Is it time to disrupt the games industry?

8 March 2021

Could mobile gaming catch up to console and PC gaming?

According to research by RescueTime, which sells productivity-boosting apps and software, the average person currently spends 3 hours and 15 minutes on their phones every day. Twenty percent of users clock up more than 4.5 hours a day, or 68 days per year.

While we can only speculate on the future of mobile gaming, looking at profit growth rates for the past decade, it's hard not to see a glass half full.

The entire global gaming market will more than double in value, from $131 billion to $300 billion by 2025, according to estimates from GlobalData and Statista.

Mobile gaming revenues alone were over $63 billion in 2020, and industry experts expect the market to double by 2023. Comparatively, worldwide box office revenues in 2019 were at $42 billion.

In-app purchases & virtual marketplaces.

The mobile gaming industry has shifted towards free to play games that offer in-app purchases. Candy Crush, Pokemon Go and Among Us are a few stand out mobile games that highlight the growing trend towards mobile gaming.

Many people have condemned the current lack of transparency relating to in-app purchases. Users have fewer ownership rights over digital assets like skins than for tangible products like clothes or books.

People technically pay for a licence to use a digital asset, with developers dictating what constitutes acceptable use and users rarely owning the underlying asset. If games shut down or developers suspend user accounts, people lose access to their skins, as they don't legally own them.

The glaring problem with this arrangement is developers and companies have complete control over what rights any individual has over digital assets they buy with cash. Many users fail to understand how little protection they have and the risks of owning this digital asset type.

For example, Twitch streamer "Evelone" was recently given a "Community Ban" on Steam, meaning he could no longer sell his skins inventory, valued at over $158,000. When Valve locked his account, his digital assets became worthless.

Despite any wrongdoing Evelone may have committed, the question remains; should Valve, or any organisation, have the right to remove an individual's digital assets without any public or regulatory oversight?  Would it not be fairer to allow individuals to keep their digital assets but ban them from individual platforms?

Loot Boxes - Virtual "Slot Machines"?

While loot boxes may seem innocent at first, some developers use them to offer players an unregulated virtual casino, where you pay for loot boxes with cash. In exchange, you receive a random digital item, which you can sell for in-game currency within the games marketplace, but cannot convert back into cash.

Regulators have been reactive rather than proactive in their approach to loot boxes. But, governments worldwide are finally taking a hard look at loot boxes and microtransactions.

Many countries have given buyers more rights and control over their digital assets. For example, China now enforces companies to provide actual drop rates for items in loot boxes and introduced caps on the number of loot boxes an individual can purchase in one day.

Similarly, in 2018 the Netherlands government declared loot boxes "have integral elements that are similar to slot machines". The Belgian government went further, declaring loot boxes an illegal form of gambling after assessing the FIFA 18 loot box system.

The UK has not passed any laws relating to loot boxes, but in July 2020, a parliamentary committee called for legislative action against the sale of loot boxes.

In January 2020, Mental Health Director of the NHS, Claire Murdoch, stated that loot boxes are "pushing young people into 'under the radar' gambling" and called on companies to discontinue loot boxes and for legislative bodies to ban them.

While skins, upgrades and DLC are a fun and necessary part of modern gaming, the industry should distance itself from loot box business models. New games should empower their players to participate in global digital assets markets by giving them ownership and control over their virtual items.

What could the future hold?

Game developers could replace loot boxes with a store selling items on rotation, as rocket league has. Alternatively, battle passes offer another approach to skins. Players purchase a battle pass, then earn their rewards by completing challenges set out at the purchase time. Users can see which skins they get and when which is entirely transparent.

In the future, users could sell second-hand games online using NFTs. Developers could limit the resale of games for the first year or until they have sold a desired amount of copies, then grant the resale of games via their platform or a third party and take a cut of the profit. To prevent a race to the bottom, developers could set a price floor for second-hand copies.

The trillion-dollar question is how fast will the gaming industry embrace business models and platforms that give users ownership over digital items.

Skins and other virtual items are a fun part of gaming, but loot boxes are evidently not desirable for anyone except developers. The gaming industry is moving away from loot boxes, albeit at a glacial pace, which is excellent news for everybody in the industry.

The next step is to facilitate growth in virtual asset markets by giving players ownership of their digital assets and a platform to sell them.

If you're interested in earning money in gaming tournaments, you can register for the beta below.

Register for the prototype

The next step on our roadmap is to ask for your help. We want to hear from you what works and what does not, which features are more important to you and which ones are lacking. In short, we need your guidance.

To facilitate this, we are creating a beta of our platform and are looking for a thousand pioneers to put it through its paces. We will expect a lot of feedback and suggestions from these pioneers over the next two to three months. However, these pioneers are not volunteers, when we launch each pioneer will have bestowed upon them 10,000 edifyqs.

If you see yourself as a pioneer, register for the prototype and explore the future.

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