The gaming industry has been seeing rapid growth since 2020, growing from 155.89 billion in 2020 to over 217 billion in 2023, according to Statista. By 2027, the industry’s global market value could be as large as $285 billion.
But there’s more to the traditional gaming industry than is portrayed by flamboyant media and world-class game streamers. Despite the attractive revenue numbers, many e-sports companies struggle to profit. From a player’s point of view, traditional games have much to be desired – only a few players manage to make it to the big leagues, while the others are not rewarded in any form for their time and efforts invested in playing the game.
Web3 gaming completely changes the equation through equitable opportunities, ownership, and more for both players and developers.
In this article, we’ll take a deep dive into Web3 gaming and explore how it is changing the game (pun intended) for both players and developers.
What is Web3 Gaming?
Web3 gaming refers to a new model of gaming that utilizes blockchain and other related technologies to create a decentralized and transparent gaming ecosystem where players have full ownership and control over their in-game assets and economies. It allows for greater security, autonomy, and community engagement in the gaming experience, and also embraces the concept of the metaverse, an immersive digital world where users can interact with each other and with virtual objects and environments.
In a nutshell, web3 gaming involves the use of the blockchain to store data related to in-game assets, rewards, and economies. The data is stored on a distributed ledger which anyone with access to the network can access. This distributed ledger makes it extremely difficult for any one user or group of users to manipulate the game’s economy or in-game assets.
Blockchain gaming gives players true digital ownership of their in-game assets, and they can trade them with other players, even across different games and platforms. The use of smart contracts in web3 gaming also enables fair and transparent gaming experiences, with provable scarcity and reduced potential for fraud and cheating.
Further, with cross-chain bridges and interoperable NFTs, web3 gaming also allows players to transfer their items, assets, and rewards across different games, platforms, and networks.
Features of Web3 Gaming
Web3 gaming builds upon the limitations of traditional gaming by bringing in new features that are not possible without the blockchain. Here are some of the most critical features of web3 gaming:
- Decentralized ownership of in-game assets and currencies
- Provable scarcity and provenance tracking
- Interoperability between different games and platforms
Decentralized Ownership of In-Game Assets and Currencies
In blockchain-based games, players can truly own their in-game assets and currencies. All data related to these items are stored on a distributed ledger that anyone can access. This means that players have complete control over their digital assets, with no authority or third party controlling them.
So, how is this different from regular games that allow users to buy in-game assets like costumes, avatars, weapons, and more?
Well, in traditional games, players only buy the right to use these assets within the game. But with web3 gaming, players actually own these digital items as they exist on an immutable blockchain ledger.
What this means is that players can trade and transfer their in-game assets across different games and platforms, gaining real-world value for them.
Further, assets in conventional game environments do not hold any real-world value whatsoever. But that is not true for blockchain games. Here, players can monetize their assets by trading them with others, even outside the game.
For example: When Yuga Labs, the company behind the NFT collection Bored Ape Yacht Club, announced the land sale event for its metaverse game “Otherside”, some users purchased the land in the form of Non-Fungible Tokens (NFTs) and then resold them on other marketplaces, such as OpenSea, in order to make a profit.
Provable Scarcity and Provenance Tracking
In traditional gaming environments, it is hard to ensure the scarcity of certain items. This means that developers may print more copies of rare items or donate them to players as rewards which could lead to inflation.
But in web3 gaming, developers can ensure that the items are scarce and not subject to any inflationary pressures. This is achieved by minting assets as Non-Fungible Tokens (NFTs), unique digital assets stored on the blockchain that cannot be replicated or counterfeited.
NFTs also provide a way to track the provenance of each asset. This means that developers and players can easily trace specific assets’ ownership and transaction history, leading to greater transparency in the game’s economy.
Again, let’s take the example of Otherside.
Here, each plot of land is minted as a unique NFT called “Otherdeed.” And the developers ensured that there are only 200,000 land parcels available within the metaverse, which can also be traded as NFTs. Simply put, the metaverse is divided into 200,000 land plots which are represented as tradable NFTs.
Interoperability Between Different Games and Platforms
Traditional gaming universes are siloed. For example, your car from the game Need for Speed cannot be used in another game, say, Gran Turismo. For a long, this was also the case with decentralized games.
With the community’s push for a more interconnected and interoperable web, web3 games and their assets are becoming increasingly interoperable. Here, players can transfer their in-game assets and currencies across different games, platforms, and networks.
However, achieving interoperability between different games and platforms is not straightforward, as it requires solving several technical challenges.
One of the main challenges is the use of different token standards and protocols across different games and platforms. Each game or platform may use a different standard, such as ERC-721 or ERC-1155, or a different blockchain protocol, such as Ethereum or EOS, making it difficult for assets to be used across different games and platforms.
To overcome this challenge, there are several methods that can be used to make blockchain assets interoperable and allow them to traverse ecosystems.
One method is the use of token bridges, which are protocols that allow for the transfer of assets between different blockchain protocols. For example, a token bridge can be used to transfer an ERC-721 token from the Ethereum blockchain to the EOS blockchain.
Another method is the use of cross-chain communication protocols, like IBC, or Layer0 blockchain solutions, such as Cosmos or Polkadot, which allow different blockchains to communicate with each other and share data and assets.
Opportunities for Players in Web3 Gaming
Monetize From Day One
Gaming is no longer just a fun pastime; now, it can be profitable too! Last year saw a surge of pay-to-earn (P2E) games take over the scene; while this isn’t our favourite model of play yet, we are certainly headed in a better direction towards finding more sustainable models where players can ‘play and earn’ with free-to-play versions as well. In traditional gaming (free-to-play), players are often limited in their ability to monetize their in-game assets. And conventional games that do offer better incentives are usually paid versions (pay-to-play).
New Ways To Earn
In web3 gaming, players have the ability to earn real-world value for their in-game achievements, such as completing a quest, winning a game, or collecting a rare item. With capabilities like transactional revenue distribution, staking, and collectible NFTs, web3 gaming unlocks new revenue streams for players and developers to monetize their gaming experiences. This can create a more sustainable and robust ecosystem for both players and developers to enjoy.
Fair Gaming Experiences
Another opportunity that web3 gaming provides for players is a fair and transparent gaming experience. The use of smart contracts in web3 gaming ensures that the gameplay is fair and transparent, with provable scarcity and reduced potential for fraud and cheating. Smart contracts also enable players to verify and prove ownership of their in-game assets, providing an extra layer of security.
Opportunities for Developers in Web3 Gaming
Perpetual Royalties
Game developers are often inadequately rewarded for their contribution. With web3 gaming, developers can earn royalties (in perpetuity) for the tradable assets they create within these games. This creates a new revenue stream for developers and can lead to more sustainable business models.
Access New Markets With Better Retention
Growing at a rate of around 18%, web3 gaming provides game developers an opportunity to access new markets with better user retention with immersive experiences. By leveraging decentralized ownership of in-game assets, enhanced liquidity, and improved monetization opportunities, developers can create games that appeal to a wider audience and retain players longer.
Experiment With New Economies
Developers in web3 can also experiment with new economies and game theory. The decentralized ownership of in-game assets in web3 gaming opens up new possibilities for gameplay and economies, such as player-driven marketplaces and shared virtual worlds. Developers can use these new possibilities to create unique and engaging gaming experiences that appeal to a wider audience.
Limitations of Web3 Gaming
As attractive as the web3 gaming industry can be, it is still nascent, and there are some significant limitations that we need to consider before diving in.
Missing ‘fun’ element: We currently lack something special – the “fun” element that is crucial to the overall gaming experience.
Many web3 games today are focused more on financial incentives rather than on providing engaging and enjoyable gameplay. To attract a wider audience and compete with big web2 players, web3 games must prioritize the fun element in their design and development. The ability to monetize in-game efforts and assets is important, but it should not come at the expense of the overall gaming experience.
In order to become successful, web3 games must strike a balance between providing financial incentives and creating engaging, entertaining, and fun gameplay. Otherwise, it would become a place where only traders exist, trading on emotionless NFTs instead of enjoying game time together.
This adds up with the issues of low throughput, latency issues, limited tooling, and high technical complexity of blockchain games, and etc. Zeeve can help you with this.
Conclusion
While there are barriers we have to overcome, the opportunities with web3 games are also lucrative. With the web3 gaming industry on its way to a $37 billion market cap by 2032, it presents a wealth of possibilities for both players and developers.
Players can earn real-world value from in-game assets, while developers can monetize their contributions and create innovative gaming experiences that appeal to a broader audience.
As more developers embrace the potential of blockchain and its ability to create open economies, we will likely see more projects leveraging blockchain to create unique and engaging gaming experiences.
The future of web3 gaming may have obstacles, but promising indeed. These can open up new markets, offer players more control over their gaming experiences, and create new business models.
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