Over the past few years, the digital gaming sector has grown significantly. There are now well over 2 billion active-gamers, located all around the globe, who generate nearly $110 billion in annual game revenues. Games are also becoming more immersive and fun to experience.
From a top-down perspective, international market penetration is only expected to rise, as the proliferation of internet-connected devices makes gaming more accessible to new users. Though receiving many positive signals, the gaming industry is largely unprepared to incubate rapid growth.
From a device-ownership perspective, this is extremely evident. In the United States specifically, 56% of households rely on a traditional, video-console to play their games. This, however, is legacy infrastructure that is not capable of supporting today’s most popular standards of mobile-first, AR/VR design.
Furthemore, the space is plagued by an array of oligopolistic practices, stringent regulations and tight profit-margins that threaten the user experience. Smaller game studios face an endless hill of challenges, operating with extremely slim revenue structures that make it increasingly challenging to stay afloat.
All-in-all, there is massive opportunity for a shift in this space, as incumbents are unwilling to budge.
The union of the gaming world and blockchain technology seems particularly promising. While we are still in the early days of this blockchain-revolution, startups are already beginning to apply this technology to a number of key problems throughout the industry. Here are four of the most high-potential areas for blockchain to impact the gaming world.
- Providing a safe means of storage for gaming data.
With evolving techniques, hackers are becoming more adept at infiltrating weak points within large systems. Cyber-security is a growing priority for all stakeholders within the gaming industry, including gamers, players, developers and studios. Players, in particularly, are extremely worried about the confidential, sensitive and valuable information that they use during gameplay.
We can eliminate this growing threat by implementing cryptographically-encrypted, blockchain ledgers that can be used guarantee the safe-storage of digital assets, currency and player-statistics. Distributed in nature, these blockchain-based data warehouses are effectively ‘unhackable,’ as, within any decentralized network, there is no single point of vulnerability for cyber-attackers to access. This would bring an unprecedented level of data-security to this space that so badly needs it.
- Accessibility for developers.
The market for game development has been strategically monopolized by a select minority of incumbents. Many of these larger players use this systematic advantage to unfairly price products, eliminate competition and drive the direction of the market. Applications of blockchain can rebalance the gaming economy, empowering independent development studios with the tools they need to be successful and reach an active audience.
For instance, JoyToken, an emerging blockchain startup, has developed an enterprise-grade, infrastructure protocol to power the gaming industry (specifically the online-casino market). They do this via a comprehensive platform-based solution that allows for simple and transparent game integration between game-engineers.
Their ecosystem is powered by an innovative cryptocurrency, called JoyToken, that has received notable attention in the broader blockchain community. Brought together, their solution will make the space more equitable, providing opportunities for the best game developers, regardless of prestige, to rise in the ranks.
- Easy-to-integrate in-game payout systems.
Another large point of friction for gaming studios is finding ways to monetize and become profitable. Today’s markets make it extremely challenging to generate stable, recurring revenue. We can trace this challenge back to the inflexibility of conventional fiat currencies that are costly to move around.
Digital assets, on the contrary, are designed specifically to be easily transferred across borders. Not only do they move quickly, but they also can be sent with no fees attached. We can use cryptocurrencies, like Bitcoin and Litecoin, to rewards users who perform well in games or, from the opposite perspective, allow users to purchase in-game collectibles using digital coins.
- Creation a liquid markets for virtual-items
Serious gamers spend a great deal of time and money invested in earning ‘in-game rewards.’ These come in the form of anything from rare weapon-skins to custom badges. The outstanding problem, however, is that these digital-collectibles possess little-to-no value in the real world. In other words, because of the lack of transferability, these items are marked worthless as soon as a game becomes unpopular. Even if you spend dozens of hours unlocking a super-rare item, there is a high chance it will be worth nothing as soon as the game becomes less popular.
This incentive misalignment can be solved for using the blockchain. Effectively, as CoinTelegraph writes, we can use blockchains to “turn in-game items and currency into unique crypto assets that can suddenly be owned just like real-life objects are.” For example, we can use the underlying technology of blockchain to tokenize digital weaponry, allowing it to be traded on a transfer-market. The creation of this liquid, secondary-market provides stability and value-creation for the entire gaming community, restoring power back to the gamers.