[Global Payment in Web 3 Keynote Speech] Lucas Huang, Head of NetDragon’s Casual Games Division: Challenges and Opportunities for Games in the Web3 and AI Era

Recently, at Global Payment in Web3, a sub-forum of the Hong Kong Web3 Festival 2023, Lucas Huang, Head of NetDragon’s Casual Games Division, delivered a keynote speech titled Challenges and Opportunities for Games in the Web3 and AI Era.

In his speech, Mr. Huang proposed the following core views:

• The history of human evolution is a history of outsourced brain power. Our memory is outsourced to written words, and our computational tasks are outsourced to AI.
• AI is a great help for the game industry, as it slashes costs and boosts efficiency. In the game industry, AI comes in handy under a wide range of scenarios, spanning art production, AIGC scene/NPC generation, and virtual world development.
• Web3 games now face three major obstacles: complex operations and technical difficulties, a lack of quality Web3 applications and services, and security & privacy concerns. Effort in seamless login and payment must be made to help Web2 players seamlessly transition to Web3.

Here’s the full speech by Mr. Lucas Huang:

Dear guests, good afternoon! It’s a pleasure to talk to you about the challenges and opportunities for games in the Web3 and AI era.

First, let me introduce NetDragon. As a listed company founded in 1999, NetDragon has developed a series of outstanding products, including 17173, which was once a leading gaming portal in China, and 91 Assistant, a hit smartphone service platform sold for $1.9 billion. Apart from that, we have also created many top online games, such as Eudemons Online and Conquer Online, with an annual revenue of nearly 4 billion yuan.

I’m fortunate to have been working in the field of online games for 20 years and to have contributed to the industry. Today, I will share some of our thoughts on AI and Web3 and the opportunities in this regard from the perspective of a game producer.

The crisis of the AI era: Could AI replace humans?

Let’s first address the trending AI topic. Along with the ChatGPT boom, AI has influenced many industries and professionals. Many are worried that they might be replaced by AI, unsure how to plan their future, and whether they should switch to a new career path. Here, I’d like to share with you how we are coping with the adoption and development of AI in game production.

It is well-known that art production accounts for a large proportion of the game development budget. We spend about half of our budget on art production, which is why art professionals are the first ones to feel the impact of AI. That being said, many new jobs, including AI designers, have emerged. What facts led to such a transition? Let’s break it down through actual cases.

Here’s a beautiful 2D image drawn by AI. So, what does the job of AI designers involve? AI designers provide accurate prompts that contain well-considered keywords to acquire the resources we need. This is not an easy task. Giving good prompts requires dedicated AI research and allows us to get 2D resources more efficiently.

This is a 3D car. The exterior is covered with textures, including green, purple, and glossy finishes. Like 2D resources, 3D resources can also be instantly generated through the collaboration between AI designers and AI. From big products through small objects to quickly built virtual worlds, AI designers and AI work together to build satisfying experiences for players.

As we just mentioned, 2D and 3D serve as common game resources. Now, let’s turn to AI’s performance in text generation. A game often needs a grand worldview, as well as plots and dialogues. Games are experience-driven products that have to offer an immersive experience. If players recognize the game world, as well as their roles, duties, and missions, then they’d be more motivated to play the game. This is why worldviews and plots are an essential part of game development. Having said that, scriptwriting can be very challenging, and a shoddy plot leads to terrible gaming experiences. In this respect, AI has demonstrated outstanding performance in text generation. Coupled with AI designers, AI could generate all kinds of quality scripts, and we only need to select and improve the output to get a good story.

Now, this is a digital human. As you can see, it is a humanoid robot, also known as an NPC. In conventional games, the interaction between players and NPCs during a quest can be rigid and tedious. However, with the extensive adoption of AI and big data, NPCs could understand the preferences and needs of players and produce content accordingly, leading to more engaging interactions. With AI, NPCs could become people with their own thoughts and behaviors, and players can even team up with NPCs to explore the game world. This is also a critical aspect of AI adoption in game development.

Finally, let’s talk about AI and UGC. In my personal opinion, UGC is essential in the human world. For instance, live streaming, which has thrived in China and beyond, is essentially a form of UGC. Why is that the case? Streamers showcase themselves and their talents in front of the camera. They go to different places and recommend all kinds of content to users. All of this content is created by themselves with the goal of attracting more user support and earning more tips. To do that, streamers are constantly trying to come up with unique content. The same also applies to short videos. From shooting through editing to sharing, the whole making of short videos is essentially a process of producing UGC. So, what’s behind all these UGC behaviors? Why is it difficult to build a UGC ecosystem for games, despite the tangible user demand? The answer is that games are more complicated, and there isn’t a good UGC tool for developing games. Still, as AI becomes increasingly powerful, our proficiency in AI is also improving, and I’m confident that it’ll be easier for players to build their own games. In the future, there’s bound to be more quality game content generated and shared by players, giving rise to a great ecosystem, and this ecosystem will probably be connected with Web3 because it protects the assets created by users.

Why are casual games attracting many Web2 players to Web3?

The game industry boasts a global user base of 3.7 billion, which is half of the world’s population. This huge market is definitely worth exploring. Casual games, in particular, constitute a large proportion of this market. But why do they continue to attract a large and growing audience? Here, the rapid development of short videos is a good example. Today, people live fast-paced lifestyles and are always under pressure, and they need fun, relaxing experiences for stress relief and mood adjustment. Short videos provide an easy, enjoyable experience that brings both joy and knowledge. With the help of big data, these videos are tailored to our interests, making them addictive. Casual games offer similar benefits. They are also inherently relaxing and stress-relieving, but with the added advantage of various gameplays, which offers interactive elements and unique experiences.

Given that casual games come with such a massive user base and promising market trends, why not consider shifting these users from Web2 to Web3? This is a huge opportunity and a completely possible trend. Though Web3 offers gaming functions, its user structure is not yet healthy, with the majority of users being investors and speculators rather than gamers. If this problem is solved by shifting a large chunk of Web2 gamers to Web3, then we could create a powerful ecosystem with a vast user base. However, this opportunity is only available to a few big players. According to the Matthew effect, there will only be very few Web3 game ecosystems, and whoever solves the problem will seize the opportunity and build a game ecosystem in the world of Web3.

What are the entry barriers of Web3 games?

Despite the huge opportunity, why aren’t more players of casual games attracted to Web3? The answer is that their core focus is on easy, relaxing experiences. What makes short videos appealing? Because the operation is so simple. They’ll stay for a minute or so if they are interested, and scroll up to get to the next video if they are not interested. In my view, the problem with Web3 casual games lies in accessibility. The complex login and payment process keep many users out. However, seamless login, like the one-click login design we often see in apps, will eliminate the need to create an account and fill in additional information, allowing users to get started right away. This seamless experience will attract more users, which is a great way to let them try out your best works.

In addition, blockchain games are different from game genres, as many user behaviors in blockchain games are closely related to payments. If a blockchain game features a complicated payment process, it will be less appealing to users, which is also why many Web2 users are not particularly keen on Web3 games.

Where there are demands, there are opportunities. We are looking for like-minded professionals to build Web3 games together. The market has already recognized the opportunity associated with Web3 games and the Web3 future. Both users and investors are confident that Web2 gamers will migrate to the Web3 world, and our goal is to build a bridge between the two worlds and create a Web3 game ecosystem to attract more Web2 gamers. That’s all for today, thank you.