The Play To Earn Phenomenon
Disclaimer: The text below is an advertorial article that was not written by Cryptonews.com journalists.
Something rather extraordinary is happening at the convergence of Blockchain Technology and Gaming. Today, thanks to the rapid emergence of NFT’s in the blockchain gaming industry, players are able to generate income for themselves by playing the games they love. The bold use of NFTs in Gaming is turning gaming into a brand new experience and is unlocking a world of value for users.
Before we venture into the domain of Play to Earn gaming, the topic of today’s article, we will need to define, very quickly, what an NFT is. Only then will we be able to truly grasp the scope of what is possible with NFT’s in the context of gaming, and understand why the Play to Earn gaming model is taking the world by storm.
The Essence of an NFT
An NFT is a cryptographic token that lives and dies on a Blockchain Network, where the ownership and transaction history associated with an NFT is stored. It is designed according to standards, that is, sets of specific rules that tokens have to adhere to. A few standards exist today but the most popular ones are, without the shadow of a doubt, Ethereum’s ERC721 and ERC1155 token standards, which are used extensively on Ethereum NFT marketplaces such as Rarible and OpenSea.
NFTs, thanks to Metadata that contains critical descriptive information, cannot be replicated: they are non-fungible.
We are increasingly seeing developers integrate Non-Fungible Tokens in the games they release, and far from being just another gimmick to squeeze more money out of players, NFT’s used in the context of games really do provide a lot of value for users, as we will see below.
The Best of Both Worlds
Considering what has been stated about NFTs above, is it fair to say that gaming and NFT’s are a fantastic combination? Gaming and NFT’s? Why didn’t we think of this before? It is a brilliant idea. Imagine: all in-game items such as swords, shields and potions, tokenized and turned into NFTs. These NFTs, associated with a particular gaming account, and held in a wallet, can then be sold and transferred to external applications. The possibilities are mouth-watering.
In-game items that can be tokenized and transferred are not bound to a game or a world: they can be transferred across different games and worlds. This, we believe, is the most important consequence of the introduction of NFT’s in the world of gaming.
In-game items as NFTs are a brilliant idea and one that will appeal to anyone who has spent a significant amount of time and money on a game, only to see their efforts and assets vanish due to a game’s technical failures, for example. When a game, platform or account vanishes, for whatever reason, users are left with nothing after investing tens, sometimes hundreds of hours of their time playing. All that effort is gone, not to mention all of the money that was spent purchasing items. NFTs change this: all game items as NFTs can be immediately transferred to an external wallet for safekeeping. Even characters can be transferred out and used in other games.
Play to Earn is Taking the World By Storm
The combination of gaming and NFT’s is fascinating. Let us take this idea further: what if it was possible to tokenize in-game items, that is turn them into Non-Fungible Tokens, and monetize them by selling them on marketplaces and by using them within Decentralized applications?
What if it was possible for players to generate income as they play their favorite blockchain games? To exchange these tokenized items for fiat currency?
Wouldn’t this be a total game-changer?
Well, this is exactly what is happening at the moment, and in the world of gaming, it is nothing short of a revolution. For gaming studios who refused to even consider implementing blockchain technology in their production process, this will come as a shock and as a wake-up call. Players are now able to sell in-game items such as tools, weapons, potions, for fiat currency. Players around the world are now able to truly monetize the amount of time and money they spend in a game via tokenized items.
What is particularly interesting here, is the crossover between Play To Earn and Decentralized Finance. Certain platforms, such as Mobox (in a sign of things to come), allow users to Stake in-game items turned NFTs. In-Game items are now making appearances on NFT Marketplaces such as OpenSea and WAX (the WorldWide Asset Exchange). What is stopping developers from granting governance rights to users who hold certain in-game items? We believe it is only a matter of time.
The game Axie Infinity, hailed as one of the best blockchain games today, is perhaps the best illustration of this model’s disruptive potential. In July of 2021, Axie Infinity’s revenue stood at 120 million dollars. At the end of August, this game’s revenue stood at 215 million dollars for the year.
Axie Infinity is proving to be such a great money-making opportunity that it has spawned a market of players offering to play the game on behalf of users who provide Axies. Laborx.com’s gaming services section gives observers a glimpse of a thriving market, where Axie Scholars (the players) play on behalf of Managers (those who provide the Axies). Such arrangements allow players to play the game and earn some revenue without the need to actually own the Axies, which are needed to play the game.
The Play to Earn gaming model is attracting serious investors and spawning innovative business models. Take the project known as Crypto Gaming United, for example, which has recently raised 5 million dollars through a seed round led by Mark Carnegie and Sergey Sergienko. Crypto Gaming United’s focus is inclusivity: not only do they support players by assisting them in their quest to generate revenue for themselves via blockchain games; they also provide sorely needed educational services and financial services, which will go a long way to improve the lives of people living in developing countries.
What is astounding with the Play to Earn gaming model is the fact that gaming and in-game economies are having a real impact on real-world economies. Countries such as the Philippines, which has been hit by the covid-19 pandemic particularly hard, have seen massive inflows in terms of new players, who realized they could make an income that rivaled the income they could get from a normal job. The income certain players are earning from this game is so significant that regulators are now considering the possibility of taxing revenues generated using Axie Infinity!
The Play to Earn gaming model will unlock a tremendous amount of value in the gaming world, which is already, thanks to Covid-19 among other known catalysts, experiencing explosive growth. The global gaming market was valued at 162.32 billion US dollars in 2020 and is expected to reach a value of 295.63 billion US dollars by 2026, registering a compound annual growth rate of 10.5% over the period of 2021-2026.
The size of the global gaming market today is 2.7 billion gamers. This is the size of the opportunity today. As the play to earn model gains traction, more and more players will be able to experience genuine ownership of their items and monetize them, generating revenue for themselves. It is easy to see how big of a market “Play to Earn” can turn into, if it taps into the global gaming market with offerings that provide not only the opportunity to play and earn money, but also a rich, engaging gaming experience.
Play to Earn completely disrupts the flow of money within the game industry, and it is worth taking a moment to look at how things changed. Traditionally, the flow of money went from the pockets of players to game developers and publishers. Game developers and publishers used strategies to maximize the amount of money they could make from players - such as paid downloadable content. The idea was to squeeze money out of players with content and items associated with the games they purchased.
The emergence of the play to Earn model changes everything: players generate income, which means that game developers, publishers and players are granted income concurrently. Players have a much more important role: they are promoted to the role of essential stakeholders. In this brave new world of gaming, value creation is not the sole domain of game developers and publishers any longer, and any strategy that aims to simply squeeze money out of players without offering anything valuable in return is doomed to fail.
If someone told you in the 90’s (an era during which the Super Nintendo and Sega genesis competed fiercely for market share) that it would be possible to earn cryptocurrency playing games and generate a significant income by sinking time and money into bitcoin earning games, you would probably have laughed it off as a crazy idea. Video games have, for a very long time, been seen as a pure waste of time. In 2021, it is possible, through the audacious use of blockchain technology but particularly of NFT’s, to grant players the ability to generate income for themselves by playing the games they love. This is the brand new world of gaming.
The Play to Earn gaming model brilliantly illustrates the power of financial incentives and it is for this reason that it is promised a brilliant future.