Player retention in gaming is everything.
Despite this, publishers optimize for company profit at the cost of player value and well-being. They are able to do this due to their end-to-end ownership and control over the development, distribution, and management of games. A prime example of this is Electronic Arts (EA), a game publisher that has gained a villain-like role in the gaming community due to their prioritization of their own microtransaction monetization models over the player experience.
https://s3-us-west-2.amazonaws.com/secure.notion-static.com/55893f75-43f5-42e2-9ec9-3062d22214fb/0T1iocd1f8Ztx-Ve0
EA’s response on reddit — the most downvoted comment in Reddit history
The core vision behind play to earn (P2E) is to address these issues by offering real player ownership of in-game assets and their surrounding world, ultimately creating greater stickiness and retention of communities. In contrast to the current global 30-day retention rate of 3% of mobile games, we have seen some initial success with the first prominent P2E ecosystem: Axie Infinity — which has a D0-D90retention rate of 40%.
Edit: Not everyone who downloaded Axie Infinity was able to play, hence the actual D1-D90 retention rate is approximately much higher than 40%.
As a result of Axie Infinity’s success, we’ve seen a surge of new P2E ecosystems attempting to replicate similar success. Despite this, many of the projects still aim to centrally control and coordinate the end-to-end production of games — thus potentially replicating the same structural mis-alignments found in legacy games.
These Web 2.5 games look to leverage ‘crypto as a feature’ by enabling digital asset ownership via NFTs or financial ownership of an economy via ERC-20s, but at the same time aim to limit context and participation around other more cryptonative properties of ownership, such as governance. Typically, the teams behind Web 2.5 games look to build highly polished but closed ecosystems where the entire player experience is centrally controlled by a single organization. These projects consider themselves ‘game first’ and mostly still optimize for Web 2 growth metrics, arguably under the same value extractive mentality as those of legacy game publishers.
“We are implementing NFTs as we think it will generate more revenue. We believe that players are willing to spend more if they believe those assets will go up in value.”
— Game Studio [Name undisclosed]
Analogous with CeDeFi, these games look to build closed-loop, centrally-controlled ecosystems on top of inherently open and permissionless crypto networks.
While we don’t expect all P2E ecosystems to be decentralized from the start, anticipating a more gradual process of decentralization as seen with Axie Infinity, we believe this Web 2.5 trend of game development stems from a fundamentally incomplete understanding of composability, interoperability, and the power of decentralized coordination technologies.
We believe that Web 3 games will win over Web 2 and Web 2.5 games because they leverage community ownership, real economic value, and native composability to drive greater player adoption & retention. We believe that the Web 2.5 approach to building P2E ecosystems is not enough to prevent the value extraction of communities. This is because there would still be key reliance on a single coordinating party that owns the end-to-end development and management of the economy and end player experiences. Instead, we believe we need to treat P2E ecosystems as open source public goods where all aspects of the economy and surrounding play experiences are built out in the open.
The verifiability of the system establishes trust that the system undeniably does what it says it does, and the consensus of participants about the information in the database establishes an unquestionable truth.
Through token incentives and community ownership, we are able to unbundle the role of a publisher through a bottom-up set of contributors, players, and guilds which instead drive worldbuilding, product development, and governance. By bringing these responsibilities out into the open, we are no longer dependent on a single company to achieve the goals of the entire ecosystem but can leverage open-source contributions from anyone on the internet.