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Game Industry Blockchain Technologies Should Be Humble to Survive

by Vadim Bulatov on 12/04/17 09:43:00 am   Featured Blogs

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The following blog post, unless otherwise noted, was written by a member of Gamasutraís community.
The thoughts and opinions expressed are those of the writer and not Gamasutra or its parent company.

 

Many online industries have been the focus of the wave of blockchain disruption, with dozens of cryptocurrency and blockchain-based projects attempting to pioneer innovative solutions in these niche sectors. Few have received the attention that the online gaming industry has.

Among the many blockchain solutions proposed for the gaming industry, the most popular have been those that create marketplaces for in-game purchases used in free-to-play models. Such projects offer simple and understandable ideas for potential investors, directly addressing gamer dissatisfaction with existing in-game trading models.

This derives from gamers who intend to quit games while recovering value from game assets earned or bought, as well as from newcomers who desire immediate access to game assets they would otherwise need to spend the time to earn.

These existing model of in-game free trading, however, can be perceived as a direct attack on the business model of an in-game economy since it excludes the role of game developers and publishers. Control rests with the players and developers or publishers are unable to exert influence.

 

Blockchain and hard in-game currencies

Hard in-game currency refers to an in-game currency that in most cases is obtained by legal tender or money. In some cases, it can be gifted to players by developers.

Soft in-game currency refers to earnings from gameplay or completing tasks — effectively it is a currency earned from time spent in the game.

Yet it remains a challenge for publishers and developers to integrate this trading aspect, to be able to facilitate it without considering the needs of existing business models.

A case study involves the free-to-play game World of Tanks (WoT), which enables players to purchase hard in-game currency, i.e. gold, with fiat and credit it to the account of any user. The hard in-game currency exists as an artificial/digital currency, which can be purchased only with real money.

In early 2016, the developers of a competitor, Armored Warfare (AW), offered WoT players a gift of either $10 in WoT gold or $30 in AW currency for registering and leveling up an account in AW. The majority of gamers opted for WoT gold, resulting in AW publishers losing significant time and resources by manually sending payments to each qualifying user.

Now let’s imagine that a hard currency of an F2P games is traded in the blockchain market, while the similar offers can be automatically carried out on a regular basis. Those game developers who will sell their in-game items for cryptocurrencies will be significantly affected. As a result, one day they will stop such trading. A possible blockchain solution that enable players to directly trade with each other can easily destroy ingame economics.

Another issue blockchain solutions could face is data synchronization with individual free-to-play game servers which is notorious for causing app crashes and freezes when balances of in-game currencies are changed or when players enter and exit battles. Blockchain-based synchronization would need to include latency considerations on the blockchain, which can add up to delays for gamers.

 

Blockchain and community development

New technological solutions offered by blockchain cryptocurrencies may be useful at the early stages of new games testing and development. Community interaction models such as Crowd Collaboration, Crowd Contests, Crowd Complementors and Crowd Labor Markets will be more efficient on these open platforms.

In the current climate, a game with low performance at its soft launch will never be released. If such games built up a community of loyal fans, this often results in disappointment communities. Similarly, when a game’s popularity declines, companies tend to remove resources from significant operations, providing only maintenance.

A blockchain solution could permit such communities to “purchase” the game from the publisher, placing themselves into the role of publisher and allowing them to continue promoting the game. This is even possible to achieve with developers retaining intellectual property.

 

Blockchain and soft in-game currencies

Now let’s talk about the soft currencies in free-to-play games. In the majority of cases, one can’t purchase such currencies for real money. Such soft currency is awarded for participation in various game modes, for time spent in the game, for game content, for participation in referral programs or socialization.

Larger projects create such currencies on a regular basis. For example, one of the most popular mobile games, Star Wars Galaxy of Heroes, offers one hard currency (Сrystals) and nine soft currencies (Credits, Ally Points, Guild Tokens, Guild Event Tokens, Shard Tokens, Cantina Battle Tokens, Squad Arena Tokens, Galactic War Tokens and Fleet Arena Tokens).

Obviously, such a huge number of soft currencies makes the process of new player onboarding more complex. While publishers can consider decreasing this number, such soft currencies are inevitable in the world of free-to-play games where the key metric of any free-to-play game is the Customer Lifetime Value.

Here, existing gamers’ Lifetime Value increases five times more profitably than the process of a new player attraction. Because soft currencies are used to increase the Lifetime Value of a player, they are currently indispensable.

In a perfect world, the player would play a game for an unlimited time, but it’s simply unsustainable to offer more and more soft currencies. And here, the implementation of blockchain cryptocurrency solutions would serve the publisher’s desire to keep players in the game for as long as possible.

Instead of creating more soft currencies, a soft in-game currency managed by the community is an elegant solution that will increase its value in the long term.

No doubt, such a currency would create a new way for peer-to-peer trading, but the publisher would still have full control over the game economy and the ability to generate revenue from transaction fees. In the majority of cases, the developer can’t change the rules for the hard in-game currency, while soft currency is more flexible.

Obviously, such cryptocurrencies will be offered by game developers, but they have to be generally tradeable across multi-game platforms.

In conclusion, there are significant hurdles that cryptocurrency projects must overcome if they are to achieve real market penetration, and many will not be equipped to succeed.


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