NFT first or NFT compatible? The key to P2E mass adoption

Games today are catching wide spread attention, paving the path to Metaverse revolution

The term “Meta” which means “going beyond” is not new in origin. It has existed since medieval times (1st century BC) in words like Metaphysics or Metaphysical which originated from works of one of the greatest thinker world has ever known — Aristotle. Metaphysics was primarily used to describe experiences or phenomenon which do not adhere to the everyday world we are so used to, and is outside our day-to-day perception.

In 2021, the term “Metaverse” is now grounded more within a technology stack (with Sci-Fi links) rather than philosophical or religious connotations. However, it aspires to the same goals of opening up experiences which promises to change our lives, our everyday reality. It has the lure of abstraction…glimpses of novelty…promise of untold riches but to the worldly wise and as with everything utopian, it also inspires…a shadow of doubt…fear of ambiguity & treading with caution. All in all..

Whether you like it or not, Metaverse is coming. It’s getting built as we speak — one brick at a time.

Before diving further, for those who are unfamiliar or a bit unsure about terms like NFTs, P2E (Play to Earn) and Crypto, it’s good for the readers to look up their basic premises. In their essence, both NFTs and Crypto are digital assets powered by a digital ledger in the blockchain which stores the proof of ownership. NFTs lend uniqueness to digital files like pictures, audio, video etc which can then be traded in a digital marketplace.

P2E refers to Play to Earn where players can potentially earn money via investing in NFT’s game assets (like characters or other digital assets) that earn crypto tokens as they play the game. Earned tokens and NFT assets can be traded for real money (subject to profit or loss). This is in contrast to the now dominant F2P (Free to Play) model wherein players play the game for free and make purchases inside them if they so desire but players don’t usually earn back anything of real money value in these games (exceptions are skill games).

Games & Metaverse

While it’s still early days to establish how wide spread Metaverse will be and what aspects of our lives it will touch, we are seeing rapid strides being made on at least 2 fronts — social networks with Facebook (now rebranding to Meta) and games industry with games like Sky Mavis’s — Axie Infinity, Mythical’s — Blanko Block Party, WolfFun’s — Thetan Arena, Immutables — God’s Unchained and many more that are dropping like pennies appearing in the headlines every other day.

For the purpose of this analysis, we will refer to two NFT Tokens/Crypto powered games: Axie Infinity and Thetan Arena.

At their very core, these 2 blockchain games are not very different from traditional games with a similar solid core gameplay loop.

Axie Infinity: which we will call an “NFT first” game, as you need to buy NFTs first before you can start playing the game has core gameplay similar to CCG (card collection & battler games) wherein you have Pokemon like creatures called Axies that you can buy, collect, breed and upgrade by taking part in Arena or PvP battles. Gameplay is similar to Summoners War with card battle mechanics.

Thetan Arena: which we will call an “NFT compatible” game, as you don’t necessarily need to buy any NFTs before you can start playing the game is a MOBA with a similar core loop as Brawl Stars and directly inspired from its developer WolfFun’s existing F2P game Hero’s Strike.

There are however 3 distinctions from the traditional Free to Play (F2P) model outside the core loop:

1. Players can generate real money income ($) from playing as they can buy and sell their digital assets (Axie’s or Heroes) which are NFTs with a legit dollar value in the Ethereum blockchain. The hard currencies generated in these games like SLP (Axie Infinity) and THC (Thetan Arena) are actually crypto tokens.
2. Assets in the game can be sold and can be held by the player via an online crypto wallet.
3. Though not directly anticipated by developers, a third earning route emerged as an outcome in the form of Manager — Scholar or Owner — Renter relationship between Crypto game players, where players who can invest (purchase) in NFT characters rent them out on a rent-sharing basis to players who can’t afford to buy them. One party invests money, the other their time and skill.

The above 3 distinctions have a profound impact on not just the nature of gaming but also on emergence of new models of player behaviour and motivation

While a great amount of very knowledgeable literature exists on the product/gameplay side analysis of these games (Axie, Thetan), in this post we are going to focus on the often missed or less talked about UX aspect of Crypto games.

F2P and P2E Players needs as per Maslow’s hierarchy

If we want to look at a high-level broad-based spectrum of inherent “needs” that drive players to play F2P and P2E games, one generic way is using the time tested Maslow’s Hierarchy of needs model. (Note: I recommend uncovering more granular game/genre specific needs and precise motivations via an array of UR methods, but that’s outside the scope for this analysis)

Abraham Maslow’s famous ‘Hierarchy of Needs” model has been a beacon of intrinsic human motivation progression for decades I have written about it earlier here)

1. Physiological needs — air, food, drink, shelter, warmth, sex, sleep
2. Safety needs — protection from elements, security, order, law, stability, freedom from fear
3. Love and belongingness needs — friendship, intimacy, trust and acceptance, receiving and giving affection and love, affiliating, being part of a group (family, friends, work)
4. Esteem needs — achievement, mastery, independence, status, dominance, prestige, self-respect, respect from others
5. Self actualisation needs — realising personal potential, fulfilment, seeking personal growth and peak experiences

As per Maslow, an “average” person aspires and works to move up the pyramid of needs, fulfilling each stage of the pyramid from bottom up

If we attempt to map where F2P (Free to Play) and P2E (Play to Earn) games correspond to this pyramid, the following picture can emerge:

As we can see, F2P, games traditionally hit player needs on tier 3, 4 and 5 of the pyramid. For example being social, part of a group/clans, achieving mastery, dominance, gaining prestige among peer players, having peak emotional experiences, adrenaline rush, deep fulfillment etc.

Games and F2P games in general fall under leisure and even luxury affordance, for the fact that players need to have taken care of their physiological and safety needs first (basal, food, water, shelter, safety) through some other occupation or dependence (in case of kids, students, spouses) before they can even think of sinking their time and resources in games (discounting hardcore players).

A divergence in P2E games, positioning themselves way down the Pyramid “additionally” offer the potential to take care of Tier 1 and Tier 2 needs as we can see in players behaviours from South East Asian economies.

Starting right in the midst of the COVID pandemic in 2020, media was rift with articles and interviews talking about how blue collar workers were beating COVID related unemployment by making a living out of playing Axie Infinity, which soon mushroomed into full time employments and various Manager-Scholar job profiles, where those who could invest in multiple Axie teams did so and rented it out to those who would play the game, like a regular job, and share earned SLP tokens with managers.

Despite token volatility, low income/exchange rate countries in South East Asia offered reasonably decent earnings and profits via grinding in the game although as seen in the case of Axie and also Thetan Arena, the value of tokens show a declining trend over time that affect the time sink vs earning ratio.

Let’s now dive deep into the UX aspect of these games.

P2E UX: If not the biggest, is one of the major hurdles to mass adoption

As we have seen traditionally with any new emerging technology/platform, UX is one aspect that relatively slowly ramps up from being “non-existent” to “user driven” over time, many early predecessors shipped as MVP experiments lack the finesse and intuitiveness that players and customers are used to from more matured and established products.

The stages above apply both to developers as well as the product they are building

In the UX stages of maturity above, we can peg the current NFT games UX between stages 2 & 3.

The challenges with emerging technology is there are no”precedents” (or previous examples) that the developers can compare against or emulate. They launch in the blind, learning on the go, fixing the experience tooth and file.

Of course it does not always need to be that way. If the UX strategy is thought of beforehand rather than integrated as an afterthought - but that’s an article for another day.

3 massive UX Barriers to entry & mass adoption for current NFT Games

P2E/NFT game platforms face UX challenges on 2 additional fronts when compared to “usability & intuitiveness” based challenges on more mature & established game platforms (mobile, console and PC). These include:

1. Technological learning curve
2. Ambiguity & volatility
3. Usability & intuitiveness

UX Barrier #1

Technological pain points: Steep learning & setup curve

A market research firm puts the age of NFT gamers/collectors roughly between 20 to 40 year olds:

There is a good reason for that. The level of tech knowledge needed to start playing, investing in crypto driven NFT games is much higher compared to your run of the mill, plug and play PC and mobile games that you can download and play in a matter of seconds.

Here is my experience signing up for Axie, when I started back in September 2021

A new player needs to self educate themselves regarding facets of block chain, NFT’s, smart contracts, crypto currencies, crypto wallets and go through an array of (probably) never before heard of third party services and platforms, before they can even get to start playing this game.

When starting from scratch, it was a 6 step process:

The average time taken can be 45 minutes to 1 hour to set up:

Step1: Buy some Ethereum from a cryptocurrency exchange. In order to do that you have to pay in dollars (I had an additional step of converting euros into dollars)

Step 2 KYC: Purchase “Ethereum” using a third party app which then triggers a Know Your Customer procedure, complete with updating your photo, taken via webcam to uploading your valid ID card and address details. It was and can be scary and stressful for most people to upload ID details to an unknown third party vendor just to play a game.

Step 3: Create a Meta mask wallet (a digital wallet that will securely hold your crypto and tokens, think of it as an online bank account) and deposit your Ethereum into it. An array of passwords, confirmation emails and security protocols follow this task.

Step 4: Create a Ronin wallet. By adding a chrome extension to your browser, where Ethereum can be converted into Wetherium (the currency that you can finally use to buy an Axie team on the Axie marketplace).

Step 5: Buying a Axie team (3 Axies). By logging into Axie marketplace via connecting your Ronin wallet you then qualify to start playing the game (Phew!).

Step 6: 45 minutes to 1 hour later (depending on your search, pace of progress and other factors), you are finally ready to download and install the game!

This is the reason why, at this moment, many early adopters of technology are hard core gamers and prospectors who form the core audiences as they are willing to plough through the inconvenience to not miss out on a potential new gold rush.

As far as average users and player are concerned, there are massive barriers to entry to start playing Axie, which includes, but is not limited to, massive knowledge gap, jumping through middleware apps, security concerns that create friction and feel extremely inconvenient.

Is Thetan Arena doing any better?

Thetan Arena cleverly got around having players at least start playing the game without going through forced NFT/Crypto investment via a standardised seamless app store route. The game appears on the app store as a regular Free to Play game and can be downloaded in a matter of seconds.

However, this does not mean that it got around all the other steps (1–5) of buying crypto, adding to a wallet converting to tokens etc. It just delayed those steps and leaves them to player discretion and choice when they want to take action.

But having a chance to experience the gameplay matches and get a taste of how skillful you can be in the game is still a brilliant move. Needless to say, it also provides dual income source by giving players the choice of both IAP and NFT purchases.

Source: Dof

Same old tried and tested F2P strategy — get players in via the F2P route, retain and engage them with the option to convert them to NFT gameplay down the line.

It definitely gives players more choice and also helps widen the download & income funnel.

UX Barrier #2

The second unique barrier to entry for NFT and crypto games arises from the ambiguity & volatility that is inherent to the bedrock technology of the game.

Ambiguity & volatility

Ambiguity: Refers to lack of exact knowledge or interpretation of how the product, specific features, P2E trading etc work inside the game. When playing Axie Infinity, this information is not as clearly presented to the players as we can expect from cutting edge F2P games.

As a player I had to do my own research on:

1. Which Axie’s to buy?
2. When should I sell, or trade?
3. Should I breed or fight my Axie’s?
4. Combat or breeding, which is more profitable?
5. When is a good time to take out my earnings?
6. What exactly will be the amount I will be getting?
7. Do I have any legal liabilities on income earned?

As a player new to crypto games, new to P2E games, all this knowledge is not explicitly made clear or taught to the user. This means you need to watch countless hours of Youtube videos or scan through a wide array of online articles, tools and resources.

One can argue that lack of “in-game knowledge” might be deliberate for creating a strong community around the game. But this is additional work, learning friction and time sink for your average player who are the key audiences for mass adoption.

Prospectors, hardcore gamers and fans might be willing to go the extra mile. Sinking in their time and effort to piece together how to best play this game and how the marketplace works. But this can also create ambiguity and a ton of frustration for new average players who are not used to this amount of homework/hard work simply to play a game.

Thetan Arena: Despite being able to get players to start playing without bothering about cryptos, Thetan Arena also has similar ambiguity issues for players who do indulge in NFT trade. They just delay those steps as mentioned above.

Volatility: Refers to liability to change rapidly and unpredictably, especially for the worse. Volatility can create anxiety, fear and stress in an average person which can result in a bad experience.

There are 3 kinds of volatility an NFT trading/P2E player has to face.

1. Price Fluctuation Volatility

Cryptocurrencies and tokens are notorious for their volatility which affect the day to day value of crypto tokens that are used for trading of NFTs.

1 Month trading average of THC: Thetan Arena’s crypto token currency.

1 Year trading Average of SLP: Axie Infinity’s crypto token currency.

“What you see is what you get” is not how the economics (or tokonomics) of blockchain gaming works.

The value of your investment can fluctuate dramatically on a daily if not hourly basis and something an average player will need to come to terms with if they are enthralled by the trading side of the game. These erratic fluctuations can create moderate to extreme fear, stress and ambiguity if the player is risk-averse or neutral.

2. Gas fee volatility

The gas fee is a fee that the user must pay to offset the computing energy used by the network which is required to process a transaction on the Ethereum blockchain. Gas fees are similar to processing fees that credit cards may incur to transfer money to various accounts or pay bills.

This fee also fluctuates erratically every minute, in the example above, it’s almost double the value player holds and it’s something players have to pay on every NFT or crypto to cash and vice versa transactions. This further fuels ambiguity about the final value of what/how much you are selling or buying.

3. Regulations volatility

The third and most worrisome form of volatility and ambiguity about NFTs and Cryptos emerges from legal regulation.

Given how tech heavy and ambiguous the concept of digital currencies and blockchains are, most governments worldwide are yet to come to terms with how to deal with them legally — what laws should apply to them, how to regulate earnings from a decentralised block chain?

Drug trade gives crypto a bad name. Part of the legal dilemma springs from heavy involvement of crypto assets in drug trade on dark net, links to money laundering makes it even harder for governments to put a legal framework around crypto.

Source A documentary pointing out, how Crypto was used to make the money untraceable.

The result is a mixed bag of reactions. While countries like El Salvador recognising it as a legal tender to China & 10+ countries banning trading in crypto, many countries like US, Australia and Ireland treat them as part of Fintech. innovation, booking them as capital gains and tax the profits accordingly (as high as @40%).

So, in a nutshell, based on where you happen to be in the world, your Crypto earnings can be downright illegal to probably tolerated or heavily taxed for profits?

This “Legal volatility”can make an average person anxious and fearful of future legitimacy of crypto earning or being part of such an eco system in countries that have a hard Crypto stance.

Though we should see this scenario improve with time if leading countries are able to create strong, safe and viable regulations for others to follow.

UX Barrier #3

Usability & intuitiveness:

Even though this 3rd barrier is the most well known in the Free to Play mobile, console gaming space and understood by many mature developers, if not done right it always poses a formidable threat to any new game or platform. Comparing Axie Infinity and Thetan Arena, we can see that the former has a lot of glaring holes for an average player (or players currently used to way smoother conventionally expected UX from F2P games).

Axie Infinity usability UX issues

• Ambiguity about which team/characters to buy
• Ton of information and research required before you start playing
• No FTUE, have to watch YouTube video to learn, lost my first battle brutally in FTUE
• Player education is more in league with PC games, needing heavy community support
• Does not do a good job of telling when multiple waves of enemies are present in a level
• MMA (match making algorithm) in PvP seems unbalanced, lost first 2 matches straight away
• No comparison of team strength like opponent level, difficulty etc. when the match starts
• “Level up” is hardly noticeable and benefits are not very clear to the player

Thetan Arena does a far better job of taking care of conventional usability checklist issues missing from Axie (above), partly because of its F2P lineage. Inspired from Wolffun’s existing F2P game “Heroes Strike” which is inherently inspired from “Brawl Star, Thetan Arena comes with most usability bells and whistles which we have come to expect from a conventionally well done F2P game. However

The area where it suffers the most in intuitiveness is “player education”, as in it forgets to mention that you can also play “Thetan Arena” as a Play to Earn game

There is no mention at all of its crypto and blockchain earning potential in the app store build and you can easily mistake it for a normal F2P game. The reason for this might be hesitation to mention “Blockchain” or prompting players to make purchases in an external store. This could be due to the current legal brawl that Apple and Google Play have been going through.

The developer is playing it safe by not openly advertising either the NFT nature or external store purchases inside the game.

But, the interesting thing about this lack of communication is, WolfFun has players' email ID if they sign up.

Even though I received a verification code via email on registering for Thetan Arena, they did not bother to send me any additional communication about P2E side of the game or even point me to their well organised WIKI resource — which I believe is a missed opportunity in player education.

Secondly:

Only NFT heroes purchased in external store grant THC tokens, not IAP purchased heroes. This creates a dichotomised experience where players need to learn from other, external sources about the NFT nature of the game and also need to make purchases in an external store to use them to earn THC tokens.

Even the marketplace does not do a good job of explaining the dual nature of the game. It is ASSUMED you know about the connection of buying NFT heroes or loot boxes and then you will be able to use them in the game to generate THC.

An FAQ section would have been a great addition to the store and is a missed opportunity to educate players.

However Thetan WIKI (once you get to it by accessing another URL) is much better organised than Axie to educate players about dual nature of the game. But again, it’s a hidden aspect and requires work on an average player's part. To be fair though, buried within the app store description, the game does mention NFTs. But who reads app store descriptions in their entirety?

Before we wrap up, there is another aspect of P2E games that differs widely from F2P and will need thought on developers' part to both safeguard as well as improve the overall player experience.

Emergent cross gaming socio-economic relationships

It’s the Manager/Scholar or Owner/Rental relationship. Many of these contracts are drawn outside the game itself.

These relationships mimic real-world manager-employee relationships with strict criteria of profit share, performance goals and quick hiring or firing. Often you can have friends or family involved in these relationships which could further strain close ties.

Not being regulated by the game itself, there is potential for abuse, uneven profit sharing, overt grinding, scamming or even toxic word exchanges. These could lead to overwhelming frustration, lack of confidence and even deep dissatisfaction for many participating players.

Thetan Arena did go a step further than Axie by providing an in-game “rental” service, wherein owners can rent out their heroes for any fee amount they set on Thetan’s existing marketplace. The renter needs to pay the fees but can keep all the THC earned from matches for the time they own the rented hero.

While this is a good welcome step towards standardising, regulating and protecting players from some of the pitfalls of “out in the wild” unregulated owner-renter contracts, there is nothing which is stopping people from making unregulated contracts with exploitive practices.

Conclusion

While each new P2E game is learning and building on the foundation of predecessors and taking steps to improve the experience, there are a lot of gaping holes which needs attention:

1. The experience of signing up to play without the need to buy NFTs works great for Thetan Arena as it brings down the barrier to entry massively and broadens the download funnel while the forced NFT buying for Axie keeps the average or lesser informed players away.
2. Being NFT compatible (Thetan) has significant advantage over being NFT first (Axie) as it diversifies the income stream (IAP + NFT) giving players the choice to explore both F2P and P2E aspects of the game further down the line.

NFT Compatible:”Come for fun and stay for the money” pitch is an easier up sell then, NFT First: “Come for the money and stay for fun”

1. Middleware juggling friction through an array of 3rd party middleware apps (crypto exchanges, KYC’s, crypto wallets, in-game wallets) to be able to buy NFTs creates a very haphazard and inconsistent experience. Vertical integration of these middleware apps into one game or platform can help streamline and alleviate this juggling friction.
2. Player education and seamless interaction with Crypto economy is still the Achilles heel in both Axie and Thetan + the majority of existing and upcoming P2E games. This is one aspect along with vertical integration that all P2E games need to pay attention to for mass adoption

P2E games have to shoulder the burden of player education, regulations, intra-game socio-economic relationships and at least some responsibility to shield players from high risk volatility of their marketplace. They need to be more than just a game as the stakes are much higher for the players, but done right, they might pave the way for the future of work and the success of Metaverse.

Disclaimer: Views and thoughts expressed here are my own opinions and not of my company.

If you liked this post, please feel free to check out my other game deconstructs at https://www.uxreviewer.com/. Feel free to connect with me on LinkedIn for future articles.