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Blockchain technology is changing the gaming ecosystem, but what value does it add for developers?

The blockchain has arrived - transforming the centralized and locked-in Web2 ecosystem we currently use into the decentralized Metaverse and Web3. For game developers, the benefits of joining this movement towards a trustless and open system include interoperability, true user ownership, and game-asset marketplaces which allow for more community engagement. These Web3 features will enable you to leverage decentralization to unlock new ways to monetize, create, and grow your games. Here are four ways the blockchain and its implementation will add value to your games for you. 

First, what is blockchain technology:

As a refresher on what we’ve talked about before, the blockchain is effectively an online registry  with its primary selling points being its security and decentralized nature. The blockchain is exceedingly difficult to manipulate and essentially monopoly-resistant - offering a database that is democratic and open while remaining secure. In addition, this technology is interoperable, meaning that the assets stored within it can be easily moved from one application or platform to another that are on-chain. These assets, which are called non-fungible tokens (NFTs), can’t be identically replicated or replaced, each having its own unique signifier and identity. The registry catalogs and stores who owns which assets using smart contracts, users are then able to view and manage their assets through a blockchain wallet. 

Value #1: Increase in-app purchases through true user-ownership

The arrival of the blockchain is changing traditional forms of monetization, most significantly through the transformed relationship between users and their in-app purchases. 

Though the majority of free-to-play games today include in-app purchases, only 5% of users make them. For many users, investment into a casual game feels wasteful - they fear that their progress and stake is wasted if they lose interest in playing. What’s more, user purchases of Web2 in-game assets aren’t truly owned by the user and are still ultimately the developers’ to do with what they will. 

Increased longevity and true ownership for users is an essentially motivating force towards more in-app purchases.

Moving on-chain helps to ease this user caution. By their very nature, Web2 in-app purchases are unable to generate value for users outside of the play experience, making all in-app purchases ultimately sunk costs. However, the tradability and true user ownership afforded by blockchain technology allows for a marketplace to exist where users can exchange ownership of their NFTs. As a result, users are able to sell their game-assets to other users to recoup their costs if they no longer want to play a game. This has the benefit of offering a safety net to users on their purchases and so further eases users’ fears of their purchases being sunk costs. 

But even without the resale value offered through tradability, true user ownership can alone increase the value of in-app purchases for users. Their purchase of in-game asset NFTs isn’t just tied to their lifetime within the game but is forever after theirs. This increased longevity and true ownership for users is an essentially motivating force. With increased value and motivation towards making in-app purchases comes a significant rise in the percentage of users who will purchase in-game assets.  

Value #2: New monetization opportunities through royalties

Thanks to true user ownership and tradability, not only does the blockchain motivate more users toward purchasing game assets, but it also provides a whole new form of monetization for developers: royalties. 

Like we mentioned, because users have full ownership of their NFT assets, they’ll be able to trade and sell those assets to other users. As the developer who created these assets, you’ll be able to charge users royalties on the movement of NFTs across marketplaces. 

Blockchain technology provides a whole new form of monetization for developers: royalties. 

Royalties will also lengthen the LTV of your games and their attached assets. While Web2 in-app purchases are essentially one-and-done sales, Web3 royalty fees are charged per transaction. For every NFT trade or sale there is a royalty attached, creating a new way for you to monetize your users across the lifespan of your titles, making those titles generate more revenue and for longer. 

Value #3: Increase efficiency and retention with user-generated content

Though user-generated content already exists within Web2, users cannot truly own, build, or trade their created content. Blockchain technology allows them to fully own and customize the assets they create. This has multiple benefits for developers.

First is the efficiency it adds to development time since the in-game assets can functionally be crowd-sourced. One of the most time-consuming elements of game development is ideating and building game-assets. Each asset must be designed, built, and implemented before it can be used to fill the game world. True ownership allows users to fully customize and personalize their assets according to their taste. Through users’ ability to customize and personalize assets within a game, game worlds can be partly or completely filled with the ideas of their users. This user-generated content provides a tremendous boost to game development efficiency for you - users can take on the lionshare of building assets, allowing them to build the world they want, while you can focus on the rest of your game. 

Second is the way you user generated content to aid in user retention. A compelling way to prevent user churn is by fostering connection between your users and your game - users are less likely to leave a game’s world if they feel they have an emotional connection to it. Through customization and personalization tools, users have a hand in creating the game world they occupy. This gives your users a reason to see themselves within the game and be a part of the world they helped create. User ownership only makes this bond stronger. Not only will users see themselves within the game, but they will also own a piece of that game’s world. 

Value #4: Improve user acquisition through interoperability and openness

The openness inherent to the technology creates new user acquisition opportunities thanks to interoperability. Interoperable assets allow users and you to move both user-generated and developer-created assets from one on-chain game to another. This allows you leverage the assets that exist within another blockchain game to generate interest on their own - essentially aiding in user acquisition.

This allows you to entice users from another game to play yours with the assets they already own.

The most rudimentary example of this is a one-for-one placement of the asset that the user owns from one game into your own. If a user owns a particular NFT within their wallet, let’s say a weapon within an RPG, you can have it that users can access and use that same weapon within your game. This allows you to entice users from another game to play yours with the assets they have already acquired, offering a new gameplay experience with the game-assets users already own. 

However, the process of implementing one-for-one placement isn’t so straightforward. It requires careful integration of movement, visuals, and attributes from one game to another. Thankfully, there are also more transformative methods to leverage these user-owned assets. 

Without needing to directly integrate the game-asset, you can create in-game benefits for users who hold a specific NFT in their wallets. You can grant access to users who hold certain NFTs to exclusive areas and supply them with unique benefits, both in-game and in real life. These tools offer you a unique way to acquire new users and share your already acquired user-base across multiple titles.

Blockchain technology offers developers empowerment and value:

The blockchain offers a variety of value to developers that they would not otherwise be able to access. By its decentralized nature, the blockchain offers opportunities for monetization, growth and creativity that don’t exist within the Web2 marketplace - where Web2 is closed and locked-in, the blockchain is open and decentralized. 

Though the story of Web3 and blockchain integration is only just beginning, its value to developers and users alike is already evident. Implementation of the blockchain within mobile games will allow developers to reach new avenues while bolstering their already existing systems. What’s more, the blockchain allows users to share in the value generated by this implementation and in so doing creates a stronger bond between user and developer - and a better bond means better games and a better market.

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