How to Solve “THE” web3 Problem: A Staircase Tax

MMOs and most web3 titles suffer from a fundamental design flaw: capital depreciation (or lack thereof). The result is a Zimbabwe-style hyperinflation economy so prevalent Redditors plead to find an MMO that hasn’t suffered. Even EVE Online, with its own Head Economist 1. suffered inflation bouts. It’s a looming threat to the web3 space, only mitigated by the fact that web3 games haven’t survived long enough to grapple with it. Luckily, there’s an answer that combines the best solutions from MMOs with the “permanence” soul of web3: a staircase tax. Reddit Find Friedman in All the Unexpected Places Gold Farmers Always Win As Milton Friedman reminds us, “Inflation is everywhere, and always a monetary phenomenon,” a principle that extends to MMOs. When players generate or mine assets, holding all else constant, the supply curve moves outward, and price falls. With enough time, […]

Phillip Black January 2

Journal

Hypercasual solved a novel problem for all mobile titles

Hypercasual solved a novel problem for all mobile titles: marketing. Like web3, hypercasual always seems to be caught in its drama with recurring reports of death or life on top of wash trading driving genre GDP. But beneath all the bullshit, hypercasual discovered something profound: how to get BILLIONS of players to download games at sub $1 CPIs. In 2022, hypercasual accounted for 29% of ALL app store downloads and cleared over 1 BILLION monthly downloads. The numbers represent real player action - they see something in hypercasual ads they don’t see in others. On a rough click-through basis, players might be 5 to 10 times more likely to tap on hypercasual ads then mid-core ads.Hypercasual’s IP playbook hammers on reducing cognitive complexity; gameplay and art are straightforward to digest. Navigating a medieval fantasy game teeming with knights, dragons, and […]

Phillip Black September 10

Journal

The Reverse-Blizzard Thesis Has Arrived

The reverse-Blizzard thesis has arrived. Firms like Blizzard, Supercell, Valve, and even Apple thrived on popularizing but not inventing mechanics and genres. Blizzard's next fresh franchise, a survival crafting game, draws heavily from predecessors like Ark: Survival Evolved and Rust. Those titles failed to scale to mainstream adoption; if players need a server browser for play, it's not ready for the mainstream. But both Supercell and Blizzard have struggled to scale their studios to meet modern content demands, and that's left them open for a sort of reverse thesis: drop production values and win on the supply side. No game exemplifies this better than Path of Exile. Blizzard's failure to establish and maintain a live-service team for Diablo III gave birth to Path of Exile, a game that recently reached an all-time high of 1.5 million DAU and is nearing […]

Phillip Black September 9

Journal

How IAPs Fuel Player Retention and Growth in F2P Games

Consider an experiment on a given game; IAP is turned on in one version, and in another, IAP is turned off. After one year, which version has more players? It's the one with IAPs on! Monetization increases engagement; far from a tax, it's a subsidy.In a rush to emphasize the unique low conversion and hyper-skewed nature of F2P, evidence rarely is presented as a time series. We often lament that "less than 1% of players pay!" but this isn't true on a time series basis. The retention rates of players who choose to pay are significantly different from those who do not. Over time, the share of DAU that's made at least one payment rises; it's also why we see ARPDAU rise. With enough time, payers outnumber nonpayers. Top games like Galaxy of Heroes or Summoner's War likely maintain 60-80% […]

Phillip Black September 4

Journal

Chinese Games Have Gone Global

Chinese games have gone global. This week’s launch of Honkai: Star Rail and Starlight 84 marks China’s emergence as a AAA developer for Western audiences. In the past, top Chinese games such as Honor of Kings, Fantasy Westward Journey, and QQ Speed struggled to meet Western expectations or compete with their Western counterparts. As with our usual economic growth story, manufacturing and outsourcing accumulates valuable human capital and spur agglomeration effects, letting developers move up the supply chain. Original IP development sits atop that chain. The adoption of mobile gaming and sophisticated virtual “dual stick” controls in the West has aided Chinese success. GenZ is being raised on dual-stick Roblox mobile, and Call of Duty Mobile’s dual-stick success was a revelation. The explosion of anime in the West hasn’t hurt, either. Driven by platforms like Netflix and Crunchyroll, the growing […]

Phillip Black August 14

Journal

Supply-chain economics is as much a game design responsibility as it is production.

Core design influences the production gap between Blizzard's Overwatch heroes and, say, Ubisoft's Rainbow Six Siege (R6:Siege) Operators. Ubisoft has shipped an average of .51 new Operators per month since launch compared to Blizzard's .21 new heroes, more than double the pace. Blizzard will pack far more lore, cosmetics, and unique gameplay into each hero at the time of release - it's part of the Blizzard "quality bar," but maybe heroes should release faster and with fewer "features." In faster character designs, weapons are sometimes disintermediated from character units - Apex and Valorent release weapons separately. Part of player empathy is servicing players' content needs, with many legacy AAA studios refusing to tackle the challenge. But it's at their peril; players ultimately choose the optimal mix of quality and quantity, not design directors. Liveops' responsibility is to reduce the constraint […]

Phillip Black August 7

Journal

Supercell To Superscale

The world’s least powerful CEO won’t lead Supercell’s next chapter. Supercell is superscaling, and with it comes bureaucratization and hierarchy. CEO Ilkka Paananen believes investing in their proprietary game engine is crucial for the company's future. One way to scale is by increasing each developer’s productivity. The engine functions like a platform with “out-of-the-box” tools to avoid re-building the wheel for every title. The challenge, however, is that each game and genre has its own “wheel.” Supercell's most ambitious project, Clash Heroes, opted for Unreal instead of the in-house engine, raising concerns about its effectiveness. The economics of proprietary engines haven’t worked. Engine development is expensive, with costs amortized over customers. The fewer the customers, the more expensive the development. This worsens when combined with new studio locations and remote work. EA’s Frostbite isn’t exactly setting the industry ablaze, and […]

Phillip Black August 1

Phillip Black