-- Danny Pantuso, Venture Investor, Decasonic
Real Player Ownership Already Exists & Is Commercially Viable in Gaming
The blockchain didn’t invent player ownership in gaming, but it is going to unlock its full potential. ****In fact, full player ownership of in-game assets has been around for quite some time. Remember taking care of your 5 puffles, and selling Pirate skins to friends in Club Penguin? Or was that just me…
Existing games from MMO’s (Club Penguin) to MMORPG’s (Runescape and World of Warcraft) to FPS (CSGO) have proven out the model for player ownership for a variety of different genres. Not only is the roadmap proven, it’s been highly profitable.
Take CSGO for instance, which has grown to become the most successful FPS title of all time (even today) with over 50 million copies sold to date. In 2020 alone, CS:GO generated $257 million in revenue in 2020, nearly all of which came from primary and secondary sales of in-game assets for the in-game marketplace.
In fact, CSGO was so successful that Valve launched the Steam marketplace in order to support it, which latter grew into the #1 PC distribution platform today.
Player ownership has also been lucrative for players. Take a look at the graph below, charting the price of a loot box all the way from its release in 2014 to today. The price has risen from its original sale value of $.83 to a market price today of $16k. That's a net return of +1,927,610%.
The blockchain is a logical iteration of technology for incorporating in-game assets
The beauty of the blockchain in gaming is that it enables true player ownership, decentralized and transparent marketplaces, and greater control over the value and direction of the gaming ecosystem. ****This is a significant improvement over the traditional gaming industry model, where players typically have limited rights to the virtual items they purchase or earn in-game. With blockchain technology, players can own and control their assets in a way that is secure and tamper-proof, and they can freely buy, sell, or trade them with other players without the need for intermediaries or middlemen. It’s almost as if it was purpose built for this use case.
Moreover, the blockchain's decentralized nature ensures that there is no central authority or company controlling the marketplace, which means that players have more control over the value of their assets. They can even create their own content and sell it to other players, thus contributing to the growth and vibrancy of the gaming community as a whole. In short, it’s the perfect technology for capitalizing on what’s already made so many games so highly successful.
While it can be tempting to incorporate utility into in-game assets, it’s a pitfall, especially for web3 gaming.
The temptation to create assets with game utility is so powerful that an entirely new genre of ‘Play2Earn’ games have sprung up that lean into the acquisition of these items as the primary goal or driving force behind the game. It’s corruptive and unsustainable. This is the darkside of web3 gaming. Any type of in-game utility for purchase quickly leads to game design akin to Axie Infinity speculation loops and not mainstream adoption.
So far, no one has figured out how to do Play2Earn sustainably, and I don’t think it’s possible.
As a result it seems everyone in web3 gaming is throwing stuff at the wall to see what sticks, but there’s no need to reinvent the wheel here. The more logical approach is to stick to cosmetic in-game assets to monetize, the tried and true workhorse of game monetization.
Why do cosmetic items have value to gamers?
Cosmetic items in games have value to gamers because they represent a form of digital social status. On Discord, I’d call it gamer cred. It’s a sign of status, and proof of work, and authenticity. It’s also simply fun to express and differentiate yourself from the rest of the unwashed masses online. The ability to create a unique identity with a layer of appealing or entertaining emotes, adds an extra layer of fun or enjoyment to the gaming experience.
How is that value realized?
Profile pages: Many games allow players to create a profile that displays their in-game achievements and items, including digital collectibles. This provides a space to showcase everything a player has collected in a trophy-like collection.
In-game visibility: In some games, players can display their digital collectibles directly on their avatars or characters, allowing other players to see and admire them in real-time during gameplay.
Group formation: In multiplayer games, players can join groups or guilds with other players who share similar interests or goals. These groups often have their own forums, chat rooms, or other social features where members can show off their digital collectibles and compete for status within the group.
Marketplaces: Your in-game marketplace is the space for players to display their items for sale or trade, making it a showcase for the most valuable and rarest digital collectibles.
Tying it all together
The concept of player ownership of in-game assets has been around for a while and has been proven to be highly profitable for both players and game developers. The Web3 gaming industry need only apply blockchain to the models that already work, in order to achieve full unicorn potential. Stick to cosmetic items to monetize and capitalize on their value as a form of digital social status. On the other hand, it should avoid at all costs the temptation for unsustainable game design and speculation loops seen in Play2Earn games.
About the Author:
Danny is a Venture Investor at Decasonic - a we3 native venture fund out of Chicago. He spearheads investments in his thesis in web3 gaming, AR/VR, and applications where web3 meets AI. With a technical background from Stanford University, Danny studied game design at the D.School and comes into the industry from the lens of a Twitch streamer, game designer, player, and now investor.
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