The NFT Gaming Revolution
“This market is gradually evolving. Even though those projects were once at the pinnacle of their glory in the early days of P2E, there is a silent purge of projects that are no longer competitive.”
That is the assessment of Mr. Hieu, CEO at Xantus, Mones strategic advisor.
You can read the article about Hieu and his vision of Mones below.
This assessment is completely grounded as a study released in May 2021 by Nansen called The Compelling Case for NFT Gaming explained and predicted quite convincingly the journey towards mass adoption of NFT games.
According to Nansen, the evolution of NFT gaming from a new industry to mass adoption occurs in four stages, each corresponding to a generation of NFT games.
First Gen (Innovators)
In phase one (2017–2019), with the most representative being CryptoKitties, NFTs are used solely for collectibles.
NFT games of the earlier days were more passive and relied on time-based actions to accumulate resources over time. For example, the gameplay of CryptoKitties is based on the collectibles’ ability to “breed” unique “parents” with different traits based on their combination. With simple graphics and animations, many of the titles drew inspiration from classic games like Pokemon and Neopets, and the gameplay was primarily 2D.
CryptoKitties’ demise demonstrates that first-generation titles lacked long-term player engagement due to several issues, such as having a “pay-to-win” model (players have to spend to compete at a competitive level), a lack of a proper in-game economy, and concerns over digital scarcity.
Second Gen (Early Adopters)
Second-generation NFT gaming has been pushed to a new level by the play-to-earn model since 2019. Players can earn money while playing the game, thanks to the use of NFTs. Axie Infinity is the best-known representative of this generation.
The addressable market for NFT games was expanded by rewarding players with an innovative play-to-earn ecosystem. This attracted previously uninterested players to the crypto ecosystem and increased levels of engagement because the game effectively became part of a person’s livelihood.
With open-ended universes that allow for land gameplay as well as higher graphics and player-generated content in the current second generation of NFT games, it is still lacking in the level of sophistication that traditional AAA games have in terms of user experience and design. Because of this, the second generation of NFT games is gradually being phased out to make way for the third generation of games.
Third Gen (Early Majority)
We’re welcoming the third generation of NFT games, which will provide “a more refined gaming experience, leveraging the strengths of play-to-earn combined with better game design/graphics that would align it with lower-budget AAA games.” (Nansen)
It is expected that the third generation of NFT games will begin attracting mainstream gamers as their production values begin to align more closely with traditional AAA titles (together with the economic incentives that come with play-to-earn).
This could be the last generation of NFT games before the direct arrival of large game developers, and we might expect rapid growth along with the NFT gaming adoption S-curve.
Fourth Gen & Onwards (Late Majority & Laggards)
Third-generation NFT game projects helped to grow the NFT gaming market to a reasonable size. Now, the traditional game industry’s big players are getting in on the action, ushering in the fourth generation of NFT games.
As a result of this passive approach to NFT gaming in the past, large game developers (such as Ubisoft’s Entrepreneurs Lab) primarily funded crypto-native developers through incubation labs. Because AAA games have high development costs, these large studios will only take on a big-budget project if NFT gaming becomes widely accepted.
Crypto-native indie developers have already laid the groundwork for mainstream adoption, so it’s reasonable to assume that large developers may directly participate in the production of AAA titles in the future (incorporating the lessons learned over the past generations, especially with play-to-earn). We can expect to see a growing number of traditional gaming companies take the leap into NFT gaming as crypto becomes more mainstream.
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