Episode 28 – Play-to-earn: make your hobby pay off
EPISODE 28 : PLAY TO EARN
It should come as no surprise, after the year and a half we just had, stuck inside during a global pandemic, binge gaming is UP!
Video gamers spent 8 hours and 27 minutes per week building pixelated worlds, scoring goals, and murdering their friends with all sorts of different weapons until only one man, or woman, remains. That’s an increase of 14% from 2020.
That’s across console-specific games, like those for Playstation and Xbox, games played on the computer, like online poker tables, and even those smartphone app games, which have come a loooong way since Snake. [SHOW SNAKE ON SCREEN]
The traditional arrangement between video game developers and players is a pay-to-play one, one where players pay developers to access the game. Plus, they also pay to purchase add-ons, such as dope skins or deadly weapons. On top of this model was built a huuuge market! In 2020, the global gaming market generated more than $159B in 2020 and that’s expected to surpass $200B only a couple years from now.
Yet, some gamers have stumbled on a way to make their habit, I mean hobby, pay off.
That’s right, FORGET pay-to-play. ENTER play-to-earn.
So go chug a energy drink and get ready to learn how to earn while playing video games!
This is School of Block.
Even if you’re not a gamer yourself, you’ve surely heard of some of the biggest pay-to-play video games on the market – Fifa, Call of Duty, Fortnite.
In Fifa, gamers pay both to play the game and also for player packs to use in the game. With Call of Duty, it’s the same, players must pay to play.
Fortnite, though, is wildly popular and one of the reasons is it’s free to play. Although that doesn’t mean there aren’t expenses. Fortnite’s in-game currency is called V-Bucks and players can purchase V-Bucks with fiat or purchase a monthly battle pass and get V-Bucks with that. With V-Bucks players can then purchase in-game items like skins.
And what do gamers get for all this dough they fork over – well and not only money, but time, skill, attention, probably some sweat, a good amount of lost sleep? Well not much. They get to play the game, sure, but they don’t actually own any of their characters or in-game items. So for one, they’re at the mercy of the game developers, to not change or take away those items. It could happen, although that would obviously upset all the nerds, so it’s unlikely to happen. But this also means that players can’t transfer their characters or items to another game or another user; they also can’t sell their characters or in-game items either. All this leaving the actual players, who make these games huge, with a…
Walled garden where game developers reign king.
Blockchain-based games, specifically the play-to-earn model, are disrupting this traditionally centralized business of many game developers.
So what is play-to-earn? I mean the name is a bit on the nose, but basically play-to-earn refers to a game whereby players play the game – taking quests, having a superb K/D (kill to death ratio), defeating the END BOSS – and for certain achievements, earn money.
That’s right, COLD HARD … CRYPTO.
The play-to-earn model sprung out of the blockchain revolution. In blockchain-based games, the money you need in the game to purchase say new armor or that fiery sword is crypto coins or tokens and those in-game items, like the armor and fiery sword are NFTs. And these things can be traded on the open market.
During 2020, a huge number of non-traditional gamers came online to play blockchain-based games as a side hustle, earning crypto for their level ups. And actually all throughout Asia, blockchain games are surging.
CENTRALIZED VS DECENTRALIZED GAMES
These new blockchain-based games change the, well GAME.
The models give power to the players, facilitating true ownership of in-game assets they purchase and earn, and the wealth that’s generated by the game is driven back to users.
This is especially true in virtual cosmetics, or the skins, accessories and other add-ons players secure to really personalize their character’s look. As we spend more and more time online, people, and especially younger generations, are becoming more interested in developing their online identities as much as they’ve developed their IRL one.
The worldwide video game skins industry will generate $50B in 2022, up from $30B projected for this year. Within games like Roblox and Fortnite, the market for character custimizations is huge. And traditionally, all that money went straight to the game developers, but now, using NFTs that prove ownership, players can take a piece of that cut in resale revenue.
Players are rewarded for PLAYING. So you can finally tell your mom who said you’d rot your brain by playing video games, STICK OUT TONGUE.
And with an ethos of decentralization, blockchain-based game developers are opening up the ecosystem and economy fully. This allows for an insane amount of creativity in terms of experiences for a players in-game items. Players to take their characters, weapons, cosmetics and other mods into other open games.
For an example that seems a million years ago, when CryptoKitties was launched, third-party developers created games that owners could bring their duffy-looking kittens into, such as Kitty Racing.
There’s one play-to-earn game right now that’s just completely crushing it, both in its own blockchain-based game industry and in crypto overall.
Axie Infinity, created by a company called Sky Mavis, is a game resembling Pokemon, built on the Ethereum blockchain. Players purchase pet characters, which are called Axies and are NFTs, and then breed, trade and take them into battle.
In January 2021, just earlier this year, the Axie Infinity platform was bringing in $100,000 in platform revenue. Yeah, that’s not much… But today, TODAY!!! Sky Mavis COO told The Defiant, that in July, just 6 months later, platform revenue was $196 MILLION.
That’s some buff!
And it means that it’s beating out even Ethereum in protocol revenue. Last month, over a 30-day period, protocol revenue was $305M compared to Ethereum’s measly $91.4M.
Uhhh well what the hell, screw making crypto videos, let’s play Axie Infinity.
[AXIE INFINITY DEMO]
“When players play the Axie Infinity game, they earn the native token Small Love Potions (SLP), and these tokens are needed by the players to breed new Axies, which are charged by Axie. Axie also charges a 4.25% fee for buying and selling Axies on the platform. Players can also decide to sell SLP tokens to other players on an open marketplace if they decide to cash out these tokens… The game is both time-consuming and strategic. Players are not only required to carefully breed their Axies to develop particular skills, but they also need to earn energy that allows them to play the game further by completing quests.”
THE DEVELOPING WORLD
By playing Axie Infinity, gamers can earn about 4,500 SLP per month. At SLP’s current price of around $0.15, that equals about $675 per month.
That’s not chump change! No, for some, that’s life-changing money! For people in many third world countries with lower costs of living, this is even more than they’d make at more traditional jobs.
For example, these games are really taking off in Southeast Asia. In the Philippines, where high unemployment rates are pushing many into poverty as the pandemic rages on, play-to-earn games can offer a brand new revenue stream. These games also offer an on-ramp into the broader cryptocurrency and NFT market, which as we’ve said before, leads to financial freedom.
The play-to-earn model blockchain-based games is stepping into the metaverse like LEEROY JENKINS! [SHOW THE CLIP HERE, MAYBE HAVE THE CLIP SHOUT THE NAME PART]
It’s pioneering a completely new model, one that’s disrupting the traditional game developers by adding new economic opportunities that democratize the money earned by being a hardcore gamer. It’s making sure you get rewarded financially for being the one spending hours of your day playing and making the game fun and challenging for the whole community.
No doubt, big game developers will have to adapt to the model or get pwned by gamer-junkies.
Sure enough, some big game developers are already starting to tread into the blockchain ecosystem. Ubisoft, the company behind Assassin’s Creed and Just Dance, is exploring applications of blockchain technology. Epic Games, the developers behind Fort Nite, partnered with blockchain game distribution company The Abyss, in May 2019. Plus, Microsoft, Sony and Atari have all started looking at how they can utilize blockchain tech as well.
As gamers say GG (good game).
You’ve been watching School of Block, presented by Ledger and the Defiant, demystifying decentralisation, one block at a time. Don’t forget to subscribe, drop us a like if that’s what you’re into, and as always – here’s to your financial freedom.