Before diving into a lot that is happening in gaming and emerging tech, we would like to point out that Signum Growth gatherings are listed at the bottom of these posts. Thanks for reading!
While 11,000 writers from the Writers Guild of America (WGA) mark the 132nd day of their strike, the video game industry appears to be changing the AI engine as they fly the plane. This week’s test in AI in gaming concluded with vehement support for creators and a welcome mat for innovation!
We have been thinking a lot about IP rights with respect to AI in games. Specifically, while it doesn’t seem to be a front burner topic as many AI startups rush to market, one of our mantras has been that IP rights, domain expertise and an understanding of how to navigate the video game industry will matter.
Until this past week, two datapoints caught our attention. First, as referenced in April, the US Copyright Office flipped its decision to protect AI generated content. While the Copyright Office approved protection for the human-generated text and arrangement of Zarya of the Dawn, it denied protection for the Midjourney-generated images within the graphic novel. Then in early July, when we heard that Valve, the owner of the largest game distributor, Steam, wasn’t allowing games with AI assets onto the Steam store due to copyright and IP right infringement concerns. Big picture, this made sense.
A test for Steam bubbled up this past week when an indie game developer went viral after his game, “Heard of the Story?”, was completely removed from Steam due to an optional mod that used ChatGPT. His Reddit stunner that grabbed eyeballs - The game I've spent 3.5 years and my savings on has been rejected and retired by Steam today. The game was uploaded to Steam with a plug-in that allowed users to generate AI NPC conversations using ChatGPT. This plug-in required players to have their own API key, and was not a default mode.
Regardless, the legal gray area around LLMs regarding how the data was gathered and who it belongs to, was enough for Steam to ban the game from the store.
Did Valve’s blanket go too far? We believe it did. At the end of the Reddit + Twitter explosion, Steam reversed the decision to remove the game, and the company approved the build that did not include AI. So while it may have seemed ‘all’s well that ends well’ to Steam, an unintended consequence could more market share for its largest competitor, Epic Games. In addition to a lot of advice from other developers to move to Epic, the “Heard of the Story?” developer said -
Although this is definitely a win for me [getting his game back up on Steam], I wanted to also highlight that other indie-devs might not be so lucky with their Steam publishing misfortunes. So as others mentioned in the comments, please do try to get your games onto the other stores as well. My recent experience with the Epic Store has been very positive. By ensuring that you publish in more than 1 place, you can help break up Steam's PC monopoly and stop single decisions having a disproportionate negative effect on all of us.
Tim Sweeney, CEO of Epic Games, also spoke up on Twitter, encouraging the developer to publish the game on the Epic store with a pretty alluring statement -
Epic doesn’t ban games for using new technologies.
It’s not that Sweeney doesn’t recognize the gray area, but his approach to builders using AI in games is less ‘guilty until proven innocent’ than Steam’s is. He more critical of the companies doing the scraping:
He tells Game Developer, "The idea that art made from generative AI whose billion-image training set included a particular piece of source art is a derivative work of that source art is a massive leap beyond existing legal precedent. No court has issued any sort of ruling of that sort."
Sweeney’s stance is that banning AI out of fear of derivatives does more harm than good in the grander evolution of games. However, he also believes in giving creators the right to choose whether their work can be scraped or not. ArtStation, a platform for sharing art acquired in 2021, recently added a “NOAI” tag, letting creators clearly state whether their work is open to scraping or not. This makes sense to us and is yet one more example of Epic and Tim Sweeney as our North Star - put the power in the hands of the creators, and innovation will flourish!
We will be staying very close to creative platforms such as Epic Games’ UEFN and Roblox to watch for their reactions to potential IP rights and copyright law infringements. We have already seen Epic’s reaction to copycat Rust maps - they were taken down. However, when a clone of Only Up! hit UEFN and was 8x bigger than the original, reaching over 100k users in 24 hours, the fact that it wasn’t an exact copy saved it and made it a remarkable example of the power of the new UEFN platform. These platforms will also be important indicators of behavioral shifts in game development and game play, as they will certainly continue to attract creators, even if only as a side hustle to start. On the last official check, only weeks after the UEFN launch, there were already 61 creators annualizing >$1mn in payment, versus Roblox at 99 creators after 17 years in business. In our view, this is less of a competitive statement between the two, as a rising tide should lift all boats.
We have been highlighting companies like Sortium AI given their focus on serving human, professional game developers, along with their long history and expertise in game development, AI and robotics. Side note: one of the founders was also a former Epic Games MegaGrant winner in AI.
Google’s NFT Ad Update - while words like “NFT” remains unpopular, many in traditional gaming are embracing the technology
Google published new terms on how apps with “cryptocurrencies and related products” such as NFTs can advertise on the Play store. All games and apps that use NFTs as in-game cosmetics or other in-game purchases are free to advertise, as long as the NFTs can’t be staked to earn fungible tokens or NFTs. Also, gambling and social casinos are clearly off limits, as licenses would be required. Essentially, NFTs can be shown as basic, in-app purchases and rewards, unless there is additional utility, and they still need to follow an array of additional declarations around NFT usage. The new update, effective Sept. 15th, did not mention NFTs that can be moved to external marketplaces outside the game, as was approved for Mythical’s Marketplace for digital assets like those in NFL Rivals.
Speaking of Mythical, stay tuned for more data on NFL Rivals after its official launch with the NFL Season this past Thursday with the Chiefs v Lions in Kansas City. We are hearing that NFL Rivals player-oriented Discords are booming, as deeply entrenched communities of interest are forming around favorite players.
As Google heads toward an inclusive digital collectible environment, others in gaming are also opening up:
Zynga teased a new web3 gaming platform called Sugartown, with an initial mint of 9,999 Oras on the 13th.
Nexon’s MapleStory Universe onboarded Chainlink for decentralized and provably fair game experiences.
Krafton, the creator of PUBG, announced a new Cosmos-based blockchain made to provide a transparent settlement system for the creator economy, called Settlus.
Conversely, and in line with the general dislike for all things crypto in games, some gamers and creators pushed back on web3 this month, following a poorly communicated Mr. Beast membership program, Creator League, that used blockchain.
Creator League, made by esports company eFuse, was advertised as a creator-led, fan-controlled esports circuit that would allow fans to play alongside their favorite creators like IShowSpeed, Clix, Cdawg, VinnieHacker, and others by purchasing a digital membership pass. In addition to having exclusive content for each creator, each pass would come with a box of Feastables chocolates, a Mr. Beast-owned company.
Interestingly, eFuse chose to not disclose the use of blockchain or NFTs outright. However, when creators learned of it, they were upset about the lack of transparency and began to drop out of the program, resulting in the Creator-League being postponed. Following the conflict, 30% of eFuse’s team was laid off (approx. 30 people) and all buyers were refunded. While eFuse claims blockchain was being solely used for accounting purposes and the membership was very clearly not an “NFT project”, it is clear that there are many misconceptions around the technology and the “NFT” isn’t a word that inspires confidence.
Signum Growth Gatherings Coming Up
NYC - Policy Discussion with CFTC Commissioner Caroline Pham, Moderated by Signum Growth’s CEO Angela Dalton
Note - As this event is full, please email to be placed on the waitlist.
Paga Investor Meetings ~ CA: 9.13 - 9.15 ~ Boston / NYC 9.18 - 9.22 ~ London 9.25
Paga is a digital payments company focused on Nigeria with an established brand name. The company is experiencing a sharp acceleration in growth, in part due to the recent changes of the Central Bank to push for a cashless society. Please reach out to us to schedule a meeting with Paga’s CEO Tayo Oviosu who will be visiting the US and the UK. In Kenya this week, Tayo will be presenting at the prestigious Kaufman Fellows Retreat, which notes “The market size of Africa’s digital economy is massive and is projected to top $712 billion by 2050. Continent-wide, the African tech scene has witnessed an explosion of growth, with impressive startups springing up across Africa’s hottest hubs.”
Some very exciting news last week, as tweeted by Tayo - We've had a strong year so far…TPV is accelerating!
2021: 1.2 T Naira
2022: 3.2 T Naira
2023 (Jan - Aug): 3 T Naira
August was our highest TPV ever