Square Enix President Yosuke Matsuda is taking gaming in a new direction.
Matsuda leads one of Japan’s biggest video game companies. And back in January, he sent a letter to the public.
Surprisingly, the letter wasn’t about the company’s popular franchises.
Instead, Matsuda focused on blockchain and NFTs.
In the letter, he highlighted “token economies.” He also referred to 2021 as “NFTs: Year One.”
Matsuda added: “I look for [NFTs] to become as familiar as dealings in physical goods.”
And recently, he said he wants to “provide incentives” for players to create content for his company’s games.
He noted that NFTs could be the way to do just that.
To me, this means one thing. NFTs are going to transform the $200 billion gaming industry.
And that creates a massive investment opportunity…
Gaming on the Blockchain
Microtransactions in games are nothing new.
That’s when companies sell virtual items for a small cost.
These sales can add up fast.
Research and Markets estimates gamers spent over $34 billion on them last year.
But NFTs are better than microtransactions in two ways:
- Players can buy and sell virtual items on the blockchain.
- The creator makes money via royalties every time an NFT is resold.
That’s why companies like Square Enix are in a rush to figure out how to put their games on the blockchain.
In fact, a report by DappRadar shows that blockchain-based games are 2,000% more popular than they were a year ago.
Games now make up over half of all the activity on the blockchain.
This incredible growth is largely due to play-to-earn games. (My colleague Andrew Prince wrote about those on Wednesday.)
These games reward players with tokens or NFTs.
The players can then choose to trade those rewards for cryptos or dollars.
Of course, these games are made by smaller companies and aren’t perfect.
You may have heard about the hackers that stole $650 million in Ethereum from the game Axie Infinity.
But investors poured $2.5 billion into this space just in the past three months.
So these games will have more resources and better security going forward.
A New Step in Gaming’s Evolution
The gaming industry is headed for massive growth this decade.
GlobalData estimates the market will grow to $475 billion by 2030.
That’s over double its current size of $200 billion.
And as you can see in the chart below, mobile games make up more than half of that revenue.
But due to NFTs, I think this estimate is too conservative.
That’s because NFTs are a whole new step in gaming’s evolution.
Masayoshi Kikuchi, a producer at Japanese game developer Sega, recently said something similar.
He suggested that gaming “will expand to involve new areas such as cloud gaming and NFTs.”
Sega registered a trademark for its NFTs in January. And it could feature them in its upcoming “Super Games.”
Bigger Than Bitcoin
You can add exposure to gaming stocks with the Global X Video Games & Esports ETF (Nasdaq: HERO).
Its holdings include Square Enix and other innovative gaming companies.
But another possible investment is the “Next Gen Coin.”
This crypto is the key to NFTs and blockchain gaming.
That’s one reason why Ian King believes it will be 20 times bigger than bitcoin.
And the good news is: You still have time to buy the Next Gen Coin before it explodes higher.
You can learn all about it by watching Ian’s new presentation.
Regards,
Assistant Managing Editor, Banyan Hill Publishing
Morning Movers
From open till noon Eastern time.
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