How Crypto and Blockchain Is Changing The Gaming Industry
by Game Marketing Genie, on 10-Nov-2021 10:48:01
The video game industry has enjoyed massive growth over the last few years. It is currently valued at $178 billion and is expected to grow to $268.8 billion dollars in 2025, according to data from Statista. This growth is attributed to the adoption and application of leading technologies such as artificial intelligence (AI), virtual reality (VR), augmented reality (AR), and the Internet of Things (IoT) that enhance the game experience for both players and developers.
In the midst of all this, it's no surprise that the industry is also looking to embrace another cutting-edge technology – Blockchain. Crypto in gaming has long been thought of as the solution to making the gaming experience more decentralized, and so far, it's showing a lot of promise. Technologies like non-fungible tokens (NFTs) make in-game assets ownership easier and more robust. This prevents the challenge of account theft and allows users to port their assets between games, thus opening new avenues of value for the industry. Decentralization could also help small development studios wrest control from the handful of large studios that dominate the sector.
It’s evident that blockchain gaming solves many legacy problems of the industry. Let’s now dive deeper into blockchain gaming to see the different ways the technology can make a difference.
7 ways in which blockchain is changing the gaming industry
Here’s how blockchain in gaming is transforming the sector.
1. NFT and in-game asset management
Blockchain gaming utilizes true asset ownership from the same concept at the core of cryptos such as Bitcoin and Ethereum. This is a fantastic innovation for players who have accepted that the items they buy will forever be stuck in the games they play. Typically, players are used to walled gardens that prevent them from moving their assets freely.
The new blockchain system lets players verify that their items are rare and allows them to send anything to anyone. All this happens without forcing players to jump through hoops or sell their entire accounts just to transfer one item to a buyer. This has enabled a player-driven economy where gamers can trade scarce in-game assets and make a profit. But the transfers don’t just happen within one game. The assets can also be transferred across games, thus enhancing the gameplay and encouraging gamers to spend more time playing.
Figure 1: Enjin NFT transfer system. Source: Twitter
Systems like Enjin have made it easy for everyone to use NFTs. The system allows creators to add transfer fees to monetize the trading done in and out of games. This way, developers don’t feel like they are losing out when players transfer items from their games elsewhere.
Figure 2: CryptoKitties Blockchain Game. Source: CryptoKitties
CryptoKitties was the first blockchain game to be developed, and it caused quite a stir. The game introduced unhackable assets, with a player’s goal being to breed, buy, and sell virtual cats. Because of its unique format, the game became so popular that the platform that operated the game was slowed down. On top of that, one Kitten was sold for over $100,00, proving that blockchain is indeed the future of gaming.
2. Decentralized marketplace for in-game items
Until recently, gaming has primarily been a centralized activity. All the data, assets, and in-game items are confined to the game they originate from, with all the ownership retained by the game devs.
The introduction of blockchain will lead to a more decentralized future where players own the assets they win or purchase and can transfer them for use in another game. This puts real-world value on digital in-game assets since some of the items can cost thousands of dollars, and players can sell them for a profit.
The current centralized nature of video games means that players don't own the items they have won. If they stop playing the game or it crushes, everything they have collected while playing is lost. Just recently, a massive fire in France destroyed the servers of the popular role-playing game Rust. As a result, players lost all their data and the items they had won or purchased.
Since players spend a lot of money on games these days, they shouldn't lose everything just because they stopped logging in. By decentralizing the industry, crypto gaming has transformed in-game spending into an investment. When players stop playing a game, they can sell what they bought to earn back their money and spend it on something else.
3. Proof of concept
There's already a working concept of what blockchain gaming should look like. Nine Chronicles is an entirely decentralized PC game that runs on blockchain. The game doesn't have any centralized servers, and developers cannot force through updates or shutdowns.
Figure 3: Nine Chronicles game. Source: Nine Chronicles
The game runs on an open API that allows players to make their own content and modifications and even create marketplaces to trade their assets. The game is also free to play, and newcomers don't need a cryptocurrency balance to join in.
Nine Chronicles shows just how blockchain can revamp the gaming industry. Through it, developers and players are free to create games they want to play. Ultimately, this flexibility creates a prosperous state of gameplay, underpinned by decentralized, open-source technology.
4. Transparent revenue distribution
Like other forms of entertainment, video games are developed and distributed by different groups of people. Games have usually been distributed through centralized platforms like Steam, which get a considerable amount of the profits for giving developers exposure to a large market.
The distributors sometimes earn as high as 30 percent of the revenues earned. Blockchain-based platforms get rid of this uneven sharing of revenue by eliminating the centralized intermediaries to ensure developers are paid more fairly for their work. The recorded sales in blockchain also make it easier for game developers and distributors to trust each other better.
5. Better ways of incentivizing players
Blockchain technology has also introduced new game marketing strategies where players are incentivized with amazing rewards. The rewards could be in the form of native tokens whose value can be realized by trading them for other in-game assets or selling them as NFTs in the virtual marketplace.
Figure 4: Axie Infinity. Source: Axie Infinity - Play to Earn Revolution
This model is currently used in one of the most popular play-to-earn crypto games Axie Infinity. Just like CryptoKitties, gamers build teams of Axies and use them to destroy enemies. The game incentives players to participate in the adventure games and PVP compact to earn AXS tokens to breed their axies.
6. Increase competition
Blockchain in gaming has opened up new territories for developers. It's now easier to create games than before, thanks to the open-source nature of blockchain games. If you need guidance to create a particular type of game, you can easily view the code of similar games for inspiration.
Centralized gaming companies keep their codes private to ensure they aren’t replicated. Talented developers also had to find jobs in these companies to bring their ideas to life because of how restricted the environment is.
But with blockchain gaming, there's a lot of excellent resources and software development kits for developers to create their own games. We talked about Enjin earlier, but they aren't the only company offering SDKs to make blockchain-based games. There's also Loom Network that provides their Unity SDK that developers can use to build games.
With developers empowered to create games, there will be more crypto-based games for players to choose from. The increased competition will result in more high-quality and affordable games for players to enjoy.
7. Increasing scalability of the game via creating virality
Any game marketing agency will tell you that the decentralized gaming economy makes it easy for blockchain games to go viral. Since players get to keep and even trade the assets they earn while playing a game, it will attract more people who want to get their hands on the prized items.
Developers can incorporate tokens that players can earn when they progress through the game. They can make these tokens scarce, such that only a few players own them after achieving certain milestones in the game. Depending on their scarcity, the tokens can form a cult-like following online where everyone wants to own them. This will increase their value, resulting in more people flocking your game to try and earn valuable tokens. This will make your game popular, and before you know it, your blockchain game will be the talk of work. Work with a gaming marketing agency to create in-game assets that will make your game popular with players.
With the advancement of technology, developers will soon have the tools to create blockchain-based games or add blockchain features to their existing games. Blockchain in gaming provides a way for gamers to collaborate with developers to improve games and become entrepreneurs by trading the assets they acquire when playing games.
Let us know your thoughts on how blockchain technology will affect the gaming industry in the coming years.
Contact us if you need help to incorporate blockchain technology into your game.