Since the gaming industry began, there have been various business models applied to their monetization with massively multiplayer online gaming (MMO) and smartphone technology only expanding these business models further.
A ‘Pay to Win’ game model is one that locks the player in at some point in the game and forces them to pay to keep moving forward.
This term is also used when there is too much imbalance between the players. In particular, where the access to paid content providing bonuses is too high compared to what can be obtained by playing the game for free. The players who bought these items (very expensive most of the time) have a strong advantage, especially in the context of Players vs Players (PvP). To remain competitive, it becomes mandatory to pay to win.
A declination of the ‘Pay to Win’ is the ‘freemium’ model. This is common in mobile games where the first 2 weeks of play are extremely easy with the difficulty then increasing dramatically, eventually forcing the player to checkout to improve their character.
Another concern has arisen in the world of video games over time: the not always random distribution of ‘loot boxes’. The concept is simple: buy a box containing a randomly distributed mystery reward. The main criticism of this distribution system is that it approaches casino practices and this has been banned in some countries not for the ‘risky’ side but because of the resale of the items in a secondary market.
‘Play-to-earn’ (P2E) is also called ‘GameFi’ (the contraction of Gaming + Decentralized Finance).
‘Play to Earn’ is not that dissimilar to the ‘pay to win’ model in that the entrance to the game has no initial cost and games have some similar mechanics as the ones found in the ‘pay to win’ model. The crucial difference is that ‘play to earn’ models function through blockchain technology, which gives players true ownership of the digital assets they earn through participating in the game.
Excuse the pun, but ‘play to earn’ is a real game-changer, and the more you explore this model, the more exciting the possibilities become.
Participating in a P2E game rewards you for your time and skills. Being a loyal user and ultimately winning, gives you real ownership of digital assets. This may not sound like a particularly unusual set-up until you discover that these rewards are non-fungible tokens that you own. They are desirable and have a currency value on digital marketplaces where they can be sold. In addition, these NFT rewards commonly bestow on the holder in-game bonuses and access to special levels or rooms, making them even more valuable to players and therefore also showing an increased monetary value.
Giving gamers the ownership of digital assets not only benefits them but also brings value to the game itself by participating in the in-game economy. Players create value for other players and the game developers for which they are rewarded.
Players can sometimes earn in-game currency which is tradable in currency pairs on crypto exchanges. Games such as Axie Infinity reward $SLP for putting your cute Axie monsters into battle tournaments and winning. The $SLP is also needed in-game to ‘breed’ your Axies further utilizing the in-game economy.
A more complex example is Aavagochi, a game in which digital pets can ‘farm’ and ‘mine’ digital assets and crypto, which again can be sold on marketplaces.
In the current world of multiplayer online gaming, the ‘pay to win’ model means big bucks for the gaming companies but shelling out hard-earned cash to gain an advantage over your competitors has its issues.
For instance, dedicated players’ time and energy are often superseded by wealthy players who don’t want to spend time grinding in the game and who prefer buying expensive upgrades or weapons. This creates an imbalance within online gaming communities.
One of the benefits of blockchain gaming is that a game can have its own in-world decentralized, peer-to-peer, trusted economy. Ultimately, players have ownership of the digital assets they have won or earned from gaming which, in turn, allows them to monetize their efforts independently of the game itself.
In a ‘play to win’ environment, you are the one selling the wealthy gamer or collector their new upgrade, an upgrade earned from your time and skills playing in the game.
‘Play to earn’ is a form of human-based mining, where your personal time and skills spent within a game generate value both for the platform and for yourself.
With the rise of the ‘Play to earn’ ecosystem in 2021 thanks to Axie Infinity and their governance token AXS, the term ‘GameFi’ appeared. This term is the combination of gaming and decentralized finance.