Why Play to Earn NFT Games Will Change Gaming

With the COVID pandemic, the gaming industry has experienced a huge boom, and is on track to make $180 billion in revenue in 2021. However at the same time, challenges exist, and the industry is also ripe for disruption. Blockchain games with play-to-earn features and NFTs are poised to change the landscape forever.

In this article, you’ll learn:

What are the current challenges in the gaming industry
What are play-to-earn NFT (P2E) games
How do they solve the current challenges in the gaming industry
What needs to happen for P2E games to become mainstream

Read on to discover what makes this new wave of gaming so exciting.

What are the current challenges facing the gaming industry?

Traditional business models of games like pay-to-play, free-to-play, season pass, and downloadable content (DLCs) have become widely popular and successful. However all of them come with tradeoffs.

1. The traditional model - "Pay-to-Play" and DLCs

The pay-to-play model delivers an immersive gaming experience, but there’s a barrier to entry. You need to spend money to buy the game upfront, and in some cases, you might need to buy an expensive gaming console or PC to run the game smoothly.

Game publishers now frequently release DLCs or season pass after a game is launched, which can include more missions, characters, and items. The problem here is that some studios have taken advantage of this to ship sub-par products at launch and try to fix them over various patches. Some content is even locked behind DLCs or season pass, meaning you have to pay even more to get the full gaming experience.

2. The "Free-to-Play" model and micro-transactions

Free-to-play games like League of Legends and Fortnite have become more popular recently, especially with mobile games, because gamers get the entire game for free. With this however, gaming studios make money from ads and microtransactions. It's pretty annoying when you see an ad pop up every 10 seconds.

To incentivise gamers to spend money, some game studios tilt the balance of gameplay towards features locked behind micro-transactions, such as items with better stats. This is called "pay-to-win" and is frustrating for gamers that don’t want or can’t afford to spend their hard-earned money to improve their in-game character faster. It's why games such as Starcraft and League of Legends have become the backbone of the eSports industry because it's genuinely about skill and you win if you're a better player.

3. Building a Career in Gaming

It's difficult for the average gamer to build a sustainable career in gaming. If you're really good at a game, you can become a professional and be part of an esports team. However, very few become good enough to be successful professionally, and the career of a pro is often quite short.

Gamers can also consider taking the content creation route on platforms such as YouTube, Bilibili or Twitch, earning subscription revenue or getting sponsorship deals. However, you’ll have to start putting yourself out there, and often times "whale" on games so that you can cover all the content. It also takes time to build up an audience before you see any success.

Finally outside of these gaming business models, gamers today are basically at the mercy of game publishers. While gamers might have spent money to buy in-game skins, characters, and items, these are all maintained by the game publisher, and they can easily choose to take them away, or even ban / close your account. Game publishers also strongly limit how in-game characters and items can change hands as they want to have maximum gamers buying their games or paying for items.

So what are play-to-earn NFT games?

Play-to-earn is exactly what it sounds like - you play a game to earn money, in this case, crypto. This adds another dimension to video games, changing the focus from pay-to-play or pay-to-win to play-to-earn.

NFTs (non-fungible tokens) are one-of-a-kind digital tokens. They represent ownership of Internet items like art, music, memes. In the gaming context, characters, skins, weapons, and other in-game items can be NFTs.

So play-to-earn NFT games allow users to make money from playing while also completely owning their characters and in-game items.

(Stick to the end where we share the 10 best NFT games to play in 2022!)

How do play-to-earn NFT games solve the current problems in the gaming industry?

The P2E model solves some of the existing issues with traditional gaming, because the game itself is typically "free", and you have to be good at the game to earn and spend money. The better you become, the more crypto you earn to spend upgrading your character. Yes, there will always be whales, but now you can compete using the crypto you earned through actually playing the game.

P2E games offer gamers a new way to earn an additional income if they aren't into being a hardcore eSports gamer or streamer. You might need to make an initial investment, but you’ll make it back and more if you play continuously. This is particularly powerful in developing economies where returns from P2E games outstrip the minimum wage. Don’t believe me? A 22-year-old bought two houses with the money he made playing Axie Infinity. This itself is a game-changer (pun intended)!

And NFTs also solve the ownership problem. Most P2E games are completely decentralized, so no one can shut down your account. In a P2E game, you can trade, sell or even lend your character to other players in exchange for crypto. This makes the in-game cryptocurrency insanely valuable because it’s used for every transaction. The best part is, players can directly sell in-game crypto for fiat, becoming another source of income as well from P2E games.

What needs to happen for play-to-earn games to become mainstream?

P2E games still need time to develop. Currently, there are some limitations.

The most obvious one is the difficulty of setting up. Creating a profile for a play-to-earn game is easy. But setting up your crypto wallet is the hard part. You might need to buy some ETH or an in-game character to start playing, which comes with hefty gas fees. This makes the games still somewhat inaccessible for the average gamer who might have not dabbled in crypto before.

There’s also the performance element because most games are built on the Ethereum blockchain, which has become congested, and the game can lag as a result. Thankfully, developers are working on scaling solutions so that gamers can have a smoother gaming experience.

Also, the gameplay and graphics of P2E games are still very basic. We haven’t seen a huge game like GTA V in crypto that offers a smooth gaming experience and amazing graphics. This shows how early we are. But the start is promising. There are 2.8 billion gamers worldwide, and only a small fraction of them play blockchain games, so there’s a big opportunity.

While some gaming studios like Steam have banned crypto and NFT games, others take the opposite approach. An EA executive has said that NFTs are the future of the gaming industry. This statement shows that gaming studios are following the space closely. The next step would be to see big studios like EA develop their own play-to-earn NFT games or add that functionality into their existing ones.

Another thing that will increase the adoption of play-to-earn NFT games is lowering the barrier to entry. The most popular game right now is Axie Infinity. But if you want to play, you’ll need to first buy three Axies, which at current prices cost at least a few hundred dollars, a sum that most gamers can’t afford. This high startup cost for P2E games has spawned a new market called scholarships. For example, a popular P2E gaming guild called Yield Guild Games (YGG) offers scholarships for people who want to play the game but can’t afford it.

Here’s how it works:

A scholarship organization lends you the characters you need to play the game.
You share a percentage of your earnings with the organization that lent you the characters.

This way, early gamers can still benefit from the game expansion, even without actually playing the game itself, while newer gamers can get into the game without a high cost. Eventually, they may well gather enough resources to get their own characters.

Here are 7 tips for getting an Axie Infinity Scholarship.

Conclusion

The future of the gaming industry may well be play-to-earn NFT games. Games like Axie Infinity already showed that you could make money just from playing a game, and this is just the beginning.

Right now, there are around 3 billion gamers worldwide, and only a small fraction of them have heard about crypto, let alone play-to-earn NFT games, so the future is promising. Interested and want to start playing crypto games? Here are a few articles to help you get started:

See you down the rabbit hole!

Tell us how much you like this article!