Video Game Market-as-a-Service model

I’ve been reading a lot about NFTs lately (example here) and watching long-form videos about them (here) and how they may interact with gaming. I largely agree with the premise of the gamesindustry.biz article that says “the reality is that you don’t need NFTs or blockchain technologies to implement any of the systems needed to enable play-to-earn” and “Most developers eventually moved from trying to crack down on gold farmers to just selling gold directly to players; play-to-earn would potentially reintroduce the artificial scarcity of in-game currency and powerful items or characters, and let the developer take a cut when players sell them to one another”

This got me thinking about markets within video games. Mobile gaming has begun to monetize everything about them – the free-to-play model, the cost to download the app, the in-game currency and marketplace for newer, better, faster, stronger items.

Why not enable gamers to sell to other gamers?

I believe this is the natural evolution of the gaming (mobile, console, and PC) economies of today. Loot boxes, buying skins, unlocking access to higher level weapons, items, strategies, etc. are systems that are now in place and are likely here for the long haul so long as companies like Activision Blizzard, EA, Microsoft, and others can continue to monetize the business.

My premise is: in the scenario where some gamers earn, buy, or otherwise acquire these items that are somehow valuable to other players, why not let players buy them from each other? There are 2 major hurdles to overcome:

1. Cross-studio markets: How do you get multiple game studios to work together?
2. Transfer: how does a skin/weapon/other item get transferred to another game?

The answer I have is an embedded “market as a service”. Effectively, creating a categorization and matching system of sellable items across games that allows like to like transfers of ownership and movement of items across platforms that exists natively within the games that would want them.

For example, Destiny (developed by Bungie, but playable across all platforms) might offer a skin for a character. Halo (developed by Microsoft studios) might be able to make use of that skin on the players’ characters if it has the correct attributes that could be assigned by Destiny.

Players on the Destiny platform could then put their skin on auction – say they won it in PvP or leveling themselves up or paying for lootboxes. Halo may not offer the same set of lootboxes, rewards, etc. but could still make use of the skin if it was built to handle this type of market.

In the middle of this transaction would be a company offering this video game market as a service platform to enable the categorization, payment, distribution of funds, and unlocking of an item between players.

The biggest risk to this type of endeavor would be

• Platform adoption (the mechanics of other marketplace tech companies absolutely apply here – the more actors bought in, the better the value of the marketplace, the fewer, the worse)
• Rigging the transaction to not disable the existing skin from the seller i.e., once sold, the transaction must be honored – this might be a difficult concept to get around given the security level of different game developers may vary
• Refunds: this could be handled similarly to Ebay or Amazon, but all digitally, removing the need for shipping fees, verification that an item has been returned, etc.
• Creating the assets on the games that are not meant to have the assets i.e., how would Destiny support a Halo asset or, to extend further, how would Apex Legends support a Fortnite asset?

Why did I bring up NFTs in the beginning? Because none of the above would need any NFT, Blockchain, or other crypto-related offering just to support this system. This would just be facilitated by a middle-person who would be responsible for the effective transaction between games and their players.

How would it make any money? Similar to marketplace dynamics – the market sitting in the middle would facilitate the movement of funds and take a minor fee (maybe stepped similar to other usage models), each of the game studios would take a minor fee, and the rest would go to the player selling the item. The problem of how to ensure different video games have different assets could also be solved on a fee basis e.g., if you create an asset that gets bought or sold, you, as a developer, could profit from it as well.

The marketplace, depending on volume of activity, could enable geographically compatible trades at lower fees than international (e.g., moving funds between Mexico and the US would be more costly than moving funds within the US). The fees themselves could be variable based on transaction speed or surge pricing if similar items have a higher demand. Sellers would, of course, have similar access to this information to enable them to price to demand. Buyers would have the option to choose their seller. Given these are all digital goods, there is no real seller risk.

This same market could work within the game as well, especially given some of the dynamics of more eclectic games e.g., Borderlands’ procedurally generated gun system could create some incredible guns that could be bought or sold to other Borderlands players and could be excluded from a broader marketplace (I don’t think a Borderlands gun with fire or caustic effects would do someone in Halo much good without neutralizing what makes it fun to use in the first place).

This as a concept of a Play to Earn strategy would make a lot of sense. As a game developer, you’d keep players on your platform (especially if the loot/skins, etc. are valuable) and as a player, you wouldn’t necessarily need to level up or burn many hours to acquire something that you might get for cheaper.

In terms of like to like items, to ensure the marketplace doesn’t cannibalize the expected economy of the game itself, game developers integrated with this market would be able to pick and choose what they might want en masse. E.g., if the game developer wants to allow skins to be bought and sold, but some skins are also for same by the developer, the revenue generated from a player buying the skin directly from the game developer would be greater than the fee collected via the marketplace. As a result, the game developer should be empowered to remove items that conflict with their own marketplace. This helps keep the marketplace offering as an “additive” offering for the player rather than cannibalistic for their own platform.

I’d love to see this be created and would love to partner with anyone interested in creating something like this. Adoption will be a massive hurdle, but I think it could be even more relevant and more quickly adoptable than NFTs, blockchains, and other snake oils being sold.