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The traditional game market and the metaverse
In essence, the Meta universe represented by traditional tech giants such as Facebook is already a reality. People can enter the virtual world without a virtual reality device. Books, newspapers, radio, television, and the internet allow people to watch events that they can not attend in person, essentially experiencing a kind of meta-universe. Sports and games are another form of virtual reality that people often engage in in the stands or in front of a screen.
So far, the game represents what most people understand about the meta-universe. An innate love of games, an understanding that games depend on rules and structure, and a willingness to assign value to the events that occur within them are all integral parts of the game culture. Everything from soccer to chess to the Roblox is an important part of the economy. The global sports market will be worth nearly $400 billion in 2020, while the video game market under the new crown disease will be valued at $178 billion a year.
Games are likely to lead people into more immersive and interconnected virtual worlds, a perfectly natural trend. It is also possible that the game will continue to bring financial value to consumers, companies and nations in its meta-reality. Microsoft's recent cash deal to buy Activision Blizzard once again highlights the value of the game. It remains to be seen how these mainstream online game developers will integrate into the Web 3 universe, but so far blockchain based games have emerged, blockchain games such as Axie Infinity and Alien Worlds have created a P2E model that allows us to see what might be popular in the future.
Players can use NFT and in-game cryptocurrencies to generate assets in these games, trade in tokens, and transfer value into real-world legal tender. This is a dramatic development for both gamers and non gamers. Because unlike traditional gamers, who derive all their value from the game, blockchain gamers benefit directly from the game's success.
Last year, the story of how the Philippine community earned its income from playing Axie gained so much attention that local government officials began recommending that gaming revenues be taxed. This phenomenon also illustrates the emerging encryption economy is fully possible to create financial inclusive opportunities. But the rise and fall of Axie's native currency also points to the challenge of developing sustainable economic models for games, and the fact that future virtual world success should be more about playing than making money.
The limitations of coinage economics
There are limits to how perfect token economics can be. For example, Axie Infinity is a digital pet game that gives players tokens when they contribute to the game's ecosystem. However, before participating in the game, players must purchase Axie pets, an NFT that can add value by playing the game. The game involves two tokens built on the ether square blockchain: Axie Infinity Shards (AXS) and Smooth Love Potions (SLP) . SLP is acquired in-game and is required to "breed" new Axie pets.
In the world of games, many factors can influence the price performance of digital assets. The distribution of tokens, the rules of supply, the mechanisms of price stability, governance, and the expectations of the game's audience are all important. However, practicality may be the most important factor underpinning the value of the game's native tokens. Simply put, do these game assets give the owners the experience they want? This may include aspects such as gameplay, community status, and earning opportunities. If players can perceive value, they will stick with it and buy more. Otherwise, like any asset, people will sell it and invest their time and money in other activities.
In Axie Infinity, the utility of SLP is that it allows players to create new Axie pets and then use them to earn more SLP and create more value for the player. This positive feedback loop helped push the price of the SLP up in 2021, but it has since fallen 94% . This means that people pay more attention to the proceeds from the sale of SLP rather than owning SLP and "breeding" more Axie pets. In other words, players are more likely to cash in their profits than to enjoy continuing to play the game.
Early stages of P2E
The concept of P2E is still in its infancy. Blockchain games such as Axie were only early experiments in models that combined gameplay with economics. Axie introduced SLP into the economic system as the second game token after finding its own problems in the liquidity of the single token model. The experiment continues, but an important lesson for meta game developers is that fun and playability still need to come first.
The risk of prioritising economic models over playability is that traditional gamers lose interest. For example, attempts by Sega, Konami and Square Enix to introduce NFT into mainstream games have met with strong opposition from users. However, as time goes on, we can expect that the increasingly complex and scalable game of the meta-universe will provide an excellent experience. More choices and richer gameplay will lead more users to discover the utility and benefits of holding tokens, creating a more sustainable game based economy.
As more and more games and sports are established in the meta-universe, audience quality will also be a key factor. Human Nature requires contests, heroes, narratives, and stakes. Game users want to interact as spectators with a shared experience, or to participate in the game themselves. Games in the Meta universe can be as real and exciting as the Free Fire series, the Premier League, the NBA or the 2021's most watched e sport.
Better playability makes the microeconomics of a particular game more sustainable and sticky. On the other hand, blockchain can increase some degree of interoperability, making the macro-economics of the meta-universe game more fluid and fair than the current large-scale sports. Interoperability gives players the opportunity to take encrypted assets or digital status directly from one game to another, and even to social platforms, this allows players to take a larger share of the value created by profits and equity. The interoperability of blockchains is the key to the macroeconomics of the Meta universe game, and the key to keeping the game interesting.
In the future, people will not necessarily be keen to join the meta-universe represented by traditional tech giants like Facebook, but be sure to use the blockchain to make ordinary fans and players enjoy the game while gaining more value for themselves. From a pure game point of view, the rule of the game field is that high playability games can exist independently of economic design, and even allow players to enjoy the game in order to keep spending in the game. Blockchain games differ from DeFi in that the underlying motivation for each is different, and DEFI's long-term sustainability is due to the complementary needs of the economy (such as borrowing) , the only way to make blockchain games sustainable in the long run is to make them more playable.
*The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of SparkDAO. Every investment and trading move involves risk, you should conduct your own research when making a decision.
