How to Make P2P Marketplaces Work | Skill Tree #43
Content: 1) My Impressions from AW Assembly 2) How to Make P2P Marketplaces Work 3) The State of Indie Games
Good to be back from Devconnect, in my basement, in front of my PC.
Today we learn
that fully onchain games are emancipating themselves by exploring game design without worrying about market size, business models, or what existing games do
how to make p2p marketplaces work: games that enable p2p trading for scarce cosmetic items that do not undermine the core gameplay loop can create long revenue tails
that indie games might squeeze into the market that AAA games open up, while mid-sized game studios struggle
🌍 My Impressions from AW Assembly
LAN party feel. A lot of builders, not many investors
Community realizes that we shouldn’t limit our thinking to existing game design. Just try stuff to come up with non-skeuomorphic ideas (exploration phase). This has worked in the past, for example, most of the successful mobile games have nothing to do with PC or console games
Gaming is a red ocean, whether AAA, indie, or mobile. Web3 games target the same market. FOCG are a blue ocean, we just don't know how big it is (TAM). Might be a lake
Chinese community is huge. Guessing 70%+of the total FOCG scene
Istanbul in 3 bullet points: lively, meat-heavy diet, cats
Good amount of FOCG projects at the ETHGlobal Hackathon
This week’s newsletter is sponsored by ggQuest
💱 How to Make P2P Marketplaces Work 🔗
P2P marketplaces have faced challenges in the past. From undermining player motivations (like Diablo 3’s auction house) to questions around the sustainability of the model as game studios forego primary sales. But, titles like CS:GO or Roblox show that there is a working business model. P2P trading happens on 3rd-party grey markets either way and bringing this market onto official venues alllows game devs to take a cut and to better protect their players from fraud. It also has potential to drive primary sales as players feel like they can recoup part of their investment or even turn a profit.
On the Diablo 3 auction house from my article “A Road forward for Web3 Gaming“
“The go-to example is the auction house in Diablo 3. When players can buy assets from others, they become less valuable to players who earned them through gameplay. What indicated skill and time commitment could now be replaced with money. Long-time Diablo players lost motivation, and Diablo later removed the auction house.”
As history shows, not all examples of P2P marketplaces have been successes.
These are the keys to creating good P2P marketplaces:
Items need to have scarcity, either by capping their quantity directly or by implementing gacha mechanics which drive trading volume. Scarcity drives desirability, which can lead to higher revenue than just selling to anyone (if demand is forecasted correctly)
At the end of the scarcity spectrum are Veblen goods, the rarest collectibles which target high networth spenders. These may have no interest in buying a big amount of mid priced items but are very much in the market to spend tens of thousands on one rare collectible.
Scarce items are also more appealing for luxury brands that want to maintain an image of exclusivity
Cosmetic items in social games are the best fit. They don’t affect gameplay (therefore don’t undermine core gameplay loops) but still have value for players (flex on others)
Roblox additionally incentivizes spending on the platform (where they take a 30% fee) versus cashing out through their exchange rate. The sell rate to USD is less than half that the buy rate. They also monetize p2p trading by locking the trading of Limiteds behind a premium subscription, in addition to the 30% fee.
👾 The State of Indie Games 🔗
AAA games are coming under increasing scrutiny as they are challenged by growing development costs, aka risk, which makes publishers take the safest route possible, which is why we see little innovation.
Often heralded as the underdogs that save the games industry, indie games move into the spotlight. But how is it looking for them? The data is based on a survey of 25 developers that released a game in 2023 and general industry insights
Sentiment is mediocre among devs. At least that’s a step up from last year, where 2/3 of games underperformed expectations (which might be coming down to unrealistic expectations)
The best genres for indies have been:
Horror (especially with coop multiplayer), like The Outlast Trials, Barotrauma, Labyrinthine, and Demonologist
Shooters such as BattleBit Remastered (biggest indie hit), Turbo Overkill, Deadlink (both oldschool-style shooters)
RPGs, for example Sea of Stars and Wandering Sword
Sports games have also seen unexpected success (Tape to Tape, Golf It, Undisputed)
A challenge remains that small teams often have long development cycles, meaning that catching a trending genre is based on luck. And even if it’s the right genre, like platformers, they’re usually top-heavy with a few titles catching most of the attention
Genres also saturate quickly which makes it harder to stand out. For instance, deck builders or roguelikes. And the audience tend to be hardcore gamers with huge expectations
Some developers expect that indie studios will develop in the opposite direction of AAA games - low-budget games with highly original ideas and highly addictive and re-playable gameplay loops that can be developed in six months to a year. Mid-sized teams might be in for a rough time. Supporting research: https://vginsights.com/insights/article/why-mid-sized-game-studios-are-the-biggest-losers-post-covid
Related, prices of indies have decreased which puts pressure on scope, content, and team size. Reasons might be that they’re getting pressure from F2P games and that expectations of players exponentially increase for games priced at $30 or above. The issue is that players do not adjust their expectations lower as game prices adjust to inflation.
As more games are released each year, it’s getting harder and harder to be noticed. Players only have a limited amount of time to play. At the same time, game quality seems to be going up (looking at professional review scores) which means higher barriers to entry for game devs
Indie publishers such as Team17, Tinybuild, Daedalic, Humble Games, and PlayWay may help. Studies have shown that games released through publishers score ~6% better on Steam. A slight advantage that might make a big difference in an overcrowded market
The stats are looking even better for AA publishers like Devolve or Deep Silver, with 12% higher Steam scores
The questions remains whether the score better because they have a publisher or if publishers select games that are more likely to do well
Publishers can help with promotion, a skill many game studios seem to be missing. A key puzzle piece for indies is Steam Next Fest. Other digital showcases are also growing in importance, together with indie-focused aggregators. But the largest sales driver remains word-of-mouth of the player base.
New trends indie developers have to embrace
Game engines are becoming easier-to-use (+ AI), leveling the playing field. That leads to more focus on the business side of things
Cross-platform and cloud gaming opens up new audiences
Another promising venue for indies are subscription services like Xbox’ Game Pass
Interesting fact: The biggest spenders on indie games are often the biggest spenders on mainstream AAA titles as well