Is Play to Earn Still “the Future” of Gaming?
Mid-to-late 2021 and early 2022 forced so many money-making, reality-changing ideas into the mainstream. In the middle of the year, celebrities were buying and boasting about their multi-million Bored Ape Yacht Club digital art NFTs.
At the end of October, Mark Zuckerberg unveiled the new company name, Meta, and his plans to introduce the world to the digital space dubbed the “Metaverse.” Bubbling up during this time, play to earn games based on NFTs, cryptocurrencies, and blockchains gathered players.
It wasn’t long before the craze of mainstream headlines covering “crypto millionaires” reached the early movers in the play to earn space. By 2021, the number of active blockchain games doubled. However, play to earn looks to have hit a wall.
Headlines of collapsing games, values, and players swarm the industry. At the same time, underpinning crypto values have tumbled significantly. So, we ask if there’s a future for the play to earn model in the gaming industry now that the dust has settled.
What Is Play to Earn in Gaming?
You’ll be familiar with the “play to win”, a phrase that players slap onto titles that aren’t skill-based, unlike game genres such as RPGs.
In these, the way that the in-game markets are set up, players need to pay more to get better and can then win more multiplayer matchups.
“Play to earn” was coined as a positive flip on this much-maligned business model. To understand how play to earn works, you need to know a few more technical terms, which we’ll go through here:
What are NFTs?
NFTs are “non-fungible tokens.” These are digital files that can guarantee a set scarcity and ownership by being on a blockchain. So, an item created as an NFT on a blockchain will have some form of identification.
It is also tracked across the blockchain with each transaction to guarantee ownership. It essentially allows for digital creators to maintain value, scarcity, and ownership in creation and discount any attempts to sell fakes.
What is Blockchain Gaming?
Blockchain gaming is a new form of gaming that sees developers build their gaming software with blockchain integration. This allows them to then create NFTs and allow for the use of cryptocurrency purchases and withdrawals.
The core technology of the blockchain is essential to the game’s economy, marketplace, and trust in the game itself. Blockchain gaming allows for play to earn crypto games to exist.
What Are Play to Earn Games?
Play to earn games are games that are built on a blockchain and allow for the earning of NFTs, which can then be sold in exchange for cryptocurrencies on the game’s market with other players. The cryptocurrency earned through the sale can then be withdrawn from the game.
A Great Concept on Its Face
With cryptocurrencies going mainstream – even if not for their intended purposes of replacing fiat currencies – playing to earn crypto games that allow you to get coins seemed like a grand idea. With the idea of NFTs also gaining traction, existing play to earn titles skyrocketed in popularity.
In the final four months of 2020, the total market cap for NFTs climbed to upwards of $7 billion from around $60 million. With so much money already being spent on NFT art and games, just about every major company wanted in on the action.
For gaming, it seemed like a natural pivot. Given the number of titles that offer in-game transactions for digital items that then can’t be redeemed for real money or get outdated with the next edition of the franchise, players warmed to the idea.
Now, in theory, players could recoup some of their grind time by selling items to other players for real money.
A Great Collapse of Play-to-Earn Gaming
Play to earn games enjoyed a strong spell in the spotlight, but as they’re inherently tied to crypto markets, their days in the sun were always numbered. After the summer 2022 crypto crash, NFT sales plummeted to a mere $1 billion – down $11.6 billion six months prior.
It wasn’t just a collapse of crypto and associated markets, though. Many leading play to earn crypto games have faded in popularity. Then, existing gaming companies trying to introduce NFTs missed the mark significantly.
The fan backlash against games like Tom Clancy’s Ghost Recon: Breakpoint bringing in NFTs was colossal, resulting in many other companies walking back on their plans. It's important to note this wasn't the case with all strategy games at the time, but only the ones promoting NFTs in such a manner.
Axie Infinity was bleeding players through the start of 2022. The face of play to earn gaming then got hit by a $600 million hack. By June 2022, the play to earn the title was deemed to have a “completely collapsed” economy.
The Inherent Flaws of Play To Earn and NFT Gaming
Play to earn games are inherently flawed in the concept being applied to the modern gaming industry. For a play to earn ecosystem to work:
- The game needs to remain popular indefinitely.
- It needs to host thousands of regular players.
- Accessibility for newcomers is essential.
- Past and future digital assets need to hold or offer more value.
You will know that there are only a handful of online games that remain perpetually popular. This is mostly through a rigorous update system and seasons.
Still, how many people do you know who have only played the one game since launch for years on end? The games industry is built on driving players to the next release. Another issue with play to earn and NFT games has been the marketing.
Inadvertent or not, most people know about play to earn titles through the dollar signs on headlines. In reality, it’s only the people who are first to the game and grind it out for big returns.
They then sell up and go. It’s almost like a hit-and-run tactic or passing an increasingly less valuable hot potato down the line. No one wants to be the one stuck with the perceivably valuable digital item when the market decides otherwise.
It’s because of this that many play to earn games are now being likened to pyramid schemes.
Furthermore, at some point, the developers will stop supporting the game. Without a vast system of interoperability between games that will go on, all of these NFTs become useless when the developers pull the plug.
As it costs to keep running online games, if the players go, so will the hosts.
Are Play To Earn Games Legit?
You can go into a play to earn game, grind for digital assets, and then sell them in its marketplace to get cryptocurrencies, which can then be cashed out as fiat money.
However, making millions from play to earn software is mostly reserved for the earliest of movers. Play to earn and NFTs may have sunk in popularity from just a year ago, but major companies see them as the future.
So, it’s unlikely that we’ve seen the last of such creations.