Recently, games built on the blockchain are giving rise to a new type of gameplay called ‘Play to Earn’ where players are rewarded with the time they invested playing these games. In ‘Play to Earn’ games, the players fully own their in-game characters or items, and they can do what they want with it. They can sell it, earn from it, or use it, compared to 99% of the games today where digital items you purchased in-game can’t be sold anywhere else without running into some terms of service violations.
This is part 1 of our article series that introduces ‘Play to Earn’ and why such a concept exists. Part 2 is the actual “How To” earn from blockchain games.
Free to Play and Centralized Games
(aka 99.999% of all the games right now.)
Before expanding into the concept of ‘Play to Earn’, it’s important to understand the current trend in the video game industry. Ronnie Tan, managing director of gumi Asia explained in 2018 that by 2007, the game industry which was once dominated by arcades and consoles were disrupted by smartphones, which gave rise to the ‘Free to Play’ model.
In ‘Free to Play (or F2P), anyone can start playing a game without any initial investment. Download a game and that’s it. These games would always have a monetization model, and the most successful of them is monetizing the player’s time. Really, in F2P games, the player is given a choice:
- Play and grind to receive a reward, therefore spend time to get the prize, or
- Pay to receive the reward now
If the player pays, they can get access to items (or even powerful characters) or any shortcuts that allow them to win in the game. For example, in Candy Crush if you run out of moves, you can pay to purchase additional moves you can use for that specific level. (Take note that if you buy more moves, there’s a possibility that you are still unable to get through the level. What do you do? Some players will pay again.)
Recently though, ‘Free to Play’ games found success in selling customization stuff such as “skins” or items that can make the player’s character look better. Most of the time, these skins don’t affect the gameplay at all. There’s no power up if you change your character’s outfit, but they will look better than everyone else. It’s also bragging rights: I have money to pay for this skin which does nothing except that I demonstrate that I have cash to look better than you….
As with most games at the moment, including ‘Free to Play’ games, the reality is that no matter how much time you spend playing a game or money you spent upgrading your character, the game company still owns all your items or characters. Yes, there are informal marketplaces where you can sell your Mobile Legends account or your Animal Crossing shirt designs. This is called ‘Real Money Trading’ or RMT. Most of the time, such activities are not allowed by the game company’s Terms of Service.
What is ‘Play to Earn’?
‘Play to Earn’ represents a new business model in the video game industry wherein the game allows the players to fully own their in-game assets and let them do what they want to do with it. Developers and game designers are also rewarded while the players continuously play the game.
Ronnie Tan said it best in 2018 (By the way, 2018 feels like a long time): “Play to Earn is the future of games. For players, it means true ownership of game assets. The digital items are tokenized, so people can buy and sell the items without the concern of devaluation or being scammed.”
Why is there no fear of devaluation and getting scammed? ‘Play to Earn’ games usually employ the use of the blockchain to host these in-game assets as non-fungible tokens or NFT, whether Axies in Axie Infinity or items and weapons in Lost Relics, or the virtual lands in League of Kingdoms. For brevity’s sake, when the in-game item is an NFT, each item has a unique attribute that verifies its authenticity, which can be proven on the blockchain. Hence, people will know immediately if the digital item is a duplicate or not. That is the reason why there are no two Axies alike, and so on.
You will ask how this can be sustainable in the long run. Well, blockchain games need to have good game economics with different types of participants in order for them to be successful. Using our #CryptoPH colleague Elle’s graphic below, you can see that in Axie Infinity, different types of participants and a community-driven economy are required in order for the ecosystem to continue.
In Axie Infinity, players earn the cryptocurrency SLP from winning battles in-game. Players can sell SLP to convert it into ETH or cash. On the other side of the transaction are breeders who need these SLPs to breed new Axies. New players will buy these newly birthed Axies, or older players will buy new Axies. Some Axies are prized over the others because of specific traits such as being good in battle, or has special parts, or maybe it’s an Axie that is one of the earliest to be in existence. This makes Axies prized by collectors as well. And because this is a blockchain game, no two Axies will ever be the same. There is only one Galadriel, one of the most valuable Axies today.
TLDR: No two Axies will ever be the same because the game is on the blockchain.
Do People Make Money From Play to Earn Games?
Short answer: Yes.
Long answer: There are many ways to earn money in the ‘Play to Earn Model.’ We will use Axie Infinity again as an example because that’s what I know best.
- Winning battles reward you with SLP, convertible to cash. Those who placed high in Season Rankings also earn additional tokens like AXS. (AXS is the governance token of the game.)
- Breeders acquire SLP to breed new Axies, which can be sold to the marketplace.
- Axie Infinity also has virtual lands in its upcoming “Land Gameplay”. Players can buy land and flip it to the next buyer
- It is expected that these lands will generate yields in the future as well. (This speculation increases the value of lands today.)
In addition to the money-generating mechanics within the game, outside the game, there exists hundreds to thousands of content creators earning by making content about the game. YouTubers like KooKoo, artists, content writers, people like me who write this very article about Axie Infinity.
Who Already Earned Money From Playing Blockchain Games?
In Cabanatuan and elsewhere, a growing number of Axie Infinity players are able to uplift their lives simply because they play the game everyday. An article from Coindesk by Leah Callon-Butler revealed that many Filipinos jobless during the lockdown were earning close to $300 – $400 in a month playing Axie Infinity. This might mean nothing in the west but in the Philippines, that’s more than the minimum basic salary per month.
In a previous article, I tracked the earnings of these early players which are more or less the same as of May 5, 2021 because of the increase in the price of SLP ($0.27). Note that this doesn’t count transaction fees and transfer fees discussed in Part 2. This is just gross income.
At SLP’s early January 2021 price of $0.08 or around Php 4. Earning 100 SLP per day gives the player $8 or roughly Php 400. You can achieve that in under 4 hours of playtime.
Over at the Axie Infinity PH Facebook Group and on Twitter, you’ll see the hashtag #SalamatAxie (or #ThankYouAxie) used every time players post pictures of what they were able to buy from their in-game earnings. Some players reported being able to buy milk for their kids, tricycle for their livelihood and even medicines and food necessary in these trying times.
This is also true elsewhere. Player @KokiJawa in Twitter reported being able to play a plot of land (“real land” btw) from their Axie Infinity earnings.
But is ‘Play to Earn’ also ‘Free to Play’?
Not all blockchain games that are ‘Play to Earn’ are also ‘Free to Play’. In Axie Infinity, you will need three Axies to begin playing. Unless you find someone who will give you these three Axies, you need to buy them in the marketplace. For blockchain games that are ‘Free to Play’, there are some sort of limitations to encourage players to purchase Axies to properly play the game.
In the future, Axie Infinity’s developer Sky Mavis said it will introduce a feature that will allow players to start playing for free (‘Free to Start’) just so players can get a feel of the game without purchasing in the beginning.
The good news in ‘Play to Earn’ is that these in-game assets you bought can be resold, in contrast to 99% of the ‘Free to Play’ games where you cannot sell the items you either like or not. Every Axie can be sold if you don’t like it or if you need to liquidate for cash. As Beryl Chavez Li, co-founder of Yield Guild Games said, this is the beauty of ‘Play to Earn’: “Players can go in and out of the program at any time.”
Because most ‘Play to Earn’ games are built on top of the Ethereum blockchain, players can swap in and out of the game simply by selling their in-game assets for the cryptocurrency called ETH. Then they can use this ETH to buy items, weapons or characters in another blockchain game. There are also cases wherein items from one blockchain game are interoperable with another blockchain game.
This article is published on BitPInas: Play to Earn Philippines: Make Money Playing Blockchain Games 101