Few sectors have experienced as much volatility in the past 12 months as web3 gaming. The sector became particularly associated with scams and speculation, and has a long way back to regain the trust, participation, and wallets of gamers. Greg Larson explains what needs to change.
It all seemed too good to be true. In 2021, the crypto gaming industry was abuzz with the possibility of a new play-to-earn (P2E) economy. Players flocked to blockchain games like Axie Infinity, where they could earn cryptocurrency by caring for and battling with their unique NFT creatures, and played NFT-powered 'staking games' like Chikn and Crabada that promised advanced gameplay in some unspecified future. However, as excitement turned to disappointment, a new prevailing opinion began to emerge, that the promise of P2E gaming was nothing but a pipe dream.
But was it?
The problem with the 2021 model of crypto gaming was its reliance on speculative trading, and lack of entertaining gameplay that would sustain actual value tied to their NFTs. That left poorly planned games indistinguishable from actual scams, with both pulling the whole sector into a market crash that took the trust of players down with it.
When crypto gaming was at its peak in November 2021, CEO of Microsoft Gaming, Phil Spencer, captured the view of the gaming community when he observed that NFT games felt like they were “more exploitative than about entertainment.” Six months later, the Wall Street Journal questioned if flatlining NFT sales was the “beginning of the end” for NFTs in gaming and elsewhere.
“The creative I see today feels more exploitive than about entertainment.”
— Phil Spencer, CEO of Microsoft Gaming
But it would be a mistake to write off NFTs and P2E gaming entirely. In fact, there’s still massive potential for NFTs to integrate into the gaming industry in a way that’s fair, enjoyable, and useful for players. This is what it might look like.
Instead of players relying on trading NFTs for a fiat return, or dev teams concentrating activity around an in-game token, successful P2E games will likely require players to earn through gameplay, such as levelling up their characters and accumulating items. These assets – represented as NFTs – could then be sold to other players, creating a true economy within a game.
By creating actual value underneath in-game assets that are tied to gameplay, this approach aligns more closely with the entertainment and escapism that have made games fun to play since their inception. It's a standard that crypto games fall far below. According to the long-time gaming executive and CEO of Laguna Games, Aron Beierschmitt, crypto games are in a “maturation phase”; speaking to Coin Telegraph, he explains that the sector is “charting a path to sustainability.” By focusing on the gameplay itself rather than financial gain, that mecca of web3 gaming, sustainability, can be reached. It is only by creating an ecosystem in which people actually enjoy playing that crypto gaming can succeed.
Imagine a scenario where Fortnite skins are NFTs that can be earned through gameplay as well as bought and sold via the in-game currency. These skins not only provide a way for players to personalise their characters, but also receive special bonuses like increased movement speed or stronger defence.
This adds a new level of strategy and choice for players: they must decide whether to save or spend their currency, and decide what to purchase and what to earn. In this scenario, not only do NFTs provide a sense of accomplishment and pride for players, but they enhance the overall gameplay experience.
Another key aspect of a successful P2E model is ensuring that the use of NFTs doesn’t detract from the overall gameplay. Free-to-play models, where players play a game for free but must pay for additional content or advantages, have proven popular in the past, but are not without detractors. Many gamers criticise this model for being overly aggressive in monetisation efforts, with constant prompts to purchase items or in-game currency. Successful P2E games should strike a balance between offering players the opportunity to earn an income whilst not overwhelming them with demands for further investments.
One route to this new model of web3 gaming is through dynamic metadata and NFT merging. Metadata refers to the data associated with an NFT and can represent a variety of information, such as the power level of an in-game weapon or the reputation of a character. NFT merging, on the other hand, is the process of combining multiple NFTs, such as traits, into a single, more valuable asset.
By incorporating dynamic metadata and merging into their games, developers can create games let players upgrade NFT assets automatically based on their gameplay. For example, if a player earns a high score, their character could receive a power boost as a reward. This not only ensures that NFT assets remain relevant and valuable, but it creates a sense of ownership and opens up the door to more diverse gameplay strategies.
The future of web3 gaming remains uncertain. It will take a blend of innovative gameplay, transparent businesses, and a focus on player experience to create a model that is sustainable and enjoyable. As Microsoft's Phil Spencer notes: it’s important to swap exploitation for entertaining whilst emphasising genuine innovations that enhance the gaming experience. By striking this balance, NFTs have the potential to become an integral part of the games of the future.
It’s important to swap exploitation for entertaining whilst emphasising genuine innovations that enhance the gaming experience.
Greg is an author and copywriter who's ghostwritten and edited more than 30 books, including Wall Street Journal and USA Today bestsellers. His most recent book, 'Clubbie', was featured in Forbes, the Los Angeles Times, and CBS Sports. In crypto, he's most curious about sustainable gaming economies and real-world NFT use cases.
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