Blockchain gaming under the microscope part 4: what lies ahead

This article is brought to you thanks to the collaboration of The European Sting with the World Economic Forum.

Author: Abhimanyu Kumar, Co-Founder, Naavik, Alice Liu, Head of Research, CoinMarketCap Research

• The fourth in this four-part series assesses the future of blockchain gaming.
• Infrastructure and distribution limitations are still holding the sector back.
• Talent migration, the gaming model and regulation will also impact the outlook for blockchain gaming.

This four-part series dives deep into the recently published 2022 Blockchain Gaming Report to distill the key insights for readers. The first part looked at the potential for mass adoption of blockchain gaming, in which players use blockchain technology to earn assets with real-world value. The second part looked at the speculation bubble in play-to-earn games, and part three analyzed how the funding and the guild landscape have changed. This final part assesses the future of blockchain gaming.

What lies ahead for blockchain gaming

The blockchain gaming industry has progressed a great deal since inception, and showed a glimpse of its potential, particularly in forging a future for crypto technology. In terms of where blockchain gaming is headed, the following five key areas will be crucial.

1. Infrastructure

The most vital infrastructure for driving mass adoption of blockchain gaming is the one closest to the players: wallets. However, there is much room for improvement. Metamask is the wallet of choice for many, but there are several issues:

– Managing private keys is complicated and risky;

– Metamask is not mobile browser-friendly; and

– Although there have been improvements, Metamask isn’t user-friendly.

Although numerous other non-custodial wallets are making progress, the report argues that there are two interesting potential solutions on the market. Sequence from Horizon is a non-custodial, multi-chain wallet with multi-key support and functionality for paying gas fees in the user’s token of choice. It has been in beta with Skyweaver (a game developed by Horizon) on mobile for at least a year, giving it an edge for mobile support for game developers. It comes with integrated network switches, token swaps, fiat on-ramps and NFT viewing.

Stardust, a company providing APIs to game developers, is another infrastructure solution. The company raised a $30 million and is developing a core application that focuses on allowing game developers to integrate NFTs and blockchain into their games. It is compatible with Polygon, Immutable and Solana, and its custodial wallet, Stardust Vault, aims to hide the blockchain layer for both players and developers. That would allow the wallet to seamlessly integrate with games in the background.

2. Distribution

Distribution is a key factor in achieving the mass adoption of blockchain games. Major game distribution platforms are beginning to adopt blockchain games. For instance, Amazon Prime Gaming offered Blankos Block Party’s first non-fungible token (NFT) on its platform. The game later also launched on the Epic Games Store, allowing players to buy assets with credit cards. As the Epic Games Store has 180 million users, the addition of Blankos Block Party will undoubtedly boost its number of two million registered accounts.

Apple has also released new guidelines for NFTs. Game developers can now sell NFTs in apps through the in-app purchasing system, although that will not exempt them from the 30% fee to Apple. While reactions to these guidelines have been mixed, the report says that this increased clarity from Apple will significantly increase the presence of NFTs and web3 in mobile gaming and bring mass adoption of blockchain games much closer.

3. Talent migration

Talent migration toward blockchain gaming developers is underway. According to LinkedIn, all major game studios have expanded their team:

Even though the effect on the space will not be immediate, this is very good news for the long-term development of blockchain gaming, resulting in games that are more fun and built on the back of traditional gaming best practices.

4. Blockchain Gaming model

Part 2 of this series covered the decline of the unsustainable play-to-earn model. Since 2021, the blockchain gaming model has evolved, from a focus on “get rich quick” in play-to-earn, to free-to-own. Pioneered by Gabriel Leydon’s new company Limit Break, developers are realizing that scarce NFTs are not sustainable as gatekeepers. Instead of exorbitantly high NFT prices, free NFTs lower barriers to entry and promote mass adoption.

Limit Break is showcasing this with its free mint release of DigiDaigaku NFTs. 2,022 were gone in a flash and have since racked up $13M in turnover on the secondary market, with a floor price of 11 ETH. Free-to-own has a few more advantages:

– NFTs can be given away for free on mobile app stores without losing revenue;

– Free NFTs help get players involved more easily than crypto tokens;

– Digital asset abundance, rather than scarcity, helps mass adoption; and

– Free-to-own can generate massive headlines with marketing campaigns.

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What is the World Economic Forum doing about the metaverse?

Experts believe that the metaverse will come to represent the next major computing platform, transforming consumer experience and business models across industries.

Fashion brands are one example. Over years, apparel companies have perfected the design, manufacture, and distribution of clothing to anticipate consumers’ wants and needs in line with seasonal changes. But today, most of their revenue is surpassed by the $3bn worth of sales of digital cosmetic items in Fortnite, which have a cultural significance that extends far into the physical world.

This is one of the economic opportunities of the metaverse – the possibility to “assetize” digital content, creating a framework of digital ownership for users. If it is replicated at scale and across sectors, then entire industries will be reshaped by changes to their traditional value chains.

However, the promise relies on the advancement of several key technologies, including augmented, virtual and mixed reality (collectively known as XR), as well as blockchain, connected devices and artificial intelligence. How should these be governed in a way that promotes their economic upsides while protecting individuals’ safety, security and privacy?

The World Economic Forum is bringing together leading voices from the private sector, civil society, academia and government to address this precise question. Over the next year, it will curate a multistakeholder community focusing on metaverse governance and economic and social value creation.

It will recommend regulatory frameworks for good governance of the metaverse and study how innovation and value creation can be strengthened for the benefit of society. Updates will be published on the World Economic Forum website on a regular basis.

5. Regulation

In 2022, regulatory bodies are paying more attention to blockchain gaming and crypto firms in general. For instance, the Chairman of the US Securities and Exchange Commission (SEC) Gary Gensler argued that all crypto tokens, except Bitcoin, could be a security. Further, the SEC opened an investigation into Yuga Labs. While the probe has not been completed, the result could affect Web3 more generally. However, given the prevalence of rug-pulls and scams, clearer regulations are clearly necessary, although the impact may negatively affect many innovators in blockchain gaming.