The gaming industry is worth billions of dollars, predicted to generate $179.7 billion in 2020, with by comparison the global film industry reaching $100 billion in revenue for the first time in 2019.
According to Statista, over 2.7 billion people in the world actively or passively play video games, with China ranked first as the biggest gaming market just ahead of the US. In this dynamic market, the latest innovation, a crossover genre between crypto and gaming is a new breed of play-to-earn games or GameFi. GameFi is a concept that provides monetary incentives to gamers through a play-to-earn model, as opposed to the traditional “play-to-win” model that has been popular in the gaming industry.
How is the metaverse taking shape?
The Metaverse concept has also recently gained popularity, thanks in part to incorporating blockchain technology into GameFi, but also clearly driven by the growth of the gaming market. Not surprisingly tech titans dominated by gaming including Microsoft, Samsung, and Sony are joining forces to form the XR Association, which is aimed at bringing this concept of an ‘experiential reality to life.
Not to be outdone at the end of June Facebook CEO Mark Zuckerberg made a big bold play, basically laying out the future for Facebook in the metaverse, before changing the company’s name to Meta, reflecting the company’s growing ambitions beyond social media. Zuckerberg declared that “the metaverse will not be created by one company. It will be built by creators and developers making new experiences and digital items that are interoperable and unlock a massively larger creative economy.” Microsoft, worth $2.5 trillion, and $731 billion Nvidia, quickly followed suit with their own metaverse visions, reported Forbes.
Of course, anyone who’s seen the movie The Social Network, or has seen recent evidence on how Facebook can do harm through manipulating its online users’ behavior, is certainly going to wonder if the metaverse is going to be safe with a giant like Facebook. As Tim Sweeney, the CEO of leading gaming company Epic, which has raised $1 billion to support their long-term vision of the metaverse, remarked:
“This Metaverse is going to be far more pervasive and powerful than anything else. If one central company gains control of this, they will become more powerful than any government, and be a god on Earth.” And as UK-based blockchain startup Outlier Ventures pointed out, the need to have a crypto decentralized core is therefore paramount: “The defining characteristic of a true Metaverse is that it needs its own economy and currencies native to it, where value can be earnt, spent, lent, borrowed or invested interchangeably in both a physical or virtual sense and most importantly without the need for a government.”
According to metaverse proponents, the success of GameFi coupled with the growth of NFTs may provide the solution required to make a more inter-operable metaverse which is free from domination by the likes of Facebook a reality. It’s also worth noting that China has itself started to take the metaverse seriously, presenting China with
“great opportunities and revolutionary effects,”
Zuo Pengfei, a researcher at the state-affiliated Chinese Academy of Social Sciences, argued in a September article. It’s interesting that more recently Zuo, agreed that the metaverse has “an inherent monopoly gene,” and that care must be taken to “avoid the metaverse being monopolized by a few forces”, according to a report in Quartz.
What’s also worth considering is that both Facebook, with its Novi wallet and cryptocurrency in the shape of Diem, and the Chinese central bank the PBOC, with its digital yuan, both have the DeFi capacity to monetize gaming in the metaverse to the tune of billions of dollars. So, any more decentralized version of the metaverse, reliant on using cryptocurrencies to power the virtual economy, needs to be aware of that reality from the get-go.
GameFi: Disrupting the online gaming industry
The play-to-earn model has shaken the online gaming industry, with traditional players looking to switch to GameFi projects like Axie Infinity. Cryptocurrencies have already been successfully integrated recently into virtual worlds created by companies such as Decentraland and Sandbox. For example, users in Decentraland can purchase virtual real estate such as theme parks and monetize them using cryptocurrencies.
BigONE believes that the rise in popularity of GameFi projects such as Axie Infinity played a significant role in GameFi’s mainstreaming. GameFi has been in the works since 2017, with the introduction of CryptoKitties. Still, it did not go mainstream until this year, with the popular game Axie Infinity reaching a market cap of over $1 billion in 2021. Before “play-to-earn,” gaming assets and tokens could not be used outside the gaming environment and had no real-world value. With GameFi, in-game purchases can now have real value and have applications outside of the gaming environment.
A key factor contributing to the disruptive power of GameFi is that it is built upon blockchain technology rather than traditional gaming apps built using Java and Unity frameworks. Plus, from a technical perspective, GameFi is generally easier to implement and develop. Such is the threat from GameFi that traditional gaming publishers such as Ubisoft and Epic Games have suggested that GameFi is the future of their blockchain-based games strategy.
BigONE believes that this is yet another indicator of GameFi’s meteoric rise and why it is the future of gaming. According to reports from the Philippines, Axie Infinity, the largest GameFi project, is a huge source of income for the people of the Philippines, paying some of the citizens more than the country’s average salary. In addition, reputable investment firms are beginning to invest more in GameFi initiatives, with Solana Ventures, FTX, and Lightspeed announcing a $100 million GameFi fund recently.
GameFi and the future of the metaverse
What’s clear is that whoever wins the battle to control the metaverse will need to use some kind of digital currency to power the virtual economy. The more monopolistic the approach the more likely this will result in something like a Novi, a dollar-based stablecoin as the de facto default currency.
Despite Zuckerberg’s awareness that by its nature the metaverse is inter-operable, rather than a ‘walled garden’, the amount of money and effort put into this virtual space shows that first-mover advantage will make a difference in the web3 world just as much as the current web 2.0 digital economy, where the likes of Amazon and Google reign supreme.
It’s up to the leading GameFi companies like Axie Infinity to show that the more choices there are for users to earn money from gaming or creating, the stronger the metaverse will be for all participants.
A more decentralized vision of the metaverse inspired by the likes of GameFi startups such as Axie Infinity would support the kind of metaverse that gamers, DeFi traders would welcome.
“While there is room for many different visions of the metaverse I believe GameFi is showing the way, with a decentralized model for gaming and earning money based on trading tokens and NFTs. This is the metaverse where people have greater choice and opportunity, to come together to form their own communities and economies.”
Anndy Lian is an early blockchain adopter and experienced serial entrepreneur who is known for his work in the government sector. He is a best selling book author “Blockchain Revolution 2030”. Currently, he is appointed as Chairman, Asia for BigONE Exchange and Chief Digital Advisor, Mongolia Productivity Organisation. Anndy is part of the Gyeongsangbuk-do Blockchain Special Committee, Government of Republic Korea, together with industry experts such as Brock Pierce. Lian played a pivotal role as the Blockchain Advisor for Asian Productivity Organisation (APO), an intergovernmental organization committed to improving productivity in the Asia-Pacific region and was previously the Advisory Board Member of Hyundai DAC Technology.
An avid supporter of incubating start-ups, Anndy has also been a private investor for the past eight years. With a growth investment mindset, Anndy strategically demonstrates this in the companies he chooses to be involved with. He believes that what he is doing through blockchain technology currently will revolutionise and redefine traditional businesses. He also believes that the blockchain industry has to be “redecentralised”.
You can read more about Anndy’s work at www.anndy.com