The traditional gaming industry is worth $160 billion USD, with 2.7 billion players globally!
In-game spending by players accounted for the biggest share of the video gaming market in 2020. Globally, gamers spent an approximate $54 billion USD on in-game content in addition to initial game purchases. The market value of in-game purchases is projected to surpass $74.4 billion USD by 2025.
Why is this important for the crypto and NFT world?
Profits are great for gaming companies and their teams, but how about the user? In-game purchases enhance the user experience and bring extra joy to the game: this is currently the main benefit to users. Additional benefits might include flexing with the latest and hottest gear, and pay to win advantages.
However once that money is spent, that value is fully transferred to the game company, and the user no longer retains any value. The in-game assets are centralised and only exist on the company’s database and servers: they are in full control and there’s no way to extract that value back to the user, or transfer it when they are finished with the game.
Bring in the power of blockchain!
Blockchain technology is a distributed and decentralised ledger that immutably stores information such as transactions in a way that is verifiable, incorruptible and censorship resistant. Meaning that the historic information in the blockchain cannot be changed by anyone and is there for all to see, transactions can’t be halted by third parties and no permissions are needed to operate, nor do users need permission to transact.
Players have had very little control of their in game purchases historically. Traditionally, the gaming company decides whether or not to allow in-game purchases to be traded. Where this is not facilitated by the company, ‘black market’ stores fill the void — enabling players to bypass these constraints by buying and selling full accounts. The company receives no benefit from this. Additionally, it can be risky and costly for players to engage in this black market activity.
Trading amongst Fortnite players showcases the constraints of black market trading. Fortnite has a wide range of collectibles, player skins and accessories that users purchase with in-game currency. These cannot be traded or sold to other players. Many speculate the reason for this restriction is to avoid children being taken advantage of through scams in any such trading system. Without a way to easily verify assets from the other party and a sound payment system, this may ring true. Scammers manage to scam over Paypal for example by refunding certain payments after the item they want is sent.
However — whether Fortnite allows it or not — trading flourishes regardless in the form of buying and selling entire accounts! This only plays into the hands of scammers, pushes trading into a black market environment, and allows vulnerable players such as children to fall prey to scams. Epic Games (owners of Fortnite) need a way to verify their assets, provide payment finality and proof of ownership. This is a perfect use case for blockchain.
Blockchain allows individuals to verifiably hold game assets themselves, in their own personal wallet that a company cannot touch. Known as NFTs or Non-Fungible Tokens, they allow unique, non fungible items to be digitally and verifiably owned and traded. These assets can provide a greater sense of ownership towards the game and are interoperable with other games that want to include them. The asset retains its value where there is intrinsic value to that asset: which can be attributed to its utility, access, cultural importance and scarcity. Now players have a way to retain their once sunken in-game costs!
Blockchain benefits gaming companies too
Gaming companies that can create desirable assets will find their communities feel a greater sense of involvement and attachment to the game and its culture. Players will feel part of a special club and build passion and word of mouth for the assets and the company. These companies can generate royalty sales for secondary sales of the assets, in a verifiable manner, creating a beneficial and less risky trading market. Games can further develop their in-game economies and enhance gamification of their in-game assets. Traditionally, the story lines and lore built around in-game assets serve as entertainment. However, the possibility of user ownership of assets has remained under-rated and is now possible with blockchain and NFTs. The right culture around NFTs can build and inspire invested and loyal communities. The right culture and in-game assets will drive derivatives, spin offs, and other games to accept the assets, adding to the culture, community and value of the company’s assets.
Player benefits are the driver of this revolution
When game assets are owned by players, game developers are incentivised to cater and collaborate with their community of players, delivering updates the players want and driving a game and economy that puts the players first. Why? When players own the in-game assets as NFTs, and if another game better caters to their needs and wants, they can take their NFTs and play on that game entirely, or participate in both.
When players hold ownership of NFTs, they feel more invested and dedicated to the game.
Players can participate in other games that integrate their NFTs, enjoying free and open trade. Instead of paying to play, users can play to earn, thus value is given to the company, but also retained by the player: a win/win! Asset trading moves off the ‘black market’ and is open, transparent and fair. If a player decides to move on they could sell their NFT and retrieve the market value of their NFT, whether that value is retained, increased or dropped, but the option is there and the initial cost is no longer entirely sunk.
Blockchain presents an incredible opportunity for a revolution in access, ownership, inclusivity and economic gain for gamers and game developers. Blockchain adoption will drive innovation, a greater sense of community and quantifiable culture shift that can develop into economies. Truly this frontier is ready for change and brings great benefit to all.