How to Build a Sustainable Game Economy Part #1— Market growth & a shift to mobile
Gaming has been enjoying a rapidly increasing acceptance for years. As the popularity of the new form of entertainment grew, so did the market. By surpassing the music and movie industries by a considerable margin, the gaming sector is considered one of, if not the most profitable entertainment industry, projected to generate near $260 billion in revenue by 2025.
In part one of this article, we’ll take a look at what drove the massive growth in gaming and the new possibilities NFT technologies create for the industry. In Part two, we’ll explore what defines a well-designed and sustainable game economy.
The Market and its Growth
As mentioned above, the gaming industry is valued higher than the more traditional markets like music, movies, and books. According to statistics gathered by Accenture, the value of the sector can be estimated to be around $200 billion as of 2022, and it can safely be said that approximately 3 billion people have and continue to play video games on different platforms regularly.
The Shift to Mobile
When discussing gaming, the first thing that usually comes to mind is consoles or perhaps high-end PC setups. However, the preferred platform for gaming has been changing for quite a while now. The prevalent trend during the past decade has been a gradual shift to mobile gaming.
As seen above, the transition of popularity has been anything but subtle, with the mobile platform steadily climbing to the top in a mere 6 years.
Several sources, including Newzoo, show that the global games market since 2021 has been dominated by mobile gaming, accounting for more than 50%.
The attraction toward mobile gaming can be attributed to several factors, including cost, comfort, and accessibility. Not many users can afford expensive gaming hardware or have the time to invest themselves in the triple-A gaming experience. Taking notice of this trend, companies like Asus, Razer, and Huawei even released models specifically designed for mobile gaming. And as more entertainment and social media platforms are effectively switching to a mobile-first development, the market share is projected to increase even further.
NFTs in Gaming, a New Frontier
Besides the advancements in the mobile sector and the swiftly growing gamer base, the industry is seeing progress in incorporating exciting blockchain technologies like Cryptocurrencies and NFTs. Non-fungible tokens (NFTs) are digital tokens on the blockchain representing unique digital assets, and every token minted on the blockchain can be uniquely identified. This gives the item digital provenance and provable ownership. Combining this property with the inherently open access nature of blockchain technology, developers can easily and natively open up the transfer and ownership of digital assets across large networks of users.
NFT allows games to turn digital representations of items, avatars, cosmetics, and characters into NFTs, thereby giving players the ability to participate in an exciting new dimension of play. Players can find or be rewarded NFTs through quests and missions and are free to trade or sell their assets to other plays, piggybacking on the existing blockchain infrastructure. Many NFT games encourage community-held auctions and boost trade between players. The game typically charges a small percentage of these transactions. The critical difference between traditional in-game purchases and NFT game tokens is that the assets in these games primarily pass between players (instead of unilaterally to developers). Developers are incentivised to participate in and improve the economic system, as the soundness of the in-game economy is tied directly to potential profits.
Blockchain gaming presently occupies a tiny portion of total gaming, current estimates put the total number of blockchain gamers at about 10M players, a number that accounts for just 0.3% of the total gaming market. With such a large potential market and such a compelling use case, it is no surprise that billions of dollars of funding have been deployed into this area.
Nevertheless, not everything is as simple as it seems. For a game to flourish in the highly competitive market, it needs to hold the interest of a dedicated player base. Moreover, for blockchain games to succeed, their primary differentiating feature, the open economy, must be fair, inclusive, and robust.
Stay tuned for part two, where Guild of Guardians Economy Designer Howie Zhang delves deeper into the importance of Game Economy design and how to build a sustainable virtual economy in the uncharted territory of Web3 Gaming.
Kelly, Christian, et al. “Gaming: The next Super Platform.” Gaming: The next Super Platform, 27 Apr. 2021, https://www.accenture.com/us-en/insights/software-platforms/gaming-the-next-super-platform?c=acn_glb_thenewgamingexpbusinesswire_12160747&n=mrl_0421.
Wijman, Tom. “Three Billion Players by 2023: Engagement and Revenues Continue to Thrive Across the Global Games Market.” Three Billion Players by 2023: Engagement and Revenues Continue to Thrive Across the Global Games Market, 25 June 2020, https://newzoo.com/insights/articles/games-market-engagement-revenues-trends-2020-2023-gaming-report/.
“The Compelling Case for NFT Gaming | Nansen.” The Compelling Case for NFT Gaming, www.nansen.ai, 26 May 2021, https://www.nansen.ai/research/the-compelling-case-for-nft-gaming.