changing every corner of our lives.

Jorn Wisman, head of marketing at Chain of Alliance, believes that AI is more than just a technical tool. It can also improve accessibility, enhance user experience, and provide new opportunities for content creation, creating more value for various projects and content.

Roundtable: User Growth and Traffic Operation of Web3 Games

At this roundtable meeting hosted by SevenX Ventures investor Lavenjer, many senior practitioners gave their insights and shared their views on topics such as user growth and traffic operation of Web3 games.

Jarindr, co-founder of GuildFi, said that the most powerful tool for marketing in Web3 is tokens. Tokens + good products are used to incentivize and attract user participation, which makes the entire user group have a strong consistency with the product itself.

Shuo Sun, founder of UXLINK, combined his own experience and gave answers in many aspects, including a user growth system based on fission to build trust; choosing Telegram, the largest social network in Web3, as a channel; and a lightweight product building method to ensure user experience.

Hooked Protocol CMO Jess Lo replied that the key points are: first, reducing the friction of the entry threshold and giving users an early drive; second, giving the right incentives at the right time; third, learning from the hotel points or flight mileage points system, users have on-chain records and can unlock proof of other experiences. This measure combines the token economics system with decentralized instant reward sharing, making it an excellent community growth tool.

Roundtable: Web3 games from the perspective of players, communities and KOLs

Afterwards, under the organization of the host Jason Chen, guests from game players, game communities and KOL fields discussed the views of different roles on Web3 games.

Nothing Research partner and Ebunker founder Allen Ding spoke first and stated his views on the GameFi field. He believes that compared with other investment tracks (such as NFT, Memecoin, etc.), GameFi requires users to spend time, energy and brainpower, and is relatively less cost-effective, especially in a bull market.

Gua Ge, the spokesperson of W Labs (Guatian Laboratory), the largest Chinese-speaking game community, answered the question of which aspect of Web3 games is more important in one sentence. He said that in a bull market, it is Fi, and in a bear market, everyone plays. In addition, whether it is Game first and then Fi, or Fi first and then Game, it does not have much impact. As long as it promotes the industry, it is good. For example, the quality of this wave of blockchain games is obviously better than the previous wave, which shows that the entire industry is moving upward.

Crypto KOL Goku is Cool emphasized that Web3 games do have real users and gamers. He believes that Web3 is essentially a logic of asset issuance and wealth reconstruction, so in theory it is not a problem of game quality at present. The main problem is that the game lacks consensus and lacks real playability. Therefore, there is no need to compete for game quality. What is important is the type of game and whether the game type can grab user time and make users want to play.

Roundtable: Growth and Evolution of Game Public Chain

In 2024, the public gaming chain is also a sub-field that many people are paying attention to. Moderated by Daniel Romero, an investment and cooperation analyst from Beam, three guests also discussed the early challenges, coping methods, and long-term operations of the public gaming chain.

Yeou Jie, head of Chromia Asia Pacific, shared that due to the difference in technical architecture, we have to build everything from scratch, including our wallet, our cross-chain bridge, block browser, etc. This is why it will take some time before the external announcement, and everything currently available is developed internally.

Joe Chen, BD manager of Immutable, believes that Immutable is currently facing two challenges: one is the C-end challenge that it is trying to solve; the other is the B2B challenge, that is, the B-end retail for different games. Among them, liquidity and market share are the top priorities, and the universal accessibility of games, cross-platform support, support for different game engines, and support for game studios are all urgent issues to be addressed.

Chris, co-founder of Mirror World & Sonic, pointed out that timing is crucial. For core technology partners, there are usually three important issues: First, how long will it take to go public using the corresponding technical solutions and frameworks? Second, commercial support, that is, how much cash and token exchange subsidies can the partners get? How to align incentives? Third, how to go public? How to obtain liquidity? How to launch assets? Considering the timing of these issues is an exciting thing, but also a great challenge.

Roundtable: Web3 Games and Frontier Infrastructure

Moderated by Arthur, an investor from SevenX Ventures, several roundtable guests discussed the current status of Web3 games and infrastructure development.

Manta Network co-founder Victor Ji said that he is very concerned about the sustainable daily active users (DAU) in Web3 games and how such games can bring more on-chain activities.

Dorothy, the growth director of AltLayer, reached a consensus after communicating with the founder of the game platform Xterio that they do not like games between Web2 and Web3. They are either Web2.5 games that do not need to be built on the blockchain, which can have NFT assets but players only enjoy the game itself; or full-chain games, where everything is tokenized and all player operations are performed on the chain. In addition, it is necessary to ensure that players can profit from the game, which is also the primary goal of Web3 users, but this is not necessarily related to gameplay.

HC Xie, head of Asia at Aptos, said that over the past year the team has communicated with more than 200 different Web3 game projects from China, South Korea, Japan, Southeast Asia and the West, focusing on three things: one is the quality of the game, such as whether there have been successful cases in the past; the second is game release, or user acquisition, clear target users are necessary; the third is the Web3 element of the game, that is, it is necessary to think about what added value the Web3 element provides for game developers, game releases or end users themselves.

Ryan De Souza, Offchain Labs Asia Pacific Partnership Manager, pointed out that there are many exciting games in the Asia Pacific region, especially those built on Arbitrum, and the most important feature of a game is the user experience, which must be interesting to ensure user stickiness; at the same time, it must also be in line with the spirit of Web3, that is, asset ownership, whether it is in-game assets or some kind of token.

Roundtable: Web3 Games from the VC Perspective

Finally, under the moderation of Eraser, founding partner of SevenX Ventures, guests from well-known investment institutions shared a lot of industry knowledge and investment experience about Web3 games. The following is their sharing of practical experience.

FD, founding partner of Gam 3 Girl Ventures, said that some traditional investment institutions focus on the game track for possible reasons including category logic, regional logic, crowd logic, multi-terminal analysis, and multi-dimensional evaluation. In the process of paradigm shift in Web3 game investment, the key points to note include: 1) Discover path records, that is, think about how Web3 can better empower Web2? In other words, solve some problems that were not solved in Web2 in the past; 2) Find Web3 Native teams, such as game companies like Mihoyo and Riot, which make games and solve existing problems from the perspective of game players.

Spartan Executive Director Tommy Chang also responded to the difficulty of investing in Web3 games. He believes that the current Web2 game industry is extremely competitive and the return on investment is not stable. Entering Web3 for game development is not easy for many game studios, including choosing a suitable on-chain ecosystem, finding suitable cooperative unions, and ensuring the overall integration of games and tokens. These are also issues that need to be considered in game investment.

Jason Kam, founder of Folius Ventures, expressed his personal opinion based on his previous investment experience. He believes that as entertainment products that take up people’s time, many games put research and development first, but at the same time, the publicity and promotion or mental costs are huge, especially for highly competitive games, such as FPS shooting games and gambling games, where the money may be spent on publicity and promotion costs; and the key to Web3 games lies in game distribution and financial leverage, and these conditions must be used to amplify the game.

Animoca Investment VP Jenny believes that innovation comes first. She believes that Web3 game investment should avoid path dependence and games that will trigger a large number of imitation cases. The focus of Web3 game investment is on categories and seizing the initiative.

Dragonfly partner GM pointed out that for Web2 teams that have just entered the Web3 industry, it is recommended to fully embrace tokens, because tokens are the difference between the Web2 and Web3 industries, and are also the best weapon that Web3 games can use. On the other hand, Web3 game projects should learn more advanced experience from Web2 game studios or producers, and understand how real games should be made. At present, there is still a lot of market space in this regard.

Conclusion

At this summit, there were experience sharing and talks from industry practitioners, as well as exchanges of views and cognitions from investors from different regions and institutions, as well as exchanges of perspectives and personal practices from game unions, crypto KOLs, and industry researchers. I believe that with the continuous exploration of Web3 game developers, investors, and many players and users who love Web3 games, Web3 games will continue to develop and move towards the next peak.