The gaming industry is seeing a seismic shift — and blockchain is right at its core. Even if mainstream gaming studios are still tiptoeing around the technology, indie producers are not holding back. That’s why the number of active blockchain games doubled in 2021, with 398 now on the market and new ones launching every day.
And the gamers are certainly here for it: At the end of last year, over 1.3 million unique daily wallets were interacting with game-related smart contracts, representing a massive 46-fold increase in just a year. From non-fungible tokens (NFTs) to play-to-earn models, blockchain technologies are set to transform gaming economics for good. Here’s how.
As a decentralized ledger, blockchain has the power to rewrite the rules of digital interactions. For players, it advances easy and transparent ownership of in-game digital assets, so they can get long-term, tangible value (both financial and status-wise) from entertainment.
One of the ways to achieve that is through a play-to-earn model, allowing players to earn tokens or NFTs. The more they participate in-game, the more they earn — something extremely popular in countries like the Philippines or Venezuela. Axie Infinity, DeFi Kingdoms, Aavegotchi, The Sandbox, and Berserk, among others, have already built massive fanbases through the model. But while play-to-earn is here to stay, it may not be viable for all games.
Another key concept game producers can leverage is GameFi. It refers to a revolution in gaming where players don’t just spend money on in-game content and items but instead invest their resources in assets that can appreciate in value and be resold on secondary markets over time.
Interoperability then completes the picture. The blockchain industry is moving towards an ecosystem where gamers can utilize their items, be it avatars, skins, or wearables in diverse digital environments — and not necessarily in that one game where they originally purchased them. For example, if a gamer invests in a limited edition avatar, they could soon be boasting it in numerous metaverses, such as Decentraland and The Sandbox.
There’s a wealth of revenue streams and monetization strategies that game producers can play around with:
Raising money for games: Game creators can sell NFTs or tokens even before the game is live and have a community of stakeholders and fans to help build and launch the project. Rather than resources being concentrated with a few studios, this allows for gaming economies to form in more organic ways. For example, when HODL launched its play-to-earn game on PancakeSwap, their crypto token sold out within 10 minutes of the presale. Similarly, The Sandbox launched its LAND token (NFT) to scale future real estate expansion within its ecosystem.
Creating in-game token economies: Developing native crypto coins for the in-game experience encourages users to collect and earn more, creating a whole network of microtransactions. With further blockchain development, stablecoins will be key to enable purchases with other payment methods — including credit cards and fiat — making new gaming models accessible to all gamers worldwide.
One of the front-running projects is Axie Infinity, the number one decentralized app built on Ronin, an Ethereum side chain. As every user has to buy or rent an NFT to start playing, it’s imposing a smart paywall structure that benefits both creators and existing players.
Living off royalty fees: Whenever a gamer sells their NFT on a secondary market, either directly within the game or through an external marketplace like OpenSea or the Venly Market, the game producers get a royalty fee. And even a 10% royalty guarantees a sustainable, long-term revenue stream for producers. Undoubtedly, there’s a lot of potential in royalties, as gaming NFT trading volume reached a whopping $4.5 billion in 2021.
Launching exclusive collections: By announcing special NFT drops or adding new items into the game experience over time (such as more opportunities to purchase a virtual piece of land), game producers can scale in-game experiences while earning profits.
When Ubisoft, the gaming behemoth behind Assassin’s Creed and Far Cry, launched limited edition NFTs for their Ghost Recon Breakpoint game in late 2021, they faced major criticism from their fanbase. Why? The players complained about some 600 hours of game time needed to earn just one of the items. This, together with the distrust towards cryptocurrencies among the more traditional gamer segments, represents a real hindrance to greater adoption.
So while the big fish in the industry are slowly pioneering the first blockchain-based innovations, they are still trying to figure out the best way to enter. Still, this may not be for too long: Microsoft has recently acquired Activision Blizzard, the studio behind gaming hits like World of Warcraft or Starcraft. There’s perhaps no greener flag for the blockchain gaming segment than Microsoft willing to invest almost $69 million into its metaverse gaming ambition.
As blockchain enters gaming, a lot will change for users. They can suddenly become investors whose digital assets form a real part of their digital identity across platforms for years to come. Marketing-wise, this brings diverse, exciting opportunities for gaming studios — both big and small — to tap into.