The Play-to-Earn business model represents the latest evolution in the gaming industry, embracing the concept of an open economy and offering financial incentives to players who contribute value to the game world. This model is poised to introduce novel game concepts and retention strategies not yet witnessed in contemporary gaming.
The landscape of business models surrounding video games has transformed alongside advancements in technology. In the late seventies and early eighties, gamers engaged in arcade machines at local game centres, armed with pockets full of quarters, competing for high scores.
Today, gaming extends to our smartphones during moments of transit or personal downtime. For a more immersive experience, we turn to personal computers or home consoles. Regardless of the platform, diverse business models are catering to every type of player.
Free-To-Play Is the Basis
Consumers traditionally acquire the right to play premium games by purchasing licenses from digital stores or obtaining physical copies from online or local shops, with a typical cost of around $60 for a newly released game. While this remains a substantial industry, the free-to-play business model has witnessed significant growth in recent years.
The free-to-play model provides gamers access to a game without any upfront financial commitment. These freemium games are downloadable for free but offer a limited or constrained experience. Gamers can accelerate their progress or acquire special items by making in-game purchases, such as buying in-game currencies, additional content, or cosmetic enhancements for their characters.
Several prominent games, including Fortnite, League of Legends, and Hearthstone, are available for free and generate substantial revenue through the sale of cosmetic items for personalized customization. Fortnite, for instance, raked in 1.8 billion dollars in revenue last year despite being entirely free.
The success of these free-to-play games, generating billions in revenue, illustrates the maturity of the free-to-play business model, with developers mastering the art of monetization. The play-to-earn business model shares similarities with free-to-play titles, often incorporating similar mechanics. However, play-to-earn games go a step further, allowing gamers to earn money or valuable digital assets within the gaming ecosystem
Explaining Play-To-Earn
Empowering gamers with ownership of in-game assets and enabling them to enhance the value of these assets through active gameplay are pivotal aspects of the play-to-earn business model. By actively participating in the in-game economy, players contribute value to both fellow players and developers, earning rewards in the form of digital assets. These assets span a wide range, from cryptocurrencies to in-game resources that are tokenized on the blockchain. This synergy makes the play-to-earn model particularly well-suited for blockchain games.
Under the play-to-earn model, players receive recognition and rewards from the game and developers for dedicating time and effort to gameplay. In Axie Infinity, for instance, players earn Small Love Potions (SLP), which they can use to breed new Axies or trade with other players on the open marketplace. Similar examples include resources in League of Kingdoms and the prizes attainable in the fantasy football game Sorare.
Acquire Value to Participate
In essence, a play-to-earn game ideally should also be free-to-play. However, this isn't always the case. Currently, players must initially invest in three Axies to participate in battles within Lunacia, the world of Axie Infinity. Similarly, Sorare requires players to invest in player cards before they can earn cards through weekly competitions. While games like Chainz Arena and League of Kingdoms are entirely free-to-play, certain idle gameplay mechanics and limitations may prompt gamers to invest money into the game. In this way, players both earn and spend.
Game development incurs costs, and these games are products of businesses. The play-to-earn model, however, offers a unique advantage—the gamer consistently generates value that can be sold. Even if a player has to pay to start playing, the acquired items can always be resold. Every card in Sorare and every Axie in a player's wallet can be sold. This contrasts with games like Fortnite and League of Legends, where players spend money without tangible returns. With play-to-earn, every obtained item holds a certain value, ensuring that gamers can monetize their in-game assets even when they decide to step away from a game.
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