Presented by Stardust
The current trajectory of game monetization is leading directly to digital asset ownership. And that’s because the central tenet of monetization has always been accessibility, says Canaan Linder, founder and CEO of Stardust.
Decades ago, games jumped from console to digital downloads and mobile gaming started to explode. Mobile opened up a huge new audience for developers to tap into, and soon the industry shifted from paid games to the freemium model, lowering the barrier to entry even further. And now there’s another enormous paradigm shift with the advent of blockchain and a new, open gaming economy.
“Game developers will be able to maximize game revenue and build new engaging experiences, while the model incentivizes players to spend more time in-game,” Linder explains.
When the items for one game only exist in that game, every game becomes its own siloed experience. The speculation that characterized early play-to-earn blockchain games is now trending downward with the economy, and developers are building with just utility-based NFTs in mind, rather than those fungible tokens. Early NFT projects demonstrate that players will embrace the kind of interoperability that lets them carry their accomplishments or items with them as they move through a gaming ecosystem.
These portable assets also signal that publishers need to be prepared for a big evolutionary leap in how they develop games, consider their intellectual property and compete in the market.
A major benefit of blockchain will impact the entire gaming ecosystem: the ability for ecosystems to interoperate, especially between publishers. According to Linder, this means that industry profits will grow exponentially. Instead of studios all fighting for a piece of the billion-dollar game industry pie, they can work together to make a trillion-dollar pie, divided among them.
And in this interconnected game economy, player retention strategies are turned on their head. In a solo game, a player will lose interest and bounce. In an interoperable ecosystem where the items they’ve gained and the accomplishments they’ve made stick with them as they move among games, players are far more likely to be happily loyal, happily engaged and stick around in the same playground for much longer.
“It becomes one economy in which developers are just making great games for players,” Linder says. “Long term, I think that’s going to have major implications around advertising, retention, even affecting Facebook and IDFA.”
The biggest hurdle is we’re really starting from scratch, he says. Since no leading effort has taken off yet, there’s no predicting which models are going to be the most interesting going forward for the next half decade. There will always be the innovators like Pokémon
Go that introduce a new, never-before-seen model, but taking the leap is still a challenge.
“There’s a lot of opportunity, but also a lot of cost in being first,” Linder adds. “Some of the hesitancy is, I’d rather be second with the most money rather than being first and creating this model for everyone to copy.”
So right now, publishers are hedging their bets, he explains. They understand the wave is coming, and are dedicating some percentage of their focus to the blockchain gaming space. But most are just waiting for the shoe to drop — for the first few big games to launch and prove that this is a viable market. And from there, the rush to embrace blockchain-enabled monetization will be even bigger than the switch to the freemium model, Linder predicts.
Transforming relationships in the gaming ecosystem
What’s unique at this next turning point for the gaming industry is how profoundly the relationship between player and developer has changed. Game developers now have a direct connection with their players, from Discord and Reddit to YouTube and Twitch. Players actually provide live feedback on what they like and dislike about games, and don’t hold back on what they want to see in upcoming updates. This creates something like an implicit contractual agreement between players and publishers — that player voices will be heard and taken to heart. And that’s how the move to true digital asset ownership will take hold.
“In my opinion, the vast majority of players are never going to say, ‘I want to truly own my items.’ But instead, they’re going to start saying, ‘I want my items to be interoperable in all of these games,’” Linder says. “Developers are going to react to that market feedback, and use blockchain to effectively bring some of the economics that have been in games forever into the light.”
For instance, games like Runescape and World of Warcraft have always had a hard-core, real-world trading scene. Players have always bought everything from rare items to whole optimized characters and accounts.
“Blockchain just synonymizes that with an actual revenue stream for developers, instead of pushing it into the dark,” Linder says. “Now both developers and players can benefit.”
Blockchain does introduce some barriers to entry; players need to understand the technology, and figure out how to manage a self-custodial wallet.
But those barriers can be lowered dramatically with tools like the Stardust Vault, which gives players non-intrusive entry into the ecosystem of true digital asset ownership and assets between games, while not putting them through the complexity of setting up their own wallets or impacting the player experience. To players, it will look and feel like they’re logging on and playing a game the way they always have.
Under the hood, the Stardust API is securely facilitating all the blockchain interaction passed to it by the developer, so that the player can easily move and manage digital assets across geographies.
To say Linder is optimistic about the future of the industry at this juncture is an understatement. “This new asset ownership model will bring in three billion gamers and more to this new vertical of gaming,” he says. “It will by far outstrip the other models, because of the network effects surrounding them. It increases the velocity of game creation, since player demand for a growing game world will rise, audiences will increase, and the innovation curve in the sector will develop much faster.”
Learn more about Stardust here.
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