Everything you need to know about gaming in Web3

Gaming has been driving technological innovation for decades. Now, with the emergence of Web3, it’s no surprise that ‘Web3 Gaming’ is such a frequent topic of discussion.

The exact definition of Web3 itself is regularly debated, but one thing we can all agree on is that Web3 is the next evolution of the internet. Web3 gaming generally refers to the use of emerging technologies, such as a metaverse, non-fungible tokens (NFTs), or a blockchain, in the gaming industry. These technologies have the potential to revolutionize gaming by introducing decentralization, security, tokenization, and digital ownership. With the integration of Web3 technologies, gaming is poised to remain at the cutting edge of innovation.

The gaming industry is a significant player in the technology sector, with a global market share of over $232 billion and a predicted compound annual growth rate of 10.2% through 2030. As technology continues to advance, the gaming industry will look to leverage new and emerging technologies to remain competitive and offer innovative experiences to players. The adoption of Web3 technologies in gaming is one way in which the industry is looking to do just that.

Today, we will explore the concept of Web3 gaming in greater detail, including the technologies being used, the current state of the industry, and the potential opportunities and challenges that Web3 gaming presents.

What is Web3 gaming?

Web3 gaming uses cutting-edge technologies to allow the creation immersive online environments for players. Some might use virtual reality headsets or augmented reality in order to further immerse players. Web3 games are primarily server-based and multiplayer, opening the door for integration with metaverses.

Though still evolving as a concept, the metaverse has been envisioned by some as a shared virtual environment created by the convergence of augmented reality and persistent virtual spaces. It can include a combination of all virtual worlds, virtual reality (VR), augmented reality (AR), artificial intelligence (AI), and the internet. Humans naturally think and interact in 3D. As such, the metaverse offers endless possibilities for gaming, allowing players to immerse themselves in virtual worlds and interact with others in real-time in ways they have never been able to before. 

Blockchain technology can be used in gaming to ensure the integrity of in-game transactions and to provide players with greater control and ownership over their assets through the use of NFTs. 

NFTs, or non-fungible tokens, represent ownership of a unique digital asset, such as a piece of artwork or an in-game item. They provide scarcity and value to digital assets, allowing for the monetization of in-game items and providing a new revenue stream for game creators.

The integration of these technologies in the gaming industry has the potential to drastically change the way we play games and interact with each other. Let’s delve deeper into the opportunities and challenges presented by Web3 gaming and its importance for both the Web3 ecosystem and the gaming industry.

When is Web3 gaming happening?

Web3 gaming is already happening, with a growing number of games and platforms already utilizing the above mentioned  technologies. Some notable examples of Web3 games include Axie Infinity, a blockchain-based game that allows players to breed, raise, and battle fantasy creatures called Axies, and The Sandbox, a community-driven platform with over 200,000 daily users where creators can monetize voxel assets and gaming experiences on the blockchain.

In addition to these, many other games and platforms are exploring the potential of Web3 technologies. Adoptionis still in its early stages, but is expected to grow significantly in the coming years. According to a report by Dapp Radar, “[blockchain] gaming activity accounted for almost half of all blockchain activity tracked by DappRadar across 50 networks, with 912,000 daily Unique Active Wallets (UAW) interacting with games’ smart contracts.” It’s what investors are betting on too, with $1.3 billion raised in Q3 2022 by blockchain games and metaverses.

The future of Web3 gaming is bright, with endless possibilities for innovation and growth. As the technology continues to mature and user experience improves, it is likely that we will see more and more games and platforms adopt Web3 technologies or else  be built directly on the blockchain. 

How is Web3 gaming changing the industry?

Web3 gaming is bringing about significant changes to the gaming industry, both good and bad. Let's take a closer look at some of the positive impacts of Web3 gaming:

Ownership: One of the key benefits of Web3 technologies, particularly NFTs, is the ability to provide digital ownership and scarcity of in-game items. This allows for the monetization of in-game items and provides value for gamers who may be willing to pay for unique or rare items. Additionally, it provides game creators with a new revenue stream. 

You’re also probably familiar with pay-to-play gaming. The key difference with NFT-based items is that if a player loses access to their account for any reason, they still have their items to use in a different account or sell off. For an excellent example of this, check out episode 41 of the Venly Expert Talks podcast around the 47-minute mark. 

Inclusivity: Decentralization through blockchain technology allows for greater participation and ownership in the gaming industry. Rather than relying on centralized entities, players can have more control and autonomy over their in-game assets and activities. This can lead to a more inclusive gaming ecosystem where players have greater agency.

Inclusivity is also extending to a market segment that has been largely ignored by the traditional gaming industry for decades. Web3 gaming is making a point to create games with women in mind. Women are attracted to Web3 gaming because the aesthetics, customization, and community building that speaks to them are all present. But better representation in the community and within the games themselves is also imperative.

Opportunity: The integration of Web3 technologies in gaming opens up new opportunities for the industry and its players. For example, the metaverse offers endless possibilities for immersive and interactive gaming experiences, while NFTs and blockchain technology enable new monetization models and the creation of virtual economies. 

Through play-to-earn, learn-to-earn, move-to-earn, and more, Web3 gaming provides people from around the world with new opportunities. The adoption of Web3 technologies in gaming is still in its early stages, but the possibilities for growth and innovation are exciting to contemplate.

Overall, integrating Web3 technologies into games has the potential to bring about significant positive changes to the industry. However, some potential challenges and drawbacks need to be considered. Here are some potentially negative impacts of Web3 gaming:

Cash grabs: One concern is that some may see the adoption of Web3 technologies as a way to make quick money rather than truly revolutionizing the industry. This could lead to a proliferation of poorly thought-out or shallow games and platforms that seek to capitalize on the hype around Web3 technologies without offering genuine value. 

However, this is normal with the introduction of any new technology, and the cream will rise to the top. The main risk is that projects that are only in it for the money and don’t bring any value to the players could dissuade people from participating.

Poor UX: Another potential challenge is the current user experience for some Web3 games. These applications can be clunky or difficult to use, creating a barrier to adoption. This is especially important given how competitive the gaming industry is. Players have a variety of options available to them; if the user experience is poor, they may simply choose to play other games. 

For mass adoption of Web3 gaming, there needs to be a blockchain-based game that is comparable to mainstream games that use blockchain tech to bring gameplay to the next level. There is no doubt that Web3 gaming has the potential to make significant positive changes to the industry, but these changes must be carefully considered and aligned with players' needs.

Why is Web3 gaming important for both Web3 and gaming?

Web3 gaming is important for both the Web3 ecosystem and the gaming industry for several reasons. Let's take a closer look at why Web3 gaming is important for each of these domains:

In terms of the Web3 ecosystem, the adoption of Web3 technologies in the gaming industry brings in a new user base and helps to demonstrate the potential and practical uses of these technologies. According to PwC’s Global Entertainment and Media Outlook 2022-26 the global gaming industry will be worth $321 billion by 2026. As such, the adoption of Web3 technologies in gaming will catalyze wider adoption of these technologies and help to showcase their potential to a broader audience. 

For the gaming industry, the integration of Web3 technologies offers new opportunities for ownership, inclusivity, and revenue for the industry and its players. Blockchain technology allows for greater control and ownership of in-game assets and activities, while the metaverse offers endless possibilities for immersive and interactive gaming experiences. The adoption of Web3 technologies in gaming has the potential to bring about significant positive changes to the industry, such as more secure and decentralized data management and different ways to monetize in-game assets.

The future outlook for Web3 gaming is bright, with the potential for significant growth. The adoption of Web3 technologies is still in its early stages, and there remains much room for growth and innovation in many industries. As the technology continues to mature and user experience improves, it is likely that we will see more and more games and platforms coming onboard, changing the way we play for ever.