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P2E (play-to-earn) basically refers to blockchain-backed games that are gradually becoming an important component of the metaverse. The P2E model is primarily based on the freemium model, which suggests that one does not have to pay anything to get started but the user can purchase in case they want to add new attributes, content, or gear or just to move more quickly through the game. However, not all gaming platforms follow this free-to-play model.
P2E games, also known simply as “crypto games” are mostly NFT-driven. Here, players have the opportunity to take real control of their in-game assets, which the developers of the P2E game mint as NFTs on the blockchain. Having in-game items minted as NFTs and in-game currency fully usable as crypto offers a host of possibilities for the gamer.
P2E games reward participants with digital cash or non-fungible tokens (NFTs), which is one of the major reasons why these games have become so popular. Participants get an opportunity to earn currency that has real-world value while having fun. They also get a chance to create NFTs that can convert into profitable assets.
In these games, players can trade virtual items such as skins, weapons, characters, in-game currency or virtual land just like any other NFT to gain profit. And just like with any other NFT, many a time these in-game assets can help gamers fetch an eye-watering amount on the secondary market. In P2E, Players can get involved in the continued progression and development of a P2E game by forming a decentralized autonomous organization (DAO).
While P2E titles like Splinterlands and the Sandbox do not charge you anything as they are completely free-to-play, P2E games like Axie Infinity require you to spend money to buy Axies you want to use even before you even boot up the game.
P2E games are gaining popularity across all segments, and the widespread adoption of P2E in mainstream gaming seems inevitable right now. Many leading game developers are likely to integrate P2E elements in their popular titles. The transition of P2E to mainstream gaming will improve the gaming experience of players and will help them make income by simply playing games.
In its 2021 annual report, the Blockchain Game Alliance maintained that in the third quarter of 2021, NFT games generated $2.32 billion in revenue. This indicated 22% of all NFT trading volume.
Moreover, a recent study by Absolute Reports noted that the global market size for P2E NFT Games was estimated at around $776.9 million in 2021. The report estimates that the P2E market will grow at 20.4% between 2022 to 2028 to reach $2.8 billion by 2028.
The P2E market is growing at a fast pace, it is thus difficult to predict whether P2E games will overtake the traditional gaming industry or whether the duo will coexist with each other.
Players who own NFTs and decide to sell them at a profit could have to pay taxes. They could also have to pay taxes when liquidating crypto tokens they own or have won in the game. The tax rates will depend on a country’s laws and could differ from one nation to another. Last but not least, potential capital gain on reselling NFTs could attract capital gain tax.
There’s no doubt that P2E is gaining mainstream attention. However, there is another group of gaming fans who are cautious about the involvement of P2E characters in popular titles. They are of the view that integrating aspects such as tokens that have real-world value could take away factors like relaxation and leisure from gaming. Players will be more stressed while playing the game as their main focus will be on winning tokens.
Q1. What are Play-to-earn games?
Ans: Play to earn games are blockchain-backed games. These games are mainly NFT-driven where players have the opportunity to take real control of their in-game assets, which the developers of the P2E game mint as NFTs on the blockchain.
Q2. Are Play to Earn games always available for free?
Ans: In simple words, no, not all P2E games are available for free, some of them require some initial investment from the player-side. But off lately some of the P2E are offering free models in order to promote their P2E games
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