Gaming, Data Standardization, and Blockchain Trademarks

Off The Blocks, Vol 118, June 30, 2020

The COVID-19 pandemic is creating a lot of turbulence worldwide. These are challenging times for businesses and the key to survival is adaptability and agility. We are working with our partners, clients, and portfolio companies, creating strong ecosystems for their mutual growth. Simultaneously, we are trying to resolve some of the most complicated and challenging issues to create a trusted environment for people to go back to work and get the economy back on its feet. You can read about our efforts in a 4 part series here.

Investing in Blockchain Gaming

This article first appeared on Magazine by Coindesk on June 29, 2020

How healthy is the gaming industry? Fortnite thoughtfully provided a concise answer to that question on June 16th.

In advance of the much-anticipated unveiling of The Device, a live event on the game platform, slots were full half an hour early as eager gamers logged in to witness Epic’s latest twist in its flagship game.

The number at which participation was capped? Twelve million players in-game. Another eight million had to be content watching the stream. For context, NFL Sunday Night Football on NBC — the highest-rated TV presentation in the United States — garners fewer viewers. And that’s also accounting for recorded shows.

When Blizzard Entertainment released World of Warcraft (WoW) in 2004, few non-enthusiasts could have imagined that the pivot from real-time strategy to the massively multiplayer online role-playing game (MMORPG) genre would result in over a hundred million registered accounts ten years later.

By 2017, the game had grossed almost $10 billion in revenue. It had become one of the highest grossing video games of all-time.

Activision’s Call of Duty: Black Ops launched in 2010, as the seventh in the series. The franchise has since released a new version annually. When Black Ops was released, it set records across games, movies, and books — taking in more than $650 million in its first five days.

Momentum in the industry doesn’t seem to be slowing down. Last year, gaming broke another record for annual revenue, at $143 billion. To put that into perspective, the music industry earned $24 billion, and TV and video combined earned $290 billion. Gaming is expected to grow from 31 percent of entertainment industry revenue to 36 percent by 2023.

According to Microsoft, when you include everything from free mobile games to complex multiplayer PC or console games, gamers worldwide number over 2 billion. And that number is growing. The more elaborate publishers are able to deliver to multiple platforms. Epic Games’ Fortnite, for example, has a version for PC, Mac, mobile, Playstation, XBox, and Nintendo Switch. 

And as blockchain technology begins to infiltrate the industry, the financial stakes couldn’t be higher. 

New funding models could change the dominance of major platforms. New gaming models could change the way we play. And new revenue models could change the way value is accrued across the industry.

All of which means that major investors are taking an even closer look at gaming, and the potential impact of blockchain technology, than ever before.

How a digital and connected world changed entertainment forever

Digital technologies changed how music and film could be produced. The internet changed how they could be distributed. For both forms of entertainment, technological changes made it cheaper to produce and easier for independent artists to distribute.

Those same changes, however, had the opposite impact on the gaming industry. With consumer demand for enhanced graphics, audio quality and internet-based multiplayer capabilities, the cost of producing video games has exploded.

Budgets for game development and marketing for so-called triple-A games — those with large budgets and heavy development — are now Hollywood blockbuster-esque. Activision’s Call of Duty: Modern Warfare 2 cost around $50 million to produce and had a marketing budget in the order of $200 million.

The most expensive game ever created, Rockstar North’s 2013 Grand Theft Auto 5, was developed for a staggering $137 million, with only slightly less spent on marketing and release costs. At today’s prices, that puts the total just shy of a total of $300 million.

By 2018, there had been 18 games created for a total cost of at least $100 million, with Rockstar, Activision, Microsoft Studios, and Sony featuring prominently on that list of primarily franchise games.

The high upfront costs and long lead times to produce games creates risks for game creators, meaning large developers and publishers have grown to dominate the industry, as startups seek out investors in an effort to compete.

While the high profile games garner a lot of the media attention, the industry should very much be considered as structured along more bipolar lines: indie games and triple-A games. And it is indie games that are attracting venture capital.

Blockchain has created a new funding model for games, with the ability for developers to create tokens that work across games. Block Bastards, creators of the in-beta BLOX game will be using their token, QUDO, to fund the 18-month development costs and to reward players. BLOX will run on the Telos network and, in a revenue-sharing style arrangement, players and games earn 90% of Qudo tokens generated and the company and any founding partners 10%. 


QUDO is a blockchain-based service for games which rewards players for their activity and performance with a coin called QUDO. These QUDO tokens aim to be widely used within the industry, allowing game developers and players to generate purchasing power, without the need for in-game advertisements, while giving them the tools to empower their games’ visibility. Blox uses QUDO, like any other game can do… QUDO is… open for every game developer that would like to integrate this technology into their game.

- Diogo Abreu, Marketeer/Product Evangelist at Block Bastards

However, only a handful of indie blockchain game developers have been able to attract venture capital. William Quigley of WAX, the Worldwide Asset eXchange that bridges the physical gaps between “collectors and traders, buyers and sellers, creators and gamers, merchants, dApp creators, and game developers” says that: 

Indie games are funded the same way all other start-ups are funded… through a combination of personal savings, friends and family, angel investors and, in rare situations, venture capital. The personal capital of the founders is by far the number one source of funding video games.

The failure rate of new games is high, so VC funds look for a 10x return from pre-release video games, much as they would any other startup. As Quigley pointed out:

“An investor needs to see this level of potential upside in order to offset the strong likelihood that the video game will not succeed.”

Successful video games have two unusual traits that makes them highly appealing to investors. Popular video games enjoy incredibly long product life cycles compared to other consumer categories.

Blockchain integration essentially enables community ownership of the entire gaming ecosystem, which in turn allows game publishers to uniquely monetize their model, create richer and deeper experiences, and extend the lifetime value of the assets that they are creating.

… Read the full article on Magazine by Coindesk

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Now for some news from the world this week:

  1. Payments | Brazilian Authorities Suspend WhatsApp Payments: Brazil’s Central Bank and antitrust regulator suspended Facebook Inc.’s WhatsApp messenger payment features in the country, the app’s second-biggest market with more than 120 million users. The bank decision aims to “preserve an adequate competitive environment, that ensures the functioning of a payment system that’s interchangeable, fast, secure, transparent, open and cheap,” the monetary authority said in a statement on its website. Bank authorities requested that Mastercard Inc. and Visa Inc. stop payment and money transfer activities through the app. … Read More on Bloomberg

  2. Standardization | Without Data Standards, Blockchain Technology is Irrelevant: Though blockchain as a technology has shown great promise within the logistics industry, mainstream blockchain adoption has been left wanting. This resistance to adoption comes from the need for data standardization. Without proper data standards, blockchain within supply chains would not work, as data being shared cannot be interoperable.  Standards organization GS1 US has been active within the blockchain circuit, encouraging the use of data standards that could eventually lead companies to build their blockchain pilot projects over the data frameworks. … Read More on FreightWaves

    The idea is to identify data captures and ultimately share that information with trading partners in a standardized fashion. This is hard if companies are creating proprietary numbering systems for their items and then sharing that via blockchain. Without standardization, those numbers do not mean anything downstream.

    - Kevin Otto, senior director at GS1 US

  3. Merchandise | Blockchain Verifies the Authenticity of Non-Genuine Nikes: Blockchain-based traceability platform VeChain will be used to power the issuance of a limited-edition run of licensed Nike Air Max 1 shoes. The Australian shoemaker first revealed that they were partnering with VeChain in November 2019, tweeting that the traceability platform would be leveraged to prove authenticity and fight counterfeit products. Chase Shiel’s shoes are shipping with VeChain’s tracking chip, which allows customers and retailers to access detailed product information by scanning a QR code. … Read More on Cointelegraph

    “This is the best strategy by Vechain. Target the small shoe companies that have released Nike licensed products, and maybe eventually Nike comes calling.”

  4. Investments | ConsenSys and AMD Raise $20 million for Blockchain Cloud Service: Computer hardware parts company AMD and the VC arm of crypto development studio ConsenSys today announced the completion of a $20.5 million funding round. The money will fund a network of decentralized data centers for cloud computing.  The funding round, in which several family offices in the United Arab Emirates also partook, will pay for the first data center for W3BCLOUD, a (soon-to-be) global network of high-performance data centers that power the blockchain economy. Think Amazon Web Services, but for crypto. … Read More on Decrypt

The Final Word | ‘Blockchain’ and ‘cryptocurrency’ dominate active trademarks in U.S. government database

Image Credit

The most popular blockchain-related terms across all active trademarks in the U.S. are “Blockchain” and “Cryptocurrency,” according to The Block’s recent research findings.The total number of “Blockchain” and “Cryptocurrency” mentions within live trademark — referring to active ones that have not been abandoned — were 2646 and 2382, respectively. “Bitcoin,” “Initial Coin Offering,” and “Ethereum” all fall below 500 mentions each as analyzed in the chart above by The Block’s Steven Zheng. The figures are based on a database from the Trademark Electronic Search System (TESS) created by the United States Patent and Trademark Office (USPTO). The USPTO database allows viewers to search for all current and previously registered trademarks within its platform. … Read More on Yahoo Finance

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