The inherent speculation and reflexive flywheel created by the play-to-earn gaming model has created gaming brands with multi-billion-dollar fully diluted valuations like Axie Infinity, DeFi Kingdoms, and Star Atlas, among others. However, the existing play-to-earn gaming model has several severe flaws that prevent its long-term success.
Web3 Job Board
I’m starting a Web3 Jobs Board for companies and individuals.
If you’re an individual looking to get hired in Web3 – or make a career change – apply to my Web3 talent collective.
Companies and startups – get access to my curated list of Web3 professionals and post job listings on my board which will get shared via Unsyndicated and across my social channels.
Sponsored By: Messari
Messari provides crypto market intelligence across data, research, governance events, and more. Check out the full piece on Messari.
The Flaws of Play to Earn
First, the ability to purchase NFTs or in-game currency effectively creates pay-to-win game mechanics, a quality that most major franchises and successful games avoid. The most successful games often share an element of skill, opting to create a competitive multiplayer gaming experience and avoiding a “spam the credit card until you win” option.
Second, most play-to-earn games require a significant upfront investment (from hundreds to thousands of dollars) in NFTs just to play the game. This naturally prohibits many potential users from playing and further enhances the pay-to-win dynamic.
Finally, ask 100 crypto gamers if play-to-earn games are fun, and almost in unison, you’ll hear a resounding “No…but I’m making money.” Players making money via routine gaming actions is not a sustainable recipe for franchise success. The end result is the same — gaming mercenaries will move from one yield farming game to the next, ever in search of greener pastures.
Source: Loupfunds
This model can broadly be applied to crypto gaming as well, with the critical distinction that recurrent revenue typically comes via secondary trading fees rather than subscriptions (i.e., Fortnite V-Bucks and Roblox Robux).
The NFT gaming playbook has focused on selling NFTs and combining staking or yield farming to create financial incentives to “play” the game. There are no notable NFT games that concentrate on monetizing via social value, although there are NFT projects like BAYC and other collections that monetize predominantly on social value.
Most NFT games fail to surpass the Entertainment Threshold — the point in which a company or developer has created a game exciting enough to be sustainable beyond the financial incentives offered to users.
Check out the full piece on Messari.