I’ve been exploring blockchain opportunities and which blockchain startups might make sense to found today. One of the sectors I’m intrigued by is gaming, partly because I love playing and making games and partly because gamers are early adopters. This post will look at some of the ways blockchain is already being used by game companies and some way it might be used in the future.
I’ll break it down by use case:
- Virtual Goods
- Gameplay on the Blockchain
- Pay for Computation
- Pay for Service
The earliest experiments on the blockchain were currencies, like Bitcoin. I’ll break game related currencies into three categories: in-game currency, play tokens, and developer compensation.
Games have long had types of in-game currency that players can earn through actives and spend on upgrades; sometimes this takes the form of ‘gold’ or experience points.
In the late 2000’s social games (think Zynga) made a lot of money allowed players to spend real world money on in-game currency. Typically these games are free to play but there is heavy pressure to buy in-game currency to speed up the boring parts or gain a competitive edge. This is often derided as ‘pay-to-win’ and can incentivize companies to make games that aren’t fun but prey on weaknesses in human psychology.
It’s easy to replicate in game currencies on the blockchain but I don’t see why a game with blockchain currency would have an advantage over a non-blockchain game.
In the heyday of electronic games, most people played at arcades where they bought play sessions by putting tokens or quarters into an arcade machine. This style of pay-per-play could easily translate to the blockchain but, as with virtual currency, it’s unclear if there’s a strong reason for why it would be better than a pay-per-play game off of the blockchain.
Furthermore, it’s unclear if gamers are interested in returning to a pay-per-play model after growing accustomed to buying games outright and having unlimited play sessions.
Blockchains could have an advantage when it comes to new publishing and distribution models. Over the past many years digital platforms like Steam have disintermediated traditional publisher and distributer channels and this process continues with platforms like itch.io that don’t take any commission. While the supply chain has changed, the revenue models are largely in two categories: buy up front or micro-transactions (like the pay-to-win discussed above).
Blockchains might be able to enable news forms of compensation, like having gamers pay based on time spent in game. Platforms like Flattr have tried this on the web and it might work for gamers, too.
There are a few different models that might work. There is Netflix or Spotify approach where gamers pay a subscription and then revenue is shared among developers based on play time. There could also be a donation based approach where players set how much they want to spend on games and that gets divide on a pro-rata basis. Another option builds on the previously discussed idea of tokens, where several developers choose to accept the same token.
Of all the currency related blockchain opportunities, this approach might make the most sense. Gamers are already used to virtual currencies but this models could be implemented without the player having to consciously deal with the blockchain. Instead, the system could be used only to track play time transparently and ensure developers get paid fairly. This might be especially advantageous if developers are comfortable trusting a third party to run the system. (e.g. https://mobilego.io/)
Virtual Goods refer to digital items that players can hold, use, and trade. There’s already a big market for virtual goods that range from purely decorative (like in Team Fortress where players spend tens of millions of dollars on digital hats and accessories) to the function (spaceships and EVE might be worth $5000).
Putting these virtual goods on the blockchain means that trade can happen between peers, outside of a centralized market controlled by the developer. If the goods are built by one for their one specific game, it’s unclear why this is advantageous over doing it off blockchain.
Virtual Goods on the blockchain becomes more interesting in a few cases. If goods are meant to be used among different games or environments, then having it stored in a trusted, decentralized way might be preferable than having just one company control the information.
Virtual Goods on the blockchain also might make sense if the items are designed by independent designers who want to track sales and make sure they receive proper royalties; this is a similar to what the music industry is considering implementing.
While it can line up with several of the above use cases, collectible trading card games (like Magic: the Gathering are especially aligned with scenario and there are experiments along these lines (see http://www.blockchainga.me/, http://ownage.io/)
Gameplay on the Blockchain
The above examples have used the blockchain for elements related to a game but not for the actual game play. There are a few scenarios where it might make sense for the actual gameplay to take place on the blockchain.
Games of Luck
There are several reasons why games of luck (blackjack, roulette, etc) might make sense on a blockchain. Because the computation of the results is transparent, the casino couldn’t cheat the player. Furthermore, there could be games with less unfavorable player odds because the casino would have less overhead with everything being automated.
Games of Skill
The same benefits apply to skill based gambling: trust and low fees. Casinos are already experimenting with skill based gambling, there are big prize tournaments for some video games, and there are experiments for other gaming competitions that involve cash prizes. (e.g. Kickback.com)
Loosely related to games of skill are wagers the folks might make amongst themselves. Blockchains can make it easy to define a given bet as well as the judges who can decide who won. The trust and escrow components of the blockchain might make a better option than doing it offline but it’s unclear if there is a big business opportunity.
Skill Tracking ELO
The blockchain might be a good option for managing official rankings in games or sports. It’s decentralized nature allows players to compete against each other away from the blockchain (or on it) and then record the outcome on the blockchain. There could be automatic and, with the addition of a referee, trusted rankings much like ELO rating for chess. The decentralized and trusted abilities of the blockchain might make this a good candidate but, again, it’s unclear if there is a substantial business opportunity here.
Pay for Computation
A blockchain use that goes beyond games is pay for computation – earning cryptocurrency by having your computer performing operations. There might be a few interesting applications related to games.
There could be a decentralized alternative to the old OnLive, where folks with powerful gaming rigs could have other players use them via remote control over the internet. I’m not sure if this would be more compelling than having it centralized with one company and my guess is that there might be legal issues with renting out one’s copy of a game.
Another option could be paying for players to simulate or store parts of a very complex world in a distributed manner. I can’t think of a specific features which would merit using this decentralized approach but perhaps it could pave the way for an indie MMO with relatively low server costs; that said, I don’t think server costs are the main barrier to an indie MMO.
Pay for Labor
Another bucked of uses would be using the blockchain to compensate folks for work. There are a few ways this might work:
- Paying someone to GM / facilitate an RPG or custom adventure
- A game studio paying actors to take over NPCs to create content for other players
- Players paying someone else to level up their character for them
The former two options don’t seem to have a strong advantage for happening on the blockchain. The third one might because it could take place in a low trust environment where the contract automatically executes when it sees the character has reached a certain level.
As with all blockchain startups, there needs to be a compelling advantage gained by using the blockchain. While this isn’t true for many of the use cases I’ve mentioned, there are a few that might make sense today.
Did I miss anything major? Disagree with anything? I’d love to hear!