Can we marry mobile and blockchain games?

What are the statistics and where can blockchain gaming compliment the mobile gaming industry? Will the two become one, or tightly integrated?

Philip Mohr2019-06-19

There are about 2.1 Bn mobile gamers, essentially every third to fourth person in the world. Mobile as a gaming platform dominates the gaming industry by every metric: Active users, revenue, growth.

The mobile ecosystems is owned by Google and Apple. It's a duopoly.

The market share of iOS and Android highly varies by country and region. North America is dominated by Apple’s iOS with 50–60% market share in the last years, whereas the rest of the world is overwhelmingly using Android devices. Japan being one of the main exceptions here, where Microsoft is in the lead.

This duopoly comes with a dictating power over anyone distributing content - i.e. apps - over these the native app stores. In the end, Google and Apple dictate what you can do and what you can not do on their platforms regardless of technical capabilities.

The Apple and Google tax

Both Google and Apple have developed pretty strict policies on what they allow in their app stores. Apple is generally much more strict than Google. I don’t know any app publisher that hasn’t had trouble with Apple’s policies and had to go through seemingly endless review cycles.

Aside from the plausible policies around copyright, adult, violent content and things of that sort, both have extensively developed rules to secure their business model of in-app purchases.

The so called “store tax” is a 30% cut that both Google and Apple charge their publishers for any in-app transactions. They slap this 30% tax on everything: subscriptions, in-app purchases and paid apps.

On iOS there is pretty much no way around it. Google’s Android taking a more Open Source approach, you can use alternative app stores or download apps (.apk files) from the mobile web and thereby circumvent the Google’s Play Store all together. While this has been popular in some asian countries and especially in China, has been the standard, it only recently became a thing in the western world.

It's a move that Epic Games made last year with Fortnite by only offering the Android version as a downloader on their website and literally “costing” Google hundreds of million dollars in “lost taxes”.

Mobile gaming — the bread and butter of the tech giants

While Tinder and Netflix frequently take the #1 spot of top grossing apps, at least in the US, it's actually mobile gaming market in aggregate, where both tech companies seriously cash-in.

Mobile gaming makes up roughly 75% of the app store revenues , which is a market set up to grow to 100 billion dollar market by 2021. From Google and Apple’s perspective this means a whopping 30 billion revenue per year, which is significant, even for these big corporations.

Almost all the mobile gaming revenue is generated through free-to-play game mechanics, where players can play a game for free, but can buy in-game items and loot boxes for faster progress or purely cosmetic items for fun. All conducted through the payment systems provided by Google and Apple.

So why does this matter for blockchain games?

While we are still in the very early days of blockchain gaming, it's already apparent that the economics of blockchain games will be different. Most importantly, it is bringing new dynamics to game design and a new value proposition to gamers: Item ownership with verifiable scarcity, interoperability and secondary markets.

Currently most blockchain games monetise initially with a pre-sales and later on with royalties that are baked into the smart contract and take a small percentage on each transaction. Pre-sales are currently only conducted with crypto (ETH, EOS, MANA.. depending on the platform), even though Nifty Gateway has become a frequently used option in pre-sales to bridge token purchases with regular, fiat, credit cards.

The point is: Neither Google or Apple are participating in the monetisation as of now. While this is great for game publishers, it is a problem for Google and Apple, and potentially threatening their “mobile games” cash cow.

As of now, neither Google or Apple have developed policies for blockchain gaming apps that use crypto collectibles or NFTs, even though both of them introduced some cryptocurrency related policies last year. However, these policies were mainly designed to avoid scams and phone mining.

Traditionally, Google and Apple are not rushing to layout new developer guidelines, but rather see new trends emerge and regulate once it becomes a problem. Usually Apple goes first, as Google has a more “laissez-faire” approach to their policies.

With blockchain gaming and crypto collectibles are still a niche market, it seems like it's too early for them to take a stance. A few thousand daily active users, which is the current state of blockchain gaming, is nothing that requires immediate attention.

As of now, we only have some early signalling from Apple. For example last year, Apple ordered Coinbase to remove the “collectibles” tab in order to not be pulled from the app store. Other wallet and game publishers have also reported to have been given a hard time by Apple.

Looking ahead

If you are reading this, you probably also believe that blockchain gaming, non-fungible tokens and crypto collectibles have a bright future. Currently we are still trapped in our “crypto bubble” and most people playing these games right now are crypto enthusiasts that also happen to be gamers.

This will change. Many experienced teams are working on great gaming experiences and others on the infrastructure to “make it easier” and increase the scope of players outside of crypto-enthusiasts.

Mobile as a platform will play an important role and therefore its important to find a way to use this platform.

So how can we marry mobile and blockchain games?

Here are some directions how this could play out:

  • Play along: Conduct item sales / pre sales in-app using Apple or Google’s in-app purchases as payment. This eliminates the entire “cryptocurrency” component on the token purchase and still taxes the publisher with 30%. Even if app stores would still miss out on royalties and gains on secondary markets, they would still capture a big part of the value. This is — even if its really sad — probably a likely scenario in the short-term, also because it's the most native for gamers.
  • Circumvent: Distribute mobile blockchain games through alternative app stores or mobile web as .apk downloads. This is currently only an option on Android. Fortnite did it, so it seems mass viable. It's more or less a standard practice in many asian countries anyway.
  • Integrate: In the long term it is also possible, that the app stores become fully crypto integrated platforms and marketplaces at the same time. Essentially something like app store meets OpenSea. This way the app store providers could participate both in item sales and in secondary market trading. With Samsung (or also HTC) pushing into crypto, it could also be that they might take the lead and be the ones to integrate something like this into their “Galaxy Store”. Other candidates could be messengers/social apps like Kakao in Korea , which has a local monopoly with about 95%+ market share and an integrated app store with a popular gaming platform. ## Wedding soon?

Unfortunately, I don’t believe we will get any guidance soon from Apple or Google. Just because the space is not significant enough yet.

I strongly believe that blockchain gaming, crypto collectibles and mobile will be a fully integrated experience at some point. How and when this will happen is still open. Until then, game publishers will have a hard time, especially with Apple, depending on how they choose to monetise. As long as they don’t have a way to profit from it, they will fight.

In the short term, I do see more potential for Android to “marry” blockchain gaming, which might put some Asian countries ahead in terms of blockchain game adoption.

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