The Curious Case of E-sports and Crypto

E-sports is a digital form of interactive content which has witnessed a massive rise during the COVID era

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By Saptak Bardhan

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Heard about GTA, NFS, FIFA, etc? These are the all-time best-selling games in the history of video games. The culture of gaming was not dominant until the early 2000s. Fast-forward to 2022, the gaming industry is on an unprecedented rise and India is home to a lot of people who have taken up gaming as a profession. The e-sports industry has been new to the Indian markets and the inception of the market is directly related to the emergence of PlayerUnknown's Battlegrounds or popularly known as PUBG. Multiplayer games became the point of inception of competitive playing to win cash prizes. The notable difference between gaming and e-sports is that players compete against each other instead of playing against the artificial intelligence embedded in the game.

E-sports is a digital form of interactive content which has witnessed a massive rise during the COVID era. It allowed the audience, especially the millennials and Gen-Z's to engage, and interact with like-minded people, giving them a sense of community in difficult times. There was a huge spike in the audience base as well as an increase in the number of players, creators, agencies, tournament organizers, etc. who kept experimenting with newer avenues within e-sports.

According to the FICCI and EY e-sports report of 2021, e-sports is set to generate over INR300 million worth of revenue by the year 2025 and the games popularized by e-sports tournaments will generate over INR14 billion in in-app purchase revenue by the year 2025. Subsequently, the Indian e-sports industry revenue is projected to more than quadruple to INR11 billion by 2025. Growing at a 46 per cent compounded annual growth rate, the industry is drawing the attention of domestic as well as international investors.

"The growing esports market presents an opportunity to build a platform for fans, gaming creators, and esports players to collect, play, and engage with their favourite esports influencers, acquire gaming-related collectables, earn rewards, and more. Gamers are almost always first-movers when it comes to advancements in technology. Web3 and the Metaverse have enabled people to think of gaming a little differently. At UniFarm, we recently partnered with Sportzchain-World's First Engage to Earn platform, Gameyoo, Battleverse, Legion Network, DCD Ecosystem and Wizardia. Blockchain enhances the experience by giving your digital ownership and being rewarded for your interactions in the game," said Tarusha Mittal, co-founder and COO, Unifarm.

The gaming and e-sports sectors are witnessing participation from the crypto industry as well. Crypto is gradually foraying into the e-sports industry. Crypto, however, has been a polarising topic, especially for the Indian market. There is some hesitance to accept the crypto industry by the Union Government. Despite the hesitance, people in India are actively buying and trading cryptocurrencies. There has been a halt in trading cryptos because of the steep decline witnessed by the crypto market, not to mention the taxations being levied on the profits of the Union government.

The cryptocurrency market is in turmoil as the prices of different cryptocurrencies are on a steep decline. The Federal Reserve FOMC (Federal Open Market Committee) announced the launch of 'Taper' in November of 2021. The popular belief among the experts of crypto is that taper would affect the price of Bitcoin. According to experts, taper means diminishing marginal dollar liquidity due to a decrease in the number of bond purchases.

The steep decline in prices of cryptocurrencies has not stopped them from foraying into the e-sports sector. There has been an increase in the adoption of cryptocurrencies and crypto tokens in the gaming and e-sports space as more e-sports companies have either started taking sponsorship payments in crypto, driving creator-based NFTs, or investing time and resources in Web3-based games.

E-sports being a digitally inclined space ensures the possibilities of NFT in e-sports are far more than in traditional sports. Crypto is touted to make NFT trading easier, offering a transparent and secure system for creators to monetize content.

An Inevitable Partnership

Gaming and crypto have an affinity. Gaming has had its fair share of controversies and criticism. The gaming sector was criticised when it came on to the scene in the late 80s for making children lazy and fat and was blamed for children not developing social skills. The sector also made the scapegoat of the infamous Columbine High School massacre since it was believed that the shooters were addicted to violent video games. It took the gaming sector around 50 years to become profitable and be accepted worldwide. The crypto sector is walking a similar path with the crypto being introduced in the year 2009 when Satoshi Nakamoto found Bitcoin. It has been criticised and threatened to be banned. However, the crypto might or might not follow the same trajectory as gaming with declines being recorded.

"There are so many avenues for the cross-pollination of both industries - be it the adoption of in-game crypto payments (crypto in gaming) or the creation of Web3 games (gaming in crypto). Both industries are majorly adopted by experimental, tech-savvy, and high-risk takers individuals, who are open to the idea of fusing the two trending spaces and making the most of them. The whole idea of crypto payments is to make the payment process easier, more secure, more transparent, and unaffected by cross-country currency rates. Integrating in-game crypto payments will see more users making in-game purchases without worrying about the above-mentioned factors. Also, for game developers, it will be a unified payment system that they have to build in the game, which makes it far easier for them," said Rohit Agarwal, founder and director, Alpha Zegus, a next-gen marketing agency specializing in the domains of gaming & lifestyle.

One thing that has constantly come up is the adoption of crypto tokens for in-game purchases. Most of the money that fuels million-dollar prizes is derived from crowdsourcing and small subscription fees. Crypto is set to make it easier with localized tokens being generated by the games themselves or by a large pool of games with interesting line-ups. The adoption of crypto will make it easier for international players to be paid easily without having to deal with the issues in the conversion of currency.

"The one thing that compliments both the token and e-sports sectors is that both are limitless in terms of their opportunities and it is not defined by any particular calendar or any competition, incident. They can continue to complement each other's growth in a faster way. When e-sports teams and sports team adopt their tokens, this will take off quickly," said Piyush Kumar, founder and CEO, Rooter.

A Tech-Savvy Future

The crypto sector, despite being down, is still one of the industries with massive potential if it takes off. The sector combined with gaming would be a faster and more efficient payment alternative to the fiat money that is currently deployed.

"Esports and crypto companies have engaged in partnership deals that help each other grow in the right direction, due to a large number of enthusiasts on both sides. The amount of brand impact is much higher on both sides, as the marketing is reaching a larger scale masses. Esports and cryptocurrency have a special connection thanks to their high level of competitiveness and rapid adoption. Companies like Coinbase and Uniswap aligned with leagues and major teams since 2021 to capitalize on the opportunity to converge the markets," said Kumar Gaurav, founder and CEO, Cashaa.

Gaming and e-sports are slowly making their way into the blockchain and metaverse. A lot of online games are already Web3 enabled. There are numerous partnerships between crypto companies and e-sports teams globally. It is only a matter of time before crypto starts playing a major role in the gaming and e-sports ecosystem.

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