By Abhay Aggarwal
With the development of technology, Web3 has transformed the gaming industry. According to grandviewresearch, it has significantly demonstrated a paradigm change in this industry with an estimated market size value of USD 220.79 billion in 2022 and is expected to reach USD 583.69 billion, with a CAGR of 12.9% over the next eight years from 2022 to 2030.
The terms “web3” and “metaverse” are currently very popular in the tech community. According to Crunchbase, which cites recent funding rounds like Polygon Technologies and Alchemy for a combined $650 million, the hunger among investors has caused a “cascade” of investment into blockchain platforms. Gaming is one industry sector that is getting more attention than most.
This investment tsunami, though, goes beyond merely creating more, bigger, and better games. With the promise of token-based rewards, Web3 is revolutionising the way games are created and developed by motivating and enticing consumers and developers. In just a few short years, we’ll stop referring to gaming as an industry and start talking about it as an economy since the change from the traditional gaming paradigm is so profound.
Let’s now take a closer look at what Web3 gaming is, its main characteristics, how it may be monetized, and how it affects the economy.
Describe Web3 Gaming
A cutting-edge method of decentralised gaming is referred to as “Web3 gaming.” Web3 gaming is the term for digital games with blockchain technology integrated into their economies (also known as play-to-earn, play-to-own, crypto, blockchain, or NFT games).
Players that play Web3 games often own either Non Fungible Tokens (NFTs) or Fungible Tokens (FTs), depending on the game (stored in custodial wallets). NFTs are distinctive cryptographic tokens that can be used to demonstrate ownership of information, including music and photos. Users can acquire ownership of game assets using NFTs in blockchain games. These can include weapons, attire, set pieces, vehicles, places, planes, characters, and more.
NFTs allow players to be the owners of the assets they earn or buy while playing the game, in contrast to normal games where in-game components are completely controlled by the developers, or the firms. An NFT is yours once you purchase it, and you are free to sell it anywhere, including outside of the platform where it was initially formed. With Web 2.0 games, it is impossible to include this feature.
The practical implication of this innovation is that player properties are real and may be bought, sold, and traded on marketplaces just like any other commodity. The system normally runs in a restricted environment that forbids users from exchanging in-game items for money or other resources in the real world. The adoption of blockchain technology in the early web3 game creation, including games like Axie Infinity, has resulted in astronomically high retention rates.
Key Aspects of Web3 in Gaming
A new age in gaming is beginning with the new web3 gaming model. Players can now own, sell, and trade in-game goods, and they can also collect prizes as they play. Decentralization is mostly what gives web3 gaming its appeal and enjoyment. Web3 in gaming offers a host of other advantages, including increased security.
Authentication and Interoperability
In gaming, proof-of-ownership is the new web3 face. True ownership and interoperability in gaming are growing as a result of NFTs’ exponential rise in popularity. Through NFTs, players can fully control their in-game possessions.
Web 3 game interoperability also enables the transfer of assets outside the gaming industry. Players can profit from these things without incurring financial loss.
Openness in the Democratic Gaming Industry
The web3 gaming ecosystem’s success depends on its ability to run autonomously with few interventions from the central government. Consensus voting is used in these games to make gameplay adjustments.
DAOs, or decentralised autonomous organisations, are the product of this. These days, the majority of blockchain games are based on this governance structure, which improves transparency. Furthermore, these games give the player control and involve no third parties.
Player-Centred Gaming
Restoring real decentralisation and giving players more control is the core goal of web3 in gaming. Additionally, it guarantees a setting that is personalised for their needs.
Monetization of Gaming through Web3
For the players, conventional games are nothing more than expensive forms of entertainment. Soon after the game ends or the player quits, the in-game items they’ve gained completely lose all of their value. Additionally, there are other problems with the traditional revenue approach for games.
With blockchain and NFTs as its underlying technologies, Web3 in gaming has created a brand-new monetization model. Players have the chance to generate passive revenue by staking and other means. In addition, they get paid for the time and work they put into the games.
Web3 games, on the other hand, have created a limitless source of income for game developers. They are able to run in-game marketplaces, offer in-game purchases, and give gamers trading freedom that has never been seen before. In short, web3 in gaming has completely changed how monetization works.
Impact of Web3 Gaming on the Economy
By 2025, the business for online gaming is expected to expand to $256 billion from its current $180 billion value. attracting more than 2.3 billion players worldwide. With an expected growth rate of 9.2% by 2025, it is also one of the fastest-growing industries in the world, with an annual growth rate of 7%.
Today, web-based gaming is a vital sector of the world economy. This industry has boosted earnings, tax receipts, and the job market, benefiting nearby communities in the process.
Games are some of the most data-intensive applications available today, thus it also propels the development of innovative technologies. Many states are already benefiting from online gaming, which is likely to have a significant economic impact.
Enhanced Economic Performance
The online gaming sector generated a staggering US$155 billion in revenue in 2021, with the online video gaming sector accounting for the lion’s share at about US$85.9 billion. The recent COVID-19 epidemic led to a significant change in consumer preferences and opened new doors for the online gaming sector.
Large audiences have been attracted by the growth of online gaming platforms that offer a wide variety of games, such as UFO gaming, gala games, etc. This has had a positive impact on the economy.
Job Market Growth
Particularly for game developers, coders, and animators, the online gaming business has helped the labour market grow exponentially, with some gaming companies reporting a 20% rise in employment.
The online gaming sector has also helped to advance the careers of audio engineers, game testers, and even professional players. The increasing demand for these occupations has resulted in commendable pay rates.
Higher Tax Revenue
Each year, the Web3 gaming sector generates large amounts of tax income. State governments have been able to balance their budgets, reduce taxes, and retain public services like healthcare and education by using the extra revenue from online gaming.
The rising demand for online games, which leads to a larger audience and, consequently, bigger profitability for the gaming industry, is the primary cause of the increase in tax revenue. The high tax rate imposed on internet gaming is another important consideration.
The author is CEO, Colexion