5 reasons why blockchain-based gaming economies are future
Anyone who hasn’t been living under a rock knows that the gaming industry has been on fire recently. It’s one of the sectors that has reaped significant benefits from the COVID-19 pandemic.
The average investor, on the other hand, might not be aware of the following growth figures:
The worldwide gaming sector is now worth $180 billion, making it the world’s fastest-growing form of entertainment. In terms of annual sales, the global film industry is about $100 billion, while all North American sports combined are worth $73 billion.
Experts predict that by 2025, the number of online game broadcasters would have risen to one billion, or one out of every nine individuals.
Three of the top four most-watched sporting events in the United States in 2018 were not even traditional sports. They were e-sports competitions. The League of Legends title, for example, attracted 30 million more viewers than the AFC Championship and 45 million more than the NCAA Football Championship.
Last April, Travis Scott gave a live performance on the popular game platform Fortnite. According to TechCrunch and GamesIndustry.biz, it had over 12.3 million views and earned Scott over $20 million.
So, what exactly is going on here, and where is all of this expansion coming from?
Much of this can be attributed to technological advancements and exponential development. Technology is continuing to change the way we communicate, collaborate, generate and consume information, transfer value, and develop online communities.
With his coffee shop concept, Howard Shultz, the former CEO of Starbucks, popularised the idea of a “third physical location.” He believed that outside of the office and at home, humanity required a “third location” to congregate. The answer was Starbucks.
Today, we see the same approach being implemented among the younger generations. The new common area, however, is digital and is known as the metaverse. These are the places where kids are progressively congregating these days. They go to socialize with their peers. Play video games or listen to music.
This can be thought of as the next step in the evolution of digital communities, following AOL chat rooms and Myspace. Finally, there’s the metaverse. Now there are concerts in the metaverse. Burning Man has been captured on film. And this is only the beginning.
History Of Gaming
The first video game, a rudimentary tennis game akin to Pong, was released in the late 1950s. Later, in 1977, Atari was created. Beginning in the early 1980s, Nintendo began publishing popular games such as Mario Bros., The Legend of Zelda, Donkey Kong, and others.
It’s worth noting that the business model has evolved considerably over time. We used to buy a game for $60 at GameStop, for example, and then play it. It was a one-time fee that allowed for limitless play. Games were advertised and released in the same way that Hollywood films are promoted and released. The first two weeks would bring in 90% of the revenue.
This model is currently available. The freemium model is here to stay. Users are enticed to make in-game payments in order to upgrade skills, dress up avatars, acquire weapons, improve animations, and so on. Today, we see this in games like Roblox, Fortnite, and others.
For game developers, this is a lot more successful strategy because it keeps its consumers engaged and constantly upgrading so they can compete with their peers. We’re getting closer to a world where social signaling takes place in the metaverse between younger generations via an in-game avatar, the weapon they wield, and the skins they own. Hello, and welcome to the future.
Why will gaming shift to blockchains?
- Today’s gaming takes place on password-protected digital networks. Users will not be able to own their in-game assets as a result of this (skins, avatars, abilities, etc). They are owned by the platform. Axie Infinity is upending this model by allowing users to own their assets on Axie, such as nonfungible tokens (NFTs), and sell them for profit in a free market/gaming economy. Since May of this year, Axie Infinity users have earned the following revenue:
For an open and permissionless pay-to-play blockchain game, annualised revenues per Token Terminal come to $2.7 billion. Important note: Blockchain technology is the means by which players can obtain ownership of their in-game assets. This is not achievable with today’s technology.
- Gaming economies can grow naturally thanks to blockchains. Users can be compensated for their participation. Axie Infinity is leading the charge once again. To begin playing, Axie users must invest in the Axie NFTs and the AXS native token. They can then earn the SLP token by playing/competing, with the tokens obtained being exchangeable for other crypto assets or money, among other things. Many users in the Philippines are earning several times their monthly wage merely by playing Axie Infinity, which is really remarkable considering the economic difficulties caused by COVID-19. Let me ask you a question:
Which would you prefer: being paid to play a blockchain game or not being paid to play a non-blockchain game? “Show me the incentives, and I’ll show you the result,” says Charlie Munger.
- Public blockchains are permissionless and open to everyone. Do you have a cell phone and access to the internet? Cool, you’re welcome to join in. In today’s closed data architecture, this isn’t the case, especially if you don’t live in the United States. You can not only participate in a blockchain but also earn money. We should expect more people to access crypto and blockchain-based games in the near future as smartphone penetration continues to spread out with the expansion of 4G and 5G technology in emerging areas.
- Existing technologies’ costs are collapsed and compressed by open protocols. Public blockchains are protocols that are available to the public. Ethereum is a protocol that is free to use. On Ethereum, anyone can create games. By doing so, one is essentially outsourcing a large portion of their operating and capital expenditures to the Ethereum foundation layer blockchain, making it much easier for entrepreneurs to create a game. Low entrance barriers encourage competition. The end-users benefit as a result of this. This has happened many times throughout history. Blockchains are merely the next step in the evolution of open source software.
- Decentralization. Anyone can build on blockchains because they are open and permissionless. This indicates that blockchain games built on top of multiple layer-one blockchains, such as Ethereum, Solana, Cosmos, and others, should be expected in the future. Users will be able to easily switch games and transport their assets with them, such as NFTs in the form of skins, avatars, and weapons. This is something that is not currently achievable. Furthermore, users will be able to earn from trading their NFT assets, or perhaps they will wish to develop NFTs? You don’t need to own a gaming platform to participate.