Most Web3 enthusiasts know that we are in the nascent stage of the development of both the technology and its applications. And in terms of Web3’s involvement in games, there is a fair amount of uncovered potential, particularly in terms of monetization.
First of all, video games in general (including what we might call ‘Web3 games’), monetize primarily at the release phase of a game. However, the mature publishers of the gaming industry monetize through a robust portfolio of titles that perform on a sustained basis for years (see, for example, puzzle games such as King’s Candy Crush, or casual games like Sybo’s Subway Surfers). Players are super loyal to these titles, and companies invest a large amount of money and effort into LiveOps, i.e. providing constant content and features in order to retain their users. All in all, they are securing their revenue in the shape of a long-tail recurring business:
This long tail is always depicted as a slowly declining line, or a plateau stage at best. But Web3 opens up new opportunities at this stage, thanks to the addition of ‘secondary markets’. Secondary markets are platforms that allow the players to trade with their owned assets (remember, Web3 is all ownership). One thing that is not often acknowledged, or widely known, is that the original creator of the assets can apply a commission on the sales of those markets. In this scenario, the long tail wouldn’t necessarily be a flat line — it may even gradually increase over time.
The likely reason that this hasn’t happened yet in the Web3 gaming space is because life spans have been too short for us to really accept that any game is yet entering the long tail stage (at least compared to other games in the non-Web3 space). However, we can easily notice signs of increasing value of the assets, based only on scarcity and rarity, and therefore, a long tail that increases instead of remaining constant or dwindling.
So, is it as simple as saying “add a Web3 element to your game and make more money”? Not quite. There are two features of the secondary market that make it unsustainable:
So, are Web3 games doomed in the long term? Definitely not. There is an approach that solves these issues and the concept is very easy to grasp (although the implementation is harder).
The key problem is that the assets are static, immutable. If we take a deeper look at the reasons stated above, one way to overcome point 1 is by modifying the value of the assets, per point 2. How can we do this?
The technical downside comes when we need this information to be written on-chain. Given that there are no standards for that, someone needs to write this from the ground up. Platforms like Freeverse.io are pioneering this vision and (good news!) it is already working.
The bottom line is that there are solutions that can overcome the declining long tail in games, and theoretically, mirror the figure or make it U-shaped. A new and uncharted revenue source is yet to come!
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