Why Web3 Games Need New Revenue Streams

...And How Somnia Will Make It Happen

Somnia’s infrastructure solves the congestion problems that have stalled web3 adoption for years, but that’s really just the beginning. It can also unlock new use cases and revenue streams like user generated cosmetics and gaming prediction markets. These revenue streams are badly needed because existing revenue models in free-to-play games are struggling, and this is especially true in web3.

The team behind Sparkball, a major title recently onboarded into the Somnia ecosystem, is expecting prediction markets to be the primary revenue stream for the game. This is a very big deal because options for monetization are extremely limited for game developers, and this gives them an entirely new pathway to making their game financially sustainable.

When Sparkball’s integration with Somnia was announced, the teams gathered for a livestream demo of the game, and shared their vision for the future.

Chandler Thomlison, founder of Opti Games and creator of Sparkball, says prediction markets solve a key problem that has held back previous web3 business models.

Thomilson explained: ​​”We're a competitive multiplayer eSports style game, so we can't do pay to win, and you can't really do “pay to go fast,” like you're kind of classic, gotcha style. So how do you actually monetize the game? Free to Play historically has been the answer, just sell skins, but you need 10 million players to all spend 20 bucks in order for us to make money on this. That model is largely dying. When we started looking at web3, instead of trying to cram a web3 economy into a web two game, we wanted to figure out how to leverage a massive audience that was eager for features like wagering, prediction markets, AI and new ways to engage.”

Monetizing competitive multiplayer games has always been a challenge. Pay to win diminishes the integrity of the game, and while cosmetic monetization with skins can sometimes work for a billion-dollar IPs like Marvel, that alone can’t sustain most gaming studios. On the other hand, the ability to tap into prediction market revenue could be much more sustainable, even with smaller audiences.

“We're gonna have somebody come in here that is going to drop 100k a month on just betting on Sparkball matches, and that's going to help us fund and pay for all of the other people to have fun and create value,” Thomilson explained.

He also made a very interesting point about how the economies of games can be much bigger than the games themselves. If you look at traditional sports, there is a whole industry around the games that has no connection to the actual players.

Thomilson continued, “If Sparkball is the activity of playing soccer, well, you don't just play soccer. You also watch it, wager on it, create leagues around it, sell merch around it, and support teams around it. There's all of these different things you can do with the sport of soccer, and that's what we want to wrap up in a bow and kind of have those web3 integration systems.”

Fans don’t just buy tickets to the game, they often spend much more on continuous participation in the community, and until now, web3 games have been almost singularly focused on the tokens, or “tickets” in this example.

This is where Somnia’s unique capabilities and gaming expertise comes into play. One of Somnia’s key features is that it can store a ton of data onchain, and we’re not just talking about transactions, we’re talking about actual data. In the case of gaming prediction markets, they will require loads of onchain metadata to truly operate in a decentralized way, and that really isn’t possible with the throughput that most blockchains can handle.

With Somnia, this is easy. The blockchain can handle all the metadata for countless different games without missing a beat. When we first began this was just a concept, but now it is a reality on the Somnia testnet. Variance, another top-tier game building on Somnia, has already begun storing its metadata onchain. A recent video teased gameplay footage in a split-screen with a live block explorer, showing how every action the player took was recorded onchain.

The metadata collection shown above is powered by Battle Records, a key piece of infrastructure from Gamer L.A.B. With Battle Records, developers can capture gameplay metadata, from kills and assists to match outcomes and in-game decisions and store it entirely on-chain.

When people hear about web3 games, they think of games with token or NFT integrations, but as you can see, there is a lot of space for new ideas.

New ideas are certainly needed, especially in web3 games, because it’s just not sustainable when an entire game economy hinges on the price of a token or the floor price of the NFT marketplace. Web3 gaming needs additional revenue streams that subsidize the ecosystem, and prediction markets will likely be at the center of these emerging paths to monetization. This revenue model has already been proven out in both traditional sports and the astonishing rise of Polymarket. Esports is starting to take the form of traditional sports, from high paying contracts and sponsorships to live events with big crowds, so it stands to reason that large businesses will develop to facilitate betting around Esports.

Very basic versions of this are available in web2, allowing people to make wagers on large games, but you often have to trade using in-game skins as currency, and they are generally not very accessible. Blockchains obviously have advantages when it comes to liquidity, and with the ability to store metadata onchain, fans can place bets on more granular details, like specific achievements in a single match, or over the course of a month. Also, since everything is onchain, the data is verifiable and the bets are fair.

This is likely just one of numerous new use cases that Somnia’s infrastructure unlocks. It’s not just about making the blockchain faster, it's about making new things possible and allowing developers to build the thing they’ve been dreaming about.