What to Expect from Web3 Gaming in 2023

What to Expect from Web3 Gaming in 2023

This is the first in a three-part series of forecasts for 2023 prepared by Brevan Howard Digital team members. In the second part (morning), they explore the world of NFTs and digital products, while the third part on Thursday is dedicated to infrastructure, regulation, and trade. The last two years on web3 have been noisy: the roaring bull market in 2021 and the cacophony of bad news echoing into 2022. Heading into 2023, some final aftershocks from the FTX crash will hit the market, but the damage is there; it’s primarily done. Over the past year, the crypto market has taken a massive dive, bad players have been exposed, and weak companies have gone out of business.

Despite the market turmoil, developers have continued to build, and the development of web3 infrastructure and applications has continued to accelerate. Institutions continue to adopt web3 technologies rapidly, and this adoption is increasingly spreading to all institutions, including financial institutions, consumer brands, gaming companies and social platforms.

While 2021 and 2022 were noisy, 2023 will be relatively quiet on the surface as web3 no longer makes daily headlines. In this calm, the excellent implementation cycle of web3 Technology will accelerate. At the application level, we anticipate the incredible adoption of web3 in global stablecoin-enabled payments, established brands offering digital products, and gaming companies adopting web3 more. Without further ado, here are our first predictions for 2023, focusing on Gaming.

Game studios integrate NFTs into their existing games

In 2023, we will continue seeing Web2 game studios engaging with Web3 and entering what we consider “Phase 4” of Web3 game adoption. 

Stage 1: Internal monitoring and experimentation (e.g., B. Web3 Accelerator program.) Ubisoft’s Entrepreneurs Lab, which has supported web game studios3) 

Stage 2: Invest in Web3 game startups to get an even deeper understanding of how Web3 Web2 games and the underlying Technology improved (e.g. Horizon Blockchain Games’ investment by Ubi, soft and Take-Two Interactive).

Stage 3: Web2 game studios create web3 game subsidiaries, often in partnership with crypto-native companies and investors (we can’t announce any of these publicly, but we saw a few in 2022). 

Stage 4: Established Web2 game publishers will integrate Web3 elements, specifically NFTs and crypto payments, directly into their Web2 games (not through independent affiliates).

Just as the language change from “crypto” to “web3” has attracted more non-crypto natives, the change in terminology from “NFT” to “digital collectibles” should help traditional game studios bring NFT directly and with less backlash in introducing games by players. While we expect traditional game developers to proceed with caution (remember that Ubisoft called Ghost Recon NFTs “digits” and still received backlash), the introduction of “digital collectibles” in games with the equivalent secondary liquidity will not last 10 years it took time for free-to-play to start catching on. We’re sure we’ll look back on 2023 as one of those pivotal years that finally helped Web3-enhanced games break into the mainstream.

Gaming interoperability emerges (in unexpected ways)

No one said, “I want to take my Peely skin from Fortnite and put it in GTA!” We’re unsure how the narrative above developed from Web3 games’ “interop.” In 2023, we look forward to seeing the *real* benefits of Web3 interop and composability in games, which will showcase how adding programmable digital elements to games improves gameplay Player Reputation/Identity: The game recognizes and classifies crypto assets (including NFTs). The user already owns and provides them with in-game assets that match the type and quality of the assets in the wallet. RTFKT CloneX in your wallet will provide you with a similarly ranked one Asset awarded/rewarded for the game you connected to, which you can now use to improve your gameplay.

Over time, Web3 part matching will expand to more general customer targeting based on portfolios (e.g., if you are a whale, degenerate, or newbie) and port status across all games (like frequent travel programs sometimes recognizing the status of other brands.)

Savvy Games Group makes a big splash

In late September 2022, Savvy Games Group (“SGG”) announced that it would invest approximately US$38 billion in games by 2030 to place Saudi Arabia at the forefront of the global Gaming and esports bring ecosystem. SGG is funded by the Saudi Arabian Public Investment Fund (“PIF”), which has an estimated $500 billion under management and invested ~$3 billion in Activision Blizzard, Electronic Arts, and Take-Two Interactive in 2021. PIF’s allocation to SGG is the most significant in its 50-year history, showing Saudi Arabia’s importance on gaming growth. This is not surprising given that 89% of the Saudi population currently play games, the highest per capita figure in the world. 

SGG has acquired significant stakes in Nintendo, Capcom, Nexon, and Embracer Group. With the additional $38 billion, SGG plans to launch 250 gaming companies in Saudi Arabia, create 39,000 jobs, increase the gaming industry’s contribution to GDP, and raise about $13.3 billion by 2030. Overall, SGG’s game investment immediately puts it in the same category as gaming titans Tencent, Sony, Nintendo, Microsoft, and NetEase.

So, how will SGG differ from these other game monsters? We anticipate that SGG will be more than just a bunch of random web2 game assets. Instead, we believe SGG will be far more prudent in allocating its capital, leaning heavily on an area where it can become “the player” (rather than one of many players): Web3 Gaming. SGG has a unique opportunity to create new value and innovation. Necessary in games to methodically build an ecosystem of Web3 games. If SGG continues to recruit well and realizes that it aspires to be the leader in Web3 gaming, it will have a lot more impact on the future of Gaming through Web3-enabled Gaming than many anticipate.

Tomorrow we’ll look at the world of digital goods and NFTs, which will continue to gain acceptance through 2023.

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