If you are interested in online gaming, you may have noticed the terms GameFi and P2E being used in discussions about the gaming industry in the past couple of years. Literally speaking, GameFi is a term made up of the words ‘game’ and ‘finance’ (not ‘fidelity’, like the ‘Fi’ in HiFi or LoFi), and P2E stands for ‘play to earn’, but what do these terms actually refer to, and is GameFi something you should be getting interested in as a player?
How P2E Games Incentivize Players
GameFi is all about offering players of online multiplayer games a new way to experience the games they put their time into, where because of blockchain technologies, they actually own the in game assets and resources they acquire. Normally, when you play a game, your in game assets only exist on a company’s server, and you can only access them for as long as that game is hosted and available. Equally, these assets, whether you earned them in the game or paid real money for them via microtransactions or loot boxes, don’t have any value outside of the game. GameFi P2E games like the upcoming Cyber City game aim to turn this on its head, with in game assets existing as NFTs or cryptocurrency tokens that the player both owns, and can trade on the blockchain.
This ultimately means that by progressing in the game and gaining more in game assets, people can earn tokens that can either be spent or exchanged for currency. It also means that their assets have a value that can appreciate over time (or depreciate, of course).
A Brief History of P2E
P2E is the newest model when it comes to how people financially interact with games. Originally, games followed a ‘pay to play’ model, with most people only able to play them in coin operated arcades, paying small amounts for a short amount of time playing. When home consoles became popular, game publishers instead moved to a model where people could buy a game outright and own it, allowing them to play it as much as they wanted for that larger initial cost.
Online gaming, and especially mobile gaming, saw the rise of the freemium or ‘free to play’ model, where games could be played for free, but players are incentivized to acquire in game items through microtransactions.
With P2E, which first really took off during the pandemic, there is a cost of entry - as you need to buy some in game assets to start playing - but then you are able to begin acquiring things that are worth real money.
How Could P2E Become More Mainstream?
P2E games currently have a comparatively small share of the gaming market, with 1.22 million unique players estimated to be using these games in 2021. However, as understanding of how things like NFTs and the blockchain work grows, this will likely see more people viewing P2E games as an opportunity. However, the thing that many commentators believe will really start bringing over more gamers from other sectors is a strong in game experience. GameFi companies thus far have been leading with the crypto aspect, and making the actual gameplay a secondary selling point. However, hardcore gamers currently value the experience they get for their time more than an opportunity to earn money, given they are currently paying to play, so will only be enticed by really engaging and fun games.
It will be interesting to see how GameFi evolves and grows in the coming years.