Chapter 3 | Insights on the metaverse and the future of gaming

We asked gaming executives about several topics surrounding the future of gaming, including how they saw their companies fitting into the ever-evolving metaverse. With this new digital universe still in its early stages, respondents’ views varied: 50% say they understand what the metaverse is and how their organization will participate in it; 26% understand what it is, but say they are not sure how they will participate in it. Lastly, 24% understand the concept of the metaverse, but don’t know the details of how it works.

Many industry watchers expect the gaming industry to play a prominent role in the early stages of the metaverse, and our survey respondents agree. Most of them (97%) believe the gaming industry is the center of the metaverse today, and all of them expect companies across industries to establish a metaverse presence in the near future.

How advanced is your grasp on the concept of the metaverse?

As first movers, gaming companies have already built an early prototype of the metaverse, and their position as early adopters is well-known across industries. For example, the widely played Minecraft and Fortnite games, as well as the popular Roblox game platform, have incorporated many aspects of the metaverse, including virtual worlds where players meet to play games and use social features such as in-game chats. Many gaming companies also provide in-game payment systems and in-game assets, such as clothes and skins, props, weapons and vehicles, that travel with players across platforms (e.g., PC, console, mobile device). Increasingly, games are doubling as social spaces where gamers forge online friendships and communities. 

Gaming executives:

97%

Believe the gaming industry is the center of the metaverse today

48%

Said the metaverse creates opportunities for new business models.

49%

Are prioritizing investments in virtual, augmented or mixed-reality experiences.  

While companies across every sector are still imagining business possibilities the metaverse offers, gaming executives already see growth potential. When asked about the possible benefits of playing in the metaverse, almost half of the respondents (48%) said that it creates opportunities for new business models, while 40% cited the ability to build closer relationships between brands and customers. They also identified adopting new products and services, improving customer acquisition and building new communities within their customer base as opportunities.

To succeed, gaming companies need to rethink both their product and people investments. On the product side, nearly half of all executives surveyed (49%) say they are prioritizing investments in virtual, augmented or mixed-reality experiences. These technologies will play a prominent role in helping users engage with the metaverse, especially in its early days (though futurists envision a time when a similar level of interactivity is possible without specialized gear).

Executives also know that their employees will need a new mix of skills to harness the full potential of the metaverse. Almost half (45%) cited a need to think differently about hiring because of the new skill sets they are seeking.

NFTs play a lead role in the metaverse

Digital assets, including NFTs, will be a key building block of the metaverse economy. NFTs are unique assets that are stored on a blockchain, such as Ethereum, Polygon or Solana. They serve as verifiable deeds to property that only exists in the virtual world. Their storage on a public blockchain provides security and authenticity and enables NFT mobility across applications. In 2021, NFT sales totaled $25 billion compared with $94.9 million in 2020, and this rapid growth is expected to continue.¹

Because NFTs authenticate ownership of virtual items and they represent value both now and in the future, they are poised to become a universal store of value for the metaverse.

NFT artwork has received significant attention lately, but almost any item can be turned into an NFT. For example, gamers can buy and earn utility NFTs, such as weapons or skins for gameplay. In the game Axie Infinity, players breed and collect NFTs of digital pets, which are called Axies. There is already a booming NFT land market in virtual worlds, such as The Sandbox and Decentraland. These metaverses allow users to create, develop, host and sell virtual properties. Each land parcel is an NFT.

Outside of gaming, NFTs can be collectibles or branded items (such as shoes or purses); even songs can be minted and sold as NFTs. As the rise of NFTs continues, they will increasingly be used as access passes for sporting events, clubs and other venues, as well as for digital experiences. Some brands are also providing their customers with “member” benefits to use their NFTs (for example, for preferred access to future products and experiences). The possibilities around NFTs are endless. Verifiable ownership means that they can be bought, sold or traded on secondary marketplaces such as OpenSea, Magic Eden or Rarible.

Notably, NFTs allow players to retain total ownership of their digital assets (skins, handbags, weapons, etc.), which enables them to freely trade NFTs with other players in the same publisher universe, sell them for real money and, eventually, use them across multiple blockchains.

In many cases, NFTs will be monetized through smart contracts. These are programs that are stored on a blockchain and run when specific, predetermined conditions are met. So, if one condition is met, then another action automatically executes. For instance, an artist who uses NFT smart contracts can sell a piece to a collector and receive a royalty percentage of all subsequent resales. A musician can sell a stake in a song to investors. With a smart contract, these investors will be compensated every time the song is played on a streaming service.

NFTs also underpin the “play to earn” (P2E) gaming model. P2E gives gamers a financial incentive to play games. This contrasts with traditional gaming, where the assets gamers acquire have no real-world value. In P2E games, players are rewarded for their time and effort within a game by earning cryptocurrencies that can be used within the game, sold in an open market or monetized through smart contracts. For example, if a gamer creates an NFT character that someone else uses to earn cryptocurrencies, the creator receives a portion of those earnings.

As the vast potential of NFTs is still being explored, companies are still trying to understand how to use them. This was evident in our survey, with virtually all respondents saying that digital assets are valuable to their company’s future business prospects. When asked what the potential benefits of NFTs will be in the next three years, respondents cited the following as their top responses: increasing customer satisfaction, growing margins, improving the visibility of products and services, enhancing collaboration with nontraditional gaming partners and attracting new customers.

Potential benefits of NFTs

However, our survey also revealed uncertainty around digital assets: 90% of our executives said that while they are interested in digital assets, their companies currently do not have a viable business model to capture value from them. Also, respondents are skeptical about how much value NFTs will provide over the long term. Ninety-five percent say that digital assets are overhyped and that their value will eventually stabilize.

Gaming executives said:

90%

Their companies currently do not have a viable business model to capture value from NFTs.

95%

NFTs are overhyped and that their value will eventually stabilize. 

That said, companies across all industries are in experimentation mode in this space. Luxury brands are minting NFTs of iconic creative designs, photos, clothing and accessories. One beverage company is building a brewery in the metaverse that can be visited virtually by users’ avatars, which can purchase NFTs. In addition, a car company is minting 3D and vintage drawings of its classic cars as NFTs. And a broadcasting company is minting what it calls NFT collectibles (e.g., premium audio sound bites and artist merchandise collections). While these efforts may not yield sizable financial gains right away, they have the potential to strengthen brands, increase consumer engagement and drive deeper consumer insights as companies learn how NFTs can be used.

However, executives see the current complexity and cost of NFTs as barriers to widespread adoption. To purchase an NFT, potential buyers must navigate an exchange platform to buy cryptocurrency, set up a digital wallet (and link the two) and finally buy an NFT on a marketplace. By and large, today’s consumers do not yet have this level of proficiency. Also, when someone buys an NFT, they pay a  transaction fee (often called a “gas fee”) that goes to the miners who validate and record blockchain transactions. These fees can be quite expensive. Half of our surveyed executives say the lack of standardization of accepted currencies across platforms impacts the viability of digital assets within the gaming industry, while 47% cite high transaction fees. Many industry insiders believe that mass adoption will come when users can buy and sell NFTs with the ease of purchasing an item online with a single click.

95% of executives believe that non-gaming companies will benefit by following how gaming companies are engaging with the metaverse and applying it to their own industries.

EY Gaming Industry Survey | Chapter 2

Gaming data security and cyber risks


EY Gaming Industry Survey | Chapter 4

Preparing for the future of gaming


Scott A. Porter
EY US West Media & Entertainment Consulting Leader
Passionate about empowering entrepreneurs and e-sports. Helps media and entertainment and technology companies navigate change. Global traveler. Explorer. Coach. Father.

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