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The Coinbase cryptocurrecy exchange, the largest in the US although, with employees working remotely, it can be hard to tell.
cards that Japanese teens were soon losing money in large quantities. The games gained such a reputation that, by 2012, the game developers were being investigated by the Japanese Consumer Affairs Agency. The chose to self regulate to avoid being banned outright. For ten years the industry was steady and unexciting but all that changed with the launch of a new digital gachapon game Genshin Impact. This is an anime-styled fantasy game which western commentators are tempted to dismiss too easily. The reality is it is the fastest growing gacha game on the App Store and played by an estimated 50 million players a month in Japan, China and South Korea. As well as self-regulation, additional protections have been brought in by regulators but it is still making millions for developer miHoYo. So, what makes digital gachapon games like Genshin Impact different from any other video game with a loot box business model? The main point of interest lies in the sheer numbers playing and the demographic they represent. Genshin Impact and similar games are attracting vast numbers of players who are not active gamblers via any other route. Despite sharing many characteristics with gambling products, players are often fiercely protective of the games insisting they are not gambling. Those players are not all from Asia, either. When Genshin Impact was launched in the US in September 2021, it grossed US$100 million in two weeks. What happened in a market not previously exposed to the ‘pay to advance’ business model was enlightening. The free to play model was initially attractive but the fun didn’t last. For a market raised on paying upfront for a cartridge game as opposed to arcade-style games, the model felt predatory. US gamers don’t see themselves as gamblers yet this is what they were being asked to do. Many reported losing thousands of
dollars and felt cheated. Loot boxes are rising up the regulatory agenda. The rise of gachapon-style video games are likely to see that continue. Trading platforms The proliferation of independent investors in securities or day traders has coincided with the launch of a range of trading platforms offering increasingly complex products. What started as an opportunity for individuals to access execution only plain vanilla trades on the main exchanges has become a much riskier proposition. Whilst the securities themselves may still be publicly traded, a pile on of day traders can have market-moving consequences. But it is the rise of platforms which step well outside mainstream securities which is of most concern. When Bitcoin was rising relentlessly, buying crypto currency on the dips felt like a safe bet. At the time of writing, the biggest crypto currency was trading at 30 percent of its peak value and showing no signs of recovering. It feels like a Warren Buffett’s famous saying “Only when the tide goes out do you discover who’s been swimming naked” feels appropriate in a marketplace which has witnessed scams, insider trading and other practices which would be illegal in a regulated market. Although crypto and NFT trading platforms have been marketed as investments, it is clear that they lack many of the protections consumers would benefit from in financial markets. The scale of losses, whether paper or real-world, are likely to have taken a lot of steam out of the market for alternative financial instruments at a time when they were starting to achieve greater visibility. This is likely to mean the retrenchment will be deeper and longer-lasting, but it is also
IMGL Magazine • July 2022 • 23
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