Web3 Winds: Nike's Airphoria + Epic's Sky High UEFN + Discord Beacon + Mythical's NFL Rivals Lacks Rivals

Nike's Web3 community platform .SWOOSH (dot-swoosh) announced a collaboration with Epic Games’ Fortnite - ‘Airphoria’, a Fortnite island, which allows users to go on the ultimate Nike sneaker hunt. Players who visit the virtual Air-Max themed island for 10 minutes or more will receive the Air Max 1 '86 Back Bling digital sneaker, and players who link their Epic Games accounts to .SWOOSH receive additional out-of-game Achievements on Nike’s Web3 platform. This is notable given Epic has not adopted NFTs in any of their games, even though they distribute Web3 games like Mythical’s Blankos through their Epic store. As mentioned in past posts, we believe that platforms like UEFN, Roblox and perhaps others that we haven't heard of, will light a match to ignite our 2018 goal of taking our Gucci bag from the holiday party to the Mario party. Could they (inadvertently) push the Web3 ball down the field? .SWOOSH caught our eye - stay tuned as we monitor behavior in this community!?

Following up on our GDC post - Being Present for the Birth of a New Gaming Genre - “Create & Own” - is EPIC - a few weeks ago, we got some numbers to sink our teeth into, indicating a strong start out of the gate for Epic’s Creative Platform, UEFN. We believe that these creator platforms will tap into the entrepreneurial spirit of Gen Alpha and make creativity, collaboration and mini enterprising a lot more fun. For the younger demos, think about the joy of a good lemonade stand, and then take it up a few notches because you now have the ability to create a lemonade stand party where an unlimited number of people can have fun and, as a bonus, you will actually get paid to create the fun! For the older demos, think about the joy of buying rare items on eBay, and then imagine a party on eBay where buying stuff is incidental to the party.

We are calling this new gaming genre Create & Own. The demographic of this genre will be everyone - in fact, these players will still likely refer to the boys who play Call of Duty as “gamers,” while their own activity will be more akin to time spent in social media and traditional entertainment. Eventually, this new behavior will lead to a demand for property rights because the lines will blur between the digital stuff that they own and the physical stuff that they own, all paid for with the same money, all generating social capital and identity. As a reminder, we completely missed the web3 speculation and trading game, because we didn’t see it tapping into traditional gamer behavior of collecting.?

At the GDC industry show, Epic grabbed headlines with a promise to pay 40% of the revenues generated on the platform to the creators and developers who generate the content and games. And payments will be skewed positively to long term engagement (ie good content.) The big question from players, investors and skeptics at the time was - how can we trust that the payouts will be fair? While Epic uses 30-40 metrics that won't necessarily be disclosed, they have very clearly communicated that the key metric to reward creators will be time played. We got some data after the first six weeks - inarguably an upside surprise.?

Some highlights on the first three months of UEFN -??

• New metric to calculate payouts - “time played” (see comment above)
• The March payout was up significantly when compared to the earlier Support-A-Creator program -> The top 1000 island creators saw a 5.2x median increase in earnings through engagement payouts over SAC.
• April’s upcoming engagement payouts will reflect the new changes to the payout formula and will result in an increase of 1.45x more total money paid to creators compared to March
• Fortnite already has 43 creators annualizing >$1mn in payment (vs. RBLX at 91 creators in '22, see Exhibit 2), and 5 developers set to earn >$10mn annually (vs. RBLX at 8 creators in '22)
• According to activeplayer.io, as of today, over the last 30 days, Fortnite has seen the biggest jump in monthly players since March 2021

What .SWOOSH Might Mean in the Future?

Back to the Fortnite X .SWOOSH news, the headlines focus on the idea that one can link accounts to receive an “Achievement”, but it also explicitly notes that these are soulbound - “Achievements are for your personal .SWOOSH profile and cannot be traded, sold, or exchanged and have no monetary value.”??

We believe that platforms like Epic’s UEFN, Creator 2.0, discussed above, and Roblox are (inadvertently?) training Web3 behavior. This is a great example. The press release doesn’t mention NFTs, likely because it is a trigger word that has a connotation of “money grab” to many gamers. As we have seen on Reddit, “digital collectibles” has a much better ring to it, and could be an easier lure into the water (or into the air in this case!)

And .SWOOSH is important as they seem to be addressing the trend of online advertising and payments to influencers and streamers getting squeezed in many ways. How can one build true engagement? Community! What is .SWOOSH? .SWOOSH is described as a new community experience, designed to give you the opportunity to co-create the future of Nike. BUILD WITH OUR COMMUNITY - Collaborate with .SWOOSH members, compete in community challenges, and earn chances to co-create next-gen Nike Virtual Creations.

All in, this collab is on our radar – .SWOOSH has offered the ability to mint NFTs and according to Nike, the collection sold a total of 98,000 OF1 Boxes, which were priced at $19.82 each. This means that .SWOOSH brought in $1.9M on this sale. The hint that players may be “eligible to get access to a Virtual Collection at .SWOOSH at a later date” could point to Fortnite players’ future ability to mint their own NFTs (which will likely be called ‘virtual creations’).?

Another standout from the FAQs was the mention that these assets (Fortnite Cosmetics and Nike Achievements) are interoperable between the two platforms. It will be interesting to see how Unreal Engine is showcased as this develops.?

Reddit Blackout Shines Light on Discord

The social media app Reddit, home to 57M daily users across 100k+ communities, was controversial last week after outlining their plans to raise API prices. Reddit CEO Steve Huffman said the cost increases were a result of AI companies scraping Reddit’s data – “one of the largest data sets of just human beings talking about interesting things” –?for minimal costs. However, these API cost increases have hurt popular third-party apps like Apollo and Rif is Fun, who use Reddit’s APIs to give mobile users new user interfaces, outside of the official Reddit App. Last Spring, Reddit pushed a new mobile update that left many users annoyed and looking for the classic experience they loved.?Apollo had roughly 1.4m users last month. It has a single part-time employee, who, under new API costs, would have to pay Reddit $20M/yearly to maintain operations. Huffman says that even though only 3% of Redditors use third-party apps, the company wouldn’t mind bringing that 3% back to their platform with their advertisements.?

The community response has been loud, with moderators closing doors to ~9,000 subreddits for 48 hours, and top communities like r/pics, r/gifs, and r/showerthoughts sharing - “Reddit is Killing Third Party Apps.”?

As unrest grows at Reddit, we believe that Discord, which eschews advertising, should stand out positively as a platform for hosting communities. Soon after the Reddit drama, Discord made a (timely?) change in offering?Activities to users as a permanently free feature. This will allow everyone to watch content together while in voice chats. Though Discord is more of a chatroom than a Town Hall forum like Reddit, it is ready willing and able to bring its unique features to Reddit’s refugees.?

Mythical’s NFL Rivals Lacks Rivals. Join us at Polkadot Decoded June 28-29 to Learn More!

Please join us at Polkadot Decoded next week in Copenhagen - see below! Last week, John Linden, CEO of Mythical, mentioned in an interview that he has been surprised by the strength of the NFL Rivals game during the offseason. One would expect engagement to increase steadily approaching the pre-season, along with the marketing efforts into the NFL season kick off on August?24, 2023. Last Friday, the game was #1 Sports Game among free apps - see below! With a “gamer-first” approach, NFL Rivals has received a warm welcome by the market, especially relative to other Web3 games, likely due to the fact that the blockchain magic is happening in the background. The game leans into traditional gamer behavior of collecting, not trading, and prioritizes a great experience along with the ability to own digital collectibles. A few interesting stats on the game:

• Players average roughly two hours of gameplay per day
• The average transaction is ~$18
• 15% of revenue is derived from secondary sales
• Rating - 4.8 out of 5 on the App Store
• In Free-to-Play (FTP) games, an industry expectation is that 2-5% of players will make in-game purchases; NFL Rivals is starting at the high end of the range.

Polkadot Decoded

Polkadot Decoded, the largest Polkadot conference of the year, will be held in Copenhagen, Denmark as well as online next week June 28 - 29. John Linden will be speaking on Mythical Games, including its partnership to build on Polkadot. Also, Signum Growth CEO Angela Dalton will be presenting "The (Treacherous) Road to Innovation: A US Regulatory View of Crypto."

There are still tickets available to attend the conference, either in-person or virtually (free!) here.