Written by Ethan Levy, Executive producer at N3TWORK, who is building his first blockchain game.

Ethan is always looking for worthy, free-to-play mobile games for the N3TWORK Platform. Ask him about a free, $10,000 UA test for your game. Thoughts and opinions are his own and do not express those of his employer.

This post is sponsored by Xsolla. If you’re interested in growing your business on mobile and beyond, look no further. Xsolla has dedicated tools that will help you create your own online commerce platform, improve your performance marketing and discoverability, and expand your game business on mobile and PC. Check out Xsolla’s solutions for more information.

Psst… if you need someone to ask stupid questions about blockchain gaming on your behalf, Deconstructor of Fun got you covered! Just check the podcast ☝️ or the YouTube video.

12 years ago, while working for the Chief Creative Director at Electronic Arts, I was part of an effort to evangelize microtransactions, in-game purchases, DLC, and other forms of incremental revenue across the EA game studios. Although EA had plenty of success stories - from the gacha packs of FIFA Ultimate Team to the premium subscription of Pogo - I remember a generally icy reception. We would tour various studios around the world (those that would have us, that is), putting on a daylong summit to highlight successes from inside and outside the company. One high-ranking exec just straight up fell asleep across the conference table from me during an afternoon presentation.

I remember standing up in front of a packed room in Orlando, telling the studio behind Madden about the F2P success of Maple Story and asking them how microtransactions could take Madden to $1b in annual revenue? I wasn’t laughed out of the room per se, but it certainly felt that way. I believe now-CEO Andrew Wilson’s exact words were “Ethan, you snot-nosed, little imbecile, what are you doing wasting all these talented people’s time?”

OK, maybe that last part didn’t happen. Mr. Wilson did correct an overly inflated number I gave for Madden’s annual revenue in front of maybe 300 people. And I wanted to run away and hide forever. Instead, I soldiered through another 45 minutes of MTX boosterism.

Anyways… here we are 12 years later and Live Service and Other revenue account for nearly 70% of EA’s revenue, with Full Game sales making up an anemic 30%. GTA5 has spanned 3 console generations thanks in large part to GTA Online. Rainbow Six: Siege, instead of being an annualized release like CoD or Battlefield, is on its 6th year of live operation. As a lifelong hardcore gamer, I didn’t even believe in microtransactions at the time I was first evangelizing them. But completely by the dumb luck of getting hired at the right time, I was tasked with prophesizing a revolution, already years in the making, that would transform the games industry as we knew it.

From my perspective, there is a direct line from the European browser and South Korean net cafe hits, to the explosion of Facebook gaming, to the ascendance of mobile free-to-play to the dominance of live services revenue in EA’s 12-month earnings. The seismic shift enabled by microtransactions and live services won’t be complete until there are no more annual releases because every tentpole AAA game has transformed into a live-operated platform.

But all of this is just the preamble to the real meat of this post. Having gone through one massive shift in the way games are built, operated, and played, it senses that we are on the precipice of another. After years spent as a crypto-skeptic, my spider-sense is telling me that this moment is very similar to when Facebook gaming first started blowing up. I believe we are on the cusp of another seismic shift. A shift enabled by a new business model. A shift that expands the audience for gaming and forces us to design games in a new way. It is my hypothesis that just like free-to-play before it, blockchain gaming will transform the games industry over the next decade and beyond.

Given that hypothesis, here’s why I believe the blockchain isn’t just a passing fad, but an inevitable revolution in the way we make games.

#1 The Blockchain Experience Will Improve

If you are a crypto-skeptic, there are plenty of legitimate reasons to think this business model won’t go mainstream. “It’s full of scams.” “There’s too much friction.” “How do you even play these games?” “This tech is terrible.” “The environmental impact is monstrous.” Every one of these reasons to doubt is really just an opportunity to improve what exists and make blockchain games that are more fun and accessible.

Many of these criticisms are the same ones I remember having in the early social gaming days. “Oh, this is just another ‘do quest’ game. You just press a button to do the quest, then you press another button to do the next quest.” I remember dismissing games as having terrible art, not being games, being Skinner boxes, having bad tech, being too confusing, etc, etc. The critical mistake I made was dismissing these games from my perspective as a hardcore gamer. Had I instead studied them to try and figure out what appeal they held to those players who did enjoy them, Dragon Age: Legends may have been social gaming hit instead of a Facebook flop.

I do think it is worth touching on the environmental impact criticism, as this is very unique to the world of blockchain. Proof of Work-based systems like Bitcoin and Ethereum is undeniably bad for the environment. However, not all chains are created the same. For instance, many projects are being built on more environmentally friendly Proof of Stake chains like Solana, Flow, and others. I believe that the environmental impact of all chains will be addressed in time, and there is a great business opportunity for those eager to be part of the solution.

#2 Asset Ownership Will Drive Player Choice

Imagine you are the type of player happy to spend $2 million to be the top player in a 4x game. You’re looking for something new, choose between two games in your favorite genre. In one, you invest in a city, raise an army and go to war with other players for control of territory. You can make some progress for free, but to really get ahead you buy resources from the devs. If you start this game you’ll end up spending $2m over a few years, and when it’s time to move on, you abandon your city and army to be ransacked by some lucky player.

In the other game, you invest in a city, raise an army and go to war with other players for control of territory. But in this game, you can buy a city from another player, skipping months of grind. When you need additional resources, you buy them from other players. When you’ve tired of the game, you sell off your city and army to another player. If you start playing this game, you will end up spending $2m over a few years, and when you’re done let’s imagine you are able to get $1m back from selling your assets.

Which game would you play? If you’re telling me you wouldn’t play the game where you own your assets, I’m telling you you’re lying.

But very few players can, let alone would, spend $2m in a game. So let’s imagine a second player type on the other end of the spectrum. You enjoy 4x games, but will never spend any money. You maximize your free resources, are highly engaged, and play a strong supporting role in your guild. You have a choice between two games. In one, you invest in a city, raise an army, etc, etc. If you choose this game, you will play three hours every day for 9 months, spend no money while playing and receive no money when you quit.

In the second game, everything is the same, but you can carve out an economic specialty selling archers to other players. You still spend no money, you still play a supporting role, but this time you can profit from your playtime. If you choose this game, you will play three hours every day for 9 months, spend no money, and earn about $500 a month selling your archers to other players.

Again, which game would you choose? If you believe that blockchain games will ultimately become as accessible as free-to-play mobile games, it is clear that a game where you own your assets is more desirable to play than one where you do not. 

#3 Decentralized Autonomous Organizations Will Extend Product Life

If you’re reading Deconstructor of Fun, there’s a good chance you’ve got a recruiting email for a successful, stable, live game that’s been running for years. The role is perfect for your skillset, the work/life balance would be great, everything about the role is appealing except the game. If you’re like me, you delete this inquiry immediately and never give it a second thought. Personally, I enjoy the early part of a game’s development and lives best. Optimizing and keeping things steady is not my favorite creative task.

But there are free-to-play browser games out there that have been running for over 20 years. And who knows, their communities might propel them to run for 20 more? Just because a distractible dev like me may no longer feel a burning passion about a game, it doesn’t mean the community feels the same. In fact, I’ve found that no matter how passionate I am about a game I’m working on, there will always be players in the community who feel more passion and ownership over the game than I ever will.

This is why Decentralized Autonomous Organizations (DAOs) are so interesting. One could build a game and community, find success in the market, and set the game up to be run by a DAO such that the community had all the tools, access, and funding necessary to turn the game into a perpetual motion machine. Sort of like open source, but with the added benefit of a community-controlled bank account that can be used to build and maintain the game, or even extend it to new experiences. Given the proper toolset, a DAO could extend the life of a game far past when any corporation would have sunset it.

This is the most utopian part of the blockchain game vision; the sort of claim that I am normally scoffing at. Building a stable, long-lasting DAO does not sound easy, and I’m sure many will try and few will succeed. But the more I think about it, the more appealing I find the idea of a completely community-run game world.

Believe In Blockchain

If you started reading this article as a skeptic, I likely haven’t changed your mind. If anything, I’ve only reinforced the arguments you have for why blockchain gaming is bullshit. But as I explained in the opening anecdote, I’ve already lived through the mistake of committing years to work in a paradigm shift without truly believing in the new business model. And the results were disastrous. Blockchain gaming is going to transform the business of game development, and only by truly believing in it, will you be able to design the games that will succeed in this new world.

Written by Ethan Levy, who is always looking for worthy, free-to-play mobile games for the N3TWORK Platform. Ask him about a free, $10,000 UA test for your game. Thoughts and opinions are his own and do not express those of his employer.