2023 will be the year when blockchain games deliver quality and fun | Polygon

There are many who want blockchain games to deliver. And 2023 will probably be the year when we get some answers as to whether high-quality games will emerge using the technology.

Urvit Goel, vice president of gaming at Polygon, recently spoke with me about how the blockchain protocol company is trying hard to make it happen.

“Especially in gaming, 2023 will be the year when blockchain and gaming will be judged heavily on all the promises made about great games,” Goel said. “We need to start watching some of these games. That will be enough to start deciding on quality. A lot of these stealth-mode builders haven’t launched a product yet.”

He notes that Polygon has been at the forefront of Web3 gaming with its recent integration of the popular NFT marketplace Magic Eden as well as top games in the industry such as The Sandbox, Dencentral Games and more.

While the collapse of FTX set the industry back, DappRadar reported that the Web3 blockchain gaming sector has seen continued investment north of $500 million between October and November, even after the FTX debacle.

“Our focus will be to help these builders get to market, whether it’s with broad tools to make it easier to launch or new technology for scaling,” Goel said.

Goel joined Polygon about a year ago, diving into Web3 for the first time after a decade of service at Amazon in gaming-related roles. He serves as head of games at Polygon, with the goal of driving the adoption of blockchain technology among game developers. He reports to Ryan Wyatt, who previously led YouTube Gaming and now oversees all verticals at Polygon.

A fund of 100 million dollars

Goel’s job is to connect developers with technology and marketplaces to build better products. Polygon created a $100 million fund to invest in Web3 games and other verticals, using much of its own money from when it raised a $450 million funding round.

Goel believes that the blockchain gaming industry is coming of age. In the early years, during the bull run for blockchain and cryptocurrencies, people brought out very simple experiences that took advantage of the economic opportunity, but were seen as a bunch of noise by gamers.

With the bear market, Goel believes that the “real builders” who have been working for several years are pushing through and removing much of the noise.

“What remains are the high-quality builders in the space who are committed to building great and fun experiences for customers,” Goel said. “These are well-funded teams that have the runway to build great games. Or there are big Web2 developers that have Web3 initiatives and can keep building. I don’t see a slowdown.”

As for the competition between blockchains, he believes we will see many successful blockchains. He does not see others as competition. Rather, the main task is to evangelize the technology so that more people are willing to adopt Web3 games. Different blockchains try different experiments.

“A rising tide lifts all boats because we are in this phase of the mission where there are many trials,” he said. “We have clearly seen what has not worked. And if we keep going through the trials, we can find what it is that will work. It’s similar to how mobile gaming took off. We’ve only seen the first iteration. The number of chains out there is actually useful.”

Recovery mode

The FTX crash is definitely a negative event hanging over the industry, Goel said. He said it’s worth noting that there’s a difference between a centralized exchange versus true blockchain technology enablement. The fallout from FTX will take months to unfold, he said.

The $100 million fund is an ecosystem fund focused on multiple verticals, including gaming, where the company distributes capital to game developers. The fund is still in operation and the company is looking at developers who apply for it. Goel said the fund has made hundreds of investments so far.

“The idea behind it is that there are a lot of native Web3 builders, and they need support and they need capital,” he said. “We are in a fortunate position to be able to deploy part of our treasury to help the ecosystem. It gives developers confidence to see that we are supporting them.”

Other funds are also putting money into blockchain games, which helps because Polygon doesn’t plan to complete blockchain game studios on its own.

Goel said blockchain games are already strong, as the number of active wallets has rebounded in recent months. And gaming accounts for a large portion of all blockchain transactions, according to DappRadar.

“The sector is down, but it has stayed pretty strong,” he said. “The thesis is that players are going to play games whether we’re in a bull market or a bear market. The other part is that there are a lot of free digital collectibles ready to drive the top of the funnel.”

It reminds him of the early days of free-to-play games, where players eventually started making premium purchases.

“We’re still in the early stages of blockchain gaming. So if you zoom out a little bit, it’s like making predictions about mobile gaming back in 2000 [before the iPhone came along] It was difficult, he said. “The focus is on helping developers get to market. Consumers will tell us what they like.”

Negative player reaction

Goel acknowledges that many Western players have been vocal about their negative reaction to blockchain games as scams and financial games instead of fun.

“A lot of the focus has been on technology versus the available experiences,” Goel said.

He noted that there is a “cultural movement” around owning profile pictures, or JPEGs, of monkeys that cost hundreds of thousands of dollars. He said people don’t want to spend that kind of money. But he believes that players would rather own the assets they pay for than just rent them. If players invest in their digital assets, they should be able to sell or trade them to get some benefits, he said.

“The challenge today lies in the fact that [blockchain] Games that companies have been able to show are just not good, he said. “You have to take a leap of faith and look further.”

There was a big backlash against mobile free-to-play games even a decade ago, he said. But it has opened up gaming for the gaming industry and is now the biggest part of gaming revenue, he said. He noted that free-to-play games took off first in Asia, where consumers did not have a negative view of collectibles.

“At the end of the day, it’s going to be big experiences that matter,” he said. “No one cares about the technology as a consumer. It’s about what you make possible for me. We as an industry have to do a better job with that.”

A newly started market

I wrote about the success of Million on Mars, which has a profitable hardcore Martian exploration simulation game with blockchain elements. But the base of players is still small with around 10,000 players.

Goel said he isn’t thinking about different segments of the blockchain gaming population yet because the industry is still so small. There is a contingent of crypto-savvy blockchain enthusiasts, and there aren’t enough blockchain games on the market yet. Goel believes the game startups and indie studios will lead the way in blockchain games, as they are the ones who are not afraid to adopt new technology.

And coming up with new kinds of games is better than launching the blockchain equivalent of a Call of Duty game, he said.

“I think you will continue to see a disproportionate amount of funding go into blockchain games,” he said. “I am bullish for blockchain games. There are more shots on target at the end of the day.”

Big challenges

Of course, it’s not all smooth sailing. Square Enix CEO Yosuke Matsuda announced that he will step aside and promote a younger executive to the top role in June. He was a big proponent of blockchain games and sold off the company’s western studios to focus on new technology. (It is not clear if the new CEO will also focus on blockchain games). The number of active wallets in the blockchain is still quite small. And funding could dry up if the economic downturn starts to hurt businesses even more.

Blockchain companies are also competing with each other for gaming customers, with ImmutableX poaching studios from both Solana and Polygon and so on.

Goel noted that some of the largest companies in South Korea and some of the largest gaming companies in Japan are still taking their intellectual properties into the blockchain space.

“We’re starting to see some of these dominoes fall. And what does it mean for Western game developers? I think that remains to be seen. But this industry is very global, Goel said.

In the meantime, the industry needs to improve its infrastructure, be it marketplaces, data analytics, wallets or payment solutions. Gaming companies shouldn’t need to dedicate their internal staff to doing that kind of work.

“We want to work more closely with developers and help them,” he said.

The Blockchain Metaverse

Regarding blockchain gaming’s intersection with the metaverse, Goel said gaming and the metaverse are very closely related, as some of the earliest metaverse experiences are games where people are willing to stay engaged with the content for a long time.

“I think the metaverse trend will continue,” he said. “There are obviously large investments from companies putting in tens of billions of dollars. Then there are the companies that build in Web3 where they believe in the decentralized metaverse. We will see more big companies enter this space and I think there will be gamified experiences and games in the metaverse. But we haven’t seen a true and impactful metaverse yet. It’s going to take time.”