Immutable’s Robbie Ferguson “quietly confident” on success of blockchain games in 2023

In light of Immutable and Polygon’s joint launch of the zkEVM rollup and various other product announcements, EIC Jon Jordan had the opportunity to talk to its president and co-founder Robbie Ferguson as part of his Blockchain Gaming World podcast series

To kick off, we asked why we should be excited about this new tech.

“Immutable is expanding from our current instant which is an application specific rollup built in StarkEx, which will continue and games can still build there, but now we’re expanding that to also include the Immutable zkEVM and custom zkEVMs. If you’re a game developer you use the same APIs and the same global order book. We’ll be unifying liquidity across all of these so there’s no siloing. And this zkEVM is using Polygon’s latest open source, zkEVM tech,” he commented.

“The beauty of this is that for the first time ever we can offer custom smart contracts to game developers, which is the biggest missing piece essentially of our product offering today, so we’re super excited about this.

“The way we think of this is the best gaming platform which is Immutable plus the best blockchain scaling protocol for games which is Polygon coming together for what will essentially be the home of web3 gaming.”

When asked to clarify how the new tech fits in with ImmutableX, Ferguson explained that “People can choose either. Obviously there’ll be differences. I think our goal in the long run is to decide on different cost structures on both sides. Ultimately people will see what works.” 

If they’re playing a complex game in the zkEVM there’ll be different pros and cons, you can do your own custom zkEVM. If you’re a Fortnight or Activision Blizzard and you need 10,000 transactions per second alone, the idea is great, have your own chain. 

“We’ll make sure that all of your assets and funds and users are still interoperable with every other zkEVM which Immutable is running or StarkEx/ImmutableX. And the benefit of that is, the future of scaling, which is fractal scaling the L2s and L3s on Ethereum. That can happen but without siloing or fragmenting liquidity in the thousands of islands that is happening today.”

On the question when we can expect to see the first projects live Ferguson confirmed “there will be games live on this production this year. Testnet will be live in a few months”.

Aside from technical constraints

Aside from this technical aspect, we asked whether scalability has been the biggest issue facing the widespread and sustained adoption of blockchain games. 

Ferguson replied: “So I think ultimately the thing that’s holding back web3 gaming right now is that these games aren’t live. 

“There’s been all this investment – $15 billion in 2 years – but fewer than 3% of those games are in the production chain. What we’re seeing is that when games go live – Across the Ages, Blocklords, God’s Unchained – you get a reliable correlation between daily volume and daily users. I think that’s the indication of where the industry is going. A game with 10 million daily active users is going to have volume that will dwarf the rest of the NFT market combined. That’s when I think the narrative around the first mainstream application of web3 will come through. Whatever we can do to help that happen, we make on the Immutable platform. 

“We have our product which is incredibly easy to build on; you don’t have to learn smart contracts, you can write if you want but with zkEVM, it’s like building with Stripe. We’ve got the global order book, which means you can sell an item inside of a game, and buy it anywhere. 

The Passport is the latest product that is critical here. UA costs are ridiculously high for games at the moment because the drop off is incredibly high when you have to have people signing on with a wallet, so they have to download a private key or have to install an extension.

Our idea is people should be able to have self custodial assets with email sign-on which is exactly what the Immutable Passport does.”

Where does distribution fit in?

Another key obstacle at present is the attitude of distribution channels such as the Apple App Store and Steam to accept blockchain project. How quickly does this change?

Staying on the topic of social gaming, we asked whether without the help of platforms such as Facebook and the app stores, is it likely to take longer for web3 because the industry lacks these channels?

Ferguson gave a hopeful reply, “I think it’s the players on the app stores and the distribution side that will be putting pressure on IOS and the closed ecosystem to open up. 

EU is now essentially forcing Apple to allow side-loading. I think that’s a significant step to open things up. We also have Samsung’s approach to integrated hardware and private key management. We have Epic Games Store emphasising a very pro-web3 stance and a multiple of Immutable games live on that store today. So, I am pretty bullish on the next couple of years of things becoming more open.

And we even see games like Genshin Impact where if you pay for an asset, an in-game item, on desktop, before you go in the game, they actually disable in-game monetization on the phone. They acquired you as a customer themselves, not through an app store’s distribution, and you have payment rails outside of the app stores. 

So I think there are a lot of companies taking a more aggressive approach given the take rate here. And hopefully we should see this pressure lead to a better ecosystem for web3 inside of app stores and play stores soon.”

Guild of Guardians
Characters from Guild of Guardians

Asked about Immutable’s own game Guild of Guardians, which is designed precisely for mobile, Ferguson said “That’s why we built Guild of Guardians. We’re actually at the coal phase, because you never know what IOS will do until they do it. I mean that’s why it’s not enough to just talk to people, you have to be pushing the boundaries, we know exactly how we can help companies do the same on Immutable today.” 

Five long years of Gods Unchained

It’s a similar situation with Gods Unchained, which released its first NFTs in 2018 and which Immutable has been solidly working on ever since. 

“We have a ton of learning from Gods Unchained,” Ferguson states. 

“The first thing we always envisioned was a way to build a card game that would use all of the benefits of a in-person card game like Magic: The Gathering, but which also had the benefit of digital upgradability and digital context. To me that was the killer app to build. It was the obvious thing where people loved it in the real world. They loved it in the digital world, but the two are kind of incompatible. We could unify the benefits of both and create a very powerful product. 

“I think Gods Unchained played a very influential part. A lot of people say it’s been the inspiration to them looking at the space. What I’m excited about is it has a lot of tradability at reasonably low values but you also have exclusive cards that trade for $100,000. 

Next step is mobile

“We’re pretty excited about how we can expand to mobile, I think that will be the next key step. Two thirds of trading card revenues are on mobile. That’s finally coming out in the next few months. 

“We expect that to drastically improve customer acquisition, and the playbook is this for Gods Unchained and for all the trading card games on our platform which we help equally; create an Immutable Passport which means we can have a normal customer acquisition cost, capable of competing with any mobile game, then take these games mobile, and build an exceptional onboarding experience where they can experience the value of web3 in the first three minutes. Then they have a card worth $0.20 cents and they can sell it. That’s the magic moment for people and they say ‘Why would I ever go back to Hearthstone‘?”

“Then plough the performing marketing dollars and take this mainstream, and all the while, users do not have to know what NFTs are or what web3 gaming is. There’s just the experience of the benefits of a game where the true guarantees of economic properties and true interoperability and they can build marketplaces and deck builders and all sorts that’s been structured on top of this.

Gods Unchained

Of course, given its long period with live assets, some of which were issued on Ethereum, and have since been reissued on ImmutableX, operating Gods Unchained hasn’t been a simple task. 

For Ferguson, even this situation demonstrates the upside of blockchain games, however. 

“What really matters is where the incentives of games are. For me the exciting thing is, if you look at Magic: The Gathering cards, the estimated secondary market cap of which the physical cards are floating around is between $10 and $20 billion. Every year Magic has to create $50 million of new cards that reduce the value of old sets in order to make money. 

“It’d be so much simpler if they could just take a clip on every trade on the secondary market and the entire goal is the incentive of the player, which is; growing your economy, growing your player base, make more interesting experiences where these cards can be valuable, without specifically deprecating the value of any one. 

“That to me is a really powerful future economic model where players don’t have to trust even in individual economic guarantees around cards. They’re useful, but the most important thing for a publisher is to align incentives with the player. 

“We see this go wrong all the time. Warzone 2 doesn’t let you have any value from Warzone 1. Valve – trade locking assets inside CounterStrike GO, making a $300 million third party market place like OPskins go belly up. This is where these rights matter the most and where incentive alignment matters the most.

What’s next?

Finally, we asked Ferguson how he expects the rest of 2023 to pan out in terms of the adoption of blockchain games. 

“We track the pipeline of all the games building on Immutable and we feel quietly confidence that this next year we’re going to see a significant increase in successful games. And you only need one with a million DAUs. We expect a big difference in traction this year.”

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