The video game industry has skyrocketed in popularity during the COVID-19 pandemic. Even though Covid restrictions are gradually lowered and people return to offices, they still find a lot of time to play. At the same time, the gaming industry is considered promising for blockchain integration. In particular, gaming tokens and crypto can contribute to this industry. The introduction of tokenization into the gaming sphere can help attract new investors and accelerate its development even more significantly. Below, we will look at the main scenarios for using tokenization in the gaming industry.
What is the problem with investing in the gaming industry right now?
At this stage in the development of the gaming industry, there is a gradual transition from physical carriers like disks to digital games. You can buy them directly from the publisher, and this leads to a dynamic increase in income.
According to the Newzoo 2021 Global Games Market Report, the global games market generated total revenue of $180.3 billion, up 1.4% from 2020. According to forecasts, by the end of 2022, there will be 3.2 billion players in the world, which will lead to market growth of up to $196.8 billion. Part of this growth is due to the fact that the popularity of games on mobile platforms has grown. In 2022, revenue in this segment is estimated at $93.2 billion.
However, despite the industry's income gradually growing, investment in it remains problematic due to the limited number of instruments. In fact, retail investors have little or no access to the market and cannot buy shares of their favorite publishers. Only large investors can buy private equity in game studios and make a profit. Accordingly, a closed investment ecosystem is being created, which is unprofitable for retail investors and limits companies' ability to attract investments.
What opportunities does gaming tokenization open up in the video games industry?
Gaming tokenization can break the vicious circle associated with limited investment opportunities. At this stage, private investors can only receive minor bonuses – for example, an early copy of the game or additional content. A much more effective incentive for private investors would be tokenized capital in the form of security tokens.
Security tokens issued as a result of tokenization can give investors the right to obtain a share in intellectual property and, accordingly, the income from it. It turns out that if an individual invests in a company, they will be able to claim a certain share of the income and receive a direct benefit.
In turn, the company benefits by attracting much more investment from fans. In addition, tokenization allows you to raise funds much faster and cheaper. There is no need to organize funding round, wait for its completion, or issue traditional securities.
An important advantage of gaming tokenization is its versatility. It is possible to tokenize not only a share of intellectual property rights. For example, you can tokenize certain in-game assets – items, coins, trading cards, etc. They can be issued as NFTs with the possibility of selling them on external marketplaces. This will enable cross-game interaction and cross-platform gaming.
As of 2022, not a single AAA-level game has yet decided to implement tokenization technology because of the lack of tools. Currently, several platforms are being developed to help create the necessary infrastructure for the world's first tokenized in-game assets.
Tokenized teams and sponsorship
Blockchain opens up new opportunities for esports teams as well. In particular, they may launch new initiatives to raise funding. This is especially important for small teams with a specific audience but experiencing funding problems. There are several solutions that can help deal with that problem.
For example, in 2019, the famous esports team Dota 2 OG was tokenized. As a result, fan tokens were created that could be bought or sold on the Socios platform. Token holders can take part in the voting, receive special rewards from the team, etc. This is not a perfect blockchain solution, but it is the first attempt. In the future, these possibilities can be significantly expanded.
The use of gaming tokenization will allow fans to become co-owners of their favorite esports team. Even a small share already gives a certain status. In addition, each investor will have the opportunity to profit from the team's winnings. For example, you can tokenize your potential winnings in exchange for an upfront payment. In this case, a fundamentally new type of investment will arise. At the same time, teams can also use NFTs, which also provides a certain share of income for the team and increases its recognition.
In addition, tokenization intensely simplifies the process of attracting investments. You do not need to involve lawyers in the registration of investments and conclusion of contracts – use smart contracts instead. All information is stored on the blockchain and cannot be deleted or changed. Also, tokenization in the gaming industry can significantly increase the liquidity of those esports assets previously considered illiquid.
Casinos are pushing tokenization forward
Virtual casinos are traditional leaders in implementing all innovations related to the gaming & gambling industry. The same thing happened with tokenization. The online gambling sphere welcomed it with great interest and immediately began to implement it. In 2022, hundreds of virtual casinos already accept cryptocurrency, and many of them allow the use of gaming tokens crypto. For example, tokens on gambling platforms can be used as gaming chips, which are credited after the account is replenished. Also, tokens can be used as additional bonuses.
This approach to using gaming tokens crypto can be considered too simple. However, many casinos did not stop at elementary solutions. There are already platforms that have tokenized their profits. Thus, investing in gaming coins allows users to be entitled to a share of the platform's income.
Investors also reacted positively to such innovations. This can be considered a sign that there may be casinos that are completely owned by players and do not have centralized management in the coming years.
The gaming industry is open to large investors, but it is still difficult for retail investors to find a way to invest in popular gaming companies. Tokenization in the gaming industry could dramatically change how companies attract investments and interact with their players. Companies can raise funding through STOs, as well as issue NFTs to promote the brand. Gaming tokenization opens up almost unlimited opportunities for raising funds for both game developers and professional eSports teams. If you're in the gaming industry and want to be one of the first companies to take advantage of the Web 3.0 world, we'd love to talk with you during a free initial consultation. Feel free to contact us!
How can an STO help indie game creators?
By launching STO, indie developers will be able to attract interested investors and quickly get the necessary funding. They will be able to direct the received resources to the development of their game.
Are there any examples of games using tokenization today?
In fact, many games use the blockchain and have crypto gaming tokens. These include Aavegotchi, Alien Worlds, Sorare, Axie Infinity, Sorare, and many more.
Is the issuance of security tokens for the game legal?
Security tokens are equated to traditional stocks in many countries, so holding an STO and investing in gaming coins is legal. NFTs are also governed by laws primarily associated with copyright. Our specialists will be happy to tell you more about the legal subtleties related to tokens during the consultation.