Opinions expressed by Entrepreneur contributors are their own.
Anyone that has been on the internet in the last year has probably come across the term Web3. For those not in the know, Web3 is essentially the next generation of the internet. It is a key aspect of the much-touted metaverse alongside other emerging technologies such as blockchain, artificial intelligence (AI), virtual reality (VR), augmented reality (AR), 5G and the internet of things (IoT).
Proponents of Web3 argue that the technology will usher in an era of decentralization whose hallmark will be user-owned content and permissionless transactions.
Of course, there remains a fair way to go before Web3 becomes fully functional and accessible to the general public. But the effects of the technology are already becoming manifest in a few sectors.
Web3 impact already being felt in the gaming industry
Related: Become a Web3 Programmer in Your Own Time
One of the spaces Web3 is expected to impact profoundly is the gaming industry. Video games and digital play spaces with Web3 characteristics already exist, with the best examples being Axie Infinity and Decentraland.
Decentraland is a three-dimensional world where players can explore museums and art houses and buy and develop virtual real estate.
Another example of Web3 gaming is the popular fantasy football game, Sorare. In this game, players can use cryptocurrencies to buy cards of professional footballers from major leagues around the world. Cards in the game come in varying degrees of scarcity, and the rarer the card, the greater its value.
The game also has a marketplace where players can buy and sell cards. A rare card depicting Manchester United striker Cristiano Ronaldo was recently sold for more than $400,000 on Sorare.
Web3 will change monetization in gaming
Related: 3 Reasons Why Web3 Needs Protocols And Not Service Providers
Previously, video game publishers mostly made their money from sales of physical or digital copies of their games, plus whatever associated merchandise they could conjure up.
As for players, the only benefit they got from games was largely the enjoyment they derived from playing. Gamers spend bucket loads of money on game titles, in-game items and even additional downloadable content (DLC).
However, these games and whatever in-game items players bought often lost whatever value they had as soon as the player finished or grew tired of the game since they never really owned anything they bought in the game.
Related: Web3 Is the Future of the Creator Economy
With the emergence of Web3 and its associated technologies, such as blockchain, cryptocurrencies and non-fungible tokens (NFTs), the traditional monetization model for gaming is set to be turned on its head.
Blockchains are immutable ledgers that securely record every transaction on a network and allow for the creation of NFTs.
NFTs represent unique and verifiable data tied to virtually anything, including in-game assets such as weapons, costumes, avatars and virtual land. With Web3, NFT-based game items can be moved across different platforms and sold to other players on secondary marketplaces.
Related: Elon Musk Changes His Avatar To The Image Of An NFT From The Bored Ape Yacht Club Collection
Some Web3 games can also offer opportunities for players to earn passive income through the staking and yield farming of in-game cryptocurrencies.
Players receiving tangible financial rewards for the time and effort put into games is a profound premise that will offset the inequality that has existed for so long in the gaming space. It will also represent a relatively risk-free avenue for introducing millions of people to crypto.
For developers, revenue streams in Web3 will become more varied. Developers will be able to offer an array of in-game purchases and run in-game marketsplaces and peer-to-peer trading. Activities in these markets would provide game developers with an endless revenue stream. Web3 game developers could enhance their income from games by continuously releasing new NFT assets into games as they evolve.
Web3 gaming communities are the future
Related: Meet the Toys For the Metaverse Age
As we head into the age of the metaverse, the next phase of the gaming evolution will be expansive, bespoke game-publishing platforms that will bring together game developers and gaming communities.
While the concept is still developing, a few projects are cropping up to get a head start in what promises to be a lucrative space for gamers, developers and investors.
One such project laying the foundation for such amalgamated gaming communities is Iskra. The South Korea-based project is building a Web3 gaming ecosystem that will support both game developers and gaming enthusiasts on their Web3 journeys. Through emerging platforms, like Iskra, there is hope that Web3 can become a home for gaming communities rather than gaming monopolies.
New principles to guide the Web3 gaming space
The onus now is on game developers to create fun and exciting titles because, regardless of the opportunity to make money, players will not lock into a drab and boring game. As we advance, game developers in the Web3 space should consider design principles that uphold the spirit of Web3, which is based on the belief that all stakeholders must be fairly valued and rewarded.
The equitable division of spoils between gamers and developers can only be achieved if games are designed to be free, fair, transparent and inherently decentralized. Web3 games should decouple playing from spending as a condition for earning.
Related: This Is What Content Creators and Entrepreneurs Need to Know About Web3
The Web3 era should see more games moving away from the old pay-to-win model, where players spend actual money to receive in-game advantages. This model made gaming less fun and discriminatory because players without access to capital were forced to grind harder and longer to progress in games. At the same time, their paying counterparts breezed through them.
The advent of Web3 should also bring with it an unprecedented level of transparency in gaming. All key financial data about a gaming platform should be shared openly. Information about how a system generates money and how the income is distributed should also be made clear.
The equitable distribution of rewards between gamers and developers that Web3 will hopefully bring about should build trust, increase engagement, and create new revenue opportunities for gaming communities.
Decentralization is the basis of Web3, and as such, games anchored on the technology are expected to leverage blockchains to record and verify game outcomes and in-game transactions. Web3-based games can build themselves as decentralized autonomous organizations (DAOs) to meaningfully involve their communities in ownership and governance.