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A Video Game Where Brands Could Win Big

HEADQUARTERS: Sherman Oaks CHIEF EXECUTIVE: John Linden BUSINESS: Video game developer NUMBER OF LOCATIONS: Two: Sherman Oaks and Seattle TOTAL EMPLOYEES: 15 full-time plus four contractors. Epic Games Inc., creator of the massively popular video game “Fortnite: The Battle Royal,” recently made headlines for reportedly raking in more than $3 billion in total profit last year. “Fortnite” – a multiplayer shooter streamed online by more than 200 million registered players – costs nothing to play. North Carolina-based Epic reached its eyepopping earnings by selling in-game add-ons such as character costumes, weapons and even dance moves for “Fortnite” avatars. Sherman Oaks-based Mythical Games aims to replicate Fortnite’s success with a new variation on this “free-to-play” model. The company was founded last year by a team of former executives and studio heads from Santa Monica video game maker Activision Blizzard. In November, it raised $16 million in seed funding to develop games and build out a proprietary platform for in-game purchases. Mythical Chief Executive John Linden said the platform will enable players, developers and brands to create customized digital assets and sell them within a game. “The worlds that players are playing are becoming big and they’re becoming immersive,” Linden said. “Players and content creators really want a bigger stake in the game.” The company has 15 full-time employees and four contractors working out of its headquarters in the Valley Executive Tower on Ventura Boulevard as well as an office in Seattle. ‘Blankos’ debut Later this year, Mythical will release its first game: “Blankos Block Party,” which lets players control colorful toy characters come to life. Like “Fortnite,” “Blankos” will be free to play and make money by selling in-game items. Mythical will also invite marketers to create branded assets to be featured in the game. They can either pay Mythical to introduce the items or sell them directly into the “Blankos” marketplace. “We’re seeing a lot of interest in brands to say, ‘We’d like to have objects and sell into these game economies,’” said Linden. “Fortnite” has already begun experimenting with branded items or characters. As part of one-time promotion for the Walt Disney Co. film “Avengers: Infinity War,” gamers had the opportunity to play as the film’s villain Thanos. As consumers spend less time watching traditional television, there is reason to believe brands will become increasingly interested in these kinds of branded assets. According to Nielsen Holdings PLC, two-thirds of Americans ages 13 and older play video games on computers, mobile phones or gaming consoles. That’s up from 58 percent in 2013. “The steady growth of self-identified gamers illustrates how far the medium has evolved to become an integral component of the mainstream entertainment diet,” Nielsen wrote in its annual report on the video game industry. Mythical aims to appeal to this growing set of gamers by allowing “true digital ownership over assets within a video game.” This means that once a player buys an item such as a new race car, he or she can later sell it to another player at market price. Players would even be able to modify an item — by repainting the digital car, for example — to increase its value. This in-game economy will be made possible by Mythical’s proprietary blockchain platform. A blockchain is a digital ledger that securely and publicly tracks transactions across computer networks. By accounting for each transaction this way, Linden said, brands and third-party developers can track ownership of items they create and earn residuals each time a sale is made. If Ford Motor Co., for example, designed a limited run of customized Mustangs for a racing game, the company would know exactly who had purchased each of the digital cars. Then, if an owner decides to sell the car to another player, Ford would receive a percentage of that transaction. “It’s a kind of new, new economy that we’re working on,” Liden said. Third-party developers Although blockchain technology is most commonly associated with cryptocurrencies such as Bitcoin, all sales facilitated by Mythical will be made with U.S. or European currency. The company also plans to license its blockchain platform to other video game makers, which will be key to its business model going forward. Linden said Mythical is in talks with several high-profile developers and aims to announce new partnerships in the coming months. Mythical isn’t the first game maker to use blockchain. But the technology has yet to be integrated into a popular game. While Linden acknowledges that only a minority of gamers will at first be interested in buying and selling on the platform, he expects that to be enough to drive in-game economies. “It’s going to be that 10 percent that is suddenly like, ‘Wow, I figured out a way to profit from the game,’” Linden said. “That’s the group that is going to be the most active.” He added that as the technology evolves, developers will continue to find new uses for blockchains in their games. “We’re in the 0.1 percent of what functionality can come out of it,” Linden said. “We’re taking a bet that it’s the right paradigm for us.”

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