Play2Earn is Dead

The Web3 gaming industry needs to face some hard truths. There have been nearly a thousand projects that have grown, some very quickly. Nearly all of them have crashed hard. It is not difficult to see the reason for this, but it is ugly.

Play-2-Earn’s concept is brilliant. Earn money by playing video games The model is complex enough that money does not just appear out of thin air. Value must be generated from somewhere. The value of P2E gaming, with very few exceptions (shout out Splinterlands and Gods unchained), is rooted within asset speculation. “Oh, Ihave nothing to do with this $2000 piece virtual land. It’s my bet that someone will pay $10,000 to get it.

There have been winners in every ecosystem. Web3 games are often very low-stakes — there must both winners and losers. The developers who sold the project are often the only winners in the worst cases. Users are all losers because they have lost precious capital and assets that were worthless. My own project, Draco Dice started in this manner (though the article has a happy end). The exit strategy was supposed to allow consumers to accumulate thousands of digital dice, so that they could sell them off when the interest in the assets increased. Although I tried to dispel the illusion that my NFTs were there to provide profit for everyone, it was still strong.

The best-case scenario is that the Web3 ecosystem’s “winners” are those who didn’t know better. They knew that the money would run out and that user growth would slow to a halt. Everyone still carrying a bag would have nothing. Smart people made their exits early. This is also a point where I was humbled. I believed that assets worth tens to thousands of dollars would rise by miracles of user engagement, but I was wrong.

After having completely destroyed my financial ethos, you can now see why I believe in the future winners.

No matter how sexist the term may sound, I am unabashedly a gamer. This is a basic lesson that you need to know if you want to be successful with Web3 gaming.

How we got here

The first time that gamers owned physical media was in the early days. Compact Discs, and game cartridges were first owned by gamers. The digital distribution of games was taken over by Steam, other huge platforms. The majority of games could no longer be physically produced and could only digitally distributed. You can cancel this license at any time for almost any reason. With Games As a Service (GaaS), consumers now have less rights. If developers decide to close down the servers, all of your work can be lost.

This means that gamers are only responsible for their hardware, even though EULAs and ToS provided by console and OS manufacturers make it difficult to prove otherwise.

Deep, deep down in the gaming hole, I don’t know how to get out. My skin is pale and my eyes are accustomed to the bright blue screens. It’s clear that the enhanced agencyfor gamers provided by Non-Fungible tokens would have a tremendous impact. It’s possible to own the games. We could ownassets we have earned or bought in a game, and take them out of the game for further utility. They could be sold with developers’ support instead of using black market sites to arrange illicit transactions (which I am not ashamed to admit I have used — we don’t have the option). If we feel that the game is no longer needed, we can resell them.

If you are the type of person I wanted to write this article, and you love games, this vision of the future should inspire and excite you.

It is a shockingly, horribly off comparison to the reality of Play-2-Earn’s work for us.

Fun Reality Check

The P2E industry should have realized the first lesson: “The game should be enjoyable first, and revenue second.” This lesson is still not widely understood. Except for the above exceptions, button-clicking token manipulation tools have dominated Web3 gaming. Even then, “fun” is still an afterthought in most Web3 games. This stuff isn’t for everyone because they have fun with it. Everyone wants sweet tokens. It’s all rocket emojis, and calls to HODL just like any other crypto.

It is impossible to make a living from video games at the moment. It is a fraud and a lie. Beware of survivorship bias – someone will make a lot of money. This realization was transformative for me. There is no way to sell Play-2Earn to actual gamers.

Believe me, gamers can smell the bullshit. Due to the negative reputation that Web3 has received for its endless scams, pump-and-dumps and other shady practices, P2E is a stench to them. It’s a right.

We see the tangible benefits gamers get by participating in a Web3 environment. But, ultimately, Web3 gaming is not about Web3. We can offer agency and revenue, but there is no Play-2-Earn. It’s not necessary to stop selling games , so that we can make money. STOP IT! This is the only way to disrupt gaming.

This is the place to be. You can create great games that are uncompromised by Web3 and provide Web3 utility to go with it.

I had promised a happy end earlier. This is the goal that myself and my team have worked towards. We sell NFTs but they don’t get the spotlight. They are not the stars. Only a game that players enjoy is sustainable. Because it is not important, I took a low view on the short-term results of a Draco Dice launch that was otherwise very successful. What is important are the benefits NFTs can bring to players who are actively playing to play.

How to Save Web3 Gaming

Draco Dice was launched to establish a standard for gaming assets that can be used in multiple games. We’ve been simultaneously developing Draco Dice Skirmish as well as Draco Dicesweeper. This is all happening in a matter of months. Both can be used with the same Draco Dice NTs — providing real utility that has never been seen in the vast world of videogames. What’s next after that?

Web3 must reach gamers directly. Gamers don’t care about tokens, wallets, exchanges or any other financial nerdy stuff we struggle with to make profits. Gamers care about the game. I’m not suggesting we hide the fact that Web3 technology is being used — but I do suggest that we use language gamers understand. Gamers understand XP levels, battle passes, currencies, and even markets — but it’s on us to streamline the experience of interacting with Web3 to break down what would otherwise be considered barriers to entry — such as requiring the manual creation of a wallet on this — or that chain beyond the username/password/2FA structure to which gamers are accustomed.

Finally, speculation should be curtailed or eliminated as soon as possible. Retail investors can dilute the authenticity of a product that was ostensibly meant to be enjoyed as entertainment. It is different to have a community that wants to make a profit and a community that wants to experience your product. The other is here to have fun. One is here to play. The other is there to make money. This means that retail investors must be held accountable for inflating the value of gaming NFTs.

This can be achieved by rewarding gameplay and not offering high-ticket assets. While retail investors may have easy access to high-value assets at a thousand different places, the only way to break into gaming is for players to achieve skill, progress, and participation.

All of this being said, one might be inclined to wonder if there are any exceptions to Play-2-Earn’s demise. The answer is that these exceptions are already moving in the right direction. Splinterlands, Gods Unchained and Gods Unchained were built around great gameplay for the purpose to have a good time. Are they required to sell new assets in order to survive? Yes! This is no different from any other game studio that releases new DLC, battle passes or other microtransactions. After all, the revenue has to flow.

Web3 is still not aware of Play-2-Earn’s death. It is still making money today and tomorrow. The gradual decay of P2E is a slow process. However, just as wise men recommend that we see the bear market as a build market, I must remind you that the meat is currently rotting. It is not a sign that there are no flies.

Web3 can create better products and services. That’s why the future champions are now making their claims.