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Why this Blizzard vet thinks the next killer web3 game will come from China

This year, around 3.2 billion people -- or about 40% of the world's population -- will play games, with total spending nearing $200 billion, estimates industry researcher Newzoo. The purveyors of web3 want a slice of this gargantuan market. Criticisms of the first generation of crypto games, dominated by the play-to-earn model, have already been well documented, so the question for developers now is what decentralized games should look like.

Back in July, I wrote that veterans from the gaming industry overwhelmingly agree blockchain games should be fun to play and offer a sustainable financial model, both of which are missing in play-to-earn games like Axie Infinity. When it comes to genres, many of them believe massively multiplayer online (MMO) games have the chance to onboard the masses into web3. The genre, which has given rise to epic titles with flourishing virtual economies like World of Warcraft and EVE Online, could benefit from having in-game assets as blockchain-based tokens to enable true user ownership, they say.

And one country, in particular, has the potential to drive this transition.

"China has the best MMO teams in the world," argues Jerome Wu, who worked on World of Warcraft’s China publishing during his three years with The9 and seven years with Blizzard, followed by stints at nWay, Baidu Games, and 360 Games.

Like many of his industry peers, Wu jumped on the web3 bandwagon. Over the past year, he's been working on a space-themed MMO title called Space Nation, which is aiming to be a AAA blockchain game with co-founders including veteran game director Tony Tang and film director Roland Emmerich, who's known for high-budget catastrophe movies. The game has a total budget of $40 million.

The team is spread across multiple countries with core development taking place in China because "the country's MMO developers are the most efficient and cost-effective in the world," according to Wu.

While China might not produce the most original and impressive gameplay -- which is perhaps why Tencent and NetEase recently sought out creative directors in the U.S. -- the country's game developers have overtaken their Western counterparts on other fronts.

But if China doesn't have the most creative minds, would its web3 plays live up to user expectations? Blockchain games are still in their infant stage and have more urgent problems to solve, Wu contends. "What they need right now is a better economic system and a more solid technical infrastructure, which are exactly where China's edge lies."

"If NetEase decided to go into web3 gaming, it could be a threat to the rest of the industry," Wu says, referring to the Chinese gaming titan behind the MMO Fantastic Westward Journey, one of the highest-grossing video games of all time.

But neither Tencent nor its rival NetEase has made visible forays into decentralized gaming. As a former Electronics Arts executive pointed out, big corporations tend to be more cautious about pursuing a new industry, especially one whose reputation has been tarnished by Ponzi-like play-to-earn games.

China's strength in MMO is a latecomer's advantage, Wu suggests. Homegrown developers began to emerge only around 2000; at the time, they had no chance of beating top games imported from foreign companies, such as MMO works Stone Age, Cross Gate, Legend of Mir, MU, and World of Warcraft. But foreign games needed help with localization and publishing, which gave Chinese firms an opportunity to carve out expertise and learn from these big titles.

The success of MMO, Wu says, hinges largely on a well-designed economic system and hands-on, meticulous community management. "Through working on product operation and publishing for foreign games, Chinese studios gained deep insight into economic and social design, user behavior, and monetization. They quickly turned around and used that knowledge in their own game development, which is why most of their early-day hits were MMO."

"You will see that Chinese people are always at the forefront of devising new business models and then improving them," he adds. It's perhaps no surprise that China also pioneered the free-to-play monetization model.

Having a solid infrastructure is also key to a genre of games that could see hundreds of thousands of players online at once. China's game operators were trained to prevent crashes from day one. "The internet in China in the early days was so complicated and wonky that we had no choice but to keep buttressing our IT and network stability," recalled Wu. "That wasn't something that Western studios had to worry about, so they were more focused on the grand plans than trying to prepare for a network crash."