Crypto, Microtransactions, and the Evolution of the Gaming IndustryNovember 14, 2021
For over a decade now, microtransactions have become a regular feature of the gaming industry. No matter what the focus of that industry domain might be esports, free-to-play casual gaming, or anything else, chances are that there is a microtransaction in that mix as well. As an economic staple of modern gaming, it is no wonder that the wider public and even the initially very resistant niche audiences, gradually grew accustomed to them. However, there is a new financial model slowly rising inside of the microtransaction domain and it is fully based on blockchain technology.
With it, there is a growing possibility of new mechanisms to disrupt the old ones and present a new norm to the global audience. As pay-to-earn gaming gradually grows in popularity, many new services and models are lowering the overall cost of entry, both for the companies that want to implement them and for the users who wish to become a part of the same ecosystem. These are also catalysts that will change much more than the way gamers and games earn money. Instead, many analysts believe that they stand a chance to revolutionize the way financial transactions and even digital economies work altogether. That covers the existing ventures but includes fort things like the upcoming Mark Zuckerberg’s metaverse and many similar projects on a grand scale.
Novel Models for Earnings
Microtransactions offer a range of options when it comes to game developers and game publishers to make earnings streams. Unlike the premium model, which sees players buying games inside of a single payment, or subscriptions models that see players make regular monthly payments, microtransactions are something different. They allow players to firstly play games more or less for free. Inside of these ecosystems, they can then purchase things for a small amount of money.
These payments are regularly in the range of single-digit USD transactions. However, with crypto in the mix, they can be much smaller than that. In fact, payments like only a few USD cents become a reality and so do many other things that come courtesy of blockchain cryptocurrencies. That makes the same models for earnings not just flexible, but open to operations in completely different ways than that of fiat currencies. Because of that, crypto micropayments and microtransactions are not just some quirky new way to earn some money, but something that game developers, publishers, and all in this industry need to think about very hard.
Financial models of video games and the wider gaming space as well are constantly evolving. While microtransactions have been around for some time, things like play-to-earn are new alternatives. The rise of NFTs and blockchain gaming is allowing for players to literally be paid to engage in particular gaming setups in some shape or form. Things like Infinity, an online game based on the NFT concept and bitcoin payments, are becoming exceedingly popular and overcoming the constrictions of a small niche market. Here, players are able to generate digital valuables, in this case, NFT tokens, and then exchange them for fiat money or other cryptocurrencies on secondary markets.
Just a decade ago, that setup was possible in things like World of Warcraft, where players were able to get objects and then sell them on the secondary markets as well. For example, an individual would grind in the game to get a special sword and then sell it to another user through eBay. Once the sale is completed in USD, the players would meet in the digital environment of WoW and the sword would be provided. However, there was no ledger of ownership and no movement that would be proof of a transaction.
There is no doubt that microtransactions as a concept will continue to function and even thrive in the video game domain. It is an absolute certainty that some of that massive amount of money will come through to developers as BTC tokens. Others will get ETH tokens or some other cryptocurrency network. Many games will use their own blockchain-based setups to allow players to purchase items, support games, and do many other such things using very small individual cash transactions. While loot boxes and similar mechanisms that are in place to basically simulate gambling will likely have a degrading experience in terms of both regulation and public reaction, microtransactions are here to stay. It is hard if not impossible to imagine a scenario where these are banned like many forms of loot boxes and surprise mechanisms likely will be in the coming decades.
Instead, the blend of crypto and microtransactions is a natural combination, just like NFTs come together easily with so many aspects of the gaming ecosystem. These things come together because they offer so many advantages to so many participants of the same gaming spaces. That goes for developers as much as it goes for players themselves. Even while the distribution of those rewards and benefits might not be there, the space they all inhabit is more than ready for crypto microtransactions. Because of that, a strong connection between these domains will keep on growing in the coming years. The question is just who will benefit from that growth most predominantly and how can the same benefits seep through to the players and end-users as well.
Developer Side of the Equation
Right now, there is no doubt that a general versatility of monetization methods of gaming ecosystems is a good option for the players. However, it is clear that developers will seek to offer more and more of these, but that is up to the creators of the NFT networks and other third-party entities. After all, it is not realistic to expect that gaming companies take on the full development of cryptocurrency systems. Instead, they have to compete with other IT companies in recruiting at least some blockchain experts for in-house solutions or to simply use retail options other businesses provide, but with a smaller level of profit. So, as more and more of them are aware of the benefits that blockchain systems can provide, more of these will appear in the game.