Blockchain gaming platform Forte closes $185 million funding round, valued at $1 billion

Forte has raised $185 million in funding for its blockchain gaming platform, valuing it at $1 billion. Griffin Gaming Partners led the investment in this latest unicorn to drive the emergence of the blockchain gaming market.

The deal with Forte comes a week after Hong Kong-based Animoca Brands raised $88 million at a $1 billion valuation to make games based on blockchain (a secure, transparent digital ledger that supports cryptocurrencies or NFTs).

San Francisco-based Forte does not make such games itself; the company is an infrastructure company that uses blockchain technology to enable a new kind of gaming economy. It can make things like the cryptocurrency wallets that blockchain games use to store player tokens. The wallets must be secure and ready to convert in-game currency in the form of cryptocurrency tokens into a variety of cryptocurrencies, such as ethereum or bitcoin, which can then be converted into hard currency currencies, such as the U.S. dollar.

“We set out to create a platform that would allow game developers of all sizes, including the world’s largest publishers, to easily integrate blockchain technology into their games, thus enabling players to own and trade digital goods and currencies with each other, true property rights, and create thriving economies from which both players and publishers can benefit. ” Josh Williams, CEO of Forte, said in an exclusive interview with GamesBeat.

He added, “Almost a year ago, we just launched our first game, the Beta platform. In the past year, we’ve grown very quickly and we created our millionth wallet, which is a crypto wallet for use in games where real players hold token assets, including virtual currency and NFT. in the span of a year, we’ve had 10 live games and grown very quickly.”

Williams said the company created these cryptocurrency wallets as part of its efforts to help game developers and gamers transition to blockchain gaming.

In an interview with GamesBeat, Nick Tuosto, co-founder of Griffin Gaming Partners and managing director of LionTree, said.

“We love the idea of creating new games starting with blockchain technology and we think that blockchain games will be an explosive success as blockchain technology brings unprecedented success. I think about the way my friends and I performed the magic trick The Gathering in my youth. Buying cards is like an investment. In that game, you use the cards for the core game, but you can trade them with friends and expect your investment to appreciate over time because at any time you can sell them on eBay and recoup your investment or even make a profit.”
In contrast, in today’s traditional games, you put money into the game and can’t get it back, as if you were a serf working for the lord of the manor, where you rent the land without actually owning it. For example, in free-to-play games, you can buy items with real money. But you cannot remove it from the game or sell it to another player. It’s like you’re renting the item from the game publisher instead of buying it and getting the benefit of ownership.

“If someone buys a durable virtual item in a video game, that item is worthless from the moment they stop playing the game,” Tuosto said. “We think the game will absolutely prove that blockchain technology will build new popular products from scratch. But we also found that Forte’s approach is specifically designed for large publishers.”

Tuosto said his company surveyed the industry landscape and talked to dozens of companies in the blockchain gaming space before deciding to back Forte.

He adds.

“The last thing a publisher has to do is risk disrupting the game’s economy or player engagement after a successful build. What Forte’s unique integration approach allows is a low-risk, highly compliant approach that allows for the use of existing games to implement NFT and blockchain technology at scale. In these games, we see incredible potential because the scene is already there. Players spend hours a day interacting with the content. They bundle this content with content in a fairly basic way. In some cases, their personal identity is invested in that game. Therefore, the ability to buy and trade it or show it to friends has tremendous value to players.”
Community Economics
The Forte Economy technology, available by invitation only and still in beta, is designed to address the growing misalignment between game developers, players and fans. It allows for the creation of new gameplay and world designs that directly support the long-term health of the game through token-based collaborative economics, or what Forte calls “community economics.

Forte’s history dates back to 2019, when Kevin Chou and Josh Williams founded the company. chou took mobile game publisher Kabam to $400 million in annual revenue and 1,000 employees before selling it to Netmarble and FoxNext Games for nearly $1 billion. FoxNext Games (now owned by Scopely). He also co-founded the eSports organization Gen.G with former Kabam COO Kent Wakeford and co-founded Rally, which creates blockchain-based tokens for creators and influencers to provide rewards for fans. Chou’s credibility is one of the reasons Forte has achieved such strong momentum and partnered with so many gaming companies. after Rally was established, Chou moved to Rally and Williams focused on running the redirection.

Chou said in a past GamesBeat interview that he and Williams started the company to solve a problem in the industry that was overly dependent on a handful of players generating revenue in free-to-play games, where 2 percent of players would pay real money for digital goods. The system was broken because game companies had to spend a lot of money to promote their games to get the 2% paid. When it comes to premium games, players pay no more than $ 60 for a game. but these games can cost hundreds of millions of dollars to produce, creating such a huge risk for AAA developers that many decide to focus on free-to-play or mobile games.

Chou believes that blockchain can create a new cryptocurrency base for peer-to-peer economic games. He also sees it as a way to empower communities. In multiplayer games, players often form groups like clans or guilds. Clans might be able to use blockchain rewards or items to motivate their own players to find a quest or do something for the clan. This means that players can control what happens with a blockchain project, not just the game developers. Rally is one of Forte’s customers, and Chou runs another company that does exactly that kind of business.

Williams said.

“Video games play a vital role in the lives of billions of people, but it’s more difficult than ever to monetize them. We envision a sustainable, equitable ecosystem for gaming and are building the necessary infrastructure to make it possible. We are proud to work with Griffin Gaming Partners and others who share our vision and are helping us bring our technology to game developers, players and fans around the world faster.”
The problem with blockchain gaming
One of the biggest problems is the “casting” and transfer costs associated with trading NFTs from one participant to another. Blockchain uses a large peer-to-peer network of computers to verify transactions. If one computer in the chain is lost or tampered with, it’s no big deal because all the other computers in the network can verify the data. But those who operate the computers must be rewarded, and the cost of those computers can be high. Thus, there are “gas” or energy costs associated with blockchain transactions. Companies like Forte must pay these fees or rely on other blockchain companies to create low-cost networks that can sit on top of cryptocurrency networks.

Blockchain technology is still in its infancy,” Williams said. It’s very difficult to use and scale. If you look at what’s happening in the decentralized finance (DeFi) and NFT space, there are some big issues today. One is capacity, and then the costs associated with transactions. It’s really important for getting this technology to work on a global scale for mass market and a game that has tens or hundreds of millions of users per month. That’s the fundamental technology that has to be built.”

User experience is another big issue. Cryptocurrency wallets are hard to use. Someone can crack your account and steal your money. Or, if you lose the code associated with a cryptocurrency, it’s gone forever. No one can retrieve it for you. These factors turn crypto wallets into complex beasts that are difficult to use for mainstream consumers.

“If you try to buy NFT or buy cryptocurrency, then getting the wallet is a very tedious process to make sure it is set up correctly and that your transaction will be completed. So, our platform takes care of all those complications.” Williams said. “We offer a very smooth, embeddable, all-white-label wallet. This allows publishers to integrate this functionality into their games, thus allowing players to make purchases.”
Finally, game developers must be extra careful about money laundering practices. They must know who they are doing business with and comply with each country’s anti-money laundering and money transfer laws.

Williams said, “Our platform provides this functionality for publishers and is really a framework to ensure that all transactions are compliant. So all three of those things were fundamental challenges to overcome to adopt the technology and open up revenue streams and economic opportunities for publishers and participants. That’s why we spent a lot of time and brought in such a strong team to build these things.”

How does it work?
Integrating blockchain well into games is difficult because most of the infrastructure actually needed doesn’t exist, isn’t mature enough or isn’t applicable to games. Tokenizing game items so they can be uniquely identified and tracked is relatively easy. But to really realize the larger market opportunity that Griffin and Forte believe is possible (and to solve the monetization problem), you need a simple wallet solution (most mainstream people have given up on blockchain because of this), developer tools, good games, a full token economy model (not just selling collectibles), a marketplace, a source of liquidity, a mechanism for people to mechanisms for “cashing out”, compliance, etc.

Each of these technical challenges is enough to build a complete organization. Forte built all of this because it didn’t have enough solutions at launch and could ensure that the end-to-end experience was as smooth as possible for developers (everything they needed) and players (everything worked as it should). This is something that has been done for the past few years.

Forte doesn’t have to charge a blockchain transaction fee, but instead makes money in an interesting way.

Williams said.

“We build markets between the cryptocurrencies and virtual currencies that players and publishers want to use in their games. The inventory we provide provides us with a sort of balance sheet to make a market. There are no transaction fees, but when prices are low, we can inventory assets and buy more assets to provide more liquidity, and when prices are higher in the ecosystem, we can sell more assets, which will provide us with a long-term revenue stream.
He adds.

“When users want to cash out, they will have to wait for a fortuitous coincidence because there is another player who wants to buy the same type of item at the same time in the same price range. But this would be a less liquid market. This would make the publisher’s economy smaller. Therefore, what we create is an automated market maker. This market maker does not charge fees, as it uses mainly collateral and inventory assets. Therefore, it retains a list of assets that can be used to generate revenue.”
It can buy cryptocurrencies and other tokens in bulk and can immediately provide in-game liquidity to players who want to sell something. Forte will first wait for that buyer to purchase the item and then immediately give the buyer some money instead of waiting for that seller to show up as a buyer. Forte can then sell the item to someone else. In the process, Forte can arbitrage the item, buying it in bulk at a low price and selling it at a higher price to make money. It’s an automated process. Williams calls it automated market making.

The most difficult but perhaps most critical aspects of the above are liquidity and compliance. Forte believes it is possible to solve these problems directly alone. But successfully building a blockchain game will face too much friction if people can’t readily withdraw money into real-world currencies and do so in a way that complies with regulations, Williams said.

Forte has built its platform to be blockchain agnostic to maximize liquidity. It is working with multiple Layer 1 blockchains (such as Ether or Bitcoin) and is obtaining the necessary licenses to transfer funds and provide education to policymakers so that developers can develop a game that people can play and make money from. It also uses companies that develop 2-tier solutions where transactions can take place faster and at a lower cost.

Finally, Forte focuses on the revenue side of liquidity. This way, developers and participants located higher up in the stack do not have to pay for the use of Forte technology. Automated market making solves many of the pitfalls Forte encounters in the existing financial and DeFi markets.

It uses the Interledger protocol, which enables liquidity on any blockchain. From behind the scenes, this is a way to see seamless trading from the user’s perspective.

Williams says, “The whole purpose of all of this is to really remove friction from the user experience and make token assets work the same way digital commodities and virtual currencies work in the game today.”

A wave of growth

In an interview, Williams said 25 game developers with more than 8 million players are actively using Forte’s technology. More than 5 million NFTs have been minted (or recorded on the blockchain) and used in games.

“We will be scaling up quickly to support our customers,” Williams said.

Active game projects in development include new experiences from industry pioneers such as Will Wright, creator of The Sims, and Jeff Tunnell, founder of Dynamix, the studio behind Star Siege: Tribes. Previously announced development partners include Hi-Rez Studios, Penrose, nWay, GC Turbo, Other Ocean, Kongregate, Magmic and DECA Games. williams said the company is helping these developers develop games that take advantage of the unique aspects of cryptocurrency and NFT.

We will continue to expand through this financing,” Williams said. Globally, we have a large number of games today that are actively integrated with our platform. The total audience of players in these games exceeds the 100 million monthly active users in all of them. We believe that the world’s largest publishers are realizing the potential of the blockchain economy and the in-game token economy. As a result, we will scale up really quickly to support our existing customers.”

New and existing investors, including Union Grove Venture Partners, Andreessen Horowitz (A16z), Battery Ventures and Canaan also participated in the round. The first round of institutional funding (Series A) will provide the company with capital to accelerate the development of its end-to-end blockchain platform, which enables developers to create fungible and non-fungible tokens (NFTs) and build scalable token-based gaming economies.

Forte has more than 100 employees, including those from Unity, Ngmoco, Riot Games, Electronic Arts, Sony and Rockstar Games, among others. Griffin Gaming Partners was founded in 2019 by Tuosto; Peter Levin, a former executive at Lionsgate; and Phil Sanderson, a venture capitalist with more than two decades of experience in the gaming investment space. Griffin recently raised more than $2.5 million for its fund recently raised more than $250 million. But as you can see, it has placed a huge bet on Forte.

Tuosto says.

“What sets Forte apart is that they can interoperate with many other partners. We do think that Forte is incredibly attractive. We think it’s the right team and the right strategy. As for blockchain gaming, we think this industry transformation has the potential to be completely disruptive. When we consider the in-app purchase market, this market is almost incidental if you follow the early development of mobile devices. Did you know that in order to download Angry Birds you need to pay $1? Obviously, the model so popular in Asian free-to-play economics makes more sense. We think that if you unlock the potential of these game economies that already have huge engagement, then this is one of those rare moments in the market that could take a higher order feature (perhaps an order of magnitude larger).”
One of the things Tuosto believes this model will enable is what I call the “leisure economy,” where we all get paid to play games. Here, people like ribbons and user-generated content creators can gather fans and make a living selling merchandise to those fans or entertaining them. They can make a living from their favorite games and get a return on their investment through the growth in the value of their investments like NFT items. This economy also benefits game companies.

“You can let modders modify your game and earn from monthly sales and extend the life of the game,” Tuosto said.

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