Web2 vs Web3, or something in between?

Over the past 40 years, computer games have been transformed beyond recognition. From pixelated paddles and monotone bleeps, we’re now blessed with hyper-realistic graphics, eye-popping resolution, a full sound spectrum plus the ability for anyone with decent enough broadband to challenge global competitors in thrilling MMORPGs with near-zero latency.

Virtual reality and open-world gaming interaction have changed the way we think about gaming, and have even spawned a new lexicon full of abbreviations and acronyms that only gamers understand. These things have only been possible since the advent of the Internet, aka Web2. But now even that’s changing, and there are some good reasons for it.

Here, we take a look at Web2 versus the emergent Web3 to ask ourselves ‘Is this an either/or situation,’ and assess whether or not, given the likelihood of a transition—however long that might take—there’s a middle-ground alternative. The advent of Web3 gaming

Web2 gaming has been the established model for the past two decades. It relies on traditional online experiences built upon Web2 technologies, employing a centralized approach to game development and monetization. Industry giants including Rovio, Supercell, King, Blizzard North, and Dream Games dominate the space producing iconic games that include Angry Birds, Clash Royale, Candy Crush, Diablo, Royal Match, and others. Anyone who has plugged in and played any of these will know that the number of participants is huge, and so are the revenues. For players, however, there aren’t any fiscal rewards in sight. This is because all of the profits go into the pockets of developers, publishers, and distributors with players way down the value chain.

Counting on community

Web3, however, introduces the possibility of more inclusive monetization models that tap into the enthusiasm of engaged communities and redistribute capital in a much fairer way. Which includes the players. With a network such as BlockGames, for example, this involves players accumulating credits through achievements made across multiple games in the network. These credits can then be exchanged for tickets to perform other tasks such as enter contests, or simply exchanged for real-world rewards such as gift cards, tokens, digital collectibles, and cash. In simplest terms, with this model, BlockGames generates the lion’s share of its income on a cost-per-install basis which forms the basis of the network economy, then redistributes that value back into the network.

Advertising revenues: The good, the bad, and the ugly

Monetization for most traditional mobile games is generated from two sources: in-app purchases and adverts. These take many forms but include interstitial ads that take up the full screen at strategic moments within gameplay (after a level has been completed for example), contextual ads, native banners, playable ads, and a few others. Since free-to-play made premium games all but extinct, Web2 mobile games pull heavily on these two strings, and the real challenge is to deliver ads in a way that doesn’t interfere with enjoyment. For players, the rewards generally include power-ups, extra lives, in-game currency, or simply continued gameplay, but there are rarely if ever any real-world rewards. Believers in Web3 feel that this model poses real limitations because the core focus is to extract monetary value from the attention and actions of players, but never gives anything back other than those things that are only relevant within the game itself.

Some of the challenges faced by Web2 games

• Centralized control:

   

  Gaming companies have full control over game data, content, and server maintenance.

• Limited ownership:

   

  Players lack ownership of in-game digital assets, as the gaming company retains control.

• Monetization issues:

   

  In-app purchases are criticized for being predatory, potentially leading players to overspend while advertising often sacrifices the user experience.

• Pay-to-play model:

   

  Traditional pay-to-play methods, either through upfront purchases or subscriptions are still common.

The solutions Web3 provides

Web3 game developers recognize these limitations and aim to improve upon them by making gaming a more immersive, rewarding, and transparent gaming experience. Meanwhile, through innovations such as the BlockGames Player Network, the issue of data disconnects because of privacy data changes (IDFA) made by the App Store and Google Play no longer present a problem; players know that their data belongs to them and that, in return for sharing that data while engaged with games on the network, they receive real rewards. Here are some of the other potential benefits:

• A different model:

   

  Power shifts from centralized authorities to players, with in-game assets stored as blockchain tokens.

• Enhanced security:

   

  Decentralized hosting and storage offer increased reliability, security, and transparency.

• True ownership:

   

  Blockchain enables players to own, trade, or use in-game assets across multiple platforms.

• Player empowerment:

   

  Gamers participate in decision-making, including asset ownership, trading, and in-game governance.

• Interoperability:

   

  Assets can be used or transferred across compatible games or platforms.

• Player-driven economies:

   

  Some in-game assets hold real-world value and facilitate trading in secondary markets.

• Increased fairness:

   

  Blockchain ensures fairness when it comes to in-game mechanics, critical for games of chance. BlockGames uses a ‘provably fair’ status to reassure players.

• Play-and-earn:

   

  Shifts from pay-to-play and play-to-earn to play-and-earn where players earn revenue or in-game assets while having fun with their favorite games.

Talk about Web 2.5

While the Web2 vs Web3 debate continues, Web 2.5 has emerged as a potential solution easing the pressure for those on either side. A relatively new concept, Web 2.5 proposes a smooth transition from Web2 to Web3 and has made real inroads into games including Illuvium and Gods Unchained. These have largely succeeded in delivering the best of Web2 gaming with the benefits of a Web3 infrastructure including real ownership of tokenized assets. The upside for developers in these early stages of Web3 is that they retain control over every aspect of their game from community structure to weapons effectiveness. The downside of the compromise is that, for players, counterparty risk will always exist meaning, in a worst-case scenario, a game can be wiped out irrespective of the strength of the community that helped build it. A full transition to Web3 where community governance is responsible for decision-making processes and game functionality would make this level of counterparty risk impossible.

Conclusion

It’s still very early days for Web3. Some sort of evolution is underway, but exactly what the shape of that will ultimately look like is impossible to determine. The sheer volume of Layer1 blockchains being built, and the persistent problems relating to data privacy in the Web2 space suggest that a fully-fledged Web3 future is increasingly likely. However, stats from a 2022 DappRadar report suggest the road ahead is long. Compared to 3 billion gamers worldwide and a staggering 55.6 billion game downloads, Web3 gamers hold less than a million active wallets between them. On the upside for anyone thinking of moving into Web3 gaming, there’s plenty of time to get established and shoot for the moon.