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Speaker 1: This is Bloomberg Crypto, a daily Bloomberg I Heard podcast,

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Speaker 1: and I'm Stacy Marie Ishmael, Managing editor of Crypto for

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Speaker 1: Bloomberg News. It's Tuesday, January Food. The relationship between crypto

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Speaker 1: and gaming is not always straightforward. Some gamers and some

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Speaker 1: game companies have outright rejected all things blockchain and crypto.

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Speaker 1: They say the environmental considerations haven't been fully addressed, and

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Speaker 1: that turning games into speculative investment opportunities just straight up

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Speaker 1: ruins the fund. Others are cautiously optimistic and experimenting with

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Speaker 1: things like in game n f t s. A smaller

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Speaker 1: number and a relatively vocal minority are absolutely committed to

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Speaker 1: making blockchain based games happen. Among those who were committed

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Speaker 1: in vocal well fd X and some bankman freed. Earlier

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Speaker 1: this year, ft X announced plans to start its own

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Speaker 1: gaming unit, a platform that would help games companies launch

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Speaker 1: their own tokens, dabble in n f t s, use

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Speaker 1: their infrastructure. F t X had also worked with a

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Speaker 1: handful of gaming startups to expand their gaming footprint in

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Speaker 1: other areas, but in the aftermath of the ft X meltdown,

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Speaker 1: many wondered what the future of those small companies might

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Speaker 1: look like. To make sense of the impact the ft

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Speaker 1: X meltdown has had on the gaming industry, we have

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Speaker 1: Bloomberg Report Hannah Miller, so we know that within Sam

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Speaker 1: Bankman Freed's empire there was the synthesis on gaming, both

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Speaker 1: through ft X Ventures and through this ft X gaming

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Speaker 1: operation they were developing. Yea, yeah, Hatt, welcome back to

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Speaker 1: the show. Thank you for having me remind our listeners

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Speaker 1: what you're up to. Yeah. So, I am based in

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Speaker 1: San Francisco. I'm on the Crypto and Tech teams, and

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Speaker 1: I cover crypto startups and venture capital, what's going on

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Speaker 1: with crypto startups and venture capital in general. But today

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Speaker 1: we're going to talk specifically about the crypto gaming ecosystem. Now,

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Speaker 1: partly because I love video games and I have the

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Speaker 1: ability to do this, We've had a lot of conversations

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Speaker 1: about about crypto and gaming on the show. We've heard

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Speaker 1: from our colleague Emily Nicole, We've heard from our colleagues

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Speaker 1: cecil A Donastasio, and one of the things that you

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Speaker 1: know they've been clear on is it's not the case

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Speaker 1: that there is a universal agreement or disagreement on the

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Speaker 1: relationship between crypto and games. What have you observed in

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Speaker 1: your reporting. Well, this is a really fun space to

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Speaker 1: write about. I too love video games, so it's been

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Speaker 1: really interesting talking to founders over the past few months

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Speaker 1: about their blockchain games, and I think I've seen some

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Speaker 1: really big changes in terms of how people are looking

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Speaker 1: at blockchain gaming. I feel like when crypto was hot,

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Speaker 1: people were like, oh, yeah, this game is all about

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Speaker 1: n f t S, it's all about blockchain. You know,

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Speaker 1: we're we're ridding the wave here. But now it feels

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Speaker 1: like people want blockchain and fade into the background. You know,

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Speaker 1: they still want to use this technology, but they don't

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Speaker 1: want it to be in your face. So they've gone

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Speaker 1: from this is all about crypto to our favorite phrase,

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Speaker 1: the underlying technology. Who were some of the people, particularly

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Speaker 1: in the venture space, who had been promoting the idea

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Speaker 1: of blockchain gaming and crypto, whether from an underlying technology

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Speaker 1: perspective or otherwise. Well, one of the first names that

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Speaker 1: comes to mind is Sam bankmn freed Um. Yeah, we've

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Speaker 1: all heard about his role in the spectacular collapse of

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Speaker 1: f t X, but what some people might not realize

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Speaker 1: is that he was super into gaming. He was actually

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Speaker 1: playing League of Legends during calls with major investors like Sequoia,

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Speaker 1: and they thought this was super cool at the time,

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Speaker 1: But in hindsight, I think it kind of shows, you know,

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Speaker 1: his flippancy towards this space and you know the work

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Speaker 1: that he was doing, and raises a red flag. He

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Speaker 1: was also playing Storybook roll during some recent Twitter spaces,

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Speaker 1: neither of which are blockchain based. I would note, Yeah,

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Speaker 1: he loves story book brawls so much that FTX acquired them. Now,

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Speaker 1: So ft X, it sounds to me like ft X

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Speaker 1: was thinking about gaming in a couple of different ways.

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Speaker 1: They were promoting blockchain gaming. They had a hundred million

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Speaker 1: dollar fund with light Speed to support the Solana gaming ecosystem,

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Speaker 1: and they straight up both games. Why other than SPF's

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Speaker 1: own interest here, Yeah, I think a lot of people

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Speaker 1: see gaming as an important front here within blockchain This

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Speaker 1: is a way too easily on board regular consumers. It's

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Speaker 1: a fun way to get people involved with things like

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Speaker 1: n FT and crypto tokens. But it's been really interesting

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Speaker 1: to balance that with the backlash that blockchain gaming has

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Speaker 1: faced among regular gamers and regular gaming companies. So yes,

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Speaker 1: there was a lot of passion um in promoting these

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Speaker 1: blockchain gaming projects, but at the same time founders and

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Speaker 1: investors had to contend with regular gamers just kind of

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Speaker 1: shaking their fists in the air and saying we don't

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Speaker 1: want them, we don't want blockchain in our backyard. Now,

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Speaker 1: let's be clear, gamers do not only shake their fists

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Speaker 1: in the air. This was just like a vocal opinion

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Speaker 1: as that I'm just describing myself. But you know, I

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Speaker 1: remember so after the story Book Rowl acquisition, they got

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Speaker 1: review bombed, right, like a lot of angry gamers were like,

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Speaker 1: this game sucks. Nothing had changed other than the owners.

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Speaker 1: So we're talking about a passionate community. Now what are

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Speaker 1: some of the objections of this vocal segments of gamers

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Speaker 1: to the existence of crypto and games specifically. Yeah, I

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Speaker 1: think the big question is why do we need crypto

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Speaker 1: in gaming and is there really a point here? And

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Speaker 1: a lot of people have looked examples like ACTI Infinity

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Speaker 1: and they're like, well, this is just defy wrapped in

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Speaker 1: crappy graphics, Like this isn't fun, This is just a

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Speaker 1: way for people to make money. This is just a

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Speaker 1: way for people to profit. It's not actually something that's

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Speaker 1: improving my experience in gameplay. One of the more interesting

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Speaker 1: hires that f t X made prior to everything was

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Speaker 1: a person named Amy Wou. Tell me more about Amy Wu. Yeah,

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Speaker 1: Amy Wou, big name and venture capital like super hot,

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Speaker 1: rising star. You know, she had been at light Speed

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Speaker 1: before going over to really help oversee ft X Ventures,

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Speaker 1: and any founder I've spoken to who's worked with her

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Speaker 1: has just said how smart she is, that she knows

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Speaker 1: how to ask tough questions, she knows what numbers to

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Speaker 1: ask for, and that she's also you know, someone who

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Speaker 1: invests in you will keep that relationship going look out

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Speaker 1: for you, you know, even after you know she's moved

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Speaker 1: places like you know, I spoke to people who she

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Speaker 1: invested in them through light Speed, but it was still

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Speaker 1: like a good contact for them. When she was at

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Speaker 1: FTX Ventures and a big part of her portfolio at

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Speaker 1: light Speed and then later at FTX was gaming correct. Yeah,

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Speaker 1: she she was a huge force there in terms of um,

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Speaker 1: you know, investing in gaming startups. And we also know

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Speaker 1: within ft X there were it was a separate division

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Speaker 1: that was working on gaming, you know, stuff to do

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Speaker 1: with gaming infrastructure. It was still in a pretty nascent stage,

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Speaker 1: and a lot of the founders I spoke to or like, yeah,

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Speaker 1: we found it interesting, but it didn't seem like they

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Speaker 1: were ready to start working with us, or like, we

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Speaker 1: already have all of infrastructure in place, so we didn't need,

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Speaker 1: you know, that technical support they're offering. So we know

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Speaker 1: that within Sam bankman Fried's empire there was the emphasis

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Speaker 1: on gaming, both through ft X ventures and through this

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Speaker 1: ft X gaming operation they were developing. Not to mention

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Speaker 1: that Alameda Research, the Trip crypto trading firm he helped

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Speaker 1: found before f t X, they were also extremely active

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Speaker 1: gaming investors. So you've got all of these different, explicitly

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Speaker 1: and implicitly interconnected bits of the f t X empire.

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Speaker 1: Now they're all in bankruptcy. What does this mean for

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Speaker 1: the founders they invested in? What does it mean for

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Speaker 1: the founders for the games they acquired? Yeah, so it

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Speaker 1: was interesting talking to founders about this, you know, especially

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Speaker 1: those who had received equity investments from either Alameda or

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Speaker 1: f t X. So with the bankruptcy proceedings, it seems

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Speaker 1: like though that you know, those shares of equity will

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Speaker 1: be up for grabs so these companies and projects could

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Speaker 1: still could soon have new owners just to recap an

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Speaker 1: equisy investment. Is in exchange for boatloads of money from

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Speaker 1: either Alameda or f t X or fd X Ventures,

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Speaker 1: they offered shares in their companies back to these folks. Yeah. Yeah,

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Speaker 1: And so it was interesting talking to the founders because

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Speaker 1: some of them they're like, I have no idea what's

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Speaker 1: going to happen. You know, I think, yeah, like these

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Speaker 1: shares are going to go up, you know, with with

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Speaker 1: everything else that's you know, involved in this bankruptcy. But

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Speaker 1: it's very interesting to think that, yeah, they could have

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Speaker 1: new owners who scoop up these shares on the cheap,

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Speaker 1: which is a lot of uncertainty for the companies involved.

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Speaker 1: For sure, are the game's going to survive? Yeah, everyone

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Speaker 1: I spoke to is super confident, and yes, they see

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Speaker 1: this as a setback for the whole industry. And some

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Speaker 1: of them have had to make serious changes. Um. Just

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Speaker 1: even before the collapse of ft X, they were doing layoffs,

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Speaker 1: tightening budgets. Um. You know, some founders at all costs

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Speaker 1: are saying, you know, I don't want to cut salaries,

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Speaker 1: I don't want to let people go I'm working on

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Speaker 1: every option to make sure that doesn't happen. I'm trying

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Speaker 1: to raise funding from my investors. Up next, more from

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Speaker 1: Bloomberg REPORTSA Hannah Mila on what the collapse of FTX

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Speaker 1: has meant for the crypto gaming industry. We'll be right back.

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Speaker 1: I want to switch slightly to talk about game stuff.

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Speaker 1: An incredible rally in game Stop to day ignoring all valuations,

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Speaker 1: all fundamental game Stop of course for the last three

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Speaker 1: days into today, up more than eighty percent. As those

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Speaker 1: message coordinators was hero of the meme stock revolution, decided

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Speaker 1: to become involved in crypto in different ways. We're talking

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Speaker 1: about getting into n f t s. They had a

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Speaker 1: deal with f t X where they would sell f

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Speaker 1: t X gift cards. Yeah, no, they had to. Is

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Speaker 1: this deal with f t x UM, like you said

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Speaker 1: to you know, sell the gift cards as this partnership,

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Speaker 1: and it seems unclear what is going to happen here

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Speaker 1: with that. I've reached out to game Stop, have not

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Speaker 1: gotten not heard back from them, But it is interesting that,

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Speaker 1: I mean, this was a big, high profile partnership the

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Speaker 1: game Stop and f t marketplace. Like other marketplaces, UM

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Speaker 1: has seen sales decline, and whether the ft X name

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Speaker 1: will taint them moving forward is a big, big possibility.

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Speaker 1: In a similar vein to their partnerships with I would

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Speaker 1: describe that as like a traditional gaming retailer. F t

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Speaker 1: X sponsored an E sports company called t s M.

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Speaker 1: I think it was one of their larger deals, was

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Speaker 1: like more than two million dollars in gaming rights. So

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Speaker 1: I have had a theory, which I think of a

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Speaker 1: spouse on this podcast, that there isn't a lot of

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Speaker 1: room between like gaming and crypto, not because those things

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Speaker 1: should necessarily be related, but because they tend to appeal

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Speaker 1: to similar kinds of people in the sort of the

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Speaker 1: grand scheme of East Sports, game Stop, etcetera. Do you

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Speaker 1: think that some of this was like just f t

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Speaker 1: X marketing being like, we want to get in front

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Speaker 1: of people who might want to trade on our platform

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Speaker 1: in addition to them all being die hard gamers themselves. Yeah,

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Speaker 1: I mean the the E sports deal that was a

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Speaker 1: really big team or is a really big team, So

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Speaker 1: to to get on board with them, I think was

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Speaker 1: a huge play. And again just part of ft X

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Speaker 1: is giant push to get to infiltrate mainstream consciousness and

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Speaker 1: with yes, I do think this comes from a personal

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Speaker 1: passion and personal interest from Sam Bankman Freed. But there

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Speaker 1: also is a lot of hype about blockchain gaming within

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Speaker 1: this space. Even during this crypto winter, you know, we've

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Speaker 1: seen resilience among crypto venture capital investing in blockchain gaming.

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Speaker 1: You know, there are these these n FT deals still happening.

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Speaker 1: You know, there are still gaming companies that use blockchain

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Speaker 1: who are scoring big valuations and raising funds, so and

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Speaker 1: even speaking to investors, you know, they see blockchain gaming

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Speaker 1: is a way for the space to survive and even

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Speaker 1: regain whatever legitimacy it had before ft X is collapse.

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Speaker 1: One area that sometimes gets conflated with blockchain gaming is

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Speaker 1: the metaverse. If as you may have to do in

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Speaker 1: your stories or to your relatives, Like if you were

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Speaker 1: to explain the difference between these two and on who

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Speaker 1: they're trying to appeal to, what would you say? Yeah,

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Speaker 1: it's a it's always a tough thing to explain, but yeah,

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Speaker 1: the metaverse. I I always describe it as a more

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Speaker 1: immersive version of the Internet, you know, like maybe it'll

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Speaker 1: use virtual reality, augmented reality, where you can see the

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Speaker 1: digital world that you're in around you, and I always

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Speaker 1: mentioned the movie Ready Player one or the book to

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Speaker 1: you know, I think that's like people's idealized version of

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Speaker 1: the metaverse in some ways dark stuff in some ways, yes,

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Speaker 1: very bleak in different ways. I think people would see

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Speaker 1: like what the the end, the end vision of that

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Speaker 1: metaverse as being the ideal, not not what it is

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Speaker 1: the majority of the book and movie. But with that,

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Speaker 1: crypto advocates have kind of stepped in this space by

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Speaker 1: arguing that that world should run on blockchain, that there

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Speaker 1: should you know, the currencies, the assets that you use

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Speaker 1: in the game should be based on blockchain because it

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Speaker 1: allows gamers to actually hold and own, um these things

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Speaker 1: that they're using in these virtual worlds. And a big

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Speaker 1: person who has invested in those kinds of games in

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Speaker 1: the metaverse and who stands to benefit potentially from the

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Speaker 1: decline of FTX and sound backmen freed is Yatsu and

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Speaker 1: Anamoca tell our listeners just a little bit about the

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Speaker 1: Anamoca empire. Amoka is huge, you know, it's it's based

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Speaker 1: in Asia. Yatsu has just been an incredible force within

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Speaker 1: the industry in terms of helping to develop blockchain games,

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Speaker 1: invest in blockchain games, so Anamoca uh is an investor

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Speaker 1: in Accine Infinity or in sky Mavis, the developer Vaccine Infinity,

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Speaker 1: and it also owns the Sandbox, which is the super

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Speaker 1: popular Well they wanted to be right beca see I

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Speaker 1: remember you writing that we had like five daily active users. Yeah,

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Speaker 1: well there was this report that they had that and

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Speaker 1: I spoke to Yatsu about it and wrote an article. Um,

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Speaker 1: and you know, he explained that there are other ways

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Speaker 1: to measure engagement in the Sandbox versus you know, blockchain

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Speaker 1: transactions and buying stuff in you know, the marketplace. And

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Speaker 1: you know, he even said something like, you know, in

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Speaker 1: virtual worlds, you'll be able to have metrics like gross

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Speaker 1: domestic product, and NAT will show you know what engagement

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Speaker 1: looks like and your jobs created. Even so, it's it's

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Speaker 1: been very interesting to kind of see how people form

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Speaker 1: their conceptions of what success means in blockchain gaming. I

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Speaker 1: think what on Amoka has done, what Yatsu has done,

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Speaker 1: is really help lift up some of the biggest names

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Speaker 1: in blockchain gaming currently. And with actin Infinity, you know

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Speaker 1: that obviously broke a lot of barriers, but I think

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Speaker 1: it's they see it as sort of like the first

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Speaker 1: step maybe not necessarily the future, right, because as you

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Speaker 1: put it so memorably at the beginning, it was like,

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Speaker 1: is this DeFi just wrapped in crappy geffics. The idea

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Speaker 1: is to play that game. You were essentially like minting

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Speaker 1: tokens and engaging in micro transactions and trying to get

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Speaker 1: a return on those micro transactions. Whereas something like Storybook

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Speaker 1: Brawl Is actually fun had no crypto elements at the

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Speaker 1: time of its acquisition, but could foreseeably support things like

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Speaker 1: you mentioned where you have in game n f t

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Speaker 1: s or others. So it seems like there's a spectrum

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Speaker 1: of ways to think about what blockchain and games could

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Speaker 1: look like. Definitely, Yeah, we're still figuring out what exactly,

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Speaker 1: uh this space could look like. And you know, when

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Speaker 1: I talked to blockchain gaming enthusiasts, they say, Okay, there

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Speaker 1: are developers coming over, There are big name companies that

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Speaker 1: are sort of softening their stance and getting interested in

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Speaker 1: you know, n f t s and blockchain. So we'll

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Speaker 1: see what happens. But I do think what's happened with

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Speaker 1: f t X, and considering f t X as presence

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Speaker 1: in the blockchain gaming space, there have been setbacks and

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Speaker 1: that might delay, you know, mainstream acceptance of crypto games.

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Speaker 1: If any of our listeners are big fans of crypto games,

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Speaker 1: send us an email at Crypto at Bloomberg dot net

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Speaker 1: and tell me and Hannah what we should be playing. Hannah,

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Speaker 1: thank you for being on the show. Thank you for

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Speaker 1: having me. You can find more of Hannah Miller's reporting

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Speaker 1: on the Bloomberg Terminal and on Bloomberg dot com. And

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Speaker 1: if you do have a recommendation for your favorite block

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Speaker 1: Dame game, make sure to email us at Crypto at

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Speaker 1: Bloomberg dot net. This is Bloomberg Crypto at Daily podcast

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Speaker 1: from Bloomberg and I Heart Radio. For more shows from

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Speaker 1: I Heart Radio, visit the I Heart Radio app, Apple Podcasts,

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Speaker 1: or wherever you get your podcasts. Send us your comments,

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Speaker 1: questions or suggestions for the show to Crypto at Bloomberg

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Speaker 1: dot net. The supervising producer of Bloomberg Crypto is Vicky

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Speaker 1: very Galina. Our senior producer is Janet Babin. Our producers

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Speaker 1: are Mohammed Farouk and Sharon Barriro. Our associate producers are

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Speaker 1: Ty Butler and Moses on Them. Desta wonder At is

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Speaker 1: our engineer original music by Leo Sidron. I'm Stacy Maria Shmael.

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Speaker 1: We'll be back tomorrow.