For fervent advocates of blockchain technology, it’s easy to point to its potential and the benefits it stands to offer to the gaming industry. Whether in terms of redefining the ownership of in-game assets or enabling greater transparency that makes it difficult for fraudsters to cheat the system, the market opportunity is certainly exciting. However, blockchain gaming has yet to win all the hearts and minds of gamers and developers — with some believing that existing titles have largely failed in the most important arena: They’re simply not fun.
This isn’t the first time that a rising new player has been dismissed. Not too dissimilar from the uphill battle that mobile gaming initially faced, the transition from console and PC games wasn’t without its challenges. Today, shifting user habits say it all — people want to be able to play on the go and 60% of the entire global gaming market is now dominated by mobile games, resulting in an ever-climbing market value of US$136 billion.
Blockchain gaming is likely to experience the same journey — and it’s only just begun. The sentiment is shifting on the ground — take gaming developer and publisher giant Epic Games and the fact that it now lists 18 blockchain gaming titles on its store. Investors, too, are expressing greater optimism in the space with blockchain gaming projects raising US$4.5 billion in funding just last year alone.
As with the evolution of technology, so will the mindsets and consumption habits of gamers evolve. Are talks of the potential benefits of blockchain gaming alone sufficient to sway the opinions of skeptics? What will it take for existing players in the space to level up and usher in the next wave of blockchain gaming innovation?
Shifting developer-player dynamics
For years, blockchain enthusiasts have spoken extensively about the technology’s ability to give gamers full ownership of their in-game assets in response to the industry’s age-old pay-to-win model. The traditional pay-to-win model relies on gamers spending money on in-game assets such as skins, power-ups, and upgrades that enhance gameplay. The model has proven to be lucrative, with successful titles including the likes of Fortnite and Clash of Clans, which have raked in billions of in-game revenues.
However, what happens when a player loses access to their account or simply stops playing because they’ve gotten tired of a game? What becomes of the in-game assets they’ve purchased that hold real-world monetary value?
What blockchain does is it gives in-game assets permanence. Assets that are stored on-chain as non-fungible tokens (NFTs), for example, are not stored with the game developers but on the network itself. This gives players true ownership and control over their in-game assets, underpinning the shift in power dynamics between players and game developers. With in-game assets denominated as NFTs, this also means that players have the opportunity to re-sell their assets on secondary markets — such as NFT marketplaces — so as to recoup the value that they had originally spent on a game, even if they’re no longer playing it.
The underlying premise of this is undoubtedly appealing to both game developers and gamers alike, ensuring a virtuous cycle that rewards long-term loyalty and engagement.
Putting a price on fun
In spite of its potential to usher in a new era of gaming, blockchain games have struggled to gain meaningful traction — and this boils down to three core components: gameplay, cost and scalability.
With real-world, resellable value encoded onto in-game assets, the earliest form of a blockchain game in the industry emerged in 2017 by way of CryptoKitties. Built on the concept of collectible virtual cats, CryptoKitties pioneered the earliest variation of the play-to-earn (P2E) model, offering players a chance to earn real money in the form of cryptocurrencies and NFTs, and eventually fiat currency by breeding, selling, and re-selling their virtual pets. While P2E has given these digital assets utility, they’ve largely failed to address the issue of gameplay. As we’ve seen with the rise and fall of the popularity of Axie Infinity in recent years, many P2E blockchain games have failed to withstand the test of time, with many players joining these ecosystems solely to turn a profit rather than to enjoy playing the game itself.
Ultimately, games need to be fun for gamers — it’s what keeps them coming back, and this is no different for both Web2 and Web3 games. One could argue that gameplay — be it the depth in the storyline or character customization — needs to come through stronger in Web3 games because user benefits like ownership and monetization won’t matter if there are no gamers to begin with. This focus on gameplay is so critical that a report from the Blockchain Game Alliance found that the majority of blockchain gaming industry professionals predict that gameplay improvements will be the single most factor driving mainstream adoption.
Constraints pertaining to cost are also related to gameplay. At the height of its popularity, users on CryptoKitties complained about laggard network speeds and high transaction fees on the Ethereum network that often exceeded the price of a virtual cat. Today, these collectible cats sell for markedly less than they used to — at around US$50 — but users will find themselves confronted with gas fees that are either around the same amount, if not slightly higher. At present, the industry has yet to fully address this challenge, with other P2E titles experiencing similar challenges that have altogether resulted in difficulties in retaining players for the long term.
Building better games begins with better tools
When new blockchain games fail due to the chain’s inability to support high-intensity use, developers are forced to explore alternative scaling solutions to better accommodate user demand, pointing to the lack of adequate infrastructure support. This scalability problem is so acute that over a third of all blockchain gaming investments in 2022 went to infrastructure builders in hopes of generating purpose-built solutions
Now, implementing new infrastructural rails for any business can be challenging. For Web2 gaming companies, this can be especially daunting as it requires a major overhaul of its systems, software and skillset of its developers. All of these are on top of the fact that it would likely also require large investments of time, money, and resources. To skirt around the need to build their own infrastructure, traditional gaming giants and tech executives have branched out to launch ventures and companies to provide infrastructure options to blockchain game developers, lowering the barriers into Web3.
However, traditional Web2 gaming organizations can look to other familiar business models to better ease their transition into Web3. For one, lessons can be learned from the managed services approach offered by cloud services providers such as Amazon Web Services and Alibaba Cloud, which help to reduce the knowledge gaps for their clients while enabling them to scale their operations. In the context of blockchain gaming, managed services can also allow companies to tap into scaling solutions specifically designed to support high-volume use.
It’s clear what the potential of blockchain will be in the Web3 gaming realm. Just as the traditional gaming industry saw earlier paradigm shifts from console to mobile, blockchain gaming is but the next step in the industry’s evolution. Beyond the medium of choice, growth opportunities are evergreen for this industry if gaming companies can prioritize and relegate the task of infrastructure development to the experts and instead focus on building immersive, rewarding gaming experiences for players. With better infrastructure being able to address the hurdles in cost and scalability, Web2 studios will be able to focus on what they do best — the gameplay itself.