Blockchain technology in gaming industry
Online gaming already represents one of the most popular kinds of entertainment in the digital age. The number of games utilizing online modes and their popularity rises every year. The highly valuable items and loot boxes had already become one of the latest things to keep an eye on for the developers and community.
However, that’s not the case of the future. The world of technology has been in great shake during the last few years – and blockchain is the reason. The emerging revolutionary solutions comes to different areas while promising modern innovations, security, and convenience.
For example, cryptocurrency and blockchain technology were the hottest topics during the Game Developers Conference (GDC) that took place in early 2018.
The recent estimates show the generation of more than $120 Billion in revenue every year by the gaming industry. The game industry has been in the rapid development for the many years, and the popularity is indeed and undoubtedly is as high as never before. Also, this number is snowballing with the constant involvement from players in almost every country in the world. Moreover, the blockchain technology and cryptocurrency are also having an impact on fantasy sports games, a market that is estimated to be worth more than $7 billion a year.
What causes that? The virtual reality experience and play go far beyond the borders, races, beliefs, and languages. Moreover, your age or gender does not matter here. During a recent decade with the advent of the internet-technologies and platforms like Youtube and Twitch, more players had been engaged even in watching others play rather than playing themselves. By entering this industry, this is just another way in which self will change the world.
Most popular online games had already implemented this feature, enabling different built-in mechanics for random rewarding and exchanging between the players. Some companies had already managed to gain profit from it and even organized black market trades. Of course, most players do enjoy the overall game reward systems as they are supposed to be played and sometimes just by so-called “booster packs” for increased chances of getting the rewards. The others use the real, fiat money, to their advantage on the online battlefields. Anyway, the growing popularity of these items between the players seen the trading rise on the black markets. In this case, the cryptocurrencies already do play a part in trades, as valuable in-game items are already selling for different digital assets and even specific platform tokens.
Nowadays, over 2,3 billion people play games every day on different platforms and devices. The gaming industry reached $100 billion of revenue in 2016 and is still booming. Only around 4,000 pro gamers are making profits out of their time spent on games and pursued skills. Just a couple of games with 6% auditory already turn over close to $4 billion trading in-game items. Selling virtual items can also include: Currency or gold; Virtual items such as armor, weapons, mounts, etc.; Boosting services such as PvP, leveling, items drop rate increase; Game account selling. Moreover, the most expensive items ever include $330,000 for the Crystal Palace in “Entropia Universe” as well as $635,000 for Club Neverdie in “Entropia Universe.” One will have a tough time finding a virtual item selling for these massive amounts, but these five games are helping people swell their bank accounts to this day: “Entropia Universe,” “Eve Online,” “Counterstrike Global Offensive,” “Dota 2”, and “World of Warcraft.”
When speaking about the blockchain-based startups, an Ethereum-powered strategy PC-game “Beyond-the-Void” should be mentioned.
Another example is “WAX” – a decentralized platform that enables anyone to operate a fully functional virtual marketplace with zero investments in security, infrastructure or payment processing. WAX is developed by the OPSkins company founders, and it’s designed to serve the 400+ million online players who already collect, buy and sell in-game items.“D-Market” is the marketplace that allows its users are turning every virtual item into a real asset. Though, it is known that 94% of gamers are not involved in global trading at all yet.
Some companies, like the DMarket, a leading global marketplace that uses blockchain technology to transform virtual gaming items into real-world assets, hosted a blockchain and gaming panel discussion during GDC. The purpose of the panel was to provide an explanation as to why cryptocurrency and blockchain technology is having an impact on the gaming sector, which is expected to become a $143 billion global industry by 2020, according to the Newzoo research.
However, modern gamers do understand cryptocurrency options due to the fact that virtual money has been a part around in gaming for the last ten years. For example, dating back to the World of Warcraft which came in 2004, there was a one-hundred million dollar market for buying digital gold. In Wow it was used as the main currency to buy in-game assets, like armor, weapons, different merchandise, dragons or unicorns. However, there was a point – it would take gamers a tremendous amount of time to acquire digital gold, so they would use real money instead to buy in-game assets.
The reason why modern online gaming companies do have such profits is simple – most gamers used fiat currency like dollars to purchase gaming items, and the so-called free-to-play games become very expensive to play.
The latest info from the SuperData shows that the gaming industry generated $108.4 billion in revenue in 2017. Mobile games were the most significant sector, making $59.2 billion, followed then by PC games, which generated $33 billion last year. The interesting fact is that “free-to-play” games drove both the PC and mobile sectors – an estimated $82 billion was spent on these games.
Due to the additional expenses associated with free-to-play games, blockchain-based games are gaining traction primarily because the blockchain technology allows gamers to use cryptocurrency to trade virtual gaming items with one another – without an intermediary (which is actually one of the main points of the blockchain at large). That eliminates the need for gamers to use fiat currency to purchase items directly from game developers.
Another vital point of the blockchain technology is the tokenization as the use of cryptocurrency in gaming also solves the problem behind ownership of in-game assets. This means that once gamers acquire assets, they remain in their possession within a digital wallet until they decide to trade or sell the tokenized asset – just like any other cryptocurrency.
The real problem with the free-to-play games is the illusion this segment implies heavily in order to attract gamers pool – anyway, to achieve real progress and buy decent items, lots of money has to be spent. That problem applies to the whole industry problem, as profit drives all of the major companies. Moreover, most of the modern gaming-producing companies do value profit over everything else, and that creates specific market problems.
With the help of the blockchain technology, gamers will finally have the best options for setting their in-game items, while providing a strong focus on trade and the gaming economy. The best things are that the direct player asset ownership and managing allow for a proportion of game revenues to go back to the player base.
Over time the gaming community continues to show increased interest in blockchain-based games, traditional venture capitalist firms and investors do find value in decentralized gaming platforms.
No wonder that the future union of gaming and blockchain is inevitable as the encrypted blockchain guarantees safe storage of all in-game digital assets, what makes the data transparent to the core. Smart contracts exclude third parties from payment processes, making transactions fast and safe. Blockchain technology is the solution we are all looking for, due to the decentralized network and capability to record each transaction to combat fraud. That actually can trigger the gaming industry’s next evolution.
As the potential for blockchain-based games continues to pique interest from both gamers and investors, the declining prices of major cryptocurrencies could also see a definite shift. The value of cryptocurrencies will become more evident as the gaming community continues to gain more active users through blockchain games.