The global blockchain gaming market is estimated to grow 70.3 per cent (CAGR) in the next five years, according to a report by MarketsAndMarkets. The 155-page report suggested that by 2027, this industry is likely to be valued at USD 65.7 billion as opposed to USD 4.6 billion in 2022. While the outlook is positive, the growth of blockchain gaming may be hindered by one major factor: a lack of awareness among the masses.
Still, if all goes well, a 70 per cent CAGR is not a bad forecast for firms involved in blockchain gaming. Experts have identified four trends that may drive industry growth. Here’s a look at those trends:
1. The transition from ‘traditional’ to ‘new-age’
A unique yet restrictive feature of traditional games is that they are highly centralised, i.e., the characters, rewards, weapons or even coding used to develop that game cannot be used elsewhere. Blockchain, however, promises to change that. This technology will allow users to acquire and use their rewards elsewhere. It enables professional gamers to earn real-life rewards.
A fancy term for this is ‘Play-to-Earn’ or P2E. Thus, blockchain-based P2E games are likely to drive market growth, enabling users to earn and own rewards.
“Blockchain gaming can become a ground-breaking, innovative, and entertaining platform for developing and storing in-game assets. It has changed gaming laws by reimagining it as a viable industry with various prospects due to its powerful data encryption technology”, reiterated Rohit Bansal, founder of the fantasy gaming application Super4.
In terms of earnings, Ramkumar Subramaniam, CEO and Co-founder of NFT marketplace GuardianLink, explained, “It is not just about P2E gaming where people can play games and earn money but also about passive income opportunities, like gaming metaverse investments, fractional tokenised ownership, and even digital infrastructure investments.”
“Blockchain gaming is all set to open a new avenue for passive revenue. This could become one of the most lucrative spaces to invest in the blockchain space as crypto might not be at its best right now,” Subramaniam stated.
The collaboration of gaming, blockchain and generative artificial intelligence can also be a potential game changer this year, believe experts.
Generative AI describes algorithms, such as the brand-new ChatGPT, that can be used to create new content, including audio, code, images, text, simulations, and videos.
“We’re going to see newer models and use cases emerge in the coming year. Gaming, blockchain and generative AI have the potential to blow so much wide open. It’s becoming increasingly clear that the next wave of wealth and value creation will come from a financial world that is programmable end-to-end. India could be at the centre of this next wave and boost its economy to strengthen its position on the world stage,” said Kavin Bharti Mittal, founder and CEO of Hike software.
2. Blockchain gaming dissociating from crypto
2022 was not a good year for cryptocurrency and virtual digital assets (VDAs). Rising inflation, stricter monetary policies, and geopolitical tensions impacted the crypto market along with other assets. Worse, the FTX scandal brought scepticism and doubt among investors, resulting in legitimacy concerns.
In the Indian context, the central government imposed a 30 per cent tax on VDAs. Since crypto was put under the VDA ambit, heavy taxes were levied on investor earnings. Such taxes, restrictions, or regulatory bans on VDAs can potentially break the linkage between blockchain gaming and cryptocurrency.
However, industry experts predict blockchain gaming will gradually disassociate itself from crypto.
According to Subramaniam, “As much as the year 2022 was promising and lucrative for gaming, it might not have been so for cryptocurrency. There was a time when blockchain gaming and crypto were intertwined with each other. However, in 2023, you can expect this forced union of crypto and gaming to break. Blockchain gaming might not always mean crypto gaming.”
3. A surge in unique active wallets (UAW)
In the blockchain universe, a platform called DappRadar exists, which provides users access to a wide range of blockchain-based platforms (in other words, dApps). DappRadar also tracks the number of UAWs or wallets on each dApp. So, how is this a trend for blockchain-based gaming?
According to DappRadar, Q2FY23 saw 8 per cent month-on-month growth in usage of UAWs in blockchain gaming, leading to the creation of 912,000 accounts.
Correlating these figures with the future, the MarketsAndMarkets report suggested that a surge in UAW interactions can create more opportunities for blockchain gaming to expand.
4. Overcoming Ethereum (ETH) dependency
Ethereum dominates the blockchain gaming industry - a fact that even non-active blockchain gamers know. In fact, it enjoyed the largest market share in 2022 for two specific reasons - - reduces security concerns - ensures that client data is safe without any leaks.
Popular games such as Axie Infinity, Gods Unchained, Decentraland, etc use the ETH blockchain platform. But the situation is expected to change in 2023. Experts predict the dependency on Ethereum will reduce, to the benefit of other platforms such as Solana, Polygon, and BNB Chain. Why? Because the public has easy access to the Ethereum blockchain. And even though it promises security, there is always the threat of a breach. The blockchain is also vulnerable to attacks by miners, the MarketsandMarkets report suggests.
The last word…
“The blockchain gaming industry is expected to experience significant growth in the coming quarters of 2023,” predicts Vikram R. Singh, Founder, and CEO of blockchain development firm Antier. “This trend is likely to continue as more games reach alpha and beta stages, providing new opportunities for game designers to create engaging and immersive gaming experiences using blockchain technology.” Blockchain can enable the creation of complex in-game economies and allow players to trade unique assets, he added.
Indeed, blockchain gaming has the potential to become the “new normal” in the gaming universe. However, the industry still has a lot of challenges to overcome, including a “lack of awareness” and “security concerns”.
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