Korea Blockchain Week: Top Takeaways 

By Devin Becker, Naavik Contributor and Consultant

While the West grapples with a web3 bear market, attention is increasingly shifting to Asia, particularly Japan and South Korea, for web3 game economy innovation. This shift was notably evident at Korea Blockchain Week in Seoul; enthusiasm for web3 technologies, especially in gaming, was palpable among attendees, though this is a self-selected group.

During a fireside chat Yuga Labs CEO Daniel Alegre said that South Korea has consistently been years ahead in various gaming sectors, such as esports and free-to-play. Many attendees anticipate a similar trend with web3 given the number of in-progress projects coming from a country that can’t even legally play them yet. Let's delve into the key announcements from the event.

Wemade Outlines Growth Roadmap

One of the more prominent event sponsors was Wemade, which is known for its Wemix blockchain and the Mir series of games. Currently, Wemade offers 32 games of varying quality on its Wemix platform, in addition to a few other decentralized apps (dApps). Seeking to broaden the reach of its somewhat isolated network, Wemade unveiled unagi (Unbound Networking & Accelerating Growth Initiative). This cross-chain solution aims to manage and transfer assets across different blockchains utilizing a new wallet named "una" and will introduce new swap and scan services.

Set for release in Q4, the una wallet will feature a browser extension as well as mobile apps, initially supporting eight chains: WEMIX 3.0, Ethereum, Polygon, Arbitrum, Optimism, Avalanche, BNB Smart Chain, and Kroma. This initial list includes most of the prevalent gaming blockchains, with the notable exceptions of Immutable and Solana.

Given that the system is tailored for EVM (Ethereum Virtual Machine) blockchains, it's not surprising that non-EVM ImmutableX is absent from the list. Solana, meanwhile, has yet to gain significant traction in the gaming space. While the new system could potentially encourage the transfer of assets out of the Wemix ecosystem, Wemade is optimistic that it will also facilitate asset inflow. Participating in the web3 economy of Mir M is currently a cumbersome process, and the new system aims to simplify that.

Planetarium Builds Off its Game and Tech

Another notable announcement came from Planetarium Labs, creator of MMO Nine Chronicles. It showcased two new web3 RPGs: Immortal Rising 2 and Verse8. Immortal Rising 2 is a mobile competitive idle RPG developed by Mobrix, a sequel to a title that gained good traction in South Korea. It will incorporate web3 elements, such as tokens, although full details have yet to be disclosed. Given that Nine Chronicles – a successful competitive web3 idle RPG – shares a similar genre, the experience gained from it should prove beneficial for its work on Immortal Rising 2.

Verse8 is less straightforward. It's described as an "open-source decentralized roguelike RPG protocol" rather than a game. Planetarium Labs says that the protocol will offer tools for world generation, distribution, and monetization. The emphasis appears to be on helping the creation of individual RPGs using a shared toolset designed to enable multiplayer experiences, gaming communities, and virtual economies. Verse8 could be an intriguing project to watch once we get more details.

Since 2020, Planetarium Labs has been operating and refining Nine Chronicles, not just as a desktop idle RPG but also as a demonstration of its decentralized multiplayer technology Libplanet. It enables multiplayer experiences without the need for a centralized server, relying instead on peer-to-peer validation.

Typically, this means that each player runs a node alongside the game client which can be CPU-intensive. However, an idle RPG is well-suited for this setup, as it provides a reason for keeping the game client open for extended periods even when not actively engaged. Planetarium Labs did not explicitly state that the newly-announced projects would utilize this technology, but the implication was there. 

Netmarble Unifies its Economy

South Korean mobile publisher Netmarble made some noteworthy announcements through its Marblex blockchain division. It said that Stella Fantasy from Ring Games would be the first game to implement its new gMBXL token and tokenomics framework. This also positions Stella Fantasy as the fifth and only non-Netmarble game to be integrated into the Marblex ecosystem.

Netmarble has been one of the largest mobile publishers to venture into the web3 space, a move that has resulted in both successes and setbacks. The company initially experimented by incorporating a token into an existing game, A3: Still Alive. It later launched the successful Ni no Kuni: Cross Worlds, as well as the less fortunate Golden Bros. More recently, Netmarble released two additional web3-enabled games – The King of Fighters ARENA and Meta World: My City –though neither has gained significant traction thus far.

Recognizing the challenges of managing individual tokenomics, Netmarble has overhauled Marblex to use MBXL as a single currency for all games. Titles within this ecosystem will use gMBXL as their in-game currency, which will be valued at a 1:1 ratio with MBXL. After Stella Fantasy the next Marblex title to use gMBXL is upcoming sci-fi RPG RF Project. Netmarble will also incorporate this new tokenomics framework into existing games, although there’s no timeline for this yet. 

Using a single token is an effort to simplify web3 and onboard web2 players, and also to enhance token utility by enabling use across multiple games. Gala Games made a similar pivot earlier in the year, but this approach carries a risk: any game capable of generating gMBXL tokens easier or faster than others could become an arbitrage opportunity. Netmarble has already shown a willingness to deviate from the 1:1 ratio as it did with the Golden Bros token when extended early access led to inflation. We expect Netmarble to use fixed distribution or supply per game to help prevent this.

Despite some setbacks, Netmarble appears steadfast in its commitment to web3. Netmarble consistently publishes high-quality games and collaborates with major intellectual properties, including Marvel, DC, and Jurassic World. Should the company successfully refine its web3 strategy, we anticipate it making significant strides in onboarding non-web3 native players, particularly on mobile, thanks to its global reach. It still may take a number of weak or mediocre releases to find a successful strategy, which will test the resolve towards web3 gaming.

Story Protocol sees IP Differently

Story Protocol, which hosted an insightful fireside chat from CEO Seung Yoon Lee on IP infrastructure, also announced a $54m funding round led by a16z. 

Story Protocol aims to use blockchain technology to democratize IP creation – what Story Protocol describes as "Git for IP." It extends beyond just game IP but certainly includes it, especially as one of its founders worked on narrative app Episode. Story Protocol plans to leverage blockchain tech to ensure transparent attribution and automated royalty payments, thereby facilitating contributions, remixing, and monetization. Systems like Story Protocol could help enable the use of NFT projects in games and improve interoperability, issues that are often more related to IP licensing than to technical constraints. The company also mentioned the authentication of AI-generated content, although the specifics of how this will be implemented remain unclear.

Final Thoughts

These announcements collectively underscore a strong belief in web3 gaming within South Korea. Due to language barriers, Western audiences may find it challenging to fully appreciate the number of high-quality web3 games that Korean developers have in the pipeline. Although tokenomics models still need refining, there was a palpable will at KBW to learn from projects like Axie Infinity and avoid similar pitfalls. Korea is also in the process of recovering from the collapse of Terra, an event that significantly impacted local developers and led many to migrate to Polygon and other blockchains.

Unfortunately, South Korea continues to enforce a nationwide ban on games featuring NFTs or cryptocurrencies, citing concerns about promoting speculative behavior. The current president, Yoon Suk-yeol, had pledged to lift this ban during his campaign but has yet to advance this agenda since taking office. Lobbying is illegal in South Korea, and efforts by some developers to influence government policy have devolved into a bribery scandal, further complicating the push for legal reform.

Wemade has also faced challenges, particularly concerning its Wemix token. Major exchanges delisted the token following accusations of inaccurate circulation numbers. At 2022’s Korea Blockchain Week, Wemade's CEO predicted that the ban would be lifted by the following year; this has yet to materialize.

Despite these challenges, developers persist in creating web3 games, and many of them will also see a South Korean release, albeit with web3 elements removed, while web-based blockchain interactions offer a useful workaround for some titles. The most eagerly-awaited project is Nexon's MapleStory Universe – South Korea hasn't had much success in creating globally enduring game IPs, but MapleStory is the exception with its 20-year history and large fanbase. 

Nexon Production Director Sunyoung (S.Y.) Hwang participated in a panel at KBW, sharing the stage with CCP Games CEO Hilmar Veigar Petursson. Hwang spoke of web3’s use as part of a User-Generated Content (UGC) system for MapleStory, noting that players often create more content than the development team. Petursson, meanwhile, focused on its application outside the game as a replacement for the API-driven ecosystem that has evolved around Eve Online. The hope is that web3 allied with strong IPs like MapleStory or the Eve universe could broaden its application in games, if executed well. 

We anticipate more challenges ahead for Korean web3 developers, especially since many current games focus on tokens and play-to-earn models, as opposed to Japan's emphasis on NFT ownership. Conversations and presentations at KBW suggest this mindset is shifting, although long game development cycles mean it may take some time to manifest. What's crucial for now is that, despite obstacles, one of the most forward-thinking gamer nations in the world is pushing web3 gaming more aggressively than any other – and that sense of the future was palpable at KBW 2023.

2023 Gaming Spotlight Report 

It’s no secret that economic headwinds and privacy regulations have slowed down gaming spend this year. Despite the softening, mobile is still the largest market opportunity for digital games, cementing its role as the world's preferred form of gaming.

Leveraging Game IQ, data.ai partnered with market intelligence firm IDC to co-author the 2023 Gaming Spotlight. This report compares performance of mobile, console, handheld, and PC/Mac categories and includes insights publishers need to succeed in gaming including:

• Why meeting the diverse demands of mobile gamers while still implementing budget friendly updates is essential for user retention and stabilization in today's market.
• Ways to streamline your acquisition and optimize your monetization strategy to battle the rising costs and limited user visibility.
• How diversifying monetization approaches beyond In-App Purchases can maximize mobile return on investment and requires staying informed about market trends.

Download the 2023 Gaming Spotlight Report to optimize your monetization strategies while staying ahead of rising costs and revenue challenges.

Gaming Market Update: September 9th – 15th

By Mario Stefanidis, CFA, Naavik Contributor

• For the week ending September 15th, 2023: The average return for gaming companies tracked by Naavik with a market capitalization exceeding $500m was 0.4%. The S&P 500 returned -0.2% and the Nasdaq-100 returned -0.5%. Full access to the Naavik Gaming Company universe is available here.
  
• Netmarble‘s stock rose 11.4% on optimism surrounding the company’s new mobile game, Seven Knights Idle Adventure, which was released on September 6th. It’s a casual single player idle RPG, and five days after launch it was second in South Korea’s Google Play chart and top in the iOS App Store. Despite sharp gains last week the stock remains 76% off its September 2020 highs. Netmarble’s global release slate for the second half of the year includes two other games – Tower of God: New World, another idle RPG which was released in July, and Grand Cross: Age of Titans, a strategy game that came out in August.

Notable Venture Financing Deals

• Animoca Brands raised $20m to kickstart its flagship NFT project, Mocaverse. This brings total funding for the private web3-focused games company to $826m according to Crunchbase. Mocaverse is a collection of 8,888 NFTs divided into five “tribes” – Dreamers, Builders, Angels, Connectors, and Neo-Capitalists. The collection spans Animoca’s “family of companies, projects, investments, shareholders, and partners”. As such, the only parties eligible to mint are the “friends and family” of Animoca. An additional category, the Mocalist, is eligible to join if they are randomly selected as holders of the Realm Ticket NFTs.
  
  Yat Siu, the executive chairman of Animoca Brands, stated that Mocaverse's DAO-based strategy ensures community-driven innovation and partnership throughout Animoca Brands’ infrastructure. Mocaverse also intends to serve as a digital identification and loyalty mechanism for other decentralized entities. Concurrent with the funding, Animoca Brands anticipates unveiling Moca ID, a non-transferrable NFT series. This will facilitate users in establishing their blockchain-based identities and engaging actively within the Mocaverse environment.

• Pahdo Labs secured $15m in Series A funding to develop an anime-style RPG along with a user-generated content (UGC) platform. The startup first developed a prototype for an action RPG mixing JRPG, fighting game, and adventure game elements, which led to the funding round. Its upcoming title, Halcyon Zero, will infuse creative and social aspects into the anime RPG space, letting players create their own personal anime-like universes using AI and procedural generation from an isometric perspective. It is built on the Godot engine. The final version will feature a large roster of anime-inspired characters and is set for release on PC, with eventual plans for cross-play on mobile and Switch. The company has 21 employees working out of the U.S., Canada, South Korea, Germany, and other locations. A16z Games led the round – Jonathan Lai, general partner at the firm, said he was “impressed by Pahdo’s execution speed” and believes the platform shows much promise.

• GamePhilos, a newly created mobile games studio, raised $8m in seed funding. The team is composed of strategy game veterans with experience at companies such as NetEase, Zynga, ByteDance, and Blizzard. The raise will go toward the development and distribution of their upcoming strategy game, “Age of Dino,” which will combine traditional real-time strategy gaming with digital ownership focused on how players can earn, utilize, and trade in-game collectibles and resources. The round was led by Xterio, and the Xterio Foundation platform, which provides web3 integrations for free-to-play games, will be used for the studio’s upcoming title. Age of Dino will utilize the FunPlus engine and will be deployed on BNB Chain’s layer 2 opBNB. The game is slated for launch next year on mobile devices.

• Other venture financing deals include:
  • Series AI raised $7.9m in seed funding to develop AI-based game authoring tools, aimed at reducing the time spent on routine game development tasks. The platform, called the "Rho Engine," blends generative AI with a game editor.
  • Rascal Games garnered $4.2m in funding for multiplayer adventure game Project Wayward. The studio was founded by the creators of Blitz.gg, an overlay for League of Legends, Valorant, Fortnite, and other titles. The game will focus on player-versus-environment group play in various Lord of the Rings-inspired fantasy settings. 

Notable Strategic Investments

• Israeli mobile game developer and publisher Playtika has acquired Innplay Labs for up to $300m. The deal is structured with an upfront consideration of $80m and maximum consideration of $300m, presumably based on performance targets. Innplay Labs is also based in Israel, and currently supports two titles – Animals & Coins and Tiles of Fortune. 
  
  Animals & Coins has been downloaded over 10m times since its 2020 release, ranks #54 in the Adventure category on iOS, and has generated $17.9m in IAP revenue. The app blends adventure gameplay with a social loot element – players steal coins from their friends and can collect them through minigames, using the cash to build their islands. Tiles of Fortune is also based on coin and raid mechanics but in a Match 3 format. It was released in August 2022 and has had a slow start with 91k downloads and $63k in store revenue. Most of Innplay’s efforts and recent development resources have been directed toward this game.
  
  Playtika CEO Robert Antokol referred to InnPlay’s niche as the “luck battle” genre, and the press release only mentioned the potential of Animals & Coins. Like many of Playtika’s other acquisitions, Playtika will likely bake its liveops capabilities into the game and try to boost overall long-term performance. What remains to be seen is whether this game’s (and the overall acquisition) story will play out more like how it did for Redecor and Reworks (poorly) or Solitaire Grand Harvest and Supertreat (fairly well) — we hope the latter.

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