Live to play, or play to live? What draws the line between a hobby and a job?
Some argue that a hobby that you earn money from makes it a job, others argue that you could monetize your hobby and still have it remain a hobby. I believe that a hobby is something you do to have fun. Earning money from it does not necessarily make it a job, it could just be an added benefit. For me, the line between a hobby and a job is when you start doing that hobby for a living.
Games, generally, cannot be played for a living. While there are a few exceptions (like streamers, play-testers and pro players) 99% of people who start playing games for a living become burned out due to the repetitiveness of the actions they perform daily. Gaming, an activity which is supposed to be fun at its core, becomes a chore — and the living proof of this are crypto games. In this article, I’m going to try to explain why I think the essential, core design aspects of these kind of games made them fail, and what can be done to remedy the on-going situation in crypto gaming.
Please, take note that while I’m very well versed in the crypto ecosystem, this comes from a gamer-first perspective. If not gamers, who’s going to play these games?
The great wall of on-ramping:
I want to start by talking about the barrier of entry to crypto games.
On ramping is not only hard, but capital intensive to most. In crypto, aggressive hyper-monetization of everything works since incentives are paramount for the “correct” functioning of the swiss watch that are inter-connected blockchains. The barrier of entry to the crypto ecosystem is relatively low in terms of capital: you can interact with almost any dApp with just a few bucks. Of course, the cost goes up when you try to participate in other activities that have a community in itself — be it NFTs, DAOs, etc. Most of these activities require more capital the more “prestigious” they are. Not only that, but you need to factor in gas fees, badly optimized contracts and in many cases token swaps/locks. Of course, this is assuming that you have money on-chain already. The difficulty of on-ramping in many, many parts of the world where there isn’t good regulatory, banking or internet infrastructure goes up considerably— if you already live in one of those countries, the odds that a $5 gas fee represents a considerable part of your salary are very high. Oh, and of course, you have to be above 18 to even think about on-ramping.
But, that’s not the case with gaming. The gaming community is giant and you cannot speak of it as one organism — it’s very diverse, with people of all kinds of backgrounds disconnecting from the struggles of real life to enjoy a parallel, virtual world; a world in which they can feel experience art, play sports or simply enjoy it as a social experience. The barrier for gaming is becoming truly lower every day: someone who has a cheap smartphone can play beautiful, free to play games (which today are almost 1:1 ports of console games!) and enjoy a social experience at the same time — all while gaming on a $120 touchscreen (and in some cases even cheaper).
And, peep this: the great majority of them are never going to pay a penny for software. So, to crypto game devs and the respective VCs that fund them: who does your product cater to?
The perfect gamer (from a VC standpoint).
Let’s think about the average gamer for a second.
The average self-described gamer is a teenager who has a home console, has little to no money and lives off his parents income. That’s someone who rarely buys games at $60–$80 launch price and plays mostly F2P games. The average gamer also doesn’t possess technical knowledge and much less the patience to learn such technical knowledge. The average gamer is someone who wants to turn on their console, boot up their favorite game, link with their friends on voice chat and play. Monetization, to them, mostly comes in the form of buying in-game currency that allows them to buy a skin or a game item that makes them more powerful.
Now, let’s think about the gamer that crypto VCs are catering their product to. That person is someone who is, first of all, above 18. Second, that person needs to have money on-chain to participate, and not only a little money but lots of it (compared to the average population who has zero money on-chain). Third, that person has to have an interest in gaming. Fourth, they need to have the free time to actually play that game. To recap, they are catering to a crypto-savvy, technically knowledgeable, above legal age gamer with lots of money and free time. I speculate the demographic that represents that type of person is very small. Sure, you could extract the most value out of those 30 people who are going to play your web3 game, but after they leave, your product is dead forever; stained with a token chart that looks like the Burj Khalifa.
The unbalance in crypto games (from a gamer standpoint).
Now that I have explained what I believe are the challenges of actually getting someone to play a crypto game, let’s talk about the core design problems of crypto games. But first, let me tell you an anecdote.
Yesterday, I downloaded Fortnite. I played a lot of Fortnite when it came out in 2017, and played a lot more a couple of years after that. I spent around $160 in in-game cosmetics. The cosmetics that I bought didn’t give me any tactical advantage, nor did they make me more powerful. Why, if they didn’t make me better at the game or increase my chances of winning, would I spend that much money on a game that is free? Well, what those cosmetics gave me was something that could only be achieved — not through skill — but with money: status.
I bought mostly the costly ones. When I killed another player, that player could see my skin. I received a lot of angry messages from angry players. Of course, they weren’t (entirely) angry that someone with a costly cosmetic killed them, they were mad that someone with more skill outranked them. Yet, in a lot of those angry messages, my cosmetics were mentioned. It added salt to the injury, and that, for me and everyone who played Fortnite, made them worth the money. Since real life money didn’t play a factor in deciding the outcome of games, I played a lot of Fornite, and so did everyone else at that time.
In crypto games, this isn’t the case. Scarcity is added for the sake of making an item more valuable and nothing more, that devaluing the experience a gamer could have playing the game by limiting access to certain aspects of the game. Not only that, but scarce items aren’t rewarded to individual players with great skills and countless hours dedicated to the game: they’re permanently rewarded to anyone with a lot of money and luck, which is even a smaller demographic inside crypto. Of course, this presents an imbalance between the two main participants in crypto games: active players of the game and crypto traders. The trader, who does this for a living, extracts value from someone who plays the game with the sole purpose of having fun — and what happens when a player feels like they’re always on the losing end of a game? They quit. After all, if they’re playing for fun and they’re not having fun (or money, in crypto’s case), why would they play? When that happens, the only remaining participants are traders that play the game for a living — and when the conditions aren’t good anymore and all capital has been extracted from those who quit earlier, the traders quit too.
Having a rare item in online videogames is okay. In fact, I would say it’s natural to have them, since they’re a sign of progression and status and give the player a sense of accomplishment. The problem with rare items in crypto games resides in trying to limit essential functioning blocks of your game to players with disposable income: take metaverse land, for example. How is it possible that metaverse land, a virtual land represented by ones and zeroes on an immutable ledger is artificially constrained by scarcity? Somehow, people are okay with that (for now). I’m not saying land should be free, since after all, you’re trying to recreate a virtual economy — but having the cost be dictated by traders and institutions in the free market makes your game simply inaccessible to the average player. You need a monetary policy designed to include inflation if you want a balanced experience for all participants. Not the kind of inflation caused by VCs dumping their vested tokens, but game-designed inflation so that the prices are more or less in accordance to what the game developers intended. This doesn’t mean items and land should have a fixed price either (the real world economy has tried price controls and failed miserably), what I’m trying to say is that some kind of intervention is needed so prices don’t become too volatile.
And, of course, this is about those kind of items and commodities that are finite in the real world but could be infinite in the metaverse. Please, don’t misinterpret me: trying to simulate some aspects of the real world in a videogame can be fun, but, simulating constraints that affect the virtual experience in bad way is not fun. Items like wood, water and so on should be infinite, accessible by any player without having a penny “invested”. While our world is finite, a videogame world isn’t — things shouldn’t be scarce just to generate value to VCs.
The problem with in-game cryptocurrency:
Now, let’s talk about the problem that to my knowledge, plagues all crypto games: in-game currency.
I’m going to make up a hypothetical scenario here, a scenario that I think it’s very likely to happen if (for some miracle) a crypto game suddenly reached mainstream status overnight.
Let’s say you have a son. He’s 12, and you just bought him a brand new gaming PC. You also bought him DEFI GODS: BLACK BLOCKCHAIN CURSE OF THE HIGH SEVEN FEES and he’s very excited to play it. He’s been playing it for a few days with his friends, and so far so good, but he’s sad that his friends are making fun of him for having a default skin (keep in mind, these are children we’re talking about here, and children are cruel). Your son comes to you, crying, asking for $25 to buy a skin from someone on the marketplace so he isn’t ostracized anymore. You reluctantly agree. You swipe the credit card, are charged with bank fees, gas fees and LP fees (since you’re buying a decentralized token issued by the game developers). Anyhow, your kid now has the equivalent of $25 in $GOLD. A few hours pass, and he tries to buy the skin from the in-game NFT marketplace — to no avail. The price of the skin went up 2x in floor value, so he asks you for more money. You say no, but he’s your kid and you already said yes before, so you might as well go through with it. You buy more $GOLD, and he places an offer on the skin. Turns out, the price of $GOLD halved against USD and the seller is asking for the equivalent of a fixed $50 in $GOLD, so… Your kid asks you for more money.
Do you realize how insane this scenario sounds compared to the normal “swipe your card, have the coins, buy from the store” scenario? Even if the price of the skin doubled in floor value, you should not have to worry about the price of your currency tomorrow against other currencies. Short term volatility is a real problem. A volatile cryptocurrency is not ideal for any economy except for a purely speculative one: Ethereum works in NFT markets because you’re not only speculating with the NFT, you’re also speculating with $ETH. A currency should not be an investment, a currency should be treated as what it is — a currency.
Pricing models: what the gaming industry got right, what the crypto industry did not.
Continuing on the topic of barrier of entry, I believe something that the gaming industry got (kind of) right is pricing models.
Most AAA games are somewhere between $60 to (more recently) $80 on release. These prices have been an industry staple going all the way back to the 90s. Back then, AAA games weren’t as costly to develop as today — they were harder to develop, sure, but not as capital intensive. The tools we have today paired with the ease of access to assets and information make the environment in which videogame devs work much less strenuous than in the 90s. So why, if games are easier to develop than ever, are games costlier? The reason lies in the scope of the projects being done. Nowadays, videogames are bigger, more vibrant and the textures more faithful to the real world than ever before. So, if games are bigger and they take longer to develop, why does a AAA PS5 game on release cost the same as an SNES one? Do the companies that produce them not consider inflation the last 30 years? Well, they do, they just didn’t care about it until it wasn’t financially reasonable to keep releasing AAA titles at $60 (which happened more or less at the beginning of 2023). But, there still was a lot of time between the 90s and today. How did game developers kept profitable margins when the release price of their games relied on an anachronic, arbitrary price? The answer is simple: they started to monetize in-game items. Microtransactions, DLCs and loot boxes.
I want to show two examples of games released by the same publisher that both had the same release price and the same monetization strategy but ultimately one failed miserably and the other is still being sold as the number one game every year: I’m talking about FIFA and Star Wars: Battlefront.
FIFA is, by itself, a case study. A game that relies on loot boxes to get the better players (which can considerably alter the outcome of a match) and has the worst grinding of almost any game still sells millions of copies every year. EA, the publisher, wanted to recreate this model with one of the biggest IPs in history: Star Wars. Long story short, they released Star Wars: Battlefront with powerful guns, enhancements and characters locked behind a 700 hour grind or the comfortable in-game micro-transaction of $20 (on top of the already full game price of $60). This made players and fans of the series mad. Very mad. But how come, if it worked on FIFA, it didn’t work on any game released after SW: Battlefront? The answer is that FIFA already had a strong player base, the strongest in the world. There are people that buy the latest console only to play the latest FIFA every year when it comes out; they don’t play any other game, only FIFA. These people are the most casual type of gamers, and they don’t know any better: they fall prey to the predatory monetization scheme that emulates gambling. Problem is, that even if you spend $200 on FIFA microtransactions and you get a bunch of “bad” players, you can’t sell them on a secondary market to get your (real) money back neither transfer them to the new FIFA that is being released next year. So on, the gambler keeps gambling every year.
Star Wars was a different kind of game: it catered to a different kind of gamer, a kind that is more cemented on gaming as their main hobby and is willing to play more than one or two games a year. This kind of gamer hates unfair advantages, and they are very, very vocal about it. So much that when EA tried to explain themselves in Reddit as to why you have to pay more money to play Darth Vader in a game you already own, they were downvoted so much that they now hold the record for the most downvoted comment ever. The game sold terribly, with even worse reviews. So, developers took note of everything that was happening and acted accordingly.
Most games today are released with microtransactions inside the game, but these don’t affect the gameplay in a way that makes someone with a bigger wallet outrank you just because they had the biggest wallet. Most of these microtransactions are purely cosmetic. The games that release today and have “predatory” monetization schemes like the Avengers game, Gotham Knights, Overwatch 2, and so forth, fail. There is no issue in adding microtransactions to a full price game as long as they don’t affect balancing. Cosmetics are, at the end of the day, vanity — and vanity isn’t necessarily something essential to core gameplay mechanics. In fact, there are a lot of free to play games that rely solely on cosmetic additions for their subsistence. Fornite comes to mind, as it rose to fame and become a cultural phenomenon while relying only on cosmetics to keep its servers and developers afloat.
This is where crypto went wrong. Crypto developers, presumably influenced by VCs and their own greed, took the crypto ethos of hypermonetization and made everything cost money so they could fill up their pockets by ponzi-ing their game. Having items be locked by whitelist NFTs mints, secondary NFTs in the marketplace that rise to stratospheric levels and the premise that people could get rich by playing a videogame (but later seeing their “investment” crash to zero) is… Not ideal. You can’t entice people to play your game with the premise that they’re gonna get rich playing it — if you need more and more people everyday to sustain your token (and your game) and the people stop coming, the whole thing crashes. And sadly, that what’s known in tradfi as a “ponzi scheme”.
If a crypto game were to succeed, it needs to be realistic in the approach it takes to pricing and monetizing. Crypto was founded to give people more economic freedom. Applying that concept to videogames shouldn’t be hard to do, yet, everyone that tried it, failed. There’s stigma in crypto about centralization, and the most extreme forms of decentralizations are praised — but videogames don’t benefit from extreme decentralization. A balance needs to be struck between the control developers have over the players, even more in an economy like the one crypto games are trying to create; otherwise, letting the free market go full laissez faire would disrupt pricing in a way that would shun away most gamers. P2P trade should be encouraged, but the game should still provide enough so that someone who is starting from zero can reach the top without having to spend a single cent of their own money — either grinding countless hours or being a good trader. How they release the game, at 60–80 dollars or free to play, that’s for the developers to decide, but they should be mindful of predatory monetization mechanics if they want a chance to succeed.
How to make crypto games suck less — possible solutions:
We’ve talked about the barrier of entry, the small demographic these games are currently catering to, the unbalance that integrating gambling and speculation into the game brings, the artificial scarcity problem, the volatility that game tokens have and how wrong incentives and economic models that crypto games employ shun away normal players. Below are what I think could be useful solutions in the crypto videogames enigma. Please — keep in mind these are NOT definitive solutions, but rather what I believe can work if applied correctly.
Everyone should be able to play, not for riches, but for fun.
The solution to on-ramping is simple: make the game accessible to everyone. And by everyone, I mean it: from that whale with millions in crypto to that gamer in Thailand who has never heard about Ethereum. You need to make the wall non-existent by having players be at equal starting conditions whether they have money or not. Not only that, but you need to eliminate the technical hurdles that come with a self custody wallet.
A couple ways this could be achieved is through a social recovery wallet or a centralized wallet system. If a player wants to log-in with their own wallet, they should be able to — but the average non-technical user shouldn’t worry about that. It shouldn't be harder than logging in with your email or your Google account. Not only that, if the game is free to play, it should truly be playable from beginning to end without having invested one penny. Either the game subsidizes every action worthy of being recorded to the blockchain (a Validium L2 or something like the L3s StarkNet is developing come to mind), or, you run it on centralized servers and you give the users the option to mint the items on the blockchain once they want to trade them in secondary marketplaces outside the game’s own internal marketplace. Reducing the friction related to technical aspects of blockchain-related stuff is paramount to user experience.
A balancing patch to… everything
Balancing is not something done easily. Game developers have been struggling with balancing for decades, yet, it doesn’t mean it’s an impossible task: it can be achieved in a way that makes all players in the start of the game more or less equal, depending the individual skill of the player. A player with a hefty wallet shouldn’t be able to buy every high-powered tool, weapon or item from the beginning; requiring a minimum amount of experience or levels completed before being able to use or trade certain items should be the norm so that “free” players don’t feel discouraged to play.
Yet, you should try to restricting P2P trading to a minimum; every item in the game should be able to be minted or obtained by anyone regardless the amount of money they invested — be it zero or a thousand dollars. Don’t tip the scale in the favor of the top 1% just to extract the most amount of value possible from them, because you’ll alienate the free players, and with free players essentially come along the whales.
And yes, legitimate investments should be able to be made inside the game. Art, clothing items, land in prime spots with resources and certain items or tools. If a player (or a DAO?) wants to build giant structures, they would need to buy a lot of wood. Instead of chopping it down manually, they would sweep the floor of the available wood in the market, making wood more valuable. Players would see wood is scarce and valuable, so they begin chopping and selling wood, after all, it’s infinite — you could say an arbitrage of sorts is being made here.
Now, let me set an example of an item being a legitimate investment/speculating instrument: Imagine everyone knows an event with dragons is coming; the smart players would stockpile on wood knowing fire dragons could burn down forests. The event comes and the dragons start burning down forests. The price of wood skyrockets for however the developers thinks the event should last, and then when the event ends, wood comes back down to normal prices. Almost like the real world, just without the huge consequences that a fire-breathing dragon would have on our finite resources.
Money needs to act as a store of value, not as a speculation vehicle
If you buy bread today at $1, it will probably cost $1 tomorrow. Of course, change timeframes and this becomes false thanks to inflation, but currency devaluation shouldn’t necessarily come without any benefits. Players need to be assured at all times that their currency is worth something and that it’s not gonna rug down to zero tomorrow. A game cannot have currency that is worth the same as a real world counterpart: making a wrapped stablecoin token and giving it another name is not only lazy and uncreative, but makes controlling the economy and handing incentives (fancy word for airdrops) more difficult for developers.
So, what I propose is not a hard stablecoin nor a volatile token. The Olympus Protocol (remember OHM?) actually ditched the ∞% APY in favor of something called range-bound stability: OHM remains liquid, decentralized and trades within a range. Something like this could be done but with devs having control over emissions so that developers not only benefit from it, but they have easier control handing incentives and controlling supply. Who doesn’t love good old quantitative easing?
So, where does the revenue comes from?
You’re creating a virtual economy in which you can tax as much as your heart desires and emit as much currency before there’s a revolution. I propose a selling and buying tax on certain items in both NPC and P2P trades — depending on the item and the rarity of it. This tax would be one source of revenue. Another source would be the goods you create out of thin air. That ever-expanding land plots with randomized resources? Let the players buy the land from you for a (really small) price — the money doesn’t come from the worth of the individual plot, but the volume and the tax you’re charging.
Another way of creating revenue streams is cosmetics. You could release paint for your items, player skins, clothes, whatever. The item is first sold to players from your store — then, people re-sell it and you get the tax. Not only that, but there will be players that will want to on-ramp fiat to this new virtual economy. Let there be no friction in the case any player wants to do so — people are willing to pay below market price to mint your currency if it saves them the hassle of creating a self-custodial wallet then transferring.
Ads inside the game could be another way of generating revenue. As long as they aren’t displayed in an intrusive way, they could serve for a good source of revenue further down game development.
Addendum: marketing
A small gripe of mine when it comes to crypto games is how unoriginal and repetitive most of them are. Nobody outside the cryptosphere wants to play ELDER CRYPTO GODS: THE TOMB OF SATOSHI or THE BLOCKCHAIN GAMES: LEGENDS OF VITALIK. Please, put a little effort on how you present your game to the general audiences!
Final thoughts
I believe this industry can offer the much needed metaverse-like experience a gamer desires, while still making it an attractive product to traders, casual players and investors. I do not want to see crypto games fail and I don’t enjoy seeing them fail, that’s why I wrote a stupidly long article x-raying the problems they have (from my perspective). Of course, my opinion isn’t final, is subject to change and most importantly is NOT the definite solution.
I really hope someone with influence or the capacity to actually build the product I described over the course of this article reads it. It would make me extremely happy to get feedback from not only that kind of person, but from anyone. So please, contact me at one of my socials if you want to further discuss this matter. Below:
