Since the days of coin-operated arcade devices, the gaming industry has come a long way. A new frontier is emerging with the advent of blockchain technology: Blockchain games, which have the potential to revolutionize game monetization and design.
In this article by Gaming Arcade, we will examine the history of game monetization, the challenges and opportunities blockchain games present to conventional monetization models, and the world of non-fungible tokens (NFTs) as a disruptive force in gaming.
Understanding Blockchain Games
Blockchain games provide game developers with a new form of technological infrastructure based on blockchain technology. Web3 gaming is still in its infancy, and early adopters are still determining which game design and monetization models will work and which will not. However, the potential for this technology to transform the gaming industry is enormous.
However, the fundamental advantages of this technology are evident:
Player empowerment through governance on the blockchain.
Increased participation via digital asset ownership.
Digital reputation through universal blockchain wallet authentication.
Preserving value by interconnecting with larger digital economies.
This article will concentrate on digital assets such as non-fungible tokens (NFTs) and how they are reshaping game monetization models.
A Brief Overview of Game Monetization and Play to Earn Games
It is essential to recognize that game design and monetization have always been inextricably intertwined.
Arcade Games
During the 1980s "golden age" of arcade games, games utilized a pay-per-play model in which players inserted a quarter into the slot to play precisely one round until they lost. The gameplay of classic arcade games such as Pac-Man and Donkey Kong was designed with this game monetization structure in mind. If players had the ability to continue progressing through an infinite number of progressively more difficult levels, a single playthrough could last for hours.
Era of Gaming Consoles
When the first gaming consoles became popular, games became "pay once, play forever." Players were required to purchase both a console and the video game in order to participate. Instead of small, continuous payments like in coin-operated arcades, games such as Legend of Zelda, Pokemon, and Super Mario offered tens of hours of content with story-driven gameplay.
The World Wide Web of Games
The rise of the Internet connected participants worldwide through their existing PCs. MMORPGs such as World of Warcraft, Maplestory, and Runescape flourished, attracting tens of thousands to millions of participants in shared digital spaces. Subscription models and status-driven cosmetics/items have emerged as significant revenue generators as a result of this shift in monetization. The majority of free-to-play games offer free access, but require microtransactions for quicker progression or social status signaling. Thus, the most successful monetization models are optimized for socially-driven, repeatable gameplay cycles that encourage microtransactions or recurring subscription purchases.
Today, a novel form of gaming infrastructure is gaining prominence, heralding the beginning of the next era of game innovation and offering novel structures for game monetization and game design: blockchain games.
How Developers Make Money from a Blockchain Game
Game monetization refers to the numerous means by which a game's developer or publisher generates revenue. Blizzard, for instance, monetizes the MMORPG World of Warcraft by charging a monthly subscription charge, selling in-game assets such as mounts, and providing paid in-game services such as swapping races and changing usernames, among others. In contrast, Riot Games primarily monetizes League of Legends through the sale of in-game cosmetics. With their game integration services, developers make money and earn fortunes too
The majority of current blockchain games resemble traditional games in terms of design. From the player's perspective, Gods Unchained (one of the first Web3 games) and Hearthstone are both trading card games (TCGs) with similar gameplay. Future Web3 extraction shooter Deaddrop is significantly influenced by Escape from Tarkov, with gameplay that is remarkably similar.
Theoretically, blockchain games and traditional online games with comparable gameplay elements should have comparable monetization models, and this is true for a large number of game genres. For instance, time-tested techniques for monetizing mobile games, such as threat generation, are likely to continue to work for mobile blockchain games. Given sufficient demand, subscription models would presumably work for blockchain-enabled MMORPGs.
However, there are instances in which NFT technology conflicts with conventional monetization models and techniques: Specifically, microtransaction-based models like lootboxes and embellishments.
Tokens, In-Game Purchases, and Microtransactions
Microtransactions, or the small-payment purchase of virtual products, have become a pillar of the free-to-play gaming ecosystem. In varying degrees, microtransactions are optimized to appeal to both small- and large-volume consumers, whether in the form of loot boxes, battle passes, or direct cash-to-virtual-good transactions.
Typically, microtransactions are created to separate purchase and reward in order to gamify transactions and encourage additional spending. For instance, currency distancing, or the use of statically priced in-game currencies as a bridge between purchase and reward, frequently forces players to deal with undesirable "surplus" currency, thereby encouraging additional purchases. Similarly, by inducing a sense of deferred cost, loot boxes encourage players to continue purchasing loot boxes until they are satisfied with their result (when they receive a specific skin or item).
What happens, however, when the recompense — the in-game items, cosmetics, or other assets that players seek when engaging in microtransactions — are tokenized as NFTs?
Blockchain games reduce market frictions by eliminating game developers' and publishers' market control over in-game assets. It also enables the direct distribution and sale of in-game assets to users' wallets, reducing reliance on dominant platforms and marketplaces such as Steam and Apple, which frequently take a 30% cut due to their control over user acquisition and game publishing.
However, by relinquishing control over the supply of in-game assets, game developers and publishers can expose themselves to an entirely new universe of NFT monetization opportunities. In particular, perpetual royalty payments.
Royalties for Monetizing In-Game NFT Purchases
At its foundation, NFT monetization is straightforward: either sell or give away NFTs. After selling or distributing NFTs to players, it is possible to enforce royalties at the marketplace level, allowing game developers to continue earning revenue whenever an NFT is traded.
This straightforward modification profoundly modifies the incentive structure between game publishers and players. In a traditional microtransaction-driven game, players are constantly pressured to make repeat purchases, and this is frequently accomplished by adding unwelcome friction to the gaming experience. In a non-free-to-play game that generates the majority of its revenue from primary sales and secondary sale royalties, there is no incentive to impose restrictions on the user.
Instead, fun online games will optimize for transaction activity and the number of times an NFT changes hands. With higher-priced NFTs, royalties are also increased, which benefits both the developer and the player.
NFT Implementations Within Games Game developers have a variety of options for implementing NFTs, ranging from tokenizing all in-game assets as NFTs to implementing only a select number of scarce and/or significant cosmetics or assets as NFTs.
Common and easily-obtained items, such as fundamental weapons, clothing, and cosmetics, cost more to create as NFTs than through centralized databases, but this cost could be covered by royalties even if they're not frequently demanded. Rare item NFTs may be inherently more expensive because they are difficult to obtain and frequently demand a great deal of resources, resulting in high transaction royalties. However, if an item is too expensive and difficult to acquire, this may reduce its potential for exchange. A Rolls Royce, for instance, is less likely to be purchased, sold, and transferred than a Honda Civic.
It is important to evaluate the cost of creating a ubiquitous NFT-powered game against the increased technical burden of implementing a hybrid solution that integrates NFTs and non-NFTs for trading, crafting, and other activities.
Conclusion
Blockchain technology and non-fungible tokens offer an abundance of opportunities for game monetization.
NFTs have the potential to realign player and developer incentives and provide players with greater control and ownership over the games they play, while allowing developers to experiment with new monetization levers that could extend the design space for the games they create. As the blockchain gaming landscape continues to evolve, we can anticipate the emergence of innovative monetization strategies and game designs that take advantage of the technology's distinctive advantages.
FAQs
How do you monetize a play to earn game?
Game Monetization Models
In-App Purchases (Freemium Model) The freemium model is one of the most common ways for game developers to generate revenue.
One-Time Purchase Model.
Subscription Model.
Model supported by advertisements.
Blended Model.
How do you monetize blockchain games?
At its foundation, NFT monetization is straightforward: either sell or give away NFTs. After selling or distributing NFTs to players, it is possible to enforce royalties at the marketplace level, allowing game developers to continue earning revenue whenever an NFT is traded.
How do players make money from play to earn crypto games?
Players can earn money through P2E games by acquiring cryptocurrencies through gameplay. Frequently, P2E games include their own cryptocurrency or token that can be obtained through in-game activities. The tokens can then be sold on cryptocurrency exchanges for real-world currency.
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