Play-to-Earn Games or Traditional Gaming Models: Who Wins in the Long Run?
The traditional gaming model and the more recent Play-to-Earn (P2E) model have long dominated the gaming business. Traditional gaming has two types of models: purchase-based, in which players buy a game directly (such as PC and console titles), and free-to-play, in which players earn money through in-app purchases and microtransactions. These models have created a multi-billion-dollar global industry focused on delivering immersive and engaging experiences.
However, the emergence of blockchain technology and digital assets has given rise to play-to-earn games, where players can earn real-world value through in-game prizes like cryptocurrencies or Non-Fungible Tokens (NFTs). As P2E games like Axie Infinity and The Sandbox gain popularity, it has sparked a debate on which model holds more long-term potential.
The following blog examines the benefits and drawbacks of P2E and traditional gaming to understand their future trajectories and determine which will likely become the dominant model in the gaming industry.
Overview of Traditional Gaming Models
Pay-to-Play and Free-to-Play Models
Traditional gaming is primarily divided into two major categories: Pay-to-Play (P2P) and Free-to-Play (F2P). In pay-to-play games, users buy the game up front, usually for PCs or consoles, and are typically given access to the entire gaming experience. AAA games like Red Dead Redemption 2 and The Witcher 3 are two examples of P2P. On the other hand, free-to-play games offer players free access but generate revenue through in-game purchases and microtransactions for cosmetic items, additional content, or gameplay advantages. League of Legends and Fortnite are two well-known free-to-play games.
Revenue Streams
Traditional gaming companies generate income through a variety of channels. These include:
- Microtransactions, expansion packs, season passes, and in-app payments provide continuous revenue streams for both Pay-to-Play and Free-to-Play games.
- Game sales provide an upfront revenue source for Pay-to-Play models.
- Subscription services like Xbox Game Pass also offer players access to a game library for a monthly fee.
- In-game advertisements are becoming increasingly common, particularly in mobile free-to-play games.
Player Engagement
Traditional games are designed with a strong emphasis on entertainment value. They provide players with immersive experiences through competitive multiplayer modes, story-driven plots, and excellent graphics. These games prioritize long-term player engagement and gameplay mechanics, which often creates fan communities around the game’s universe. Traditional games employ engagement techniques that prioritize gameplay satisfaction over monetary rewards, keeping players invested through narrative depth, competitive play, and frequent content updates.
Overview of Play-to-Earn (P2E) Games
Play-to-earn (P2E) games introduce a new gaming model in which players can earn real-world value by participating in gameplay and acquiring in-game assets. These assets, which are frequently in the form of cryptocurrencies or Non-Fungible Tokens (NFTs), can be bought, sold, or used on a variety of decentralized finance (DeFi) systems. Unlike traditional gaming, where in-game rewards have no value outside of the game, P2E enables players to monetize their time and skill by earning assets with real-world liquidity.
Blockchain Integration
P2E games are powered by blockchain technology, which ensures transparency, security, and decentralization. These games incorporate NFTs to represent unique, digital items such as characters, weapons, or virtual land, which are owned by the players and can be traded on secondary markets. Another important aspect of P2E games is their token economies, in which native tokens act as in-game currency and give players financial rewards for participating. Blockchain ensures the security and verifiability of all transactions, including asset trade.
Examples of Popular P2E Games
Axie Infinity and The Sandbox are two of the top P2E games. Players can collect, breed, and battle Axies in Axie Infinity, earning cryptocurrency rewards along the way. The Sandbox is a virtual metaverse in which players can use NFTs to purchase, trade, and build virtual assets and real estate. Both games have built thriving ecosystems where players can earn substantial real-world income, making P2E a compelling model for the future of gaming.
Monetization and Revenue Models
Traditional Games: Monetization Model
While traditional gaming uses a variety of monetization techniques, game sales are the primary source of revenue for Pay-to-Play games. Whether a game is purchased digitally through stores like Steam or PlayStation Store or on physical media, players typically pay a one-time cost for it. In Free-to-Play (F2P) games, revenue is generated through microtransactions, where players can buy cosmetic items, in-game currency, or additional content.
Other revenue sources include season passes, expansion packs, and subscription services (like PlayStation Plus or Xbox Game Pass) that offer continuous access to content. Additionally, in-game advertising is being increasingly employed, particularly in mobile games, to help businesses monetize large non-paying player bases.
P2E Games: Revenue Model
Play-to-earn games adopt a different revenue structure, allowing players to earn real-world value through Non-Fungible Tokens (NFTs), in-game tokens, and transaction fees. NFTs are unique in-game assets such as characters, weapons, or virtual real estate that players can purchase or earn. These NFTs can then be exchanged for cryptocurrencies or fiat money on marketplaces.
Many P2E games have a native token economy, where players earn tokens for completing tasks, winning battles, or achieving milestones. These tokens can be traded for other cryptocurrencies or used to make in-game purchases. Additionally, game developers and platforms generate revenue by taking a small fee from each transaction on the NFT marketplace or token exchange, creating a continuous stream of income based on player activity.
Player Financial Investment
In a traditional gaming setup, players usually pay money upfront by buying the game and then choosing to spend on in-game items or expansions. By contrast, in P2E games, players may need to invest in NFTs or tokens to participate, often requiring a significant initial financial commitment. While traditional games concentrate on entertainment value, P2E games necessitate financial consideration as players look for a return on investment, blurring the distinction between gaming and finance.
Player Engagement and Ownership
Traditional Gaming: Engagement through Gameplay and Storytelling
The main factors that generate player engagement in traditional gaming are competitiveness, deep narratives, and immersive gameplay mechanics. Players are attracted to high-quality games that offer compelling storylines, challenging gameplay, and multiplayer modes that foster competition. Games like The Witcher 3 or Call of Duty rely on intricate worlds, characters, and lore to captivate players.
Engagement is further fueled by the sense of accomplishment that comes from leveling up, unlocking new content, and using progression mechanisms. Traditional games prioritize creating a sense of community and providing entertainment through co-op options, online forums, and esports competitions.
P2E Gaming: Engagement through Rewards and Ownership
Play-to-earn (P2E) games encourage participation by providing real-world rewards in the form of cryptocurrency and Non-Fungible Tokens (NFTs). In P2E games, players are not only motivated by the gameplay itself but also by the potential to earn valuable digital assets. Players have the option to monetize their time spent playing the game by selling or trading these assets on secondary marketplaces.
The ability to earn while playing creates a significant engagement driver, as players are incentivized to participate regularly to increase their earnings. Progression systems are also linked to rewards, with players earning tokens or NFTs as they reach new milestones or perform well in the game.
Digital Ownership: Traditional Games vs P2E Games
In traditional gaming, players do not have true ownership over the in-game items they acquire. Players cannot transfer, sell, or trade these assets outside the game, as these are stored on centralized servers.
P2E games revolutionize this by giving players full ownership of in-game assets through blockchain technology. Because NFTs are held on decentralized networks, players can purchase, sell, or exchange NFTs, and they even have control over them if the game shuts down. In P2E games, this degree of ownership is a key distinction and offers players an additional level of engagement.
Barriers to Entry and Accessibility
Traditional Gaming: Financial Barriers
Traditional gaming often presents financial barriers related to the cost of game purchases and the hardware requirements necessary to run high-quality games. Players usually have to pay between $40 and $70 for each Pay-to-Play (P2P) game, particularly AAA titles. Furthermore, many traditional games require expensive gaming PCs or powerful consoles (like the Xbox or PlayStation), which may cost hundreds or even thousands of dollars.
Free-to-play (F2P) games lower this initial barrier, but they often entice players into in-app payments or microtransactions to access premium content, skins, or boosts. Overall, a player’s willingness and ability to spend money on games and hardware determines how accessible traditional gaming is.
P2E Gaming: Accessibility Challenges
Entry barriers in Play-to-Earn (P2E) games are often associated with the requirement to make initial financial investments in NFTs or tokens to play. Unlike traditional gaming, where access is granted upon purchasing the game, P2E games may require players to purchase NFTs that represent characters, assets, or tools to begin playing. These resources can sometimes be expensive, particularly in well-known P2E games like Axie Infinity, where players need to buy several NFTs to start.
Additionally, newcomers who are not familiar with blockchain technology may find it difficult to manage cryptocurrency transactions and comprehend blockchain wallets. Although P2E games have the potential to be profitable, casual gamers and those with limited funds find it difficult to participate due to the upfront costs and technological requirements, which limits accessible P2E gaming.
Longevity and Sustainability
Sustainability of Traditional Models
Traditional gaming models have proven longevity through expansions, sequels, and competitive gaming. To keep players interested and the game new, developers often issue updates, expansion packs, and downloadable content (DLC). Long-standing franchises such as Call of Duty, Assassin’s Creed, and FIFA build on their success through annual or bi-annual releases, generating consistent player engagement.
Esports and competitive gaming also help contribute to the sustainability of traditional games by developing long-term ecosystems around multiplayer games like League of Legends or Counter-Strike: Global Offensive. These games cultivate thriving communities and professional leagues, ensuring longevity through both recreational and competitive play. A loyal fan base, competitive gaming structures, and constant content delivery support the traditional gaming model.
Sustainability of P2E Models
Play-to-earn (P2E) games face unique sustainability challenges that may affect their long-term viability. One major problem is token inflation, which occurs when in-game tokens are continuously issued, devaluing the rewards that players receive. An oversupply of tokens can lower their value without proper economic balancing, which would make it less desirable for players to keep playing the game. Additionally, P2E games must maintain a delicate economic balance between early adopters and new players to avoid situations where only the initial participants benefit financially.
Another issue is player retention, as the financial incentives that encourage participation may diminish if the game economy becomes unstable or less rewarding over time. Moreover, if the gameplay itself is not sufficiently engaging, players may abandon the game once the economic incentives wane. To achieve sustainability, P2E games need to constantly innovate, provide engaging gameplay, and build robust in-game economies that can withstand token inflation and player attrition.
Regulatory and Legal Considerations
Traditional Gaming Regulation
Different regulatory frameworks apply to traditional gaming, especially to gambling mechanisms like loot boxes and in-game betting. Loot boxes, which offer randomized rewards for a fee, have faced scrutiny in countries such as Belgium and the UK, where they are often classified as a form of gambling. Regulators argue that by promoting excessive spending for uncertain results, loot boxes take advantage of vulnerable players, especially children.
Some countries have responded by enacting or proposing laws that either ban loot boxes or mandate game developers to disclose the chances of obtaining particular rewards. Additionally, games that offer in-game currency used in betting or competitive play with real-world prizes must adhere to gambling regulations, making legal compliance a critical aspect for developers.
P2E and Crypto Regulation
Play-to-earn (P2E) games, which incorporate cryptocurrency and NFT ownership, face legal uncertainties related to crypto regulation and digital asset ownership. Because they involve the exchange of real-world value, they are governed by financial rules related to cryptocurrencies, like Know Your Customer (KYC) and Anti-Money Laundering (AML) standards. However, the regulatory landscape for P2E is still evolving, leading to challenges for developers and players in navigating legal compliance across different jurisdictions.
Additionally, NFT ownership in P2E games raises questions about intellectual property rights and the legal status of virtual assets, particularly whether NFTs are classified as securities, commodities, or collectibles. Because of these obstacles, establishing a uniform legal framework for P2E gaming is hard, leaving many regulatory issues unresolved.
Future Potential of Both Models
Traditional Games Adopting Blockchain
As blockchain technology becomes more prevalent, traditional gaming models may begin integrating Web3 elements, such as NFTs, token economies, and blockchain-based domain names. These additions could offer players true ownership of in-game items, enabling them to trade NFTs like skins, characters, or weapons across platforms, providing a new layer of value and engagement.
Additionally, traditional games might include token-based economies where players can earn cryptocurrency through gameplay, similar to P2E models. Another emerging trend is the establishment of decentralized in-game assets or stores through the use of Web3 Top-Level Domains (TLDs), like .game or .crypto. These domains could further enable cross-game item trading and player ownership of virtual assets.
P2E Gaming’s Growth
The future of Play-to-Earn (P2E) gaming holds significant potential for growth as developers work on improving gameplay mechanics and accessibility. If they want to appeal to a wider audience, particularly those used to traditional gaming, P2E games must prioritize more engaging gameplay and storytelling over monetary incentives.
Moreover, adopting Web3 domains, such as .game or .nft, could strengthen the infrastructure of P2E games by enabling secure, decentralized in-game asset management and ownership. This could facilitate smoother integration between games and marketplaces, allowing players to own, manage, and trade assets across the Web3 ecosystem. As these innovations develop, P2E could become a more mainstream model, attracting casual and dedicated gamers alike.
Conclusion
Play-to-earn (P2E) models and traditional gaming have different advantages and disadvantages. Traditional games excel at engaging gameplay, immersive storytelling, and long-term viability through expansions and competitive ecosystems. However, they often lack actual ownership of digital assets. Blockchain-powered P2E games give users digital ownership of in-game assets and real-world rewards, but they also have drawbacks like token inflation, accessibility problems, and unclear regulations.
As the gaming landscape evolves, a convergence of traditional and P2E models seems likely. While P2E games can improve gameplay and reach a wider audience, blockchain integration with traditional games can completely transform how players interact with digital assets. Players and developers alike should investigate how these advances can ultimately reshape entertainment and digital economies, as both models can influence the direction of gaming.
