“To properly sustain a model where players love the game yet have opportunities to earn money or assets the potential to earn cannot be at the forefront.”
Games should be fun. This statement should be obvious, but sadly it is not a given in the digital currency space today. “Play-To-Earn” games are online video games where users can passively earn tokens and/or NFTs while playing. However, this model creates a perverse incentive structure where gamers only play to earn, and not for fun. In this model, the long-term sustainability of the game is based on the price of the tokens earned, not the enjoyment of the game.
When the token price of a Play-To-Earn game is appreciating, incentivizing many new gamers to join, many believe this is due to the gameplay. In reality, players are simply taking advantage of the arbitrage opportunity to earn tokens at a lower cost than the actual market price. If the game is not fun, when this arbitrage opportunity dissipates, so do the players.
Axie Infinity
Axie Infinity is a Play-To-Earn game where players can collect in-game pets named Axies (NFTs) and battle others. To start, players must purchase a minimum of three Axies to battle others. As NFTs, the Axies have a market price that range from a few dollars to thousands. While playing against other players in a battle, the victor may earn SLP (Smooth Love Potion) tokens.
These SLP tokens do have utility in the game, but also a market price. As you can see in figure 1, this price spiked to $0.36 in mid-2021, enticing many new players into the game and increasing demand for Axies. Therefore, the price of the Axies rose as players tried to defeat others to earn the appreciating SLP. As players started to sell SLP, the price dropped which in turn decreased the value of the Axies.
Figure 1: The market price of SLP tokens in USD over the last year and a half
Figure 2: Various Statistics regarding the SLP token and Axie NFT activity levels
Source: Nansen
FIGURE 1. The SLP price has collapsed to $0.003, a 99.1% decrease from its all-time high. The daily volume of players, SLP sales, and NFT sales have collapsed as well.
FIGURE 2. If the game was truly fun such that it could retain players, we might have seen a decrease in sales and trading volume due to the overall bear market in digital currencies, but we would not have seen such a significant decline in daily players (see “daily active addresses” in figure 2). This indicates that new players only joined to take advantage of the high SLP price and left when the game was no longer profitable to play.
CryptoKitties
CryptoKitties is a digital pet game where each kitty holds unique traits on the Ethereum blockchain. Players can breed two kitties to yield a new one, chasing rare traits that could be valuable. However, due to the lack of utility with the kitties, the only use case is to create more or sell your kitties. This implies that the game would be ‘fun’ so long as players are breeding and selling but requires constant or rising demand due to the inflation in the price of kitties.
The game is famous for “breaking” the Ethereum blockchain shortly after its release in 2017, where its demand caused transaction (gas) fees to skyrocket. Perhaps this prevented more utility from being added to the kitties such that their only use case was to sell.
Again, we observe the same pattern with CryptoKitties as with Axie Infinity: as soon as the profits dry up so do the players because the game is not enjoyable at a fundamental level.
Why have previous Play-To-Earn efforts failed?
Many other blockchain games fall into this category, but not at this scale. The core issue behind past failed Play-To-Earn efforts is that the game needs to be sustainably fun in the long-term independent of crypto speculation, where digital assets and the potential to earn are passive and distinctly secondary to the core gaming experience. Expectations are not properly being set with players for blockchain games, which leads to disappointment. New players join these games with expectations of profit but are typically left holding the bag.
If players join a game first out of genuine interest and stay because they like the game and they just happen to earn a rare and valuable digital asset, then their enjoyment may rise. Happiness is reality minus expectations, thus attracting users on the potential of earning absurd profits has never ended well to date.
“Play-To-Earn” or “Play-And-Earn”?
To properly sustain a model where players love the game yet have opportunities to earn money or assets the potential to earn cannot be at the forefront. This is the opportunity in blockchain-enabled gaming that we at Unbounded are excited about: Play-And-Earn NOT Play-To-Earn.
The publishers of a Play-And-Earn game may choose to not even communicate that opportunity exists or add those features after a significant player base has been established. While playing games that have rare drops, creatures, or any other bonus collectible when a player is unaware of its existence, they often get excited.
For example, in an RPG (role-playing game) where the hero is on the main quest, but unexpectedly encounters a rare monster, who then happens to drop an extremely rare item, the player often feels excited, happy, and lucky. The player may wonder what other rare, unknown monsters were programmed in the game, and may explore more, leading to more play time and more enjoyment.
Examples of Play-And-Earn
Duro Dogs
Duro Dogs is a digital pet game where players can engage, train, and care for their dog. The first dog is gifted to the player and gameplay does not require any digital currency. While training your dog and digging for items, players have the potential to earn rarer digital items that may have a market price. These digital items can be equipped on your dog, allowing players to show off to others, not necessarily sell. The draw of this game is for players to care for their digital pup, not necessarily grind for items.
In the Duro Dogs Park, players may take their pet into other games. One such game, Ruff Runner is a game where you navigate your dog around various obstacles, collecting treats along the way. On rare occasions, you may take the risk to obtain a treasure chest that will potentially earn a digital asset (for example a scarf that your dog can wear). However, this earning potential was added after the Ruff Runner game was initially released. Most players who play Ruff Runner will not expect to earn digital items, as they were not even aware of that feature when they started playing!
Haste Arcade
The Haste Arcade has various games that one may play at a traditional arcade (like a space shooter), platform games, and what the company describes as “hyper-casual games”. Games that not necessarily hardcore gamers will play but simple, quick, and fun ones that appeal to the masses.
While preserving a leaderboard like traditional arcade games (think Pac-Man, Galaga), Haste implements their Instant Leaderboard Payout™ where users can optionally play tiers where they spend digital currency for the opportunity to earn a spot on a paid leaderboard. Each subsequent play will divide the amount spent proportionally to those players already on the leaderboard. If a player earns a high score, they may passively earn from having a top spot on the leaderboard when subsequent players play a game in the same division.
By leveraging micropayments only possible on a scalable blockchain, you can risk as little as $0.01 and have a shot at earning hundreds or even thousands of dollars if you score high enough on a popular game. Additionally, free tiers exist where the potential to earn still exists such as Free Rolls or Tournaments. Haste Arcade seeks to attract casual gamers, with the potential to earn, but not as the primary draw. We have written more about how Haste and how it is an example of the future of gaming here.
Conclusion
Just because a game happens to implement blockchain technology or digital assets does not supplant the need for games to be fun. Players should want to play regardless of the market prices of various digital assets outside the publisher’s control. When publishers can provide optional or luck-based opportunities to also earn, they can capture the hearts of players as well as the minds of those who do want to speculate.
Expectations need to be set properly with the gamer base to succeed and create the feelings of wonder they seek out when starting a new game. Blockchain games have utterly failed to do so because they focused on the speculative aspects first and the fun factor second (or not at all). Additionally, players balk at or outright criticize Pay-To-Play models where the initial price to simply start can be in the hundreds or even over a thousand dollars if the market is hot enough such as what we observed with Axie Infinity or CryptoKitties. Leveraging the micropayment capability of blockchain may still attract casual players who will spend because the amounts being spent are casual. Games must implement these traditional, fundamental concepts if they want to succeed, where users Play And Earn, NOT Play To Earn.