Table of Contents

• Introduction

• Takeaways

  • 1. Gamers want to have fun

  • 2. Challenges with Play-to-Earn Games

  • 3. How can Web3 and Blockchain enhance Gaming

  • 4. The world of Game Development

  • 5. Users shift

• Conclusions

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Introduction

Gaming is the largest category in the entertainment industry, with revenues exceeding those of the film and music industries.

The volume of the gaming market was just below $200 billion in 2022 and market was sizeable with nearly 3.2 billion gamers, based on data from Newzoo.

By region, Asia accounts for nearly half of the global revenue pie; followed by North America, with 26%; and Europe, 18%

Out of the 200 billion revenue in 2022, about 5 billion are related to crypto games.

Crypto games are a recent and emerging market that utilizes blockchain technology to offer unique gameplay experiences and new business models.

Here are 5 takeaways about crypto games.

Takeaways

1. Gamers want to have fun

Therefore they mostly do not care about the underlying technology and the innovation powering their favorite games. 

While there may be some gamers who are interested in the technology behind games, the majority of gamers are primarily interested in the gameplay and overall experience that games provide, rather than the underlying technology.

For most gamers, the technology used to create a game is simply a means to an end, and not something that they need to fully understand or engage with in order to enjoy the game. They are more interested in the game's story, graphics, controls, and other gameplay elements that directly impact their enjoyment of the game.

In addition, some gamers may not have the technical background or knowledge to fully appreciate or engage with the technology behind games. They may simply be interested in playing games for fun or as a form of entertainment, without needing to understand the technical details.

The moment gamers have a Web3 equivalent of their existing game(s), they will likely switch as Web3 games can enable earning while playing their (new) favorite game.

2. Challenges with Play-to-Earn Games

The current play-to-earn crypto games have a rather poor graphics and gameplay, and the in games economics are often complex. Fun seems not to be the focus of the Web3 game designers, so far. 

In fact, until now, blockchain games have typically been created by individuals well-versed in the cryptocurrency world, prioritizing in-game tokens and financial gain over the imperative of designing enjoyable and engaging games.
In addition, the initial generation of Web3 games lacked sufficient content, which resulted in gamers not being fully engaged in any particular game. 

Developers need to ensure that the game design is engaging and enjoyable for players, even if they are not primarily motivated by the play-to-earn aspect. If the game is not fun to play, players are unlikely to continue playing even if there are rewards available.

Another critical challenge is that  Play-to-earn games need to be sustainable over the long term, which means that developers need to balance the rewards offered to players with the costs of running the game. If the rewards are too high or the costs are too high, the game may not be sustainable in the long term.

Despite this, the play-to-earn model introduced some noteworthy concepts, such as incentivizing users to participate in games, which presents several promising use cases.

3. How can Web3 and Blockchain enhance Gaming

Minecraft and Roblox are examples of games that currently incorporate aspects of ownership through features like mini-games, mods, and cosmetic items. Nonetheless, one can envision the potential benefits of implementing these features on a blockchain, enhancing transparency and mobility, and enabling players to trade or sell their items with individuals both in and outside the game.

In fact, Web3 allows game developers to create in-game assets that are truly owned by the players, thanks to the use of non-fungible tokens (NFTs) and other blockchain-based digital assets. This means that players can trade and sell their assets on cryptocurrency exchanges, creating a new market for gaming assets.

Additionally, Web3 can also enable developers to create decentralized game economies, where players can earn cryptocurrency tokens for their in-game actions and achievements. These tokens can be used within the game or traded on cryptocurrency exchanges, creating new opportunities for players to earn money through gaming.

Web3 also enables interoperability between different games, allowing players to use their in-game assets and tokens across multiple games and platforms. This can create new opportunities for cross-game collaborations and interactions, as well as new business models for game developers.

4. The world of Game Development

New gaming models (e.g., mobile or free-to-play) often originate from countries in the Eastern hemisphere. Game development in the Far East countries, particularly in countries like China, Japan, and South Korea, is known for being innovative and trend-setting. For example, VR is emerging as a popular trend in Far East game development. With advancements in VR technology, game developers are creating immersive VR experiences that are gaining traction among consumers. Japan, in particular, has a vibrant VR gaming industry.

Overall, game development in those countries is characterized by a focus on mobile, e-sports, and new technologies like VR and blockchain, which are shaping the future of the gaming industry.

It is true that gaming studios in the Western hemisphere have historically been somewhat slower to adopt new technologies, such as virtual reality or blockchain, compared to studios in other regions like Asia. However, once they do adopt these technologies, they have the potential to help drive mass adoption due to the size and influence of the Western gaming market.

One reason for this is that the Western gaming market is very large, with a high concentration of gamers and gaming studios. As a result, when a new technology or trend begins to gain traction in the Western market, it can quickly reach a large audience and become mainstream. 

Another reason is that Western gaming studios often have a strong focus on storytelling and creating engaging experiences for players. This means that when they adopt new technologies, they often use them to create innovative and immersive gameplay experiences that can capture the attention of players and help drive adoption of the technology.

5. Users shift

It is anticipated that between 50 to 100 million individuals will embrace Web3 or blockchain-based games by 2025, considering the current global gaming population of over 3 billion people. While user numbers are small, it has to be noticed that a small percentage of gamers are responsible for the majority of money spent on games. 

In the near future, we can expect a substantial migration from off-chain to on-chain transaction spending. This shift, largely by heavy spenders, towards blockchain-based games is likely to be the tipping point for the entire ecosystem to incorporate games that utilize tokens and blockchain technology.

Conclusions

Being a new market, crypto games are still in their early stages and face several challenges, including scalability, user adoption, regulation, and interoperability.

Brightnode offers services related to the creation and sale of NFTs and tokenomics consulting.

Despite these challenges, the potential for crypto games to disrupt the gaming industry is significant, and we can expect to see continued growth and innovation in this space.

Even if blockchain-based games are adopted by only a fraction of the total gaming community, this could translate to significant adoption numbers and revenues in the blockchain and Web3 ecosystem.

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