Nov 9, 2022•2 min read
GameFi’s evolving model could make “today’s AAA game companies look like peanuts,” Jack O’Holleran, CEO of Skale a multichain Ethereum native network that powers Web3 games. With $1.3 billion raised in the most recent quarter, blockchain-based games and metaverse projects are actually demonstrating endurance in the face of a winter that has brought down many players in the cryptocurrency business.
But it's still difficult to find a GameFi model that can be sustained. Due mostly to gas prices and the difficulty of purchasing, owning, and exchanging NFTs, user experience rates are among the industry's top challenges. Due mostly to gas prices and the difficulty of purchasing, owning, and exchanging NFTs, user experience rates are among the industry's top challenges. O'Holleran stated that there is a lot of work that needs to be done around usability in order to appeal to the mass market, adding that charging users fees every time they transact or activate a smart contract creates a disincentive to participate.
Despite usability challenges, Web3 games represented approximately 50% of blockchain activity across 50 networks in the most recent quarter, with 912,000 daily Unique Active Wallets (UAW) interacting with games' smart contracts in September alone.
Most common in-game business models include play-to-earn (P2E) - which allows players to earn rewards such as tokens and non fungible tokens (NFTs) - and play-to-own (P2O), which is a more detailed version of P2E, providing players with proof of ownership of rewards for peer-to-peer trading. According to a recent study by Absolute Reports, the GameFi will experience rapid expansion over the next six years, with P2E games expected to reach $2.8 billion between 2022 and 2028, representing a compound annual growth rate of 20.4%.
While crypto gaming companies are becoming more prominent in the industry, some studios are taking cues from AAA games — high-budget, high-profile games produced and distributed by large publishers — to improve usability.
Gunzilla Games, a game studio founded in 2020, combines AAA content with blockchain under the hood, allowing players to access full character and weapon customization through owning the assets as NFTs within the game.
“All blockchain-related features will reside in the background, meaning gamers will never need to set up any wallets, swap any tokens, or perform any of the ‘usual’ crypto-related tasks” Vlad Korolev, co-founder and CEO of Gunzilla . He also noted:
“We see GameFi is at a critical crossroads. On one hand, GameFi has the incredibly unique ability to attract the next 1 billion users to the crypto space (given how many gamers there are worldwide). On the other hand, gamification does not cater to traditional gamers and focuses heavily on just the blockchain and the play-to-earn aspect of gaming.”
Improving gamers’ experience may also mean a shift from the revenue model for many companies in the space, as free transactions could boost adoption among traditional gamers. “Web3 has been focused on the DeFi, where users can absorb the cost of a transaction directly. That’s in contrast to a game where even at 5 cents per transaction, it’s simply not acceptable as even simple games would be instantly cost prohibitive,” commented O’Holleran.
The market capitalization of blockchain games was around $25 billion at the start of 2022.
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