Messari Report: Blockchain Will Disrupt the Gaming Industry

The following report was commissioned by Forte, a member of the Messaru Hub, for more information see the disclaimer at the end of the article .

abstract

The blockchain-based gaming scene is rapidly expanding with the rise of NFTs (non-fungible tokens) and in-game currencies. Its rise can be seen as a continuation of decades of iterations across monetization strategies and business models. Over the past few years, the global interest in video games and NFTs has been gradually rising, which has become an important catalyst for the development of blockchain games. At this stage, the number of video game players worldwide is rapidly approaching 3 billion, and the compound annual growth rate (CAGR) is expected to reach 5~7% in the next few years. Meanwhile, NFT sales surpassed $15 billion for the first time in 2021. In fact, the secondary sales of NFTs that appear in blockchain games account for 20% of the total sales of NFTs, and dozens of small blockchain games continue to generate tens of millions or even hundreds of millions of dollars in revenue.

In the end, while the concept of the Metaverse remains vague, it’s clear that games have a strong presence in the virtual world. Virtual world games such as Decentraland and The Sandbox have generated nearly $500 million in cumulative NFT sales (virtual land and in-game assets). We witnessed the highest growth in NFT sales in the virtual world in 2021, which generated over $320 million in NFT transaction volume. As global understanding of the Metaverse advances, this new digital experience is likely to leverage blockchain as a core part of the infrastructure, and as blockchain infrastructure continues to expand to meet the needs of developers and consumers demand, this is more likely to happen.

This report will delve into the growth of these three categories: Global Gaming, NFT Market, and Blockchain Gaming.While the industry is still in its infancy, understanding these trends will help us gain insight into how gaming may change in the future.

Introduction to Blockchain Games

The gaming business, like the fictional characters in it, is in constant evolution. The industry is on the verge of disruption, with innovations that have historically emerged that allow it to adapt to changing market demands.

Take, for example, the evolution of gaming business models. The first mainstream games featured a pay-to-play system: we remember these games were mostly arcade or computer discs in malls, and later these games could be downloaded directly to machines. The advantage of paid games is simple: you just have to buy the game and you can play it forever.

After paid games, there is a free-to-play mode of games. In the era of free-to-play games, players don’t need to pay to play games. Instead, companies generate revenue by paying players to unlock other components of the game or, more commonly, by selling in-game products such as expansion packs, platform subscriptions and costumes. For many, free-to-play has lowered the barriers to entry for gaming, and the shift to free-to-play games has helped increase the number of gamers worldwide.

And right now, the next monetization revolution in gaming is just around the corner: blockchain gaming. Blockchain games already have other names like GameFi or Play-to-earn (P2E), which speak volumes about the new monetization model of this gaming era. Blockchain games typically feature non-fungible tokens (NFTs) or other forms of tokenized assets as game content, which can be traded in cryptocurrencies or fiat currencies in blockchain-powered markets. Thus, this core monetization strategy comes in the form of sales of tokenized assets and subsequent royalties. Game studios and players share consistent incentives in this new business model, as both parties benefit when the game’s tokenized asset appreciates.

Messari Report: Blockchain Will Disrupt the Gaming Industry

At the heart of this revolution is that gamers should own the content they earn, or at least have more ownership in the digital world where they spend a lot of time and money. This creates two immediate advantages:

  1. Increased lifespan of in-game assets, as these continue to exist in their owners’ wallets even after the game is closed;
  2. The interoperability and composability of assets (terms describing their portability) enable them to interact with other games, applications or blockchains. Interoperability between different blockchains enables gamers to lend their in-game assets, port them to another application, or gain access to real-world events. In addition, blockchain has the potential to provide gamers with the ability to buy, sell, trade, and create game assets securely and efficiently, even within the same application; the secondary market for games in a gray area can be rife with fraud, with many emerging The marketplace lacks payment infrastructure, but it enables gamers to seamlessly conduct gaming-related transactions.

While blockchain games can be a new source of funding for game studios, you still need to be cautious, as entering the blockchain world is not without its pitfalls. The recent announcement of Ubisoft’s in-game NFT marketplace, Quatz, has drawn suspicion from fans, leading to the cancellation of Ubisoft’s plans to include NFTs in its new game Ghost Recon: Breakpoint. Previously, the popular gaming community Discord faced a similar pushback after it hinted at integrating with Ethereum. The main reasons behind the community pushback are sustainability, unclear user value propositions and ubiquitous rug pull, among many others. In fact, all of these concerns could be avoided or mitigated with more thoughtful rollouts and market education; Twitter’s introduction to NFTs and Adidas’ forays into NFTs have shown an encouraging path forward for platforms and IP owners, This is worthy of reference for later generations.

Global Game Market

Gaming is one of the most popular sources of entertainment for humans, and the gaming space continues to expand.Major games such as Fortnite and League of Legends now have a large global reach and player base. For example, Fortnite has teamed up with Marvel Studios, Star Wars and John Wick in the film industry, with Ariana Grande, Neymar and other influencers celebrity collaborations and collaborations with popular brands such as Balenciaga, Ferrari and Air Jordan. On the other hand, the international sports leagues hosted by League of Legends attract millions of fans.

To assess the global gaming market, we need to understand what has happened in the gaming industry over the past two years. In 2020, stay-at-home quarantines due to the COVID-19 pandemic have been a strong catalyst for the gaming industry. Those who are already gamers find themselves having more time to play their favorite games. At the same time, non-gamers find themselves having time to try new hobbies. As a result, global gaming revenue grew by 15% in 2020.Revenues from mobile, PC and console games all increased, with mobile in particular up 26% year over year.

Unfortunately, gaming-related businesses in 2021 face a different story. The prolonged disruption of the Covid-19 pandemic is beginning to highlight unexpected second-order effects in the global gaming market. Disruptions to manufacturing, shipping and logistics processes have hampered the launch of next-generation consoles, and PC hardware has faced chip shortages and delays in other high-end components.

Despite the growing interest in gaming in 2020, both PC and console revenue declined slightly compared to 2020 due to these supply chain disruptions and tough competition, with mobile being the only category to experience growth.

Messari Report: Blockchain Will Disrupt the Gaming Industry

Forecasts show that the gaming industry will return to previous levels of growth once the impact of the coronavirus subsides. The industry is forecast to reach $269 billion by 2025, a 53% increase from the most recent figure. During the upcoming three-year period, it will be in line with the historical compound growth rate of 15% in recent years, driven by continued changes in consumer behavior post-COVID-19 and new revenue models from streaming and professional esports.

Messari Report: Blockchain Will Disrupt the Gaming Industry

Meanwhile, the total number of gamers worldwide is expected to hit the 3 billion mark, with 55% coming from the Asia-Pacific region. The main drivers of the growing user base remain the expanding Internet population, better network infrastructure, and easier access to smartphones.

The overview of these three drivers remains solid in the short term, but as more people come online in regions such as the Middle East, Africa and Latin America, the rate of user growth will gradually slow down and explore new avenues to increase the number of participants will be the direction of interest for many companies. Blockchain games and their new token-based monetization model offer game developers a unique opportunity to generate more game revenue per customer, expand their customer base, and explore new revenue streams .

Non-Fungible Tokens: Game Changers

As the core element of blockchain assets, non-fungible tokens (NFTs) are also the key value proposition of various blockchain games. NFTs in blockchain gaming provide various benefits to gaming, including asset ownership, asset programmability, and new opportunities for incentives and innovation.

asset ownership

In traditional games, in-game assets are controlled and owned by the game developer and effectively rented out to players. In blockchain games, by contrast, players retain true ownership of their digital assets, whether it’s in-game currency or more unique assets such as skins, account names, in-game lands, or other assets.

Programmability of Assets

Since NFTs are essentially software on a blockchain network, these assets can be programmed to have various qualities or utility built into the game. NFTs can be designed as single-use, unlockable content, distributed to players who reach a certain status, or programmed into some other unique use case.

Inspiration and innovation

Game developers are among the most insightful when it comes to incentives. NFTs provide an additional layer of economic incentives, enabling players to acquire yield-generating assets, inject real financial value into game assets, and build a stronger game economy through in-game currency and NFT marketplaces.

Since blockchain networks are permissionless, they open the door for developers to innovate. With NFTs, a single asset class can be automatically licensed to other companies or utilized in other games. Fantasy football NFT game Sorare has licensed the rights to use its NFTs to other game developers such as Ubisoft.

Finally, NFTs also open up new forms of monetization. For example, company-issued NFTs can earn royalties from all secondary sales, creating new revenue streams for digital asset issuers. Companies can choose to vertically integrate their own markets and campaigns, or integrate with third-party platforms such as OpenSea.

The Growth of NFTs: An Analysis of the Secondary Market

Messari Report: Blockchain Will Disrupt the Gaming Industry

Total secondary sales of NFTs in 2021 exceeded $15 billion across multiple blockchain networks. On the platform side, Ethereum leads the sales of NFTs. However, the increase in transaction costs on the Ethereum network has paved the way for newer blockchains and second-layer network scaling solutions such as Solana, Ronin, ImmutableX, Polygon, etc.

Every blockchain or layer 2 network has its own set of trade-offs including scalability, existing infrastructure, users and security, and more. So there are various game developers building on different blockchains for different reasons. Games that require greater scalability might opt ​​for a blockchain like Solana, while games looking to leverage Ethereum’s existing network effects might opt ​​for Polygon, ImmutableX, or other Ethereum scaling solutions.

Looking at it now, August 2021 is the peak of monthly NFT transactions in 2021, with NFT secondary sales exceeding $4.5 billion:

Messari Report: Blockchain Will Disrupt the Gaming Industry

While the transaction volume of NFTs at the end of 2021 is still relatively lagging compared to the peak period, it is important to realize that the secondary market for NFTs at the end of the year is still several times higher than at the beginning of 2021. As more applications and markets integrate various forms of tokens, including NFTs, the NFT secondary market will be poised to regain the highest levels of participation seen during August 2021.

Note that these graphs represent secondary sales, meaning that the NFT was sold from the seller to another person. As such, this data excludes initial NFT sales from gaming companies to first buyers, which can generate meaningful revenue.Secondary sales are a useful indicator of the health of the NFT market as a whole and individual games. An increase in secondary sales may translate into a stronger game economy, as NFT collections typically pass perpetual royalties to companies on each sale, and a healthy secondary market also directly corresponds to increased revenue for NFT publishers.

The data shows that Axie Infinity is the clear leader in secondary NFT sales, the vast majority of which occurs on its sidechain Ronin. More recently, ParallelAlpha, another strategy card game, has grown in recent months, in part due to its engaging sci-fi backstory and intellectual property. Overall, there are several successful games at this stage with secondary NFT sales in excess of $100 million across multiple blockchain networks, but the market remains unclear as to which platform is best for blockchain-based games consensus.

Messari Report: Blockchain Will Disrupt the Gaming Industry

It is also worth mentioning that most of the current successful blockchain games are based on card games. In contrast, the existing game industry is more inclined to sandbox games and massively multiplayer online role-playing games ( MMORPG) and games with a more robust gaming experience.

At present, blockchain games have not yet developed to a scale that can simultaneously support complex games and economic elements (such as NFTs). Over time, however, advancements in blockchain technology and user experience, including improvements to roll out next year, will open the door to higher-functioning games running on the blockchain network.

The landscape of blockchain games

As the blockchain gaming space gains momentum, the gaming infrastructure stack is also rapidly evolving, and blockchain gaming now consists of a rich ecosystem of studios, games, and key pieces of infrastructure.

Messari Report: Blockchain Will Disrupt the Gaming Industry

Let’s analyze various aspects of the blockchain gaming space.

game guild

Messari Report: Blockchain Will Disrupt the Gaming Industry

Guilds are no strangers to blockchain games. These social groups (guilds) have been exploited in role-playing games for decades. However, a Decentralized Autonomous Organization (DAO): a community-formed entity organized around a set of rules enforced on a blockchain, which often has no central leadership structure, combined with gaming enables these guilds to ingest and Allocate capital, which creates new models for game financialization and user acquisition. Well-capitalized guilds like Yield Guild Games, GuildFi, and Merit Circle have sponsored (delegated assets in exchange for some of the game’s rewards) hundreds of players to play games like Axie Infinity.

blockchain game

Messari Report: Blockchain Will Disrupt the Gaming Industry

The biggest layer of the blockchain gaming scene is the game itself. So far, various blockchain game genres exist. Some of the most successful categories include trading card games (like Axie Infinity), MMORPGs (like DeFi Kingdoms), virtual worlds (like The Sandbox), and sports games (like Sorare).

As the game landscape evolves, there will be dominant explosive games in every field. However, many games are still in development right now, and they can take months or years to fully develop.

market place

Messari Report: Blockchain Will Disrupt the Gaming Industry

Since games issue assets in the form of NFTs, general marketplace platforms like OpenSea provide access, and blockchain-specific marketplace platforms like Metaplex, VIVE, and Magic Eden facilitate transactions. Additionally, some game infrastructures such as Enjin for the Enjin SDK will provide their own marketplace for developed games.

Launchpad

Messari Report: Blockchain Will Disrupt the Gaming Industry

Launchpad can effectively help new game developers raise money for game development. Often these Launchpads raise funds for a specific gaming ecosystem (like Polkastarter for Polkadot, or Magic Eden for Solana). Typically, Launchpad is funded through an Initial Decentralized Exchange Offering (IDO) or a Liquidity Bootstrapping Pool (LBP), each of which enables an initial token sale.

game development infrastructure

Messari Report: Blockchain Will Disrupt the Gaming Industry

Game development infrastructures like Forte and Enjin often have APIs and SDKs that allow game developers to quickly integrate economic activity with NFTs or other cryptocurrencies. Building the entire blockchain infrastructure required for a game from scratch can be daunting and time-consuming for game developers. Just as blockchain developers leverage existing smart contract tools and wallet infrastructure, game developers can leverage blockchain game development software (i.e. Stardust, Enjin, Forte) to support wallets, asset issuance, payments and other basic functions and other modular components.

Layer 2 infrastructure

Messari Report: Blockchain Will Disrupt the Gaming Industry

The 2021 NFT bull market has led to increased investment in the gaming ecosystem by second-layer networks. Axie Infinity opted for vertical integration, developing its own sidechain Ronin and its own decentralized exchange Katana. Elsewhere, game development platforms like Enjin have opted for horizontal integration, recently securing an auction for Polkadot parachain slots for Efinity. Nonetheless, many existing games are dedicated to building on Ethereum’s existing network effects, leveraging Starkware (like Sorare), ImmutableX (like Gods Unchained), Polygon (like Zed Run), and more to meet their scaling needs.

Tier 1 Infrastructure

Messari Report: Blockchain Will Disrupt the Gaming Industry

Layer 1 infrastructure is the core foundation of various protocols and applications. While some games are building higher throughput blockchains like Solana and Flow, most Ethereum games have migrated to layer 2 solutions. The importance of the first layer comes from other composable protocols that the game will leverage, including guilds, financialization protocols (such as NFTX), identity solutions (such as ENS), marketplaces, and other applications or services.

game studio

Messari Report: Blockchain Will Disrupt the Gaming Industry

Studios are at the base layer of the game scene, as they are usually the developers of the game and the first and second layer of infrastructure. Dapper, Sky Mavis, and Animoca Brands are the most well-capitalized game developers, with hundreds of millions in capital. Ultimately, not every game studio survives. However, the studios that develop the next blockbuster game have the potential to be the face of the next Electronic Arts of the future.

Blockchain games gain attention

The first blockchain games were created in late 2017, but it wasn’t until recently that the mainstream began to explore NFTs that the sub-sector has seen a surge of engaged users. With games like Axie Infinity and mainstream collectibles like NBA Top Shot gaining popularity, blockchain-based gaming is now on the eve of wider adoption.

User and Funding Metrics

While blockchain gamers make up only a small percentage of the world’s 3 billion gamers, DappRadar recently released data showing that October 2021 marks the first time that Independence Day’s active wallets and decentralized game app interactions exceeded 1 million month. This number is almost a 300% increase from the previous four months, when the same metric showed only 350,000 wallet interactions.

The number of monthly NFT buyers for blockchain games is also on the rise. To date, most blockchain games require individuals to own NFTs, which places an initial capital burden on gamers, just like buying a gaming console. While this mode is still the most popular today, it’s likely that more games will try the free-to-play mode in the future.

Messari Report: Blockchain Will Disrupt the Gaming Industry

Follow in the footsteps of funding

In addition to wallets as a proxy for blockchain gaming adoption, another important metric to track is venture capital.Capital investment reflects many things. It reflects interest in the industry; in part, it reflects founders’ ambitions in the field; and to a greater extent, it also reflects the resources at hand for those who challenge the status quo. It is worth analyzing how the financing environment has changed over the past year.

Not surprisingly, these numbers continue to further highlight the growth of this sub-sector. Compared to 2020, total venture funding across games and ecosystem infrastructure has increased more than 100 times. Venture funding in 2021 is about 40 times higher than in 2018, which was at its peak until 2021.

Messari Report: Blockchain Will Disrupt the Gaming Industry

Venture capital in 2021 is a stark contrast to previous years, with multiple companies raising more capital than all previous years combined. Examples include Forte, an end-to-end blockchain game development platform that works with numerous game studios. Perhaps what’s notable about this data is the diversity of products and services on this list.Studios and infrastructure/tools are represented, not to mention other components of the gaming stack, including NFT marketplaces and various Layer 1 or Layer 2 blockchains.

In addition to funding amounts, sources of funding have also changed over the past year. Crypto-focused venture funds are no longer the only source of funding for the game. Those investing in the space over the past year now include traditional tech funds such as Sequoia Capital, Andreessen Horowitz (a16z) and Lightspeed Partners, as well as hedge funds with a proven track record in growth investing, notably Tiger Global and Coatue Management. Building on the growing funding of industry financing, this three-pronged player, especially new players, should continue to bring new capital to the ecosystem.

developer action

Additionally, a recent study of 157 developers in the US and UK found that 72% of respondents have considered integrating blockchain technology into their games, while 58% of the same group have plans to do so in the next 12 months Do so within. Meanwhile, 47% of participants have used NFTs in their games, highlighting the considerable interest from developers.

While developers see an opportunity for new content, it should be reiterated here that the technology behind such games is still in its infancy. In addition, current challenges around blockchain, such as transaction costs, throughput speed, and general scalability, further limit the gameplay, and existing blockchain games are mainly turn-based card-collecting games, rather than Live action and 3D graphics for AAA games released by high budget studios.

Blockchain Gaming Case Study

In the following chapters, we will look at the development of three well-known blockchain games, their models, and what they mean for the blockchain gaming ecosystem.

Axie Infinity

Widely regarded as the most popular game to date, Axie Infinity has facilitated over $3.5 billion in cumulative trading volume within its NFT marketplace. The game’s mode is similar to Pokemon, where players own and breed Axie Champions, as tradable NFT characters, they either complete adventure levels or fight against computer opponents or other human-owned Axie Champions in the Axie Infinite Realm.

Successful battles or conquests earn players in-game rewards that can be monetized into real-world currency. Axie Infinity has spawned the adoption of P2E business models worldwide. Axie Infinity is estimated to have 40% of players in the Philippines alone, and players can earn more than $500 a month from gaming.

Axie Infinity derives protocol revenue from various fee mechanisms. The first mechanism is a marketplace fee earned as a percentage of sales facilitated through the NFT marketplace. Another major source of income is the breeding fees that players pay to create new Axie creatures in the game. Two smaller revenue streams include fees from in-game land sales and original sales of first-generation Axie creatures.

Collectively, the agreement generated more than $1.3 billion in revenue from these four sources, almost all of which occurred after June 2021. This time point coincides with the launch of the Ronin network by Sky Marvis, which will help reduce transaction costs for users and promote the popularity of the game.

A further breakdown of Axie Infinity’s revenue seems to support this conclusion. Over 99% of the cumulative total revenue comes from activity on the Ronin network. Ethereum accounted for only 0.19% of the $1.3 billion, including revenue from land sales and first-generation Axie sales, both of which were not available on the Ronin network. So, Ronin’s claimed 99%+ revenue is another indicator, and it comes from the astonishing activity of farming and marketing fees alone.

Messari Report: Blockchain Will Disrupt the Gaming Industry

The chart below shows how much Axie Infinity’s revenue has grown in the second half of the year. Surprisingly, Axie Infinity’s revenue started to decline in the final weeks of 2021.

Potential explanations for this include the recent devastation caused by Typhoon Rai in the Philippines, where 40% of total users live, or a shift in player interest in blockchain games with newer gameplay.

Messari Report: Blockchain Will Disrupt the Gaming Industry

While Axie Infinity’s float market cap has indeed fallen in recent weeks due to slower revenue growth, a rough benchmark does find that the game is still comparable to many pure-play game studios. Notably, this approach compares a single game (Axie Infinity) to a game studio with multiple games, further showing that this one blockchain game has become very large.

Axie Infinity lags behind the biggest industry players like Nintendo, Activision Blizzard, and Electronic Arts, which all have triple-A game studios, but it’s closer to several other industry players. In the benchmarks below, Axie Infinity has a similar market capitalization in circulation to Ubisoft, the creators of well-known games such as Assassin’s Creed and the Rainbow Six: Siege series.

Messari Report: Blockchain Will Disrupt the Gaming Industry

Sorare

Much like fantasy sports, Sorare offers its players the opportunity to blend real-world sports with digital gaming, only this time with blockchain technology in the game. Come to think of it, FIFA Ultimate Team has NFT cards as collectibles.Sorare’s play has so far been limited to football, though the company recently raised $680 million in September to support its continued expansion.

Messari Report: Blockchain Will Disrupt the Gaming Industry

Sorare tracks real-world football stats, rewarding NFT card players with high-performing athletes. The nature of the game naturally attracts a large number of football fans. As mentioned above, the second half of 2021 saw a surge in the number of first-time buyers of Sorare NFTs. In December 2021, the total monthly unique buyers of Sorare NFT exceeded 20,000 for the first time. It is important to note that, unlike Axie Infinity, Sorare players do not need to buy NFTs to start the game.This likely means that Sorare’s total number of gamers exceeds those who make secondary NFT purchases.

Sorare is one of the most successful cases of NFT and cultural fusion to date. The participation of influential football leagues, including some of the world’s most popular football leagues such as the Premier League, La Liga and Europe’s top European Champions League, who are willing to lend their brands to blockchain gaming, which is the future of gaming A good demonstration.

DeFi Kingdoms

Another blockchain game, DeFi Kingdoms, shares similarities with the popular internet classic Runescape. Players of the latter may feel some nostalgia as avatars interact with each other in a retro pixel art world. Unlike Axie Infinity or Sorare, DeFi Kingdoms’ gameplay doesn’t revolve around collecting and fighting cards. Instead, the game incorporates heroes, quests, occupations, and broader actionable activities such as mining, gardening, farming, and fishing. The game’s roadmap has a huge ambition: future gameplay will allow heroes to join guilds, engage in peer-to-peer battles, hatch pets, and more. Engaging heroes in these various missions can improve the odds of gamers accumulating tradable resources on the blockchain marketplace.

As its name suggests, DeFi Kindoms blend elements of gaming and Decentralized Finance (DeFi), focusing more on DeFi properties than many games. The game includes a decentralized exchange, liquid staking and native NFT marketplaces, all of which are services found in the cryptocurrency ecosystem but not in traditional blockchain games. In fact, the team behind the game took the opposite approach to Axie Infinity; DeFi Kingdoms didn’t start with the game, but with traditional liquidity mining incentives and developed the game over time.

Messari Report: Blockchain Will Disrupt the Gaming Industry

The blockchain that runs the game is Harmony. The launch of DeFi Kingdom on Harmony is notable for the project’s sheer dominance across the entire blockchain network. DeFi Kingdom owns approximately 68% of the network’s total value locked (TVL), a share significantly larger than the two major decentralized exchanges (DEXs) active on the network, SushiSwap and ViperSwap. DeFi Kindoms launched on Avalanche are also expected to be released in the coming months.

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The game’s usage data also seems to support the claim that the game is gaining traction. DeFi Kindoms has seen an upward trend in daily user numbers since its launch. In early December, the game announced that it would expand to Avalanche, with a new realm called Crystalvale. On the day of the news, Avalanche DEXs like Trader Joe and Pangolin announced that they would immediately begin providing liquidity for DeFi Kingdom’s new Avalanche-specific in-game token; a few days later, the number of users active on Harmony jumped by 64%, and then again has declined. Trading volume also jumped 29% over the next two weeks.

Metaverse

On a broader scale, a lot of what’s happening in gaming is happening in tandem with another major technological trend: the Metaverse. Maybe the Metaverse has touched your life, not too long ago Facebook strategically renamed itself Meta.If the Metaverse hasn’t caught your eye, it’s likely to touch every aspect of our lives in the next few years.

Messari Report: Blockchain Will Disrupt the Gaming Industry

The current definition of the Metaverse is somewhat unclear, in part because the concept itself remains largely hypothetical. At its foundation, the Metaverse represents a collection of virtual worlds (including AR, VR, and 2D) where we can come into contact with each other digitally. But as things stand, multiple Metaverse worlds co-exist, ecosystems are fragmented, and competition is fierce among the companies vying to lay the framework for the final construction of world applications.

Whatever the final form of the Metaverse will be, the opportunities for integrating the Metaverse within the game are largely untapped at this stage. The Metaverse expands the scope of the game by unlocking new types of intellectual property, experiences and behaviors. An early example was Worldwide Webb, an interoperable massively multiplayer online role-playing game (MMORPG). Worldwide Webb allows users to import owned NFTs into games as digital identities, marking the first example of NFT cross-application interoperability in a blockchain-powered digital world.

Dominance of the virtual world

Since Decentraland’s ICO in August 2017, virtual worlds have long been discussed as a potential application within the Metaverse. These virtual worlds are designed as sandbox games (like Minecraft, Roblox, etc.) where players can buy and build their own assets and socialize with other gamers.

The leading four Metaverse worlds are The Sandbox, Decentraland, Somnium Spaces, and Cryptovoxels. Each of these virtual worlds enables users to purchase scarce digital land, many of which also utilize their own in-game currency (such as The Sandbox’s Sand).

To date, some of these virtual worlds have received more attention for specific use cases. For example, Cryptovoxels users have created 3D art studios, and Decentraland provides casinos and digital offices for various cryptocurrency companies.

The virtual world has generated nearly $500 million in cumulative NFT sales (virtual lands and in-game assets). In 2021, NFT sales in virtual worlds witnessed the greatest growth, generating over $320 million in NFT sales.

Messari Report: Blockchain Will Disrupt the Gaming Industry

The Sandbox leads the virtual world by a large margin, with more than $235 million in sales. Additionally, in the fourth quarter alone, NFT sales in Decentraland and The Sandbox increased by 490% and 739%, respectively.

Messari Report: Blockchain Will Disrupt the Gaming Industry

As awareness of the Metaverse has grown, so has speculation in sync with virtual worlds. At the end of the day, these apps are in their infancy, still building content for gamers and trying to find their niche (i.e. social, gaming) among potential users.

The unique value proposition of blockchain networks: asset ownership, permissionless innovation, incentivized design and programmability are likely to ensure that these protocols will support the meta as a base layer or as a key part of the infrastructure for secondary and tertiary applications and services universe.

Summarize

It is undeniable that blockchain gaming has experienced a watershed moment in the past year: a historical shift upon which future development depends. Due to successful games such as Axie Infinity, the explosive growth in secondary sales of NFTs, and the widespread growth of cryptocurrency adopters, or more precisely, the expansion of blockchain gaming users, perceptions of blockchain gaming have changed. This, in turn, has spurred further funding for the blockchain gaming space, involving various core infrastructures and dozens of new games and studios.

The gaming industry has also benefited from tailwinds in the Metaverse, which accounts for a large portion of online activity today and could be an important area of ​​growth and user acquisition for companies established in the Metaverse.

Blockchain ecosystems like Ethereum are growing at an ever-increasing rate, but scaling challenges and user experience issues remain. Still, there are many teams developing solutions for consumers and game developers to enhance the experience of building and playing blockchain games. While a common monetization model for the entire blockchain game has yet to emerge, experiments around issuing NFTs, vertical markets, in-game currencies, and other cryptoeconomic elements remain promising.

This report was commissioned by Forte, a member of the Messari Hub. All content is done independently by the authors and does not necessarily reflect the views of Messar, Inc. or the organization requesting the report. Paid membership to the Hub does not affect editorial decisions or content. The author may hold cryptocurrencies mentioned in this report.

Cryptocurrency projects can commission independent research through the Messari Hub. For more details or to join the project, please contact hub@messari.io.

This report is for informational purposes only. It is not meant to be used as investment advice. You should do your own research and consult an independent financial, tax or legal advisor before making any investment decision. Past performance of any asset is not indicative of future results.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/messari-report-blockchain-will-disrupt-the-gaming-industry/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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