The gaming industry has come a long way. From clunky consoles, quirky cartridges and simplistic games (Super Mario Bros, anyone?) to an entertainment outlet worth over $170 billion, powered by more than 2.7 billion players worldwide. Nowadays, gaming is an all-consuming experience, built on top of ultra-realistic animations, full of twists and turns throughout what seems like an endless stream of entertainment content.
There's seemingly nothing out of bounds when it comes to the possibilities of gaming. From personalizing avatars to customizing environments, purchasing tools and setting up tournaments, gamers are showered with all kinds of options to enhance the time spent in virtual worlds. But we've gone beyond the choosing of color palettes and skins; user preferences are changing the foundations of gaming.
Instead of the linear experiences of the past, gaming is increasingly an open-ended experience. This is evident by the success of sandbox titles like Minecraft, drawing in players with infinite playable loops that can take shape in the form of challenges and competitions, for example. The more players engage, the greater their status in the community and bigger the incentive to engage with other users. And how to better enhance this experience than by letting players create and exchange (or even sell) their own content. All of this opens the doors to a gaming experience without limits. Take Roblox or Fortnite, two games also seeing a meteoric rise on the back of user-generated content (UGC).
However, the majority of gaming experiences remain trapped in traditional, centralized models. This means that developers and gaming companies hold the most power within the ecosystem. Even when users come up with their original content, its value is entirely tied to the gaming dynamics set by developers.
That's because games are provided to users on a licensing basis, meaning that they’re free to play and be enjoyed, but in the end users don’t own any in-platform assets. Think of it like renting a house but not being the owner; gamers are simply renting games. Players can be subjected to unexpected or arbitrary decisions that limit their possibilities, from the worth of their creations to the number of units that can be sold or exchanged in a marketplace.
Ultimately, centralized gaming models don't favor players - and certainly fail to reward the most loyal ones, despite them spending more time online.
Blockchain technology is the next revolution in the games industry. With a decentralized architecture as its starting point, blockchain removes intermediaries to empower users as the only decision-making authority and adds real-world value to virtual assets.
Crypto gamers have ownership over their in-game creations, like new avatars or props, and can easily monetize them, either by trading or selling them via marketplaces in exchange for crypto or fiat money. The value of each creation and peer-to-peer transactions is determined by the community instead of a developer. Creations are tied to non-fungible tokens or NFTs, they're one-of-a-kind and the history of ownership can be easily verified, lending trust to the entire ecosystem. While play-to-earn games, players can also rack up incentives and earn tokens as a reward for their investment in the game. All of this makes blockchain games a very attractive proposition.
The rise and rise of crypto gaming
With the advancements in PC and mobile gaming, there has been a noticeable increase in the gaming industry’s interest in crypto. Undoubtedly, crypto games are now disrupting the traditional games market by allowing players to earn while playing (play-to-earn model), thereby rewarding their time and effort. And it's clear gamers prefer platforms where they can create, collect and exchange digital assets in exchange for virtual currencies or real-world money.
Moreover, a recent report shows that over 75% of online gamers would like to exchange their virtual assets for a currency that would be used across multiple platforms.
As a hassle-free, secure and rewarding system, blockchain gaming is an effective monetization model. The industry is certainly latching onto the opportunities, with blockchain-based crypto games securing $476 million worth of investments in the first half of 2021, double the total amount invested in 2020. And there are already plenty of examples of successful play-to-earn blockchain games, most notably Axie Infinity which recently hit a record $1 billion in sales.
All fun and games
By tokenizing gameplay players can finally have real command over their digital assets, while having a greater control over their gaming experience as a whole. On the other hand, as blockchain games rely on decentralisation as a key part of their mechanics, the applications and benefits are many fold.
Digital ownership: Players retain digital property rights over their in-game virtual assets. With blockchain, their ownership can be publicly traced and verified. This allows players to unlock the time, effort and financial investment value of their gaming experiences.
Monetization: All in-game items are potentially monetizable and transactable. This opens new revenue possibilities for players who can cash in on their skills, create, buy, sell or exchange original digital assets.
Decentralization: Publishers and creators converge in one platform and have an equal say. This removes a central entity with power to change the rules or limit market opportunities.
Marketplaces: Blockchain makes virtual economy marketplaces a safe, fair, thriving and transparent platform. This is particularly useful when it comes to royalties, for example. Gaming legacy systems for securing and managing royalty processing are traditionally cumbersome. By using digital contracts, royalty payments can be easily calculated, instantly processed and tracked.
In-game currencies: Crypto gaming platforms traditionally feature a native cryptocurrency that can be used to buy and sell digital assets, and that can be exchanged for crypto or actual money via exchanges. In-game purchases are then made easier. Instead of relying on third-party entities to validate fiat transactions, exchanges are made almost instant.
Player-driven economy: By putting the power in the hands of players, the gaming ecosystem can thrive on original content and organic engagement between users.
Interoperability: Gamers can switch between games and hold crossover digital assets (NFTs) that can be sold or exchanged across platforms and marketplaces. Initiatives like the CryptoKitties and Gods Unchained collaboration are an example of the potential of cross-game interoperability.
Governance: Blockchain games harness the power of the community to democratise gaming mechanics. This can be achieved through a decentralized autonomous organisation (DAO). in order for changes to be implemented, all DAO members should vote and agree on it. This way, players are directly involved in product-related decisions.
Unlimited creativity: When a game exists on a centralized server, developers are the main decision makers. With blockchain, players are not bound by predetermined rules and can create at will, without fear that rules will be changed by a third party or that their creations will be taken away. In an ecosystem where they can easily monetize their creations, this also fuels the creation of new assets, and in particular rare assets.
The winner takes it all (well, almost all)
The prize of blockchain is huge for players but also for gaming companies, whose integration of the technology can lead to positive and long-lasting outcomes:
Better game economies: Blockchain-powered games award creators with a (generous) portion of the revenues . Roblox, for example, paid its developer community some $250 million in 2020 alone, as a result of new revenue options and an explosion in active players. Developers are still able to capture value through fees on things like micro-transactions, as a rewarding gaming ecosystem also translates into higher player retention rates when compared to other gaming models.
Cost efficiency and safety: Blockchain is often described as the most secure way of storing value, meaning that all in-game transactions are completely protected at all times. On the other hand, as there are no longer intermediaries, exchanges can be processed almost instantaneously, increasing efficiency and saving time and money for both players and developers.
Transparency and accountability: Blockchain games enable a neutral playground, where all in-game transactions are publicly recorded and easily tracked. Players also take responsibility for key aspects of their gaming experience, like product-related decisions, instead of relying on developers to determine the course of the game.
We are still, of course, in the beginning stages of blockchain gaming. But it's been a promising start, nonetheless. The success of games like Axie Infinity and Crypto Kitties makes for a compelling use case of blockchain, proving that it’s no longer just a buzzword but a robust technology ready for mass adoption.
Blockchain has upgraded gaming from a simple hobby to lucrative activity for players worldwide, while also helping improve gamified environments such as metaverses. Sensorium Galaxy is an example of a metaverse, whose blockchain-powered virtual economy can fairly and transparently reward users for their help in co-creating its many worlds.
Based on these incentives and the clear appeal it poses to players and developers alike, blockchain could soon become a standard feature for a decentralized gaming industry.