An Interpret study found that, among 1,500 console and PC gamers, 56% are interested in earning NFTs through gaming. And if you’ve clicked on this article, chances are you are also fascinated by the applications of NFTs, blockchain, and ultimately Web3 on gaming.
What exactly is Web3 gaming? How is it different between web3 games and traditional games? How is it relevant to gamers? Is there a catch to be aware of? You probably have these questions, and a zillion more. Fret not, this article is written to help you better understand the emerging Web3 world, and be better prepared to take it on yourself!
Traditional gaming at a glance
Video games have become the world’s most popular form of entertainment. The sector is now worth more than 200 billion and is growing at over 10% yearly. By the end of 2023, we expect to see 3 billion gamers – out of the total population of 8 billion.
Gaming spans dozens of genres with 3 major platforms: PC, mobile, and console – both online and offline. But when it comes to monetization, there are only two main models. First is premium games that charge a fixed price for full access. Second is free-to-play games that attract a larger player base and gain profit via in-game purchases and advertisements.
As the gaming sector grows, its setbacks also become more evident. There’s a strain on consumer spending since purchased assets only hold value within the ecosystem of that particular game. And even so, gamers don’t truly “own” anything – from in-game assets to personal data – game publishers are the ones calling the shot.
That’s why the concept of Web3 is created – to facilitate the power shift from creators to players.
The emergence of Web3 games
In 2017, CryptoKitties started the first Web3 game, a niche community that breeds and trades customized cat NFTs. Then amid the global pandemic in 2021, Axie Infinity (a name we must all have heard of) emerged with scalability solutions, drawing in millions of users and driving up billions in market cap.
So what exactly is Web3 gaming? Web3 games are different from traditional games in that they allow players to earn cryptocurrency and non-fungible tokens (NFTs), powered by blockchain technology. Players can own their acquired assets, which can then be traded on marketplaces for virtual or real-world currencies, blurring the line between two worlds.
As of today, we have seen nearly 2,000 games launched and developed by web3 development companies, with other significant names including Gods Unchained, Decentraland, The Sandbox, Alien Worlds, and DeFi Kingdoms (updated Jan 2023). Web3 mobile games remain the most popular platform on the market, but PC-based titles are also on the rise.
🔸 Interested in Web3 Trends in 2023? Read this article
Key differences between Web3 Games & Traditional Games
|Web3 gaming||Traditional gaming|
|Ownership||Players have complete ownership over in-game assets||Players have no ownership over in-game assets|
|Marketplace||Creators to players & between players||Creators to players only|
|Currencies||Fiat, crypto and in-game||Fiat and in-game|
|Interoperability||Assets can be used across different games and platforms||Assets can only be used within the game|
|Earning opportunity||For creators and all players||For creators, top players and influencers only|
|Personal information||Managed by users||Managed by game creators|
|Governance||Decisions are made by the majority of players through DAOs (decentralized autonomous organizations)||Decisions are made by game creators|
Web3 gaming is here to stay
Despite the crypto winter in 2022, Web3 gaming still recorded an 85% growth in daily players in 2022, from 622,620 to 1,152,255. They also account for a staggering 49% of all blockchain-powered apps, with 7.4 billion in transaction count (source: DappRadar).
The industry has raised over $2.5 billion in venture capital as investors recognize their potential to not just millions, but billions, of players worldwide. With the concept of Web3, they may lose a fraction of control over the game to players, but the added-on benefits surely can compensate for it. Publishers can:
- Grow and engage the community since the early stages of development without having to wait until the official game release
- Appeal to a larger customer base, thus increasing the retention rate with either entertainment or financial motives
- Earn revenue from the entry price, in-game assets and NFTs, and advertisements
- Facilitate trading to other games and platforms within the larger ecosystem
Over the next two years, we can expect hundreds of new titles to be released, along with innovations from currently successful games (in-the-making Axie Origin for example). Like any new and rapidly growing industry, there will be challenges to overcome, but Web3 gaming does hold the power to completely disrupt the gaming industry as we know it.
How traditional games can adopt Web3
Traditional gaming runs on a central server, while Web3 gaming operates on a peer-to-peer connection. In order to incorporate Web3 into a game, you will need the following components:
🔸 More technical details are included in our Web3 gaming overview.
However, Web3 games can easily fall into prioritizing the “earn” aspect over “play”, which usually results in mass inflation and shortened lifespan. Future developers need to step away from the original but disruptive play-to-earn model to advance new and innovative solutions, such as free-to-own or play-and-earn to make their Web3 games more sustainable. This new focus also needs to include community nurturing, add-on services (e.g. investment management), and creative content production.
While some are still hesitant, the migration to Web3 is already happening in traditional game corporations like Atari (market cap: $72M) and WeMade (market cap: $640M) issuing their own crypto tokens named ATRI and WEMIX respectively, and Bandai announcing a $130 million investment to build a Gundam-themed metaverse. Last September, Epic Games Store released its first Web3 title, Blankos Block Party. And even Apple, who had put in a complete ban on NFT, has now allowed in-app purchases!
📌 Free download: A comprehensive guide to sustainable Web3 gaming.
Even though the concept of Web3 can seem quite alien to some, gamers are among the most adaptive demographics, since virtual assets and digital currencies have been the norm in video games for years. The decentralized nature of Web3 allows them to actually own, trade, and influence multiple aspects of the game.
With compelling blockchain applications, successful game titles, and growing numbers of both investors and players – the Web3 game is proving to be no longer a buzzword but a robust technology ready for mass adoption. And if you are looking for a trusted companion to start the Web3 journey with confidence, Ekoios Technology, with our extensive portfolio of Web3 game development, is glad to be of service!