The gaming industry is facing a huge upheaval and blockchain technology is to blame – Play-to-Earn, the future of gaming?
Blockchain gaming has eked out a niche existence for a very long time, but that has changed at the latest with the game Axie Infinity (AXS). In the Philippines, thousands are already earning their living with the blockchain game every day. The income of many Filipinos is now so great that the Philippine government is having serious problems taxing its own population.
But it’s not just Axie Infinity that’s booming; investment in blockchain gaming is also at record levels. A recent report from Dove Metrics showed that most of the investment flowed into the blockchain gaming sector in the third quarter of 2021.
According to the analysis, projects that were in the blockchain gaming space were able to collect about 72 percent (about $1.1 billion) of all money invested in the non-fungible token (NFT) sector. Most venture capitalists thus seem convinced that blockchain gaming has a bright future ahead of it. But what is the traditional gaming industry doing wrong and what is the potential of blockchain-based gaming?
The problem with the traditional gaming industry
The traditional gaming industry is also booming tremendously, with gamers spending over $54 billion on in-game assets in 2020 alone.
Gamers spend a lot of money when it comes to buying skins, accessories, game items or other things in games.
In the coming years, we can expect this trend to continue. In an increasingly digital world, it is obvious that more and more people are spending money on things that are valuable in the virtual world.
The problem with the traditional gaming industry, however, is that only a few major game providers are currently benefiting from this development. These providers (Blizzard, Nintendo, EA, Ubisoft…) are becoming more and more powerful and rich, while their users are going empty-handed.
Indeed, if you read through the fine print in the terms and conditions of these companies, you quickly realize that the in-game assets earned or acquired are only licensed to the players. Thus, gamers don’t really own their digital assets, but to put it bluntly, are merely exchanging their money and time for gaming fun – but that could change in the coming years.
The play-to-earn blockchain game Axie Infinity shows that it is entirely possible to design an alternative to the traditional gaming industry. The blockchain game shows what the gaming industry of the future could look like, where both the game provider and the users can profit together.
As the chart from crypto analytics firm Messari shows, a project like Axie Infinity can already play in the market capitalization of the very big players.
But how is that possible, and why might play-to-earn be superior to traditional games?
What the future of play-to-earn might look like
Currently, there are very few serious play-to-earn games. Users often must choose between game quality and achievable profits. In addition, many play-to-earn games are very difficult to access via crypto wallets like MetaMask. For the masses, it is currently still too complicated to dive into the world of play-to-earn.
Likely, this will change drastically in the coming years. At some point, it is thus quite conceivable that players will not even notice when they interact with blockchain games. Furthermore, it is safe to assume that major game developers will also venture into the play-to-earn sector.
In addition, the combination of decentralized finance and blockchain games could become extremely interesting. For example, it would theoretically be possible for players to exchange or lend in-game assets with other players via decentralized exchanges or lending protocols to generate returns. The in-game ecosystem of many new games could therefore experience enormous growth that has been underestimated to date.
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