There’s a unique opportunity for mobile operators to help push blockchain-based content and crypto currencies into the mainstream, Tony Pearce, co-founder of Reality Gaming Group, thinks there is
In the nascent days of mobile games in the early-Noughties there were two issues that dominated industry discussion: solving fragmentation of Java-based handsets and determining publishers could leverage Direct Carrier Billing (DCB) to push what were rapidly evolving business models.
As it turned out both conundrums were solved by the iPhone and its App Store. Suddenly there was a huge target market of smart devices with its own billing ecosystem outside of the mobile operator ‘walled gardens’, with delicious APIs for developers to use that hooked into the slick user experiences Cupertino began to roll out.
Over a decade on and with the help of Apple’s peers such as Google and its Android platform, mobile game developers have a raft of options open to them when it comes to monetising their content: paid downloads, subscriptions, in-app purchases, or a heady mixture thereof.
But we think there could yet be a significant role for DCB to play to help grow a new segment of games – one that has the potential to utterly disrupt established video game business models.
Here’s why. A little over two years ago my company, games studio Reality Gaming Group, decided to forgo traditional forms of fundraising to conduct an Initial Coin Offering (ICO) – we raised $2.5m via a completely new financing mechanism that leveraged the blockchain and the crypto currencies that run across it.
The capital was ostensibly used to build and launch mobile AR combat game Reality Clash, which soft launched earlier this year. But planning the ICO got us thinking – what if we could use our own crypto currency within the game, allowing players to buy and trade in-game items such as weapons?
You see, the ‘traditional’ market for in-game virtual items, on both mobile and console platforms, is very restrictive for players, with publishers and platform holders retaining control over both the digital asset inventory and the commercial upside. In 99% of titles when a player buys in-game items they don’t actually own anything, they just get a license to use the item in the game
But why can’t they sell these items to their friends when you have finished the game? Why can’t they use these items in other games, after all they paid for the item. And what happens if the game goes bust or if the publisher decides to stop supporting it? The player loses everything they paid for.
The blockchain, however, has the potential to blow this restrictive model wide open – what we’re talking about is a rapidly-emerging ‘crypto collectibles’ segment in video games, all managed using so-called smart contracts connected to the Blockchain. These are known as NFTs (Non Fungible Tokens).
In short, games likes Reality Clash can use the blockchain to allow players to actually own the items they buy. These items are limited edition weapons which can be traded online or used in the game. The items are purchased in the Armoury Store with the Crypto token called RCC Gold – the player can buy RCC from online crypto exchanges and transfer their RCC directly into their account in the Reality Clash game.
The assets are tokenised and registered to the player on the blockchain and as such are theirs to do with as they wish (the assets can even be used in other compatible games from different publishers), without any interference or control from us as the game’s publisher.
The potential is eye-watering, with estimates of $200 billion in terms of an addressible crypto collectibles market.
There’s a snag, however. How many times have you spoken to someone about crypto currencies or the blockchain and felt your eyes start to glaze over? It’s a complicated ecosystem to get your head around, and it can be an equally bewildering process to actually buy a crypto currency such as a Bitcoin in the first place, let alone use it to buy virtual items in a mobile game.
We factored this steep learning curve into our planning, making sure Reality Clash is playable without any need for the player to get involved with buying RCC from online crypto exchanges. Indeed, if a player wants to get involved but isn’t familiar with crypto exchanges we’ve made it possible for them to purchase bundles of RCC Gold via our website using just a debit or credit card, with no need to visit third party crypto exchanges.
But not everyone has a credit or debit card, especially in emerging markets, and this is where DCB could have a crucial role to play. Think about it: buying crypto or games tokens on a phone account shouldn’t really be any different from any other purchase that has been transacted that way over the last two decades. In fact, earlier this year AT&T was among the first mobile operators to welcome Bitcoin into its ecosystem via an integration with BitPay.
However, as a mobile economy we need to come together to smooth out how the process will work. Everyone, both consumers and merchants, understand DCB (subconsciously in terms of the former) – it’s why it’s so popular as a means of payment all over the world.
The issue for us as a content provider is that the DCB ecosystem can be fragmented and confusing place to do business. So we’ve opened up dialogue with operators to discuss how we can work together to unlock the potential that lies within. It’s like travelling back to 2003, but with less WAP.
Ultimately, there’s an amazing multi-billion dollar opportunity for creators of crypto collectibles (plus wider blockchain-based businesses) and crypt currencies and for the platforms that can facilitate the associated transactions possible. Let’s grasp it.
Tony Pearce is co-founder of Reality Gaming Group