This GamesBeat podcast is hosted by James Zhang, founder and CEO of Concept Art House, studio focused on creating graphics for NFT projects and Web3 games.  He is joined by Yat Siu, Chairman and founder of Animoca Brands, one of the largest innovators in the Web3 gaming space.

Yat Siu explains why crypto has a negative connotation in the west, why Asia is primed to adopt crypto, and how Web3 gaming can be the medium for Asian adoption.

Read our notes below to learn more.

Education in Web3

• Onboarding Issue: gamers don’t understand why they need a wallet.
• You have to undo decades of gaming experience to integrate self-custody.
• Some want to implement “Web2.5”; this doesn’t teach people to own their digital assets if the game does it for them.

Crypto in the West

• Another issue is that the west rejects the idea of NFTs, ownership in games.
• F2P (free-to-play) games are less popular in the west.
• Many young people in America are anti-capitalist; 60-70% of American youth openly prefer socialism.
• Western youth think crypto is a tool for the rich, they associate all crypto and NFTs as being the equivalent of luxury goods e.g., Lamborghinis, expensive watches, etc.
• In some ways capitalism has hurt people in the west in past 20 years, which contributes towards negative feelings towards crypto and NFTs.
• American game companies received backlash for pivoting to Web3.

Crypto in Asia

• Large Chinese game companies can’t implement Web3 because crypto is just banned.
• Absence of both western and Chinese game companies creates opportunity for new studios.
• Countries like Japan have made metaverse a priority.
• Asia is much more accepting of blockchain gaming.
• The American Dream is much more alive in Asia.
• Asian countries are thankful for the recent implementation of property rights; westerners take capitalism, liberty, freedom for granted.

Future of Blockchain Gaming

• Can take lessons from mobile gaming evolution, which included wave of M&A (mergers and acquisitions) in gaming sector.
• Large game companies traditionally don’t need to innovate.
• Asian game companies will lead as they only have to deal with the UX barrier, not the consumer barrier that the west has.
• Chinese companies have set up in Singapore, other places to enter Web3 gaming, but they lack domestic advantages.
• Korea is most active in Web3 gaming; every game company is pivoting.
• Square Enix (game company most known for the Final Fantasy series) sold off some of their studios to focus on Web3.

James

• American consumers also have to worry about SEC regulating crypto.

Regulation and Tokenomics

• Most SEC investigations are related to fungible tokens.
• Fractionalizing NFTs may turn them into a security.
• Different countries regulate differently.
• Most important factor is what is the purpose of buying the asset; just because an asset increases in price doesn’t mean that was the goal.
• Regulation exists to protect people, which is important.
• As seen in Web1 and Web2, progress doesn’t stop because of regulation.
• Hong Kong recently announced new digital asset policy, want to become a leading jurisdiction in this area.
• Even in Web2 games, markets already exist for trading accounts and ingame items. 
• Web3 gaming just takes this concept and makes it official, instead of being a “black market”.

James

• Last year was all about P2E (play to earn) gaming, now it’s more about having fun.

How Web3 Gaming Will Evolve

• Play to Own is the new paradigm. 
• “Freedom and Property Rights are inseparable.  You can’t have one without the other”.

– George Washington

• This applies to digital assets as well.
• Digital freedom could result in democratic voting, but more importantly, it gives freedom to do what you want with assets.
• Most Web3 games assets aren’t being sold, because the players need to use them, just like IRL.
• First generation of crypto users were solving financial issues, lately people are joining crypto because of culture.

Gaming Marketing

• Average paying consumer in games pays $80-$90.
• In traditional gaming, ~$120b will be spent this year on marketing, which doesn’t allow funds to go back into the gaming industry.
• This also makes it difficult for indie developers to survive.
• Instead, Web3 games could give users free items.
• There is a much higher chance that the game will keep this value in the gaming industry. 

James

• Web1: read and write, Web2: publish, Web3: own.
• A16z report showed how extractive Web2 companies are.

Changing Crypto Perception

• Ownership comes with responsibility.
• Education is most important.
• “Exile System” should be implemented so if digital assets are stolen it is hard to monetize them.
• Having an option to reclaim stolen digital assets opens up new questions: Do you really own something if ownership can be revoked?
• This isn’t a crypto winter, it’s an opportunity similar to economic development of a new nation.
• Close to $3b has been raised for Web3 gaming.
• Only tens of millions of people in crypto, compared to 3.4b who play games, ~5.5b people online.

This content was originally posted on The Daily Bolt, which is a 100% free no-nonsense daily crypto newsletter by Revelo Intel.