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Speaker 1: This is Bloomberg Crypto, a daily Bloomberghart podcast, and I'm

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Speaker 1: Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News.

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Speaker 1: It's Friday, November twenty Hey, y'll Stacy Marie here. Because

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Speaker 1: of the Thanksgiving holiday in the US, we are representing

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Speaker 1: one of our previous recordings for the holiday. If you're celebrating,

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Speaker 1: I hope you have a good day. Thanks for listening.

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Speaker 1: I used to argue, I still sometimes argue that you

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Speaker 1: could divide folks into two categories, people who play video

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Speaker 1: games and everybody else. Gaming is bigger in revenue terms

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Speaker 1: worldwide than the film and television industries combined. It's also

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Speaker 1: a complex universe that's dealing with hard and necessary conversation

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Speaker 1: about things like who benefits from those record breaking profits,

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Speaker 1: whose work and whose labor, and under what conditions are

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Speaker 1: these profits being made? And as always, there's tough questions

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Speaker 1: about things like intellectual property. And that's before you even

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Speaker 1: add blockchain and n f t s into the mix.

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Speaker 1: Joining me now is Bloomberg Reports Cecilia Donastasio. The bigger

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Speaker 1: question is do gamers want their teams to look like capitalism?

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Speaker 1: She's going to discuss why and how crypto is showing

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Speaker 1: up in video games and why much of that gaming

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Speaker 1: community isn't necessarily a big fan of either technology. Cecilia,

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Speaker 1: thank you so much for joining us on the podcast today.

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Speaker 1: Thank you so much for having me. You are a

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Speaker 1: video games reporter at Bloomberg, And once I got over

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Speaker 1: my jealousy of the existence of video games reporters at

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Speaker 1: Bloomberg doing jobs that I was not doing, I started

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Speaker 1: asking the question, what is the intersection of crypto and

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Speaker 1: n f t s and video games? Yeah, it's a

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Speaker 1: huge question. So over the last couple of years, people

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Speaker 1: who have been involved in both the video game industry

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Speaker 1: and the world of crypto have looked at games and

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Speaker 1: thought to themselves, well, games have virtual currency and games

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Speaker 1: of virtual items. Crypto is a virtual currency and n

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Speaker 1: f t s are technology underpinning virtual items. What if

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Speaker 1: these two things were married. And it's been very interesting

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Speaker 1: to see how that has and has not played out.

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Speaker 1: How has it played out? Yeah, So we have seen

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Speaker 1: crypto games for several years. People say Crypto Kitties was

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Speaker 1: one of the first ones in two thousand and seventeen. Basically, um,

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Speaker 1: there are these virtual cats that were sort of symbolic

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Speaker 1: of real life value through crypto. And one of the

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Speaker 1: things that was pretty interesting with crypto Kitties was that

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Speaker 1: despite the fact that one pet might self for a

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Speaker 1: hundred thousand dollars, the equivalent of that in crypto, players

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Speaker 1: really bled out of crypto Kitties because, and we've seen

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Speaker 1: this several time time since then, there was an increasing

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Speaker 1: division between richer players who had enough money to buy

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Speaker 1: high value assets early on in the game high value cat,

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Speaker 1: high value cats. Sorry for calling cats assets people too. Yeah,

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Speaker 1: and these poorer players, though, who also, um, who were

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Speaker 1: not able to kind of scale the ladder and have

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Speaker 1: as much fun with the game. I want to kind

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Speaker 1: of go into a little bit more detail here because

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Speaker 1: I think it's fair to say we both play a

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Speaker 1: reasonable amount of video games, or perhaps an unreasonable amount.

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Speaker 1: I was about to it depends on your perspective, really, um.

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Speaker 1: And one of the things about video games is, you know,

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Speaker 1: a lot of them involve some kind of grind, right,

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Speaker 1: some kind of not fun, repetitive activity that you do

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Speaker 1: over and over again in order to get the loots

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Speaker 1: that lets you buy the swords that lets you do

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Speaker 1: the thing that you want to do with Crypto, there's

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Speaker 1: a dynamic in there that is also that also already

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Speaker 1: exists in traditional video games, which is the idea of

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Speaker 1: or you could spend money and buy the sword and

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Speaker 1: skip the grind. So you know, there's there's an existing

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Speaker 1: dynamic of the haves and the have nots in traditional

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Speaker 1: video games. Are you saying that it's it's worse in

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Speaker 1: Crypto or that it's like more aggressive in some way?

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Speaker 1: I love this question because I think that a lot

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Speaker 1: of gamers feel that are attracted to video games because

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Speaker 1: of this egalitarian element where you know, everyone bought the game.

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Speaker 1: People you know, go in with various skill levels, but

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Speaker 1: you know, if you spend enough time trying to grind

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Speaker 1: for gold in World Warcraft, you're gonna get gold in

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Speaker 1: the World of Warcraft, regardless of how how good you

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Speaker 1: are at the actual fighting in the game a lot

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Speaker 1: of the time. Um Crypto is a little bit different

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Speaker 1: because you do need that initial financial buy in a

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Speaker 1: lot of the time. So while there are people who

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Speaker 1: play Axie Infinity who are able to grind their way

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Speaker 1: into more and more valuable axes, people who start out

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Speaker 1: with a lot of money upfront do automatically have a

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Speaker 1: head start. But I think it's worth noting that people

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Speaker 1: have been purchasing high value assets and selling them inside

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Speaker 1: of video games for like a decade. So if that

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Speaker 1: is the case, and we we both know that to

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Speaker 1: be true, I will not confess which online video games

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Speaker 1: I may have spent too much time and I possibly

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Speaker 1: too much money and in a prior life, Why then

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Speaker 1: do we need things like blockchain based economies and games?

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Speaker 1: What are the arguments that these developers are making. There

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Speaker 1: are some really interesting arguments out there that, you know,

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Speaker 1: because micro transactions have become such a prominent business model

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Speaker 1: for video games, particularly ones where there's no initial buy

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Speaker 1: in free to play, you know, free to play exactly.

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Speaker 1: Players love these in game cosmetics. I too, am unwilling

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Speaker 1: to admit um what games I send what money in

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Speaker 1: in this regard. But ultimately there's this argument that you know,

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Speaker 1: you don't really own your those cosmetics. You don't own

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Speaker 1: the really awesome dragon mount in, for example, of Final

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Speaker 1: Fantasy fourteen that you might have, for example, spent some

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Speaker 1: money on in this store. So if you know, Square Annex,

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Speaker 1: the publisher which one day say all right, we're done

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Speaker 1: here with this game, like your mount disappears even though

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Speaker 1: they spent fifteen dollars, which has happened. Yes, the idea

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Speaker 1: of the blockchain technology is that it would allow you

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Speaker 1: to own the assets somehow, and maybe you could even

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Speaker 1: transfer that asset into another game. So if you have

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Speaker 1: your cool dragon mountain Final Fantasy fourteen, maybe you could

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Speaker 1: play with it in World of Warcraft. I have also

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Speaker 1: seen some game developers, and particularly people who draw assets

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Speaker 1: for video games, pulling their hair out on Twitter over

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Speaker 1: this argument, because God, what a owerous thing to do

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Speaker 1: to redraw everything. Let's just take a completely not related

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Speaker 1: to something I may have done in my own life example,

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Speaker 1: and let's say you had spent some large amount of

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Speaker 1: time building an extravagant apartment complex in you know, the

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Speaker 1: sims on desktop PC, and later in life you spent

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Speaker 1: some similarly extravagant amount of time customizing your island on

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Speaker 1: animal crossing on switch. In the idealized version of the

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Speaker 1: world pitched by these pro blockchain flu n f T developers,

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Speaker 1: I would be able to move to buy that real

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Speaker 1: estate and move it between games. Right, nothing should stop

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Speaker 1: me from being able to move these things between each

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Speaker 1: other In reality, those are totally different platforms, they're totally

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Speaker 1: different game publishers, they're totally different art styles, they're completely

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Speaker 1: different ecosystems. There's just no practical way that's possible. Yes,

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Speaker 1: And there is an argument that some gamers do you

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Speaker 1: want things that they work for in video games, since

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Speaker 1: they grind for to be redeemable for real life money,

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Speaker 1: and so I could sell my island, so you could

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Speaker 1: sell your island, And there is the argument that that

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Speaker 1: end is worth those complicated means I haven't seen, however,

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Speaker 1: a lot of gamers be particularly excited about that. There

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Speaker 1: have been big publishers who have launched initiatives along those

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Speaker 1: lines that have received um as. My colleague Jason Schryer

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Speaker 1: puts it more vitriol than anything he's seen in the

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Speaker 1: games industry since he started reporting on it, which is

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Speaker 1: a lot high. It's a very high bar. So here's

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Speaker 1: here's the thing about that. Though. If you do something

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Speaker 1: that is hard, labor intensive, time consuming, and then you

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Speaker 1: make money at the end, typically that is considered work.

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Speaker 1: And I played video games to be the opposite of work.

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Speaker 1: I don't want to monetize my video gaming because then

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Speaker 1: it becomes a job. And if I'm in an escapist

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Speaker 1: universe in which I'm spending dozens of hours on a

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Speaker 1: building houses, it's because I'm not trying to work. So

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Speaker 1: what is going on with this mechanic here where everything

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Speaker 1: is just becoming label? That's a really awesome thing to

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Speaker 1: bring up, you know. I think it's worth noting that

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Speaker 1: there are a lot of gamers out there who do

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Speaker 1: approach video games very seriously as if they were work.

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Speaker 1: When I go on a raid in Final Fantasy fourteen

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Speaker 1: and I'm with seven of my friends and we're trying

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Speaker 1: to be the same fight, you know, like eighty times,

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Speaker 1: that does require a kind of like work approach, but

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Speaker 1: it's for fun. I think you're right, and people really

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Speaker 1: do attach monetary compensation to the idea of labor. I

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Speaker 1: think the bigger question here is don't do gamers want

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Speaker 1: to approach their games as if their jobs? Because I

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Speaker 1: think a lot of gamers really do. The bigger question

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Speaker 1: is do gamers want their games to look like capitalism?

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Speaker 1: There are in these block handing games and particularly Acts Affinity,

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Speaker 1: there have been these guilds that have sort of spawned

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Speaker 1: where players who have more resources and higher value axes

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Speaker 1: or assets are able to farm out the actual gameplay

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Speaker 1: of these games. Two players who don't have as many

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Speaker 1: monetary resources, particularly in countries like the Philippines that were

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Speaker 1: hit quite hard by the pandemic, and those players kind

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Speaker 1: of sharecropper style will increase the value of the richer

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Speaker 1: players assets by playing video games. And I think you

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Speaker 1: know that's a different kind of work relationship that is

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Speaker 1: exacerbated by the fact that do you think that this

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Speaker 1: is a fact that a lot of these blockchain based

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Speaker 1: games right now aren't very fun yet. We'll be right

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Speaker 1: back with more on video games from Bloomberg Report to

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Speaker 1: Cecilia Denistaso. I want to go back to something that

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Speaker 1: you said earlier about you know, folks who've been doing

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Speaker 1: this for a long time. So Second Life, which is

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Speaker 1: you know, much like much like Eve, one of the

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Speaker 1: very earliest online spaces. The folks who take Second Life

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Speaker 1: very seriously, and there are still a lot of them,

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Speaker 1: would argue it was never really a game. It was

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Speaker 1: much more metaversy than necessarily video gaming. But you interviewed

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Speaker 1: there the executive chairman of Linden Labs, which is the

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Speaker 1: developer of Second Life, for the a Tech Summit hosted

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Speaker 1: by Bloomberg in San Francisco, and he was, you know,

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Speaker 1: less than convinced that blockchain and crypto had a role

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Speaker 1: not even justin video games, but also in the metaverse.

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Speaker 1: I'm just gonna play that clip really quickly, right. The

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Speaker 1: whole point of blockchain is that everybody knows everything. It's

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Speaker 1: a huge word document. Um So, if you if you

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Speaker 1: talk about an n f T and you put that

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Speaker 1: by definition and m T is on the blockchain, we've

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Speaker 1: got two point two billion items we transact. We can

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Speaker 1: transact in a one fifty a penny that does not

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Speaker 1: work on the blockchain. So, and the other thing about

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Speaker 1: blockchain is it is it dovetails with crypto, which um

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Speaker 1: we've talked in the past, which, as you know, I'll

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Speaker 1: use the word because I ask permission, is the apocalypse

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Speaker 1: and so um So, when I start thinking about metaverse, blockchain, crypto,

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Speaker 1: I see that as a future, but I think it's

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Speaker 1: as much of a risk as it is a positive.

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Speaker 1: I do want to just talk about that idea of

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Speaker 1: the metaverse a little bit more because when Microsoft announced

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Speaker 1: that it was going to try to buy Activision Blizzard,

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Speaker 1: one of the very first things that they said was like,

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Speaker 1: this is a big play on the metaverse, and you're like, how, like,

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Speaker 1: what is what is the relationship from your respective between

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Speaker 1: video games and the metaverse, even if you ignore n

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Speaker 1: f T s in crypto, that's a great question. So

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Speaker 1: we have seen articles for publications like the New York

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Speaker 1: Times that will refer to metaverse and virtual world kind

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Speaker 1: of interchangeably. There was, um notably, a New York Times

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Speaker 1: article in which two individuals got married in a so

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Speaker 1: called metaverse. Never mind those individuals happened to work for

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Speaker 1: the company. It was a real estate company that created

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Speaker 1: that virtual world. Details it in details, you know. This

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Speaker 1: really great book by a venture capitalist named Mathew Ball

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Speaker 1: came out just called The Metaverse, and he has the

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Speaker 1: definition of like the most a metaverse is a persistent

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Speaker 1: virtual world that is connected to other virtual spaces, that

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Speaker 1: has an economy, and also is able to be kind

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Speaker 1: of immersed in in some way. So whether that's through

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Speaker 1: you know, operating an avatar, or maybe you're walking around

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Speaker 1: it in virtual reality. That's that's how he defines a metaverse.

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Speaker 1: And by that definition, there is no meta not yet.

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Speaker 1: Tech companies don't really aren't really making moves to kind

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Speaker 1: of partner with each other as equals, to kind of

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Speaker 1: hitch their different virtual spaces together. What we see more

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Speaker 1: of is, of course, consolidation, one big tech company kind

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Speaker 1: of absorbing a smaller one. Metaverse right now is a

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Speaker 1: way for a lot of tech companies to describe their

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Speaker 1: sprawl of digital and physical apps, hardware that they used

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Speaker 1: to construct their virtual spaces, and their technological products that

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Speaker 1: they sell. And I would be really excited to see

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Speaker 1: if that ends up advancing into a true metaverse at

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Speaker 1: any point in any future, hopefully not a dystopian one,

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Speaker 1: just as a as a closing thought, games that get

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Speaker 1: described as metaverses are often like Fortnite, which has you know,

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Speaker 1: the consumables and the cosmetics that you described. You can

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Speaker 1: buy skins, you can buy suits, you can buy cool stuff,

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Speaker 1: you can create spaces, you can have a persistent character

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Speaker 1: that represents to you, and then you could like party

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Speaker 1: and listen to real world DJs, um Minecraft, roadblocks, similar

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Speaker 1: sorts of things, and those are also often the games

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Speaker 1: that are held up as well. What if you could

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Speaker 1: take your Fortnite outfit or the things you made in

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Speaker 1: micraft or roadblocks and you know, import those into other places.

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Speaker 1: What I'm hearing from you is those might have metaverse

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Speaker 1: like elements, but they don't fully fit the description yet.

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Speaker 1: They're not like fully realized entities in that way. Absolutely, Actually,

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Speaker 1: Minecraft developers came out really recently to say that they

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Speaker 1: will not be allowing n f T s in in

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Speaker 1: that game at all. That is a metaverse element to it,

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Speaker 1: The connecting video games in virtual worlds through assets that

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Speaker 1: you can kind of share for them. I would be

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Speaker 1: more curious to see. And this is more of like

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Speaker 1: this is more of a vestige of a truer metaverse.

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Speaker 1: Whether people will be able to bring avatars across different

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Speaker 1: video game properties, that feels a little bit unlikely, just

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Speaker 1: considering the fact that everything from art styles to video

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Speaker 1: game engines that provide the kind of software infrastructure for

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Speaker 1: video games to exist aren't necessarily synonymous between these properties.

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Speaker 1: But you know, people really believe in this thing. True.

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Speaker 1: Great place to stop. Thank you so much, Celia, Thank

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Speaker 1: you for having me on the next episode of Bloomberg.

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Speaker 1: Crypto venture capitalists and certain people in the music industry

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Speaker 1: seem to be enthusiastic about the potential for autists to

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Speaker 1: benefit from crypto technologies like the blockchain and n f

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Speaker 1: t s, but there isn't universal agreement, especially among musicians themselves,

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Speaker 1: that any of this is necessarily a good idea. Bloomberg

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Speaker 1: Reporto Luca Shole will join me from Los Angeles as

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Speaker 1: we continue our discussion about the decentralization of the music industry.

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Speaker 1: This is Bloomberg Crypto, a daily podcast from Bloomberg and

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Speaker 1: iHeart Deo. For more shows from I Heart Radio, visit

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Speaker 1: the I Heart Radio app, Apple Podcasts, or wherever you

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Speaker 1: get your podcasts. Send us your comments, questions or suggestions

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Speaker 1: for the show to Crypto at Bloomberg dot net or

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Speaker 1: find us on Twitter. We're at Crypto. The supervising producer

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Speaker 1: of Bloomberg Crypto is Vicky very Galina. Our senior producer

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Speaker 1: is Janet Babin. Our producer is Mohammed Farup. Our producer

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Speaker 1: is Sharon Burriro. Our associate producers or Zanam Sudiki, Thai

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Speaker 1: Buffalo and Moses and um Desta wonder At is our engineer.

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Speaker 1: Original music by Leo Sidrin. I'm Stacy Maria Schmo. We'll

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Speaker 1: be back tomorrow.