Summary

Play-to-Earn is defined by its financial characteristics, as players can create income streams by playing games.
During the COVID-19 pandemic, some Filipinos were able to overcome economic hardship by playing Axie Infinity.
As P2E is looking forward to mainstream adoption, developers are facing strong opposition from traditional gamers.

Blockchain Technology in Gaming

It has been over a decade since blockchain technology was introduced. Many have predicted that it will transform the digital landscape. The narrative was that blockchain’s implications for finance, logistics, and e-commerce would be massive. But more recently, Play-to-Earn, also known as P2E, has been making the headlines more often than not. How come P2E has become such a hot topic and why are game developers, including household names like Ubisoft are rushing into it?

Axie Infinity made its debut in 2018, but started to gain attention since the beginning of the COVID-19 pandemic. As the pandemic struck the Philippines, it took a massive toll on the economy, and many Filipinos found themselves struggling to make ends meet. There, the legacy of Axie Infinity sprouted. Players were able to create a stream of income by participating in the Pokémon-like-game; earning cryptocurrencies and NFTs to exchange them for real-life goods. It’s not hard to say that the game literally saved lives. Axie became a worldwide sensation and attracted a huge user base. Now the brand is sitting on a $4 billion market cap, boasting $3.6 million in trading volume as of February 2022.

The Cost of Gaming in P2E

As seen from the Axie example, P2E can be defined as “gaming that creates income.” Thanks to blockchain technology, gamers can now play games to win tokens or tokenized items (NFTs) and exchange them on exchanges for other cryptocurrencies or fiat currency. The term “Play-to-Earn” is pretty self-explanatory in that sense.

Some P2E games, including Axie Infinity, require gamers to pay an upfront cost to play. For example, users need to purchase at least three “Axies” to play. The upfront cost can sometimes reach hundreds of dollars. Due to the increase in upfront costs, some users take advantage of scholarship programs, where they borrow Axies for free and share the income with the lender. Scholarship programs are facilitated by gaming guilds like Yield Guild Gaming.

However, it is not always the case that P2E games require initial investments. Games like League of Kingdoms are completely free-to-play. Recently, Axie Infinity also announced they will be shifting to a free-to-play model. There are also games like Defi Kingdom and Defi Land that are attempting to mix Defi mechanics into their games.

Yield Guild Gaming front page. Source: yieldguild.io

P2E Mainstream Adoption: Not So Easy

As the hype around P2E is growing, the trend is now going mainstream. Ubisoft has been investing in blockchain-based games through their Strategic Innovation Lab, supporting games like Skyweaver and Guild of Guardians as a part of the Ubisoft Entrepreneurs Lab program. But somehow, the broader gaming community is not very fond of the idea. Ubisoft’s Quartz, a platform aimed at turning in-game items into collectible NFTs, facilitated only 54 purchases on Rarible since its launch. Critics of P2E games are opposed to the idea due to the financialization of gaming. As gamers witness the ever-growing financialization of the gaming industry through DLCs and unfinished game releases, it is not surprising that such negative sentiment is dominating the gaming community.

Due to the overwhelmingly negative reception, the gaming industry is taking a pragmatic approach. "The way we think about it is that we want to deliver the best possible player experience we can. We'll evaluate that over time, but right now it's not something that we're driving hard against.", said Andrew Wilson, CEO of Electronic Arts, during the company’s Q3 earnings call after expressing positivity about NFTs as a part of gaming’s future.

Ubisoft Quartz Rarible Page. Source: rarible.com

Will Gamers Change?

Axie Infinity showed the world that P2E gaming can be a game-changer, but we also know that financial incentives in gaming can be a debatable tactic. Free-to-Play games in the early days also saw backlash for similar reasons: financial incentives by eliminating upfront costs to play a game. The stigma towards free-to-play games as being of low quality is still lingering in the air, but the sentiment is not as strong as it used to be. P2E games are also still in their infancy. Game developers will need to venture out into the wild to figure out a win-win strategy.

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