The mobile game and app ecosystem is extremely saturated. The mobile gaming markets are still growing and already worth more than $40 billion — but only a few developers are reaping benefits from this growth. Let’s address why mobile games and app stores should opt for blockchain.
The success of the market lured developers and publishers to jump on the mobile bandwagon. These devs were able to replicate the dynamic financial performance of such titles as Clash Royale, Pokemon Go, or the various Candy Crush incarnations.
You can explore millions of games on the app stores that took a long time to pass their launching phase — making the financial reality entirely different than you may suppose.
The pressure to push launch dates caused the competition for getting a player’s attention — not precisely correct. Take a look at the trajectory on the Assassin’s Creed games — it’s just off, off, off — and aggravating. As gamers, and tech consumers, the player acquisition costs keep rising while retention rates keep going down.
According to Giacomo Tognoni, the CEO of Bethereum, this is not a good recipe for developer success. “Just three to four years ago it was enough to have a decent title and a bit of marketing to drive home a winner.
“Also, being featured by Apple was enough to get a million players and a long monetization tail. Now, even some of the best projects can be happy if they recover the development costs and are able to break even on marketing. With so many games out there, an Apple feature may not bring much more than a short-lived download peak.”
Blockchain solutions can pave the way to new business models, which go beyond the current free-to-play (F2P, FtP) video games and premium pricing models. With increasing competition (many quality games, leading to lower attention span and retention rates), higher development costs, and higher user acquisition costs, F2P struggles to bring the returns developers deserve.
Premium pricing requires an upfront investment by players, which in turn reduces game penetration and player bases, for all but the most exaggerated or promoted games. High app store fees make these pricing models even less sustainable.
Tognoni further adds, “Apps are not faring any better — the attention span of users is meager, and unlike games, apps don’t even monetize well (apps make money, only when some bigger company buys them). So for every success story you hear — you can count on thousands of failures.”
Why is it crucial to base mobile game and app stores on Blockchain Technology?
App stores and marketplaces can thrive exponentially after using the concept of Blockchain. The app economy is highly inefficient due to many intermediaries between the users and developers. Building these stores based on Blockchain will provide transparency, affordability, but most of all — decentralization.
Hence, Apple and Google will no longer have full power over what will be allowed — or not — and no more of their (whoops) security breaches. [Frankly, as gamers, we don’t want Apple, Google and Amazon having all our data, using their bots to record and watch every eye movement, heat map, brain scan, and processing — then monetizing every action that is personal in gaming decisions.]
When discussing the possibility of what will convince people to leave or switch to any other app store or such platforms, Matteo Ziff from Rokk3r Labs said, “Apple and Google operate their own app stores, so they retain full control of the technology available on the platforms. With Blockchain, the system has a foundation on which it can become decentralized.
Within the existing ecosystem, big tech companies (Apple, Google, Amazon) are an obstacle to giving creators full autonomy over their products. Blockchain is poised to shift that paradigm.”
With these trends in mind (especially lower retention rates and therefore; lower LTV), many developers have shifted from a free-to-play model to premium pricing (pay once to “buy” the game).
Therefore, the first and foremost reason is that Blockchain reduces friction. Mobile games and app stores currently transmit products through a centralized intermediary. Using Blockchain, standard products and assets can be traded wallet to wallet, user to user, thus avoiding the processing fees associated with heavily centralized distribution models.
Currently, mobile games and app stores are not secure. Whether it is for censorship or hacking — there are always problems. With Blockchain, we can secure not only mobile — but the systems that games and their apps run on. Then we can provide an advantage to users and developers — availing them the application built on Blockchain. However, we should never undervalue the importance of best VPN services — delivering the next level of online protection to mobile games and app stores users.
Ideally, Blockchain is simply a public/private transaction ledger or, even more concisely, a well-designed database that facilitates decentralization. As a result, a multitude of companies can make Blockchain work on mobile, whether its app related, hardware related or security related, etc.
As for the users, the integration of Blockchain technology into mobile game and app store is expected to affect them positively due to its secure and reliable nature. Transactions through Blockchain are faster, cheaper and much-secured compared to other method payments.
Moreover, it adds another mode of transaction that is cryptocurrency. By accepting cryptocurrencies within games and apps, we can open the door for users those who have no debit/credit cards but are holders of cryptocurrencies.
With the advancement of blockchain technology, many industries have risen to a place where things are more transparent and helpful towards the stakeholders, no matter big or small. Blockchain-based mobile games and apps platform ALAX is claiming to give the game and app developers access to millions of unbanked consumers.
This new venture between Blockchain technology company DECENT and games distribution platform Dragonfly is enabling users without debit/credit cards or bank account to a wide variety of mobile games and apps.
Earlier this year, ALAX and Gionee, a Chinese smartphone manufacturer based in Shenzhen, Guangdong have made a collaboration. ALAX will be pre-installed on Gionee’s new smartphones, with older models moving to the ALAX platform in line with regular updates.
Gionee shipped over 40 million smartphones worldwide in 2016, is now becoming one of the most popular brands in India, adding to its presence in over 50 global markets.
Matej Michalko, Co-founder of ALAX, explains how the platform works, “Using the ALAX platform, customers could purchase tokens in cash through the existing Dragonfly retailer network. Tokens are then used in-app to purchase games and apps direct from the developer, avoiding the additional cost for the content. Whereas, the developers will be getting their payment instantly.”
As per their claim, such a platform could enable developers to reach the untapped audience of millions allowing them to capitalize substantial gains potentially.
However, the key phase will be the testing of this store. Still, the technical part should be resolved up to 100%. It should also work like clockwork to ensure that the store is correctly adapted to the specifics of the emerging markets.
The store would have to be attractive, not only for its revolutionary technology but also for its visual features and functionalities that are crucial to the success of the mobile app.
The end goal is the regular incorporation of Blockchain technology into mobile devices and apps. It will happen in almost every industry; mobile is no different. The benefits are too attractive for big companies to ignore.
Used Case Studies
The End user can obtain tokens for app purchases in different ways. A QR code card can be obtained in exchange for cash; the QR code from the card can then be paired with the platform.
The tokens are then charged to the end user’s account and can be exchanged for games or in-app content.
The other way of getting tokens is through the app itself, either by using the parent company tokens or using a local payment method.
As for the Game Developers, they can integrate the platform SDK into their app. Then the platform is supposed to take care of distributing their game through the existing pre-installed channels. The tokens from each purchase could then be transferred to the developer’s account.
These obtained tokens can be used by the developer in a variety of ways including a reward for the players to motivate them, for marketing purposes or it can be transferred to FIAT and paid out.
However, such platform can also provide an excellent opportunity for resellers. These resellers would be of two types, brick and mortar stores or mobile operators and the app itself. Brick and mortar stores will receive tokens from the platform for a fixed price to which they can add an additional fee and then distribute them to the end users.
Similar to the End User, there will also be the possibility to use a local payment method to purchase those tokens.
How can this platform be decentralized?
Let us take an example of alax platform that uses DCore Blockchain. It uses a Delegated Proof of Stake (DPoS) mechanism to achieve the consensus of various nodes in the network.
As DPoS is one of the fastest, most efficient, and most flexible consensus model available, it leverages the power of stakeholder approval voting to resolve consensus issues in a fair and democratic way.
Deterministic selection of block producers allows DCore to decrease the block production time to 5 seconds. A community of voters covers the principal miners’ delegation.
Surprisingly, ALAX utilizes multiple layers, transaction layer, data layer, store, and application layer. The transaction layer manages all Blockchain transactions between clients, publishers and the Store.
The data layer is responsible for storing all content securely published by game developer partners. The Store provides basic business logic and provides management of entities available offered by the service. Lastly, the application layer is an interface for consumers and publishing partners (game developers).
Consumers can access the service using web and mobile access, whereas, publishing partners would be able to access the store infrastructure using web access where they manage their accounts and publish new mobile content (games).
The platform utilizes IPFS infrastructure for storage of published content that would provide decentralized storage. Content stored on IPFS is encrypted to ensure that only clients with authorization have access to it.
The transactions, however, utilizes blockchain as a transaction component that is based on top of the existing DCore blockchain technology and can leverage all features and operations currently available in the DECENT network.
When will this happen?
We are seeing big things happening now in the Blockchain space, but I do not expect to see regular, refined blockchain integration for two to five years.
However, when confirmed about ALAX making its first appearance, the management said, “We are successfully over our Token Generation Event (TGE) which means that ALAX team can now fully focus on the development of the Testnet. If everything goes smoothly, end-users will be enjoying the ALAX Store in its entirety in Q2 2019.”
Mobile games sector can offer various opportunities as smartphones are on the rise in terms of quality no matter the price. Interestingly, millions of active Android users purchase most of the items through mobile apps.
There are also people who are unbanked (about 1.7 billion according to Findex) but have access to cash and 3G/LTE smartphones. All those people are spending a lot of time playing mobile games.
What to expect in regards to reality?
There is no denying that alternative app stores will arise and many of them will leverage interest in Blockchain technology to correct the challenges posed by conventional stores. We can expect lower fees, fairer and speedier approval processes, and marketing schemes that lower user acquisition. For example, it is quite possible that gamers will be rewarded with the store’s digital tokens for several activities. In addition to this, they will be able to spend these tokens for in-app purchases and to acquire new games.
This technology would genuinely benefit the industry and especially the developers – which could still gain a financial return without incurring prohibitive user acquisition costs. There are several potentials for these Blockchain operations to disrupt the app store, gaming, and app ecosystem. However, it is challenging to replace established infrastructures, as companies behind the current app stores will not let that happen quickly.
Apple can put on a real fight, as virtually nothing can be installed (legally) on their devices without their approval – and that includes whatever game or application provided by alternative Blockchain-powered stores. But eventually, a compromise may be reached, which will see conventional and Blockchain stores sit together in the same ecosystem, adequately balanced. It will take time, many attempts will fail, but some will succeed.
When it does happen, this will be a big plus for the whole industry, including the content developers.
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A business school grad specializing in marketing. Usman now pursues a career as a digital privacy & security advocate for VPNRanks working as a blogger.