In-game purchases enhance the gaming experience and create profit for game developers. But what if they were also an investment for gamers?
Los Angeles-based game technology studio Mythical Games is trying to make that happen by bringing NFTs into the gaming world. As blockchain technology and the gaming industry both see a surge in interest, their combination may have been inevitable.
Mythical, started three years ago with the explicit purpose of making blockchain a part of gaming, is one of several companies distributing NFTs through video games, along with Chain Games and B-Side Games.
Nicole Yang, the company's VP of marketing, said the company initially struggled to figure out how to even explain blockchain – the underlying technology that verifies crypto transactions – to consumers. Now, there's "an insane amount of energy and awareness" around the technology and NFTs.
On Wednesday, Mythical announced it raised a $75 million Series B round, bringing the total amount raised to $120 million. The round, led by WestCap, will be used to grow "Blankos Block Party" — the company's first game — as well as expand to more gaming platforms and develop future projects.
"Blankos Block Party" is an open-world party game where players can play mini games with friends and create their own levels. The Open Beta version of the game is available to download for PC.
Blankos are designed by Mythical Games in collaboration with artists and can be compared to collectible vinyl toys.
What separates Blankos from similar party games is that each playable character, called a Blanko, is a unique NFT owned by the player, with the potential to appreciate in value. Blankos are designed by Mythical Games in collaboration with artists and can be compared to collectible vinyl toys. Other items owned in the game, such as clothing, are also sold as NFTs. Current Blanko players collectively own more than 100,000 NFTs, and there is no limit to how many a single player can possess.
To make a profit, players can resell their Blankos within the company's "Mythical Marketplace," which recently went into alpha testing. Yang said said certain factors can contribute to the appreciation of a Blanko's value, including when it was created, the scarcity of the model and what the Blanko has done in the game. The NFTs are sold on the EOS.IO blockchain and use the Proof of Authority algorithm to validate each transaction.
Some, including influential blockchain site Cyptopedia, have raised concerns that integrating gaming with blockchain could cause game developers to focus more on the investment opportunity and less on quality of gameplay.
Yang said gameplay is their priority, and that players could come into the game with no intention of touching the blockchain and still have a fulfilling gaming experience.
"I think there's this intersection of people that are gamers that are going to come into it, which we've definitely seen," she added. "[And] we have people that are more on this game entrepreneurship side, who maybe are less engaged with the core gameplay of the product but very interested in the NFT aspect of it. For us, it's a welcome space."
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Mobile games featuring Harry Potter, Jurassic Park and the Teenage Mutant Ninja Turtles will soon be on the same roster when L.A.-based mobile game publisher Jam City goes public and acquires Montreal-based Ludia, creating a $1.2 billion gaming juggernaut.
Jam City announced Thursday it is going public through a merger with special purpose acquisition company (SPAC) DPCM Capital, which is led by former Uber senior VP of business Emil Michael. The merger will then allow Jam City to purchase Ludia for $175 million.
Jam City co-founder Josh Yguado said market consolidation in the mobile gaming space was the catalyst for the deal.
"If we're going to continue to be a leader and a consolidator in this space, it's going to require more dry powder," Yguado said in an interview. "Raising this money right now enables us to do this deal, and then also have additional, again, dry powder to continue to do more deals in the future," he said.
The combined company will have about $115 million in cash for other mergers and acquisitions and to develop more original games.
The deal comes during an explosive time for the gaming industry which saw a surge in users during the pandemic as people were forced to stay indoors. The value of the gaming industry topped $300 billion with 2.6 billion players globally, according to a report released in April by Accenture.
Investor interest has followed. Market analyst InvestGame reported that in the first quarter of 2021, $39 billion was invested in the gaming industry, compared to $33 billion in all of 2020. Game-maker Roblox also went public earlier this year.The gaming industry is expected to exceed $205 billion in revenue by 2023, according to Newzoo.
Related: What is a SPAC?
Since Yguado founded the company with My Space co-founder Chris DeWolfe in 2010, Jam City has based its growth strategy on acquiring games and producing original ones for a broad audience. Yguado said about half of the company's games are original. The other half are based on licensed Hollywood intellectual property, including Disney and Harry Potter.
Ludia's model is similar. The publisher will bring its Jurassic World and Teenage Mutant Ninja Turtles games, in addition to others, to Jam City platform.
Yguado said he's known Ludia President Alex Thabet for many years and they've discussed ways to work together.
"I think that the opportunity right now when their games are doing so well and they have such a great pipeline of new games and we're really at the same position, felt operationally and strategically the right thing to do at the right time," he said.
Jam City and Ludia games have been downloaded 1.3 billion times as of December 2020 and have 31 million monthly active users. The two companies also generated a combined 3 billion total hours played and 9 billion advertising impressions last year. An average of more than 1 million players spend about $45 each month playing Jam City games.
Yguado said while Jam City saw a boost in new player acquisition during the pandemic in the second and third quarters of last year, there has been "sustained performance" since then, creating a new baseline for continued growth.
More and more people are consuming entertainment on mobile devices and games are one of the most popular apps on those devices. Mobile gaming is set to grow faster than any other segment in entertainment, Yguado predicts.
"I think there will be a time when some of the words and universes and characters we're creating may live in other worlds, but that's not something that we're currently working on," he said. "There's so much opportunity in mobile games right now and in creating these mobile entertainment universes that we're really laser focused on at the moment."
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In the self-described "absurdist horror fantasy" video game Blaseball, almost anything goes: the antagonist in the first season was a giant peanut. A squid named The Monitor makes an appearance from time to time.
"When players die, they're usually incinerated by umpires," said Sam Rosenthal, founder and CEO of the video game startup behind Blaseball. "There's a lot of this dark absurdism."
Rosenthal said the baseball simulation game that lets players bet on fake teams and win currency went viral quickly after launching in July of 2020. On Tuesday, his Highland Park-based startup closed a $3 million seed round to expand into mobile.
Instead of playing baseball themselves, gamers place bets and vote on changes to the virtual league. Rosenthal compared his game more to the ESPN app than to a traditional video game. The "text-based game" flashes stats and score updates of the virtual league, but most of the drama comes from Blaseball's community of players, who make up stories and conspiracies about the simulated baseball games.
"Since it is so stripped down, the fans create their own artwork," he said, likening Blaseball to other tabletop role playing games like Dungeons & Dragons. "They show us what they think they're seeing."
Gamers can use their earnings to vote on whimsical changes to the sport like adding an extra base or dropping the number of strikes batters get in each inning.
The startup also uses that format — and its sense of humor — to weave in sponsorships from podcasts to video game brands to coffee subscription companies like Yes Plz. Apart from a crowdfunding campaign, which closed with Tuesday's round, sponsor deals remain the startup's primary business model.
"All the players have a favorite type of coffee that you can see in their stats page," Rosenthal said. "It's not like a programmatic ad; they're deeply embedded into the game."
Rosenthal started the company to build out his thesis project from USC's Games Program, which he called "Where Cards Fall," in which players solve logic puzzles to slowly build a house of cards. Each step unlocks new memories from the protagonist's past.
"We don't tell you too much and we ask the player to put the pieces together themselves," he said. "It has that in common with Blaseball."
Makers Fund is behind the startup's first fundraising round, which will be used to hire and adapt Blaseball to an app format, as well as other undisclosed projects. 1UP Ventures and Matthew Ball also participated in the round.
A previous version of this article stated the company will hire 15 employees. The Game Board will grow its team to 15 in total.