Web3 games are the games that use crypto and NFTs in their operations. However, games seem to have rejected them en masse citing several complications. With all that happening, several Web3 game developers believe they can win players over.
One gamer, Chris, used to spend many hours a day playing League of Legends. He, nonetheless, decided to stop after he discovered that he was spending a lot of time playing the popular battle arena game. When he was Axie Infinity in May 2021, nonetheless, he was hooked.
Axie Infinity, inspired by Pokemon, is a video game about training and battling monsters. That is the same model used in many other games. However, one element makes Axie Infinity unique: it is built entirely on the blockchain.
Axies are the powerhouse of Axie Infinity. However, they are owned as nonfungible tokens (NFTs). Crypto known as Smooth Love Potion is earned by battling the Axies. Gamers can also breed Axies and then sell or battle with them.
Chris declined to give his real name but is known by the pseudonym Cryptobarbarian. He believes that he could justify playing video games, provided that it paid. The 28-year-old said:
“It was fun for the first few weeks, but it gets boring really fast.”
Then, he stated that Axie Infinity became wholly about making money. Axie Infinity is a free browser game but you have to acquire a team of three Axies to play. At its top level of popularity, bottom-tier Axies cost nearly $350 each, which means that playing the game once needed a four-figure investment.
The game lets Axie owners lease out their monsters to other players, nevertheless. Being a long-time investor, Cryptobarbarian said that he acquired $30,000 worth of Axies and then loaned them out for 40% to 70% of the profits.
At first, this strategy paid off. Axie Infinity was a top ticket in CryptoTown, generating more than $15 million a day last August. Nevertheless, due to inflation threatening the real world’s economy, poor in-game economics, and a $600 million hack allegedly caused by a fake job posting, the price of Axies and the game’s Smooth Love Potion crypto collapsed.
The Axies that cost hundreds of dollars in 2021 now fetch below $10. Cryptobarbarian said over Twitter:
“I got around 100 players playing for me with high-end Axies, which overall cost around $100,000 at the height and are now worth nothing.”
To many gamers, stories like that offer a great reason to reject Web3 games, a term referring to the integration of cryptos and NFTs into games. The considerable carbon footprint of bitcoin and ethereum adds to that resentment. Whether it is Square Enix investing in crypto technology or Ubisoft bringing NFTs into Ghost Recon, players have strongly rejected the blockchain coming anywhere near their sector.
Many fear that crypto and NFTs will deform the gaming space into a side hustle, transforming its purpose from entertainment to only moneymaking. Play-to-earn (P2E) titles like Axie Infinity prove that they are not games as much as they are financial speculation with the layer of the game.
Cryptobarbarian commented on Axie Infinity:
“I’ve never met anyone that played it just for fun, only to make money.”
Nonetheless, Axie Infinity does not represent the future that most Web3 developers envision for the current gaming world. Video game companies are creating titles they hope will clean the Web3 gaming sector. All of them are powered by carbon-neutral blockchains including Solana and Polygon which are highly efficient when compared to Ethereum.
The primary aim is not to make titles that entertain cryptocurrency speculators, but instead to make games fun enough that people can enjoy playing them irrespective of whether they earn crypto. Head of gaming at FTX Ventures, the investment arm of the FTX cryptocurrency exchange, Amy Wu, stated:
“I’ve long been a believer that gaming is one of the consumer internet categories that is most likely to bring on mainstream adoption of crypto. But I also believe when you have a hit game with Web3 elements, likely, the majority of players will never actually trade those tokens. They’re just playing the game.”
Free To Play, Play To Own
The uprising wave of Web3 games is expected to range from the free-to-play (F2P) mobile titles to big-budget AAA games for consoles and PC. On the simpler side is Shatterpoint. With an art model that is majorly inspired by Legend of Zelda: Breath of the Wild, it is an action RPG for iOS and Android that, theoretically, resembles many App Store games.
There is a single-player campaign and a PvP (player versus player) multiplayer mode. You earn new gear and weapons as you move, Similar to Call of Duty and Fortnite, the multiplayer is divided into various ‘seasons.’
However, these seasons are divided by the shattering in the game, and that is where the blockchain comes in mainly. Players will be offered a list of goals every season. When they complete one of these goals; being one of the first 100 players to reach level 50, or remaining atop the PvP leaderboard for a certain time, their character is changed into an NFT. Just a limited amount of nonfungible tokens will get minted for every season.
There are key reasons why players may want to earn NFTs. The sad fact is that in-game reset causes the gear that you have collected will vanish. NFT characters, which there is a limited amount for every season, are permanent.
Nonetheless, the character gets a permanent look once it is minted into an NFT. The other benefit is that the NFTs can be sold in a marketplace, whenever there is a market for them.
Three critical elements make the model of Web3 games sustainable, according to Shatterpoint developer Benas Baltramiejunas. The game is free to play unlike P2E games like Axie Infinity which need upfront costs of three Axie NFTs.
Second, none of the items that are retained as NFT can be similar to ‘pay to win’ mechanisms. Thus, there can just be cosmetic benefits to owning it, not a competitive edge.
Finally, and most importantly, the game is well designed with the assumption that a majority of the people who play these games would not be interested in minting their character as an NFT. It needs to be fun for them as well. He stated:
“We’re using the NFT approach to create a bit of competitiveness, to incentivize players to play.”
In this context, Shatterpoint is monetized by traditional micro-transactions and from taking a small commission from NFT sales; 2.5% is the traditional cut creators take. Baltramiejunas hopes that focusing mainly on nonfungible tokens will result in better game design and affordable prices.
In case the developers can create a compelling game, revenue can, on paper, be sorted out organically via whatever the players set as the value of the nonfungible tokens. He stated:
“In free-to-play games, you have whales which account for 10% of the player base but 90% of the revenue. If you only have those microtransactions for monetization, you are only focusing on those whales during the content creation, and you’re leaving everybody behind. However, with NFT integration, you don’t need to monetize that aggressively. The market decides.”
NFTs Brands Invest In Gaming
While Shatterpoint is a mobile game that creates NFTs, the future might see many examples of the reverse: NFT collections turning into games. NFT drops like the famed Bored Ape Yacht Club appear to be doubling as crowdfunding platforms that produce games. Developers earn millions in royalties from sales and later use that money to grow the brand, tentatively boosting NFT prices in the process.
Some of the brands are even expanding into film and TV and many others are dabbling in gaming. One notable example is My Pet Hooligan, a product from AMGI Studios. According to the studio, blockchain technology and Unreal Engine 5 are the next technologies that will underpin entertainment. Colin Brady serves as chief creative and technology officer in the firm.
AMGI Studios aimed to make an animated film for Netflix at 50% of the traditional cost using Unreal Engine 5. While the film was approved, Brady said that AMGI technical lead Kevin Mack talked to him about launching an NFT collection.
Their venture resulted in a set of 8,888 3D rabbits dubbed My Pet Hooligan. Brady commented:
“We sold out in less than a minute, and all of a sudden people started saying, ‘hey, when movie? When TV show? When video game?’ So we said, we already have a studio full of Unreal Engine programmers, let’s try making a game.”
Eventually, Rabbit Hole was born. Rabbit Hole is a Sandbox Web3 game that seems to be an integration of Ratchet and Clank and Grand Theft Auto. As of July 10, 2022, Rabbit Hole was still in closed alpha, available just for My Pet Hooligan NFT holders with a single map functional. Brady said that the Rabbit Hole project aims to reach 1 million players by the end of the year.
He sees it as a virtual Disneyland which features less gaming and more socializing, just like the way people use Fortnite and Roblox. In that context, the studio created a companion facial recognition app for mobile phones. When you put the phone where a webcam normally is on a computer, it tracks your face and imitates all facial movements on your on-screen Hooligan.
Incredibly proud of what we have delivered and this is just the start!
The Rabbit Hole Alpha v1 is available now for all holders at https://t.co/8qZtkeENTr
You can't spell WAGMI without AMGI 😎
👇 All gameplay footage 🚫 🧢 pic.twitter.com/vKDSeSRJwr
— My Pet Hooligan (@mypethooligan) June 4, 2022
Rabbit Hole will use both crypto and NFTs powered by a play-to-earn mechanism where players earn in-game Carrots. They can buy dances, clothes, and a lot more for the Hooligan avatars. On the other hand, the Carrots are also cryptos that can be exchanged for Ether or Bitcoin. Brady said:
“We think you should just be able to jump into the game and start playing as a generic Hooligan. You start earning Carrots, and then maybe in a couple of months you realize, ‘wait for a second, I’ve earned a hundred dollars worth of Carrots.'”
On the other hand, there is the element of NFTs in these Web3 games. This targets holders of the 8,888 My Pet Hooligan nonfungible tokens. While those who download the game will start with a generic Hooligan, the My Pet Hooligan owners can use their NFT as an avatar in this game. But for this game to gain popularity, there is a lot of work to be done, Brady said:
“Superman No. 1 is valuable because Superman was a great comic. I think the NFT space for a while started to get that a little backward, where they thought the things were valuable just because they were collectible.”
Risks And Rewards Of Web3 Games
Web3 games come with a lot of potentials. However, the challenges are also massive. Making high-quality AAA games is considerably hard since the Web3 components come with more opportunities for failure. A good example is the Star Atlas project.
The Web3 games might be impacted by an imbalanced economy that can break the game entirely. Security and regulation are the other issues. For many years now, crypto has been a digital Wild West dominated by hackers and scammers. Nonetheless, regulators are gradually changing that. Many now wonder, can Web3 games thrive in a regulated environment?
FTX Ventures’ Wu stated:
“In many countries, consumer protection is the No. 1 driver of regulations. Given gaming is so mainstream, it will be a topic. 100%, these assets are going to be regulated.”
The final issue is hype, which is the engine that powers cryptos and NFT projects. Vaporware is common since games are promised on NFT project road maps before one second of development is implemented.
For longevity, Web3 games need to be developed in a model that insulates players from the crypto speculators. These speculators keep outbidding each other, which artificially increases the value of in-game items blocking players who genuinely want to play these games. A good example is a speculative bubble that pushed the entry cost to Axie Infinity above $1,000.
“I’m personally not interested in someone who’s paying $100,000 for an NFT. That’s a certain echelon. That’s not a normal society. I’m only interested if this helps every person.”
Web3 games aim to be highly engaging than other video games and simultaneously benefit players with some pocket money on the side. While reflecting on the amount of money he would need to earn to justify playing blockchain and Web3 games once more, Cryptobarbarian concluded:
“If the game was good I would be satisfied with a little money as long as it’s not a time waste. If I could earn some lunch money with it, that would be nice. But I think that will take at least a few more years before it happens.”