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Play-to-Earn games where participants convert digital credits into real-world money are gaining in popularity and are the gaming industry’s next big thing. Blockchain-based technology is upending the gaming industry. Until recently, regular games didn’t offer monetary compensation to gamers. Instead, proceeds flowed to game platforms.
These new types of play-to-earn games are an early iteration of what many see as the promise of Web3,» Alexander Braun, an executive director at Capco responsible for digital strategy and innovation.
In the early web, referred to as web1, users consumed content in a way best described as read-only.
Technological advances gave way to Web2, giving users read-write access, and enabling them to load content onto platforms such as YouTube and Facebook. These platforms went on to monetize the shared content.
Introducing non-fungible tokens (NFTs) allows players to earn and own digital assets, which they can convert into money and use outside the game. This decentralization of economic ownership is a key component of Web3.
In this sense, these games have become virtual economies. The hype around NFTs and the metaverse are closely connected to this development, Braun says.
The global video gaming market is estimated to reach $268 billion by 2025. This sum should be setting off alarm bells at banks.
The NFTs earned in such games are manifold and include virtual characters, decorative items, and pieces of land, which players can earn and transfer into real-world money.
Microsoft’s $70 billion planned acquisition of game developer Activision Blizzard last month, and Walmart’s filing of patents last year related to creating and selling virtual goods show the importance businesses are assigning to games and the metaverse.
Some go as far as to say the paradigm shift in gaming could serve as a blueprint for the start of a new economy, based on a self-governing financial system. One in which the way people interact with traditional financial institutions and with governments will fundamentally change.
This expectation is certainly the driving force behind the billions of dollars invested in blockchain-related projects, Braun says.
Banks can enter the trend in different ways beyond the short-term gain of improving efficiencies and streamlining outdated processes. It is also a massive opportunity for them to generate new business, Braun says.
Yet the discussion is currently dominated by the banks’ fear their role as an intermediary will be made redundant by blockchain technology, he adds.
However, if banks learn the costly lessons from the software industry, which was afraid of being disintermediated by open-source-software in the late 1990’s, initially fighting it and almost going extinct in the process, only to later embrace it becoming all the more profitable as a result, they will have an important and very prosperous role to play in the future, Braun says.
Or is the real question: will gamers become bankers before bankers become gamers?
