History of Gaming and its Web3 Future

The History of Gaming and its Web3 Future

Gaming is a massive driver for new early-stage crypto investments. Prominent funds such as Galaxy Interactive, Immutable, and a16z each raised $325mn, $600mn, and $500mn to invest in web3 gaming startups. Yet, mainstream gamers are not always big fans of potential web3 integrations.

This is because most gamers are used to games being monetized by their developers. Crypto or NFT is very well promoted in the esports gaming space, but it also came with a few scams that keep many people skeptical about the concept.

Fast Facts:

• The global gaming market reached $198.4bn in 2021, more than the film and music industries combined ($99.7bn and $26bn, respectively)
• The rapidly growing gaming space is projected to reach $260bn by 2025
• There are 2.5bn gamers worldwide (3bn projected by 2023)
• The average gamer plays 8 hours and 27 minutes per week
• US gaming revenue is projected to hit ~$90bn in 2022
• Mobile games comprise about 50% of gaming revenue, with consoles making up ~30% and PCs making up the remaining ~20% of the market

Non-transferable NFTs will likely be a key primitive for web3 games.

Non-transferable NFTs can obtain many benefits from web3. Players' achievements and unified logins through wallets can enable a player’s history to travel across various platforms and game environments. The permanence and open-source nature of permissionless blockchains ensure that developers can always build new experiences upon this treasure trove of on-chain history. This use case alone is already a massive improvement over the status quo. We expect legacy game developers to experiment with this before introducing riskier economic primitives (such as fungible tokens).

The League of Legends example

League of Legends is a game created by Riot Games; the game has been around for more than ten years and has a well-balanced ecosystem. The game is free to play, and you don’t gain any extra advantage from buying in-game items. Imagine you have been playing this game for ten years, put your time and hard-worked money into it, and it's time to move on to something new. You have probably built up an inventory; if you sell your account, you will get some money. However, this is against the rules and TOS. The NFT technology would be the perfect fit for a game like this, and Valve has already proven that it works with their concept, even though there are some things to be said about this concept. Furthermore, they have a game where you can buy or sell your items in the Valve store!

The History of Economies in Video Games

1978-1983: The Golden Age

The video game industry has come a long way since its humble beginnings in the 1970s. Atari is credited with releasing the first game, Pong, and the first video game console, the Atari 2600. What ensued is colloquially referred to as the golden area of video games. Atari was king during this era, and arcades were the dominant medium through which players played games. “Pac-Man” became a worldwide sensation. Many newspapers and magazines would publish the local “Pac-Man” high score list, inciting competition and signaling status and hierarchy among players in the local gaming community. Players often gave each other tips and tricks to better their scores, which naturally led to communities forming around specific games.

Why do we game? The psychology of gaming

Video games differ from other media forms because users are heavily engaged and immersed in the game’s interactive environment. While it may be easy for a commuter to listen to a podcast while driving to work passively, that same person would have a more challenging time juggling a video game in one hand and a steering wheel in another. Even in an age of information abundance accelerated by passive social media content streams, the revenues from the gaming industry continue to grow to record-breaking levels. Why is this the case?

In this section, we outline some psychological motivations for playing games, and the mechanisms game developers employ to maximize user engagement. By studying psychology, game developers are better equipped to design environments conducive to the myriad player-to-player interactions that generate in-game economic activity.

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