Statement:
RE3W was not paid by Neon Media to produce, distribute, curate, demonstrate, or advocate for its company. Any paid writing will be marked with a “#AD”
What happens when you blend the UGC (user-generated content) tooling of Roblox, operator class sets of Rainbow Six Siege, and the survival extraction mechanics of “Escape from Tarkov”? What if these gameplay mechanics were backed by player-owned digital assets and a real money in-game economy? Neon Media, a company spun out of HBO, is attempting to blend these elements with a new FPS game called “Shrapnel”.
Before we dive into what the game is offering, it’s important to note that the following details and writing are based on a Twitter spaces interview we hosted, the company website, and a lengthy whitepaper. Aside from well-crafted concept art and imagery, we have not seen gameplay and our report of this company/game may change as we see live gameplay. We will be giving an overview and hope to do follow on writeups as the game releases.
Full whitepaper here:
https://www.shrapnel.com/
We should also highlight that Neon Media has raised $10.5 million in venture capital and an additional $7 million through a private token sale.
“Those who bought the tokens (in a way for the company to raise money among private investors) included Dragonfly, Defiance, Three Arrows Capital, Mechanism, Sfermion, Spartan, and Overwolf. Angel investors include the first pro-gamer Dennis Fong aka Thresh; Stephen Lim, Co-founder of Valorant and Raid Base; Brian Lee, Co-founder of The Honest Company; Keith Nunziata, Portfolio Manager at Citadel Global Equities; and Jason Zhao, partner at Kleiner Perkins. The news follows a $10.5 million seed funding round led by Griffin Gaming Partners, alongside Polychain Capital and Forte, which took place last October.” - Venture Beat
The Shrapnel Backdrop
The Shrapnel team has spoken about supporting their story with comic books and other art/NFT drops. Their first NFT drop launches to the public on June 9th, 2022 via Ethereum. The core game, however, will be launched on Avalanche at a later date. We’re seeing many web3 games attempting to form “ecosystem games” which will allow one narrative theme to span across multiple art forms and other partnered products. Shrapnel is one of the first to attempt a web3 “AAA” FPS UGC ecosystem game.
Shrapnel story summary:
In the near future, an asteroid collides with Earth’s Moon. The event, called “Lunar Impact Event [L.I.E]” shoots fragments of the moon hurtling towards Earth and the impact covers hundreds of miles. In the game, this impact area is designated as the “sacrifice zone”. The fragments from the moon at the sacrifice zone produce rare materials that are sought after by corporations, governments, and mercenaries. Players take the role of various mercenary forces that are waging conflict against each other.
Shrapnel Gameplay Design
The core gameplay loop takes place at the “sacrifice zone”, where players will be tasked with entering matches that have individuals or teams competing for resources and then delivering them to extraction areas. It is not clear if this game will be a primarily solo experience or a team-based game, but they have shown operator classes that suggest tactical team-based combat. We also don’t know if the game will see each player having significant HP such as Halo or “one-hit kill” combat like Escape from Tarkov. It is likely the gameplay and hit damage will be a slightly softer version of Escape from Tarkov.
Image - Types of operator classes for what appears to be squad-type warfare.
One portion of the Shrapnel whitepaper that stuck out to us was: “For players who are new or want to experiment without jeopardizing their equipment, a temporary Contract Operator character is available for lower-risk / reward play.”
This is an important “make-or-break” feature for Shrapnel, as the gameplay is designed to initiate PvP gunfights, where the victorious player(s) can pick up someone else’s “loot” and additional “compound sigma” resources. It is a smart strategy to add “temporary contract operators” for new players learning the mechanics of the game. However, it may be in the best interest of the Shrapnel ecosystem to have a permanent ranked and casual playlist. There will be players who want the hardcore esports experience; where they lose their NFTs (gear) in a battle, but a majority of casual players will eventually quit playing the game if they lose the temporary contract operator holding free gear.
Another potential flaw with this gear staking system could show itself through the later life of the game. The first 3-6 months of Shrapnel’s release will see fair gear ownership across the player ecosystem, but as the skill hierarchy is established, the top 5% or so of players may hold gear that is significantly superior to other entry or intermediate players. This could make the game “sweaty” (a common gamer term) and force the lower bracket of skilled players to exit the system. We are still not sure if these gear items create direct in-game advantages or are purely cosmetic in nature. If cosmetic only, there will not be a concern around a possible fragmented player ecosystem. What we do know is the gear mentioned in the whitepaper referenced a player's four customizable operator assets.
Image - Operator’s interchangeable assets beyond class types.
The whitepaper also notes that the extraction game mode may have other player objectives that could provide gear drops or more resource farming. It would be interesting to see a web3 game test-optional objective-based mechanics that guide the player towards a play style and creates different PvP encounters. We have seen web2 games try this and while effective, the objectives often grow stale. Maybe UGC maps and game modes can increase the lifespan of optional objectives.
Shrapnel As A Player Economy
The Shrapnel economy is based on four types of participants accumulating or spending in the native token called $SHRAP, which is currently being built on Avalanche.
Players: Players play the game and fight against each other for gear which can then be sold on the Shrapnel marketplace to potential buyers. Similar theme to collecting and selling CSGO skins. We aren’t clear on if the marketplace only holds cosmetics or game-altering items that may cause game balance issues.
Creators: A creator is an individual, guild, or group that uses the Shrapnel UGC tooling system. Creators can make maps, design vanity items such as skins, build optional objectives, and much more. The whitepaper specifies that creators can profit from the economic value of what they create. We won’t dive into the economic splits in this first Shrapnel article as they are complex, but it can be inferred that the profit relates to revenue share as well as combined bonuses for curation into what is called the “Podium System”.
Curators: The Shrapnel whitepaper discusses the importance of having an incubated content creator system where players are rewarded for not only being skilled, but good at showcasing the most valuable map makers and vanity item makers. We expect guilds to dominate the curator aspect of this economy. Curators will play an important role in the “Podium System”. We will likely see guilds create maps and then use their hired content creators to reshare the content. There may need to be an additional system that gives individual non-sponsored curators the ability to be able to showcase on the Shrapnel Hub.
Land Owners: Digital land ownership is the biggest point of contention between web2 and web3 gamers because they may earn more than most of the game’s ecosystem without actually contributing to the intrinsic value of the game itself. Many land owners across web3 have been accused of being value extractors. We think Shrapnel provides an interesting game mechanic on land ownership that is slightly different from what we have seen so far in web3 gaming. We will not be touching on the subject of land price in this article. It is more important to focus on how the land works as a game mechanic.
The Dual Land System
As demonstrated above, Shrapnel has constructed a dual land system. Please note that the whitepaper could change, so the dual land system could change as well.
VIP Arena Land: This type of land is a higher value land that is likely to be owned by larger guilds and brands as it can function as a curation system and as a branded showcase.
Arena to Podium Land: It’s best to think of these competition lands as esports franchise slots - such as the Call of Duty League. There is an initial buy-in and expected earn rate. The competition lands must compete to reach “Podium Status” which allows for more earnings as that land will become a popular player map. Each competition land can work like a map selection slot.
Shrapnel will likely release studio-designed maps as well as work with partners on example lands. Those could have automatic initial “Podium Status”.
Image - The structure of how competing lands can reach podium status.
Image - The placement structure of the “Podium System”; is based on tournament cycles.
While this land system seems complicated, it can be broken down as follows:
Two different types of land have different earning rates.
VIP lands are more focused on branding and curation.
Each competitor land acts like an esports team slot.
The better the game map on top of the land (meaning more playtime and votes) the closer it is to the Podium.
The closer to the Podium, the higher the monetary reward and reputation.
This is how Shrapnel is initiating their esports ecosystem and we will see how the model works in practice. It is certainly innovative.
Highlighting The Shrapnel Team
If a game developer doesn't have over $17 million in the bank or an experienced larger team they should not attempt to be as ambitious as Shrapnel.
Here are a few bios from the Shrapnel lead team. While past performance is not indicative of future results, it should still be noted.
Shrapnel has at least 10 core team members and 11 notable advisors including a massively famous Twitch streamer, Myth.
Potential Points of Failure
Game Balancing: FPS-type games are notoriously difficult to balance as weapons can be overly powered or weak, gear may have a dominant advantage over others, featured maps may not have traditional H-shaped halls and complex corners, and other potential factors. This is typical with any FPS game regardless of web3.
Anti Cheat Failures: Almost all FPS games are prone to cheaters, even when money isn’t involved. These cheaters may have aim bots, wall hacks, mobility hacks, hitbox hacks, ESP hacks, or others. The biggest FPS games on earth have created anti-cheat software measures, but often hackers have found ways to circumvent them unless the software is required at the “kernel-level”. Kernel-level anticheat is a wider gaming debate around privacy. The concern for Shrapnel is when real money cryptocurrency is on the line for competitive matches. There will be hackers.
When we spoke to Shrapnel studio head, Don Norbury, he highlighted that they are prepared to combat cheaters and hackers and have been working with a technology called “Byfron” and “Anybrain”. We look forward to seeing this implementation.
UGC Maps: The greatest advantage to this game is also its biggest potential weakness. Many web3 games lack a core tenant of metaverse making, showing people how to build. In order to jumpstart the content creation ecosystem, Shrapnel will have to work hard on creating the first round of really great maps to play on. They will also need to partner with already established map makers from other games and onboard them onto the Shrapnel toolkit. Because the Shrapnel toolkit is created on Unreal Engine, maps will be detailed and aesthetically pleasing, but the tool may be more complex than other solutions. We would suggest Shrapnel create a special creator program that offers initial grants and increased earn for verified map makers. They should then place those creators on a recommended hire list. Shrapnel will also need to create in-depth education content around their toolkit.
Potential Points of Success
Roblox for Hardcore FPS Gamers: It could be better to use the term “ecoverse” instead of “metaverse”. A metaverse is a collection of the entire internet communicating and transferring digital assets. An ecoverse is the various worlds around one game's narrative and artistic theme. There is definitely a need in the market for a gritty FPS video game ecoverse that allows for content creation similar to Roblox. Shrapnel has a clear target demographic and the strategy of not trying to please every gamer type will likely be a successful one. Building strong niches is a good move that will allow the potential Shrapnel community to create its own flavor.
Tokenomics And Values: While there could be a point of failure around the math itself, the principles around the tokenomics are better than many other web3 games we have reviewed thus far. It is clear that the Shrapnel team wants to reward monetization to those that are sharing and/or creating. While the duel land system and gear pickup mechanic could have issues past the six-month mark, the intention to make players log on and play a match in order to earn is good. There are often too many web3 traders and speculators and not enough players. We will see how the ecosystem works in action and we can expect Shrapnel to make tweaks.
Esports Strategy: Similar to our thoughts on crafting niches, there aren’t many web3 FPS games on the current market. In the subgenre of tactical-based gameplay, Shrapnel could offer compelling encounters that create the Escape from Tarkov adrenaline rush. Good FPS esports titles are sticky and can last many years. Assuming the gameplay is a hit, their esports strategy will be important.
The Game Is Being Built On Unreal Engine 5: UE5 is a next-generation game developer engine built by Epic Games. Some of the biggest “AAA” games on Earth are built using the engine. Assuming Shrapnel has skilled Unreal developers, the game could have stunning graphics backed by a great tech stack. We have seen web3 games such as Illuvium built on Unreal Engine. We need more games built on UE5 if more gamers are going to be interested in web3 ecosystems.
Twitch Streamer Gameplay: Battles Royales, Survival games, UGC games, and others that takeoff do so not only because they have good game loops, but because they grab the attention economy on Twitch and Youtube. Content creators are always looking for games that create high stakes, allow them to play with other creators, and build innovative storylines. These types of games are not available on web3 yet. When they are, we will see more creators sharing web3 games to traditional markets. Shrapnel would address a good creator segment on Twitch based on the suggested gameplay design.
Other great stories RE3W covered last week
1. Square Enix Dives Deeper into Web3:
Famous Japanese game studio Square Enix recently elaborated on its plans and business strategy to enter into the web3 gaming space. They stated that they are planning to include blockchain technology and NFTs in their games. As well as invest in its own new blockchain game infrastructure.
The recent announcement came after the publication of their latest earnings report. The game studio stated that investments in NFTs will be part of their medium-term business strategy for 2022 and beyond. Part of Square Enix’s plans includes a partnership with well-known Animoca Brands.
Square Enix President Yosuke Matsuda has spoken about integrating blockchain technology into their games previously. But this is the first time Square Enix made a formal announcement of more concrete plans with regard to NFTs.
Square Enix recently sold some of their game studios along with the “Tomb Raider” franchise for $300 million. These funds are apparently going to be invested in building out their blockchain, cloud, and AI technologies.
Square Enix has confirmed that it is looking at establishing its own gaming token, web3 ecosystem, and economy. An entity that will manage, issue and invest in its own tokens.
Takeaway
Square Enix has received public pushback for several months from the web2 gaming community with its open letter commitment to entering the blockchain gaming industry. Regardless of traditional gaming criticism, they have taken large measures to enact their strategy. They recently sold Crystal Dynamics and Eidos Interactive (game studios) to another large gaming company, Embracer Group. The sale sees the transfer of rights to the following video game titles: Akuji the Heartless, Crash N’ Burn, Deus Ex, Gex, Legacy of Kain, Mad Dash Racing, Pandemonium, Project Snowblind, Solar Eclipse, The Horde, The Unholy War, Thief, Tomb Raider, Total Eclipse Turbo, Off-World Interceptor, Whiplash.
Tomb Raider, Deus Ex, and Thief were the most notable title transfers. Also, it appears Square Enix did not transfer Marvel’s Avengers and Marvel’s Guardians of the Galaxy. At least it wasn’t highlighted in the press. The IP sale with Embracer Group was transacted for over $300 million. This influx of cash to Square Enix may be used to immediately invest in constructing and purchasing new web3 gaming IP. It’s not clear what Square Enix has planned strategically, but we would not be surprised if they created a gaming fund similar to Ubisoft. They may have the opportunity to co-invest with Animoca Brands and their titles as it would make sense to see Animoca take lead and incur more risk. Animoca Brands has a greater understanding of tokenomics and a partnership may be a huge positive for Square Enix.
Square Enix’s flagship franchise, Final Fantasy, is one of the most popular and well-recognized games on Earth. We would be surprised if Square Enix attempted to add NFTs into a game loved by millions of traditional gamers. It is likely they will experiment with new brands first for several years. Ultimately, this is a positive for the general blockchain gaming industry and still a question mark on the future value of Square Enix IPs.
2. Sky Mavis Is Preparing To Expand Ronin Ecosystem:
Sky Mavis revealed on Twitter the first projects accepted into its competitive Builders Program. The program is a new initiative that introduces user-generated content (UGC) into the Axie Infinity ecosystem. Of approximately 2,000 applications submitted, only 12 were accepted into the program.
The Builders Program aims to reward community developers who help grow the blockchain-based Axie Infinity ecosystem and strengthen the community’s ability to create gaming experiences and tools on top of Axie.
Sky Mavis said community co-creation is a “guiding North Star of the Axie Infinity ecosystem and will be a fundamental driver of scaled-value generation over time”. With the Builder’s program, players will get to monetize their creations. The builders get to keep a significant portion of their revenue, with the rest going back directly to players or the community treasury.
The projects chosen to be part of the program receive the following:
A minimum $10,000 grant in $AXS to go towards their project.
Guidance from Sky Mavis engineering, game design, and product teams.
Permission to monetize their game using the Axie Infinity intellectual property with no limit, with a revenue share model aimed at rewarding the builder while supporting in-game rewards for players.
Exclusive access to tech integrations such as Ronin Single-Sign-On and Ronin Wallet Transactions.
Promotion of their project by Sky Mavis to the community.
Takeaway
Sky Mavis’ hit play-to-earn game, Axie Infinity, is slowly waning in popularity (at least in the west). To create lasting IP around Axie, Sky Mavis has started funneling capital to builders that will help them form an ecoverse. As stated in our writeup on Shrapnel, an ecoverse is more of a niche metaverse focused on the narrative and themes of one video game IP. This is an excellent strategy to build out the Ronin chain so long as there are quality builders sending in applications.
Here’s a look at the games coming from the builder program:
3. Gala Games May and June:
Gala Games wraps up its 2022 month of May Mayhem and announces it has been the most “rewarding month ever” in the history of the event. Gala Games revealed that over $4 million dollars worth of prizes were given away to players, as well as 100,000 free NFTs. The free NFT assets will continue to be dropped over the coming weeks. Here is a short summary of the prizes won!
Weekly Competition GALA Prizes | Approximately $3 million total won
Weekly Referral Challenge GALA Prizes | Approximately $1 million total won
Across all the game titles that participated in this year's May Mayhem, somewhere around 100,000 new NFTs were created and distributed to the players. These NFTs will continue to be distributed over the coming weeks according to Gala Games. You can find a full list of the free NFTs released on Gala’s blog.
Takeaway
Also announced the following week is their breakthrough relationship with the Epic Games Store. Gala Games’ latest title, “GRIT”, will be listed on the Epic Games Store for download. This is a major step for web3 gaming as Steam banned all NFT games from being listed on their platform. The distribution power from Epic Games will see many traditional gamers testing out the Gala Games ecosystem.
Image: “GRIT”, The first NFT game to be listed on Epic Games Store
“This town ain't big enough for the two of us, and it ain't just the two of us looking for a fight. Ride or die in the ultimate Wild West battle royale, where there's more to winning than aiming true. Saddle up and ride across town, building the best poker hand from found weapons to make a killing. Grab the best shooter to-hand and gun your way to infamy on the new frontier.”
Epic Games Store Statistics 2021:
There are now over 194 million Epic Games Store PC users, an increase of 34 million from 2020. Daily active users peaked at 31.1 million, and peak concurrent users reached 13.2 million. December's monthly active users peak reached 62 million users, an increase of 11% from last year's peak of 56 million.
We will be producing a more in-depth story on Epic games x Gala later this week so be on the lookout for that.
That wraps up the RE3W newsletter for this week.
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