Digital Assets Empowers Developers and Publishers
With this article we dive deep into the surprising growth of the gaming industry, highlighting the value of in-game items and their role in this multi-billion dollar market. In future articles, we’ll delve deeper into the current state of the in-game item market and explore how FiPME aims to revolutionize it.
The Rise of Gaming: A Multi-Billion Dollar Industry
The gaming world is experiencing explosive growth. With a staggering $138 billion valuation and a mind-blowing 2.2 billion gamers worldwide, gaming has shed its niche hobby label and transformed into a global phenomenon. Technological advancements like the rise of mobile gaming and the ubiquitous proliferation of the internet have revolutionized not only the games themselves, but the entire gaming landscape.
Industry Growth Statistics:
A report by PwC* projects the video game industry’s total revenue to rise from $262 billion in 2023 to a staggering $312 billion by 2027. This highlights the industry’s immense potential and its trajectory for continued growth.
Investment Opportunities and Industry Trends
In just a decade, the gaming industry has nearly doubled in size, rivaling the music and film industries. Emerging technologies like VR, the production of games for all tastes and ages, and the overall affordability of gaming position the industry for even more robust growth in the years to come.
This industry boom has attracted a whole new set of intermediaries who capitalize not only on people’s desire to play games but also on the joy of watching others do the same. Back in the 2000s, gamers and game & hardware producers dominated the industry. Now, the infrastructure is considerably more complex.
The Rise of Streaming Platforms and Esports:
Take the phenomenal success of streaming platforms like Twitch, which was acquired by Amazon for a cool $1 billion. In 2018 alone, users clocked a staggering 560 billion minutes – roughly equivalent to 1 million years – on Twitch, with a user base estimated at around 140 million, roughly the size of two Germanys!
Esports tournaments have also witnessed a meteoric rise. The 2018 “The International” tournament, a premier esports event, boasted a prize pool of a staggering $25 million, surpassed only by one sporting event that year: Wimbledon, with a $43.8 million prize pool. These high-profile events and the participation of these new industry players significantly contribute to the growth and infrastructure of the gaming industry – a win for all participants.
The Core of the Gaming Experience: Games and In-Game Items
Despite these transformations, the core of gaming remains the game itself. Or, more accurately, the enjoyment we derive from interacting with the game world, solving puzzles collaboratively, competing with other players, and socializing – a unique aspect of contemporary online multiplayer games. In these virtual communities, players tend to showcase their status through in-game items, similar to how they might use expensive (but perhaps non-functional) belongings in the real world.
The Social Impact of Gaming:
The human desire to elevate experiences transcends the physical world. Gamers, just like people in the real world, constantly seek ways to enhance their gameplay and derive greater satisfaction. Luckily, for both gamers and game developers, there are readily available tools to achieve this: in-game items.
In-Game Items: Functions and Value
These items, with functionalities varying across games, offer a path to a more fulfilling gaming experience. In-game currency can unlock new levels in your favorite mobile game, while armor might enhance your performance in a shooter game. Character skins, on the other hand, allow you to stand out from the crowd and express yourself within the game world.
The Freemium Model and The Rise of In-Game Economies
The freemium model, popular among game producers, relies on maximizing playtime and encouraging in-game item purchases. This model incentivizes developers to create experiences increasingly dependent on in-game items. Some games even establish in-game economies with fixed exchange rates to real-world currencies.
Regulation of Digital Assets
Entropia Universe, a massively multiplayer online virtual universe, exemplifies this concept. The game holds the Guinness World Record for the most expensive virtual item ever sold: a virtual club purchased for $635,000! Even more astounding, Planet Calypso sold for a whopping $6 million!
The Value of In-Game Items and The Challenges of Trading
The willingness of gamers and companies to spend significant real money on in-game items, regardless of function, underscores their value. Some might scoff at the idea, but in-game items hold intrinsic value within the game world, similar to the value a phone holds for someone who uses it constantly.
This value fuels a growing trend of gamers trading in-game items, either to acquire desired items or monetize their efforts. Speculation on in-game item prices is also on the rise, attracting non-gamers to this lucrative market.
The Problem: Insecure and Fragmented In-Game Item Trading
Unfortunately, the current in-game item trading process is riddled with hurdles. It can be insecure, slow, expensive, and restricted to individual games. These limitations hinder the market’s potential and exclude many potential participants. Here at FiPME, we aim to change that.
Stay tuned for future articles where we’ll delve deeper into the challenges of in-game item trading and explore FiPME’s solutions for a secure, efficient, and empowering experience for gamers, developers, and publishers.
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* PWC reports can be found here: https://www.pwc.com/gx/en/issues/business-model-reinvention/outlook/insights-and-perspectives.html
