There has been a lot of talk about Web3 recently, with grand claims about how disruptive it will be for a range of sectors. Most technology experts agree that its arrival is a certainty, but there are still several challenges to overcome. Many estimate it will take at least five to ten years to truly get there.
Certain elements already exist, such as blockchain and Non-Fungible Tokens (NFTs). In addition, Facebook has rebranded as Meta and is investing heavily, and Virtual Reality (VR) has gone increasingly mainstream.
As is often the case, the gaming sector is one of the forerunners of innovation. When people explain how Web3 might work or look, they point to platforms like Roblox, games like World of Warcraft or Fortnite, or worlds like Second Life. However, these only provide hints - Web3 gaming is likely to be based on very different models.
How will Web3 gaming change things?
Many pieces are already in place for Web3 gaming, but it is still early days, and some of the predicted changes have yet to be integrated. For example, gamers are already familiar with in-game purchases using fiat currency. This hasn't changed much over the past decade, but it is an aspect that will be significantly impacted in the future.
Currently, in-game goods are hosted on the game publisher or developer's central server, and they tend to be the primary beneficiary. Consequently, publishers often actively discourage players from trading game products, and if they shut down their servers, everything is gone. However, this will change when games are on the blockchain, as gamers can 'own' a digital product like an NFT and will be able to use it in multiple spaces or even sell it for cryptocurrency.
This is not entirely new, as Web3 games and game spaces already exist - the scene is still nascent, but it is developing fast. Web3 gaming already accounts for 49% of the crypto industry's blockchain use. The BGA Blockchain Game Report 2021 found Game NFTs reached $4.5 billion in trading, accounting for 20% of all NFT sales last year.
The technologies of blockchain, NFTs, and gaming are starting to blend. An interesting example of this, and the burgeoning play-to-earn (P2E) model, is Axie Infinity, built on the Ethereum blockchain. The game uses NFTs and tokens and has proven incredibly popular, with AXS tokens rising by 20,800% in 2021.
Many of the current game industry models still favor the publishers, but that is starting to change. An excellent example of this is being pioneered by Iskra, a Web3 game community platform.
Eugene Lee, the CEO of Iskra, explains, "Web3 gaming is still in its infancy, but there is a lot of interest, and communities are forming. So we wanted to provide a place where early adopters, players, developers, and investors can get together and explore exciting opportunities.
"This community will help us mold the Web3 future. Gaming will increasingly take place on the blockchain, and Iskra aims to be the Future of Play. This will be a gradual process and involves tackling more traditional approaches to gaming where the main beneficiary is the publisher or the publishing platform. Web3 is changing that model to something more inclusive."
Who are the beneficiaries of Web3?
"Our platform's community-forward system aligns interests by rewarding stakeholders based on their participation, which includes game developers" Lee says. "We offer a place that provides seamless blockchain integration for anyone who loves gaming. At the same time, we are redefining the game-publishing model by giving back to both developers and players.
"For example, by addressing game developers, players and investors as one community, and putting everyone on the same side of the table, we can more easily address the growing pains of the P2E category. We provide sustainable tokenomic solutions for game developers who are new to web3 , and who may not have the technical resources or expertise for blockchain services, allowing them to focus on building amazing games. This helps bridge the gap between early adopters and the mainstream by combining enjoyment, sustainability, and the latest in blockchain technology."
Iskra's business model collects platform fees for on-chain activity, transactions, and publishing fees. But it then gives this back to the community in the form of incentives and rewards based on participation and contribution. It's an approach that benefits all stakeholders, and its concept is proving popular. Although Iskra was only formed at the end of 2021, it has already raised US$34 million, led by Krust Universe, an investment arm of the Korean tech giant Kakao.
Lee says, "Things are happening fast. With backers like WeMade, NHN, and Neowiz, it is clear our model is something people believe in. We've even secured a US$200 million game fund with Krust Universe. We are planning a limited but public NFT sale for the right to operate our network nodes in the 2nd quarter, an initial DEX offering (IDO) in the latter part of Q2 or Q3, and several games starting in Q3 through end of the year.
Iskra's model gives another glimpse at how Web3 is likely to play out. Lee adds, "We reward participation and plan to return platform fees to developers, gamers and investors alike. This creates a more sharing community and shifts away from traditional models where the publisher is the main beneficiary. I think this is what Web3 gaming will be about."
Two things are certain - Web3 is coming, and it will transform the gaming industry. It may take years to arrive in the form many tech experts envisage, but the pieces are already falling into place.
