I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News, and this is Bloomberg Crypto, a daily Bloomberg I hard podcast. It's Monday, August eighth. I used to argue, I still sometimes argue, that you could divide folks into two categories, people who play video games and everybody else. Gaming is bigger in revenue terms worldwide than the film and television industries combined. It's also a complex universe that's dealing with hard and necessary conversations about things like who benefits from those record breaking profits, whose work and whose labor, and under what conditions are these profits being made? And as always there's tough questions about things like intellectual property. And that's before you even add blockchain and n f t s into the mix. Joining me now is Bloomberg Reports to Cecilia Donastasio, the bigger question is do gamers want their teams to look like capitalism. She's going to discuss why and how crypto is showing up in video games and why much of that gaming community isn't necessarily a big fan of either technology. Cecilia, thank you so much for joining us on the podcast today. Thank you so much for having me. You are a video games reporter at Bloomberg, And once I got over my jealousy of the existence of a video games reports at Bloomberg doing jobs that I was not doing, I started asking the question, what is the intersection of crypto and n f t s and video games? Yeah, it's a huge question. So over the last couple of years, people who have been involved in both the video game industry and the world of crypto have looked at games and thought to themselves, well, games have virtual currency and games have virtual items. Crypto is a virtual currency and n f t s are technology underpinning virtual items. What if these two things were married. And it's been very interesting to see how that has and has not played out. How has it played out? Yeah, So we have seen crypto games for several years. People say Crypto Kitties was one of the first ones in two thousand and seventeen. Basically, um, there are these virtual cats that were sort of symbolic of real life value through crypto. And one of the things that was pretty interesting with crypto Kitties was that despite the fact that one pet might self for a hundred thousand dollars, the equivalent of that in Crypto, players really bled out of Crypto Kitties because, and we've seen this several times since then, there was an increasing division between richer players who had enough money to buy high value assets early on in the game, high volume, high value cats, calling cats assets people too. Yeah, and these poorer players, though, who also, um, who were not able to kind of scale the ladder and have as much fun with the game. I want to kind of go into a little bit more detail here because I think it's fair to say we both play a reasonable amount of video games, or perhaps an unreasonable amount. I was about it depends on your perspective really, um. And one of the things about video games is, you know a lot of them involve some kind of grind, right, some kind of not fun, repetitive activity that you do over and over again in order to get the loots that lets you buy the swords, that lets you do the thing that you want to do. With Crypto, there's a dynamic in there that is also that also already exists in traditional video games, which is the idea of or you could spend money and buy the sword and skip the grind. So you know, there's there's an existing dynamic of the haves and the have nots in traditional video games. Are you saying that it's it's worse in crypto or that it's like more aggressive in some way. I love this question because I think that a lot of gamers feel that are attracted to video games because of this egalitarian element where you know, everyone bought the game. People you know, go in with various skill levels, but you know, if you spend enough time trying to grind for gold in World of Warcraft, you're gonna get golden in World of Warcraft, regardless of how how good you are at the actual fighting in the game a lot of the time. Um Crypto is a little bit different because you do need that initial financial buy in a lot of the time. So while there are people who play Axie Infinity who are able to grind their way into more and more valuable axes, people who start out with a lot of money upfront do automatically have a head start. But I think it's worth noting that people have been purchasing high value assets in selling them inside of video games for like a decade. So if that is the case, and we we both know that to be true, I will not confess which online video games I may have spent too much time and im possibly too much money and in a prior life, Why then, do we need things like blockchain based economies and games. What are the arguments that these developers are making. There are some really interesting arguments out there that you know, because micro transactions have become such a prominent business model for video games, particularly ones where there's no initial buy in free to play, you know, free to play exactly. Players love these in game cosmetics. I too, am unwilling to admit um what games I spend what money in in this regard. But ultimately there's this argument that you know, you don't really own your those cosmetics. You don't own the really awesome dragon mount in, for example, of Final Fantasy four tea, and that you might have, for example, spent some money on in this store. So if you know, Square Annex the publisher which one day say all right, we're done here with this game, like your mount disappears even though you spent fifteen dollars, which has happened. Yes. The idea of the blockchain technology is that it would allow you to own the assets somehow, and maybe you could even transfer that asset into another game. So if you have your cool dragon mountain Final Fantasy fourteen, maybe you could play with it in World of Warcraft. I have also seen some game developers, and particularly people who draw assets for video games, pulling their hair out on Twitter over this argument, because God, what an ownerous thing to do to redraw everything. Let's just take a completely not related to something I may have done in my own life example, and let's say you had spent some large amount of time building an extravagant apartment complex in you know the sims on desktop PC, and later in life you spent some similarly extravagant amount of time customizing your island on animal crossing on switch. In the idealized version of the world pitched by these pro blockchain FLU and f T developers, I would be able to move to buy that real estate and move it between games. Right, Nothing should stop me from being able to move these things between each other. In reality, those are totally different platforms, they're totally different game publishers, they're totally different art styles, they're completely different ecosystems. There's just no practical way that's possible. Yes, and there is an argument that some gamers, do you want things that they work for in video games since they grind for it to be redeemable for real life money, and so I could sell my island, so you could sell your eye end, and there is the argument that that end is worth those complicated means. I haven't seen, however, a lot of gamers be particularly excited about that. There have been big publishers who have launched initiatives along those lines that have received um as. My colleague Jason Shire puts it more vitriol than anything he's seen in the games industry since he started reporting on it, which is a very high bar. So here's here's the thing about that, though. If you do something that is hard, labor intensive, time consuming, and then you make money at the end, typically that is considered work. And I played video games to be the opposite of work. I don't want to monetize my video gaming because then it becomes a job. And if I'm in an escapist universe US in which I'm spending dozens of hours on a building houses, it's because I'm not trying to work. So what is going on with this mechanic here where everything is just becoming label? That's a really awesome thing to bring up. You know. I think it's worth noting that there are a lot of gamers out there who do approach video games very seriously as if they were work. When I go on a raid in Final Fantasy fourteen and I'm with seven of my friends and we're trying to be the same fight, you know, like eighty times, that does require a kind of like work approach, but it's for fun. I think you're right, and people really do attach monetary compensation to the idea of labor. I think the bigger question here isn't do gamers want to approach their games as if their jobs, because I think a lot of gamers really do. The bigger question is do gamers want their games to look like capitalism? There are in these block handing games and particularly Acts in Affinity, there have been these guilds that have sort of spawned where players who have more resources and higher value axes or assets are able to farm out the actual gameplay of these games. Two players who don't have as many monetary resources, particularly in countries like the Philippines that were hit quite hard by the pandemic, and those players kind of sharecropper style will increase the value of the richer players assets by playing video games. And I think, you know, that's a different kind of work relationship that is exacerbated by the fact that do you think that this is a fact that a lot of these blockchain based games right now aren't very fun yet. We'll be right back with more on video games from Bloomberg Report to Cecilia Denistasu. I want to go back to something that you said earlier about you know, folks, we've been doing this for a long time. So Second Life, which is you know, much like much like Eve, one of the very earliest online spaces. The folks who take Second Life very seriously, and there's still a lot of them, would argue it was never really a game. It was much more metaversey than necessarily video gaming. But you interviewed there the executive chairman of Linden Labs, which is the developer of Second Life, for the a tech summit hosted by Bloomberg in San Francisco, and he was, you know, less than convinced that blockchain and crypto had a role not even justin video games, but also in the metaverse. I'm just gonna play that clip really quickly, right the whole point of blockchain is that everybody knows everything. It's a huge word document. Um So, if you if you talk about an n f T and you put that by definition and mt is on the blockchain, we've got two point two billion items we transact. We can transact in a one fifty of a penny that does not work on the blockchain. So, and the other thing about blockchain is it is it dovetails with crypto, which we've talked in the past, which, as you know, i'll use the word because I ask permission, is the apocalypse and so, um So when I start thinking about metaverse, blockchain, crypto, I see that as a future, but I think it's as much of a risk as it is a positive. I do want to just talk about that idea of the metaverse a little bit more because when Microsoft announced that it was going to try to buy Activision Blizzard, one of the very first things that they said was like, this is a big play on the metaverse. And you're like, how, like, what is what is the relationship from your perspective between video games and the metaverse, even if you ignore n f t s and crypto. That's a great question. So we have seen articles for publications like the New York Times that will for two metaverse and virtual world kind of interchangeably. There was, um notably, a New York Times article in which two individuals got married in a so called metaverse. Never mind those individuals happened to work for the company. It was a real estate company that created the virtual world. Details. It's in details, you know. This really great book by venture capitalist named Matthew Ball came out just called The Metaverse, and he has the definition of like the most a metaverse is a persistent virtual world that is connected to other virtual spaces, that has an economy, and also is able to be kind of immersed in in some way. So whether that's through you know, operating an avatar, or maybe we're walking around it in virtual reality. That's that's how he defines a metaverse. And by that definition, there is no metaverse. Not yet. Tech companies don't really aren't really making moves to kind of partner with each other as equals, to kind of hitch their different virtual spaces together, or what we see more of is, of course, consolidation, one big tech company kind of absorbing a smaller one. Metaverse right now is a way for a lot of tech companies to describe their sprawl of digital and physical apps, hardware that they used to construct their virtual spaces, and their technological products that they sell. And I would be really excited to see if that ends up advancing into a true metaverse at any point in any future, hopefully not a dystopian one, just as a as a closing thought, games that get described as metaverses are often like Fortnite, which has you know, the consumables and the cosmetics that you described. You can buy skins, you can buy suits, you can buy cool stuff, you can create spaces, you can have a persistent character that represents you, and then you could like party and listen to real world DJs, um Minecraft Roadblocks similar sorts of things, and those are also often the games that are held up as well. What if you could take your Fortnite outfit or the things you made in micraft or roadblocks and you know, import those into other places. What I'm hearing from you is those might have metaverse like elements, but they don't fully fit the description yet, they're not like fully realized entities in that way. Absolutely. Actually, Minecraft developers came out really recently to say that they will not be allowing n f t s in in that game at all. That is a metaverse element to it, the connecting video games in virtual worlds through assets that you can kind of share for them. I would be more curious to see. And this is more of like this is more of a vestige of a truer metaverse. Whether people will be able to bring avatars across different video game properties. That feels a little bit unlikely, just considering the fact that everything from art styles to video game engines that provide the kind of software infrastructure for video games to exist aren't necessarily synonymous between these properties. But you know, people really believe in this thing. True. Great place to stop. Thank you so much, Ceilia, thank you for having me on the next episode of Bloomberg. Crypto venture capitalists and certain people in the music industry seem to be enthusiastic about the potential for artists to benefit from crypto technologies like the blockchain and n f t s, but there isn't universal agreement, especially among musicians themselves, that any of this is necessarily a good idea. Bloomberg reports. Lucas Shore will join me from Los Angeles as we continue our discussion about the decentralization of the music industry. This is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the I Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Send us your comments, questions, or suggestions for the show to Crypto at Bloomberg dot net or find us on Twitter. We're at Crypto. The supervising producer of Bloomberg Crypto is Vicky very Galina. Our senior producer is Janet Babin. Our producer is Mohammed Farup. Our producer is Sharon Barrier. Our associate producers are Zanam Sidiki, Thai Buffalo and Moses and um Desta wonder At is our engineer. Original music by Leo Sidrin. I'm Stacy Maria Shmaal. We'll be back tomorrow.

I'm Stacy Marie Ishmael, Managing editor of Crypto for Bloomberg News, and this is Bloomberg Crypto, a daily Bloomberg I hard podcast. It's Monday, August eighth. I used to argue, I still sometimes argue, that you could divide folks into two categories, people who play video games and everybody else. Gaming is bigger in revenue terms worldwide than the film and television industries combined. It's also a complex universe that's dealing with hard and necessary conversations about things like who benefits from those record breaking profits, whose work and whose labor, and under what conditions are these profits being made? And as always there's tough questions about things like intellectual property. And that's before you even add blockchain and n f t s into the mix. Joining me now is Bloomberg Reports to Cecilia Donastasio, the bigger question is do gamers want their teams to look like capitalism. She's going to discuss why and how crypto is showing up in video games and why much of that gaming community isn't necessarily a big fan of either technology. Cecilia, thank you so much for joining us on the podcast today. Thank you so much for having me. You are a video games reporter at Bloomberg, And once I got over my jealousy of the existence of a video games reports at Bloomberg doing jobs that I was not doing, I started asking the question, what is the intersection of crypto and n f t s and video games? Yeah, it's a huge question. So over the last couple of years, people who have been involved in both the video game industry and the world of crypto have looked at games and thought to themselves, well, games have virtual currency and games have virtual items. Crypto is a virtual currency and n f t s are technology underpinning virtual items. What if these two things were married. And it's been very interesting to see how that has and has not played out. How has it played out? Yeah, So we have seen crypto games for several years. People say Crypto Kitties was one of the first ones in two thousand and seventeen. Basically, um, there are these virtual cats that were sort of symbolic of real life value through crypto. And one of the things that was pretty interesting with crypto Kitties was that despite the fact that one pet might self for a hundred thousand dollars, the equivalent of that in Crypto, players really bled out of Crypto Kitties because, and we've seen this several times since then, there was an increasing division between richer players who had enough money to buy high value assets early on in the game, high volume, high value cats, calling cats assets people too. Yeah, and these poorer players, though, who also, um, who were not able to kind of scale the ladder and have as much fun with the game. I want to kind of go into a little bit more detail here because I think it's fair to say we both play a reasonable amount of video games, or perhaps an unreasonable amount. I was about it depends on your perspective really, um. And one of the things about video games is, you know a lot of them involve some kind of grind, right, some kind of not fun, repetitive activity that you do over and over again in order to get the loots that lets you buy the swords, that lets you do the thing that you want to do. With Crypto, there's a dynamic in there that is also that also already exists in traditional video games, which is the idea of or you could spend money and buy the sword and skip the grind. So you know, there's there's an existing dynamic of the haves and the have nots in traditional video games. Are you saying that it's it's worse in crypto or that it's like more aggressive in some way. I love this question because I think that a lot of gamers feel that are attracted to video games because of this egalitarian element where you know, everyone bought the game. People you know, go in with various skill levels, but you know, if you spend enough time trying to grind for gold in World of Warcraft, you're gonna get golden in World of Warcraft, regardless of how how good you are at the actual fighting in the game a lot of the time. Um Crypto is a little bit different because you do need that initial financial buy in a lot of the time. So while there are people who play Axie Infinity who are able to grind their way into more and more valuable axes, people who start out with a lot of money upfront do automatically have a head start. But I think it's worth noting that people have been purchasing high value assets in selling them inside of video games for like a decade. So if that is the case, and we we both know that to be true, I will not confess which online video games I may have spent too much time and im possibly too much money and in a prior life, Why then, do we need things like blockchain based economies and games. What are the arguments that these developers are making. There are some really interesting arguments out there that you know, because micro transactions have become such a prominent business model for video games, particularly ones where there's no initial buy in free to play, you know, free to play exactly. Players love these in game cosmetics. I too, am unwilling to admit um what games I spend what money in in this regard. But ultimately there's this argument that you know, you don't really own your those cosmetics. You don't own the really awesome dragon mount in, for example, of Final Fantasy four tea, and that you might have, for example, spent some money on in this store. So if you know, Square Annex the publisher which one day say all right, we're done here with this game, like your mount disappears even though you spent fifteen dollars, which has happened. Yes. The idea of the blockchain technology is that it would allow you to own the assets somehow, and maybe you could even transfer that asset into another game. So if you have your cool dragon mountain Final Fantasy fourteen, maybe you could play with it in World of Warcraft. I have also seen some game developers, and particularly people who draw assets for video games, pulling their hair out on Twitter over this argument, because God, what an ownerous thing to do to redraw everything. Let's just take a completely not related to something I may have done in my own life example, and let's say you had spent some large amount of time building an extravagant apartment complex in you know the sims on desktop PC, and later in life you spent some similarly extravagant amount of time customizing your island on animal crossing on switch. In the idealized version of the world pitched by these pro blockchain FLU and f T developers, I would be able to move to buy that real estate and move it between games. Right, Nothing should stop me from being able to move these things between each other. In reality, those are totally different platforms, they're totally different game publishers, they're totally different art styles, they're completely different ecosystems. There's just no practical way that's possible. Yes, and there is an argument that some gamers, do you want things that they work for in video games since they grind for it to be redeemable for real life money, and so I could sell my island, so you could sell your eye end, and there is the argument that that end is worth those complicated means. I haven't seen, however, a lot of gamers be particularly excited about that. There have been big publishers who have launched initiatives along those lines that have received um as. My colleague Jason Shire puts it more vitriol than anything he's seen in the games industry since he started reporting on it, which is a very high bar. So here's here's the thing about that, though. If you do something that is hard, labor intensive, time consuming, and then you make money at the end, typically that is considered work. And I played video games to be the opposite of work. I don't want to monetize my video gaming because then it becomes a job. And if I'm in an escapist universe US in which I'm spending dozens of hours on a building houses, it's because I'm not trying to work. So what is going on with this mechanic here where everything is just becoming label? That's a really awesome thing to bring up. You know. I think it's worth noting that there are a lot of gamers out there who do approach video games very seriously as if they were work. When I go on a raid in Final Fantasy fourteen and I'm with seven of my friends and we're trying to be the same fight, you know, like eighty times, that does require a kind of like work approach, but it's for fun. I think you're right, and people really do attach monetary compensation to the idea of labor. I think the bigger question here isn't do gamers want to approach their games as if their jobs, because I think a lot of gamers really do. The bigger question is do gamers want their games to look like capitalism? There are in these block handing games and particularly Acts in Affinity, there have been these guilds that have sort of spawned where players who have more resources and higher value axes or assets are able to farm out the actual gameplay of these games. Two players who don't have as many monetary resources, particularly in countries like the Philippines that were hit quite hard by the pandemic, and those players kind of sharecropper style will increase the value of the richer players assets by playing video games. And I think, you know, that's a different kind of work relationship that is exacerbated by the fact that do you think that this is a fact that a lot of these blockchain based games right now aren't very fun yet. We'll be right back with more on video games from Bloomberg Report to Cecilia Denistasu. I want to go back to something that you said earlier about you know, folks, we've been doing this for a long time. So Second Life, which is you know, much like much like Eve, one of the very earliest online spaces. The folks who take Second Life very seriously, and there's still a lot of them, would argue it was never really a game. It was much more metaversey than necessarily video gaming. But you interviewed there the executive chairman of Linden Labs, which is the developer of Second Life, for the a tech summit hosted by Bloomberg in San Francisco, and he was, you know, less than convinced that blockchain and crypto had a role not even justin video games, but also in the metaverse. I'm just gonna play that clip really quickly, right the whole point of blockchain is that everybody knows everything. It's a huge word document. Um So, if you if you talk about an n f T and you put that by definition and mt is on the blockchain, we've got two point two billion items we transact. We can transact in a one fifty of a penny that does not work on the blockchain. So, and the other thing about blockchain is it is it dovetails with crypto, which we've talked in the past, which, as you know, i'll use the word because I ask permission, is the apocalypse and so, um So when I start thinking about metaverse, blockchain, crypto, I see that as a future, but I think it's as much of a risk as it is a positive. I do want to just talk about that idea of the metaverse a little bit more because when Microsoft announced that it was going to try to buy Activision Blizzard, one of the very first things that they said was like, this is a big play on the metaverse. And you're like, how, like, what is what is the relationship from your perspective between video games and the metaverse, even if you ignore n f t s and crypto. That's a great question. So we have seen articles for publications like the New York Times that will for two metaverse and virtual world kind of interchangeably. There was, um notably, a New York Times article in which two individuals got married in a so called metaverse. Never mind those individuals happened to work for the company. It was a real estate company that created the virtual world. Details. It's in details, you know. This really great book by venture capitalist named Matthew Ball came out just called The Metaverse, and he has the definition of like the most a metaverse is a persistent virtual world that is connected to other virtual spaces, that has an economy, and also is able to be kind of immersed in in some way. So whether that's through you know, operating an avatar, or maybe we're walking around it in virtual reality. That's that's how he defines a metaverse. And by that definition, there is no metaverse. Not yet. Tech companies don't really aren't really making moves to kind of partner with each other as equals, to kind of hitch their different virtual spaces together, or what we see more of is, of course, consolidation, one big tech company kind of absorbing a smaller one. Metaverse right now is a way for a lot of tech companies to describe their sprawl of digital and physical apps, hardware that they used to construct their virtual spaces, and their technological products that they sell. And I would be really excited to see if that ends up advancing into a true metaverse at any point in any future, hopefully not a dystopian one, just as a as a closing thought, games that get described as metaverses are often like Fortnite, which has you know, the consumables and the cosmetics that you described. You can buy skins, you can buy suits, you can buy cool stuff, you can create spaces, you can have a persistent character that represents you, and then you could like party and listen to real world DJs, um Minecraft Roadblocks similar sorts of things, and those are also often the games that are held up as well. What if you could take your Fortnite outfit or the things you made in micraft or roadblocks and you know, import those into other places. What I'm hearing from you is those might have metaverse like elements, but they don't fully fit the description yet, they're not like fully realized entities in that way. Absolutely. Actually, Minecraft developers came out really recently to say that they will not be allowing n f t s in in that game at all. That is a metaverse element to it, the connecting video games in virtual worlds through assets that you can kind of share for them. I would be more curious to see. And this is more of like this is more of a vestige of a truer metaverse. Whether people will be able to bring avatars across different video game properties. That feels a little bit unlikely, just considering the fact that everything from art styles to video game engines that provide the kind of software infrastructure for video games to exist aren't necessarily synonymous between these properties. But you know, people really believe in this thing. True. Great place to stop. Thank you so much, Ceilia, thank you for having me on the next episode of Bloomberg. Crypto venture capitalists and certain people in the music industry seem to be enthusiastic about the potential for artists to benefit from crypto technologies like the blockchain and n f t s, but there isn't universal agreement, especially among musicians themselves, that any of this is necessarily a good idea. Bloomberg reports. Lucas Shore will join me from Los Angeles as we continue our discussion about the decentralization of the music industry. This is Bloomberg Crypto, a daily podcast from Bloomberg and I Heart Radio. For more shows from I Heart Radio, visit the I Heart Radio app, Apple Podcasts, or wherever you get your podcasts. Send us your comments, questions, or suggestions for the show to Crypto at Bloomberg dot net or find us on Twitter. We're at Crypto. The supervising producer of Bloomberg Crypto is Vicky very Galina. Our senior producer is Janet Babin. Our producer is Mohammed Farup. Our producer is Sharon Barrier. Our associate producers are Zanam Sidiki, Thai Buffalo and Moses and um Desta wonder At is our engineer. Original music by Leo Sidrin. I'm Stacy Maria Shmaal. We'll be back tomorrow.