Korea Blockchain Week points to games leading the way into a Web3-savvy world

Beyond being just a buzzword, Web3 is meant to be a redesigned Internet that offers users gaming, social media, and financial services through decentralized applications, or dApps, that run on a blockchain and are controlled by a user’s own wallet.

Gaming-related companies, such as Australian-based Immutable, expect to pioneer the industry for blockchain-based Web3 services, pointing to the interest of venture capital funds and the money pouring into the sector as proof.

Much is at stake. The current global video game market was valued at $195.65 billion in 2021 and is expected to grow by around 13% each year from 2022 to 2030, according to market researcher Grand View Research. It also has major stakeholders. The gaming industry accounted for more than 70% of South Korea’s content production exports in 2020, according to the Ministry of Culture.

“The majority of the venture capital talent, the money and the actual human talent, is going to the gaming sector, because we realize that’s going to be the first breakout application,” Robbie Ferguson, co-founder of Immutable, said in an interview with Discard at Korea Blockchain Week.

“It’s one of the strongest product markets that fits a lot of Web3 and a real use case,” said Ferguson, who co-founded Immutable in 2018. The company now includes Immutable X – a coining and trading platform for non-fungible tokens ( NFT -er) used in games such as Gods Unchained – and game developer Immutable Studios.

“If you look at the leading indicators of what will happen in 12, 24 months, VCs have invested $8 billion in Web3 games. That’s more than any other Web3 division,” Ferguson said.

The game

Electronics-based gaming burst onto the scene in the 1970s and 1980s with so-called arcade games made by Japan’s Nintendo and Atari, and then moved from arcade to console to computer and mobile platforms.

The mission has been to provide players with unique experiences and blockchain offers yet another spin on that, said Henry Chang, CEO of South Korean game developer Wemade.

“Blockchain technology is fundamentally separate from the game,” Chang said, using the company’s MIR4 fantasy warrior game as an example.

“If an NFT is imprinted in MIR4, the NFT does not belong to MIR4,” Chang said discard, highlights that blockchain-based games give users full ownership of the rewards they receive for the time and effort spent in the game.

Blockchain specialists at the conference in Korea also argued that gaming can help drive Web3, because the activity is resilient to economic ups and downs.

“Gaming has traditionally been a fairly recession-proof business, even in [market] downturns, makes gaming very good, John Linden, CEO of Mythical Games, said at the conference.

“I think gaming is a great area to be in because it hasn’t really followed the economic patterns as much as other businesses have.”

The players

Ganesh Swami, CEO of Canada-based Web3 data aggregator Covalent, said Web3 adoption will come through the current major players in the gaming industry rather than up-and-coming blockchain game developers.

“If you look at the biggest games in the blockchain space, they have maybe five, ten thousand daily active users. So they’re still very small, still very nascent in terms of their user bases,” Swami said.

“But triple A studios have millions of users. And so if they were to add a crypto experience that suddenly introduces millions of players to the Web3 space, that’s pretty exciting.”

Swami added that this could happen sooner than expected.

Apple’s decision to adjust its advertising model citing privacy concerns has trimmed that revenue channel for game developers and publishers, so they are looking at blockchain games as another revenue stream, Swami said.

However, he said that blockchain games leading Web3 will mean a focus on the gaming experience, not just a means for players to earn rewards.

Play-to-earn (P2E) is a game element adopted by many blockchain-based games and has grown in popularity in recent years where players receive rewards that have real-world value, often in cryptocurrencies or NFTs.

“What needs to change is the economics of making money. It’s just not sustainable. The games don’t really have a gaming element, it’s more of a gambling element, so that needs to change,” Swami said.

Wemade’s Chang and Mythical’s Linden both addressed the concept of play-and-earn, rather than play-to-earn.

“We have to make sure we’re building real games with worlds and stories and gameplay,” Linden said. “When it’s built for speculation, it’s not as fun.”