What will happen when a bear market hits blockchain gaming, a sector that hasn’t really seen a downturn before?
The most obvious game to look at is the market leader, Axie Infinity, the game of teams of cute playable characters battling it out much like Pokemon.
“Right now I am realizing the Axie family is extremely strong. It’s not going to go away,” Ben Heidorn of Blockade Games, the company behind the NFT-powered game Neon District said Thursday at NFT.nyc, the digital collectibles conference that ran from Nov. 2 to 4 in New York.
If there’s a bear market coming to crypto soon, as many expect, Heidorn said no one really knows what the impact will be on blockchain games that have made so much progress in recent years. He predicted that the most popular blockchain game so far will weather it successfully.
That reflected the general bullish sentiment of the play-to-earn panel on the last day of the conference. As digital items in games grow in value, the panelists predicted that gaming is going to make the global economy adapt to it, from driving up the global notion of a minimum wage to igniting economies in the developing world.
Heidorn shared the stage with Jason Chapman of Konvoy Ventures and David Zastrow of Axie Infinity, on stage in the Palladium Theater, one of the several venues in which NFT.nyc took place.
Play-to-earn is a new way to monetize video games enabled by cryptocurrency and blockchain technology. In its purest form, creators can release a game that has in-game items and currencies that players earn and can be traded outside the game either for other items or for cryptocurrency.
If a game is good enough, that drives value for those digital assets, which makes the creators’ own treasuries go up in value, making it worthwhile to build the game in the first place.
Across all these games, “The end goal is the same, to give people a means by which they can change their own lives,” Heidorn said.
These economies are going to evolve fast, the panelists agree. “Play-to-earn in Axie or Neon District is an experiment,” Heidorn said. We are not going to be able to foresee the many ways that the economics of games like these shift over time as this sector becomes more popular.
Zastrow estimated that the current size of the decentralized gaming space is 2.5M players, predicting that people in places like South America and Africa would soon discover blockchain gaming, expand the base of players and quickly become leaders in the industry. Chapman estimated that the next few years would see 100M players.
“It is going to become 100X from what it is today in the next few years,” Heidorn said.
The question is what kind of games will bring those players in. No one expects it to remain simply an Axie Infinity world forever. The ongoing conversation in Web3 gaming is, when will blockchain games reach the quality of mainstream videogames, what’s known as triple-A games.
Heidorn pointed out that, for example, Ubisoft (a major studio) has been in the space for years now, but it’s complicated.
“The tripleA model is — you can’t just tack a blockchain on it,” Heidorn said. “If the assets have any kind of utility in the game you have to completely redesign your economy.”
That’s why he expects that triple-A quality is more likely to come from the existing companies as more and more funds come into blockchain games and studios get more thoroughly built out.
“I know there are teams right now that have massive triple-A talent coming in,” Heidorn said.
Meanwhile, the major platform for game distribution in traditional games, Steam, has said that NFTs and blockchain games are not welcome.
“I was upset. I love Valve. I respect Steam and everything they’ve done for the community, but they missed the boat,” Chapman said.
Heidorn predicted it’s temporary though. “Eventually they are going to cave and blockchain will come back to the platform,” he said.
One model that’s used heavily in mobile gaming is known as free-to-play. These games are open for anyone to start trying but to do well the players usually have to buy in-game items. Heidorn pointed out that it’s about 2% of the players who buy a lot of items and end up subsidizing the games for everyone else.
When those items become something people can speculate on, though, he predicted that the proportion of players buying items goes up massively. It’s one of the ways game development becomes much more feasible with blockchain.
Chapman said that this increased power to players is one of the things he likes so much about this industry. Players get to share in the upside of successful games. People have more options for getting by in the world.
The blockchain gaming industry is “retraining players in terms of what they should expect from their games,” Chapman said.