Mapping In-game Creator Economics
What are the rule of the game that exploit in-game creators? And how does The Sandbox revolutionize this order?
Nearly 41% of the world’s population, or 3.09 billion people, play computer games, generating over $184 billion in yearly income for the gaming industry. Over half of this revenue came from virtual game currencies. One of the largest platforms in gaming, Roblox (played by 3 of 4 American children) made $1.9 billion in 2021 and $2.2 billion in 2022, most of it from selling the Robux currency.
“The difference between the Linden Dollar, World of Warcraft Gold, Fortnite V-Bucks, the Euro, and the U.S. Dollar is in scale, not in nature.”
What draws so many players to Roblox, is its ever expanding variety of sub-games. Roblox and other leading open-world games rely on millions of independent creators, to independently build and expand the game. But these builders get ‘taxed’ heavily on the income their creations generate.
Game studios usually take a 50% to 70% cut of earnings associated with in-game creators. And that’s only if they’re lucky enough to jump through the bureaucratic hoops put up before you can cash out your in-game earnings.
Using open-blockchain tokens for game currency can help cut out this heavy tax and bureaucracy. In the following post we’ll expose the current dynamics between in-game creators and the companies and look at the possible revolution offered by The Sandbox — a gaming universe still in beta, which uses a blockchain to pay creators and register virtual property.
Game Currencies and Creator Economics
Since 2011, the majority of global game revenues has come from the sale of in-game currencies. Fee-to-play games, which generate income by offering various in-game purchases, are known to reach the widest possible markets and they often feature an in-game currency.
Roblox, Minecraft, and Rec Room are popular games that offer the players tools to expand the game’s universe, creating an ever-growing world with seemingly endless sub-games. This growing variety is the key to these games’ success. The gamers pay with their tokens for better playing experiences or to enter sub-games. They also trade and purchase objects, mostly designed by other users.
Roblox and Rec Room are free-to-play, while Minecraft costs a one-time fee of $25. They all offer monthly paid subscriptions that enhance the gaming experience and include a monthly currency supply. Players can also earn the game’s currency by creating and selling avatars, clothing, objects, or maps.
Roblox creators can charge for their games or receive payments from Roblox if they make a popular game. Rec Room players can also earn currency by selling interactive objects in games they create or by designing and selling skins and virtual T-shirts.
Centralized hurdles: Heavy tax and a tricky bureaucracy
Heavy tax
Microsoft takes between 30% to 50% Minecraft creator income, while Roblox takes a staggering 75% but adds bonuses to popular games. Rec Room takes only a 30% cut, while Sandbox (beta) takes only a 5% cut from skin and object sales. The cut from Sandbox’s future game tickets is unknown.
Bureaucracy
Most in-game creators only earn a couple of bucks a month and game studios make it not worth it from them to cash out, so the money goes back to the game studio. This adds up into millions and millions of unclaimed dollars.
Hurdles for cashing out include forcing creators to buy a monthly subscription to the game which is $8 a month for RecRoom, $20 a month for Roblox Outrageous Builder Club. The studios set a minimum to cash out -$105 for Roblox, $100 for Rec Room. Mincraft’s case — you have to apply as a registered business! Payouts often take more than a month, and are conditional on owning a recognised ID card and a bank account. Open-source crypto games have the potential to disrupt these dynamics.
From a bureaucratic super-state to radical capitalism
No bureaucracy
The crypto game Sandbox had no barriers to cashing out gaming income. Any earnings from the game can be cashed out at any time of any day, at any amount, with no ID, and sent by a open-source transaction on the blockchain and cashed out in minutes to an hour.
Lower tax
Most gaming currencies have a fixed exchange rate against the US dollar. Crypto games can afford to charge less tax due to their currency’s fluctuating exchange rate, which may provide additional revenue if their currency succeeds.
So what’s The Sandbox?
The Sandbox is an open-world game where, like in Roblox and Rec Room, players create avatars and choose from a variety of games that keeps growing thanks to other players. It uses $SAND tokens and the sale of virtual land plots to fund the game. All the digital objects in the game are registered and traded using the Ethereum blockchain.
The Sandbox land map
Sandbox reports that in Q1 2023 it has over 23,500 land owners, 150,000 customized avatars, 6,400 monthly creators using the Game Maker and over 34,000 assets created in VoxEdit. Over 4,000 items (NFTs) were traded in Q1 2023. Each of these sales is taxed only 5% by the game.
SAND tokens were distributed through a token sale. Creators can earn them by selling objects, skins, or games, which can be converted quickly to fiat currency or used for purchase within the game.
Warner Music Group, Gucci, Playboy, Adidas, Binance and HSBC are some of the hundreds of companies who have purchased land plots on The SandBox’s map. There’s so many companies, because anyone can put their logo on this map with a few clicks of a button, with no strings attached or need for approval from The Sandbox HQ. Pretty cool, right?
The Sandbox has no barrier for cashing out game income, and low taxes (currently only 5%) on creators’ earnings.
Additional technological advantages of open-source game tokens like SAND
- Unlimited charges are impossible. Cryptocurrency can only be spent in a ‘push’ function, like cash, so you never spend more than you deposit. In contrast, today, many parents give their children their credit card credentials for games, without any ability to limit their spending.
- Transparency and auditability. Open-blockchain allows everyone a view into the game’s economy. Revenue from games, skins and objects are 100% visible and can not be hidden.
Crypto-economics
In this case instead of an all-powerful for-profit company and a currency controlled by a centralized bureaucracy, with an open-blockchain token you have a game studio which hopes to profit from the economy it creates via demand for the game currency and sale of game tickets and beside it a non-profit foundation poised to transform into a DAO, focused on community development.
The Sandbox’s setup allows more freedom and transparency, but the company does have the power to influence the game’s exchange rate by selling from its reserves. But with a vested interest in the game’s success it is highly motivated to influence the SAND market as little as possible.
The game discourages speculation on SAND price by automatically adjusting NFT prices according to current SAND exchange rates to fiat currencies. This makes SAND more like floating currency and less like it’s own tiny nation state.
