A clear pattern emerges as you analyze the ecosystem landscape. We’re seeing an abundance of blockchain games jumping in and out of the top 10. Currently, almost all blockchain-based games have simple mechanics, boring gameplay, and charge exorbitant amounts for items that have little utility. New releases see a brief surge in usage after launch then quickly watch their user base fade. This is because most of these games lack depth and aren’t very fun. Frankly speaking, they suck.

Successful games from the traditional gaming industry have mastered the art of user retention and addictive gameplay. Blockchain-based games are in a nascent phase where they jamming blockchain features into an experience that’s fundamentally lacking and onboarding hurdles are too high compared to the fun level. This article is meant to serve as a primer for people unfamiliar with the size and viewership of the gaming market as well as ways blockchain features can enhance the industry.

AAA Blockchain-based Games

As the industry continue to mature, we’re going to see more AAA game developers enter the blockchain gaming arena. As the educational and technical challenges are overcome, many will likely employ a light touch integration that creates a valuable feature for gamers and improves inefficiencies around ownership, scarcity, and secondary item trading. For others, it may become a core element of the gameplay as the power of fully decentralizing a quality game starts to proliferate. Exciting projects like Gods Unchained, Axie Infinity, and Project Genesis are already starting to materialize that exhibit the right blend of decentralized features and high quality gameplay.

The $100 Billion Gaming Market

Most people outside of the gaming industry significantly underestimate its market size and influence. Leading gaming industry research firm Newzoo projects 2.3 billion gamers across the globe and $137 billion in global revenue this year. To put it another way, gaming revenue is more than double the global movie (40.6B) and music industries (17.3B) combined! There’s been a massive shift in the way we consume media over the past 10 years. Millennials aren’t in the living room with their parents watching reruns of Seinfeld. They’re in their rooms playing video games, watching YouTube videos, or watching their favorite gaming influencers stream live on Twitch.

The gaming market includes everything from playing casual mobile games on the train to high-octane competitive shooter games on a PC. Asia is currently the largest market in the world for gaming, both by sales and also by viewership. Live streaming has quickly become one the hottest online trends in China with much of this viewership happening around esports, the booming industry that has emerged around the world’s most competitive games.

The level of online viewership for esports has grown tremendously fast and collectively represents one of the most popular spectator sports in the world. This isn’t collecting cats or crushing candy. These are hyper competitive live events that require split-second decision making, masterful hand-eye coordination, and months of practice with your teammates. These matches are organized by leagues and are streamed live and watched by hundred of millions of gamers around the world. Esports are the new college football.

Live Streamed Gaming Events are Outpacing Traditional Sports

Who would want to watch teenagers clicking away playing video games you might ask? It turns out over 200M people per month on Twitch and 200M everyday on YouTube! Twitch, the Amazon-owned live streaming website, is the 14th most trafficked website in the US (35th worldwide) and host to 2M individual streamers each month. Similarly, sites in China such as Douyu and Huya boast even larger numbers. Just as you may never play football, but you enjoy watching the SuperBowl, gamers enjoy watching famous players stream their gameplay. Viewers can learn and interact with them through chatting, making it a more engaging experience than traditional televised sports.

Twitch, because of its embedded chat and tipping system, is one of the most engaging ways to watch something. The streamer’s chat box turns into a stream of instantaneous reactions, references to other popular jokes, and direct interaction with the influencer through voice enabled donations and Q&A sessions. A typical 8 hour stream of a well known streamer will have thousands of messages sent and hundreds of dollars donated to the player through Twitch chat. StreamLabs, one of the add-ons used by streamers for donations, paid out $34 million in tips in Q1, up 33% from the previous quarter.

The infamous Drake & Ninja stream that broke the record for an individual stream with over 600,000 concurrent viewers.

Watching traditional TV has become far less responsive than gaming. Between reruns, depressing commercials, lack of live content, and no way to directly interact, the viewing experience is extremely shallow. With streaming websites like Twitch, this dynamically personalized content and ability to engage with the content producer in real-time deepens the experience and results in astonishing viewership for high profile events and popular players.

Esports Investment & Viewership

This is TV for the internet and the viewership levels are staggering. League of Legends, one of world’s most popular competitive games, had a World Finals viewership of 36 million unique viewers. That’s more than the 2016’s NBA Finals of 31 million. Individual gaming streamers, armed with nothing but a webcam and a colorful personality, are monetizing at incredible levels and becoming the superstars of tomorrow.

Investment is pouring into the esports space at a feverish pace. Traditional sports teams like the Yankees, Mets, Dodgers, and Cowboys are also putting up big bucks to build out the professional infrastructure around these star players in the Overwatch League. In the past 12 months alone, top teams like TSM raised $37 million, Cloud9 $25 million, Team Liquid $25 million, and NRG raised $15 million. This is perhaps the most valuable demographic in the world and investors are rushing to capitalize on this growth.

Live Streamers are the new superstars

At the center of this streaming phenomenon is Tyler “Ninja” Blevins, the most popular streamer on Twitch. In April, Ninja was #1 among all athletes worldwide for social interactions, beating out the likes of Cristiano Ronaldo and Shaq. Recently, the rapper Drake joined Ninja for a 6 hour session of the popular kid- friendly shooter game Fortnite. Together, they broke the Twitch record for viewership for a single individual with 635,000 concurrent viewers at the peak of the broadcast. Their stream went on for about 6 hours with concurrent viewership maintaining 400,000+ so the total unique viewership is estimated to be over 3 million. This level of viewership exceeds hit TV shows with multi -million dollar budgets like the Westworld season finale, which drew 2.1 million viewers.

Ninja garnered more Twitter interactions than any other athlete in April.

Ninja has about 150,000 paid monthly subscribers. Base subscriptions are $5 which give subs access to special Ninja-themed chat emojis, a prominent logo next to their name in the public chat box, and the ability to have their monthly resub message read aloud on stream to everyone watching. Ninja is bringing home over $500,000 each month just from his Twitch subscriptions alone. He also has a YouTube channel with over 18 million subscribers and over 3 million Twitter followers which he is monetizing. This doesn’t include any of the major non-endemic corporate sponsorships he has like Red Bull, PSD Underwear, and the recent UberEats deal.

The Fortnite Craze

Fortnite, the most streamed game on Twitch, is breaking records left and right. In March, Fortnite raked in $296 million in revenue , primarily from selling skins. A skin is an in-game item that changes your character’s appearance. They don’t make your character more powerful or likely to win. Skins are merely an aesthetic upgrade that can be shown off to other players and differentiate your character. The game is free to start playing and new skins are released throughout the week in the in-game store which are typically $10 — $20 each.

With Fortnite being such a big hit on Twitch, game companies are now enlisting big name streamers to play their new releases in front of this coveted demographic. We already see non-endemics like Geico, Mastercard, and Samsung deploying large marketing spends to Twitch influencers. It’s not uncommon to hear that larger streamers are getting paid $2,000 per hour to promote a new game.

In less than a year from its initial launch, the game now has 125 million players and has announced its plan to give away $100 million in prizes through 2019 through live streamed competitive events. The game has gotten so popular that parents are now enlisting tutors to help their children excel at the game. Fortnite has even been mentioned in over 200 divorce filings.

Selling Skins is Big Business

When you think of the word collectables it usually means a physical object like a sports jersey or a rare baseball card. The worldwide traditional collectibles market generated more than $370 billion in 2016. Just as a basketball superfan was willing to purchase the shoes Michael Jordan wore in his famous 1997 “flu game” for $100,000, gaming fans can be similarly obsessed with collecting exclusive digital memorabilia.

Earlier this year, an esports fan paid $61,000 to purchase a rare skin for his in-game rifle that was owned by a famous player who had just won a major Counter-Strike tournament. While this was among the highest ever paid for a cosmetic in-game item, the skins trading market has been booming for years. According to a Narus Advisors report, gamers spent an equivalent of nearly $5 billion on skin trading and wagering in 2016. The market is already massive and this is only from a few games.

This rare skin previously, owned by Counter-Strike player Skadoodle, sold for over $60,000 after his team won the ELeague Boston Major tournament.

Games like Fortnite feature a closed item system, whereby items are non-transferable to other players and can never be sold. This creates a situation where the value of your digital goods are trapped inside that particular game’s economy. Items cannot be liquidated and players cannot move their digital wealth to other gaming ecoystems. Games like Counter-Strike popularized tradable skins and have given birth to a multibillion dollar market, but I believe this is just the beginning. What if there was a way to enhance this booming item infrastructure and bring true digital scarcity to the gaming world?

Blockchain Gaming Use Cases

The gaming industry can serve as the educational trojan horse towards mainstream consumer adoption of blockchain applications. As a gamer and avid crypto enthusiast, I believe there’s a strong correlation between the two. Gamers already grasp the concept of digital asset trading and are technologically savvy enough to adopt new trends early. Gaming is already the largest entertainment medium by far and it’s ripe from blockchain disruption.

In a time where dapp adoption is sorely lacking, the gaming industry can be the conduit for which our industry can showcase some truly useful applications that enhance the experience for gamers. Part 1 explores what I believe to be the lowest hanging fruit, non-fungible tokens. Creating transparent digital scarcity within games through the use of non-fungible tokens, enhancing the trading infrastructure of digital assets, and leveraging the Twitch streaming phenomenon to educate and onboard new users.

Non-Fungible Tokens

Digital collectibles have garnered massive interest in the blockchain space in recent month mostly due to the proliferation of non-fungible tokens (NFTs) stemming from CryptoKittie’s success. Simply put, non-fungible tokens are a special type of crypto token used to represent digital assets that are unique. If you give someone a $20 bill and they give you back two $10s, you both understand that it’s the exact same value. Money has fungibility. If you were to give me your car, and I bring you back the same make and model but it’s not “the same” these objects are non-fungible in terms of value.