Interview: Gaming on the blockchain – the sector has struggled, but what next?

I have long been a skeptic of GameFi, the intersection between blockchain and gaming. The sector took off during the pandemic, when games like Axie Infinity exploded in popularity.

The only problem is that players fled the room when the tokens they earned for playing dropped in value as crypto sold off aggressively and many such cryptocurrencies dropped 90% or more. This has led to questions about the sustainability of the model. If tokens fall in price, why would players continue to play?

There is also the question of whether a blockchain is necessary. Why not just make a normal game?

To gauge how people in the industry feel and what they think about all these obstacles, I interviewed Tatsuya Kohrogi, Chief Strategy Officer at DEA, the creators behind the web3 gaming platform PlayMining.

Invezz (IZ): In short, can you explain why you need a blockchain for PlayMining, instead of focusing on just making a gaming product?

Tatsuya Kohrogi (TK): Blockchain is what enables the Play-to-Earn (P2E) aspect of our games, allowing people to earn DEAPcoin just by playing. By having a cryptocurrency token ecosystem, we are able to build apps that interact with this ecosystem in many ways. It also links to our PlayMining NFT marketplace. Blockchain is what ensures that the NFTs our users buy have intrinsic value. Furthermore, many of the NFTs available for purchase on the PlayMining NFT Marketplace are also imbued with blockchain smart contracts that enable them to add utility to PlayMining games. For example, we sell farmland NFTs that can be used in our Lucky Farmer game to give players access to special crops, increase their odds of winning, and also increase the amount of DEP tokens they can win when they score certain combinations.

As for why we choose to make PlayMining a P2E gaming platform instead of a regular gaming platform: we believe very strongly in creating social good through our games. We don’t just want to sell games to people – we want to provide entertainment products that will enrich their lives. While anyone can play a P2E game and earn tokens, the gaming genre has really taken off in Southeast Asia, a region where the average monthly salary is relatively low. We can help people earn extra income in a non-labor-intensive way, which non-blockchain games can’t do. Some of our players even earn a full-time income just by playing PlayMining games! And as can be seen in our collaboration with TEPCO, rewards can also be a great way to incentivize other actions that contribute to social good in the real world. We are always looking for new ways to create social good through our entertainment platform, and having a blockchain-powered reward ecosystem is a great tool that we can use to achieve our goals.

From: The unique selling point here is that players receive tokens when they perform social tasks, such as inspecting physical infrastructure in their cities. This sounds good in theory, but how does the economy work? Where do the tokens and money to pay these users come from?

TC: The money to pay users comes from multiple revenue streams: paid in-game experience value, digital goods sales, NFT sales, revenue from solving problems businesses face, third-party game studios using our platform, advertising revenue, etc.

Games launched on the PlayMining platform can use our DEAPcoin token economy and the PlayMining NFT marketplace. Players can earn DEP through gaming, and NFTs can be purchased with DEP or legal tender. DEP can also be traded on popular crypto exchanges including OKX, Gate.io, Uniswap, Bitmart and Bitrue. In short, the tokens come from the DEAPcoin ecosystem we have built into our PlayMining platform, which is powered by a high volume of NFT sales.

From: While all of crypto struggled, P2E games were among the hardest hit over the past year. Falling prices of tokens meant that the incentive to play games was gone, leading many to declare the P2E model unsustainable. What makes you think this could change in the future?

TC: Simply monetizing players from a traditional gaming business model is not good enough for web3 games. We’ve been around for five years and this is our second bear market, but we’ve learned that the key to a sustainable ecosystem is a diversification of revenue channels unique to blockchain gaming. We are still very early in the blockchain game, and I think the market is quick to decide what works and what doesn’t.

To take a clear stand, I am strongly convinced that linking symbolic incentives and games to problem solving in the real world is both socially important and a deep opportunity for value creation.

An example of diversification in value creation is having income sources from both B2C and B2B. At DEA, we are trying to revolutionize the way people live and play by creating new forms of entertainment. We see that GameFi-For-Good is popular in our community, where investors and players can empower others by lending their NFTs. This experience alone has become a new form of social contribution to various communities, and we see this as an early example of how web3 games can do good in ways that traditional gaming was unable to.

Our strategic partners also extend to companies, non-profit organizations, game studios and game guilds. We see endless possibilities where gamification can be applied to the real problems these organizations face.

Many existing players and game developers have a preconceived idea of ​​what gameplay should look like. But I would like to encourage blockchain game builders to think outside the box: what entertainment experiences can we create that are unique to blockchain games?

We at DEA believe that GameFi will act as a bridge between the actions we take in the digital world and the real world.

From: DEAPcoin is 97% off its all-time high – how has this affected the popularity of the game, and has the game seen users fall in line with the industry as a whole?

TC: The popularity of our games has been unaffected. We have released five games on the PlayMining platform and we have seen an increase in NFT sales as the token price has become cheaper, because it allowed new users to acquire NFTs at a cheaper price.

From: DEAPcoin is down 25% since announcing a buyback program to “increase the token’s value sustainably“. Will funds continue to be used to bolster demand for the token amidst falling price? Are you worried that users will flee the game if the token continues to fall?

TC: The buyback program is a mechanism that is implemented every month, so we plan to continue buying back tokens from the market.

The macro economy is not favorable now, and our action plan for a more diversified economy has only recently been implemented. We believe symbolic price stability and gradual growth are two important factors for building user trust and returning value. So it is one of our business priorities to stabilize the economy and continue to implement the above business plans.

When it comes to user retention concerns, we make sure to provide value in more ways than token price increases, such as co-creation of games and IP content, payment of creator royalties, release of new games and x-and-earn services. Therefore, we are focused on what we can control and we see these market downturns as an opportunity to integrate new users into our ecosystem with the support of our existing community members.