It's no secret that gaming has evolved from a harmless pastime to a multibillion-dollar business. The industry paradigm has shifted as a result of the development of blockchain.
Instead of money going solely to game creators and distributors, players may now earn money using cryptocurrencies or non-fungible tokens (NFTs) in play-to-earn games on their computer or smartphone.
However, despite its popularity, is Play-to-Earn gaming really a legitimate source of income? Before we can answer that question we first need to understand what Play-to-Earn gaming is.
What is Play-to-Earn/P2E gaming?
Play-to-earn (P2E) enables users to earn a consistent income by just playing a game. This income is usually in the form of cryptocurrency but in some cases players can receive NFT items as compensation for their gaming efforts.
The prizes vary depending on the game, but popular games like Axie Infinity allow players to earn tokens through combat in Player-vs-Environment (PVE) or Player-vs-Player (PVP) events. Staking, cultivating a game's money, and producing tradeable NFT products are all ways to gain tokens or NFTs in P2E games.
Players in previous blockchain games depended heavily on luck to generate money. Play-to-earn, on the other hand, has built in-game economies and business models that allow users to make money while playing.
However some early P2E games have a grindy experience, requiring players to repeat a certain set of tasks to earn tokens without much diversity in gameplay features.
How do Play-to-Earn games work?
Play-to-earn games are part of the GameFi ecosystem since they combine gaming with financial incentives, with each game offering monetary rewards for playing and progressing.
As previously said, there is frequently a grind involved in repeating particular behaviors that allow users to earn money in two ways:
- Earning cryptocurrency in-game. Axie Infinity's Smooth Love Potion (SLP), for example, may be obtained by performing daily objectives or fighting monsters and players.
- Obtaining or exchanging NFTs in-game. Each NFT might represent a gaming object, character, or other collection. These can be entirely decorative or have a functional purpose in the game, depending on the game.
Staking is a third option for earning money in P2E games. Users can lock up NFTs or cryptocurrencies in smart contracts in some NFT games, which produces incentives.
For example, Defi Kingdoms is a fantasy game based on an NFT asset platform where you may earn an income by staking the game's in-game currency, JEWEL. Within the game, you can also buy interactive NFT heroes and sell them for a profit.
Barriers to entry for P2E gamers
Despite being a promising way to earn an income for players from impoverished nations, current P2E games have some substantial barriers to entry. One of these barriers is a high entry cost and Axie Infinity is a good example.
Players need to own a team of three Axies before playing and an Axie can cost anywhere from $25 to over $100 based on its traits, so a player is looking at spending anywhere from $100 to over $300 just to start playing the game.
This is almost twice as expensive on the low end than paying for a AAA game that costs around $60 on average. Once you take into account the fact that the average salary in the Philippines is $3,218 per year ($268 per month) you can see how prohibitive this startup cost can be.
However there are scholarship programs that aim to help players get into playing Axie Infinity without any upfront costs. Scholarship programs are agreements where a manager (a player with plenty of Axies) hires a scholar (a player who can't afford their own Axie squad) to play the game for them.
According to their agreement, the scholar's SLP would be shared between the management and the scholar. It might be an equal 50-50 share, a 60% scholar/40% management split, or a 70% scholar/30% manager split like the one offered by Sereia Scholarship.
Although these scholarship programs can reduce the entry barrier for players, it does not address additional problems faced by players:
- A very long and grindy process to earn an income. This Reddit thread highlights the complaints put forth by players who use the scholarship model.
- When the value of SLP goes down, the value of the tokens earned by players goes down in real world value.
Common complaints include the following:
- “It's not a matter of trust any more. It's a matter of necessity. The grind of 3 hours can be more productive elsewhere because the truth of the matter that we can't deny is many Filipinos rely on axie to help their expenses. It's not a casual game for many of us (including me).” - by user darkwillowet.
- “My scholars are starting to get demotivated. Im not sure what to do anymore.I feel demotivated myself. I try to keep a brave face and keep encouraging them, but im not sure about it anymore.” - by user AnotherIntheFire_029.
- “Not a scholar, but it’s my 2nd day of not playing. I’m just gonna put my energies into other crypto games as I wait for the slp price to rise again.” - by user PaleAlePilsen.
Axie's play-to-earn scholarship programme exemplifies the difficulties at hand. In this context, a scholarship entails a rich player paying the often exorbitant initial cost of setting up an Axie team, which may run into the thousands of dollars, and then finding a scholar who plays the game on their behalf for 2 hours or more each day per team.
After then, the revenues are shared 50–50 between the scholar and the owner. Scholars can make some money by 'working' for a virtual Axie team in this fashion, with the goal of one day earning enough to buy their own squad.
This works because Axie is most popular in the Philippines, where the low cost of living and lackluster economic prospects make a money-making game a huge hit. According to reports, the Philippines is home to 40% of the game's more than 8 million players, making it so influential that the Philippine government considered taxing the game's earnings directly at one time.
SLP, one of Axie's key tokens, has replaced local cash in several real-world companies. This game has taken the country by storm in numerous ways.
Is this, however, a terrible thing? If this were a regular game, one that you bought and played for enjoyment, it would be a wonderful accomplishment for the creator and a tale of millions of people having a good time.
However, by getting in early and paying others to join the game, this pyramid scheme model is perceived as an economic safe haven, a way to escape the region's dire economic realities.
Some platforms are making it easier for gamers to get into P2E gaming
There are platforms out there that are working to make it easier for players to get into the P2E space. UniX Gaming is one example, they’re a growing community of P2E gamers with over a thousand Axie Infinity scholars and they aim to onboard an additional 9,000 in 2022.
UniX Gaming plans to supply high-quality Axie teams, and one of the key aims of their strategy is to provide players with training as well as the tools they need to improve their earning potential. They believe that by creating higher quality teams, they reduce the grindy nature of P2E gaming, since higher quality teams can complete battles faster and more efficiently.
Affyn aims to solve the high cost to entry barrier by building a Free-to-Play P2E metaverse, this way players can start earning an income without any upfront costs. Affyn is mobile Play-to-Earn game where players will be able to explore, play, and participate in activities depending on their geolocation in a Metaverse named "NEXUS," which will be constructed on a digital layer linked to the actual world.
Players in the NEXUS Metaverse will be able to catch and train "Buddies," which are a collection of NFTs that may be used in missions, PvP fights, and raids. Every "Buddy" character in the game is a blockchain NFT, which means "Buddy" holders will control these NFTs.
Players may train and play with Buddies interactively in addition to owning them. In the future, the team hopes to make these Buddies transferable to other games as well, maybe without modifying their qualities.
The P2E concept still has a long way to go. The sector has various significant obstacles; yet, we are already seeing the creation of several platforms that are helping to address these concerns.
The play-to-earn model is clearly destined for greatness, and new gaming guilds, communities and games are driving development. It is clear to see that the foundations are being laid out for a stable digital economy and ecosystem.
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