Chapter 5: Okay, so maybe web3 enhanced games and NFTs aren’t dead!
5.7. J TikTok: UGC for the (younger) masses
As discussed above in Democratization; UGC on Steroids, the vast majority of TikTok users create content. While some Gen Zs post content solely for fun, many others create with the goal of making money. What does this have to do with web3?
Ownership! Older generations were lurkers, not creators, and therefore, ownership wasn’t much of a concern. TikTok has turned Gen Z and Gen Alpha into creators and I believe that with creation, there will increasingly be a desire to own. Of course, web3 provides the ability to own the content you create as NFTs and/or getting paid more efficiently and effectively via blockchain rails.350
Not surprising to those who have been paying attention, TikTok has also become a juggernaut in gaming. Before we jump into gaming, some quick TikTok general stats:
• TikTok is available in 150 countries, has 1 billion users351, and — much to the chagrin of US policymakers352 — has 150 million US active users – or 50% of the entire United States.353
350 I think it’s interesting that Meta intends for Threads to enable access to ActivityPub, an open protocol for decentralized social networking established by the World Wide Web Consortium (W3C), the body responsible for the open standards that power the modern web. Unlike Twitter (or X or whatever Elon is calling it by the time this essay is published), where I can’t take my followers or content with me when I go, with Threads, I will be able to. I believe Meta thought they would gain a competitive advantage over Twitter by building Threads on an open protocol instead of in a
centralized silo. I also believe that Meta has an abundance of data indicating that Gen Z and
younger will expect to own their social graphs and content. That said, while Threads got off to a very fast start, that is no longer so. While the idea of decentralization is appealing to many, the stickiness of today’s centralized, massive web2 social networks like X and Instagram is undeniable. While web3 has so many things going for it – decentralization, global accessibility, transparency, etc. – we need products that users demand because they make their lives better in some way. It’s at that point that web3 will seriously start to go mainstream. And this is a real challenge: if Meta with its billions to spend can’t take on X with a decentralized framework, how is a web3 start up expected to? (This example is a little unfair because Meta didn’t exactly market Threads becoming decentralized as a selling point. It was more the case that folks in my industry picked up on the ActivityPub aspect of it.)
351 https://wallaroomedia.com/blog/social-media/tiktok-statistics/
352 I’m not going to get into TikTok politics / policy in this essay, but it’s important to note that some US policymakers would like to ban TikTok for national security (concern that ByteDance, TikTok’s owner, will share U.S. user data with the Chinese government) and other reasons (kids are addicted, lots of misinformation, mental health concerns). The United States already bans TikTok on federal and public sector employees’ phones. TikTok is also banned on state employee phones in 32 out of 50 states. The State of Montana banned TikTok effective January 1, 2024, although Montana’s decision was just blocked by a Federal judge. I personally doubt that either political party in the United States will attempt to ban TikTok during the 2024 election year given that would likely alienate young voters.
353 https://www.reuters.com/technology/tiktok-tell-congress-it-has-150-million-monthly-active-us- users-2023-03-20/
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• An estimated 60% of users on TikTok are Gen Z.354
• Nearly 40% of Gen Z uses TikTok and Instagram for search instead of Google.355
• More time is now spent on TikTok than on Facebook and Instagram combined.356
• TikTok will generate more in ad revenue than Twitter and Snap combined.357
• TikTok users in the United States averaged more than 80 minutes a day scrolling through videos.358
Remember above when I noted that one of the ways for mobile apps to survive in a post-ATT world is by having sh*t tons of money? Well, TikTok didn’t grow to 1 billion users by accident; it spent $3 million / day on acquisition
marketing in the United States alone and is said to have spent ~$1 billion on
advertising over the course of 2018 (Snapchat inadvertently fueled TikTok's rise by allowing it to become its largest advertiser in 2018, which ultimately led to TikTok siphoning off Snapchat's user base through its advertising efforts).359 But, back to TikTok and gaming! Like Netflix, TikTok also sees tremendous opportunity post ATT and is aggressively recruiting “gaming brands” to advertise on TikTok as a
“gateway to future growth”.360 Indeed, TikTok is becoming a critical new GTM for mobile games and here's why361362:
• 82% of TikTok users game at least once a week.
• 75% of TikTok gamers discovered new gaming content on TikTok.
354 https://wallaroomedia.com/blog/social-media/tiktok-statistics/#:~:text=Gen%20Z%20–
%2060%25%20of%20TikTok%20users%20are%20Gen%20Zers.
355 https://www.nytimes.com/2022/09/16/technology/gen-z-tiktok-search-engine.html
356 https://sensortower.com/blog/tiktok-power-user-curve#
357 https://www.reuters.com/technology/tiktoks-ad-revenue-surpass-twitter-snapchat-combined-2022- report-2022-04-
11/#:~:text=Twitter%20and%20Snapchat%20are%20expected,%2411%20billion%20projected%20for
%20TikTok.&text=Our%20Standards%3A%20The%20Thomson%20Reuters%20Trust%20Principles.
358 https://sensortower.com/blog/tiktok-power-user-curve
359 https://mobiledevmemo.com/tiktoks-billion-dollar-secret-that-
wasnt/?utm_source=substack&utm_medium=email#:~:text=The%20fact%20that%20ByteDance%20s pent,over%20the%20course%20of%202018
360 https://www.tiktok.com/business/en-US/blog/gaming-marketers-ultimate-guide-tiktok-content
361 https://www.tiktok.com/business/en-US/blog/tiktok-made-me-play-it-supercharging-game- discovery?redirected=1
362 https://venturebeat.com/games/tiktok-is-turning-games-into-cultural-phenomena-3t-views-in- 2022/
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• 500 million TikTok users watch game content!
• In 2022, there were 3 trillion views of game content on TikTok.
• 41% of TikTok gamers co-created on TikTok, which “supercharges discovery via co-creating / sharing.
• TikTok mobile gamers are 70% more likely to talk about games on social media.
• Game publishers who employed TikTok as a component of their marketing strategy saw high conversion rates:
o 41% of users downloaded the game o 26% purchased to play
o 61% of TikTok users see brands more favorably if they create or participate in a trend on TikTok
o TikTok followers are 191% more likely to like or comment than non-followers
Game discovery on TikTok isn’t a boring, typical pop-up ad; rather, TikTok gaming ads consist of unique content that the gaming community wants to engage with, including in-feed playable games, mini-clips, and UGC video collages. Two mobile gaming companies that have found tremendous discovery success on TikTok are:
• Finland’s Kitka Games, developer of Stumble Guys, which was acquired by Scopely in 2022, and
• Denmark’s Sybo Games’, developer of Subway Surfers, which was acquired by Miniclip in 2022.
Subway Surfers is an old game — it launched 11 years ago — but it has had a massive resurgence over the last year thanks to UGC on TikTok. Specifically,
creators on TikTok use Subway Surfers in video collages to catch users’ attention, which led to Subway Surfers being the most downloaded mobile game of 2022 and hitting 4 billion downloads.363 Similarly, Stumble Guys, a mobile clone of Fall Guys, was one of the first mobile games to incorporate TikTok into its UA strategy early – before TikTok even had a global gaming division – and, as of February 2023, the Stumble Guys hashtag had 40 billion views on TikTok.364 Interestingly, when you go to Stumble Guys TikTok page, the first link under 1.9 million followers and
363 https://venturebeat.com/games/subway-surfers-reaches-4b-lifetime-downloads/
364 https://mobilegamer.biz/tiktok-isnt-launching-a-games-tab-but-it-is-doubling-down-on-discovery/
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6.9 million likes is a link to the Stumble Guys Web Store, which of course, allows Scopely to bypass the Apple and Google 30% IAP fees.365
My discussion of Netflix and TikTok may seem removed from web3 and gaming, but I included them for a few reasons:
o I’m surprised how many folks I speak with are generally unaware of the extent to which these two companies have pushed into (mobile) gaming.
While TikTok’s parent company, ByteDance, is apparently exiting the game making business366, I can’t imagine TikTok exiting the games advertising business any time soon.
o I’m also surprised that more game developers aren’t using TikTok for UA purposes — free (start putting up videos!) and/or paid (through TikTok itself or working with paid influencers).
o The very rise of these two massive superpowers in gaming – both of which are relatively new entrants to the space – tells me that there is a real opportunity for others to also break into mobile gaming in novel ways,
especially now that Apple and Google have started to clarify their respective stances on web3 enhancements to games.
Just how significantly mobile F2P games have suffered due to ATT shows the fragility of the mobile gaming industry and demonstrates why now is the time for new entrants with new models, including web3, to step up to the plate and take a big swing.
365 https://www.tiktok.com/@stumbleguystt?lang=en
366 https://www.gamesindustry.biz/bytedance-reportedly-pulling-out-of-games-following-nuverse- restructure?mc_cid=9a6af86d89&mc_eid=51ad266bef
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Chapter 6: web3 Wallets: the “thing that gets you to the thing” … or maybe