Blockchain Gaming and the Metaverse
The relationship between gamers and the games they play is changing fast, for better or for worse.
The relationship between gamers and the games they play is changing fast, for better or for worse.
Anyone who has spent an entire weekend gaming with their friends will understand the pain that comes with finishing a game after hours and hours of work but are left with nothing to show for it.
Some gamers sink hundreds of dollars into a single game, which helps their progress and reputation in that virtual world but does almost nothing for them outside of that.
The implementation of digital assets and blockchain mechanics into gaming introduces a way for gamers to own the items they earn or buy, and even sell them to someone else when they are finished using them.
Blockchain Gaming 101
Blockchain gaming was first introduced in 2017 with the advent of Ethereum and CryptoKitties. CryptoKitties is a blockchain game built on the Ethereum blockchain, where players would buy NFTs of “CryptoKitties” and breed them to create new ones.
What’s different from this compared to other breeding or collectible-based games is that you can sell your in-game assets for real money to spend elsewhere. Thus, introducing the concept of ownable digital assets into the gaming world.
These digital assets that are used in-game are NFTs, whose data is stored on the blockchain, publicly verifying your ownership of the item. The in-game currencies are primarily cryptocurrencies, meaning that you can withdraw in-game funds and sell them on an open marketplace.
Until somewhat recently, to play a video game you had to go to the store and physically buy the disk for your console or pc. Game studio’s main revenue streams were focused on the sale of individual games via the Pay-to-Play model.
In these days, you could technically sell your game when you're finished, but when you buy a game for $60 and GameStop offers you $1.25, you usually decide to keep it anyway.
Then came along the uber-successful battle royale, Fortnite, which is available to everyone for free. Their primary focus was capitalizing on the sale of in-game assets, such as skins and emotes, for players to use in the game. This introduced the Free-to-Play model, which has been a relatively dominant strategy in the gaming industry as of late.
CryptoKitties introduced the increasingly popular Play-to-Earn model. Although it may sometimes include an initial investment to start playing, gamers are now able to monetize their time and abilities to generate return on their talent.
The more that someone plays a Play-to-Earn game, the more digital assets they earn, which can then be sold or reinvested, including the assets you needed to buy to even participate.
This means that after hours and hours of playing a game and ending up with nothing of value, you now have valuable assets that can be sold and reinvested into the next Play-to-Earn game.
Where We Are and Where We Are Headed
In a world where we have ultra-immersive games such as Elden Ring and Grand Theft Auto, the current popular blockchain games struggle to achieve similar levels of quality. But, it is important to recognize that these mechanics are just beginning to be understood by notable studios, and major games are already in development.
Many of the largest Blockchain games, such as Splinterlands or Axie Infinity, boast hundreds of thousands of players and millions of dollars of activity. Although these are impressive numbers for such a niche corner of the gaming market, the games themselves are less impressive from a true gaming standpoint, meaning they are not innately exciting when you take away the blockchain mechanics and the potential to make money.
The majority of blockchain games on the market now are focused on simplistic games centered around trading cards, pixelated RPGs, and puzzle-centric genres. It seems that they have been created through the question “How can we build a game around these blockchain mechanics?” instead of “How can blockchain mechanics improve an already great game?”.
This approach can mainly be attributed to how early the blockchain game space is. Most developers are just getting their feet wet and trying to understand how these mechanics work in action, and more importantly, how audiences react to them.
Blockchain games are just getting started, and we are already seeing more immersive games on the horizon. Games such as Illuvium, an open-world creature-battler game (similar to Pokémon), and Gala Game’s NFT-based battle royale, Grit, are seeking to be the first AAA-rated games (High-budget/quality) in the blockchain space.
Many developers and game studios recognize the potential of blockchain mechanics within video games, but are hesitant to dive in. This is primarily because high-quality, AAA-rated games can take years to develop and are very costly. This can prove to be quite daunting for developers, as they are taking a big risk to try something that has never been done.
This is not to say that some developers won’t take the chance, as there is potential to become wildly successful as a first mover. There will continue to be subpar games produced, with a few passable games sprinkled in, but in the coming years, we will experience some amazing games with excellently thought out blockchain mechanics that may revolutionize the space.
How does the Metaverse Fit in?
Unless you’ve been hiding under a rock, you have at least heard the term “Metaverse”. Facebook has rebranded its entire business around this idea, it is the favorite buzzword of CNBC, and your one friend just won’t shut up about it.
The metaverse is more of a concept, or group of concepts, than it is strictly defined. Most people think of it as a Ready Player One universe, or a digital workplace powered by VR. Everyone has a different idea of what it means, but there are certain concepts that can be identified throughout.
The most important concept to the metaverse is the idea of interoperability of digital assets. Think of a skin for your avatar that can be used across multiple platforms or an in-game currency that is used across a wide variety of games.
The other important aspect that is commonly tied to the metaverse is the “virtual world”. For example, Meta wants to be a pioneer in this space, creating its own metaverse where users can work and play. This most likely won’t go over well with web3 native users, as it completely contradicts the idea of decentralization that lies at the center of web3. Although, Meta is one of the leaders in VR/AR hardware, and by continuing to develop that, it can potentially become a cornerstone of the space.
The definition of metaverse will continue to become clearer as interoperability and VR hardware are developed, and it is certainly something to be excited about, but for now, it is primarily a buzzword used to generate enthusiasm around the future.
The Pushback from Gamers
The benefits provided through the implementation of blockchain game mechanics and digital asset ownership are obvious, but traditional gamers have outlined a number of reasons as to why they don't want things to change.
Highly Financialized Games
Highly financialized Play-to-Earn games may take the purity out of gaming. The ecosystem will flood with token farmers, bots, and game grinders to squeeze out every ounce of alpha the game has to offer, leaving very little for the casual gamer.
The simple approach to this may be to keep the blockchain mechanics simple for these kinds of games. Simply being able to own the digital assets and sell them. Leave the DeFi to the GameFi games (games solely focused on earning money).
The other approach is to just not play these games, as not all games will become blockchain games. Their worry is that their favorite games will incorporate these unwanted mechanics, and they will be forced to accept them, which never goes over well.
Costly Barrier to Entry
Many NFT-based games currently require a player to purchase hundreds (sometimes thousands) of dollars worth of NFTs before they can participate in a game. This is a big leap from Fortnite’s Free-to-Play model, eliminating a huge number of casual gamers from playing the game.
This introduces a need to understand financial and economic concepts to determine whether it’s worth it to make this investment. The average gamer will need to understand things such as supply/demand and market volatility, so they don’t get taken advantage of.
For players looking for a casual stress-free gaming environment, this proves to be a big problem, but this can also be a good thing.
These are skills that are very valuable in the real world and may not be learned otherwise for younger players. This situation is very similar to RuneScape’s introduction of the Grand Exchange many years ago, which many gamers claim to be the beginning of their knowledge of fundamental economics.
Money Grabs
One thing that 2021 made clear is that the crypto world is full of scammers, money grabs, and rug-pulls.
Gamers are rightly worried about the due diligence needed to determine if game developers are legit and committed to a game.
If they spend thousands of dollars on a game, and the developers stop innovating or rug-pull the community, the gamers’ investment could be lost.
Conclusion
The opportunity for blockchain mechanics to be implemented into the gaming space is clear, and the playing field is wide open.
The winning games will be great games by themselves, but made more attractive with the addition of simple ownership of digital assets. Game studios need to focus on developing a compelling narrative and immersive world first, instead of making the selling point “We have NFTs!”.
The most successful games will look and feel like traditional games, but under the hood will be powered by intuitive crypto wallets, NFTs, and subtle mechanics.
Games that rely heavily on DeFi mechanics and that are highly financialized will attract a niche group of gamers but will lose out on the larger population, eventually becoming a passing fad as users move to games with a higher return.
Players want to play the game as they always have, without needing to read whitepapers to understand the game.
Keep it simple and the gamers will come.
Never Stop Innovating,
Jake
Follow me on Twitter (@chefsteff_) for more insights into the Web3 world.
Additional Insights:
DappRadar - Top Blockchain Games
CoinDesk - Blockchain Gaming Usage Explodes 2,000% in a Year
DevTeam - How Blockchain Can Redefine The Gaming Industry?
Cointelegraph - How will GameFi and P2E blockchain gaming evolve in 2022?
Blockchain Gaming and the Metaverse
This is bound to go somewhere, with the intense focus younger generations have on gaming its just a matter of time before they can make a living or at least support their habit playing games. It'll be exciting to watch this develop. Hopefully it doesn't turn us into a world of trolls that never come out of the darkness of the gaming room. Nice article my man! Keep on grinding!