Building The Blockchain Gaming Industry: Industry Voices Share Their Perspectives

The Brave New World

Game developers have long embraced the bleeding edge of what’s possible in technology to further the possibilities of gaming for entertainment, engagement, and more recently, the rise of online gaming and microtransactions.

Recently, TZ APAC’s research and adoption manager, Jacob Pouncey, joined the Blockchain Game Alliance and a panel of blockchain and industry leaders to discuss gaming’s brave new world.

When global gaming behemoth Ubisoft announced it had partnered with the Paris-based Nomadic Labs to become a corporate baker on the Tezos network, it was a clear signal that blockchain’s uses within gaming is set for an exciting new chapter.

In particular, the gaming sector has shown a burgeoning interest in NFTs (Non-Fungible Tokens) and its applications within games to engage, reward, and create value for gamers.

According to Nomadic Lab’s adoption expert, Alexia Martinel, the exploration of NFTs and their uses in gaming environments are still exploratory.

“When it comes to gaming, I think we have been able to identify use cases that are clear and pertinent for the industry. But (sic), I think that the exploration continues. At least that’s what we see on Tezos”, said Martinel.

Panel moderator and TZ APAC’s research and adoption manager, Jacob Pouncey asked the panel: What frameworks or structures need to be implemented for NFTs to catch fire and deliver blockchain-integrated gaming its ‘Netscape moment’?

“There’s a lot of talk regarding secondary markets in gaming, for example facilitating the exchange of skins or special artifacts. There’s also the notion of having special editions of some items in some games.

But I think that NFTs intrinsically are tied with the adoption of blockchain. Later adopters won’t necessarily understand the realm of NFTs. I think it will take some time for NFTs to be easily implemented in gaming, or at least to see that momentum that we’re all waiting for.” – said Martinel.

In response, Stephane Panyasiri, founder of production studio NFT1 argued that it depends on whether it’s the technical side of implementing NFTs, or their usage that is being discussed.

This is because of the factors that gaming houses need to consider to implement NFTs, and what kind of value gamers derive from having NFTs as part of their gaming experience.

“Also, are we looking at traditional gaming sites, or at gaming experiences that are inherently NFT-enabled at the core, like Axie Infinity – an NFT-based online game.

We want to see NFTs create completely new patterns – new usage – within gaming. If we can make them fun and then use them as an intrinsic part of gameplay, that would be a win.” – said Panyasiri.

Early adoption is a key to future growth

As with all new technologies, having a dedicated and numerous base of early adopters is essential to ensuring the success of any platform, app, or game. Early adopters are often the most vocal advocates of a new game and assist in creating the viral momentum needed to outpace churn.

Correspondingly, the more players a game has, the more players are likely to stay, thus keeping retention rates high and allowing further viral (and paid) acquisition of users to grow the user base.

Speaking to the panel, Pouncey made the case that NFTs are one of the main selling points for web 3.0 games, and early users are attracted to games promoting NFT usage for precisely that reason. What did the panel think about NFTs in this context, and what does true integration look like?

It’s because you’re trying to attract the early adopters, and you need to create a base. Until you get a minimum volume, then nobody wants to play your game. If you have enough early adopters to show you the way, then you can work on the bigger mass.”  – said Panyasiri.

Nomadic Labs’ senior blockchain support engineer, Florian Pautot, argued that gaming will have arrived at its ‘blockchain moment’ when its integration and implementation (including NFTs) are so seamless in facilitating the gaming experience that players are largely unaware that blockchain underpins the gameplay.

“If gamers don’t even know that they are using NFTs and leveraging the blockchain in the game, then that’s the point where we will reach mass adoption, and that’s what we need to target.

And that trend would see terms like ‘NFT’ or ‘blockchain’ diluted into more common aspects of gameplay. Do people talk about microtransactions? No, they don’t. They just buy items within the game, and they don’t care what underpins it.” – Panyasiri agreed.

Gaming studios embracing blockchain’s potential

Gaming studios have been quick to embrace microtransactions as a way of monetizing their content and creating additional revenue streams to maximize profitability and increase CLV (Customer Lifetime Value) against spend like development costs and CAC (Customer Acquisition Costs).

Asked about why gaming studios are turning to blockchain with equal fervor, the panel raised a variety of considerations, not least that the gaming sector sees it as another way to generate revenues.

“Thanks to NFTs and the safety of transactions, the blockchain can basically create a new economy. It’s a gold mine that remains relatively untapped for gaming companies.” – remarked Panyasiri.

Moreover, according to Pautot, gaming companies see a raft of technical benefits to making blockchain a foundational aspect of game development and usage, including security, inter-playability, and ease of transactions between fiat and virtual, or digital currencies.

“There are key factors that need to be addressed from the beginning, one of which is the smart contract security and the keys of the user.

Because in most blockchains, people have to manage their own keys; how do you abstract the complexity of blockchain and embed it right inside the game and still provide a sufficient level of security? That’s the challenge.” – said Pautot.

Pautot stated that increasing inter-playability means gaming companies easing the friction between other platforms and even other games in a studio’s stable of titles.

“Imagine being able to earn ‘money’ in one game and spend it in another – or exchange it for something else of value and have all that underwritten by the blockchain. There’s significant potential in that for games companies and gamers.”

The decentralized nature of blockchains like Tezos adds additional layers of protection for players using fiat currencies to purchase virtual goods and currencies, and through implementing blockchain, companies can also facilitate payment in cryptocurrencies to deliver greater ease and convenience.

“The key is to make it completely transparent for the users, so they have a very seamless experience.”

Decentralized governance, the ultimate player feature

Asked where blockchain implementation in games could take the player experience, the panel discussed how some games could spawn new, professional player economies, where players ‘play to earn’ and have a level of control over a game’s updates and evolution.

“If you create these economies around games, with the blockchain, there is the potential to provide some kind of decentralized governance.

For example, players could earn tokens, and then they could have control of the future of the game(s) they’re earning income from. That could be an interesting option for the future of gaming and what blockchain could bring to it.” – said Pautot.

While generating real-world value from virtual items and currencies is not necessarily new, Martinel said that players earning digital currencies through games could take their ‘income’ and spend it in other places unrelated to the game they’ve ‘worked’ to acquire the value from.

“For example, you have the ability from your wallet, which might be an SSI (a self-sovereign identity) wallet, to allow you to spend whatever you’ve earned in your games on a completely unrelated product or service.

And that’s something that can be facilitated by blockchain. I think that we’re going to see a lot of creativity there.” – said Martinel.

Generational shift

Ultimately, the validation of blockchain and its applications, like NFTs, may come from the game players of today, who have grown up with free-to-play gaming ecosystems where goods are offered and traded freely, and users’ gift’ items they intrinsically see as having value to other people.

“It goes to free-to-play and how there’s a generational shift in how our kids, who are born using mobile and tablet devices and are born into buying free-to-play items and virtual items, are now thinking.

They are not wondering ‘is it a physical good? Is there value to it?’ They already accept that virtual items have value and they’ve been spending to acquire them.” – argued Blockchain Gaming Alliance president, Sebastien Borget.

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