Web3 Game Development

Jon Radoff: All right, welcome everybody to the premiere episode of the Web 3 game development live stream. Since it's the first time, I just want to share a little bit about what this is all about. So, first of all, it's an open platform. This isn't going to just be me talking at you. This is intended to be something where you can send a DM and we'll bring you right onto the stage. Oscar our producer, he'll shoot

Unknown: you a Streamyard link, you can jump right in. I'll come back to that, but let me take a moment here to also introduce my co-host, Jack. Jack, welcome. You're going to be doing these with me. Thanks for taking part. Thanks for having me, John. Pleasure to be here. So, let's just take a moment to maybe

Jon Radoff: share a little bit of our different perspectives and kind of what we're going to bring to the table in these since it's our first time. So, my background is a combination of game development as well as technology. So, I've shipped games to about 20 million players based on TV shows. Everybody here has heard about Star Trek, Game of Thrones, Walking Dead, stuff like that. So, games for mass market audience that have made an okay amount of money. So, I've been kind of in that whole product development life cycle. I've also run technology companies and now I'm running a company called Beamable where we are building decentralized infrastructure for game developers. Both Web2 and Web3, but we can talk about maybe the Web3 aspects of what we're doing at some point. We can talk about the fundraising we recently did just to give people a little behind the scenes, like what it's like to fundraise in the current environment. But that's my background and I'm based here in the US. I'm in the Boston area. Jack, you're bringing maybe a perspective from a different part of the world and also something maybe a little different than game design. Like,

Unknown: share kind of that complimentary set of perceptions that you're going to be able to bring to this

Jon Radoff: conversation. Appreciate that, John. A bit of background on my side. I come from a much more

Guest: of the corporate finance capital market side, sort of off my career on private equity venture capital. But before that was a big MMORPG RTS play. And so, best favorite, favorite scrolling up, obviously your wild classics, your stock craft, root wars, and so very much a blizzard maxi in the purest form. A lot of hardstone as well, actually. But so, most of my career early in technology investment didn't really come into gaming until I entered crypto in 2017 and 2018. And so, fell in love with blockchain technology. I thought

Unknown: that it was a great tool for economic empowerment. It wasn't really until 2021 that crypto gaming

Guest: really made sense to me. You can hear by my accent that I'm Australian, met the Anabokiteam when they were so listed on the Australian Stock Exchange in 2018-19. And so, I've kind of heard the NFT gaming craze since then. So, I've kind of been there from when it was a mirror concept of that crypto kiddies. And the early gods and chained, the earlier crypto experiments in gaming of the 17-18 cycle ended up joining Immutable in 2021-2022, locked after tokenomics for that organization. Obviously IMX is premier blockchain for games. And so, did that for a few years before spending up my own research and investment firm with three of my partners at win-win. And so, most of my perspective comes from, I spent all my time with founders to give out capital raising, the Gold Public Movement, or a gaming project, and then also what happens after your game is live. And the game is live and the token is live. We think that tokens are more than just a tool in a game developer's toolkit, but actually it's a whole separate product that has to be run as well. And so, that is very much an investment banking capital markets type of capability that game developers eventually have to come into. Much earlier than traditional Web2 gaming where you don't really have to interact at this scale until your company goes public. And not many have the chance to do that. And so, crypto has really been at the marketizing force for game developers. And so, I'm personally very proud to help game developers come into crypto. And I'm based in Hong Kong. And so, a lot of my time I spend is around the Asia's in particularly China with Chinese founders, which are whole kind of worms that I'm sure we'll talk about today.

Jon Radoff: So, super glad to be here, John. Yeah, awesome. So, hopefully this gives everybody a little bit of flavor for the kind of conversations we're going to be able to have because I come from tech, I come from game design, game development. So, I'm able to really talk through like what goes into making a great game, how you design it, how you build it for big audiences. When I was running Disruptor Beam, the game studio that I operated for a number of years, like I did in the course of that, which was like over a decade, I did everything from coded most of the first game to then I was product manager, did a lot of design work, eventually just kind of like studio head writing checks for things by the end. But that's sort of my background. So, I shipped games, I'd marketed games, I'd bring that perspective. We also built one of the first blockchain games there. So, our start trick game, this isn't actually very well known at all. Now, we worked with a company called Forte at the time. I think I don't know what the hell happened to Forte, but like they seemed to have like a lot of capital at one time and then they just sort of left the map. It's a complete mystery to me what happened there, but we did build a blockchain edition of start trick timelines and it minted over a million wallets on chain. So, it was pretty significant as an early like 2018 game. So, I kind of had that early exposure to the market as well. But what Jack is going to bring to the table is this really unique aspect of Web 3, which is the fact that you've got effectively open market economies and tokenization and currencies that go beyond the game and that's both a capital formation model. It's a way that the game itself has operated. Frankly, no one is totally cracked the code on how to do this perfectly yet, but that's where we want to kind of dig into details and figure out like who's on the right path. What are some of the interesting ideas there? Also, how do you fund a studio doing this? Like, that's really, really hard. It's harder today than it was say a couple of years ago. So, those are some different perspectives and by the way, I noticed a bunch of people are coming in to watch the stream. Thank you for joining us. Your time super valuable. And you decided to hang out after seeing this pop up in your feed somewhere. We got a few dozen people already here. Awesome to have you. And we want you to just know that this isn't just me and Jack having a conversation and ask for pulling up news items. It's here for you to participate in a conversation. So, if you feel like you have insights you want to bring, then comment wherever you are on Facebook, on LinkedIn, on YouTube, on X, we're on all those platforms. Comment, Oscar's monitoring it. He's going to send you a Streamyard link. If you want to jump into the conversation, just all you need is a video camera and you can join in. Future weeks, we're going to have guests lined up from top game studios that are working on Web 3. So, we'll add that added dimension and we'll continue that idea of bringing people in. Let's talk about the whole fundraising environment because I probably get asked this more than almost any other question from other founders of game studios, Web 2 and Web 3. By the way, like, Jack, you're closer to that because you work on the tokenomics side and sort of the capital side. I can speak to my own stories there and I'm happy to tell you like our long fundraising journey to what we got earlier in the week. But, Jack, you probably have a broader perspective,

Unknown: frankly. What are you seeing with startups right now? Yeah, I think it's really interesting.

Guest: If I zoom out all the way for us, crypto gaming really captured mass market interest in 2021. Off the back of the explosive growth of Axi Infinity, I think that really brought into the public consciousness, this concept of play to earn and the power of digital economies and having players own economic interest in games themselves, historically, we've come from. Obviously, close economic groups where games and the publishing entities could own the economics and users actually didn't have a say in anything, but the fact that Axi did such an amazing job of creating this GDP of Axi, it brought this new generation of crypto, brought this generation of gaming developers coming into a crypto. And so what we saw was, for the first time, crypto experienced a Cambridge explosion of applications that actually made sense that should have digital economies and just incredible venture capital investment. I think that was the most funded category in 2021. In terms of just velocity of checks being sent over Q2 and Q3 of 2021. In 2223, what that

Unknown: brought, though, was a lot of game developers, which actually had weren't like you, John, who actually

Guest: have built games before. There was a lot of just shorty projects left. And so a lot of these games then master rated as sophisticated and disciplined game development, but actually lacked all of that.

Unknown: And they raised a lot of money in 2223. What we saw was a lot of these projects not delivering.

Guest: And so today in 2425, we're seeing some of the lagging impacts of the frifiness of 2021. If I bring the conversation to the public markets, a lot of these game tokens that I'll have launched and they are performing very well because the games are fundamentally not that fun and not that

Unknown: fundamentally valuable for the market. And so broadly today, it is incredibly difficult in the

Guest: last two years. If you have come out of somewhere like, unless you've come out from a top tier studio like a riot, any other place, any other indie developer, it is incredibly difficult to get funded. I think what happened in 2021 was all of these crypto venture funds because they saw this new consumer category pivoted from infrastructure investment, i.e. a fund which traditionally was an expert in Lair 1 and Alt Lair 1 investing said, actually, I get gaming because they played FIFA one time. You know what I mean? And so they thought that they could then you had to pick games and evaluate the fundamentals, but they weren't very good. And so the lagging poor returns are reflective of the froth of 2021. And those same investors now have had a tough experience investing in crypto gaming and thus the interest level is just not as high. And so today broadly, unless you're a top project which has a game which is competitive, it's really hard to get financing. And so we're just seeing incredibly difficult rounds getting built not only on the pre-seed seed stage, but also growth rounds, even if you've built a game and there's a core game loop. If you don't know how to go to market and have a competitive edge and go to market, for example, the chain that you've

Unknown: built or some type of unique user acquisition channel investors ask, why should I buy this? I can

Guest: buy anything else. Most of these funds can have mandates that buy gaming to buy other consumer applications in crypto by infrastructure. There's a lot of opportunity costs. And so it's today it's very, very, very difficult. But for you, John, how long has it been able to be in on this financing journey now since you made this entry in a crypto? Yeah. Well, let me speak to a

Jon Radoff: couple of things. So we just announced literally yesterday that we raised this new 13 and a half million dollar round led by Bitcraft, which is a major VC, both in crypto and gaming. So it's

Unknown: perfect fit for us. That was not easy to do. And we're a little different than most

Jon Radoff: quote unquote gaming companies because we serve the game market, but we are a technology company fundamentally that serves the vertical of gaming. It's a weird place to be actually because a lot

Unknown: of the traditional technology investors as soon as you say anything gaming or gaming adjacent,

Jon Radoff: they run away from that because they feel like they can't understand it even though the dynamics of the company are kind of the same as any technology company. On the other hand, you go to gaming investors. What I learned in talking to a, I mean, I pretty much talked to every gaming investor in the VC world at this point. A lot of them talk about investing in infrastructure and technology, but if you actually look at the distribution of funding that they've done within their funds, mostly they're investing in content. There's very little true infrastructure, early stage infrastructure place. Sometimes you'll see them doing like very late stage investments, like you'll suddenly see a venture fund investing in a really late stage of like epic games or discord or something like that. So you'll see that, but like actual early stage technology, they're tend to write very small checks. They're very risk-averse in this category. I think that just reflects the way their teams are structured. Their teams often come from people with a game publishing background or have those people around them and they're making game publishing decisions, but as a venture capitalist. So they're not investing in as much technology. So I found it to be really, really challenging to fund a company that was hitting that intersection. Let me go back to the timelines you were, though. I want to talk about game studios and then I want to talk about like our experience. And a little bit of it is probably going to sound like doom and gloom if you're looking for capital right now. I do want you to be clear-eyed about how challenging it is in the current environment. I promise, though, that if you

Unknown: stay listening, I will have some input for you that will give you some direction as to like how you can increase your odds of success here. But if we use the same, let's talk about game

Jon Radoff: studios first and then I'll talk a little bit about being able successful financing that we did yesterday. So if I go back to that 2021 timeframe you described, let's maybe list out all the ways you could fund a game at that time, Web 2, Web 3, anytime. So number one, you could go to a game publisher and that's the traditional source of financing for games and lots of publishers had tons of capital at that time because pandemic, they were like game usage was way up, like all this capital is flowing through publishers. So it was a good option for you in 2021. You could go to venture capitalists. There are a lot of newly funded funds at a range of venture capital funds.

Unknown: So BitCraft A16Z makers, Galaxy, Griffin, kind of those were some of the bigger ones that the list

Jon Radoff: kind of goes on. There was a lot of venture capital out there. You could do a Kickstarter. Kickstars were still kind of working at that time. That would be for a smaller indie game, viable option. You could go to the crypto side without a funding source and you could very credibly just float some NFTs in 2021 and finance a whole game at that point in time. We can talk about how the track record actually played out from that but that was a way that you could actually could raise capital. You could go to a Web 3 specific source who had grant funding. There were lots of layer ones and layer two's, doling out grant funds at that time. I think that, and I guess the last one is like you could do what the creator of Star Do Valley did, like have your girlfriend fund you for five years while you solo create a game and then launch it, make tens of millions of dollars. If you could do that, you should fucking do that, by the way. Just do that. Like keep all the money. That's the best way to do it. But, okay. So let's talk about the performance of those different things. So,

Unknown: okay. So publishers, there actually is still publisher money out there. Publishers are, here's the good thing about publishers. They're in the business of publishing games.

Jon Radoff: Like they literally just have to keep publishing games. So they can't not do that. The money is harder to come by now. The expectations are a lot higher.

Unknown: But I actually tell most game developer, I won't say all, but most game developers,

Jon Radoff: I think she probably exhaust that option before they even think about other things. Or they should parallel track conversations with publishers while they're exploring others. Because why not be in business with the people who are actually in business to publish and create successful games? Now there's lots of downsides to publishers. This probably isn't the right chat for like publisher deals, what makes for a good publisher deal, etc. Like that would actually be a good conversation in the future. But like that is an option that I think you could look at today.

Unknown: With the understanding that, you know, look at 21 or so like,

Jon Radoff: Embracer was buying up little studios left and right. And then they went the opposite direction. Like it is harder to get the capital to fund from a publisher today. But still an option. Venture capital. Like some of the funds still have money. But it's really, really hard. Like I got to just tell you the brutal truth of this. Like I see a lot of studios come to me every day asking for intros to VCs. And I'm happy to make them. But like the likelihood of success for venture capital for a small team building and like an indie game project is it's pretty grim to be really honest. A lot of the venture funds that had money three years ago. Frankly, their fund performance in a lot of these funds has been very poor relative to the market. And that means that they are having trouble raising their next funds. And that means they're very conservative about how they deploy capital. A lot of the time they're preserving capital to support that they've already made. And even within those portfolios, they're making really disciplined decisions. Like frankly, I'm seeing them cut off funding and places that they just don't think they're going to make it. And if they're signs of life and ones they'll double down there. And that's the better funds. So assuming they still have capital, it can be done. And we can talk about like what the

Unknown: venture sources are for game studios. But it's, I gotta tell you, it is not easy. And I see a lot

Jon Radoff: of small teams with unrealistic expectations of what that's going to look like. Maybe we can drill down into that more. And by the way, like we now have like almost a hundred people watching live. So like put the questions, put comments in there because they that will help guide the discussion. If you want to know more about VC, you want to know more about publishers, you want to know more about web three sources. Like we'll focus in on what all of you want to hear. And by the way, you can post comments if you want to join the stage and talk about your own experience. Don't take my word for it. We'll bring you right into the stage. This is an open forum. Oscars here kind of producing this handling comms. We'll bring you right into the chat and you can tell us what it was like for you. Okay, web three sources. So like, yeah, you could you could get I'll say $3 million is easy in 2021 just by having a good looking NFT drop. And like the right kind of social connections around your project. And you wouldn't have to get anybody. You would you would keep all the money. And that's the problem. Most people decided after raising their three million that they couldn't really make a game and they were happy to just keep the cash. And that that rug pulling back in 2021, unfortunately, really fucked up the market for a lot of people who could have otherwise learned from that and then built a project more earnestly and sincerely. But yeah, there was just a lot of rug polls. And that kind of wrecked it for a lot of people. Grant funds grants have really dried up like you can get them, but they're now based on milestones. So it's it went from getting millions of dollars from most chains. If you had a good team with a good idea, you could get a few million dollars

Unknown: just in grant funding back in 2021. I don't see many of those deals now. I see sometimes a few

Jon Radoff: hundred thousand dollars for a really strong idea. For the big money, the money you'd actually need to build a real game. I'm seeing much more hitting milestones like they give you a little bit of money, but then it's going to be based on how many wallets did you put on the chain? How much trading act to like there'll be some kind of parameters that unlock more grant funding. And unfortunately, that's a total chicken and egg problem because like you don't have the capital yet to build the game. You just have this supplemental capital, which maybe you could use for marketing later on, but you're still trying to build the game and it's not getting you there. Kickstarter really hard for kind of similar reasons like tons of people made kick starters. We're way overly ambitious couldn't pull off what they promised. So now like if it's a kick starter, people want to it's it's almost like the same thing as VC. They want to see the game already done. Like if it's 80 90% done, kick starters happen, kick starters for like brand new ideas, people got super skeptical. It's hard. I don't want to I don't want to lie to anybody. So those are sort of the sources of capital and how it's changed from then to now. Like I said, for beamable, it was a little bit different. By the way, was very hard. Right. So I spent the better part of last year raising capital. And frankly, for most of the year, I was I was getting little bridges here and there just to keep us going until we got in alignment of interests with Bitcraft. And then we put that round together. Why did that happen? Because we had really figured out how to take our technology and move it from the SaaS version of beamable, which already like many games were operating on. So it was first of all product market fit with a technology that was working and games were running on it. And not just Web 3 like well, first of all, start with the Web 3 like some of the biggest Web 3 studios out there. So mythical games building their biggest games on beamable, wild card alliance, which is Paul Bettner, one of the creators of Age of Empires, like top name studios building on that. But also a lot of Web 2, frankly. But we had product market fit there, which helped just as a SaaS company, frankly, though, it was really hard to raise on that alone, even with the product market fit and the growth. We grew revenue triple that 3x here over a year. Usually that would be considered good. Just to give you a sense of like just how hard it was raising capital last year. And I've taken a company public before. I'm not like first time figuring this out. So like we had a lot of things in our favor and it was still super hard. What we did figure out though, because we had this Web 3 DNA in the company early on having built this blockchain version of Star Trek and having a lot of Web 3 customers, we're like, we should Web 3 ourselves. Like it's not enough just to be an SDK for Web 3. How can we do that to ourselves? And there was a good reason for it, which is a lot of game studios are starting to get burned by SaaS products that went out of business, basically. By the way, it wasn't about company size. Like Amazon did the biggest rug poll in gaming history when they shut down game sparks and effectively canceled 2000 games. So people in Web 3 talk about rug polls. This was the biggest rug poll and it wasn't Web 3. Like this happens all the time in traditional tech where things just get canceled and left a lot of game studios with nowhere to go. So people were getting really risk of verse about that. So the solution was right in front of us. Number one, open source our platform. So that people know that they could just get this source and run it on their own if they needed to. Like worst case

Unknown: scenario, they don't run into a game sparks scenario. But with backend and our technology is a backend technology, you have this unique aspect to backend, which is you also can't just ship SDKs

Jon Radoff: and source code to people. You have to give them the ability to scale it out and automate that whole process, which means you have to deploy on servers and all of that. So there had been this whole emerging category in Web 3 called deep in, which stands for decentralized physical infrastructure networks where you aggregate high quality data centers from around the world and you essentially create the equivalent of a hyperhiscaler, a hyperscaler is like Amazon or Azure or GCP. Except we're creating a virtual hyperscaler by putting a lot of these data centers together from around the world. So now you combine open source, you combine the aggregation and the payment architecture, which allows you to orchestrate all these resources. And you also create the open source ecosystem around it as well so people can add to it. So that was the idea last year. And it took me most of the year pitching that, you know, I had to kind of shift from the traditional SaaS investors who really won't touch Web 3 and focus on crypto native investors. Ultimately got bitcraft and ARCA and two punks and advanced it like a bunch of these guys who do crypto

Unknown: investing came to the table and backed it. But boy guys, it was not easy. It was not easy to do this

Jon Radoff: in this time frame and I hope everybody. I'll come back in a moment to like maybe what some of the cheat codes are to help everybody out now that I've given the gloom and doom version in a

Unknown: little of our own story. But Jack, what do you think of what is that resonating with what you're

Guest: seeing out there? Yeah, 100%. I mean, there's like the rough mental model is for beamable, this was

Unknown: essentially the a slash growth route, which is there was where post R&D were post the initial

Guest: proof of concept of the product. You had paying customers and there was quite a few of them.

Unknown: And even then investors were saying, is this a real business? You need more money to

Guest: grow this, but is this really scalable? Like what, John, what were the actual pushbacks that you were getting from investors? Like why were people passing on a deal? Do you think you had money?

Unknown: Yeah, well, what I'm finding in, we'll just say game tech investing. It's a little bit different

Jon Radoff: than other SaaS kind of investing. So SaaS investing by the, so there's a whole, there's a countless number of ECs, frankly, that invest in traditional software as a service. Sort of the reality of software as a service as an investing category is it's very KPI driven, it's a bunch of numbers. Everyone looks at a zillion SaaS opportunities, they plug the data into their spreadsheets, they look at your core metrics around what's the typical sales cycle,

Unknown: what's your return on ad spend, what's your month over month growth? Like and they plug all

Jon Radoff: these KPI's in and different VCs have different views into which of those KPI's are more important than others. And it's almost like a, it's kind of a later, typically more of a later stage,

Unknown: like series B kind of private equity almost, very, very numbers driven stack rank for their

Jon Radoff: investment decisions, except in SaaS, that is applied to an earlier stage, definitely series A and even as early as, as like seed stage investing, just to try to figure out what they think is going to take off. Games is just a weird category, it doesn't have normal funnels, that frankly the sales cycles are stupidly long because you deal with people show up as an individual developer and they poke around and they figure it out and maybe it's a year later or two years later that suddenly there you learn that they're working on a commercial game.

Unknown: This is sort of, it's a double edge sword, both positive and negative, the positive of that is

Jon Radoff: when people get deep into your platform, they, it's a moat because they don't, like people are sticky to tech in games that they like, like, but also you've got super, super long sales cycles. The other positive is once they stick with it, it kind, from a revenue standpoint,

Unknown: these studios kind of become in annuity, you can't take it for granted, but you have to,

Jon Radoff: you have to keep servicing them and doing great job, but like, if you do that, they stay around and a good game can last 10 plus years as a revenue generator. So that was our advantage, slash disadvantage, relative to the standard SaaS market, but you know, the opportunity for us became Web 3 because of Deepin. Deepin is this emerging category where normally it takes billions of dollars of capital to fund infrastructure projects, and for the first time in Web 3, you have effectively community-owned infrastructure or crowdsourced infrastructure. Still takes venture capital or a significant pool of capital to kind of light the fuse and get the R&D, get the marketing tokenized, like that's a lot of work to get to that point that does require some upfront capital, but the unfrucked capital is in the millions of dollars instead of the billions of dollars, which is what infrastructure normally costs. So that was a story that

Unknown: resonated with a lot of VCs, and I feel like the ones who had good fund performance and had more

Jon Radoff: capital that they could continue to deploy were the ones that came to us. I think we also ran into frankly a lot of funds that we love this idea, but we are just sort of, we have to stand by our existing portfolio companies, some of them are struggling, we need them to get to the other side before we just start dwelling out more capital to new bets. So we started hearing that story a lot, and by the way, Samu, who were like, hey, it's games, we just don't get it. Like games is too weird. games has these different risks that we don't understand, but fortunately we were able to get it done. It was challenging, and it took me all year. Here's lesson number one, which is perseverance does pay off. Sometimes it's just that one VC that comes along and wants to lead, and maybe it takes you the hundred rejections. I don't think I'd quite a hundred rejections, but I had a lot of rejections. Then BitCraft was like we get it. By the way, we invest in games, we invest in crypto, we feel the pain that the studios are having on their side of it. We understand the way crypto markets are changing, and Web3 as a new orchestrating layer around physical infrastructure, they saw that, and they were able to put the two together. There frankly are not a lot of funds that are premier investors in both of those categories. So we were fortunately able to connect with them and make it happen after a lot of rejections. Then of course, once VCs learned that you got a great lead, then a whole bunch of them won in, which is much easier in our favor as well. But it is hard to overcome that inertia. John, you speak with a lot of these game developers as well.

Guest: What's your read on with the early stage entrepreneurs who are running their own studios, the game theory between entering Web2 and Web3. What's your view on where the trend is, where the puck is going for these founders? From our perspective, we see a lot of, maybe I can commentate in particular about China. What we see out of China, there's a lot of regulatory overhang in terms of the central government is not that fond of blockchain. They've been very PPP historically outright banning cryptocurrency in the country and unbanging it over the last few years. It's in this interesting gray area. What we find is, though the entrepreneurs who historically leave someone like Tencent working on any number of the games that Tencent operates, either set up their own studio, so historically the exit Tencent set up their own studio and take money from Tencent. They are essentially just a subsidiary code that is operated by Tencent. What we see in the last two, three years off the back of 2021 is a lot of these people now are coming into crypto. They think that there's this arbitrage that these people have come from a lot of experience and they think that they can get venture funding pretty quickly. We've seen quite a few examples of really solid standard going up. You think about something like Matrix Far, that is a X Tencent team. What's really interesting is that none of these founders are usually docks, either. It's like Chinese entrepreneurs who you trust their investors, who probably know them in person, can't reveal their identities in case of any government action, shall we say, who certainly brought up the standard. The rationale for teams like those is, well, we could have built a, and Matrix Far as a mobile FPS, in similar vein to that crossfire. The whole argument is, it probably isn't that competitive if we just launched this as a mobile game, but in crypto, I can get higher valuations. There's investors who value my background more, and it's like incredibly obvious for them to come to crypto. Do you see that a lot as well, John?

Unknown: What's your experience on the early stage side? Well, I'll comment generally in a way that applies

Jon Radoff: to both Web 2 and Web 3. And I have my own thesis about what makes an early stage team work. And I think a lot of VCs share the same opinion, not all of them, but so first of all, I think

Unknown: hyper-efficiency in that early stage team. You should be able to ship, well, I mean, obviously,

Jon Radoff: we're talking about a huge market of different kinds of games. Some games just cost a fortune to make. If you want to build a first-person shooter with a storyline, a lot of cinematic immersive content, and you're going to go ahead to head with Call of Duty, then you need a lot of lot of money to build out that content, even with the AI tools which we're supposed to make that less that they do help a little bit, but they're still super expensive games to build. Let's forget that for a moment. Those kind of games are not generally fundable by VC, by the way, because it's considered the domain of publishers who can endure those very long funding cycles. So good or early stage games. I see a lot of excitement from VCs from the earlier, I'm going to talk about the smaller funds, where if you can deploy one or two million in capital to a team, and they can ship a game in two or three years, that's really great for a target market with a really viable chance of hitting, call it the tens of millions of revenue range. There's a lot of VCs who get excited about that, because there's such a high ROI on that revenue generation relative to the capital in. Sometimes you'll find the ones that'll do one or two million to get to the vertical slice of a much bigger game that then requires a lot more capital. You'll see that too. I think those are riskier bets for everybody involved, frankly, because more often than not, I see teams get to that

Unknown: vertical slice and someone wants to fund it anyway, even with a good looking vertical slice. So

Jon Radoff: I would just counsel any game developer who takes outside funding, like imagine that the funding you're getting is the last funding you'll ever have, even if you have a dream of getting more to build it, because you may not actually get more capital and you may have to survive without it. So hyper efficiency is the way you get there, and I think it comes down to really small teams, because look, there are lots of great examples of teams that have built great games with very few people. We talked about Stardew Valley and it took the guy five years, but his girlfriend basically covered his cost of living for five years, and they shipped the game. Undertale, the guy made it by himself for, I don't know how long it took him a while, probably, but again, game that made tens of millions made by an individual person. You also find plenty of examples of the small team,

Unknown: like the team that made Hollow Knight, I think it was four people, three or four people,

Jon Radoff: the team that made Ballheim, it was like four people. I'm not including QA and stuff that were brought in later, but the core team that built it basically, three or four person teams that built really great games for that, and that making a lot of revenue. I think if you have a thesis around that, then you will probably find that some of these earlier stage funds are really excited about that. Also, the Web 3 guys too, because they got all sick of these big asks, they threw the grant money, they basically threw the money away over and over again on teams that couldn't actually execute. In that sense, it's common between both, but I would say that if you can build a game that way, you've got a not great chance, but a fair chance of actually being able to figure out how to fund that with publishers, like you will have the maximum number

Unknown: of options for funding. What goes into that, I mean, team is everything. I see too many teams,

Jon Radoff: by the way, where it's two management-heavy people that have come from big publishers and think that they know how to build a game, but they don't know how to actually do things themselves. You need a great game designer, but also not just a person who sits in a GDD and writes it all day long, like the person who can go in at detail level, do level design hands on, go figure out all the

Unknown: economics of the game, figure out all the math. You're a game designer who's actually a game developer,

Jon Radoff: like you're in there working on systems building them. You need, for most games, a really great person with a graphics background, not because you have to code your own 3D engine anymore, that's not a thing now with Unity and Unreal, but you want someone who really understands shader graphs and all the cool tricks and can just help you make the game look great from a graphics standpoint. Again, knows all the options has been around the block and not just a pure graphics person, but a well-rounded game developer who has a core of graphics, but also system implementation. If you're building an online game, you're going to need someone with, you know, live services capability, like even when you're using Beamable, like the platform that helps you build all the live services and scale it out, you still need someone who understands servers and game rules,

Unknown: and is going to be the architect of that game logic, and really a great art lead. So you need

Jon Radoff: someone who is going to have that creative vision for what the game looks like, but can put it into practice, not just someone who does concept art, someone who can kind of do it like the best art directors I personally work with, they can do concept art, they can do traditional painting if they need to on a canvas, they can then sit down in the blender and make the 3D models, and they can not only do that, it's game ready 3D models, which is its own whole thing, like make sure that the textures and the art is like functional in-engine and actually works. So like they're actually sitting in the engine, making sure that worlds and characters and everything look right, not these really long pipelines that exist in AAA where you've got a dozen steps

Unknown: between idea and thing actually operating the engine. So great art lead whose hands on great

Jon Radoff: game developer with kind of a graphics core whose hands on back end person if you need them, if you don't need the back end person, probably just another programmer to help you with systems, and great game designer, but again the game designer isn't just like up here thinking about game design docs, they're hands on, they're building stuff, they're shipped, they're part of that shipping process. So I've seen a few teams that have done that really well and I think when I look to Ballheim and Hollow Knight, this is a couple of examples of where that was done well, I think I just described those teams more or less. So that kind of team that has that kind of really hands on capability and a track record or shipping

Unknown: has a really good chance of getting some funding. If you don't have that, what are your options?

Jon Radoff: Number one, you do the classic thing that all of us as game developers did, you become that person,

Unknown: you actually start developing, like download Unity and start learning. That probably means you're not super close to funding, but you know better start today than two years from now when you find

Jon Radoff: out that no one will fund your idea, right? The game industry doesn't need more ideas, it needs people who execute. So start learning. The other possibility is find some great technical co-founders to work with. There's no replacement in game development for strong technical execution capability, people who can actually sit down and start shipping builds daily. If you're not able to ship builds daily, it's going to be really tough for you. By the way, when you start getting into a funding process with a publisher, with a VC, like they're going to want to see that velocity, by the way,

Unknown: or Web 3, show them that you're shipping every day. Every time you have a new conversation, it's like,

Jon Radoff: oh, here's the new build. You've got to have the sense of the train sleeve in the station. Are you getting on board or is someone else going to get on board? Because we're building this thing with or without you. You kind of have to be able to project that. So I think for most teams having that strong central core around execution is what's needed. And just to kind of bring it back to Web 3, this is where everybody got in Web 3 two or three years ago. There were a lot of teams that knew how to create a website and do Web 3 wallet registration and do a NFT drop and do

Unknown: parameterized random PFPs. But turning that into a game, we all know what happened. None of those

Jon Radoff: teams had that capability. And frankly, the vast majority of them had no intention to do that. So that kind of burned a lot of the funding sources for this early on. And now they don't have a lot of capital just throughout ideas. But you will be able to find funding sources if you've got that core of execution. Figure out how to get that execution underway in your studio. And if you don't have it yet, my best advice and this will sound a little bit negative-sus positive depending on how you approach things. But like, stop trying to raise capital because you won't, frankly, just stop and start creating a team. Create the team and then start shipping builds. Even if it's not at the max velocity, you'll be able to get to once you all can go full-time on it. Get the team start shipping, then see capital. Otherwise, it's cart before the horse. And like, you're just going to run into a lot of roadblocks because anyone can make a really great pitch deck for a game right now. Like, we can all go to mid-journey,

Unknown: make some really cool-looking images for our pitch deck. And ideas always sound great, but guess

Jon Radoff: what? Ideas are not worth anything in game development. I've had tons of, I've shipped games. I've had great ideas for games. Guess what? The idea doesn't actually seem as great anymore when you start building it. And you're like, oh, shit, this game design actually doesn't work when you play through it. And the craft of game development is iterating, iterating, iterating, and like, being willing to dispose of the idea that didn't work, kind of bringing in new things, it's about shipping. So get to that, and then you have a small but possible chance of funding the project. By the way, just before I turn it back to over to you, Jack, for more questions. And we're coming up on the hour here. We've got another 10-ish minutes left. Great audience here. We've got like 150 people on the live stream watching right now. So, I want to say, this is here for you. This isn't just me to talk at you or Jack to talk at you. The idea of this live stream is to be an open forum where you can come in. So, first of all, post comments on LinkedIn, on YouTube, on X, on Facebook. That's all the places we're broadcasting to right now. But it's also place you can come in. So we've still got 10 minutes left. You know, what would be amazing? Come tell me how wrong I am. Tell me, tell me I was like completely insane and how you raised $50 million off a PowerPoint deck and you should just do that. I mean, I would love this, love the counter example story. Or add something that's a gap. Or a piece of advice. Or if you got funded. Or if you're struggling to fund your studio. Come tell us that story so everybody can hear it. We can add you to the stage. Oscars monitoring all those communication channels. We'll send you a Streamyard link. You can you can join the stage and in our follow ups and we'll be doing this by the way

Unknown: 9am Eastern time, weekly on Wednesdays. And we chose that time because we can get the East Coast for people awake who kind of got in the work. If you're early morning and getting your cup of

Jon Radoff: coffee in the morning on the West Coast, you can tune in. But we also wanted to be able to capture the evening audience, the night audience out in Asia. We know we can get the daytime. So we wanted this to be a global chat as well. I'm I'm here in East Coast of US, Jackson Asia. It's like we're we're trying to make this a global talk East and West perspectives. By the way, the East perspective could be also very different from a I'm giving a very western view and to kind of what what funding is like. And Jack, you probably have a little bit more exposure to what's happening in China. Like you were mentioning earlier saying the 10 cent

Unknown: teams that were that break off and get funded by 10 cent. What else is happening in Asia? Like does my efficiency argument is that the map is does that matter in China or is that where you can just hire 40 people for like a lot less expensive anyway. So they're less focused on that.

Guest: Yeah, what we find is that and I think there's a larger point to be made about the development of

Unknown: the Chinese gaming industry as well. Everyone in this on this show knows that I think the Chinese have

Guest: really made their bread off of back a mobile game development. Their style is very much categorized by it's not very creative. It's very methodical and scientific in how they

Unknown: think about user acquisition retention and monetization. What you find is the two key advantages

Guest: out of Asia that define the development here is all about efficiency as well, which is of course there's a cost of labor that's much more efficient. And so on a pure financial basis is the funding environment for gaming just from local entrepreneurs here, not even venture community, but local entrepreneurs again who are your internet tech backgrounds love the gaming industry here because they know that the Chinese mobile industry has been incredible in attacking and generating global revenue.

Unknown: They the Chinese are not just on the other side, off the back of the resources,

Guest: what happens is just the intellectual rigor that goes into thinking about user acquisition channels and teagering in game, WacLiveOps for Chinese gaming applications is just incredible. The amount of updates that they ship. It's certainly a very different investment thesis. Over here. And so what you find is any top portal gaming team, there's a lot of gaming teams in China are usually just king made by Tencent by Dance and the crew. And so it's less reliant on gaming specific venture capital over here. It's very much done by your netizens, farmpluses, etc. And so there really isn't a if I'm going to do a studio, I'm going to go raise venture capital on a pre-seed seed. It's no, I just took 20 million dollars from Tencent and this is going to be public private for the next four years. So it's certainly different. Yeah, well here's some East

Jon Radoff: East meets West insight that I can share. So first of all, I think in general for a variety of reasons, Asia is frequently ahead of the curve in terms of newer business models. It was certainly true for free to play so we can start there. So when I built Star Trek timelines, I looked at a lot of Chinese free to play games as inspiration for how we should build the monetization component of Star Trek timelines. One game in particular that I was very inspired by was a game called Heroes Charge, which was just happens to be a was at the time a very popular game out of China. Everybody told I told I showed people in the Westward building and I was consistently told, okay now this is just put it in the time period. We're talking 2014, 2015. It was when that game was being built. Everyone was like, that game's too Chinese. That's not going

Unknown: to work in the way that was like the conventional wisdom like Chinese like character development

Jon Radoff: grind model. That doesn't work in the West. He used people will reject that. It was like, I don't know, I think these guys kind of cracked the code on how to make this work. I'm going to I'm going with it. And two things happen. One is turns out that's actually a pretty fun game loop for a lot of people including me. Like I spend a lot of money on Heroes Charge and I'm not from China. Obviously, so like that it was fun for me and I felt it would just be fun for a lot of other people. And we adapted it to our game in the West in a major ID Star Trek. And people did think it was fun. And on top of that it monetized really, really well. Like that game to this day does a dollar to two dollar ARP Dow, which is just incredibly good for any free to play game. So there's a lesson there, which is if you're a Western entrepreneur, I think there's like, it's almost like looking into Chinese companies as a cheat code for you. See what they're doing now and import the game design into the West and leverage some of that. And that's where I think some of the Web 3 comes in because this is so typical of Western game development and public game publishing practices. There's a

Unknown: bias towards what has always worked before. And in assumption that we in the West know what's best

Jon Radoff: for Western audiences. But I actually see that as a blind spot relative to Asia and a missed opportunity to start learning from what's working over there. One particular market I like to look at really closely is Korea, by the way. So yes, in China, you have kind of like very Chinese games that are very kind of almost, I mean definitely tailor made for the Chinese audience, not only in

Unknown: terms of the IP, like sure we see like romance of the kingdoms, done way too many times there. It's familiar, but also just like the very heavy UI with a zillion

Jon Radoff: elements that you have like very Chinese kind of feeling games. Korea a little bit, I find it straddles both like and Korea, I have to give them a lot of credit and Korea like their games do well in West and East consistently. Like they seem to know how to have the balance. And I think part of it must just be cultural like it's that so many people in Korea grew up with Starcraft for example as their games. So they kind of so Western games were kind of beloved there before a lot of other games. And now they've kind of homegrown a lot of their games into that audience, but they're also close to other business models like in China and kind of imported that in. So one of my cheat codes is look at what's working well in Korea. They seem to be a little bit ahead in terms of like global game business models. And that's where Web 3 comes in because look at the number of top like this isn't just like the weird studios like doing NFTs which I think is maybe the popular perception in the West we have of Web 3 games. Like we're talking to biggest studios, the biggest publishers in Korea, almost universally are building Web 3 games. And they're doing it because the whole cultural

Unknown: attitude there towards marketplace economies, played a win if we want to call that like use all

Jon Radoff: the bad words that we in the web in the West throw at these game designs. They're culturally accepted there and they're figuring out how to structure games around that. And Web 3 is often seen as a

Unknown: real positive, very different approach than here. Now that hasn't been exactly how it has played

Jon Radoff: out here in the West. But again, I would if you're a Western developer who's not watching what's going on in Korea and even China, I think you're probably two or three years behind the curve and

Unknown: what will work here. Yeah, I think as well coming from the outside, especially the West looking

Guest: into the East, the presumption as you said is Koreans know how to sell to Korea, China knows how to sell to China. What we find is in both those markets, it is incredibly competitive. And so there's so many studios in China and Korean fighting for domestic market share that historically that have been forced to globalize. And so for the same, what you find is the Chinese entrepreneurs and the Korean entrepreneurs are targeting Latin America, Southeast Asia, just like any other Western studio wood that targeted the US, Australia, the UK, because they have no other option. And so I think it's

Unknown: quite, we can't undersell the fact that it is not simply they know their own countries, but

Guest: they are like the West targeting the same geography so far. And so you're not just fighting against

Unknown: other European and American studios, the insight out of the improvements out of China and how they

Guest: localize for these countries, there's so many lessons that just like how China caught up to the rest of world by copying, there's a lot of lessons to be made from looking at what these studios well very well financed now and have great users on these platforms now. What are they doing? I get a lot to learn there, so absolutely great.

Jon Radoff: Yeah, yes, Chinese studios have mastered the art of the fast follow and cloning, like no idea,

Unknown: we'll go uncloaned for very long in the Chinese market. But I think it's a mistake. I'm a

Jon Radoff: mistake a lot of Western developers make I think is thinking that that's all that they do, which is not correct. They are very innovative on business model. They're super smart about live ops. They build live ops machines. That's why Tencent funds these people who break out and form studios because they come from a live ops culture where they just know what the heck that

Unknown: actually means and know how to put that machine in place. So look at what they're doing and download

Jon Radoff: downloads from Chinese games, frankly, and just play them. Most of them, frankly, a lot of the bigger ones, they're all available in English. So give them a try. You'll see how they play and I think you'll learn things and don't look at them superficially either. Like, like, download a

Unknown: Chinese free to play game that comes from a Chinese studio. You will not learn the depth of the

Jon Radoff: monetization messing around in one or two hours. There's a game I'm playing right now from a Chinese studio. I'm probably 50 hours into this game and I'm still discovering new ways they

Unknown: want to monetize me. So, like, go deep in. Then you learn. And I think it's the same for Web 3,

Jon Radoff: too, right? It's not going to just be about the NFT flip. It's going to be about the deep mechanics built into open market economies and like, really getting into that. But it still requires innovation, too. And so look at the studios in Asia that are investing in this. So we kind of just hit the end of our hour here. So we're going to end on a high note. We've got a couple hundred people on the live stream watching right now and hundreds and hundreds, probably a thousand that have come

Unknown: through across the course of this hour and peaked in and out. So great that you decided at whatever

Jon Radoff: time of day this is for you to come in and listen to us for a little while. I just want to like mark in your mind what you can expect from the future. So first of all, we'll be back here at 9 AM

Unknown: Eastern time on every Wednesday. And we'll be talking in this live stream about game design

Jon Radoff: and development from a Web 3 perspective. And that means both game design, the industry aspects, the development aspect, what it actually took to build a great game. This is for you as a game developer to learn from because of the unique role of tokens and trading economies and the financial aspect of Web 3 based economies. We're also going to talk about that. So that'll be a big part of it. How to capitalize and fund these things. How the token as its own product can please into the world of Web 3 gaming, which by the way, everyone's still discovering. No one is actually correct. The code on this yet. So we're all figuring it out together. And that's why the last part of this is so important. It's not going to just be me and Jack and Oscar here. It's going to be you. Right. We have like a lot of people who watch this live stream this morning. You need to join us as well for the next one. So when we do this next Wednesday, we'll bring it. I'll definitely have one or two great guests from a great Web 3 games studio to come in and share their experiences building in this market. But it's not like just the people that I hand pick. Like seriously, like you could just show up at the live stream and tell us you have a story to share or question you want to ask live. Oscar will send you the stream yard link. You can jump right on stage. Someone asked earlier, they said, oh, English is my second language. Totally fine. Like this is a

Unknown: global, this is a global live stream. Like we're conducting it in English, obviously, but we would love

Jon Radoff: you from wherever in the world you come from to join us and don't worry about that. Like we're very friendly. And it's a safe spot for you to come and just share your ideas. So please do join the conversation next time and mark your calendar for 90 hours on Wednesday morning. And we'll do this again next time. So Jack, thanks so much for joining me for the kickoff of this. I'm looking forward to doing more of these with you and Oscar. Thanks for producing us and keeping some of the content streaming through. Thank you, John. All right, everybody. See you next time. This was awesome. See you.