Home / Opinion / Technology / 1KIN CEO Jack O’Neill Talks About How Fails in Traditional Gaming Give Web3 an Advantage

1KIN CEO Jack O’Neill Talks About How Fails in Traditional Gaming Give Web3 an Advantage

Last Updated June 5, 2024 10:11 AM
Last Updated June 5, 2024 10:11 AM
By Ana Alexandre
Key Takeaways
  • The shift towards player-centric governance models could redefine interactions within the gaming community.
  • Leveraging Web3 technologies can add significantly to game depth and realism.
  • Despite the opportunities Web3 can potentially provide, the broader online community remains cautious about its promises.

Many still find it challenging to explain the concept of Web3 gaming drowning in technicalities while a helpful comparison has been around for some time, represented by the universe of the “Ready Player One” novel and eponymous movie.

Web3 gaming and “Ready Player One” both dive  into virtual worlds where players have immense control and influence. In Web3, blockchain backs up everything, making game assets truly owned by the players, just like in the movie where users can earn and own unique items that carry real-world value.

And both the movie and Web3 emphasize the significance of community building within the virtual realm. Explore, customize, earn, compete, and cooperate—Web3 games aim to offer a similar breadth of freedoms.

As such, it makes perfect sense that, earlier this year, Ernest Cline, the author behind “Ready Player One,” ventured into  creating his own metaverse.

The announcement, however, sparked intense discussions. By diving into metaverse creation, critics say, he might inadvertently celebrate the very dystopia he initially warned against. Potentially, it can endorse a future where people increasingly disconnect from the physical world to dwell in manufactured realities.

Another compelling argument is that the key beneficiaries of metaverses—which provide more immersive gaming experience—are often tech entrepreneurs and investors who see significant financial opportunities in such projects. This makes the line between benefiting users and exploiting very thin.

Yet, criticisms aside, Web3 provides a platform where virtual escapism and reality intertwine. Whether these concerns validate or contradict the intentions of Web3 developers, they play a crucial role in shaping the conversation around the future of our interactions with digital worlds.

CCN spoke with Jack O’Neill, who leads the development of 1KIN, a modular gaming network engineered to power a mass-market Web3 gaming ecosystem. He discussed the measures the Web3 gaming industry must embrace to captivate mainstream gamers, skepticism from the community, and new gameplay mechanics, among many other things.

The resistance

Web3 gaming seems to be a natural next step in the evolution of the gaming industry. Still, skepticism dominates the space as, at this point, users “don’t see a screaming need for it.” Commenting on possible reasons behind this resistance, O’Neill said:

“There is an overarching theme to consider that people don’t often talk about when it comes to Web3 gaming—how studios implement it in a game. Web3 is simply a tool, and studios can implement it in just about any way conceivable. The best studios understand how real-world economies impact and enhance gameplay, and use Web3 to embody that real-world economy.”

“Players will resist games with poorly implemented real-world economies. If they feel Web3 is just ‘tacked on,’ they will continue to resist.”

Apparently, doubts also arise from past overhypes and underdeliveries, with studios prioritizing profits over fairness, like running asset drops prior to game releases. “It’s quite common for players to be asked to ‘believe in the vision’ and shell out big bucks for something they can’t even use yet. That is attractive to speculators, but it’s a deterrent to players,” O’Neill pointed out and added:

“Keep in mind that Web2 gamers are already upset with traditional game monetization strategies like restrictive battle passes and overpriced microtransactions. Some Web3 games are now asking players to pay up to $500 or more for a Web3 game asset, which makes even less sense to players.”

When browsing online forums, it’s easy to stumble into discussions where gamers express their frustrations. A common complaint is about the video game publishing model, with many arguing that it’s flawed and in need of reform. “Anyone who published a video game knows that the current model doesn’t work and it has to be changed,” highlighted  one commentator.

“No, it doesn’t, and yes, it does. The traditional giant studios have slowly but consistently implemented aggressive monetization strategies over the last 15 years: players are up in arms, and they are reaching a boiling point. The big traditional studios have trained players to be highly skeptical of any monetization strategy, especially new ones,” O’Neill replied to the statement and continued:

“The Web3 gaming industry believes that empowering players with more ownership over economies and limiting studio influence over player-to-player transactions are the paths forward for gaming as a whole. Kickstarter was one of the first innovations in funding and publishing new games.”

“Web2 players are discovering how various studios and publishers use Web3 in different ways to express this ethos, and they will make their own decisions in terms of which implementation strategies to support.”

‘In-game economies have various levels of importance’

Few understand the complexity of developing a video game and what it entails. This misunderstanding often leads to misplaced criticisms, such as “Most game devs are incompetent and don’t know how to design an in-game economy.”

“While the phrase ‘most game devs are incompetent’ comes off as dismissive, it’s reasonable to consider that in-game economies have various levels of importance depending on the game genre. A studio that makes MMOs will have a better grip on in-game economies than a studio that makes single-player games.”

“The challenge arises when studios transition from a walled-garden centralized in-game economy to a permissionless decentralized in-game economy. In-game items with utility vs simply cosmetic items complicate the matter further. Debates like ‘immutability vs balancing’ are commonplace in the Web3 gaming space,” explained O’Neill.

“The studio-publisher relationship is a storied one. Studios want to produce the most fun game possible that reaches the widest audience possible, while publishers want to optimize the returns for a particular title.”

“This dynamic doesn’t go away in Web3, and Web3 game publishers are still usually in the driver’s seat when it comes to designing in-game economies. At the end of the day, it is the players who will speak with their wallets, and studios and publishers must collaborate to arrive at the optimum in-game economy designs that benefit players, studios, and publishers alike.”

O’Neill shared that the interesting thing about Web3 as a technology is that it can empower players with large stakes in an ecosystem to carry a loud voice in the governance of an in-game economy. “Web3 can bring players to the governance table in a way that isn’t often acknowledged in the traditional gaming space, if at all,” he believes.

‘I want to carry my digital assets from one game to another—why not?’

This brings up the issue of control and profit. Most established publishers guard their intellectual property, not eager to dissolve boundaries that keep characters limited to their own ecosystems.

This proprietary nature could clash with a more open, interconnected gaming experience. It raises a question: what’s in it for them? Letting characters roam between games may sound appealing, but it could also mean a loss of exclusivity, potentially diluting brand identity and profiting less from their creations.

“An in-game asset that can traverse different games makes that in-game asset inherently more valuable. Players want as much utility as possible from each purchase, even if the asset is purely cosmetic. Owners of massive IP libraries are constantly hunting for new ways to expand the reach of their IP and new ways to monetize. Both of these facts should mean that interoperable gaming assets would be a no-brainer. Seems like a win-win, however, in practice, you hit significant barriers to this becoming a reality,” clarified O’Neill.

“The first barrier is one of control. Large IP conglomerates fiercely guard and protect their IP, while also aggressively seeking new ways to monetize and expand the reach of the brand. These goals are at odds but inevitably yield to ‘control’ over ‘expansion’.”

“This is why you will only see Disney IP in Fortnite now that they have structured an incredibly complex deal between the two companies, which took years to complete and hundreds of millions of dollars just to get across the line. But what if there were a system which could efficiently solve both control and expansion? That is exactly what we are building at 1KIN, leveraging the power of blockchain technology.”

Speaking of the second barrier, O’Neill stated that it creates risks to the existing business models of major studios: “If I can take a weapon from Fortnite and go play with that item in Minecraft, that means I’m no longer playing Fortnite. If my favorite skin from Call of Duty: Modern Warfare 2019 video game is playable in Call of Duty: Modern Warfare 2, then I can’t sell that skin to a gamer a second time. Both of these scenarios lead to a decrease in key metrics of user engagement and revenue. So why, then, would a studio have any incentive to enable this?”

“Again, Web2 is not built for this but Web3 is. Structured properly, blockchain technology can create tokenized systems that provide efficient means for sharing value creation for multiple parties and discrete actions, i.e., user acquisition vs ARPU.”

“For example, imagine that by purchasing Helldivers 2, you can then deploy your favorite Helldiver skin in some battle royale made by a completely different studio. Now, purchasing Helldivers 2 is essentially also providing you with a free desirable skin for Game X. Sales of Helldivers 2 go up, and Game X’s player base also goes up. Tokenized systems provide a means to track and quantify these complex interactions and a means to distribute value, accordingly.”

O’Neill continued by saying that incumbent traditional publishers want their IP to remain in their walled gardens; they are happy with the status quo. “However, we are seeing gamers become sick of buying the same skins over and over in each new installment of the same game, or buying the same game every year with only tiny modifications. Interoperability across games is a narrative that Web3 is bringing to burned-out Web2 gamers,” he added.

New mechanics: how about heroes bearing offspring in the form of new NFTs?

The anticipation of new gameplay mechanics brought by blockchain/Web3 in video games is growing as more game developers begin to experiment with these tools. O’Neill says that as an industry, we are just scratching the surface.

The gameplay mechanics that can be unlocked using the primitives like permissionless ownership, exchange of digital assets, and an immutable ledger of activity are very much in their experimentation phase, according to him.

“Some of my favorite examples from our partners are Blocklords’s new Dynasty mode, which enables you to play the game of thrones in their epic player-driven MMO medieval grand strategy game. How you make alliances and forge marriages impacts the game as your heroes bear offspring in the form of new NFTs. This creates an entirely new level to the Civilization-type gameplay with the potential to create blood feuds that last generations. Really excited for where they take that.”

“In developing these new mechanics in Web3, games really need to consider more deeply how their tokens and in-game assets create value for stakeholders across their ecosystem. In developing the 1KIN network, we narrow this down to three distinct groups: gamers, game studios, and IP owners. With each product we build, we ask ourselves ‘How are we creating value or solving problems with this product for our core stakeholders?’”

“For gamers, we start and end with ‘is this fun?’ because at the end of the day, that’s why we game. Our last stakeholder group, to me, is where this question gets extremely interesting. The new game mechanics we will enable will similarly be focused on creating fun and engaging experiences for gamers while solving some of the issues brands and large media companies face with how they expand and monetize their content,” O’Neill explained.

A thoughtful approach to how blockchain is integrated

While Web3 introduces innovative gameplay mechanics, integrating blockchain brings new challenges to user experience design. These challenges are different from those in traditional gaming scenarios.

O’Neill says, this is a massive question, and each studio needs to make numerous decisions about how they want to implement Web3, both on the in-game assets side and on the in-game currency side. “People don’t realize how difficult it is to create successful gameplay loops and deliver a hit game in the traditional gaming industry,” he commented and then, added:

“The gaming industry has always been at the forefront of technical innovations and publishers must constantly be up to date on the latest game engines, platform requirements, and have simultaneous builds of their game to ensure maximum distribution of their titles.”

“Blockchain adds a brand new, intensely complex, and rapidly changing technology stack to the game development process. This compounds the difficulty for developers who need to manage the complexities of both tech stacks. Adding to this is that there is an ever-present, transparent system measuring real monetary value of the success or failure of their games.”

“This was a core reason we began building infrastructure products with a focus on interoperability. Games may choose a particular chain for reasons of capability, community, funding, etc., but that landscape can shift very quickly, and what seemed like the best chain to launch on, now could impact the distribution of their game. We want to unite all of the chains to push forward as an industry, allow games to tap into communities from multiple chains and make all of that seamless and hidden from the user experience.”

“This will allow game developers to focus purely on their gameplay and innovating new gameplay mechanics and experiences and spend less time worrying about the blockchain side of the process.”

O’Neill pointed out that publishers also face a new challenge of incorporating non-gamer speculative participants in their ecosystem. This adds another layer of complexity to in-game assets, economies, and currencies, and developers must seek a balance within their community that will contain both speculators and gamers, he says.

What if a studio turns off its servers?

Many gamers feel  that the in-game assets they have developed or purchased should have protections against disappearance, if, for example, a studio decides to turn off its servers or revoke or modify a user’s purchase with little to no notice. As a rule, players often don’t truly own the digital content they buy. Instead, they are merely licensed users, subject to terms they likely haven’t read.

O’Neill thinks that this is a question of the lifecycle of a game, in the first place: “If you are passionate about gaming, you likely understand that a great game takes years to complete. Building a game is a labor of passion, frustration, and artistic expression. This is why games are so beloved and that the industry is larger than the television, movie, and music industries combined.”

He says, it’s important to recognize that developers dedicate significant portions of their lives to building the games we love, and no matter how much you love a game, it’s natural that they, too, want to pursue new and exciting opportunities.

“But where does that leave the community who remains passionate about a particular game? In Web2, it leaves them nowhere. Servers get shut off, maybe, eventually, the studio might release a re-mastered edition a la Halo: Master Chief Collection. Contrastly, in Web3, there is the potential to form a new path.”

“The problem remains that someone needs to pay to keep the servers running, and any updates or mods take real work. But gaming has an advantage—the communities that form in gaming have historically been the most passionate and deeply embedded communities found anywhere.”

“Web3 provides the means by which a game at the end of its lifecycle could be ‘turned over’ to the community. Governance, mods, updates, server costs and more could then be managed and maintained by the community and the survival of a game can become a function of how passionate the fan base is. This, again, is only feasible in a Web3 gaming world.”

Another advantage of having an immutable ownership record, O’Neill states, is that new games that emerge could leverage the community of a game that has been “put out to pasture” for user acquisition:

“If a studio turns off its servers and closes down a game in Web2, all the records of proof of ownership for the in-game assets among the player base disappear as well. In Web3, these proofs reside permanently and publicly on a blockchain.”

“Thus, if a new game from a different studio is looking for players of a similar game as cheaply as possible, they can offer in-game assets to the player base of the defunct game or give those assets utility in their new game and instantly activate a community for their game very efficiently.”

“In this way, it’s not about the actual code of the assets of the dead game anymore. It’s about the community the dead game was able to build and the value the new game can provide the playerbase of the dead game for their assets.”

‘If a game is not fun, then it is not a game’

Speaking of how to maintain a balance between the decentralization aspect of blockchain and the developer’s control over game content, O’Neill suggested:

“First things first: games must be fun. If a game is not fun, then it is not a game. So my advice to game publishers is to focus on decentralization from a community perspective. How can you leverage a community that believes in the vision of a game to make it better?”

“Web3 can enable game publishers to combine the game designer’s vision with direct community feedback and engagement. For example, if you want to release an NFT of a gun but retain the ability to nerf the damage of the gun after someone already spent money on it, the player base needs to be okay with that, or you will hear about it in the Discord and on X.”

O’Neill also thinks it creates an opportunity to involve the community in the lifecycle of games. He believes that games can leverage Web3 and their communities to increase decentralization over time via modding incentives or community voting.

“Unfortunately, DAO structures have not been successful as of yet and until better engagement models and consensus mechanisms are proven out, it is more efficient and less risky for the initial game development and launch to be driven by the team with a consistent effort on gathering and implementing community feedback,” O’Neill continued and added:

“Game studios should also take notes from decentralized organization models like the one historically implemented by Valve. Their team had no titles, no bosses, and they encouraged every member to provide the most value where they could. This is a prime example of gaming having deep roots in decentralization even before Web3.”

O’Neill concluded that the Web3 gaming industry has evolved from believing that the very existence of Web3 is a selling point in and of itself in a game. The industry is far more focused now on sticky, high-quality gameplay loops and providing not only real-world value but gameplay value through Web3, he said.