Today, the relationship between game creators and consumers happens largely through highly centralised, inefficient platforms that take up to 100% of the value from the game, making it inaccessible to both creators and players. The device-operating system-distribution oligopoly is a thick layer that players and developers have learnt to live with.
Mobile platforms are the largest and fastest growing segment in gaming in terms of consumer spend (both time and money). Developers are forced to pay 30% of all transactions to platform operators and suffer due to suboptimal game discovery flows which means they must utilise their own, and third party platforms to advertise, costing between 60-70% of their revenue. On average, developers are left with less than 10% of proceeds. Player ownership either improves this funnel dramatically or provides a new funnel with lots more room for value to accrue with developers and players.
Tools: The introduction of community ownership and financialization of games provides the necessary incentive models to bring together game creators and players. The creation of small communities who can engage directly with creators will support game creation and allow games studios to flourish without a dependency on third parties. Tapping into these models, however, is no small feat for the average studio.
Embracing and mastering the principles of web3 and cryptography come with significant technical, legal and economic questions. Game making for mobile platforms has been made significantly easier over the past decade, but tools for web3 integration are at early stages.
Game & Tokenomics Design: What poses an even more significant challenge for the industry is game design that can balance fun and web3 tactics such as play-to-earn. Whatever the chosen path is, typically this comes with the need to redesign games for web3 audiences, creating a major point of friction for studios who don’t have the financial freedom to take risks which will cost them months.
Community: Finally and most importantly, kickstarting a highly committed and engaged community is an essential component to a successful game. Incentives align networks and dramatically strengthen network effects. There are high barriers to entry for small to medium teams who don’t have the skills in-house to form and grow a lively community. In casual gaming experiences, the issue is more pronounced. Despite being the game genre with the largest aggregate player base, casual games attract players for a few weeks or months at a time which means these types of games, and their makers, will struggle to attract and maintain large communities at an individual level. Relying on community building could be a real issue for investors and players in time as by their temporal nature, you may see them shy away from buying, or holding onto assets which form part of smaller experiences. This is a real barrier for entry for creators of casual games experiences from participating in the new paradigm.
In conclusion, web3 offers a significant opportunity for game creators to break away from the oligopoly and improve the economics of their efforts. However, to participate in this new world, studios will face new challenges around technology, game design and community.
Updated 7 months ago