To Web 3 and Beyond
To put it simply, Pluto is a web 3 company.
We are positioning ourselves to support and capitalize on the revolutionizing value creation models that web 3 facilitates.
The term “web 3” may have emerged as a buzz word last year, but we are committed to building in this space long term. Declaring ourselves as “a web 3 business” is reflective of our company values, as we understand the importance of empowering users in this next generation of the internet.
A core principal of web 3 is the decentralization of power, moving it out of the hands of big tech companies. Users becomes owners and investors in the platforms they use, replacing these tech giants as the central actors. This new model will have (and is having, already!) a massive impact on how people exist online, enabling a genuine shift in consumer behavior. And of course, for this to be facilitated, crypto technology and token economic systems play an essential role.
How Did We Get Here?
Before we go into any more detail, it is helpful to look at the history of the internet to understand the considerable paradigm shift that web 3 represents.
Its earliest carnation, “web 1” was really just ‘read-only,’ where static websites operated as digital message boards for one-way communication.
Web 2, also referred to as the “social web” or the “read-write” web, enabled two-way communication via 3rd party platforms (think Facebook, Instagram and Twitter). These companies have structural incentives which conflict with what is best for their customers. The users of these social media platforms have no ownership in them as they are run by centralized corporations. Thus, they cease to capture any of the economic upside in the value they create for the platform. Instead, a user’s time and energy is translated into profits for private shareholders.
Web 3 sits in direct opposition to this, with its key tenants being decentralization and “permissionlessness” (i.e. you don’t need permission from a central party like Facebook or Instagram to use the service). Token incentive structures allow value generation and product ownership to live with users. As such, people actually have a stake in the platforms they use and can economically benefit from their growth.
We’re a Web 3 Native Company
Pluto Digital PLC is a London based web 3 technology builder. Our thesis is that web 3 introduces a far superior incentive model for users which will disrupt web 2 tech businesses.
This vision permeates each division of our company: our venture capital arm “Pluto V,” where we primarily invest in consumer facing web 3 applications; “Pluto Labs,” where we are building out our user friendly DeFi applications; as well as our blockchain gaming arm, “Pluto Metaverse.”
And we’re not the only ones excited about the promise of web 3. Facebook has rebranded itself “Meta,” in an attempt to redefine itself from an extractive social media company to a “metaverse” brand, even committing $10 billion to building out their version of the metaverse (which can be generally defined as a fully immersive digital world were people gather to work, play and socialize). However, by its very definition, the metaverse won’t be owned by Meta/Facebook but by their web 3 equivalents who embrace a democratized model.
The Game Changer: “Play to Earn”
Pluto has identified the blockchain gaming space as a vertical we can contribute enormous value to, which is why we have constructed an entire division of our company to focus on this sector.
In the traditional gaming space, the mechanics are largely the same as they are in traditional web 2 social media. Someone purchases a game, then they invest substantial time (and money) into playing it. Yet, they are at the mercy of the game publisher, only “allowed” to use in-game items as long as the game publisher grants permission, but at no point does the user control or own their characters or the items they earned or paid for.
Conversely, blockchain based “play to earn” games provide economic value and “real” ownership to its users. Gamers earn/spend crypto tokens to play a game. The user has full ownership rights and control over their tokens and any other items (via NFTs) they use in the game. They can hold the items for as long as they want and can also choose to sell them at any time.
This model has already had a dramatic impact in developing countries where people can generate a livable income from spending 10 hours a day playing games like Axie Infinity (who pioneered the “play to earn” model). Users can literally make a living playing a game! This helps battle inequalities that currently exist, made possible through web 3 native incentive structures. People can leverage their time (as opposed to their economic capital) to generate returns for themselves in a manner that hasn’t been possible before.
We believe that a successful blockchain game needs a vibrant community and sustainable commercial incentives. This creates an incredible opportunity for technology builders like us but also for gamers who no longer wish to be exploited and are gravitating to a far more rewarding and collaborative model.
All Eyes (and Bank Accounts) on this Sector
As mentioned above, Axie Infinity is a leader in the space. Their game operates with a two-token model. “AXS” is their governance token (which has a fixed amount of supply) and gives its owners influence over future decisions within the Axie ecosystem. “SLP” is their in-game currency, which is issued as a reward to users for winning battles and achieving certain tasks.
Axie currently trades at a fully diluted valuation of over $12 Billion and also generates a royalty flow of 4.5% of the trading volume of its in-game currency. Since the token launch in November 2020, Axie has generated over $2 billion in sales and the launch cost was only $4 million with a staff of approximately 25 (now circa 65). To put this into context, the Call of Duty franchise is nearly 20 years old and its recent Modern Warfare 2 title alone cost $250 million to produce, market and launch. Their corporate generated $3 billion in total revenue in 2020 and has over 440 staff.
When comparing these numbers, it becomes clear that there is immense opportunity to build games within the web 3 framework!
On the back of Axie’s breakout success and further development and hype around the promises of web 3, it’s no surprise we’ve seen huge inflows of capital coming in to the sector. This has been led by the likes of Animoca Brands who raised $138 million at a $2.2 billion valuation in October 2021. In January, they raised an additional $359 million at a $5 billion valuation led by investors such as Coinbase Ventures, Samsung, Ubisoft, Soros Fund, Rothschild, to name a few.
Andreessen Horowitz’s (A16Z) last crypto fund raised $2.2 billion last year and they’ve just announced they are raising a further $3.5 billion this year for what would be their largest crypto fund.
The investor appetite for the crypto space is growing at a significant pace and this is a trend that we expect will accelerate with increased M&A activity, and high-profile investments and collaborations.
Our Gaming Studio: Resurgence has Emerged
With all these prominent investments taking place, we couldn’t help but make our own!
As we announced earlier this week, we have formed a joint venture with Maze Theory: a gaming studio called “Emergent Games.”
Maze Theory has a world class team, comprising of gaming industry veterans from the likes of Activision, Sony PlayStation, Output Group, Oculus, EA, Disney and BBC. They also have incredible experience in producing top notch traditional games including Doctor Who: The Edge of Time and will soon be releasing Peaky Blinders: The King’s Ransom.
The combination of Pluto’s web 3 expertise with Maze Theory’s gaming pedigree is incredibly unique. It will allow us to build exceptional blockchain-based games that will reach far outside of traditional crypto followings, which is where we feel the real upside is. Our target audience is the 2.5 billion traditional gamers, as we want our games to be the on-boarding mechanism to bring these “regular” users into crypto.
Our studio will bring free-to-play mechanics to blockchain gaming, offering players the option to just play for fun, or engage with the crypto elements and earn “real” money (via in game tokens/NFTs). We have a “game-first” mentality, removing barriers entry for traditional users migrating into crypto. Our model is best described as ‘Play and Own’ and we will seek to build significant user base who will be rewarded for their time and progress with the issuance of in game tokens and assets, making them key stakeholders in the growth of Emergent.
This approach combines the best of both the web 2 and web 3 worlds; the slick game play experience from conventional web 2 games, with the economic models of web 3.
Resurgence is our first game release, a MMMPOG. It will take players on a journey from present-day disaster to a post-apocalyptic future, community-based survival concept. Stay tuned for announcements and info about what we have in store!
Future is Bright
Web 3 presents infinite possibilities in which, we at Pluto, are primed to contribute to. We are early adopters and builders, and we plan to help onboard the next generation of users and support massive value creation, particularly in the blockchain gaming space.
Our core belief is that to maintain sustainable long-term success, blockchain games need to be fun to play and attract users based on gameplay (not just because they are making money). The web 3 gaming experience needs to match the quality of traditional web 2 titles.
We think this is our major opportunity… as we are committed to building AAA gaming experiences with web 3 value incentives and structures. It’s difficult to comprehend what a web 3 equivalent of a Fortnite or Call of Duty could be worth, but it’s inevitable that it’ll happen and when it does, the value created will be staggering!
We are committed to leveraging crypto technology and principals to create innovative web 3 experiences and platforms. Let the games begin!