We are in the first wave of web3 games, and some believe that games don't have network effects built into their development or long-term strategy. In this episode, listen to NFX partner Gigi Levy-Weiss as he dives into the world of defensibility within the gaming industry, sharing the 4 layers of network effects, the future of virtual goods, and a case study on Steam - the leading platform for video game development.

(0:00) Introduction to the episode and foundation of NFX

(2:38) Understanding network effects in games and misconceptions

(3:29) Game liquidity, player matching, and personal networks

(5:15) Layers of network effects in games: Game network and personal utility

(6:29) The marketplace layer of network effects and the bandwagon effect

(8:16) Defensibility and longevity of top games due to network effects

(9:39) Introduction to Steam and its marketplace network effect

(12:34) User-generated content and virtual goods in Steam's marketplace

(14:40) Network effects in Steam, the bandwagon effect, and its 30% rake on transactions

(16:50) The challenge for competitors to replicate Steam's network effects

(17:13) Concluding remarks and a preview of the next episode