How the Play-to-Earn revolution could turn your gaming career dream into a reality
The economic models of video games have changed enormously over the past few decades.
In the 1990s, Sega and Nintendo launched their consoles, and MMRPG gaming became hugely popular. These are known as buy-to-play/premium, with a one-off investment of console plus games. The subscription model, pay-to-play, is also popular.
In 2017 Fortnite Battle Royale was launched for PS1, Xbox One and PC, on a revolutionary free-to-play (or freemium) basis, with in-game purchases such as Battle Passes. As of May 2020, Fortnite had 350m registered users in 150 countries, with an estimated 30m daily players.
The latest phenomenon to shake up the gaming industry is play-to-earn, or P2E. Players can earn money from blockchain or crypto-gaming — potentially, enough for a wage to live on.
Crypto-gaming marries the fun and entertainment of traditional gaming, with the freedom and earning potential of the blockchain.
One step on from this is free-to-play-to-earn, or F2P2E, where no initial outlay will be needed to use the game, and money can be earned.
How can gamers make money in the new play-to-earn economy?
This alternative business model turns the existing gaming industry on its head. Making money out of gamers will no longer be the norm; instead, the new paradigm rewards players for spending time in-game. Rather than winning tokens and spending money on assets which are then “walled in” to a specific game, players can create their own unique digital assets — NFTs, or non-fungible tokens — which they sell and trade on the open market.
Gaming tokens, or currency — such as Banger Games’ Bombcoin (BMB)can be earned to create assets and stake rewards, and can be exchanged for fiat (conventional) currency. This is an entirely new type of economy, which puts the power of ownership, income generation, and spending in gamers’ hands. Before, only the top few e-Sports players were able to make a living from playing video games. Now, anyone has the potential to turn gaming into their day job.
As always, gamers need to grind for hours in order to earn assets and tokens. But the big difference is that the NFTs and tokens that players create and receive can be exchanged for currency that they spend in other games, giving back to the economy, or on other products or services altogether.
The decentralised nature of cryptocurrencies used in blockchain games is a key factor (DeFi, or decentralised finance). Banks are not part of this alternative economy. DeFi is easier, faster and safer for people to earn money than in a conventional way. Play-to-earn is sometimes referred to as GameFi, or the financialisaton of the video gaming industry.
This alternative crypto-based economic model is enabled partly by Level 2 solutions such as Polygon, as used in Banger Games. These offer a scalable solution for secure, low-cost, high-speed blockchain transactions. Without them, crypto transactions can be considerably slower and more expensive.
The democratisation of play-to-earn also encompasses the increasing use of decentralised autonomous organisations (DAOs), whereby games are not governed by a sole individual or board, but rather by the community itself — including how the game develops and how payments are made, using automatic smart contracts. This decentralised control is implemented using governance tokens, which allocate voting rights to holders, thereby ensuring fairness and transparency.
Axie Infinity — a crypto game that is changing people’s lives
One of the biggest success stories of P2E this year — and which has brought the concept of crypto-gaming to the wider public’s attention — is Axie Infinity. Sales from this game, of breeding and battling creatures called Axies, hit $2.5bn in the first half of 2021. Axie Infinity has transformed the lives of thousands of people in countries like the Philippines. Players, usually functioning as “scholars”, use the proceeds to support themselves and their families. For these users, gaming is not a passion, or even a hobby or pastime, but a way of surviving in challenging times, as we are experiencing now with the Covid-19 pandemic.
These are not typical gamers, and have adopted blockchain gaming as a way of earning ETH, the Ethereum cryptocurrency. A player can bring in $350–1,000 a month by earning AXS tokens, making SLP (Smooth Love Potion, which is needed to breed Axies), and selling Axie NFTs. Around $30m of these NFTs are transacted in Ronin, the Axie marketplace, every day. The game has 1m active daily users.
As Arianna Simpson, a partner at VC firm Andreesson Horowitz, who led the company’s Axie investment, commented to Esports Asia, “Axie … created this model, but I think it´s going to be extremely widely applied … If I can play a game, and have an equivalent amount of fun, and also make money — well obviously I´d rather do that, right?”
According to Sky Mavis, the game’s creator, 25% of players do not have a bank account. This flexibility in paying is a key aspect of crypto-gaming — payments are more streamlined and broadly accessible, thanks to blockchain technology.
One major limitation to playing Axie Infinity is the high investment threshold of three Axies, at an outlay of around $900, which is where the sponsored scholar system comes in. Axie is also selling tokenised plots of its homeland, Lunacia.
Another fast-growing area is games where you can make money, such as from breeding creatures or creating assets and selling them as NFTs, but without the initial investment. F2P2E games include Township, a farming and city-building game.
A revenue stream can also be secured from decentralised metaverse games like The Sandbox, a virtual immersive world created and owned by players — they can build, trade and monetize their game creations and experiences as NFTs. This user-generated voxel (volumised, or 3-D pixel) game has formed partnerships with big-name companies like Atari, The Walking Dead and Binance.
The crypto-gaming economy is still in its infancy, like the internet in the early 1990s, e-commerce in the mid-1990s, or mobile internet in the early 2000s. Many investors normally wait till such new technology is established and fully functioning, and more importantly until they can see profitability, before throwing their hat into the ring. However the cannier ones, whether players, developers or investors, will want to take a risk and get in on the ground floor to take advantage while entry prices are still low. Blockchain gaming has the potential to empower creator economies and drive growth to phenomenal levels.
With crypto-economics, gaming communities can profit from participation and from the success of their own games, rather than big corporations taking all the benefit. New games and NFTs are constantly appearing on the market, so there’s never been a better time to be an early adopter, and potential big-earner, in this exciting new space.