Forte Labs, the latest venture from Kabam founder Kevin Chou and former Kabam COO Kent Wakeford, had an overwhelming response at the Game Developers Conference (GDC) in San Francisco this past week. This comes on the heels of announcing its brand new $100 million fund backed by Ripple that will enable traditional games to add key blockchain features.
With investors that include Andreessen Horowitz, a16z Crypto, 1confirmation, Battery Ventures, Canaan Partners, Coinbase Ventures, Coinbase founder Fred Ehrsam, and Coinbase CTO Balaji Srinivasan, Forte seeks to revolutionize gaming by giving developers a cut of peer-to-peer buying, selling and trading of digital assets.
I had a chance to talk with Wakeford about the platform, the fund, and the future of gaming. The following is an edited transcript of our discussion.
MODERN CONSENSUS: Many believe the path to mass adoption of blockchain will come from gaming, but what incentive is there for top developers, like Epic Games who earn billions of dollars on Fortnite, to add blockchain products like nonfungible tokens (NFTs) to their games?
KENT WAKEFORD: I fundamentally and wholeheartedly agree that gaming is going to be the killer application for blockchain. From platform to platform, gaming has been the leading application that drives both revenue and engagement. That was true for Facebook and Apple. History is telling us the fastest growth comes from gaming.
When we look at blockchain, it’s a new technology that not only can transform existing gameplay, but can open up new ways of building games and creating game economies. Our approach is to not just to enable the next blockchain game but to enable items in existing games to become an asset that consumers can trade between each other.
A good example is CS:GO. They sell about $400 million a year in skins. It’s a sizable market, they make a great amount of revenue from it, and it’s a very healthy economy. The aftermarket of trading of CS:GO skins is $1.2 billion. [In marketplaces outside of Steam Community Market in which Valve its parent company is able to charge a 10% fee], the developer typically doesn’t get a cut, but with smart contracts on the blockchain you can set rules for trading where the developer can take whatever percentage they want.
The blockchain ledger shows the provenance of every item, where it’s traded, who owns it, and tracks payments. Now developers can participate in the aftermarket and every trade in perpetuity. That opens up a whole new market for any game with items where consumers invest their time or money to collect them. New game dynamics and peer to peer economies will arise as consumers change their gameplay to earn more of the items. Chasing items will create its own kind of game design.
Real money trade for game items have existed for a long time. Mt Gox began as a marketplace for Magic the Gathering items.
A lot of those were in this grey market. They weren’t sanctioned by the publisher because they cut out the developer from any of the economics, so there was no incentive to do it and there was also fraud and bad actors. If people are buying from the secondary market and not the primary market the developer can’t invest in making the game better. If you can solve for those problems, it’s a whole new revenue stream for the developer.
Can you tokenize these assets in a way that makes it possible to take them into other games?
The idea is that they would come back into the existing game and trade from you to me. This is not about the metaverse. That’s probably years away because there are dynamics that you need from a computational perspective within a game to know the stats of what the item does.
What are your thoughts of other platforms helping games tokenize their assets, like Mythical Games on the EOS blockchain.
I’m an advisor to Mythical Games and they’ve created some really fun technology with Blankos to allow you to take assets out of the game, have people design them and put them back in the game. Blankos has a chance to become the first big breakthrough game. We see Mythical more as a potential partner than as a competitor.
Even though we’ve partnered with Ripple on the fund, we’re agnostic to all of the first level protocols whether people want to build on Ethereum, EOS, TRON or any of the other platforms. We built sidechain technology to allow for the portability of these games. We’re trying to making this as easy as possible so developers can focus on making great games and designing great game economies. We want to take the challenge and complexity away from them and make blockchain seamless in the background. We don’t want the consumer to have to jump through a bunch of hoops We want them to be able to log into the game they love and have assets with value that they can trade with others. If we do this right, it’s a seamless experience for the consumer, it’s great technology for the developer, and it can then open up new aspects of game development where there’s more peer to peer interaction with these items.
What is Forte’s relationship with Ripple?
Ripple believes that consumer behavior and mass market adoption of blockchain and crypto is likely to first come from the gaming community. What we at Forte are enabling is the ability for these game developers to access blockchain in their new or existing games. Through our platform we are having XRP as a settlement currency for when people trade or sell NFTs. We are also leveraging Ripple’s Interledger technology which allows for some nice advancements in smart contracts. They’ve been a great partner and big supporter of our approach of interoperability and cross chain. Together we have launched a $100 million fund to help developers tokenize their NFTs and put them on the blockchain.
You just announced your fund on March 12. What has the response been?
Response has been strong. This has been an incredibly successful GDC for us. We met with over 40 game developers and are in active discussions to deploy the $100 million fund. We’re looking at existing games with existing items and existing audiences over 50,000 registered users.
Do you mean you’re seeking hit games like Apex Legends?
We would love Apex Legends!
Can developers use the funds for user acquisition?
The funds are primarily for development of tokenized assets.
What’s involved with creating NFTs?
There are multiple layers in creating NFTs, which blockchain are you going to use, how are you going to host it, how are you setting up the smart contract, what are the rule sets behind it. Then once you have this NFT, what are you going to allow consumers in your game to do with it, how does that play throughout the game, is it based on engagement, spend levels, alliance play? Game developers need to consider if they’re going to add NFTs and how consumers are going to be rewarded with them.
What are your thoughts on Google’s Stadia announcement?
I love what Stadia is doing. The technology is super hard and involves the ability to go in and play via streaming a high definition game at high frame rates with multiplayer and zero latency. If anyone can pull it off, it’s Google. If they do, it changes the distribution of games. Why would you need a console anymore? What happens with Game Stop and the various app stores? If you can do this with a console game, you can do this with a mobile game. Now you can just watch gameplay with influencers on YouTube and hit play, or click to buy. That changes game discovery, purchase behavior and the unique aspects of viewability and community that can be built around YouTube. Stadia has the potential to disrupt the entire industry.
What are your thoughts on Amazon entering the fray? They were pretty quiet at GDC.
Amazon will likely come up with something because of their capacity with the cloud, plus they have Twitch.
In the battle of the game engines with Unity and Epic duking it out, might we possibly see a Forte reveal at a GDC keynote next year?
That’s the space we want to play in, that’s what we’re building, a blockchain game engine with plug-ins for item tokenization, distributed hosting of assets, ID management, side chains, and more.
How long will it take for blockchain to reach mass adoption?
As we fast forward five years from now, I would be shocked if there were games that didn’t have some element of blockchain in their items. From an economic perspective it makes all the sense in the world and also from a consumer perspective. If you’re a consumer buying these skins, wouldn’t you want to own them?