The Success of In-Game Tokens Compared to ICOs and ‘Traditional’ Cryptos Using NBA 2K and EA
Since the reveal of blockchain technology, many investors have explored the notion of utility tokens over stocks. This is primarily due to the fact that the former relies on use cases associated with said tokens, whereas the latter’s value is dependent on overall company performance.
While the crypto world has been hit by continuous downfalls, the concept behind tokenization hasn’t completely fallen flat, at least in the eyes of the author of “In-Game Coins: Comparing Financial Data of NBA 2K and EA’s Ultimate Team to Cryptocurrencies,” Christian Ott (https://christianott.co/ingamecoins_en/).
Interestingly, Ott believes that best use case for tokens to date has been implemented within the gaming world. The purpose of this piece is to share the key points that have been highlighted by Ott. This will provide consumers with a general sense of how tokens can be useful in sports related games. Additionally, it can be viewed as evidence for what might be negatively impacting the crypto market.
A Quick Look at Different Games Supporting Virtual Currencies
Ott starts off by providing an example of a sports game that is known for its “in-game currency,” which is none other than NBA 2K. As per his claims, virtual currencies were first implemented in NBA 2K13, and ever since the interest has only sparked. Significance was assessed in terms of revenue, where the,
“series grew by […] 150% in both 2014 and 2015 and by about 70% in both 2016 and 2017.”
EA supposedly specializes within the sporting sector as well. It has since combined with other series, including the likes of “FIFA, Madden NFL, NHL, and NBA Live,” in an effort to create the:
“Ultimate Team mode” that encourages gamers to, “collect players and build a team to compete against each other.”
As for the revenue, the Ultimate Team has supposedly seen a net revenue of roughly 775 million in the 2017 fiscal year, which went up from 2016’s 660 million.
Difference Between “Traditional” Crypto and “Sporting” Crypto
Some of the key differences that Ott shared go as follows:
- While cryptocurrencies typically have a fixed supply of tokens, in-game tokens do not.
- With traditional cryptocurrencies, you can expect token price to go up, whereas, in-game tokens only witness increase in token sales.
The argument made in relation to in-game token’s unchanged prices is that a fixed supply like the former does not exist.
How Sporting Crypto Relates to ICOs
Ott credits the distinction between in-game tokens and traditional cryptocurrencies implies they are not completely comparable. Captivatingly, the nature of in-game tokens is said to be closely related to Initial Coin Offerings (ICOs). In doing so, here’s a summary of what has been found:
EA’s net revenue is expected to sit at 4 Billion after fiscal year 2019, compared to NBA 2K Series’ 1.2 Billion, EOS’ 4 Billion and Telegram ICO’s 1.7 Billion. The latter two ICOs have been deemed “outliers” because every other ICO conducted never raised such funds.
Ott also did a market capitalization comparison and found that EA’s “Ultimate Team” sits right underneath EOS and above Bitcoin Cash in CoinMarketCap’s list. On the other hand, it is unreasonable to base success by market cap alone, as it merely indicates the amount invested, but without clarity as to how much is devoted to “a particular asset”.
Overall, it is clear that the success of a token is impacted by its usefulness. With the several cryptos existing today, a good portion of them fail to incorporate real uses. In-game tokens have proven to carry actual uses. While it is not entirely on a societal level, tokens seem to have picked up well among sports fans. This is especially witnessed in the revenues generated by said series.
What are your thoughts on this comparison? Was it reasonable to compare in-game tokens to cryptocurrencies amidst some differences? Finally, do you think that this is sufficient evidence to conclude that cryptocurrencies need real uses? Let us know in the comments below.