It is difficult to find a gamer or investor that has not heard of Axie Infinity, The Sandbox, Decentraland, or Gods Unchained these days. With more than 2.5 unique active wallets being connected to blockchain game services during the year, 2021 was the biggest year for the industry yet.
While playing games used to be a form of entertainment in which earning money was reserved to a few pros, cryptocurrency and NFTs have changed this reality over the past years. By bringing true ownership to the table, these 2 technologies allowed the creation of a new business model that changed gaming forever: Play-to-earn (P2E).
P2E is Growing Fast
As the name suggests, this model rewards players for playing the game by providing them with cryptocurrency and NFTs which hold real value.
Not only can these assets be truly owned by the player and traded freely but they also create new possibilities for the player to gain more rewards. This results in a feedback loop in which players master the mechanics and strategy of a game to maximize their rewards.
With players historically having been forced to pay for the games they enjoy, only to have to grind for in-game assets they don’t truly own, it is not a surprise P2E has become incredibly popular among them. However, developers have also found that a P2E model brings a lot of benefits to them in several aspects, incentivizing them to further adopt the model.
The greatest and most immediate benefit to developers and studios is the diversification of earning streams, which has been a constant struggle since the rise to the popularity of the free-to-play (F2P) model. While loot boxes, DLCs, in-game currency, and other sellable in-game assets have allowed them to generate revenue, these features remain unpopular among gamers.
A Value Generation Machine
By bringing true value to in-game purchases and assets, features usually associated with F2P models are no longer seen as an expense but as an investment. The result is a richer ecosystem in which players and developers benefit from the game’s growth, promoting cooperation among both parties.
According to a report by Newzoo, not only will P2E become a more viable business model during 2022 but blockchain technology is also expected to become more prominent in the esports industry. With esports having become the staple of what professional gaming can be, this increased adoption is expected to create an influx of new players to the P2E ecosystem.
While hardcore gamers have been reticent to the idea of having NFTs integrated with their favorite titles, this sentiment is the result of the ongoing speculation with the NFT craze. With NFTs being seen as a technology meant to make money instead of adding value to the gaming experience. According to Newzoo’s report:
“Game publishers are stuck between a rock and a hard place: many shareholders and investors want to see NFT strategies as they see it as “the next big thing”; however, gamers in the AAA space negatively react to the technology. We might see publishers appeasing both parties by adding NFT(-like) technology) under a less controversial name.”
Still Being Resisted by Entrenched Interests
The opposition to NFTs is nothing new as publishers have experienced a backlash in the past due to their use of mechanics like loot boxes, forcing titans like EA games to reconsider and apologize. However, loot boxes have integrated with other titles in a seamless manner over time, especially when players also have the option to acquire them by playing.
As P2E games are all about rewarding players who play the game regularly and with the intent to master it, most rewards don’t require them to pay to be acquired. If players choose to pay, they do so as a means of investment to increase their chances of making a profit when playing the game instead, knowing what they are getting beforehand.
Another important factor that is expected to drive growth in the P2E space this year is the increasing anticipation over the metaverse. While companies like Meta and Epic Games have gained the spotlight when it comes to media coverage, decentralized platforms like Decentraland and The Sandbox have also gained mainstream coverage.
With the metaverse representing a digital representation of real-life to a big extent, the need for true ownership and censorship-resistant nature is a given. Not only can NFTs and crypto allow for the creation of complex economic systems based on a P2E model, but the decentralization of blockchain would also result in a trustless ecosystem that doesn’t rely on the whims of a single corporation.