F1 Delta Time: The Value Of A Brand

F1 Delta Time was a blockchain-based game developed by Animoca Brands that was offered to gamers, firstly in the beta form, between 2019-2022. The game went up in flames in March 2022, to much rejoicing from all NFT haters.

But was this hate deserved? How much of a trainwreck was the game actually?

This is my hypothetical post-mortem based on online evidence, with the aim to evaluate the value that was added to the game by implementing blockchain technologies. I haven’t played the game myself, and I honestly never cared about it, although I’ve been aware of it since 2019.

At that time, I could not believe that a racing game could be built on blockchain. Now I am playing a lot of Hill Climb Racing 2, and I am completely convinced that you can build a racing game as good as Hill Climb Racing, on the blockchain. I urge Fingersoft to not take this as advice.

How Exactly Does F1 Delta Time Work?

From what is now possible to collect from YouTube, F1 Delta Time was a browser racing game that utilized blockchain technology to assign exchange value to game assets. Racing is one of the most fast-paced genres by definition, and the only way blockchain could help was to support its economy.

The game was ‘pay-to-play’: participation in each race cost a relatively small amount of fungible tokens, akin to inserting a coin into the arcade machine. However, it included a certain element of skill, even if somewhat levelled down with expensive customization that followed a ‘pay-to-win’ trend.

Initially, F1 Delta Time was built on Ethereum, which first became unusable in the summer of 2020. To solve this problem, the game’s own fungible token, REVV, was introduced in September 2020. This token can be used for participating in races and buying cars and car parts on open marketplaces based on Ethereum and Polygon. A part of the supply was airdropped directly to players, while the rest of the ‘monetary reserve’ was allocated to future prize pools and could be earned by winning races and lending out racing tracks to other players to compete.

Surprisingly, as compared to many other ‘minor altcoins’, the price of the REVV token has proven to be relatively stable during its existence, although it naturally followed major cryptocurrency price trends, as well as major hype-generating events such as big sales in the first year of the game’s existence (Fig.1).

The unique selling point of F1 Delta Time came from the official collaboration with Formula 1® and the value that was associated with the brand. This collaboration made F1 Delta Time a premium product and justified the high costs of its non-fungible tokens that represented Formula One cars and drivers.

Several notable purchases have established F1 NFTs among the most expensive ones on the already bubbling market. The first one happened in May 2019, long before the official launch of the game and even before the REVV altcoin was introduced. The buyer, then known under the name ‘MetaKovan’, would later be revealed as Vignesh Sundaresan, the same person who would later purchase the most expensive art NFT to date for the equivalent of $69 million from Beeple at Christie’s.

Back then, in 2019, MetaKovan paid the equivalent of $111,000 in ETH for the unique race car in F1 Delta Time. The car had its own name ‘1-1-1’ and was all covered in digital diamonds. Notably, in his interview with Jon Jordan for the Blockchain Gaming World podcast, MetaKovan has described one more way to assign value to NFTs, to which we will return in our future cases: the value of a story.

The second, even more expensive, the sale happened in December 2020, three months after the game went public. Vignesh ‘MetaKovan’ Sundaresan was, again, the buyer, and he paid 9 million REVV (223,000 dollars at the time) for the token that represented a track segment for the Grand Prix of Monaco. As we already mentioned, the owner of a track segment could generate passive income by collecting a share of the racing fee when other players used this track for a race.

There were other major sales of F1 NFTs later, which broke the record set by MetaKovan, but we will use these two sales as most showing examples of the value of NFTs comes.

The question we are exploring here is how important the value of a brand is in the world of NFTs. F1 is a unique example of how this value went to zero overnight. Animoca Brands received a crushing blow to its reputation when they announced the end of the 3-year licensing agreement with Formula 1 on March 15, 2022.

The game was shut down the next day, although its former players will still be able to swap their F1 Delta Time cars for other assets by July 31, 2022. The PR backlash resulted in at least a month of negative press from every gaming website beyond the crypto corner of the internet. Now, when the dust has settled, it may be that Animoca Brands is still going strong in terms of blockchain gaming - and even the assets that should be considered worthless without the power of a brand are still branded and up for sale after two months since the end of the licensing agreement.

Even though the game itself can’t be played - only a line of code shows up in the browser where the playground for most expensive NFTs used to be - branded game NFTs are still available on OpenSea, available for purchase (see Fig. 3). Even the Monaco racing track that belongs to MetaKovan is still listed - to be precise, the .png render of the track, now representing nothing but the loss of 9 million REVV, is still worth about $250,000 in May 2022. The image file still remains on the server, though, as well as all other digital images that represent deprecated game assets, and rare transactions still take place on OpenSea.

It may be that the value of a brand does not disappear with the end of licensing agreement. Even more, its role in the valuation of game assets may not have been as important as the critics suggest. What F1 cars and drivers have actually lost - in a rather painful way - is their utility value, that is, the ability to use assets productively in the game.

For example, MetaKovan can’t generate passive income by lending out the .png file of the Monaco track segment. Of course, this .png will be deleted one day after the server clean-up, - but the same is true for many other unique and premium NFTs in many reputable projects that have, in Bondian terms, no time to die, although they may as well die another day. However, legendary and exclusive cars and drivers still retain potential exchange value: for instance, MetaKovan can still sell his 1-1-1 car on OpenSea. To make it almost actually immutable, the visualization of this car NFT on OpenSea is currently an (unlisted) YouTube video.

Is F1 Really A Failure?

It has been definitely painted as such in the media. However, if we look at the game statistics available on DappRadar, it appears that the game’s popularity had been fading for many weeks already before the partnership was discontinued.

The number of daily players rarely exceeded 10 since September 2021 - for 6 months already - which would not be enough to continue a costly partnership with Formula 1. Of course, these are only the statistics that are publicly available at DappRadar, and they are already quite buggy, but there is no reason to suggest that the game was more popular than that.

In the meantime, Animoca Brand launched its own racing game REVV Racing in August 2021, as the hype around F1 Delta Time was fading. It is very likely that the remaining players of F1 Delta Time have moved to that game even before the closure. In terms of player engagement, REVV Racing by far outpaced F1 Delta Time, although we do not have the data about how profitable it was for the developer or for an average player.

As of May 2022, the collection of REVV Racing cars on OpenSea amounted to 167,000 items that belonged to 59,400 players. This is a success if we compare it to F1 Delta, which only had less than 4,000 cars, and which belonged to 1,800 players, which is the cumulative number of all players during the lifetime of the game.

This large number of REVV Racing players can be explained by the airdrop rules: everybody who had 8,000, 12,000, and 20,000 REVV tokens in their wallets would also get one, two, and three free new cars. Even though these were still considerable investments (8,000 REVV would amount to 1,137 USD at the time of airdrop, July 16, 2021), many free cars would go to the secondary market, and even more new cars would be minted and distributed later. From the viewpoint of an outsider, it looks as if the company moved from monetizing through ultra-wealthy ‘whales’ to a wider, poorer, but also more active and motivated player base.

Why communicate ‘deep regret’, then?

The main problem with crypto games today is that, due to the rapid speed of the NFT scene, many of their creators don’t develop long term memory, so they never learn (or maybe, they are just not used to hiring the people who actually do the work of development and marketing, for the real money, on a long term basis).

A similar event already happened in 2018 in CryptoKitties - the first popular blockchain-based game that also tried cooperating with sports brands at some point. In early May 2018, the company prepared to launch a marketing campaign CurryKitties, to celebrate their first NFT based on a living celebrity, the NBA player Stephen Curry.

The deal was canceled at the last moment due to a misunderstanding about the role of Stephen Curry in the promotional campaign. The basketball-themed kitties were already pre-programmed to be minted by smart contracts, and Stephen Curry was replaced by a generic character Swish at the last minute. Although some fallout from the CurryKitties could be observed in social media, it was by far incomparable to the grilling that F1 Delta Time received from all kinds of media in spring 2022.

Based on that, the devil’s advocate in me suggests that Animoca Brands should have communicated smugness, not regret, in their public announcement. Anything along the lines of “Formula 1 is not good enough for us” would please their core player base and provide less food for the trolls. Griefing could be easily redirected at the former partner, whose reputation is by no means squeaky clean. In the end, if the value of a brand does not convert into other types of value in this particular community of players, why keep this brand?

How Important Is the F1 Disaster At All?

For the company that has the word ‘Brands’ in its name, and describes its mission as bringing premium brands into the blockchain and NFT space, - yes, it is a big screw-up in terms of PR. However, their other game REVV Racing seems to be doing really well on the ‘play-to-earn’ scene, based on publicly available information. There’s no value in that brand, but the main point is that it perfectly communicates the message that sells right now: this is where you can earn minor altcoins by playing a simple racing game.

As you can see, upon a very rough calculation, the price of REVV is well correlated with the number of active players. Moreover, as the new crypto winter is coming, we are about to see what will happen to the game if the price of REVV goes down. The number of active players after that will demonstrate how much of REVV’s value is utility value in the game, and how much is exchange value, boosted by speculation, lending, and borrowing, as in the recent case of Axie Infinity.