It’s 2000 Again: Why The Next Gaming Innovation Cycle Could Follow The Same Path As The Internet
Founder and CEO at Admix. Pioneer of “in-play.” Previously ran a hypercasual game studio before they were cool.
Remember Second Life? In 2003, it became the first real-time 3D virtual world, enabling players to connect around live events and build virtual businesses but also make real money. Several creators made hundreds of thousands of dollars being virtual architects or building virtual furniture, plants, fashion items and accessories for the platform.
More recently, Roblox or Minecraft took the concept further, enabling players to create not only virtual items, but mini games — without having to write code — and publish them on their platforms. In 2020, 350,000 Roblox developers will share a total of $250 million revenue among themselves, with the top ones bagging millions of dollars.
Yet with these few exceptions, most people think of games as stand-alone applications, not platforms where economies can be built for the benefit of the players.
I believe that we are on the verge of a revolution, and over the next few years, gaming will evolve from applications to platforms. This is happening mainly for three reasons:
1. Democratization of real-time-3D content creation. It is easier than ever to build complex gaming content, from tools such as Unity to no-code editors such as Buildbox or GDevelop.
2. Reach of distribution. Billions of people are playing games and can be reached easily via the app stores or communities such as Twitch, Discord and Roblox.
3. Evolution of monetization tools. The ability for creators to monetize their creations creates the incentive they need to start building. In-app purchases and in-play advertising have been growing fast and provided new tools for creators to make money from their content.
These are key ingredients for gaming to develop a complete infrastructure around its apps. This might not be obvious immediately, but I believe gaming is following the same evolution pattern the internet did over the past 20 years.
As more and more people started using the internet, and distribution became easier because of search engines and the growth of digital advertising, its utility increased, creating an incentive for more creators to jump in.
Tools such as Webflow, AWS and Stripe then removed barriers to entry for anyone to create, host and monetize very complex applications, almost without the need for coding.
Overall, the innovation from static Web 1.0 to a programmable Web 3.0 created a new media channel, enabling billions of individuals to connect. It also enabled millions of small businesses to find their customers online and monetize them.
These pioneers of the internet infrastructure generated some of the biggest investment successes, creating billions of dollars of return for their investors.
So why does it matter?
History repeats itself in cycles. I believe that we are currently at the year 2000 for gaming and that it has the same potential for future growth. With 2.5 billion active gamers globally and an attention time on a par with social media globally, gaming is becoming a new generation of the internet.
The evolution in creation, distribution and monetization means it will soon be a global hub for communication, entertainment and commerce — all in rich 3D environments.
When asked about whether Fortnite should be viewed as a game or a platform back in 2018, Epic Games CEO Tim Sweeney responded with this: “Fortnite is a game. But please ask that question again in 12 months.” During that year, Fortnite organized virtual concerts, hosted fashion collections, cementing its position as an entertainment hub, rather than simply a game.
At a much smaller scale, SomniumSpace (full disclosure: I am an investor) is a VR world where users can buy virtual land with cryptocurrency and run virtual events or sell virtual goods such as fashion items and accessories — but for real money. In the first half of the year, Somnium has sold close to $1 million in virtual goods.
Many platforms will grow the same way and give their users tools to build and monetize on their platforms. So what does it mean for you?
If you’re a business owner or CEO, it means you will be able to leverage games as a new channel to reach your customers. Don’t laugh — in 2000, most people didn’t believe the web would enable that either. Evolution in distribution and monetization tools mean that gaming is becoming a new media channel, unlocking a huge audience that is still mainly untapped by advertisers.
If you’re an investor, now is the time to keep your eyes open and look for companies building that “gaming infrastructure.” Missed the internet boom 20 years ago? Luckily, the Google or Facebook of gaming are still being built. Just like there was 20 years ago, I believe there will be billion-dollar category winners in each vertical, from creation to distribution and monetization.
Games are becoming platforms, a 3D version of the internet, and judging by past results, it could result in the largest investment and most exciting growth opportunity of the decade.
Originally published at https://www.forbes.com.