The gaming industry is going through a tough phase and it seems like Blockchain is here to boost the economy and help them progress.
Anyone who has never lived under a rock before probably knows that the gaming industry is in turmoil. This is one of the industries that have benefited greatly from the COVID-19 pandemic.
However, the average investor may not be aware of the following growth figures:
- The global gaming market is currently worth $180 billion – the world's fastest growing form of entertainment. In comparison, the global film industry is worth $100 billion and all of North American sports combined have annual sales of $73 billion.
- Experts assume that the number of online gaming streamers will grow to one billion by 2025 - one in nine today.
- Three of the four most watched sporting events in the US in 2018 were not even traditional sporting events. It was an electronic sporting event. For example, League of Legends has 30 million more views than the AFC and 45 million more views than the NCAA Football Championship.
- Travis Scott appeared live on the popular gaming platform Fortnite last April. It received over 12.3 million views and grossed over $20 million for Scott for TechCrunch and GamesIndustry.biz.
What is going on here and where is this growth coming from?
Much of this we can attribute to the rise of technology and exponential growth. Technology continues to change the way we communicate, the way we collect information, the way we create and consume information, the way we deliver value, and the way we form online communities. Howard Schultz, former CEO of Starbucks, promoted the idea of a "third physical space" with his coffee shop concept. He believes that people need a "third space" to gather outside the office and at home. Starbucks is the answer.
We see the same concept at play among today's younger generation. Despite the fact that the new shared space is digital and is referred to as the metauniverse. Nowadays more and more children are hanging around here. They go there to meet their friends. Listen to music or play video games. We can think of this as the next iteration of the digital community: AOL chat rooms, then Myspace. Facebook and finally Metaverse. We've had concerts on the Metaverse. Burning Man is being digitized. And we're just getting started.
The first video game to hit the market in the late 1950s - a simple tennis game similar to pong. Atari was then found in 1977. Nintendo began releasing popular games starting in the early 1980s with Mario Bros., The Legend of Zelda, Donkey Kong, and others. It is important to note that the business model has changed a lot over the years. We used to pay $60 to play at GameStop, for example, and off we went. It is a one-time reward with unlimited play. The game is introduced in a similar way to the promotions and releases of Hollywood films. 90% of the revenue will come in the first two weeks.
This model is already on the market. Freemium model included. Users play for free and are forced to make in-game purchases to upgrade their skills, dress up avatars, buy weapons, improve animations, and more. We saw this in Roblox, Fortnite, and other popular games today. This is a much more profitable model for game developers as it keeps its users busy and always updated to compete with their friends. We're moving into a world where social cues occur among the younger generation in the metaverse through the in-game avatars, the weapons they carry, and the skins they possess. Welcome to the future.
Why games will switch to blockchain
Today's game takes place on a closed data network. This means that users cannot own their in-game assets (skins, avatars, skills, etc.). Platforms have them. Axie Infinity violates this model because consumers can hold their assets as irreplaceable tokens (NFT) from Axie and sell them for profit in the free market/gaming economy.
Token Terminal's annual revenue reaches $2.7 billion from this open and unlicensed pay-per-play blockchain game. Important note: Blockchain technology is a means by which users can own their in-game assets. This is not possible with the technology used today.
- Blockchain enables the organic formation of the gaming economy: Users can get paid to play. Once again, Axie Infinity takes the lead. Axie users invest to buy Axie NFT and own AXS tokens to start the game. From there they can win SLP tokens through games/races, as the tokens won can then be exchanged for other crypto assets or fiat etc. Many consumers in the Philippines are earning many times their regular monthly salary just playing Axie Infinity, all during the economic hardship caused by COVID-19, which is pretty cool. Let me ask you, if you could get paid to play blockchain games but couldn't get paid to play games without blockchain, which one would you choose? As Charlie Munger said, "Show me the incentives and I'll show you the results."
- The public blockchain is open to everyone and without permission: Do you have a cell phone and internet connection? Great, happy to participate. This doesn't really work in today's closed data architectures, especially if you live outside the United States. Not only can you participate in the blockchain, but you can also generate income. As smartphone adoption continues to grow with the advent of 4G and 5G technologies in emerging markets, we should expect more and more users to have access to crypto and blockchain based games in the near future.
- Open protocols collapse and reduce the cost of existing technologies: The public blockchain is an open protocol. Ethereum is an open protocol. Anyone can make Ethereum games. This way, you essentially outsource most of your operating and capital costs to the Ethereum base-level blockchain, which makes it easier for entrepreneurs to start the game. Low barriers to entry increase competition. In the end, the end user benefits from this. We have seen this game time and time again throughout history. Blockchain is just the next iteration of open-source technology.
- Decentralization: Because blockchain is open and permission less , anyone can build it. This means that we should expect a future where there will be blockchain games based on different blockchains of one layer, for example Ethereum, Solana, Cosmos etc. Users can easily switch between games and keep their assets in a form such as NFT Bring skins, avatars or weapons. That's not possible today. In addition, can consumers trade their NFT assets for profit, or may they want to build NFTs? Go ahead - you don't need to have a gaming platform to do this.
The gambling economy is the future and they will take place on the blockchain.