The crypto game industry is facing a critical juncture following the decline of Axie Infinity, a prominent play-to-earn game. While many executives and developers are returning to a gameplay-centered approach, Alexis Ohanian, co-founder of Reddit and a strong supporter of NFT games, firmly believes that “play-to-earn” gaming is still the way forward.
Ohanian, who is also the founder and current General Partner of venture capital firm Seven Seven Six, took to Twitter on Wednesday to share his opinion.
“Within the next five years, the majority of gamers won’t play games unless they are being properly valued for that time,” he wrote. “The model is called “play-to-earn” and it will become standard for video games in the future.”
Within the next 5 years, the majority of gamers won't play games unless they are being properly valued for that time.
The model is called "play-to-earn" and it will become standard for video games in the future.
Let’s talk about why ↓ pic.twitter.com/vPWlWmmK4a
— Alexis Ohanian 🧠 (@alexisohanian) May 31, 2023
Ohanian believes that although these games may encounter initial hurdles as the wider public adjusts to crypto and NFT trading, scaling these technologies will make play-to-earn an undeniable choice.
To support his argument, Ohanian referred to past success stories, such as the sale of a virtual nightclub called Club Neverdie in the early 2000s game Entropia Universe, which fetched a six-figure price tag.
He also pointed out recent six-figure sales of Counter-Strike: Global Offensive (CS:GO) skins as evidence that games will increasingly adopt the play-to-earn model.
In games that follow the play-to-earn model, players are rewarded with something of value, usually a cryptocurrency token or an NFT, in exchange for their gameplay hours, victories or noteworthy accomplishments.
Did my guy leave this tweet in draft for 2 yrs https://t.co/XHQ5LhZQ7J
— Zhuoxun Yin (@ZhuoxunYin) May 31, 2023
Challenges and setbacks
While Ohanian acknowledges that Axie Infinity is leading the charge in this arena, it is important to note that the game’s play-to-earn economy faced a significant setback in early 2022.
Despite generating over $4 billion worth of NFT trading volume to date, the game experienced a sharp decline in token prices. The in-game SLP reward token is now down 99.5 percent from its peak price, and the AXS governance token has fallen 96 percent from its all-time high.
Sky Mavis, Axie Infinity’s creator, has pinpointed SLP token inflation as the primary contributing factor. The daily generation of SLP through the Axie breeding process surpasses the quantity burned, leading to an imbalance. To tackle this issue, Axie Infinity reduced the distribution of SLP significantly by removing it from the single-player adventure mode and eliminating rewards for daily quests.
This is a terrible take
Gamers have never measured monetary value pulled from a game and they shouldn’t start.
Monetary value coming from a game is a bonus on top of the the main value metric of enjoyment
— Phin ⚡️ (@Phin_totten) May 31, 2023
Skepticism surrounding play-to-earn model
As an investor in Sky Mavis and an early supporter of Horizon Blockchain Games, the developer of the NFT-based trading card game Skyweaver, Ohanian has long advocated for crypto-infused video games. He is known for his collection of high-value NFTs and his backing of various Web3 startups.
However, many crypto executives and game developers have voiced their opposition to Ohanian’s stance in recent months, casting doubt on the sustainability of play-to-earn as a viable model for the industry.
Mark Otero, CEO of Azra Games, expressed his disapproval of play-to-earn games, while Johnny Lee, General Manager of Solana Games, went as far as to claim that play-to-earn games are not truly games but rather DeFi products.
Zhuoxun Yin, COO of Magic Eden, wrote on Twitter, “Did my guy leave this tweet in draft for 2 yrs.”
Phineas Totten, Wildcard Marketing Manager, also countered Ohanian’s thread, saying it was “a terrible take” and that gamers have never quantified the financial worth derived from a game and should not begin to do so. According to Totten, the monetary value obtained from a game should be seen as an additional benefit alongside the primary measure of enjoyment.