Interview about how the blockchain underlies the future development of the gaming industry. Answers from Jared Psigoda, the CEO of BitGuild!
Hello Jared! You have an interesting game development background. As I know, many game developers start doing this as a hobby. Is that true for you?
I’ve been a gamer for as long as I can remember. I got my start on an old DOS computer that my dad brought home from work when I was three years old. Later, I got into the consoles such as Nintendo, Sega Genesis, the stuff like that. I have always been very competitive, and that carried over into gaming. I played Starcraft, Warcraft III, and Counter-Strike semi-professionally. I was also a huge MMO fan, and played Asheron’s Call, Ultima Online, Everquest I & II, then eventually World of Warcraft. At one point, I was the Guild Master for the number one guild in the world for Everquest II. Back then I was gaming close to twenty hours a day. Needless to say, it started to affect the other aspects of my life!
I made my first dollar from gaming when I was thirteen years old. I had been playing Asheron’s Call and my character had accumulated more pyreals (the game’s in-game currency) than I could spend. On a whim, I decided to list these on Ebay, and I made about $35 from that sale. It was an amazing discovery to me then that there were people willing to pay real money for virtual items. I started buying and selling more and more accounts, items, and game equipment on eBay, and I made enough to buy myself a top-of-the-line gaming computer, which was a big deal to me at the time!
After college, I realized that the virtual item trading industry was starting to become a real business. I happened to be in China at the time studying abroad, which was also where a lot of virtual items were being “farmed” (or “mined.”) I feel I was in the right place at the right time, and so I was able to start up my first company, R2Games, which created an exchange to buy and sell game items. We scaled up that company to around 100+ people.
Can you tell us about R2Games? What are some of your achievements as a CEO that you are proud of?
After struggling for years working in virtual currency sales, a “grey market” business where we were in constant battle with huge game publishers who loved nothing more than to ban our accounts for playing their game the way we wanted to, my partners and I decided it would be a good idea for us to try and make our own games. Free-to-play gaming was quickly growing in China and Korea, but it hadn’t picked up much steam in the US yet. Asian companies had started to try promoting their games to Western audiences at the time, but the translations were terrible, item pricing was way too high, and the marketing campaigns didn’t make any sense. R2 started as a game publisher, and our primary business model was to license, localize, and publish these games outside of their home territories. I remember clearly sitting in front of an Excel spreadsheet for three weeks translating the first game myself!I decided to make our own games when free-to-play gaming was quickly growing in China and Korea, but it hadn’t picked up much steam in the US yet. – Jared Psigoda Click To Tweet
Over the years, R2Games eventually scaled to 250+ employees with offices across the world and over 80 million registered users on the platform. We published games in over a dozen languages. I’m most proud of the team we built, consisting of employees from over 15+ countries. In addition, we did not take in any funding before we took the company public, which means we learned how to make the best of what little resources we had available.
You were a virtual currency enthusiast long before Bitcoin. What were these currencies?
The first currencies I started trading were all game-related, starting in 1999 with Ultima Online, Asheron’s Call, and Everquest. I traded both the soft currencies for these games (gold, pyreals, and plat), as well as digital items such as armor, weapons, and more (PLAT was chosen for our own token name in reverence to EverQuest, a game which I feel really made the MMORPG genre what it is today).
World of Warcraft came out while I was in college, which really took the RMT (Real Money Trading) industry to a whole new level. While studying abroad in China, I built up my first real business providing gold, power leveling, and item procurement services for RMT platforms around the world.
I guess that because I spent so much time on video games when I was young, the concept of a virtual currency being worth real money came very natural to me. I still remember having a very hard time trying to explain to my parents and friends why anyone would spend $100 to buy a virtual sword…
When did you first hear about the blockchain? How did it happen?
I actually heard about Bitcoin and the blockchain back in 2010 or 2011. Believe it or not, some of the earliest pioneers in cryptocurrencies were gold farmers! As we had been “mining” video game gold for years, many people in RMT understood the concept of cryptocurrency very quickly. Some of my friends had even started their own mining operations (I’ve got plenty of stories of lost hard drives).
Unfortunately, as R2Games was showing early signs of success, I did not really have the time to focus on much else, and I missed out on the first wave of blockchain and cryptocurrency hype.
It wasn’t until 2017 that I got involved full-time with the blockchain. I was in Los Angeles on other business, and had sent a message to Brock Pierce to see if he wanted to grab lunch (Chairman of the Bitcoin Foundation and a long-time friend from RMT and gaming). He invited me over to his house, which was full of guys and gals sitting on laptops talking passionately about blockchain technology. All I can say was the energy in the room was infectious, and it wasn’t long before I had a great group of guys teaching me the ropes. I spent the next several months researching everything I could about blockchain and cryptocurrencies, participating in several great projects along the way.
Towards the end of 2017, I started doing a lot of thinking about building our own cryptocurrency rather than just participate in others. While I had several ideas which we could have ran with, I didn’t feel strongly enough about any of them myself to take that first step. When the CryptoKitties game came out, I immediately realized that blockchain games could be revolutionary:
• By combining game design with the blockchain and smart contract technology, we would be able to design games that wouldn’t otherwise be possible.
• Blockchain games could solve the real problems that players and developers face.
• The experience and skillset for building such a platform meshed perfectly with our RMT / gaming backgrounds.
• It was exciting!
After that, I was all in on BitGuild!
What are some blockchain projects that you invested in at early stage?
I’m fairly picky when it comes to projects I invest in. The two major areas I focus on are what I call 3rd-gen blockchains (blockchain projects that solve for scalability) and projects with clear and fast practical applications. I was an early investor in both EOS and WAX. I’ve also invested in a few other interesting projects that I can’t announce yet.
Tell us about your current project, BitGuild. What goals do you plan to achieve here?
We’ve been working in the gaming industry for a long, long time, and have done our best to be on the forefront of new business models. It used to be that if you wanted to play a game, you went down to your local store and bought one for $50, then played it to your heart’s content. In the late 1990s, the “subscription model” was released (mostly for MMORPGs),where, after purchasing a game, you had to spend another $15 a month to actually play it. I still remember trying to explain this to my mom when she bought me a copy of Ultima Online. It didn’t make any sense to her then (and probably still doesn’t to this very day).
Along with MMORPGs came the concept that in-game items could be sold for real-life money. This may not seem like a big deal now, but I need to re-emphasize how unbelievable of a concept this was 20 years ago. Whenever I told anyone that I sold video game gold on eBay for a living, 9 times out of 10 I was met with the response: “What kind of idiot would pay real money for virtual coins?” (They probably didn’t buy Bitcoin…)
Free-to-play gaming was revolutionary to our industry, onboarding millions of new gamers who could never see themselves going out and actually “buying” a game. F2P gaming relies on a business model allowing as many players into a game as possible for free, then charging them for items or power-ups within that game. Free-to-play was laughed at originally by “real” game developers who were building AAA titles for the PC and consoles. They weren’t prepared when mobile gaming became the largest industry segment, and F2P came to dominate it.I honestly feel that blockchain gaming will be the next major evolution after free-to-play. – Jared Psigoda Click To Tweet
I am seeing a lot of the same things I did 10 years ago when we tried to discuss free-to-play with Western developers. They just didn’t get it. There are very few cross-discipline teams out there now who understand both blockchain technology and gaming. The aim of BitGuild is to develop the blockchain gaming ecosystem. We plan to do that by first working with developers to define what exactly a “blockchain game” is (utilizes smart contracts, tokenizes in-game assets, allows for free trade, etc.). We then need to build the platform and tools (wallet, exchange, community, etc.) for their games to be published on our platform. All they should need to focus on is creating a great game, while we strive to take care of the rest.
How did you come up with such an idea? Why did you decide to build a complete platform instead of implementing some local blockchain solutions in games?
We want to do as much as we can to:
• Introduce new users to blockchain technology
• Support the efforts of indie game developers
• Provide a collection of the most fun games for players
We feel that we are only able to create the most positive change for the industry by creating a platform (as opposed to just a game). In addition, our background was in creating a global platform with dozens of games in multiple languages. Utilizing PLAT (over ETH) allows players and developers to enter on the ground floor of what we hope will be a next-generation gaming project. In addition, there is a strong chance that we will migrate to a 3rd-generation blockchain in the future.
In general, what is your forecast for the gaming market in the next 2-3 years? Which genres will dominate the market?
The gaming industry is huge, and there will always be different types of games and different business models existing simultaneously. I am not of the perspective that all games should be put on the blockchain. That being said, there are certain types of games we will see built on the blockchain that couldn’t be built anywhere else (collectible trading card games, simulation games, next-gen strategy games, etc.)
I am also very bullish on eSports and expect to see some really cool eSport/blockchain combination projects coming out soon. I’m also a big fan of eSports games like League of Legends, PUBG, and Overwatch personally!
I remain a bit hesitant on free-to-play; it will still probably be the largest market segment for the next couple of years, but I think developers are going to start to struggle as they push the limits on what players are willing to accept with aggressive microtransactions and DLC. In addition, it is becoming more and more expensive to market games, especially on mobile. Apple and Google take 30% of game developers’ revenue while selling them billions of dollars in ad space a year. Talk about centralization…
Do you think AAA game developers are interested in blockchain implementation? It doesn’t seem that they would want to lose control of the in-game assets.
I don’t think AAA developers will be the first to implement the blockchain into their games. They don’t need to. They didn’t need to for F2P. I see blockchain games getting their start from small indie developers who are really looking for an opportunity to build something new and cool.
You claim that blockchain will disrupt the gaming industry. What imperfections of gaming will be avoided by the implementation of the blockchain? How will you achieve this?
The coolest thing about blockchain games, in my opinion, is the ability for players to truly own all of their in-game assets. Where in a traditional game, when a monster is killed, it will “drop” a piece of equipment that a player can pick up and store in his inventory. This inventory is nothing more than a database on the developer’s servers that states, “Item X belongs to Player A.” This means that when you leave the game, all items and currencies stay. Many developers have gone so far as to bar any trade from happening in their games in an effort to maximize their profits.
In a blockchain game, when a monster is killed, it will also “drop” a piece of equipment. The difference is, technically speaking, this piece of equipment is actually being “sent” to the player over the blockchain. It ends up in his/her wallet and nobody can take it away. Players will be able to buy, sell, and trade their items as they see fit, and in the future some gamers might even be able to make a living by playing games.The coolest thing about blockchain games is the ability for players to truly own all of their in-game assets. – Jared Psigoda Click To Tweet
On the other end of the equation, the blockchain has the potential to solve many big problems for game developers and publishers. I don’t want to mention all of them here, but I think the most important one is fraud. Game companies spend millions of dollars a year combating fraud. There is a vibrant stolen credit card industry out there and a lot of that money flows into games. Paypal and credit card providers don’t recognize virtual assets at all, and anytime a customer calls them and says “I didn’t buy that in-game item,” the purchase is refunded immediately and the publisher fined. To combat this, game companies must hire massive customer support teams and spend millions on anti-fraud technology, and in the end they still must decline a large number of orders. With the security of blockchain transactions, this cost can be reduced to zero.
What added value will PLAT tokens bring to in-game assets?
PLAT will be the universal currency used on the BitGuild platform. Games will accept it, developers will earn it, and players will buy, sell, and trade with it. PLAT will be used to fund games in the design house and participate in events and promotions on the platform. We may also provide developers with a certain amount of PLAT to “drop” in their game to bring in new players (in lieu of a more traditional marketing approach).
How easy is it to implement PLAT tokens in existing games?
While it would be negligible to take a traditional F2P (free-to-play) browser game and allow users to make purchases in that game with PLAT, our goal is not to replace fiat currency as a recharge method in traditional games. Our vision is to build an entire new class of games that live on the blockchain. We will be focusing on building new games rather than trying to move existing games onto the blockchain.
Do you have any potential competitors in your space? What do you do different from them?
I feel that we are still in the nascent stages of this industry. The number of blockchain games out there can be counted on two hands, and they are all very similar in design philosophy. We haven’t even really began to scratch the service of what can be built with this technology. While there are a few white papers out there for more platform-like gaming projects, we haven’t seen anyone doing quite what we are yet.
What is the main benefit for players using BitGuild-based games?
I think the games will have to speak for themselves! Our goal is to host the best blockchain games out there on our platform and provide all the necessary tools for players in order to have the best gaming experience possible.
What are the benefits for game devs? How do you plan to kickstart their games on your platform?
For the specific benefits, I recommend reading our whitepaper. I think the main things are no fraud, no 30% channel fees, support with localization, marketing, customer support, etc. We are a blockchain company and profit is not our sole motivation! We want developers to be able to focus on building great games while we take care of the rest.
As a new platform, we will have some very special offers for the first developers to come onboard.
Do you already have agreements with some developers? Which ones?
We already have several first and third-party game developers around the world working on developing blockchain games for the BitGuild platform.
Specifics regarding these partnerships will be released in the near future.
Can you tell us something about your team at BitGuild? Who has some notable experience in relevant industries?
Our entire team comes from the gaming industry! Curtis, Mikhail, and myself have all spent 10-20 years each making and publishing games. We’ve worked on PC games, console games, and free-to-play. I have worked on several cryptocurrency projects from the business/investment side, while Mikhail has been researching the technology for several years, most recently building a decentralized exchange platform.
How do your advisors help the development of the company? Can you tell us about some of the cases when advisors played a crucial role?
The blockchain industry is not like any other industry out there. It’s not just a new technology… it’s not just a new business model… its technology, business, economics, finance, sociology, philosophy all combined into one. It has the potential to change everything. Anyone who plans to be a serious participant in this industry needs to do their homework, and it is well known that many of the most successful individuals in the blockchain don’t sleep all that much. There is so much to learn, think, and dream about.
Our advisors consist of some of the top minds in gaming and the blockchain from both the East and the West. They have firsthand experience in building successful gaming and blockchain companies, and they all have valuable insights on how this industry could evolve over the next decade. They are great sounding boards for us to run ideas by and we’re lucky to have them.The blockchain industry is technology, business, economics, finance, sociology, philosophy all combined into one. It has the potential to change everything! – Jared Psigoda Click To Tweet
Are there any courses you recommend for both game and blockchain developers who want to start their journey towards a big game studio right now?
Cryptozombies.io! This is fantastic! Major props to the guys who created it!