Head over to our on-demand library to view sessions from VB Transform 2023. Register Here
This article was contributed by Olga Vorobyeva, VOX Consulting.
Nonfungible tokens (NFTs) have been around for the better part of four years, quietly growing in popularity among hardcore cryptocurrency investors. But in 2021, their total market cap jumped from $55 million to more than $7 billion, according to NFTGO.io. Ninety percent of that growth was within the last four months.
OpenSea, the largest NFT marketplace, has become a significant player in gaming. In 2021, it reported around $10 billion in total all-time sales, the vast majority of that being made last year. This was due to a $3.4 billion transaction volume during August due to frenzied interest in artistic NFTs. So-called GameFi is becoming an increasing part of OpenSea’s business model.
No matter how big that number sounds, it isn’t much compared to standalone blockchain-based games. Axie Infinity, an NFT-focused video game developed on the Ethereum network, surpassed $1 billion in total trade volume in August 2021, perhaps the most prominent 30-day period in the history of NFTs.
GamesBeat Next 2023
Join the GamesBeat community in San Francisco this October 24-25. You’ll hear from the brightest minds within the gaming industry on latest developments and their take on the future of gaming.
With so much interest in NFTs, it’s only natural that developers have begun to develop the infrastructure necessary to handle what will undoubtedly become a massive secondary market for these assets. In addition, holders want real tangible benefits to holding NFTs, and in a crowded gaming market, new entrants need to differentiate to survive.
2022 is likely the year NFT games become more mainstream, especially now that many crypto investors own these assets. And real innovation, not just in NFTs but in gameplay and mechanics themselves, will be the driving force.
While NFT gaming gives gamers a way to earn while playing their favorite games, the industry lacks a social component. The advantage of owning an NFT asset is that it’s yours, and you should be able to use that asset where you want. Here are three innovations that are driving the success of NFT gaming today.
VR and AR
It’s no secret that Virtual Reality (VR) and Augmented Reality (AR) are the future of gaming. We got a taste of this tech with Pokémon Go, but that was merely a herald of things to come. VR and AR offer a much richer experience than a 2D screen ever could; however, we have some ways to go before the technology is fully operational. Smartphone-based AR applications will probably become prominent in specific industries before VR goes mainstream.
AR offers the ability to tie in a physical location with NFTs. Like in Pokémon Go, users can visit a real-world place to interact with an object (in this case, an NFT). Both AR and VR offer the ability to make these NFTs real. Imagine a game where you see your NFT, inspect it, purchase it, and use it. An NFT can be a gun in a tactical shooter VR game or a suit of armor in a medieval VR game.
Ultimately, the user experience will determine the success of NFT gaming. When NFTs are tied in with a virtual world, it will offer a richer experience than the current craze for digital art NFTs. 3D gameplay, in combination with functional NFTs (bulletproof vests, guns, pets, etc.), will revolutionize gaming. But it will take quite a lot of innovation before we get there fully.
Creative distribution models and NFT gaming
The way that rewards are distributed is key to enticing gamers into any ecosystem. Gameplay is important, followed closely by ownership and dividends for the time spent on a given platform. Games like Axie Infinity are successful mainly because they are forms of investment as much as entertainment. The play-to-earn (P2E) distribution model is more attractive to gamers as they are fairly compensated for their time.
And some blockchain-based platforms are even taking this a step further. Gamerse’s new “share-to-earn” offers further incentives to gamers. While P2E is a lot better than the old model, it still does not provide adequate rewards to gamers. The share-to-earn model is an innovation on the play-to-earn model, which has worked well for many Web3 games.
A cross-chain social platform for NFT gamers, Gamerse’s platform gives NFT game developers an easy way to connect with their users and the broader NFT gaming community. With the new share-to-earn model, group participation is rewarded, and the APY yield for the group’s holdings is determined by group activity.
Gamerse is also developing an aggregated NFT marketplace and platform for holders to buy and sell NFTs. Swipe Swap, a Tinder-like recommendation engine for NFT collectibles, learns gamers’ preferences over time and offers a smooth process to acquire new NFTs within the app.
More games could adopt the share-to-earn model in the future, and new reward models will undoubtedly be a feature in the NFT gaming ecosystem. Gamers now expect to be appropriately rewarded.
The evolution of the Multi-Online Battle Arena (MOBA)
The multi-online battle arena (MOBA) game genre is red hot. League of Legends, Pokemon, and Mobile Legends are downloaded more than a million times a month, and their accompanying marketplaces generate millions in revenue for their developers each year. However, despite this being perhaps the most popular genre of all time, the games are still based on a centralized architecture, and we haven’t seen this industry disrupted in quite a while. Two of the most popular games, DoTA2 (2013) and League of Legends (2009), are old and need some innovation of their own.
MOBA evolution is at hand, and some blockchain-based MOBAs are lining up to disrupt the industry. One example is League of Ancients, which puts the power back into the gamer’s hands. The League of Ancients (LoA) mission statement declares that it seeks to become the best MOBA of all time while acknowledging the contributions of other highly successful games.
Unlike MOBA games from the big developers, LoA is entirely free to play. And even more importantly, players have the chance to earn while enjoying the gameplay. This is the opposite of other MOBAs built to extract as much money as possible from their customers.
Players earn currency and NFT assets through battles. These assets are usable in the game, including skins that change the hero’s abilities within the game. Players can trade these assets to other players through an in-game marketplace.
The LoA gameplay is based on two of the most popular MOBA games — DoTA2 and League of Legends. This is typical of this industry, as it takes successful components from one map or game and adds new elements, themes, features, avatars, and revenue generation models. LoA will certainly not be the only blockchain-based platform looking to disrupt the MOBA industry, large as it is.
Other factors contributing to NFT gaming success
Other elements could potentially play a role in the success of NFT gaming. It’s hard to ignore the ongoing COVID-19 pandemic, which has relevance even in a gaming article. But gaming has already proven its worth, as people who lost their jobs turned an income with platforms like Axie Infinity. The fact that gaming has become a legitimate source of revenue through NFTs is quite noteworthy.
The quality of the blockchains that NFT games are built on should also not be ignored or relegated to the side. Most successful blockchain games were built on Ethereum, and this was the only place offering this functionality at an acceptable level. With high-power chains like Solana and Binance, more functionality could be provided that directly supports better quality games with the ability to cater to many thousands/millions of online gamers, at all times, in rich environments. That, or significant Ethereum upgrades.
We don’t know how much bandwidth will be needed for futuristic metaverse games involving complex NFTs. But it’s safe to say it will be significant. After all, Games can only get better at a rate proportional to the network on which they are built. However, there is plenty of room for excellent game design, and it’s more about mainstream adoption than technological innovation.
An industry of innovation, not profits
People want something new. The utility of the blockchain adds a necessary layer of interaction and ownership that could never exist before. Introducing these elements in new and novel ways has huge, reverberating effects on the entire industry.
As soon as someone does something interesting, that concept is introduced in five established projects and 10 upcoming ones. The growth is incredible, and innovation leads the charge, not profit or hype.
Olga is the Founder of Vox Consulting, a marketing firm for blockchain, DeFi, and NFT startups, and a former Head of Marketing at SwissBorg – the first crypto wealth management platform (TOP -100 Coinmarketcap).
Welcome to the VentureBeat community!
DataDecisionMakers is where experts, including the technical people doing data work, can share data-related insights and innovation.
If you want to read about cutting-edge ideas and up-to-date information, best practices, and the future of data and data tech, join us at DataDecisionMakers.
You might even consider contributing an article of your own!