The gaming industry is poised to make blockchain a new norm for its players. The transaction of digital items and the backend infrastructure of games themselves are experiencing a transformation today. How gaming adopts blockchain and when it does so could be a signal for when other parts of the economy will begin adopting blockchain technologies.
As an example of this push, you can read about the creator of Crypto Kitties expanding his reach in this article.
The idea behind blockchain, at its core, is information hosted by millions of computers simultaneously on a decentralized network that agrees on a single history of events.
The ledger of events coupled with the immutability of data are properties that are particularly attractive to the online gaming industry. This is because a distributed ledger can not only save transactions but also ownership of a character. Also saves in-game items, premium currency, and virtually anything a game has programmed in it.
Blockchain technology has created the backbone of a new type of internet by allowing digital information to be available in a cryptographically-secure way. This logic has the potential of migrating into other markets, and one such industry is gaming.
Right now the transfer of value by making digital payments using cryptocurrencies like Bitcoin or Ether is the big draw of blockchain. These digital currencies are very secure, transparent, and virtually instant, thus creating competition for credit card companies and traditional payment processors.
Their global reach is also a major draw since many online games have to deal with multiple payment channels for different regions of the world.
The popularization of Massive Multiplayer Online Games first, and later mobile gaming, has had a large impact on the gaming industry. The new business models presented by these new genres is pushing game development in a new direction, along with its monetization practices.
Today's players have come to expect more sophisticated gameplay even from relatively simple games. We are seeing a trend in technology that is pushing games to new platforms and distribution methods as digital media replaces physical copies in all regions of the world.
This is driving new forms of payment and revenue streams. Gaming companies are quickly coming to this realization. Many gaming companies are looking to understand the technology. They are shifting, or planning to shift their business models to adapt. Additionally, developers are looking for potential crossover points where traditional consoles and other digital platforms can cross-play.
The big winner so far in this new wave of business practices is the free-to-play (or F2P) model. F2P games are games that are available at no cost to players. These games secure their revenue streams by way of microtransactions. The micropayments built inside the gaming experience serve to sustain and make profitable the software.
Players play for free but are often encouraged to pay for certain in-game. Items such as premium in-game currency, cosmetic options, and virtual property which are updated and expanded through patches and content expansions over long periods of time. It is referred to by industry experts as "game as a service model".
Innovative operators are now looking at the bigger picture by not only accepting digital currencies in the form of fiat payments. The future lies in developing and integrating blockchain-fuelled transactions that are bi-directional and allow the exchange of private items cryptographically.
The success of Epic Games' Fortnite could be a premonition of blockchain's success within gaming. The game earned $2.4 billion in 2018 and $1.8 billion in 2019, making it the highest-grossing game in history. Free-to-play games, in general, made up 80% of all global gaming revenue in 2019. The gaming console market is also being transformed as free-to-play titles saw gains growing by 458% in 2019 when compared to 2018.
In comparison, the blockchain-based games market is still in its early stages. Blockchain games have been simple in scope, being composed of two main categories: decentralized or hybridized. In the first model, the game is run completely from a blockchain, stopping the developer from altering the game in any way without the approval of the community.
On the other type, the hybridized model, the game itself still runs from a central server but its assets are traded via a decentralized marketplace using a distributed ledger. Both leverage the advantages of blockchain to make digital assets ownable in ways previously impossible, creating legitimacy and permanent value.
This has attracted the attention of the industry, as gaming pivots its focus to in-game assets to fund and make games profitable. Here, blockchain could potentially solve a number of related problems such as eliminating fraudulent items, securing scarcity, and incentivizing more purchases by making items transferable across games.
According to a survey by the Worldwide Asset eXchange (WAX), on a platform based on the ownership of digital assets, 62% of gamers would be more likely to invest in digital assets if they were transferable between games.
Also, 84% of developers would increase the use of digital items if such exchanges were possible. Epic Games' CEO Tim Sweeney hasn't publicly ruled out applications of blockchain or cryptocurrency which might be enough to tip gaming towards mass blockchain adoption.
Check out some other ways that Bitcoin will change the future, in this article.
So we know that blockchain offers many things to the gaming industry, with the more promising offerings being:
Cross-play is when a game shares its player base among multiple devices. A game like Dauntless is available on PS4, XBOX ONE, PC, and SWITCH. What makes it cross-play is that no matter which platform a player is using it is possible to encounter players who are playing the same game on all the other devices.
Someone playing on a PS4 can be playing with a person using a PC. The next frontier is to allow a person who owns items on his PC account to have them ready to use for his character on a console.
Even in the previous example, cross-play is limited to one game. No matter what device a gamer is playing, the user is still just in Dauntless. In blockchain, the user has the capacity to go beyond this limitation.
In order to advance cross-play even further, the possibility to trade between different games by linking these different universes' data, items and assets are needed. This will greatly expand the horizon of gaming as multiple offerings are interconnected between platforms and genres.
The transfer of verifiable digital tokens among different games that share a universe is the great promise of blockchain. Imagine a space sim like Elite Dangerous or Star Citizen, where on the PC a player has own items.
Then he goes to a console and plays a shooter linked to the universe of the previous game, what it is earned on this FPS is then shared with the space sim. Finally, as he commutes to work, he trades his excess items on his phone connected to a global market.
Games running on the blockchain also opens up the possibility of fairer governing rules. In such cases, the game's mechanics will only be changed if the majority of users vote in favor of proposed modifications. Alternatively, a game following this model could be forked if a large portion of the community decides to support the proposed changes.
This could potentially stop the more predatory practices of large gaming companies. Since if the player base enjoys the game but dislikes aggressive monetization practices, the community can propose an update.
If enough people agree, the game can even be split into two offerings. Of course, this could also be abused and a game splintered too much could lose popularity.
A blockchain could also prevent hackers and cheaters from disrupting the game as there is no single point of failure. The account information and possessions would be secured by the same standards as the underlying protocol.
Online games exist on servers that depend on continuous support for the project by the publisher or developer. This means that at any point and for any reason service can be stopped, leaving the players with essentially nothing. All of the hours dedicated and all of the items accumulated are taken from them forever.
With blockchain, players can take control of the game's lifespan. As long as the blockchain network keeps running, the game remains alive. Then different teams of developers can take over for periods of time and build upon a foundation.
The players would have a direct say on the changes. Players would be able to show support with the purchase of tokens to fund updates.
The result would be a closing of the gap that exists between the developers and the community. No longer would the user be beholden to the whims of a publisher, nor a developer pushed around by its publishing house.
The world of Decentralized Ledger Technology is looking for its beachhead into mass adoption. While all eyes rest on the promise of decentralized finance (DeFi), gaming offers equally tantalizing possibilities as gamers are tech-savvy by nature. This could be the winning combination that takes blockchain into the mainstream.
