Insights into the Metaverse and the Future of Gaming | EY

While companies across every sector continue to imagine business opportunities the metaverse offers, game executives are already seeing growth potential. When asked about the potential benefits of playing in the metaverse, nearly half of respondents (48%) said it creates opportunities for new business models, while 40% cited the ability to build closer relationships between brands and customers . They also identified the adoption of new products and services, improving customer acquisition and building new communities within their customer base as opportunities.

To succeed, gaming companies must rethink both their product and people investments. On the product side, nearly half of all executives surveyed (49%) say they prioritize investments in virtual, augmented, or mixed-reality experiences. These technologies will play a prominent role in helping users engage with the metaverse, especially in its early days (although futurists envision a time when a similar level of interactivity is possible without specialized equipment).

Managers also know that their employees will need a new mix of skills to harness the full potential of the metaverse. Almost half (45%) mentioned that they have to think differently about hiring because of the new skills they are looking for.

NFTs play a major role in the metaverse

Digital assets, including NFTs, will be a key building block of the metaverse economy. NFTs are unique assets stored on a blockchain such as Ethereum, Polygon or Solana. They serve as verifiable deeds for property that exists only in the virtual world. Their storage on a public blockchain provides security and authenticity and enables NFT mobility across applications. In 2021, NFT sales reached $25 billion compared to $94.9 million in 2020, and this rapid growth is expected to continue.¹

Because NFTs authenticate ownership of virtual items and represent their value, both now and in the future, they are poised to become a universal store of value for the metaverse.

NFT artwork has received considerable attention lately, but almost any item can be turned into an NFT. For example, players can buy and earn NFTs, such as weapons or skins for gameplay. In the game Axie Infinity, players breed and collect NFTs from digital pets, called Axies. There is already a thriving NFT land market in virtual worlds, such as The Sandbox and Decentraland. These metaverses allow users to create, develop, host and sell virtual properties. Each parcel of land is an NFT.

Outside of games, NFTs can be collectibles or branded items (such as shoes or wallets); even songs can be minted and sold as NFTs. As the rise of NFTs continues, they will increasingly be used as entry tickets to sporting events, clubs and other venues, as well as for digital experiences. Some brands also offer their customers “member” benefits for using their NFTs (for example, for preferential access to future products and experiences). The possibilities surrounding NFTs are endless. Verifiable ownership means they can be bought, sold or traded on secondary marketplaces such as OpenSea, Magic Eden or Rarible.

In particular, NFTs allow players to retain total ownership of their digital assets (skins, handbags, weapons, etc.), allowing them to freely trade NFTs with other players in the same publisher universe, trading them for real money sell and eventually use them across multiple blockchains.

In many cases, NFTs will be monetized through smart contracts. These are programs that are stored on a blockchain and run when specific, predetermined conditions are met. So, if one condition is met, another action is automatically performed. For example, an artist using NFT smart contracts can sell a piece to a collector and receive a royalty percentage of all subsequent resales. A musician can sell a share in a song to investors. With a smart contract, these investors will be compensated every time the song is played on a streaming service.

NFTs also support the “play to earn” (P2E) gaming model. P2E gives players a financial incentive to play games. This contrasts with traditional games, where the assets players acquire have no real value. In P2E games, players are rewarded for their time and effort within a game by earning cryptocurrencies that can be used within the game, sold in an open market, or monetized through smart contracts. For example, if a player creates an NFT character that someone else uses to earn cryptocurrency, the creator receives a portion of those earnings.

As the huge potential of NFTs is still being explored, companies are still trying to understand how to use them. This was evident in our survey, with almost all respondents saying that digital assets are valuable to their company’s future business prospects. When asked what the potential benefits of NFTs will be in the next three years, respondents cited the following as their top answers: increasing customer satisfaction, growing margins, improving the visibility of products and services, improving collaboration with non- traditional gambling partners and attracting new customers.

Potential benefits of NFTs