Messari: Analysis of the Current Situation of the Blockchain Game Industry

The blockchain-based gaming space is rapidly expanding, thanks to the rise of NFTs and in-game currencies. Growth in this area can be seen as a continuation of decades of constant iterations of the gaming industry's monetization strategies and business models.

The rise in global interest in video games and NFTs has been a huge catalyst over the past few years. Globally, the number of video game players is rapidly approaching 3 billion, with an expected compound annual growth rate of 5-7% over the next few years. Meanwhile, NFT sales surpassed $15 billion for the first time in 2021. In fact, secondary market sales of NFTs in blockchain games account for 20% of total NFT sales—many smaller games consistently generate tens or hundreds of millions of dollars in revenue.

While the "metaverse" is still vague, it's clear that gaming has an important place in the virtual world. Virtual world games like Decentraland and The Sandbox have generated nearly $500 million in NFT sales (including virtual land and in-game assets). In 2021, NFT sales in the virtual world will grow the fastest, with a transaction value of more than $320 million. As the metaverse is better understood, some parts of this new digital experience (i.e. the metaverse) may utilize blockchain as a core part of the infrastructure — and as blockchain infrastructure continues to expand, This is more likely to happen to meet the needs of developers and consumers.

This report will delve into the growth of the three categories of the global gaming industry, NFT market, and blockchain gaming. Although the blockchain gaming industry is still in its infancy, understanding these trends will give us insight into the future of gaming.

01. Introduction to blockchain games
Like its fictional characters, the gaming industry is constantly evolving. The industry is on the verge of disrupting traditional models to adapt to changing market demands.

Take, for example, the evolution of gaming business models. The first mainstream game featured a Pay-to-Play system. As far back as we can remember, these games were mostly arcade games in the mall, games on CDs in the computer, or games that were later downloaded directly to the machine. The advantage of pay-to-play games is simple: you only spend money once, and you can keep playing.

Following the paid model, the "Freemium Model" came into being. In the age of this model, players no longer have to pay to start playing. Instead, game merchants make money by making players pay to unlock additional components of the game, or, more commonly, making in-game purchases such as expansion packs, platform subscriptions, and character skins. For many, freemium games have lowered the barriers to entry for games, and the shift to freemium games has helped grow the number of players around the world.

This brings us to today, where the next monetization revolution in the gaming industry is about to begin: blockchain gaming. The blockchain gaming space has also acquired names like GameFi or Play-to-Earn, which represent a new monetization model for this gaming era. Blockchain games typically feature NFTs or other forms of tokenized assets as game content that can be exchanged for other cryptocurrencies (or fiat currencies) on a blockchain-based marketplace.

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The development process of the profit revolution in the game industry: the era of paid games → the era of freemium games → the era of blockchain games (players have ownership of in-game assets)

The core idea of this revolution is that players should have ownership of the content (in-game assets) they earn, or at least more ownership in the digital world where they spend a lot of time and money. This yields two immediate advantages: (1) the lifespan of in-game assets is extended as those assets continue to exist in the player's wallet, even after the game is closed; (2) the interoperability and composability of assets Properties enable them to interact with other games, applications or blockchains.