Forte has raised a whopping $185 million.
Image Credit: Forte
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Yesterday, I wrote about my rule of game journalism: follow the money. That was all about the flow of money into blockchain games. And there’s another rule as well: follow the people.
In yesterday’s story, I said I expected to see an exodus of people from traditional game companies to blockchain game companies. Chris Akhavan, who was a senior executive at Glu Mobile and then at Electronic Arts (which acquired Glu for $2.4 billion), has jumped ship to join Forte, a company that specializes in handling the technical infrastructure for blockchain games. That’s a big deal, as Akhavan spent nine years at Glu, and now he will become the chief business officer at Forte, which is making an end-to-end blockchain tech platform for games and other content.
Akhavan left one of the biggest video game companies to make sure he wasn’t too late to catch the latest trend. You can expect to see more of this happen as an enormous amount of money goes into making blockchain games the next big thing. Blockchain is a transparent and secure digital ledger. It enables nonfungible tokens, or NFTs, to authenticate unique digital items. And that enables a new kind of business model in video games where players can own their own digital items in games. They can receive these as rewards, and they can resell them for a profit.
Such NFTs can transform players from spenders into investors in games, and that could change the whole game industry. You can read more about that in my column from yesterday about the true believers in NFT games. Akhavan is one of those true believers as well, and we walked through the decision he made to jump into something new. It reminded him of jumping into social games, mobile games, and free-to-play.
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“As a lifelong gamer who has spent countless hours and money playing games, I quickly started to believe with full conviction that this technology will be transformative for gaming in the most positive of ways by aligning the interests of game developers with gamers, and enabling incredibly rich and vibrant communities and game economies,” Akhavan said. “I’m pumped about the creative and business opportunities this technology will create for our industry.”
Here’s an edited transcript of our interview.
Above: Chris Akhavan is the chief business officer at Forte.
Image Credit: Forte
Chris Akhavan: My role at Forte, I’m joining as the chief business officer. I’ll run all things biz dev and corp dev, primarily responsible for our partnerships with game developers and other types of content creators. Personally I found myself — probably like a lot of people — spending a lot of free time learning about blockchain technology, checking out early games in the space and other types of content. Things like Axie and Sorare and NBA Top Shot that were pioneering. It was all coming from a place of personal passion and genuine interest. As I thought about what I wanted to do next with my career, having now spent since 2010 working in mobile free-to-play, it started to become obvious that my passions were moving toward this new world of blockchain gaming. Any time you can align your passion with what you do for work, it’s a good thing to do.
From an industry perspective, as I got deeper into the space, the energy reminded me of when I was fortunate to be a part of the early social gaming wave on Facebook back in 2007, and the early free-to-play mobile wave in 2010 when I was at Tapjoy. The excitement and the energy and the innovation and all these new teams forming left and right to pursue these opportunities that are going to be transformative.
I also noticed that there’s so much friction involved in the current group of blockchain games out there. It’s a great sign that there’s a massive opportunity here. Despite all the friction involved in moving Ethereum from one wallet to another just to play a game–I’m sure you’ve seen Axie sharing that their day 30 retention is the same as day 90, which is just unheard-of. It shows how sticky games with these compelling economies can be. I felt like this was going to create some cool creative opportunities for game teams, and business opportunities as well. It’ll require the industry to evolve our skill sets and bring people in that have never worked in gaming as this whole thing takes off.
GamesBeat: What’s interesting to me is that this moment in time feels a lot like mobile gaming’s start and social gaming’s start in one particular way. There’s this group of believers who believe it’s completely going to change and disrupt the industry for the better, improving things like monetization. Now you have a much better base of people to monetize compared to just monetizing two percent through free-to-play, the “whales only” model. But that’s spread all the way to the other side of–everybody thought Mark Pincus should be thrown in jail for running a scam or whatever. Gabe Leydon was running a machine to strip people’s money away. And now supposedly the SEC is going to declare NFTs illegal any day now. Valve decided not to allow blockchain games at all. (I don’t think these things will really happen, but it’s a sign of the skepticism).
Akhavan: And then Epic welcomes blockchain games.
Above: Forte was started by Kevin Chou and Josh Williams.
Image Credit: Forte
GamesBeat: But there’s that spread. It’s even weird for me to see GameIndustry.biz has said they’re going to limit their coverage of blockchain games, because they don’t think it’s good for the world. It’s bad for things like climate change because of the environmental cost of mining.
Akhavan: That’s rapidly changing. So many solutions are quickly coming on board that are eliminating that as an issue.
GamesBeat: There’s a fair amount of gamers out there who have also said that this is a new evil. Partly because of the climate change thing, but also because they feel like there are scams involved. These questions, they arise when there’s something that challenges the status quo like this. And then everybody has to figure out what the answer really is. I don’t know if you went through and analyzed a bunch of these challenges.
Akhavan: You’re hitting some very pertinent themes. There’s no doubt that plenty of people are in this space right now just to jump in and try to exploit what they might see as a short-term opportunity. It reminds me of the early days of social gaming. People used to crank out apps on Facebook and spam the news feed. Just horrible games of very low value that would spam every little activity to the news feed. In some ways it’s reminiscent of that behavior. I’m sure you’ll see people enter the space that are purely here for short-term speculation. But I think that will be weeded out very quickly.
What got me excited is I’m seeing legitimate people get involved in the space, both from the blockchain world and also from the gaming world. It’s hard to come across a proven triple-A team that’s not going on to start a studio. A lot of those teams are creating blockchain games. Those are the kinds of teams that will not be in it for a quick buck. They’ll be very thoughtful. They want to deliver high-quality games. They’re in it for the value that the blockchain technology can bring to making their game more compelling.
I look at this as a big opportunity to closely align the interests of game developers with gamers, enabling rich and vibrant communities and game economies. I think blockchain technology and blockchain gaming can fix some big problems. You touched on some of the problems with the current free-to-play landscape. A lot of the dynamics in free-to-play gear companies toward grinding this small pool of payers. Non-payers are okay, but they’re not who we really care about. That mentality is not good for the ecosystem.
With this model, and you already see this with things like Yield Guild Games–amassing these NFT assets and loaning them out to people that maybe can’t purchase them themselves. They can borrow the assets and use those assets to earn in-game value. All of a sudden those people have real value they’ve created themselves in these games. The opportunities this opens up to serve the entire spectrum of players and gamers out there is going to be transformative in a positive and healthy way.
Above: Forte is building wallets for blockchain gaming companies.
Image Credit: Forte
I even think about things like user acquisition right now, which has gotten absurd in free-to-play mobile. So much of the value goes straight to ad networks and other platforms that serve that intermediary function of introducing players to games. I also feel like blockchain can shift some of that value directly to players themselves. Players get so invested in these economies 0that all of a sudden they have a real vested interest in growing that game’s economy. In many ways they can become the best form of marketing possible, bringing new players to the game. Through doing that, maybe they then capture the value that, in the current free-to-play landscape, is all going to ad tech players.
I also think about how you can reward all this content creation that happens in games, whether it’s people creating content in a game, or contributing to a game’s community on places like Discord or forums or wikis. Being able to connect all that activity to the game’s economy is going to create some positive and healthy loops that strengthen gaming and game communities. That’s the perspective I had coming into the space.
Part of why I joined Forte–I know you’ve talked to Josh Williams, our CEO. It’s very near and dear to Josh’s entire vision for Forte, to build this platform with that long-term perspective in mind. We want to work with high-quality games. We’re not interested in any short-term speculation stuff. Another big part for Forte was just day-one thinking about regulatory compliance and doing things the right way so this will be a sustainable business for us and our partners. That’s what got me excited about Forte in particular. It’s pretty amazing that these guys started to work on this back in 2018, and now we’re ready to go as the industry is shifting in this direction.
GamesBeat: If you had to pull back a bit and look at the legal question that may have motivated Valve–there’s that Washington state law. It mentions that you cannot win something of value in a game. If you do, if it has real-world value, there’s other implications coming out of it. Things like gambling regulations and taxation. I don’t know whether that will cause people to go back and become legal experts to figure out how to parse what that might mean. It also seems like that could give the traditional big companies–I think Forte would love to have them as customers, right? But it might give them pause to sit on the sidelines even longer while this new question gets resolved.
Akhavan: It’s a good point. I can’t speculate as to whether that was Valve’s specific concern, or whether they had other concerns about simply not controlling other parts of the value chain in their ecosystem. But from my perspective, again, this is why I got excited about Forte. Forte, from day one, has planned on regulatory bodies looking very closely into this space. They didn’t cut any corners. Things like all the know-your-customer aspects of having a custodial wallet, anti-money-laundering, all the money transmittal licenses you need to have, tax compliance so that you’re dealing with all that in the appropriate way when people cash out value in the game, that’s all fundamentally built into the Forte platform.
With Forte this was all fully expected. It would not be long until all the regulatory bodies said, “Wow, this industry is blowing up. Let’s make sure this follows the rules.” That’s a big piece of the value that we can add for game developers. We’re their partner in understanding the regulatory environment and making sure we’re covering all these pieces you need to cover.
Above: Kevin Chou, CEO of Forte, and Mike Vorhaus of Vorhaus Advisors at our 2019 GamesBeat Summit event.
Image Credit: Hanh Nguyen/VentureBeat
GamesBeat: There was another group of people I’ve heard concerns from about whether the industry has found the right kind of NFT game yet. They point to Axie. There’s evidence that it’s really working well, but then there’s some concern that it’s almost Ponzi-like. The latest players have to hope that there’s going to be more players coming into it down the road so they can sell their stuff to them. Things like price fluctuations could happen. That could trigger a collapse.
Akhavan: You’re hitting on exactly the kinds of things I was talking about before. For game developers that are currently working in free-to-play or premium, moving into the blockchain world is going to require a whole different set of skills and ways of thinking about economy and game design. No one’s going to be successful if they build a game that’s purely reliant on new users coming in. Games that are going to be enduring and sustainable need to fundamentally be games that people want to play day after day because they’re getting pure value out of it. They want to maintain it, growing value and putting value into those ecosystems.
In addition to all the tech that Forte’s built, we’ve also invested in expertise and services. Our model is, when we work with a game studio, we have people working on tokenomics and helping with economy design precisely to hit on the things that you’re mentioning. We want to avoid creating mechanics or loops that end up being reliant purely on new players coming in. Instead, we want to create games that are genuinely fun and engaging and compelling that people want to play because of what they’re getting out of the value of the game. We definitely don’t want to be involved in speculation-driven gaming.
GamesBeat: When you were at Glu and EA, did you get a chance to discuss these topics with people there? Did they give their blessings, or did they say, “Why do you want to go out into the wild west? Why not stay here?”
Akhavan: I won’t speak to those companies in particular, but I can comment on–at this point Forte is talking to so many big publishers. We’re talking to the biggest companies in the world that are interested. It’s fair to say that within even the biggest publishers, there’s at least a number of people at each of those companies who are interested in this space and actively exploring it. Along with that you still have plenty of doubters.
Maybe the way to think about it is the size of the company–smaller studios right now tend to be the ones that are moving the fastest into the space. Smaller startup teams that are coming from phenomenal talent, proven triple-A game development talent. These people are going out and in many cases starting new studios just to pursue blockchain gaming. I think they will be the first ones to capture this opportunity. At the same time, big companies are quickly seeing, especially over the course of this year–their eyes have been opened to the potential of this space. I don’t think they’ll be late to the game either. A lot of people that might be doubters today, I wouldn’t be surprised if just six months from now, given how fast the ecosystem seems to move, they might quickly find themselves in the believer camp.
GamesBeat: Did you feel some FOMO (fear of missing out) as well? I have to move to this new thing!
Akhavan: I will fully admit I felt the FOMO. As I personally got super engaged in blockchain gaming and blockchain technology, to me it was like, “Wow, this feels like this is going to be a big part of not just the future of gaming, but the future of many different things in our digital lives and beyond that.” For me there was an element of–I just felt like I needed to be involved. That genuine pull, when you feel that, it’s a sign to take the leap. At this point I’m glad I did.
Above: Forte enables blockchain game economies.
Image Credit: Forte
GamesBeat: Have you heard any interesting reactions from people you’ve talked to yet?
Akhavan: In general, most people are not shocked. I’ve talked to a lot of people I know in the industry, and they get it. Everyone’s looking at this space like, “Wow, this might be the next big moment for gaming.” I’ve been pleasantly surprised that no one’s told me, “You’re a moron.” I might have had a few conversations with people who are clearly not sold on it yet, but I’d say by and large everyone’s said, “Yeah, I get why you’d go after that.”
GamesBeat: Was there a different reaction when you were switching into mobile games or Facebook games?
Akhavan: I feel like Facebook and mobile games–I almost had a similar arc. I’m looking back to the early days of mobile, when I was at Tapjoy. The App Store had finally rolled out in-app purchases. Back then the companies we worked with were not the big publishers. It was the early pioneers. They changed their names later, but I remember people like TinyCo and Pocket Gems. Back then they had a different name that escapes me. That initial wave was driven more by those small studios jumping. I still remember the view of a lot of the big companies back then. “Mobile’s too small. It’s not worth our time yet.”
The difference this time around, I think, is that the cycle will be much shorter. You’re already seeing so many big companies actively looking at blockchain. I feel like the early stages of mobile gaming–the way I recall it is that the big companies firmly sat on the sidelines for quite some time before they realized that mobile was going to be a big deal. Perhaps, having gone through that experience of being a bit late to mobile, maybe that will drive a faster and more serious look into the world of blockchain gaming from the big players. This is certainly looking like it could be the next major shift in the ecosystem.
GamesBeat: Turning the tables a bit to me and my industry, there were so many publications that didn’t want to cover crappy Facebook games. They didn’t want to cover crappy mobile games. The core of the journalistic industry has been eviscerated. Lots of journalists are out of work. We’re still standing as a small thing 13 years later because we’ve always moved to cover these new things.
Akhavan: Do you typically get good engagement on blockchain stories?
Above: Kevin Chou, founder of Forte
Image Credit: Kabam
GamesBeat: The last one in particular, the Axie story, was fairly popular, where we were describing their fundraising and all the different reasons. I did an interview with Jeff Zerlin for that. We got into as much of the weeds as we could there. That story definitely had good readership, broader readership than normal.
Akhavan: It’s good to hear that people are engaging. I get a lot of the mobile free-to-play podcasts. I’ve noticed over the past couple of months that blockchain is the topic. It’s permeating across a lot of the media landscape, a lot of the conversation that’s happening around gaming right now.
GamesBeat: My logic is that when people start betting billions of dollars, somebody’s going to find the right solution, the right model. That business is going to take off. When you bet these billions of dollars, they’re not all going to be wrong. It’s the classic lesson. Follow the money. If the money is all going one way–
Akhavan: With gaming it’s just so obvious to me. We’ve all spent our lives playing games that have gray marketplaces. I remember games we had at Glu, Racing Rivals was one, where there were all these Facebook groups full of people figuring out their own ways to buy and sell cars with each other. I play Counter-Strike, and I’ve put all this money over the years into gun skins and knife skins. There’s an actual marketplace where I can buy and sell those in-game items. I feel like with gaming it’s almost assured that this concept of in-game economies that are real and measurable and transparent–gamers have been demanding this for many years. We as an industry have not provided that to audiences in a reliable way. That’s what I think blockchain is going to be able to solve. It’s a core gamer desire that’s been around as long as I can remember.
GamesBeat: It always seems like sitting on the sidelines with the status quo feels safer. But the way that disruption works, that’s only true for so long.
Akhavan: And then it happens fast. You can imagine a world where blockchain gaming really does take off. In some sense, if you’re just making a normal free-to-play game where people don’t own their stuff and have no ability to trade value–if you’re stuck in that world and the world shifts really quickly, then those games, in some sense, become obsolete. Why would you spend all your time and energy in a traditional free-to-play game if you have all these new high-quality games where you actually own a piece of the economy? Companies need to be mindful that this is the kind of thing that could be a very fast shift, if it indeed takes off the way it looks like it will.
Above: Rina Hahm (left) of Facebook’s Audience Network talks with Chris Akhavan (formerly) of Glu Mobile (center) and Joseph Kim of Lila Games about monetization best practices and myths.
Image Credit: GamesBeat
GamesBeat: The strategy of sitting on the sidelines as a big company and waiting for it to shake out, and then buying whoever is left–that’s a familiar strategy. But it’s not going to work when Softbank puts $680 million into Sorare, a 30-person company. It’s not as if EA is going to turn around and buy Sorare now.
Akhavan: You bring up a good point. Buying your way into this market could be very expensive, given the excitement around the space, the valuations. There’s a risk that if your strategy as a game studio is just to wait around and buy one of these successful companies, that could end up being a very expensive strategy to take on. It’s exciting. It’s this huge shot of energy into the ecosystem. For me personally, I think the industry needed it. I’m really excited.
GamesBeat: Anything else you wanted to mention about your transition?
Akhavan: I do have some KPIs that might be interesting. Forte now has more than 10 million wallets across the network of partners we work with. It’s now processed more than $1 billion in sales across Forte-powered games and apps. We have 30-plus developers integrating right now that represent more than 100 million MAU. We’re seeing big numbers in the pipeline. It’s going to be exciting when they all hit the market.
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