Why Some Gamers Dislike the P2E Movement

A brief introduction

In 2018, the gaming industry was valued at about 140 billion USD. This number is predicted to go up to 200 billion by the end of 2022, according to a Forbes article published on 3 June 2022. The number of gamers currently involved in the ecosystem is about 3.24 billion people around the globe. That is around 50% of the world’s population (obviously), which shouldn’t be a surprising number. After all, if you are reading this article, I would place my bet on the fact that you must have played games on a mobile/PC/console at least at some point in your life.

The reason that we get so addicted to games is that they’re fun. Not because they allow players to take responsibility for their players or to develop their reflexes, but simply because they are fun. Gamers can spend hours grinding for a game and create a certain reputation. Some of them build an audience that enjoys just as much spectating the gameplay as they do playing the game themselves. Gamers get a self-reinforcing incentive to grind even more and improve at a game. That is what web2 gaming focused on. Fast forward to 2020, and you see a different future emerging for the gaming ecosystem.

Nevertheless, many gamers claim to “hate” the change being brought. Even though the web3 gaming ecosystem had promised to allow the gamers to play-to-earn(P2E), the shift has been relatively slow. Let us explore the reason behind this.

Gamers Hate Miners

Firstly, gamers have hated miners since the middle of 2020. “With the pandemic in full swing, governments enforced lockdowns, causing businesses to shutter and forcing many to work at home. As the year went by, many people discovered that mining crypto, especially Bitcoin and Ethereum, could be lucrative. This caused prices to skyrocket from around $6,000 in March 2020 to more than $55,000 just one year later. The near ten-fold increase further increased crypto hype which, unfortunately, relied on GPUs for processing,” — according to an article published in 2021. A lack of supply caused GPU prices to increase, which was not favorable for gamers who needed GPUs to play games. The conflict of demand for the same product gave birth to animosity between the two groups of people: gamers and miners. Seeds of hatred for the blockchains might have been planted in those early days. With the current prices of Bitcoin and other cryptocurrencies crashing, the ban on mining in China, and Ethereum moving to PoS — the prices for GPUs will hopefully continue easing up worldwide (see graph below).

Average Sale Price of eBay Completed Listings (GPUs)

Secondly, many P2E games that advertise as “play-to-earn” eventually become “pay-to-earn” games. Axie Infinity, which at a certain point in time allowed gamers in the Philippines to earn more than the minimum wage in the country, might have dipped in popularity for this reason only. Revenue is diverted from the newcomers to those who have been in the games since the beginning. However, if you have weight in your bags, you can simply buy a couple of doxxed NFTs and be at the top of the game not by experience but by having cash. Hardworking gamers most certainly do not like that since the concept undermines the hard work invested in the game by players.

Thirdly, NFTs have a get-rich-quick narrative around them. The NFT market bull run in 2021 made people believe you can quickly get rich by trading NFTs. “This is just the pure desire to get rich that drives everything in the crypto space right now. It’s another of these bubble manias,” says Frances Coppola, a finance and economics commentator. Nobody likes lucky winners. Neither do gamers. Web3 gaming is supposed to be built on NFTs, and if gamers don’t like NFTs, yet another reason crops up to hate crypto gaming as well. More on NFT’s below.

The promise that the blockchain has made is to transfer the power of authority from centralized entities to the masses. Web3 gaming was also supposed to transfer ownership to the gamers via NFTs. However, this promise was never delivered. NFTs for games started becoming a road to raising money for the development of the games. Gamers are not investors. That is what companies like Animoca or Sky Mavis must understand. What they tried to do was raise money by selling NFTs even before the game used to be built. An approach worth giving a shot would probably be to build the product first and then supply monetary incentives for the gamers. With the highly unperfected graphics for the games available, gamers do not have a solid reason to shift from the games they are playing today.

Graphics for Read Dead Redemption 2 (developed by RockStar studios over 8 years)

Graphics of a metaverse in Decentraland (largest crypto gaming project by mcap)

Another primary reason for the hate would be that web3 gaming might be highly overvalued. Sony, the largest video game company in the world by revenue, makes around 25 billion USD per annum. Activision, Ubisoft, Tencent, and Nintendo together drive revenue of about 30 billion. Sum the largest gaming companies according to their market cap, and you get a valuation of around 1 trillion USD. But, almost any game that we have ever played are produced by studios that we have heard of dozens of time and are used to.

Meanwhile, AXS, the governance token for the blockchain game Axie Infinity had a fully diluted valuation of around $ 40 billion at its peak. That is a considerable number comparable to Activision Blizzard’s market cap of 60 billion USD today. If we compare the fame gained by Axie Infinity with the developer behind the call of Duty, HearthStone, World of Warcraft, Candy Crush, etc., obviously the winner emerges rather quickly. The amount of hard work gone into the franchises that Activision has built is incomparable to that of blockchain games today. This leads to the obvious observation that the web3 gaming ecosystem may have been highly overvalued, which irks the apparent fans of the established gaming companies.

Comparing active users in metaverse games to popular PC games (April, 2022)

Possible solutions

Even though I have discussed some of the most probable reasons we have not seen a substantial shift of users from the conventional games to the P2E economy, this does not mean that web3 gaming is not here to stay. In a vast majority of the cases, consumers do not know what they want. Gamers alike might not be interested in the ecosystem right now. However, they will be when the infrastructure is ready. If you are reading this in 2022, you are early. The infrastructure for web3 gaming is currently being built (similar to Defi in 2018).

It might take a couple of months, or probably years, for the ecosystem to be ready for millions of new users. Several projects are working on it e.g Respct.co, a company in Delhi, is currently working on Web3 “CVs” for gamers.

Their infrastructure is currently being built for the next generation of gamers, including an NFT lending platform, a marketplace, and a decentralised ID for gamers. Yet another reason for the huddle in adoption of web3 games is the responsibility of storing private keys safely. However, Respect is also working on a solution for that (with semi-custodial wallets that don’t require users to bother about keeping their private keys secret).I believe that right now it is the time to build. With not much hype around scams and shitcoins, the problem-solvers that are here to stay are perfecting their solutions. With not many projects staying around, it might be the perfect time to build before the next bull market.

Hope you liked the article, and let me know if there are statements that might have been incorrect. Disclosure: I am also a Solidity dev at Respct.co, however this post reflects purely own opinions.

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