Earning Money Just By Playing Games? Count Me In!

I had wonderful plans for my summer holidays this year. I wanted to invest in my health, both physical and mental, go on a diet, buy myself some fancy new clothes…

Then, the Steam sale happened and my money was gone.

And I’m not the only person who went through this ordeal. One third of the world’s population are gamers — a whopping 2.5 billion people! — and an average video game afficionado has 11.07 titles on their Steam account.

Gaming is quite an expensive hobby, because it’s not just games, but also all the hardware needed to play the latest stuff, collectibles and merch. Your friends and family are bound to look down on your favorite pastime, unless they’re gamers themselves.

Of course, we’re all aware there are folks who actually make money playing games: software developers, QA specialists, game reviewers, streamers, and professional esports players. But what if we were all able to earn just by simply playing for ourselves?

The State of Online Gaming says that gamers spend about 8 hours and 27 minutes each week on average playing. That’s basically a workday!

Imagine you have a small virtual farm, harvest digital apples, but sell them for real money.

Ridiculous? Maybe, but games like that exist. They’re called play-to-earn (P2E) and some call them the future of the gaming industry.

But you can sell your assets anyway!

Well, yes, but actually no.

In general, selling in-game items is not a new idea. There’s plenty of people on eBay and the like offering rare, uncommon and legendary items, as well as various currencies from MMO games, perhaps “mined” by bots, but all there are a breach of terms & conditions, and if the developers catch you making such purchases, you risk a permanent ban.

However, Diablo III allowed players to sell the items they collected during the game for real money using a Blizzard-sanctioned market called Auction House. Still, the feature was shut down 2 years later.

This is where P2E games come in. In this model, you can earn real money or other rewards simply by playing a particular game. One of the most popular titles is Axie Infinity where you earn non-fungible tokens (NFTs), one-of-a-kind items that belong to you, and not to the game’s devs.

When a MMO game gets shut down, you lose your characters, items, progress, everything. When it comes to P2Es, however, you’re the assets’ only owner and you’re free to do with them whatever you wish. You’ll also still have access them even if the servers are long dead.

What’s this NFT thing all about?

A non-fungible token is a unique item, much like a comic book with the author’s autograph, for example, but it’s a thing of the digital world. It can be sold, but it can’t be simply copied. It’s based on the blockchain technology, but it’s not a cryptocurrency. One bitcoin is the same as another bitcoin, but you can’t have, say, two copies of the same token. NFTs are indivisible.

Most NFTs are tied to Ethereum, which is used as a public ledger: each token has a unique ID, directly linked to a single Ethereum address. This means every single one of these have an owner, and ownership is easy to prove.

Why non-fungible? It’s because these tokens cannot be freely replaced or exchanged. You can sell an NFT if you find a buyer, but it’s not a currency by itself.

An important feature of the NFTs are the so-called smart contracts. These are agreements between two parties that can work in a number of ways. They can be tied to NFT’s and include conditions that execute them, if conditions are met. For instance, the creator of a digital asset can be paid a fee each time the asset is sold.

One ring to rule them all?

The main differences between traditional and P2E games boil down to four things: ownership, business model, developers’ experience and the role of the community.

In the traditional model, the game’s content is owned by the developer/publisher, whereas P2E games the ownership is shared between the devs (who hold the rights to the game itself) and the community, which holds the rights to assets.

Even if P2E games are initially free, you’ll need to buy some assets in order to achieve any more spectacular results. Sounds like pay-to-win? Probably, but the idea is that the digital goods you bought increase in value as you play. You can resell them later and earn more. Even better: the assets don’t have to be tied to just one game only. They’re somewhat separate from the game, and there are folks who predict that in the future one item might be used across various other games.

An interesting thing about P2E game developers is that these people often didn’t have anything to do with the gaming industry per se. Many titles resulted from experiments with the concept of tokens.

As far as the community is concerned, the player base has a limited role in traditional video games. Of course, fans can mod games and create new content, and without that we would’ve never had Counter-Strike or Dota, but it is in P2E games where these communities really get to shine. In fact…

Community is everything

Even the biggest MMO games would be nothing without its player communities, creating forums, wikis, forming guilds and building relationships even outside the game. Still, communication and cooperation between the developers and the fans is usually limited.

In the P2E model players create the in-game economy and attend global-standups during which important decisions are made. They vote on various aspects of the game, and can gain voting power in some cases by acquiring tokens. The fan base has the opportunity to participate in the development process, and players become the project’s shareholders.

But how do I P2E?

Two questions remain: are those games fun to play and how do you actually earn money playing?

One of the first P2E games is Cryptokitties, launched in 2017 by Axiom Zen, a Canadian studio. Here, players breed and trade digital cats whose appearance is defined by a 256 bit genome. With a proper combination of traits you can breed a “fancy” cat with unique artwork, which can land you a nice sum of money. The game was a great success after the launch, and the most expensive cat was sold for 600 ETH, or roughly $170,000 at the time. Two years later, though, the interest waned, though there are still those who keep buying and selling cats.

Since I mentioned Axie Infinity, it’s time to tell tell more about it. Developed by Sky Mavis, a Vietnamese studio, and released in 2018, this game’s a bit more complex than Cryptokitties, although it’s also based on collecting creatures, known as Axies, which you can raise, trade and send into battle against either the game’s environment or other players.

It’s a lot like Pokémon, although simplified. Every creature belongs to one of the 9 Axie types, each with its own strengths and weaknesses, and has four stats: speed, skill, health and morale. The beasts are made of body parts (mouths, tails, etc.) that define their skill cards and influence their stats. During the battle, you need to choose proper attack cards and moves that best suit your beasts and the current situation on the arena.

How do people earn money in Axie Infinity? There’s a couple of ways. You can breed Axies for sale, resell the ones you bought, but also make money on in-game land and items, as property is also tokenized here. You can also earn Smooth Love Potions that you can use to breed new beasts or sell on the market. You get SLPs by fighting at the arena or by going on adventures.

There’s also the scholarship program where experienced players “lend” their Axies to fresh starters, teach them how to play and help them make some money without the initial investment. Such mentors usually take a 60% cut off the Smooth Love Potion earnings.

As for the game’s developers, they earn a 4.25% fee on each sale of an Axie.

To start playing Axie Infinity, you need at least three Axies, and the initial investment is very steep — you need to pay over $1,000!

Sounds an awful lot like the Ponzi scheme, don’t you think?

Large investments required by some P2E games and their ties to cryptocurrencies are a sign that we should tread with caution. Nobody can guarantee that an asset’s value will keep increasing indefinitely, just like in the real world. Axies get more expensive because of the influx of the new players. Once it stops, however, there won’t be such a demand. Veterans will have earned a huge margin on their sales, but newcomers will be left with stuff that’s really hard to sell.

People at Sky Mavis are aware of this. They even published a white paper on achieving long-term sustainability in Axie Infinity, and they have plans to further develop their game and introduce new features. But without any drastic measures — such as a max cap on Axies’ prices — there’s no way to be completely safe from speculation. Prices can drop just as spectacularly as they rise at any moment.

Looking for economists!

Economy is a crucial feature of P2E games which are based on trading assets, after all. But there’s so much more to this.

It turns out that P2E game communities themselves — not developers, mind you! — hire specialists to help them with a particular game. They need copywriters and newsmen, because there are always interesting developments. They want people to sell digital real estates. They seek mentors running scholarships for newcomers — these games have high barriers to entry and steep learning curves, after all. There’s even a place for comedians, uh, I mean meme creators, because it’s all about having fun.

Axie Infinity actually helped a lot of people during the pandemic. Those who lost their jobs found employment in the virtual world — not through collecting pets, but performing various tasks for the community.

One of the hottest jobs in the P2E industry is the economist. Devs and game communities need specialists to play the role of ministers of finances and help to develop the economy of a particular digital world.

That’s why you have to reconsider the way you think about these games. They’re not games anymore: they’re slowly becoming digital countries with their own economies, currencies and other developments. And since the idea of blockchain is trendy, to say the least, they receive huge subsidies from investment funds.

When Axie Infinity introduced its staking tokens — a form of cryptocurrency and co-ownership of the game — its capitalization brought its developers on par with the four biggest players in the video game industry, right after Electronic Arts.

What does the future hold?

P2E games are still quite a fresh idea and there’s plenty of room for improvement. It’s very much like the early development of mobile games.

There are genres that don’t work well in the P2E model — visual novels, for example. MMOs and games where you collect stuff are a much better fit.

The most important aspect of P2E games, community, is also its weakest link. If the fan base is involved, the game thrives, if it’s not, the game is bound to die.

Last but not least, if you are really thinking about this becoming your way to make money, you need to be aware of the fact that at this point there’s no control over P2E games’ economies and some of these titles are for wealthy people. There will surely be price bubbles, as well as potential frauds.

Finally, the Internet. No connection = no money.

Still, the concept has many aspects unheard of in any other medium. It works well with digital fashion, and new designers can start their own business even if they don’t have the funds. Modern brands can also enter a game’s universe by collaborating with content creators and selling assets with their logo.

And there’s even more to it: the modern game industry’s dynamic shows that small teams work better during the pandemic, and P2E games are often made by just a few people.

Some call this model the future of human civilization.

Big thanks to all the awesome peeps who helped me write this piece!

By Joanna frota Kurkowska, Data Insights Analyst at G2A.COM