Gaming and Blockchain: Ready, Payer One
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Gaming, with billions of players who are spending billions of dollars on digital assets, seems like the perfect environment for blockchain to thrive.
By combining self-executing smart contracts with payments, we see an opportunity for a cross-platform payment system that could unlock a novel functionality across gaming platforms.
Blockchain finally has use cases
As we’ve written about before, blockchain is exiting from the “trough-of-disillusionment” and we’re entering a phase where products will find and fit into markets.
We believe that compelling blockchain use-cases need to leverage three things:
- Speed and scale: the quick and easy settlement through protocols
- Trust gap: the need for transparent and secure control
- Absence of or, underserved by, existing solutions
Using blockchain to disrupt payments across gaming leverages all three.
The evolution of gaming
Gaming is a massive and growing industry (revenue has grown to over $150 billion.)
Gaming platforms have evolved from PC & Console to include mobile. With this, there has been business model innovation in the form of “free-to-play” and gaming-as-a-service.
The “in-game” services have been a huge success for gaming companies — allowing them to monetise games post download or purchase. It’s also opened up a range of new behavioural/psychological triggers to enhance the consumer experience. This trend has been hugely positive for gaming companies and investors but has raised serious concerns about gamer addiction and the moral responsibility of game developers.
The coupling of new & enhanced platforms and business model innovations have facilitated a rise in massive game companies (King [acquired by Activision Blizzard], Epic [maker of Fortnite]). As the industry has grown, the ecosystem has become richer too. We have seen businesses that support the community, from distribution (Steam by Valve) to communication (Discord and Twitch), become wildly successful. This evolution is set to continue, and blockchain could be an enabler for those new products and services.
Gaming X Crypto
There‘s a lot of debate going into what the next phase of digital existence will look like. We’ve seen social networks (Facebook with Libra and F2) and gaming companies (Epic with the Metaverse) lay the foundations for this next iteration.
There remains the existential question as to whether this will be made up of fragmented but centralised “Walled Gardens” or open and interconnected systems. Whichever way this next digital economy comes into existence — there is a need to connect the physical with the digital.
For gaming today, blockchain provides the perfect solution for the seamless and interoperable link into gameplay with payments. By coupling self-executing smart contracts and inbuilt decision-making mechanisms, it unleashes a range of new gameplay opportunities — from competition and wagering to creating assets — to improve end-user experience.
Ready, Payer One
A blockchain-enabled payment layer would disrupt the current economic paradigm — in-game services — where value is locked to platforms and games.
Imagine a world where you could sell Lionel Messi Ultimate team player on FIFA and then spend it on Fortnite skins. This is like moving away from spending Disney Dollars at Euro Disney to spending pounds on the high street. Items created in-game begin to take on value that transcends the games in which they are created. These games start to operate more like the physical world.
There have been blockchain solutions that have tried to solve this problem (Dash — Decentralised API and Wallets and Ejin — Crypto gaming assets) but with limited success. For this to work now, there needs to be significant adoption by game developers and gamers on an open system.
We can imagine a world where the long tail of indie developers adopt a solution that, through a decision-making mechanism, allows for more post-purchase monetisation and access.
Ultimately, features and functions that enhance gameplay and draw users to interact with the product on a more varied and more frequent basis are in demand. A great example of this is Roblox and Minecraft (both with over 100 million monthly active users) have created a generation of gamers turned creators who spend countless hours building worlds within these platforms.
Equally, we can see a world where gamers are pulled into new forms of gameplay that allow them to transfer value cross-platform and into the real world.
This can be as simple as creating bounties or head-to-head competition that result in cash prizes. Being able to transact beyond the games they play. No longer would gaming be the idle pastime but a means to earn a living (something that is only a reality for star gamers and eSports teams).
If you’re working on a business in this area, please get in touch with me here.
