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Gaming vets promise to make blockchain games fun and sustainable – TechCrunch


The success of the escape of Axie Infinity and StepN convinced a wide range of entrepreneurs that web3 games, where ownership of in-game assets is in the hands of users through the adoption of blockchain rather than a centralized platform, is the future.

Some of the biggest successes to date reward users with tokens that can be cashed in what is known as the “play for money” model. While P2E games have attracted millions of players and billions of dollars from investors, game industry veterans argue that they are fundamentally unsustainable.

They say these games are the brainchild of financial engineers aiming to get rich quick, not experienced developers building timeless works.

Axie Infinity’s impressive rise and fall speaks for itself. After peaking at $754 million in November when bitcoin hit an all-time high, the game’s monthly sales plummeted to $4.5 million in July.

“Most GameFi developers are not game developers,” said Maciej Burno, head of Polish game studio Reality’s new metaverse business.

Burno is among blockchain veterans around the world trying to make blockchain games mainstream. Their vision is to counter the public impression that web3 games, popularized by P2E, are all scam and trash. Instead, they want to build games that are both fun and sustainable, and introduce cryptocurrency as a new way to incentivize players and creators.

Is it a game?

The problem with P2E, as See Wan Toong, former senior technical director at Electronic Arts and CTO of web3 game startup Red Door Digital, has seen that users have to pay upfront to start playing.

In Axie Infinity, users buy and breed cute blob-like creatures called Axies as non-fungible tokens that are validated on the blockchain. Sales from the NFT will then go towards funding rewards for those who earn tokens by playing and the tokens, the game’s native cryptocurrency, which in turn can be cashed .

That means for the game to be sustainable, it must have a constant stream of new users or it will lose its financial resources. That’s why critics compare P2E games to pyramid schemes.

By strict definition, many P2E titles aren’t really games, Toong argues. They are more like decentralized finance, or DeFi, products with gamified features. Hardcore gamers consider Axie Infinity to be “simple” or even “boring”, not unlike the mindless, free mobile games they have opposed for years.

But for those living in developing countries, the prospect makes several hundred dollars every month by clicking on the computer screen can be very tempting. That is largely why Axie Infinity has been so successful in countries like the Philippines during a pandemic when many people have lost their jobs. For them, the game is more like work than fun.

Simon Davis, CEO of Mighty Bear Games, a web3 gaming studio based in Singapore that just raised $10 million in a token sale, said of critics Axie Infinity.

“In Western countries there is a tendency to dismiss things that are common in other parts of the world and are not as respected as you should be. If you look especially in Southeast Asia and Latin America, and those countries whose income may be lower, then people don’t buy high end consoles and consoles. It is exciting to provide people with not only entertainment but also potential economic benefits.”

Davis, formerly director of design at Ubisoft, continued: “I don’t like the term play for money. “I don’t think that has to be the main motivation because you’re playing games for fun. But someone might then decide that they don’t want to play the game anymore and get some of their investment back at that point. I don’t see how that’s a bad thing.”

Play and earn

While Davis recognizes the value of P2E, like many other experienced game developers getting into web3, he is pouring resources into perfecting the gameplay first and foremost. His studio produced casual games, like an official Disney and Pixar game, and Butter Royale, a hit on Apple Arcade, before moving to blockchain. It will soon release its first web3 title, a third person battle royale multiplayer incorporate token economy.

Games can be both fun to play and some blockchain game developers argue. It’s not news that gamers have an incentive to make money – even in the more developed parts of the world.

“Remember World of Warcraft? There is already a group of players in the MMO [massively multiplayer online] The game hires tons of people in Vietnam and Indonesia to farm the gold,” Toong commented.

“When you look at a traditional game, people are putting millions or billions of dollars at the gateway, but it’s on a different side. They don’t get any value in return,” Toong added.

Burno agrees. “People want to play for fun and they are willing to spend money to make them happy, but there are also people who want to invest, so you can give them a tool to invest.”

Developers are also promised greater rewards from blockchain-integrated games. In free-to-play games, a popular monetization model these days, Davis commented, developers earn an income by rolling out an update every “six to eight weeks.” “Users get annoyed because you are trying to extort their money every two months.”

In contrast, in web3 games, developers receive a small percentage of each transaction in the game, recorded on the blockchain. “So the only thing you have to worry about is creating a game that people want to keep playing for a long time and creating value for the assets of the players who want to trade between them,” Davis said. .

Tokenomics

To make a blockchain game sustainable, Toong’s Red Door Digital is taking a different approach with Axie Infinity. Users do not need to purchase the platform’s tokens to start playing – unless they want to start earning or have real value in their assets.

When a game maintains a recurring user base, the value of the game will increase and outside investors will come in, Toong said. “All this increase in value will then go to the hands of the players who are playing for a financial return.”

Like many other web3 games, Red Door Digital’s platform offers utility tokens, which are used as in-game currency to purchase skins, items, etc., as well as admin tokens. Users who contribute to the game will receive governance tokens and can vote on important project decisions. Utility tokens can be traded, while governance tokens do not have the liquidity to strip them of any speculative value.

While developers are still working to optimize their token economy, investors have been pouring big money into their fledgling projects. Blockchain games attracted a massive $2.5 billion in funding in Q2, according to DappRadar, a data company that tracks decentralized applications. In H1, blockchain games accounted for about 30% of all capital raised by private game companies, a report of investment bank Drake Star shows.

Despite the influx of VC money into web3 games, some legacy studios and publishers seem to have erred on the cautious side. Tencent, the world’s largest game company, has no plans to develop web3 games known to the public.

“Reputation is an important thing to the company, so if anyone creating this initiative fails, it is the end of their career. They will have to answer the board,” said Toong. “So the only way is for them to invest in a crypto company or two to see how it goes.”

The gold rush to web3 is also posing a challenge to crypto skeptics in the gaming sector. A game-focused fund manager based in Asia feels frustrated that the investors he meets these days are extremely interested in knowing if his fund has a web3 perspective.

“If I say I don’t have one, they don’t want to invest.”



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