Blockchain gaming offers huge upside despite slow adoption says Com2uS’ Kyu Lee

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In the latest episode of his Blockchain Gaming World podcast, editor-in-chief Jon Jordan talks to Com2uS US’ president Kyu Lee about why the Korean publisher has been so quick into blockchain games, what it’s learned from the eight web3 games it’s released so far, and why he thinks blockchain gaming offers huge upside to games and gamemakers despite its slow adoption.

This transcription has been edited for length and clarity. Can you give us some background on how you got into the industry?

Kyu Lee: I joined Gamevil [which became Com2uS] straight out of college. We were a group of young entrepreneurs trying to do new things in the gaming space. We were one of the first mobile game companies in the world. I started in 2000, so we’ve been in the gaming industry for the past 23 years. 

We’re still fairly new to the blockchain industry but one of the things I want to mention is the blockchain industry really reminds me of the early days of mobile, when everything was chaotic. The user experience wasn’t great. Lots of potential – yes – but a lot of things we had to build out. We had to wait eight years until the App Store came around. It takes long term preparation and building. But with the amount of capital that’s coming into the blockchain space, I expect it to move at a much faster pace.

Why have South Korean game companies been so early into blockchain?

I think Koreans in general, we are very early adopters, even as consumers. The huge amount of consumer interest led to developers getting early into the space. South Korea is one of the top crypto countries in the world. It also has a lot of good development talent, not only on the client side, but also on the backend side. It would be weird if a backend engineer didn’t think blockchain is interesting.

Most companies were waiting for the right moment to come in. You don’t wanna get into the industry too early and you don’t wanna get into it too late. But in general, a little bit early is how we prefer to do things. 

I can’t speak on behalf of the other companies but for Com2uS, for mobile we got in maybe too early, but because we were early, we were able to carve out a position within the mobile gaming industry. Because we were early in the free-to-play space compared to western competitors, we were able to position ourselves and have a good title like Summoners War early in the market. And so it’s the same approach with blockchain. 

We’ve seen a lot of market cycles happen, and we defined blockchain as one of the bigger market cycles that’s going to happen in the future. When Axie Infinity and NBA Top Shot were being adopted by the mass market, we thought, it’s already starting in the mass market. We’d better not be behind. Because all of the Korean companies have seen what happened in the free-to-play space firsthand, that also sparked a lot of interest in getting early into the blockchain.

You’ve chosen to add web3 components to all your games rather than design something blockchain-heavy from the ground-up. Why?

We’ve already launched eight games on our mainnet but as you mentioned we could have moved into the blockchain space quickly with an original game, but would the game be fun? It wouldn’t be fun if you only develop the game for a year. The first focus should be is the game fun? So our approach was, let’s take all of our web2 games in production and slightly pivot or add game mechanics and turn them into web3 games. 

One of the reasons we decided to go all in into web3 is that when you’re running a lot of different teams, it’s really hard to say, you guys focus on web3 and you guys focus on web2, because developers will want to be on the web2 side. It’s the Innovator Dilemma. If you don’t self-disrupt yourself, you really can’t change your company. 

So we chose to put out a strong message to our teams that whatever game that you’re developing, you have to implement it with web3. This is going to be a long-term approach to educate our users. It’s not going to happen overnight, but just put a small portion that’s web3, so that the users can learn about it and get used to it. 

Over time, when we launch newer titles, we’ll start at a more aggressive point, but we had to send out a message internally to all of our development teams that web3 is the future, and you have to implement it. Of course, there’s resistance from our teams and our users, but this is the beginning. Our eventual goal is to bring something amazing to you that will completely change the landscape.

Is this approach better in terms of sustainable economies?

If you let users go into web3 immediately, there are going to be gamers, but there are also going to be traders who will try to extract from your system. It has to be that users are contributing to the ecosystem so that they can also extract from the ecosystem. We can’t print money out of air.

It has to be a sustainable economy that you’re building, and in order for it to be a sustainable economy, there has to be contributors so that there can be also benefits. Last year we saw what play-to-earn can do. We saw its potential. But we also learned the downside. But we can’t print money from the air. You have to be very controlled. 

The way we approach it is we have a very controlled environment where we make sure that it’s a zero-sum game: where the players that are contributing are the players that can extract. Then it becomes like those skill type of games or real money gaming but we do it in a web3 way, which provides a lot more flexibility around what type of currencies that you can use. 

We thought this would be a sustainable way to approach it. But for games like MiniGame Party what we’re doing differently is we’re generating revenue from ad revenues. So everybody becomes a contributor from the beginning, but we only share a portion of what we earn from ads back to the users. If you do it that way, then you can distribute it to everybody but the amount will change every day, depending on what the collective contribution is to the ecosystem.

It’s a painful topic but when Terra collapsed did you think about stopping blockchain?

Initially we thought we should focus on building a gaming-focused platform and building great games on top of that so building a layer two platform. Of course, most of our engineers are based in South Korea so working with the Korean development team at Terra was very comfortable. When we looked at ecosystems, we thought Terra was a good one. We love the Cosmos ecosystem and we loved the way that we could customize a lot of things and then work on the user experience.

After everything fell apart on Terra, there was a lot of learning for us. But we also learned that our company is a good company. We have a lot of assets ourselves. We’ve been running live operations for our games for more than a decade. I think we were a little scared at the beginning because blockchain was a completely new world for us. But as we got more accustomed to it, as we learned more, we grew our confidence in building our own layer one.

And because we had many assets we could bring into the web3 space, we thought, why don’t we build our own decentralized gaming and content-focused platform and invite all of the best creators around the world? We’ve been in the gaming industry for such a long time. We have a large number of things we could potentially bring in. 

Also, when we looked at all the blockchains out there and spoke to them, we didn’t feel they understood what gaming was. It felt more like they were general infrastructures and nobody was a game creator themselves. So, as game creators, we can build something that’s very focused. Right now, it may be hard to tell the difference, but if we do this for three to five years, our chain is going to look very different compared to the competition.

We think it’s one of those unique opportunities where we get to start and control our own destiny. We love the Cosmos ecosystem so we thought let’s do it by ourselves this time. I’m really proud of our team because we went through the hardest time with Terra. FTX was our lead investor too. But we’re still here. Our approach has always been very long-term and now I’m proud to say I’m a veteran in the web3 space. 

The web3 component of Summoners War: Chronicles has just gone live. Did you consider not putting blockchain in such a big game, such an important game for Com2uS?

I would be lying if I said there wasn’t resistance internally. That’s why the executive team had to have a strong stance, to make sure everybody’s aligned. But when you say “big games”, I think MiniGame Party is a big game too. It’s a casual game anybody can play, young or old, male or female. Anybody can pick up and play. It’s a collection of 13 hypercasual games with a huge RPG backend element.

On the surface it looks very friendly to you but it’s a big game too. We also have the best-selling baseball game on the App Store. We have an eight-year relationship with Major League Baseball and that game has been growing every year. We love those type of evergreen franchises. On an annual basis, it’s not a big game, but if you combine all of the revenues over the years, it’s a big game. It’s really a big game. So I wouldn’t say one is more important than the other. 

Why is blockchain so important for games and Com2uS?

Web3 is such a powerful tool. It adds 10 more levers for a game designer to play with, but if we let the players play with 10 more levers, we don’t know where the economy is going to go. So we’re constraining the different types of variables and starting to play around with one or two of them. Once we feel more comfortable then we’ll open it up more and more. 

Over time we believe it’s going to be much more generally adopted. It’s going to be much more accessible to the users. We’re going to get more comfortable because we understand what the user behaviors are.

It’s going to be a slow adoption phase, but we’re bringing blockchain into one of the biggest games that we have. I think there’s a huge upside to what this can add over time, but at the beginning we’re launching it softly.

Find out more about the XPLA blockchain here and Summoners War: Chronicles here.

Com2uSKyu LeePodcastSouth KoreaSummoners War ChroniclesXPLA
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