The Network Effect

Aug 18, 2020admin

A network effect is the positive impact on a product or service when additional users are presented. It becomes significant after the critical mass has been achieved and resulting in a positive feedback loop. In fact, the ability to leverage the network effect of a platform gives an advantage over competitors in every industry. It is evident by seeing the results from Microsoft Windows in the 90s and Apple’s iTunes store over the last decade. More recently, Uber and AirBnB are examples of some of the most disruptive companies in their respective industries that leverage the network effects when a new technology arise. The network value leads to a snowball effect that allows these companies to dominate the multi-billion dollar markets. This should also apply to gaming, and I believe this will happen for those who can first utilize the future use of technologies.

In the recent years there is a new technology called “Blockchain” and a real blockchain platform is about a distributed ledger that is open, decentralized ownership, with an emphasis on a strategic focus. For gaming, the focus of this trustworthy ledger can be :

A truly trustful layer for data sharing among different parties … from operators to regulators and customers.
The ability to define ownership of digital assets, not limited to token only, in the gaming world.

The best well known new class of asset is called “bitcoin” and many other crypto currencies to follow. However, the creation of bitcoin and other crypto is only the beginning. With smart contracts alongside the maturing of blockchain technology, the new creatures of crypto assets has continue to explode beyond bitcoin — CryptoKitties, Etherbot, etc.

The demand of innovations for the gaming industry is driven new forces to unlocked potential use cases of blockchain that were not possible before. Tokenization of virtual goods is just one example. Data sharing among parties to increase efficiency is another example. With an distributed computing platform enabled by the blockchain technology, the game providers and players will be able to able to interact closer than ever before, also with the regulators to increase transparency for a healthy growth.

“The true sign of intelligence is not knowledge but imagination.” — Albert Einstein

We are still in the early stages of the blockchain technology and the use cases within the gaming industry is still experimental. The second layer technology and ability to connect multiple blockchains synergistically will be the next milestone of technological advancements that we can foresee today. Creation of quality games will follow once the associated blockchain technology (and financial benefits) becomes accessible to the game developers. A new chain of gaming ecosystem will form in parallel during the whole process.

Whoever can see the future coming will have the first mover advantage to leverage the new wave of network effects, which can potentially be bigger than the web 2.0 /3.0 combined in term of economical impact to our industry. Blockchain is a technology that meant to re-write the communication layers of all industry from inside out, and it is time for the first mover advantage. We will continue to share our research in technology innovations hoping to give inspirations for industry, and working together for a better future.

About Raymond Chan

Raymond Chan is a 20-year data science and business innovations veteran. He is the founder of Alphaslot, a technology company to develop extraordinary new gaming products for business innovations. Prior to founding Alphaslot, Raymond spent 10 years in Silicon Valley where he was the lead architect of the Business Intelligence System for E*Trade Financial and TiVo Entertainment. In 2007, he joined Global Gaming Group in Macau and co-founded Takara Gaming Group before founding Alphaslot in 2018.