Gamers, The Games Industry, and Blockchain
There is a reason why Blizzard, one of Korea’s main video game producers and a demigod-developer for millions of gamers, has already created and mastered its own cryptocurrency and blockchain for their iconic games such as World of Warcraft. As a result of gamers using fiat currency (ex: USD) to purchase gaming items, free-to-play games become very expensive to play, which is why gaming companies are able to generate so much revenue. There’s a science to it.
Jared Psigoda, the CEO of BitGuild — spoke on DMarket’s gaming and blockchain panel at GDC in 2017 and explained that the concept behind digital currencies has resonated with the gaming community for years, citing Blizzard as a major player in this realm.
Gamers can seriously wrap their head around and understand cryptocurrency because virtual money has played a large role in the games industry for the last 14 or so years now. Dating back to 2004 in World of Warcraft, there was a large market for buying digital gold. The one-hundred million dollar market for buying digital gold became the main currency used in World of Warcraft. For those unaware with gold, in-game, players could purchase in-game assets like pets, toys, dragons and tons more to improve their experience within the game. Players of the game would mine for gold, often spending insane amounts of time, so using real currency instead to buy the in-game assets immediately at any time changed the game forever.
The chairman of Netmarble, one of the largest South Korean gaming companies, believes that blockchain technology will soon be applied across all industries, as Netmarble reported revenue of 1.5 trillion won (about $1.35 billion) in 2016. During the 9th Annual Strategy Forum held in Seoul, chairman Bang Joon-hyuk responded to a college student’s question about the future of blockchain and business with an optimistic prediction: “Blockchain, with objectivity, reliability, and security, will be applied to all industries in the future.”
Games such as Hearthstone and Gwent: The Witcher Card Game, have appeared on the scene, where the set of properties attributed to unique cards on the ERC721 token will determine the user’s skill in battles and competitions. This is where blockchain comes in as an immutable, transparent, and fair marketplace that will be able to serve as a platform for gamers, where they will be able to sell hard-earner items and monetize their gaming efforts and skills, thus creating a real reward system and incentive to keep on playing and using blockchain technologies.
To put this into perspective, recent findings from SuperData show that the gaming industry generated $108.4 billion in revenue in 2017. Mobile games were the biggest sector, generating $59.2 billion, followed by PC games, which generated $33 billion last year. Both the PC and mobile sectors were driven by “free-to-play”games. An estimated $82 billion was spent on these games.
Due to the additional expenses associated with free-to-play games, blockchain-based games are gaining traction primarily because blockchain technology allows gamers to use cryptocurrency to trade virtual gaming items with one another. This eliminates the need for gamers to use fiat currency to purchase items directly from game developers. The use of cryptocurrency in gaming also solves the problem behind ownership of in-game assets, as blockchain-based games tokenize all gaming items. This means that once gamers acquire assets, they remain in their possession within a digital wallet until they decide to trade or sell the tokenized asset — just like any other cryptocurrency.