Blockchain Gaming And Intrinsic Value Tokenization with Nithinan Boonyawattanapisut
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Blockchain Gaming And Intrinsic Value Tokenization with Nithinan Boonyawattanapisut
I have an interesting interview, an international one. I have the CEO and Cofounder of HotNow, Nithinan. She’s from Thailand. She is a serial entrepreneur with a successful career in video games. She’s also the Cofounder of Axion Games, one of the leading AAA independent video game studio in China. Nithinan oversaw record-breaking games such as Gears of War, one of the most successful Xbox games, Infinity Blade, the fastest selling IOS app in history at launch and Rising Fire, selected as Tencent’s headline shooting game for 2018. Why we’re talking though is that HOT Token had an ICO in 2017 and they have a retail play as well. I thought that this was interesting for us to have a conversation about what’s going on between the combination of gaming and retail, and how tokenization is playing a part of that. Nithinan, welcome.
Tracy, how are you doing?
You have been playing in the gaming industry for like a dozen years. This is quite some time. Over here in the US, we have a lot of conversation about how there’s not a lot of women involved in the gaming industry. You are quite an exception there. Not only are you very successful, but you’re a woman playing in this field. Tell me how you got started in gaming and how you keep up on technology as you move forward in your career.
It was all analytical decisions. You’re trying to get into gaming space. I started off my career as a financial analyst and got myself involved in the capital market.
I seriously haven’t heard that one from a single gaming company before.Content is always changing, and so does the target audience. Click To Tweet
As I was doing a lot of investing and trading, I had the time to study a lot of various industry across all things. Of all things, I started noticing that gaming has zero correlation with how the market moves. Basically, it’s a resistance to the market downturn. When the market went down, the revenue on our gaming side did not go down with it. That’s caught my attention.
That flies in the face of retail because retail always takes a hit.
Indeed it does. It was always in the back of my mind that I wanted to somehow get into gaming space because that data alone was interesting. Around that time during the year 2004, broadband was starting to get popular, get propagated in Asia where Korea and Japan, they’re the ones that are leading the pack. As I went into looking into the usage of the internet package on the broadband, I found that the number one usage for the broadband was to download porn. I thought to myself, I can’t do porn, what’s the next thing?
The number two is getting online gaming.
I was like, “This is something I’ve got to get into because I believe it was going to be the next growth web in these regions.” I was trying to identify the niche of how I would get into space. Being in finance obviously, the first thing you’re going to look at is cost structure. I dive into looking at the cost structure of video game productions. It’s turned out that the cost of producing game has been going up in an exponential manner as a computer graphic and computer processing ownership was getting more powerful.
Computing power was getting faster, cheaper and yet production was skyrocketing in price, that’s an unusual situation.
If the platform is getting better, what happened is you expect to see more because now that device is sophisticated and it can play a lot better graphics, nicer audio and therefore, the content that we’ll be serving those platforms, I expect it to look awesome. The costs that go into making things look awesome is very expensive.
There were games that we’re setting the bar at that time. We were talking about this because Game of Thrones Season Eight landed. Everybody has gone through that. They set the bar on that level of TV requirement that is almost movie quality at TV prices, although they’re high prices for TV. It was $15 million an episode. Looking at that, it’s the same thing that happened in the gaming industry.
It’s happened in an even more expansive degree because thinking about movie productions, you know exactly what you’re going to be showing on the screen. You only build stuff for that limited space that the screen would cover. In video games, you don’t know how people are going to behave in your games. They could be running around here and there. What you would do, you end up building the whole world. That’s why the cause of video game went crazy. At that time, most of the production studios that are able to produce high-end games are located in the West, which we know that the labor cost is expensive if you compare to an emerging country like in Asia.
Let’s fast forward a little bit. Your platform is called HotNow. Do you produce your own games on that platform or is it more of an app store? How does that work?Gaming is one of the largest forms of entertainment media on earth right now. Click To Tweet
The eventual revolution and the platform, I see it to be like an app store, but maybe not of that large extent. Most of the content that would be integrating on the platform obviously would be focusing on games, not another gazillion app, not any app. It’s a game marketplace in a way. I’m using my own studios that I have used in various countries to produce the first set of content to be plugged onto the platform basically to set an example of what can be done and how the game developers who’s going to be joining the platform can benefit out of this network.
You’re creating the premium model. This is what it looks like. This is what you should be creating. This is the level of quality we’re setting. Now, why ICO it?
Obviously, ICO was basically an alternative means of startup to raise money to fund that project. If you don’t want to go the VC route or you don’t want to go raise money from a few BOD institution or private individuals. ICO is a gateway, a good alternative for getting capital into the door to try to execute your project. Another reason is the technology that’s underlying what we’re trying to do, the blockchain itself made perfect sense because this platform, what it’s doing is trying to utilize the space and the asset in the game itself. You think of the native ad that is seamlessly integrated within the game content itself. It’s like when you’re playing a game, it’s like you’re living in another virtual world that someone built. In that world, everything in the world imagine if you can change it on a real-time basis into any commercial content that the brand or your vendor partner required to be. For example, you’re running around in the house and on a table, there’s a can sitting on it. One day that can become a Coke can or the next hour, it could become Mountain Dew. This is what the technology enables the game content to do.
I have some young kids who play a lot of young games over time. It always surprised me how long it sometimes took the game developers to get products out there for the game. There is a lag behind because they don’t know what’s going to be popular. They don’t know what kids are going to interact with so they don’t plan that out. It isn’t until later that they realized that kids want this stuffed animal, which happened to be a secondary character or something like that. It always has surprised me. I had to multiple times with my daughters because they’re such early adopters, had to sew animals that look like their characters because we couldn’t find them anywhere. You’re going to pre-integrate that based on relationships with brands.
We don’t even have to pre-integrate anything. This content can be changed in real time. It will also be changed upon the target audience. Normally, the technology that HotNow has built enables you to do that. The reason for it is I want to hook the two up because if you look at gaming this day, you can comfortably say that is the largest form of entertainment media on earth. If you look at the value of digital advertising that is being created within a gaming space is only represents about 1.4% of the total value of digital advertising, which is tiny. It doesn’t go hand in hand with the size of the media itself.
That doesn’t go hand in hand because immersive media should have a higher conversion rate. We have on podcasting, for instance, integrated ads, host-recorded ads. We would have a 37% conversion rate on things that we suggest here. Social media has a 1.3%, for example. For it to have that low says that they were doing something wrong in the way in which they’re serving ads. You’ve changed that. You’ve immersed them. You’ve created a much more immersive environment for the advertisements themselves.
Something as immersive as gaming, I saw into it that they’re here to be interrupted if you think about it. When you’re playing a game, what would you feel if that pop ad just popped right in front of your face or a video does force you to watch 32 seconds of content because you can get some in-game currency? In reality, people who click on that video because they want that extra currency in the game, what they do is they click on a video and they put their phone down. They wait 30 seconds before they pick it up again. They don’t even see those ads.
That’s the time they go take a coffee break. Go get that Coca-Cola and come back. You’re tapping into the behavior as well as what’s in best service. It’s not that they’re not interested in it, it’s that because of the disruptive nature, they’re not paying attention to it.
What we also added to the whole value chain is the last measurability. The issue of digital advertising overall is the measurability of the actual purchase itself. When you do advertising on a digital platform, you can count like how many people, how many eyeballs see your ads or you can count to click how many people went on and clicked on those ad content. At the end of the day, you don’t know how many are converting into purchases. What the platform does is we integrate digital coupon within that in-game asset itself. The journey of the customer is the gamer can interact with those objects or the commercial content within a game and it could pop up to become a reward coupon that goes right straight into the HotNow app coupon wallet.
They don’t have to remember anything. They just get to keep it. Is this the token?Focus on the right product, the right time, and the right channel for the curation of the customer experience. Click To Tweet
The token now acts as access granting key to all these services and to unlock all these benefits. How the HotNow ecosystem work, I’m trying to create something that all the participants that are doing something, doing some activity on this network can benefit from it. I wanted to function as an actual real-world economy. I’m looking at it as I’m trying to create a new country with its own currency. It should have a functional economy that drives the value of the currency itself.
Here’s your finance background coming right back in because that’s interesting because too often it feels like manipulated currency within a game. I’m earning points. I’m earning coin. I’m earning whatever that is. I can purchase but only within the catalog of items that they’ve chosen there. It doesn’t extend external, but in this case, through being able to earn the rights to and have the ability for the digital coupons, you’re now allowing them to step outside as well.
By allowing them to step outside and mark the value of the currency with the real-world item basically, what we’re doing here is you automatically installed intrinsic value into your currency right away. That’s the first benchmark that I’m trying to create value to the token holder. Obviously, people who have entrusted that capital with us, we want to make sure that we go back to the principle of the real economy that how the currency or our HOT Token should be released into the whole network should be driven purely by the real demand of the currency itself. The rate of release or the token that’s going to the economy grows with the actual economic activity that all the participants are performing in the network. How the value of the currency will be justified in this network has a positive correlation with the size of the economy itself, which determined by the velocity of the money being a change in this economy that is being spent on the real economic activities. Not just being traded on some crypto exchange somewhere.
You’re encouraging them to share in a way, which is very common in the retail world. In other words, I got a coupon here, you’re going to go there. They’re encouraging that activity to have other people access that as well. There’s a financial reward for the whole community for that.
That’s relationship directly between the brand, the vendor and the consumer themselves. I also want to create an environment where the consumer can interact with one another and exchange this coupon that they pick up through playing the game. I also create a marketplace within this network itself that people can exchange coupon they found in the game like they can trade it between each other.
I don’t drink Mountain Dew, but I’m willing to trade this for you for Starbucks or whatever that might be.
You can trade it for the currency in the HOT Token and it works. You’re holding HOT Token. If you run into someone and want to serve the coupon that you want, you can then spend this HOT Token that you earned selling some coupon that you don’t want and then buy the other coupon.
It encourages you to pick up what you find no matter what because it may be valuable to somebody else. You talk about the right product, the right time and right channel as being your focus for the duration of the customer experience. I like that because I have another podcast called Product Launch Hazzards. We’re specifically focusing on retail products. I say something similar that it has to be the right thing at the right time with the right resources. Otherwise, it won’t fit. It won’t fly at retail because retail is all about timing in a sense. Is this the right time? Is this the right product for this market? That product-market fit is more essential to any other thing that you might do. If it’s a wrong fit, you can’t spend enough to add dollars to correct that. I always say, if you don’t have the right market, you’re going to spend a fortune trying to tell that market and educate them on the product. You’ve tapped into a way in which you can almost flexibly do this so you can test out products and say, “Are they flying with my community or not?”
Not only that, you can make it a full circle because you can make people do activity in the real world and still got them back into the game as well because some people are playing game because they feel like they are escaping the real world and they want to make a statement of their own identity in another version of themselves in another world. That would be something that they want to express through the video game by being better than anyone else in the gaming world. They might find certain items in the gaming world valuable to them more than something in the real world. The emotion in the real world can also benefit from this psychology where they don’t always have to give a constant discount because, in reality, businesses do not want to sell stuff at a discount. You can choose to benefit the consumer another way by saying stuff like, “If you spend up to $30 at my shop, you can gain this token that then you can spend and gain access to the in-game item that you want. It can flip the models the other way as well.
You’ve created a big challenge for you and your company because not only are you building games that have to have very high-quality level because the bar is set high as an industry in general, but you’ve got to create an ad platform. I’m struggling with this too on my advertising platform. It’s not blockchain based yet. I’m working on that being blockchain based, but an advertising portal basically that advertises on all of the podcasts that we produce. We produce over 200. The challenge that we faced is similar to the challenges you’re facing, which is first off advertising in gaming is underserved.People don't even need intrinsic value to believe in the dollar anymore. Click To Tweet
In other words, most advertisers are not taking advantage of it, possibly because of the low conversion rate. Also, the lack of measurability that’s existed prior to now. It hasn’t been as viable or as I’m going to say mainstream advertising option and podcasts have been very similar. We have bad measurability. It’s hard to measure the success rate. That’s a challenge. Now you have to build up a whole ad group, ad platform at the same time that you’re building up assets and wonderful games to have them be on. That’s quite a challenge. You must be building quite a big corporation. How did your ICO go and what did you raise?
It went successfully. We managed to raise $37 million. Obviously, the game business has been running. I was more than ready to pluck all the resources that we already had into trying to bring this vision into a reality. I’m happy to also share with you that pretty much all the pieces are done. I’m in a testing process and the first pilots of all this activity will go out.
What is your biggest challenge going forward?
It’s the crypto environment in general. The regulatory is still murky in some territories and a lot of big companies are still lost of how they want to treat digital asset on their book as well as some other country basically outright ban crypto. I’m lucky in the sense that Thailand is not one of them.
It’s not even crypto because the exchange market is within it. How have we not had that? That’s existed in the gaming community. I can remember you could play arcade games and it was token based. There was always that level of acceptance in that community already. No regulations happen as long as it stayed within that. It’s the slight step outside to exchanging that for goods that are only the slight mark. The reality is that any retailer has an option to take a coupon or take a gift certificate. Why is that any different? It shouldn’t be.
It’s going to be. It is because a lot of the government’s valid points that they should be scared, when they said to enable people to have control over that currency, the central government or the central banks become less influential of how they can control monetary system is a valid point. If you look at the upside of what blockchain and this whole potential can provide, I would think that the benefits supersede the potential downside. It might all be about imaginary scare anyway in any case because what country did you form a currency that has been stable until this day, especially the US. It got to the point where you don’t even need the intrinsic value to believe in dollars anymore. It’s all perceptive value that people trust in the value of the US dollar. That’s all it is. That trust is never going to go away.
I’m so glad you came on to talk about what’s going on over there. You’re coming out of testing and moving into being available. Are you doing a limited offering? In other words, could people from the US access the platform or is it only within Thailand?
We look at Thailand as our first market. If you’ve been in any tech development at all, you always expect something to go wrong. We take a cautious step in having limited access in Thailand probably in the first few months. Once we know that everything is all smooth, stable, we start opening up access to the rest of the world.
Is there anything else you want me to know or you want our audience here at New Trust Economy to know?
What I believe is I’m trying to create something of real value that has real-world efficacy. I don’t want people to look at this being a speculative investment on the blockchain space. What I’m trying to utilize is the infrastructure on a blockchain itself is to add transparency, as a vehicle to transfer value and to provide trust on the exchange of the currency on this network itself. The token will function basically just a means to unlock all the services that we as a platform is providing, as well as the motion partner and all other platforms they want to plug into our usual network. The one thing that I forgot to mention is even though I said that I don’t mean to be like a Google app store.
For those other applications that have an adjacent prospect with the content business gaming and retail space are more than welcome to join the HotNow Network and utilize what we have already built in terms of the securities of the blockchain network itself. I have also created a usage workflow that enables automatic tax system, an escrow system where a developer can take a couple of weeks to plug in their platform and it’s all good to go versus trying to view all this usage workflow by yourself. Even if you’re trying to do it on top of existing blockchain infrastructure like Stellar or Ethereum is going to be like four or five-months development even with an experienced team of blockchain quarter. I have made it super easy open ABI for anyone to plug in a couple of weeks and good to go.
You’re creating an ability for existing game developers to integrate with your system, work in that process. You mentioned early on that there’s this significant labor cost difference. Will they be able to subcontract them with our team of developers as well?
That’s always a potential because I’m quite selective because even though I have quite a few developers in-house, it’s still a limited capacity because I can’t take on every project. If the project has a very interesting concept, by all means, send us some details, I’ll be happy to take a look at all those types of things. One thing that I want to stress with the game developer community is you may not know that if you notice the business model in gaming business these days is what we call the freemium models. These are the most popular models, where you download the game for free and people doing an in-game purchase. In reality is if you dig into that business models, on average, only about 5% of the people, who play the game are not buying anything in the game at all. What’s happening as a game developer, you are not monetizing out of that 95% of the players that are playing your game every day. By plugging in your game onto a platform like this and making your real estate in the virtual world becomes something that you can monetize, basically you get a chance of creating another stream of revenue from 95% of the player that you can never get a grip on before.
That’s so essential because so much money was spent in the initial to get to that freemium model of business that it’s not viable. It’s why they go belly up all the time because they don’t realize what they’re getting into.
It’s because of that model, the nature of it, it becomes the winner takes all type of business. 85% of the game out there is not profitable. It’s only the 15% that’s considered a hit is making any money through in-app purchase. The 85% of those game don’t have to worry about transacting, selling in-game item anymore as long as there are still people playing your games, it is another revenue stream for you.
Nithinan, thank you so much. HotNow, you will be looking for this out there. It’s starting in Thailand platform. It will be hopefully worldwide. Thank you so much. Keep us posted on how things are going.
Thank you, Tracy.
I’ll be back again with a new episode.
About Nithinan Boonyawattanapisut
Nithinan Boonyawattanapisut is the CEO and cofounder of HotNow. A serial entrepreneur with a successful career in the video games industry, Nithinan is also the cofounder of Axion Games, one of the leading AAA independent video game studio in China. Nithinan oversaw record-breaking games such as Gears of War, one of the most successful Xbox games, Infinity Blade, the fastest-selling iOS app in history at launch, and Rising Fire, selected as Tencent’s headline shooting game for 2018.
HotNow is the location-based digital marketing platform with over 700,000 application downloads and over 50,000 partner stores, including notable retailers such as McDonalds, Baskin-Robbins, and Dunkin’ Donuts. Both a digital marketing and video game industry veteran, Nithinan developed HotNow to appeal to the needs of the modern consumer by leveraging on gamification tactics to access a curated selection of deals and promotions, while merchants similarly benefit from real-time and transparent advertising solutions. Most recently, HotNow developed Evergleam Hill, the world’s first fully-integrated crypto game. Facilitated by the HOT Token, players can plough their way through prizes, vouchers, and even actual gold in the upcoming launch of the casual mining game, unearthing value from the virtual world for the real one.