A four-part review of Ultra, a Next-Generation Blockchain powered PC Game Distribution Platform.
Welcome to part two of my four-part series on the Ultra platform. In part one I covered Ultra’s team, as well as their partnerships with Ubisoft, AMD, and the as yet unnamed Chinese “Operator”. You can read part 1 here.
If you’re new to Ultra, I recommend before anything that you check out the video demos of the platform below!
Now without further ado, here are the next 4 reasons why Ultra is set to disrupt the gaming sector:
The Ultra network is based on EOSIO (the technology behind EOS), which, with its high performance and low fees, is widely considered to be one of the first consumer ready blockchains. Of course the EOS mainnet is not without it’s problems. Account creation is difficult and costly, adding considerable friction to user on-boarding. Solving this issue has been a focus for Ultra and other EOS chains like WAX, which focuses on digital trading.
EOS’s most well documented issue, though, is surrounding its governance model and the block producers (BPs) that secure its network. The Ultra team has a very different approach to BPs that in my opinion is one of the most underrated aspects of the projects.
Ultra will have two different types of block producers, Technical and Corporate. In short, Technical BP’s are experienced EOS block producers hand-picked to run the Ultra Mainnet. The first three that have been selected are; EOS NY, EOS RIO, and Bitfinex. Corporate BPs are trusted global corporations outside of the crypto world, all of which have a vested interest in the success of Ultra. Ubisoft is the only Corporate BP to be announced to date, but according to David (co-Ceo of Ultra), more will be announced in time.
Ultra will initially be restricting the number of BP’s in order to keep a close relationship with partners and operators that will contribute to the maximum performance of the Ultra platform. This means at launch, Ultra will have far fewer than EOS’s 21 BP’s.
While this will attract charges of “centralisation”, it’s the inclusion of large public companies like Ubisoft that creates a tremendous amount of trust in the security of the network. While this may not satisfy blockchain maximalists, it will more than likely satisfy other big players in the gaming industry who may otherwise deem blockchain an unnecessary risk if they are asked to trust small anonymous third party block producers to act in good faith.
David has even suggested that it will be possible to reverse transactions on Ultra in the event of a hack. His reasoning encapsulates Ultra’s pragmatic and business focused approach to blockchain, and illustrates why companies like Ubisoft are signing up to use the platform.
Ultra’s use of corporate block producers is the smartest approach to governance I have seen, as it leverages the reputation of large public facing companies to create trust in the network, while ensuring high network performance. Ultra’s intelligent, business focused, and non-maximalist approach to Block Producers is something that set’s it a part from most other projects.
You can read more about Ultra’s approach to blockchain governance here.
And for an excellent summary on the improvements Ultra has made on the EOS chain, read Rami James’ recent blog here.
Firstly, the gaming industry is indeed massive. It’s more than twice the size of the film and music industry combined, and it’s growing. A recent report suggested the gaming industry could hit $300 Billion in revenue by 2025. To put that in context, the global box office takings in 2018 were $40 Billion, and total sales for the music industry were just $19 Billion.
Steam has held a virtual monopoly on the PC distribution market for over 15 years but it has several significant and well documented pain points. These include; monopolistic commission rates, discoverability issues for smaller developers, slow payments, and a lack of true ownership of games. Ultra’s platform has a solution for all of these problems, but first let’s understand why these problems are so significant to begin with.
Steams pain points:
Monopolistic practices and discoverability issues: Steam, like any good monopoly, extracts a large commission on each sale of 30%. This is very high considering Steam offers little in the way of marketing support. Combined with the fact that Steam has a significant discoverability problem as a result of the now thousands of games releasing on Steam each year:
Since it’s not possible to advertise directly to gamers on Steam, developers are forced to advertise their game outside of the platform and hope that Steam users will see their ads, go to Steam and purchase their game, at which point Steam takes its 30% cut.
It’s not surprising that developer discontent with the platform has been rising. In an survey conducted last year, developers gave opinions on their perceived value of being on the Steam storefront. Only 11 percent of the 167 respondents believed that Steam had earned its 30 percent cut in the past year. That’s down from 39 percent the year before.
Slow payouts: Money from game sales can take between 30 to 60 days to make their way back in to the pockets of developers, depending on the platform. This represents an enormous missed opportunity for smaller developers that could be reinvesting that revenue towards marketing efforts to promote their game at launch, which is the most critical period for sales.
Lack of true ownership: Do you really own the games you buy on Steam if you can’t lend them to friends, or resell them if you choose to? A French court recently ruled that Steam must allow its users to resell their games.
Nicolas is surely correct. As consumers are introduced (or re-introduced) to the rights and benefits that come with true ownership of the games they purchase (enabled by blockchain), it will be increasingly difficult to justify the current Steam model.
Ultra’s Solutions:
Revenue share: Ultra will take a 15% cut of sales, instead of 30%, meaning developers are making an additional 21% revenue on each sale compared to Steam. For an indie developer that could be their entire profit margin. It could be the difference between them staying in business and making another game, or shutting up shop and going back to their IT jobs. Ultra will be putting more money back in the hands of content creators which benefits the developers, and gamers. Developers can also earn more through referral links on their websites, receive a share of the revenue from all secondhand resales. Ultra enables even more new revenue streams for developers that we will go in to in part 3.
Some people have asked why Ultra doesn’t go even lower than 15%, since Epic games takes just 12% of each sale. It’s worthwhile mentioning here that Ultra re-injects 50% of their revenue share back in to the platform in various ways, more on this later. David with some thoughts on Ultra’s revenue share:
Discoverability: The Ultra platform gives developers access to an advanced set of marketing and advertising tools, allowing them to specifically target users from the platform according to the kind of games they play and enjoy. There’s also an innovative influencer program that incentivises third parties to promote the game on behalf of the developers. More on these features later.
Slow payouts: Today’s publishing platforms typically pay out to developers anywhere between 30 to 60 days after sales. On Ultra the payouts will be instant. Developers that have just launched a game can immediately reinvest these funds into the Ultra Ad platform in real-time, significantly increasing the initial reach of the game during the critical launch period. This is a hugely significant feature, particularly for smaller developers that don’t have large marketing budgets.
Digital ownership: Ultra will be one of the first platforms to allow for true digital ownership of games and other assets. Ultra will enable a secondary market for the re-selling of games and even game accounts, opening up another revenue stream for developers (and gamers), while giving the rights associated with true ownership back to gamers. In the interest of not forcing developers to adopt new business models they may not yet be comfortable with, this will be an opt-in feature.
Developers will be able to customize how and when their games become resellable after purchase, as can be seen in this (early) screenshot of the platform.
Cross-platform SDK: Steam’s SDK is currently the industry standard for game publishing, and so not necessarily a pain point. However, the Ultra platform boasts a powerful cross-platform SDK that is more user-friendly than Steam’s and will make porting games to Ultra from other platforms easy by providing all SDK features available from competing platforms.
The SDK has point and click setup for everything from user authentication, Digital Rights Management, microtransactions, messaging, leaderboards, achievements, and so on, so developers can spend less time on “low level plumbing” and more time developing their games.
So to summarise, we have; a massive industry, a strong developer appetite for an alternative to Steam, a new platform powered by a disruptive new technology that has feature parity with Steam as well as powerful new features that addresses Steam’s various pain points. The new platform also has significant buy-in from developers with over 150 signed and has been working closely with a tech giant in AMD that is on every level of gaming from PC, to console, to streaming. If Ultra executes on its plans, at the very least it will be a compelling alternative to Steam, at most it will be a revolutionary platform that will turn the gaming industry on its head.
The alter at which all new platforms worship. Network effects will be achieved on Ultra by growing the user-base so that it attracts more developers, influencers, and other 3rd party users and applications, which in turn attracts more users, and thus continually increasing the value of the platform for all users.
The team has made it clear that they are not looking to achieve slow organic growth for the platform, but rather explode out of the gates with a critical mass of developers and gamers. They have already laid a lot of the ground work by building a feature rich platform that has attracted over 150 developers to sign on, including many of the largest in the world. Ultra’s pitch to developers has evidently been very successful. As Nicolas Gilot (co-CEO of Ultra) points out, though, pleasing developers is not enough:
The Ultra team has an aggressive user acquisition strategy, which was outlined in the whitepaper but has since been expanded upon. I will summarise the various strategies and how they will contribute to the network effects of the Ultra platform.
Attracting gamers:
Exclusives: Ultra is committed to funding exclusive games through their game development and acquisition war chest, which sets aside 5% of Ultra’s profits to fund exclusive content, including triple AAA games. Exclusive titles attract new users who spend money which in turn increases the amount of funding for new exclusives i.e. As the platform user-base grows, Ultra will have more and better exclusive games.
Many of Ultra’s exclusives may be exclusive simply because it would not be possible to publish them on other legacy platforms, for example games that heavily incorporate Ultra’s NFT technology.
We’re still at the dawn of the age of blockchain in gaming. Developers like Ubisoft are still experimenting with the technology so it’s difficult to even imagine what sort of new gaming experiences will emerge. Game developers are some of the most creative people in the world, so it’s just a matter of time before we get a breakthrough title that heavily leverages blockchain tech.
Better experience: Most games will be distributed on both Ultra and Steam, but say, for example, the Ultra version has some unique features courtesy of Ultra’s NFT tech that improve the gaming experience in a compelling way. Players will want to purchase the “best” version of the game or risk the feeling they are missing out. Even just watching other players run around in-game wearing unique “skins” that can only be earned on the Ultra platform, could be a powerful motivation for gamers to jump ship.
Sell-able games/accounts: If players are given a choice between buying a game they can later sell, or buying a game they will never be allowed to sell, most would choose the former. For some games on Ultra, even accounts will be sell-able. That means everything that players work towards within the game in terms of character progression, items, in-game wealth etc, will take on a new sense of value. Considering the countless hours gamers sink into games in the MMO genre, for example, this is a feature that shouldn’t be underestimated. The secondary market also means cheaper games which should attract new users.
Rewarding Players: A key component of the Ultra platform will be the rewarding of player participation in the ecosystem. Whether it be from watching ads, writing reviews, participating in Betas, bug hunting, or referring other players to the platform, users will see the value of their participation in the UOS coins delivered to their wallets on a daily basis. Players are more likely to resonate with a platform they feel is rewarding them for their time and effort. Plus, once people start receiving a reward for doing something, it’s difficult to go back to doing that thing for free.
Virality: Influencers and games websites etc will play a significant role in the viral growth of the platform because they are incentivised to direct gamers via referral links to instantly receive a share of the sale. As new users are added to the platform and the potential revenue from referral links also increases, more and more influencers and websites will participate and their efforts to push users to Ultra will intensify. As it becomes an increasingly successful strategy for driving sales, more developers will offer sales referrals, giving more opportunities to influencers and websites etc.
All-in-one platform: Ultra plans to be an open platform for all things gaming- integrating third party apps for streaming, esports, betting and more, making it a more fully featured platform than Steam. Ultra will also incentivise the development of third party apps that will add value. If they’re successful, gamers will never have to leave the Ultra app, creating a convenient social hub for gamers, all under one account and under one roof.
On top of all this, Ultra has committed to redistributing 50% of its revenue share to developers, gamers, and third parties that bring new users to the platform. The user referral system makes up part of this 50% but according to Ultra’s lead community manager, it will take many forms. As sales revenue on the platform increases, so to do the resources dedicated to attracting new users which creates yet more revenue etc.
Now let’s look at some of the solutions Ultra offers to developers and third parties in the context of network effects:
Attracting developers and third parties:
New revenue streams: Developers are heavily incentivised to drive their audience to Ultra where they have access to new revenue streams through sales referrals and secondary markets, as well as 21% more revenue than Steam on each game sale. By giving devs new revenue streams and a higher revenue share, Ultra will be their preferred platform. The more devs make from the new revenue streams, the more they will push gamers towards Ultra vs its competitors. New users means higher potential earnings within these new streams.
Operators: The opening up of previously inaccessible markets through the use of Operators in countries such as China greatly increases the value of the Ultra platform for developers by granting them access to millions of new users. The more operators, the more users, and the more attractive the Ultra platform is to new developers and third parties.
Corporate BPs: With each new Corporate BP that signs on, the perceived security of the network increases, and the risk factor for large developers (low appetite for risk) drops. Large developers are also more likely to want a “stake” in the security of the network. Big developers bring with them big games, further driving new users. The effect of new Corporate BP’s signing on will likely have diminishing returns once a critical mass is reached, since Network security will no longer be in doubt.
Ads and Marketing toolbox: Ultra will give developers the ability to advertise directly to users on the platform in an efficient and targeted way. Consider an indie developer that’s just released a Tower Defense game (a fairly niche genre). Instead of spending thousands of dollars for ads on various gaming websites where perhaps 2% or less of the websites visitors play Tower Defense games, that developer will instead be able to advertise specifically to users on Ultra that have a history of playing and searching for Tower Defense games. And there is no up-front marketing cost, instead they pay UOS only when a user watches an Ad. Using marketing dollars elsewhere will seem wasteful by comparison.
Considering it’s not possible to Advertise to users on Steam, this will be an attractive feature to developers. Developers will also be incentivised to direct their players to Ultra, not just for the extra revenue stream from referrals, but because Ultra is the platform where they can market their games in an efficient and cost effective way.
Community Tools: Ultra offers game developers (and gamers) a variety of built in tools such as Game-specific clubs, forums, newsletters, chats and other tools. They can also receive support from their communities through financial incentives for beta tests, bug hunting, feedback, and more. This allows them to build better games with the help of their communities and fosters deeper connections between developer and player, adding value for both sets of users, another win-win outcome.
Third party apps and storefronts: Ultra also provides a solution which allows anyone to build and operate their own distribution platform or virtual goods trading service. These 3rd party services still require UOS to operate and all core features (e.g. Referral system) are enforced across all shops throughout the Ultra network. As the Ultra platform grows, it will attract more and more third party developers to build applications on the Ultra blockchain in order to have access to Ultra’s user base.
Steam’s network effects:
It’s not enough to talk about how Ultra plans to achieve network effects. We also need to look at Steam, which has significant network effects of its own. It has the most features of any other platform, a large modding community, forums and other social features, gamers have large libraries of games on Steam, and despite the aging UI many gamers are comfortable there. As mentioned, Ultra plans is to challenge Steam’s dominant position by providing feature parity to at launch (something Epic games store still has not achieved over a year after launch), by providing powerful solutions for Steams current pain points, and offering new attractive features for both devs and gamers.
There’s also another feature of the Ultra platform that will make it a lot easier for gamers on Steam to jump ship to Ultra, and that is the universal cross platform game library. This feature will allow gamers to see all the games they’ve purchased on other platforms and launch them from inside the Ultra platform. This is a significant feature because gamers with large games libraries won’t feel like they’re leaving something behind (they can’t sell them after all). In reality, most gamers have purchased games from a variety of different platforms and so the biggest advantage of this feature for gamers may be that, for the first time, all of their games will be under one roof.
The team recently released a new roadmap which delayed the public launch of the platform from Q1 of 2020 to Q4 2020.
While many supporters of the project were unhappy at the news (myself included!), the delay was not a result of the development taking longer than expected, but rather a decision to include, at launch, some of the more advanced functionality meant for later release. Here’s David and Nicolas explaining that:
It’s difficult to argue against the rationale of choosing to launch a stronger more disruptive product, especially if you’re going to be throwing some serious money behind a marketing push. We don’t know the details of all the features that will now be included at launch, since they are the more secretive aspects of the Ultra platform.
Ultra has been in development since 2017 and by all accounts is in an advanced state. You can see a sneak peak of the storefront for the closed beta here, and one for the GameDev centre here.
With almost another full year of development with an expanding team, and on the back of a multi million dollar marketing push with go to market partners such as AMD and Ubisoft, Ultra will launch with a platform that not only has feature parity with Steam and a superior UI/UX (see below), but a host of powerful and disruptive features that Steam lacks. In addition to that, Ultra’s most disruptive features (the “secret sauce”- See Part 3) that have yet to be announced will be revealed soon after launch.
If there was a risk of the platform not making a big enough splash with gamers, that risk is surely reduced by launching with a more feature rich and polished platform, more developers signed on, and more coporate BP’s and partners. Steam’s problems certainly aren’t going away any time soon, meanwhile, Ultra continues to build out a powerful platform that at launch, could make Steam feel as old as it looks.
Regarding the Ultra platform’s UI; the UI designers of Endless Space 2, a 4X strategy game, are Ultra’s UI designers today. That game’s UI was highly praised in reviews for its aesthetic qualities, intuitiveness and functionality and it looks like these guys are continuing to do great work at Ultra.
Here’s another screenshot shared by the team in Telegram, though it’s apparently been updated since to a “more modern look”.
While Steam holds a dominant position in the PC game distribution market, it has well documented issues and there is plenty of evidence that there is a strong appetite among developers for an alternative. Ultra’s platform offers compelling solutions to Steam’s various pain points and promises powerful and disruptive new features. With a new launch window and an aggressive user-acquisition strategy geared towards generating network effects for the platform, Ultra does in fact look set to make a big splash when it launches later this year.
That concludes Part 2. Part 3 which will focus on the technology behind the Ultra platform including the UOS token itself, the powerful referral systems, as well as Ultra’s “Secret Sauce”. You can find Part 3 here.
Meanwhile, come join the conversation in the Ultra telegram. https://t.me/ultra_io
Or check out some of Ultra’s other resources:
Ultra Resources:
Website: www.ultra.io
Medium: https://medium.com/ultra-io
Whitepaper: https://ultra.io/wp-content/uploads/2018/09/Ultra-Whitepaper-1.06.pdf
Thanks for reading!!
Investment Disclosure: I own some UOS tokens.
