The first computer games were developed in the late 20th century with the primary goal of providing entertainment to players. The first goal was to take players away from their everyday lives and into a fantasy world. Games began to take up more time than traditional forms of entertainment, such as movies, circuses, theater performances, zoos, etc.
There are currently over 6 billion people on Earth, and it is estimated that this number will reach 8 billion by 2023. If computer games become something that people do in addition to work instead of instead of work, there will be 4 billion gamers in the world by then.
The traditional boundaries between games, media, sports, and communication are disappearing, causing more businesses to merge and acquire other businesses around the world.
The online virtual world Second Life was one of the first attempts at creating a portal to the metaverse. It was active between 2003 and 2006 and grew rapidly during that time. Players in many countries have quit their jobs and dedicated themselves entirely to the virtual world.
The use of blockchain in games is causing a real revolution in the gaming industry. That is what this article seeks to answer.
The gaming markets
According to data from mid-2021, there are 3.2 billion people playing computer games globally. A report by Newzoo states that the global gaming revenues in 2021 are about $180.3 billion, which is 20% more than before the pandemic began in 2019.
Digital channels are the main sources of this revenue. Mobile games are driving the games industry to $93.2 billion dollars.
The game development industry has changed a lot in the last five years. Small studios are now able to create games for the global market with the help of mobile app stores and digital distribution platforms.
The Chinese markets makes up a large portion of the entire market, with around a fourth of all sales coming from China. This is in terms of both revenue and number of players. The Asia-Pacific region is home to 55% of all players and is the most profitable and fastest growing region.
The market is becoming increasingly dominated by new technologies, such as artificial intelligence (AI), virtual reality (VR) and blockchain. In recent years, we have seen a surge in the number of blockchain-enabled gaming apps and services, and this is only set to continue in the coming years. By 2022, the market for these kinds of projects is expected to grow significantly.
The evolution of business models in the games industry
Pay-to-play (P2P) model
From the 1970s up until the early 2000s, the most common business model for the games industry was the “pay-to-play” model. With this model, game development studios and publishers would generate revenue from initial game sales and, in some cases, from monthly subscriptions. There were few collaborations between the game and advertisers for in-game ads.
In this model, players can only extract value from games by enjoying the in-game experience.
Free-to-play (F2P) model
The “free-to-play” gaming model gained traction in the late 2000s and early 2010s. This business model was once seen as a failure that would either result in less money for a single game, or kill off the video game industry entirely. Although initially it was thought that video games were not a good way to make money, it has turned out to be the best way to do so. In addition, video games have also had a positive cultural impact.
In the free-to-play model, games are offered to players at no upfront cost. The revenue of publishing studios come mostly from in-game purchases, which are items and upgrades that make the game itself better, and advertisements. The streaming and esports services generate revenue for players, and also provide rewards for “elite” players.
Fortnite is a great example of how some of these free-to-play business models can be successful. The game was launched in July 2017 and generated over $5 billion in revenue in its first year. Its number of monthly active users increased to around 80 million in 2018.
Play-to-earn (P2E) model
The “play-to-earn” model is where users can earn tokens or crypto by playing games. This model is attractive because it provides rewards and entertainment, two things that have motivated humans throughout history.
The basis of the P2E model is that players who invest more time and effort into the game will be rewarded, and thus become part of the game’s economy. This creates value not just for the player, but also for other participants in the game ecosystem, as well as the developers. They receive digital assets that could be worth more in the future as an incentive for participating and playing for a certain amount of time.
Blockchain technology has made digital assets in games scarce, which can take the form of NFTs. NFTs can represent anything from characters like the kittens in CryptoKitties to cryptocurrencies like Bitcoin (BTC) or Ether (ETH).
Many concepts come from traditional games
The gaming industry that is based on blockchain technology is still in its early stages and is focused on many ideas that come from traditional gaming. An example of this is NBA Top Shot, which is based on the “collect and trade model” that has been popular for decades with baseball cards and other collectibles.
Axie Infinity is a blockchain-based game that uses the “breed and battle” game model that was launched by Pokémon in the 1990s.
Related: How blockchain technology might bring triple-A games to metaverses
Sorare is a game where players can buy and trade soccer cards in order to build their own competitive soccer teams. Just as Second Life and The Sims allowed people to escape to alternative realities, Decentraland and Somnium Space are providing people with immersive experiences in virtual worlds.
Although many blockchain games may fall into the same categories as traditional games, the most important distinguishing factor is their use of blockchain-based cryptocurrency support.
Overview of blockchain gaming
Advantages of blockchain games for players
The introduction of blockchain technology has allowed game assets to be stored on global, decentralized platforms, rather than being locked into a single game or controlled by the game development company. This has a number of advantages, including increased security and transparency, as well as the ability to trade assets freely. We’ve talked about this before, when we talked about the role of blockchain in NFTs.
Blockchain technology has made digital assets, like nonfungible tokens, interoperable and viewable across many different wallet providers. They can be traded on other gaming platforms and required in virtual worlds in the Metaverse. Interoperability has allowed digital assets to be traded freely on other gaming platforms, thanks to blockchain technology. This gives users complete ownership over their in-game items and allows them to use them however they want.
Players of blockchain games can access NFT marketplaces and brokers of crypto-active to buy and trade digital assets obtained from games. This can be done 24/7 globally. Tokenizing in-game assets creates more opportunities.
Related: Ready Player Earn: Where NFT gaming and the virtual economy coincide
The decentralized finance marketplace is a place where some players can put their acquired in-game assets to work and earn a return on their investment. DeFi platforms like Yield Guild Games help players who don’t have the money to buy in-game items to participate in a game by allowing them to borrow items and pay back lenders with a portion of their earnings.
The advantage of blockchain games for developers
Aside from giving gamers more ways to earn money, blockchain-based assets can also help game developers.
Gold mining is a common practice under the current in-game item exchange structure. Gold mining refers to the activity of selling game accounts or in-game “coins” on dark markets or over-the-counter markets. This limits the monetization opportunities for developers and makes players vulnerable to fraud.
Developers can use the expansion of marketplaces for digital assets to get information about the trading volumes of these assets. They can encode royalties into NFTs so that they get a portion of the sale price as a royalty fee every time the asset is sold. This is a real change in the way intellectual property and copyright are seen in the digital world.
The game industry and the property dispute
Games that use blockchain technology differ from traditional games in the way they approach ownership. Blockchain games let players keep track of the digital assets they earn or acquire through their participation in the games.
Players of traditional games cannot access their digital assets if the game’s servers are down, even though they paid real money for those assets. This means that in traditional games, the money and assets are owned by the publisher or developer.
Players who play blockchain games have full ownership of their digital assets. They can trade these assets with other players, sell them for real money, or use them in other games or virtual worlds.
How Blockchain Gaming Can Help?
CHARACTERISTICS OF THE GAMING INDUSTRY:
There are certain characteristics that all gaming platforms share, as well as specific industry dynamics that all stakeholders must be aware of. This sector is growing rapidly due to these technologies. They also make it a prime candidate for disruption! These are the following:
- You need money to play popular games. While some of such games allow a player to accumulate digital gold, that‘s too inconvenient for most players because it takes time. Most players spend their fiat money to buy in-game assets.
- Game entrepreneurs and developers need a safe and secure environment to develop and launch games and subsequently, monetize them.
- Players need to securely buy and sell in-game currency; hence they need safe platforms for that.
- Players may play many games, and they create their profiles there. They would like the profiles to be interoperable across games, and this is another area where technology can help.
- The trend of people projecting value on intangible assets is real, so we will see more and more real money spent on virtual games. When a sector enters this phase, it’s ripe for technological disruption.
- When they are not playing an online game, the players would need to store their virtual game assets securely. Currently, these assets are stored in the centralized server of the gaming company, making them an easy target for hackers. This is another area where technology can make a big impact.
- Do you play online games? Then you have experienced this. You never really own any of the in-game assets, rather the gaming company owns them. This presents another opportunity for disruption.
- Did you ever feel disheartened that your favorite online game shut down? Or, did you feel that the rules were changed suddenly and arbitrarily? Technology that can give greater control to players will disrupt the current gaming market.
- Have you ever felt that you have the talent to make a game even more interesting, but you can‘t do so because the gaming company won‘t employ you? A technology that opens the field for talented developers will be a game-changer.
- As a player, did you ever feel that you could make a game far more exhilarating if you could collaborate with the developer? If technology can spawn a business model enabling closer collaboration between players and developers, it will change the industry forever.
- Did you ever feel that if the gaming company allows the creation of rarer forms of in-game assets, then the game would be a lot more fun playing? The technology could help here.
- Players often face fraudulent transactions in virtual game platforms, which is another aspect where technology can make a difference.
This article discusses the characteristics, dynamics, andasks of blockchain games and what is to come in the future.
Why not find out how blockchain can have a positive impact on each of the above areas?
Cryptocurrencies Can Make In-Game Purchases Easier:
If you are a game developer, you can help players by enabling them to make in-platform payments and purchase assets in cryptocurrencies such as Bitcoin. Players will not need to wait for 3rd party payment providers to process their transactions. Instead, they can buy game collectibles instantly.
You are also saving players fees that the payment providers would charge. For more information on how cryptocurrencies are being used in video games, check out “Real World Applications of Cryptocurrencies?—?Video Game Virtual Goods.”
Blockchain start-ups are already noticing this opportunity. For e.g. Enjin has introduced a framework for game developers that include the following:
- Software development kits (SDKs);
- Wallets;
- Game plugins;
- Other apps for virtual item management and payment gateway.
They are also introducing blockchain technology to the video game industry. The Enjin platform has its own cryptocurrency, called ENJIN Coin, which will be used to facilitate transactions on the platform. To learn more about Enjin Coin, visit their website.
Blockchain Provides A Safe And Secure Environment For Game Developers And Entrepreneurs:
Blockchain platforms use data encryption technologies like the private key-public key to secure crypto token transactions. It is not possible to hack the data encryption techniques that we have today with the computing technology we have.
If one server is destroyed, the decentralized blockchain network will still be functional since there is no one server to destroy. Each node in the system has a complete copy of the database. Nodes work together to keep the database up-to-date and accessible to all.
While hackers can’t delete or modify a blockchain’s transaction history, it is impossible to stage a distributed denial-of-service (DDoS) attack against these networks. This text is discussing the different ways that blockchain networks can keep themselves secure. The main method mentioned is “Proof of Work,” but other algorithms are also mentioned as possible options.
For more information about the POW algorithm, check out “Proof of Work vs Proof of Stake Comparison.”
When you develop your game on the blockchain, you have a secure environment.
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