Web3 Gaming Industry - The upcoming Trillion dollar market
Why is Gaming in Web3 better than Web2 and how the Play-to-Earn(P2E) model is going to revolutionize the Web3 gaming industry?
As y’all know, gaming has always been a part of us; whether it be for entertainment or to get rid of boredom, the way gaming has evolved in the past couple of years is just amazing. Thankfully, online games were a savior for all of us stuck at home between online classes and work. According to a survey, Genz’s and millennials spent more on gaming during lockdowns and shutdowns.
Let’s now look at some numbers:
Global video game market value in the year 2020 - $155.89 bn Global video game market value in the year 2022(expected) - $ 220.79 bn
That’s nearly a 40% increase in the gaming industry in the past two years!
As you know Web1 was about read, Web2 about read and write, Web3 about read, write and own. The gaming industry in Web3 is somewhat similar allowing players to own assets and not just for the sake of playing. The best part about Web3 is the tech behind it like decentralization, privacy, blockchain, tokenomics , NFTs, and a lot more.
Now let’s get to the main topic and deep dive into the world of gaming in the Web2 and Web3 ecosystem:
Web3 games are basically digital games, where activities of the ecosystem, especially the Play-to-Earn(P2E) revenue model and the ownership of digital assets are made easier along with the decentralization. These games allow players to engage at a deeper level in a much better way than the traditional games in the Web2 ecosystem. The assets owned in Web2 games were nothing more than just a mere showoff without any use case, but what Web3 games did was help people win in-game rewards and have lots of real-world use cases as well. The traditional Web2 games followed a P2P(Pay-to-Play) revenue model where users will have to pay a fee in order to play the game. Web3 games took this to another level by introducing another revenue model called P2E( Play-to-Earn) where people can own assets such as cryptocurrencies and NFTs by just playing games. The Web3 gaming industry actively observed an increase in both the number of DAUs(Daily Active User) and ARPU(Average Revenue Per User), after changing its revenue model from P2P to P2E.
What was just a hobby back then, is a source of income now. Coming to the decentralization part, Web2 games have centralized servers, where all the information related to the game is stored and is completely controlled by a single party. This increases the chance of scammers and hackers invading your server and exploiting it resulting in cyber attacks and eventually shut down. Web3 is all about putting the power in the hands of the user rather than a central authority and the gaming industry has done an amazing job here. With the help of Blockchain technology, now everything is happening on-chain. All the data and wallet addresses are stored on on-chain databases that are distributed and decentralized which makes it transparent and trustless. The tech behind Web3 games makes them resistant to these hacks and far more safe and secure than Web2 games. We saw how centralized servers in the Web2 ecosystem resulted in the loss of digital assets, fraud and theft just because of their inefficient safety features.
In traditional gaming, players do not own digital assets and even if they own, most of them do not have any real-world use cases. Web3 solves this by providing users assets and rewards that have both in-game and real-world use cases. The reward mechanism in Web3 games is mostly tokens and NFTs, where they incentivize users which helps them contribute to the ecosystem and also ensures long term sustainability of the game.
Let’s discuss the reward mechanisms in Web3 games in detail:
Tokens play a huge role in the overall development of the game and have lots of utilities attached to them. The first thing that matters is the Demand and Supply of the token because it determines the value of the asset and how likely are people gonna use it. Secondly, tokens allow the holder to vote on changes in the game or be a part of it. Another use case could be that token holders be given various types of access across different platforms.
Now let’s discuss the buzzword nowadays: NFTs and their utility in the gaming industry. NFTs provide a real-world use case where collectibles like skins, weapons, digital accessories, and in-game characters, help users show their loyalty and entitlement towards the game. Non-transferable NFTs like soulbounds can also be like an exclusive reward where it can be given as an achievement and unlock additional content in the game. Another use case is dynamic NFTs whose metadata can be updated and changed under varying conditions, which means when any user reaches a new level the NFT would also get updated with it. Some web3 games also allow cross-platform use cases for their tokens and NFTs i.e, allowing trading of NFTs and tokens across various other supported platforms and even cross chain.
Games like Decentraland and Sandbox have created their own 3D virtual world where users would be able to experience things with their in-game avatars. These games are based on AR(Augmented Reality) and VR(Virtual Reality) and are somewhat similar to the concept of metaverse. Axie Infinity, a Web3 game based on the P2E model where users have to trade NFTs and earn cryptocurrency, got popular after people became millionaires just by playing games and flipping NFTs at their home.
Recently, Axie Infinity got hacked for $600M just because someone downloaded a PDF…..Doesn’t that sound crazy!?
Well, I got the story covered for you👇
Not just this there are numerous examples of hacks happening everyday in the Blockchain, Web3 and Crypto Industry.
Now let’s talk about the future of Play-to-Earn model in the Web3 gaming industry:
Gaming in Web3 is the combination of finance, reward mechanism and blockchain. This industry has a huge potential and is gonna be the next trillion dollar market in the upcoming years. The founder of Reddit, Alexis Ohanian, predicted that 90 percent of the gaming market will be Play-to-Earn games within the next five years. He further added that people will not play a video game unless they are being properly valued for that time.
Conclusion
The gaming industry in the Web3 ecosystem is currently an untapped market and there’s a lot to be explored in the space. Right now, it’s still a very young concept and we have just scratched the surface. Once this space gains traction, the audience retention would be quite high resulting in users to spend their time and money.