By Igor Plusa, CMO and co-founder of Game Lounge
In 2021, metaverse became a ubiquitous presence in our lockdown-ridden lives, facilitating virtual interactions during the pandemic hellhole. So much so that metaverse entered the Collins Dictionary’s shortlist to become the 2021 Word of the Year. According to a Bloomberg report, the metaverse market was worth $479 billion in 2020 with a 13% annual growth rate. Out of this staggering market size, the video-game industry contributed a whopping $275 billion and will rise to $413 billion in 2024.
Neal Stephenson who first conceptualized the metaverse in his famous science-fiction novel, Snow Crash, raised questions about the spectacular market size. Although Stephenson was speaking about the implications of Facebook entering the metaverse market, his concerns about revenue generation are all-encompassing. He asks, “What’s the business model that is making it possible for people to make money off of it?”
If we introspect deeply about Stephenson’s question, two important things come up. First, the metaverse in its current form operates in a top-down approach with little contribution from its most active participants. In an owner-take-it-all structure, users have very little to contribute and gain. Second, without the participation of a large user community, the market and revenue growth gets affected. It fails to tap into the individual productivity metaverse participants, making them passive recipients rather than active contributors.
However, the scenario is gradually changing with the slow but steady growth of metaverse real estate projects. Rather than simply coming into the virtual world to play games and then leaving, users are exploring opportunities to build game-scapes. Players build these gaming spaces from scratch, creating their own pad to socialize with other gamers while playing games.
In 2021, the nascent metaverse real estate sector recorded $500 million in total sales. We can expect the industry to grow further in 2022 with more gamers deciding to design their own gaming arenas. But the question is—why do players feel like designing their own spaces? Is that beneficial for the industry? The following sections will elaborate on each of these questions respectively.
Personalizing the metaverse
At the moment, players have to satisfy themselves with the gaming environment that big companies design for them. Games are a social activity through which players forge long-lasting connections with each other. But when that happens in impersonal, emotionless spaces, it takes away the fun and essence of entertainment from these games.
After all, gaming arcades in public parlors revolutionized gaming because they helped forge robust communities around them. Friends and family came together on weekends and during leisure hours to socialize and enjoy playing games. The social aspect of gaming was lost with company-made video games where everyone was ultimately alone even in multiplayer settings.
The metaverse provides a new opportunity to bring the social aspect back into the online gaming experience. Instead of passively participating in these metaverse gaming ecosystems, users are actively developing and designing them according to their preferences. It is as if users are making their own personalized gaming parlors where they socialize with their friends and play games.
Once users start to personalize the metaverse according to their tastes, the options are practically limitless. They can recreate an Irish pub, German Biergarten, Vegas-style casino or a classic wild western saloon complete with mahogany tables and marble tops. Then they can invite their friends to hang out in the metaverse and play with them.
However, most metaverse games, especially those running on blockchain technology, do not offer an immersive, high-fidelity gaming experience for their players, unlike leading traditional games. If blockchain-based metaverse gaming is to become successful, it must focus on providing a AAA gaming experience. Thus, besides customization, gaming platforms should never compromise on cutting-edge graphics. For example, Game Lounge provides a platform to customize the metaverse with high-end graphics using Unreal Engine 5.
Customization diversifies monetization structures
When users start personalizing a metaverse with custom features, it opens up new avenues of revenue generation. Unlike designed games in-house, community participation rewards different stakeholders in the metaverse market.
To begin with, NFTs are the fundamental building blocks of the metaverse real estate sector through which users design their personalized spaces. A parcel of land, virtual furniture, gaming boards, tables, and everything else is practically an NFT on the blockchain network. Thus, customization directly benefits those users who deal in NFT trading. For example, they can buy an NFT chair at $50 and resell it at $100 in the secondary markets.
This kind of ‘flip’ trading will encourage artists from the gaming community to come forward and design these NFTs. Moreover, customization helps creative professionals to contribute their digital designing skills to the gaming ecosystem. Without any centralized intermediaries taking a share of their profits, artists directly benefit from the new economic structure. For each sale, the metaverse platform takes a small percentage and the rest goes to the designer for their contributions.
Metaverse real estate gaming projects also provide advertising opportunities to all its users. Just like any real-life stadium game, owners of the gaming arenas can have designated advertising spaces to earn revenue. Advertisements can come in the form of moving video screens or static banners on the wall or stands. Virtual estate owners should of course be careful to not dampen the user experience with too many advertisements. But the right amount of ad exposure will generate a stable passive income for them.
Finally, customization will lead to varying kinds of Play-to-Earn (P2E) facilities on these metaverse platforms. Instead of having just one type, real estate owners can experiment with the playing formats. On one hand, they can install different things in their game stations like a pool table, chessboard or arcade machines. On the other hand, owners can introduce tournaments and league matches for the players to earn more rewards than standard P2E games. And in all, with the metaverse market slated to become an $800 billion industry by 2030, customized metaverse gaming spaces will pave the way to realize its market potential.
About the author:
Igor Plusa is the CMO & co-founder of Game Lounge where you can create your own game lounge, personalize it, impress your friends, and relax in the metaverse in style. Follow Game Lounge on Twitter and join the discussion on Telegram.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.