The Blockchain Gaming Business Model: Revolutionizing the Gaming Industry?
A Paradigm Shift in Economic Modeling
Recently, there has been discussion about the consumer adoption of blockchain-based games and their growing user base that could lead people to further adopt other related tech advancements such as Web3. That’s really a big topic that has a lot of legs!
Those discussions also triggered the topic of business models in the gaming industry. Namely, Framework Venture’s co-founder Michael Anderson pointed out an interesting fact about how the blockchain gaming business model has been broadly trending towards a defund state, specifically in the light of advertising activities. Since blockchain could easily become in the future the only platform to build on, developers and investors have been gathering around the technology to gain new monetization opportunities.
The gaming industry has experienced dynamic growth in the last couple of years reaching the mark of more than 2.5 billion gamers worldwide and billions of dollars in profit. It is believed that it will reach over $300 billion by 2025. The impressive growth of the video gaming industry has been followed by an interesting shift in revenue sources as well. From making money by selling games, the industry opened another revenue stream and adopted divergent perspectives. The last couple of years has witnessed the emergence of the free-to-play gaming model. Currently, most of the industry’s revenue stems from high demands for in-game assets while playing is for free.
The evolution isn’t over yet.
From the pay-to-play model that was the prevalent business model until the 2000s over the free-to-play model, we are down to a new business model known as the play-to-earn model, usually associated with blockchain technology. As the name suggests, it is a gaming business model where gamers can play and earn tokens or cryptocurrencies while playing, providing a strong incentive to deeply participate in governance matters and the in-game economy. The model is a combo of two activities that have driven people from the beginning of the human race; reward and entertainment.
You probably wonder what’s the incentive for the gaming industry to adopt such a model. Similar to the free-to-play model, the economy lies in the power of obtaining digital assets and players’ becoming a significant part of virtual economies. The latest gaming business model is an entirely new creation with a separate niche market of collectibles and a genuine economic model.
But as you Cradians know, we at Cradles decry the unsustainable practice of so-called Play to Earn and propose instead, in a nutshell, a Play and Earn model. Where Earning isn’t the focus, but the experience is. That philosophy forces us to work on introducing the best version of such a model from its first introduction in the gaming industry.
The Blockchain Tech Giving the Gaming Industry a Leg-Up
Ever since CryptoKitties successfully accessed the market, many other blockchain-based games have evolved and joined the movement. To this date, there are more than 750 blockchain-based games in existence across a number of platforms (there are possibly more). The blockchain gaming aspect of the industry is still in its infancy phase and is centered around multiple concepts that stem from traditional gaming. For example, the popular NBA Top Shot is built on the traditional ‘collect and trade model’ that came into existence a long time ago.
There are many benefits of the blockchain gaming business model, either for players or developers. Game developers have the opportunity to monetize their in-game assets in pre-sales and post-game launches by collecting small pieces of royalties or fees from each transaction. The opportunity to freely transfer assets by players made blockchain gaming rapidly popular, especially over traditional Web2-based games.
We all understand the perks of blockchain technology: providing gamers with additional layers of security, digital ownership, novel earning opportunities, along with tamper-proof ownership records and the ability to cross-transfer in-game assets.
The new business model is set to disrupt the video gaming industry as we know it. The change will be a revolutionizing one since the decentralized architecture of the emerging technology removes the middleman, namely the intermediary, entirely from the picture. The main idea behind this is linked to giving back power to the hands of users and adding real-world value to digital items. Thereby, traditional legal and economic aspects are being leveled-up at the moment.
Additionally, a noteworthy trend powered by the new technology has been gaining massive momentum recently as well. We’re talking about non-fungible tokens (NFTs) and the broad monetization possibilities they bring to the table. These unique digital assets managed to provide greater levels of engagement possibilities for both creators and users. To sum it up, the new play-to-earn business model opened up a plethora of new revenue streams and made the process of gaming more entertaining and rewarding than ever before (even if we believe there is a better way).
Even though technology has been developing at a fast pace, the full transition from longstanding business models to a new economy may take a while. There are particular limits to rapid mass adoption. There is no doubt that blockchain technology encompasses a strategic significance to a plethora of major industries, especially in the light of the video gaming industry.
However, the technology is still considered an immature one with an embryonic yet quite promising market. If we step away from the hype for a moment, we may see that the technology still needs to overcome particular obstacles to reach a more massive type of user adoption such as traversing the UI barrier, becoming compatible with more complex economics, and making a true change in the game development philosophy. Even in the times of a rapidly evolving fourth industrial revolution, true changes don’t happen overnight.
The Cradles business model
Here at Cradles, we have been working hard on the development of our signature business model. We understood the importance of providing, aside from constant technological developments and advantages, a decent business model, incentives, and earning opportunities for our community members.
We understand that the blockchain gaming business model, aside from obvious technological advancements, has to provide a plethora of options. This is apparent not only through our unique token economics design that will be incorporated into the game, featuring a fair and transparent token distribution model, our signature Flatten and Income Rise Governance (FAIR-G) model, our Stake into NFT (SIN) model, but also introduce many possibilities to gain IP rights while maintaining a familiar and community-based approach for all our members.
And even on the entry level, tackling head on the unsustainable practice of high-cost of entry to newcomers in NFT and blockchain gaming, we introduce a subscription model that allows players to decide if the game is worth their time. No more entry cost, because all transactions in game are free, all materials free to harvest so they can create their own tradeable items, only a subscription fee to enjoy access.
From the very beginning, our idea was to introduce a highly entertaining, but also a rewarding experience. It isn’t just about improving the industry (though that is sorely needed) but about creating a virtuous cycle that rewards players, who then continue to contribute and sustain the game, rewarding back the creators.
As always, feel free to reach out to us or join the conversation with Cradians on the following channels:
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