Blockchain Gaming Part I: The opportunity

Quick Take

  • Part 1: Blockchain-based gaming opportunities for both game developers and players


This is Part 1 of a multi-part comprehensive series on blockchain-based gaming by Zane Huffman: @jeffthedunker

The series is a culmination of historical accounts and interviews with a number of blockchain and crypto based game projects, sprinkled in with opinions on the current state of gaming.


Abstract

Beyond just store of value and medium of exchange properties, cryptocurrency and blockchain technology encompass a number of nuanced applications. This emerging technology enables, alongside units of value, the capacity to transact data and information between participants and broadcast these values to the larger network. This elevated usage of cryptocurrency has seen experimentation in industries and niches across the board. Of the first initiatives, the space has persistently seen a strong push in the integration of blockchain and crypto into online gaming.

As the overarching crypto space continues to mature and grow, so to does the blockchain gaming niche. The current state of the niche represents a race between enterprise corporations and crypto startups across the largest blockchains to be the first to create and share the infrastructure to harbor the gaming environments of tomorrow and create the first blockbuster blockchain game.

However, in order to ignite the spark that will in turn ignite the gaming revolution, builders and developers in blockchain gaming must overcome the failures of their predecessors and build solutions to the cost, speed, and scalability concerns that have inhibited past and current developments.

 

Industry Overview

The worldwide video game industry generated a sizeable US$134.9 billion in 2018, and with strong growth each year, that number is expected to continue to increase at impressive rates. It’s also one of the most popular industries in the world – there are more than 2.5 billion gamers worldwide. That figure represents a third of the world’s population; everyone is gaming.


Source: Newzoo


Despite this growth, the video game industry still suffers from a number of shortcomings that have left both consumers and producers dissatisfied. The current trends of video games have directed activity away from Triple A masterpieces to “freemium” pay-to-win mobile games. These mobile games are designed to be addicting and drain players for as much money as possible, and
not to be fun. 

In suit with the mobile market, PC and console game development has also regressed in certain metrics. The industry has become increasingly accepting of the marketing and sale of unfinished and incomplete games, with core components added later as downloadable content for additional pay. Alternatively, developers earn their profit with unfinished “early-access” games and subsequently abandon their projects in search of the next payday.

Unfortunately, the video game industry is oversaturated with subpar content, where quality is substituted with aggressive marketing. Indie developers looking to bring their dream games to fruition get the short end of this stick. By certain estimates- the average indie developer can expect to barely earn US$10,000 a year. This is far below that of a minimum wage job anywhere in the U.S.

Alas, game development is becoming increasingly centralized to the biggest forces in the industry. In 2018, seven of the top 10 highest grossing games worldwide were games owned or partially owned by Tencent.

So, in a broad overview, today’s video game industry looks like one dominated by several Triple A companies that push out increasingly expensive, frustrating, and unrewarding games for the global population of billions of gamers. Small-time and indie developers are crushed by their enterprise counterparts, and their labor rarely pays off. Essentially, Nobody is having fun.

 

The Blockchain Opportunity

Fortunately, blockchain provides solutions to the woes of the global gaming industry. Game currencies, items, avatars, gameplay inputs, and even entire games can be propagated on and secured by the blockchain. Proper execution of blockchain into online games suggests players can interact with one another and the games they play in a manner that has never before been possible. It also suggests that developers can formulate new genres of games by emphasizing gameplay elements unique to blockchain gaming.

Benefits for Gamers

Primarily, blockchain gaming is exciting as it can empower players and improve their experience. The following are several of the primary benefits players can enjoy through blockchain gaming.

  • Real-World Ownership: Any or all items and elements in a game can be placed on a blockchain. Whether it be scarce resources in a game, rare items or coveted loot, or the characters and avatars themselves, any entity in a gaming environment can exist as a crypto asset. Typically, this manifests as fungible tokens (in the form of game currencies) or non-fungible tokens (in the form of items and avatars) upon an existing blockchain network. A core component of blockchain is the value of sovereign ownership for its users. When game elements are placed on the blockchain, they can be interacted with directly by the player. When avatars or accounts are linked to player wallets, the loot they collect and currency they accumulate can be sent to their wallets as they achieve in-game. In such a system, players do reap what they sow. Their rare swords, gold, armor, and whatever else is theirs forever. The developer has no permission to take back anything the player has earned, and even if the game shuts down, the items still belong to the player. They can send it to other wallets and sell for real-world profit. Ownership of their items empowers them to receive a tangible output from their efforts and successes.

 

  • Provably Fair Gameplay. Hackers suck. Faulty gameplay does, too. When players are cheating against their competitors or games don’t run the way they are anticipated, the experience is completely ruined for everyone. Blockchain gaming enables a quality of “provably fair gameplay”. When games are placed onto a blockchain, the game logic and gameplay elements are shared as well. The consensus mechanism for securing the network works simultaneously to secure the game. This means two things for gamers. One: hackers, cheaters, or anyone else that seeks to infringe upon what is possible for players is inherently unable to do so. If their moves contradict the stated game logic, their activity is rejected. Two: games are transparent. If, for example, a game has a chest that says it has a 10% chance of revealing a rare item, players can be sure that the possibility of revealing a rare item is, in fact, 10%. If they are unconvinced, they can look at the game logic as it’s published on chain.

 

  • Play-to-Earn Gaming. Pay-to-Win gaming has plagued the experience of the billions of worldwide gamers. It’s no fun to play a game where success above the competition comes with the deepest pockets, independent of whoever carries the highest level of skill. Blockchain gaming turns pay-to-win on its head with its system coined “play-to-earn”. As mentioned above, blockchain gamers maintain real ownership of their items and virtual assets. This includes the ability to sell them on open markets to other players. Blockchain games encapsulate a quality of rewarding players with crypto assets that carry an associated real-world value. In the pay-to-win freemium model, the best or highest ranked players may be required to spend thousands of dollars on the game. In the play-to-earn model, the best or highest ranked players may instead see earnings of thousands of dollars.

 

  • Cross-Game Communication. What does a gamer do when they stop playing their favorite game? Either they grew out of it, or the game died out- the community left or the developers decided to pull the plug. Unfortunately, there’s not much they can do beyond finding the next game and starting back from scratch. Games exist in suspended, independent universes; there is no continuity between different games in the current scope of the industry. With blockchain, this component is also radically disrupted. When games and game assets exist upon a blockchain, they can communicate with any other environment on the same blockchain. If a developer made a sequel to a game, the items from the first could be taken onto the second. Avatars can bounce across multiple games. Quests or events can jump across games. Most importantly, players may never have to start from scratch again. Ideally, they possess a single, universal avatar that follows them as they hop onto different games. Their virtual currencies and items may carry functionality across games. The “Kittyverse” (explained in Part 3) represents a synergy across several dozen Ethereum DApps where one’s Crypto Kitty can be used across each individual DApp.

Benefits for Developers

While it’s certainly important to improve the experience of gamers, it’s also necessary to understand the benefit developers have by incorporating blockchain into their game development. After all, if it’s nothing but headaches, developers simply would not bother. When applied intuitively, there are a range of benefits for developers to enjoy while building blockchain games.

  • Emerging Markets. For every big indie hit, there are tens, hundreds, or thousands of alternative games that just never take off. Perhaps the greatest obstacle to overcome for an independent developer or studio is their ability to stand-out and grab the attention of gamers in order to bring in an audience and forge a community around their game. The experimentation of many traditional game studios in blockchain gaming projects confirms the assumption that there will be a breakthrough blockchain game, and there is an ongoing race to be the one who doesn’t. The first major blockchain games that can captivate the attention of the general gaming population will be massive, and the pioneer developers will be well rewarded.
  • Cost Reduction. For an industry with as low a payout as game development, the associated costs can be crippling. Even when games do take on an active playerbase, the burden of publishing, server upkeep, player moderation, and so on can be unaffordable for games that don’t “properly monetize” their players. By building games on blockchain, all of these costs can potentially be outsourced to the miners or validators responsible for propagating the network. Online game publication and propagation can potentially be a zero-cost endeavor
  • New Development Genres. In the same vein as previously mentioned, developers and studios, particularly in the world of indie, are always seeking for ways to differentiate themselves. There are unique properties associated with blockchain gaming, and these properties can be leveraged into the formation of entirely new and previously unknown genres of gameplay. There are already examples of “play-to-earn” games, where gameplay is emphasized around the concept of players earning real world profit. Several existing projects also boast their potential to recreate the OASIS universe from Ready Player One, the New York Times bestseller and subsequent Hollywood film.
  • Value Creation. So many recent game trends have revolved around sucking value from players in “freemium” and “pay-to-win” models that emphasize addiction and spending over actual fun. For good reason, many developers across the board are opposed to this profit model and the parasitic implications it has on the industry as a whole. With blockchain, developers have more creative outlets to earn profit. Blockchain games enable developers to create and forge crypto assets with real, transferable, intrinsic value. Not only does this give players more capacity to profit, but it also gives developers less intrusive profit mechanisms, too. Setting up games to split profit between developer and player is a much better alternative to draining the player’s bank account.
  • Enhanced Playerbase. The existing and future players that make up blockchain gaming are an interesting subset of the consumer population. These players have an elevated interest in their gameplay and heightened attention in seeking profit through their play. Blockchain gaming connects developers to communities of “super players”, with far more resources and investment in regards to their gaming. A more active, elevated, and beneficial relationship between two parties can be forged than is possible in traditional gaming counterparts.

 

Up Next:

Part II – The History of Blockchain-Based Gaming


About the Author

Zane was first exposed to Bitcoin in 2013 through a gaming community that utilized Bitcoin. Since then, he’s followed gaming closely while immersing himself further in the cryptocurrency space. In 2015, he began working as a freelance writer for several crypto news blogs, and today continues to work as a freelance writer for various projects and websites in the space, primarily focusing on educational and technical content. His pinpoint area of focus within cryptocurrency continues to be gaming.

Crypto Destroyer

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