As a gamer myself, I spend a lot of time (too much probably) imagining what the future of gaming will look like. I do have to admit that I have been very disappointed in the slower than expected advancement of gaming technology over the past 20 or so years. I remember playing Super Mario 64 when it first came out in 1996, that was the first time I had ever seen a video game that featured 360-degree gameplay and you could run around in circles as long as you wanted, a huge improvement over the classic side-scrolling Mario predecessors and it completely blew my mind.
Young me was so amazed at the jump from side-scrolling gameplay to the open-world concept of Mario 64 that I was convinced that video games were going to advance at lightning speed, and we would all be gaming in highly impressive and fully immersive virtual reality worlds in ten years…How wrong I was.
Here we are nearly 30 years later and we are still nowhere near the high-quality, fully-immersive and interactive virtual worlds that I have been waiting a lifetime for. I remained so disappointed by the snail’s pace of the technological advancements in the virtual reality space, feeling like nothing else could excite me in this industry until I was completely and unexpectedly blindsided by the phenomenon of play-to-earn gaming and NFTs. While I was growing bored and collecting dust playing what seemed like the hundredth Halo game in the series, noticing how it was barely any different to the first Halo game that was released over a decade earlier, I felt that nothing in the gaming space would fire me up until I could jump into a Virtual Reality and run around my house shooting aliens through the Master Chief’s eyes. Little did I know that two of my passions, Crypto and Gaming were about to collide.
History of Play-to-Earn Gaming
In-game currencies are nothing new to the gaming industry. Whether you smash bricks to collect coins in Mario, skulk around the shadows pick-pocketing gold in games like Skyrim, or you are a ballin-out, mansion owning millionaire in games like Grand Theft Auto, in-game currencies with utility specific to that game have been around since the inception of video games themselves.
What also isn’t new are gamers who are able to make a living playing traditional games. Popular PC games such as Diablo II, Runescape and World of Warcraft have long seen gamers who are skilled enough to earn money by winning competitions or selling their in-game assets and levelled-up characters to people in the real world. Though it wouldn’t be until 2021 where we would see an in-game currency and a digital economy that could directly translate into real-world value.
In 2021 we saw for the first time the introduction of games that would have a monetary system that did not only have value within the economy of that game but would hold value that would traverse into real life, resulting in gamers who could earn a real-life income by directly and nearly instantaneously exchanging in-game earnings for fiat. While there have been multiple games released this year with the play-to-earn gaming model, the leading example of this is, of course, Axie Infinity which has turned average gamers into millionaires and provided an income for millions of people in poverty-stricken nations around the world.
Axie Infinity has become so much more than just a game, it has become a way of life for many people, with the game having such an impact on helping impoverished nations that Sky Mavis, the team behind Axie Infinity have even launched a scholarship program for people who cannot afford to purchase the Axies needed to get started.
As if being able to swap in-game assets for real-world cash isn’t enough, the play-to-earn economic gaming model also brought about the introduction of NFTs into the gaming space, which players have been able to sell for insane amounts of money in a verifiable and secure manner using blockchain technology.
Why are Play-to-Earn Games and NFTs Such a Big Deal?
For any of you who are just looking into this space for the first time and the previous paragraphs were full of jargon and you haven’t quite grasped just how valuable and revolutionary this movement is (I will link additional articles below), allow me a moment to take this back old-school and explain why these concepts are so revolutionary by comparing it to one of my favourite childhood games, again with the lovable mushroom eating plumber Mario.
If Mario was created using the play-to-earn economic model, it would be possible that each coin collected by smashing bricks or stomping turtles could be directly converted to cash pretty much instantly by sending those coins to an exchange like Binance or Coinbase, swapping them for dollars (or currency of choice), then depositing cash in your bank account. Pretty cool eh? So, if you earned 99 coins in a level, and each coin was worth a dollar, you could swap it for 99 bucks, (not including exchange/network fees) not too shabby for playing a game that you were probably going to play anyway. Mario with a side order of free money? Could life get any better?
It does get better! Say Mario is now customizable and you can earn things like different coloured hats or goofy outfits in the form of NFTs. Imagine you just defeated Bowser and you won Mario a green hat that gives Mario special powers, and there is only one green hat in existence. Through the use of blockchain technology, green-hat Mario is now yours, attached to your unique crypto wallet address and nobody can duplicate that same green hat, and you have fully verifiable and certifiable ownership of green-hat Mario. Other gamers and collectors may be willing to pay a seriously high price to get their hands on your one-of-a-kind green-hat Mario NFT as it is rare, unique and gives Mario special abilities within the game. We have already seen in-game items sell for millions of dollars so you could be sitting on a serious fortune with your coin collecting, Mario NFT.
“Okay, so you’re telling me that I have the ability to earn a boatload of money with this play-to-earn gaming model and NFTs? What else?”
What, those aren’t good enough reasons already? Alright, to quote Drax in Guardians of the Galaxy, “I’ll do you one better.” I think one of the most exciting use cases for in-game NFTs is the capability of being able to transfer assets between virtual worlds and games. Remember that as soon as an item is an NFT, it is no longer stuck within the confines of that game. Let’s grab our friend, green-hat Mario again. By integrating NFT capabilities into games, one can remove green-hat Mario from his universe and potentially plant him into other gaming universes or metaverses. In theory, eventually, gamers should be able to run around as Mario (or whatever NFT character they like) in metaverses like Decentraland or the Sandbox, or things can get really crazy if we can equip Mario with the Master Chiefs assault rifle and ride around on Yoshi while shooting aliens, the possibilities are limitless!
While we are on the topic of Metaverses, another reason this is quite useful, is imagine that you have a lovely little plot of land, built a house on it, with an arcade, plus you just purchased your avatar a cool tattoo, each item it’s own unique NFT. Now, all of a sudden, a bunch of riffraff just purchased the digital plot of land beside yours and you don’t like the look of those bad hombres. Easy, you can simply pick up every item on your plot of land, and transplant it exactly as is, along with your avatar and their cool new tattoo to any other available plot of land on the map, or even possibly between metaverses completely! Meaning you will someday be able to keep the same avatar and items regardless of what game or metaverse you find yourself immersed in.
The Play-to-Earn Model can Revolutionize and Shape World Economies
If you have read one of my previous articles on the future of Blockchain gaming, you will recall that roughly 2.69 billion people on the planet can be classified as “gamers.” That is nearly a third of the population, a trend that is rising at a very quick rate and expected to continue, so this impacts a heck of a lot of people. That means that the play-to-earn gaming model is providing an alternative way to earn an income for a third of the planet, from anywhere in the world provided internet is available.
Games like Axie Infinity proved to be so lucrative for so many gamers that there was an influx of gamers around the world from the United States to the Philippines who quit their jobs as Axie Infinity provided a higher salary than jobs in many parts of the world, and of course, made for a far more enjoyable way to earn money versus flipping burgers or sifting through company memos all day. Imagine the impact this gaming model would have if a third of the world decided to quit their jobs in order to earn money in Blockchain games.
While this may not happen on a macro scale anytime soon in stronger economies, it has already had a significant impact in poorer countries such as the Philippines and Venezuela where salaries are low, jobs are scarce and hyperinflation is destroying the native currency.
While we are still so early in the revolutionary play-to-earn gaming model, we have already seen pretty the pretty big impact on economies it is having. The government of the Philippines has had to impose a new tax for gamers earning money from blockchain games and people in Venezuela are quitting their jobs in droves as it is far more lucrative playing blockchain games as the in-game assets are worth more than their national currency. Though it is unlikely that these levels of inflation and weakening economies will impact wealthier nations in the same way, I don’t believe it is a stretch to imagine that millions of people anywhere in the world would rather earn a salary, even take a pay cut to be able to make a living doing what they love in virtual worlds as we have seen in this article about a Goldman Sachs employee in the United States quitting their job to get into blockchain gaming.
Will This Trend Last?
Because we are still so early in the space, it is impossible to know what kind of lasting and significant impacts play-to-earn gaming might have on the world. There is no doubt that this economic gaming model has created life-changing wealth for gamers in 2021, and many people made absolute fortunes, enticing more and more players into the gaming space. Though there is also a chance that these explosive gains and fortunes were merely the result of retail hype and FOMO entering a brand new space for the first time, a trend that could die off in the coming years as excitement wears off, resulting in fewer gains being made and less incentive to quit jobs and jump into gaming full time.
I also want to address the elephant in the room, and that is that most of the current games available in the play-to-earn ecosystem suck! It feels like going back in time and playing Pong on Atari after you just finished a round of Fortnite. The graphics are currently quite lacklustre, and the gameplay is very basic and if this trend is going to last, a lot of development will need to be made in this space. The good news is that these developments are on the way, and there are some massive projects in the pipeline, with incredible teams building out triple-A titles on the very impressive Unreal 5 Engine for cinematic-like graphics.
While there are some amazing looking games on the way such as Star Atlas, Big Time and Cradles: Origins of Species that are highly likely to be big hits, attracting hundreds of thousands of players, we also need to consider that there are now hundreds of teams coming out of the woodwork looking to jump on the bandwagon and capitalize on this trend while it is hot. This is causing an influx of developers to create games that are pure 💩.
We have seen a rise in teams of developers that have no interest in creating exciting or enjoyable games, just knocking out whatever play-to-earn games they can release asap, with tokens that will likely have no value long-term just hoping to make a quick buck. This flood of poor-quality play-to-earn games could eventually oversaturate the market, with supply outstripping demand, leaving a lot of people with empty pockets getting involved in games that will likely flop if there is a requirement to pay to get started, driving people away from the space.
Many of these games won’t be developed further after launch or will not be created exciting enough in the first place to entice gamers, resulting in them not being lucrative, nor exciting enough for people to want to play. Look out for the sincere gaming projects with strong teams behind them such as the ones I’ve covered here. As long as the gameplay and storyline are great, that should be enough to attract players to partake and get involved, interacting with the in-game economy resulting in a higher value and worth of the in-game assets.
I believe that the trend of earning in-game currencies with real-world value and the use cases of having in-game items minted as NFTs is a trend that is likely to continue but with fewer games succeeding than those that will fail, similar to real-world businesses and crypto projects themselves. Blockchain gaming projects are likely to remain an enticing proposition for investors as we have seen some serious wealth generation in this industry, but I believe it will ultimately be the games that are actually worth playing, not just investing in which will be the ones that will likely stand the test of time.
Video games have managed to onboard about a third of the world’s population simply by being fun, exciting and entertaining. The gaming industry has expanded at an impressive rate over the past 50 years, promising to deliver nothing further than a fun way to spend (or waste) time depending on how you look at it. While fun and entertainment are enough of a driver and motivator to attract people, nothing motivates people quite as much as money. By combining the entertaining nature of games with the ability to generate wealth by having fun, it is no surprise that the play-to-earn and NFT inclusive gaming model has seen exponential growth this year, enjoying a faster rate of growth than anything else ever seen in the crypto industry. If you want to dive deeper into Blockchain gaming, you can find my previous articles that go more in-depth here, and find specific games and projects with huge potential here and here.
I would not be surprised to find this trend continuing in the years or decades to come, though the space will be rife with projects that will go nowhere, just as traditional games often flop and fall by the wayside, there will be a few that will withstand the test of time. It is quite extreme to think about, though not impossible, that this gaming model may even become big enough to completely shape the economy of the planet as we have already seen in the Philippines and Venezuela.
There are many factors at play that could all lead to a mass exodus of the job market and a transition to earning an income online in virtual worlds. With the development and expansion of metaverses increasing in user adoption, the automation of industries resulting in many people losing their jobs, inflationary pressures, and goodness forbid we all find ourselves in lockdown again due to a future pandemic, these are all events that could bring significantly more people into the play-to-earn gaming space. If people decide that they would rather earn an income in a digital world, this could result in the potential permanent removal of a large percentage of people from the workforce having unknown impacts on the future of world economies.
It isn’t difficult to see why the play-to-earn gaming model has seen such growth and is causing so much excitement. If it becomes commonplace for people to be able to earn decent incomes via gaming, who would be left that would rather flip burgers, fold clothes, wash cars, or stare at spreadsheets all day at a miserable job? This gaming model opens up the potential to get paid to live an infinite number of exciting lives and go on an infinite number of adventures in imaginative virtual worlds.
To paraphrase an old friend of mine who loves video games more than anyone I have ever met, he once said to me: “In games, I can be whoever I want, do anything I want and live any life I choose. Why wouldn’t I spend my time gaming?” It is tough to argue with that. I guess the days are gone where mothers around the world can chastise their children saying that games are a waste of time as people are now earning life-changing wealth, opening up opportunities to better their lives, the lives of their families, give back to their communities and strengthen their economies. Next time someone tries to tell you that video games are a waste of time, ask them if they have ever managed to save enough in just 6 months to buy two homes outright using Smooth Love Potion and enjoy the look of confusion on their face.
Disclaimer: These are the writer’s opinions and should not be considered investment advice. Readers should do their own research.