The gaming industry has plenty to teach other businesses about how to keep customers engaged.
The global gamer market is 2.2 billion gamers strong, per a recent study, and was projected to generate more than $100 billion in revenue last year. Video game revenue has even eclipsed other forms of entertainment like movies and music according to some estimates. The most popular titles can generate sales in the millions of units and can sustain hundreds of thousands of concurrent users.
This is why a range of industries has turned to gamification or the use of gaming and game design principles to better engage their own customers. Marketers are now applying gamification to their activities to minimize customer churn. Rather than simply offering coupons, spendable points and discounts, marketers are spicing up their loyalty programs using new technologies to deliver engaging risk and reward mechanics. Starbucks , for example, has an established loyalty program that allows customers to earn better rewards the bigger they spend. But beyond this, Starbucks has also introduced various tech-driven campaigns over the years including mobile apps, QR codes and even augmented reality to keep things fresh.
Recently, blockchain technology has been making some buzz as a complementary technology to games and gamification. A blockchain’s ability to provide secure record-keeping and facilitate transactions using crypto tokens makes it suitable for such use cases. Various services are already finding interesting ways to marry gamification and blockchain capabilities. Projects such as Sandblock , for instance, leverage smart contracts to power loyalty program mechanics. The virtual game CryptoKitties also shows how blockchain technology can be used to effectively assign ownership of digital items. Such projects also showcase how blockchains are helping promote fairness and trust in gamified activities.
One of the common criticisms against loyalty programs is that they’re mainly designed to maximize profit for companies. Some, when closely scrutinized, actually have unfair rules that make it extremely difficult for participants to be fairly rewarded for their efforts or for the amounts they spend. While it only makes sense for companies to offer loyalty programs if they are sustainable, they should still provide customers with acceptable reward rates.
Blockchain technology can help prevent these issues through the transparency it provides. Smart contracts can be used to keep track of the mechanics of a program or campaign. Since these terms are transparent, it is easy to notice if companies are offering absurd conditions. On the inverse, some unscrupulous customers may also seek to game and abuse the system. Poorly designed gamified rules can easily be manipulated by determined fraudsters, and thus, having transparent records reveals which users are actually trying to throw the balance of the rewards ecosystem.
Sandblock, for example, provides a blockchain protocol that handles rewards attribution and merchant rules for rewards programs. Using the platform, merchants create their rewards program rules on how their customers will be rewarded using their own branded crypto tokens. Sandblock uses the Ethereum network as its blockchain and a smart contracts platform, which means transactions and agreements are transparent. This compels both merchants and customers to act in good faith.
The use of crypto tokens also gives customers more flexibility with their loyalty points. Most loyalty programs limit these points for exclusive use and redemption with their respective brands. In contrast, crypto tokens can be mutually interchangeable and may be exchanged for other crypto or even fiat currencies.
Virtual items are often acquired as some form of reward from certain games and gamified activities. In video games, for instance, items can be obtained by successfully completing tasks or by defeating enemies. These virtual items may be made available to a player or be tied to a particular account. However, “ownership” is determined mostly by the game developers’ or publishers’ rules.
Since these items have some form of utility within the games, many are willing to pay for these items. Virtual items are estimated to be a market of around $15 billion . The sale of virtual items has become an underground economy for many gamers. Most game developers and publishers prohibit the trading of virtual items for fiat currencies as they consider this a violation of their terms of service.
Blockchain technology is redefining the concept of virtual item ownership. The technology provides means to create unique identifiers for virtual items and assigns ownership. Take the case of CryptoKitties, a virtual game that allows users to own and take care of virtual cats. Each of these virtual cats is distinct and even features unique “DNA” that is validated through the blockchain. Ownership is also tracked using Ethereum smart contracts. Each virtual cat can then be traded or sold for ether tokens, giving gamers the incentive to nurture and breed more virtual cats.
Several blockchain-based digital marketplaces like DMarket and WAX also seek to address issues in the growing virtual items market. Game developers and publishers rarely have features that would allow the safe and secure trade of virtual items within their platforms. These marketplaces use blockchains and smart contracts that enable gamers to safely trade among themselves.
Trustworthy and Fair Mechanics
Games and gamification are about engaging users through interesting rules and risk and rewards mechanisms. Unfortunately, centralized authorities are inclined to create rules that often favor them. Blockchains encourage participants to create and abide by fair rules and establish equitable risk and rewards systems. The use of crypto tokens even allows for rewards such as those from loyalty programs to have more financial utility for customers. The proof of digital ownership even creates more value for participants’ rewards. Participants can rest assured that through such mechanisms, all parties benefit from gamified activities.