Animoca Founder: Web3 in My Eyes, an Era Belonging to the Community

Author: Yat Siu's speech at Shanghai Wanxiang Blockchain Week

Host: Next, Yat Siu, co-founder and executive chairman of Animoca Brands, will share with us on "Marketing in the Era of Web3 and Digital Ownership." Due to scheduling conflicts, Yat is unable to be here in person and will share his insights online. Let's welcome Yat.

Yat Siu: Hello everyone, my name is Yat Siu, and I am the chairman and co-founder of Animoca Brands. I am very pleased to discuss marketing in the era of Web3 and digital ownership, as well as how Animoca Brands is involved in this space.

I will share a few slides to present today's topic. Before that, let’s briefly review what Web3 and digital ownership actually mean. Starting from the beginning, many years ago, about thirty or forty years ago, there was Web1, which was a read-only web. Then came Web2, which introduced a read-write web or social web, like Facebook and TikTok, where users generate content, and all data belongs to the platforms. Now we have Web3, where individuals own their data, and we cannot own a part of the internet's data framework. The value we accumulate online also belongs to us, marking the dawn of a new era for Web3—an era not controlled by platforms, but by communities. Everyone here, as end users, has the ability to own a part of the network they participate in. This means that when you share videos and photos on a platform, you own a part of that network. This is the true meaning of Web3: ownership.

The impact of Web3 on marketing is that it unites network participants to work towards a common goal. Everyone is interested in collaborating to share the success of the network. In Web2, most of the value belongs to investors or entrepreneurs, with very little returning to content creators. Outside of entertainment and social fields, users gain almost nothing. In Web3, the entire network shares value in a relatively equal manner. The most successful Web3 models are those that can share the most value.

For example, in the early days when everyone was buying NFTs, the prices were very low. The reason for the low prices was not that they were deliberately kept low, but to invite more people to participate, especially during the early stages of issuance and construction, whether it was Cool Cats, Bored Apes, or Mocaverse, all aimed at attracting more participants so that everyone could start from scratch. Once you participate, you become a builder and stakeholder of the network. The value you create is not just your own value or the value owned by others. Throughout the product development process, you will share value. If my NFT becomes a very successful NFT, the NFT you collect in another country will also share in that success, and people will see that success, leading to visible results.

Lastly, let me give an example of how early stakeholders shared value in Web3. Every time you share a photo on Instagram, you gain a certain ownership because you add value to that network. Another impact on marketing is that we now have interoperability and ownership economics. This means your NFTs or digital assets can be used across multiple platforms. These assets form a platform on NFTs, becoming a focal point. For instance, you can use NFTs in multiple games or across different protocols on various platforms, and you don’t need to get permission from the game developers because these are your assets. If you want to buy skins from your favorite game, you can use them not only in one game but also in others. We emphasize the importance of virtual asset ownership in gaming because most gamers today are involved in the trading process of virtual assets. Although they may not own virtual assets, over three to four billion people play games, and China is a great gaming market. Global spending on virtual products exceeds $100 billion, primarily based on rental fees. The underlying reason is that we believe these goods should belong to gamers to enjoy the benefits of capital. When we turn purchased items into owned items, we can enjoy the benefits of capital.

Why is marketing important? First, we need to understand the basic principles behind these types of games. Taking the most famous company as an example, its free game conversion rate is less than 3%, meaning that most people playing games today do not pay, and only 3% are paying users. In some parts of the world, they refer to this as VIP gaming, which is a way to play mobile and computer games for free.

In this regard, 97% to 99% of people will never pay. They think they are playing free games, but in reality, the remaining 1% and 3% are the entertainment targets. If free players do not play games, these 1% and 3% will never pay because no one plays games with them, making it a great example of shared value. Now you provide entertainment services to others, and as a free player, you should receive compensation; this is the mechanism of gaming in the web. You can measure the value it brings, and blockchain can show you its transaction rate.

Another way to view the art of marketing is how we think about such marketing. Last year, global advertising spending exceeded $100 billion. If we think carefully, in some global industries, the cost is $200 billion, half of which is spent on marketing. Not to mention the revenue share given to Apple and Google. Most of the funds are spent on the world's largest advertisers and advertising platforms, such as Facebook, Google, Apple, etc.

From this revenue, how much goes back to the gaming industry? In fact, it is very limited. But in Web3, what we can do is instead of paying this money to advertisers, we can provide value directly to players through NFTs. This is why people start giving away NFTs for free; it is not because they want to do charity, but because it is a marketing method. Rather than giving money to platforms, like millions, they prefer to give it to players, saying this is an asset. If you like it, you can play with it; if you don’t, you can decide to sell or keep it because it is your asset, allowing for free disposal. This forms the marketing approach of Web3, which is free NFTs or free NFT distribution, becoming an effective marketing method with a high success rate. By giving these people NFTs, you significantly contribute to the game ecosystem or platform you build. This increases the probability of retaining players by providing value, which is why every user’s overall income in Web3 far exceeds that of Web2 based on web games.

Another example is the NFT example in the education sector. Through NFTs, the entire intellectual property contract is embedded in every transaction, meaning I can now sell NFTs to others or push them to the market while also gaining capital benefits. This means that among teachers, the earnings from content creation can be better shared, allowing new owners to benefit. These new owners will also engage in content marketing and distribution.

This method is very effective. In places like Venezuela and Southeast Asia, teachers earn only $10 to $20 a month, and they need additional income. They sell the content they create as NFTs, allowing them to earn more money. It also creates another market channel because marketers can help teachers. Since teachers do not understand marketing, combining the two can lead to better promotion, which is the essence of our Web3 philosophy. It is about allowing both owners and creators to earn more income, rather than just the platform.

This model is the one advocated by Web3 marketers. For instance, sometimes you own the property rights to a product, such as water, games, sneakers, etc., which can be owned by different people and promoted well. Web3 also acts as a sandbox, where everyone can make better decisions and promote products more effectively. In our Web3 promotion process, we can better engage with customers. For example, we can have good on-chain operations, and our incentive mechanisms are more refined because often your customers are NFT owners who care about your success and the success of the chain. However, in the Web2 model, the success of customers or companies or platforms has nothing to do with the customers. At that time, platforms were more focused on extracting more value from customers. But in the Web3 era, the model has changed; we share value and share economic value with customers. We see customers becoming a part of our business, fostering a sense of inclusion. In this process, we also hope to help customers achieve better success, and customers also hope our chain can be more successful. This is different from past models. In 2022, NFT sales reached about $24 billion, and we saw that 90% of the value was captured by NFT creators and owners, with those who truly create NFTs earning more money. This revenue-sharing model is fairer. But in Web2, it is not the case. For example, the world's largest music library platform pays only $8 billion in copyright fees annually, making its revenue distribution unreasonable. However, in Web3, thanks to blockchain technology, we can achieve a more reasonable distribution.

Web3 gives us a brand new market, and in this new market, there are decentralized autonomous organizations (DAOs) based on communities. We saw that last year, it was $12 billion, roughly equivalent to the income of a small country. We see corresponding systems, products, and services that allow us to develop and collaborate better in autonomous communities and organizations, providing better revenue distribution models and more possibilities.

What we are currently doing is launching the Mocaverse platform, which is an interactive platform with many autonomous organizations that will also join the NFT system. We have also established a global model, hosting seminars and various activities on this platform where many people can participate. You don’t have to be the owner of an autonomous organization; others or observers can also participate in our activities. This is what we can do in the Web3 era; we can engage with these networks.

Additionally, we can create an identity system where people can find each other's identities and connect appropriately, which is also a decentralized identity system. This means that through the Mocaverse platform, we can participate and find more customers in the Web3 era, which is a very efficient system. Compared to other markets, including launching new content and new games, we can obtain higher quality customers through the Mocaverse identity, and these customers all have Web3 identities. This is also a project we are working on.

We find Mocaverse very useful because we now have many Web3 investors and a large user community. We hope to leverage the community network to better benefit the public, allowing everyone to participate in the network through the Mocaverse platform.

Additionally, we recently announced that we raised $20 million to continue building our Mocaverse project.

I hope the content I shared is very useful to everyone, and I have discussed marketing in the Web3 era and the Mocaverse platform.

Also, our Animoca Brands focuses on the network effects of the Web3 era. We hope to share these network effects with everyone, allowing all users to become owners and participate in the network.

I hope my speech is helpful to everyone and enables you to better enjoy the new ownership in the Web3 era. Thank you all!