If you’ve ever stayed up all night to defeat a baddie or to complete a particular level, you’ll know that gaming can be somewhat addictive. Even games that are ‘free-to-play’ often get people hooked enough to spend a small fortune on bonus content. This ‘fremium’ business model, fuelled by microtransactions, is making gaming companies rich — but is relying on a small section of high-spending players the way to go to guarantee growth?

Let’s look at what’s going on!

Companies Getting Richer as Consumers get Poorer

Gaming companies are raking it in. According to GAMEBYTE, Electronic Arts (EA) made over $787 million from extra content on online games, while Ubisoft garnered €18.5 million from player investments! These are not small figures by any stretch of the imagination.

Publishers, taking a cue from mobile app developers, have started allocating cash flow to microtransactions; teasing players with free content but charging for the juicier stuff to up their revenue. It’s clever! That said; a study by Tapjoy concludes that 70% of the total microtransaction revenue comes from only 10% of the player base.

So basically, the money generated by gaming companies depends on a small section of big spenders which is rather risky. Alarm bells, alarm bells! Ethical questions are also being asked as to how fair it is to charge people once they’ve committed to playing a particular game. Surely, if a game is appealing due to the graphics, narrative and such like, players will be more willing to part with their hard-earned cash to see what else is in store? Some experts have compared such techniques to gambling.

What’s more, these virtual items, which players spend so much on, are useless anywhere else, including on the next version of the same games in many cases. In addition, payments through credit cards attract large transaction fees.

Government Crackdowns

Not many industries escape government crackdowns and regulations — even the gaming sector. The USA has already started regulating microtransactions, categorically terming practices like ‘loot boxes’ — which allow gamers to pay for additional features — as predatory business activities. The sale of video games with loot boxes to under-18s has been prohibited in states such as Minnesota with strict warnings over ‘gambling mechanisms’ and ‘financial risk’ being incorporated into the advertising.

Blockchain Could Improve Microtransactions

So what’s the answer? How can gaming producers grow and develop yet maintain their ethics? Blockchain will make ‘microtransactions’ and similar practices fairer. Subscription services can be renewed or cancelled on a second-to-second basis on blockchain, allowing players to restrict and carefully monitor their spending.

Blockchain will further enable gamers to trade and sell their virtual assets, which will increase the value of digital assets. Players will also be given the option to cash in virtual items or tokens for fiat money, enabling revenue for both developers and players.

Mutual Gaming Benefits From Sgame Pro™

Microtransactions can seem very much one way benefitting gaming publishers only — but leading mobile games aggregator Sgame Pro™ is looking to change this with their innovative and unique blockchain-based approach. Players will be rewarded for their gaming efforts with the utility token, SGM, which can be used to buy both physical and digital goods on the platform. The token is accepted across all games on the platform, as well as the digital stores of publishers.

Founder and CEO of Sgame Pro™, Gip Cutrino, says that since these tokens will be the sole mode of payment on the platform, players will no longer need to use their fiat money for transactions. In addition, microtransactions will prove beneficial for both players and publishers.

The SGM token economy is centred on the continuous circulation of tokens between Sgame Pro™ and the ecosystem’s participants (Players, Publishers, Influencers and Merchants), aiming at a highly liquid token, which in future can be used to participate directly in the revenues of the company.

Want to know more about this blockchain-based game which is revolutionising the gaming sector through innovative technological developments? Then visit sgamepro.io and keep yourself posted on Facebook, Twitter, Instagram and LinkedIn.