What’s the Point of Blockchain in Games?

Co-authored by Test Jar Labs

At Test Jar Labs, we are game developers and designers primarily out of the University of Southern California’s games program — the top games program in the US according to Princeton Review — with experience in indie, AAA studio, and innumerable personal projects. When Jeron, Jkorn, and I first founded Test Jar Labs, we were banging our heads on the wall while reading and hearing the discussions regarding blockchain in games while constantly looking at each other in disappointment. We were left wondering, “what’s the point of anything at all?” Jokes aside, we do see the value that blockchain can bring to the games industry — and here’s why.

Long discussions amongst our team and with other “Web3” natives and “Web2” game developers over the last couple years on the point of blockchain in games have become a daily occurrence. The culmination of these numerous discussions have led us to the content of this document. The discussions are, of course, still ongoing, and the opinions stated here are subject to change as the industry evolves. However, for now, the following points are what we believe are essential in the discourse surrounding the value that blockchain brings to the games industry:

• Interoperability between games and studios
• Monetization opportunities for devs
• Additional affordances for players

Note from the author: I believe that it’s really important to think about how putting games on chain can actually change the industry at a higher level — and that’s where I feel that the majority of the value comes from. Our approach is rather idealistic and would require that gamers accept and understand that games can be on chain without being scammy, that it could greatly benefit innovation in the games industry, and that they can directly support the smaller developers and games by helping them support themselves. However, it is extremely possible for this to happen in the next few years if the discourse and projects surrounding blockchain (and NFTs) move towards a more positive and genuine discussion. And the actual process of doing so is an entirely different conversation. But let’s start with this conversation first.

Interoperability between games and studios

Interoperability in games means sharing game asset data between two or more games — and I want to clarify that it is not necessarily the actual game object that is shared, but the representation of the asset and its relevant data that is shared.

Problem

If studios wanted to collaborate with another studio and work with their game assets, they’d have to figure out a very specific standard and pipeline that allows for this.

Example 1: Nintendo’s Amiibos. A physical object that players can buy that unlocks different things in different games.

• This costs a lot: manufacturing, engineering, building into their systems, etc. A smaller studio would not be able to commit to doing the same thing.

Example 2: Keys. The same code that can be used to unlock something in two different games.

• There is low security: keys get stolen easily and might be used by the wrong person/sold on the black market.
• The value of the key is difficult to determine: both games that the key can be used in have to work together to determine and would need to create an exchange protocol that sets the value of the key.
• All studios have to agree to and use the same metadata standard: one or all studios need to decide and agree on the same standard, which is complex and would take a lot of time, negotiation, and effort — game studios use their own ecosystems and pipelines.

The Problem TLDR; Studios need to spend a lot of resources on engineering and business rather than focusing on the game in order to collaborate with each other.

Solution

Using blockchain as a standard protocol for game developers to share game asset data. Blockchain abstracts the process, and tools should be built to simplify the process, thus lowering the cost of resources for development (time and money).

• There are protocols that allow for assets on-chain to be bridged between two different chains: if two studios build on different chains, there is a bridge that can translate one to the other. This is necessary to implement into our tooling.
• There are protocols that can determine the value of assets according to supply and demand: the studios that want to collaborate with each other don’t need to determine the value of the assets they want to share.
• There are token standards that may be usable in this context.

Example 1: [Game 1] from [Studio 1] has [Game Asset 1], which is reflected on chain with [FT of Game Asset 1]. [Game 2] from [Studio 2] allows the player to use [FT of Game Asset 1] from [Game 1] to unlock [Game Asset 2] in [Game 2].

• [Studio 2]’s designers and artists can choose how [Game Asset 1] is represented within [Game 2]. That way, [Game Asset 1] can fit into the world design, gameplay, and art style of [Game 2] even if the two games are drastically different.

The Solution TLDR; Networks of studios can be formed who wish to collaborate with each other.

• This follows more of a digital Amiibo model instead of a literal interoperability model. The [FT of Game Asset 1] is equivalent to the Amiibo, but is implementable across multiple studios.

Value

For developers: Huge opportunity for marketing through collaboration with other studios and IPs that a blockchain layer opens up technologically.

• It creates another channel for studios to reach players from the other games they collaborate with. Studios can then lean on each other to widen their player bases and develop a much more collaborative ecosystem and experience for themselves and their players.

For players: Creates more value for a player’s time played (owning assets) and player interaction with studios and their titles that they love.

• Interoperable items and collaborations can create numerous small but memorable and unique experiences for players.
• Players are able to discover games that fit their playstyles and player profiles that they otherwise would not find.
• The collaborative environment encourages communities of players from different games to bridge together.

Monetization opportunities for devs

Developers can monetize their games and studios in new ways, and all profits go to the developers.

Problem

Smaller devs, especially indie devs, have a hard time funding their games.

• Most don’t find funding through VCs/investors, so they lose out on opportunities for bigger money that could help them finish the game, grow their team, and grow their studio.
• Some fund through crowdfunding and grants, but these typically are only one time opportunities and also may not be enough to sustain the studio. On top of that, crowdfunding sites typically take a cut of the money earned.
• Many others go to publishers, but then they lose out on future growth of their studio, future opportunities for furthering their games, and overall lose their autonomy.

This has led to AAA studios dominating the games space, leaving little room for smaller devs to grow their studios and games despite the beautifully high quality games many of those smaller devs release.

• There is a common sentiment that emerges when speaking to gamers and game developers: that AAA games have begun to stagnate when it comes to innovation. The games industry is ready to move towards a more indie led environment.

The Problem TLDR; The games industry is ready to shift towards a more indie led environment and games space, which can be seen from the stagnation in innovative titles from AAA studios. But it’s simply too difficult for smaller devs and studios to support development and growth unless they find VC or publisher funding, which rarely happens, crowdfund, which is less efficient and platforms typically take a percentage, or they go to a large publisher, which oftentimes kills the studio.

Solution

Put elements of games on chain through NFTs and FTs while leveraging the affordances of NFTs and FTs for future opportunities.

• Use NFTs and FTs as an alternative way to crowdfund.
• Use NFTs and FTs as a bridge to communities and collaboration between games in and out of their own studios.
• Use NFTs and FTs as a way to provide more affordances to players.

The Solution TLDR; NFTs and FTs can be taken advantage of as ways for studios to better support themselves and development.

Value

For developers: By being on chain, game devs can take advantage of monetization opportunities that are made possible with a more collaborative industry, more collaborative player communities, and NFTs and FTs.

• Smaller devs have more opportunities to market and monetize their games and in turn, fund themselves without solely relying on VCs, crowdfunding platforms, or publishers.
• Smaller devs don’t need to sacrifice equity, a percentage of what they earn, or their autonomy.
• Smaller devs can also begin forwarding a change in the industry by growing their own player bases and gaining visibility, moving the industry towards a more innovative, developer friendly space.

For players: NFTs and FTs provide additional affordances to players that would otherwise be much more difficult to implement. See section below.

Additional affordances for players

This section is dedicated to other fun little benefits of putting games on chain for players that were not mentioned above. I have decided to omit others that have been discussed at length already (such as displaying NFTs or FTs as badges, profile pictures, etc).

Storing data on NFTs and FTs

NFTs and FTs can track data of the players who own them, while they own them. The next owners can see that data.

Example 1: The history of players who owned an NFT or FT are visible.

• Players can see if a pro-player owned the same NFT or FT that they now own.

Example 2: The win/lose stats of the previous players that owned an NFT or FT are visible.

• A player might look at the history and say “Hey, cool, everyone who owned this had a really high win percentage! Maybe this is a lucky NFT/FT!”.

Ownership

Players own their in game assets, they don’t just have them.

Example 1: Personal fulfillment in true ownership.

• Commonly cited as a huge incentive for players to own NFTs and FTs. It is one of the more subjective (and less convincing) affordances.

Example 2: BUT, ownership means that players can sell assets they don’t use anymore.

• If a player bought a skin that they no longer use as often because they bought a new skin that they like more, the player can sell the skin to another player that wants it more than they do.

Recap

Interoperability between games and studios

Interoperability in games means sharing game asset data between two or more games.

The Problem TLDR; Studios need to spend a lot of resources on engineering and business rather than focusing on the game in order to collaborate with each other.

The Solution TLDR; Networks of studios can be formed who wish to collaborate with each other.

• This follows more of a digital Amiibo model instead of a literal interoperability model. The [FT of Game Asset 1] is equivalent to the Amiibo, but is implementable across multiple studios.

Monetization opportunities for devs

Developers can monetize their games and studios in new ways, and all profits go to the developers.

The Problem TLDR; The games industry is ready to shift towards a more indie led environment and games space, which can be seen from the stagnation in innovative titles from AAA studios. But it’s simply too difficult for smaller devs and studios to support development and growth unless they find VC or publisher funding, which rarely happens, crowdfund, which is less efficient and platforms typically take a percentage, or they go to a large publisher, which oftentimes kills the studio.

The Solution TLDR; NFTs and FTs can be taken advantage of as ways for studios to better support themselves and development.

The Final TLDR;

Blockchain has the potential to change the trajectory of the games industry — away from the AAA dominated space and towards one that encourages and supports truly innovative games from smaller devs that are oftentimes overlooked or buried, as well as greater collaboration and community focused development.

Special thanks to the Test Jar Labs team for sitting in the discussions that went on for way longer than expected, game developers from various AAA studios who believe in us enough to entertain our vision, and our other mentors, friends, and family from URL and IRL (gag) who have provided their own various opinions and perspectives.