Thoughts and Opinions #3/ Crypto Gaming is not fun (yet)
Thoughts and Opinions #3/ Crypto Gaming is not fun (yet)
One of the most persistent narratives in crypto in 2021 has been Play2Earn games, GameFi, and Crypto Gaming. This post will discuss several themes around these emerging sectors from an avid gamer’s perspective.
Content:
Background: Play2Earn, GameFi, Crypto Gaming
Why do people play games?
My take on Crypto Gaming fundamentals
Demand and Player Retention
Concluding Remarks
Background: Play2Earn, GameFi, Crypto Gaming
Play2Earn
Play2Earn is characterized by the ability of players to earn a cryptocurrency after engaging with the game. Axie Infinity, a strategic card game with cutesy graphics, was the market leader which kickstarted the Play2Earn bull run in 2021. Sensational news about players earning their way to financial freedom took over mainstream media and onboarded many new entrants, especially in the Philippines, into crypto.
The success of Axie Infinity led to many projects trying to emulate it by copying its Play2Earn model. Soon after Play2Earn, alternative terms like GameFi started appearing on the interwebs.
GameFi
GameFi is a portmanteau of Gamified and Finance. Gamification isn’t new - it is simply the adding of some light-hearted and fun elements to an activity to make it seem less dull. For instance, one of the most popular productivity apps on the Apple app store, Forest, allows users to grow virtual trees as a reward for staying off their phones during work.
Typically, gamification is done to further a goal. To build good habits, I can gamify the process. As a business owner, I can gamify spending if I want to encourage users to spend more.
GameFi is a special class of its own though. I will use pizza.game as an example. Users play by owning chef NFTs. These chefs can be put to work and staked to produce $PIZZA, and $PIZZA can be used to buy tools (Figure 3) to improve chefs’ $PIZZA production rate.
Chikn.farm is another example of gamefi, where they have a tri-token ecosystem (Figure 4) to generate supply and demand in a closed-loop system. Players own a Chikn NFT, which can lay eggs. These eggs can be used to farm $FEED, which is turn is used to fatten the Chikn NFT to produce more $EGG.
In a nutshell, the game’s NFT produces tokens, and these tokens are used to advance a level, enhance the NFTs, or stake for another token. Other projects also have similar models. The supposed goal of GameFi projects is to create an ecosystem where there is a balance between supply and demand for tokens and NFT holders. It is essentially themed yield farming.
Crypto Gaming
Crypto Gaming seems to be an all-encompassing term to include any form of a game using blockchain technology. GameFi and Play2Earn would fall under Crypto Gaming, though projects which refer to themselves as Crypto Gaming seem to have a stronger focus on actual gameplay
Why do people play games?
Adrenaline Rush
Games can provide an adrenaline rush that is easily accessible from the comfort of your home or mobile device. Games of the MOBA genre such DotA2, LOL are fast-paced, real-time and extremely competitive. Other genres such as First Person Shooter (FPS) where players try to gun down their opponent also induce a good measure of endorphins in the players.
This adrenaline rush is one of the many reasons why these games are addictive and manage to grow such a huge player base.
Social component
The social component is arguably the most important aspect for the retaining power of any game. Being a fun game is not enough - there are loads of fun games out there. Many viral games emphasize the social component and ensure that cooperation between players in a team is the fun of the game. Among Us went viral during the pandemic in 2020 as a seemingly simple multiplayer game that required teamwork to sniff out the saboteur that was preventing the game from completing its goals.
Games are a fun activity to bond with people of all ages, keep in contact with people who might not be able to be there physically, and also provide a medium of interactivity with strangers and friends alike.
Escape from reality
Ultimately, games serve as a cathartic outlet. Fleshed out MMOs such as Lost Ark, World of Warcraft immerse the player in a whole new other fantasy world where they are the central character. The lore, story, exploration of worlds and maps are important and crucial ingredients to a good game. A game’s capability to induce a sense of accomplishment by killing a difficult boss is an understated feat that is hard to replicate in our arduous reality.
My take on Crypto Gaming fundamentals
F2P culture
The Freemium gaming model is the defacto business model that many games utilize. The game is free to play, but progress is typically gated behind higher difficulty levels or bosses that would require spending for premium in-game items. This has resulted in the proliferation of ‘F2P’ players who are willing to trade time for a longer grind in game. Similarly, these ‘F2P’ players are often the most vocal players of any game, often clamoring for free handouts or complaining about game mechanics that they deem too hard.
Needless to say, these F2P players would likely be strongly against any forms of extra monetization in their games, be it in the form of NFTs, or blockchain gas fees.
Casual and social gamers
Everyday people who play games just to pass time or play with their friends probably don’t care about asset ownership or being able to resell their game items. They are in it for entertainment and just to pass idle time. Imagine baking in mandatory financial instruments and an extra layer of complexity that a casual player would have to manoeuvre around. It would be pretty off-putting.
What is the point of GameFi?
Is GameFi fun? Take away the NFT and yield farming elements, would there still be a standalone game? Unfortunately I don’t think so. You could argue that GameFi is a very niche category, just like how trading card games are pretty niche and only appeal to a relatively smaller audience. Fair enough. I could see the appeal if someone only had time and money to pay to click a few buttons a day. My two cents are that GameFi is just simply a very contrived clicker game.
How does GameFi value add to any ecosystem? Honestly, i am stumped. There seems to be no point to any GameFi ecosystem at all. The game isn’t that fun (to me), it isn’t innovative, graphics aren’t breathtaking, hell even the actual playtime is 10 min maximum of clicking buttons a day. It’s just there.. for the sake of being there. Take away this closed GameFi ecosystem and I am sure nobody would find it missing from their life.
Where will these GameFi projects be in 1 year? Some GameFi projects do have ambitious roadmaps. For instance, chikn wants to offer a service for other NFTs projects to become upgradeable NFTs. DefiKingdoms, wants to gamify automated marketing making with a lighthearted retro setting and some fun quests. These are enjoyable additions, no doubt. Yet, I feel that gamification should never be at the forefront of any business model. Innovate, iterate and impress with your core business model first, then throw in gamification to make using your platform fun for the users.
Demand and Player Retention
Before I draw a parallel with crypto games, let me talk about some stats from mainstream games.
Demand is the most important metric that all games, crypto or not, have to grapple with. Mainstream games also call this metric player retention. Take a look at the above 2 charts, one from Lost Ark and the other from Artifact Classic. Lost Ark is a game released pretty recently. The number of players has been declining steadily since its all-time high of 1.3million players. It seems to have managed to stabilize around 270k daily players. The second chart, however, is 95% down from its all-time high and it is basically somewhat dead.
Parallel to Crypto Games
Similarly, crypto games have to deal with this outflux of players from their community too. There is one important distinction though. Players in crypto gaming tend to see the money they put into crypto gaming as investments, instead of money written off for entertainment. This leads to a ‘profit first, pleasure second’ mentality. Like most games, the novelty wears thin quickly and players can and will jump ship to the next hottest new game in the market.
The token price is also typically correlated to the number of players. When players start to leave, the token price declines while the devs are left to salvage a decaying game with an inflating token supply.
Remember the Pizza GameFi game i mentioned at the start? Here’s the chart (Figure 8). The volume has dried up, corresponding to a lack of players. The chart seems to indicate only sell pressure from bagholders trying to salvage whatever they can. Avalant, another similar game, also suffers from this unfortunate combination of slow bleed and player drain (Figure 9).
This twitter thread below does a wonderful job of explaining the relationship between supply, demand and price.
Concluding Remarks
I recognize that there will always be games catering to niche audiences. I do feel that Crypto Gaming, in its current form and state, is in its infancy and many games will come and go before we settle on a sustainable model. More importantly, I have yet to discover a crypto game that makes me go ‘Woah, that’s cool!’ or ‘I really wanna play it!’. I do acknowledge that Play2Earn is a trend that can revolutionize the industry. But until we actually have a game that is fun, it is just all hopes and dreams and a game of waiting for the greater fool.
Make no mistake, for all my disparaging above, I am still involved in crypto gaming. After all, is there a better way to experience for yourself new trends other than immersing yourself in said trend? There seems to be interesting developments upcoming such as the Terra gaming subnet, and multiple Avalanche Subnets focusing on gaming (Crabada, Shrapnel).
In an ideal (crypto) world, I would hope to be able to game to my heart’s content, without worrying about financial incentives/disincentives, while still being able to have a chance to earn something nice. Having my cake and eating it too huh?