Decentralization is the next big thing in game development

Gaming is one of the biggest and most profitable entertainment industries right now. According to mobile market research firm Newzoo, gamers across the globe will spend $137.9 billion on games this year—representing an increase of over 13% from the year before. Digital games are responsible for over 90% of global gaming market revenue.

One thing that shouldn’t be left out of the conversation when talking about the future of gaming is decentralization. Companies have been exploring ways to leverage blockchain technology in gaming, specifically, in game development.

“Right now, we are seeing studios and publicly traded companies allocating their resources into the development of decentralized gaming,” said Kyle Lu, the founder, and CEO of Dapp.com. Lu spoke about decentralized applications (dapps) and the future of gaming on the TechNode ORIGIN stage at SWITCH (Singapore Week of Innovation and Technology). The Beijing-based Dapp.com is a platform that has created an ecosystem to encourage the development of dapps.

At first, the decentralized gaming space was largely occupied by smaller teams and individual developers, but with bigger players moving in, product innovation will surely accelerate, said Lu.

According to Dapp.com’s data, currently, 70-80% of dapps are game-based. Lu said when looking at the history of new tech development, it usually starts with games. “Games are the easiest to understand and the easiest to access,” Lu said gaming is a way for dapp developers to attract users as well as to educate them about blockchain technology and why it is important.

A collaborative environment for game developers

In the traditional gaming industry, big-budget developers have dominated the market and have been behind most technological advances. With decentralized gaming, however, blockchain technology has brought in a democratizing factor and is creating a more collaborative environment for developers.

In China, games by Tencent or NetEase are competing with each other, Lu said, but it is different with decentralized games. For example, after CryptoKitties, a crypto-collectible game developed by Axiom Zen, went viral last year, another game by a different developer, KittyRace, came out. The game lets CryptoKitties players race each other with their “virtual cats” for prizes. Lu said this more collaborative environment is possible with dapps “because blockchain gives us ‘ownership’ to the crypto-collectibles.” The fact that these crypto-collectibles exist on a blockchain via smart contracts means that any game developer can write programs for them.

And because these characters and items in the game are immutable, like physical objects, you can own and trade them. Many companies choose to do a pre-sale by selling characters and items that players could use during the beta testing phase. This is a way for developers to secure funds as well as to expand their community of players early on when the game is still in development.

Bringing ideas to market

There are still many road bumps for decentralized game developers. First, blockchain, dapps, and decentralized gaming are still very new concepts to the public, Lu noted. Access to decentralized services is also a barrier. For example, in order to play CryptoKitties, the user needs to hold a certain amount of cryptocurrency and is required to download a crypto wallet extension.

On the other hand, for developers, it is still difficult to promote their dapps because the access to decentralized services is still not prevalent enough. Dapp.com has built a platform for developers to list their games and gain more exposure via their user base.

Decentralized gaming will disrupt the traditional gaming industry sometime soon. Lu said the number of transactions on decentralized applications increased fivefold from the first quarter to second quarter this year. What’s more is that the development of blockchain technology is advancing and new platforms are popping up where transactions can be done faster and less-costly, meaning user experiences on decentralized platforms are improving.