According to Jack O'Holleran, CEO of Skale, a multichain Ethereum-native network that supports Web3 games, GameFi's continually changing business model may make today's AAA gaming businesses look like peanuts. With $1.3 billion raised in the most recent quarter, according to DappRadar, blockchain-based games and metaverse projects are demonstrating endurance in the face of a winter that has brought down many participants in the crypto business.
"Charging users fees every time they transact or trigger a smart contract creates a disincentive to play," said O'Holleran, adding that "to appeal to the mass market, there's a ton of work that needs to be done around usability."
Web3 games, despite usability issues, made up over half of the blockchain activity across 50 networks in the previous quarter, according to DappRadar, with more than 900,000 daily Unique Active Wallets engaging with smart game contracts in September alone.
The most popular in-game business models are play-to-earn (P2E), which allows players to earn prizes such as tokens and non-fungible tokens (NFTs), and play-to-own (P2O), which is a more in-depth version of P2E that gives users evidence of ownership of rewards for peer-to-peer trade. According to a new report by Absolute Reports, GameFi will experience rapid growth over the next six years, with P2E games expected to generate $2.8 billion between 2022 and 2028, representing a compound annual growth rate of 20.4 percent.
"We're witnessing the birth of many different economies with different distribution mechanisms and the development of different token models (single token, two-token, NFT-driven, etc.). Only time will tell how suitable and reliable each of these will be over the long term in open global markets," mentioned Sonny Tsiopani, a research analyst with Delphi Digital.
While crypto gaming firms are growing in popularity, some studios are adopting AAA games' high-budget, high-profile design elements to make their products more user-friendly. AAA games are developed and sold by major publishers.
Gamers may enjoy complete character and weapon customisation by owning the assets as NFTs within the game thanks to Gunzilla Games, a gaming company launched in 2020 that integrates blockchain technology with AAA content.
"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," mentioned the co-founder and CEO of Gunzilla, Vlad Korolev.
He also added, "We see games are at a critical crossroads. On the 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 the blockchain and the play-to-earn aspect of gaming."
Enhancing the gaming experience could also need a change in business strategy for many organisations in the industry since traditional gamers may be more likely to accept free transactions. At the beginning of 2022, the market value of blockchain games was about $25 billion.
"Web3 has been focused on 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 not acceptable as even simple games would be instantly cost prohibitive," noted O'Holleran.
The writer is the founder at yMedia. He ventured into crypto in 2013 and is an ETH maximalist. Twitter: @bhardwajshash