In this fast-paced, ever-evolving environment, there’s a major key difference compared to other games: the impact of third-party tools and platforms in engaging and retain the most dedicated players.

I’m Marcos, co-founder of Tacter, a platform that builds game-specific communities. And joining me today is ‘Guthers’, founder and developer of MetaTFT, a website and desktop app that uses data to help TFT players learn and improve at the game. Both of our projects are included on Riot’s list of "3rd Party Friends".

🎯 Our objective is to identify behavioral differences between these two cohorts to measure the impact that top-tier third-party tools like MetaTFT or Tacter have on player engagement, progression, and ultimately, the lifetime value of your players!

Benefits of Third-Party Tools.

We analyzed a sample of 80,000+ players actively using third-party tools like MetaTFT, compared to a randomly selected group of 17,000+ players. To be included, players had to have played at least one game during Set 13.

At first glance, players using third-party tools played 2.1 times more matches on average than the random sample during the analyzed period, while the median user played 3.4 times more than their counterpart in the random sample.

Daily engagement also showed significant differences—players using third-party tools played 47% more daily matches than the random user average and 61% more than the median user.

In short, players who use third-party tools tend to play more frequently, both overall and daily, compared to the average player.

Players who actively use third-party tools played 47% more daily matches than the average player, and 61% more than the median player.

Differences in N-Day Retention.

For live-service, free-to-play games that monetize through cosmetics, season passes, and in-game currency, long-term user retention directly impacts LTV.

In this analysis, we use N-Day Unbounded Retention to measure long-term retention differences between our two cohorts: players using third-party tools and a randomly selected control group.

⭐ After 60 days from their initial match, players using third-party tools had 59.2% higher 60-Day Unbounded Retention than the control group.

As the graph shows, the retention gap between the two cohorts widens over time—21% higher on Day 7, 35% on Day 30, and 59% on Day 60 for players using third-party tools.

As we all know, the longer a player stays engaged, the higher their LTV. And it's now clear that players using third-party tools have significantly higher retention. That said, third-party tools may not be the direct cause of this increase. As Guthers explains, “Correlation doesn’t necessarily equal causation; however, it’s evident that our users engage with the game far more than the average player.”

The analysis makes evident that 3rd party players engage with the game significantly more than the average player.

A likely explanation is that players who take the game more seriously are both more inclined to seek external resources and more committed to playing regularly. Moreover, providing these players with the content, tools, and a like-minded community is a proven way to keep those super players engaged longer.

Differences in Player Progression.

Player progression is another key factor in boosting player activation, a crucial step toward long-term retention. Third-party tools help create an environment that reduces frustration and accelerates the learning curve—both essential for keeping players engaged and progressing. This is especially important in competitive live-service games like TFT, where the meta is constantly evolving.

Notably, 87% of players using third-party tools played at least one ranked match, compared to 59% in the control group—a 46% higher tendency to engage with competitive game modes.

While we don’t have exact data on the LTV difference between competitive and non-competitive players, it’s reasonable to assume that players engaging in ranked modes have significantly higher LTV.

Moreover, when comparing ranking distributions within both cohorts, the difference is striking—players using third-party tools rank 30% higher on average than those who don’t. This is clearly illustrated following the TFT Rankings distribution.

Why do Third-Party Tools Benefit the Game Ecosystem?

By @Guthers — MetaTFT founder and developer.

After several years of third-party tool development, here are some of the benefits that I see to the game ecosystem:

Closing the Frustration Loop - With any game, you win or you lose, while winning is a positive experience, losing can cause frustration, which people naturally seek to avoid. When experiencing frustration, players alleviate this in several ways:

• Playing again can temporarily relieve this, but consecutive losses can exacerbate the negative feelings.

• Seeking external guidance or feedback is the next logical step. Players can take a step back, reflect, learn from external resources, and come back with fresh motivation.

• Players might also share their misfortune, hoping for sympathy from others and reinforcing social connections.

Without outlets to alleviate their frustrations, players might stop coming back to the game altogether.

Accessibility & Extending the Learning Curve - 3rd party tools live or die by how well we serve our users (the players). As such, we have to be incredibly receptive to user needs - creating resources to answer questions that users might have.

Players that just start out a game have lots of questions, and often seek out guidance - having resources available to players can help the new player experience massively. This can help to improve accessibility to new players for a game, which is often a critical time to keep players engaged.

3rd party resources also help players continue improving. As the average skill level of your player base increases, players adapt & innovate new strategies to succeed, which also increases the depth of the game. With any competitive game, players are often motivated to maintain their rank between seasons - which can involve playing more and more games as the player base improves.

Foster Community - Tools that can create and foster discussion around your game can also help user engagement. We are naturally social creatures, and sharing thoughts, discussions, highs and lows around a shared passion are great ways to form social bonds. Speaking for myself, I’m much more likely to play a game that my friends are playing, and having ways to share highs and lows, discuss strategies, and help each other improve will keep me engaged for longer.

Additionally, Community discussions are also full of valuable insights for developers. You can see what your players are excited about, what frustrates them, and react accordingly.

Experimental Features - The community often develops tools around games to alleviate their own frustrations with the game. Some of these can genuinely improve the player experience and be adopted into the game itself if successful. Observing what tools are popular within your player base is another valuable risk-free source of insight into what your players want.

The “Community as a Platform”.

By @Marcos, founder and CEO of Tacter.

After several major game release flops, it's becoming clear that creating a great game is no longer enough* You also need to build a strong game ecosystem around it.

For studios, building a robust game ecosystem is essential for long-term success, but it's a challenging endeavor.

• The average Studio relies on Discord for community building, yet less than 3% of a game’s total player base actually joins a Discord server.

  • This is mainly because Discord wasn’t designed for this purpose. However, it seems that they have recognized the opportunity and are shifting their focus back to gaming.

• Established studios, like RIOT Games in this study, lean on fan-driven third-party partners. They sacrifice the control of those hubs, trading control for scalability.

  • Their success, along with supporting data, proves this approach works—projects like MetaTFT and Tacter are prime examples.

  • However, this comes at the cost of control, limiting the publisher’s ability to fully leverage the community to support game operations. In periods of massive growth—like previous years—this wasn’t a major concern. But as growth stagnates, optimizing in this area becomes a more compelling strategy.

  • Additionally, Studios with less bargaining power often struggle to attract top-tier community projects early on, creating a "chicken-and-egg" scenario.

• Modern approaches lean toward building in-house solutions, which require significant time, money, and resources—often shifting focus away from core game development. Examples include:

  • Hoyoverse (Genshin Impact, Honkai, etc.) is building its own community platform, HoyoLab.

  • NCSoft is developing their own community hub: Purple Lounge.

  • Monopoly GO (Scopely) created their exclusive Monopoly GO Tycoon Club.

This last example is particularly interesting as it intersects with another growing industry trend—especially in mobile gaming— the alternative stores.

In the case of Monopoly GO, the “club” isn’t just a regular player community—it’s an exclusive, invite-only space designed for highly engaged players who drive the majority of sales. It also serves as an alternative store, effectively bypassing the 30% mobile store commission and directly impacting LTV.

At Tacter, we anticipated this trend nearly a year ago when we talked about the concept of the community as the platform.

That’s why, based on these market trends, we expect controlling the spaces where the most engaged players gather to become a key strategic priority for studios.

And, as demonstrated in this article, third-party platforms like MetaTFT and Tacter naturally attract these highly engaged players, making them invaluable strategic assets for expanding game operations beyond the game.

• The opportunity for single-industry verticality is bigger than ever. New platforms serving single sectors are seeing massive increases in TAM, competitive moats, and economic opportunities due to their ability to leverage more complex business models and product capabilities. It already happened in SaaS, and consumer platforms will undoubtedly be the following.

• The gaming sector offers the greatest opportunity for a single-industry vertical platform. It has transformed from a niche hobby into a $282 billion major entertainment industry over the past two decades. Despite being the most content-intensive sector globally, it remains highly fragmented, with most market leaders being generalist platforms that do not aim to capture the full vertical. The cherry on top is that distribution has dramatically changed in recent years due to the change in the nature of the games by becoming long-term live services instead of one-hit products.
  

• Various initiatives are in the race to capture this opportunity, such as the “Games as a Platform” approach led by game studios like Roblox and EPIC or the innovative “Community as a Platform” approach advocated by startups like Tacter (this is us!) or Metafy. All these initiatives represent innovative disruptions to the traditional “Store as a Platform” model used by Steam, Apple, and Google.

Why is "The Gaming Vertical Platform" the next $1B opportunity?

The online platform era, as we know it, is nearing its ceiling. The opportunity to expand the platform’s business models needs to go far beyond selling user data to advertisers.

New platforms serving single sectors are seeing massive increases in TAM, competitive moats, and economic opportunities due to their ability to leverage more complex business models and product capabilities for each value chain stage.

There will always be generalist aggregators, but the opportunity for single-industry verticality is bigger than ever. We have already seen it happening in SaaS vendors, and consumer platforms will undoubtedly come next.

🎮 The Gaming Market.

With more than 3.09 billion gamers worldwide, the gaming sector has quickly gone from a niche hobby into one of the biggest markets in the entertainment industry in the last twenty years.

In fact, the gaming market has a current valuation of $282 billion and is projected to be worth over $363 billion by 2027.

The Gaming Market is simultaneously a niche that is no longer a niche - the most content-driven market in the world - and a sector where using new technologies is the norm rather than the exception. This is the ideal environment for a vertical platform to take the baton.

Many of the control points of the gaming industry are led by generalistic platforms like Apple (App Store) and Alphabet (Play Store), which were the second ($14.8B) and third ($12.4B) biggest gaming companies by revenue in the world in 2021. Yet, none of them are the main sources of new game discovery. Those are platforms like YouTube, TikTok, Instagram, and Facebook, ranking even above word-of-mouth, which is fifth, and digital advertising, which is sixth.

🤝 The Status Quo.

A Game Studio gets funded to develop a game. From the start, they have already pledged 30% of their future revenue to Steam / Apple / Google for distribution. However, that’s not even close enough to reach players. They still need to spend most of their budget on paid advertising via Facebook / Google or, the new meta, Influencer Agencies who aggregate gaming demand via Content Creators. After that, a tiny portion of the leftovers will be dedicated to nurturing their organic community on every gamer’s platforms: YouTube, TikTok, Reddit, Twitch, Discord, etc. Meanwhile, the Content Creators who are organically creating the content/community that the game studio really wants on YouTube, TikTok, Reddit, etc, need to launch a Patreon, sell their knowledge on Fiverr, or look for new ways to monetize their content to generate enough revenue to finance themselves.

Notice that apart from Steam, the other companies mentioned above are generalistic platforms offering their generalistic solution across many industries. Their playbook is expanding their offering horizontally instead of vertically within the gaming industry.

• Why aren't Reddit or Discord, which every game studio in the world uses as an Official Channel to manage their community, expanding their model to offer specialized services?

  • [UPDATE 10/06/24] Discord recognizes the opportunity and announced its renewed focus on gaming vs. “being a broad community-centric app.”

• Why isn't Steam expanding into the Creator Economy by linking its distribution behemoth directly with Gaming Content Creators who organically aggregate demand through their content?

  • In fact, going to Steam’s official community site is like traveling back to the ’00s.

👀 It already happened: Patreon vs. OnlyFans.

Patreon, the creator monetization platform, is suffering the blindness of this new opportunity in front of everyone’s eyes with Adult Content (another content-intensive sector like gaming).

Like it or not, Patreon has always been 40% Adult Content (source). However, their vision was to go generalistic instead of capturing a full vertical. Why?

Obviously, the market size of ALL creators is bigger than the market size of the creators of a single industry, isn’t it?

That’s precisely the point, not anymore.

A deeper business model, brand recognition, and more complex product capabilities compensate for the arguably lower consumer count. Market size is not only how many lemons there are but also how well you squeeze them.

Back to our example, OnlyFans (2016), by focusing only on Adult Content (after hesitation), is now making $5.55B in revenue (2022), while Patreon (2013) is somewhere between $75M to $180M (2022). Nobody cared until the opportunity for verticality became big enough.

I’m not saying Patreon should have gone full-on Adult Content. That was not their mission! My point is that the opportunity to fully capture a single vertical is bigger than ever, and counterintuitively, it might be bigger than the generalist approach.

🤔 By the way, gaming represents around 10% to 25% of Patreon, 6% to 28% of Reddit, 80% of Twitch, 30% of YouTube, and 90% of Discord… More importantly, none of them embrace the vertical but go generalistic instead.

⏰ Why Now?

Video games are not fads anymore. There will be video games being played for more than 100 years. How long have people played chess? and poker? What about sports like football or basketball? Hundreds of years, and they’re still played today more than ever!

Technology is already mature enough to allow this natural human behavior in video games. In fact, it’s already happening: Counter-Strike is 23 years old and hitting active player records (source), World of Warcraft is 19 years old, League of Legends is 14 years old, Clash of Clans is 11 years old, etc.

The playbook of developing a game as a product, for which players pay 60 dollars in exchange for 60 hours of enjoyment, launching a big release marketing campaign like a Hollywood movie, and then focus on developing the next hit after hit does not work anymore. Games are service-based models now! Live services (GaaS) are specifically designed to evolve into what we call “forever games.”

This change in the nature of video games has disrupted the distribution layer. New games cannot reach players; even if they do, they cannot compete with established players with more than a decade of community building. Data speaks louder. 61% of total hours players during 2023 were on +6 years old games (source)

🛠️ Who is seizing this opportunity?

Slowly but surely, boards wake up to the opportunity. They realize that the race is on to capture the full potential of their vertical and with opportunity comes competition, both from within one’s category (e.g. application area) or from adjacent categories within one’s vertical (e.g. industry).

Generalistic Platforms.

Generalistic platforms (YouTube, Reddit, TikTok, etc) do not seem to care for now. Understandably, they’re leaders in their categories, and they’re not exclusively focused on gaming. Some of them have taken timid approaches like Discord with a mission to help game developers or YouTube unsuccessfully trying in the past with a standalone app: YouTube Gaming.

[UPDATE 10/06/24] Discord recognizes the opportunity and announced its renewed focus on gaming vs. “being a broad community-centric app.”

“Store as a Platform”

On the other hand, traditional market leaders in gaming distribution like Steam, the Apple Store, or the Play Store do not seem to be concerned yet. They're likely experiencing the innovator’s dilemma and continue exploiting the 'Store as a Platform' approach that has been successful for the past twenty years.

“Games as a Platform”

Market leaders are seizing the opportunity by “platforming” their games following the “Games as a Platform” approach popularized by Roblox.

In this approach, the game itself becomes the vertical platform, allowing players to play other games inside the game via UGC or socialize inside the game.

Another example is EPIC Games, which initially tried the more traditional “Store as a Platform” approach with the EPIC Games Store but recently joined the new approach of ‘Fortnite plus other games within Fortnite.’

In the words of Jacob Navok: “Live service titles will increasingly platform-tize and offer UGC [user-generated content] tools (expect this to be a big part of GTA.)”

“Community as a Platform”

However, while I believe “games as a platform” is a promising approach, it is only valid for market leaders. Not every game will want to be “another game within Fortnite”; however, all of them will need a way to generate those direct long-term relationships with their players.

Ways of doing this are to empower the community by building dedicated tools and incentives with your own resources as a game studio (Hoyoverse is doing with Hoyolab) or via third-party help that’s exclusively focused on solving that problem, which is what startups like Metafy ($105M valuation) or Tacter (this is us!) are doing.

At Tacter, we follow this approach, which we call “Community as a Platform.“ — We’re building a platform that empowers the three main entities of the gaming market:

• Content creators by empowering them to monetize (disrupting Patreon) and manage their community (disrupting Discord).

• Players by empowering them through specialized content (disrupting Reddit) and relationships with their friends (disrupting Discord).

• Game studios by empowering them with community-building services to adapt to the new distribution opportunity (disrupting Steam).

That’s what we have been building since 2023. You can read our first-year results and upcoming challenges at:

🔥 The race is on. Gaming is a sleepy giant market, and I firmly believe that the company able to capture the potential of the full vertical will be an order of magnitude bigger than generalistic companies controlling parts of it.

If you think similarly or want to discuss the opposite, say hi at marcos@tacter.com

“Most entrepreneurs aren’t building a house. They are putting bricks in the foundation of a skyscraper.”

- Naval Ravikant

Thanks to Florent Simon, and Jaime Novoa for their expert guidance and suggestions in writing this specific post to share our vision at Tacter. You rock!

Starting as a duo, we developed a mobile application to help gamers win more at their favorite games. Fast-forward: we secured a 275K€ Pre-Seed Round (KFund, 4Founders, Lanai), the team expanded to six people, downloads surpassed the 1 million mark, and the revenues reached +$150K Annual Run Rate.

It was time to scale up! To keep growing, we should expand into more games. Our solution was a custom-made companion app for each game; every app was a job from scratch. We expanded from Teamfight Tactics to League of Legends, and we secured a 3.42M€ Seed Round (Moonfire, PlayVentures, KFund, Possible Ventures) to continue our expansion into playable Web3 games like Axie Infinity or Gods Unchained, simultaneously secured contracts for future expansions to upcoming ones like Illuvium or Metasoccer.

We had work to do. We needed to invest many resources into each app, only to encounter a sudden downturn in the web3 gaming market. Games like Axie Infinity, where we used to grow double digits, lost 90% of their player base in less than three months. The upcoming games we were preparing shut down or announced delays, and our expansion to more traditional games was failing due to a lack of focus. Uh oh, big problems ahead!

We were miserably failing to scale our idea because of poor strategic decisions, sudden market changes, and a challenging-to-scale product concept.

We needed to gain perspective. Historically, the only company in the gaming companion niche with outstanding results is Overwolf (2010). Their solution was to pivot from building companions to building tools (SDK, mods, monetization tools, etc.) for gaming companion creators. Simple but brilliant. As a reference, they paid 201 Million dollars to In-Game Creators in 2023.

Based on that idea, we examined our product to identify where the value relied: our users were not paying for the custom-made utility tools but for the high-quality, specific content about the game.

🤔 What if we scale content instead of utility?

That simple question sparked the evolution of our gaming companion idea into the vertical gaming community concept we've dedicated the past year to developing. tacter.com was born.

If you want more details about the Vertical Gaming Community Concept, I have already published two pieces on the topic. This can be considered the third part of the series:

• Part 1 - Tacter - The Vertical Gaming Community. (March 2023)

• Part 2 - Tacter - The Vertical Gaming Community. (June 2023)

• [THIS ONE] Part 3 - Tacter - The Vertical Gaming Community. (April 2024)

• Why is "The Gaming Vertical Platform" the next $1B opportunity? (June 2024)

Tacter - The Vertical Gaming Community. Part 3

🗓️ Tacter.com is almost one year old (May 2023), and in the last ten months, we have gone from zero to….

📈 +1M Total Visits per month.
👥 +200K Unique Users per month.
👤 +80 Gaming Content Creators per month.
💸 +9.000€ Paid-Out to Gaming Content Creators to date.

💫 That’s a 10-month run!

🔮 Let me show you what the next FIVE YEARS WILL LOOK LIKE.

📝 Tacter for Gaming Content Creators.

Tacter empowers gaming content creators to make money through their passion.

Create and Share Content.

The content includes In-Depth Guides (example1 or example2) and (soon™️) quick-to-digest posts and conversations similar to Twitter or Reddit.

Creating and sharing content on Tacter is simpler than anywhere else, thanks to our integration with games powered by our Custom Modules. This enables creators to share things they won’t or can’t share elsewhere.

Creators are using Tacter in three different ways:

1. They enrich and complement their video content strategy, usually on YouTube and Twitch, to grow faster on all platforms.

2. They build an exclusive content strategy to improve their monetization on all platforms.

3. They publish on Tacter to expand their audience, tapping into SEO and the growing Tacter community.

Monetize your Audience.

Creators use Tacter to create an additional source of revenue in already two (and soon three) different ways:

Advertising Revenue.

In Tacter, you get paid for contributing. We run ads and share a percentage of the revenue directly with the creators in a performance-based way: the more engagement you generate, the more advertising revenue you make — similar to the YouTube Partner Program or Twitter Revenue Sharing.

Revenue-sharing with users is a fundamental principle we advocate for in the platforms of the future, and we've incorporated it into Tacter from the ground up.

As a creator, you can run advertising without managing it; Tacter does it for you, allowing you to focus on your passion: creating the best content.

💰 This represents the initial layer of our business model: advertising.

Revenue by Paid Subscribers.

In Tacter, creators can share exclusive content with their paid members, regardless of the platform they’re paying from. This empowers creators to implement a multi-platform freemium content strategy, with the ultimate goal of boosting paid subscribers across all their channels.

Let me illustrate the concept:

Fans often pay their favorite creator a Twitch Subscription, a YouTube Membership, a Patreon Subscription, or (soon™️) a Tacter Subscription.

Most likely, the fan will pay only one subscription to support the creator.

Due to most platforms’ business models, creators are forced to move their subscribers from one platform to the other, increasing friction for their fans.

To avoid doing this, Tacter seamlessly integrates with the platforms where creators’ subscribers already are (and are paying) so that those subscribers can access exclusive content posted on Tacter without having to pay twice.

👉🏼 Fans who already pay the creator a subscription ON OTHER PLATFORMS  can access the creator’s Tacter exclusive content.

👉🏼 By offering Tacter-exclusive content as a perk to their paid subscribers on ANY other platform they use, creators can increase their overall number of paid subscribers and revenue.

Tacter does not need to force creators to bring all their fans’ subscriptions because our model is not fee-based but fixed-subscription-based. We offer creators a simple, predictable, and flat monthly subscription to use these (and many more) capabilities—similar to the Behiiv model approach in the newsletters market.

💰 Tacter is a tool for creators to continue growing on all platforms, and they pay us for this service. This is the second layer of our business model: Creator Subscriptions.

Creator Shops (soon™️)

For established creators, the ability to directly sell products to their audience presents a potent revenue stream, spanning from digital offerings like courses, coaching, or emotes to physical merchandise.

You can fulfill this need using generalist services like Shopify, Gumroad, or your custom website. Nonetheless, this entails setting everything up yourself and redirecting your audience from their habitual platforms. Several gaming-related companies are already exploring this use case:

• Discord has just announced Discord Shops for servers.

• Patreon is announcing Patreon Shop for Creators.

• Metafy is doing it the other way around, being initially a marketplace for coaching and now expanding into becoming a full-attention platform.

At Tacter, this opportunity is on our radar for imminent action. It resonates with our vision of empowering gaming creators to monetize better. Integrating a shop directly tied to your existing content and community is a perfect fit.

💰 It not only unlocks a new revenue stream for creators but also serves as the third layer of our business model.

Nurture your Community.

Creators' power relies on their community. However, there is still no simple way to manage it. A Discord server is the usual tool for gaming creators to manage their community. Sadly, as often as having a Discord server is to have an abandoned Discord server.

• For creators, setting up a proper Discord server integrated with your other platforms is not easy, and maintaining engagement over time is almost impossible. You even need people to help you!

• For fans, Discord is a mess. As soon as you join more than five different servers, you cannot properly attend to any of them. There is too much noise.

Tacter is building Communities (soon™️) for this: a simpler approach than Discord for creators to build, grow, and nurture their community automatically integrated with their other platforms and a built-in monetization engine as explained above.

💰 Communities will be free for everyone to use. However, advanced capabilities will be included in some of the Tacter Creator Plans, increasing the value of the Creator Subscriptions and finishing the core offering of Tacter for Creators.

🌐 At this stage:

• Tacter does everything Patreon does for gaming, just better: it is easier to create gaming content, there is no take-rate fee on fan subscriptions, it is integrated with YouTube and Twitch, and it has a built-in monetization system, communities, and shops.

• Tacter also replaces Discord for some use cases, such as community management.

🎮 Tacter for Players.

Tacter empowers players to make the most out of their favorite games through content, communities, and tooling.

Several Tacter for Creators features, such as high-quality content, communities, and direct engagement with favorite creators and peers, also cater to players. Moreover, vertically Tacter integrates with games, simplifying onboarding for new players, enhancing progression for engaged players, and elevating status for the most devoted players.

Tacter Player Identity.

The games you play and the ranking you have reached are two of the more important status symbols in gaming.

As a player, you want to mirror those above you to keep improving and laugh at your friend when he’s stuck at a certain level or in a losing strike. Status Communication is a foundational aspect of community dynamics, and Tacter will (soon™️) integrate it natively with Player Identity.

As a player on Tacter, you (soon™️) have a built-in tracker in your profile. This will allow you to showcase your rank and the games you play, attaching that status to your community actions and content.

This is a known need in the market, barely covered by the existing services. Each game has hundreds of community-led / passion projects to allow players to track their performance, and some of them, like Porofessor for League of Legends, have been sold for $54M.

There have been attempts to bundle this use case into a single product across various games, exemplified by the PS Network Profile or the somewhat overlooked Steam profile. However, in our view, the most effective product for this purpose currently is The Tracker Network: a group of websites integrated with Xbox, Steam, PSNetwork, and hundreds of other games to offer their 10M users the ability to track their performance.

What all of those products lack, but Tacter has by default, is the attached community of players, games, creators, and content. The Player Identity is the utility layer that makes the community and the content shine! It is the old playbook of come for the tool, stay for the network.

Tacter Game Tooling.

Along with player identity comes the desire of players to improve and progress in their favorite game. In gaming, two utility products usually cover this: guides and analytics.

Tacter covers both needs with the existing platform described so far:

• On the one hand, Tacter attracts game experts by providing utility and incentives aligned with enhanced monetization, community management, and content sharing. They create the UGC content to help players onboard, improve, and excel at any game. Check some real examples: example1 or example2.

• On the other hand, by leveraging the Player Identity capability, Tacter gains access to extensive player data, including the match history and performance statistics of millions of players. This will (soon™️) allow us to offer player statistical guidance (usually known as META Analytics) that perfectly complements users’ creation of top-tier content.

💰 As mentioned, Tacter is free for everyone, and we monetize free players via advertising. This will allow Tacter to get the scale needed for the Vertical Community Concept to develop.

Once big enough, we will complement our business model for players with direct purchases and consumer subscriptions.

Tacter will allow players to purchase and earn status cosmetics and utility power-ups in their favorite communities. Similar to other big communities in our space like:

• Reddit sells collective Avatars, Expressions, or Badges.

• Discord sells avatars, profile decorations, and other virtual items.

This not only applies to the Tacter platform but also extends to partnerships with creators (e.g., your favorite creator emotes) and game studios, as demonstrated by Hoyoverse (Genshin Impact, Honkai, etc.) with their community product, Hoyolabs selling comments overlays and other badges, or, Discord partnering with games, like Valorant, to sell overlays and badges.

🛠️ Tacter for Game Studios: The “Community as a Platform”

Tacter empowers game studios to find new players and bridge the gap with their most beloved fans.

Traditionally, the winners of the gaming market regarding distribution have been the platform publishers or “stores as a platform“ companies, led by Steam (the +5 billion dollars per year behemoth), and competition from the EPIG Game Store (EGS).

There's also a newer approach: “games as a platform,“ popularized by Roblox and embraced by EPIC with Fortnite and Fortnite Creative.

However, we believe there's a third approach better suited to the challenge: “community as a platform,” perfectly embodied by the Vertical Gaming Community concept.

Game studios face unprecedented competition in today's gaming landscape, contending with “forever games” boasting decades of community development, such as Fortnite, League of Legends, Minecraft, Counter-Strike, Clash of Clans, etc. (For reference, 61% of total hours played during 2023 were on +6 years old games, according to this NewZoo’s report)

It is not a fair competition anymore. These games offer vast player bases, content, and supportive communities, setting a high standard for new releases: a great game is not enough anymore. Players now expect robust community tools and experiences alongside compelling gameplay. This is evidenced by successful titles like Clash Royale or Brawl Stars by Supercell and Teamfight Tactics or Valorant by RIOT, which leverages existing franchises to attract dedicated player bases across multiple genres.

Studios must meet elevated player expectations and navigate a highly competitive environment dominated by established franchises. In this scenario, you have two real options to compete:

• Simultaneously, build your game and community tooling with your resources, like Hoyoverse (Genshin Impact, Honkai, etc.) is doing with Hoyolab—setting the bar for community-led initiatives and creating a place for fans to hang out.

• Partner with Tacter to co-create the essential tools your players and creators demand, raising the standard for community-driven initiatives that will surpass your player’s expectations.

As a Game Studio, your game will be present on Tacter, and you can decide if you manage it yourself or delegate the management to the Tacter community (similar to a Reddit or a Discord Server)

When a game studio claims their listing, they gain access to a range of options: from basic community management tools for engaging with devoted fans, to advanced features enabling direct integration with Tacter (player identity, analytics tools, integrated shop, boosting incentives for creators, advertise to new players, etc) Similar to what Hoyoverse is building with their own resources: Hoyolab, but as a service for other game studios.

💰 Claiming and managing your game listing as a game studio is a premium capability, creating a new layer of our business model: Game Studio Subscriptions.

We’re building the “Community as a Platform” opposite to the “Store as a Platform” that gaming storefronts like Steam, EPIC Store, or Microsoft Store traditionally exploit.

In today’s competitive environment, you will not be able to be a simple store anymore, but a shopping mall: a place that mixes social-like places with shops like Tacter wants to do.

• Steam, the best positioned to take on this opportunity, does not seem to care, as you can judge by visiting a Steam community, which is like traveling back to the ADSL times.

• Discord seems to understand the opportunity and is taking action with one of its latest moves (Discord Quests to help Game Developers). Still, their focus is split between gaming and non-gaming initiatives.

• EPIC is a different beast; it tried to compete with Steam with another “store as a platform,” the EPIC Game Store. However, it seems to be pivoting resources more into “game as a platform” using Fortnite Creative, similar to what Roblox is doing.

This is the perfect mix for an underdog like Tacter to take the lead.

🌐 Summary

In summary, we are building the platform described above in the next five years to empower the top three gaming market stakeholders: Players, Content Creators, and Game Studios.

• Empower players to make the most out of their favorite games.

• Empower content creators to earn a side income through their passion.

• Empower game studios to bridge the gap with their most passionate players.

We are set to disrupt the gaming platforms every gamer utilizes today, integrating with some, replacing others, and boldly competing with the industry giants.

Thank you for reading until the end. If you want to join this journey, do not hesitate to email us at marcos@tacter.com.

Marcos.

We believe this $1B opportunity is within the intersection between games, content, and social. A niche that is being heavily impacted by new technology like web3 (blockchain) and AI, alongside massive cultural changes.

This context is the perfect primordial soup for a new disruption. We’re not 100% clear how the final product will look like, but here are six ideas that we believe are closer to it:

1. New games need the Creator-Content-Player flywheel.

Today’s biggest games: Fortnite, Minecraft, and Roblox were the innovators around the idea of “the game as the playground and the stage.”. They have changed the world by leveraging user-generated content for massive distribution and awareness.

Any new game aiming to compete should nurture the Creator-Content-Player flywheel natively.

2. The easier to create content, the more content is created.

This is obvious but still reinvented one time after another. Creating a Tiktok is easier than creating a Youtube video. The result is a content explosion on Tiktok.

Reducing the barriers to creating content is one of the top priorities if your business relies on content. IA will shock the world in non-imaginable ways by reducing this barrier. Tomorrow's creators will not be making videos or guides about a game but creating games themselves with the same effort.

3. Financial Incentives for creators were the innovation. Now, they are the norm.

Previous generations of online creators were surprised when they discovered how much money someone can make online. However, for the newer generations is the norm. They know the value they create for the platforms and have raised their standards about capturing part of that value.

Any consumer platform aiming to have a chance to become relevant must leverage a native creator program from scratch. Creators should be treated as one additional stakeholder. In fact, technology like web3 (blockchain) will push this in non-expected ways.

4. Organic Growth is king, as it always has been.

LTV & CAC formula and perfect targeting are a thing of the past. ATT changes, privacy legal battle work, and the new generations' awareness have broken a model where you could substitute a good distribution strategy (hard) with tons of money (easy). Distribution is being reinvented one more time and must be integrated natively into the product.

5. There will be games played for more than 100 years.

Why risk creating and releasing a new game when you already had one hit? How would new games compete with games with +10 years of accumulated content, player base, ecosystem, etc.?

Counter-Strike, League of Legends, or Clash of Clans are over 11 years old, setting all-time high player records, and not going anywhere anytime soon.

In the same way that other games like chess, poker, or football are centenary, there will be centenary games, and some of those games’ economies and player bases will be (and already are) bigger than some countries.

Bonus Point: Data Ownership could not be leveraged anymore as the defensive moat.

I’m still making up my mind about this idea. All of the biggest monopolies of the last decade were profiting from the ownership of their users' data and using it as a defensibility moat. The whole idea of the Aggregation Theory is around this.

New generations seem to notice this, and new technology (blockchain) allows the creation of new models and the delegation of data ownership to the users, not the platform. However, the power of existing platforms is so big that they’re the ones controlling this technology evolution, and we might end up in a different scenario.

Still, if the platform of the future could not leverage data to build defensiveness, then how do you defend yourself? Without defensibility, there’re no incentives to innovate. I do not have a clear answer to this yet.

And then, the comparison just becomes unfair 😅

Slack arguably has a better product, but it simply cannot compete. Microsoft has a distribution advantage, and distribution is always the best MOAT.

According to by :

• 🥇 There are just EIGHT games with +1M DAU on PlayStation.

• 🥈And less than 60 with +100k DAU from the entire PS4/PS5 catalog.

👉🏼 It is more complex, if not impossible, for new games to compete with games like Fortnite, GTA, Rocket League, etc., that have built up 5 to 10 years of content to attract and retain players.

I believe that this reinforces our thesis that some video games will be played for more than 100 years.

Also, the macro trends in gaming are not helping:

• 🍏 Apple and his ATT changes precipitated a recession within the social media advertising economy and other advertising-dependent categories like gaming, particularly mobile gaming and hyper-casual gaming.

• 🔍 New game discovery is more complicated than ever. There’re 40M Roblox experiences; Steam accounts for more than 11K new games in 2022; meanwhile, the Epic Game Store added another 626 more.

• 📲 The App Store has more than 460.000 games; even so, the only way to discover them is via Top-10 Charts, direct search, or advertising. (really, apple? 🤦🏻‍♂️)

  • Unsurprisingly, trying to become viral on TikTok is becoming the default way to promote your game. For instance, Subway Surfers (initially released in 2012) became the most downloaded game of 2022 by going viral in Tiktok.

• 🤖 Last but not least, the mix of UGC + AI is cooking the perfect combo to reduce the barrier to creating new games. Fortnite Creative, Roblox, or Overworlf’s mods are just sneak peeks of the future. The number of new games available will continue growing faster and faster 💨💨

And who’s the winner when the product (in this case, games) becomes commoditized?You guess it right, the ones in control of the distribution. That’s why distribution is everything, as it always has been.

👀 How did Steam become the behemoth that it is today?

As in any other consumer industry, the gaming value chain is formed by the interactions of three main actors:

🛠️ Creators: the developers building games.

🔊 Distributors: the publishers selling games.

👤 Consumers: the players playing games.

Historically, the gaming market followed an industrial publisher standard where games were physical goods. The publisher had relationships with the retailers and controlled the production and distribution of the games. Developers were paid based on royalties and earnouts. The publisher was the one making the most profit mainly by:

• Increasing the public awareness of the game.

• Creating availability for sale.

• Controlling the key resources (retailers and developers)

However, it wasn’t born like that:

Valve was about to release Counter-Strike (a Half-Life mod) as a standalone, competitive online game. They had massive post-launch maintenance needs: bug fixing, balancing, exploits, etc., so they needed software to force players to update the client to play with the latest version: 👉🏼 They created Steam for that.

Initially released alongside Half-Life 2 (2003), it was the software players used to manage their different mods, licenses, and game updates.

It accomplished its purpose well. However, they noticed that there was a more significant opportunity out there, and they did two additional movements that would completely change the industry forever and transform Steam into what it is today:

1. They acquire the World Opponent Network (WOM), a community of players for matchmaking. They bring the WOM players to Steam, attaching the platform to an existing community. By doing this, they aggregated the demand side: players inside their platform.

2. Once an audience was using the platform, they allowed third-party developers to distribute their new games as digital downloads.

As a developer, you can now upload your game to Steam and instantly reach ~150M of existing players with payment methods set up and ready to buy your game. Let’s compare your options as a developer:

1. Traditional: Negotiate a private deal with a publisher to distribute your game physically, delegate player targeting, and give up control of your unit economics in exchange for royalties.

2. Upload your game to Steam for a 30% fixed commission in every sale, and tap into a 150M players-only user base.

A no-brainer. Steam exploded, creating a virtuous loop:

♻️ The more games on Steam. The more players are on their platform. The more attractive for new games to publish on the platform.

The pure definition of an internet platform disruption according to the Aggregation Theory by @statecherry.

Nowadays, Steam is still a private company making $5B annually in revenue. They’re still growing and, just some weeks ago, set a new record of 33M players concurrently using the platform (source)

They aggregated the demand side (players) by integrating distribution into a proprietary solution. Games were modularized, and they joined Steam on their terms to be able to reach players. ⭐️ Steam is so successful because it retains the player. And Steam retains the player because it has a siloed data monopoly:

As a player, you can’t use any alternative if all your games, in-game items and friends are on your Steam account. You will lose everything if you stop using Steam. You’re not buying anything there, but renting it.

That’s the core of their defensibility, but for the first time in its story, they’re facing new challenges that risk their defensibility moat (web3) and their competitive positioning (EGS). We will cover them in upcoming articles:

• There are some industry innovations, in particular, web3, that affect their defensibility moat directly: data (like we shared here)

• They have a scary competitor: Epic Games Store, who’s innovating in the same space. As we talked in Twitter:

In my experience, the worst possible scenario is when you are failing (which happens very often), and you're not at peace with yourself (which should never happen).

This combo stops you from thinking correctly, and it is game over.

Unfortunately, you cannot avoid failing. In fact, you should develop a love for failing somehow. However, you can (and must) maintain your inner peace no matter what. That’s the challenge.

It sounds more straightforward than it is because, here’s the twist, you do not control almost anything, and it's fine.

The only thing that you really control is: yourself. So, that’s the only thing you can make promises about.

• You should never promise yourself that you will succeed.

• You should never promise your employees that they will be rich by following you.

• You should never promise your investors that you’re building the next unicorn.

Instead, you promise that you’re going to push as hard as you can to make that a reality.

Your implication is something you control. The outcome, success or failure, is not. It works like the totem in Inception: no matter the situation, no matter the outcome, if you’re giving your 100%, you can be at peace with yourself and avoid getting lost.

This simple thought releases tons of pressure when facing difficult situations and has allowed me to focus on what really matters in that situations: turn the situation around.

Hope it helps you as well! ✌🏼

Today free-to-play with microtransactions is the standard business model for games generating more than 120 billion dollars in annual revenues, more than half of all games revenues!

However, some game developers believe they can improve the gaming business model again by giving away in-game items for free.

You’re granting the complete game for free and some of the in-game items, and even so, you will monetize better than before. Is that even possible?

👉🏼 Let’s introduce the free-to-own model.

Popularized by Gabriel Leydon, CEO at LimitBreak, a company that has raised $200M to build a web3-based MMO around this idea (source), the free-to-own thesis (not a big fan of the naming) is as follows:

1. Your game implements player ownership. This means that all your in-game items are powered by web3 technology, and your players will be their legit owners. Everything they achieve, unlock, or buy within the game can be freely traded in secondary (official or not) markets.

2. You create packs of in-game items for your early adopters. You distribute them FOR FREE among your early fans and supporters. And you make sure those items are scarce. They’re OG drops that are not going to be created again.

3. When the game grows in popularity, those in-game items will appreciate in value within the game ecosystem, similar to what’s already happening in existing games with skins or, for example, in other non-gaming markets like sneakers.

4. This will align incentives with your players thanks to the ownership, converting them into advocates for your game. The more your game grows, the higher the appreciation of the player’s items. And since the items are theirs, they can decide if sell them for a considerable profit, exchange them for other things, or even destroy them whenever they want.

but, how does the game studio make money in this situation? The answer: Royalties 💸

Since the game studio is the creator of all in-game items, they can set a royalty fee for any transaction related to the game. In a similar way that Stripe takes 3% for processing a payment, the game studio would take -let’s say 5%- of all the transactions involving one of their items.

If the game is big enough, and player transactions are a part of their play pattern, the volume of daily transactions a game can have is massive. For instance, Fortnite has 80M monthly active players. Can you imagine how big an economy in a game as popular as Fortnite could become? For sure, more significant than some countries’ economies.

The core idea of the free-to-own model is to create enormous games thanks to:

1. Being free-to-play to reduce friction for new players.

2. Being free-to-own to align incentives with the players and convert them into advocates.

However, there’s a considerable tech limitation. In my opinion, for a model like this to work out properly, the royalty fees should be on-chain, which is not the current standard (as we discussed here). By being on-chain, the game studio can be 100% sure that they will collect the fee in any transaction with the independence of where the transaction is happening.

This also opens the door to game interoperability, but that’s another topic to explore another day.

💭 Do you think it is possible to properly monetize a game by giving away the in-game items for free?

💭 Could this model become the new standard or just a side model to combine with existing ones?

👀 I’d love to read your thoughts.

M.

Some years ago, a video game was a packaged good for which you pay 60 dollars in exchange for at least 60 hours of enjoyment. Games were a product. When finished, you look for another one, and so on. As a game developer, your job was building hit after hit to keep players hooked.

Multiplayer Online games, in particular Doom, changed this forever. They allowed players unlimited enjoyment by competing or collaborating with other players in an endless play pattern. The 60 hours became 600, 6000, or even 60.000 hours of playability with similar upfront development costs for game studios.

This new kind of game put the industry upside-down:

1. They had a considerable need for ongoing maintenance: bug fixing, patches, updates, etc., transforming games from products to services. (to solve this need is why Steam was born initially)

2. They unlock massive upselling opportunities. Players were retained for long periods, so why limit your business model to packaged sales? Free-to-play and in-game items were born.

3. They changed the incentives for game studios. Why try to develop a new hit when you already have one that can evolve with new content, events, etc.? Live services were born.

These changes led to what today we know as Games as a Service (Gaas) or, more recently, Forever Games. Games that players have been playing and continue to for an incredible number of years.

Let’s think about it this way:

How many years have people been playing chess? and poker? What about sports like football or basketball? Hundreds of years. And those are games that are still being played today, and probably more than ever!

Why was this not happening in video games? Well, now it is happening: Counter-Strike is 23 years old and hitting active player records (source), World of Warcraft is 19 years old, League of Legends is 14 years old, and Clash of Clans is 11 years old.

Let me remark on the importance of this: Top game studios are not just focused on building the next big hit but maintaining the good ones for as long as possible.

In the words of Ilkka Paananen, co-founder and CEO of SuperCell in his annual post for 2023:

Supercell’s mission is to create great games that as many people as possible play for years and that are remembered forever.

Once upon a time, “all” we had to do was create a great game […] we now have TWO simultaneous challenges:

1. Creating Great New Games, That Have A Shot At Becoming Cultural Phenomena.

2. Serving Players in a Live Game They Love, So It’s Played and Remembered Forever

(Source)

Mitch Lasky and Blake Robbins dedicated a podcast episode to the Forever Games. They identified five characteristics that might make a game become a forever game:

1. Balance

The game has a perfect equilibrium between complexity and flow state. It also forces you to a conclusion (e.g., A clash of clan match is about 3 mins, and a League of Legends match is about 30 mins) and welcomes different players at different stages to play together. The general mantra here is: easy to play, impossible to master:

• In the beginning, you want to progress faster and learn the game: level up, climb the ladder, get better, etc

• In the end, you play differently. You want status, master complex combos, become the best, etc.

In my opinion, Online Multiplayer is non-negotiable here, and it should mix perfectly with another play pattern that varies from one game to another: battle royale, tower defense, RPG, etc.

2. Community

Introducing community in a game is necessary when aiming for the long term. It fosters a sense of belonging and engagement between players that last forever. The game becomes a cultural phenomenon that goes beyond playing.

Your existing players become the best advocates for new players, creating a virtuous loop. They’re the ones who know more about the game. Many game-changing developments are community-led (e.g., Counter-Strike was a community-developed mod on top of Half-Life), or, for example, publishers like Roblox delegate the new game creations directly to their community.

UGC is a dimension where we expect many innovations to happen in the upcoming years when mixing new technologies like Web3 and IA and recent success cases like Roblox.

3. Eventfulness

The game is live and in constant evolution. In the same way, a traditional sport has competitions, seasons, transfer markets, etc. Forever games need re-engagement mechanisms over time that make existing players come back: seasons, expansion packs, balance changes, special events, etc., are examples of live operations that keep the game fresh. It attracts new players and re-engages existing ones.

The game stops being a single-shot product to become a live service, with something always happening at any time.

4. Competition

Competition raises the status within the game and generates an infinite end-game: you can always become better, learn new tricks, or climb the rankings.

Some of the existing forever games are creating esports around them, and the professional players are celebrities within the game, as in any other traditional sport.

This also aligns perfectly with community and eventfulness. Some of the biggest game competitions are community-driven, and competitions are one of the best re-engagement mechanisms.

It is not weird to find players that stopped playing years ago but still follow the game’s competitions. Those are players still engaged around the game even without playing!

5. Player Investment

This is the persistence of the player's achievements over time. Players not only invest money but time and effort. Those investments must pile up—acquired knowledge, skills, in-game items, badges, levels, etc. Your past achievements in the game are what build your status and are valuable: The more the player invests the less likely to churn.

An extreme example is World of Warcraft. People did not cancel their subscriptions even without playing to avoid losing their characters forever. They eventually come back to play for new expansions (eventfulness), but they did not churn in the meantime even though they were not playing anymore.

These are the main characteristics of a Forever Game. I believe that it is not crazy to think that if Chess or Football have been played for more than 300 years, why a video game cannot achieve the same?

New generations prefer to kill dragons with their friends in Roblox rather than put a ball in a basket - and this is a cultural phenomenon.

I’m sure Forever games are not going anywhere near soon, and this is the kind of game that we’re looking to support on Tacter.

M.

Second, the LTV <> CAC formula dominates the Free-to-play business model. We’ve already explored the details of the F2P business model in this other post having as a conclusions:

📈 The price is uncapped.

💸 The hard-core gamer might end up paying hundreds of dollars over time for in-app items.

👍🏼 The casual player will be able to play. He might be converted to a hard-core gamer or pay for a few in-game items.

👾 A good F2P game should also have an addictive, infinite play pattern to retain players as much as possible and 🪝 well-designed spending hooks to increase the spending of their engaged players, such as battle passes, skins, speed-ups, and cosmetics...

👉🏼 The whole F2P model relay on a tiny amount of users (usually below 5%) spending high amounts of money because they really like the game. 🐳 Those users are called whales, and all your user acquisition efforts focus on identifying and attracting those whales.

🐟 At the same time, the rest of your players (~95%) does not spend almost anything. Their LTV tends towards zero.

🌓 That’s the best and the worst characteristic of unlocking the price elasticity of your players with the F2P model. Still, it works because your top-of-funnel skyrockets, and everyone plays, leveraging social and network effects.

However, there might be Plenty of Fish in the sea. Let’s introduce the concept of dolphins:

However, they might spend in the game if they can recover their money when deciding not to play anymore: the dolphins are unlocked in web3 by default 🔓🐬

In Web3 Gaming, recovering your money as a player is possible thanks to ownership and secondary markets. You can always sell your in-game items to other players.

💡 It’s similar to the e-commerce persona, who's not buying unless the shop offers a free return policy, even though the more likely scenario is for them not to return anything.

Let’s take a look at the dolphin’s concept in a way too simplified scenario just to illustrate the idea:

💪🏼 A game is selling an in-game booster priced at 1.99$ that allows you to gain x2 experience in your next ten matches:

✅ The ~5% of whales will buy it.

❌ The remaining players, including dolphins (95%), will never buy it.


but What if… you can buy the in-game booster and sell the remaining matches to another player when you don’t want to use it anymore.

✅ The whale (5%) still buys it.

🐬 The dolphins (~20%) might buy it cause it’s a reversible decision.

❌ The rest (75%) will not buy it anyway.

🧐 As a result, the LTV of the players can be higher than the F2P one. Here's an example with some made-up assumptions:

• There's a 20% dolphin population.

• Avg price of an item in a secondary market has a 20% discount on avg.

• Dolphins will not cannibalize whales.

• The game has a 5% fee on transactions in the secondary market.

With those (made-up) assumptions, the LTV can be higher.

However, the biggest lies in history have been written down in a spreadsheet (sorry, business joke 🤡), so now it’s time for real games to prove it!

M.

The biggest existing consumer platforms have extracted until the last drop of value from their users. However, the enviroment is changing:

• Many have claimed that the Social Media Era as we know it is dead. Facebook is almost 20 years old!

• User data and privacy are not overlooked anymore. Now it's a legal battlefield distracting everybody from innovating.

• The creator economy has raised the user expectation standards for new generations:

  • Users have noticed the significant difference between the value they create and the value they capture in traditional platforms.

• Technological disruption is happening faster than ever:

  • Web3 Tech is disrupting the value capture and data ownership mechanisms. This is a massive hit for the defensibility measures of traditional platforms.

  • AI is disrupting the way users create and interact with content. This will change the whole value chain of digital platforms in non-expected ways.

⛈️ It’s the perfect storm for disruption.

With 3.09 billion gamers worldwide (3.32B expected for 2024 source). A gaming company that seems niche can attract hundreds of millions of users.

Games have evolved to become primarily social. You do not play alone anymore. In particular, the younger generations (👀 how different generations interact with games)

There are already successful cases of consumer products that started within the gaming sector and are now expanding beyond, like Twitch or Discord.

Technological innovation always happens in gaming first (this is a thesis I will develop soon)

We envision Tacter as a vertical gaming community:

• A place where players of different games hang out together.

• A place where experienced players can capture part of the value they created by playing games by sharing their knowledge with other players.

• A place that players use to discover new games, improve their skills, connect with like-minded people, or just have fun.

A product like this should showcase all the early signs of success of a vertical community (based on the vertical social networks thesis from a16z).

1. Users post things that they can’t (or won’t) share anywhere else.

Gaming is the perfect environment to nurture this behavior. Each game is like its own market with its jargon, memes, culture, etc. And gamers usually participate in multiple games simultaneously (Gen. Alpha playing 6 genres simultaneously on average). There’s room for a platform enhancing this kind of vertical gaming content.

2. Solves a core, utility-oriented need with a new tool/feature.

Similar to what Strava does for runners, Duolingo for language learners, or Substack for newsletter writers, this can be expanded into gaming. There are hundreds of utility-oriented opportunities in gaming, like coaching, tournament organization, game discovery, META analytics, etc. Many companies are going behind these opportunities, yet, nobody has succeeded in integrating a vertical proprietary solution.

3. Platform is a “system of record” for identity that enhances a user’s status within the vertical.

This is crucial in gaming. Games, in particular competitive ones, are continuous status contests.

Your gaming profile can be as vital for you as a gamer as the StackOverflow, or Github profile is for developers or your LinkedIn profile for your career.

And probably the closest thing we have for this is your Steam profile, which is not cross-platform, and barely prioritized for them.

4. Develops and supports its own group of platform-native “stars.”

There are already sub-platforms within major platforms where this is happening. For example, a YouTuber creating content only for Minecraft can perfectly out-earn most non-gaming YouTubers.

Of course, youtube already noticed this and is pushing forward Youtube Gaming with some custom tooling, but they’re just scratching the surface, and just for video-gaming content.

There are hundreds of content formats and interactions happening in every game. A custom vertical gaming community will be better positioned to compete with generalist approaches.

📝 EDIT:
This post has a continuation: Tacter - A Vertical Gaming Community Part 2

📌 We believe that new business models and distribution strategies, on top of proven play patterns, will happen sooner than gameplay innovations.

It has already happened in the past. None of the first waves of successful free-to-play games (e.g., league of legends) had an innovative play pattern. They just improved existing ones, and a little bit later, new gaming genres emerged (e.g., hyper-casual)

We expect web3 to act similarly. Axie Infinity shocked the world in 2021 with a tier-c game (in terms of quality) on top of a proven play pattern (turn-based strategy), but unlocking exponential growth (without marketing spending) and generating an internal economy as big as AAA companies like EA or Nintendo… just by giving in-game ownership to their players on top of the promise of earning by playing.

That was simply impossible for a tier-c game built on top of state-of-the-art models.

And, YES, it did not work in the end.

Their model was not long-term sustainable, the tech was not ready to provide a good player experience, and their player base imploded as fast as they grew, but it was enough to prove a point:

⏳ Innovation was coming. Web3 Tech can unlock a new way of doing business in gaming.

Since then, more than +$12B of funding in less than 24 months (source) has been allocated to web3 gaming startups, followed by a massive talent migration from traditional gaming to web3 gaming startups.

I’m sure this will lead to new gaming genres, innovative gameplay, and play patterns not seen before, but the innovation is more profound. Gaming business models and existing distribution strategies are going to change.

That’s what excites us the most at this moment. And it’s why we spend lots of time discussing different theses, like a new business model for web3 games or web3 games will have higher LTV than F2P, and we will talk about distribution innovation soon.

These innovations are going to happen sooner than gameplay disruptions. In fact, we’re earlier than expected. It’s challenging for a game studio to develop a web3 game with the same level of player experience as a traditional one with the tech available. Actually, web3 tech deteriorates the game experience: wallet key management is a mess, transaction signing interrupts gameplay, gas fees are a high barrier for users, etc

🤔 However, what do you think will happen when a new game with the same quality level as the current top games but using web3 tech arrives?

I’d love to know your thoughts. In the meantime, the industry has to figure out some things. Thankfully, the money and the talent are already here.

M.

One of the critical changes in recent gaming history was the free-to-play model. It’s the current status quo in the industry, and we firmly believe that F2P is something that web3 games should stick to. Let’s explore why:

First, we have to go back in time and understand the initial model of the gaming industry. The packaged goods:

💰 Games were fixed priced at around 60€

🥷🏼 Piracy was an issue. If you cannot afford the game, you get it for free.

👩🏻‍💻 Game Devs were usually paid by publishers via royalties for distribution.

At this point, people used to believe that you must innovate on gameplay to build a successful game. Let me tell you; it’s not usually needed. You have at least three dimensions to innovate on:

👾 Gameplay: how the game is played.

📈 Distribution: how you reach players.

💸 Business Model: how you monetize them.

You can innovate in just one or all three at the same time. However, the more innovation, the more risk you add to your go-to-market strategy. Some examples:

• League of Legends was mainly a business model innovation. The gameplay (MOBA) was already proven by other games (DoTA - a WW3 mod)
  

• FarmVille was mainly a distribution innovation (social - Facebook). Other existing games already proved the gameplay.

The most notable business model innovation in recent gaming history is the Free to play model. It allows you:

🕸 Increase your game's reach (¡obvious, it’s free!)

✋🏼 Stops piracy (if the game’s free, why steal it?)

🪢 Unlocks your players' price elasticity

If the game is free, reach multiplies. Anyone can try your game without friction—your top-of-the-funnel skyrockets. You can now leverage network effects and social.

If the game is free, there need for piracy disappears:

• Who has pirated the PSP or Nintendo DS to get all the games? 🙈

• Who has pirated the iPhone to play Clash Royale or Marvel Snap? Significantly fewer people.

📝 In the words of the game master Mitch Lasky: piracy is just mispricing.

🤔 The question now arises: How are you making money if the game is free?

You create in-game products that players can buy via micro-transactions. Usually, cosmetics (skins, emotes, icons) with no impact on the gameplay or speed-ups progress faster within the game. They have value because players care about your game.

✨ The magic appears because the new model unlocks the price elasticity of your players:

BEFORE

💰 You were charging 60€ to all your players.

✅ The hard-core gamer who’s playing 10.000 hours pays 60€. A no-brainer for them.

😐 The casual player who’s playing for 5 hours also pays 60€. A more difficult call.

NOW

📈 The price is uncapped.

💸 The hard-core gamer might end up paying hundreds of dollars over time for in-app items.

👍🏼 The casual player will be able to play. He might be converted to a hard-core gamer or pay for a few in-game items.

You’re monetizing your player base way better.

This was the real innovation behind the Free-to-Play model. The games that understood it were able to monetize their player base better, increasing the Lifetime value of their users.

And you already know, a higher Lifetime Value means you have more budget for customer acquisition, which allows you to bring in more people, which increases your revenue again in an endless virtuous loop ♻️

👉🏼 Web3 games should not forget that they compete against this, not against other Web3 Games, and if they want to win, they need to disrupt the free-to-play model, but that’s for another day!

M.

P.S.: If you want to know more about the gaming industry and the free-to-play model evolution. I cannot recommend you more to listen to this podcast episode by @mitchlasky and @blakeir in the 🎙️ @gamecraftpod "Steal This Game." Such a masterpiece 🔝

Now I think I get it.

Everything around you, your company, and your market is in chaos. You’re surrounded by uncertainty. Nothing is clear. There’re more doubts than answers, yet you’re the one in charge of providing clarity.

To be able to provide clarity, you must believe in something. Just there, in the middle of the chaos, you must see something. That’s your vision.

🔮 What you can see through the uncertainty is your vision.

It might be obvious to you, but it isn’t for others. They usually don’t get it. You’ve to explain it.

That was what I didn’t get at first.

I see it clearly now. You think that the rest of the world sees the same, but they don’t, so you explain it over and over again.

And that’s your job. Probably your main responsibility as a founder: repeat yourself.

You are the one in charge of reigning that chaos, riding the uncertainty, building a clear vision around it, and communicating it to everyone: partners, employees, investors, clients, etc., again and again.

That’s your vision, and it’s attached to you and your project. Making the world a better place is just empty nonsense.

The missing piece is that your vision can be a hallucination. A mirage. A pool of water over a hot desert. And that might be why you’re the only one seeing it because it’s not real.

Unfortunately, going for it is the only way to discover if it's real.

And that’s what we’re doing 💪🏼

Good luck, gentlemen.