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In this article, I will look at the application topic blockchain in the gaming area computer (aka Gaming), in which direction is the computer games industry developing, is blockchain applicable here, or is it used by force? What are the real-world use cases where these two areas intersect.
This topic interested me recently because Algorand joined the Blockchain Game Alliance (BGA). It inspired me to take a closer look at gaming. Can BGA help the industry blockchain in reaching a wider community of gamers? Or maybe it is the computer games industry that needs a blockchain?
Algorand and BGA
In June 2020, we learn that Algorand joins Blockchain Game Alliance. Besides Algorand, several other organizations have joined BGA, such as Atari. Most players recognize this company quite well, games such as Montezuma Revenge, Asteroids or Pitfall, I remember myself today with a tear in my eye.
Having seen companies such as Atari or Ubisoft on the list of BGA members, I became interested in the subject of gaming again, because I must admit that I have not been an active player for many years, but in fact recently more and more people are hearing about the use of blockchain in the gaming area, so I decided that perhaps this the moment that the topic deserves more attention on my part.
GamingIndustry
The Computer Games Industry is a huge business nowadays. The size of this business is estimated at $ 140B- $ 150B a year and it is on a very aggressive uptrend.
It is estimated that over the next few years, the size of this industry may further double, reaching a dizzying value of $ 300B around 2025. An additional perspective on this is the fact that we already have 2.5 billion players in the world. Every third person in the world is a player! Let us also consider that gaming is considered the most innovative industry, usually the first when it comes to adopting all technological innovations, such as inventions such as VR (Virtual Reality) or AI (Artificial Intelligence), so we can expect that the blockchain area also has a chance to find itself quite efficiently in gaming. What in other areas of business is not immediately adopted due to concerns about technology maturity or regulations, gaming will be the first to adapt.
Blocks + Games + Alogs?
Okay, but where could this slow and rough blockchain fit in such an innovative industry as gaming? Where is the place for a platform such as Algorand, which perhaps so far I have associated more with use cases such as DeFi, InsurTech, digital currencies, real estate tokenization, or CBDC - how does gaming fit into all this?
The more I explore this industry, the less surprised I am. Gaming is so colorful and multi-dimensional that perhaps it is in the area of computer games that we will see the first killer apps for blockchain (and I'm not just talking about Crypto Kitties;))
In addition to the mentioned Crypto Kitties, built on the basis of Ethereum, of course the gaming industry is already being developed by such projects as Enjin, FunFair or Wax, which try to find themselves in this area in various ways, so Algorand is trying to join these ranks through BGA.
What real Blockchain problem can solve here?
Looking at the use of blockchain, tokens i cryptocurrency, I like to check if there is any real problem that these technologies can address. Too often we see use cases bent over. Let us recall a few facts that will serve me in the further narrative:
- Huge billions of dollars are generated in this area. Industry estimated at $ 150B per year.
- The gaming area is growing at a dizzying pace, 20% -30% year on year (and literally "eats up" other entertainment activities)
- Most games are available for free, and producers make money from all sorts of in-game-items.
The games are available for free, most often, but as part of games, we usually have many different elements (in-game-items), such as better weapons or props - affecting the appearance of the hero, his outfit, or other artifacts that make our game even more attractive, and our the possibilities within the game are expanding.
The problem with in-game-items is that they usually cost real money, sometimes they are much more than symbolic zlotys, and the purchased item is locked within one game. Additionally, it is not a unique copy and may be reproduced by the producer or other players at will. It is hard for us to say that we spent the money reasonably (e.g. $ 500), since similar items, the producer of this game can sell any amount, and additionally, if the game ends its life, our purchases will remain trapped within this game and the purchased "toys" are not available to us on other platforms.
This is an important problem because more and more elements from the real world are virtualized (or digitized), so we would certainly like to have a similar sense of ownership over a sword acquired as part of the game, as it would be acquired in the real world (especially if it cost $ 500). Oh yes, it happens 😉
Additionally, startups that try to enter the market with new games have a difficult task, because the user who is "purchased" in some or other in-game-items within the existing platforms will not necessarily want to switch to the game, where all such props will have to be purchased again, because those that already have are not interoperable with a new game.
The interoperability of such acquired game elements is therefore an important area where blockchain can help, especially if we take into account the fact that the cost of entering the gaming area is often tens if not hundreds of millions of dollars (GTA 5 = 137M USD).
What is the incentive for a new startup to invest hundreds of millions and create a game that will have to be made available for free, counting on the fact that someone will buy from us elements of the game of this game, allowing us to earn (armor, rent, better car), and in addition to the students in quantities that will allow us to cover tens of MM USD invested in creating such a game? Fewer and fewer entrepreneurs dare to take such a step.
Gaming as a Service (GaAs)
In addition, some technology giants are starting to offer access to a platform with games, without advertising, as part of a fixed monthly fee (e.g. 5 USD / month), i.e. GaaS (Gaming as a Service)
Google Stagia or Aple Arcade give you almost free access to hundreds of games for a fixed monthly fee. There is nothing wrong with that, if we forget for a moment that we are watching the centralization of the gaming area, which gives these giants a lot of control over what will happen in this area in the long term. There is nothing wrong with centralization, as long as it does not lead to the monopolization of business, and as a result to the abuse of the monopolistic position. Such a phenomenon is usually not oriented towards the long-term good of the end customer, but only allows giants to maximize profits, in this case on-line platforms.
Dominants of a given business area are starting to buy startups that come out with new services, games, as a result, they enclose all the innovation in their silosclosed ecosystems, controlling the market, dictating prices, making the user dependent on their platforms. Over time, there is less and less innovation, and prices are starting to get higher (or worse - we as users become a product), and information about our behavior is monetized by these platforms, resold, or used by advanced sales tools to offer us more products and services that we obviously badly need.
As a result, our private data related to our life in the virtual world (games) is no longer ours, and what we do in the world of games ceases to be freedom, and a kind of cage, maybe even a bondage. Let's hope that such a fate will not befall the gaming industry, but the progressive centralization is also visible here, the potential for growth in this industry and dominating many aspects of our lives is enormous. So it's better to make sure that the development of gaming goes in the right direction.
Can Blockchain help here?
tokenization
One of the areas where exactly blockchain such as Algorand can prove themselves - there is tokenization of these game elements. Algorand offers easy-to-create Non_Fungible_Tokens (NFTs), in simple terms, tokens that reflect unique, unique elements. For example, you can imagine a Sword_NFT representing a sword. Such Sword_NFTs would be created in a finite number (e.g. 10 pieces) and each of them would be unique, unique, and could also have a different market value. Thanks to this, Sword_NFT_ # 1 could be the most valuable, as the first of the forged NFTs, and the next ones would be a bit cheaper as copies of swords. The number of uses of NFTs for in-game-item tokenization is basically limited only by your imagination, but it is definitely a fascinating use case for blockchains like Algorand that will also help gaming. To understand how it will help gaming, it needs to be considered in another aspect, namely interoperability game items.
Interoperability of game elements
Undoubtedly, an important aspect in which blockchain can help in gaming is to make all game elements interoperable with each other, i.e. for games to communicate freely with each other, exchange not only logic but also exchange the value carried, for example, by such elements as the previously mentioned NFTs and saved in-game-items in them, regardless of the platform on which they are embedded or regardless of the manufacturer of the game. Blockchain Algorand could be an external (to the gaming platform) communication bus, which at the same time ensures data integrity, enables the exchange of values (e.g. payments) or transfer of the previously mentioned game items (in-game-items) between different games, while making the end user (player) in control and in possession of their assets (or artifacts :)) regardless of which one the platform will be chosen and whether the operator of the platform is still functioning or closed the store. At the same time, it creates an open environment for competition between various suppliers who can use such a data exchange bus as blockchain to a selected extent, simultaneously not closing the user only to his own ecosystem.
When it comes to the independent market for elements and items that can be used in computer games, something like this based on blockchain has already started to develop DMarket.
Another example of combining the trust that blockchain gives, its public characteristics, and enabling interoperability is driving public, trusted player ranking, in a transparent way, connecting players from multiple platforms under one umbrella. Algorand and the World Chess Association have already managed to do something like that, leading an independent ranking of chess players as part of the FIDE Grand Prix.
Commitment Community vs Centralization by Platform
If you look at the gaming industry more broadly, there is no reason why there should be one or another centralized platform that connects different game providers and players. Utility tokens - a blockchain invention - can be great as a connecting fuel players, manufacturers games, providers artifacts for games (in-game-items) and maybe even supporters those games, fans. I can imagine blockchain-based use cases, such as Algorand, on which the environment is built: a decentralized platform, linking all the mentioned sites and providing them with a unified token that is the fuel for this platformwhile providing incentives for all parties.
An example of how such a token could function?
- Players "earn" TokenG for downloading the game first.
- Players also pay via TokenG for various game elements (new characters, new levels).
- Game developers offer all sorts of contests where you can win TokenG.
- Game developers also offer additional game features or characters in exchange for an appropriate amount of TokenG.
- People who want to design their game elements can do it based on the XYZ Platform and put up for an auction in exchange with TokenG.
- Game fans and gamers can earn TokenG for watching and cheering for games.
- Game fans can also tip their favorite players in the form of TokenG.
- Additionally, games can offer interfaces to external stores, where, for example, with TokenG you can buy the actual sword, outfit or participation in an event.
- TokenG is interoperable with the wider crypto ecosystem, making it easy to exchange for Fiat (USD, PLN, GBP etc.), Bitcoin, Algos or Eth.
It all comes down to building an attractive platform, connecting all parties involved in gaming, and withto design a TokenG whose system of incentives will be sufficiently attractive for all parties involvedso as to stimulate their participation.
It seems simple, but at the same time difficult, because there are a few issues to address on the way, but this is a topic for a separate article.
Virtual currencies
I have already discussed this topic in part earlier. Of course, it is perfectly natural for games to have their native (separate from FIAT) means of payment, and this is often already the case. In the previous section, I discussed how such a means of payment could be an internal TokenG, interoperable within the platform, but of course nothing prevents payments for games or as part of games to be based on the currency of the given, but made in another cryptocurrency such as Bitcoin, Algo Czy Eth and were automatically converted according to the current rate, based on the decentralized exchange (DEX). There is no need to interact with the expensive and slow world of fiat money.
What awaits us..
Gaming bigger than Social Media?
There is more and more talk that games will become a new form of Social Media. They'll replace Social Media and eat SM for breakfast, like Pac Man.
Social Media has replaced people-to-people contacts some time ago. Games, thanks to the rapid adoption of VR and AR technologies, and the introduction of virtual personalities, can become Social Media 3.0, pulling these virtual, digital personalities beyond the world of games and allowing further interactions in a world not directly related to the game.
Hence the interest of funds and VC in this area. Adam Draper (son of Tim Draper, known from the Bitcoin world), he invests, among others, in the area of Gaming, VR, AI and Blockchain, and especially in topics that constitute a meaningful intersection of these technologies. Hence, such projects as TeleportEr
which are a kind of new variety of Social Media based on blockchain and are of interest to Adam Draper (specifically his BoostVC fund)
What is Blockchain Game Alliance
Algorand joined BGA in June 2020. If we look at the Board Members for Blockchain Game Alliance, you can see that the work promises to be interesting, under the leadership of companies such as Ubisoft, Enjin or Consensys.
The list of organizations involved in BGA is of course much longer: from hardware manufacturers (AMD), through the spearheads of the gaming industry (Ubisoft, Atari) to representatives of the DeFi and Blockchain market (MakerDAO, Algorand, Matic, EOS). Perhaps something cool will result from such cooperation.
As I presented before - the possibilities are endless and limited only by your imagination.
And what goals does BGA set itself?
Creating a space that will allow individual parties in this industry to communicate and exchange ideas, in such a way that blockchain and gaming can find their best intersection and use cases, so that communities open here to create an environment, hopefully oriented towards the good of the player 🙂
Of course, as it usually happens, such an initiative will only be as successful as the organizations involved in it, so I hope that Algorand will take matters into its own hands and create new trends and ideas for the gaming industry, among others thanks to its presence in BGA.
In sum
The estimates I found on the scale of the gaming area in terms of revenue were prior to the covid period.
Whatever the data is, it's impressive = $ 150B in gaming alone, that's half of what the TV, video, and music-based entertainment industry has racked up over the years.
Depending on the sources, the growth rate for gaming in terms of reve is estimated at 20% to 30% year on year, which indicates that in a few years gaming will be twice as high as it is today. I would argue that "covid" will only accelerate the digital transformation (virtual work, virtual events, virtual games, digitization of money, supply chains). Everything that is digitized will grow faster in this new reality than previously assumed. Including Games, Virtual Reality and contacts in the new Gaming / VR space (read: new social media) will gain quite clearly on the pace of development.
Whether I like it or not, it's a completely separate topic, but it creates an incredible need for this newly designed environment to be:
- just, i.e. it created similar opportunities for everyone to participate,
- kept ours privacy in the virtual world, as we have it today in the real world,
- and at the same time (perhaps as an addition) it created new possibilities and opened up new gates, previously unknown.
Blockchain, Tokenization, Smart contracts ... are great for all these purposes. It depends on us whether we get involved and help develop this new technology in a direction that will make the world we live in a little more interesting. It may be waiting for us colorful world of games, it is possible that digitization awaits us and surveillance.
Everyone has a brick to add in this newly built world. I talk about it a lot on my YouTube channel.
Algorand and other blockchain platforms provide ways to engage the wider community. Get involved.
Andrzej_0xa0 on Twiterku.
