Play-to-earn has the potential to significantly boost engagement and attention for mobile advertisements says Ozgur Taskaya.
With an industry value of over $300 billion and a consumer base of 2.7 billion players across the globe (expected to exceed 3 billion by 2023), the booming gaming industry is showing no signs of slowing down. While gaming is a global phenomenon, APAC stands out as the region for growth in the market, accounting for half of global consumer spending on games and 55% of all players.
With such a large, engaged audience, developers and advertisers are always looking for new ways to monetize games, from a traditional one-off purchase model to subscription services and ad-supported free-to-play. A new monetization innovation – ‘play-to-earn’ – has seen particularly strong uptake in the APAC region.
Why gamers are being paid to play
Play-to-earn provides players with the opportunity to turn their investment of time and attention into earnings in the form of non-fungible tokens (NFTs) and/or cryptocurrency via blockchain technology. While trading items earned through gameplay with other players is not a new concept (Pokémon did it via Gameboy link cables a quarter-century ago), the innovation blockchain gaming presents is that such items double as assets with fluctuating value that can be traded, bought and sold in a manner similar to stocks.
Axie Infinity — developed by Vietnamese studio Sky Mavis — is the largest and most well-known play-to-earn game. In Axie Infinity, players purchase cute monster pets called “Axies”, which can be used to battle against the computer or other players, bred to create more powerful Axies or sold for real money. Players are also rewarded with smooth love potions (SLPs), NFTs that can also be sold, and Axie Infinity Shards (AXS), which are exchanged for digital in-game items.
While players can keep their earnings in-game without “cashing out”, the opportunity to profit from playing games has proven to be enticing. Some have turned play-to-earn gaming into a regular and substantial income, with potentially transformative effects for gamers based in emerging economies such as the Philippines.
Unlike the free-to-play monetization model that is dominant in the industry, Axie Infinity does have a barrier to entry. Players must buy at least three Axies to be able to play, with prices depending on market value, which could set starting costs as high as $1000. Axie Infinity’s business model requires a constant influx of new players for its various tokens to remain a profitable investment.
“Play-to-earn has the potential to significantly boost engagement and attention for mobile advertisements by rewarding players who engage with an ad with NFTs, effectively sharing ad revenue with players while providing advertisers with the engagement they seek.”
Such a model raises concerns over volatility and longevity, which game developers could alleviate by diversifying revenue streams enabled by play-to-earn beyond the buying and selling of in-game items.
APAC has powered up
The APAC region is forecast to account for 50% of global consumption growth in the period 2020–30 and advertisers tapping into this rapid increase in disposable income are focusing their attention on mobile phones. Between 20-30% of Gen-Zs in Asia spend more than six hours a day on their mobile phones and gaming is taking up an increasing share of that time. Demographics are shifting too, with female gamers now representing 38% of the Asian market, opening up more diverse audiences for advertisers.
In-game ads are a common monetization strategy in free-to-play games, most often seen in mobile games, with players watching ads in exchange for in-game items or to continue playing. Play-to-earn has the potential to significantly boost engagement and attention for mobile advertisements by rewarding players who engage with an ad with NFTs, effectively sharing ad revenue with players while providing advertisers with the engagement they seek.
A hybrid play-to-earn/ad-supported model also reduces the dependence on the success of the in-game economy, smoothing out periods of volatility by providing developers with a stable source of revenue and providing more earning options for gamers. This has the potential to truly take off in the APAC region where gamers are already switched on to the benefits of play-to-earn.
Warner makes the first move
The play-to-earn market is growing rapidly — with APAC leading the charge — providing new inventory opportunities that are being snatched up by forward-thinking marketers. Other companies are going a step further by releasing play-to-earn games of their own.
Developers of popular blockchain trading card game Splinterlands recently entered into a partnership with Warner Music, allowing Warner’s artists to create personalized play-to-earn games to promote their brands and music while providing players an opportunity to collect branded NFTs with real-world value.
Gaming is on the rise in the region and marketers who can take advantage of the new inventory opportunities here can reach a large and growing audience. The even faster-growing sub-category of play-to-earn creates a need for partnerships between gaming companies and marketers to sustain its business model.
Through those partnerships marketers can reach a high-attention growth market, gaming companies gain a new avenue for monetization and gamers can earn money from playing. It’s a win-win-win for the marketers ready to get involved.