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How much would you pay for a meal you can’t eat, a pet made of pixels, or a football player who wouldn’t give you the time of day in real life? In the gaming world, the answer is in the process of being redefined.
The introduction of playable NFTs has caused a stir. Over the past year, it has allowed gamers to create new kinds of value for themselves with every win.
A non-fungible token or NFT is, essentially, a fancy term for a digital-only asset bought using a cryptocurrency. It’s an abstract and somewhat murky idea that has already disrupted the art world.
There are two things NFTs are now doing to the world of gaming: they’re changing revenue streams, putting more power in the hands of the player; and they’re changing advertising models.
Here’s why: Unlike most games’ virtual tools, bonus points or even in-game currency, NFTs (at least for now) are standalone digital assets. They don’t lose value outside a game. Within a game, they can be sold to other players. Outside it, they can be swapped for cryptocurrency on an NFT exchange platform.
What do NFTs in gaming look like? They can be anything from a meal to a pet to a football player. In the fantasy football game Sorare, for instance, players can buy, sell, trade and manage virtual football teams using cards issued by actual clubs and leagues, the latest addition being Spain’s LaLiga. On Zed Run (launched in 2018), players can do something similar with horse-racing.
The game that is perhaps the best example of the NFT model is Axie Infinity (launched in 2018). Here, players acquire, breed and train Pokemon-type creatures called Axies. Each Axie is a tradeable NFT. Axies can be used to complete challenges that let players acquire digital assets (love potions) that can be used to breed more Axies, which can be traded on an NFT marketplace… and so it goes.
The price of an Axie (as also a soccer card or a Zed Run horse) fluctuates based on a complex system of supply and demand. As a result, new Axie Infinity players must now invest up to $1,000 to acquire the mandatory three Axies before they can start playing.
This has become so prohibitive that older players have formed guilds to try and help out. They lend Axies, as well as other in-game tools, to new players in exchange for a share of their future earnings. They also train and mentor them, as a way of helping, and to ensure better returns. The interesting thing is, guilds were not part of the original game design. They are an indication of how NFTs can decentralise gaming, ownership within a game world, and gameplay.
How much would you pay for a meal you can’t eat, a pet made of pixels, or a football player who wouldn’t give you the time of day in real life? In the gaming world, the answer is in the process of being redefined.
The introduction of playable NFTs has caused a stir. Over the past year, it has allowed gamers to create new kinds of value for themselves with every win.
A non-fungible token or NFT is, essentially, a fancy term for a digital-only asset bought using a cryptocurrency. It’s an abstract and somewhat murky idea that has already disrupted the art world.
There are two things NFTs are now doing to the world of gaming: they’re changing revenue streams, putting more power in the hands of the player; and they’re changing advertising models.
Here’s why: Unlike most games’ virtual tools, bonus points or even in-game currency, NFTs (at least for now) are standalone digital assets. They don’t lose value outside a game. Within a game, they can be sold to other players. Outside it, they can be swapped for cryptocurrency on an NFT exchange platform.
What do NFTs in gaming look like? They can be anything from a meal to a pet to a football player. In the fantasy football game Sorare, for instance, players can buy, sell, trade and manage virtual football teams using cards issued by actual clubs and leagues, the latest addition being Spain’s LaLiga. On Zed Run (launched in 2018), players can do something similar with horse-racing.
The game that is perhaps the best example of the NFT model is Axie Infinity (launched in 2018). Here, players acquire, breed and train Pokemon-type creatures called Axies. Each Axie is a tradeable NFT. Axies can be used to complete challenges that let players acquire digital assets (love potions) that can be used to breed more Axies, which can be traded on an NFT marketplace… and so it goes.
The price of an Axie (as also a soccer card or a Zed Run horse) fluctuates based on a complex system of supply and demand. As a result, new Axie Infinity players must now invest up to $1,000 to acquire the mandatory three Axies before they can start playing.
This has become so prohibitive that older players have formed guilds to try and help out. They lend Axies, as well as other in-game tools, to new players in exchange for a share of their future earnings. They also train and mentor them, as a way of helping, and to ensure better returns. The interesting thing is, guilds were not part of the original game design. They are an indication of how NFTs can decentralise gaming, ownership within a game world, and gameplay.
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If that sounds like gaming is encroaching into the real world, the truth is, it was a mad, mad world out there even before NFTs.
In 2018, venture capitalist Matthew Ball tweeted that Netflix’s most threatening competitor was the video game Fortnite, and he wasn’t exaggerating. A month later, in a shareholder letter, Netflix CEO Reed Hastings said: “…we compete with (and lose to) Fortnite more than HBO”.
It’s probably why streaming platforms and tech giants are now pushing the envelope in gaming too. Netflix launched a series of games, including two set in the Stranger Things world, in 2021. Since 2019, Alphabet has offered a cloud gaming service. The following year, Facebook (now Meta) added cloud-streamed games too.
WHY GAMING?
Gaming is up there with the movies as one of the most immersive forms of media, storytelling and engagement available today. Except that gaming is also the most interactive and customisable.
The gaming sector — this includes games for arcades, consoles, smartphones, as well as open-world games such as Minecraft and internet-only massively multiplayer online role-playing games (MMORPGs) — is currently larger than the movie and music industries combined.
Gaming represents $200 billion in direct spend and influences another $100 billion in indirect revenue globally per annum, according to data from a 2021 report by Accenture. Admittedly, those revenues are split between mobile gaming and the more traditional kind of hardcore gaming (MMORPGs such as Fortnite and PUBG / Battlegrounds), but play-to-earn, NFTs and gaming universes are set to change this.
ENTRY LEVELS
The thing about gaming with NFTs is that it’s easy. Players don’t need to understand NFTs or know what a blockchain is. They play, win a card, or an item, trade it, and move on.
In fact, it makes playing to earn easier and potentially more profitable for players and game-makers. Some gaming platforms are already charging hefty sign-up fees; others are claiming a portion of all sales, in addition to existing revenue streams from in-game sales and product placement.
CryptoKitties marked the start of this phenomenon. That game let users trade in virtual kittens using Bitcoin. It was launched in 2017 and went like this: a player bought virtual cats and mated them to create new cats who inherited some of the characteristics of each parent. Other players bought cats from some of these players, and so it went. Each CryptoKitty was an NFT.
The success of this game led to an explosion of NFTs in gaming. Today, as market dynamics change, prices fluctuate more wildly than they ever did with the cats. A “newborn” Axie can go for anything from $200 to the current record of $130,000, the latter sum paid in 2020 for an Axie with very rare (and valuable) characteristics.
INTO THE METAVERSE
The coming of the metaverse promises to make things even more interesting. A metaverse is an immersive future digital universe in which people will be able to use virtual reality headsets to, for instance, play a video game or meet up with friends at a virtual café, attend a course or a work meeting, collaborate on a project, or go to a virtual mall, theater or gig, all on the same platform.
Among the most popular NFT-based gaming universes inching towards this model today is The Sandbox. In addition to being able to buy anything from a virtual pizza to a virtual house in-game, players in The Sandbox can create their own avatar and digital identity, their own virtual games in-game, and other in-game items — all of which can be traded as NFTs across different games within this universe, and of course outside it.
In a further step towards its metaverse goal, Sandbox recently raised $93 million in funding for a platform that will allow it to host its game world alongside events such as virtual concerts, art initiatives and fashion events.
“Eventually, in the metaverse, players will be able to create their own versions of a game with different outcomes, and the rewards might include recognition too,” says Lik-Hang Lee, an assistant professor with the Korea Advanced Institute of Science and Technology and head of the institute’s Augmented Reality and Media Lab. “So the common territory is a 3D world with flexibility to modify the graphics, to modify the plots, and that would be the mainstream game of the future. Games might become the new social network, where all the players become creators, in turn leading to an open creator economy.”
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KEEPING SCORE
There are an estimated 3.24 billion gamers worldwide.
Of these, 1.48 billion are in Asia, making this the world’s largest video-gaming territory. Europe is a distant second, with 715 million gamers
There are an estimated 400 million gamers in India. This includes casual gamers (who play sporadically, in shorter sessions, opting for simpler games) as well as hardcore gamers (who typically spend hours every day gaming, spending most of that time within complex game worlds)
94% of India’s casual gamers play primarily on mobile devices, as opposed to computers or gaming consoles.
At 47%, men aged 25 to 44 make up the largest slice of India’s mobile gaming population.
Source: Statista data for 2021