Rudy Koch: 0:00

But in fact, while we were trying to figure it out, platforms like Telegram came out of nowhere and took the lead, and Web3 consumers chose the platform they wanted.

Joeri Billast: 0:11

Hello everyone, and welcome to the Web3 CMO Stories podcast. My name is Joeri Billast, I'm your podcast host, and today I'm excited to be joined by Rudy. Hi Rudy, how are you? Hi, great. Thanks for having me today. And you might know Rudy as Rudy Koch. He founded Mythical Games, one of the first unicorns in Web 3 games, and he exited in 2022 at 1.25 billion. He's the inventor of 100 of the most important patents in games and Web3. He has been shipping some of the most prolific games in the last 15 years: 5 Call of Duty games, two World of Warcraft expansions, one Disney MMO, and a handful of number one mobile games. That's impressive, Rudia. So I mentioned hey, you build games at Disney. There is also Activision, Blizzard, before helping create a Web3 unicorn. So what invisible shifts did you see in player behavior that convinced you Web3 gaming could be inevitable?

Rudy Koch: 1:24

Yeah, you know, I I don't think it was necessarily a sh, but rather a behavior that we were already very familiar with in games. When blockchain came about and I started looking at blockchain, it was very familiar to me. The idea of ownable digital items that had value, this was a concept that we've had in games for a long time, especially games like World of Warcraft. We had what's called gray market in the gaming industry, where players, passionate players, would buy and sell digital game items on eBay and other uh websites, even though the game didn't allow for it, or in spite of the game not allowing for it, right? No, none of the game developers or none of these games ever envisioned this behavior and never planned for it. You know, they would sell items to the player, or the player would be able to grind items in the game. They never imagined, oh, well, now the players want to trade them with each other or sell them to each other for real money. And this has been going on for quite a long time. In the late 90s, uh, I was playing a game called Ashwan's Call, published by Microsoft. Uh, that was an early MMO. Same thing. You had items that people really wanted. You could go on to eBay and sell them for real money. And back then it was very early. So you would go, you would find a uh a buyer on eBay, uh, they would give you the money, uh, and then you would go in the game and go stand under a tree and wait for them to come along so you could give it to them. So it wasn't, it was very, you know, it was a very difficult process if you wanted to do it. Uh, and it wasn't very safe. I mean, there was a lot of fraud. This is why they're called gray markets. Um, but this behavior pattern has been around in games for quite a while. I mean, the 90s, we're talking like 30 years now. And so when blockchain came along, it was instantly captivating for us in the gaming world because we saw an opportunity to, or a technology that would allow us to really harness that behavior rather than it being something that game developers fought against these gray markets, tried to shut them down because of fraud or or whatnot, you know, or because it wasn't part of the game ecosystem. So therefore, it shouldn't exist. Right now with blockchain, we were really excited by the idea that we could uh tap into this potential. We could actually facilitate these gray markets. That there was a segment that really wanted to do this peer-to-peer trading and selling of items. And yes, digital items have value intrinsically, especially those part of that are part of a game. And so, yes, blockchain came along, we were instantly captivated by it, and it felt like it was a natural transition to what was already happening in the space.

Joeri Billast: 4:17

Now, how now looking back and how you explain it, indeed, it makes total sense to go in that direction, actually. Now, looking back at mythical games, what is made one strategic decision that most marketers underestimate when they try to bring mainstream audience into on-chain experiences?

Rudy Koch: 4:37

Yeah, you know, I mean, I think we went through it all uh at mythical, you know, being in so early in 2018, um, we got to experience, you know, quite a lot of the adoption cycle from a very early stage. And, you know, what we saw was first and foremost, you know, a lot of excitement and enthusiasm around the technology itself. There was a real interest marketing and selling blockchain and NFTs and this technology is groundbreaking, it's going to change everything, it's going to make products better, it's going to make monetization better, right? And uh what as we went through this process, and I think this is true of any technology and any period in time, is at the end of the day, what's important is that you're putting out a product that consumers enjoy and want to participate in. You you're not marketing or selling a technology is not the path to mass adoption, because at the end of the day, most consumers they're not playing a game because of the technology it uses, right? Nobody plays Call of Duty because it's built on AWS or Google Cloud or whatever, right? No, that's not a marketing point, right? They you do it, they play it for the experience because it's fun, because their friends are playing, because you know, in the case of Call of Duty, an incredible uh FPS experience, a multiplayer experience. And so initially, when you want to go, well, this is a game with blockchain, you want to market that as a message, um, it becomes more about the technology, which isn't as exciting. You know, yes, there was a Web3 community that really resonated with that. And there was a big up uh swell, I guess, in what what we called, what was it, pay play-to-earn games that were, you know, marketed to Web3 where being on a specific chain mattered, having NFTs mattered. Um, but that's a segment, right? The mass market, which is what you alluded to, they're not really dialed into that stuff. What they care about is is this a fun game or is this a great product? It doesn't even have to be a game. Whatever product that you're doing, what is it that it's doing that is interesting to the consumers? And how can we market or talk more about the experience that it's bringing rather than the technology that it's using? What experience is blockchain providing? So over time, and and initially that was very difficult to balance because the initial interest did come from crypto people from DJs. And so they very much wanted to hear about which blockchain you were on, especially as we went from 2018 three blockchains to now we've got over 100 blockchains. You know, there was definitely uh an early consumer base that was really passionate and really cared about which chain, you know, these chains were tribal. You know, there were those who were diehard Ethereum, you know, and nothing else was going to replace that. But now we've seen so many chains coming out with different strengths and tool sets. And Ethereum still rules, but there's certainly a lot more options. And, you know, so there was a group that really cared about that initially. So as you were coming out with ideas for okay, what could we do with blockchain? There was a group that you had to appeal to, and marketing to them and was important, and they cared about the technology. But uh but as the sector matured and you know, we wanted to expand beyond this core group of early adopters into mass market, we learned that we had to pivot our marketing, like I said, messaging and focus more on what's the product, what's the experience, what's the unmet need here, why do people you know consumers want to consume our product? And it can't be just about the technology, it's what are we bringing to the table. And I think that's where it gets really challenging for us at Mythical. You know, we coming from the gaming world, like I said, you know, Call of Duty and World of Warcraft and these kind of games, you know, we came at it from we do want to build products first. Great games will bring consumers in. The technology is just an enabler. Um, so that's the perspective we came in with, anyways, but not to say it wasn't a challenge, right? Still threading that needle. And I still think today you still have a little bit of that dichotomy, and no one's really been able to really uh navigate it well yet, right? We don't quite have that mass market product out there that's Web3 based. And and I think part of the challenge is how do you message to this sort of bifurcated audience where one is about the experience, you know, the mass market experience in the product, and one is the smaller but really passionate crypto people who care about the technology. It makes it very challenging to sort of navigate your messaging.

Joeri Billast: 9:41

Yeah, we had the NFT hype and the metaverse hype, and people say web three is hot, but you have the gaming people, the typical gamers, and they're not Web3 or they don't care. No, you mentioned Call of Duty and World of Warcraft. In gaming, community is important. In Web3, community is also a thing. What did those worlds use gaming worlds teach you about community psychology? And maybe there is a difference between the gaming community and the key community, or they are alike.

Rudy Koch: 10:11

Yeah, I mean, for gaming, community is everything. You know, if you don't have a community, then you you don't have you don't have a game, you don't have a product, really. And you know, community is a massive focus for us, even in traditional game development, fostering a healthy community, fostering a passionate community, being engaged, different development teams. I went from Disney to Activision to Blizzard, and every team has their own philosophy on how to cultivate community. And but it's very important, right? And what was interesting to me as we were getting into Web3 is that Web3 had introduced new tools that we could use for community, and it expanded the definition of what community could be and where as well. For example, in traditional gaming, we had regions around the world that we would test monetization, right? And so if you were, if we found regions that were would monetize, those are regions we would invest in. There were maybe some regions out there that wouldn't monetize. And so they weren't invest worth investing in. And so then over time for traditional gaming, there were really sort of big markets that we would go into, and those would, that's where our communities would be, our strong communities would be, and that's where we would pay attention. But with concepts like what Axie Infinity did with Play to Earn and what my friend Gabby over at YGG did with guilds, you know, what we saw was communities blossoming in regions that we'd never had before. You know, Southeast East Asia, for example, became extremely important communities, not just because, not, and it wasn't measured just by how much they spent, but how much they could grind or how much they contributed value from selling digital items and participating in the economy, right? We also saw concepts like DAOs and even social tokens for a brief moment were a big thing, but I think they got surpassed by DAOs. But these sort of new tools were fostering and driving community. And I think that was that that's some of the most interesting aspects of Web3 for me. You know, the concept of governance now democratizing certain decisions to the community. I think all of this stuff is very interesting. And I think this gave us, and again, not just games, but any sector, more tools to be able to drive community. But in particular for games, community is such an important thing. It was really interesting to see all these new concepts come about and look at ways that we could integrate them into our world.

Joeri Billast: 12:53

Yeah, absolutely. I think community, that community is also the new marketing, as I call, as I say it in my book. Maybe you saw it, have it in this book, The Future CMO. I talk a lot about that, about community. Now, except of all your gaming experience, you're also an advisor for budget penguins, for pixelings. Now, you mentioned community in the web 3 gaming markets. There is also things like creating the hype, there is IP, there is culture, and there needs to be user acquisition. How do you balance all those things in a crowded market?

Rudy Koch: 13:26

So, I mean, you touched on something that I think is very challenging in the gaming world and in web 3, and that is user acquisition. You know, I think you've got if you let's say you take a game that's multiplayer, you want to make sure when people are coming in to the game and they press play, that there's a game on the other end, there's someone on the other end who's going to be able to play against you, not just sitting and waiting and waiting and waiting, or you get matched against a bot and you know that it's a bot and it's not the most optimal experience. But what that means is as a developer is you need player liquidity so that there's enough players in the system at any given time that, you know, some if you want to play, you can play. And in web 2, there's been some challenges with UA over the last few years. The Apple has changed their policies in terms of privacy, and that's affected user acquisition and made costs per install go up, which for gaming in terms of free-to-play is a margins game. When the CPI goes up, it makes it very challenging to be successful in that. And we've seen the repercussions of that. But then you go to a sector like Web3, which is quite new. And it's it's strange now, you know. I mean, we've been seven years, it's 2025 now, you know, seven years since I joined the space, and blockchain was around longer before even longer before that. It's strange to still call it new, but it I I say it's new is because some of these core concepts like UA haven't been solved properly, right? Like, so if I was doing a Web3 game, you know, one of the questions was, well, where's the user base? How do I market to them? How do I do UA? You know, is it just through traditional means like Facebook? You know, I remember, I mean, we were in early enough to remember where Twitter and Google and all of these platforms had banned any kind of crypto ads. And so, you know, obviously that's no longer the case. But, you know, it was a question of like, well, how do we solve the player liquidity problem? You know, when you go and you build on, let's say you look back in um, I don't know, like 20 years ago, where Zynga was at its peak, and you know, Facebook, you were building games on Facebook and you got player liquidity just by being on Facebook, right? Um, and then blockchains came along and they were sort of the new platform to build on, but they didn't come with a giant user base along with it. A lot of the marketing for blockchains was around how fast our chain is, how low the gas fees are, right? Which is important, but you know, that's only one part of the equation. The other part is, well, you need users, right? And so I was quite interested in chains like base that Coinbase has put out, right? Because that's an example of a chain that's part of a larger ecosystem. And there was a few like that where they have big user bases connected. The question is now, how do we see this sort of manifest into a proper go-to-market opportunity for products so that we can tap into those users so we can drive UA. And I think there's a real opportunity here that's not really being quite tapped into yet, right? Like, and I know there's, you know, I've talked to folks at Coinbase, and I know there's definite interest from them. They see the opportunity. It just takes time to get all of this together. You know, and I know that they've announced recently uh a Super DAF as a means to sort of do those kind of solve those kind of problems where you can launch your product on their super DAF, and then that gives you access to their user base. I think these are really great to, you know, initiatives to watch, see how they play out, see how they help the user acquisition challenge. But at the end of the day, when I what I see all of this, I think all of it is very positive and very uh healthy for the sector. But what I see is that ultimately, you know, we're gonna have to still go back to traditional, we're gonna have to find out how to make traditional UA work for us. Because at the end of the day, we all want the mass market. And yes, we're seeing more and more of those getting onboarded onto ecosystems like Coinbase. Coinbase has a massive, you know, Web2 audience because it just makes it easy for them to be in crypto, but it's not doesn't have everybody. And so we're gonna have to figure out, you know, as we go, like how do we drive user acquisition? You know, it's easy to say, well, just put out a great product and they come. And I think that's a mistake because there's a fluke product that does that every now and then. You know, you look at uh, I mean, Ethereum is a great example or just the hive mind just took over and it and it became uh its own ecosystem that sort of self-red itself, right? But that isn't the case with any other blockchain. Ethereum was just a fluke in that way, or you know, one of the early, you know, one of the first or lead first that was able to do it. Um and I think the same is true with consumer products, is that we're gonna have to find ways to be efficient with UA and marketing, and we're gonna have to find ways to make it so that as teams are coming into the space and they want to launch products, there's a clear path for them. Otherwise, where's my ROI? And that's a big challenge.

Joeri Billast: 19:01

That makes total sense. And also to go where users are already there. Now I had a few podcast episodes around Telegram and gaming because a lot of telegram, and they it's a way to onboard them actually in Web3 or in the gaming. Any thoughts about yeah, Telegram and gaming on Telegram?

Rudy Koch: 19:18

Yes, absolutely. I mean, yeah, I I'm that that one should have also been one of the ones I mentioned, along with Coinbase, which have managed to capture a huge user base, right? And they've launched on, you know, Telegram is very unique in the way it's captured a huge user base. Well, I think it was, I don't know, a billion users on there, right? I mean, this is to me similar, more similar to the Facebook example that I gave you, where there's an audience there. There's a, I think it's still yet to mature developer ecosystem. It's still early days, but they're clearly very being very deliberate about uh uh setting up the foundation for developers. And I think that's a very, very exciting opportunity. I think. There's a market there that's growing. There's opportunity there. It's a matter of developers getting out, testing, building, launching, and finding their way through how to deliver great experiences to consumers. But I think that's an example of, yeah, to your point. And it's not just Web3. Yes, Web3 is a massive part of it. And we've uh but there's also a lot of mainstream consumers on there. There's a lot of people on there, right? And we've always talked about, I remember, big debates about okay, which is going to be the first platform to allow crypto? Is it going to be Steam? Is it going to be PlayStation? Is it going to be Xbox, Microsoft? They're very forward-thinking. Maybe they'll be the first. Well, in fact, while we were trying to figure it out, platforms like Telegram came out of nowhere and took the lead, and consumers, Web3 consumers, chose the platform they wanted. And it wasn't Steam, it was Telegram. I think it's very exciting. I think it also leans into something that I'm a big advocate of, a few things that I'm a big advocate of. One is that it's a social platform. And I think the next big wave of gaming is going to be on social platforms. So not just Telegram. I think Telegram is one of the big ones for sure. But I also believe we're going to see games on Reddit, on X, on WhatsApp. You know, these are where consumers are starting to amass, uh, which means there's opportunity. And we've seen it out in Asia, for example, in a market that tends in games tends to be slightly ahead of the West, with platforms like Line, for example. Very mature development ecosystem, you know, launching mini games on their ecosystem is quite lucrative. I believe Disney has games on their ecosystem. So it's very, you know, it's proven and more mature out there. And it's a matter of time before I believe it's going to be uh extremely strong out here. And I think there's a huge opportunity. The other thing that I think it touches on that's really important, the Telegram thing, is that these all these social platforms are basically browser native. They're web, you know, you can't all you you're launching web games. And I think that's really good for the industry. You know, as we look back Web 2 and Web3, we see a lot of very, very expensive failures, right? Games that cost $40 million, games that cost $400 million, right? Concorde, for example, $400 million was dead on arrival, right? Like these are massive failures, massive because of how much money was spent before they figured out it wasn't going to work, right? I think Telegram and these kind of platforms flip it on its head a little bit and go, okay, I mean, you could get a web game out for a few hundred thousand dollars, right? It won't doesn't have to take you three, four years to build. You could build something in under a year, right? Which is very exciting. I think it de-risks the space. We want to we wanna see more teams come out, be quick to market, and find a product market fit, uh, I think will only help our learning curve and the adoption of these kind of platforms and moving them forward. So yeah, I'm glad you brought it up. I'm very excited about platforms like Telegram. I'm very bullish, not just on Telegram, but all the social platforms. I see that sort of the future of gaming, web two or web three, I see those platforms playing a huge role.

Joeri Billast: 23:25

Yeah, that's also the feeling I have by speaking to people like you coming on the podcast or meeting at events. I met people building on Telegram at MemeCon at NFC Summit, and I also had someone on my podcast. Now, a word we didn't mention is AI. I think AI is now accelerating, world building, production cycles, player personalization. Where do you see AI giving founders unfair advantage, maybe in in the new generation of game economies?

Rudy Koch: 23:55

Yeah, I mean it's I'm deep down the AI rabbit hole at the moment. I'm very excited about the technology. For me, I love coming in, you know, once sort of some of the big foundational pieces have been put in, right? Like with Web3, I came in after Ethereum was launched because I'm a consumer product guy. And so I love to take these kind of foundational pieces and look at, well, how then can we turn this into something we can put in front of consumers or what can I build on top of it that would be interesting? And AI has been fascinating. I mean, we get excited in the gaming world about any technology that sort of challenges the way we do things, but AI in particular has been very fascinating. And I think it's fascinating in two ways. One is for Assets developer, we've definitely seen an opportunity to be much more efficient, right? I talked about these spectacular failures that cost $400 million, right? And you know, web games now make, you know, can be cheaper. Obviously, they're not as high fidelity, right? You can't build an FPS, but I still think there's an incredible amount of opportunity there for lower fidelity game, casual games on web. Well, you could take that and reduce the risk even more by having AI on the development side involved in your pipeline, in your involved in your workflow. You know, we've definitely, you know, with my startup that I'm just getting off the ground, my new startup, I'm very excited about. We um we're we're integrating AI heavily into our workflow, and it's been incredible, right? Like you say, like 80% of your best work comes from 20% of the staff, then you know, we can we can really focus our hiring and our as a as a new startup that needs to be lean. You know, we can be very efficient with AI on our workflow and building uh our products, which has been very exciting. But more exciting for me is what we can do for consumers. And I think for us, one of the things that we are really leaning into, and what I'm really looking at is how to leverage AI to create hyper-personalized experience for consumers, right? If from a workflow perspective, AI can be an engineer, but from a consumer perspective, why can't it take on a role like a live ops producer, for example, right? A live ops producer in gaming world is a role that's their job is to engage the consumers. That's their job, right? The game is live, the live ops producer has to think of ways to keep the get users engaged. And so they will do events regularly. And you might have seen this in games in the form of, let's say, a Halloween party because it's October or Christmas party because it's December. You know, if we have now AI and we're experimenting with this, AI filling those kind of roles, how much more efficient can we be with essentially an AI agent that doesn't need to sleep, that's on 24-7, that can get down to every player level, understand what they like and what they don't like. And so for me, one of the things I'm most excited about is what AI can do for hyper-personalized experiences, not just in games, but in other consumer products as well, meaning that I, as an individual, can have an experience that's tailored to me, and an AI agent has the capability to learn about me and get better at delivering experiences that I'm expecting. Okay.

Joeri Billast: 27:21

And by the way, congratulations with your new startup. I'm curious to hear more about this, Rudy. If because there are other Web3 gaming startups out there, if there would be one advice that you would give to them with all your experience, what would that be?

Rudy Koch: 27:37

Yeah, I would say that we're definitely, I think, past the point where the technology matters the most. I I alluded to this already, but at one point in the adoption cycle, people really, really cared about what the technology was. At least there was a segment that did. You know, but I think now more so people are just looking for a great product that fits a need that they have. Well, so, Mike, the question that I would be asking myself as a new startup is like, what is that experience that I'm putting out there? What is the unmet need? What is the market opportunity? Who is the consumer that I'm trying to reach out to and how am I solving a problem for them? Because, you know, you can't just say, hey, we're on blockchain or hey, we're doing NFTs or this or that. Um, it it's not going to, that's not going to land like it used to do in 2020 or 2019 when the hype cycle was really, really big. Think about what how to answer those kinds of questions. And your first answer might not be the right answer, right? It might, you might take a few steps of iterating. We talk about pivoting in the startup world. Everybody uses that word, but it really is a thing where it doesn't mean you're switching directions, but you're refining and you're understanding your vision on a deeper level. And I think that kind of pressure testing of what is it that you're what problem are you solving, what consumer base are you going after is incredibly important. I love that.

Joeri Billast: 29:04

That's a great advice and a positive message at the end of the podcast. Actually, the word experience, I I noted that it's really important. Rudy, if now people that are listening, they want to know more, they want to keep in touch with you, or they want to know what you're building, or maybe something else. Where would you like me to send them?

Rudy Koch: 29:23

Yes, absolutely. So I'm I'm deep down the rabbit hole in sports and AI at the moment. Very excited about the opportunities in sports. I think it's a massive growing market opportunity. And so if you're into sports, or if you're not, if you just want to talk, uh, you can find me on Telegram at RudyCott, just my name as it's spelt. Same on on X as well. You can find me there or on LinkedIn as well. I always love chatting to to innovators and thinkers out there. So by all means, feel free to reach out.

Joeri Billast: 29:56

Guys, so as there are always show notes, you can find the information, everything that Rudy said, you okay, you can find in there. It made me think of something, Rudy, because of course we cannot tackle everything on this podcast episode, but I had a really nice one at NBC in Lisbon with the live duel. I don't know if you know those guys about sports uh batting and then web 3 and so on. Yeah, a really nice episode. So I walked around with him, with the founder, around the venue recording like that the podcast episode. So if you know, if you like this episode and you like to know more about sports and everything around that, check out that episode too. Rudy, yeah, it was a real pleasure to have you on the show. Thank you so much.

Rudy Koch: 30:38

Thank you for having me. This was a lot of fun.

Joeri Billast: 30:41

Guys, what an amazing episode. I'm sure people around you that can also benefit from this episode and would like to listen to it, so be sure to share the episode with them. If you are not yet following the show, well, this is a really good moment to do this to hit the subscribe button. If you haven't given me a review yet, if you give me these five stars, this will help me reach an even bigger audience. And of course, I would like to see you back next time. Take care.