Smaller esports tournament organizers have started to embrace blockchain technology to run tournaments and distribute prize pools. However, don’t expect to see it in the big leagues just yet, says one investor.
Esport, or electronic sport, is a form of competition organized through video games. Players sometimes referred to as esports athletes usually compete for prize money, either individually or as a team.
Dave Harris, managing director of esports investment firm Guinevere Capital, told Cointelegraph that he has started to see blockchain being used in amateur gaming competitions.
According to him, however, it will take longer before headlines and professional tournaments consider adopting the technology.
“There are certainly plenty of places where this technology can or is being used in esports, but it will take time for it to be widely adopted in mainstream titles and events, and as always, the major game publishers are the kingmakers,” he said.
Ivy Fung, chief executive of the Esports Players League (ESPL), says she thinks blockchain technology is a good choice when it comes to distributing prize pools.
The Singapore-based company operates a blockchain-powered platform that distributes cash prizes via digital assets such as non-fungible tokens (NFTs) and crypto tokens directly into winners’ digital wallets.
According to Fung, the use of blockchain greatly facilitates the distribution of the prize pool as it bypasses obstacles such as cross-border transfer fees charged by traditional banks.
“When you’re talking about a global tournament, you need an efficient way to distribute the prize pool so that you don’t have to wait for the winner to give us their bank account and then verify and all those things.”
The prizes are a far cry from international esports tournaments, however, which can run into the millions of dollars.
Harris believes blockchain and Web3 have a vital role to play in esports, but thinks future developments will need to think outside the box to really catch mainstream attention.
“There may be more efficient ways to use this technology to track and display results, but I’m not sure that will really change the dial,” he said.
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“I think a model that allows user-generated content to be commercialized and income to be fairly distributed among all stakeholders is an opportunity for the industry,” he added.
Related: NFT gaming trends in 2023: Industry executives expect more big players to step in
Gaming enthusiasts have had a love-hate relationship with crypto, especially when NFTs are involved.
An October survey from Coda Labs found that traditional gamers were not fans of cryptocurrencies or NFTs, rating their sentiment at 4.5 and 4.3 out of 10 respectively.
French gaming giant Ubisoft Entertainment came under fire last year for its NFT Quartz project, forcing the company to later backtrack on plans to integrate NFT into its games.
Despite this, Harris said that ultimately the technology will benefit gamers, stating:
“In principle, ‘actually owning’ in-game items and possibly being able to transfer them to other games or environments is a good proposition for players.”
“Current technology will be used more and more in the future, but I think there is currently skepticism and in some cases pushback from the community where technology to date has often manifested itself in this which she sees as over-marketing or get-rich-quick schemes,” he added.
“I think the learning curve is definitely there,” Fung said.
“There will definitely be people who will object to it, but as long as we can show them the advantages of using this system, I think they will adopt it sooner or later. This will be the norm. Everyone will use it,” she added.
The total market value of the esports industry is expected to reach $1.62 billion in 2024, according to data published by Exploding Topics.