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Gaming has evolved over the years from a simple way to pass the time and distract yourself from the stresses of everyday life to a means by which gamers may be rewarded utilizing blockchain-based technologies like NFTs. In the past, we used to refer to gamers as those who spend their time playing games rather than doing anything constructive. However, that notion has changed.
Thanks to the world of video games, a Play-to-Earn model allows players to earn incentives with real-world value. It embraces the notion of an open economy and delivers financial rewards to all players who provide value to the game environment by participating. Gamers may literally “farm” or “collect” digital assets like cryptocurrency and NFTs, which can then be sold in the open market.
The worldwide gaming industry is anticipated to be worth $268 billion by the year 2025. It’s safe to say that cryptocurrencies have stepped into this expanding market because they’ve seen the potential benefits of blockchain technology. NFTs have played a significant part in this growth by helping developers realize that they can generate and transmit real value in the ecosystem.
Even while the gray gaming marketing industry is vast, it does not benefit the developers in any way. Using the game Clash of Clans as an example, many players bought maxed-out bases for a significant sum of money from others who spent their time creating them. Previously, all of these transactions were peer-to-peer. Now with this new emerging technology, a portion of every transaction goes to the developer, benefiting both parties. With the emergence of play-to-earn games, developers benefit from storage safety and data security.
So, what are these play-to-earn Games?
These games allow the time spent on playing video games to be monetized. Many of these games have been revolutionized by introducing blockchain technology and non-fungible tokens. Using cryptographic tokens known as NFTs (unique, rare, and individual), we are able to prove the ownership of material such as photographs, drawings, etc. In the same way, they allow us to possess in-game objects. NFTs allow you to own the assets you acquire, like digital items, allowing you to sell them outside of the platform.
There are different ways to acquire these in-game assets, depending on the game you are playing. In addition, some games also offer the ability to reproduce unique NFTs using previously acquired or bought in-game items.
NFT marketplaces may trade and sell these assets or what you would term in-game items. In addition, You may also add scarcity to these items and raise their cost.
Even if you’re not a gamer, you may still take part in this market because of the unique value and trading opportunities it provides you with.
Some popular P2E games include:
- Axie Infinity
- Decentraland
- The Sandbox
Why has P2E gaming grown so popular?
You may use economic ideas like demand and supply to explain why P2E gaming has grown so popular (particularly in underdeveloped countries).
Growth fueled by demand
P2E gaming, like everything else associated with the metaverse, has been the subject of extraordinary consumer interest (or, to put it another way, demand). It’s for two reasons in particular:
- A significant, ready-made user base: As a result of widespread unemployment caused by the COVID-19 epidemic, a sizable group of individuals (particularly in developing nations) were unemployed and unable to earn a living. The arrival of P2E gaming (promoted by new-age gaming companies like Axie Infinity) in countries with high literacy, widespread smartphone penetration, and an avid gaming culture like the Philippines attracted these unemployed players who were interested in gaming and were eager to earn money regardless of their interest in cryptocurrencies. As demand for Axie tokens expanded, firms like Yield Games Guild gave additional alternatives for users to get their hands on the tokens, which resulted in a larger client base.
- Strong network effects: Apart from gaming and cryptocurrencies having two of the largest online communities, a key cause for high consumer demand for P2E gaming has been the deep-rooted community that has sprung up around it. More individuals joining Axie (for example) raises the perceived value of being a member of the Axie community (whether online or in-person), which in turn encourages more people to start playing, and the cycle continues. Interestingly, as these gamers not only play together but also exchange NFTs/tokens on these (and other) platforms, their interactions are growing from purely social to also having an economic component, which strengthens the presence and power of the online community. It’s probable that, with the rise of web3, the connections made through these games may extend to other transactions, such as where to become a virtual landowner and which Guilds to contribute towards, etc., as the players progressively develop their lives online.
Supply-led growth
With P2E gaming’s development being pushed by not just gaming platforms like Axie Infinity and StarTerra, but also auxiliary platforms like Yield Games Guild, major tech corporations like Meta and Microsoft, and smaller tech businesses such as Bitstamp (who make the otherwise prohibitively costly tokens needed to enter the games more reasonable and accessible for new players), P2E gaming is becoming more mainstream. P2E gaming’s supply ecosystem is becoming increasingly “full service” as new players enter and plug-in outstanding holes in the ecosystem, resulting in more frictionless interactions (social or economic) and greater access/participation across geographies, which will, in turn, drive customer demand across not only emerging economies but also developed countries.
The Success of AXIE Infinity
P2E game Axie Infinity is based on the concept of digital pet avatars, or Axies, which players may collect and interact with. Played by third-worlders from countries like Venezuela and the Philippines, Axie’s native crypto-assets—Smooth Love Potion (SLP) and Axie Infinity (AXS)—rose to cultural popularity in 2019 as reports emerged of players making a full-time livelihood off of the game’s own crypto assets.
With SLP and AXS, gamers may breed their Axies in order to expand their collection. Like other governance tokens, AXS may be exchanged for cash, but they’re intended to act like shares.
Vincent Gallarte, 25, a Manilla IT worker who was fired, earned 35,000 pesos ($732) in the first two weeks of this game. He made three times as much money playing the game as he did at his previous work.
Three Axies, each costing $200, are required to participate in the game. Students who cannot afford to buy the game have taken advantage of scholarships, where Pangindian has helped students acquire their first Axies and begin playing them.
Another gamer, RK Secreatario, 31, of Nueva Ecija province in the Philippines, who formerly worked in agricultural sales for two years, now earns about $2000 per day, more than double his prior earnings. He makes the money in an hour of gaming and considers it a blessing.
According to the research department of blockchain analytics platform Nansen, 2.8 million unique addresses are now holding 11.1 million Axies, and 97 percent of those users have at least three Axie non-fungible tokens or NFTs.
There has been a lot of discussion about how Axie would benefit from authentication of in-game assets, secondary market trading prospects, and decentralized governance. Nansen’s research is in line with those previous public evaluations, concentrating mostly on these and other benefits.
Even in developing countries, it is reasonable to infer that P2E gaming models are a big success, given that Axie Infinity has produced $1.3 billion in revenue and $4 billion in transactional volume over the course of the previous year, with a significant portion of its user base in developing nations like the Philippines.
This compels me to ask the question, can this success be replicated in India? Yes. Why? Well, there are a couple of factors that make India the perfect market for P2E games.
A Rapidly Expanding Market for Gamers in India
Worried when the Covid-19 outbreak struck two years ago, Indian parents of various socioeconomic backgrounds requested their children to refrain from playing video games. It was regarded as a complete and utter taboo at the time. An important victory for the country’s $930 million gaming industry happened recently when the Karnataka High Court struck down changes to the Karnataka Police (Amendment) Act, aimed at outlawing participation in online games.
Several lockdowns and limitations imposed by the epidemic have altered the complexion of the gaming sector in India, one of the world’s major markets today. The internet penetration rate in India is believed to be 30%.
Now, the gaming sector is viewed as a significant economic contributor. There might be tens of thousands of jobs created in this new industry. In the coming years, a number of gaming tech startups are likely to finalize their recruiting plans in order to sustain growth.
More than 560 million people in India use the internet, making it the second-largest internet consumer in the world.
In India, mobile phone users make up 85 percent of the sector, followed by PC users at 11 percent and tablet users at just 4 percent.
India’s gaming sector has grown at a 15 percent annual rate over the previous five years because of the availability of inexpensive cell phones, according to the World Economic Forum (WEF). In addition, the world’s lowest data tariffs and high-speed 4G internet adoption have made a significant contribution.
Nearly half of India’s mobile users started playing games on their cellphones during the epidemic, according to a poll by an AdTech business. While the pandemic has closed the doors of opportunity for many, it did, however, affect the gaming industry in a major and positive way.
Indian Gaming Giants are Betting on Blockchain
Companies like JetSynthesis, well-known in the gaming industry, have begun exploring the potential of NFTs in games. “We have done some R&D on this and we are deeply looking at some use cases. Some of the things are very obvious, like the NFTs which can be used for skins and avatars,” said Rajan Nawani, CEO of JetSynthesis. Ludo Zenith is one of the company’s most popular mobile games, and it has partnered with worldwide gaming heavyweights like Square Enix.
Even the gaming branch of Avisa Ventures, situated in Bengaluru, is collaborating with game developers to build two or three blockchain-based games for its consumers to enjoy. An NFT Gaming Guild and a slew of investments have been made in a variety of initiatives. The guild has also started a “Play to Earn” tournament on Axie Infinity for Indian gamers so that they may earn tokens that they can then sell to other players.
Similarly, NODWIN Gaming and RageFan teamed together to give Chess NFTs during the Chess Super League (CSL) competition in October in the eSports sector. RageFan is a Blockchain-based marketplace that sells NFTs and fan tokens for sports and entertainment. It has been announced that RageFan would soon be selling NFTs for the Chess Premier League.
Blockchain-based games account for around 55% of the daily traffic to decentralized applications (Dapps), according to a survey by blockchain analytics firm DappRadar. In October, Dapps achieved an all-time high of 2 million daily unique active wallets globally.
These advancements, according to industry analysts, are a prelude to Web3 games. Decentralized infrastructure and machine-based data understanding are expected to be the driving forces behind Web3, the next generation of the internet.
Homegrown Polygon is sponsoring a hackathon with over $100,000 in prizes to encourage developers to build and demonstrate Web3 apps and games that run on blockchains in India’s developer community. More than 100 web3 unicorns would be created in India by 2025, according to the crypto business. Dapps using Polygon’s blockchain networks have witnessed the “biggest growth,” according to the DappRadar research quoted above.
In spite of the general optimism about the potential of NFT and blockchain-based gaming in India, many businesses are hesitant to move forward because of the uncertainty surrounding cryptocurrency regulation. However, that could soon change as Indian regulators have recently introduced a tax on crypto trading, hinting that future regulations are a possibility.
Looking Ahead
Considering the current state of the Indian gaming sector and the willingness of Indian gamers, it is safe to assume that P2E games are a promising sector in the Indian market. Non-fungible tokens (NFTs) are being considered for use in games and esports, as well as the development of new blockchain-based games, in order to capitalize on the burgeoning interest in crypto and NFTs in India.
Gamers that participate in P2E games in India are rewarded with cryptocurrencies as well as being able to purchase virtual products and real estate using NFTs. NFT games like Axie Infinity, which have millions of players worldwide, are popular in India. Other play-to-earn gaming initiatives, such as Star Atlas and Illuvium, are rapidly gaining traction in the cryptocurrency market, capitalizing on the burgeoning metaverse and NFT worlds.
As a result of the pandemic, eSports and NFT games in India have grown tremendously. A growing number of Indians are playing games on their mobile devices thanks to the widespread use of smartphones, as well as low data costs. Gaming in India is likely to increase exponentially in the future years because of Web3’s concept of play for money, where players can monetize their time and achievements.
Disclaimer: Cryptocurrency is not a legal tender and is currently unregulated. Kindly ensure that you undertake sufficient risk assessment when trading cryptocurrencies as they are often subject to high price volatility. The information provided in this section doesn't represent any investment advice or WazirX's official position. WazirX reserves the right in its sole discretion to amend or change this blog post at any time and for any reasons without prior notice.
