Today, the online gaming industry is one of the fastest-growing entertainment sectors in the world, projected to reach a market size of over $242 billion by 2027, up from $107 billion in 2020. However, such massive profits often come at players’ expense as gaming companies have to constantly come up with new monetization models, many of which are widely considered to be exploitative and even borderline predatory.
But wouldn’t it be great if players themselves were able to profit from in-game economies — or at least recoup some portion of their investments? Well, that’s exactly what adopters of the blockchain-based “Play-to-Earn” model, also called “Play-to-Own,” are striving to achieve.
‘Not-So-Micro’ Transactions
In their most common form today, online in-game purchases, which often comprise cosmetic “skins” for characters and weapons as well as numerous other embellishments, are extremely limiting and severely lack any kind of “liquidity.” When you buy an item from a developer/publisher-controlled store, it is essentially forever welded to your account, and there is no way to transfer, exchange or sell it afterward.
At the same time, while microtransactions can be somewhat justified in Free-to-Play (F2P) games —after all, their creators need to earn at least some kind of profit to continue development — they have slowly but surely seeped even into full-priced AAA games over the past years as well. So now, players not only have to pay $60 — or $100+ in the case of “Super Duper Ultra Deluxe Editions” — for a new game but are also facing walls of microtransactions in-game.
Another source of gamers’ scorn is built-in advertising which, again, makes sense in F2P projects but arguably looks bizarre in $60 games from big studios. For example, major publisher Electronic Arts have recently faced a massive fan outcry after adding advertisements to its MMA fighting game UFC 4 weeks after it was initially released. Ultimately, the company was forced to apologize and remove the full-screen ad.
Another question is what would happen if or when users get bored with a certain online game after spending tens, hundreds, or even thousands of hours and dollars within its world and decide to play something else instead? Well, that’s it, that’s the end.
Since there is usually no way to transfer your purchases to other players or games apart from selling your account in its entirety — which is almost always prohibited by end-user license agreements (EULAs) — the only recourse is to just “shelve” your profile and forget about all the money you invested in it.
Meanwhile, in-game microtransactions remain highly profitable since developers and publishers wouldn’t have been so keen on adding them otherwise. This is because players actually love to collect digital items, including cosmetics, to show them off on their characters or profiles, somewhat mirroring real-world economies.
Can In-Game Economies Be Friendlier For Users?
With the exception of the so-called “gold farming,” where players accumulate virtual currencies to sell them for real-world money (also prohibited by most EULAs), there hadn't been many ways for users to benefit from in-game economies until recently. The emergence of blockchains and non-fungible tokens (NFTs), however, is rapidly changing that.
Unlike “normal” cryptocurrency tokens, NFTs are not interchangeable as each and every one of them is wholly unique. This makes NFTs a digital equivalent of real-world items and gives their holders ownership over their digital property.
For virtual economies, this means that every item can be represented by a corresponding NFT and be freely transferable, exchangeable, or tradable between users, offering gamers an opportunity to truly “own” their in-game goods. Notably, there are already whole blockchains, such as the Worldwide Asset eXchange (WAX), for example, that specialize in NFTs, video games, and collectibles, fully embracing the Play-to-Own model.
Another benefit of NFTs is that they offer the potential for interoperability, enabling players to transfer them beyond the boundaries of a game itself. Considering the industry’s love for long-standing IPs and sequels, blockchain will allow studios to increase “stickiness” and keep players attached to their franchises in the long term.
Demand for various memorabilia can also persist for a long time after a game’s release. For example, Konami has recently minted a special collection of 14 NFTs to commemorate Castlevania — 35 years after the first game in the series first launched. The demand was obviously there as these tokens managed to sell for over $150,000 in total and currently have a floor price of 6.7 Ethereum (around $12,000).
In an industry where revenue can start to fall almost immediately after a game’s release, or is highly dependent on long-term player engagement and retention, anything that can extend player activity can be considered highly beneficial.
Happy Player, Happy Game
Rather than shutting down gamer freedom of choice, developers should work with — rather than against — users’ urge to tap into digital ownership. Blockchain provides a unique way for companies to take advantage of this in a legal, productive, and, most importantly, entertaining manner for the gamers themselves.
Though it’s easy to take a short-term viewpoint when it comes to NFTs, if developers want to stay on the right side of the revolution, they’ll need to think longer-term than that. Successfully capitalizing on the industry’s shift to blockchain will mean setting the correct groundwork, and building the right in-game culture and infrastructure first.
Most importantly, Play-to-Own models are more inclusive and allow for much deeper player engagement — as opposed to largely unilateral relationships games have with their audiences today. After all, happy and involved players are much more likely to stick around and support their favorite game in the long run.
About the author
David Kim - Head of Publishing at WAX Studios. A veteran in the entertainment industry, David Kim possesses over two decades of experience working for big brands like Warner Bros, 20th Century Fox and Sony Pictures Entertainment. David is now spending the majority of his time at WAX tackling the main issues of mass adoption in the blockchain gaming space.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.