Author: YBB Capital Researcher Zeke

Preface

This article contains some casual musings during a slow market period, meant for readers with a certain level of understanding of the traditional gaming market. You can treat this piece as a diary or stream of consciousness. These are just some of my thoughts on GameFi after playing “Black Myth: Wukong,” along with my perspectives on the future of this sector.

I. The Eighty-One Trials of Game Science

Three days after its release, “Black Myth: Wukong” broke ten million sales across all platforms, reached a peak of 2.35 million concurrent players on Steam, sparked a frenzy of brand collaborations, and saw its merchandise sell out rapidly. It was covered multiple times by national media, with several in-game locations offering lifetime free entry for players who completed the game. Additionally, the 1986 TV adaptation of “Journey to the West” saw its YouTube viewership surpass 4 million. These are just a few news highlights since the launch of “Black Myth: Wukong.” If you don’t play single-player games, you might not fully grasp the significance of some of these statistics. To put it simply: in terms of sales and online player data within its first week, this game’s impact is akin to the Chinese national soccer team reaching the semifinals of the World Cup, with room for further improvement.

Certainly, this success is due in part to factors beyond the game itself. But fundamentally, it’s the game’s high quality that underpins this success. From my personal experience, while “Black Myth: Wukong” isn’t perfect, it is undoubtedly groundbreaking in the context of Chinese AAA games. Its quality is enough to rival the ARPGs produced by top global game developers. After playing, I was left with a sense of awe and reflection. The challenges faced by Game Science, the studio behind the game, were far greater than those encountered by developers in our circle. Yet, why has there been no breakthrough GameFi project since the decline of the P2E era?

To understand this, perhaps I should start with my memories of Game Science. In the summer of 2013, the most popular games in internet cafes were undoubtedly League of Legends and CrossFire. As a regular at a small, nearby internet cafe, the sounds I heard most frequently were “Welcome to Summoner’s Rift” and “Fire in the hole.” Interestingly, one day, amidst these familiar sounds, I faintly heard the clashing of sticks and swords set to traditional Chinese music. I asked what game they were playing, and they responded with, “You don’t know? It’s ‘Asura’!”

This game was absolutely top-tier among MMORPGs at the time. I remember the situation vividly: in an internet cafe that only had two peak business hours during school lunch breaks, nearly a quarter of the people were playing this narrative-heavy game — a rarity indeed. However, the popularity quickly faded. A few months later, I seldom heard those familiar battle sounds. When I asked some players why they had stopped playing “Asura,” the responses were consistent: it wasn’t fun anymore, and they couldn’t afford to spend so much money on it. Eventually, no one mentioned the game anymore.

Six or seven years later, a monkey, brought to life by an elderly voice, appeared in Black Wind Mountain, heralding a new era in Chinese single-player games. Curious, I searched to see which major game company was taking on such a challenging project. The result was shocking: Game Science? A studio with about 30 people? To put it in perspective, comparable games have development teams exceeding 3,000 people (“Red Dead Redemption 2”), with even the most frugal Japanese studios (like FromSoftware, developers of “Elden Ring”) having around 200–300 members, most with over a decade or two of experience in single-player game development. Upon further research, I came across a name that was both unfamiliar and familiar: Feng Ji, the lead designer of “Asura.” After learning the story behind this creator, I suddenly understood the deep meaning behind the final line in the first promotional video for “Black Myth: Wukong” — “After the White Bone Demon, the journey to the West continues.” This line held a great deal of unspoken regret (after the third chapter featuring the White Bone Demon, “Asura” began its decline).

In 2009, MMORPGs dominated the online gaming scene. Titles like “World of Warcraft,” “Conquer,” “Legend of Mir,” “Fantasy Westward Journey,” and “Blade & Soul” were staples in internet cafes. The 1980s and 1990s generations grew up alongside these well-known IPs. As the most profitable genre of games at the time, MMORPGs were booming. Yet, despite its growing influence, Tencent was struggling to capture even a slice of this lucrative market, which led to the hurried deployment of the AGE engine. But who would develop the game? Feng Ji, who was not yet 30 years old, was tasked with the responsibility of being the lead designer for the game.

“Asura” had an incredible start. The CG produced with Tencent’s substantial investment, combined with meticulously designed game levels, made the game an instant hit. But Feng Ji and his team made what I consider a fatal mistake: they aimed to create something more like a single-player game and focused too much on quality. With only three chapters, the game’s content was far too sparse for an MMORPG, and the team spent too much time perfecting it. It wasn’t commercial enough. While Feng Ji understood games, he didn’t understand capital. “Asura” was critically acclaimed but not commercially successful. Once all the content had been consumed, the developers added a lot of repetitive, Korean-style gameplay (quests, factions, and repetitive dungeons) to maintain daily active users and meet Tencent’s KPI demands. Unfortunately, this didn’t extend the game’s lifespan; it caused a massive collapse in its reputation. “Asura” ultimately met its end when Tencent replaced the operations team and introduced numerous pay-to-win systems that unbalanced the game, leading to its death amidst a storm of player complaints. At that time, a phrase popular among the players perfectly captured the situation: “After the White Bone Demon, there is no more Journey to the West.”

Afterward, Feng Ji filmed a self-mocking short film and left with a few loyal team members and art director Yang Qi. To summarize, the story of “Asura” is about a group of young people with dreams of making great games, only to be harshly crushed by reality. However, the story has a happy ending, as we all know. I won’t elaborate further, but fourteen years after the release of “Asura,” this group of “young people” has finally succeeded in obtaining the true scriptures (it took Tang Monk fourteen years to complete his pilgrimage in “Journey to the West”).

II. The Extreme Pursuit of Certain Things: A Golden Hoop in Disguise

To know shame and then to be courageous — this is a spirit severely lacking in our circle. We tend to believe that the reason GameFi hasn’t succeeded is because the economics aren’t perfect, the game format isn’t right, or the blockchain is too complex and the barriers too high. We become fixated on factors outside the game itself, without paying attention to the game itself.

2.1 Financialization Only Works if Players Are Willing to Pay

I’ve always considered myself somewhat knowledgeable about games. I’ve been playing since I was seven, starting with a Gameboy and moving through the 2D black-and-white era of Pokémon, Kirby, and Zelda, up to the rise of esports and now the twilight era of gaming consoles. I’ve played most of the popular games, and I’m fairly proficient at most of them. However, despite this, I seldom talk about GameFi because I’ve always felt that my understanding of it is inferior to other sectors. GameFi is a concept that baffles me. As a pre-investor, I receive at least three or four GameFi project decks (business plans) every month. In most of these decks, 80–90% of the content is about economics, token distribution, the vast scale of the gaming industry, and how blockchain technology can provide security — very little is about the game itself, and some don’t even have a demo.

These projects give me the impression that they understand finance but not games. The essence of a successful game is simple: it has to be fun. Over-financialization is actually anti-player and anti-project (assuming the project genuinely wants to make a game). You might argue that the P2E era of blockchain games was glorious, but to me, that was a victory of Ponzi schemes, not of GameFi. Many in the circle were ecstatic about the entry-level NFTs of games like Stepn and Farmer’s World, which often cost tens of thousands or even hundreds of thousands of RMB. This actually alienates real gamers. In over 95% of online games, even subscription-based ones, the entry barrier is free. Traditional gamers aren’t incapable of paying; they will only pay for emotions, passion, and a sense of achievement. Items like the Dragon Lore in CSGO, Dragon Blade Lee Sin in League of Legends, the early PUBG coat, and the Spectral Tiger in World of Warcraft are also expensive, but they don’t change the attributes of the player’s character and some can’t even be resold. In this era, the commercial logic of top games is straightforward: if you can make players happy and stimulate dopamine release, they will gladly pay. Most of these games don’t even have an economic model.

Once a game introduces tokens and balance-altering NFTs, it becomes very complicated. Let’s consider the simplest case: a project genuinely aiming to develop a large-scale blockchain game must balance the value of tokens and NFTs with the game’s frequent updates and improvements. As mentioned earlier, the value of these tokens is a problem — if prices are too high, they deter new players; if they crash, the community collapses. Tokens and NFTs are at odds with the game’s development, which is far more costly than most people imagine. After the early funding is burned through, tokens and NFTs become the sole financial support for subsequent updates. Selling tokens either leads to a death spiral for the community or forces the team to abandon their principles and make a quick exit. The alternative is to create a bunch of new NFTs and sell them, but the only way to attract buyers is by making these new NFTs rarer, more profitable, and more powerful than the earlier ones. Isn’t this just a slap in the face to early NFT buyers and the Web 2.5 model? Even if they survive the development period, how will they address the massive issues these NFTs create later on? Ultimately, collapse is inevitable. The end of “Asura” was a reflection of this scenario.

So, to me, GameFi feels more like a series of different types of mines, each with different rules, but at their core, they are all about buying a shovel and going to work in the mine every day until it collapses. This is still a common scenario today. Speaking of which, let’s delve into something a bit more complex. Discussions about GameFi in the circle still focus on the “mining rules.” Recently, there’s been talk of ServerFi, which gives me the impression that people believe some “mining rule” can maintain balance indefinitely. GameFi has indeed become richer in elements and more playable as it enters the AAA era, and large-scale blockchain games can certainly have more complex economic designs. In 2023, I also tried to understand so-called game economics, but in reality, any economic model requires a large player base for support (without a player base, it is impossible to create turnover out of thin air. Economic design can only restrict different participating roles). Otherwise, it just turns into a struggle between players and the project team. Introducing complex economics doesn’t necessarily make the game more fun; in most cases, it’s the beginning of the end. If you’re familiar with traditional MMORPGs, it’s not hard to understand that finding a balance between faucets and sinks is extremely difficult. Designing a complex game economy isn’t much easier than governing a small country. After reviewing many MMORPGs’ economic designs, I found only one that successfully maintained balance for years: “Fantasy Westward Journey.” But with over 100 million registered players (nearly the population of Japan), its elements and design complexity are beyond the reach of GameFi, and even Web2 has very few successful replicas.

The cryptocurrency world is also very utilitarian. As long as there’s money to be made, all the rules, designs, and loopholes in a game will be thoroughly studied, and collapse can happen in an instant. To maintain balance, the rules must be constantly updated, with new decrees issued daily — this is a slap in the face to decentralization. “Mining rules” were never the most important thing. The meaning that blockchain brings to games is simple: to make the ownership of digital assets and economic systems more fair and transparent, and to provide opportunities for bottom-up game developers. But blockchain cannot change the essence of things and should not turn everything upside down.

2.2 AAA Games

After the P2E era, GameFi essentially split into two directions: AAA-level blockchain games focused on playability and On Chain Games aligned with the spirit of fairness and Autonomous Worlds. Let’s first talk about the former. Although I also look forward to a breakout AAA game in GameFi, AAA might not be suitable for this circle. I’m not saying this to completely dismiss such games — I believe there will be successful AAA blockbusters in GameFi in the future — but for now, it’s difficult without breaking out of the circle. From a business perspective, AAA games are already a very niche genre in Web2, and even more so in Web3.

First, we need to understand the definition of AAA: a lot of money, a lot of resources, and a lot of time. As for how much “a lot” is, there’s never been a precise definition. By my standards, AAA projects represent the highest industry standards, where even a single failure can doom a top-tier game company. Blockchain is bottom-up by nature, which fundamentally doesn’t align with AAA. Yet, the current GameFi development path is strangely obsessed with AAA. AAA equals grand production and stunning visuals, but it doesn’t necessarily equal fun.

In the blockchain world, it’s common practice for AAA blockchain games to raise funds through NFT pre-sales. At this stage, however, these games are often not even half-complete, and their future is left to luck and imagination. If they fail, it’s not the project team that pays the price, but thousands of retail investors and VCs. For a game with a development cost exceeding hundreds of millions to achieve a positive cycle, it would need to attract at least tens of thousands of players, based on normal conversion rates for paying players in online games (low conversion: less than 1%, medium conversion: 1% to 3%, high conversion: 3% to 5%). Given the current state of things, it’s not hard to imagine whether most of these AAA blockchain games will be able to meet such expectations (the number of Web3 players in 2024 is six times lower than in 2023, currently below one million). The vast majority will fall into the scenarios mentioned above, becoming mines that ultimately collapse. Under current conditions, the entire business logic from top to bottom in the circle cannot form a closed loop. Creating AAA blockchain games seems more like an attempt to extract money from both VCs and retail investors. If someone is truly committed to this path and wants to be the one to break through, I hope they won’t lose their original vision in the pursuit of profit. Games are a highly tangible form of entertainment, and they can never deceive real players. I also hope that the story of Game Science can inspire others to obtain the true scriptures in this restless circle.

2.3 On Chain Games

On Chain Games, also known as fully on-chain games, Autonomous Worlds, pure Web3 games, or “halal” games, is a concept that has been around for a long time but only became popular last year. However, it has already faded from discussions. From a decentralization standpoint, the On Chain Games path isn’t fundamentally wrong. As mentioned earlier, Web 2.5 games have various methods to break away from centralization, and the purest form of fairness is to leave everything to the code. But when viewed from other angles, this concept is riddled with flaws. For example, is the importance of playability really less than that of fairness or permanence? If a bug occurs when the rules are fully on-chain, how can the tokens not crash? Can something that requires gas and signatures for every action really be called a game? At this stage, On Chain Games can only meet the needs of a niche group. Like the early days of SocialFi, would you use a social platform without content? Although there are now many solutions to these problems, most are still imperfect. The activation of this concept may have to wait for the next cycle.

III. The Wind Begins at the End of the Green Reed, and the Waves Rise from a Gentle Ripple

Blockchain isn’t limited to just running games, and the financialization of games doesn’t necessarily have to be about online blockchain games. Outside of Web3, there are countless grassroots game developers — perhaps university students, self-taught enthusiasts, or mid-career game developers recently laid off from big companies. They may not create miracles like “Black Myth: Wukong,” but there are countless types, platforms, and gameplay options for games, and independent games are often the direction they choose. The funding they need is actually quite minimal, and blockchain itself is an excellent crowdfunding platform. Building an economic system around this group, focused on independent games, has always been an idea of mine. The crypto world is too focused on short-term gains, but outside of it, there’s a group of people who maintain their passion. If you’re interested in this idea, you can check out some documentaries, like “The Lone Walk” by Modian or “More Than a Game” by Senna Films. This is something that has both positive impacts and potential profitability.

The specific implementation process may not be very rigorous, but I’ll briefly explain my idea. Although there are many Launchpad platforms for games in the crypto space, most of them are still focused on online games, and the crowdfunding methods mostly involve selling NFTs. In the end, even if the game succeeds, players still gain very little. Independent single-player games have the advantages of being quick to produce and low in cost. Crowdfunding could be done by releasing demos of a few levels, which would also help build a dedicated community before the game’s release. Enthusiasts and stakeholders could contribute to improving the game’s details. The NFTs for crowdfunding could be categorized into different levels; for example, the lowest tier NFT could secure the right to play the game in the future, higher tiers might offer additional skins, and premium tiers could include a share of the game’s future revenue. The release of crowdfunded funds could be managed through voting by NFT holders. For instance, when additional development funds are needed, the previous progress, relevant demos, and videos would be presented, and funds would only be released after the community has reviewed the overall quality. If a game’s demo performs well, the value of the corresponding premium NFTs would naturally increase. Once this model is mature, the platform could also try crowdfunding for larger-scale games. Here’s an additional story: the funding for “Black Myth: Wukong” actually came from an independent mobile game led by Feng Ji. The greatest things in blockchain also often come from the shadows — independent games can be just as successful.

IV. Flattening the Obstacles to Create a Broad Path, and Setting Off Again After Overcoming Challenges

Lastly, I’d like to share a reflection from Feng Ji, made two months before the release of “Black Myth: Wukong.”

“In the development process of ‘Black Myth: Wukong,’ most of the decisions I made could be simplified into three words: ‘Let’s try it.’

Let’s try those features that others perfected ten years ago, but that we still haven’t mastered.

Let’s try the ideas that made us talk late into the night with excitement, but that turned out awkwardly in actual gameplay.

Let’s try the gameplay mechanics that we boasted about in the demo but proved underwhelming or boring in practice.

Let’s try investing a great deal of time into things that seemed promising at first but ended up leading us to repeatedly hit brick walls, leaving us battered and bruised.

The Black Monkey has been incredibly fortunate. Since its inception, it’s been full of challenges, and naturally, there have been regrets where we fell short.

When I finished writing the script for the first promotional video, I didn’t know how to turn that video into a playable level.

When we completed the first level that could be tested internally, I didn’t know what it would cost to turn the entire story into such levels.

Even when we had what seemed like a complete story, I still didn’t know what it would take to make it stable, smooth, compatible with different software and hardware platforms, and translated into more than ten languages, or to release it as a physical version on discs.

Not knowing is good.

Since we chose to party in uncharted territory, we must embrace the fear and anxiety brought by uncertainty. Because behind the fear and anxiety, there’s the thrill of satisfying curiosity and the joy of self-discovery.”

In this fog of uncertainty, our only guide is to keep asking ourselves and every member of the team: Is what we’re doing something that we, as users, can understand, appreciate, and love?

Are the challenges we face something that others in the world have already tackled? And even if no one has done it before, can we do it?

If the answer to these questions is yes, then it’s certainly worth trying.

Just like in Game Science’s tenth year, when we decided to self-publish for the first time, set our own pricing for the first time, launch on consoles for the first time, create a physical edition for the first time, and promote globally for the first time… it was all based on this kind of self-questioning and answering.

Why not give it a try? After all, it won’t kill us.”

About YBB

YBB is a web3 fund dedicating itself to identify Web3-defining projects with a vision to create a better online habitat for all internet residents. Founded by a group of blockchain believers who have been actively participated in this industry since 2013, YBB is always willing to help early-stage projects to evolve from 0 to 1.We value innovation, self-driven passion, and user-oriented products while recognizing the potential of cryptos and blockchain applications.

Website | Twi: @YBBCapital