SparkDAO is an investment research group focusing on the field of digital encryption, with members distributed all over the world. We are keen to explore the underlying logic and cutting-edge tracks in the field of digital encryption. Welcome to our Twitter: sparkdao_io

The evolution of the game business

The gaming business has changed dramatically, compared to the early days.The Nintendo 64 console was first launched in the US in 1996, when sales reached 1.6 million units (worth $200 each) in the first quarter.More than 20 years later, the Nintendo Switch sold 1.5 million units ($300 each) amid more intense market competition.

The widespread adoption of the Internet has changed in gaming dramatically, from selling basic monetization of consoles and physical copies of digital games, to in-game monetization through microtransactions. Video game studios of the last century relied on selling games and game hardware revenue, but things are already different today.Nintendo, for example, is a big game studio that doesn't dive into microtrading; Fortnite could make about $5 billion a year.But in this shift, the counter-acceptance of microtransactions will be a long and arduous process.

Fortnite is not just a game to introduce microtransactions, but also one of the first typical games to rely purely on in-game purchases for real-time services.At the same time of the other games mostly need to buy props, make the game evolved into a "payers win" ecosystem, consumers are more and more disappointed with game publishers, and fortnite broke this situation, it will micro transactions as a way to distinguish themselves in the game, at the same time to support developers, and micro transactions will not affect the game play, can prevent rich players dominate the game, but also can provide the rich players with a good way to show.

The NTF gets into the game ecosystem

From the early blockchain games such as CryptoKitties to the current Axie Infinity, digital tokens are becoming more and more compatible with games, and NFT is bound to enter the game ecosystem.Game collectibles have sold high for decades, and NFT is now being supported by some big names in the video game industry.

From Ubisoft to Square Enix, all trying to figure out the best way for NFT to fit into video games.Some game makers are currently selling digital goods as NFT, allowing buyers to resell them to other enthusiasts; others are trying to adopt a play-making (P2E) model similar to Axie Infinity.

This year, U. S. video game retailer GameStop announced plans to work with an Australian crypto company to raise $100 million in funds for NFT creators, content, and technology.Square Enix's president also said the company wants to include blockchain and NFT into its future releases, but hasn't mentioned any details.Recently, Ubisoft is also trying to release limited edition NFT collectibles in its Ghost Recon Breakpoint games.This is a highlight moment for the blockchain gaming industry, as one of the world's largest and most valuable gaming giants has announced the adoption of blockchain technology.

Why do traditional gamers dislike the NFT?

According to DappRadar statistics, game-related NFT generated nearly $5 billion in revenue in 2021, or about 20% of all NFT sales in the year.However, Ubisoft announced an NFT project on December 7, and the NFT project announcement video was 96 percent disliked.Two weeks later, the project reportedly sold only 15 NFT, with a total worth less than $1,800.Legendary video game Atari company believes, " In the current state, the traditional game industry will not adopt NFT, although blockchain games will continue to develop, but there is no utility within reach.The value of NFT for individual participants and communities is currently unclear, and NFT and blockchain technology have great potential in video games, but it must only wait until the definition of NFT is greatly beyond its current level.Most of the relevant innovations in the next 12 to 18 months are expected to occur in the narrower blockchain gaming space.”

Actually, it's not that gamers dislike NFT because they are often advertised as blatant money-circling activities.To boost player confidence in buying the NFT, Ubisoft chose to make it more difficult to get in-game items for free.In addition, the most prominent industry players like Zynga and EA Sports are also closely watching the blockchain and how it will affect the $80 billion gaming business.

Currently, the average age of American gamers is 35, and the group has witnessed the transition from a medium based on text, 2D, 3D and virtual reality, a process for about 20 years.During this period, the game industry profited mainly from selling entertainment products for games only.But once money flows in and out of games, it turns the game economy into the same nature of the stock market.This makes many gamers feel that using NFT and blockchain makes studios and game publishers more focused on creating markets and market making than a uniquely interesting gaming experience.

Playability and financial gamification

The basic principle of game NFT is that publishers do not openly circle money, and that the tokens themselves have no impact on the game's financial incentives.Currently, the NFT, while innovative and practical, lacks sufficient infrastructure.

On the face, video game studios and software companies are alike: hiring developers, designers, managers, and executives, as well as sales and marketing teams to build and sell products.However, the two serve customers that make it completely different.

Among software-based companies, the video game industry works the longest in complementary relationships with entertainment and large tech companies.However, the line between work and entertainment began to blur as the NFT attached optional financial services to video games.

Game NFT exists between fast-paced, highly skilled, high-value environments, the intersection of technology, finance, and entertainment.All three environments are highly adapted to various market conditions and consumer behavior, and all require time to understand the complexity of other environments.

NFT games are still in their early stages and haven't developed much deeper beyond the simple GameFi and P2E models.The situation is that if the player is motivated to get a reward, then they don't care much about the quality of the game.Consumers spent more than $90 billion on microtransactions in 2021.The consumer market is keen to spend money on games, but not at the expense of playability; the greater the practicality and influence of NFT in games, the less the importance of playability is weakened.

Indeed, the GameFi and P2E areas are the beginning of the industry, because the NFT has the potential for more collaboration and interaction between games and virtual worlds.Ultimately, NFT could be a cornerstone for allowing players and developers to create new shared experiences.

On the other hand, cultural factors are also at play.While Western game publishers have avoided the "payer win" microtrading economy, Eastern gamers seem entirely able to embrace the model.Chinese game developer Miyou's "Original God" game (Genshin Impact), a fantasy open-world action role-playing game based on free and item card charging, is essentially a fortune-based trophy economy, but its first year revenue exceeded $2 billion.

Square Enix president Yosuke Matata once said, " It's not just for entertainment, but some people want to participate in game design to contribute to the games they are playing.So far, traditional games have seen no incentive models to cater to such consumers."At present, NFT is more inclined to attract speculators, but as people's awareness of game prop ownership and participation in design increases, NFT integration into mainstream games will become the development trend in the future.After finding the right balance between game finance and financial gamification, the whole game ecology will develop better.

 *The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of SparkDAO. Every investment and trading move involves risk, you should conduct your own research when making a decision.