Play-to-Earn – How the Next Generation of GamingProvides Real Lifelines for Its Players.

Updated: May 26

Here’s how the future of gaming enables people to earn real money and a real living wage

Yan Krukov — Pexels

After NFTs, perhaps the biggest blockchain story of the year comes from the play-to-earn gaming industry, which, through Axie Infinity, announced its arrival into the crypto scene – and arguably into mainstream media.

Play-to-Earn, known mostly within crypto circles prior to 2021, has grown significantly in the past twelve months, particularly in countries located in Southeast Asia. This revolutionary gaming model, which can essentially be summarized as one which provides real financial incentives for game players who contribute to the gaming world, is not only pushing the gaming industry forward, but also introducing new players into the space – many of whom are seeing their lives change forever as a result.

During 2021, Yield Guild Games released a brief, but eye-opening documentary on how the play-to-earn model has changed the lives of many inhabitants of a rural city (Cabanatuan City) in the Philippines. Through Axie Infinity, residents of this city share how the leading play-to-earn game has significantly impacted their lives, especially after the impacts of covid-19 devastated their local economies.

From teenagers to the middle-aged, and spanning all the way to grandparents, Axie Infinity appears to be played by all in this small, but representative community in this island country.

Thinking that this would be an interesting topic to discuss with my own mother, I introduced the documentary and the game to her. While amazed at the benefits that play-to-earn could provide, she was also shocked that video games could actually provide real financial benefits to its players. Knowing this, perhaps it is useful to briefly explain the evolution of the gaming industry model – before analyzing why play-to-earn is a promising evolution of gaming, and why it will be especially impactful to certain countries and economies.

How We Arrived to Play-To Earn

In the beginning, games started with the “pay-to-play” model. Those who were around in the Untied States during the 1980s and 1990s may remember a time when going to the local arcade with a bag of coins was an exciting way to spend a weekend afternoon. The model was easy – insert coins into the arcade game of choice, and play until you failed in achieving a particular mission. Want to continue? Insert more coins. The cycle repeats.

As the game industry developed, so too did its offerings. Soon, there would be multiple competing game consoles that families could buy for their children, so that they could have unlimited play at home. The “OG” game consoles – Nintendo, Sega, Sony Playstation, dominated family rooms of the 90s. These would be later followed by offerings from Microsoft, who, together with Sony, would rule the console gaming world for the first 20 years of the 21st century.

With games being played at home, the pay-to-play model evolved. From coins in a machine to an upfront payment for a video game at the local electronics store, players needed to still pay for their game before playing it.

The tide would begin to the change before 2010. The release of Apple’s first iPhone not only introduced a new kind of mobile device, but also the app store, which would come to be stacked with all sorts of mini-programs, including games.

Many popular games on mobile devices were largely free (Angry Birds, anyone?). They relied on advertisements to fund the continued development and success of the game, while users could play to their heart’s content without ever spending any money.

Eventually, as mobile games became more sophisticated, and people became more invested in the games themselves, a “freemium” version of games emerged. In this model, players could begin playing for free – but could only access certain features (e.g. special levels, in-game assets, etc…) by paying real world currencies.

Between Pay-to-Play and Freemium – these business models have largely dominated the gaming world. Until now.

Play-to-Earn reimagines the gaming experience for its players. In play-to-earn, users either start playing for free, or they may pay an upfront amount to acquire some game assets (NFTs) to begin playing.

As individuals engage in these play-to-earn platforms, players earn in-game currencies (tokens) which can then be used to purchase other NFTs in game, or sold on a supporting decentralized exchange – effectively converting their in-game earnings to real-world money.

What Play-to-Earn Solves from Gaming Models of the Past

To understand why play-to-earn is so revolutionary, one only needs to understand why gaming models of the past were deficient. In the beginning, video games were simple. Imagine Pong, or Pac-Man, and one can quickly see that such games are one-dimensional and eventually would lose its luster quickly.

Over time, the games became more complicated. Nintendo’s Mario Brothers essentially introduced missions to video games (save the princess!). Games of the 90s – Warcraft, Starcraft, and more, introduced a whole new level of gaming – requiring strategic thinking and deep time investments from its players.

Over time, as the games became more sophisticated, the amount of time it would take to complete them also rose. Players would spend months, if not years, playing the same game – as it would literally take this long to complete the various missions that were part of the experience.

Along the way, players would acquire in-game assets, like upgraded weapons (swords, knives, etc…), body armor, and more. While this may seem normal, what gets overlooked is that eventually, the player stops playing the game. The hundreds of hours spent playing and acquiring in-game assets become of no value, and along with it, the real hours spent by the player in earning those assets. Over time, all gets lost into a digital black hole.

But what if this didn’t have to happen?

What if players could sell their in-game assets to other players who might find a use for them?

This is play-to-earn.

The Gaming Industry Today, The Rise of Play-to-Earn, and Where this Model Succeeds

Today, it is estimated that more than 3 billion people in the world are playing some form of video games. With the industry valued at over 330 billion USD, the industry has its sights on crossing the half trillion USD mark by 2028. With continued evolution of not only games, but gaming models like play-to-earn, it isn’t difficult to see how and why this will happen.

Axie Infinity succeeds in places like Cabanatuan City because they provide a reliable source of income in a place where the economy is less than reliable and where there is regular uncertainty about whether or not jobs will be available for its inhabitants. For these places (or perhaps countries, for that matter), Axie Infinity and other play-to-earn games allow for its inhabitants to not only have an escape from the toil of their daily lives, but to also earn a reliable stream of income to literally put food on the table. In places where one cannot find employment, one cannot earn a living wage, or one cannot sustain their own business because of poor economical infrastructure – play-to-earn has an incredibly bright future.

Other parts of the world where Axie has found increasing success is Venezuela – where the official Bolivar currency is actually viewed as even more unstable than the in-game currency of Axie Infinity. This Spanish speaking country ranks #2 in terms of Axie Infinity game players – who find value in not only earning a currency which is more stable than their own, but also in being able to find a way to consistently earn money in a country where employment can be so hard to come by.

Herein we find the second type of environment where the play-to-earn model succeeds – one where the local currency is viewed as unreliable, and in the case of Venezuela, where inflation (or rather, hyperinflation) quickly makes the in country money worthless.

Where Play-to-Earn Goes From Here

The Play-to-Earn industry is just taking off. The success of Axie Infinity has put existing game makers on notice – as the industry has watched the unbelievable ascent of the game in just one year. At the time of this writing, Axie has monthly users averaging more than 2.5 million. While this is only a fraction of what leading game titles can accomplish, its rise to the top of blockchain based games is no small feat.

Axie may be the first play-to-earn title to start breaking into the mainstream, but it certainly will not be the last. Other games, such as Battle of Guardians, Rainmaker, and Splinterlands are quickly and swiftly moving into the fray – as the space becomes hotter and hotter and players look for increasingly greater opportunities to earn more and to have more fun.

One thing is for certain – the play-to-earn movement looks to be here to stay. Prior to this model, it was never imaginable that playing video games could address real-world challenges. But this is exactly the case with play-to-earn. With such infrastructure, anyone with an internet connection and the desire to learn can quickly begin playing, and earning real money. Once people see the first transaction of in-game assets convert to real-world value, it is only a matter of time before interest and adoption further explodes.