Get OnChain with Off The Grid
Get OnChain with Off The Grid
Why We Invested in Off The Grid: The Future of Gaming Meets Web3
We're excited to announce our second major gaming investment: Gunzilla Games, the creator of Off The Grid (OTG) .
Off The Grid is a third-person shooter set in a dystopian cyberpunk future. It offers an unprecedented 60-hour narrative campaign alongside a 150-player battle royale mode. Developed with creative guidance from Oscar-nominated director Neill Blomkamp (known for District 9, Elysium, Chappie and Halo: Landfall), OTG brings cinematic storytelling to a genre known for its intense multiplayer action.
Our Web3 Gaming Thesis
When looking at any gaming investment, we ask ourselves four simple questions:
Does the team have a proven track record?
Is the game fun and likely to become a hit?
Are the tokenomics sensible and do they enhance the gameplay?
Does the game have potential to evolve into a larger platform?
Triple-A games like Off The Grid typically cost hundreds of millions of dollars and require about five years of development time before anything substantial reaches the market. For instance, Call of Duty and Grand Theft Auto received $300 million and $250 million budgets, respectively, from their game studios to produce the next major title in each franchise. When considering an investment in the triple-A game category, the team's capabilities become particularly important. They must be able to execute effectively across all aspects: creative direction, game design, launch campaigns, partnerships, and more.
While not all games appeal to every player, we must believe that the game is objectively fun and has the potential to become a hit in its respective category. If we don't believe it can achieve this success, we're likely better off as players rather than investors. We take long-term, high-conviction bets, and to do so in gaming, we must be confident that the games we invest in are genuinely enjoyable.
In crypto, we've seen many impressive projects with poorly designed tokens that make for bad investments. Gaming is even more sensitive because video games should be an escape from reality. So far, most attempts at bringing blockchain technology to gaming have resulted in poorly designed cash grabs and gameplay mechanics revolving around sustaining the ponzi. Therefore, we have two key requirements: first, the blockchain component must enhance the gameplay, and second, the tokenomics must make sense from a value accrual perspective.
Lastly, we look for growth potential. A hit game title can evolve into a much larger ecosystem through its distribution and IP. Two great examples are Riot Games and Epic Games, both of which transformed single-game successes into major gaming platforms. Riot Games’ League of Legends, launched in 2009, became one of the world’s most popular and profitable games, paving the way for their growth into a top-tier studio with other hits like Valorant. Epic Games achieved similar success with Fortnite, a battle royale game like Off the Grid, using its massive popularity to expand into a leading game studio. They also offer the Unreal Game Development Engine to developers and run the Epic Games Store. We look for that kind of potential—a vision that can grow beyond just the game.
Why Off The Grid?
Top Tier Team
The Gunzilla Games founders, Vlad Korolov, Alex Zolland Neill Blomkamp, are industry veterans with extensive experience in game design and deep connections throughout the industry. Their expertise enabled them to raise over $90m and assemble a team of over 350 people to develop Off The Grid over the past five years. They've brought on board talents like Oscar-nominated director Neill Blomkamp (known for District 9, Elysium, Halo: Landfall, and Gran Turismo) and Altered Carbon author Richard Morgan to shape the game's creative vision. Korolov and Zoll's track record speaks for itself—they previously created Warface, which generated $1 billion in revenue with over 140 million players. Korolev and Zoll also founded Plink.gg, the world's largest social network for gamers, matching over 100,000 gamers daily.
The Off the Grid early release launch campaign featured live streams from some of the world's largest streamers—including Ninja, TimTheTatMan, xQc, and Shroud—who collectively boast nearly 50 million followers. OTG reached an impressive peak of 154,000 total Twitch viewers, a milestone that took Fortnite nearly a year and Call of Duty: Warzone six months to achieve. It was also listed as one of the top free-to-play games on the Epic Games store, which has 270 million users. The team's ability to plan and execute a campaign of this magnitude demonstrates their exceptional skill and industry expertise.
Source: Twitter
Exciting Gameplay
We love playing Off the Grid. The game is fun and exciting with the ability to create hilarious moments like this one where a player shoots both their opponents arms off rendering them incapable to shoot until they find a replacement. Little things like this are what separate OTG from being another generic battle royale and create viral moments that attract players to the game.
Off the Grid also features map objectives for players to pursue during matches. While battle royales typically offer two main strategies—playing passively to outlast others or aggressively eliminating opponents—OTG introduces a third option. Players can focus on accomplishing map objectives, which may lead to opportunities for engagement or defense. One such objective involves finding and decoding a hex, rewarding the player with a loot box containing a random item that can be opened after the round.
Thoughtful Blockchain Integration
Given how impressive Off the Grid is, our primary concern was ensuring that the blockchain component wouldn't detract from the gaming experience in a way that could jeopardize the game's success. While the Gunzilla team consists of highly experienced gamers, we wanted to make sure they wouldn't squander five years and millions of dollars by implementing a flawed token system. Fortunately, the system they designed is, in our opinion, excellent.
Gunzilla’s blockchain implementation works by using an Avalanche Subnet called the GUNZ chain as the ledger tracking each player’s GUN token balance and items. Like other battle royales, OTG players are rewarded with a currency and loot boxes that reveal random in game items. Below is a table of how other battle royale games reward systems work. The key difference is OTG’s rewards are represented as fungible and non-fungible tokens (NFTs) on the Gunzilla chain.
Essentially, Gunzilla is using a blockchain instead of a centralized database to track players' items. For players, this simply means the ability to buy and sell in-game items on a marketplace. Choosing blockchain as the underlying technology offers two key benefits:
Increased transparency and safety for players
New revenue streams for developers
Gamers have long sought ways to buy and sell in-game items, often risking account bans by violating developers' terms of service. Traditionally, game developers viewed secondary markets as a threat to their primary sales revenue. However, this perspective is evolving, as evidenced by the success of the Steam marketplace. Over the past five years, Steam's marketplace has generated an impressive $32 billion in volume, allowing players to trade in-game items while Steam collects a 5% fee and developers optionally add their own fees. This model has proven lucrative, with Steam likely earning around $1.6 billion in revenue from the marketplace alone.
By leveraging blockchain technology as the foundation for Off The Grid's marketplace, Gunzilla Games offers players enhanced transparency and security. This approach ensures that players can confidently engage in item trading without fear of breaking game rules or falling victim to scams. It also empowers players to build their own analytics, which helps foster community growth outside of the core gameplay.
Gunzilla's Ecosystem Vision: Beyond Off the Grid
Gunzilla's ambitions extend far beyond the success of Off the Grid (OTG). The company is strategically positioning itself at the forefront of blockchain gaming innovation, with OTG serving as the cornerstone of a much larger ecosystem.
At the heart of this ecosystem is the GUNZ chain, complemented by a comprehensive software development kit (SDK) and companion apps. This powerful combination offers game developers a turnkey solution for integrating blockchain technology into their games. The companion apps also helps generate engagement even while logged out. The SDK simplifies the process of connecting new games to the Gunzilla chain and marketplace, potentially revolutionizing how developers approach in-game economies and player ownership.
The success of OTG creates a unique opportunity for new games joining the Gunzilla ecosystem. These games can leverage OTG's established user base, instantly tapping into a community of players already familiar with blockchain-enabled gaming. For instance, a new game could launch on the GUNZ chain with items that are easily tradeable for OTG items, creating an enticing cross-game economy that encourages OTG players to explore new titles.
Beyond supporting its own ecosystem, Gunzilla is well positioned to white-label its technology to other game developers. This approach allows established games to implement blockchain features without building the infrastructure from scratch, potentially accelerating the adoption of blockchain technology across the gaming industry.
By successfully implementing blockchain technology in a AAA title, Gunzilla is setting new standards for the gaming industry. Their innovative approach puts them at the forefront of shaping what video games might look like over the next decade. As pioneers in this space, Gunzilla is likely to be regarded as expert trailblazers, much like how Epic Games transformed the industry with Fortnite.
Just as Fortnite catapulted Epic Games from a successful game engine company to a dominant force in the gaming industry, OTG and the GUNZ ecosystem have the potential to elevate Gunzilla beyond a single-title studio. This could be Gunzilla's "Fortnite moment," propelling them into a leadership position in the rapidly evolving intersection of blockchain technology and gaming.
By fostering a mutually beneficial relationship between game developers and players, and by providing the tools for seamless blockchain integration, Gunzilla is not just creating a game—it's building the foundation for a new era in interactive entertainment.
How Does the Blockchain Integration Actually Work?
In Off The Grid, players earn GUN tokens and Hexes as rewards for gameplay, with better performance yielding greater rewards. GUN tokens serve a dual purpose within the game ecosystem. Firstly, players can spend them to open Hexes, which reveal random in-game items. When a player opens a Hex and receives an item, it's automatically minted as an NFT on the Gunzilla blockchain and assigned to a wallet linked to the player's account. This process happens seamlessly in the background, invisible to players unless they choose to engage with the blockchain aspect.
The second use for GUN tokens is within the in-game marketplace. Players can buy or sell items directly through the game interface using GUN. For those interested in interacting with the broader blockchain ecosystem, items can also be sold on external NFT marketplaces where users can pay with various cryptocurrencies. However, to withdraw an item to their personal crypto wallet, players must first complete a Know Your Customer (KYC) verification process.
The marketplace significantly enhances the game experience by addressing the challenges posed by the random nature of loot boxes. For instance, if you prefer snipers but have had bad luck revealing the right weapon, you can now sell unwanted items on the marketplace in exchange for GUN tokens. These tokens can then be used to purchase the specific weapon you desire, providing a more satisfying and targeted approach to acquiring in-game items.
It's crucial to note that while items can be transferred between a player's game account and their crypto wallet, GUN tokens themselves cannot be transferred in or out of the game. This means GUN tokens earned in-game have no direct monetary value outside the game environment. This helps to eliminate play-to-earn dynamics and maintain a sustainable economy
The GUN token and GUNZ chain are designed with sustainability in mind, maintaining a maximum supply of 10 billion GUN tokens with no inflation rate. GUN tokens serve multiple functions: they’re used for gas fees on the GUNZ chain, serve as direct payments to validators, and are necessary for decoding and minting in-game items.
On the GUNZ chain, validation fees paid by users are burned, reducing GUN’s total supply and creating a deflationary mechanism. Validators are incentivized through the rewards of GUN tokens and also receive a 1-5% commission on the resale of any in-game items they decode on the secondary market. This structure both supports the ecosystem and encourages validator participation.
Final Thoughts
Gunzilla Games has created an impressive title with Off the Grid, laying the foundation for a multi-faceted platform built around their blockchain infrastructure. We find Off the Grid to be an incredibly fun game that has the potential to propel the GUNZ ecosystem into one of the top gaming ecosystems in the industry. We believe the blockchain implementation they've developed for video games will catch the attention of other developers, who may seek to incorporate similar features into their own titles.
Disclosures
Please note the VanEck has a position in Gunzilla Games
This is not an offer to buy or sell, or a recommendation to buy or sell any of the securities, financial instruments or digital assets mentioned herein. The information presented does not involve the rendering of personalized investment, financial, legal, tax advice, or any call to action. Certain statements contained herein may constitute projections, forecasts and other forward-looking statements, which do not reflect actual results, are for illustrative purposes only, are valid as of the date of this communication, and are subject to change without notice. Actual future performance of any assets or industries mentioned is unknown. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data. The information herein represents the opinion of the author(s), but not necessarily those of VanEck or its other employees.
The Strategy is highly speculative, is not suitable for all investors, and is available to Qualified Purchasers Only. An investor should consider the investment objective, risks, charges and expenses of the Strategy carefully before investing. There is no guarantee the Strategy will achieve its investment objective and investors may lose their entire investment. Past performance is not a guarantee of future results.
Cryptocurrencies and digital assets are subject to significant risk and not suitable for all investors. Investments in digital assets and Web3 companies are highly speculative and involve a high degree of risk. These risks include, but are not limited to: the technology is new and many of its uses may be untested; intense competition; slow adoption rates and the potential for product obsolescence; volatility and limited liquidity, including but not limited to, inability to liquidate a position; loss or destruction of key(s) to access accounts or the blockchain; reliance on digital wallets; reliance on unregulated markets and exchanges; reliance on the internet; cybersecurity risks; and the lack of regulation and the potential for new laws and regulation that may be difficult to predict. Moreover, the extent to which Web3 companies or digital assets utilize blockchain technology may vary, and it is possible that even widespread adoption of blockchain technology may not result in a material increase in the value of such companies or digital assets.
Digital asset prices are highly volatile, and the value of digital assets, and Web3 companies, can rise or fall dramatically and quickly. If their value goes down, there’s no guarantee that it will rise again. As a result, there is a significant risk of loss of your entire principal investment.
Digital assets are not generally backed or supported by any government or central bank and are not covered by FDIC or SIPC insurance. Accounts at digital asset custodians and exchanges are not protected by SPIC and are not FDIC insured. Furthermore, markets and exchanges for digital assets are not regulated with the same controls or customer protections available in traditional equity, option, futures, or foreign exchange investing.
Digital assets include, but are not limited to, cryptocurrencies, tokens, NFTs, assets stored or created using blockchain technology, and other Web3 products.
Web3 companies include but are not limited to, companies that involve the development, innovation, and/or utilization of blockchain, digital assets, or crypto technologies.
Information provided by Van Eck is not intended to be, nor should it be construed as financial, tax or legal advice. It is not a recommendation to buy or sell an interest in cryptocurrencies.
© 2024 Van Eck Associates Corporation
 | A guest post by
|