Blockchain technology is transforming the gaming industry in exciting new ways. By integrating features like NFTs, cryptocurrencies, and decentralized systems, blockchain introduces new economic models that are changing how games are designed, played, and monetized. While blockchain gaming is still maturing, rapid evolution is happening across several dimensions. Here is an overview of the key trends, opportunities, and challenges shaping the current state and future trajectory of blockchain gaming.
Proliferation of New Games and Migration Across Networks
There has been an explosion of blockchain-based game releases across diverse genres like RPGs, MMOs, virtual worlds, and more. Popular titles include The Sandbox, Axie Infinity, Illuvium, and Gods Unchained. Many blockchain games involve collecting rare NFTs representing unique in-game assets. Some feature fungible crypto tokens as part of virtual economies and incentive structures. Dozens more games are slated for release in 2023 and beyond, indicating growth momentum continues. However, user adoption has lagged the pace of new games. Capturing mainstream gamers remains an elusive goal. In addition, many existing games are migrating across blockchain networks seeking better infrastructure and reach. Popular destinations include Polygon, Immutable X, Arbitrum, and BNB Chain which offer lower fees. This cross-chain migration shows the fluidity of blockchain games across technical platforms. Retaining value and assets when switching chains will be key.
Mainstream Adoption Remains Slow
While innovation in blockchain gaming is accelerating, mainstream adoption is still limited. Top grossing PC and mobile games rarely integrate blockchain features currently. Major publishers like Electronic Arts, Nintendo, and Ubisoft have yet to embrace blockchain gaming. Dominant platforms like PlayStation and Xbox offer no crypto integration. Partnerships between crypto providers and gaming companies could help bridge the gap. But barriers like friction with crypto wallets have slowed mass adoption so far. Simplifying onboarding and adding free-to-play options may help attract mainstream gamers. But overcoming skepticism from established players could take years.
Emergence of Digital Asset Ownership
A huge innovation in blockchain gaming is enabling true digital asset ownership through NFTs. Players fully own unique in-game items verified on-chain. This differs from traditional games where publishers can revoke or modify assets. Blockchain assets persist independently, giving players digital property rights. NFTs can represent rare items like cosmetic skins for prestige. Because ownership is public, NFTs can be traded in secondary markets. Secondary sales generate perpetual revenue for developers through royalties. And players can monetize coveted NFTs. This shift enables new play and business models.
Unlocking New Play and Revenue Models
Blockchain gaming facilitates new modes of play and revenue generation not possible before. For example, some games let players earn real money through token rewards and NFT sales, not just virtual currency. However, sustainability of “play to earn” models remains uncertain. Other innovations include community governance through tokens and collective asset management via DAOs. But balancing player ownership with designer control is still tricky. Asset interoperability between games also emerges as a key opportunity. Expanding utility for NFTs across multiple worlds could provide a major value boost. These provocative models are still evolving but demonstrate how blockchain can enable transparency and portability not feasible previously.
User-Generated Content and IP Ownership
Blockchain gaming empowers users to truly own IP rights around the content they create.Several games feature virtual worlds where users build NFT assets they control and monetize. This incentivizes participating in co-creation.For example, over 1 million users have purchased digital land in The Sandbox to build experiences and profit from their creations. This focus on user ownership of digital IP differs enormously from closed environments like World of Warcraft or SimCity. It enables permissionless innovation. But IP protection and quality control around user-generated content remain issues needing improvement as blockchain gaming matures.
Infrastructure Evolution Impacts Design
The limitations of underlying blockchain networks heavily influence game design and adoption. Most early blockchain games were built exclusively for Ethereum. But high gas fees led developers to explore alternatives like WAX, Flow, and Solana with lower costs. Developers face tradeoffs between transaction speed, predictable fees, security models, and composability when choosing blockchain platforms. As blockchain interoperability improves, games can expand across multiple networks to remove friction points. But balancing economies cross-chain remains difficult. Supporting both browser-based and native wallets is ideal for accessibility. And decentralized cloud services could significantly improve responsiveness. Overall, teams must stay flexible regarding infrastructure given the rapid pace of evolution across public blockchains and solutions.
Emerging Regulatory Considerations
A major open question is how governments will regulate cryptocurrency, NFTs, and blockchain gaming concepts. While the U.S. and E.U. remain open, others like China and South Korea have taken more restrictive stances so far. This creates geographic fragmentation. Taxation has been clarified in many regions but legal gray areas around data privacy, AML, cross-border payments, and reporting obligations persist. Until more regulatory guidance emerges, prudently evaluating jurisdiction-specific risks is advised for blockchain game developers, investors, and publishers.
Evolving Approaches to Valuation
The unique dynamics of community ownership, token-based incentives, and user-generated content in blockchain games necessitate new valuation perspectives. Various models have emerged for valuing crypto assets and NFTs based on speculative demand, discounted cash flows, and other factors. But their application in gaming is still developing. When assessing blockchain games, metrics like token distribution percentages, token economic designs, competitor landscapes, and team reputations take on heightened importance compared to traditional gaming. As blockchain gaming matures, standardized revenue multiple-based and market comparable methodologies will likely emerge. But for now, more qualitative and speculative approaches prevail.
The Promise and Uncertainty of Blockchain Gaming’s Future
Blockchain gaming is undeniably opening up new paradigms around digital asset ownership, community governance, permissionless innovation, and transparent economies. However, realizing this potential relies heavily on balancing token-centric design with compelling gameplay and user experience. Sustainable economic models are still emerging. Predicting the pace of mainstream adoption and impact remains difficult given the nascency and rapid evolution of blockchain technology applied to gaming. But incumbent publisher attitudes and regulatory stances in major markets will play a key role in determining the trajectory of blockchain gaming in the years ahead as innovative startups continue pushing boundaries.
Teknos Associates is uniquely positioned to identify and analyze the current and anticipated trends within the blockchain and gaming industries. From our significant knowledge of how the blockchain and gaming industries have developed, to our first-hand experience providing advisory services to organizations at all stages of development and growth, our team is ready to help organizations navigate through all types corporate governance and strategic initiatives. Our vast experience includes providing valuations, offering structural guidance, and delivering strategic analyses. To learn more, contact Teknos Associates at email@example.com .