Epic Games, Axie Infinity, And The Hurdle Ahead of the GameFi Industry
Blockchain has radicalized the world and many sectors of the world. It changes how things are done and how people think about something as better alternatives have been presented regarding security, decentralization, and transparency. Bitcoin is the most significant innovation of blockchain. 60% of blockchain’s worldwide market share can be traced to the finance/banking sector in cryptocurrencies, tokens, and other financial solutions. Most cryptocurrencies still struggle to be significant due to their inability to find real-life applications. The remaining percentage is left to the different industries to share; almost every industry has seen the adoption of blockchain technology, with manufacturing being the next highest at 17.6%. Many other industries are beginning to merge to deliver richer experiences to their audience, aligning their priorities. These new hybrid industries are gaining wide adoption. One of such mixed industries is the GameFi industry.
GameFi, which is the short-form for Game + Finance, another blockchain innovation, revolutionizes the gaming industry. It combines cryptocurrency, blockchain, NFTs, and game mechanics to reward players for participation. The model for most GameFi projects lies in the in-game items being NFTs; from here, they can be traded on exchange platforms for fiat currencies. NFTs have shown a glimpse of the rich experience in ownership of in-game items, with transferability of owned things between games now being possible; interoperability.
The problem of most cryptocurrencies and NFTs problem lies in some of them not having real-life utility. GameFi is now positioned to solve these “utility” problems. Items bought in the game universe are now interoperable and have uses outside their game world, making them more powerful thanks to NFTs.
Axie Infinity, the most popular and played GameFi game, has the highest number of players in the Philippines. The game enjoys about 2 million active monthly users and about 10 million total players. P2E, or play to earn, is the model most practiced in the industry. It has made sure players are rewarded for their time. Players in the country earn as much as 1200 dollars per month. This is significant for countries whose currencies are not as strong as the dollar, higher than their minimum wage.
Statista revealed that there are 2.3 billion gamers globally, and only a smaller fraction belongs to the GameFi community. All these pales compared to the 126 million active users of Minecraft per month. Or Fortnite, which enjoyed 10 million active users in its first two weeks, has grown ever since.
So, how can the GameFi industry and games scale and enjoy mass patronage worldwide?
Rather than create a product most people won’t be able to access because of the technicality of enrolment, the GameFi industry must look for ways to welcome non-crypto users because, as it stands, only 300 million people were crypto users at the end of 2021. That number is expected to climb to 500 million in mid-2022 and reach 1 billion in 2022. Despite CBDCs and regulations from different governments worldwide, the world witnessed how Ukraine crippled its financial activities with martial law. They were able to raise $100m from crypto, NFTs, and other forms of blockchain donation. All these can help grow those numbers. And these are through NFTs and cryptocurrencies, the most adopted blockchain solution.
Tim Sweeney’s first game, ZZT, was released in 1991, and the game enjoyed immense success under the shareware distribution model. Tim, freely gave away the basic version and players who wanted the game paid for extra features. Also, players could edit the ZZT game, creating their levels. Over the next three decades later, Tim’s company built several games like Deus Ex, BioShock, Splinter Cell, and Gears of war. Eventually, they released Fortnite, which didn’t enjoy as much success until it was rewritten in the likes of PUBG. These two games are open-world games where players battle themselves in a limitless world; battle royale. They bring to mind pictures of the metaverse.
Epic charged developers 5% royalty for their usage of Unreal Engine to develop their games. Many other successful award-winning games franchises like Borderland and Mass Effect have utilized the Unreal engine to build their games. All this can be traced to Epic’s mannerism in attracting users and keeping them.
Fortnite, Epic’s most successful game, made over $9 billion in its first two years. Epic’s Game store is another marvel from Epic that is also growing in the gaming industry. Unlike Steam, the dominant game distributor, they charge a 12% royalty fee, which charges 30% royalty from game developers. This has caused game developers to troop to the platform. Of the many reasons responsible for the game’s success, Fortnite being free to play was huge. Players who loved the game pay for extra features. It is sacrosanct that the GameFi industry understands that not every GameFi project can or should be like Axie Infinity, where players need to possess basic NFTs before playing the game. Although Axie Infinity is trying to correct this with their scholarship program, it’s a pill after poison situation. The “basic NFT to play” model reduces the number of people who get to play the game, affecting the adoption. This spells even more enormous consequences for the GameFi industry, given that most will be trying to adopt Axie’s “basic NFT to play” model.
The wrong side of this model lies in the difficulty most will have to get into games like this. Axie Infinity’s scholarship program wherein new players get loaned the needed NFTs to start the game is a solution trying to nip this. However, more solutions that can onboard non-crypto users must begin to flow, like basic versions being free to play (like Fortnite) or the provision of demo versions of games. Ethlas is a free-to-play GameFi company; they are currently focused on everyone being able to play games on their platform in less than a minute of their time there. They do this with a one-click sign-in to MetaMask, a wallet. Though their games are casual, they are looking at adopting more complicated games, as their recently launched KOMO NFTs sold out. They grant owners premium utility within the Ethlas ecosystem, and they are asset-backed too.
Ethlas and Fortnite have shown a suitable pathway for GameFi projects to avoid trapping. The hurdle ahead of the GameFi community lies in drawing close non-crypto users, and the path to this is not to be shrouded in technicality. These non-crypto users must be met in the middle. As more exciting GameFi projects come into the limelight, the number of GameFi players must also increase. As the industry matures, users will begin to gravitate towards the kind of games that satisfy them, weighing on the degree of decentralization they want, genres, and payment methods. For now, the GameFi industry must take in as many users as possible, non-crypto users.
Worthy of note is that Sony has already delved into the Metaverse; it’s straightforward to see where they are headed with their vast collection of games and fanbase. Translating that into the metaverse would be Facebook, also changed to Meta, in a bid to be the go-to place for the Metaverse, they even procured Blizzard in the process. Apple has also reportedly invested in VR/AR hardware design and production. So, the industry is facing off against these big companies and will win based on blockchain already being a part of them. Still, they mustn’t be treated with levity.
Fornite has transcended from being just a game to being a sort of mini-verse, where famous real-life stars like Travis Scott hold concerts. And this is amazing, given how the world has changed ever since the emergence of covid-19. All this is possible because the company made it possible for many people to access their games and store. Hercules faced many challenges and he scaled every single one. The GameFi industry is still an infant one; hence, we must monitor how we grow. As this can make or mar the industry.
Photo credits: Unsplash
Join Coinmonks Telegram Channel and Youtube Channel learn about crypto trading and investing
