Most decentralized games start as passion projects. Developers, often in their twenties or thirties, interested in blockchain technology and cryptocurrencies, fueled by coffee, coding away in their bedroom at night. Their keyboard taps are driven by a desire to create an exciting game that will, hopefully, one day, generate at least enough revenue to pay back the time they’re investing. And in the back of their minds, hidden away, a daring addendum to that thought: for their game to generate a consistent stream of revenue that allows it to become their sole focus.
In a way, their situation is no different from any game developer programming indie games from the nineties and onwards. It’s the story of Markus ‘Notch’ Persson and Minecraft, the story of the Adam brothers and Dwarf Fortress, the story of Jonathan Blow and Braid; all critically acclaimed indie games that started with one or two developers coding away at their passion project.
The difference, however, is that DGame developers work with blockchain technology, a technology so disruptive that it affects not only how games are created and played, but how they’re monetized too. I asked Behfar Iranmanesh, creator of Forest Knight, a turn-based strategy game powered by the Enjin blockchain, and Tehn, Community Manager of Blockchain Cuties, what they thought were the best ways to monetize decentralized games. But first...
Let’s Talk About ICOs
Initial Coin Offerings are a way of raising money where blockchain startups offer their cryptocurrency in exchange for legal tender or other, stable cryptocurrencies such as Bitcoin or Ethereum. It was an incredibly popular way of raising money in 2017 and 2018, when startups could easily raise tens of millions of dollars in the span of a few weeks, sometimes days.
ICOs were so popular because investors had seen the hyperbolic growth rate of cryptocurrencies in 2017 and were hoping for a similar return, and because investing in an ICO wasn’t subject to the same regulations as investing in a startup looking to go public. Suddenly, regular Joes could get in at ground level. It’s why some blockchain startups received funding with only a white paper and the vaguest promise of riches.
People seem to have wizened up since then. ICOs are now out of fashion, particularly since the SEC has started defining them as securities, subjecting them to regulations that make ICOs much more difficult to sell. While you shouldn’t entirely disregard ICOs as a way to raise money, there are likely better ways to monetize your blockchain project.
Getting the Fundamentals Right
Although I spoke to Behfar and Tehn separately, both raised the same point as the single most important thing to get right if you want your DGame to bring in a consistent amount of revenue: you need to create a fun game where assets have value. It’s a point I’ve raised often when reviewing DGames.
While blockchain technology is exciting and adds a new dimension to gaming, developers cannot neglect the fact that a DGame is still a game that needs to have unique graphics, great game mechanics, and that needs to be fun to play. It’s why collectible DGames, where the only thing you can do is buy, sell, and breed digital assets, have limited playability. It’s all blockchain and very little game.
Similarly, Tehn raised that you need to listen to your players. In fact, be proactive and ask them for their feedback. Players will gladly tell you about their frustrations and how you can make the game better. Often, they’ll propose improvements you’d never thought of, tell you about bugs you hadn’t encountered before. It’s the easiest way to improve your game and ultimately create something that players would be willing to pay for.
Avoid Doing This
Both also had a similar answer when I asked them what developers should avoid when it comes to raising money. DGames that hype up a presale of their digital assets might be a good way to quickly raise money, but they cast a bad shadow on the DGaming industry and put you at risk of getting a bad reputation if your DGame doesn’t live up to the buyers’ expectations when it’s released. Anyone who remembers the launch of No Man’s Sky in 2016 will understand how vigorous such a backlash can be.
I never quite understood the need for presales. I appreciate it’s a way to raise money, but it’s also quite risky. Most people buying assets during a DGaming presales event see it as a speculative investment that they hope to see a return on. How do you know what your in-game economy will look like? You risk disappointing hundreds of investors, some of which will be quiet about their loss and some which won’t be.
Viable Ways to Earn Money
One of the easiest and fastest ways to earn money comes from the sale of your in-game assets. While players are likely to eventually switch to secondary markets to buy and sell the items of your game, you can have them come back by periodically creating new assets that add value to the game. You can also present your offer so it’s more compelling than buying from other players, either because it’s cheaper or because it’s easier to buy.
Steem Monsters does this very well. You can buy ten cards for $2 and you can pay for it with crypto or with fiat. On its secondary market, however, you can only buy cards one by one, and they’re more expensive too. Of course, you can choose which card you want to buy, which is the advantage of buying from the secondary market, but buying from Steem Monsters itself is cheaper and more convenient.
You can also go old-school and dedicate some space to advertisements, although it’s not an approach that’s well-liked by players, particularly if they disrupt the game too frequently (as is often the case with free mobile apps). Additionally, while most players realize ads are almost inevitable if they can play a game for free, they might not be so understanding if they’ve already spent money on buying your in-game assets.
If you’re a bigger team and you live in the right country, venture capital funding might be another option to explore. While it’s definitely one of the more difficult ways to raise money, and one that’s influenced by the economy and regulations, it’s one of the most effective ways to raise a chunk of money in one go. Additionally, your project will gain in stature when it has the backing of VC investors, all of whom now want your project to thrive.
Investors in blockchain games will want to see an idea that requires the benefits of blockchain technology and that has proper tokenomics (if you’ll have your own token). You can’t simply think of a game idea and then plonk blockchain technology on it. It needs to be properly integrated into your idea.
Another way to raise money is to either source a grant or join an accelerator program. Blockchain platforms want your game on their blockchain. Often, they’ll have some kind of program to entice you and support you.
Consider this: TRON dedicated a staggering $100 million to blockchain gaming through its TRON Arcade fund. At the beginning of March, Ripple, otherwise associated with the finance industry, partnered up with Forte to announce another $100 million to blockchain gaming. EOS also has its own VC fund, called EOS VC, to help budding developers with their project on the EOS blockchain. It’s an interesting avenue to explore for budding DGame developers.
There’s one other way to raise money: through community funds. Developers set aside a certain percentage of the mining or staking rewards of the blockchain they run on, into a fund that pays for the development of their project. Often, these funds are only released every so often, incentivizing the developers to keep working on the project.
I think it’s one of the best and most sustainable ways to monetize your DGame. It doesn’t disrupt gameplay and it incentivizes the developers to keep on improving their game. It’s an approach I’m increasingly seeing in DGames. Sometimes, these funds are decentralized too, with the release of the tokens dictated by a smart contract, something that’s very much in the spirit of blockchain technology.
A consistent stream of revenue is a great motivator to build an ever-better DGame. While there are many ways to monetize your DGame, some are better than others: you should probably forget about ICOs, presales, and maybe even advertising.
Instead, focus on making your game as good as possible, while earning revenue from the sale of in-game items or through a community fund. Alternatively, you can raise VC funding or join an accelerator program from the blockchain platform you’re developing your game on.