The traditional gaming industry is facing multiple crises at once. Web3 meanwhile could be an answer to many of its problems, creating ample opportunity not only for web3-native startups, but also major gaming studios.
The blockchain gaming sector grew by 33% in Q4. Trade volume tripled in the short span of six months. Meanwhile, traditional gaming is facing a crisis. Mobile gaming revenue fell for the second straight year. China unveiled draft rules at the end of 2023 to curb rewards in video games, leading to a massive market sell off and trepidation about the future of an entire space.
With so much chaos in the gaming industry, it could be time for video game studios to shift to web3 models.
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The State of The Gaming Industry
The carnage was widespread. Game companies laid off thousands of workers in 2023. For instance, game engine maker Unity Technologies laid 300 people off while Microsoft cut 1,900 people. Still more major studios axed jobs across the board, leading to talk of unionizing in the tech industry: Epic Games, Ascendant Studios, Electronic Arts, Volition, Amazon’s games division, and more. There have been allegations of toxic workplace cultures levied as well in the industry.
A slowdown in growth was bound to happen, especially as executives incentivized short-term profit over patient growth. At the same time, the gaming industry has been facing escalating costs for some time now. High-definition graphics, intricate storylines, and complex mechanics demand a level of investment that is much higher than what was required a decade ago. And the surge in development costs is not only affecting the large studios, but also indie developers. It’s not pretty.
Fluctuating consumer spending habits have made it difficult to forecast returns on game investments, leading to slashed budgets and even project cancellations. Consumers have been overwhelmed by choice in the gaming industry and become indifferent, as developers and publishers put out hundreds of games per month.
Consumers simply can’t navigate the digital tidal wave of new games. The excitement that accompanied new releases in past decades has waned. The deluge of content with which consumers are faced has not inspired engagement. These issues are further compounded by shifting consumer expectations and the rapid evolution of digital technologies.
Gaming Industry Has Fallen Behind Consumer Trends
Gamers want immersive and interactive experiences. The types of things web3 delivers. That includes increased user agency, ownership of digital assets like NFTs in the games, as well as novel forms of player interaction and monetization. Web3’s transparent revenue-sharing models also appeal to modern consumers.
These things aren’t found in traditional gaming. They’re found only in web3 gaming. Alongside virtual reality, blockchain is setting new standards for the gaming industry.
Web3: The Cure For The Gaming Industry’s Problems?
Web3 represents a paradigm shift towards a decentralized and player-centric gaming world. It could be the beginning of a more equitable gaming ecosystem, as well, while also creating new revenue streams and business models that could change gaming forever.
At this point, it would be a strategic move towards long-term viability for many gaming companies, and perhaps the industry as a whole, to move towards blockchain. Web3 right now, at this very moment, has the opportunity to revive the gaming industry and get it over the current hump and safeguard its status as a major industry.
In a (potentially less toxic) web3-based gaming world, players can participate in true online economics, earn digital assets, create an identity and control that identity, earn passive income and more. Those companies which adopt web3 features will earn a competitive edge over others in the industry. Blockchain can improve games, give players a better experience, and create actual ecosystems where players have agency.
Web3 developers must work towards lowering entry barriers, hiring top-tier talent and creating inclusive workplace environments, and continuously creating innovative experiences. But, web3 is a technology that can help the gaming industry continue to mature as it faces decreased demand, falling profits, and regulatory pressure worldwide.
Who knows? 2024 could be the year blockchain gaming onboards millions of users to web3.
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