Play to Earn is Exploding

Play-to-earn games represent a paradigm shift in the way that players interact with their games. Rather than being a purely one-sided affair, that sees players fork over money to access their games, in-game items, and additional content, it enables a bidirectional opportunity that sees players earn revenue from their gaming activities.

This has been made possible by the advent of cryptocurrencies, including non-fungible tokens (NFTs) which can be distributed to players as a reward for completing certain tasks. These tokens can then be traded on external (and sometimes internal) marketplaces as a potential income stream.

Thanks to the advent of an array of innovative new gaming titles, the play-to-earn gaming industry is exploding with interest, and some might argue it’s the next big thing in blockchain.

What is Play to Earn?

Previously, one of the only ways to earn real-world income from video games was to become a professional gamer. However, the odds of successfully making a career as a professional are vanishingly low — with just ~1% of gamers successfully making the transition.

Play-to-earn games instead give all players an opportunity to earn — whether that be by grinding quests for tokens, offering in-game services, winning/creating rare NFTs, mining virtual plots of land, renting NFTs, and more.

This helps to make gaming a more rewarding experience for players, while enabling new potential revenue streams for the developers. Today, most play-to-earn games benefit from multiple revenue options — which are used to continue the development of the game. This might include a commission on NFT sales, taxes for certain in-game activities, direct sales of NFTs and in-game items, and a share of newly emitted tokens.

Given the explosion in innovation in the play-to-earn space in recent months, we are increasingly seeing innovative ways to monetize player behavior and in-game interactions, and play-to-earn games are now the primary income stream for thousands of players — the majority of which live in developing economies.

Unique Opportunities

Play-to-earn games represent an attractive introduction to the world of blockchain. By blending one of the world’s most popular pastimes (video gaming) with the capacity to earn a passive income, the value proposition of play-to-earn games is clear and undeniable.

Because of this, these games could be poised to act as one of the most powerful on-ramps to the crypto ecosystem, and hence a catalyst for its further growth. This is also being accelerated by blockchain gaming guilds like Yield Guild Games and blockchain game incubators — which help make gaining exposure to and playing these games more intuitive and accessible.

Thanks to the capabilities of non-fungible tokens, blockchain games also pave the way for permissionless game crossovers — such as games that support assets from other titles, as well as unique opportunities for cross-game interactions.

The traditional gaming industry is only now beginning to see the first wave of game crossovers, thanks to pioneering titles like Super Smash Bros, Death Stranding, and Fortnite. But these crossovers are often short-lived and full of legal hurdles that make them few and far between.

For blockchain-based games, this is a completely different story. Since game NFTs are completely player-owned assets, other game developers are free to add support for external NFTs in their games — such that assets from one game can have value or utility in another.

We are already seeing the beginnings of this play-to-earn overlap with titles like Warena — a personalized play-to-earn action-survival game that supports NFTs from a variety of other Metaverse games, including Cat Gunner, My DeFi Pet, and Axie Infinity.

Blockchain technology enables a new wave of games that are truly owned by the players, both in terms of any in-game real estate and items, as well as the governance of the platform. Now, a large proportion of play-to-earn games feature community governance, allowing token holders to vote on how the game develops and evolves — with the vote weighting often tied not only to the absolute number of tokens held but also to in-game activity.

This ensures games develop along the lines that their players prefer while giving both casual and hardcore users an opportunity to make their voice heard and submit proposals for new features and changes. This feature is essentially unheard of in the traditional gaming landscape and could help to change the way games are developed and updated going forward.

Future Perspectives

Given that the first bonafide play-to-earn games first emerged less than a year ago, it’s safe to say that the industry is still very much in its infancy. Though the number of play-to-earn games has expanded dramatically in recent months, a large proportion has not garnered much attention among players, while most have not been demonstrated viable long-term.

Understandably, a large number of players take to play-to-earn games with the intention to earn a profit — taking both their time and capital investment into consideration. However, not all games are equal in this regard. While some offer a genuinely rewarding experience, others have too high an initial entry cost or lack sustainable economics, which can lead to a gradual decline in rewards and an exodus of players.

Because of this, there has been a gradual trend toward a more sustainable play-to-earn model, that allows players to earn a fair yield by playing, without resulting in excessive inflation or driving away smaller players.

Image courtesy: Axie Infinity

Some games are also looking to reduce their impact on the environment and operating expenses by leveraging more energy-efficient blockchains like WAX, while a small handful are even developing their own sidechain solutions — such as Axie Infinity’s Ronin sidechain. Moreover, a growing number of NFT-enabled games, including The Sandbox, are beginning to leverage carbon offset programs to address their environmental impact.

As play-to-earn games grow in popularity and the capabilities of NFTs are further unraveled, they are increasingly becoming more accessible and attractive to mainstream gamers. In line with this, there are now a number of play-to-earn games in development that feature not only top-quality graphics, but also a depth of gameplay that could position them as the first AAA-grade blockchain-enabled games.

A wide variety of games arguably fit into this burgeoning new category of blockchain games, including the space conquest and battle game Star Atlas, gold mining and exploration game Gold Fever, and open-world RPG game Illuvium — all of which feature top-notch graphics, player-owned assets, and a robust play-to-earn model that is designed to remain viable for years to come.

With play-to-earn games growing in vision and scope, and delivering a massive array of novel value-adding features to players, the sector appears ripe for rampant growth in the months and years ahead.

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About Master Ventures

Master Ventures is a blockchain-focused venture studio helping to build the next generation of blockchain-based Web 3.0 system innovations within the crypto industry. Launched in 2018 by Founder and CEO Kyle Chassé, the company’s ethos can best be summarized in the acronym #BeBOLD: Benevolent, Open, Love, Decentralized.

Master Ventures co-creates with entrepreneurs and businesses worldwide to turn the best ideas into innovative and disruptive products. They do this by investing as strategic partners through offering advisory services to the projects they believe in. To date, Master Ventures has invested in over 40 crypto projects, including the likes of Kraken, Coinbase, Bitfinex, Reef, DAO Maker, Mantra DAO, Thorchain, and Elrond.

For any questions, please feel free to reach out to us on:

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