Being Present for the Birth of a New Gaming Genre - “Create & Own” - is EPIC
Being Present for the Birth of a New Gaming Genre - “Create & Own” - is EPIC
Bits of Signum | 4.11.23
Here is a summary of important tenets and key beliefs on Create & Own, post Epic Games’ State of Unreal - Deeper dive is coming!
We believe that we are on the verge of a new gaming genre that we will call Create & Own for the purposes of visualizing it. Ownership might be too strong of a word until and if we reach a decentralized web3 world, but Roblox and Fortnite Creative are training new and important in-game behaviors. The concept of ownership is multi-faceted. It refers to the items in the game, the games themselves, and even traditional content from creators outside of the gaming world. Epic’s announcements at GDC helped show us the way. Yes, players will be empowered to create games, but it also left us thinking people will be empowered to create spaces. And brands will finally have a chance to leave empty living rooms and find a place to be present with actual people. In short, Epic’s announcements and this new genre will likely bring completely new types of people to gaming. Even though the Roblox creator platform has been in existence for much longer than Epic’s creator platform, which launched in 2018, Epic has more than 500 million player accounts to tap. Also, now it will be powered by Epic’s Unreal Engine 5, which we learned has been used to create 550 TV shows and movies. The cinematic quality offered by Epic’s Unreal Engine could be the match to light a fire under non-gaming influencers and streamers on YouTube, who complain of the flood of talent and lower payouts. Inevitably, one is going to ask, “I wonder what would happen if we let 10% of our social media production team go, and replaced them with one good Unreal Engine developer?” Mr. Beast already fits, along with many other gaming-adjacent esports influencers and streamers who don't need to make a huge leap. But what if we even step out of “gaming” and push the boundaries a bit? As many know, we have been wondering for years when the widely-loved Maria Menounos will be invited into Fortnite as a host. After the most recent announcements, the platform is ready for her to call the architects and design team (aka husband and manager Keven Undergaro) and put up a shingle herself. For those who are unaware, Maria is an Emmy Award-winning journalist, TV personality, undefeated WWE pro wrestler, actress, motivational speaker, Heal Squad podcast host, and New York Times best-selling author. You might recognize her from the few minutes that you watch TV while pumping gas, as she is the nationwide face of GSTV. Instead of calling it gaming, we might just call it entertainment.
Signum Growth Capital was founded in 2018 on a series of mantras that we believed to be important drivers for new economies in new digital neighborhoods. One of them is Creators and Developers to the Front of the Line! With more transparency into value chains, easier coding tools, new User Generated Content (UGC) platforms in games, and new versions of the internet in web3 which enable property rights, developers/creators are getting closer to the cash register. AI is an important ingredient in this thesis as well.
Why are the concepts of web3 important? We believe now, as in 2018, that web3 will be important for social capital, identity, and to enable real property rights in online spaces. As we are growing to have more and more of our most valuable stuff online, we are going to want to actually own it. We did not see the initial wave of NFT speculation and trading coming, but like a game that catches fire and quickly burns out (See Destiny 2 money grab gone wrong), a ponzi scheme as the game itself can’t last. Another reason web3 is still important is because an advertising-driven internet is getting tired, and web3 accelerates the shift from advertising-based to transaction-based online economies. Finally, despite all the speculation and trading in crypto, this world understands authentic community building better than its web2 social media counterpart, which has advertising as a conflict of interest, wedged between creators and consumers of content. Could it be that real economies with real monetary incentives are required to see an authentic community blossom? The jury is out, but Epic’s announcement of Creator Economy 2.0 is important. While Epic doesn't embrace digital collectibles called NFTs, I wonder if this platform will give birth to digital assets backed by a cryptographic hash (aka an NFTs) if players are spending so much time in their spaces, creating assets using Unreal, and demand property rights. Epic's announcement included a generous promise to distribute 40% of the net revenue from Fortnite’s Item Shop and most real-money Fortnite purchases to the creators of eligible islands and experiences, both indie developers and Epic’s own.
Why is community building important? We believe community is the secret sauce that is required for true engagement to exist. Anything else is short-term, speculative, low value behavior. We liked this quote from Mitch Lasky of Benchmark Capital, which was reminiscent of leading web3 games influencer DJ Wright (@TheNextGenGuy) in describing his favorite childhood game, RuneScape. Lasky said, “The real lesson of RuneScape was that it wasn’t about the graphics, it wasn’t about the game design, it was about the strong social networks that could be developed within the context of this game. It was about the hangout.”
Why is AI in games important? AI will be a tool to augment artist creativity, to significantly improve time to market, and to give access to creators who might not have the engineering chops to be involved until now. After hearing a few developers on the GDC floor complain of the need to learn a new language (Verse) which arguably requires lower coding skills, we wondered if this would result in a brand new set of creators moving even faster than the original creators of the Fortnite Creative toolset. We didn’t need to wonder for long as we watched AI games team, Sortium, integrate their AI-generated characters (using their own IP) into Fortnite by dinner. These AI guys move fast! Erin Drake Kajioka, Google Head of Applied Game Design, made a very important comment - “Large Language Models (LLMs) and generative AI are the linguistic equivalent to an optical illusion.” This really made us think. It's important to separate the “magic” we feel from the business model. On the topic of AI being incorporated into games, we believe that copyright laws and IP rights will still matter. (See Zarya of the Dawn as a good example.)
Why is UGC important? Here is a great description by David Taylor, Lead Product Manager of SuperSocial (founded by our good friend and thought leader Yon Riz Fridman!) The Flywheel of User Generated Content in Games is: Great Content attracts -> Players/Audience/Spend to the game, which attracts -> Developers/Creators, which attracts -> More Great Content
Brand interest: Until recently, brands weren't able to access players, who have generally abhorred in-game advertising, similar to the extreme skepticism we have seen around NFTs in-game. We describe this sentiment as, “Get your money grab out of my fun.” Epic’s announcements at GDC allowed brands, especially those already familiar with Roblox, to visualize and dream big. Adding Epic’s Unreal Engine to the Creator platform, along with Epic’s commitment to pay creators, puts Epic on par with Roblox as a place for creators to build worlds. The difference is that Epic offers a set of tools that enable more beautiful, higher fidelity, 3D creations that won't need to look like Fortnite. On NFTs, despite the drop in popularity of the word, we don’t see a slowdown in “digital collectibles backed by a cryptographic hash” if that's what you prefer to call it! We are seeing evidence of brands, especially luxury brands, continuing to experiment in web3.
Deeper dive coming! In the meantime, Maria isn't in the metaverse yet, but what truly excites us in all of the developments out of GDC and the State of Unreal is our expectation that a whole new set of people will arrive at this world of parties, which 500 million people have already decided to attend. The Gossamer movie stars and producers Timbaland and Beatclub aren't there either - they are still busy working on movie production until YE23! But the Gossamer world has already been born in Fortnite. Wager - players and creators in the game will influence the creativity in the movie, not the other way around.
