Supercell is making its first investment in web3 games since the NFT frenzy of 2022, alongside veteran game investor Mitch Lasky of Benchmark.

Supercell, Lasky and others contributed to a $3.2M funding round for multigame web3 studio/publisher Games for a Living (GFAL), amid a challenging climate for web3 games. GFAL also managed to amass $4.4M in capital from token pre-sales in 2023, so the collective funding puts GFAL in a strong position to develop and deliver on its multiple web3 games, which we’ll dive into in a moment.

But firstly, what is GFAL doing that’s able to attract investment from knowledgeable investors? Supercell's commitment to backing web3 game studios isn't new, but the large gap since its last investment shows a belief in this particular project. In 2022, Supercell backed Klang for its ambitious MMO project, Seed. However, this once-promising game seemed to vanish into thin air following a final playtest in November 2023. Supercell also helped fund Oxalis Games, which is developing Moonfrost, a web3 take on Stardew Valley. In contrast to Seed, Moonfrost is still in active development, and Oxalis is planning to run a new closed alpha playtest in the near future.

Benchmark also isn’t new to investing in web3, though Mitch Lasky himself has been publicly skeptical at times. Benchmark invested in both web3 related infrastructure with Chainalysis and games with Sorare, seeing some success from both. Lasky also has investments in other studios like Singularity 6 which recently released Palia; Odyssey Interactive, which failed to find success with Omega Strikers, and two studios that haven’t yet released games, Good Trouble and Rascal Games.

GFAL’s Elemental Raiders Explained

GFAL released the first of its games, Elemental Raiders, globally on mobile and desktop last month after a long soft-launch period that started in June 2023. It is a hero-based card battler with both PvP and PvE modes that has a similar "collect duplicates to upgrade" mechanic as Supercell’s Clash Royale.

The game is available on Steam, Android, and iOS, with plans for a console release as well. None of the versions available through third-party distribution hubs have any blockchain integration at the moment, although the standalone desktop version does have a little. The game does have full IAP monetization with soft and premium currencies alongside seasonal PvE/PvP gameplay.

The gameplay is a decent iteration on squad-based gacha battling games mixed with ability cards for greater variety. PvP battles are 3v3, with heroes powered by a specific element for typical rock-paper-scissors-style balance. Ability cards can be upgraded via duplicates and soft currency.

During battle, players draw and pick cards to play using a typical energy system. Card choices are simultaneous blind choices, like in Marvel Snap, which can be important as there is an order in which the heroes use their cards, and dying mid-turn can stop a card from being used.

In the Raid-style PvE gameplay, players attempt to do as much damage and make as much progress as possible, before dying and repeating a run to chip away at increasing rewards. Leaderboard rankings are important to the game in determining the reward of the $GFAL tokens to players.

GFAL’s Token

The focus of the game’s current web3 implementation is less on NFTs and more on its $GFAL token, which is unlikely to see all that much integration into game clients with current platform policies. The token was launched on March 13th 2023, raising $3.5M in private sale and $800K in pre-sales, and it boasts a market cap of $38.9M (or $173M fully diluted).

The token is focused on merit-based play-to-earn, which means awarding players through game leaderboards and seasons, much like Sky Mavis has done with its Axie Infinity $AXS rewards. Unfortunately for GFAL, one of its initial promises for its token was that it would be required for all in-app purchases in Elemental Raiders and its other games, which is currently prohibited by major game platforms.

GFAL has therefore had to adapt and feature traditional IAP for a premium currency. The workaround is the ability to purchase the currency for $GFAL tokens on its web marketplace. Not exactly a compelling investment, but it at least provides some flexible utility and makes for a clearer business model.

The need for a traditional IAP involvement highlights two important issues web3 game developers using tokens must face. Platforms currently don't want to touch tokens as a form of currency and need their cut of sales. There’s also the even bigger issue of needing to not have secondary sales of your token cannibalize your ability to make money while still giving players value.

When IAP is purchased for the nontoken premium currency, the platforms get their cut, and GFAL gets actual revenue. Driving revenue through token sales is generally quite a bit more complicated, but GFAL does at least make getting into the web3 side somewhat easy with an easy click-to-create wallet integrated with the free GFAL account. It has also partnered with Ramp for easy credit card-based onboarding.

This single token is also intended to be used across the different GFAL games and earnable through playing them. It's doubtful, however, that the company literally expects to give players the $1 per hour in value it has stated players should get, which seems more likely to only apply to the top players.

The distribution of the token rewards has also gone through revisions over its four previous game seasons. None of GFAL’s other games currently reward any tokens, but the studio does plan to at some point. So far, the only thing to spend tokens on is for the premium currency or a single one-time purchase of a legendary chest for Elemental Raiders.

GFAL must have some ideas shared with investors on how to expand the need for the token, with plans for it to be an in-game currency somewhat sidetracked.

The Investment

So the question is, why did Supercell and Benchmark invest? The answer may have more to do with history and the team at GFAL than the state of web3 gaming.

Many of the founders of GFAL come from now-shuttered game studio Digital Chocolate. The connection here is Supercell CEO Ilkka Paananen, who cut his teeth in Digital Chocolate’s Helsinki studio. We assume Paananen believes in the GFAL team’s potential, and the Digital Chocolate alums now running GFAL includes Chief Strategy Officer Trip Hawkins, of EA fame, and CEO Manel Sort, who came from King and Activision Blizzard.

While Lasky isn’t as deeply connected to GFAL as Paananen, he said in the funding announcement that he has been ”very impressed with the GFAL team's design-centered approach to web3 gaming.” Lasky has often been vocal about a focus on business models in gaming, so perhaps he sees some potential in the monetization opportunities web3 might open up across multiple games.

Despite some of the difficulties GFAL is likely to have with its token, given platform restrictions, there are some advantages to web3 that Supercell and Lasky may want to see play out here. Two of the biggest struggles in mobile gaming right now are user acquisition and retention.

Rewarding dedicated play, as GFAL intends to do, has shown some success in user acquisition and retention. Retention in particular is helped with the offer of cryptocurrency rewards, according to ZBD, which has seen significant increases in long-term play from giving out tiny amounts of bitcoin to dedicated players. While players initially see the rewards as financial, they often increase LTV beyond the amount given out, and much of the initial P2E wave was built on some of this premise, though it was often naively executed.

Web3 ownership and investment in tokens and NFTs has also shown benefits to retention as part of sunk cost and network effects outside of a single game. Sky Mavis has demonstrated on its Ronin chain that player investment into a network, even through a single game, can sometimes transfer to other games within an ecosystem, as Pixels has benefitted from recently. Some of this can be attributed to community building and some to the friction of moving value outside the network without losing a portion.

While GFAL isn’t taking the exact same approach as Sky Mavis, it is also adopting a publisher ecosystem mentality to ensure there is a reason for players to stick around.

What’s on the Horizon?

GFAL’s next game, Diamond Dreams, is a match-3 and appears close to beta or early access. Anime-inspired Soccer Legends is currently in early access on Android with monetization, but there’s no sign of a token yet. Dead Zombie, a zombie-themed idle RPG, just launched in alpha on mobile, and Jump Pump, an evolution of Doodle Jump, is still in private beta.

Acting as a publisher in addition to first-party development is helping speed up the growth of GFALs potential ecosystem. There is a pretty ambitious road map for the web3 side of things across 2024, with collectibles trading and UGC features having the most potential to improve the ecosystem, if successful.

None of these games screams web3, outside of having some focus on collectible elements, and instead focus on trying to be interesting casual mobile games first. The real test here will be to see if GFAL can find a successful way to leverage any web3 advantages as part of an ecosystem of different games. Simply having a token that can be exchanged for premium currency across a handful of games isn’t going to be a game changer, but other features, like Elemental Raiders' in-game minting, are slated for Q2 2024 that can at least introduce NFTs into the mix.

The overall strategy seems to be to allow more dedicated players to earn things that primarily have value within the ecosystem, and drive a sense of ownership through NFTs and governance that helps to retain players longer term. This is a concept with quite a few competitors, so it’s more GFAL’s ability to execute that helps investors to see the business opportunity.

Many of the plays for building a web3 ecosystem around games have often resulted in a large number of hypercasual or very low-quality casual games. GFAL isn’t necessarily building hugely innovative blockbuster titles, but it does have a decent quality standard and a slowly growing community.

Elemental Raiders and Soccer Legends are both fun games in their own right, but we remain skeptical of the web3 elements being strong enough to foster the demand needed to bring players to the token. It’s not so much a question of whether or not GFAL can deliver on its promises, so much as whether that’s enough in a crowded and unforgiving market.

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