We are in the first wave of web3 games, and some believe that games don't have network effects built into their development or long-term strategy. In this episode, listen to NFX partner Gigi Levy-Weiss as he dives into the world of defensibility within the gaming industry, sharing the 4 layers of network effects, the future of virtual goods, and a case study on Steam - the leading platform for video game development.
This is an audio version of episode 10 from The Network Effects Masterclass, curated for audio and listening on the go. For the full video experience, transcripts, and recommended reading, join the free Network Effects Masterclass at - NFX.com/masterclass.
(0:00) Introduction to the episode and foundation of NFX
(2:38) Understanding network effects in games and misconceptions
(3:29) Game liquidity, player matching, and personal networks
(5:15) Layers of network effects in games: Game network and personal utility
(6:29) The marketplace layer of network effects and the bandwagon effect
(8:16) Defensibility and longevity of top games due to network effects
(9:39) Introduction to Steam and its marketplace network effect
(12:34) User-generated content and virtual goods in Steam's marketplace
(14:40) Network effects in Steam, the bandwagon effect, and its 30% rake on transactions
(16:50) The challenge for competitors to replicate Steam's network effects
(17:13) Concluding remarks and a preview of the next episode
