The gaming industry is a crucial component of the global entertainment industry. While it is highly regarded as its dark horse, adolescents and youngsters past time, developments in the past few decades are changing this overtly inaccurate narrative. There are approximately 2 billion gamers worldwide. The fact that a video game is humankind’s highest-grossing piece of entertainment leaves more to be desired.
Statista suggests that the gaming industry’s value will exceed $200 billion by 2023. Availability of various gaming platforms, including consoles, cloud and mobile platforms, innovative solutions to copyright infringement, and blockchain integration is expected to boost the industry’s fortune in coming years.
Blockchain gaming integration has birthed a new niche. What are blockchain games? What is so special about this niche that it has continued to dominate gaming discourse in recent times? How can crypto gaming change the fortune of the industry?
To correctly answer these questions, we must cast a retrospective glance into the industry before the knight in blockchain’s armor arrives.
Pre Blockchain gaming industry
The pre-blockchain gaming industry featured a centralized business model. It saw gaming companies make billions in revenue as they milk game enthusiasts of their scarce resources. Games in this era featured micro-transactions where gamers spend fortunes to acquire in-game assets and unlock a level or a bonus mission after purchasing the games. While gaming companies and their shareholders smile to the bank, gamers could only boast of the playing experience and holes in their finances.
Suffice to say, the pre-blockchain gaming industry is predatory, parasitic and exploitative to the extreme. The whole business model seemed designed to turn gamers into game-loving cash cows.
What is Blockchain Technology?
Think of the blockchain as a highly secure, decentralized, and immutable public ledger. It is like a database of diverse information shared across several computer nodes, making it impossible to alter. It dispenses the need for centralized third parties to secure, maintain and store transaction records. Every entry on this special ledger remains immutable and free from compromise.
As you might already know, this technology is the foundation upon which cryptocurrencies and NFTs are built. From politics and governance, banking finance, supply chain logistics and gaming, it also enjoys various use cases.
The rise of crypto gaming
Blockchain technology might be popular for its cryptocurrency supporting architecture and ecosystem; Blockchain games are increasingly becoming popular and mainstream.
Crypto gaming is the integration of blockchain technology into gaming through the use of smart contracts. Blockchain games utilize the Play-To-Earn business model as opposed to the game companies’ self-serving centralized model. In-game assets and collectibles exist as NFTs, which can be earned through staking. These NFTs are then traded to earn cryptocurrencies which can then be converted into raw cash. Crypto gaming offers limitless earning opportunities to gamers who can trade in-game assets in high liquidity, interoperable NFT marketplaces.
A newswagg study suggests that crypto gaming grossed over $321 million in 2020. A popular blockchain game, Axie infinity has made over $1.32 billion in revenue since its launch. One can only begin to imagine what the future holds once crypto gaming becomes more mainstream.
Blockchain’s prospects in an expanding gaming industry
While crypto gaming appears to be the newest kid on the block, it has enjoyed a positive reception from gamers, critics and industry analysts since its not so humble beginnings. Predictions from industry analysts and experts suggest a glorious future. We have identified the following prospects in the crypto gaming niche.
Elimination of hacking and compromise
Several gaming companies have suffered data breach and compromise from Ubisoft, CD Projekt Red, Wenkinz World, and Nintendo. By hacking the Call of duty and Overwatch franchise, hackers made about $76 million selling cheat codes.
Blockchain eliminates the susceptibility of games to hacking. The technology is hack proof, cryptographic secured, and decentralized. Elimination of hacking and compromise increases gaming companies’ revenue base as gamers will be left with no choice but to obtain games from authorized sources. This will, in turn, serve as an incentive to gaming companies to deliver superior content to the fulfilment of gamers.
Simplify in-game transactions
The elimination of third-party intermediaries is one of the upsides of crypto gaming. This will overtly simplify in-game transactions as gamers can transact directly through their cryptocurrencies without authorization from centralized third parties and their unfair transaction charges.
Increase earning capabilities
A piece of virtual real estate on the Blockchain game decentraland already sold for $2.4 million. Millions of in-game assets have been traded on Axie infinity and similar blockchain games.
The ability to trade acquired in-game assets as NFTs is one of the key advantages of crypto gaming. As demands for in-game assets increase, gamers can sell for a profit. The key to increasing earning capabilities in this racket is to buy low and sell high.
Interestingly, several GameFi startups are working on interoperable NFT marketplaces for in-game assets to increase market liquidity and cross platform synchronization. Insights from Vietnam and the Philippines, where virtual in-game local economies have emerged, provide a deep insight into the prospect of this expanding niche. In coming years, freelance developers will create in-game NFTs to be traded for profit across diverse marketplaces.
Democratization of the industry
Gaming companies and their executives call the shots – they determine the trajectory of franchises in their catalog, the kind of games to produce, and the business models to adopt. By issuing governance blockchain backed tokens, gamers can have a say in the industry. Democratization of the industry will encourage consumers-centric, quality gaming content.
Redefine ownership of in-game assets
Before crypto gaming, gaming companies enjoy exclusive possession of in-game assets. They can decide to delete a character, a whole level and other in-game components and remain unquestioned. Blockchain emergence means individuals can now create and trade in-game assets for profit. Their ownership can always be verified on the blockchain.
Increase demand
The ability to earn NFTs from having a fun-filled gaming experience will increase the demand for blockchain games across the globe. Since the crypto gaming niche is not fully developed, demand will far outweigh supply creating a web of revenue for all stakeholders.
Conclusion
While elimination of hacking and compromise, simplification of in-game transactions, increased earning capabilities, democratization of the industry, are the major prospects of crypto gaming, as this niche becomes increasingly mainstream other opportunities are certain emerge.