GameFi opportunities and challenges in 2024

GameFi could be set for a landmark year, with several Triple-A (AAA) titles scheduled for release. Could 2024 be the year that blockchain shakes up the traditional gaming market?

GameFi titles haven’t always enjoyed the best reputation with the general gaming public. Critics of the genre point to lackluster graphics, uninspired game mechanics and a general lack of fun. Even more galling is that the tokenized elements of GameFi titles often prove difficult to sustain in the long term.

But GameFi could be set for a reinvention if industry experts are to be believed. Mark Long, CEO of Shrapnel — a AAA first-person extraction shooter that includes a creator ecosystem — is among the voices predicting positive things for the industry. Long was quick to admit that blockchain titles currently have a very mixed reputation, but he argued that the next wave of titles will confound critics.

“One of the biggest things I expect to see in the next year is a shift in narrative around Web3 gaming,” Long told Cointelegraph. “Perceptions of the genre are, let’s face it, that blockchain games suck. Driven by Ponzi-scheme mechanics that require a constant inflow of new players to substantiate any accrued value. They’re not play-to-earn; they’re play-to-work.”

As critical as Long is of the current crop of GameFi titles, he predicts several “groundbreaking” titles in the pipeline will alter public perceptions.

“Two games I’m really excited to play are Dead Drop and Off The Grid,” said Long. “Dead Drop is led creatively by Dr. Disrespect and the influence of a guy that plays by his own rules is right up front […] Off The Grid has my favorite film director, Neil Blomkamp, driving design, and it looks fire. Bloomkamp’s worlds, for me, are a uniquely grounded kind of sci-fi that, at the same time, is surprising in very specific ways.”

The Shrapnel CEO also named Wildcard as another title he was looking forward to, citing a development model that includes player ownership.

“GameFi offers an exciting new opportunity for Web2 gamers to do what they’ve always wanted to do: be part of the creation of a game,” said Long.

Simply Ponzi schemes

Not everyone in decentralized finance (DeFi) is quite so excited about GameFi’s prospects in the coming year. Oleg Fomenko, co-founder of the move-to-earn platform Sweat Economy, is highly skeptical about the sector.

Fomenko does not believe that a differentiated GameFi sector will ever be in a position to challenge traditional gaming, arguing that the whole concept is wrongheaded.

“The belief that a game which simply incorporates Web3 elements automatically belongs to a distinct category of GameFi is quickly fading,” Fomenko told Cointelegraph. “While Axie Infinity and StepN initially led us to believe they had created a whole new gaming world where players could earn and live off their earnings, this turned out to be a temporary and disappointing phenomenon. These were simply Ponzi schemes that benefited early adopters who also knew when to jump ship early.”

Fomenko said GameFi tokens only capture value “if gameplay inherently generates value,” but “it doesn’t.” Therefore, GameFi is inherently flawed.

Even so, the Sweat Economy founder did find some positivity in the wider Web3 sector. Fomenko went on to say that “games with Web3 elements will thrive, and I’m excited to see further innovation in this space, especially in the utility of nonfungible tokens (NFTs) within games.”

GameFi’s redemption arc

For GameFi to make a significant impact in 2024, it will need to overcome the negative perceptions that surround the industry. This is the verdict of Les Borsai, co-founder and chief strategy officer of Wave Financial — an investment adviser managing over $1.5 billion in assets.

“Looking towards 2024, the journey of GameFi is at a critical juncture,” says Borsai. “Its current state has frankly been underwhelming, often criticized for prioritizing blockchain and DeFi gimmicks over genuine gameplay quality. This approach has led to significant backlash from the gaming community, who feel that the essence of gaming is being overshadowed by overt monetization tactics and unengaging mechanics.”

Borsai sees an opportunity for the industry if it can capitalize on other new technology trends, such as artificial intelligence (AI) and digital twin technologies. As Borsai sees it, these present “an opportunity for GameFi to redeem itself.”

“For GameFi to make a real impact in 2024 and win back gamers, it needs to fundamentally reevaluate its approach,” said Borsai. “It must go beyond slapping on advanced technology; it needs to integrate these elements seamlessly into games that players actually want to spend time in. If GameFi can strike this balance, it has the potential to not only mature but to also significantly alter our perception of what gaming with integrated finance can be.”

A complex business

Building AAA gaming titles is no easy task. Cutting-edge games typically take anywhere from two to five years to develop and bring to market. The wait for some titles is even longer. For example, Grand Theft Auto VI is scheduled for 2025 — a full 12 years after its predecessor hit the market.

The protracted development process illustrates how difficult game development is, even without the added complexity of integrating blockchain technology.

Teddy Pender, a technical product manager at zero-knowledge (ZK)-native blockchain Mina Protocol, argues that the implementation of zero-knowledge technology may simplify the process.

“In the past, Web3 gaming applications have been criticized for having rudimentary user interfaces and a poor gaming experience. 2024 will be a turning point, however, when we will see GameFi applications start to look and feel like real competitors to the incumbent Web2 gaming industry,” Pender told Cointelegraph. “With the use of ZK-native blockchains, developers can build games that utilize zero-knowledge frameworks, reducing the complexity of GameFi applications.”

Whether ZK-proofs or other technological solutions can help propel the industry forward with renewed vigor, some figures believe the industry has some distance to go before it can hope to catch traditional gaming.

A little longer yet

Rob Greig and Josh Jones, co-founders of Cornucopias — a multiplayer online video game built on Unreal Engine 5 — agree that 2024 will be a landmark year for the industry.

“The potential for 2024 is immense: We’re looking at a landscape where personal ownership of in-game assets, underpinned by blockchain technology, isn’t just a novelty but will, ultimately, become the new norm as it continues to evolve,” Jones told Cointelegraph. “This shift promises to unlock unprecedented opportunities and user engagement, making it a pivotal moment for developers and gamers alike.”

Despite this, however, the pair feel that the industry is not quite ready to mature in the coming year.

“The industry is at a crossroads,” Greig told Cointelegraph. “As we look ahead, 2024 appears to be a pivotal year […] with studios cautiously dabbling in crypto-related initiatives and testing the waters before fully committing. We will likely see mass adoption within the gaming sector in 2025–2026.”

Whether 2024 is the breakout year for GameFi, advocates such as Long will hope that the next batch of gaming titles will begin to shift the needle in favor of the industry as a whole.

“As the year ends, it feels like traditional and centralized models are getting tired. I think players are ready for something really new,” said Long.

Source: https://cointelegraph.com/news/gamefi-opportunities-and-challenges-in-2024