On July 25th, Xangle’s Co-Founder and Co-CEO James Kim held CMC Live with Nexon’s Partnerships Lead Angela Son, NPIXEL’s Business Director Joseph Lee, and XPLA’s Director of Corporate Development Michael Lee to explore strategies of Web2 game companies diving into Web3. Below is the full transcript. The original recording can be found here.

0. Opening

James: I am the Co-Founder and Co-CEO of Xangle, the largest Web3 data intelligence and research company in Korea. Today we will be having a session about ‘Web3 game market trends,’ with a focus on two keywords, Korea and adoption. In Korea, crypto is a very big thing and more than 20% of the total population has active experience in crypto trading. It is also one of the largest markets in online games with globally strong game companies leading the market. Today, we invited Web2 game giants from Korea entering the Web3 realm to hear out their approaches and plans into adopting Web3 to their core business.

1. Company Intro and Their Approach to the Web3 Market

James: Angela, please introduce yourself.

Angela: I am the partnerships lead for Nexon’s blockchain initiatives, namely, MapleStory Universe. Nexon is a company founded in 1994 and has been providing more than 50 game services such as MapleStory, Dungeon & Fighter, and Kingdom of the Winds to the world for over 20 years. Since its founding, Nexon has consistently held the number one position in its industry in South Korea, with annual revenue of $2.9 billion and a market capitalization of more than $20 billion in 2022. Nexon is listed in the Japanese stock market, and as of 2022, it was ranked second in market capitalization after Nintendo among gaming companies in Japan.

James: You mentioned that you are in charge of the MapleStory Universe project, which is the blockchain-powered version of MapleStory. Could you elaborate on the project’s purpose and the motivation behind the development into Web3?

Angela: MapleStory, which was launched in 2003, has been in service for 20 years and has more than 180 million registered users worldwide. We've been thinking a lot about how to sustain such a long-loved game for the future, and we think blockchain is the right way to create the next paradigm. MapleStory Universe, in short, will be an ecosystem based on the MapleStory IP. We want to create an ecosystem where everyone who enjoys MapleStory can use the IP together, expand the utility of in-game items, and enhance the game's reward experience by introducing new functions, such as limiting item count to provide a new gaming experience to users. The first game we will be launching within the MapleStory Universe is MapleStory N, an NFT-based PC MMORPG. Starting with MapleStory N, we will be servicing additional products, such as MapleStory N Worlds, MapleStory N SDK, that can serve as the foundation of this experience. But ultimately, we envision a universe where other creators and builders can also come in and build dApps and new experiences based on the MapleStory IP together with us.

James: Thank you, Angela. Looking forward to the new experience MapleStory Universe will bring to the Web3 field and the gaming industry. Now moving on to Michael from XPLA. Michael, please give an introduction about yourself.

Michael: My name is Michael Lee. I am the Director of Corporate Development at XPLA. My focus is on investments and growing the ecosystem of XPLA.

James: Thanks for being here with us today, Michael. For the benefit of those who might be less familiar with XPLA, could you please provide a brief introduction to your company?

Michael: XPLA is a Tendermint-based mainnet that serves to be a hub for various content starting with gaming but soon to have entertainment and music content as well. Com2uS is one of the genesis contributors to XPLA, so all of Com2uS’ web games will have a Web3 component to it, and they will all be on XPLA. Com2uS is known for Summoners War, MLB 9 Innings, and the Zenonia series.

James: XPLA has indeed established a strong global presence through its flagship title, Summoners War. Could you elaborate on the XPLA initiative in this field?

Michael: Our goal is to bring on the masses to Web3. XPLA is the next generation of Web3 mainnet, developed with gamers at the core designed using Cosmos SDK for optimization, and featuring development support from Delight and ZenaAD. We place heavy emphasis on user experience. The 10-year exclusive agreement that we have with Com2uS is to have all of the games moving forward that Com2uS produces on XPLA, our Layer 1, and our metaverse platform Com2Verse will also be on XPLA as well. To date, we have already launched 6 different titles and we have learned so much from them. We have tried every single title we have launched. We have tried different kinds of tokenomics. We plan to launch a Web3 update to Summoners War: Chronicles with over 10M downloads currently. This update will come this week. We have recently launched Ace Fishing, which hit number one in various countries in Asia. In the next few months, we will launch Mini Game Paradise, our hypercasual game.

James: Thank you, Michael. Can’t wait to see the new titles coming along soon. Now, shifting our focus to Joseph from NPIXEL. Thanks for your patience, Joseph. Please give us an introduction about yourself.

Joseph: Hi, my name is Joseph, Business Director of METAPIXEL. I am currently leading our Web3 business for NPIXEL's Web3 initiative, which is METAPIXEL.

James: Thanks for joining us today, Joseph. Could you kindly give us a brief introduction to NPIXEL for those who may not be as familiar with the company?

Joseph: NPIXEL is a gaming company established in South Korea in 2017. Our mission is to develop and service high-quality games for gamers across the globe. We are well-known in the APAC market with our debut titles, Gran Saga and Chrono Odyssey. Now, we are leveraging our existing IPs and studios to bring a new gaming experience using blockchain technology. Previously, we have been focusing on the Web2 market but we thought there is a high possibility of enhancing gaming experience by integrating blockchain technology into our upcoming titles. Now we are moving forward into the Web3 spaces.

James: As the Web3 initiative of NPIXEL, what is the goal of METAPIXEL and what can we anticipate from METAPIXEL?

Joseph: The goal of METAPIXEL is to build a Web3 home for gamers. We aim to continue excelling in areas where we have traditionally succeeded while also harnessing the power of blockchain technology. This will allow us to deliver new possibilities and experiences with the help of our strategic partner, Aptos. Starting with our first title, Gran Saga: Unlimited, a classic MMORPG, we're planning to expand our IP universe with Pixelcraft and Catcha Collection using METAPIXEL. Since we began our community late last year, we have amassed more than 78K registered users in our ecosystem. Moreover, when we ran our 1st community test this March, we focused solely on gameplay. We thought that if we cannot convince the regular gamers with our upcoming games, then what is the blockchain for? So since our first community test, we have gathered some interesting metrics from the gameplay. Even though we did not set blockchain-related features at the time, the tester's average play time was more than 7 hours a day and they were showing excellent retention rates. Recently, we have been conducting our second community test with blockchain-related features integrated. We expanded our tester pool to more than 8,000 members, but more than 40,000 members showed a high interest in joining the test this time. We are happy to move on to our next journey.

James: I heard that some of my colleagues participated in the 2nd community test of Gran Saga: Unlimited and found it to be an enjoyable experience. Best of luck to you, Joseph! Now let’s dive into an intriguing topic, the potential of blockchain technology in the gaming industry.

2. The Potential of Blockchain Technology in the Gaming Industry

James: For this particular discussion, we’ll hear from Joseph and Michael. Let’s begin with Joseph. Joseph, we’d love to hear your insights on what drives NPIXEL to explore blockchain technology and how NPIXEL is integrating blockchain into its existing games.

Joseph: We are exploring blockchain technology to grow our gaming community without turning our game into a reward grind. Instead, we aim to build a high-quality Web3 game, incorporating Web2 aspects and adding Web3 features beyond NFT and token rewards. We focus on transparency, connectivity, and community growth. To ensure transparency, we're storing key in-game data on the Aptos blockchain using our Proof-of-Play algorithm in METAPIXEL, enabling the community to access information about item circulation and probabilities reliably. As for connectivity, we are enabling players to own on-chain game assets, trade items, and engage with external dApps or ecosystems. We are also developing use cases for NFT and SBT standards with Aptos to broaden the in-game economy and promote a gig economy within our games. Lastly, to boost community growth, we are recognizing key influencers via our idol/fan program, sharing rewards with communities that help us grow. Using blockchain, we plan to collect in-game and user data to benefit our community as we expand. We are trying to add some more technical layers to benefit the user experience inside the METAPIXEL ecosystem.

James:  Thank you Joseph for your insights. Now let’s shift our attention to Michael. Michael, we would love to hear more about XPLA’s interest in blockchain technology and how you are leveraging its potential in your game development endeavors.

Michael: We believe that the future will revolve around digital assets. As we see more and more people spend time on the internet and in the future, the metaverse, digital assets will be a large part of the new paradigm. Just as how physical assets are verified whether to be owned by a specific person or entity, we believe that digital assets will be verified via the blockchain. As for Web3 games, because we want to target the billions of users who are already playing F2P games, our approach to Web3 gaming is more of a Web2.5 approach where the game itself is still F2P but Web3 elements added on to the game. While the user experience still is not quite there, we know that there will be many iterations just as there were for F2P for the Web3 gaming scene to mature.

James: It is quite interesting to see that both Joseph and Michael are on the same page when it comes to prioritizing gameplay above all else. Because we have been talking about investments and returns a lot even when we are talking about the adoption of gaming in the Web3 industry. I think this viewpoint-prioritizing gameplay above all else-is definitely shared by many gamers, including myself. Moving forward, let’s shift our focus to the Korean Web3 gaming market. Specifically, let’s discuss how the current state of the market differs from when the concept of Web3 games first emerged in 2021. What notable changes and developments have taken place in the landscape since then?

3. The Current State of the Korean Web3 Gaming Market

James:  For this particular discussion, we’ll hear from Angela and Michael. Let’s begin with Angela. Angela, please share your insights on the given topic.

Angela: For the current state of the Korean Web3 gaming market, I definitely feel that the number of gaming companies taking on the blockchain has increased and the market is maturing. I think the trend is changing from games that had been focusing on profitability to games that are fun and rich in content to enjoy. Ultimately, it seems that gaming companies are putting a lot of effort into making a fun experience for users. Unfortunately, due to regulations, we cannot service in certain countries such as the US and Korea, but we are preparing by listening to the voices of users in various countries.

James: Thank you, Angela. I think we all share the pains of regulation not allowing us to move forward even though we are so much ready to move on with our businesses. Now moving on to Michael. Michael, please share your viewpoints on this topic as well.

Michael: Almost every large Korean gaming company is aware of Web3 gaming and has plans to do something whether it is to invest in other Web3 companies or take on Web3 gaming themselves. There is quite a spread between all the companies in terms of how they are approaching to tackle Web3. That being said, the regulation in Korea has not caught up with Web3 yet. Currently, any “Play to Earn” gaming is not legal and geo-locked. The users in Korea that tend to play these Web3 games do so via their personal VPN. In 2021, Korean gaming companies were just starting to investigate the space, which is quite early if you compare them to the rest of the world. Now, as mentioned, almost every Korean gaming company has a Web3 initiative.

James: Many Korean gaming companies have certainly entered the Web3 gaming market over the past year. As Angela and Michael have pointed out, blockchain-powered games still face legal restrictions in Korea. While the regulatory environment requires attention and development, Korea is showing remarkable leadership in the Web3 gaming market despite a lot of criticism. This is a nice transition to our next topic, the differences between the Korean Web3 gaming market and global Web3 gaming markets. This time we have the opportunity to hear from all our three panelists.

4. Korean Web3 Gaming Market vs Global Web3 Gaming Markets

James: Let’s begin with Joseph. Can you shed some light on how the Korean Web3 gaming market differs from the global Web3 gaming markets? What are some notable distinctions you have observed between these two?

Joseph: I believe that the Korean market is not much different from other global markets. However, I do see some differences in perception regarding digital goods, mostly delivered as NFTs. There seems to be substantial skepticism towards crypto and NFTs among Western players, based on the feedback I've received. However, most players in the Asian market don't appear to find it off-putting. They simply want to focus more on entertainment as their primary gaming objective. Given that the gaming market in Korea is sizable both in terms of the pay ratio, number of players, and the abundance of development companies and publishers, it is understandable why major corporations are interested in being a part of this movement.

James: Why do you think Western players tend to exhibit more skepticism towards cryptocurrencies and NFTs compared to Asian players? Is there a particular reason behind this contrast in attitudes and perceptions?

Joseph: The key divergence can be traced back to traditional Web2 games, even before the rise of the Web3 market. Western gamers have generally been resistant to what they view as manipulative content seeking to extract additional payments, with the industry constantly seeking new monetization methods from DLCs to loot boxes. As a result, Western gamers often lean towards games with a one-time purchase cost, avoiding in-game spending for enhancements. In contrast, the Asian market has been more accepting of the free-to-play model with in-game purchases, a trend prevalent in major Asian markets like Korea, Japan, and Greater China. In this framework, Asian gamers tend to perceive NFTs in games as personal digital collectibles, secured through blockchain technology. Despite these cultural contrasts, Web3 gaming needs to provide tangible enhancements to the gaming experience that only blockchain can offer. If this is achieved, delivering a seamless, innovative, and enjoyable gaming experience, the market will likely embrace these new technical elements and finally bring regular gamers into the market.

James: Thank you, Joseph, for sharing your valuable insights. Now, turning our attention to Angela. Angela, I would like to ask you what sets the Korean Web3 gaming market apart from the global market.

Angela: I would like to note that since there are no Web3 games in Korea, there isn't officially something that we can call a user market. But I can comment on the builder market that developers are creating in Korea. Despite the legal restrictions on the domestic Web3 gaming scene, many Korean gaming companies are now entering the blockchain game space with large projects. In the case of gaming companies elsewhere, they tend not to actively utilize their core IPs for Web3 games, but I think the difference is that Korean game companies are utilizing their core IPs for Web3 games, such as Nexon's MapleStory, WeMade's Mir, XPLA's Summoner's War, Netmarble's Everyone's Marble, and NPIXEL’s GranSaga. The core differentiating factor here is that we are really in it to be serious.

James: You highlighted the developers and the creators in the Korean market. Why do you think Korean game companies opt to utilize their core IPs for Web3 games much more actively than game companies elsewhere? I don’t think I can think of any big gaming companies utilizing any of their flagship titles globally. Could you elaborate further on this matter?

Angela: Here is our take on this. Asia is already a very strong gaming market, and the Asian gaming market specialty is in the MMORPG genre. Due to the core characteristics of this genre, it fits very well with what blockchain has to offer and I think we are very well aware of that synergy. Even for MapleStory, this is a game where a lot of people gather, trade, and create communities around a series of items and content. When you consider core IP for blockchain, just because it is famous does not mean that it will guarantee success. One of the reasons why we are going forward with MapleStory is the fact that the IP and the experience of the IP itself resonates with the Web3 gaming experience. We feel that this experience and what users can experience in a blockchain environment are very similar to what the MapleStory IP has to offer at its core. Therefore, when meshed together, it can create a more frictionless but new experience for users that is ultimately going to be great.

James: I totally agree with your thoughts. It would be much more easier to build communities considering the core characteristics of the genre that most flagship titles of Korean gaming companies are known for. Angela, thanks for sharing your insights. Last but not least, Michael, please share your insights on this topic.

Michael: In my opinion, the Korean Web3 gaming market is different from the global Web3 gaming market in the sense that nearly all the large and public gaming companies have a Web3 initiative. A lot of these companies have come out publicly including ours committing to launching titles with Web3 elements. You already see quite a few games that have some sort of a Web3 element in Korea versus everywhere else. People are just starting to try it out and dip their toes in it. Additionally, the users generally are much more open to Web3 than in other markets.

James: Thank you once again, Michael. Now, let’s move on to our final topic, the future of the Web3 gaming market. In this segment, we will hear insights from Angela and Joseph.

5. The Future of the Web3 Gaming Market 

James: Angela, how do you envision the future of the Web3 gaming market?

Angela: Games in the past were content with a set end, you played it once and consumed the content, and that was it. From that, games in the Web2 era have become a continuous service with constantly available content that can be played over and over, namely live service. Nexon, as a pioneer of online gaming, has been successfully running and researching live services for more than 20 years, and we thought that there are some challenging missions for sustainability. The Web3 era game is an online game that uses blockchain technology to build a better community and ecosystem, maximizing the sustainability of the game and overcoming the limitations of Web2 era games. I think it will be something that players can play for a lifetime while forming a community in a healthier ecosystem and experiencing the expansion of that ecosystem together.

James: Couldn’t agree more with that. Joseph, how do you perceive the future of the Web3 gaming market?

Joseph: The future of Web3 gaming hinges on drawing more gamers with high-quality content and seamless adoption. The market is evolving from small teams emulating Axie Infinity's tokenomics to larger companies spearheading innovation. The path ahead involves creating infrastructure for on-chain gaming data and embracing Web3 principles. Yet, challenges like crafting sustainable business models and navigating regulatory issues persist. Companies like us, Nexon, XPLA, and many others are devising strategies to tackle these obstacles. As the market is still emerging, participants are investing in one another to enhance the ecosystem, leading to collaboration over competition. Over time, I am confident the market will find the right approach to offer gamers an advanced experience, fostering true adoption. The short-term objective for gaming companies is to establish sustainable models for user onboarding and servicing. The long-term vision involves a paradigm shift similar to the rise of mobile gaming. Ultimately, the goal is to create successful gaming experiences, producing games that can compete with Web2 heavyweights, and onboarding regular gamers into this market.

6. Closing

James: It was extremely interesting to learn how each company share similar views but take different approaches to unlock the value of Web3 within their existing business. I admire the fact that everyone here from the gaming industry is going through tests, taking bold experiments and adventures in this field. I wish everyone in this field good luck and success to the projects that you are trying to adopt into the industry. I strongly believe that these meaningful initiatives will take huge roles in building Web3 business in scale and accelerate adoption in the mass public. Everyone has been questioning a lot-when will the crypto winter end and what are we waiting for? I don’t think it is just the price changes that we are waiting for. Of course, everyone welcomes that but more than that, I think what we need is scalable proof. I think Web2 gaming players who have bold and vast experience in building services on a large scale would be able to repeat success methods into the Web3 scene as well. Thank you very much for your time despite the late time in Korea, and I hope everyone listening enjoyed the session.