Dean Drobot/123RF
 

Blockchain in Online Gaming: 10+ Possible Use Cases

  • 23 October 2018
  • Sam Mire

The seismic growth of online gaming is likely a perplexing and astounding development to most non-millennials. In 2017, online PC gaming alone was a $31 billion behemoth, and that figure is expected to grow by 2–3% per annum, with 2018’s total projected to be $32.6 billion. The total of non-computer based online gaming constitutes a market projected to hit $2.2 trillion by 2021. Pacific Asia and North America account for an outsize block of revenue growth, together accounting for 78% of global revenues in 2017. Further, virtually any projection anticipates continued growth that is likely to reach double digits by the end of the decade. The online game Fortnite has proven how viral a single game can become, with the 125 million people who have played the game since its release in July 2017 roughly equivalent to the entire population of Mexico.

While there aren’t many obvious barriers to the further growth of online gaming — perhaps cultural awareness of gaming addiction, but even that is an unlikely foil — the blockchain is likely to be incorporated as a measure to add new features to existing games and platforms. Many of these blockchain-for-gaming proposals are centered around convenience and security, while the introduction of new concepts, such as crypto-collectibles, may attract gamers looking for truly novel features to add to their virtual experiences.


Crypto-Collectibles

When crypto-collectible gaming platform CryptoKitties raised $12 million from venture capital giant Andreessen Horowitz in March 2018, the investing world couldn’t help but wonder: what the hell is a crypto-collectible? Simply put, a crypto-collectible is a cryptographically unique, non-fungible digital asset that has a limited quantity. Some have likened them to Beanie Babies on the blockchain, but the market has proven strong, with blockchain crypto-collectible trading platform Rare Bits collecting $6 million in a funding round this year.

Those who don’t understand the appeal probably won’t be any more interested even once they completely grasp the concept, but much of it lies in novelty. Individuals who are now adults were in on the idea of digital pets back in the day, so the concept of trading blockchain-secured, unique digital assets, whether they are manifested as cat illustrations or something else, has a broader audience than many may realize.

Companies Trying to Solve This Problem


Unique In-Game Assets

In-game assets take several forms, and many developers create an opportunity for gamers to purchase those assets so that they can continue replenishing their development budget. Whether the for-sale asset is music, an avatar of a character, environment design, or something completely different, players who love a certain game are often willing to purchase unique add-ons to enhance their experience. A single character in World of Warcraft, Zeuzo, sold for $9,500. The game Dota 2 is free to play, but one gamer forked over $38,000 for a “courier,” a form of character within the game that unlocks unusual and unique items. The gaming universe Entropia garners unfathomably high price tags for unique settings within the game. One setting, the Crystal Palace Space Station, commanded $330,000 in a 2009 sale.

The point is, gamers take their in-game assets quite seriously, and aren’t bashful about paying large sums for one-of-a-kind add-ons and perks. However, systems used to pay for these assets have proven vulnerable to hacks, and the assets themselves aren’t always truly unique. To solve these issues, the blockchain has been floated as a means to reduce duplicate content and also execute more secure transactions when purchasing and selling in-game assets.

Companies Trying to Solve This Problem


Transparent Development Updates

Blockchain use cases in online gaming - Transparent Development Updates

Glitches in a newly released game can crush its sales and irreparably damage a developer’s credibility. There are rare exceptions like The Division, which was riddled with bugs and technical issues upon release yet solds more than $330 million worth of units in its first five days. But for most games with development issues, such as 2013’s reboot of SimCity, which required a constant internet connection to function and therefore lost out on a non-connected demographic, sales and reputations are tough to resurrect.

Then there are games such as Duke Nukem Forever, which instead of releasing on their promised dates, are delayed into oblivion, leaving gamers to wonder if the games will ever see the light of day. No game can live up to expectations when it becomes the equivalent of Bigfoot, much talked about but never seen. In the case of Duke Nukem Forever, the game was delayed for about 15 years, and it eventually became a running joke in the industry, taking down the developers’ and the game’s credibility in the process.

If developers can find a way to provide updates on the blockchain and assure gamers that upgrades and tweaks are being made to a game, whether before or after launch, there will be far more trust and loyalty given to developers. Gamers pay $60 or more for a single game, and they deserve the courtesy of knowing that developers are doing all they can to maximize the investment.


Incentivizing and Rewarding Gameplay

Those who play video games average about six hours per week playing games on their mobile phones, consoles, computers, etc. On a global scale, the majority of people play games on their mobile phones as opposed to other platforms. Statistics tell us that roughly 155 million Americans regularly play video games of some sort. Considering that there are roughly 327 million Americans, that means that as many as 172 million Americans are not playing games regularly. While that’s not a problem in and of itself, it is a figure that game developers would like to reduce.

There are several blockchain platforms that allow users to tie their digital wallet to their gaming, rewarding time spent on a console with gift cards, digital currencies, and other tangible rewards that incentivize interaction with different gaming titles.

Companies Trying to Solve This Problem

  • Refereum – Token platform for incentivizing various forms of participation.

Paying Gamers and Co-Developers for Content Creation

Blockchain use cases in online gaming - Paying Gamers and Co-Developers for Content Creation

Content is king, and gaming live streams are all the rage right now. That’s why Facebook is offering gamers money to utilize Facebook Live to broadcast streams of themselves playing video games. Roblox, a free-to-play game for Xbox One, PC, and mobile phones makes gamers into creators by encouraging them to build levels in which other gamers can play. The company will pay out more than $70 million to gamers this year, most of whom are young developers bettering the platform for gamers to enjoy. Roblox has doubled its payout, which follows its doubling of content creators. In 2017, roughly 2 million gamers were building content on Roblox, but that number has doubled to 4 million in 2018, a testament to how proven payment systems will bring more developers to the yard. Free-to-play games, such as the smash hit Fortnite, make their money through micro-transactions, but their platforms must evolve in order to continue reaping revenues from gamers. One way to do that is for the gamers themselves to become the content creators, learning to code and taking in a modest paycheck in the process.  

These systems of payment could become automated and more appealing once they are tied to a blockchain platform that utilizes smart contracts. Developers and gamers could be paid automatically and immediately based on milestones, with these milestones serving as built-in carrots to incentivize consistent content creation.

Companies Trying to Solve This Problem

  • UltraGame publishing platform on the blockchain.

P2P Gaming Transactions

Blockchain use cases in online gaming - P2P Gaming Transactions

eSports are not the only way that gamers can go head-to-head. Whether it is a sports video game like FIFA or NBA 2K, a first-person shooter such as Call of Duty, or any other video game that allows for peer-on-peer competition, the ability to wager directly with other gamers adds an extra level of flair and incentive to the digital experience.

However, there are issues with the current systems of potential peer-to-peer remote gaming that will be difficult to resolve. Issues such as poor connectivity, early quitting, and lack of built-in transactional systems mean that wagering on a match or series of matches with somebody in a different city, state, or country is difficult. Online gamers are twice as likely to abandon an online interaction if latency is affecting the quality of a match. Even a two-second lag in load time can create abandonment rates as high as 87%, an indication of just how impatient gamers can be. Abandonment rates, along with the poor connections themselves, mean that putting money into escrow under current conditions is risky at best, and foolish at worst. With 53.6 million or more online console gamers in the U.S. alone, there is a huge missed opportunity for companies to produce additional game sales and even revenue cuts from each peer-to-peer wager.

However, with the blockchain, smart contracts could be used to hold money in escrow and void the transaction if elements beyond the gamer’s control occur, such as a loss in connection. The blockchain also serves as a means to transfer digital currency, and connected digital wallets would make wagering on video game interactions a fairly straightforward affair.

Companies Trying to Solve This Problem

  • CryptoKitties Early example of successful P2P payments that could occur in-game. 

Gaming Marketplaces

Blockchain use cases in online gaming - Gaming Marketplaces

The market for virtual gaming assets is massive — we’re talking $50 billion a year. When a virtual planet can sell for a cool $6 million, it’s understandable how the spectrum of in-game asset sales eventually adds up. It’s not a single-market system, either, as gamers can typically pass along unique skins through resale. PC gamers spent $5.3 billion on downloadable content in 2015, while console gamers did them one better, shelling out $6.4 billion that year.

But these markets are not always what they appear to be, and can be marred by fraud and misrepresentation. Hackers are able to use VPNs and other tools to disguise their identities or appear as multiple people, taking advantage of rare promotions and unique virtual items that they can then resell at a markup. These hackers take advantage of currency differences by acquiring items using VPNs located in nations with weaker currencies, then resell them to users in nations with stronger currencies. In addition, con men engage in schemes to ascertain other gamers’ passwords, then use the passwords to download content onto their own servers.

With stronger personal identification and authentication parameters built into the blockchain, gamers can feel safer when transacting with other players and game developers.


Parallel Gaming Universes/Universally Accessible Games

Blockchain use cases in online gaming - Parallel Gaming Universes

Though it may sound like something Neil deGrasse Tyson would speak of on Cosmos, the concept of parallel gaming universes is not as out-there as it might sound. The concept is actually fairly simple: gamers would be able to use in-game assets, characters, etc. within different games with completely different environments. For cooperating game developers, this could create off-the-wall game modes, characters, and other aspects that set them apart from the pack. Or, for games that are created as series, a single character could be transported from one game episode to another. Blockchain technology could possibly take care of the interoperability aspect of such interlinked universes.

Companies Trying to Solve This Problem

  • Beyond the VoidEarly example of a Universe built with interoperability potential. 

Augmented Reality

Blockchain use cases in online gaming - Augmented Reality

Pokémon Go opened the world’s eyes to the impact that a game can have when it is intertwined with real-life events and milestones. Its impact has still not waned, as more players took part in Pokémon Go in May 2018 than any other month since its meteoric rise in the summer of 2016. 174 million people playing in May translated to $174 million made for the game’s developers.

The cross between virtual reality and reality that Pokémon Go represents is often referred to as augmented reality, and it’s a market that has the potential to impact industries beyond gaming. Businesses who were able to make their physical location a hot spot for Pokémon capture were undoubtedly exposed to countless new visitors, who have to be considered potential customers. L’inizio’s Pizza Bar in Queens, NYC found that they experienced a 30% increase in business from spending only $10 on “lure models” that bring in random visitors seeking PokéBalls. The game also had a larger economic impact, increasing parent company Nintendo’s valuation by $23 billion in just over 2 weeks.

Blockchain could take these sort of augmented reality games to the next level, instantly rewarding gamers based on milestones. Those who implement smart contract technology and pay in blockchain-enabled cryptocurrencies could surely reach deals with businesses that would be a win-win for all parties.

Companies Trying to Solve This Problem


Secure In-Game Payments

Blockchain use cases in online gaming - Secure In-Game Payments

The global and domestic video game markets are massive — worth approximately $71 billion and $17.7 billion, respectively — and in-game purchases are no small part of these immense valuations. Microtransactions, often the term given to purchasing in-game content, were worth $908 million in the U.K. alone in 2014, and revenues have only climbed since then. The 2017 projection for in-game purchases for app games was expected to be $37 billion, while in-game video game microtransactions totaled $2.94 billion. But these costs don’t have to be so high for the micro-paying gamer. The ability to connect gamers directly to game manufacturers and creators presents the opportunity to limit the amount that is paid by cutting out intermediary fees.


eSports Betting

eSports — a form of competition that revolves around video games — is an already impressive and growing sector of the gaming landscape that has made its mark by, among other feats, becoming broadcast on ESPN. The world’s best-known sports network didn’t have a choice but to capitalize in eSports’ rapid rise. 2017 revenue from eSports was nearly $700 million last year, and that figure is projected to hit the $1.5 billion mark by 2020.

Brands have paid attention to the eyeballs being commanded by teams of e-athletes, too. Sponsorship revenues for 2017 were $266 million, while advertisement spending for eSports telecasts was expected to total $155 million for the year. These figures seem impressive for those not familiar with eSports, or those who would meet such statistics being tied to professional video gaming with disbelief. The eSports landscape is extremely dependent on advertising and sponsorship dollars, with sponsorships driving approximately 40% of eSports’ growth. Merchandise and tickets, meanwhile, account for only 11% of industry revenue streams. So if a team isn’t sponsored, it can be extremely difficult to dedicate the necessary time and resources to be competitive.

eSports’ popularity has stimulated demand among young people who see themselves as the next great eSports superstar, but it has also created a glut of participants in what is already a crowded space. Individuals and teams seeking funding for their eSports careers can feel like needles in a haystack, but blockchain platforms have emerged and continue to arise that are aimed at connecting talented e-athletes with willing investors to mitigate the reliance upon traditional sponsorships.

Companies Trying to Solve This Problem

  • Unikrn – eSports betting backed by Mark Cuban
  • BX.betBetting platform that includes eSports betting
About Sam Mire

Data journalist and market research analyst focused on emerging technology, trends, and ideas.

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