Play-To-Earn (P2E) games are NFT-based Web3 games that pay users to play advertise themselves as revenue generating opportunities, but it is realistically impossible for these games to sustain profits for all players indefinitely. Developing a game that allows players to create, earn and sell in-game items with a real value is not difficult thanks to blockchain technology, but problems arise when game developers advertise the game as a source of income or investment opportunity for all players.
While some games denominate the in-game items in fiat currency, the overwhelming majority of online games are built on virtual economies that have no real value. Thanks to blockchain and Web3, it is now easy to create digital real estate with real value, and implementing non-fungible tokens and cryptocurrencies in web applications is also easy. The allure of P2E gaming comes from the frustration of players who have invested years of their lives playing online games and earning/crafting high-quality player gear and collecting in-game fortunes, only for all their efforts to mean nothing when they quit the game. . Many players wish they could sell their in-game items to other players willing to pay money for them, but this type of value exchange was previously impossible (or very difficult), until the creation of Ethereum and its ETH cryptocurrency.
As BEAT esports co-founder Bill Elafros discusses in an in-depth article on the subject, P2E games typically suffer from a combination of several issues. They are too shallow or boring to engage casual players, have unsustainable in-game economies driven by the same player base as every other P2E game, and too many P2E players have unrealistic expectations of profit instead of just having fun. Many P2E games shoot themselves in both feet by placing high financial barriers to entry for new players, only for small changes in game dynamics to result in financial ruin. What’s worse, in-game items are usually tied to macro cryptocurrency market movements, punishing late adopters who join the game and see their in-game items’ value collapse in one day, only adding to traditional players’ disdain for NFTs and crypto. Finally, the user experience of verifying transactions, managing and paying blockchain gas fees, and dealing with network issues is even worse than dealing with World of Warcraft server outages.
What is the solution?
P2E has proven to be unsustainable as an economic model, as it is not possible for all players to make money without other players losing money, or, more commonly, the game’s economy suffers from hyperinflation and collapses. P2E games attract exclusively P2E players, who have unrealistic investment expectations and will dump their holdings at the first sign of trouble. This has resulted in most Play-To-Earn games evolving into a Play-And-Earn (P&E) model, where rewarding gameplay is prioritized and the ability to sell in-game items for real value is secondary function when playing.
Ultimately, the most successful Web3 games will be those that traditional players can join and play without knowing that the game items they earn, create and trade are NFTs and cryptocurrencies. If P&E game developers stop using the term NFT to describe game items, and can find a way to create proxy wallets for non-crypto players, the traditional player base can be used as a primary source of income for the game’s economy, which can be used to reward the actors who act as economic producers.
The problems with P2E games are related to the reasons why NFTs are misunderstood, as most P2E players are crypto-investors looking for easy ways to get rich. P2E games are notorious for selling in-game assets for large sums of money to fund the game’s development, and many of them are scams, or lose their appeal quickly after release. Instead, Web3 gaming must follow the direction of P&E gaming, where the game’s items and currency are blockchain tokens with small/marginal real-world values, and the main focus is to design and maintain a rewarding experience for traditional and casual players.
Source: Bill Elafros
