What happened to all those NFT and crypto games that have been developed in recent years? Are players on track to make a fortune through blockchain?
There is money to be found in the field of monetized games, but is blockchain coming for the rest of the market? Find out below.
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What are crypto games?
Crypto games are a genre of video games that allow users to earn cryptocurrency by playing.
This is a new phenomenon in the context of blockchain-based currencies.
The concept of earning real currency from video games, however, isn’t all that new. Examples are Second Life and EVE Online. While Second Life’s linden dollars and EVE’s ISK are not exchangeable for real currency (in EVE’s case, it didn’t stop players from doing so even against terms of service) players spent a lot of real-world currency on both of these games.
Second Life’s economy has grown to such an extent that it is perhaps the best-known digital real estate market to date. EVE on the other hand is a space combat and science fiction simulator. The battle of B-R5RB, EVE’s most famous battle, had an estimated cost of $300,000 USD and involved more than 6000 players.
What both of these games have in common is that they are experience-focused, player-driven, and started without monetization. It was only after players invested a lot of time in gaming to form communities and the internet technology advanced enough that the financialization of these two games took hold and was successful in doing so.
CCP Games, the developers of
EVE Online, report an estimated in-game GDP of around $7.4 million dollars, and Second Life developers report that the virtual world has an estimated GDP of $500 million.
Crypto games in 2023
In recent years, many developers have attempted to launch blockchain-based games that allow players to earn cryptocurrencies or tokens that convert to cryptocurrency by playing. Some of these games started during the NFT craze between 2020 and 2022 and relied mainly on speculation and hype to generate investor confidence.
In addition, a number of cryptocurrency- and web-based games3 do not consider the player experience of their games, which is how tokens should be generated.
This has led to the failure of a number of projects or the loss of investment due to unclear roadmaps from development to launch. The crypto gaming market has developed with the wrong types of incentives to attract players, effectively focusing on gaming loops not much different from slot machines and speculation on in-game real estate that have yet to have a proven value system.
In better news, VCs are moving away from hype-based models, examining successful projects and planning developments found by successful studios.
VCs have spent millions in funding for studios like Uncaged Studios, Revolving Games and many more. These are long-term investments based on deeper knowledge of the gaming industry, teams that have experience in creating games, and failures of previous web-based projects3.
While crypto games may not hit big in 2023, crypto game development, which can attract both gamers and investors, could be in sight between 2026 and 2028.
Games that relied on their own tokens to attract investment are not making the cut and so it is the studios that attract VC money that are going to make the most from the future of the crypto gaming world.
Models that work in 2023
Successes in the crypto gaming market are mainly found in mobile games. The casual model of games offered on mobile devices lends itself well to current NFT technology.
Negotiable In-game
An example of such a model comes from Sorare, who developed a fantasy sports league game based on the NFT. Players can manage their virtual team using NFT cards, which are tradable in-game.
However, not all cards are negotiable. Some cards have identifiers such as the limited edition that mark them as scarce and exchangeable making them a digital asset. This provides access to players who are not invested, as well as incentives for invested players, in the experience both to play and to attempt to acquire a digital asset that they can keep or trade for later.
Mobile gaming
As the mobile market for crypto and web3 games expands, gamers and aspiring investors can look to games like Genshin Impact for guidance on developments ahead. Genshin’s monetization model easily translates into the current state of the crypto and web gaming market3.
The model that
Genshin follows is known in Japan as the Gacha (toy vending machine) model which focuses on the fact that players spend their real-world currency on in-game items. This offers the possibility to earn the desired virtual items.
The most successful mobile games in
Japan follow this model for the most part, and this model could be how crypto games make their next big breakthrough in the field of mobile gaming.
Currently, these models are based on scarcity and chance, and critics say they resemble gambling. The free-to-play models found in non-cryptographic games have long been criticized as exclusive and not player-centric. If VCs succeed in their investments, this could change the trend in what makes a crypto game successful.
The Growing Metaverse
In summary, what can be expected from crypto games in 2023 is a lot of construction towards the future. Crypto and web3 games are still in their infancy, and if you’re interested in taking the opportunity to bet on the future of crypto games, follow the VC money.
The crypto games that have the most successful models in 2023 are found in the casual and mobile market. The crypto game has yet to thrive in the same way that regular gaming, however, could change after development has taken its time to pay off in a few years.
