Over the past year, gaming communities have been vocal about their disapproval of NFTs and blockchain technology. Renowned publishers such as Electronic Arts (EA) and Ubisoft have faced backlash — from gamers, employees, as well as other game developers — for announcing NFT ventures.
As such, it’d seem there isn’t much overlap among the user bases of traditional games and blockchain games. This could be because the latter are generally built to serve a different objective. They’re often referred to as play-to-earn games, emphasising the ability to earn crypto rather than gameplay or entertainment value.
This also means that their popularity is directly linked to the state of the crypto markets.
For example, Axie Infinity was one of the most popular blockchain games in 2021, allowing users to earn the Smooth Love Potion (SLP) crypto token as a reward for playing. Over the course of the bear market, SLP’s value has fallen drastically. Today, it’s worth 98 per cent less than its all-time-high of around US$0.40.
The challenges of blockchain gaming
As the blockchain gaming industry develops, it’s beginning to address such flaws. Companies are now looking into business models which are more sustainable.
“In order to drive mainstream adoption, firstly, the user experience must be good,” explains Daiki Moriyama, director at blockchain gaming company Oasys. “This is where many projects fail.”
It’s difficult for them to retain their user bases when the monetary payouts slow down.
A significant pain point to address revolves around the actual gaming experience, and whether it is fun. If the play-to-earn game is not fun, then it will not have long-term success in this industry.
– Daiki Moriyama, director of Oasys
Moriyama believes that this largely comes down to the limitation of current blockchain architecture. “Nobody wants to pay high gas fees to execute actions within a gaming metaverse, or wait up to five minutes for a transaction to be confirmed.”
Since most blockchains are geared heavily towards decentralisation and privacy, it can often come at the expense of factors such as speed, performance, and cost. “For blockchain-powered solutions to be attractive, they need to be highly scalable with fast transaction speeds and low or zero gas fees for users.”
Security is another major concern in the space. In March, Axie Infinity reported losses of over US$600 million due to a hack. “Scams, hacks and misleading projects are rampant and discredit the good work that has been ongoing to upgrade gaming infrastructure,” says Moriyama.
Changing business models
Based in Singapore and Japan, Oasys was established to help improve the blockchain gaming experience. The company is working to increase mainstream adoption of play-and-earn gaming, in partnership with publishers such as SEGA and Bandai Namco.
As opposed to play-to-earn gaming, this is a model which makes use of blockchain technology, without making it the sole focus. “The misconception is that blockchain gaming is focused on earning, but really, what it offers is value — to both players and game developers alike,” says Moriyama.
“Blockchain architecture, being decentralised, offers players and token holders the chance to participate in governance and make decisions fairly and equitably,” he adds.
It also has significant implications on the ownership of in-game assets and user data.
Previously, these were all held by a centralised game publisher, and there were often strict user agreements in place to prohibit the sale or monetisation of such assets. What blockchain gaming does is transfer the value of these assets from centralised publishers into players’ hands.
Beyond earning tangential income, this really changes how we approach a leisure activity/hobby such as gaming.
– Daiki Moriyama, director of Oasys
How blockchain gaming will evolve
Moriyama believes that mass adoption of blockchain games is expected to happen within the next five years. “What we’re seeing now is more and more buy-in from traditional game developers and gaming companies.”
Although they’ve faced backlash in the past, traditional gaming companies are finding ways to enter this space without alienating their existing fanbase.
“Companies see the value of engaging users beyond traditional gamers. Bandai Namco recently launched its new mid-term plan which emphasises the gaming industry’s pivot from the product (games, toys, art, etc.) to a community.”
Blockchain technology offer an avenue through which users can be more involved in the success and ownership of their favourite games. “It allows game developers to program incentives that align with the interests of players.”
Oasys is working with a wide range of Web2 and Web3 partners to make this pivot a reality. This July, the company raised US$20 million in a private token sale round, with participation from companies such as Crypto.com, Huobi, and Jump Crypto.
The company operates a blockchain designed especially for gaming. It takes into account the aforementioned problems of transaction times and gas fees. “We are working with some exciting game developers to build on our blockchain, as well as working on a concrete plan to list our tokens on the very best crypto exchanges.”
Although the future looks promising, there’s still plenty which needs to be done. “For many long-standing game publishers, they will have to manage their reputations, as well as protect their intellectual property. They have understandably been hesitant about diving headfirst into blockchain technology,” says Moriyama.
As time resolves these issues, it seems the aim is not for blockchain gaming to take over, but rather co-exist with its traditional counterpart.
It is clear that for blockchain gaming to succeed, it cannot do so alone. Rather, it must acknowledge its limitations and embrace the value and expertise that traditional gaming brands can offer.
– Daiki Moriyama, director of Oasys