Democratisation of Ownership
We have been fortunate to have seen Web3 gaming from more angles than most people. We were heavy players of games like Runescape, World of Warcraft, Diablo, and DOTA, which all demonstrated early experiments at what we’d now call Web3 gaming. These experiments ranged from gray markets for in-game currency in World of Warcraft, to “NFTs” of rare items in Runescape and DOTA 2, and the brief attempt at a real-money auction house in Diablo 3.
For as long as gaming has been around, third-party trading has been a reality. Traditional gamers are not opposed to ownership, but they are wary of over-commercialisation and financialisation, they don’t want digital capitalism in their games.
Web3 Gaming
The Value
Access; 3rd party trading for in-game assets using fiat money has existed for a long time. But games offer more than currency — they offer access. NFTs will open the door for creative inputs, allowing artistic careers to be more accessible from different communities.
Ownership; Web3 allows people from different backgrounds combine financial resources, enable creators and distribute to true fans. Direct ownership of a community enables direct incentivisation. In gaming, people provide value for others through digital objects, NFTs will take this to another level.
Composability; is simply extending the work somebody has done. It allows devs to extend the utility of a game’s assets to an infinite amount of use cases. We’ll see the best games built on the foundation of previous builders.
Distribution; Gaming NFTs might look like a toy now, but the concept behind this new tech is that all media can be free and creators can monetise the true fans / owners. When the platform becomes the largest publisher, independent studios lose their leverage for distribution. Web3 will allow creators to capture value that is locked into the monetisation strategy of distribution platforms.
It’s not a “zero sum game” anymore for players; There are essentially two ways to value something; Non-monetary value (Status, happiness, excitement, joy, etc) and Monetary value (cash flow and appreciation). The non-monetary value of Web2 games has been paramount. Now, Web3 offers us a chance to combine those two; – We can build real products with great gameplay and strive for matching that non-monetary value and top that with true ownership.
In 2022 Web3 games account for 49% of all dapp activity, with on average 1.15mn dUAW (60% increase 2021) numbers and 7.4bn in transactions (40% increase 2021) count.
Web3 gaming market size in terms of revenue was estimated to be worth $4.6bn in 2022 and is anticipated to rise to $65.7bn by 2027, at a CAGR of 70.3%. So we might hit 100mn players by 2027.
Scaling Web3 Games
Stop Trying To Onboard People Into Web3; Instead, we need to infuse the internet with Blockchain technology in such a way that everyday users can enjoy the benefits without knowing they are doing anything differently. Reddit’s Collectible Avatars, limited-edition personal profile pictures backed by non-fungible tokens, offer the perfect case study. Since their launch in July, more than 6M of Reddit’s users have bought at least one, paying for it with their credit cards.
Build a Game Everyone Wants To Play; For Web3 games to live up to their societal paradigm-shifting potential, we will also need to build what many more people will want to play. Going back to fundamentals, building real products inspired by traditional games, economies not reliant on short term incentives, but with intrinsic values, is essential for scaling.
Fair / Skill Based gameplay; Power distribution should be fair and should be attained through playing time and sharpening skills, rather than through the purchase of an epic in-game item / NFT. When money impacts core gameplay it can undermine the above.
Frictionless gaming Experience (let them play);
- Lower the barrier to entry and expand to a F2P model.
- Remove Web3 game mechanics of using NFT as a prerequisite and let players jump directly to the game without having NFT or Wallet.
- Offer, alternative payments options
- Build in-app Wallets/built-in marketplaces, to make it easy for users to purchase/store NFTs and access other in-game assets directly in their in-app wallets.
Create Utility for Your NFTs (in-game/out-game); Have other devs build games with your NFTs (composability) Build B2B businesses, give players the option to use those NFTs somewhere else (interoperability). Think about what tried-and-true biz models you can combine w/Tokenization to create innovation while improving your chance of success. Focusing on partnerships w/diverse brands in both real life & Metaverse is a key part of making growth. Think about how you can bridge the real economy & Metaverse in creative ways.
NFTs as a Business Model (like f2p); You can build your game economy on NFTs and price in-game transactions with a major Crypto asset or a stable coin. The huge benefit here is the transaction fees are in an asset that is not tied to the game performance. For this model to be sustainable, stop anchoring value as ROI to in-game assets! Let players earn them/put a value on them and let those digital assets be uplifted by players themselves.
Think About Traditional Monetary/Fiscal Policies; You can play around w/ interest rates / taxes to manipulate the token demand/supply, price and growth. Token emission rate should match the rate of project growth, so it doesn’t hurt NFT value but at same time doesn’t unnecessarily encourage “up only” financial speculation either.
Conclusion
In order to innovate within the realms of Web3 gaming, it is essential to apply the rules and principles that are applicable to traditional finance / gaming. – It is my opinion that those who possess a sound understanding of those rules / principles will be the ones to make these innovations work and scale.
We are striving to create a permission-less world, which will require a considerable amount of time and effort. It is safe to say that the final chapter of Web3 is not only not written, it’s not even imagined.
We are striving to create a permission-less world, which will require a considerable amount of time and effort. It is safe to say that the final chapter of Web3 is not only not written, it’s not even imagined.