Why gaming is the most valuable vertical a blockchain can invest into

And how some Blockchains are missing a 1000x potential opportunity

Published in

Blockchain Biz

6 min readNov 25, 2022

No matter how you look at it, gaming is by far the best vertical a blockchain can invest into. Whether it is by market size, total addressable market, by growth, by profit, or by pretty much any major indicator you can think of.

A main issue we see is that the community associates blockchain with cryptocurrency. And cryptocurrencies are, generally, associated with DeFi, CeFi or NFT art collections.

At the same time, blockchains position themselves through DeFi solutions and dApps.

This is the classic chicken or egg situation: do blockchains empower DeFi because there are a lot of users for it? Or are there a lot of DeFi users because blockchains empower them?

We do understand DeFi solves a clear problem. Especially with stablecoins in countries with low economic stability. However, by focusing on DeFi, blockchains are targeting 1% of the population, missing a much larger market opportunity: gaming.

Did you know that for every DeFi investor you have more than 1,000 times that number of players? ¹ ² ³. Now that’s a powerful multiplier.

Not only that. Gaming also adds an audience, which DeFi does not (nobody watches DeFi for fun!). Esports is expected to reach over 570 million viewers by 2024⁵.

First, let’s clarify what Blockchain Gaming is not, so we can get the noise out of the way.

Blockchain Gaming is not GameFi

Gaming Finance (GameFi) refers to the incentive players receive for playing a game.

In GameFi, this incentive is financial. Players play to earn money (in any shape or form). Winning or losing in the game usually reflects directly on the result of the incentive: you won money or you didn’t (or even lost some).

In blockchain gaming, this incentive is emotional. Players play to enjoy, to have a good time. Winning or losing in the game does not affect the incentive. It may affect your experience or result (it’s ok to be angry if you lost a battle!). In the end, you fulfilled the goal: you played a game (if you play to suffer or have a bad moment you may have bigger issues blockchain cannot fix ;).

If a game has to pay you to play it, it probably is not a good game to begin with. How many concerts have you attended in which you were actually paid to go?

Blockchain Gaming is not a nicely looking DeFi

Most existing or hyped blockchain games today are a hidden or disguised form of DeFi. It may look nice, but in the end, it’s just a financial or investment tool. Not that there’s anything wrong with that. But it attracts gamers that are quickly deterred from the lack of content and depth.

If you have to buy stuff and stake it to earn passive income, it’s not a game. A game is not passive income, it is active entertainment. When you play a game you like, you always win. No matter what the outcome is.

So… what is Blockchain Gaming?

Is a game taking advantage of blockchain technology. That’s it.

And blockchain provides ownership, decentralization, security, governance, and more.

Ownership is a key factor. You actually own the assets you buy or earn within the game. They’re yours and nobody can take them away from you. You can trade them with anyone, or keep it in your collection as a family heirloom for years and years to come, regardless of what happens to the game that NFT belongs to.

Ownership also empowers community participation. This can be achieved on its own or through governance, which is giving the owners of the governance token (whether is a fungible or non-fungible one) voting power on decisions about the game and its future.

Decentralization and security go hand in hand. Since you don't have a centralized database where your blockchain assets are, is -almost- hacker and tamper proof. Remember the old days with dupes items in games? This is almost impossible in a blockchain.

These features above are inherent to blockchain technology. It has nothing special to do with gaming. Games have one and only one requirement: they need to be fun.

Ideally, games should aim to have a lot of depth and low complexity, though that is not necessarily a requirement. But the fun part is.

If it’s not fun, it’s not a game. Period.

Why investing in gaming is paramount for a blockchain?

A blockchain is, in the end, a Software as a Service. SaaS companies need growth and a dominating presence to survive. On top of that, it is a technology that allows you to do something. Technology needs adoption. And its worst enemy is churn.

As with all technological advancements, only few will survive. In the blockchain realm, we’ll see Bitcoin and a couple more. Algorand is definitely one that is already in the race. But this window of opportunity does not last forever. It's constantly closing in and will be for the first few that really takes the race head-on.

The biggest problem is that if you have nothing to do within a blockchain ecosystem, it is, by definition, useless. No matter how good the technology is or how cheap it is or how fast it is or how many users it has.

A blockchain needs to provide its users with something to do. The more stuff you can do within a blockchain, the more you’ll use it. The more people use it, more content will be created for such a blockchain. It is a positive spiral of growth.

That's where blockchain gaming enters the scene.

What can a blockchain game do for a blockchain?

A blockchain video game is the best investment because:

Has a larger audience
Implies consumer participation
Entices community participation
Has higher growth as a market

Audience

A blockchain game can target both web3 players and web2 players. GameFi and DeFi are, by definition, web3 only. You're already missing billions of potential consumers.

Do you know how many people worldwide invest in DeFi? Around 2.5 million.

And do you know how many people worldwide play video games? Over 3.2 billion. That is over 1,000 times (yes, one thousand) than DeFi.

Consumer participation

Blockchain gaming not only provides people with entertainment. It is also a point of entry to the blockchain and, from there, they can do other things the protocol provides.

Community participation

The gaming ecosystem has two big audiences: the players, and the viewers. This is something unique to gaming (as with entertainment in general). These represent over 570 million esports viewers expected by 2024⁵ the ecosystem could be benefiting from.

Growth

Finally, gaming is one of the fastest growing markets and the most lucrative by far within the entertainment industry. With a CAGR 2018–2023 of +9.6% in revenue⁶. Already twice as large as movie-tickets. With an average growth of 5.6% of global players from 2015 including forecasted 2023.

The power of Blockchain Gaming

We’ve seen first hand that a game can generate a massive amount of adoption for a blockchain. Even if the only thing you have is one game.

We’ve seen this with Ronin, for instance. Now a massive blockchain that exists only because of Axie Infinity.

The average gamer spends 9.5 hours a week playing! If you add that to the demographics of gaming and how they overlap with blockchain users (18–34 y/o, almost 50%-50% male/female), you have an amazing onboarding opportunity⁵.

In the end

A blockchain that has only DeFi in any of its many forms is targeting investors. A blockchain that invests in video games, is targeting consumers (players). As we’ve seen, there are 1,000 more players than investors.

It’s not strange, though. The average person buys a book to read it, not to resell it.

We need to teach the world that blockchain is not just an investment tool. That blockchain does not equal cryptocurrency.

We need to teach them how revolutionary blockchain technology is. About ownership. About decentralization. About governance.

In the end, it all points to freedom. Which may not be free. But by all means, it is achievable.

By Nicolas Varchavsky (twitter: @NicoVarcha)
CEO of Indelve, Inc

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