How blockchain games can break out of their niche and win over more people

While early conversations with Web3 centered around rising cryptocurrency prices and million-dollar JPEGs, blockchain gaming has since grown into an entire industry in its own right. This has inspired stalwarts of the traditional gaming industry to explore the benefits that blockchain technology can bring to game development. The reason for this? Blockchain-based games are a radical departure from traditional gaming platforms because they allow players to own in-game assets through NFTs. Through this innovative rewiring of traditional games, the blockchain gaming market is predicted to be worth USD 65.7 billion by 2027.

Beyond the potential economic upside of the market as a whole, incorporating blockchain technology into game development offers the opportunity to improve KPIs when it comes to the number of installs, user engagement, user retention and revenue. While the tokenization of in-game assets provides new revenue streams for game developers and players alike, they also offer a new way to keep users engaged. That said, the blockchain gaming market is still very small compared to the traditional market. To accelerate mainstream adoption, the Web3 industry must promote synergies between Web2 and Web3, support developers in the transition to Web3, and prioritize building games that are fun for the everyday user.

Accelerating Web3 by onboarding Web2

Bridging the gap between Web2 and Web3 will be the first step in accelerating the adoption of Web3 games. As blockchain technology enters the mainstream, Web2 businesses are expanding into Web3 territory to attract a new generation of users. In turn, the entry of household brand names into the space gives the technology further credibility in the eyes of consumers. Countless large companies have begun to enter the fray with promotions such as Starbucks’ Web3 Rewards Program and Chipotle’s Buy the Dip campaign.

While the transition to Web3 by major players has begun to turn the tide on mainstream sentiment toward blockchain use, smaller startups often require more accessible solutions to build blockchain-based offerings. New gaming companies have also done so, using blockchain technology providers to easily build out an offering that allows players to hold and trade in-game assets through NFTs and crypto wallets.

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Supports blockchain games from the ground up

Taking a step back, traditional companies will only be able to develop blockchain strategies if the necessary infrastructure is in place. What drives the development of that infrastructure? Developers.

The current sentiment among developers when it comes to exploring blockchain technology is a mixed bag, but one that shows promise for the future. Early evidence of this can be seen from the recent GDC State of the Game Industry Report, which found that even at this early stage, roughly a quarter of game studios are currently interested in, or already using, blockchain technology. But what was perhaps a more insightful takeaway from this report came from a lengthy response to the question “What are your thoughts on the use of blockchain technology in video games?” The response suggested that it has now become too fashionable to be open to blockchain to “score points” on social media when many developers are actually exploring blockchain’s uses behind closed doors.

As such, game developers must be openly incentivized, supported and encouraged to make the transition to Web3. Offerings such as APIs, game toolkits, and widgets will all support developers’ ability to embed Web3 without retraining in Solidity or other blockchain programming languages, all of which can accelerate this transition. Beyond these infrastructural supports, proactive efforts must be made to educate those in this area about the benefits and new use cases that blockchain can facilitate. Initiatives such as these will help to significantly reduce the barriers to adoption, while laying the foundation for the industry’s growth into the future.

Great strides have been made in bringing blockchain gaming to the mainstream, but the driver for mass adoption, both among players and studios, will ultimately be the development of games that are fun, regardless of their use of blockchain technology. While many early adopters of blockchain gaming have gravitated to the space for financial benefits such as game-to-earn models, this alone is not sustainable to pave the way for widespread engagement with blockchain gaming. To quote the GDC report again: “High salaries are nice, but give me your game, not your profit!”

The vast majority of people don’t play games that use one underlying technology over another. Simply put, most people don’t care what’s under the hood. Similarly, the benefits that blockchain can facilitate through in-game ownership and interoperability will do little to drive adoption if people are not first interested in playing a game for enjoyment.

Once developers are equipped to embed Web3, they must focus on creating games that are primarily entertaining. Once the foundation of a fun game is established, projects can add layers of tokenomics to give players the ability to own and trade aspects of the game.

To quote Tom Fleetham, head of business development for sports and games at Zilliqa in his article for TechCrunch, “The overall vision for Web3 games is to give players more control, reward them according to the value they contribute and to lower the bar so that it’s not just the top 0.1% of players who can make a living through gaming.”

What the future holds for Web3 games

That said, a game’s development cycle can take years and is highly dependent on available infrastructure, development tools and distribution channels, to catalyze explosive growth.

A recent report indicates that the future is bright for Web3 gaming, noting that during October and November 2022, US$534 million was invested in projects. Although activity is still small compared to traditional gaming, steady, industry-wide growth is undeniable through mass adoption metrics such as the number of unique active wallets, NFT transaction volumes, and the number of blockchain games available.

For large companies, small startups and individuals alike, the future of NFTs and Web3 games will be collaborative and evolutionary, rather than disruptive and revolutionary.