Dialogue rct AI: It's time to think about how blockchain is changing the game publishing side

Interview: AChai, Chain Catcher

Interviewee: Wu Xiankun, Co-founder & President of rct AI

Recently, with leading projects like Axie and STEPN facing token declines and shrinking user bases, the overall GameFi market has also become more subdued.

However, at the same time, we have observed some GameFi projects that go beyond token economics quietly entering the scene with differentiated ideas. For example, rct AI, established in 2018, is a service provider mainly offering AI technology solutions for the gaming industry. Its core technology, Chaos Box, is an AI narrative engine based on deep reinforcement learning that helps game developers generate intelligent NPCs, smart organisms, and intelligent environments with various behavior patterns and dialogues on a large scale. Currently, it serves over 20 game studios, including Yuelong Zhiyu and Youmi Entertainment.

Based on AI technology, rct AI has attempted to lay out ecosystem projects related to Web3 gaming overseas. Recently, Wu Xiankun, co-founder & president of rct AI, accepted an exclusive interview with Chain Catcher to share some thoughts and differentiated strategies regarding blockchain games. Here is the full dialogue:

Chain Catcher: In the disclosure of your A3 round financing, you mentioned that you would continue to focus on the Metaverse. What is the current progress? What projects or major events have you undertaken?

Wu Xiankun: In May last year, we collaborated with digital artist Song Ting to launch the virtual human NFT "Nüwa."

After that, our overseas business laid out ecosystem projects related to Web3 gaming. One is Mirror World, a game matrix driven by an interoperability SDK layer, aimed at helping Web2 developers complete Web3 game development with low code. The Mirror World game matrix consists of multiple interoperable crypto games, creating a virtual playground that allows all users to experience various casual games and earn crypto rewards simultaneously. The Mirror World mobile SDK is a cross-platform tool designed to help developers integrate blockchain technology more effectively, easily, and economically. In March this year, we raised $4 million, and currently, there is a team of about 30 to 40 people operating.

Another project is the AAA-level MMO Internet 3.0 game Delysium, which emphasizes diversity and a 3A open-world MMORPG experience, including combat, exploration, building, nurturing, socializing, and AI-driven MetaBeing gameplay, pushing the blockchain gaming industry into the next stage. This project also raised $4 million in March, and the team has over 150 members.

Recently, we reached a strategic cooperation with Next Generation Culture to jointly launch the Soularis brand, utilizing cutting-edge technology to create a virtual society where users coexist with AI virtual beings, and digital identities and assets are interconnected in the Internet 3.0 era.

Chain Catcher: Why at this point have you expanded from being a B2B AI technology provider to B2C gaming products?

Wu Xiankun: In fact, we have been thinking about how to better construct the Metaverse. Our understanding of the Metaverse has three main characteristics: self-growth, scalability, and sustainability.

Previously, our AI work focused more on the self-growth aspect, while sustainability and scalability may require visualized and gamified products to achieve the goals. Regardless of the type of game, to extend it into a Metaverse, it also needs to be on-chain.

The key moment was after we completed our A2 round financing, where many investors had high expectations for us, which facilitated the attempt at new ecosystem business. We are one of the early companies researching the Metaverse in China, so in addition to continuing to focus on AI, we hope to directly engage with users and build a more grand Metaverse.

Chain Catcher: Although representative blockchain games like Axie and STEPN grew rapidly, they quickly encountered bottlenecks. What is your differentiation strategy when developing blockchain games?

Wu Xiankun: The play-to-earn token economics needs to continuously support the value of the token, providing players with returns far exceeding the market's natural rate. Once the scale becomes large, it is challenging to sustain this system. However, we believe that blockchain can influence not only the digital mechanism design of games but also other aspects, such as channel distribution.

When designing, we do not want to replicate existing blockchain game models but rather explore changes in business models based on blockchain characteristics.

Our blockchain games serve as a container, allowing everyone to issue their own content and operate with their own tokens. Thus, the value of the project is a collection of values from many parallel universes, not entirely dependent on or bound to any one of them. Additionally, as content creators, if we distribute this game in a more decentralized manner, the system will not rely solely on the success or failure of a specific investment.

Of course, we also care about future revenue, and a condition behind revenue is the necessity to focus on content quality. If the game itself is of good quality, it may bring some consumer-oriented, non-investment value, becoming a "robot" that continuously generates profits and digital productivity.

Under this premise, our content production features many AI-driven virtual beings that can interact. We also provide a cloud gaming version to expand to players in developing countries. In short, we hope to increase the user base and make the entire ecosystem more sustainable.

Chain Catcher: In what aspects is AI applied in the content production of your blockchain game products?

Wu Xiankun: First, we want to define a new narrative experience for AI interaction, making the user’s gaming experience more dynamic and personalized.

Secondly, we will make some attempts in financial attributes, such as issuing an AI to compete against other players to improve matching efficiency and help users earn income while playing games.

If we were only making games, we could indeed abandon the AI content, but we hope to continuously explore the possibilities of AI. Moreover, if we want to create a self-growing world, the virtual beings within this world need to be intelligent.

Last year, we experimented with AI dialogue, and this year we used last year's model to help users "farm gold." We have many other attempts; in short, we believe that within an identity system, there can be a virtual being to assist me in interactions and dialogues.

Chain Catcher: Why does it seem difficult to create a fun and high-quality game in the current blockchain game market?

Wu Xiankun: First, user demand mainly revolves around spending money. Only investors and those researching this industry pay attention to the entertainment value of games, which does not provide much drive for content production.

Secondly, the most important issue is that people still do not understand how blockchain and games can be combined. What does blockchain mean for games, or what do games mean for blockchain? This fundamental question remains unclear. The current common practice is merely transforming game currencies from traditional games into digital assets. If this is all, it carries gaming risks, and it neither enhances the gaming experience nor reflects the characteristics of free circulation in Web3.

Thirdly, investment is still insufficient. Most blockchain games currently raise only a few million dollars, which is very little compared to the scale of traditional game investments. If the investment is small, and the profit model has not been validated, relying solely on asset trading to recover costs will certainly not lead to the rapid creation of quality content.

Chain Catcher: What does blockchain mean for games? What might the future form of blockchain games look like?

Wu Xiankun: I believe we cannot focus solely on gameplay design, as this is very unsustainable.

The level changes in mobile games will certainly influence every type of game. Regardless of what game you release on your phone, the changes in channels and UI interactions can be utilized by many.

Beyond gameplay, we are more concerned about the impact on distribution. If I am a blockchain game, how should I distribute it? Should I have local distributors, and how should I share profits with them?

Because many projects have a homogenized demand for profit, there is fundamentally no localization in content. In the future, if demands based on content itself arise, will there be a need for localization? And should the operational methods and gameplay in different regions be tailored to local conditions?

Since purchasing power varies across regions, do we really need to share a single data system? Do we need to allocate servers? How much of the content should be on-chain? We need to explore many distribution-related aspects.

Chain Catcher: From B2B AI technology services to creating B2C products, what is the biggest challenge to overcome?

Wu Xiankun: It is not related to experience; lack of experience can be addressed by finding experienced people. The most difficult issue is defining the nature of the project. In the early stages, it is essential to clarify the correct direction in mind and how to give it vitality.

When definitions are unclear, it is impossible to set successful standards. Some believe it is about asset value and sales or daily active users, while others think these are all illusory. Unclear definitions also mean that solving problems becomes vague, requiring a long time to think.

Chain Catcher: Who has the advantage in making blockchain games, crypto-native teams or traditional game developers?

Wu Xiankun: The difference between crypto-native teams and traditional Web2 players is not that significant. Asset prices have formed some abnormal phenomena under a massive bubble, but when the tide recedes, only a portion can truly become native.

The so-called native teams, whether traditional game producers or those making blockchain games, still need to resolve a fundamental contradiction. If traditional game players want to play interesting games, they can easily go to Steam, but what about the incentives for game assets and ownership? There are many aspects that need to be balanced and coordinated.

The real competitive advantage lies in the team's differing understanding of the matters at hand.

Chain Catcher: Currently, the GameFi user base is still relatively small. How do you plan to break through in the future?

Wu Xiankun: The user base of the entire Web3 world is not very large either. It includes practitioners, profit speculators, and gamers, with overlaps and integrations among them. However, we believe that the proportion of gamers among them will not be low. At this stage, everyone still wants to separate making money from playing games. Even industry insiders may not choose blockchain games when they want to play. However, everything has pros and cons; a small user base means that it is likely to become one of the fastest-growing branches on the blockchain in the future.

The current trend seems to have shifted from emphasizing tokenomics to emphasizing the novelty of gameplay, but I personally believe that the diversity of gameplay is not the main driving engine for the next growth of blockchain games. Instead, we are more focused on changes in distribution structures.

In industry development, everyone should respect natural laws. It requires investment, production, and distribution channels, followed by the need for funds to enter and produce richer products and business forms, thereby attracting more innovative creators and capital inflow. This is a continuously spiraling process.

Many people have misunderstandings about the blockchain gaming industry, feeling that projects seem careless and games have not made breakthroughs. In my view, sometimes following the market development laws too quickly may not be an advantage. Through continuous efforts, everyone will gradually find a balance.

Chain Catcher: What new plans do you have next?

Wu Xiankun: First, we definitely need to ensure the quality of the games. Secondly, we will continue to explore the changes that blockchain technology may bring to other aspects of game distribution through ecosystem projects.