Artwork for podcast META Business
24. Spotify In Roblox, Nintendo Blockchain, Crypto Wallets For Gamers, Blockchain Gaming Pitch Explosion
Episode 249th May 2022 • META Business • Holodeck Media
00:00:00 00:34:14

Share Episode

Shownotes

In this episode, we discuss Spotify joining the metaverse through Roblox, former Nintendo of America president Reggie Fils-Aimé showing interest in blockchain gaming for Animal Crossing, Argent raising $40 million to make crypto wallets for games, blockchain gaming pitches flooding venture capital inboxes, and so much more!

Episode 24 Keywords: Spotify, metaverse, Roblox, Reggie Fils-Aimé, Nintendo, blockchain, Animal Crossing, Argent, $40 million raise, crypto wallets, blockchain gaming, video game investment market

Transcripts

Unknown:

Welcome to the metaphysics podcast. The Metaverse and web three are bringing about the

Unknown:

biggest revolution since the internet itself. With your hosts Paul the prophet Dawalibi And Jeff the

Unknown:

juice Cohen. We will be bringing you the latest Metaverse, business news and insight into what it

Unknown:

all means. The meta business podcast starts now. From the boardroom

Paul Dawalibi:

to the metaverse. This is the metal business podcast. I am Paul the Prophet Dawalibi.

Paul Dawalibi:

I'm joined today by my friend and co host, Jeff the juice Cohen. For those of you who are new

Paul Dawalibi:

here, welcome to the official podcast of the metaverse what we do is we cover the most

Paul Dawalibi:

pressing, Metaverse, stories and news of the week, we look at all of it through a business and C

Paul Dawalibi:

suite lens dissect. We analyze the business implications of everything happening in this

Paul Dawalibi:

industry. For our regular listeners. Thank you guys for tuning in every week. Thank you if you

Paul Dawalibi:

have subscribed already, thank you for doing that. Thank you if you've left a five star rating and

Paul Dawalibi:

review, if you haven't yet, do two things for me. Leave a five star rating and review and share the

Paul Dawalibi:

podcast with someone that you know a colleague, a friend, someone who might be interested in the

Paul Dawalibi:

metaverse or what's going on at the intersection of gaming and crypto. We know there's so many of

Paul Dawalibi:

you out there who enjoy that. Jeff, how you doing this week?

Jeff Cohen:

doing pretty well. Pretty well. Feels like we just we just recorded the last episode we

Jeff Cohen:

had. We had we're a little off schedule because we're both traveling so now it's like been two

Jeff Cohen:

days. Normally it's it's a week. So I'm like ready to go right and really

Paul Dawalibi:

I feel rusty. I feel rusty because like last week was a big jumble. You know, like,

Paul Dawalibi:

I'm not on my usual feel like I'm a toddler when it comes to the all the podcasts and content we do

Paul Dawalibi:

right? If it's not on schedule, I'm just I'm totally off.

Jeff Cohen:

I know that feeling having a 15 month old throw them off a little bit and it's just

Jeff Cohen:

chaos. I hear you on that. But I feel I don't know, I'm the opposite. Maybe I'm just in the

Jeff Cohen:

flow. Like, I feel like we're we're good to go.

Paul Dawalibi:

Just more used to it. I guess more practice. Exactly. We've got so much news to

Paul Dawalibi:

cover. So let's jump into it. That's what people are here for. Let's cover the news. We'll start

Paul Dawalibi:

with a fun story as we always do. I thought this one was interesting. The headline here and this is

Paul Dawalibi:

from hypebeast.com Spotify enters the metaverse with interactive gaming island on Roblox. Players

Paul Dawalibi:

can create their own beats, complete quests, unlock exclusive merch and more. So, Spotify. This

Paul Dawalibi:

is their announcement. They're entering the metaverse. It's called Spotify Island. It's on

Paul Dawalibi:

Roblox. And the idea is, and I'll quote here from the article, it will connect fans and artists

Paul Dawalibi:

across the globe in a wonderland of sounds, quests and exclusive merch. The digital Island takes on

Paul Dawalibi:

signature elements of Spotify is branding with a primarily green layout. Alongside colors and

Paul Dawalibi:

iconography that users will recognize from the app, you'll be able to collect heartshaped like

Paul Dawalibi:

icons to unlock merchandise and climb the charts or rank on the games leaderboard and artists earn

Paul Dawalibi:

an unspecified percentage from sales of endgame merch, which can also be taken into other

Paul Dawalibi:

destinations on Roblox so this is a way for Spotify to bring their brand and bring artists

Paul Dawalibi:

bring music and merch into Roblox and for Roblox players to interact and engage there. Jeff, what

Paul Dawalibi:

do you think of this as from although you know we've seen now in a number of Metaverse plays

Paul Dawalibi:

we've probably covered, I don't know at least half a dozen of them now. Big brands, either doing

Paul Dawalibi:

fortnight or Roblox activations, or decentraland or sandbox. What do you think of Spotify is

Paul Dawalibi:

execution here first of all, and second of all, their choice of Roblox because that's, that's an

Paul Dawalibi:

interesting conversation these days to write the platform brands are choosing.

Jeff Cohen:

Yeah, it's interesting. I think this is definitely a more serious or we usually like to

Jeff Cohen:

start out with almost like a jokes or I think this is I view this as a serious story. And mostly

Jeff Cohen:

because I think that we've covered a lot like the interaction between music and the metaverse music

Jeff Cohen:

in gaming is a very real angle here. Historically, I think fortnight has probably been a bit ahead.

Jeff Cohen:

Like we've seen a lot of big events, big concerts happening on fortnight Roblox has done a little

Jeff Cohen:

bit, but maybe this is another step in that direction. So I think the interaction of music in

Jeff Cohen:

the metaverse is is a theme that that is a real one, and it's not really going away. The question

Jeff Cohen:

maybe that I have for you is the one that you always pose on the live stream and even here is

Jeff Cohen:

the who wins, like who is this better for? Is this better for Spotify? Or is this better for Roblox?

Jeff Cohen:

Well, when you were talking that was sort of like the only thing that was going through my head and

Jeff Cohen:

I'm not even sure I have a great answer yet. So I'll let you start and then maybe I'll take the

Jeff Cohen:

other side.

Paul Dawalibi:

I definitely think it's better for Spotify. And I'll tell you why. I think the Roblox

Paul Dawalibi:

choice is kind of genius here. At least this is anecdotal. My own experience with music streaming

Paul Dawalibi:

is once you find an app you like and a service you like you don't really change like the, all the all

Paul Dawalibi:

the apps have all the songs, right? Like, once you're into one, there's not a whole lot of

Paul Dawalibi:

motivation to switch. And so it becomes increasingly more important to capture users

Paul Dawalibi:

earlier younger, right? So that they stay with your platform forever. And I think in a world

Paul Dawalibi:

where a lot of 10 year olds, 12 year olds, their first device is there, hand me down iPhone or hand

Paul Dawalibi:

me down iPad, and Apple Music is maybe the easiest, or YouTube is maybe the easiest, Spotify,

Paul Dawalibi:

I think has. And maybe I'm giving them way too much credit here. But if I'm in that boardroom,

Paul Dawalibi:

I'm going, we need to figure out how to reach that age group. Because we want to get them on our

Paul Dawalibi:

platform early so that they're not thinking about Apple Music, and they're not thinking about

Paul Dawalibi:

YouTube for music. And, and this is smart, right? This puts them right in front of that the core

Paul Dawalibi:

sort of Roblox demographic, extremely valuable young. And I think the activation here is clever,

Paul Dawalibi:

right? They're gonna get artists involved. There's merch involved that the players can use outside of

Paul Dawalibi:

just this. Spotify land, right. So you know, they've checked most of the execution boxes, it

Paul Dawalibi:

feels like, but the choice I think is what's smart and why Spotify is the big winner here.

Jeff Cohen:

So I think I absolutely agree with that. It's it's a really smart user acquisition

Jeff Cohen:

play, particularly with the demographic that Roblox addresses is really that, like, younger

Jeff Cohen:

adolescent where they probably don't already have a music subscription service. The question that I

Jeff Cohen:

guess I would pose is maybe a little bit of the one that you posed to me. Is it better to go to

Jeff Cohen:

Roblox or would you go to a different metaverse? Probably not decentraland or sandbox just because

Jeff Cohen:

you're not you're not getting a large player base there but would you would you have activated with

Jeff Cohen:

fortnight if you were Spotify? And the only reason I say that is because I think the music events

Jeff Cohen:

important had have been have been a bit of a bigger news story. Like I think it's more of an

Jeff Cohen:

event like does this get found in Roblox or does it just kind of like end up getting lost in the

Jeff Cohen:

shuffle of all the other great content and apps that are on Roblox?

Paul Dawalibi:

You know, this there's like a huge conversation to be had around discovery within

Paul Dawalibi:

meta versus right and because no one is solving for that yet either. Right? Like we're everyone's

Paul Dawalibi:

gonna build these giant virtual universes, but how do you find anything within them like Google?

Paul Dawalibi:

Google the metaverse Wait a second maybe maybe we should be pitching that

Jeff Cohen:

sounds easy. Why not? Take a week

Paul Dawalibi:

but you know, discovery is definitely not obvious. I think you have to expect

Paul Dawalibi:

that whatever activation whatever Spotify has paid for here or whatever, you know, they've built here

Paul Dawalibi:

there's some agreement with Roblox that this is gonna get surfaced, right, you log in there's

Paul Dawalibi:

gonna be some advertising I'm guessing. You know, pushing users there. Why not fortnight with their

Paul Dawalibi:

past music experience? I mean, fortnight really is they've shown mastery of the specific character

Paul Dawalibi:

activation, right? Whether it's like Batman, or like, you know, Travis Scott, or like, a single

Paul Dawalibi:

individual or a single character, but I haven't seen great overall brand integration outside of

Paul Dawalibi:

just skins. You know, could this have been integrated in fortnight? Absolutely. Right. I

Paul Dawalibi:

could see this being in in, in car radio in game is powered by Spotify, right, Spotify radio, or

Paul Dawalibi:

whatever I there's a lot of ways to do have done this in fortnight, but I suspect the key for

Paul Dawalibi:

Spotify was probably more control over the experience, which I think they would get with a

Paul Dawalibi:

Roblox versus a fortnight and to a demographic that they're that is more valuable to Spotify

Paul Dawalibi:

today, because I think fortnight still does trend a little bit older than Roblox.

Jeff Cohen:

I'm curious, do you think? And maybe, I don't know if you caught this in the article. Do

Jeff Cohen:

you think that Spotify built this internally? Did they have a third party dev build this did because

Jeff Cohen:

Roblox doesn't. You can't go to Roblox at the brand and say, Hey, build this for us. Correct. I

Jeff Cohen:

think it has to be built. You know, it's user generated. So third party, maybe they used an

Jeff Cohen:

agency or something like that. Like I wonder if how they actually logistically contracted that

Jeff Cohen:

because we've talked about this in the past. We're going to see so many more brands enter the

Jeff Cohen:

metaverse. How do they actually do that? Like who is building this? Spotify presumably doesn't

Jeff Cohen:

employ game developers?

Paul Dawalibi:

Exactly right now it's not in the article. It doesn't really say they did say they,

Paul Dawalibi:

one of the experiences like the virtual beat maker stations powered by company called Soundtrap. But

Paul Dawalibi:

like the overall experience clearly was produced out I have Spotify and the nice thing about Roblox

Paul Dawalibi:

is you know, there's 300,000 Plus developers who build content for Roblox and that's everyone from

Paul Dawalibi:

you know, your 15 year old girl who's building something for her and her friends to you know

Paul Dawalibi:

professional development teams that that build content just for this so the developer community

Paul Dawalibi:

exists for Roblox and I think that also is a lot easier for Spotify because you you control more

Paul Dawalibi:

right with with fortnight. It's really epics show. It really is depend on Epic for all of these

Paul Dawalibi:

activations. Epic builds the activations with Roblox, that third party developer community, I

Paul Dawalibi:

think makes a big difference. Yeah. Any other thoughts on this before we move on?

Jeff Cohen:

No, I mean, the only thing I guess the only other thing I was going to be curious about.

Jeff Cohen:

And neither of us I don't think I've gone into this activation yet was just how upfront they are

Jeff Cohen:

about pushing, you know, pushing subscriptions. Like I wonder if they break the immersion, where

Jeff Cohen:

it's like, hey, click, click on this ad to subscribe. Like, I'm just curious about the

Jeff Cohen:

attribution. Because I'm wondering what the, you know, how are people that are, like, Are people

Jeff Cohen:

advertising, seeing the ROI in these metal versus when they're when they're invested?

Paul Dawalibi:

I mean, there's always going to be, you know, metrics that can be tracked, like KPIs

Paul Dawalibi:

that are measurable, like, you know, how much time people spend and how many songs they listened to,

Paul Dawalibi:

and things like that. And there's going to be intangible brand, you know, kind of awareness that

Paul Dawalibi:

that they're going to get, I think there's way longer conversation here of how do you connect

Paul Dawalibi:

virtual, like a Metaverse to the real world in some way. And um, in this case, I'm not sure you

Paul Dawalibi:

have to write like in an ideal world. Spotify exists in the metaverse capital M, right. And you

Paul Dawalibi:

never need the metal the Spotify app in the real world because you're spending so much of your time

Paul Dawalibi:

in the metaverse and so that, that account that you know that that creation happens all in the

Paul Dawalibi:

metaverse and the use of the software happens all in the metaverse, but that taking a user today

Paul Dawalibi:

from the metaverse to the real world, I agree is, you know, still needs to be figured out. Let's

Paul Dawalibi:

move on. Jeff, let's let's talk about Nintendo for a second here and Nintendo, specifically, the

Paul Dawalibi:

former Nintendo of America president. And this is, I think, surprised both of us when we saw this.

Paul Dawalibi:

The headline here is former Nintendo icon Reggie. This is Reggie fece Ma, who's the former Nintendo

Paul Dawalibi:

of America President wishes he could sell his Animal Crossing island on blockchain. It says the

Paul Dawalibi:

former Nintendo of America president also wished he could sell his Animal Crossing Animal Crossing

Paul Dawalibi:

Island. He's a fan of blockchain technology and played own games with the caveat that it quote

Paul Dawalibi:

unquote, makes sense for the player. So he this was at South by Southwest, just this year, that he

Paul Dawalibi:

believes that it's a compelling technology, and that it can be used to help power play to own

Paul Dawalibi:

experiences in games, letting players sell digital items they have earned or created in a video. So

Paul Dawalibi:

just let me finish the argument he makes is he's invested 300 hours in the game. Wouldn't it be

Paul Dawalibi:

great to monetize? You know what I've built when I decided to move on from that game? So we can spend

Paul Dawalibi:

a lot of time agreeing or disagreeing. Let me let me try and ask him there or question. What do you

Paul Dawalibi:

think of the former president of Nintendo saying this when Nintendo to my knowledge hasn't done

Jeff Cohen:

anything? wasn't? I wasn't even thinking that. I mean, let's try this. Nintendo

Jeff Cohen:

will probably get into blockchain when hell freezes over. Nintendo is historically like, no to

Jeff Cohen:

Korea, like they got into mobile like three years ago. Like so they Yeah, so Nintendo is, you know,

Jeff Cohen:

and Reggie obviously doesn't work for Nintendo anymore. But I think what's interesting here is

Jeff Cohen:

two things. Number one, Reggie is like an icon in the space right? And he the fact that someone who

Jeff Cohen:

is so entrenched in gaming is evangelizing for play to own is actually pretty important just

Jeff Cohen:

given what we know around kind of the the narrative of played own and kind of how gamers

Jeff Cohen:

have viewed it. So I think people like that sticking their necks out and I you know, hopefully

Jeff Cohen:

we'll see more streamers content creators people start getting in on this and getting on sides but

Jeff Cohen:

this will actually help you know, player just player player behavior and people's, the way

Jeff Cohen:

people perceive blockchain gaming, and people need to get on side with it and onboard with it not in

Jeff Cohen:

a slimy way and like, hey, a cash grab way like streamers can't be doing it. They need to be doing

Jeff Cohen:

your word in an authentic way. And I think what Reggie is saying here is valid. That's that's

Jeff Cohen:

number one. Number two that I thought was interesting. And maybe this is because Kotaku

Jeff Cohen:

wrote it, and they kind of have an axe to grind. They're calling it Plato. Right. So the way Reggie

Jeff Cohen:

is describing it, I think we're both on very much on board with where it's, you've put in 300 hours,

Jeff Cohen:

you've spent all this money, you want to own those assets, right, you feel like you've put in the

Jeff Cohen:

time you own the assets, and you want to sell them, you're not saying you're gonna make money,

Jeff Cohen:

you're not saying you're earning money on a daily basis, because you put in seven hours. So you

Jeff Cohen:

make, you know, $20 times seven, so you're making $140, it's no, I bought a bunch of stuff, I put a

Jeff Cohen:

lot of money and time into the ecosystem, I now moving on to a different game or whatever, I would

Jeff Cohen:

like to get some I own it, I think get some sort of value back. I think that is very valid. And

Jeff Cohen:

that's probably where the future of a lot of this, like that's a future I can I can very much buy

Jeff Cohen:

into. It's not played earn. It's not this kind of digital job that we've always been kind of very

Jeff Cohen:

negative on. So those are my two takeaways.

Paul Dawalibi:

Yeah, I mean, it's definitely shocking coming from anyone associated with

Paul Dawalibi:

Nintendo or even formerly associated with Nintendo, because it really is anti Nintendo,

Paul Dawalibi:

right? Like, this is just not how they think about gaming. And they're definitely not on the cutting

Paul Dawalibi:

edge of anything. Other than maybe mobile hardware, you could argue, but they're very much,

Paul Dawalibi:

you know, focused on IP and characters and story and, you know, the things that you don't usually

Paul Dawalibi:

associate with play to earn play to own kind of games, where I disagree with you a little bit.

Paul Dawalibi:

Jeff, and it's a it's a subtle disagreement, because I agree, play to own is, I could argue

Paul Dawalibi:

better than played or earn, because it's just about, you know, while you put in the hours

Paul Dawalibi:

anyways, it why not, you know, be able to sell it when I'm done with the game or whatever, like, why

Paul Dawalibi:

not own these items and have a market for them. I just think it's such a weak argument. Like it's

Paul Dawalibi:

such a weak argument for blockchain and gaming coming together. Because, look, you pay $60 for

Paul Dawalibi:

the game, you play the game for 50 hours. there for decades, there's no, you know, no expectation

Paul Dawalibi:

beyond, okay, I got 50 hours worth of entertainment. And I paid. All right, if I paid

Paul Dawalibi:

$50, I got 50 hours of entertainment, right? This is $1 an hour in terms of you know, in terms of

Paul Dawalibi:

cost, it's cheaper than going to the movies, right? That was the the argument for gaming for

Paul Dawalibi:

many, many years. It's cheaper than going to the movies because you get 100 hours out of the game.

Paul Dawalibi:

Now we're saying you put 100 hours into the game. Well, now you need to be able to sell your stuff

Paul Dawalibi:

at the end.

Jeff Cohen:

Okay, but let me let me make a counterpoint. So for 100 years, you could buy a

Jeff Cohen:

game, you go to GameStop, you pay $6. You play it, you'd like oh, that was great. I enjoyed it. You

Jeff Cohen:

could go back to GameStop. And you could sell it for 15 $20. Right? That was always the case. Yep.

Jeff Cohen:

How is that different? If you are spending money in game? Historically, you've always been at you

Jeff Cohen:

know, you've spent 20 $40 on skins. You've never had a way to sell that back. How is it that how is

Jeff Cohen:

that that different? Right.

Paul Dawalibi:

It's a good point. I just and I'm not saying it's an invalid argument, because I

Paul Dawalibi:

agree, there is a benefit to the player. I agree. I just don't think it's so compelling. That you

Paul Dawalibi:

know, entire game companies industries are going to, you know, stop the presses and change

Paul Dawalibi:

everything tomorrow, right? Like, again, gamers are going to be clamoring for this. Like I said,

Paul Dawalibi:

this a crypto Bahamas we have not found the killer app yet. Reggie has not. For you know, all in. I'm

Paul Dawalibi:

not saying him coming out. And saying this about blockchain technology isn't important isn't

Paul Dawalibi:

positive. It's just, this is not groundbreaking. Gamers are not all of a sudden gonna go, Wait a

Paul Dawalibi:

second, I'm not going to play a game anymore. Unless I can sell it at my items at the end. No

Paul Dawalibi:

one is going to have that moment. It's not a strong enough argument on its own. It is better.

Paul Dawalibi:

There is value to the player. But it's not compelling enough, I think to stand on its own.

Paul Dawalibi:

And Nintendo is not going to be as you pointed out, I think very astutely, he's not going to be

Paul Dawalibi:

the one leading the way. Even though they could right like so much of what they do is about the

Paul Dawalibi:

art and the character like NF T's are a perfect fit of so much. I don't know if you remember what

Paul Dawalibi:

amiibos you know, the amiibos which they still use for some of their games could be NF Ts. Like

Paul Dawalibi:

there's so much about Nintendo's gaming library and the way they do gaming. That is a good fit.

Paul Dawalibi:

it. And I see why Reggie would have made a statement like this because it is a good fit.

Paul Dawalibi:

Let's move on let's talk about we've got three stories here I want to put together, Jeff. And

Paul Dawalibi:

actually now before we get to that, I want to talk about this. Because this is an interesting

Paul Dawalibi:

infrastructure story. And this is Argent in the news, which is a French word or money, aqua, defy

Paul Dawalibi:

wallet origin raises 40 million and takes aim at gaming. And so this is fabric ventures, co founder

Paul Dawalibi:

investment for meta planet led the rays, they're going to use the cash to build new gaming

Paul Dawalibi:

infrastructure as advice to become a crypto Super App. I've never heard that term actually up until

Paul Dawalibi:

now. And the CEO said we want to be the de facto wallet for gaming. So Series B $40 million. I'm

Paul Dawalibi:

very finance centric, according to the article, but they want to they want to be the wallet that

Paul Dawalibi:

people use in games. For NF T's virtual real estate, any kind of transaction in game. Instead

Paul Dawalibi:

of connecting through something like the existing wallets, more more sort of general purpose

Paul Dawalibi:

wallets, they want to be the infrastructure layer for gaming. What do you think of this? And, you

Paul Dawalibi:

know, what do you think generally of that infrastructure layer play within gaming as it

Paul Dawalibi:

pertains to crypto.

Jeff Cohen:

So it's tough. I mean, without digging into the tech, it's a bit hard to say, to me what

Jeff Cohen:

like wallets are an incredibly important piece of the tech stack within within crypto. And whoever

Jeff Cohen:

creates kind of the default wallet for crypto is obviously gonna be a, you know, probably worth

Jeff Cohen:

$100 billion, it'll be the Pay Pal of kind of crypto, I'm just not sure that it needs to be

Jeff Cohen:

verticalized. Like we've had this conversation in the past with regards to, you know, like NFT

Jeff Cohen:

trading platforms, and I was actually pretty bullish that like, there would be a it would

Jeff Cohen:

become a verticalized market where like, there is some value to having a marketplace that is only

Jeff Cohen:

specific to games. I'm just not sure I'm seeing the use case of why the wallet has to be specific

Jeff Cohen:

to games. Almost, it seems like that would be worse. Like I want one wallet where I can buy

Jeff Cohen:

whether it's a profile pic NFT or a gaming NFT or just buying crypto or, you know, exchanging for

Jeff Cohen:

Fiat, like, I'm sure there's a use case that I'm missing here, but I'm not sure I could think of

Jeff Cohen:

one like why why did you need to have a verticalized wallet for gaming?

Paul Dawalibi:

I think your your insights good. That for the consumer, it doesn't like there's no

Paul Dawalibi:

difference really, right? Where I think there's difference and why you see more vertical focus

Paul Dawalibi:

solutions is because it's the other side, that's different, highly differentiated, right? The ease

Paul Dawalibi:

of integration. And again, your game, for example, right? building tools and API's specifically for

Paul Dawalibi:

game developers. So you know, they can write two lines of code and they're done. versus maybe a

Paul Dawalibi:

wallet that's not specific to games, and doesn't have you know, plugins for Unity and Unreal, and

Paul Dawalibi:

you know, all this kind of stuff that you may do. If you're urgent and not as someone else that I

Paul Dawalibi:

mean, it's more I think, on the developer side that you may see the difference. But I agree from

Paul Dawalibi:

a consumer standpoint, it feels like this may be worse, like if I if I ended up having 25 wallets.

Paul Dawalibi:

I feel like we've gone backwards. Like it's not

Jeff Cohen:

like I have a credit card that I use for seamless. And then a credit card I use for

Jeff Cohen:

Uber and a credit card I use for hotels, some people might if they get good points, but like

Jeff Cohen:

most people don't. That's what

Paul Dawalibi:

I mean, people are trying even though like in college traditional finance to

Paul Dawalibi:

connect to gamers, right, like a credit card for kids right to spend their money on gaming. Like

Paul Dawalibi:

you see some of that. I really think this comes down to more of a deeper infrastructure play in

Paul Dawalibi:

building tools. I would I would suspect if they're going to be successful for the game developers to

Paul Dawalibi:

make it like that simple where they don't need to think about anything. It's right. Like they insert

Paul Dawalibi:

a line of code and everything's taken care of for them that that to me is where a vertical play like

Paul Dawalibi:

this makes sense.

Jeff Cohen:

Yeah. And maybe it becomes maybe they become the pipes where it's like a they just build

Jeff Cohen:

some really good like API that connects the game like Unity to Metamask or whoever the dominant

Jeff Cohen:

wallet ends up becoming because yeah, I just think you're going to create a ton of it's already

Jeff Cohen:

actually in the neck to do anything in crypto in terms of wallets. So the last thing you want and

Jeff Cohen:

just knowing you know how these gaming everything every bit of friction is so optimize. Like, the

Jeff Cohen:

last thing you want is someone who wants to like they're playing your mobile game. And all of a

Jeff Cohen:

sudden, they you want them to do an in app purchase. And it's like, oh, actually go download

Jeff Cohen:

this wallet into your iPhone, you fund it via another crypto wallet, come back to the game like

Paul Dawalibi:

65 character address, right? Like, yeah, like,

Jeff Cohen:

find your like, you know, logging key. And then 35 minutes later, like, come back and

Jeff Cohen:

play with it. You're literally like, no one's gonna do that. Yeah, so yeah.

Paul Dawalibi:

Yeah, it'll be interesting to watch. Like, they just raised 40 million. So a lot

Paul Dawalibi:

of, you know, a lot of dry powder to build cool things. So we'll see. I like the idea of

Paul Dawalibi:

standardization in general. So you know, hopefully they build something that becomes a standard.

Paul Dawalibi:

Let's talk about this article from GamesBeat. Which, you know, it's one of those where I think

Paul Dawalibi:

both of us were not surprised. But it's still like you have to talk about it just because of how

Paul Dawalibi:

crazy things are right now. The headline here is blockchain game pitches are flooding into game

Paul Dawalibi:

VCs. What they're saying basically, I'll summarize the article that blockchain related game companies

Paul Dawalibi:

are getting a ton of funding right now from VCs and VCs are seeing mostly blockchain related

Paul Dawalibi:

games. It says here, Blockchain related game companies receive a third of all games startup

Paul Dawalibi:

funding, 120 companies received 1.2 billion just in the first quarter of this year. And obviously,

Paul Dawalibi:

that means they're hot. But I think what was more interesting for me was at as part of this article,

Paul Dawalibi:

it says, one investor indicated that 90% of the inbound pitches at one game VC were blockchain

Paul Dawalibi:

related. And then anywhere from 50 to 90% of the pitches coming into gaming VCs involve blockchain

Paul Dawalibi:

games in some way. So you know, they call this a forward indicator, right? That maybe even though

Paul Dawalibi:

blockchain based games that only received a third of all funding in the first quarter of this year,

Paul Dawalibi:

given how many pitches are now blockchain based games, that may change drastically. What do you

Paul Dawalibi:

make of this, Jeff, like other than the fact that we should all be starting a blockchain based game

Paul Dawalibi:

up and

Jeff Cohen:

certainly still grow that it is still remarkable to me? That it just seems like the

Jeff Cohen:

whole capital markets side of gaming has decided that this is the future. But gamers haven't gotten

Jeff Cohen:

the memo yet, right? Like we always talk about this and use the size of the blockchain gaming

Jeff Cohen:

pant like audience currently is just so small relative to like, mobile gaming console gaming,

Jeff Cohen:

general get and like, it's almost like, you almost want to be contrarian and be like, Hey, we should

Jeff Cohen:

be investing in great games, companies that are just building games, because the valuations on

Jeff Cohen:

those are probably come way down. And let's face it for the next five to five plus years, your

Jeff Cohen:

those are probably the companies that are going to get the most users be profitable. Whereas you have

Jeff Cohen:

all this capital and all these people chasing a trend that we all think is coming, but but

Jeff Cohen:

decidedly is not here. And they're just the users are not here, right? So it's like, I don't know,

Jeff Cohen:

at some point, like, give me a really good mobile gaming company are really good. You know, like,

Jeff Cohen:

give me the next attention impact. And like, let me let me invest in that or the next Elden ring.

Jeff Cohen:

Right. And that's what I would want to fund not the 10,000 web to developer that wants to move

Jeff Cohen:

into web, right.

Paul Dawalibi:

I mean, it's such an interesting insight and thought, you know, I want to bring it

Paul Dawalibi:

down for a second, because you said valuations are probably lower. In terms of like, early stage like

Paul Dawalibi:

startup, you're probably right. Because everyone's focused on the blockchain based games, right?

Paul Dawalibi:

Everyone's fighting over those deals, valuations are probably crazy, that the five man development

Paul Dawalibi:

shops that are trying to raise, you know, seed rounds today, probably are undervalued, where,

Paul Dawalibi:

where you're not seeing low valuations is like the other end, right? Like if you're, if you're an

Paul Dawalibi:

existing studio that has has already had, you know, a hit or two, those are selling for crazy

Paul Dawalibi:

valuations still, because there's so many buyers for Game Studios these days, including crypto

Paul Dawalibi:

companies. Yeah. But you're right, like the VCs may be getting ahead of themselves, or maybe

Paul Dawalibi:

choose choosing a winner that the world has not chosen yet. Right. And, and, and but it's because

Paul Dawalibi:

I feel like the thesis is easy to make right? Tons of interest in crypto tons of money to be made

Paul Dawalibi:

there. Tons of interest in gaming, tons of money to be made there. The two together must be great.

Paul Dawalibi:

And I buy that. Obviously I'm a believer in that where I have a bit of a stop sign that other VCs

Paul Dawalibi:

aren't seeing I think is Okay, but what does that intersection actually look like? Right? Because we

Paul Dawalibi:

haven't figured that out yet. No one has not any of these companies pitching has figured that out

Paul Dawalibi:

yet. The actual business model that is the intersection of these two, other than just selling

Paul Dawalibi:

crypto services to the gamers, which you know, any crypto company can do not necessarily a blockchain

Paul Dawalibi:

based gaming developer. No one has figured that out yet. And so they're betting on a future that

Paul Dawalibi:

is a little bit uncertain, which I guess is what VCs do. But betting in a really big way without

Paul Dawalibi:

any hedge, call it in traditional gaming. You're right. I mean, the more I'm thinking about it, and

Paul Dawalibi:

the more I hear you talking about, I'm like, we need to go start a venture fund that invests in

Paul Dawalibi:

only old fashioned games, right? Try to share Yeah. traditional sports. Traditional gaming.

Paul Dawalibi:

Yeah. Yeah, right. Like maybe maybe there's a, because you're right, even if they're all

Paul Dawalibi:

spectacularly right, about played, earn, play to own any of these things. It's still a few years

Paul Dawalibi:

before we really see, you know, the fruits of all this, and, and so, definitely a place for

Paul Dawalibi:

traditional games. I can't believe I'm even calling that using that term. But what do you

Paul Dawalibi:

think this statistic will look like? If we have this conversation? Six or 12 months from now,

Paul Dawalibi:

Jeff, like, do you think it's a blip, you think this is going to be sustained?

Jeff Cohen:

I think it will be sustained for six to nine months and will definitely be sustained. I

Jeff Cohen:

think there might be a point where we have like the we had the whatever the term is like the

Jeff Cohen:

trough of disillusionment, where if we don't start seeing, and I think we kind of had this

Jeff Cohen:

conversation and maybe a few weeks ago, where it's like, what, when do we start to get concerned that

Jeff Cohen:

we're not seeing a mega hit in this space? Maybe it's about that six to 12 months from now, like,

Jeff Cohen:

if, if none of these projects are starting to hit? I do think at some point VCs are gonna panic and

Jeff Cohen:

be like, Okay, well, we've, we've put all this capital out there, no one's playing the game.

Jeff Cohen:

Yeah. And then maybe they transition out of gaming, and a lot of the tourists that kind of

Jeff Cohen:

came into the space end up going out, and maybe people pick it back to like, traditional gaming.

Paul Dawalibi:

I will say that there does come a point with venture though where, and I know, I'm

Paul Dawalibi:

gonna get, you know, comments on this. But there does come a point where it's too big to fail from

Paul Dawalibi:

a total money invested standpoint, right? Like, when you have the biggest investors the Andreessen

Paul Dawalibi:

is the Sequoia is putting billions and billions and hundreds of deals across the entire industry

Paul Dawalibi:

in a single quarter. Right. Like, it gets to a point where there's just too many at bats chant,

Paul Dawalibi:

there's statistically some of them will be successful, and it becomes too big to fail as a

Paul Dawalibi:

sort of a an effort, you know, combined effort from VCs. And I think we've reached that point

Paul Dawalibi:

already, where there's just too many too much money in the system. Some of these will work. Now,

Paul Dawalibi:

they may not look exactly the way they do today, or they may not, you know, they may figure out

Paul Dawalibi:

something different two years from now, but the reality is, there's already too much effort people

Paul Dawalibi:

resources, dollars in the system. Some of these will be successful. On that note, Jeff, that wraps

Paul Dawalibi:

up this week's episode. Thank you. As always, thank you guys for listening tuning in every week.

Paul Dawalibi:

Make sure to go subscribe, follow the podcast on whatever app you find us on, whether it's Spotify,

Paul Dawalibi:

or Apple podcasts or Google Play or Stitcher or wherever, make sure you hit that follow button,

Paul Dawalibi:

leave a review and most most importantly, share the podcasts. If you love this specific episode,

Paul Dawalibi:

send it in an email, share it on social media, with your friends, your colleagues really

Paul Dawalibi:

appreciate that it's the way the podcast is grown. And it means a lot to us, Jeff, thank you. Thank

Paul Dawalibi:

you all for tuning in. Don't forget guys, the future is fun. We'll see you next week.

Unknown:

Thanks for joining us here on meta business. Make sure to subscribe to this podcast

Unknown:

everywhere you get your podcasts, leave a five star review and tell your friends, family and

Unknown:

colleagues all about us. Also, make sure to follow metta TV on all socials to get more of the best

Unknown:

Metaverse content anywhere. Tune in every week for another episode of meta business

Links

Chapters

Video

More from YouTube