Advancement in technology has revolutionized the gaming industry over the last several decades. We are currently at the cusp of another significant advancement in the gaming industry, and I am super excited about this trend! As the gaming industry moves from free-to-play to play-to-earn, it will change the dynamics of the gaming industry completely. This is why I have decided to start penning down my thoughts about it.
While we will explore the pros and cons of a Web 3.0 gaming industry in another blog post, allow me to briefly explain what blockchain-based gaming has to offer and how it can transform the industry.
Quick Peek Into Legacy Gaming Ecosystem
The gaming industry generated close to $160 billion in revenue in 2021. In the current setup of the gaming industry, gamers put in the time and resources to play games with barely any economic benefits in return. They buy a lot of in-game items, develop their characters, get to like zillionth level but don’t get the opportunity to monetize their skills or assets in the game directly. In fact, if they stop playing the game, they can’t do anything with the money and time they have spent on the game. So, while the players do all the hard work in-games and spend real dollars, they don’t get to own anything.
Web 3.0 stands to change the gaming industry fundamentally. In the Web 3.0 world, gaming could allow players to earn money while playing the game. If players spend money on buying some asset in this new era of gaming, they will own it. They will also be able to sell it to other players within the game or outside of the game.
Ways for Gaming To Thrive in Web 3.0
1) Ownership & Scarcity of Assets
Almost all games today have in-app utilities for purchase, which drives over 50 percent of gaming revenue. These in-game assets are typically infinite in number and are sold to the players through In App Purchases or IAPs. Even after paying for these assets, players don’t really own them in Web 2.0 gaming.
Blockchain technology will enable in-game asset ownership and digital scarcity. In Web 3.0, each asset will have a finite supply, and each asset ownership will be with players after the sale. When a player buys an asset, the technology will tie the asset to the player instead of the game, technically making them as investors. Since the players own these scarce digital assets, players should be able to sell them to others within and outside of the game.
2) Earn While Playing
Players don’t typically earn while playing games currently on Web 2.0. Instead, players try to monetize their gaming skills through streaming and e-sports which in most cases requires massive investment. In Web 3.0, players can earn money while playing and can monetize their gaming skills within the game itself.
Games will become economies, and players will have real economic incentives depending on how good they are at a game. As players cross levels or complete tasks, they earn cryptocurrency that they can exchange for other crypto-assets or fiat currency.
Traditionally, gaming ecosystems are siloed, and one game does not interact with another game. The assets of one game usually cannot be used in another game. But in the blockchain-based ecosystem, there will be projects that will complement each other with portability features and users will be able to move between different games. They will be able to bring their digital assets, such as NFTs in the form of skins, avatars, or weapons, with them to other games.
Underlying Technologies/Utilities in Play
NFT is a technology that enables digital asset scarcity and ownership much like any other digital currency. NFTs can be stored in the wallet and transferred from one wallet to another. In blockchain-based games, in-game assets will be converted into NFTs, enabling asset ownership. There are classified types of assets like common, special, uncommon, epic, and legendary similar to what you see in RPG or role-playing games. In Web 3.0, NFTs can define the rarity. Games’ finest players will collect the rarest NFTs and will be able to sell them to others.
Tokens will be the currency around which the economics of the whole game will be built. Every participant of the gaming ecosystem – be it the team that makes the game, the community that helps support the game, or the players that play the game – they will be incentivized through these tokens. Everyone benefits as the value of the token increases. This in turn would lead to growth of the game. Players earn and reap the benefits of their hard work through tokens in the game and will be able to exchange these tokens for real money through trading exchanges.
Typical blockchain is open, permissionless, and immutable. Anyone can interact with it and can build over it. There are building blocks just like in Legos and one can add a block on top of another. In the same way, the very nature of openness and permissionless will allow one to build a game over another and make the gaming ecosystem interoperable.
The very concept of Metaverse will be powered by Web 3 technologies such as blockchain. Metaverse can also be thought as a virtual version of the real world. Players create avatars to virtually represent themselves and interact with places, objects, and other players. Through blockchain, items could be transferable between different games and game universes, resulting in a digital multiverse. At the same time, the gaming industry will grow along with growing number of Web 3.0 users.
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Disclaimers : This opinion piece was originally published by the author on yourstory.com which is edited and re-published here. Opinions expressed in this publication are those of the author. They do not necessarily purport to reflect the opinions or views of Shardeum foundation.
About the Author : Lakshika is an engineer turned MBA graduate (ISB- Hyderabad). Lakshika has developed keen interest in blockchain, Web3 and play-to-earn ecosystem. She currently leads strategy & marketing at two DeFi protocols – Router & Dfyn. Follow Lakshika on Twitter and Substack.