Blockchain games, ‘play to fun’ and Japan’s Web3 investment in spotlight at IVS Crypto 2022 Naha

The keen interest shown by Japanese start-ups in the Web3 industry was evident. During the IVS Crypto 2022 NAHA (alongside IVS 2022) conference, held between July 6 and 8 in Naha City, Okinawa Prefecture, its 30 sessions on Web3 had meeting halls at Hotel Collective filled with audiences, many even standing.

■ Moving away from ‘Play to Earn‘

Highlights of the sessions were blockchain games. Over the past two years, blockchain games with a “play to earn” format have been all the rage. They have engaged a large number of users. Their rapid growth attracted huge investment globally.

But what was impressive about these sessions was that the speakers talked about ‘moving away from play to earn.”

A case in point was Axie Infinity, a monster-competition blockchain game developed by Sky Mavis of Vietnam. It has over 1.5 million users and can be considered a pioneer of play to earn games. During the COVID-19 pandemic, the game was described by reports as a symbol of  the ‘Web 3 Dream,” as users in the Philippines and other countries earned virtual currency and made a living from the game.

The “play to earn” concept gave people a dream during the pandemic, but the situation was changing now, Albert Takagi, Japanese ambassador for Axie Infinity, said during the session ‘Players and the current state of Japan’s GameFi industry’ on 7 June. As Takagi put it: “play to earn is not the most important thing.”

The game has had three versions so far. Previously, players were required to buy three Axies with virtual currency to start their game. But in the second half of 2021, soaring virtual currency prices caused players to pay 100,000 Japanese yen to start the game. For users who genuinely wanted to enjoy the game, the threshold was very high.

Addressing this situation, Takagi said the game’s developers introduced Axie Infinity Origin. Its trial was released in spring 2022 as an enhancement of the play to own concept. This version came with a free starter Axie and therefore avoided high initial costs. “We plan to release a smartphone app on the App Store and Google Play this year. We want to make the game playable for people who are not familiar with virtual currency,” Takagi said.

■ ‘FTs’ and ‘NFTs’

As mentioned by Takagi, the incorporation of FTs (fungible tokens) used for in-game currency, and NFTs (non-fungible Tokens) used for in-game items, helps blockchain games to widen their user bases. However, global services such as Axie Infinity seem to play a different game from their Japanese counterparts, as Japanese laws and regulations make it difficult for listed companies to issue FTs within their own services.

Therefore, how to handle FTs in blockchain games as well as NFTs became very important, Hiroki Naito, president of Dricom, said during the session “The Web3 service layer has finally arrived” held on the morning of August 8. By handling FTs, “crypto investors who deal in BTC and ETH will also be covered by our services, allowing us to expand our target audience.”

However, handling FTs on their own services relates directly to the introduction of ‘money’ as an incentive for community building, which is important for all Web3 services. This is because what crypto investors want is essentially the profit from the trading of virtual currencies and tokens.

In this regard, Takahiro Ishihama, chief executive of Nanameue, which operates the social media app Yay!, told the session that “incorporating incentives into the community that can be converted into money is a major topic”. Yay! raised 1.6 billion yen in April and embarked on building a token economy by issuing NFTs. Ishihama described it as a trial and error process. “We are introducing monetary incentives while evoking the enthusiasm of the community and current users,” he said.

■ ‘Play to fun’ key to popularising Web3

Globally, the recent fall in the value of virtual currencies has already hit some companies. Some cut their investments or laid off workers.  At NFT.NYC, the world’s largest NFT event, held in New York in late June, the chief executive of a major Web3 service said: “A long winter is coming. It is still fresh in our minds that the CEO of a certain web3 service ‘predicted’ that a long winter is coming and the majority of the projects here will fail.”

However, Naito said the Japanese market was still relatively unscathed. “In a sense, this is an opportunity, as Web3 funds set up in legal tender are finally starting to turn up in Japan.”

VCs and investors in attendance shared similar views. Motoya Kitamura, co-founder of LUCA Japan, who has been involved in domestic and international private equity for more than 22 years, said that “there is no difference in perception between myself and those who are actually running Web3 services. I felt rather hopeful about the future of Web3”.

A domestic VC investment manager who participated in the conference said, “Global Web3 ventures, which had previously been closed to us, are now showing interest due to investment restraints by overseas VCs.”

Shinichi Takamiya, general partner of independent VC firm Globis Capital Partners (GCP), which announced the establishment of its seventh fund on July 5 with a record size of over 50 billion yen, also expressed his enthusiasm. “Web3 investment, both domestic and global, is just getting started,” Takamiya said. 

When asked what kind of Web3 companies he would like to invest in, Takamiya said: “companies and services that can essentially define values for users, for example, ‘play to fun’ rather than ‘play to earn.’ This is the key to expanding Web3’s services not only to core crypto fans, but also to the general public in Japan.”

(This article was originally written in Japanese by Rumi Tomiya. The English translation was compiled and edited by Kit Lai.)