Episode 24

full
Published on:

9th May 2022

24. Spotify In Roblox, Nintendo Blockchain, Crypto Wallets For Gamers, Blockchain Gaming Pitch Explosion

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

Transcript
Unknown:

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

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

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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

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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.

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About the Podcast

META Business
From the metaverse to the boardroom...
Meta Business tackles the most important Metaverse industry news. Business experts dissect and discuss all of the hottest topics and happenings, from a unique C-suite perspective.

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Paul Dawalibi