Every once in a while I like to do a deeper dive into self improvement/investing/technology/Web 3 topics. I wrote a tweet on gaming last week that got a lot of strong feedback, so I wanted to do a breakdown of my thoughts on the future of Web 3 gaming. I cover a lot of topics in my newsletter so if you’re into Web 3 and gaming this is for you! Otherwise this might be a learning opportunity, or a skip if you’re having a busy Sunday.
When I announced I was writing content on gaming Big Time (a Web 3 gaming studio) reached out and asked to sponsor. This post is sponsored by Big Time and the example I wrote about them later in the article was written based on a play session with them. Everything was written by me and solely my thoughts. Enjoy!
The Future of Web 3 Gaming
The biggest question NFT enthusiasts have is what will it take to onboard the mainstream? How can we make this technology more attractive to the average consumer? What will get NFTs into the wallets of “normies”. The answer is simple: Gaming. Gaming is the single most popular and powerful entertainment medium in the world. On top of that gaming is the PERFECT use case for NFTs and digital ownership. It’s simple: Gaming will be the single most powerful bridge between Web 2 and Web 3, and it’s going to happen sooner than you think.
You may not know this but gaming is far and away the most popular form of entertainment on earth. In fact, gaming makes more money than movies, TV and music COMBINED.
In 2018 the movie and TV industry made $43,000,000,000 in total
The music industry made $7,400,000,000
Gaming made an eye watering $134,000,000,000
That’s almost TRIPLE movies, TV and music.
Money talks, and what it’s saying is gaming dominates the attention economy.
So now we know more money, time, and attention goes into gaming than any other medium. What else do we know? Gaming has a major issue. Game studios charge users billions for digital assets yet the user owns NONE of it. NFTs solve this. In fact, it’s harder to come up with any other use case that’s a better fit for NFTs other than maybe art. In 2022, $92.6 billion was spent on microtransactions in games for digital assets. It’s the biggest source of income for game studios by far.
Here’s the issue: gamers are starting to get sick of them. They’re getting tired of buying skins and assets they don’t really own. NFTs will not only solve this issue, they’ll actually return more value to gamers, making them more likely to stick with the game they’re playing. NFTs have the power to absolutely revolutionize the entire gaming industry.
While NFTs are the future of gaming, we also have to be honest with ourselves about something. A vast majority of attempts to integrate NFTs into games has been a failure to this point. There’s been many issues:
The games have been boring
The studios stopped supporting them
The economics were broken
“This might blow your mind, but people don’t like boring games.”
In order for gaming to truly bridge the Web 3 gap, these problems need to be solved. Let’s start with point 1) the games have been boring. Up until this point NFT games have been classified as P2E (play 2 earn). These P2E experiences have largely been passive games where users will stake NFTs (lock them into a smart contract) then sit around for weeks while tokens accumulate.
This might blow your mind, but people don’t like boring games. Up until this point, almost every single Web 3 game has been horrendously boring. The mainstream doesn’t like boring. They won’t spend money on games that feel like work.
Another big issue: the economics have been completely broken. Because these games are so boring a lot of people have been buying into these games just to extract value. Here’s the dream people have when they buy into these projects: they stake their NFTs and earn a token in return. Then they sell that token for tons of money and get rich.
The issue is because the tokens have no use, they’re worth nothing. The token holding 0 value destroys the value of the NFTs, which destroys the project. The economics shatter and never recover. Being a Web 3 game developer basically makes you Jerome Powell in a sense. You have to balance a delicate economy to keep value in the assets. The issue is nobody does much balancing when it comes to these assets.
So what does the future look like with NFTs properly implemented into gaming? First and most important, the game is fun. People are not going to spend time in a game and spend the hard earned cash if it isn’t a fun experience. A boring game makes a project unsalvageable. Now that we have a fun game, we can start implementing digital ownership. Instead of gamers paying billions for assets like skins and then not actually owning them, they’ll be able to do whatever they want with their skin. This could include equipping them, trading them, or selling them on the open market.
Imagine you’re fighting deep in a dungeon and defeat a high level boss. The boss drops an ultra- rare skin that very few in the game own. You now will have the option to equip it or sell it to your friends for a big pay day. You have complete freedom to do with your assets what you wish.
You also need a balanced economy. There can’t be too many tokens or assets in the ecosystem. This could destroy the value of the game items, giving players less reason to stay in the game. Successful Web 3 games will actively balance the in game economy on a regular basis, changing the inflows of tokens and assets so the whole ecosystem remains valuable.
Now let’s talk about what an example of this well balanced game can look like. Big Time is a game being developed by Big Time Studios that checks off all of these boxes. First, the game is straight up fun and modeled after many of the popular gaming genres today. It is a AAA Action RPG based around combat and dungeon looting. This isn’t a passive P2E staking game. This is an actual open world action gaming experience. You can play with thousands of others online to raid dungeons, defeat bosses, collect loot, and sell your items in the town square.
It also has a very well thought out in game economy. The main resource in the game is an on chain cryptocurrency that is again, owned by the players. The in-game cosmetics including skins are actual NFTs. This means players can fight dungeon bosses, earn materials, create skins, then sell those skins to others for profit. You even have an in game house you can customize with cosmetic NFTs.
With all of these in game assets flowing between players, balancing of this delicate economy will need to happen as well. Big Time has systems in place to make sure the game economy remains stable. First, The amount of tokens that flow into the economy is limited and is adjusted depending on the forecasted demand for the craftable cosmetic skins.
Second, The number of cosmetic skins available to craft and the materials required is adjusted depending on the number of users in the game. These 2 systems would cause the demand for cosmetics, materials and tokens to always exceed the supply. This will ensure the assets retain value, keeping the game economy healthy.
By focusing on a fun game with a balanced economy, Big Time has a great chance at doing what no other studio has been able to do so far: build a legit AAA game experience with true digital ownership integrated in.
The future of gaming is Web 3 and the future of Web 3 is gaming. Over the next several decades video games will be the single biggest driver of the mainstream to the blockchain. The use case is just too perfect. As more and more funding is driven to Web 3 gaming, we’ll see more AAA experiences getting created. If you’re a Web 3 enthusiast it’s time to start paying close attention to the gaming space. Jump on the bandwagon or fall behind.