‘Radical experiment’: HBO spinout led by industry veteran uses blockchain for new combat game

(Neon Images)

Imagine you’re playing Shrapnel, a first-person shooter due in late 2024 from Seattle game studio Neon.

You’ve carefully plucked from your armory the right gear to carry into battle: A NEXGEN assault rifle with holographic smart site, a cloaking device for sneaking up on enemies, a wrist-mounted combat computer with holographic display as well as any number of grenade-like weapons that can injure or slow your opponents.

Then, boom. Four enemy soldiers swoop in and get the drop on you. You’re dead.

If you were playing Call of Duty, all you’d lose is your pride and your leaderboard ranking, but the stakes are higher here. That’s because Shrapnel is one of the gaming industry’s first blockchain-based combat shooters.

The game’s weapons, gear, loot and other items are all worth money — as in actual U.S. currency — which can be cashed out and used in the real world to fill your gas tank, pay for drinks during a night out or socked away in your bank account. Virtually everything you’re carrying in the game and much of what’s around you has been custom-designed by you and your fellow players.

And here’s where it gets really interesting: When you lose a firefight, all of that valuable weaponry you carried onto the battlefield — and all the crypto-backed loot you collected during the game — is gone. Every bit of it drops to the ground where other players can snatch it up.

“It’s winner take all,” said Neon CEO Mark Long. “That’s going to add a crazy new competitive dynamic to the space.”

All of this begs the question: How would you react after losing, say, $100 in an online gun battle? Would you shake your head and laugh? Curse the guy who killed you? Call out “nice shot!” over your headset mic? Fret endlessly about what your partner will say? Punch a hole in the drywall?

Among the biggest questions Neon faces as it prepares to roll out a limited-release alpha version of the PC game later this year is how fighting for real money is likely to influence players’ behavior.

It’s a critical question, because, with not a penny at stake, players of other online combat games can be notoriously surly. More than a few have even placed fake 911 calls summoning the SWAT team to their opponent’s home.

“I’ll be very frank with you: This is a radical experiment. It’s fraught with unknowns, difficulties,” said Long, who over nearly three decades has developed games for just about every platform, from the Sega Genesis to Oculus Rift. He was also CEO of Meteor Entertainment and Zombie Studios, and founded a startup called Uno that created a wearable wristband.

Neon, which spun off from HBO two years ago, raised more than $10.5 million in a November funding round led by Griffin Gaming Partners that included Forte and Polychain Capital.

Since 2020, the Seattle studio has more than quadrupled from seven employees to 40. Among Neon’s team are developers, artists and gaming executives, some of them Emmy winners, who have helped launch blockbuster titles like Tom Clancy’s Ghost Recon, Bioshock, Halo, The Sims, Madden NFL and games related to the Harry Potter, Indiana Jones and Star Wars franchises.

How it works

Shrapnel allows players to create and customize their own weapons, costumes, game maps, even sound and visual effects and parts of the terrain.

Long compared the game’s customizability to Minecraft and Roblox, where players create entire worlds. Those games, he said, introduced a user-friendly method of visual programming to a whole generation of young players who are now older and increasingly playing combat games. Shrapnel, he said, will let those players customize the game “at an unprecedented level” for a first-person shooter.

Each of the weapons, gear and other items players create can be minted on the blockchain as non-fungible tokens (NFTs), which means they can accrue value and be put up for sale in the game’s marketplace. That means Shrapnel’s players can share in the game’s profits, thanks to a series of rapid-fire, seamless transitions on the blockchain.

“It digitally belongs to them,” he said. “That’s the philosophy of blockchain. It’s completely decentralized. It’s the community owning and managing the project, or in this case, the game.”

Mark Long.

Neon is partnering with smart contracts platform Avalanche as well as Hong Kong-based Amber Group to issue and manage 3 billion ERC-20 tokens, known as SHRAP, which will serve as the game’s currency.

Since Shrapnel frees players to “mod” and customize so much of the game, its developers are installing mechanisms for keeping its photo-realistic environment from appearing a mish-mash of random design — or worse. 

Long, who recently returned from Sydney, Australia, where he was working with a production studio on Shrapnel’s first trailer, expects only a fraction of players will take to creating complex NFTs virtually from scratch. They’ll do that using what Long described as a professional-grade game design software (from Epic Games’ Unreal developer suite) that’s also relatively easy to use.

Most players, though, will be content to buy — or pillage — NFTs from their fellow gamers, or build and customize weapons and in-game items using simple “kits” similar to a box of pixelated Legos.

Still, players are notorious for sneaking designs depicting the untoward and inappropriate into anything they can alter in a game. When Long worked for Microsoft in its Xbox Live division from 2016 to 2018, players tried to alter their avatars on the network in endlessly roguish ways once Microsoft gave them the chance. “With millions and millions of subscribers, that was the number-one problem,” he said. 

Shrapnel, like many other games, uses AI to spot unseemly content and block it. In addition, if injecting money into the game risks incentivizing bad behavior, Neon is fighting fire with fire. It’s building in financial incentives for following the rules and participating deeply and regularly in its player community.

Players with higher “reputation scores” will find their profiles and created content more prominently placed in the game’s maps and marketplace, Long said. That means the higher your “reputation score,” the more likely players are to find and buy your NFTs, which means you earn more money.

“There is no magic bullet to solve this problem,” Long said. “They’re humans. They’ll be clever and work their way around it.”

A social experiment

Long predicts most Shrapnel players will eat up the tension and high stakes that cryptocurrency brings to the game. Still, he acknowledged that online gaming has long had a reputation for baiting, bullying and worse. Counter-Strike, Call of Duty, Fortnite, Valorant and Halo, all military combat games, have been blasted over their players’ bile.

“These communities can actually turn very toxic,” Long said, adding, “I can’t play Counter-Strike anymore.”

Losers of near-miss firefights often unleash curse-strewn tirades, which roar like hurricanes in others’ headphones. Bullying between strangers is rampant. An Anti-Defamation League study released in May said 71% of adult gamers have experienced some form of “severe abuse” — including stalking and other threats to their safety.

Players’ conduct is sure to worsen if they’re playing for cryptocurrency, said Andrew Lightfoot, a Philadelphia-based Licensed Professional Counselor specializing in gaming and mental health.

Andrew Lightfoot. (Thriveworks Photo)

“That loss will hit you much greater than if you were just playing a ranked game,” said Lightfoot, who describes himself as an avid gamer and said he’s eager to play Shrapnel. “The level of toxicity will definitely be intensified.”

The vast majority of players aren’t expected to risk large sums of money on Shrapnel’s battlefield, Long said, which means players aren’t likely to go thermonuclear after losing their mortgage money.

But Shrapnel allows players to create their own tournaments with their own rules, and those events, Long said, will almost surely involve NFTs valued in the six figures.

“You might have a famous streamer playing other famous streamers — and they’ve got an assault rifle, one of the kinds that’s worth $100,000,” Long said.

Neon’s goal, though, is to create a game that’s accessible to just about any adult with a gaming PC. People won’t play if the game leaves them angry, frustrated and anguishing over their financial losses, said Ben Perzyk, a partner at Polychain, the crypto VC firm that invested in Neon last year.

“I don’t think it’s good game design and I don’t think it’s good business to punish people for playing the game or to raise the stakes so high that it means the casual players cannot have a good experience,” he said.

That, Long said, is one of the reasons Shrapnel will be free to play. And, while most players will buy NFTs in the form of equipment and weapons, Long expects the average player will risk just more than a dollar each game. That, he said, should be enough to capture players’ attention in a way other games don’t.

“It’s not a lot of money, but it’s kind of like playing the slot machine in Vegas,” Long said. “Because there’s $1 in that machine, somehow I care more about it.”

Which is to say, Shrapnel stands a good chance of becoming a case study in human behavior, group dynamics and the mind’s capacity for weighing risk and reward under extreme pressure.

Long described Shrapnel as less frenetic and harried than other first-person shooters. The game encourages strategy as well as playing in teams.

“It’s more kind of like sneaking around and looting,” Long said, adding that the idea is to get as much loot as you can while surviving long enough to summon a pilotless drone helicopter to carry you off the battlefield.

“You don’t win by killing, murdering the other players in the level,” he said. “You win by getting out alive with the most loot — and that loot has real value.”

There are endless ways winning and losing money in a video game can uniquely influence human behavior, Lightfoot said. So much so, he suggested Neon partner with a mental health researcher who could help “make this a social experiment to see what will happen.”

For one, socioeconomic status has never been thought to directly influence a player’s tactics while playing a first-person shooter. Shrapnel is about to change that, said Lightfoot, who is also a regional clinic director for Thriveworks, a chain of U.S. therapy clinics.

“It’s always been a gamer’s dream to make money from video games … This is going to open up a new opportunity.”

Wealthier players will surely adopt more aggressive in-game tactics, he said, while less-affluent players are likely to be “extremely risk-averse” because they can’t afford to buy new equipment in the game’s marketplace.

And yet, in a demonstration of the game’s cutthroat stakes, the opposite might be true: Having less disposable income could motivate players to sharpen skills and win firefights. In other words, if you can’t buy it, kill someone else and take theirs.

Meanwhile, the game is sure to ignite players’ entrepreneurial spirit, Lightfoot said. Cryptocurrency, he said, will motivate people to learn Shrapnel’s every trick, perfect the art of the ambush and attack with ruthless speed in an effort to stockpile NFTs.

Some, Lightfoot said, are also sure to play the game professionally.

“Any game like this that has real monetary value attached to it becomes a career for subsets of people,” said Lightfoot, who incorporates video games like Dark Souls into his therapy practice.

“It’s always been a gamer’s dream to make money from video games,” he said. “So far the only way to accomplish that dream has been streaming or minor celebrity. This is going to open up a new opportunity.”

Putting guardrails in place

Neon is putting in place a number of measures aimed at preventing fraud, blocking cheaters and stemming other bad behavior.

First, Shrapnel will follow an established convention among combat games that prevents players from “paying to win,” Long said. In other words, it’s impossible to buy more firepower. A $10 rifle won’t necessarily prove more lethal than one valued at $5.

Second, Neon is deploying a number of security and anti-fraud technologies to protect the game and its players. Software called Anybrain will scour Shrapnel’s landscape for cheaters, including those relying on “aimbots,” which illegally help players lock their gunsights on their targets. Anybrain uses machine learning to detect fraud, spot when someone is using another gamer’s account and even monitor a player’s mental fatigue and stress.

Lastly, players will have to provide nearly rock-solid proof they’re 18 or older. You need a blockchain wallet to log on to the game, and to get one of those you have to show your photo ID, Long said.

And yet, adults who play first-person shooters can be among the worst offenders when it comes to cheating and harassment, so Neon is putting in place technologies and procedures to give poorly behaved players a “timeout.” Problem players can also be “muted” or, in the case of repeated or particularly egregious offenses, banned for life.

Here, Shrapnel’s photo ID requirement comes with a bonus: In other combat shooters, banned players have the option to create a new account with a different email address, then sneak back into the game. Shrapnel players can’t do that because they’re registered on the blockchain.

“You’re out of the game and you’re never coming back again,” Long said. “It’s a tool of last resort, but it’s also a pretty big threat to keep toxic players out — or at least behaving properly.”

But one of Neon’s best tools for maintaining its community’s civility may have nothing to do with safeguards or punishment at all. Long said the studio’s developers are partnering with players to create the game collectively, which he hopes will give players a sense of ownership in the game.

From the earliest stages of development, he said, Neon’s team has been consulting with players about details as small as a logo or a character’s design. Shrapnel’s website encourages players to join discussions on Discord and encourages them to “help shape the game by taking part in development fireside chats.”

“We need to think about these things very carefully,” Long said. “I don’t want to give you the impression that we’ve got it all figured out. It’s one of the reasons our team is so excited to work in this space.”

A new way to game

Crypto-gaming is still in its infancy. Still, the games are widely seen as an early version of what’s become known as the coming “metaverse” or Web3: the potential next iteration of the internet, which is expected to include a new and immersive digital world in which we’ll work, interact, shop and play. Just like today’s early crypto-games, the “metaverse” is expected to be powered by decentralized blockchain technologies that enable token-based economics.

Microsoft, Meta and other companies announced last year that they’re devoting considerable effort to laying the foundation for this digital landscape.  

Shrapnel’s backers describe many of the crypto-game market’s earliest entrants as clumsy and unrefined, as though the concept of a game had been hastily bolted onto the blockchain. Still, venture capital firms are pouring billions into the crypto-gaming business, which is rapidly growing. 

Games backed by cryptocurrency made up more than half of all blockchain activity during this year’s first quarter, according to DappRadar, which tracks blockchain applications and NFTs. 

More than 1.2 million unique blockchain wallets were tied to crypto-games as of March, the company said in a report. Also as of March, three of the sector’s most popular games — Splinterlands, Alien Worlds and Crazy Defense Heroes — have a combined average of more than 650,000 crypto-wallets in play.

Shrapnel’s current biggest competitor is Off the Grid, a third-person battle-royale combat shooter from the game studio Gunzilla, which has offices in Los Angeles, Germany and Ukraine. Like Shrapnel, Off the Grid lets players create, customize and trade in-game items. A key difference between the two games, Long said, is that Gunzilla isn’t designing its game “to be modded” to the extent Shrapnel is.

“It looks promising,” Long said of Gunzilla’s forthcoming blockchain title. “Their team is deeply experienced.” In a move that significantly boosted the game’s credibility, Gunzilla said in late July that Neill Blomkamp, the Oscar-nominated director of the sci-fi hit movie District 9, has signed on as Gunzilla’s “Chief Visionary Officer.”

Long said Neon won’t release a completed and commercially ready version of Shrapnel until the fourth quarter of 2024. The early version of the game coming this December will be available to a limited number of players as well as “Myth,” the famous live streamer who has millions of followers on YouTube as well as social media platforms. 

The goal is to get early feedback from Myth and other players when it comes to what Long described as “the things that make a first-person shooter feel right or wrong in the first seconds of gameplay.” In particular, he said, Neon’s team will be wanting to hear from the players about “gun feel” — or the responsiveness of weapon animations, “bullet spread,” and “muzzle climb.” 

“Myth,” otherwise known as Ali Kabbani, is best known for his skills at another combat shooter: Fortnite. He’s among a handful of notable figures from gaming, movies and literature whom Neon has recruited as “project advisors.” 

Also guiding Shrapnel’s development are game designer Terry Spier, whose previous tactical shooters (most notably The Division franchise) have sold more than 20 million copies; Derek Kolstad, the screenwriter and producer behind the John Wick film series; and Neal Stephenson, the popular Seattle science fiction author who has been cited broadly in the press since last year when Microsoft and Meta announced plans related to the “metaverse,” a phrase and concept widely attributed to Stephenson’s 1992 book Snow Crash

Long said the studio is hiring about seven new employees each month and expects the company will grow to around 70 people by year’s end.

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