Since the euphoric rise of the popularity of gaming in the 1970s and 80s, billions of dollars have poured into the scene. Whether gamers like it or not, the industry has been commercialised with million-dollar payout tournaments and ‘professional gamers’ propping up for every type of genre. Crypto gaming is the next evolution of the monetization of gaming with Play-to-earn games taking centre stage. Currently, the most popular games such as Counter-Strike or Fornite rely on users buying extra items, most often cosmetics, for a large portion of revenue. However, what if investors could get a guaranteed return on investment simply by users playing the game? Well, here comes crypto gaming.
Investment into Web3 gaming is already on the incline and many top talents from traditional gaming companies are transitioning over. However, many are still sceptical about what’s to come.
Even before crypto gaming came into existence, we have been in an attention economy. Massive Web2 companies such as Google, Facebook and many more compete for your eyes and then try to keep you there as long as possible. I’m sure you’re all well aware of the classic quote ‘’if the product is free, you’re the product’’. Well, that is undoubtedly true, but how does it relate to crypto gaming?
Many such P2E games have seen historic rises, such as Axie Infinity, but equally bad crashes, which is a defining factor keeping venture capitalists away from crypto gaming. To entice investors, a shift must be made towards a game’s longevity whilst still providing them with a transparent investment model and return-on-investment schedule. Instead of focusing on traditional P2E games with short life cycles, we should instead push games focused on gameplay, where earning is a tertiary benefit. Don’t you think counter-strikes gameplay, where you can experience great gameplay and earn on top of that, trump ‘playing’ a game purely for returns?
With $1.1bn poured into blockchain gaming in Q1 of 2022 alone, shouldn’t venture capitalists be putting their investment into games with such attributes? Games such as DoRac, which push play-and-earn instead of solely play-to-earn, should be considered ripe for investment. Gamers are hyper-aware of extra monetization, which venture capitalists looking to enter the crypto gaming space should have on their radar. Many top-tier gaming publishers are backing down from NFT integration after backlash from their player base. Venture capitalists must seek out the ‘great games’ as FTX Founder Sam Bankman-Fried quotes. If NFT or crypto implementation hinders making a great game, what’s the point? The focus should be on the game and digitalization through cryptocurrency second; that’s when venture capitalists will come rushing in.
While every sector of the crypto-sphere has been feeling the pain of the recent crash alongside crypto-gaming, GameFi has received a tertiary benefit by flushing out weak games from the ecosystem. A space that currently amounts to less than 1% of the total crypto market cap can only mean one thing; ripe opportunities for retail and institutional investors to find the best crypto games before the rest of the gaming industry does. However, GameFi is more than just gaming. It represents the shift in societal values as entertainment, earning, and investing all merge into one, put elegantly by Dan Nissanoff:
‘’GameFi at a high level is the convergence of videogaming, gambling and investing into a new form of entertainment.’’ – Dan Nissanoff, Co-founder and CEO of Silks.
There are now estimated to be over three billion gamers worldwide, but currently less than 10 million active gamers in the GameFi scene. The possibilities if even 10% of the traditional gaming player base shifted into GameFi would be groundbreaking. The current $10 billion market cap would easily be passed, triggering a knock-on effect when the most significant game studios start to recognize the value. We’ve seen massive gaming organizations like EA and Sega attempt and fail to join the crypto-sphere. However, these ‘failures’ were backlash from their communities, not wanting a quick NFT cash grab made to exploit their fans. If they were to create entertaining gameplay with a focus on play and not just earn, it’s unlikely their fans would turn down the opportunity of free money to play the games they love.
Other, more opportunistic organizations, such as Seascape and Bigbang, the creators of the hit Steam game Skyfrontiers, are partnering to create a ‘new user experience’ utilizing NFTs and cryptocurrency. It’s innovative companies and projects like these that venture capitalists should have their eyes on.
On top of that, games like DoRac, which focus on the sustainability and longevity of the game and community instead of a quick profit, are critical for investors to realize this emerging market’s real potential. Cash grab games may currently lead the charts, but their downfall is inevitable. By implementing the most unique deflationary mechanisms into their game, DoRac has ensured their game will not become one of the many drowning in NFT overpopulation and inflationary token problems. For the DoRac developers, it’s always game first, earn later. These are the projects which will survive in the industry.
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We are entering a new era, with crypto enthusiasts and gamers leading the charge. According to TripleA, 55% of millennial gamers own Crypto, compared to 5% of all millennials, showing how invested they are already in the space. However, the games that will truly define this space are still up for grabs. Games like DoRac and many others require the backing from major investors to show the world what the GameFi sector is all about, and that not all games are cash grabs with limited gameplay. When we see the historical rise of crypto gaming in the coming years, the venture capitalists who missed out will be kicking themselves. Crypto gaming is here to stay; it’s just a matter of who’s in.
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