Hello and welcome to Dark Tunnels, a newsletter dedicated to exploring the emerging ecosystem of fully onchain games. Dark Tunnels is published by Always Scheming, a research consultancy focused on the future of interactive entertainment.
The following essay is Issue #13 of Dark Tunnels. Enjoy!
Recently, I’ve been spending a lot of time thinking about the following quote from former Twitch co-founder, Justin Kan:
Builders in the fully onchain games space (myself included) spend a disproportionate amount of time discussing products: their game loops, their design innovations, their economic models, their tech stacks, and so on.
Yet few fully onchain game developers seem to be focused on how they will actually get their games in front of players.
To be fair, there aren’t a whole lot of distribution channels open to web3 games in the first place (as we’ll soon discuss), but I would have expected to at least hear more chatter about the tradeoffs between the few platforms that have opened their doors to blockchain integrations. Instead, seemingly everyone has (for better or worse) defaulted to browser-based distribution.
That’s not to say that there aren’t good reasons for doing so. For one, most wallet integrations already occur through browser extensions, which naturally lends itself to web distribution. Browser-based games also don’t require any client installation, thus reducing friction for new players. This is no doubt an important consideration, given the number of roadblocks a non-web3 gamer already needs to overcome to even get started with blockchain games.
Perhaps the focus on browser-based distribution is a result of an overemphasis on building for web3-native audiences, as opposed to mass markets? Whatever the case, developers need to think about how they’ll get their games in front of as many players as possible. [1]
This is particularly true for the onchain games explicitly targeting UGC communities, where the atomic value swap (to reference a Chris Paik framework I’ve discussed in prior editions) a creator makes is, fundamentally, an exchange of content for distribution. [2]
With that in mind, let’s review the options currently available to fully onchain builders and attempt to chart a path forward.
Console
Given that console distribution is controlled by the various gaming hardware manufacturers (Sony, Microsoft, Nintendo), all game developers hoping to distribute to console audiences are beholden to the policies of these companies. Unfortunately, none of the major console makers has yet put their support behind web3 gaming in any meaningful way. [3]
There have been some indications that these companies may one day be open to web3, though these have been speculative, at best.
For example, there was the leaked Xbox slide from 2022 (below) proposing “crypto wallet” integration into a “next gen platform.” However, Microsoft Gaming CEO Phil Spencer was quick to point out that much of these leaked materials were outdated at the time of publication, so it’s difficult to put too much faith into this single data point. I’m certain that important looking slide decks like this are dime a dozen at Microsoft and subject to frequent revision.
There’s also the matter of Sony’s patent filings aimed at NFT interoperability between consoles, VR headsets, tablets, and other devices. This seems promising on the surface, but remember that this is only an application, not an approved patent.
Having taken part in a patent application process myself with a former employer, I can tell you that these are sometimes fairly speculative in nature and may not actually represent any existing pieces of technology. Often, patent applications are proactively defensive, meant to prevent others from capitalizing on useful innovations. A commonly cited example of this is the infamous “auxiliary games” patent from Bandai Namco that prevented other developers from creating loading screen games.
Nintendo has been relatively quiet as it relates to web3, though keen observers have noticed job postings at affiliated companies seeking candidates with “strong expertise and knowledge of Web3, including blockchain technology and NFT, and/or metaverse.” Beyond that, the historically conservative company has said little on the topic, other than deflecting the occasional analyst question during earnings calls. [4]
Certainly, there is an element of public posturing to these stances from the console makers, too. All three hardware manufacturers are publicly traded companies and any formal announcements of blockchain-related initiatives would likely be cause for concern among investors, given the regulatory uncertainty around cryptocurrencies in some markets (to say nothing of the general anti-web3 stigma from “gamers”).
Yes, there are some web2.5 games planning future console releases (Deadrop, for example). These games will inevitably be forced to conform with platform policies, though, as NFTs are currently not permitted on any of the three major consoles.
As such, console distribution is currently out of the question for fully onchain games. Perhaps one day there will be a solution that enables offchain console gameplay to be provably verified onchain, but for our purposes, we can move on to other options for the time being.
PC
It should come as no surprise that PC gaming distribution channels are more favorable to web3 integrations than their console-based peers. The openness of the PC development environment has historically been a critical enabler of blockchains and cryptocurrencies, making it only natural that gaming should follow suit.
That’s not to say that web3 games have had free reign to distribute widely, however. Valve, the company behind the leading PC gaming platform, Steam, has outright banned games that use blockchain technologies. Though some web3 games have Early Access or “Coming Soon” listings on Steam, they have all been defanged of their blockchain functionality and, in most cases, review-bombed into obscurity.
Outside of the aforementioned direct distribution of browser-based games, the only major PC gaming distribution platforms to allow blockchain integrations have been the Epic Games Store (EGS) and, to a lesser extent, itch.io. Given the generally negative sentiment towards web3 on itch.io, however, Epic Games Store presents the clearest path forward to broader distribution among the PC gaming platform incumbents.
Of course, EGS is far from a perfect solution for web3 games. To quote my friend Devin Becker in his Naavik piece from last October:
“While [Epic’s'] adoption of web3 has been decent to start with, there’s a Steam feature that could take things to the next level: an integrated marketplace. Epic has an opportunity to create a marketplace system that not only provides a marketplace fee/royalty cut to developers for non-blockchain game items, but also supports blockchain trading with royalties as well for NFT items. Epic could still take a marketplace fee in that scenario and have a competitive advantage against Valve.”
There are likely many other features in this vein that would provide meaningful benefits to the web3 gaming ecosystem. Unfortunately, there is little incentive for Epic Games to invest in a blockchain-oriented product roadmap at present, given EGS’s struggles (the platform remains unprofitable more than five years after launching) and the diminutive nature of web3 gaming relative to the broader PC games audience.
Additionally, web3 games listing on EGS must display a lengthy FAQ covering all manner of tech and UX concerns (see below). Given the struggle fully onchain games are already having in communicating their value propositions, this feels like a bit of a minefield (though I hope someone proves me wrong).
With all that said, it’s worth taking a moment to acknowledge a few PC gaming platforms that are taking a web3-forward approach to distribution: Ultra, HyperPlay, and Elixir.
Both Ultra and HyperPlay list web3 games alongside their web2 counterparts. This is done via public APIs, pulling in listings from platforms that may not themselves be open to web3 (HyperPlay lists titles from EGS, GOG, and Amazon Prime Gaming, for example).
Ultra’s key proposition is the ability to buy and sell tokenized versions of entire games (including web2 games). However, this feature is still in its infancy, with the first tokenized game just announced last December. While this represents an interesting twist on traditional PC games distribution, it is likely a poor fit for the permissionless, decentralized nature of fully onchain games.
HyperPlay, on the other hand, may be a better option for fully onchain game developers. Backed by high profile gaming investors like BITKRAFT and Griffin Gaming Partners (among others), HyperPlay focuses on interoperability and wallet integration, allowing for smooth integration of browser-based titles and game clients alike. HyperPlay is also open source and supports a variety of wallets. [5]
Finally, Elixir appears to be going for more of a vertical integration strategy, having already acquired a few games of its own (most recently LitLab Games and its autobattler, CyberTitans), in addition to listing many others. The company has also partnered with Square Enix, though it appears to be focused exclusively on distributing web3 games, for the time being.
Working with PC distribution platforms seems like a reasonable next step for many fully onchain game developers — particularly those that allow for browser-based games. Ultimately, the decision comes down to a tradeoff of integration time versus potential uplift in active users, but I would not be surprised to see some of the larger teams in the ecosystem experiment here.
Given the headless nature of fully onchain games, one can even imagine a future where a PC distribution platform such as Epic Games Store or HyperPlay might eventually feature multiple clients serving the same onchain game or interfacing with the same set of protocols. This could lead to some super interesting creator dynamics and potentially attract a broader player base to the underlying game. Of course, this would still be dependent on there being a much larger audience for web3-enabled games than currently exists.
Mobile
If you read the Dark Tunnels predictions for 2024, you’ll know that I am particularly optimistic about more fully onchain developers adopting mobile distribution this year.
Indeed, some of the data from recent years already supports this trend for web3 gaming at large. According to Game7, web3 games have been increasingly shifting efforts towards mobile:
Despite this, the only fully onchain mobile game that I’m aware of is draw.tech (though Pirate Nation also has mobile apps on its long-term roadmap). [6]
The biggest tradeoff — and the one that many in the games industry are trying to alleviate, even beyond the world of web3 — is that all purchases are subject to a 30% tax from Apple and Google. [7]
Distribution via the dominant mobile app stores comes with additional restrictions, too. This is an evolving space with many studios actively testing the limits of platform policy. As such, reliable information on what is and is not permitted by Apple and Google can be difficult to come by. I’ve done my best to summarize the major platform policies, below:
(Please, please do not take the information above as gospel. These are my interpretations of the rules based on the research I’ve done. I strongly recommend doing your own research before making any decisions based on this. I’ve dropped some relevant links in the Notes section below for additional reading.) [8]
Clearly, these platform limitations restrict the design space for fully onchain game developers. Apple’s policies seem especially cumbersome (surprise, surprise…) as it relates to token-gating and use of IAPs.
Frustrating though they may be, these are the costs of doing business in the mobile games industry. If you want to access the largest possible audience, you need to be on mobile.
Besides, constraints breed creativity in game development…and if there’s one thing that fully onchain game developers are accustomed to, it’s building around constraints. [9]
A final consideration as it relates to mobile is the use of Progressive Web Apps, or PWAs. This is the path that the aforementioned draw.tech took, and one that makes a lot of sense for fully onchain game developers starting from a browser-based model.
PWAs are essentially a hybrid approach, combining the best features of native and web apps in one easy-to-use package. They can be downloaded and installed from the web, launched from a user’s home screen or taskbar, constantly updated without the need for frequent downloads, and run at high speeds. PWAs have been utilized by social media companies like Twitter and Pinterest, games like 2048 and Pacman, and ecommerce firms like Alibaba and Starbucks, among many other examples.
Unfortunately, PWAs face nearly the same distribution challenges as browser-based games. While they are easy to use on mobile phones, they are expressly permitted in the Apple App Store. PWAs may be listed on the Google Play Store, but they are still subject to the various policy restrictions outlined above.
Additional Considerations
This final section is a bit of a miscellaneous grab bag, but I thought it worth briefly covering a few other options that builders might be considering:
Web3-Native Hardware
While there are companies looking to differentiate themselves as web3-native hardware manufacturers (Polium and Zilliqa consoles, Solana’s mobile phone), their adoption is limited, at best (and non-existent, at worst).
I will concede that there is something to be said for adopting a new hardware platform early. Attempting to create the “killer app” that brings in new users is certainly a high risk, high reward strategy. However, we typically see these strategies in relation to established hardware manufacturers entering new verticals, where the risk is at least somewhat constrained by the reputation and credibility of the manufacturer (e.g. Apple entering the smartwatch or spatial computing markets; Amazon or Microsoft building mobile phones; etc.). There is still risk, to be sure, but builders can at least trust that these companies will have most of the tools in place to support a large ecosystem of developers.
On the other hand, putting your company’s future in the hands of an unproven hardware startup represents a far greater leap of faith. It’s an extremely risky path and one that (at least in the short term) likely doesn’t increase your company’s serviceable addressable market enough to justify the added expense of building on or porting your game to an unproven platform.
Farcaster Frames
Finally, we need to touch on the the topic du jour in web3. If fully onchain game developers are searching for web3-native distribution channels, then Farcaster’s latest release seems worthy of further exploration.
For the uninitiated, Farcaster is an onchain social networking protocol akin to Twitter. [10] Recently, Farcaster’s DAU has spiked as a result of its newest feature, Frames, which reimagines an old Facebook misstep — the Open Graph Protocol — for a web3 future. [11]
Essentially, Frames allow developers to turn any Cast (the Farcaster equivalent of a Tweet) into an interactive app. This has already been utilized (perhaps predictably) to recreate DOOM in a Frame:
In the last few days of perusing Farcaster, I’ve seen simple prediction games, MUD-style choose your own adventures, onframe chess, and more. Expect to see increasing amounts of development in this space as Farcaster continues to grow its userbase and add greater functionality to Frames. I’d strongly recommend builders in the fully onchain games space take a look at what’s possible with Frames, particularly if you are still hyper-focused on web3-native audiences.
Notes:
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I’m sure that some will read this and protest: “We’re still on testnet! We’re still prototyping!” I’m sympathetic to that argument, but it’s important to keep in mind that results from such small-scale tests are not necessarily generalizable. In my opinion, its better to build for a platform that can scale to large audiences from the outset.
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One might argue that creators trade their time and content (mods, clients, etc.) for direct monetization (a la Patreon or Shopify), rather than distribution. However, in most cases UGC revenue is directly tied to user engagement, meaning that if your game or platform has no users, there’s no user engagement to drive creator monetization whatsoever.
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Not publicly, at least. Word on the street is that at least one hardware manufacturer has been working on web3 integrations in a major way. Do what you will with that information.
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This is a great opportunity to shoutout our friends at Tonk, who have created a provable NES emulator called Dappicom. Not affiliated with Nintendo in any way, but a fun project worth mentioning.
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In the interest of full disclosure, I should note that HyperPlay is an incubated product from Game7, and Game7 is a client of Always Scheming.
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If there are other mobile FOCGs that I’m not aware of, please correct me! Twitter DMs are open, as is the Dark Tunnels inbox: DarkTunnelsNewsletter@gmail.com.
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In fairness, this is a slight generalization. Both Apple and Google do offer lower take rates in specific scenarios (e.g. for developers that qualify as “small publishers”).
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Here are some resources I used to research Apple and Google’s respective policies towards web3. Please do your own research! Links: Apple policies; Google policies; this BlockchainGamer.biz editorial; the Double Coconut blog (shoutout to David Fox in the Deconstructor of Fun Slack group for the assist!); this LinkedIn post.
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I wrote about constraints in greater detail way back in DT#3: Perspectives for Readers with Zero Knowledge.
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Obviously, you should Follow me on Farcaster: mdion
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For a great explainer on the significance of Frames, I highly recommend this quick read from Antonio García Martínez’s Substack, Spindl.
In Conclusion
There’s clearly a lot to consider here.
Given the policy restrictions put in place by the largest incumbent platforms, decisions on distribution strategy cannot be made in a vacuum. Platform policies trickle down to design decisions, monetization systems, technology choices, and more.
The correct strategy will naturally be dependent on the title(s) that you’re developing. If I were to start from scratch, however, I would aim for short session fully onchain games that can be deployed to as many platforms as possible in order to maximize the serviceable addressable market. If I’ve already built a browser-based product, then I’d be exploring PWAs (if native apps are out of the question), browser-friendly PC distribution platforms like HyperPlay, and even Farcaster Frames as potential next steps.
Thanks for reading. If you found this edition useful, please consider sharing it with a friend or colleague.
Until next time.