NFTs, although very prominent even in mainstream settings now, have been around for several years. Only their rise in popularity has made them more viable in different settings and for different use cases, especially in the gaming sector.
NFTs are well suited to use in the gaming world, especially a gaming world that is evolving and becoming more of a Web3 experience. Just as NFTs have been around for a while, in-game assets have been important aspects of some of the biggest gaming titles. Fortnite and CS:GO, both their skins and weapon camos, are two key examples of this.
But, when there is a melding of NFTs and in-game assets, the real value of blockchain assets can be seen in the gaming sector. Issues around in-game assets have plagued gamers for years, and a breaking point is being reached. NFTs, though blockchain technology, can solve many concerns — such as genuine ownership, decentralisation and hacking and theft of items.
NFTs can also add extra benefits for gamers, studios and developers, allowing them to break the traditional barriers of Web2 gaming and move into a new era. Not only that, NFTs can be used to create new revenue streams and actively promote deeper engagement of the game or even interoperability with other gaming platforms.
NFTs and in-game assets
In the last 2 years, NFTs became quite the buzzword as celebrities and both crypto natives and newcomers looked to snap up verifiable, unique, blockchain-based pieces of digital art. Records were broken when digital artist Beeple sold an NFT for $69 million at Christie’s auction house.
NFTs are simply a type of blockchain token that have the property of being non-fungible, meaning one token is not interchangeable for another — making them ideal for digital art and in-game assets.
The NFT market is expected to register an incremental growth of $147.24 billion between 2021 and 2026, according to a report by Technavio. But, this growth is still predicated on the increasing demand for digital artwork.
NFTs work well as a medium for digital art as they have several key properties:
- They can be programmed to be as unique as necessary
- They cannot be forged
- They cannot be stolen off the blockchain
- They are finding more use cases (with the growth of the Metaverse, for example)
These factors also lend NFTs to being ideally suited for another role — in-game assets. Gaming is already a huge market and an ever-growing sector, but in 2020, the global online microtransaction market is estimated to be approximately $33.4 billion. Games like League of Legends ($1.75B in annual revenue) and Fortnite ($5.1B in annual revenue) earn most of their revenue through microtransactions.
So, by melding together NFTs and in-game assets – the key areas of digital ownership and decentralisation are significantly improved that could help bring even more players into the valuable space that is in-game assets.
The need for a Web3 evolution
The in-game asset space is hugely important and lucrative for developers and studios. As stated above, many free games make the majority of their revenue off in-game assets. However, the issue is these studios’ total control over the assets.
Gamers and internet users are starting to shift their mindset to one that is more Web3-based. Notions of centralisation and control are being pushed out by desires for decentralisation and personal ownership.
There is a rise in the notion of making the gaming industry player-driven rather than controlled by mainstream gaming companies that may have become greedy and have failed to prioritise the experience and well-being of the players over profits.
Player-driven gaming is a very Web3-minded way of changing the gaming industry and will allow players to own and control the assets and content within their games. Players should also have governance rights that will allow them to control the decisions made amongst the team, which means that the destiny of certain franchises will be placed into the hands of the community.
But before this entire revolution begins, there is a quick fix that can make gamers far more comfortable with their in-game purchases — NFTs. NFTs for use as in-game assets promote true digital item ownership.
If skins, weapon camos, and other game items can be backed by NFTs, then there is an instant opportunity for gamers to be owners of those items truly — and not have the threat of them being stolen, lost or duplicated if using an unsecure, centralised platform.
More than that, it also secures these items in the user’s hands, rather than tying what can be thousands of dollars worth of digital assets at one point of failure.
Recently, there was news of a hacker that made away with $6 million in CS:GO skins from a skin trading website called CS.MONEY. While this is not a failure of the gaming platform, it highlights the value of these assets and the fact that they are at the hands of other platforms rather than secured by the individual, as would be the case in an NFT.
Adding value with NFTs
When it comes to utilising NFTs for in-game assets, not only are many of the core issues with these assets solved, other added benefits can propel gaming into Web3.
Firstly, placing in-game assets onto the blockchain gives these items advantages like decentralisation, verifiability, transparency and authenticity. NFTs are perfectly suited to be in-game assets, enabling true digital ownership.
If a weapon skin is an NFT, it is available on the gaming platform — and perhaps across other platforms depending on interoperability — but it resides with the user. If there is a breach or a hack, or even if the gaming platform decides to try and take that weapon skin away, they will be unsuccessful.
Digital ownership like this protects and promotes the player and maintains the value that they spent in accruing the weapon skin will never be wasted. That asset will always be in their control.
More than that, NFTs for in-game assets can be protected from cyber attacks, thanks to blockchain’s decentralisation which leads to cryptographic security and traceability, which allows the assets to be verified and authenticated.
Finally, and importantly for gamer developers, making in-game assets NFTs allows for them to be taken off the gaming platform and listed on NFT marketplaces to trade or sell (outside of the gaming ecosystem). This increase’s their intrinsic value and can become another revenue stream for studios.
NFTs are reaching a stage now where their functionality can go beyond digital artwork. But, through their explosion as a medium for rare digital art, other applications can be seen. The opportunities afforded by NFTs to gaming studios and developers are immense. Not only are gamers given what they desire in a move towards Web3 ideals like ownership, but there are incentives to create secondary NFT marketplaces for additional revenue streams.
Gamers are looking for the current limitations of Web2 games to be solved, and blockchain can offer a lot in making games more suited to the growing desire. This move towards player-driven gaming will take some time, but implementing NFTs for in-game assets has huge potential to kick things off.
Not only are gamers looking for this, but game studios and developers should be seeking this out as there are ample opportunities for them to appeal to their users and to earn added benefits like a new revenue stream from NFT marketplaces.
Book a free consultation with our Web3 experts to explore how NFTs can unlock new opportunities for your game, studio or community.