🔍Industry Outlook
Issues, Challenges & Trends in Gaming & the NFT space
Current issues with Gaming
With almost 3 billion players worldwide and market value of 214 billion USD as of 2021, gaming is by no means a small industry. From the 8-bit graphics and off-the-rack models of old to today's incredibly detailed characters and varied purchasing mediums, video games have come a long way. Yet, in spite of continued exponential growth, with market values of 321 billion by 2026 projected, many issues persist in the medium that is gaming.
Problem 1: No democratized asset ownership
A tale as old as time, centralized game publishers sell game assets to players but deny buyers free reign over assets which they legally own. Take games like League of Legends for example. Rarer character skins like “Pax Twisted Fate” and “Young / Human Ryze” can be worth hundreds of dollars in the aftermarket. Yet, players who rightfully earned and own such skins are unable to sell them unless they choose to sell their entire accounts - which in itself is difficult to facilitate and may be liable to risks of account banning.
In even more extreme cases, skins like a “StatTrak™ Case Hardened AK-47” variant bearing four Titan Katowice 2014 stickers and a “Karambit Case Hardened Blue Gem” and can go for hundreds of thousands to millions for CSGO players. Again, to sell such personal assets for cash, players must rely on 3rd party service providers. Such transactions bears the risk of middlemen running away with both cash and item instead of facilitating the transaction.
Here's what we believe: Asset ownership should be in full. It should be democratized for the owners.
2. Broken modding incentives and exploited communities
There is perhaps no greater representation of love, dedication, and talent by gamers than the act of creating mods for games. Modding is an expression of passion and love which benefits the game upon which it is bestowed and the gaming community at large. Moreover, it also benefits game publishers and developers by essentially adding free, quality content to their games, prolonging lifespan and increasing engagement.
Prominently, games like Skyrim and Grand Theft Auto manage to remain relevant despite being around a decade old. Download the right ENB and shader mods and your 2011 copy of Skyrim could look more graphically impressive than many titles released in 2022. Yet, modders do these for little to no incentives and are, at times, penalized by game publishers for their active contribution. Bethesda’s attempt to create a paid modding pace, whilst initially noble, eventually failed because of corporate greed. Modders were eventually made to take mere pittance of commissions for their contributions.
Here's what we believe: Good work stemming from passion should be compensated fairly. More modders should be incentivized to emerge with the right reward systems.
3. Absence of cross platform game asset compatibility
Many of us would be familiar with barriers of platform compatibility in gaming. There are two major issues here.
First, there is a lack of interoperability – games which we purchase on one platform cannot be played on another even though we already own it. Buying a game on Steam does not allow you to play it on the Epic Game store. Buying a game on PlayStation does not give you access to it on XBox. While we may be used to such systems, it is of fundamentally bad sense, since each purchase already gives you ownership of it.
Fans of older titles are also made to purchase the same license over and over if they want to play it on newer consoles and systems. Do we have to pay for the same t-shirt twice to wear it in different countries or venues? Whilst possibly a stretch, interoperability is something which industry veterans like Tim Sweeney, founder of Epic Games and creator of Unreal Engine, has argued for with passion. We share his belief that interoperability will be unequivocally beneficial for gamers and that digital barriers to proper full ownership are archaic practices.
Second, many of us would know of at least one nostalgic and much-loved game which is no longer playable, either because the servers have long been shut down or the game is simply too old. This is an issue because the assets that we hold nostalgic value for no longer exist. They are gone for good.
Here's what we believe: We can do better. Title ownership can and should give full access across platforms. Assets we have nostalgia for should have an avenue to live on and for new life to be breathed into them.
Issues with the NFT space
Rising as an incredible force for movement, community, and branding in recent times, the NFT scene has grown with much fanfare. However, we think it is clear and reasonable to admit that there are issues with the scene in its current state.
Problem 1: Questions of whether “real” value exists
The uphill battle faced by us blockchain natives in proving value to detractors exists for a reason. Like it or not, there are gaps as to whether blockchain assets can be truly worth anything beyond the initial hype and speculative movements. Indeed, it is hard to deny that some of the most successful blue chip NFT projects were built on community hype and maintained value through association.
This is fine in the short term though. Some of the most valuable items in the Web2 world, like the Mona Lisa painting and gold, also hold little to no innate value. Famous paintings and decorative metals all derive most of their value through the collective belief that they have value. However, there can only be that many paintings which hold value by legacy. Similarly, little other metals and jewels beyond gold and diamond hold value which exceed their utility in the real world.
Here's what we believe: Over time, blockchain projects will have to start delivering real utility for their value to hold. While initial hype is not a bad thing - after all, you need good packaging to sell a good product too - we must aim to build for the better and for longer term applications.
Problem 2: New Metas excite but under-delivery prevails
We are now at crossroads. Some NFT projects continue to try and imitate the older success stories, and succeed based purely on hype build-up. Sometry to create a cause to stand behind. Some try to rely on branding. Some try to propose supposed utility. There are many ways which NFT projects attempt to create value, but what is difficult to deny is that there is often little follow-up post mint. What is vaguely overpromised is often underdelivered.
One of the reasons that such gaps in the NFT space exist is because promises made by projects are often generic and for the masses. This makes sense since you would want to target as many people as possible. But this also means the build, beyond NFT launches, are vague and difficult to define.
Here's what we believe: Targeting a specific niche and introducing a phased build will allow projects to serve specific wants and offer deliverable timelines that can be reasonably tracked. That is also why we want to reveal details of the build phase by phase, so that expectations for build time are fair but also trackable post commitment via reveal.
Blockchain Gaming
The Blockchain Gaming space is both an exciting and wild ride. The rapid rise and price collapse of Axie Infinity has attracted much mainstream media attention. There are many people who view the turbulence of play-2-earn (P2E) gaming as yet another scam. Yet, there are also many people who’s lives have been invigorated. These include “scholars” who managed to experience newfound wealth and sources of revenue, and who still give thanks to the creators of Axie Infinity today.
Our view is quite different. We think that P2E may have been, and may continue to be, a distraction in the short term. Gaming must begin with fundamentals of being fun. Income can be a reward on the side, the cherry on top of the cake, but it cannot be the sole focus. The hype and incredible decline of STEPN, compared to the sustained vitality of Sweatcoin, is testament to the stronger mainstream value of “X AND Earn” as opposed to “X TO Earn”.
Beyond these shortcomings though, blockchain as a technology applied in gaming can resolve many of the problems, identified above, with the traditional gaming space and NFTs.
Unfortunately, mainstream audiences are shying away from blockchain games in no small part due to all the fallout surrounding collapsed P2E models. Worse yet, many shun blockchain and crypto as a whole and are simply unaware of the potential benefits of blockchain for gaming. Quite ironically, even though blockchain has the potential to solve many of gaming's current problems, identified above, mainstream gamers are some of the most vehement opposition to NFTs. Riot games faced huge backlash merely because a Killjoy, a character from Valorant, was implied to have an interest in NFTs in a promotional art piece. This is a depressing situation, where induced fear and ignorance, while understandable, has led to the mass dismissal of a technology which can fundamentally change the space for the better.
Here's what we believe: Blockchain and gaming have incredible synergistic potential and can be used to change each other for the better. To grow blockchain gaming as a technology and community, education and awareness will have to expand. Doing so will not only encourage more high quality use cases for blockchain in gaming, it will also expand the market size for blockchain and crypto as a whole. The latter wil be allowed to outgrow the current density of speculative players in the market to create a more sustainable and viable industry.
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