The Securities Exchange Commision (SEC) issued a No Action Letter for Pocketful of Quarters (POQ).
This has HUGE implications for crypto and gaming, and is a GIANT first step in advancing POQ roadmap. In an industry of fast turnover, the SEC letter affirms our plan for long term stability. Many of the current game coins are “get rich quick” business plans. Pocketful of Quarters is in it for the long haul. They want a better future for gamers and game makers, and the only path forward is the first legal, two token crypto currency.
So, what is a “No Action Letter” and why is that exciting for POQ? A No Action Letter literally means “the SEC will take NO LEGAL ACTION at this time”. This is as close to an endorsement as it comes from the agency that oversees regulation and enforcement. The bouncer is letting you into the VIP area.
To understand why this is so important, let’s take a look at how game developers get paid when players buy “premium currency,” symbolized by gems, gold, or another visual representation of monetary value. Developers don’t get paid when players redeem their “Premium Currency.” This means that developers are motivated to get their cash transactions as soon as possible, up front, without worrying about retention and providing long lasting replay value. If we consider these two phases inside the larger game monetization, we get:
“During my time as the Creative Director at Nexon I started asking tough questions: We have a premium currency that is called the same thing in all of our games. Why can’t we let players take that currency from game to game?”
It turns out there were many reasons. That question illuminated many problems that needed to be solved on the Publishing/Development side.
A player buys 100 “Premium Currency” in Game A. That transaction has happened. Money has been deposited in developer X’s account for 100 units of “Premium Currency.” After the player spends 10 “Premium Currency” in Game A, he/she then goes to Game B and spends 20 “Premium Currency.” Game B is made by developer Y.
PoQ provides a framework to answer these questions by replacing the “Premium Currency” with Quarters (400 per $1.00) and moving the developer payment to the redemption phase instead of the cash conversion phase. In conjunction with using blockchain tech as a ledger for all Quarters sold, this addresses all the questions and problems with games sharing a “Premium Currency” regardless of whom the publisher is.
How is payment handled for the 20 “Premium Currency” in Game B?
POQ handles all purchase of Quarters. Payment to developers is handled after Quarters redemption.
Does developer X pay developer Y? Or pay the publisher who then pays dev Y?
Developer Y gets paid at redemption, and a portion is paid to developer X as a royalty for selling the currency. In the case that POQ directly sold the quarters, there is no royalty payment.
Who does the accounting for this?
Pocketful of Quarters.
How do we know that 20 “Premium Currency” was bought from Developer X?
Pocketful of Quarters will be able to track every Quarter sold and when it is redeemed. Full transparency made possible with our blockchain integration.
This has HUGE knock-on effects for game developers. Once I realized the incentive to get paid could move from the paywall to Quarter redemption, it changed how I viewed monetization design completely.
Quarters also addresses one of the biggest problems in game design, particularly in Free to Play games. Developers can now focus on retention and token redemption instead of cash conversion. This aligns the business goal of making money with the design goal of retention and a positive player experience.
This may seem like a minor adjustment, but it’s not. Incentivizing retention and alignment with business goals leads to better game design. The current paradigm is to monetize players as soon as possible. This means that players are led through a marketing funnel, shoved through a “push this button” tutorial and a mock first-purchase experience, in an effort to convert their cash as soon as possible. It’s like a stranger constantly asking you for a dollar on the street. This is bad for players and bad for games.
Players haven’t even decided if they like the game before they are asked to make a purchase. This has created a general feeling of distrust and skepticism in the market. (Never mind the compounding action of “whale hunting.” I’ll cover how POQ addresses that in another post.)
Removing the stress of an early paywall frees up players to actually take their time to try a game. And if a designer can assume part of their audience already has Quarters, they can be guided to purchase in an organic way. Players can be properly ramped into enjoying the deeper mechanics of a game and then come to a decision about spending Quarters on their terms.
You can audit all the transactions on the blockchain yourself. You can see the prepaid value for you to earn that is securely held in escrow. You can read the redemption formula right in the smart contract yourself. And it’s all based on a white-as-driven-snow compliance strategy with US regulators.
It’s time to start the revolution!
Disclosure: I am not associated with any of the projects mentioned in any financial capacity.
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