Web 3.0 and Video Games: The Changing Paradigm

With the dawn of a potential new paradigm of the architecture of the flow and storage of information, the excitement and hype around predicting the future is at an all-time high. Millions of opinions from thousands of people are heard every day, with a reimagining of the internet being proposed daily. But how many of those opinions are born from a train of thought regarding genuine innovation, and are truly brought forward by visionaries, not peddlers?

What is Web 3.0, what does it promise, and what does it have to do with video games?

Web 3.0 promises a decentralised architecture where decision rights, information, and security belong to everyone participating. It envisions a democratic system atop a few traditional online activities, namely finance and community interactions.

It achieves this through blockchain, a decentralised ledger that guarantees automated security, immutability of decisions, and a platform of computational power on which democratic activities can take place.

Blockchain - Basic information on Blockchain
Smart Contracts - Basic information on Smart Contracts
Consensus and democracy - Basic information on how consensus is achieved

Alongside blockchain, the new Web 3.0 promises to bring to life a concept from the 70s and 80s - the metaverse. A radical concept for its time, the promise of the metaverse borders on escapism, particularly escaping to participate in an alternate reality unbound by existing social factors. Boiled down to its essence, the (or any) metaverse is a virtual universe focused on social connection, a single physical universe where everything comes together simultaneously. One can think of it as "IRL internet".

By leveraging blockchain and metaverse, Web 3.0 imagines a new iteration of our digital experiences. The promises of blockchain - guaranteed proof of ownership, and automated, secured transactions of any asset; and the promises of metaverse - a single universe for social, economic, and communal activities; they all converge into one media that consistently involves human to human interaction and creation of assets - our video games.

What do we need and expect out of our video games?

Video games started as and still remain a simple medium for entertainment. Combining the social and communal aspects of sports and discourse inducing presentation of films, video games also offer a platform for many shared activities. Growing from a "childhood pastime" to a "serious" hobby for adults, the medium has seen a huge shift in what is considered successful. Just as movie genres keep changing to the context of the world, so do video game genres, mechanics, and presentation.

Even though our motivations to play video games are complex, the expectations are quite simple. We want our video games to be platforms to fulfill our basic social and aspirational needs. RPG games for those who want to be involved in creating stories, competitive games for those who like to practice and get better, wholesome games for those who want to wind down, and so on and so forth.

Here, there is a small subset of games that deals with the desire of being a craftsperson and another that deals with social interactions. And these games are ripe to be a pilot study for all proposed Web 3.0 concepts. Large MMOs are the first iterations of all metaverses, and games that involve crafting or creation require technology to prove and facilitate ownership, as well as transactions for an internalised economy if the participants want it. Other examples are games based on real-world games that involve ownership, those being card games and deck-building games. They lack the metaverse aspect but are a smaller and simpler space to conduct research and market fit for blockchain tech in games.

But these concepts are technology, not features. They must subserve larger goals that are driven by player wants, and needs. We must analyse the technology and its application through the context of these goals to scrutinise it effectively.

Rather than definitive statements, I wish to leave the reader with questions that can help everyone become watchdogs for the new coming age, and if it's worth the hype preceding it.

Promise 1: Play-to-earn

As automation, AI, and abundance of resources challenge the notion of work, labour, and our relation to it, we may soon look at a future where work can be replaced by leisure or pleasure activities for a larger part. A stepping stone towards that would be to allow people to make leisurely activities a part of their livelihood, to allow them to earn money doing things that do not traditionally count as value creation labour.

The play-to-earn promise helps us envision that it may be possible to create a complete or partial livelihood by playing video games. This would take the form of creating value inside a supposed metaverse or game economy, in the form of intangible goods deriving value from being luxury items. But in its initial phases, no one knows how much someone could realistically earn from play-to-earn. Can a dollar a month be considered a fulfillment of the promise? Does it have to exceed double, triple, or quadruple figures to be truly meaningful? How will it be distributed and will there be a huge gap between top earners and bottom earners? And how will value be generated for spenders?

An economy generates value by creating goods and services that participants pay for, thereby moving capital from those willing to spend to those offering their time and labour. This means that there must be participants in the economy who are creating the value that other participants are willing to pay for.

If the game is merely a platform for content creators and content providers, then the concept has already been proven by Roblox, RecRoom, and other UGC based games. The only issue a blockchain could help with is managing the transactions and creating digital scarcity of the content. But if the spenders are only buying goods in hopes that someone will pay them more at a later date, i.e. investing, then it can quickly devolve into a ponzi scheme as the goods have no intrinsic value besides the money they can fetch in the future.

But all the hype around blockchain comes from the distributed computing power that can uphold ownership and consensus using mechanisms such as smart contracts. So instead of value being purely generated within the economy, can we not consider how value can be brought in from outside?

As of now, the only ones to monetise players' data are the companies that sell it. But what if we gave players true ownership of their data, and gave them a choice on how much they would charge for it? The game where the data is generated will provide the key context to it and also serve as the ad space to utilise it. The data and the context of its creation can be bundled together and sold to advertisers to create value for the economy. This is but one example of how value could be brought in from outside, which is not an easy strategy for game companies to consider given how much control they would have to relinquish. But touting Web 3.0 technology also means swallowing the bitter pill and realising that the content creator truly owns their content, and that data is content.

At this point, it is very hard to predict how the future of play-to-earn will unfold. It will include multiple mechanisms where value is created within and brought in from outside the economy, with complex relations between games, players, and spenders. Those entities may or may not be players themselves, which will ultimately decide how viable it is to earn a complete or partial living from playing video games.

Promise 2: Ownership

The mechanism securing a non-fungible representation of any digital asset has opened up a huge discussion point for true ownership, at least one that many game devs are propping at the front of their game's promises. But in the world of centrally backed guarantee about ownership, how true does this hold? We own the mobile devices in our pockets, but the end user agreement dictates that software support can be disabled by the manufacturing company rendering the device useless or incapacitated (read more about how Tesla does it). Regardless of the reasons and many implications behind such decisions, the fact remains that ownership of hardware does not always guarantee the owner the ability to use it on their own terms.

With this in mind, can players be truly assured of asset ownership in games? What happens if the game shuts down? What happens if the asset you own has gameplay imbalances, and has been blacklisted? None of these incidences are new; many cards are blacklisted at competitive events for Magic the Gathering. It's not even exclusive to just physical games, as many video games have specific builds, loadouts, and items blacklisted in competitive contexts. The conflict arises when these restrictions do not arise from a consensus between the players first.

The concept of ownership is truly tested in an environment that lacks democratic decisions. There are numerous voting and governance mechanisms used to achieve consensus in an environment built on top of a blockchain, but if the minority's consensus overrules the majority's desired outcomes from assets they own, then the concept of true ownership cannot be guaranteed. There are exciting times ahead as game devs are already heavily involving players in the development process, and with the possibility of voting and governance mechanisms in the hands of players, their opinion is going to matter much more. But a lot of failed experiments will be seen before we reach there.

The future

The future is easy to predict, as no one will hold the predictor accountable and they will be forgotten by the time it arrives. Actually realising the future is harder though. Many people are involved in attempting to realise it, including the misguided, the piggybackers, and the peddlers.

Web 3.0 may be a technology that allows us to reset and reimagine our digital experiences, or it may be a bust, perpetrated by unfeasible technology that solves no one's problems. Play-to-earn may be a stepping stone into a new age of society where we have automated our tedious labour, and have time to find value in luxury activities. It may even lead to other verbs, such as play-to-bond with other humans or play-to-grow into better people. There may be a metaverse that connects us or a metaverse that divides us, both at the same time, as social media has done.

What I can predict is that we need people to question everything, inside and outside the industry, so that we, as a collective, progress in the correct direction.