Menu
User-generated content (UGC) is transforming the way we consume media, engage with games, and interact with each other. Initially a marketing tactic, UGC has become a crucial element of Web3 gaming and the metaverse. In this piece, we delve into the world of UGC and how Web3 addresses the challenges faced by Web2 UGC games.
User-generated content (UGC) was around long before the term itself was coined, yet it only entered the mainstream in 2005. UGC was the driving force behind the transition from Web1 (read-write) to Web2 (the internet as we now know it). Sites we use every day, including Twitter, YouTube, Facebook, and Twitch are built using UGC. Social media and other platforms that embrace UGC provide a space for open collaboration and flexible licensing agreements to reduce the barriers to content creation and discovery. UGC includes any form of content that is posted by users on online platforms such as images, GIFs, videos, text, music, in-game characters, in-game modifications, etc.
The gaming industry is one of the biggest areas of growth for UGC. A report by Nimdzi estimated that the 2020 market size for localizing UGC in player support ranged between USD 100 and 180 million. This figure is projected to grow at a compound annual growth rate (CAGR) of 10% by 2024. A small fraction if we consider the entire games industry, however, UGC has been steadily growing and has ample room for expansion.
In its early stages, UGC took the form of “Mods” — custom alterations to existing games’ mechanics and designs achieved by modifying software, often distributed through independent channels like third-party forums. Apart from Mods, UGC encompasses two additional categories: “Machinima,” which involves utilizing gameplay from existing games to produce animated content like cinematics, and “Game Creation Systems,” which are platforms or software provided by game studios that empower users to design and develop entirely new gameplay content.
From images and videos to text and games, user-generated content comes in various formats. UGC was instrumental in transitioning from Web1 to Web2, as platforms like Twitter, YouTube, Facebook, and Twitch relied on user-created content. Early marketing campaigns, such as Coca-Cola’s “Share a Coke,” leveraged UGC to create personalized and shareable experiences. Fast forward to today, UGC has evolved beyond marketing strategies and social media posts, becoming an essential aspect of video games like Roblox and Minecraft.
Challenges in Web2 UGC Games: Despite the success of UGC in Web2 gaming, several limitations impact both players and creators:
Web3 builds upon the success of Web2. A fundamental feature of Web2 systems is centralization. However, Web3 give people ownership over their data and allows them to monetize it, unlocking new possibilities for UGC:
The concept of owning your assets and earning real value in Web3 game worlds is already built into several blockchain-based metaverse games. Decentraland, a pioneer in Web3 gaming, is a DAO-governed virtual world where users retain ownership of their creations through NFTs.
The increasing interest in UGC games has led to significant investments in metaverse projects and platforms enabling users to create their virtual land. UGC platform Yahaha raised $40M for its metaverse creation tool, UGC metaverse Createra raised $10M to enable creators, while BUD, a metaverse user-generated platform, announced its $36.8M Series B, and finally this week, with CCP Games securing $40M for a new triple-A Web3 game in the Eve universe — a universe heavy on UGC.
These examples just show that we have only just begun to see the true power of UGC in Web3 games. There are a lot of new exciting projects adding UGC elements into their gameplay including Shrapnel, Nyan Heroes, ArchLoot, Project Eluüne, OccupyWallStreet, just to name a few.
The true potential of UGC in Web3 games is just beginning to unfold. As creators and players from Web2 UGC games recognize the opportunities and value of building in Web3 games, the migration to Web3 is inevitable. Given the many advantages both for players and games, eventually, the majority of Web3 games may integrate some level of UGC capabilities. With continued investments and advancements, Web3 technology will undoubtedly revolutionize UGC gaming and the metaverse landscape.
