The potential for blockchain technology to be implemented in the gaming industry is often cited as one of the most compelling use cases for the technology by leading crypto venture investors. In many interviews, Andreessen Horowitz’s partner Arianna Simpson, who spearheaded the firm’s investment in the cryptocurrency game Axie Infinity, mentioned the play-to-earn concept as a critical element in luring “hundreds of millions” of players to the web3 area.

Justin Kan, co-founder of Twitch and opinions on the Solana, California-based gaming NFT marketplace Fractal, and on what is necessary for this sector of web3 to live up to expectations. Web3 gaming, according to Kan, has a long way to go. He said that there are over 3 billion gamers globally, including those who play mobile games, but much fewer have purchased or participated in blockchain-based gaming assets. This suggests, according to him, that web3 gaming has a long way to go.Kan views this opening as a potential for blockchain technology to significantly upset video game firms’ economic structures.According to Kan, creating digital assets is rational, and then charging everyone for all transactions using them is not.

Web3 gaming was partly developed as a reaction to the success of games such as Fortnite. In these games, microtransactions, which allow players to buy customized items like clothes and weapons, have opened a lucrative income stream for game producers. These microtransactions allowed the studios to generate revenue. Kan said that Web3 game creators want to realize this vision by enabling players to move their digital assets from one game to the next, transforming the gaming industry into an interoperable and immersive environment.

Twitch co-founder Justin Kan opens his own gaming NFT marketplace, and says many game developers are interested in using NFTs in their games.

According to Twitch founder Justin Kan, the new wave of blockchain-based monetization is just beginning. Lots o… https://t.co/RK8R6MyzfV pic.twitter.com/GjowPlDYPx

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According to him, Kan has made around ten angel investments in various web3 game firms, including the creator of the NFT-based shooter BR1: Infinite Royale. Despite this, he recognized that blockchain technology is technically unnecessary for constructing an interoperable ecosystem, which he considers the future of video games.The author believes, “Blockchain is the inevitable future since there is a great deal of cultural momentum behind people associating blockchain with openness and trusting decentralised blockchain things.” “Blockchain is the only way for this to occur.”

According to Kan, the conventional gaming industry has not yet achieved interoperability owing to the unwillingness of many incumbent studios to let third parties build on their application programming interfaces (APIs). He ascribed their reluctance to the “innovator’s dilemma,” a phenomenon that occurs when major gaming organizations with solid business strategies fear taking new risks.

According to Kan, gamers like blockchain-based firms’ economic engagement and transparency. However, he went on to say that the attractiveness of an open gaming environment has less to do with generating money and more to do with the subject’s core ideals.

Kan said, “I feel that people associate NFTs and games with this play-to-earn paradigm in which folks make money and accomplish their jobs [via gaming], which I believe is completely unnecessary.”

He said that having digital assets in your game may be advantageous even if nobody is generating money and there is no speculative appreciation or price increase. Digital assets in a game may be practical and effective.Popular video games often inspire the development of more intellectual property. Kan used the computer game Counter-Strike: Global Offensive to demonstrate his point (CSGO). Customized “skins” for the game CSGO are sold for up to $150,000 per piece.

He claims, “I supported a firm that manufactures CS: GO skins.” “CSGO modified the laws about what was permitted and seized more than $1 million from a single company,” the developer claimed. I am no longer interested in developing on these restricted platforms.

Kan’s claim that an open gaming environment monetized via blockchain technology is the future of the video game business is contested by many prominent game development firms. Last month, the revelation that one of the most popular games of all time, Minecraft, would not allow NFTs on its platform generated a commotion. The business expressed concern over web3’s “speculative pricing and investment mentality” and said that NFTs would undercut the goal of building an inclusive environment for participants. Minecraft is one of the most popular games of all time.

The Minecraft in-game store now earns income via microtransactions. Despite the company’s opposition to NFTs, this is the situation. Existing companies that built play-to-earn games using Minecraft’s open source code and sold non-fungible tokens based on Minecraft are in limbo due to this decision.Kan considers blockchain-based games “more economically engaging” versions of current video game businesses. However, he does not believe that players would flock to blockchain games just to make money.

Also read: 4 Major Benefits And 3 Cons Of Metaverse In Web3

“Play-to-earn was related with those doing this kind of repetitious, menial labour in third-world or developing nations,” Kan said. Play-to-Earn was related to individuals doing this kind of labour in developing countries. The speaker said, “I do not consider the strategy to be sustainable; thus, I expect interest to diminish.”Instead of concentrating on establishing economic incentives within the framework of the play-to-earn paradigm, he believes that the proliferation of web3 gaming will be driven by developers creating delightful games on the blockchain.

“I believe that web3 games are simply being more forthright by announcing that, rather than this being a black market, we are going to make this a legitimate need and that people’s economic activity will vary. There will be players who never spend real money on anything outside of the game. There will also be players who make additional money because they are exceptionally good at the game and can obtain items through the game that they sell or trade.

Kan believes the market will develop similarly to the mobile game industry, with a small number of businesses gaining initial popularity. As a result of their success, he said, major gaming companies will be compelled to capitalize on their existing intellectual property and enter the competition “five years later,” despite their initial scepticism regarding the technology.The blockchain-based gaming industry has a long way to go before capturing many people’s interest.

“For this industry to reach its full growth potential, these games will need to be played by average, recreational gamers. This has not yet been created. Kan believes that most of the present market is made of native cryptocurrencies.