NFT Gaming is The Key to Wider Token Adoption in 2022 by@jeremyfoo

NFT Gaming is The Key to Wider Token Adoption in 2022

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Non-fungible tokens (NFTs) gained momentum in art, music, and even collectibles last year. But despite the great strides and profits of almost $25 billion in 2021, NFTs failed to make a stronger mark. Gaming, the perfect ground for experimentation, could bring many benefits to other industries. Gamers are very much used to digital ownership already, and gaming is the perfect place for experimentation. Gaming is a tech-savvy audience and ripe opportunities for monetization.
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Jeremy Foo

Founder of TripCandy, an accommodations booking platform that brings cashback rewards in the form of blockchain tokens.

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Last year, non-fungible tokens (NFTs) gained promising momentum in the world of art, music, and even collectibles. But despite the great strides and profits of almost $25 billion in 2021, NFTs failed to make a stronger mark. You might have seen someone change their Twitter profile picture to a Bored Ape or read an article about the future of the metaverse, but at the end of the day, that’s probably about it.

While widespread adoption is yet to come, there’s a particular space where progress has been happening in leaps and bounds – gaming. The reason for that is simple: NFTs are the epitomes of digital ownership, and there is a wide array of digital objects to own in games – and extract value from that. 

With a tech-savvy audience and ripe opportunities for monetization, the adoption of blockchain technologies in gaming could bring many benefits and also be replicated to other industries.

The interest is certainly there: A Morning Consult survey that inspected the level of interest in NFTs across demographics found that eSport fans were the most receptive (58% showed interest). Gamers ranked third, showing interest in NFTs in 37% of cases.

For now, it’s mostly the indie gaming studios that have led the way, but even the gaming giants aren’t shying away from NFTs. While Ubisoft’s NFT venture hasn’t exactly struck the right note, studios across the board are showing signs of grandiose plans in the works.

For example, Microsoft has recently announced plans to acquire Activision Blizzard (the behemoth behind World of Warcraft and Starcraft, among others) for $68.7 billion. The purpose? To help drive the development of the metaverse – and it’s only logical to assume NFTs will be a huge part of that.

Similarly, Andrew Wilson, EA’s CEO, highlighted the importance of new experiences through NFTs in gaming.

“I think that in the context of the games we create and the live services that we offer, collectible digital content is going to play a meaningful part in our future,”

he said, hinting at the immense potential.

“So, it's still early to tell, but I think we're in a really good position, and we should expect us to kind of think more innovatively and creatively about that on a go-forward basis."

So, why exactly is the future bright for NFTs in the gaming industry, and how will the development help advocate for broader token adoption beyond digital entertainment?

Gaming, the perfect ground for experimentation

Ironically, art NFTs aren’t exactly visual. You may be able to admire what you see, but not many people understand how to appreciate having ownership of it – making it particularly challenging to convince them to adopt NFTs as just another form of blockchain. Raise your hand if you’ve ever heard,

“Why would I buy a JPEG if I can right-click save as an image?” 

But in gaming, the utility of NFTs – meaning the direct benefits of ownerships – is virtually in front of you everywhere you go. For other industries, inventing utilities for digital goods can be a little more laborious than in gaming, where it comes fairly naturally.

Whether it’s dressing up your character, decorating your metaverse property, or getting the tickets to the next metaverse concert, being a direct part of the world inspires gamers to make their experience there even better.

And what’s more, gamers are very much used to digital ownership already. From Steam games and skins for League of Legends champions to weapons in Call of Duty, they have been spending money on in-game products for years.

So, since we have already seen massive adoption and proliferation of gaming economies, it’s only a question of time when these transactions take place on the blockchain instead.

This is exactly where NFTs come into play, establishing themselves as a vital part of the everyday gaming experience. The level of education among gamers (not to mention the sector being traditionally dynamic) makes gaming the perfect breeding ground for adoption via curiosity rather than force. Gaming experiences that leverage the savviness of their audiences towards blockchain and NFTs are most likely to win broader segments over, too.

Gaming already enjoys a demographic more inclined to purchase crypto. Added to that, 94% of today’s crypto buyers are Gen Z and millennials – and this is similar to NFTs (despite Gen Xs outspending the other segments in high-profile art sales).

This means that when presented with new in-game NFT opportunities, these audiences might be more receptive than any other demographics out there.

Where blockchain flows, money goes

Traditional gaming formats leverage play-to-win, pay-to-play, or free-to-play models. From the gamers’ perspective, the problem is that all the purchase items and upgrades tend to be limited to the environment of that game only, offering no real economic utility or return.

For example, you could have bought all the skins you wanted in League of Legends, but if Riot Games declared bankruptcy, canceled the game, or you simply chose not to play anymore, you lost all the value invested.

But considering that in 2020, global gaming audiences spent some $54 billion on additional in-game content, blockchain innovations – and NFTs more specifically – change the game. With digital ownership recorded on the blockchain forever, gamers can suddenly become the real owners of digital assets (rather than merely “buying access” to them within a particular game).

This way, gaming becomes an investment, with NFTs providing tangible value to their owners, as well as a promise of financial returns for the resources they invest in those assets.

To extract more value from their NFTs in the future, gamers themselves become advocates for the tokens. Basically, it’s in their interest to get others on board. And if they stop playing the game, want to upgrade, or don’t see value in their asset anymore?

They can simply sell it in the secondary market – closing the cycle by giving a share of the profits to the gaming producers again, depending on the terms of an underlying smart contract.

The redefining of value within gaming is why we have also seen the steep rise of play-to-earn models. By participating in a game, players can earn NFTs – something extremely popular in countries like the Philippines, Venezuela, or Vietnam, where the earnings can easily surmount the minimum daily income. 

In this respect, Axie Infinity has earned particular attention. It has developed its own native crypto coin as well as NFTs that encourage players to participate to earn more – advancing an entire financial ecosystem that could be easily transferred to other spaces.

For example, imagine an NFT-powered media setup where readers can earn tokens for their activities on the platform and trade rare NFT collectibles, such as famous photographs produced by the organization.

More utility, more value

The widespread skepticism about NFTs comes from their superficiality. But the gaming industry is one that has been going way beyond flexing NFT wallets or PFP (profile picture) value on Twitter – and we can expect more advancements in utility shortly.

From exclusive perks, discounts, or early drops to actual access to invite-only digital (or even in-person) events, NFT owners can enjoy emerging utilities in the digital world. Everybody still remembers Travis Scott’s metaverse concert – next time, such an event could be exclusive – with NFTs serving as the tickets. In the collectibles space, this is something that Gary Vaynerchuck has mastered, launching his Vee Friends collection and allowing the holders of those NFTs to attend exclusive events, access mentorship, or even have dinner with Gary Vee himself.

For many NFT-based games, utility is the next competitive battleground. Some latest examples include Niftyville, open-world style gameplay where you can explore the town, go shopping, or even start a business that gives you an opportunity to earn passive income.

Also, the game is bringing some VIP NFT drops with real-life value, including a whitelist for exotic car NFTs. Guess what? The rarest one minted will receive an actual Lamborghini – in real life.

Obviously, the industry still has a long way to go regarding interoperability. The blockchain industry is moving towards an ecosystem where gamers can utilize their items, be it avatars, skins, or wearables, in diverse digital environments – and not necessarily in that one game where they originally purchased them.

For progress to happen faster, a few things need to change. For example, the Solana network is pushing the space with its lightning-fast transaction speed and low costs to compete with Ethereum-based NFT projects that are still marked by high gas fees. What may become a trend in gaming will help push for better minting conditions in other areas too.

As an industry, gaming is a behemoth with the power to change behaviors and trends that start a shockwave across industries and locations. While the implementation of gaming NFTs is still in its infancy, it won’t be long before retailers, event organizers, and companies start giving out NFT membership to provide exclusive treatment to the holders. And even that will only be the beginning.

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