Its industry grew 2,000% in the last year and attracted more than US$2.5 billion in investment. The country that adopted this type of games the most was the Philippines (representing 40% of the Axie Infinity player base). In South America, the cases of Argentina and Brazil stand out.
You have probably heard of NFTs . Think of them as digital assets backed by certificates of ownership that cannot be forged.
Nothing on the Internet is truly yours: all your digital assets are data points on company servers that can be erased. But with non-fungible tokens, or NFTs, users “mint” unique on-chain assets that they fully own. Since each record is encrypted, trust is decentralized and allows for ownership that cannot be destroyed.
NFT trading volume grew from $135 million to $64 billion since December 2020. The blockchain gaming industry grew by 2,000% in the last year and has attracted more than $2.5 billion in investment.
People are fascinated by the idea of putting durable game assets on a blockchain. For players, the items they acquire will now be tradable for their monetary value.
For game companies, their assets become persistent platforms on which other developers can build experiences. However exciting these concepts are, the space is young and comes with its own challenges.
- Players don’t like NFTs.
Players care about one thing: having fun. The moment that fun is accompanied by an ulterior motive, they rebel. Subscriptions and microtransactions have been a tough sell to players. Diablo Immortal, a recent Blizzard title, received the lowest user rating in Metacritic history after it was discovered that it could cost players up to $110,000 to fully upgrade a character.
When it comes to NFTs, where every win or loss can translate into a profit, the pushback can be immense. Prominent game studios like EA and Ubisoft have faced intense backlash from gamers for their NFT releases. For Web3 business owners, game developers, and investors, it’s vital to be aware of this general sentiment and guard against it.
- It’s early days, but the money is coming.
The blockchain gaming space is still new and fraught with growth challenges. Hacks are common: popular play-to-earn game Axie Infinity was robbed of $622 million in March. Its native market then lost 17% of its user base in the 24 hours following the hack.
Volatility, hacks, and scams of this kind have made it difficult for big platforms like Twitch and Steam to adopt crypto games : Both have company policies that prohibit NFTs. For builders looking to get into this space, expect a lack of support from major platforms and media outlets as blockchain games slowly gain legitimacy.
In the meantime, it’s important to focus on three things: providing fun gameplay, cultivating a loyal community, and ensuring good security for users. Establishing a game product feedback loop is paramount. Also, it is largely unrelated to cryptocurrency macro fluctuations, which can be harsh.
One piece of good news is that blockchain games are getting better funded . In the first quarter of 2022 alone, investors poured more than $2.5 billion into crypto games. This figure is expected to rise to US$10 billion by the end of the year. The challenges of being early – such as the incorporation of cryptocurrencies, gaming infrastructure and tournament software – are also entrepreneurial opportunities. This is a promising trend for new founders looking to attract seed funding.
- Play-to-earn games can be life changing.
Blockchain games allow players to win while they play. This is fast becoming an alternative career for many in developing countries. The Philippines boasts 20% adoption of blockchain games by the population and accounts for 40% of the Axie Infinity player base.
In some cases, Filipino workers earn double or triple the local minimum wage. LATAM countries like Argentina and Brazil follow close behind (Decentral Games, one of Argentina’s favorite gaming sites, attributes this to strong inflation in both countries).
For those hoping to understand the potential of “play-to-earn,” or P2E, gaming, this is worth noting. For game developers in particular, this suggests that having a sustainable token economy goes a long way. Also, due to income differences, cultivating a P2E fan base in developing countries may be a superior strategy.
For investors and companies, it becomes imperative to fully understand the white paper of each project. Additionally, countries like the Philippines and Argentina may present a growth opportunity that cannot be overlooked.
