Immutable’s outlook for blockchain games in 2023 | Robbie Ferguson
Immutable's Guild of the Guardians.
Image Credit: Immutable
Of the many companies in blockchain gaming, Immutable has emerged as one of the leaders, or at least survivors, in the emerging market. And it has an elevated role among blockchain platforms and so it can see more of the future.
ImmutableX generated $87 million in non-fungible token (NFT) trading volume, 250% higher than last year. And Immutable’s Gods Unchained game finished among the top 25 most-traded collections across all blockchains.
There’s two parts to the Sydney, Australia-based company. Immutable is making its own blockchain games like Gods Unchained and Guild of the Guardians. And ImmutableX is a Layer 2 scaling solution for Ethereum applications on the blockchain. It has become a platform for games with nonfungible tokens (NFTs) as well as a marketplace. Meanwhile, ImmutableX users get the benefit of the Ethereum blockchain’s security.
Robbie Ferguson, CEO of Immutable, started the company in 2018 with James Ferguson and Alex Connolly. It was originally created to lower the transaction costs associated with trading NFTs for Gods Unchained, offering a near-instant confirmation and near-zero gas fees for NFT trading and minting.
I talked with Ferguson about the milestones that Immutable has hit and what he expects to happen in 2023. The company had five games at the start of 2022 on its platform, and now there are more than 100. It has 15 marketplaces and more than 1.5 million active wallets on ImmutableX today. And the company has more than 300 employees. It certainly sounds like Ferguson means to be one of the survivors of the crypto winter and to drive NFTS into mainstream gaming.
Here’s an edited transcript of our interview.
GamesBeat: I wanted to check in on some of the milestones you hit this year, and what you’re looking forward to in the next year in general.
Robbie Ferguson: This was a massive year for Immutable. At the start of the year we had five games on the platform. We now have more than 100. We’ve moved from three marketplaces to 15. Our global order book has more than doubled through the volume of those marketplaces and those games, because more than half of origin trades on the Immutable protocol take place in a marketplace other than where it was created. If you list it on one marketplace or any game, half the time it’s being bought somewhere else, which is only possible with our global order book.
The stuff I’m really excited about that just came out, Delphi Digital released their gaming report. Immutable was the largest ecosystem by funding allocated for Web3 games, over any other layer-1 or layer-2 in the world, except for Ethereum layer-1. More than Polygon, Solana, Avalanche. I think we’re more than 10 times Solana. The reason we were thrilled about that is it’s a very high signal piece of information. It’s very easy to say that we have X number of games, which may be indie games that have very little chance of making a dent and going mainstream. We’ve focused on games with sufficient funding and firepower to actually get 10 million or 100 million players. We also have more than 1.5 million wallets active on Immutable today.
As far as we know, in terms of market share we’ve moved from fifth to first in terms of market share of winning Web3 games. It’s been a big year for us, and a big year for Web3 gaming in general, particularly across the backdrop of people asking, “Where will the first mainstream utility use cases for Web3 come from?” To us that is very clearly going to be Web3 gaming, now more than ever.
Gods Unchained is Immutable’s hit title.
GamesBeat: I see five games listed there. Are they accounting for the bulk of the wallet activity?
Ferguson: Yes, it’ll definitely be the top 20% of projects contributing the vast majority of trade volume, which we expect to continue. You’ll have breakout hits which have more users and traders than the rest of the games combined.
GamesBeat: Each of those games, are they all live in terms of being out of beta now?
Ferguson: Gods Unchained obviously is. Guild of Guardians is launching (in 2023). Illuvium just launched the beta for overworld, and for their auto-battler. We have more than 18 games that will be launching in the first quarter of next year, based on our timings.
GamesBeat: Beyond the active wallets, how many players do you know are out there? Is that number going to be higher than the number of active wallets?
Ferguson: Across all the games? It’s going to be higher than traders, because some people might play a game but never end up trading. Customers like Aglet, which are building on Immutable–I know they had up to 3.5 million monthly unique players at their peak. Pretty significant numbers. In the last quarter we’ve onboarded more games than in the rest of the company’s lifetime combined, and half of those games migrated from competitors, like Ember Sword from Polygon, or Cross the Ages and Delyseum. Deviant Factions, Undead Blocks, and StarHeroes from Solana. Multiple games from Terra as well.
GamesBeat: What do you detect is happening there? Are you proving more successful on any single metric than those platforms?
Ferguson: I think people choose to switch for a few reasons. The first would be security and reliability. There has been more than $4.2 billion in consumer funds lost in the last 18 months from bridge hacks. Immutable is completely immune to these, because we use ZK-rollups at our core. That’s a choice we’ll never compromise on. The second thing is, our uptime and reliability is 99.9 percent, which is two to three orders of magnitude higher than the nearest competitors. If you look at something like Solana’s uptime, it’s been averaging around the 97% mark.
The other thing is how easy Immutable is to build on. Our goal is, you should not have to touch a smart contract in order to develop a high-quality Web3 game. You can build on us using APIs rather than having to write in smart contracts, let alone the new proprietary languages that are emerging from alternative layer-1s. It’s ease of use. It’s security and reliability. It’s the volume and audience we bring games to help make them successful. Obviously we’re doing this with things like our GameStop partnership.
Immutable’s Guild of Guardians is an ambitious blockchain game.
GamesBeat: It’s interesting to see some folks come in with large amounts of funding, like Mysten Labs. How would you say you compare to someone like that, and other companies that have raised that much money?
Ferguson: There’s always fundraising in the space. Web3 has been one of the most invested-in categories, and gaming has been the most invested-in category of Web3. We’ve seen $15 billion poured into it in the last two years. We focus on how we translate that funding into a platform that games want to use, and that allows us to have leading market share. The reason we feel that’s so important, we fundamentally believe in Ethereum, in a decentralized platform, and in a low-fee platform that everyone can play on.
For us that’s philosophically why it’s so important to be the leading platform supporting Web3 games. We think that a lot of alternatives taking 52 percent fees on a “metaverse” or a locked-in aggregator app store are not the right way forward for digital asset ownership.
GamesBeat: Where do you feel we are in terms of having Web3 games reach mainstream audiences? In what ways have we cleared some hurdles there, and where would you like to see things go in 2023 for getting further into the mainstream market?
Ferguson: We’ve hopped over a big hurdle of risk with the amount of funding that’s poured into the space. That’s reduced the time to go to market and become live games with tens of millions of players. My prediction is that the global audience for Web3 gaming is going to move from roughly 2 million people to tens of millions in 2023. That’s going to be catalyzed by two to three games that become breakout hits. Games like Illuvium, games like Gods Unchained or Ember Sword. Or Ambrus Studio, where the Riot Games CEO in Asia dropped out to found a MOBA on Immutable. These are going to be hits with chances at having 10 million to 100 million players. The other crucial bit is building a mainstream user experience, which has progressed significantly over the last year as well.
Web3 gaming will continue to be the most invested-in category of Web3. The reason behind that, it’s the clearest empirical use case where nothing is hypothetical. The size of gaming has not stopped. When we started this it was $80 billion in in-game items every year. It’s now nearly $200 billion, and it’s growing 10 percent year on year. Everything is becoming interactive. The cost to build games has become significantly cheaper. This year, art became zero cost to create for games, with the invention of DALL-E 2 and GPT-3 and AI that’s going to completely change the cost structure of gaming businesses into the future. That will happen.
Illuviam is coming to ImmutableX.
We’ll start to see the first forays of NFTs into other verticals in a meaningful way. Financial businesses tokenizing unique forms of value in sophisticated ways. I think we could see the market move sideways for ages, though, which is something we’re completely fine with. The point of this is to build use cases and applications that help tens or hundreds of millions of people. It’s not to make the price of Ethereum go up.
If I knew where macro was going in 2023 I’d be running a hedge fund. But to us the most important thing, and what we tell people all the time–the price of Ethereum doesn’t matter. What matters is how many people are getting real ownership of stuff, where the previous day they were getting scammed by an exploitative gaming company.
GamesBeat: What about different regions of the world? I’ve heard a lot of people saying that Asia may be the region that races off first, while there’s still a lot of resistance in places like the United States and the west in general.
Ferguson: In a lot of Asian gaming genres, the idea of buying power inside a game is native. There’s a very native application for Web3 asset ownership. You also have a high degree of progressivism. South Korea led the free-to-play gaming movement. They’re very much at the forefront of adopting Web3 for their games. That being said, I think we’re seeing a huge portion of entrepreneurial, well-funded developers and talent in the Web3 gaming space in the west as well. There are fewer incumbents. You’re seeing more activity from some of the largest gaming studios in the world in Asia.
GamesBeat: Is anything on your radar as far as regulations? Different regions of the world making this more predictable or unpredictable as far as how to operate?
Ferguson: Self-custody is incredibly important. There’s going to be more scrutiny than ever on custodial solutions, or solutions that propose ownership, but really you don’t have asset ownership at the end of the day. If it’s not your keys, it’s not your crypto. That’s what we’ve always had at the core of our philosophy as well.
The funny thing about that, this year we had marketplaces like X2Y2 invented that effectively went zero royalties. Immutable is the only protocol live today that guarantees royalties at a protocol level. No matter where you trade an asset on whatever marketplace, the asset creator can always get a cut. That’s incredibly important for protecting the monetization and continuing mainstream interest in games. Otherwise we’ll see none. That’s something we’ll continue to offer. Earlier in the year that was a vitamin. It’s definitely now a painkiller.
GamesBeat: We had a pretty good discussion early on about the objections that people had to Web3 games. Where do you think that conversation is today? Where are the skeptics now, and how do you counter some of that skepticism?
Ferguson: Actually, I don’t try to. The answer to skeptics is not debate. It’s building an exceptional game that 100 million people play without knowing that they’re even touching NFTs, but experience far more value because of it. They can sell them for the $100 they would normally put into a trading card game and just see it go into the abyss through an exploitative system. To me the answer is to build great products that people want to use, and you don’t have to know about the blockchain to use them.
This is more crucial than ever against the backdrop of waning consumer trust, after things like FTX and the crypto bear market more broadly. What they’re going to see is Web3 gaming becoming the category that defines the earliest mainstream utility applications of Web3. That’s going to be very much the narrative that emerges in the next bull market.
GamesBeat: Do you feel like you’re getting to a “What’s not to like?” situation with blockchain games in general?
Ferguson: A lot of the category has been de-risked with talent and funding moving into the space. We have 10 or 20 games on the platform today with very significant amounts of funding that have chances to become 100-million-player hits that will redefine the way we think about Web3. The next 18 months will be the critical period for Web3 gaming as these games go live, as we optimize mainstream user experience, as we figure out how to fine-tune economies.
The role we want to play there is, one, make it as easy as possible for anyone to build. Two, ensure consumer assets are always completely secure. In the wake of the loss of custodial assets in FTX, it has never been more important to have a scalable protocol that is fundamentally self-custodial. Immutable has never deviated from this since day one. It would have been very easy for us to go to a sidechain or a centralized wallet, but this trust is fundamental to what we’re building.