You already know Asia is a gaming powerhouse: home to the largest population of gamers in the world, 1.5 billion people (vs the US of 180 million). Yet with $billions invested, GameFi is still battling to gain mainstream adoption.
Tl:dr: regulation (existing & the threat of future) is holding back Asian GameFi.
But smart investors realize that regulation is therefore equally one of the largest catalysts to unlock GameFi in Asia. We explore how that can unfold so you can recognize the signs.
How Much Money has been Invested in GameFi?
A significant amount of cash was devoted to investment pools in January of 2022, hunting for the future big breakthrough in GameFi — the intersection of crypto and videogames. In January, FTX launched a $2 billion gaming fund, and soon after, Singapore’s Crypto.com Ventures increased its $200 million pot of money to $500 million, citing gaming among the investment topics on which it aimed to concentrate on. GameFi market cap of the top 3 projects is $20billion. This isn’t a direct investment but it represents the market value placed on these projects by investors in the secondary market.
Directors at a few of the gaming industry’s major incumbents share crypto investors’ optimism for gaming. Both EA and Ubisoft executives have stated that blockchain infrastructure and non-fungible tokens (NFT) are the future of gaming.
While commercial crypto gaming has previously faced a lack of consumer enthusiasm, the sector now confronts an even larger barrier in some of Asia’s most crucial markets: a stringent regulatory environment.
How are Asian Regulators Holding Back GameFi?
The present legal framework and norms are unfortunate for GameFi. For almost 15 years, countries such as South Korea and China have established legal procedures for converting in-game tokens into fiat currency.
In South Korea, gaming is a vital industry with its own regulatory code that rigorously prohibits speculative activity, gambling, and the distribution of free goods. Its legal standards forbid the exchange of recreation tokens for cash.
Korea employs a sort of soft web censorship that generally blocks pornography and other items the government considers unlawful or subversive, although Axie Infinity is still available online.
Play-to-earn games, on the other hand, are not allowed to be distributed through current digital or retail outlets in the nation, also including mobile app stores, which is bound to be a no-go for bigger game makers.
Megan Huang, a research associate at Korea University’s International Cyber Law Institute and a director of Delio, claims that the Korean Game Rating and Administration Committee has previously prevented the release of play-to-earn titles Infinite Breakthrough as well as Three Kingdoms Reverse from mobile app shops by withholding their rating categorization.
“The regulator has issued a formal request to Apple and Google, requesting that they remove play-to-earn games via their app shops,” she stated.
Article 28 of the Gaming Business Promotion Act, which outlaws speculative behaviors, gambling, and free gifts, is especially difficult for the emerging industry, according to Huang.
However, when it comes to web-based gaming, there’s always the question of how effective a ban may be. Many Korean gamers are already utilizing virtual private networks (VPNs) to access play-to-earn games, thereby circumventing any country-wide restrictions.
GameFi, according to market analysts, is not in the game. It relates to the financial deregulation of video gaming, which they claim will change game business models and power the digital economy.
GameFi, according to Obasi Francis, Co-Founder as well as Chief Executive Officer of DeSpace, is a combination of video games (gaming) with decentralized finance (DeFi).
How has China’s Ban on Cryptocurrencies affected GameFi in Asia?
The People’s Bank of China has imposed a blanket prohibition on cryptocurrency buying and trading, whereas Japan considers it to be a game. The Supreme Court of India has asked the federal government to clarify its position on the validity of cryptos.
GameFi is not Defi, according to Anndy Lian, Chairman of BigONE Exchange. Playing hard to gain in the game and then allowing the points to be converted into coupons to be used to purchase food is not playing.
“There are games that are tokenized but not listed on any platforms, and they can only be redeemed for very particular items, not cash,” he continued. “They’re only doing it in their own environment,” says the author.
Crypto gaming has gained in popularity since it allows players to amass and trade digital assets that can be swapped and sold anywhere on the planet. It has arisen as a way to profit from the gaming industry in a secure and safe manner.
GameFi, on the other hand, is more concerned with profit than with the sport. Games like Axie Infinity, for whom the native token has achieved multi-bagger returns, don’t have many active consumers on a daily basis, and the majority of its user base is from developing overseas places.
Lack of player base globally
At the moment, there are more talkers than players in blockchain video games. Consumers ought to reap the crop but never enjoy the sport, hence these video games don’t have a large player base. In addition, the game’s financial system is plagued by catastrophic inflation.
Unlike traditional video games, blockchain online games allow players to profit by purchasing, selling, and swapping non-fungible tokens for a variety of in-game items, according to Francis.
Lian, on the other hand, believes that GameFi is no longer developed in countries with low per capita income. “Game content, as well as quality, come first, not profits,” he continued. GameFi is undeniably one of the trendiest technologies in the crypto ecosystem, and early investors should expect gaming-related collectibles to power the digital currency.
Foreseeable retaliation by Asian Authorities.
However, video games will not become widespread in Asia’s major markets because authorities would retaliate with legal action. Furthermore, such GameFi are rarely popular enough to reap the benefits of word-of-mouth marketing.
“Through the ease of transactions, the freedom to play from anywhere, and enhanced levels of protection and wellbeing, GameFi improves the entire gaming quality for game players while enabling new income streams for game producers,” Francis explained.
The concept, on the other hand, comprises providing gamers with cash rewards to play and develop via video games. Blockchain game developers, on the other hand, should work more to promote commerce expansion.
“If authorities believe GameFi is gambling, perhaps they should probably outlaw NFT as well,” said Lian of MassiveOne. “When it relates to mystery boxes, NFT is a lottery.” Regulators must get under the surface and not only glance at the surface.”
Despite the fact that GameFi would never take off in China because of its stringent regulatory environment. GameFi aficionados are unfazed. China is seen as a “factory” for video games and the impending metaverse, according to them.
