The Future of Gaming | Play to Earn
How play to earn games backed by cryptocurrency will disrupt the gaming market.
Video games have evolved through three phases. First came games where users pay a onetime fee and get access to all the features, such as World of Warcraft.
Next were games that were free to play but often have in app or in game purchase options, like Clash of Clans. This attracted a wider audience while still allowing the makers to monetize. The third phrase, which we’ll discuss in more detail in a minute, is a play to earn model, powered by crypto currency, where users earn money for playing, and own the characters, land, and items they build in the game.
New to my substack? My name is Alec Torelli, and for the past 16 years I’ve been a professional poker player, coach and entrepreneur. I discovered crypto in 2017 and have since spend 1,000+ hours learning. My mission at CrypTorelli is to simplify bitcoin, crypto, DeFi and NFTs so that anyone can understand it.
Things are highly centralized in the first two iterations of games. This means one company owns the game while the consumer has nothing to show for what they built.
One can’t sell or trade their weapons, rent out their land or do anything that creates value for the end user. In short, no value is captured by the users while all the financial upside goes toward the game maker.
As an aside, this inefficiency is similar to social media, where the content creator does all the work and essentially builds the platform for the centralized entity. I believe crypto will disrupt this model by giving the value and power back to end user. The most notable example of this is BitClout, a decentralized social media that looks and feels like Twitter.
I wrote and produced the Ultimate Guide to Bitclout here.
This highly inefficient system in both social media and gaming is ripe for disruption, and another one of the many industries that crypto will radically transform over the next decade. Crypto will empower video games to improve upon the legacy model by offering users a chance to earn money (referred to as ‘play to earn’ or P2E).
The global video game marketing was valued at a whopping 150 billion in 2019, and is expected to grow at 13% per year through 2027. There’s simply too much opportunity for a broken business model to survive.
Enter Play to Earn
So, how does a play to earn game work? By leveraging the blockchain and crypto currency, games of the future will allow you to not only purchase items in the game, but you can own them, lend them out or sell them on the open market and earn real money. This will empower a new generation of people to make a living playing games and create new entire jobs and opportunities, the likes of which we can’t even imagine.
Just think of people in third world countries with no access to banking, who can now support themselves through video games. The market will explode. This is already happening in countries like the Philippines, where gamers are making a living playing the world’s most popular P2E game, Axie Infinity.
Built on the Ethereum blockchain, Axie Infinity is a case study of a play to earn game that leverages crypto currency which people can play and earn real money. In the game, players battle with Axies, fierce little creatures that fight each other and hunt for treasure. Players earn AXS tokens, which they can then use to decide the future of the game. Players can then stake or lock up their tokens to earn interest and vote on future proposals.
The market has spoken. The Axie token has risen to over $100, and the market cap of the game is over 7 billion dollars.
I personally believe that play to earn games will obsolete all other games. The reason is because of incentives. Think about things from the end user’s perspective. Given the choice between two new games, one where the game maker keeps 100% of the profit, or one in which each individual player can earn real money and be rewarded for their contribution to the game, which are you more likely to choose?
As more P2E games like Axie come onto the market, players will continue to flood there. Eventually, players will demand a built in play to earn feature, and only support games where they can have sovereignty over what they build in the game, and where they are financially rewarded for their effort.
This will happen faster than most people expect or realize. Much like the advent of steaming obsoleted companies that many thought could never fail (a.k.a Blockbuster), crypto will eat alive the legacy companies which fail to adopt to the new economy of gaming. In short, the future of gaming is in crypto.
You’re probably wondering how you can get exposure to the upside of crypto gaming. In upcoming articles I’ll be sharing the complete guide to two of my favorite Play to Earn games, and how you can bet on them.
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Have a look at DeFi Kingdoms on Harmony. Its volume is now 3-4x Axie with a quarter of the players making volume/user about 10-12x. Very passionate community, incredible team that consistently delivers and communicates, and an amazing roadmap with cross-chain expansions coming.