Video Games are changing. They are being completely remade from the ground up sprouting into new blends of entertainment & opportunities. 

But how do we know video games are evolving?

All we need to do is look at the major shifts that have occurred in the industry.

In the past decade alone we have already seen dramatic changes in the business models & fundraising mechanics.

Lets dive into one of the biggest constants of gaming; video games are expensive to create. A "senior" coder salary starts at $100k/year. And as any company that creates products they are in a consistent state of developing, marketing and planning product releases years ahead of time.

So game studios are faced with a problem: how do we bring in cash in-between product releases?

Here are some of the most popular ways you may recognize. 

The game studio will cut off chunks of the game to sell as individual DLCs or downloadable content. Like how some restaurants charge extra for guacamole, but it’s an ingredient that could have come with your burrito.

Pre-orders also try to solve a problem with a money based solution before the game comes out. Games can be pre-ordered and have the product shipped to the player once available vs them having to go to a store and wait for an item that may be out of stock. The biggest issue with Pre-orders is players may pay an extra amount for perks and trinkets that gives them buyers remorse. Especially if they end up hating the game.

Pre-orders and DLCs allow game studios to keep bringing in cash regardless of where they are with the development of their game(s). This lets them  keep their developers and managers on payroll. 

Another more recent monzeitzation model is battle passes.

Some games like Fortnite and Call of Duty do a double tiered battle pass. They have the free option for players while teasing them with the carrots they could earn these items and skins if they pay for the premium battle pass. And with battle passes being renewed every 3 months the game developers have recurring income similar to a subscription based model.

Naturally players hate having to pay for more content especially if they already paid full price for that game. As game studios try to one up each other and take more market share they dabble with new models 

In recent years we have seen games adopt a freemium model that lets them take advantage of microtransactions like battle passes and new content releases. Players are more likely to spend more for add ons if they didn’t buy the game.

Initially freemium models were scoffed at by developers. Media sites like Kotaku also piled on the idea that these free games like Farmville were stupid and not real games. Over time these games showed that players would spend more money and they’d have higher margins by releasing a game for free.

So we have seen there has been tremendous change in the gaming industry. But what’s next?

One of the shortcomings of the current gaming models is developers create something I like to call a walled garden system. You can bring assets, money and players in but they can’t leave. Spent 20$ on a super rare skin? It’s stuck. You can’t do anything with it. It’s housed on their centralized server. 

However there is a way for players to have freedom with their assets and it allows game devs to make consistent revenue as a byproduct of the game.

True item ownership through NFTs.

This new digital asset class is busting open doors for players and developers 

Non fungible tokens use the blockchain to provide proof of scarcity (how many items there are) and proof of ownership. This allows players to trade items peer to peer in marketplaces both inside and outside of the game. 

This allows game devs to have a new monetization model - Market fees -

It would look something like this:

Imagine a limited skin being offered in fortnite. 

Call it Dragons Torch. This rare skin can be bought for $20 inside Fortnite. In the previous models that’s all the monetization a developer gets, from that initial sale. But if it was a NFT? And could be sold peer to peer? Fortnite could put a percentage fee on everything that item is sold on the market. If a player sells it for $50 and if Fortnite has a 2.5% fee they would make $20 + $1.50. That additional income they had  from having a trading ecosystem. So by having players own assets they buy and sell the game benefits. They’ll have a passive income stream that’s a byproduct of a healthy trading economy.

And that’s just the tip of the iceberg.

Next Chapter: Intro