From 2020 to 2021, blockchain gaming made its first steps into the mainstream with play-to-earn titles like Axie Infinity and Crypto Kitties. These games are centered around a player-owned economy enabled via in-game assets represented by speculative tokens and NFTs. Although these games initially rose to widespread popularity, many game industry veterans feared the play-to-earn model was simply unsustainable; insisting gameplay be valued above all else. Now, as we look at the current state of blockchain gaming, it seems these vets were right to doubt the long-term viability of play-to-earn.
From the start, those interested in play-to-earn games made it abundantly clear the reason they were interested was for monetary incentives, not for the fun of the game. As Tello plainly put it, “People were not playing these games or buying these NFTs for anything more than the thought of perceived value in the future.” Meaning, it wasn’t really a game. According to Tello, Axie Infinity is a simple staking protocol used to line the wallets of Sky Mavis, the developers of Axie Infinity. The way this is done is through Axie Scholarships: programs in which wealthy benefactors front the buy-in fee for those who are interested, but are short on money.
Sky Mavis co-founder, Jeff Zirlin once claimed this system had “freed” these individuals despite some popular lenders taking as much as two-thirds of the players’ total profits. This business model, which has received criticism for its uncanny resemblance to a Ponzi scheme, relies heavily on this army of low-wage workers to generate value which is then shifted from their hands to wealthy investors. Sky Mavis calls these investors ‘managers’, the players ‘scholars’, and the overall arrangement a ‘guild’. According to David Barshop, a writer at Business of Esports, "Because many of the low-level players are poor workers from the Philippines and elsewhere, others instead call this arrangement digital colonialism”.
Due to Axie Infinity's structure, there is a persistent need for new players to be introduced to the game’s ecosystem. This fleeting method diverges from the proven ecosystems of games with long-sustained communities. Research shows the most difficult number to accrue for any game is new users. Axie Infinity’s dependency on this constant flow of new users was not realized until they reached their downside tipping point.
THE PLAY-TO-EARN MODEL IS UNSUSTAINABLE
– <cite>Jeff Zirlin, Axie Infinity co-creator</cite>
When the number of individuals entering the game to trade NFTs for monetary gains outpaced the number of individuals interested in actually playing the game and trading their NFTs for game strategy reasons it created an oversaturated market. Even Jeff Zirlin now sees the truth of his own system. Zirlin recently stated, “The play-to-earn model is unsustainable because eventually a game will run out of new users able to make money.”
Lessons Learned, Bridges Built
As in any new and exciting industry, chances are taken and mistakes are made. What is learned from those mistakes is what is important. As is evident from Jeff Zirlin’s comment, the gamefi (gaming and decentralized finance) industry is beginning to realize the major restrictions of the play-to-earn model. As more established AAA studios with years of game-building experience enter the space, the games continue to get better. Large studios with great games under their belts like Take-Two and Ubisoft have recently announced further research focused on gameplay and user experience, not speculative Ponzi schemes.
A WORLD WHERE SPECULATION IS ERADICATED FROM GAMES
– <cite>Tim Tello, COO</cite>
In a recent BGA (Blockchain Gaming Alliance) survey, it was found that only 22% of gamefi executives believe play-to-earn will be a major factor in the advancement of blockchain gaming. Instead, gameplay improvements were seen as the biggest driver for adoption in 2023 with 36% of respondents saying gameplay improvements will be the industry's top priority. Making it the most popular answer among participants. This data combined with a positive sentiment inside AAA board rooms tells a new story for blockchain gaming. One where NFTs are used to enhance players’ gameplay and community experiences rather than for monetary gains. As Tello put it, “We’re headed for a world where speculation is eradicated from games completely.”
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