How play-to-earn gaming brings rewards to players

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Play-to-earn is a new phrase that has a lot of people excited about a new opportunity in gaming. And in this case, the biggest party that could benefit is the players themselve

We had a panel to discuss this phenomenon at our GamesBeat Summit Next event, moderated by Amy Wu, a partner at Lightspeed Venture Partners. Speaking on the session were Piers Kicks of Bitkraft and Delphi Digital; Miko Matsumura, general partner at Gumi Cryptos Capital; and Gabby Dizon, CEO of Yield Guild Games.It’s pretty hard to imagine that just four months ago, few people had heard of play-to-earn,” said Wu. “But today, pretty much the entire gaming industry is talking about it

Play-to-earn means that players of games can earn rewards and even money in games that they play. It has come exploded this year with the growth of Axie Infinity, a game by Vietnam’s Sky Mavis which uses nonfungible tokens (NFTs). Axie Infinity has been so successful that Sky Mavis recently raised $153 million at a $3 billion valuation..

We definitely are excited about this space and working hard to make it real,” said Matsumura.

NFTs use the transparency and security of the digital ledger of blockchain to authenticate unique digital items. It enables game makers to create rare items that players can collect and resell. That’s what they do in Axie Infinity, where players create characters for a fee, level them up, and sell them.

The play-to-earn phenomenon took off with Axie Infinity in the Philippines, where players played it during the pandemic to make wages that paid three times better than minimum-wage jobs amid 40% unemployment.

Earlie this year, Dizon formed Yield Guild Games, a company that consists of a guild of players, many of whom are Axie players. The company provides “scholarships” for players, paying their startup fees so they can start earning money and sharing the proceeds. YGG also invests on behalf of players to ensure they can make more money.

Jeff Zirlin, cofounder of Sky Mavis, said hundreds of guilds are in places like the Philippines now, and he believes Axie Infinity provided hundreds of thousands of jobs to Filipinos — so much so that the Philippine government is proposing taxes for players.

“We invest in assets inside these games, typically NFTs that produce some kind of asset in the form of tokens similar to Axie Infinity,” Dizon said. “We lend these assets to our player community, who play the games and earn an income.”

Kicks agreed that we’ve hit a breakout moment for this concept of play-to-own gaming. And it has succeeded in spite of the fact that the games themselves aren’t industry-leading in terms of things like graphics or gameplay. Rather, the business model is what has the players excited. Over time, the gameplay will catch up as more established developers get involved.

Gamers get to participate in the economics of the games they love and share the value that they’re contributing to these ecosystems,” Kicks said.

Axie Infinity takes just a 4.25% marketplace fee when players sell their characters to other players. So most of the proceeds go to the players, and they repeat the cycle where they can level up characters and sell them again.

“Being able to lean into that concept of shared economics and building a community around that is key,” Kicks said.

Players also get to own characters outright and that unlocks new possibilities, he said.