Published on: 08/11/2022
Web3 games to overshadow traditional AAA counterparts, SKALE CEO says
Jack O’Holleran, CEO of SKALE, a multichain Ethereum-based network for Web3 games, has said the constantly evolving model of GameFi will make “today’s AAA game companies look like peanuts.”
The CEO is a seasoned Silicon Valley technology businessman with a strong background in machine learning/AI and blockchain technologies. His experience includes executive positions at Good Technology and Motorola and co-founding Aktana and IncentAlign.
The AAA games O’Holleran referred to are titles with high costs and long development periods in traditional gaming. Such games attract many high-retention users due to their stunning visuals, rich playability and appealing narrative.
O’Holleran’s claim is not without validity. In recent years, the GameFi market has seen a definite increase in funding and project developments, allowing the industry to expand as a powerful niche in the market, highlighting historic advancements with iconic titles such as Axie Infinity and StepN as successful examples.
DappRadar reported that last quarter, blockchain-based games and metaverse projects had raised $1.3 billion, despite crises dragging down the cryptocurrency industry. However, discovering a viable GameFi model remains challenging, thanks to high gas prices and the complexities of purchasing, owning and trading NFTs.
“Charging users fees every time they transact or trigger a smart contract creates a disincentive to play,” O’Holleran said. “There’s a ton of work that needs to be done around usability in order to appeal to the mass market.”
Despite usability issues, Web3 games contributed nearly half of blockchain activities across 50 networks last quarter, with 912,000 daily Unique Active Wallets (UAW) interacting with smart contracts.
Play-to-earn (P2E), which lets players earn rewards such as tokens and nonfungible tokens (NFTs), and play-to-own (P2O), a more detailed version of P2E that provides players with ownership proof of rewards for peer-to-peer trading, are the most common in-game business models.
Absolute Reports recently projected massive growth for GameFi over the next six years, with P2E games expected to reach $2.8 billion between 2022 and 2028 for a compound annual rate of 20.4 percent.
“We’re witnessing the birth of many different economies with different distribution mechanisms as well as the development of different token models (single token, two-token, NFT-driven, etc.),” Sonny Tsiopani of Delphi Digital told Cointelegraph.
“Only time will tell how suitable and reliable each of these will be over the long term in open global markets.”
Taking inspiration from AAA games
While crypto gaming companies are trying to gain prominence, some studios are taking cues from AAA games to improve usability. Gunzilla Games, a 2020 game studio, combines AAA content with blockchain technology, letting players own their characters and weapons as NFTs within the game.
“All blockchain-related features will reside in the background, meaning gamers will never need to set up any wallets, swap any tokens, or perform any of the ‘usual’ crypto-related tasks,” Gunzilla co-founder and CEO Vlad Korolev said.
Korolev said that GameFi was at a critical crossroads regarding how the business works on gaming experiences. Given the number of gamers worldwide, he believed GameFi had a unique ability to lure billions into the crypto space. Improving the gaming experience may require a revenue model transition for many companies, with free transactions possibly boosting adoption among traditional gamers.
“Web3 has been focused on the DeFi, where users can absorb the cost of a transaction directly. That’s in contrast to a game where even at 5 cents per transaction, it’s simply not acceptable as even simple games would be instantly cost prohibitive,” said O’Holleran.