Web3 Gaming: A Vision from EA Co-Founder Jeff Burton

Story of the Electronic Arts

Dan: Apparently, a lot of good stuff is happening in Web3 gaming, and Jeff can transcend his experience from the past when he founded Electronic Arts to today. He has been involved with gaming companies ever since. And to the best of my knowledge, he's advising quite a few GameFi companies.

So it will be very interesting to understand what the situation is today. How does it differ from the past? And why should we be excited about the future and, nonetheless, what can you do today to earn in this market?

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So, Jeff, how are you? And where are you? What are you doing now?

Jeff: I'm doing fine. Thanks, Dan. I'm pleased to be here and pleased to speak with you. I'm in San Francisco Bay Area. It is amazingly chilly here in July, but I'm doing fine.

Dan: So, could you give us a little background of why you matter in this gaming industry at all?

Jeff: You know, I have been involved for 41 years in the gaming industry, a little bit more than that because I was at Atari before we founded Electronic Arts.

One of the objectives we had when we started Electronic Arts. And as I said, I was an executive at Atari. I was the only one of the founding members of Electronic Arts who came from the gaming industry. And I had been in charge of Europe and the Middle East for Atari's home computers.

And one of the things that it did was give me connections to some of the programmers that Atari had on staff who had built games, one of them, in particular, was named Chris Crawford. He ended up becoming well-known. He had a game called, I think it was a deep strategy war gaming product called “The Eastern Front”, I believe. Electronic Arts eventually did publish one of his titles, and he left Atari. He also started the game developers' conference in San Francisco a number of years ago.

But the point is when Chris was an employee at Atari, and I knew him, the work he did, and others like him at Atari, it was kept kind of secret. I mean, developers who were employed by Atari didn't get their names on the products that they produced. They didn't get royalties if the products were successful. They really didn't share much in the significant profits that Atari was reaping from its games.

And so one of the aspects of what we wanted to do, and we talked about this at Electronic Arts, was to allow the developers of games to actually have credit, take credit for the work they've done. And I think it was our intention that the significant profits that gaming companies could generate should be shared more broadly with the people who created the game in the first place.

And so that was one of the things that I think we didn't stress that much, but I think we really wanted to bring value and all to the developers of software and share the wealth with them.

Dan: Alright. So let me stop you here. So 40 years ago, with Electronic Arts, you were actually democratizing the revenue that big companies got and sharing them with the creators of games. And like 40 years later, we are at the cusp of sharing those revenues with the players of the games. And because companies understood that the most important and valuable asset that we have is actually all those players that are spending hundreds if not thousands of hours on those games. Is that correct?

Jeff: Absolutely. That's exactly what I intended to imply and say about what brings me to this point. And the possibility of compensating on some level, the players of games, just really wasn't possible before the, I would say, before the development of the cryptocurrency realm because with that, you can make it so much easier to transfer currencies using crypto and it's available to anybody.

And it's really before that happened, it was technically very difficult in any way to compensate the players who make up the base value of every game. And so it is a very necessary thing to begin to allow players to earn some value from what's related, in a way, to their skill in a game or the time they spend on a game.

GameFi

Dan: Next, let's see the first 20 years of your experience. Maybe let's get to the year 2000 or 2010, and back then, online gaming became a thing, and instead of having this sole experience, suddenly you could have like multiplayer experience playing with other people. And only then would I actually presume the value in items was created because if only they were playing the game raising level, acquiring some assets or items in the game, but you couldn't share it with others, it had no value. It was like your personal track record that you're keeping.

But then games became social. I would say we had the early signs of GameFi emerging. I'm using this GameFi as a term that defines game finance, and if somebody could sell skins online to somebody else, that's finance to me. So how would you describe two decades from 2000 till now, in terms of having multiplayer games, the social experience creating value in items and even companies emerging like marketplaces, where you could trade those non-blockchain enabled items?

Jeff: That's what has put us where we are today, and so companies in the gaming industry kind of turn up their noses at the idea of having crypto involved in games or even blockchain. All these developments have really made it possible for the game, and the players of the games, to benefit. There are markets in created, as you say, inside a game with multiple players where the players can exchange, they can build their assets and then enhance them and exchange their assets with other players for their own financial benefit.

Dan: How have you seen this from the legacy perspective? Did you see that as a threat? Some games tried to limit the trading of game assets. They did not want to see game economies emerge. How you, as EA co-founder, saw this trend? Was it an opportunity? In those times.

Jeff: Back then, it was viewed as a threat. But I believe that where we've got today, it's recognized that it is great, it's actually necessary for one thing, and it's a great benefit to the whole gaming world that people can acquire and own assets in a game and then exchange them and to the extent that process is enhanced by the amount of time they spend playing the game, more power to everybody it's great.

Dan: So with the emergence of NFTs, actually like the path to creating sustainable game economies and actually game economies that surpass one game title became possible. And then suddenly, the GameFi, as we know it, the crypto GameFi movement started. We have seen CryptoKitties as one of the first examples, and related to that, the rise of Animoca Brands, the leading player in this fight, and we got to today.

What I want to ask you is, why do you think a lot of gamers that are not in crypto are actually fervently opposed to making those in-game items NFTs or even introducing tokens as cryptocurrency in the games? Why do not only the companies, some big gaming companies, see this as a threat, but also the players are acting against this trend?

Jeff: I'm baffled by that too. I don't understand why it would be any kind of anything but a big advantage to gamers to be able to play games that have, that allow them to build assets of value. I don't know why that doesn't make sense to everybody. One of the things that may have hindered it along the way is that the initial games that were involved in the GameFi world were not as good quality as some of the other games that have been around for a long time in terms of graphics and play and all that stuff.

So it's taken a little while for companies to build AAA games that are also involved in the NFT, blockchain, and crypto asset value side of things. It's just taking a while to shake out. I think that the skeptical gamers right now will certainly be pulled into the realization that it is actually a really great thing to have economies, independent economies based on games. In the future, we'll see more and more of the games become really super quality, and so that'll change the attitude of the ones, gamers right now who are quite skeptical.

Dan: Do you think we are in a GameFi revolution, like the usual revelation playbook? First, they ignore us, then they deny us, and then they want us, essentially. Do you think that’s the situation? Animoca said that next year we will see some of the first AAA Web3 games coming to market.

Jeff: I agree totally with that, and I think that it's just there are major game publishing companies that are taking the whole GameFi revolution seriously, and we'll be seeing games in the next year. EA is probably one of them, but they don't tell me anymore. They are very secretive. So I don't know, but I'm sure they are looking at this too, as a number of companies in Asia are currently planning and indicating that they are heading in this same direction. It's taking them a little longer. That's normal in a large corporation to take a while to make a decision. This is sort of a new twist on the whole marketplace, the whole industry.

And I'll tell you that I'm connected to a number of people in Hollywood at some of the major film studios in Hollywood. And once the gaming industry kind of starts to define how it can help its players earn something, some kind of compensation for the time they spend. Let me tell you that the movie industry is trying to figure out how to compensate its viewers as well. And so the gaming industry is kind of leading the way in that regard, the movie industry will be right behind it as the gaming industry figures all this stuff out.

So it's fascinating to see from my standpoint, who knows, maybe television broadcasters will start trying to figure out how to compensate their viewers as well. It'll be interesting to see how that all unfolds.

Dan: I think it will come, but let's look at GameFi today, where we are at, and also from that, we will follow into the opportunities that all of us have by being early in this, let's say GameFi revolution.

So today, we have a bunch of Web3 games. Web3 games funding hasn't stopped that much compared to other verticals of crypto and Web3, so we see the investments going on steadily in GameFi.

Also, we see the number of GameFi players going up and companies, Web3 gaming companies, successfully selling game NFTs. And it was my big surprise, to be honest, when the, let's say, last year's crypto winter went into full force that GameFi was probably the least affected vertical.

And simply because there was a real influx of new gamers and new users, as opposed to the traditional crypto channels like attracting crypto investors, those GameFi companies could simply attract players, which is a huge market. All you need to do is convert them into Web3 believers by giving them some tokens or NFTs and creating the first wallet.

And in terms of the companies that you advise today, what's their experience, today, are they panicking? Are they looking forward to good times? I know that you're advising at least one game title and one up-and-coming Gamer Guild. What are they saying?

Jeff: I think they're positive. They have a very positive outlook for the future. They are expecting things to begin to pick up again around the crypto world. It'll come out of its long winter, and I think that'll be soon. You have to take into consideration things that are happening around the world, like the war in Ukraine. If that can somehow be dissipated or calmed down, that'll help things. If it blows up more, that'll be a problem. So these things do have an impact around the world that are, that can't be controlled.

But I think that the companies definitely are thinking that this fall and, next, early part of the first quarter of 2024 would be really good times in this particular industry, and I think the companies that I'm advising aren't really in the marketplace yet. They haven't had the release of their products. But they are certainly preparing and looking forward, without any real fear of what's gonna happen the next year.

So I think things will turn on the positive side for the industry, the crypto industry, which will then allow more and more people to get involved in the gaming industry. That's what's happened is that mobile phones have now just penetrated almost every spot on the earth. And so there are huge numbers of people that are involved now in gaming that weren't 5 or 10 years ago at all. So that's making a big difference, and that's what's going to drive the efforts over the next couple of years.

The Future of GameFi

Dan: So, let's sum up the situation today.

So essentially, we have reasons to believe that the Autumn and Winter will be good for GameFi unless something major happens with the crypto market, influenced probably by some economy-related events. But we are looking at the positive outlook, and I would add that even if the economy is bad, I doubt that the gamer growth and the title growth in GameFi will slow down.

I think it will just continue, and this is where we get into the opportunities part, so how do we as players can take action on the belief that GameFi is the revolution if not now, then maybe in five years over five years or ten years, the forecast is that by 2028, it will be like a 50-40 billion industry. Today, it's only at around 12, I think. So we'll see some 4x rise, and I think it might be even more significant.

So what do we, as players, do today to capitalize on this belief? And by the way, we are not discussing financial advice. I will not tell you which company to look at, etc. I'm talking about the mechanics that could work for early adopters and believers of GameFi in general.

First of all, by being an active community member, you can gain some free-of-charge rewards just for your community participation, and those items could increase in value or not. You know, depending on whether the title is successful or not. That's the first way.

The second way is to bet on the items or even the token if it's being used early on and believe that the team will succeed. You could simply try the game for yourself, and if you are enjoying it and you believe that a team is doing a good job, the title will become successful, you could make a decision to stock up on some items. And, of course, you could invest in the company directly. I will not discuss this here, but the usual equity, crowdfunding, equity investment or ICOs, IDOs, IGOs, etc., that's a common way in this industry.

And lastly, I see some tied opportunities, such as guilds that collect a bunch of players and then basically get an outsized importance in a game, essentially negotiating better deals, better drops, and other conditions in this GameFi industry. We have seen the rise of those guilds with mostly infinity, where a million or more people have joined and spent the day and night playing the game, and finance, even if people could not afford the items that would make them more successful, would allow them to earn more. The finance industry around GameFi has emerged to loan items to the players, the scholars.

Do I miss something, Jeff, in terms of opportunities today?

Jeff: No, I think you've summarized all that quite accurately.

And really, in the gaming companies that I'm dealing with these days, the gameplay is, and the game itself is what's the most important thing to them. The cryptocurrency side of things and the earning side of this are great and part of what they're doing, but really they're still focused on creating a great game that people love to play.

And in terms of economics. The great thing about video games that we learned 40 years ago is that when times are bad, people seek entertainment to kind of escape the realities, and when times are good, they seek entertainment to increase their fun and enjoyment of living.

So entertainment is a great industry to be in. It thrives in both good economic and bad economic times, and that is as it's spreading around the world, particularly to countries that are densely populated where there are now hundreds of millions of people who have access to mobile phones and play games all the time on their mobile phones. So that really has created this whole boom, I'd say, in what video games can do for the world, really.

Dan: Jeff, let's end with wild predictions for the future, 5-10 years. Let me throw in a few, and then you can throw in a few of yours. Do you think a significant percentage of youth would be going to play games as their full-time job? Yes or no?

Jeff: I don't think a significant number will do that. But certainly, I guess I'm thinking about the numbers in the US and Europe, but really, it's the rest of the world, the places like the Philippines and Brazil and certainly Southeast Asia. Maybe in certain geographies, that will be the case that youth will, in the next 5 to 10 years, be spending their time, earning money, and playing these games as a full-time occupation, but I'm not sure about that.

Dan: I actually want to challenge you, Jeff. I want to challenge you because I actually believe that the percentage will be high, simply because even today, we have a lot of gamers that do it only for the pure joy of it. And then became pro just to compete in those tournaments where only the tip of the iceberg gets compensated.

I think with GameFi, the percentage, let's say out of 100% of players, I think 10 or even 20% of them could become full-time earners in, let's say, low-income countries, for just having access to this economic opportunity and this is not a stupid thing to do. To be a Web3 gamer simply because you will be building the skills that are relevant for the metaverse that is coming.

And secondly, you will be building financial literacy on how to behave with the assets that you have acquired. And even in some cases, those people do not have access to the banking infrastructure that is actually rotten, and crypto can replace that. So we are seeing economic inclusion and economic empowerment happening through GameFi. And this is something that I'm really excited about.

Jeff: I agree, I agree. I do agree with you on that front that the billions of people in the world who previously had no access to building some assets or learning how to deal with assets, trading them, or selling them is a great future that the video game industry is leading the way for.

I agree with you, and especially in developing countries, there are hundreds of millions of people that will get involved in economies now that couldn't be before and didn't. It's an easy way for them in the gaming industry to get into that. It bodes well for this industry and for the world, really.

Dan: So, in 5 to 10 years. What do you think will be the percentage of games that are Web3 enabled or actually have joined the GameFi movement compared to today?

Jeff: I think it'll be above 50%, probably more like 80% to 90%. I think everything is gonna go in that direction.

Dan: Wow, that's a bold prediction, even bolder than mine.

So, do you want to leave some parting thoughts to our audience, and what do you want to wish them?

Jeff: Well, I hope that they will consider the fact that there's a lot there. There's now, particularly with the social media aspect of the social impact of games with people around the world. I hope that people will begin to understand and learn how to manage and communicate with people all around the world in the game industry, which they're doing right now.

And I think this is just gonna increase, and I hope that the people who are listening right now who are gamers probably have an interest in the crypto world at least. I think they'll just get more and more into it, and I encourage them to do that because it's not even just the learning that you get from having assets. It's fun that you have. I think a really bright future for people who are listening today. They have a bright future in the gaming world.

Danielius: Thank you, Jeff.

And you know, the last thing from my side, I would like to say that all innovation in the world comes from play like that, somebody who wrote a book on it and that was fascinating to me. So I think we need to change the perspective of how we treat play and play more. So that's it from me. And thank you, Jeff, for joining me in this discussion. It was a delight.

Jeff: My pleasure. Thanks for having me.