Speaker 1: I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News,
Speaker 1: and this is Bloomberg Crypto, a daily Bloomberg I hard podcast.
Speaker 1: It's Monday, August eighth. I used to argue, I still
Speaker 1: sometimes argue, that you could divide folks into two categories,
Speaker 1: people who play video games and everybody else. Gaming is
Speaker 1: bigger in revenue terms worldwide than the film and television
Speaker 1: industries combined. It's also a complex universe that's dealing with
Speaker 1: hard and necessary conversations about things like who benefits from
Speaker 1: those record breaking profits, whose work and whose labor, and
Speaker 1: under what conditions are these profits being made? And as
Speaker 1: always there's tough questions about things like intellectual property. And
Speaker 1: that's before you even add blockchain and n f t
Speaker 1: s into the mix. Joining me now is Bloomberg Reports
Speaker 1: to Cecilia Donastasio, the bigger question is do gamers want
Speaker 1: their teams to look like capitalism. She's going to discuss
Speaker 1: why and how crypto is showing up in video games
Speaker 1: and why much of that gaming community isn't necessarily a
Speaker 1: big fan of either technology. Cecilia, thank you so much
Speaker 1: for joining us on the podcast today. Thank you so
Speaker 1: much for having me. You are a video games reporter
Speaker 1: at Bloomberg, And once I got over my jealousy of
Speaker 1: the existence of a video games reports at Bloomberg doing
Speaker 1: jobs that I was not doing, I started asking the question,
Speaker 1: what is the intersection of crypto and n f t
Speaker 1: s and video games? Yeah, it's a huge question. So
Speaker 1: over the last couple of years, people who have been
Speaker 1: involved in both the video game industry and the world
Speaker 1: of crypto have looked at games and thought to themselves, well,
Speaker 1: games have virtual currency and games have virtual items. Crypto
Speaker 1: is a virtual currency and n f t s are
Speaker 1: technology underpinning virtual items. What if these two things were married.
Speaker 1: And it's been very interesting to see how that has
Speaker 1: and has not played out. How has it played out? Yeah,
Speaker 1: So we have seen crypto games for several years. People
Speaker 1: say Crypto Kitties was one of the first ones in
Speaker 1: two thousand and seventeen. Basically, um, there are these virtual
Speaker 1: cats that were sort of symbolic of real life value
Speaker 1: through crypto. And one of the things that was pretty
Speaker 1: interesting with crypto Kitties was that despite the fact that
Speaker 1: one pet might self for a hundred thousand dollars, the
Speaker 1: equivalent of that in Crypto, players really bled out of
Speaker 1: Crypto Kitties because, and we've seen this several times since then,
Speaker 1: there was an increasing division between richer players who had
Speaker 1: enough money to buy high value assets early on in
Speaker 1: the game, high volume, high value cats, calling cats assets
Speaker 1: people too. Yeah, and these poorer players, though, who also, um,
Speaker 1: who were not able to kind of scale the ladder
Speaker 1: and have as much fun with the game. I want
Speaker 1: to kind of go into a little bit more detail
Speaker 1: here because I think it's fair to say we both
Speaker 1: play a reasonable amount of video games, or perhaps an
Speaker 1: unreasonable amount. I was about it depends on your perspective really, um.
Speaker 1: And one of the things about video games is, you
Speaker 1: know a lot of them involve some kind of grind, right,
Speaker 1: some kind of not fun, repetitive activity that you do
Speaker 1: over and over again in order to get the loots
Speaker 1: that lets you buy the swords, that lets you do
Speaker 1: the thing that you want to do. With Crypto, there's
Speaker 1: a dynamic in there that is also that also already
Speaker 1: exists in traditional video games, which is the idea of
Speaker 1: or you could spend money and buy the sword and
Speaker 1: skip the grind. So you know, there's there's an existing
Speaker 1: dynamic of the haves and the have nots in traditional
Speaker 1: video games. Are you saying that it's it's worse in
Speaker 1: crypto or that it's like more aggressive in some way.
Speaker 1: I love this question because I think that a lot
Speaker 1: of gamers feel that are attracted to video games because
Speaker 1: of this egalitarian element where you know, everyone bought the game.
Speaker 1: People you know, go in with various skill levels, but
Speaker 1: you know, if you spend enough time trying to grind
Speaker 1: for gold in World of Warcraft, you're gonna get golden
Speaker 1: in World of Warcraft, regardless of how how good you
Speaker 1: are at the actual fighting in the game a lot
Speaker 1: of the time. Um Crypto is a little bit different
Speaker 1: because you do need that initial financial buy in a
Speaker 1: lot of the time. So while there are people who
Speaker 1: play Axie Infinity who are able to grind their way
Speaker 1: into more and more valuable axes, people who start out
Speaker 1: with a lot of money upfront do automatically have a
Speaker 1: head start. But I think it's worth noting that people
Speaker 1: have been purchasing high value assets in selling them inside
Speaker 1: of video games for like a decade. So if that
Speaker 1: is the case, and we we both know that to
Speaker 1: be true, I will not confess which online video games
Speaker 1: I may have spent too much time and im possibly
Speaker 1: too much money and in a prior life, Why then,
Speaker 1: do we need things like blockchain based economies and games.
Speaker 1: What are the arguments that these developers are making. There
Speaker 1: are some really interesting arguments out there that you know,
Speaker 1: because micro transactions have become such a prominent business model
Speaker 1: for video games, particularly ones where there's no initial buy
Speaker 1: in free to play, you know, free to play exactly.
Speaker 1: Players love these in game cosmetics. I too, am unwilling
Speaker 1: to admit um what games I spend what money in
Speaker 1: in this regard. But ultimately there's this argument that you know,
Speaker 1: you don't really own your those cosmetics. You don't own
Speaker 1: the really awesome dragon mount in, for example, of Final
Speaker 1: Fantasy four tea, and that you might have, for example,
Speaker 1: spent some money on in this store. So if you know,
Speaker 1: Square Annex the publisher which one day say all right,
Speaker 1: we're done here with this game, like your mount disappears
Speaker 1: even though you spent fifteen dollars, which has happened. Yes.
Speaker 1: The idea of the blockchain technology is that it would
Speaker 1: allow you to own the assets somehow, and maybe you
Speaker 1: could even transfer that asset into another game. So if
Speaker 1: you have your cool dragon mountain Final Fantasy fourteen, maybe
Speaker 1: you could play with it in World of Warcraft. I
Speaker 1: have also seen some game developers, and particularly people who
Speaker 1: draw assets for video games, pulling their hair out on
Speaker 1: Twitter over this argument, because God, what an ownerous thing
Speaker 1: to do to redraw everything. Let's just take a completely
Speaker 1: not related to something I may have done in my
Speaker 1: own life example, and let's say you had spent some
Speaker 1: large amount of time building an extravagant apartment complex in
Speaker 1: you know the sims on desktop PC, and later in
Speaker 1: life you spent some similarly extravagant amount of time customizing
Speaker 1: your island on animal crossing on switch. In the idealized
Speaker 1: version of the world pitched by these pro blockchain FLU
Speaker 1: and f T developers, I would be able to move
Speaker 1: to buy that real estate and move it between games. Right,
Speaker 1: Nothing should stop me from being able to move these
Speaker 1: things between each other. In reality, those are totally different platforms,
Speaker 1: they're totally different game publishers, they're totally different art styles,
Speaker 1: they're completely different ecosystems. There's just no practical way that's possible. Yes,
Speaker 1: and there is an argument that some gamers, do you
Speaker 1: want things that they work for in video games since
Speaker 1: they grind for it to be redeemable for real life money,
Speaker 1: and so I could sell my island, so you could
Speaker 1: sell your eye end, and there is the argument that
Speaker 1: that end is worth those complicated means. I haven't seen, however,
Speaker 1: a lot of gamers be particularly excited about that. There
Speaker 1: have been big publishers who have launched initiatives along those
Speaker 1: lines that have received um as. My colleague Jason Shire
Speaker 1: puts it more vitriol than anything he's seen in the
Speaker 1: games industry since he started reporting on it, which is
Speaker 1: a very high bar. So here's here's the thing about that, though.
Speaker 1: If you do something that is hard, labor intensive, time consuming,
Speaker 1: and then you make money at the end, typically that
Speaker 1: is considered work. And I played video games to be
Speaker 1: the opposite of work. I don't want to monetize my
Speaker 1: video gaming because then it becomes a job. And if
Speaker 1: I'm in an escapist universe US in which I'm spending
Speaker 1: dozens of hours on a building houses, it's because I'm
Speaker 1: not trying to work. So what is going on with
Speaker 1: this mechanic here where everything is just becoming label? That's
Speaker 1: a really awesome thing to bring up. You know. I
Speaker 1: think it's worth noting that there are a lot of
Speaker 1: gamers out there who do approach video games very seriously
Speaker 1: as if they were work. When I go on a
Speaker 1: raid in Final Fantasy fourteen and I'm with seven of
Speaker 1: my friends and we're trying to be the same fight,
Speaker 1: you know, like eighty times, that does require a kind
Speaker 1: of like work approach, but it's for fun. I think
Speaker 1: you're right, and people really do attach monetary compensation to
Speaker 1: the idea of labor. I think the bigger question here
Speaker 1: isn't do gamers want to approach their games as if
Speaker 1: their jobs, because I think a lot of gamers really do.
Speaker 1: The bigger question is do gamers want their games to
Speaker 1: look like capitalism? There are in these block handing games
Speaker 1: and particularly Acts in Affinity, there have been these guilds
Speaker 1: that have sort of spawned where players who have more
Speaker 1: resources and higher value axes or assets are able to
Speaker 1: farm out the actual gameplay of these games. Two players
Speaker 1: who don't have as many monetary resources, particularly in countries
Speaker 1: like the Philippines that were hit quite hard by the pandemic,
Speaker 1: and those players kind of sharecropper style will increase the
Speaker 1: value of the richer players assets by playing video games.
Speaker 1: And I think, you know, that's a different kind of
Speaker 1: work relationship that is exacerbated by the fact that do
Speaker 1: you think that this is a fact that a lot
Speaker 1: of these blockchain based games right now aren't very fun yet.
Speaker 1: We'll be right back with more on video games from
Speaker 1: Bloomberg Report to Cecilia Denistasu. I want to go back
Speaker 1: to something that you said earlier about you know, folks,
Speaker 1: we've been doing this for a long time. So Second Life,
Speaker 1: which is you know, much like much like Eve, one
Speaker 1: of the very earliest online spaces. The folks who take
Speaker 1: Second Life very seriously, and there's still a lot of them,
Speaker 1: would argue it was never really a game. It was
Speaker 1: much more metaversey than necessarily video gaming. But you interviewed
Speaker 1: there the executive chairman of Linden Labs, which is the
Speaker 1: developer of Second Life, for the a tech summit hosted
Speaker 1: by Bloomberg in San Francisco, and he was, you know,
Speaker 1: less than convinced that blockchain and crypto had a role
Speaker 1: not even justin video games, but also in the metaverse.
Speaker 1: I'm just gonna play that clip really quickly, right the
Speaker 1: whole point of blockchain is that everybody knows everything. It's
Speaker 1: a huge word document. Um So, if you if you
Speaker 1: talk about an n f T and you put that
Speaker 1: by definition and mt is on the blockchain, we've got
Speaker 1: two point two billion items we transact. We can transact
Speaker 1: in a one fifty of a penny that does not
Speaker 1: work on the blockchain. So, and the other thing about
Speaker 1: blockchain is it is it dovetails with crypto, which we've
Speaker 1: talked in the past, which, as you know, i'll use
Speaker 1: the word because I ask permission, is the apocalypse and so,
Speaker 1: um So when I start thinking about metaverse, blockchain, crypto,
Speaker 1: I see that as a future, but I think it's
Speaker 1: as much of a risk as it is a positive.
Speaker 1: I do want to just talk about that idea of
Speaker 1: the metaverse a little bit more because when Microsoft announced
Speaker 1: that it was going to try to buy Activision Blizzard,
Speaker 1: one of the very first things that they said was like,
Speaker 1: this is a big play on the metaverse. And you're like, how, like,
Speaker 1: what is what is the relationship from your perspective between
Speaker 1: video games and the metaverse, even if you ignore n
Speaker 1: f t s and crypto. That's a great question. So
Speaker 1: we have seen articles for publications like the New York
Speaker 1: Times that will for two metaverse and virtual world kind
Speaker 1: of interchangeably. There was, um notably, a New York Times
Speaker 1: article in which two individuals got married in a so
Speaker 1: called metaverse. Never mind those individuals happened to work for
Speaker 1: the company. It was a real estate company that created
Speaker 1: the virtual world. Details. It's in details, you know. This
Speaker 1: really great book by venture capitalist named Matthew Ball came
Speaker 1: out just called The Metaverse, and he has the definition
Speaker 1: of like the most a metaverse is a persistent virtual
Speaker 1: world that is connected to other virtual spaces, that has
Speaker 1: an economy, and also is able to be kind of
Speaker 1: immersed in in some way. So whether that's through you know,
Speaker 1: operating an avatar, or maybe we're walking around it in
Speaker 1: virtual reality. That's that's how he defines a metaverse. And
Speaker 1: by that definition, there is no metaverse. Not yet. Tech
Speaker 1: companies don't really aren't really making moves to kind of
Speaker 1: partner with each other as equals, to kind of hitch
Speaker 1: their different virtual spaces together, or what we see more
Speaker 1: of is, of course, consolidation, one big tech company kind
Speaker 1: of absorbing a smaller one. Metaverse right now is a
Speaker 1: way for a lot of tech companies to describe their
Speaker 1: sprawl of digital and physical apps, hardware that they used
Speaker 1: to construct their virtual spaces, and their technological products that
Speaker 1: they sell. And I would be really excited to see
Speaker 1: if that ends up advancing into a true metaverse at
Speaker 1: any point in any future, hopefully not a dystopian one,
Speaker 1: just as a as a closing thought, games that get
Speaker 1: described as metaverses are often like Fortnite, which has you know,
Speaker 1: the consumables and the cosmetics that you described. You can
Speaker 1: buy skins, you can buy suits, you can buy cool stuff,
Speaker 1: you can create spaces, you can have a persistent character
Speaker 1: that represents you, and then you could like party and
Speaker 1: listen to real world DJs, um Minecraft Roadblocks similar sorts
Speaker 1: of things, and those are also often the games that
Speaker 1: are held up as well. What if you could take
Speaker 1: your Fortnite outfit or the things you made in micraft
Speaker 1: or roadblocks and you know, import those into other places.
Speaker 1: What I'm hearing from you is those might have metaverse
Speaker 1: like elements, but they don't fully fit the description yet,
Speaker 1: they're not like fully realized entities in that way. Absolutely. Actually,
Speaker 1: Minecraft developers came out really recently to say that they
Speaker 1: will not be allowing n f t s in in
Speaker 1: that game at all. That is a metaverse element to it,
Speaker 1: the connecting video games in virtual worlds through assets that
Speaker 1: you can kind of share for them. I would be
Speaker 1: more curious to see. And this is more of like
Speaker 1: this is more of a vestige of a truer metaverse.
Speaker 1: Whether people will be able to bring avatars across different
Speaker 1: video game properties. That feels a little bit unlikely, just
Speaker 1: considering the fact that everything from art styles to video
Speaker 1: game engines that provide the kind of software infrastructure for
Speaker 1: video games to exist aren't necessarily synonymous between these properties.
Speaker 1: But you know, people really believe in this thing. True.
Speaker 1: Great place to stop. Thank you so much, Ceilia, thank
Speaker 1: you for having me on the next episode of Bloomberg.
Speaker 1: Crypto venture capitalists and certain people in the music industry
Speaker 1: seem to be enthusiastic about the potential for artists to
Speaker 1: benefit from crypto technologies like the blockchain and n f
Speaker 1: t s, but there isn't universal agreement, especially among musicians themselves,
Speaker 1: that any of this is necessarily a good idea. Bloomberg reports.
Speaker 1: Lucas Shore will join me from Los Angeles as we
Speaker 1: continue our discussion about the decentralization of the music industry.
Speaker 1: This is Bloomberg Crypto, a daily podcast from Bloomberg and
Speaker 1: I Heart Radio. For more shows from I Heart Radio,
Speaker 1: visit the I Heart Radio app, Apple Podcasts, or wherever
Speaker 1: you get your podcasts. Send us your comments, questions, or
Speaker 1: suggestions for the show to Crypto at Bloomberg dot net
Speaker 1: or find us on Twitter. We're at Crypto. The supervising
Speaker 1: producer of Bloomberg Crypto is Vicky very Galina. Our senior
Speaker 1: producer is Janet Babin. Our producer is Mohammed Farup. Our
Speaker 1: producer is Sharon Barrier. Our associate producers are Zanam Sidiki,
Speaker 1: Thai Buffalo and Moses and um Desta wonder At is
Speaker 1: our engineer. Original music by Leo Sidrin. I'm Stacy Maria Shmaal.
Speaker 1: We'll be back tomorrow.