The Road Ahead for Play-To-Earn Games — Thought Leaders
The success of the pay-to-earn gaming sector, led by Axie Infinity, has taken a bit of a knock recently with the recent $600 million hack of their Ronin bridge. Up until this news play-to-earn games threatened to take a slice out of the multi-billion dollar video gaming market by allowing users to earn money for completing game objectives. Investments in such projects have surged drastically this year. Earlier this year we reported that Solana Ventures, FTX, and Lightspeed recently announced the formation of a $100 million joint GameFi fund, which FTX followed up with a $2bn fund of its own. Web3 venture capitalists BITKRAFT and Galaxy Interactive each announced over $400 million in investment funds aimed at the space. While tech giant Microsoft’s $69 billion takeover of Activision Blizzard, the publisher of Call of Duty and World of Warcraft, was the largest acquisition in gaming history. And according to one expert, over six out of every ten gamers want the chance to exchange their virtual assets for a currency that could be used across various platforms.
Source: ‘7 business models for web3 games,’ Sophia Weng, Medium
Does Axie Infinity’s market leading success (gross income of $781.6 million for the third quarter of 2021, and its token price all-time high of $155 by the end of 2021), now look under threat following the hack? In fact, its user engagement (measured as daily active users: DAUs) was already in decline 40% from its peak last November. Taken together, does this mean the hype around this emerging sector is overblown? Consider some of the key adoption barriers acknowledged by BITKRAFT. These include the slow speed afforded by Ethereum, used by most crypto gaming platforms, the associated high costs of buying NFTs thanks to high gas costs on Ethereum, not to mention its environmental impact. But perhaps more tellingly from a growth perspective is the fact that few large game developers have ventured in the space. A key obstacle is the key play-to-earn nature of the innovative gaming model itself: “It is a difficult sell to switch from a model where 100% of in-game economy sales go to developers to one where a much larger percentage of transaction volume is earned by the player community.” In other words, this means developers have less control of in-game economies in a decentralized ecosystem, where community ownership is baked in.
Rasa Petuch, Head of Growth at Block Games, which is based at West Palm beach in Florida, in an interview with BigONE said she believed the basic obstacle right now in play-to-earn gaming, was remembering it was first and foremost about gaming. And that in order for the play-to-earn games industry to grow, there needed to be an influx of regular gamers, whereas at the moment users were engaging primarily to earn rather than to play, and with developers concentrating on small games focusing on the tokenomics rather than the game itself. “Traditional gamers are not here yet”, because for one thing, the games are not here “and many traditional gamers are skeptical and not really crypto native”, Petuch said.
She added that she thought that play-to-earn gaming would really change when there were really quality games in the sector that are fun to play with. “That was one point I was thinking about, the other is about console games. They are not ready for blockchain yet and they are a big part of the gaming industry overall. So that kind of limits that you know, potential audience as well as many players you know, love playing console games, too. And these, like big console companies, they seem pretty skeptical,” Petsch pointed out. Indeed, during an Electronic Arts’ recent earnings call, CEO Andrew Wilson suggested that while the market for NFTs and play-to-earn was still early, it did point to the future development of gaming. “The play-to-earn or the NFT conversation is still really, early..there’s at some level, a lot of hype about it. I do think it will be an important part of the future of our industry on a go-forward basis,” Wilson added.
Talking about Shatterpoint, Petuch said their new play-to-earn game, she said the issue wasn’t so much about getting the word out, but that the general level of trust and skepticism was proving difficult to overcome: “I think people are excited and they want to see new products coming out. What’s difficult, in my opinion, is if you’re trying to build a big quality game, it takes time, right? So, then the challenge is to keep people engaged for a long time, while you still have no game to show them. But I think it’s all doable.
“It’s all about community anyway. And yeah, allowing, you know, people who decide to be a part of your community to like really to be that part. And like, you know, share like in-game art and share decisions and like, talk to them and have some of the NFT sales in between and kind of keep it moving. I think you have to be open and honest with where things are. Because, yeah, there’s like a lot of scams out there,” Petuch added.
In an interview with BigONE Federico Gallucci, CEO & Founder at gaming studio Deep Monolith based in Turin, which specializes in play to earn games said gamers are still reluctant to understand the value of NFTs, as in game assets, because they see them as game producers trying monetize even more. As a gaming developer himself Gallucci said part of the problem was that blockchain gaming is “not sophisticated enough” for an experienced gamer who is used to high quality games. “But I think that it’s only a matter of time before gamers start to realize that it’s good for gaming and that this technology can bring awesome improvements,” he added.
A key area for growth in play to earn is around esports, suggested Gallucci: “This is a huge opportunity because you know, there are thousands of people who are gamers and fans that follow esports, but currently this is only restricted to the biggest development studios where they have a ton of cash and can afford to spend a bigger reward.” But the adoption of crypto technology could be a “disrupting point” allowing multiple developers to offer big prizes. “I think that’s the way it’s gonna break through, It’s through esports,” he concluded.
Chairman of BigONE Exchange, Anndy Lian, said despite the problems for users caused by the Axie Infinity hack the level of demand showed the play to earn sector was still growing, even as the general market for NFTs was slowing down compared to 2021, with Axie topping $4 billion in all-time NFT sales in February. “I believe that there is plenty of potential for the growth of play-to-earn games that has yet to be tapped into. For example, the election of a new President in South Korea may pave the way for legislation allowing in-game tokens to be converted into cash.” Lian said he agreed with the assessment of esports as a new avenue which would allow smaller studios to win a slice of the action. “It’s time the dominance of the large gaming studios and console makers had a shake-up. Play-to-earn isn’t just good for gamers but also for up-and-coming developers who want a new way to compete on a more level playing field.”
Original Source: https://www.securities.io/the-road-ahead-for-play-to-earn-games-thought-leaders/
