Play-to-Earn has given blockchain gaming a foundation for many investors to raise some eyebrows. Mobile gaming industry profits are shooting up, and, as far as developers are concerned, it shows no sign of stopping. The global Play-to-Earn NFT Games market size is projected to reach $3618.4 million by 2028, from $755 million in 2021. Play-to-Earn has NFTs to thank for its rise in popularity. Blockchain-based gaming is the next big step in Web3, and we’re here to argue about the importance of focusing on Play-to-Own versus Play-to-Earn.
According to SkyQuest Technology, the NFT Market was valued at USD 15.70 Billion in 2021 and is expected to reach USD 122.43 Billion by 2028. There’s been a lot of whitewashing about the industry, but it’s important to note that out of thousands of use cases, the gaming industry has seen the most feasible benefits. But is it Play-to-Earn or Play-to-Own that people think of when they say blockchain-based gaming?
Before we discuss that, let’s talk about what exactly Play-to-Earn (P2E) is? It’s a simple concept of playing the game and earning cryptocurrency. Whatever core feature the game focuses on will reward its player base with tokens. Even though this is a grand leap from traditional gaming, the current applications of P2E are all a ticking time bomb.
Many people have made a living off P2E games. We don’t want to detract from the many families that fought off hunger thanks to them. However, as the hype settles and people calm down (and the market takes a nosedive), we can see that P2E is a black sheep and a predecessor to something bigger. A stepping stone for what’s about to come.
Earning money from gaming isn’t exactly groundbreaking. Players have done it since the early 90s. One of these activities is “gold farming” - acquiring in-game currency to sell for FIAT. Gold farming is the outlier, but depending on the genre, players would have engaged in many other activities as a service, such as questing, power leveling, achievements, etc.
Saying that “gold farming in traditional gaming is the closest thing we have to a Play-to-Earn model” would be false, but it shows that people have had the incentive to make money from gaming for a long time. This industry picked up steam during the early 2000s, and in popular games like World of Warcraft and RuneScape, gold sellers would bring in cold, hard cash. So much so that it prompted developers to put a chokehold on real-world trading, enforcing strict rules against it.
Developers acting against gold sellers is a two-fold decision. For one, some gold sellers revert to shady methods of acquiring gold. In games like RuneScape, it meant severe botting issues. The amount of gold in the game pressured the game’s economy. To understand the severity of botting, check out this video dating back to 2011 when RuneScape deployed what they called “Bot Nuke.” Players complained there was no one left to play with and that they “would like to have the bots back if it meant the game didn’t have to die.” Secondly, any major traditional game would like to retain its entire value within the game. Sellers disrupt this cycle. As simple as that.
We can see attempts at an “open marketplace” from the Diablo 3 Auction House, allowing players to buy items in-game using FIAT. Its deployment was a disaster by anyone’s standard because the game was never designed with an open marketplace in mind. Gold sellers flocked to it, making a fortune. Rampant botting inflated the currency and tanked the game’s player count. Diablo never recovered from it. Ultimately, traditional games have failed to implement any sensible open economy, leaving a lot of players wanting, or worse, searching for shady alternatives.
Other than botting and gold-selling, there’s always this thought in mind. What happens if the game stops developing? If developers go missing, then it’s lights out for everyone. Several MMORPGs have gone offline in the past three decades. This statement might sound like a joke, but Club Penguin going offline meant thousands of hours of fun, progress, and grinding evaporated for some players. No progress saved, no NFTs in your wallet. Nothing.
But we can’t pretend as if Play-to-Earn didn’t come with its own set of challenges. Maintaining wallets, keys, and crypto means a high entry barrier that deters a lot of gamers from joining P2E games. Rug pulls are also a thing and a few other reasons. Ponzi schemes take the cake. So let’s dive deeper and see what makes Play-to-Earn so lucrative.
In traditional gaming, you pay for the game once or use a subscription-based model. It is the first instance of money expected from the user in exchange for the game’s development, time, updates, etc. With the addition of aggressive microtransaction models, its become a staple for some newer triple-A games to be pay-to-win. Look at Diablo Immortal. According to Bellular News, maxing out your gear costs roughly USD 100,000. But we digress. Let’s get back to P2E games and see what they’re doing.
What makes a play2earn game “successful”? To a degree, the input must match the output. So you might ask yourself this question: “did I pay any fees?”
An entry fee isn’t necessarily an indicator of good or bad, but it’s better than nothing. Remember, no one gives away money for free, so one way or another, you’re working for your money.
Titles like Axie Infinity had a low entry barrier starting and rapidly ramped up to exorbitant fees. They made their players purchase 3 Axies (monsters used for fighting) before they could play with other players and start earning. So if the influx of new players trickles down, this economy fails to hold up and crumbles from the bottom up.
A price chart of the native Axie Infinity cryptocurrency, Smooth Love Potion (SLP).
There are many other input sources such as advertising, a subscription-based system, packages sold in-game, etc. Anything giving the developers money counts as input from the players. Investors don’t. Investors are interested in driving value for themselves.
Another question could be: “is there any preventive measure for inflation?”
Developers hyper-focused on distributing value rather than creating value present us with another issue. Many P2E games have discovered strategies to manage inflation, so burning, staking, and other methods have become industry standards. Don’t confuse these for anything other than management. They control inflation but don’t create value for their users.
Finally, is the game really “gaming first,” or is this just a hot topic? We understand the tendency to play simple games that reward crypto, but remember that if the gameplay loop is not fun, as soon as the rewards dry out, players pack up and move on to the next game. Nothing personal it’s just business. And that’s what these “earning” focused P2E games get you: just business. Instead, focus on the games that have a narrative. A game that resembles an actual game with some “meat on its thigh.” If traditional games have done nothing to give back to the player, they have tried hard to enhance the gameplay experience to keep players coming back.
“Earning first” games will have a quick start! All developers have to do is mint and keep the servers running. Get-rich-quick schemes might be attractive from a developer’s point of view if all they want to do is just that. But if the interest is in keeping players going for decades, if the game wants to create a journey, sustainability, and long-term value for its players, then the gameplay-first loop is critical. And in “earning-first” games, that loop is secondary or, in some cases, inexistent.
While Play-to-Earn is far more favorable than any traditional game with a closed economy, if we were to look at it from an investor’s point of view, a game worth investing in is a game that offers long-term value. The same goes for players.
The concept of Play-to-Earn is not inherently evil, but it’s now become a buzzword for Ponzi schemes. Sure, it’s allowed many players to earn in proportion to their time spent. Some have even made a comfortable living for themselves. The problem is that the focus is on earnings and not gameplay. Players expect a maximum return on investment for the minimal input. This cat and mouse game can blow up at any minute, and holding a system like that together is a duct-tape solution at best.
The game experience, unique journey, and a strong community are the basis of everything. However, if we look at P2E from a business standpoint in a regulated economy, what comes in must come out. In P2E games, there are incentives to continually output regardless of input. If the crypto earned is the only incentive, and developers can mint these, wouldn’t that make this a centralized system? Wasn’t the whole point of blockchain technology decentralization?
That means we’re left with games that focus on gameplay.
Play-to-Earn was a stepping stone, but we believe that that’s all it was, a stepping stone. It introduced “blockchain newbies” to core blockchain concepts and showed that there’s money to be made. But if a game is in it for the long run, it will steer towards Play-to-Own and away from Play-to-Earn.
This concept emphasizes gameplay first. Its value is inherent in the gameplay loop. What other forms of input the game uses are just additions to an already well-established game. Play-to-own games focus on ownership rather than earning. Its players will receive collectibles/NFTs rather than raw crypto, which is known to be volatile.
Blockchain-based gaming should focus more on “gaming” than on “blockchain.” If the point is the game, blockchain should just be a means to an end. Play-to-Own brings value to its players by going back to its roots. Think of “Play-to-Earn” as a feature that developers can add to their game after some assessment. Play-to-Own is game design. What Play-to-Earn developers have to do to maintain healthy levels of inflation, Play-to-Own developers can regulate with a free and open market.
Traditional games have done it before. RuneScape has its Grand Exchange, World of Warcraft has the Auction House, etc. Time and time, players have shown that they are capable of self-regulation. A player will sell something for the appropriate amount of currency they think is right, making ownership key. Blockchain is another means to an end, and developers shouldn’t play cold shoulder with the traditional gaming industry to gain fictive “elitist” points. We must learn from the past and understand where things went right and where they went wrong.
Play-to-Own is the only logical step in blockchain-based gaming. Developers who focus on creating evergreen games are the ones that will make it through all the bear and bull markets because of their inherent value tied to the gameplay loop and not a cryptocurrency. The truth is, if you’re getting free money, it’s not free. You’re getting it from someone’s back. You can’t substitute a good gaming experience for anything else, and Play-to-Own is the only philosophy that supports that ethos!
Chrono Games is a Web3-focused gaming studio based in central Hamburg, Germany. Our mission is to create successful Play-to-Own games while helping traditional game studios and startups in their Web3 ventures. Our ethos is to create games that drive value to the economy and give power to the players. What we discussed in this article is a product of our research and our shared experiences, and we believe a successful blockchain-based game should always be “gameplay first.”