Collapse and Reshape: Drawing from the History of the Gaming Industry, Looking Ahead to the Future of NFTs

Original author: Tastingo.eth, OHDAT founder

In the next 1-2 years, the NFT market will undergo a major transformation, and new platform companies will launch a serious challenge to the old order! What are the characteristics of these new platforms? How will they compete and gain market share?

Let's first go back 40 years to the early days of the electronic gaming industry.

In 1982, American children were eagerly anticipating a game called "E.T. The Extra-Terrestrial". This wasn't surprising, as the leading game manufacturer at the time, Atari, had spent a whopping $25 million to acquire the hottest IP commercial license from Spielberg. Everyone had high expectations and believed it would be a big production and incredibly fun. Atari seemed confident and was ready to make a fortune during the Christmas season, sweeping away the shadows of numerous emerging game development companies that had taken market share.

However, something devastating happened. People were appalled to find out that the game was a rushed Christmas release developed by one person in just six weeks. Even worse, besides this garbage game, there were countless other junk games developed in 1982-1983. All of this stemmed from Atari's pursuit of market share, allowing third-party game companies to develop games for their platform without conducting serious quality audits (including their own garbage games). They betrayed the trust of consumers. In the following year, 1983, the electronic gaming industry collapsed rapidly, plummeting from $3.5 billion in annual sales to just $100 million in 1985, a decline of 97%! "E.T. The Extra-Terrestrial" has been considered the worst video game of all time.

The collapse of "E.T. The Extra-Terrestrial" reflects the importance of product quality regulation. Lavish promotional videos, massive investment in IP copyright endorsements, and the inability of ordinary consumers to anticipate game quality resulted in losses amidst excessive promises and false advertising. Does this sound somewhat familiar to our current situation?

So how did the electronic gaming industry regain consumer confidence and make them fall in love with games again? I believe it relied on four main approaches:

1) Platform companies reclaim publishing rights and require audits for releases

During Atari's decline, Nintendo and Sega, especially Nintendo, took a stand. Nintendo implemented a royalty system, leveraging the market share of their gaming console to regulate third-party game development companies and ensure game quality.

2) Strong companies develop high-quality projects to boost market confidence

Nintendo and SEGA themselves were also very powerful, using multiple exquisite games as their flagship products at the time, which restored market confidence. The well-known IPs we know today were born from the ruins at that time:

Examples:

Super Mario Bros.: This game became the flagship game of the NES console and achieved tremendous success worldwide. It set a new standard for side-scrolling platform games.

The Legend of Zelda: This game is an open-world adventure game. It became one of Nintendo's most popular game series and laid the foundation for the subsequent Zelda series.

3) New technology, new experiences, new players

Activision and EA were also established around 1985, but they chose a new track and technology development standard, namely the blank market of personal computers. They released the first generation of PC games, which sparked strong interest in gaming among many new consumers and led to the branching development of the industry:

Examples:

"The Bard's Tale": An iconic role-playing game.

"King's Quest": Paved the way for PC adventure games.

"SimCity": The first milestone in the simulation game genre.

4) Emergence of rating media

With the rise of gaming magazines in the 90s and the internet in 2000, game companies started to let media outlets with professional appraisal capabilities have early access to their games for reviews. The emergence of game reviews significantly reduced the information asymmetry between products and consumer expectations, exposing low-quality products.

Examples:

IGN and Gamespot have become the must-have PR targets for all game companies.

Summary:

Companies like Nintendo saved the industry through a series of subjective operations, promoting healthy competition, and becoming prominent giants in their respective fields. The gaming industry is now a market worth billions of dollars.

From here, we can draw some valuable conclusions:

1) NFT platform enterprises should take on the responsibility of industry standardization

If the old forces continue to tolerate the generation of low-quality content and fail to filter and support high-quality content, new forces will surely take their place.

2) NFT new platform will have integrated production and research capabilities

Driven by high-quality projects in the first party, banishing competitors' contracts and gradually eroding their market share

3) NFT new platform will leverage new technologies such as AI/AR/VR for innovation

Using new media and experiences will bring in new players and create new market opportunities to expand the battlefield to new territories and capture incremental market share

4) NFT new platform will promote professional project due diligence and attract KOL endorsements

During the project due diligence process, important tasks such as real-name registration, background checks, art asset previews, contract auditing, etc. need to be carried out diligently.

Although previous experts have provided standard answers, it is important to acknowledge that we still face many challenges that the gaming industry has not encountered before.

1) Inadequate industry regulation

For integration into the mainstream world, there are still major differences within the industry, and top industry entrepreneurs should step forward to promote the integration of the mainstream world;

2) Difficulties with payments and wallets

This is mainly due to regulations and is essentially an extension of problem 1;

3) Unclear business models

In my opinion, the existing release and secondary royalties are reasonable business models that should be respected. This is the core driving force for artists to transition from web 2 to web 3, and we should not lose out on this opportunity. Similarly, issuing more NFTs does not necessarily dilute hodlers. Project owners can differentiate based on rights and rarity, community status, class, and pricing, among other aspects. Different series themes, unique designs and experiences, and sustainable NFT releases will not result in significant dilution issues. There are precedents for this in collectibles and sneakers.

Therefore, while waiting for new platform companies to make their move, we should further observe the development of regulatory and compliance issues in the cryptocurrency industry. Once the timing is right, the next truly magnificent wave will begin, presenting significant wealth creation opportunities for the industry's new landscape.

That's all for today. If you like my content, please like and share, and leave your brilliant comments. Of course, this is just my perspective. I welcome logical discussions, case studies, mutual inspiration to make the industry better together.