Emergents TCG: The End
An unfinished article about an unfinished experiment
In tragic news, Emergents TCG is winding down. I have been following the project very closely since the closed beta, and this post is more or less a dump of much of the thoughts I’ve had concerning Emergents these last months but never got around to writing down.
This article has two parts. The first title “The coase whitepaper” is my final attempt to explain, in a relatively accessible way, the key points from the original whitepaper for this project, and why it was so underrated, and why it could have made a huge impact for Tezos.
The second part of the article, titled “So what the fuck happened” is a collection of disordered speculations about why this project may have failed.
Having spent far too much time on this game, and specifically on this article, I am now publishing it unfinished and without proof reading. It probably has many grammatical and spelling errors. Hopefully it is interesting to the few of you have been following this project.
The Coase Whitepaper
The game that became Emergents was initally described in a whitepaper written by Kathleen Breitman and Zvi Mowshowitz. You can read the original paper here. I have made previous attempts to make coase whitepaper more accessible, a few I didn’t complete or publish, but here is one that doubled as a plug for Emergents. I wasn’t really satisfied with it.
I have done my best to make the below explanation concise, with limited successs. The crucial point: the paper describes a new online gaming business model, native to blockchain. In this model, the firm does something impossible without smart contracts - it voluntarily and credibly places restrictions upon its own actions through the use of smart contracts. This creates a virtual economy with custom-built laws of economics. In this world with bespoke economic rules, the firm and its customer have more closely aligned goals than they would be in ‘real world’ economy.
This is much more profound than a ‘game with NFTs’, which is how I think this project was typically perceived (and even how it was presented by the project’s own marketing). This is not simply a great business model for TCGs specifically, but I suspect it is the first example of a much wider set of use cases for blockchain, in which firms (and possibly governments in future) use smart contracts to redefine how economics and incentives act upon actors in a given industry. The alignment gap between a firm and each of their users can be measured in dollars. Redefining the economics to close that gap makes all those dollars available for capture, either by making products cheaper and more desirable, or by providing that value to customers in exchange for higher profits.
This all surely sounds theoretical and hand-wavy. Well, we can get specific with the TCG industry as a concrete example. Domain knowledge about physical and digital TCGs (and how the firms and their customers are misaligned) is required to follow the example, which is covered in the following two sections. Then I detail the alternate blockchain native business model.
IRL TCGs are wonderful … but booster packs are unethical
The instant you open a median pack of physical Magic the Gathering cards, you lose about 50% of the pack value. You are burning money. There is a gap between the market value of the cards and what you pay. So why do people buy boosters? Remember, they have an alternate option - the could just buy the individual cards they want market price.
The gap is bridged by the value that boosters provide relative to your other option - buying individual cards directly from a card shop. This value comes in two flavours:
Real value (Service value1) - boosters are an exciting way to explore a new set of cards, build a collection, and provide utility as the basis for drafting game formats
Hacked value - this is percieved value from hacking your brain’s reward system. Booster packs are lotto scratchies with no age restriction, and their ‘sometimes win, mostly lose’ nature is highly addictive.
If you are drafting, you are probably getting a pretty good deal - most of the value you get from the pack is ‘real’. If you are a player with a bit of an addictive streak, you will buy more packs than you should. Many players feel regret for their purchase - some come to feel exploited any resentful.
Overall, TCGs such as Magic the Gathering generate an enormous amount of value - playing IRL TCGs is great fun, creative, social. These games provide players with a sense of identity and an opportunity to achieve excellence and expertise in a complex game world. Despite this, the use of what is essentially an addictive gambling mechanic to drive sales is a black spot on the industry.
I don’t blame anyone in particular for this outcome. Wizards is simply incentivised to sell cards in the most profitable way possible. Players simply buy more cards when they are randomly packaged into boosters like this, even if it is, in some sense, against their interests. This is the equilibrium business model for TCG card sales in the physical world. Game makers will helplessly gravitate towards it.
Digital TCGs are convenient and diabolical
The equilibrium business model for digital TCGs is far, far grimmer. The deal for players is worse - any money they spend on the game is immediately and irretrievably locked in the game. In most cases, they aren’t even able to trade the cards they collect for other cards, or with other players. Unlike with a physical TCG, there is no alternative way to buy cards, no secondary market. This time we observe a gap of 100% between the price paid and the market value of the asset purchased. Any cash ‘invested’ is irretrievably and instantly lost. Once again, the gap is bridged by a combination of real and hacked value.
Real value (service value) - there are some additional sources of real value in a digital game as opposed to a physical. It is convenient, you don’t have to store or organise your cards, you can play it on the train, you can easily find people to play against.
Hacked value - the scope for hacking the brain’s reward system on digital devices is vast. The UX experience and even visual design often is inspired by the digital gambling industry.2 A wide range of hacks are employed. Just one especially nefarious example: the rules which dictate when you receive new cards will punish you if you do not play the game twice a day. To collect cards at the optimal rate, you must organise your day around playing the game. The game plays you.
Just as with slot machines, much of the revenue for these exploitative mobile games comes from a relatively small number of players who spend orders of magnitude more than the average player. In relation to slot machines, we usually refer to these people as ‘problem-gamblers’. In relation to mobile games, we call these people ‘whales’.
I don’t approve of these tactics, but I also recognise them as inevitable. Game makers and projects will experiment with economic and gameplay designs and the most profitable will survive. It increasingly looks like the equilibrium design for digital TCG games depends heavily on exploiting behavioural hacks. It was once the case that whales could pay large sums to avoid having to grind, but in recent successful games such as Marvel Snap and Gods Unchained, even cash has its limits. You cannot even pay for relief from the squeeze. To collect all the cards, you have to play at the game makers schedule (if compelled, is this play, or work?) .
As inevitable as gravity
When building a house, you accept the laws of physics as given. If you ignore them, your house will fall down. The same is true of creating a TCG and the economic realities of your medium. All successful physical TCGs rely on booster packs, and all successful digital TCGs rely on reinforcement schedules and grinding for cards. Other strategies get outcompeted. The house falls down.
But with tezos, we can change the physics
In a virtual world, you can have a virtual physics. A virtual house can float in space, or have a cupboard that leads to Narnia. In a virtual economy, you can suspend or change the ordinary rules. Many configurations are unstable, and attempts to interface them with the real world economy fail in interesting ways.3
The coase whitepaper proposes a way to set up a virtual economy that is self-contained, stable, and where the interests of the game maker and the players/ collectors are much more closely aligned. The interface to the real world economy is not via grinding for NFTs, as past blockchain games have attempted. This effectively causes a relationship to develop the price of labour and the game NFTs, leading to ‘gold farming’, and leading the game becoming over financialised, less fun and economically volatile - unsustainable.
The custom physics of the new business model
In summary:
There are no booster packs.
Players can buy the cards they want directly from a smart contract, as singles.
Players can sell the cards back to the contract. They get almost4 the full value of the card back. The difference is firm revenue and considered a transaction or admin fee.
When a player buys a card from a contract, the price goes up slightly.
When a player sells a card back to the contract, the price goes down slightly.
These changes in price are determined by bonding curves in the smart contract.
Different card ‘rarities’ have different shaped bonding curves, such that ‘rare’ cards are more expensive than ‘common’ cards for a given level of circulation.
The entire market value of the in-game economy is held in smart contracts. This value can be baked by the firm to produce a major form of revenue.
I’m just going to repeat that last point - because it is important, and a little bit nuts
The entire market value of the in-game economy is held in smart contracts. This value can be baked by the firm to produce a major form of revenue
Better physics, better deal for players, better revenue model for the firm
This revenue source aligns the interests of the game maker with the player. The usual (short term) incentives are for the game maker to focus on new content, sell that, and to be indifferent to the value of cards that the players already own.
In contrast, under the ‘new physics’ of these smart contracts, the incentives for the game maker are to:
Encourage players to hold large stocks of cards long term. Players will only hold their cards if they either find them actively useful in play or they anticipate they will increase in value.
Not devalue cards arbitrarily (by re-releasing old cards, for example).
Not engage in ‘power creep’, by releasing increasingly powerful cards that make earlier cards redundant for tournament play
Not nerf or buff cards, which could cause players to rage-quit and found blockchains5
There are further benefits of the system which cash out in the form of public goods that benefit all players in the ecosystem. For example, the highly liquid market for cards, in combination with fixed-price tournaments, allows the meta to self-heal if overpowered cards are inadvertedly released. I describe this mechanic in more detail in a previous post.
Players own their assets, and can cash them out at any time, with much less inconvenience and much lower effective exit fees than any other TCG project on the market. They can basically withdraw the full market value of their cards. For a magic collection - maybe you will get 50-70% if the cards are in mint conidition. For Hearthstone or another digital collection - you can’t reclaim a single cent of what you spent.
Why so centralised?
This proposal is for a web 2.5 project. There are still servers, the IP belongs to a single firm. There are art directors and lead designers. There are salaries and (maybe?) office buildings. Why couldn’t this be entirely decentralised, funded and managed by a DAO?
I personally am skeptical that a DAO could build such a complex project, but I’m open to being convinced otherwise. My intuition is that a project like this needs a cohesive vision and someone in a directorial or ‘showrunner’ type role. I doubt a decentralised group could build that. Perhaps the fundamental infrastructure could be built by a team with a strong vision, and the addition of new cards could be proposed and voted on by a DAO. Maybe, but I suspect this would lead to a fragmented and unbalanced product. Please direct me examples of any great games, films or tv series designed and produced by committee and convince me otherwise.
A race to the top
If its a utopian vision you want, how about this liberatarian alternative to the DAO model? Instead of firms competing to extract the maximum profit from customers through behavioural modification, how about if instead they compete to create virtual economies where the firm’s interests are most closely aligned with their customers’? In these blockchain powered virtual economies, the profit maximising move is to provide maximum real value to customers.
Now feel bad for a few paragraphs
I’m trying to make you feel sad. This was a very cool, very innovative project. I am sad it is dead and you should be too.
The concept laid out in the original whitepaper for EmergentsTCG is a rare thing. It proposes a use case for smart contracts that creates value for ‘ordinary’ people in a domain outside of crypto. The solution and business model proposed cannot be replicated without blockchain. Moreover, the business model is greatly enhanced by blockchain features where tezos excels. For instance, the ability to bake with tezos stored within contracts to as a major source of revenue.
The proposed business model is experimental, innovative, untested. Perhaps in the future it will be common and dominant within whatever web3 becomes. The Emergents project was an attempt to test an entirely new, tezos native business model - a proof of concept. If successful, the promise was not just a single hit game, but the opening of a new domain of crypto use cases in gaming and beyond, for which tezos would be the only proven substrate.
Although I am sad that a great game has been killed, I am more disapointed still that the whole exercise has yielded little new information. The experiment was suspended before we could answer the questions raised by the coase whitepaper.
So… what the fuck happened?
I don’t really know. I don’t have any inside info. However, I have followed the project closer and for longer as a player than probably anyone else outside the project, and so perhaps my guesses may be slightly better than the next guy.
Here’s my current speculations about what happened, starting from when I joined the project discord - at which point the project was in the closed alpha stage of development.
To be doubly clear, these really are speculations. I asked some people from the team if they wanted to share any details, but they declined. This is just a story I made up that explains what I saw from the outside, and isn’t contradicted by the various statements and comms around. I am also reconstructing/ contructing this from my memory, which is pretty poor anyway, so I might even have the order of events or basic facts wrong. I’m not trying to write highly accurate investigative journalism here, just share my personal speculations and experience. That said - here’s my current guess of a rough timeline of what happened, interspersed with naive commentary
Technical development of the Emergents TCG begins from scratch in early 2021, with most of the dev and design team recruited and working on the project by mid 2021.
Project was very well funded through to the closed alpha. The team believes they have enough runway to finish the project in terms of time and money. (Speculative)
However they start to get pressure from their investors. They are asked to show progress towards releasing the game, and to show they can bring in revenue. (Highly speculative)
So they open the beta. There are still A LOT of bugs, some are major and ruin or freeze matches. The game is clearly far from release. There was no-one in the queue before the beta opened, and there is still no one after.
At the same time as opening the beta the Emergents team is forced to do something way outside their wheelhouse - to throw together a crypto-bro, PFP style NFT drop at short notice to make the cash they are being asked to find. For some reason they decide to sell booster packs of NFT cards. This seems a very odd decision given how critical the whitepaper is of booster packs. Nevermind, booster packs fit nicely with the crypto drop theme, where such randomisation is par the course - e.g you get a random NFT dropped, and what you bought is later revealed.
The super booster sale is marketed at great expense. There seems to be much more marketing for this sale than there will be for the official game release the following year. The NFT prices seem weirdly high for a project without a game that really works and no players. The booster packs are expensive and their contents are complicated to understand. Its no clear what the relationship is between the booster pack cards and the future game cards. The marketing is largely targeted at crypto people, not TCG or comics people - for example, ads are placed in the brave browser. The open beta and booster sales are advertised, targeting crypto people. Some people come to check out the game to see if they’ll be able to make money speculating on NFTs but quickly realise that it is a ghost town and bail.
The launch is a mess. The team can’t get their microphones to work in the Twitter Space leading up to the sale (Twitter spaces are very important in Crypto Twitter). To the crypto speculators, the inexperience of the marketers and the team in running a drop and building the right sort of hype is obvious, cringeworthy. They stay away. To gamers, this just looks like the typical crypto NFT bullshit they love to hate, and makes it appear that the game is incredibly expensive the play. Earlier followers of the project are confused and suspicious by the pivot to booster packs.
Despite the extraordinary talent in the game design department, the Emergents / Interpop team would be hopeless at running a ponzi scheme. They can’t pump up the hype balloon (a lot of hype leaks because anyone interested in the NFT drop who opens the game immediately finds that the game has no players in queue). The incentives for sharing the drop on social media are backwards. Because the most valuable packs were to be sold at auction, the people who were the most bullish on the project were incentivised to NOT share it on social media or boost the project (because theat would be to invite competiting bidders). If anything, their short term incentive was to FUD the project immediately before the sale.
The super booster sale is a disaster. Maybe 10% of the NFT booster packs on offer sell. Most of the NFTs are sent to the burn address. The costs were high and profit negative. Developers had been pulled off working on the game to build out the auction mechanics, artists were commissioned to make art for the boosters. (Highly speculative(
As a result, the company is unable to make the requested loan payment to investors on time. (Highly speculative)
Investors make further money contingent on changes to the management team. So new mangement comes in. A lot of people get fired as part of cost-cutting. Budgets are slashed. Morale suffers. (Highly speculative, though we know that the project management was changed at the most recent round of investment, whenever that was, and they implemented cost cutting measures)
The new management focuses on completing the core game and getting it released as soon as possible. Their remit is to establish if the game has hit potential as quickly and as cheaply as possible. (Highly speculative)
The quality of the core game improves markedly and rapidly over the following months.
As soon as the core game is complete and major bugs are removed the game is released. What is released is high quality and has potential to be a hit game, but is far from a v1. The core game is good, even brilliant, but there are no play incentives or organised PVP features besides a simple queue. Bugs remain, but generally do not make the game unplayable. There seems to be some sort of momentum building in terms of players for a few days early on after the launch, but it is not sustained. There is basically ‘nothing to do’ in the game, unless you have people to play against. It is more of a deckbuilding sandbox than a game. There is no battle-pass for unlocking cosmetics through play ala fortnite. There are no tournaments or events accessible from within the game. There is a big button marked “events” on the game homepage, but the button is disabled, as though these are coming soon.
The learning effort to reward payoff is similair to Magic the Gathering. It is a hard game to learn, and can be initially very frustrating. The wildcard mechanic is brilliant, but initially seems ridiculous. It makes games very swingy, especially if you don’t know how to respond to your opponent getting an early wildcard. To an appreciator of board games and card games - it is a masterpiece. For your average mobile game player - it is perhaps too difficult to learn, and the resource system and the corresponding resource dashboard visualisation is unintuitive (you could see Kibler struggling with this in some of his streams)
A core group of 15-20 players discover the game and start to play it A LOT, racking up hundreds of games. They start discuss the game and strategies on discord. The queue is short in the peak hours each day, but it is basically impossible to get a match outside those times when the core group tend to be on.
The only thing to do in the game is PVP, which only provides a good experience if there are people in the queue. This means a blitz marketing campaign is required in tandem with events to get players into the queue at the same time. Instead, there is a soft launch and a drip feed marketing approach. Players come to the game one at a time. Drip feed marketing continues, likely with a negative ROI, as players who discover the game find an empty queue. This is both bad UX and serves as social proof that the game should be avoided. Once they have tried the game and bounced off i, they will be twice as hard to get back for a second look.
A lot of money goes into marketing the game on android, but it isn’t available on the play store, and requires special effort to install. Lots of people complain that it is broken, doesn’t run on their device, makes it overheat etc. The android version turns out basically to be broken and not ready for release. It is taken down from the main Emergents download page and reverted to beta.
Lots of weird marketing happens.
A random example": apparently the game was advertised during some chess competition stream. I found this very odd, because a key part of the gameplay, the wildcarding system, is going to just be hated, hated by chess players. Poker players would be much more comfortable with such a probability based mechanic - indeed one of the core players hitting the ladder every day was a poker pro.
Two popular streamers of Magic Arena and Hearthstone are paid to play the game. Instead of playing in an event or tournament, they spend a lot of time just going through the tutorial and playing against bots. One of the two streamers seems to really like the game. The other struggles with the wildcard mechanic and the resource system. Some of the sponsored streams are initally released behind paywalls after the live stream ends. The blockchain side of the game is downplayed. Little attempt is made to communicate what is unique about the project.
Many people with questions about the project can only seem to get them answered if they join the discord, usually by other players.
The team has one more shot to improve player retention but they clearly don’t know it, because they continue developing the game as though they have another year of runway. The final dev release to the game introduces the ability to complete quests on cards (though still buggy) but this feature is only a precursor to actually bringing those cosmetics into the game. It is an interim step towards providing more value - not an update that would improve player retention on is own.
Building out events and tournaments functionality would probably have been a better short term strategy to improve player experience, I’m guessing the direct incentives piece was seen as the more important strategic piece needed to address the larger cohort gamers more interested in collecting that competition. Given an assumption of more runway, this makes sense.
Frustrated by the lack of community engagement, an unnofficial tournament is started by the core players in the discord, run off a google sheets doc. There’s only 8 players in the tournament - about half of the core group of players - but we all start playing the game heaps as we try to optimise our decks before the cut off for providing deck lists. For the last time, the queue is full. During the week of the tournament games, we probably have more fun playing and talking about the game than any time previous.
After the easter weekend, new cards mysteriously stop being released. The team stop replying to messages or talking in the discord, or posting on social media.
A few days later we get the announcement that the game is dead. The announcement is only on twitter - no email has goes out and no announcement is made on discord (and still hasn’t been).
Date of announcement: 15th of April 2023
The announcement included news that buyers of the super boosters will recieve refunds (to the relief of the core players), but no details are provided about the cases in which this will or will no be honoured. How or if refunds will be handled for secondary market sales is not discussed.
That’s my current guess of how it went down. If anything here turns out to be very wrong or unfair, I will write a correction. Hopefully more information will come out later, though I will likely try to actively avoid any further news about this project once the refunds come through so I can shift my focus to other projects.
My general opinion of the funding being killed
The justification for killing the game’s funding is that it did not prove itself to be a hit game. I personally do not see how assesment could have been made given the stage of development of the game.
(below is copy pasted from a comment I made earlier on discord)
For a game to be a 'hit' it requires an strong 'outer loop' to bring players back day after day. This can either come in the form of direct incentives (e.g grinding, battlepass rewards) or woolier, indirect incentives (desire to excel, status within community, winning tournaments etc), I suspect the PVP experience (and associated 'indirect incentives') was good enough already that this game could have been a hit, but that would have required a more coordinated marketing campaign based around events or tournaments with prize money etc and more focus on community. This alone may not have brought in enough players to bring the game to profit, but would have brought down queue times which was the 'bottleneck' input limiting the quality of the gameplay experience. It also would have brought in the sorts of players who are most likely to be passionate and share their experiences. We had a very embryonic version of this sort of community developing already, with an informal tournament underway, and blockborn would have soon started running automated tournaments. A quite passionate community was forming over the last few weeks in an off-shoot "super-thread" of the general channel (for reasons I don't understand, we were never given our own channel to discuss the tournaments) Even with only a small number of players, we were able to bring queue times down greatly because we were playing so much, e.g in the lead up to the tournament when we were all testing out new builds. As for the direct incentives, these were close to release at the time the game was killed. The point is that there was not enough pieces in place to assess if this game truly had hit potential. As a player following this projects since beta, I felt the momentum was finally starting to build in the last few weeks, and a small community of core players were discussing the game, new cards, strategy making video content etc
Also note that the game was not available on steam, or iOS, or google play store. It's gotta be rare to see a hit game that is not released (with an actual working version) on one of these platforms.
I don't think the justification that the game did not prove itself a 'hit game' makes good sense, given the incomplete nature of the released game, how it was marketed, and that little effort was made to generate a community around events such as tournaments. Not even a single official tournament was run for this game. This would have been a very simple thing to do, very low hanging fruit. You can run a tournament with an excel spreadsheet. What sort of response would we have seen to a tournament with $20k first prize, targeting that at mtg and hearthstone players, getting the sponsored streamers to play in it? We will never know. This would have given some real information about the hit potential of the game, even before the direct incentives were introduced.
Given that the outer loop did not exist at all, you might even argue that the intense passion which a small group of players (including a few who were entirely free to play) had for the game was quite a strong signal that there was hit potential
Ultimately my view is that the game either should have been cut, much, much earlier in development, or given how far it had come it should have been given a fair opportunity to test if it truly was a hit game. This would have meant an extra 6 - 12 months of runway to build out the direct incentives for the normies while running small tournaments to build on the growing community of passionate players, and then followed up with a hard launch on iOS and Android stores, with a serious marketing budget blitz.
The future
In the reddit post, Arthur Breitman suggests that the IP could be licensed. This suggests that the Tezos Foundation owns the project IP. It may be possible that the project will have some sort of future life, and that the core game can someone be salvaged. I’m not optimistic at this stage. The economic concepts behind the game are likely dead, and will not be resurrected until this failure is a distant memory, or the ideas are rediscovered independently, perhaps in another domain beyond gaming.
Final note
Just a final note - I am very dissapointed that this project has failed. What a great game - I was a great fan. I have the greatest respect for the team behind this project, and I hope my speculations above do not offend. Please be in touch via twitter DMs or discord if you would like me to make corrections.
Also, its been great fun meeting everyone in the community while playing this game - I hope I can get a couple more games in before the servers shut down
With that, I hope I can now shift my main focus to other projects.
Grum
EDIT:
Made an addition to the timeline after receiving the following comments from a team member:
“I wanted to give one point of clarification for history sake. The development effort has been discussed in some places as a continuous effort from the Coase days until this month. Instead, the foundation of InterPop marked a complete reset of the game. All of the code base and systems were made from scratch. We take great pride of what we were able to accomplish in two years. Especially as other web3 TCG projects, such as Gods Unchained and Skyweaver, had five or four years of development under their belt, and are still considered WIP.
…
InterPop was formed in 2021. Most of the team working on Emergents joined either at the beginning or middle of 2021. All of the unity code and art started from scratch.
I am not privy to the history before my participation so I can't comment beyond that.”
We pay money for things all the time that we can’t resell. Nothing wrong with that. The main example of this is when you pay for a service. If someone fixes your washing machine, you can’t resell that service, but you still got a lot of value from it.
Modern slot machines are so addictive that their most addicted players wear adult diapers so they don’t need to leave the game for toilet breaks during a session. See the book by Natalie dow shull: Addiction by Design
Link to Lars Doucet convo on economics design podcast goes here
In the coase whitepaper they got back 99.75% of the card value. As implemented by Emergents with was reduced to 90%. Some possible reasons for the change: 1. to increase lock-in of customers to appease investors skeptical of the vision 2. Obtain some much needed guaranteed revenue that could be banked, maybe the spread would have been reduced later. 3. The 10% might be what they hoped they could negotiate with stores such as app store, playstation store should be considered as the sale price of the card - and the store commision was to come from this.
Obligatory link to Vitalik Buterin blog goes here