Blockchain Lead @Akoin / Blockchain Consultant @PwC / Partner at @BMA
Disclaimer: I don’t accept payment for articles and am not invested in, or involved in any way with RobotCache and its team beyond the extent of the conversation below. .
I’ve always been drawn to new industries. I see them as a somewhat even playing field. I took my first steps into the real world when I started managing social media accounts for small businesses. I saw social media as something new and exciting. People didn’t really understand it’s value, but it quickly became a part of most businesses best practices.
After social media, I took a dive into the world of eSports and video game based content. With a company I co-founded with Louie Cesario, LVLUP Dojo. The world of eSports was enticing in the same way that social media had been. It was reminiscent to the wild west. When my friend Erik sold a player from FaZe’s Overwatch roster, he essentially set the price of Overwatch players. Solely by being the first person to sell one to another team. I wanted to be a part of it because I felt like I was getting in near the ground floor. Which to me meant that I had a higher chance of disrupting the industry.
Now, that same need for excitement has driven me to crypto. This industry is young enough, that a few years of experience doesn’t give anyone much of a head start. A few years of advantage can be outweighed by working harder, smarter, and bringing in more value to the community than others are willing to.
If you told me a few months ago that I’d have the chance to speak with people who had taken two of my passions, video games and cryptocurrency — and found a way to successfully disrupt both industries: I probably wouldn’t have believed you.
I was introduced to Brian Fargo and Lee Jacobson by the DNA Fund after attending an ICO Pitch Day. I told some guys at the event that I came from the world of eSports/video games and they were quick to offer introductions. Brian & Lee are working on a project called RobotCache which is currently nearing the end of its public pre-sale.
“The world’s first decentralized video game distribution and resale platform using the blockchain”
Essentially, RobotCache is the blockchain version of Steam, with a few key tweaks to the model. Robot Cache allows publishers to drastically reduce the fees they’re charged to sell their video games, and users to re-sell their digitally purchased games. Users can sell their games for the token that powers RobotCache, IRON.
Steam is a digital game distribution platform where users can buy PC games, and video game publishers can sell their game titles for a 30% fee.
To be honest, the only reason I go to video game stores anymore is because then I can resell my game. I can bring a physical copy of a game into a GameStop and sell it for a fraction of what I paid for it. When you purchase something online, the price you pay for the convenience is: not being able to recoup any of that cost by selling your used game back.
I even found a little loophole in the GameStop return policy to address this pain point. If you buy used games, and return them within a week, you can indefinitely swap out games for one another without paying more than your initial purchase.
I know, I’m a criminal genius.
RobotCache is working on a platform that means: not only will I not have to cheat GameStop anymore. I can continue to buy new games, and sell them back to other users from the comfort of my own home. Which is both good for me, GameStop, and game publishers. Everyone involved in this transaction can benefit by using RobotCache.
How many of you have hundreds of video games downloaded on your Steam account?
How many of those games do you still play?
I don’t throw around the word “disruptive” too often. To truly disrupt an industry you have to come up with a solution that is a “win” for every party involved. How else can you get gatekeepers and titans of industry to allow the status quo to change? With that being said, throughout this interview I found my jaw dropping to my desk repeatedly.
Perhaps it’s because I’m a huge nerd, or perhaps RobotCache truly is going to disrupt the $27 billion dollar PC gaming industry.
Lee: So, like Brian I started writing video games in BASIC, when I was young on my Atari 400 computer back in the early 80’s. I disappointed my parents immensely by forgoing my big college education at the United States Air Force Academy which by now would have made me an airline bus driver by now.
When playing the old Atari games, I thought, what an amazing place to work. I would love it if I could just go and work at this crazy company called Atari just to sweep the floors!
As a kid it was such a magical time back then, so I decided to get into the industry. I was with a couple game development studios, then joined Virgin Entertainment in the late 90’s and was there for several years. I later joined Midway Games (some call it “The house of Mortal Kombat”) and we did a lot of great games there. I moved out of production and into a business development role: licensing, biz dev, digital distribution and developer relations.
I was there for 13 years and we sold the company to Warner Bros, and lo and behold, I found myself at the same company I dreamed of when I was a kid, Atari. Only instead of sweeping the floor, I got to run global publishing and licensing operations.. It was crazy. At that point I was done.
Brian: My background is that I’ve known Lee for a long time!
I’ve been in the industry for a while myself. Most people know me for the games I was involved with, Wasteland, Fallout, for example. I helped give a start to some great companies such as BioWare and Blizzard. Then I started inExile in 2002, managing my way back to the beginning of making role playing games again. Then, thanks to crowdfunding, I raised over 10 million dollars on Kickstarter and Fig. Did Wasteland 2, Torment: Tides of Numenera, Bards Tale, and have Wasteland 3 coming next year.
My background is primarily in production and managing the insanity of making video games.
Lee: We have a lot of bumps and bruises that’s for sure.
Brian: We’ve heard that quite a bit from our investors too. I think they appreciate that. With our business model, it is, in the beginning: very relationship driven. We have to get publishers to sign up and plug in our API, and whatever other efforts might be required. We’ve known these people for decades. There more likely to do business with us than some brand new group who hasn’t been in the industry before. We definitely have an advantage.
Brian: Brock Pierce really started on me 3 or 4 years ago, nagging me about it. I’m still upset he didn’t nag me a little harder so I bought more!
He got me thinking about it. I’ve known Brock since he was doing World of Warcraft mining, and I gave him a lot of credit for being a pioneer in recognizing the value of a digital item. That people would pay real money for digital things. It seems obvious now, but back then it was a new thing.
I’ve known him for a long time, he got me into it. Then last year he challenged me. He said to come up with something good and that he’d get behind it. So I started reading lots of white papers and the benefits of the blockchain, and came up with this whole concept for RobotCache.
Brian: He’s super eccentric and smart, he’s a character for sure. I like characters.
Brian: I’ve read a lot of white papers like everyone has, and there are some common themes among them. One is the reducing the need for middle men. In our industry, the biggest middle man is Steam. They take a 30% commission and control 90% of the market.
If there’s going to be business disruption, I thought, “well that’s a good place to start”.
The other Aha moment, and I think I literally I woke up in the middle of the night…
Lee: Yeah he called me and was so excited, it was crazy.
Brian: Yeah, I called Lee, “Lee you’re not going to believe this”. It seems like an obvious idea now, but I was reading about chain of ownership and the cryptography of the blockchain. What makes it so powerful is that you can be assured in a nearly un-hackable way that something can’t exist in two places at once. That got me thinking, “Okay, if I can convince the publishers that their titles are 100 percent safe — then maybe they’ll allow me to set up a site where people can resell them”.
In addition, since I have lots of extra margin to give, I can keep them whole on a resale by giving them the same 70% that they make on a new sale from another site. It’s when those two came together that I had my “Aha moment”. I called Lee rambling on like a mad fool.
Brian: Another thing I like about it, you mentioning privacy reminded me of it: there is a large group of people who don’t believe in Digital Rights Management (DRM) protection at all. They feel like, if they buy something, they own it and should be able to do what they want with it. You can let them argue with publishers about license vs. sale and all that good stuff. But I think the one thing we can agree with is that you can’t have DRM free AND allow people to resell.
Those two states can not exist.
It creates a compelling argument for people who don’t like DRM to hopefully agree, “now that I can resell my games and get money back”, that might be a compelling reason to have protection of some kind.
Brian: It stands for Digital Rights Management (DRM). It’s copy protection. People put it on their products so that users have to log into a server to validate that they own something. So it can’t be freely copied and given away.
Brian: I think its the high margins that are taken by third party stores and the lack of ability to resell games.
Lee: As well as curation, or the lack of, has been an issue.
Brian: That’s true.
Brian: They’re like a benevolent dictatorship.
Listen, I have a lot of respect for the guys at Steam. We expect to coexist with them. To me: there is Netflix, and there is Hulu. We never claimed that we want to take out Steam. There’s a huge pie still out there, for a party to be in second place in this market, which could be quite large. At the moment, yes they control most of the market share. I think there will be some fun dynamics that kick in when people start reselling there games.
These articles don’t get the full picture, the Forbes piece for example, it takes time to explain it all. I’ll give you a simple dynamic. We allow publishers and developers to move the dial for what that commission is. On a secondary game sale they get 70%, consumer gets 25%, and we get 5%. But the publisher can dial that up and say, “lets give users a 50% commission this month”, and see what happens. I think they will discover that there monthly sales are not negatively affected. They will see that they can give more to their users. If they see they’re getting incremental sales from people pushing their friends to buy games from the commission their getting — then it will be a real game changer. 25% is great, but if all of a sudden 50% becomes the defacto. and you can buy your game on our site and get half your money back, that has a lot of disruption potential.
Lee: Fundamentally it’s pretty basic. As Brian mentioned, DRM really ties in to what we have, which is a client like Steam, with a token embedded around it. It’s a process that validates who has a valid license, and once a game is sold the license is reassigned using smart contracts and it becomes a part of the blockchain.
In the old days you would have had to have a bunch of paper sub-licenses and would have to generate a bunch of contracts. Imagine having a million contracts, it’s just not practical. Using smart contracts and the blockchain we can predetermine and pre-set that up. When a gamer puts their game up for sale they can decide if they want to get IRON or cash. Once that happens all the DRM gets updated, pulled from their library, and put into someone else’s library, all registered on the blockchain using a smart contract.
Brian: It’s a similar function. Most people don’t have cryptocurrency, don’t own digital wallets, and they don’t mine. People who want to maximize their mining profits will want to join a mining pool. Ours is a friction free environment. You just click a button and you’re mining. Miners contribute and we reward them with Iron, which they can use to buy games.
It’s really about the frictionless effort of mining that we’re appealing too — not the person trying to maximize mining capabilities on their machine.
Brian: Exactly. We’re talking to NVIDA about certain things and our contact at NVIDA doesn’t mine. Most people don’t want to go through the hassle of setting it all up, so we’re for the rest of the world.
Lee: Yes, we’ve been approached by numerous companies that have free-to-play games and we feel that they are important and our IRON will be focused around their games if they choose. We’ve had a lot of conversations with very well known companies about that exact same thing. We absolutely see it as a possibility and want to encourage it. Not only inside our platform but with other third parties as well. I could see a day whereby no matter what other platform your on you could use IRON as a form of payment. the way you’d use PayPal. That opens it up to thousands and thousands of games. Even ones outside our ecosystem. So yes, absolutely yes. We see that process evolving in the next couple of years.
Lee: It blows our minds too. We had a conversation yesterday with an MMO developer who’s doing a free to play game, and they are so into blockchain and are already building around it. They came out of their skin because there are so many people, like Brian mentioned, that are in gaming and also fans of crypto. It’s not just millennials, it’s gamers themselves. They want a venue or an outlet to spend that currency and earn. It’s garnered a lot of great enthusiasm.
Brian: One of the things that we see, hitting your point, we see RobotCache becoming a watering hole for developers who want to develop on the blockchain. Not everyone wants to launch their own coin and write the own code. We’re open source, its friction free. We think because we’ll have thousands of games and developers + open source, we’ll become the place for people to go. It transcends the idea of buying and selling games. It will hopefully be a thriving development community.
Lee: And when you add in skills based gaming, it’s another step up to full blown eSports. When you want to join an esports team, you can’t just go to the tv shows on Disney, you have to grind your way up. We see people being able to challenge their buddies in skill based wagering and over time build their rankings that eventually they can transition into eSports.
Brian: In the beginning we had to explain the blockchain to them. We’d go out there and they’d say help us understand. We started explaining it, and they went, this is really great, this is really smart. It’s a combination of the fact that they like the business model an love the idea of changing the status quo, and they’ve known Lee and I for 20–30 years so they trust us to follow through with what we say.
Lee: It certainly helps that we give them 95%, everyone wants a higher margin.
Brian: We have an unfair advantage.
Lee: And we’ll take it!
Lee: And to Brian’s point, it’s just a re-education process. When we were able to help them understand how big it could be, that’s when it happened. No one has come along and really disrupted this industry. This is transformational, not only are they making more money, but by giving back to the gamer they look like they really care about their fans. It’s a win win across the board. It’s rare when you can get an opportunity where publishers and gamers get to win. As opposed to, one wins and one loses. That’s what I think makes this special, and they understood that.
Brian: One of the best compliments we’ve gotten is that investors feel like some of the other ideas they hear are solutions looking for a problem. This has an absolute real world benefit for consumers and publishers. We get a lot of positive remarks on that.
Lee: For gamers, being able to resell games to their friends is huge. It doesn’t exist. A friend of mine has a son with 300 games on his Steam account. He doesn’t play hardly any of those anymore, and he’d love to be able to take even 50% of those and sell them. He’s on a college budget, doesn’t have a lot of extra money, so being able to sell and buy the next big game — we think that’s going to happen a lot. When you combine that with other marketing initiatives and rewards for gamers (i.e. token air drops and bonuses) that’s a win for them as well. We’re going to have random air drops out of nowhere based on how long you’ve been a user, your usage on the platform — gamification will be built into the site. Then when you add mining and skill based gaming we think there are a lot of compelling reasons for gamers to check us out.
Brian: We’ll also line ourselves up with other people with large ecosystems. So we’ll be doing strategic deals. We did one with Wax already, we will air drop tokens into their system and will cross promote traffic to each other. You can expect plenty more of those in the future.
Brian: They can go to our website, RobotCache.com. All of the SAFT agreements are there, the whole process can be handled online. Even if you’re institutional you can reach us through there.
Lee: It’s [email protected]
We only have weeks left in the campaign. For institutional investors its a minimum of $500,000 with a 40% discount. For accredited investors its minimum 50,000 with a 25% discount. We aren’t doing a public token sale, doesn’t seem like it makes sense to do.
Brian: We agree with that. We think it will be the trend going forward.
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