About 15 years ago, a teenage Canadian gamer woke up to an unpleasant surprise. Blizzard, the video game company behind his favorite game, World of Warcraft, had nerfed (a gaming term for reducing the powers of an in-game character) this young gamer's character overnight. Disgusted with the "horrors centralized services can bring," this gamer vowed to take revenge and, a few years later, co-created Ethereum, the second largest cryptocurrency.
The fact that World of Warcraft was the inspiration behind Vitalik Buterin's forays into decentralization and blockchain is not known by many. However, fifteen years later, gaming is emerging as one of the leading use cases for blockchain technology. Ethereum and subsequent blockchains have enabled distributed computing, decentralized applications, and the ownership economy, opening up endless possibilities for the gaming industry. Today blockchain technology powers hundreds of games played by millions of players.
Like other industries, the gaming industry is no stranger to disruption by newer technologies. From Dangerous Dave to DOTA to Axie Infinity, video games have come a long way. As trends such as play to earn and NFTs are set to disrupt the $210 Billion gaming industry, the incumbents must look at newer technologies such as the metaverse, crypto, and NFTs. Along with new monetization opportunities, web3 enables a greater degree of community participation and ownership for video game developers. Here are some of the reasons why gaming companies should consider integrating web3 technologies into their games.
Newer Monetization Models
Web3 gaming, with technologies like blockchain and NFTs serving as its foundation, has brought a new monetization model into existence. Players have an opportunity to earn passive income through staking and other methods. They also receive financial rewards for the time and effort they put into games. Because of the decentralized nature of blockchain, these rewards can be sent and received by anybody across the globe with minimal or no Fees.
Game developers can create exclusive 'VIP' clubs that are accessible only to owners of s tokens and in-game items. Furthermore, collecting and trading gaming NFTs have become more than a hobby for many dealers of NFTs. For instance, in less than 24 hours, Yuga Labs generated more than $561 million from just land sales in their metaverse 'Otherside' this year. In fact, the advent of play-to-earn gaming is providing people in many underdeveloped nations an opportunity to make a living. Thanks to DeFi, gaming companies can also program a percentage of NFT resales to come back to them as royalty, ensuring perennial sources of income and higher Customer Lifetime Values.
Web3 has enabled the 'ownership economy.' As we move towards the metaverse and virtual reality, users are spending more and more on their digital avatars. The focus on the metaverse and AR is evident from the fact that tech giant Meta has pumped over $36 Billion into its Metaverse division since 2019. With leading brands such as Louis Vuitton, Adidas, and Nike racking up millions of dollars in wearable NFT sales, we are set to see new business models opening up in the gaming space.
Imagine playing Call of Duty, but it's even more exciting because you and your gamer community have co-created the maps and scenarios. Due to its decentralized and open-source nature, web3 enables greater participation from the community. Communities can vote for anything - from features to game dynamics, putting power back into the hands of the community.
Contributors can get rewarded for their efforts in proportion to their contribution to the games and the community. With the community at the heart of building and developing the games, game developers can expect renewed zeal and participation from the players. Gamers were some of the earliest adopters of crypto.
Throughout different market cycles, gamers have been some of the oldest adopters of crypto worldwide. As of today, there are roughly 1.4 million unique wallets connected to gaming dApps. With that number only set to grow, it makes sense for gaming companies to go after this market segment by enabling web3 and crypto integration with their existing and new Games.
As organizations such as Fortnite, Meta and Roblox vie to get the early mover advantage in the metaverse, we can expect to see a singular and more united version of the metaverse soon. Experts suggest that these metaverses will allow users to soon work, socialize and play together on one platform. Fungies.io, one of the providers of Whitelabel NFT Marketplace for game assets and developer tools for Web3 - will soon launch its “Shopify” for in-game NFT’s.
Fungies.io created whitelabel NFT marketplace for Web3 games.
Web 3.0 will allow gamers to switch their digital assets easily in the form of non-fungible tokens, or NFTs, which allow for interactive communication between different games and even outside applications. Additionally, gamers could use their in-game assets in various games. Platforms such as reNFT and EXA are already pioneering rentals for gaming NFTs.
First mover advantage
Web3 gaming is still a nascent space. As more and more users flow to such games and platforms, early adopters will stand the competitive advantage of being the first movers in the space. Game developers can use Web 3.0 technologies to create a better user experience and more engaging games for their users.
Fueled by easier accessibility to smartphones and computers, a third of the world's population are gamers today. With that number only set to grow with the rising disposable income worldwide, the gaming and metaverse industry is expected to grow multifold in the near future. Gaming has been one of the most popular entertainment forms for the past few decades, and As web3 technologies emerge as the new frontier in gaming, they are slowly revolutionizing the way we play games, earn rewards, and experience ownership.
There's no denying that some aspects, such as security and convenience, need to be fixed for web3 to win widespread acceptance, but companies that shift their games to these newer technologies will have the first-mover advantage, ensuring maximum adoption.