Cryptokitties seemed like it could do no wrong.
Just two short years ago, this blockchain based flurry of feline fun was the darling of the Ethereum blockchain, bringing mainstream users into the fold for the first time and crippling the networks infrastructure.
Cryptokitties had all the tools it needed to succeed. A first-mover advantage, extensive funding, experienced developers, great artists, and in the last year it even began to build out its own wallet called “Dapper” designed to make onboarding easier – by all accounts Cryptokitties should have been the Neopets or Tamagochi of our time.
So why is it then, that Cryptokitties has fallen from its all time high of nearly 14,000 daily active players, to a measly 141 unique players per day?
It’s because Cryptokitties, and their investors seem to have missed the mark, in fact they’ve missed the entire value of NFTs.
Recently, when Dapper Labs (the makers of Cryptokitties) launched their latest game “Cheese Wizards”, Union Square Ventures investor Fred Wilson took to his blog to discuss the value of non-fungible tokens (NFTs) and how they play into “extensible games”:
The concept of extensibility in-games is nothing new to gamers, we’ve had mods and game-workships since the early 90s, and in-fact some of the most popular games of all time started out as nothing more than custom game mods.
The concept that Fred and CryptoKitties seem to think will take off is this idea that you can create a character, and some very basic assets that people will fall in love with, and then let other developers build the actual games where people will bring in your content.
More than a year after launch, and more than $15M in funding, CryptoKitties still has the same core feature set (plus a few extra cats) that it did when it launched.
What they are relying on is a concept called the “KittyVerse” an open-source system to encourage developers to create games that use CryptoKitites – essentially derisking the creation of a game by letting indie devs take on all the work while CryptoKitties still earns revenue from the breeding of the cats.
This model, doesn’t provide much to gamers that regular modding couldn’t. All it provides is a poor game experience from the core developer – which is probably why users have rated CryptoKitties a 2.7/5 on “State of the DApps” and even decided to remove it from the “Games” category citing that it lacked any game features.
What CoinDesk Got Wrong
Earlier this week NonFungible.com wrote a great research piece outlining the adoption of blockchain games that are NFT-powered, causing CoinDesk reporter to wrongly tout that “Gamers are showing little interest in the decentralized future of NFTs” taking a page from the views of Fred Wilson and assuming that NFTs require cross game integration.
(Image courtesy of NonFungible.com)
NonFungible.com’s research showed that while there was some overlap between games in the ecosystem, most games had a fairly high “isolation rate” which is the unique number of players that only play that particular game. (Which I’m sure would be significantly higher when we examine non-blockchain games.)
CoinDesk wrongly asserts that this shows the inability of NFTs to deliver.
At the core of NFTs it is not about being able to integrate my game, into your game – although the ability for cross-collaboration is interesting.
NFTs provide a few key points of value that players ARE interested in:
They give users sovereignty of their items. No server crash, rollback, or corrupt game owner can take it away from them.
They make items trustless. Users can feel confident investing in items, trading them or selling them, because they are a real item on the blockchain now and trustless smart contracts can facilitate transfer.
They allow developers to vertically integrate their own games. Now if I’m an active player of one game by a dev, they can reward me in their other games to cement me into their ecosystem.
They create transferable value for the players time. If I choose to leave a game, and that developers ecosystem, I can sell off my NFTs in an easy trustless fashion to other players, gaining a monetary reward for my time or be easily able to swap it to different NFTs in a game that interests me more.
How do we know?
Unlike CoinDesk, before we make a claim about a groups opinion we actually poll them.
For example, in our recent survey of cryptocurrency holders who are also gamers (n = 3837) we found that 88.61% of respondents said they find the use of NFTs in video games to be “Exciting or Very Exciting.” (±1.028% α = 95%)
Further, we asked this same cohort (n = 3837) to tell us which features of NFTs they thought were most exciting. Here were there responses:
16.84% (±1.184%) of respondents said they were most interested in being able to earn money or rewards from playing games.
12.54% (±1.048%) or respondents said they were most interested in the ease of trading that NFTs brought.
The other leading reasons revolved around item security, permanence, and value.
When it actually game down to using NFTs in other games, people were most interested in:
Getting bonuses in other games by the same developer.
Moving their items/characters into a sequel game.
Continuing with their characters in an open-source version of the game if the official developers stop supporting the game.
Only 2.79% (±0.52%) of users thought the idea of transferring items/characters to games by other developers was interesting, and only 2.32% (±0.476%) of users thought it was interesting to build new games or game features for their NFTs.
What does this mean for developers and investors?
Gamers are absolutely excited for the future of NFTs. It’s why last week the former director of Magic: The Gathering joined Ethereum game startup Gods Unchained and why last week we also saw Reddit Founder Alexis Ohanian livestream his game play of SkyWeaver an Ethereum based game he invested in.
But, to be successful in the blockchain gaming and NFT space, developers and investors need to better understand gamers.
The gaming audience is passionate, creative and often quite technical. They will build fantastic tools, extensions, mods and fansites around games they love, helping to build that network effect. But, before they can fall in love with a game, game studios actually have to build some features themselves.
NFTs are not about all games being in one ecosystem. Games are delicate, nuanced and balanced. Developers spend thousands of hours balancing battle mechanics and economies.
NFTs are about giving players more control and sovereignty and creating real value for the digital items, achievements and characters that we already actively trade.
This article was originally published in “Coffee&Coin” a free weekly newsletter covering the blockchain industry with a deep look at advancements in technology, economic impact, political policy and adoption.
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