DISRUPTIVE TECHNOLOGIES FOR ESPORTS: ICO'S
TNL Industry Guest Post 008: Over the past 13 years, Anton Ferraro has helped develop numerous esports focused properties including tournament broadcasts, television programs, streaming platforms, branded campaigns, digital products & live event activations.
Anton began his career in 2004 by organizing and playing at local Halo events and shortly thereafter joined Major League Gaming to assist their media efforts. After 8 years with the company Anton transitioned to the West Coast and helped build the Azubu streaming platform as Director of Content.
Anton currently resides in Brooklyn, New York with his wife and pug and too much of his time is spent playing Overwatch. You can view his work at www.AntonFerraro.com
TNL Take: In the first post, we looked at the potential disruption that blockchain technologies like Ethereum could have on eSports.
Now that it's already been a month, we've moved onto the next hot buzzword of the moment: ICO's or Initial Coin Offerings.
As with anything hot and new comes the inherent risk - hence why we will look at the good, the bad and the ugly that comes with each.
Two of the main tools we will use to examine ICO's are White Papers & CoinMarketCap.com.
White Papers are technical papers provided by the team who are selling the coins. These papers aren’t audited by any government entity so their accuracy should be taken with a grain of salt. They’re not ideal but it’s usually better to have some insight as opposed to having none.
CoinMarketCap hooks into the API’s of various cryptocurrency exchanges and calculates a volume weighted average for different coins. Again, unregulated but having some info is better than none.
“Our main product under this ICO is creating an exchange service with a convenient API for connecting to the third party websites, so that they can accept payments in SKINCOIN without having to open and maintain their own stores.”
Gambling is a lucrative space within eSports with skin betting estimated to be a $5B market. The developers also operate several skin related websites that they hope to plug SkinCoin into. (Steamtrade.net, Skinwin.com, Case.club and Dotashop.net). Outside of those little things like ethics and morality, it seems that the team knows the market they are planning to operate in.
It remains to be seen whether SkinCoin will offer enough functionality to be adopted by sites other than the ones owned by its operators.
At the conclusion of the ICO, the market cap spiked and then promptly plummeted to $3.4M. By cocktail napkin math, the creators control somewhere in the neighborhood of 82% of the the tokens.
Valve (and various government entities) have previously attempted to shut down skin trading websites. While these sites are no doubt profitable, SkinCoin is choosing to operate in a very legal grey area.
Horror stories abound of minors circumventing age gates, getting addicted to gambling and racking up thousands of dollars of debt on their parent’s credit cards before they are even of a legal age to wager.
“FirstBlood will be the first decentralized app, built on top of Ethereum, that allows eSports enthusiasts to compete in their favorite games through a decentralized, automated platform.”
FirstBlood completed it’s ICO in October of 2016 when Ethereum was trading at ~$10, raising $5M. In Spring of 2017 Ether spiked to a peak of $391 and has recently been hovering around $300. If they kept their funding round in Ethereum to this point — Firstblood would sitting on a $150M warchest.
Since their raise FirstBlood has built a team, launched a platform, and seen the value of their token spike to $2.05 and then settle at $0.66. The platform currently supports only DoTA 2 but they are teasing the addition of other games in the near future.
Nothing I’ve seen yet is revolutionary but the potential size of their warchest will allow them to experiment and pivot the product if need be. They’re also riding the momentum of the Ethereum developer community which could provide breakthroughs FirstBlood could capitalize on.
FirstBlood is following in the footsteps of ESEA, Gamebattles and a slew of other competition platforms in attempting to package a competitive skill based system. Before assessing the benefits of using a crypto currency for this service, it’s important to understand the intrinsic difficulties that come with operating such a service:
/01 Publishers & Developers have greatly improved their in game matchmaking and competition features [Edit: As well as the platforms themselves] .
Many other tournament platforms have been launched and shuttered (Virgin Gaming, XFire, Avyd, etc and from a user perspective the value provided by these services is not worth the difficulty of using an outside service. Yes you can get introduced to other serious competitors - but managing accounts, reporting matches and managing disputes is tedious - which in large part has prevented these services from scaling.
/02 Skill based platforms tend have sharks who prey on newer entrants. A few of the top players will take money from newbies, drive away the newbies, and ultimately stifle growth.
When I reached to reference the accuracy of the archived FirstBlood White Paper linked above a representative for the company said that there is no current White Paper for First Blood. This leads me to think that the product has pivoted beyond the vision that was shared prior to the ICO.
“The purpose of the NEVERDIE Coin and Teleport Token is to turn the mechanics of buying a new life in a game or traveling within a game or between games into a utility that requires universal tokens. With a limit to the number of tokens in circulation, these utility tokens gain an intrinsic value as the demand to utilize them grows.“
MMORPG’s have millions of people playing them with the digital goods found in these games having real life dollar value with NEVERDIE hoping to become the currency that is used to trade these goods. They have two products on the market — the NEVERDIE Coin & the Teleport Token.
What value these two tokens can provide remains to be seen. Exchanges for MMORPG digital goods exist, however publishers are incredibly wary of secondary markets and Neverdie is going to need their support to improve their product.
Neverdie has the lofty goal of creating 1 billion jobs in virtual reality worlds. In practice, the wages for these type of jobs are incredibly low and in the past has resulted in unscrupulous digital slave shops to be built.
“The HPGC token can be used to pay for premium in-game content, compete in eSports competitions, share in yearly game revenue payouts, or sell on an open exchange.”
HPG hopes to finance their video game studio and projects via Ethereum and the blockchain. Looking back to 2009, Riot benefitted greatly by being a first mover in the freemium space. If the Ethereum model succeeds, Hungry Panda Games could find themselves owning a financing pipeline that could grant them a lot of freedom to experiment and innovate.
Profits from the studio will be split among token holders and a percentage of studio revenues will be used to buy tokens back. This “stock buyback” program may serve to drive token prices up, which is lucrative for token holders.
Finally the studio says it will focus on traditional forms of distribution as well thereby diversifying risk by also incorporating traditional monetary systems.
Hungry Panda’s website states that they have a 15 member team that has worked for various studios - which would be more compelling if more information was provided.
Their team identity hasn’t really been revealed, the website is amateur looking and everything found online is from their press release. For all their AAA experience it’s surprising the limited amount of credibility Hungry Panda Games has managed to establish.
Conclusion: The ICO space is incredibly active. There will be a few huge winners and many losers. Unikrn with Mark Cuban and Na’Vi’s past owner are also offering huge ICO’s in the eSports space and there will be more after them. Cryptocurrencies have spiked and it remains to be seen to what degree this will be a sustainable market.
We will look at the upcoming batch of ICO's in the next part of the blockchain series.
Hungry Panda Games: ICO has yet to occur