InXile

Above: One of Brian Fargo’s games: Production art for inXile’s Wasteland 2.

Image Credit: InXile

GamesBeat: The other thing generally was that chicken-and-egg situation. Nobody wants to give 30 percent to Apple or Google, but they have the traffic. How do you change that equation?

Fargo: We’re going to have to be very clever about customer acquisition. That’s why you’ll be able to mine, why you’ll be able to resell. We’re going to have strategic alliances with people who have a lot of traffic sending that our way. Also, as part of the token sale, we’re going to use a lot of money on customer acquisition. We’ll be handing out tokens, spending marketing money, getting exclusive content on the site, that sort of thing.

It’s not as if we’re going to be a force on day one. But there’s a compelling story there for everybody to keep supporting it and for users to come over. There are all these sites. You’ve heard of Itch? They have huge traffic. It’s like a Humble Bundle indie store site where people tip the store, pay whatever they want. You look at the traffic there, and it’s massive. There are stores other than Steam that do quite reasonable revenue. Even a 10 percent market share is a big deal.

GamesBeat: Can you share proceeds with someone like that if they produce a sale for you? 

Caldwell: Like an affiliate? It’s possible. There’s no reason we couldn’t do that. It’s not something that’s in the plan right now.

Fargo: We’re looking to strike deals with some of the hardware manufacturers. As an example, if you’re mining with an AMD card, we know that. Maybe we can give you some extra perks if you’re mining with an AMD. They want to sell hardware, and we want to find customers. There’s a lot of great symbiotic relationships we can build.

GamesBeat: Is there a name for the coin? 

Fargo: Iron, like the Iron Bank.

Caldwell: Brian said to me once, “You drag a magnet through the sand, and you produce iron.” That’s our mining mentality, right there.

Fargo: It’s interesting. The response to the concept has been really strong. I’m talking to a guy at Nvidia. He says, “I work at Nvidia, and I don’t even mine.” You figure, something like 0.03 percent of people own crypto? The people that mine, it’s even smaller than that. The idea that I can just opt in, leave my machine on, and I come back in the morning. We’ll show you a little ticker in real time. Our little robot will be mining away. It’s compelling. You just come to our site and buy a game.

GamesBeat: The sense of scale is good to know. How much money do you have to have in order to do this, to attract the audience? Are you targeting PC games, console games, mobile games?

Fargo: It’s all PC, yeah. You can’t do console this way. Those are closed, walled systems. We couldn’t do it if we wanted to. We’d like to get to 10 percent market share pretty quick. We’re giving guarantees to people, to publishers. We’re doing a lot of things to get content that have never been done before. Usually, people just set up the store and say, “I’m the Steam reseller. Please give me your game.” That’s not a new pitch. This is something where the publishers can make more. There’s more margin to play with. There’s a lot of little clever things we can do in terms of exclusive content, paying people to sign up, using the currency to get them on board.

GamesBeat: How many [stores] are out there doing this? Do you call this a store?

Fargo: Yeah, it’s a digital store. All of the stores, for the most part, are Steam digital key resellers, except for GOG. GOG does a great business. If we did GOG numbers, we’d be in great shape. Think of how many people buy GOG just because they don’t like DRM. What if we get a similar number of people that want to buy games and resell them when they’re done?

GamesBeat: Where do you need to get your backing from? Is it the publishers and then you can go to investors?

Fargo: To raise the money for it, do you mean?

Above: Steam is the big gorilla of PC game stores.

Image Credit: Steam

GamesBeat: And get the momentum. Do you need someone like Take-Two to say yes? Or do you just need a lot of small guys? 

Fargo: I think it’s going to be a combination of some of the bigger ones, which we’re getting, and some of the important indie developers, who are also coming aboard. Usually, when you go out and pitch, there’s a funnel, right? X percent of the people you talk to say yes. But there’s almost not been a “no” for us. Some people have technical reasons. But everyone would love to see a switch up in the status quo of how this works and get a bigger piece of the pie.

GamesBeat: How much does Steam actually get?

Fargo: They take 30 percent. You’re getting 95 versus 70.

GamesBeat: Google+, when they started out against Facebook, they were saying, “We’ll take 10 percent.” And then, when they actually launched, it was 30. Why does everyone settle on that as the cost you incur running the store, marketing games, and otherwise doing what a store owner has to do? I never quite understood why everyone does 30, other than that’s what the market will bear.

Caldwell: That’s what the publishers are willing to spend to get the traffic.

GamesBeat: It seems like Steam could run their store far more efficiently on just five percent. They have so much momentum that 30 percent — it’s like they’re not earning it, right? Anyway, that number always bugged me. Google was theoretically going to come in and fix things, and they never did. 

Caldwell: And Google+ lost.

GamesBeat: Did they learn something? “We’re going to incur so many costs that we have to take a higher percentage.”

Caldwell: We’ll never know because they never tried, and Google+ never took off.

GamesBeat: Do you guys face some risk that you’re maybe taking too small a percentage?

Fargo: We believe we’ll also be making money on the mining side and doing some other things. It isn’t just that. But our numbers don’t show that it takes that much to run a store. The good thing is we’ll be raising enough money to give us some landing room, some room to experiment and try different things.

Caldwell: Plus, some of the stuff we’re doing is decentralized. Some of the services and things we’re doing, we don’t have to run servers and maintain things for them because the world is doing it for us. That’s a lot of the infrastructure costs that we don’t have to spend. That helps our numbers line up with five percent. Volume is where we’ll make it, obviously. If we only have one or two people, five percent doesn’t cut it. But if we have the volume of games we expect to get, the volume makes it work.

Fargo: If, for example, we launch and, over time, we have every major publisher with all the new releases — that’s what you strive to get, and they’re going to like getting 95 percent. Then, we’re right there with everyone else. Plus, we’re trying different things. And then, we’ll have all the consumers saying, “Hey, I get free games by going to Robot Cache, and I can sell them when I’m done.” That word of mouth will bring a lot of people in. At least that’s the goal. It’s compelling.

Above: Bitcoin is a volatile cryptocurrency. Brian Fargo will create his own, dubbed Iron.

Image Credit: REUTERS/Dado Ruvic

GamesBeat: One worry could be that Steam might outspend you on marketing by, whatever, six to one? 

Fargo: They could drop their fees, too.

Caldwell: It’s not just a marketing game, though. We can do deals with [publishers] where we get one month of selling a new product before Steam does. There’s lots of ways to fight back. Steam is the gorilla without a doubt.

Fargo: I’m not going to say we’re taking out Steam. And guess what, I’m super appreciative of Steam, too. Trust me, I have nothing bad to say about those guys. But why not have another guy who’s in there with 10 percent? To do that, you need to come up with something unique if you’re going to get some market share. We think this is unique.

Caldwell: How many Steam players want to sell back their digital games that they … can’t use anymore? Almost everybody on Steam wants to do that.

GamesBeat: If you bought a $50 game, as a consumer, what are you selling it back for? 

Caldwell: $50. Again, the consumer doesn’t realize….

GamesBeat: So, you get a quarter of that; $12.50 goes into your pocket….

Caldwell: Right. The publisher, at the worst, gets the same they’re getting now. At best, they get another 25 percent.

Fargo: We think it’ll spur some extra sales for two reasons. One, you’ll call your friend up and say, “Hey, you wanted this game. Buy it from me.” And then, once you get the tokens, what do you do with them? You buy another game. We think there will be extra sales on both sides. It spurs the economy. The feedback has been — I’m used to pitching products. Some people like them, and some people don’t. The way this has been, at the end of the conversation, they want to invest. We have a few more things we have to get together. This is the most complex thing I’ve ever worked on before, from SEC money transmission laws to international treaties.

GamesBeat: I’ve talked to some other serious people about blockchain ideas. It sounds like a big opportunity. Tim Sweeney is talking about the open metaverse. Phil Rosedale is talking about connecting virtual worlds, taking avatars across platforms. 

Fargo: As long as people support it. You have to have all these different people supporting it. One of these things for us about blockchain is that — the indisputable thing about it is it’s a great piece of security. It’s nearly unhackable. That gives publishers the comfort that their game cannot exist in two places at once. Now, games can be hacked, and you can remove the checks, things like that, but the minute you go to our store and try to resell that, we’ll pull it right out of our library. That’s the big advantage over a central server. That can be hacked, and all of a sudden, people are reselling their games like wildfire all over the internet with a DRM-free version. This is unhackable in that way. It’s a unique money-raising event, too. We can start doing some different things.