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
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
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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,
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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.
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