Blockchain technology in gaming: P2E Vs Pe Models
The use of blockchain technology in video games is gradually becoming more prevalent. Thus, now is the best time to familiarise yourself with this technology and learn how to include blockchain functionality in gaming. In the last instalment of this series, we presented an overview of blockchain technology and its significant benefits, including improving user retention and creating new income opportunities.
In the second instalment of this series, Gal Fisheloviz, Director of Business Strategy for Blockchain Gaming at ironSource, and Etai Koren, Director of Blockchain Games at ironSource, delve deeper into use cases for the technology in gaming by discussing the two most prominent frameworks currently in use. These consist of:
- Earn via gameplay (P2E)
- Win while having fun (P&E)
Continue reading to learn more about these options and the future trajectory of blockchain-based gaming. Let’s start by considering “play to win.”
In these blockchain-based games, players fight to earn virtual currency, precisely what they sound like. By completing objectives like quests and battles, players earn tokens that they can either add to their bitcoin wallets or spend in-game. These tokens may then be added to the player’s wallet or in-game.
This is one of the first iterations of a blockchain-based game, and although it remains popular today, it has undergone substantial evolution during its life. In the earliest days of pay-to-play contests, users were obliged to obtain an NFT from a limited selection. This necessitated that users already have a piece of specific knowledge and proficiency with cryptocurrency. Early pay-to-play games let customers begin playing for a nominal fee. Most of the time, however, these gamers purchased one or more NFTs from the limited supply to create a profit rather than because they loved playing the game itself. As more individuals began playing these games, the NFTs and tokens earned by participants rose in value since fewer were available.
— swankyfinance.eth (@swankyfinance) August 12, 2022
Consequently, the games’ rewards became more lucrative, and their participation fees rose. Accordingly, many normal players were priced out of the game, leading to the establishment of guilds. Guilds are groups of gamers or investors that pool their resources to acquire high-value NFTs, which they then lease to other users so they may engage in gaming activities and earn tokens. The users compensate the guilds with their passes, which fulfils the function of income sharing. Even though their influence on the game’s economy has expanded significantly, guilds continue to function independently of these ecosystems. This indicates that the riches amassed by guilds are seldom spent back in the game.
As more players engaged in these games, the advantages became more lucrative, but the expenses connected with participation also rose.
As the value of assets increased exponentially, play-to-earn video games appeared nearly immediately on the market. The purpose of these games was primarily to attract high-value investors and guilds, and they had little entertainment value. These users built an environment for token trading in which players would rent NFTs, earn tokens, and then sell back a portion of the tickets they had acquired in the hope of continuing to make a profit. This tendency resulted in a higher rate of user churn since players were mainly focused on generating a profit and, consequently, abandoned a game in pursuit of one with more considerable profit potential. In these instances, it was more advantageous to leave a game than to enter it; resources weren’t redistributed within the game because users earned their rewards and sold them to other players for a profit, frequently outside the game, as opposed to using their dividends to purchase in-game assets, such as upgrades.
Due to the imbalance between resources entering and leaving the game and the fact that players do not tend to remain around for a lengthy period, it is especially challenging to build a sustainable economy utilizing the play-to-earn paradigm. To sustain a healthy game ecosystem, a blockchain gaming model necessitates that new players constantly join the game and deposit their resources back into the game. This guarantees that the game’s assets retain their value and profitability, increasing their appeal to players.
Since there is a mismatch between the resources entering and leaving the game, it isn’t easy to build a viable economy using the play-to-earn approach. Play-and-earn games, often known as P&E games, were established as a reaction to the problems of user turnover and an unsustainable gaming ecosystem.
Win while having fun: (P&E Model)
The P&E model is an extension of the P2E framework to develop a sustainable, open-ended game economy. Similar to players of pay-to-play games, users of play-and-earn games have the option to win NFTs and tokens, which are then loaded directly into their cryptocurrency wallets. In contrast to its predecessor, however, most P&E games do not charge a fee for participation. Instead, users may receive rewards by displaying high levels of knowledge or obtaining assets like NFTs and tokens.
Playing and earning games is primarily aimed at generating value via gaming. The supply of a high entertainment value encourages players to continue playing. To do so, they will want incentives they can spend inside the game to enhance the overall quality of their experience.
Playing and earning video games aim to create value via gameplay, which encourages players to continue playing to acquire rewards that can be utilized inside the game.
For instance, players in a P&E game may earn tokens to spend on a non-fictional object (NFE) that unlocks certain powers for a character. While the NFT may still be used on a secondary market or sold outside of the game, it is more likely to be spent on bonuses or enhancements that make playing the game more enjoyable and rewarding. This is because NFTs may still be traded on secondary markets. In contrast to the P2E model, the game’s economy runs more smoothly and can be sustained for a more extended period when players spend their rewards inside the game instead of selling them for real money.
For pricing to remain reasonable, you must deliver incentives at a rate proportional to player expenditures. A well-functioning game economy relies on the circulation of assets. In addition, players must amass a sufficient number of rewards to maintain their interest and keep up with demand. The entering and exiting flows of support must be in equilibrium. This situation is more likely to unfold as anticipated if P&E is involved, as opposed to P2E.
The future will have both labour and pleasure.
Play-to-win video games are now going toward a future environment that will not be able to sustain them. The game’s pricing continues to deter many users, resulting in a rise in guilds and investors asserting their claims. There will probably continue to be a market for play-to-earn blockchain games as several developers strive to solve the problem of the game economy and make it more sustainable. P2E will likely remain a niche business if producers do not prioritize entertainment and instead focus on providing clients with a delightful gaming experience.
Play-and-earn games are anticipated to become the most popular kind of blockchain-based games since they satisfy the primary objective of games, which is entertaining and engaging. Many individuals believe that the fundamental purpose of fun, especially those on the blockchain, is to provide entertainment. They give entertainment value in addition to the ownership benefits of being on the blockchain, increasing the urge to spend assets inside the game. This leads to a self-sustaining ecosystem that enables players to earn their awards and encourages them to spend money inside the game to improve their overall experience.
Play-and-win games using blockchain technology are anticipated to become the dominating form of games, given that the fundamental objective of fun is to offer players an entertaining and engaging experience.
These well-oiled game economies comprising the P&E architecture can provide additional opportunities for game creation, monetization, and marketing when executed well. In the gaming industry, adopting blockchain technology now positions you to increase user engagement and your monetization strategy in the future, when this technology is anticipated to become more prevalent. This holds regardless of the model chosen.