Nitro: Enabling Promising Game Companies

In our previous post, we talked about the booming games industry and how it raked in a total of US$101.1 Billion in 2016, with revenues being anticipated to grow to US$108.9 Billion in 2017. We also talked about participation options for lay people, beyond just buying and playing games.

In this post, we look at the people who create these experiences, Game Producers!

Generally, game producers are split into 3 categories: Hobbyists, Large Corporates, as well as a group of segmented or early-stage game developers -firms which we term as Promising Game Studios. These players are distinguished by their scale of production, but are also differentiated by the commerciality of their games as well.

Hobbyists tend to produce aspects of games that are non-commercial in nature, focusing on producing mods for existing games out in the market.

Large Corporates, such as Blizzard or King Digital, typically comprise of a network of studios that develop games backed by its own established production and funding system. This, while efficient, may inevitably give a commercial feel towards titles produced by such developers. These are the ones that seemingly dominate industry revenue.

Promising Game Studios, however, are placed in the middle of the spectrum. While they do not possess the scale of big companies, they are arguably charged with a mix of creative and commercial potentials that are surprisingly popular in the current market; a market that has been criticised as “oversaturated” due to the numbers of “indistinguishable games” flooding the market.

The problem is though, that the video-games industry is dominated by a handful of Large Corporates.

In 2015, $69.6 billion of the $91.8 billion global games market (or 75.8%) was generated by almost 70 public companies worldwide.

In 2016, the top 10 video-games companies accounted for an immense 54% of the global game market revenue, up from 43% the prior year.

Clearly this is not a good sign for the industry especially for all the promising game studios that are trying to make a mark in the industry.

Source: AListDaily, Newzoo

What is worrying is that this oligopolistic trend is intensifying rapidly. If this continues, there will be less and less diversity in the industry.

Existing Problems for Promising Game Studios

While there are many commercially successful studios, most of them tend to be clustered in Europe or North America, by virtue of a more developed eco-system to market and fund titles. The games ecosystem outside of these regions appears to be relatively stunted, creating great problems for early-stage studios.

Even though the market is seen to be thriving, a multitude of factors including the general inaccessibility to funding prevents Promising Game Studios from fully exploiting this growing market.

Promising Game Studios lack funding options

The increasing market size has created prime conditions for investment within the sector. Yet, access to public funds is often limited for smaller and early-stage firms. Only a handful of firms of considerable size are able to access funds through public listing, with Promising Game Studios often lacking the resources to qualify for publicly traded capital markets.

And while funds could be sought from institutional investors, of which there is no shortage of, these funds are more often placed in larger companies, who would have an established track record of successful titles, simply out of a need to balance risk and commercial viability. Access to funds, at least through the capital markets, or through institutional means, is thus limited for these early-stage video-games companies.

Challenges of Promising Game Companies to raise funds

Current Funding Options for Promising Game Studios

While other funding options are available within the industry, these options have significant issues, which limit their utility for Promising Game Studios. One option includes approaching publishers in the industry. However, due to the need to maintain a balance between risk and commercial viability, such publishers tend to shun niche games, which inevitably affect the diversity of the video-games industry.

Other options include applying for funding from independent funds within the sector such as the Indie Fund, but such funds are often limited, and hence are only available to fund a few selected titles within the industry.

Crowdfunding remains a viable option for early stage studios to receive funding pregame development, but there are limited platforms to facilitate this process in the current market. Some of the more popular platforms include Kickstarter and Indiegogo, but such platforms are not specific to the game industry.

The many problems associated with the current funding options thus limits the success of Promising Game Studios, preventing them from fully exploiting the vast potential of the growing industry.

The Potential of Promising Game Studios

Even though barriers and challenges exist in the industry, there is still a lot of potential for small game studios to flourish in this nascent market space. Various hits such as Subway Surfers (revenue of USD 20 million; 2nd only to Pokémon Go in 2016 mobile game downloads) or even the relatively simple game 1010! (revenue of USD 5 million) have been published by such studios, demonstrating strong market potential for games produced by small and promising studios.

These successes, especially for mobile games, have been spurred on by dedicated Indie game sections on Google Play and the App Store, providing a visibility boost for such games to all smartphone users.

This is also true for the desktop, where game platforms such as Steam also have a curated section for indie games. Many of these desktop games such as “Don’t Starve” (rated 10/10) and MineCraft (eventually bought over by Microsoft for $2.5 billion) have successfully held their own against similar titles from bigger game developers.

However, unless access to funding for these Promising Game Studios catches up to their market potential, these successes will continue to be few and far between, which is a disappointment, considering how some funding could go a long way towards.

This is one of the key reasons why we created Nitro.

A global platform that empowers anyone to partake in the video-game economy.

Nitro aims to change the value-chain of the video-games industry by bringing all major stakeholders together on a single blockchain-powered network.

By democratizing the structure of the gaming industry, Nitro enables funding access to promising game studios all around the world. At the same time, it encourages diversity in the industry.

The platform harnesses the power of blockchain technology and cryptocurrency to empower token-holders globally to contribute to the video game economy and benefit from it as well. Here’s how:

1. Participating in selection and funding of promising games curated by experts

2. Engaging with game producers, marketers, publishers and financiers in the games marketplace and exchanging tokens for in-game items/currency or other benefits.

3. Potentially receiving rewards from the success of the games funded by the Nitro network.

Dynamics of the Nitro Platform

The initial coin offering will feature the minting of a new currency based on the Ethereum platform. This currency, or NOX, will be the centrepiece of all activities that are carried out on the Nitro platform.

The dynamics and the process flow of activities carried out on the platform are summarized below:

Issuance: Nitro will issue NOX: A blockchain-based token that is the centrepiece of Nitro activities, to be used on the Nitroplatform.

Curation: Nitro Team will curate Promising Game Studios (PGS) and submit game funding proposals to the Nitro platform

Voting: NOX holders can vote on their favourite games, and if sufficient votes are received, the proposal game will undergo a funding process.

Funding: Funding will be received in Fiat currency or Ether, which would be used by the game studios to develop and market their games. This funding will be provided by Nitro.

Post-Funding: Funded games will subsequently share its revenue with Nitro. A portion of this sum returned to the pool for funding new games, to ensure sustainability of the ecosystem. The remainder will be held in a Vault, which could be distributed to NOX holders, from time to time, as a form of reward for participating in the platform and to encourage the adoption of NOX.

Redeemable for Game Credits: Upon developing the Nitro marketplace, NOX holders will be able to redeem NOX for in-game credits and items.

How does Game Studios benefit from Nitro?

First, video game studios are expected to receive better access to funding through Nitro. This will provide them with the resources to create better games, for example through the exploration of new gameplay mechanics and concepts that can better excite the fans.

Second, game studios will be able to receive timely and immediate feedback on their games throughout the video-games production cycle by interacting with gamers on Nitro Marketplace. This will enable them to produce games that better fit the tastes of gamers, improving game quality and their eventual success.

Third, game studios are not only able to improve on the quality of their games through NOX, but also their outreach in marketing efforts. Through the Discover function, gamers would have an opportunity to discover these otherwise obscure Promising Game Studios that would have been hidden beneath the behemoths in the industry. This will definitely help in promoting the studio’s games to the wider public.

Fourth, the use of NOX for in-game purchases will heavily benefit the developers. While in-game purchases of virtual items already exist on major app stores, such purchases are subjected to a 30% fee, with a payment delay of 30 days. The Nitro Marketplace will not only offer a more favourable transaction fee, but would also offer instantaneous transactions for game studios to provide greater liquidity.

Lastly, with the instantaneous transaction system to be put in place through NOX, studios will be able to receive the proceeds from in-game purchases immediately. This will greatly increase the liquidity of their business.

What is envisioned, is that the Nitro will be to able solve the challenges that are faced by the gaming industry especially for Promising Game Studios.

Come join us in democratizing the video-games economy!