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The video game industry is a behemoth in the entertainment sector, outpacing the revenue of both music and film combined. It is projected to reach a market size of $363 billion by 2027. While traditional video game models like Games-as-a-Service (GaaS) have long been the gold standard, the sector faces significant challenges that call for innovative solutions.
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Historically, the GaaS model in its free-to-play (F2P) incarnation thrived by allowing users to access a base game for free and monetizing through in-game purchases such as cosmetics or gameplay advantages. It’s easy to see the appeal of the F2P model for players: with no upfront costs and therefore no risk of paying for a gaming experience of unknown value, as was the case in the past, there was little downside to trying new games.
The success of the GaaS F2P model over the past decade has been so incredible that it has become a staple across the industry. From casual games to the big industry publishers, GaaS F2P games are in everyone’s books. However, the sustainability of F2P GaaS is under threat because margins are getting smaller across the board. This is due to a perfect storm combining an oversaturated market with rising user acquisition costs, exacerbated by recent stringent changes to privacy policies.
The promise of web3
As the industry seeks a lifeline amidst these growing challenges, blockchain technology is, for many, a beacon of hope, with its promise of revolutionizing game monetization through web3. However, the initial forays into web3 gaming focused on NFT collectibles came with a critical flaw: the games required a continuous influx of new players to exist. It was an exciting model but unsustainable in the mid- and long-term.
The second wave of web3 games took the initial NFT collectibles mode and enhanced it with play-to-earn (P2E) and tokenomics. Unfortunately, these systems not only didn’t solve the dependence of NFT collectible games on acquiring new users but also brought new issues to the table. P2E games quickly became play-to-win (P2W) schemes, demoralizing most players and hurting retention. Worse still, many tokenomics systems raised concerns about their resemblance to gambling rather than traditional gaming due to their random reward distributions.
This divide is still evident in the web3 gaming community today. It is split between speculators, attracted to the financial incentives of P2E models and eager to turn gaming into a business, and traditional gamers, who are increasingly disillusioned by the monetization strategies that tend to a P2W model and are yet to see truly engaging games that give them what they want: real entertainment value.
Bridging web2 and web3 gaming
Moreover, the broader gaming community, which reaches billions worldwide, remains largely unaware or uninterested in web3 games. To many of them, web3 is still a futuristic proposition, a Wild West of possibilities that only the bravest dare explore. The fact remains that there are significant gaps between the current quality of web2 games, the existing realization of web3 games, and the true potential of blockchain in gaming.
At GFAL (Games For A Living), we plan to bridge the division between web2 and web3 gaming through an innovative business model that integrates the best of both worlds. The GFAL business model focuses on GFAL game collectibles and turns them from in-game assets to real-world valuables by focusing on ownership, seasonality, and standardization.
The first element of our business model is ownership. At GFAL, we make it possible for players to become the legal owners of the in-game collectibles they acquire. In other words, once players mint or purchase a GFAL game collectible, they acquire a license to exploit its intellectual property (IP) rights. This means that players can utilize and potentially monetize these collectibles in ways never explored before, beyond the gaming environment, if so they wish.
Secondly, all games must follow a “Battle Pass” seasonality system, like the ones often seen in Gaas, designed to keep the game engaging, fresh, and continually running. GFAL takes this further with fusion mechanics and blends it with our unique approach to collectible ownership. On a practical level, this means that games require using existing collectibles to create new ones, cleverly encouraging a healthy exchange in the cross-game marketplace and preventing inflation within the game’s economy.
The third element of the business model, standardization, makes the ownership of collectibles and the seasonality system with fusion mechanics possible. All game collectibles must follow a standardized system that tracks and allocates them a rarity and level based on the time invested in the game. This enables the creation of unique collectibles with their own individual history attached and gives every single in-game collectible a comparable and fair value that is also transferable to all other GFAL games.
Beyond the business model
This pioneering business model, blending ownership, seasonality, and standardization across different games, answers many of the current concerns about video games. The approach, designed to foster a fair, stable, and sustainable game offering that benefits players and developers, may become what blockchain gaming needs to transcend its niche status and achieve mainstream adoption.
However, we know that beyond the business model, products must provide an exceptional gaming experience. That’s why developers must remain committed to building games that are enjoyable on their own merits, with blockchain elements that enhance rather than dominate the gameplay experience.
To support this, we are also developing a robust ecosystem that includes a proprietary personal ID system and a multi-game marketplace. These features are designed to support a community-centric gaming environment, encouraging interaction and engagement beyond the games themselves. This comprehensive ecosystem, open to third parties, is part of GFAL’s strategic approach to reduce friction for players transitioning from web2 to web3, ensuring a smooth integration of new technologies within familiar gaming contexts.
As we prepare to launch new titles later this year, we are aware that the gaming industry is watching closely. No doubt, many want to see whether this new model can set a new standard for how games are played, owned, and monetized. We believe this approach could herald a new era for the gaming industry, one where the line between web2 and web3 is not just blurred but effectively erased, creating a unified gaming experience that respects both the roots of gaming culture and its future potential.
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Author: Manel Sort
Manel Sort is the CEO and co-founder of Games for a Living (GFAL). With over two decades of experience in the video game industry, Manel has developed and published more than 60 titles across diverse platforms, many acclaimed. His analytical, results-oriented approach focuses on driving business strategy in free-to-play and play-to-earn models. Skilled in building and pivoting game businesses, he has achieved revenue run rates exceeding $1 million per day within two years of operation. Specializing in video game development, strategy, project and product management, HR, and web3 game development, Manel is committed to innovation and excellence, continually pushing boundaries in the gaming industry.