Play-to-Earn Gaming Faces Obstacles to Expansion

Play-to-Earn Gaming Faces Obstacles to Expansion

         

In the gaming sector, Reddit co-founder Alexis Ohanian recently raised some eyebrows when he projected on the "Where It Happens" podcast that play-to-earn gaming will take over 90% of the market in five years.

In the podcast, Ohanian stated, "Ninety percent of people will not play a game unless they are adequately valued for that time."

"In five years," he added, "instead of being harvested for commercials or fleeced for bucks to purchase silly hammers you don't actually own, you'll be playing some on-chain similar game that will be just as exciting, but you'll actually earn value, and you'll be the harvester."

For in-game prizes and revenue, most play-to-earn games employ cryptocurrencies rather than proprietary tokens. "Axie Infinity," a Pokemon-style game where Axies can be purchased and traded for Ronin cryptocurrency, is the most popular play-to-earn title.

While play-to-earn gaming is gaining popularity, Michael Inouye, a principal analyst at ABI Research, noted that much of the enthusiasm and interest is focused on future opportunities rather than improvements to present gaming business models.

"The bigger potential comes from the excitement around the metaverse," he told TechNewsWorld, "where digital products will be acquired, purchased, and traded much like real-world, tangible commodities."

Optimistic Prediction

According to Ross Rubin, senior analyst at Reticle Research, a consumer technology consultancy business in New York City, there have been a lot of trials over the years with paying individuals to do things like view advertising or play games.

"Payment is usually made in a proprietary currency that can be exchanged for rewards," he told TechNewsWorld. "That's where play-to-earn gaming comes in."

He went on to say, "Cryptocurrency, on the other hand, is more universally recognized than proprietary currencies." "It also permits something to be done that was previously impossible." It allows for microtransactions. This may make play-to-earn gaming more feasible than in the past, but there are still a lot of difficult dynamics."

He explained that "so much of the industry is made up of casual gamers - individuals playing a game on their phone while waiting on a train, in an elevator, or in a waiting room."

"It would be a dramatic reversal of what has been a highly lucrative paradigm — in-app purchases — where the money has been moving in the opposite direction, to developers and game businesses," he said.

Chirag Upadhyay, an industry analyst at Strategy Analytics, a worldwide research, consultancy, and analytics business, said, "It's overly optimistic."

He told TechNewsWorld, "Developers and game businesses are attempting to earn money from software." "It will detract from that."

Resistant Developers

Ohanian's projection is "wildly optimistic," according to Mark N. Vena, president and chief analyst of SmartTechResearch in San Jose, Calif.

He told  "I'm quite doubtful about the 90% statistic."

He stated, "The majority of the gaming community is on consoles and mobile devices." "The writers of those platforms' titles are adamant about not changing their business model."

"Those creators must come on board with play-to-earn gaming," he concluded. "It would take a lot of effort to do it in five years."

Cryptocurrency usage might potentially be a concern. "Its unpredictability might be a deterrent to game producers adopting play-to-earn gaming," he said.

Furthermore, he said that the new Xbox and PlayStation game consoles, which are not designed for NFT and cryptocurrency deployment, are still within their five-year lives.

"To make it work, Microsoft and Sony would have to do stuff at the platform level," he said. "I don't think they'll do it."

He said, "Future platforms may support the trend," but "I don't see it occurring in the immediate future."

Getting Paid To Play

IDC's gaming research director, Lewis Ward, expressed worry about the fundamental reason of play-to-popularity. earn's

"I don't think these play-to-earn games are wonderful games, and I don't think they're pushing gamers to play them because they're amazing games," he said.

"From what I've heard, a sizable portion of the Axie Infinity user base is getting paid to play the game," he stated.

"In the cryptocurrency realm, individuals are paying people to play games in order to boost the value of cryptocurrencies and their link to NFTs," he claimed. "In that context, having a lot of liquidity, a lot of people buying and selling what you have to offer, gives other people confidence that it will appreciate over time." As a result, the cryptocurrency's creators have a strong incentive in increasing transaction volume."

"What concerns me is that the desire in play-to-earn games is a type of self-dealing," he said. "In and around this arena, companies are basically paying individuals to play these games in order to push up the value of cryptocurrencies that they can monetize." It turns into a money-making venture."

"Once you get into minors and the extraction of cryptocurrencies into fiat currency, this may cause a slew of legal concerns," he warned.

"That's why there aren't any play-to-earn games on the Apple App Store or the Google Play Store," he explained. "The platform owners don't want to become involved in something so unclear from a legal standpoint and risk facing lawsuits down the road," says one source.

Digital products and NFTs will undoubtedly have value in the future, according to Inouye, but there is still a lot of work and research to be done before they become the major income generator for the gaming industry.

"In this perspective, pay-to-earn should be considered more as a tool to reward players for their efforts and virtual collections, but shifting income sources away from premium and advertising will require a big lift," he added.

"I'm not saying it's impossible in five years — we've seen some surprising shifts happen in short periods of time — but the chances, I'd say, are quite remote," he said.