Gaming’s $1 trillion opportunity? Blockchain and digital goods
Gaming has come a long way since the days of Atari. The gaming community today has grown to 2.2 billion gamers, and generated revenue of $108.9 billion — 87% of which comes from digital gaming revenue. And based on the market research, and what I’ve seen during my decade in the industry, this trend isn’t slowing down anytime soon.
With $94.4 billion being generated from the purchase of direct-from-publisher digital goods, the digital world is aiming and scoring high. Yet an untapped opportunity remains: digital goods. Until there is a safe platform for transacting gamer-earned goods, the industry isn’t even close to achieving its full potential.
Here’s how we’re using the blockchain to drive new gaming revenue through the safe sale of all digital goods.
Gaming’s lost revenue
Digital gaming’s “free to play” model has been a goldmine for publishers, but in many ways a wasteland for gamers. It’s not uncommon for gamers to spend upwards of thousands of dollars, and countless hours, to obtain in-game goods — skins, weapons and other rare items earned while playing through the game. But the challenge for gamers everywhere has been that no matter how much they spend on digital goods, those goods don’t hold any true value once a player leaves the game. That’s because digital goods are often locked within the context of a single game.
To make matters worse, the third-party sites that gamers often turn to for making these transactions are rife with fraud. Take, for instance, Reddit. During my time as CEO of Aeria Games, I saw many of our best players turn to Reddit to buy, sell or trade their in-game items, only to be scammed. Not surprisingly, this fraud often prompted the player to leave the game altogether — a scenario that’s not good for publishers or gamers.
As the CEO of Gameflip, this is a space I know extremely well. Since our launch three years ago, our platform has become one of the biggest marketplaces for digital goods, with 500,000 active monthly users and a community of more than 2 million registered users.
The demand for digital goods is undeniably growing. The goods that gamers earn in-game tend to hold more value, and keep that value over time — especially when we’re talking about rare items. And with more titles and digital goods released daily, all signs show that this demand will only grow.
Platforms like Steam and Reddit have attempted solutions by facilitating online trades. But their solutions had serious limitations that prevented them from becoming top players. As I mentioned earlier, Reddit’s transactions weren’t secure, leading to frequent fraud. The Steam Community Market enables trading for other goods. But unless gamers want to trade for other items supported by Steam, this leaves them with the same problem: lots of valuable goods, and no true ownership.
In a digital gaming landscape that’s already generating nearly $95 billion annually from direct-from-publisher goods alone, the monetization of gamer-earned goods is easily a trillion-dollar opportunity.
Yes, you heard that right. Gamer ability to transact digital goods safely within and across games could drive digital gaming revenue past the $1 trillion mark. As the CEO of a leading digital goods marketplace, I can tell you that achieving that goal is a lot closer than you think — thanks to the blockchain.
The blockchain solution
In an increasingly digitized world, the future of gaming lies on the blockchain. At Gameflip, we recognized this early on, and have launched FLIP: a decentralized ecosystem and digital token built on our already-launched platform.
The blockchain’s inherent transparency and accessibility are key to providing a safe marketplace for gamers. Thanks to the smart contracts on our Ethereum-based blockchain, gamers and publishers can both benefit from a fully-functional, fraud-free digital goods marketplace. Gamers will have the ability to buy, sell and trade on the blockchain, and publishers will receive commission for the digital goods their players sell.
And there’s more where that came from. Finally given a secure and liquid marketplace for transacting their goods, players are likely to actually purchase more digital goods, confident that their investment is safe. Game developers and publishers will be able to use our open-sourced plug-ins and software development kits (SDKs), ensuring they receive a commission where commission is earned.
Through FLIP, we’re opening up an entirely new revenue stream. It’s a win-win opportunity for everyone involved, and a major new source of revenue for the industry. By connecting a key gaming challenge to the blockchain and its smart contracts, Gameflip’s decentralized infrastructure enables gamers to finally buy, sell or trade their virtual items — using our FLIP token to enable the transaction.