Are Play to Earn games the future?
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
I don't think so. They're the past. PtE is not the future of gaming powered by web3. They're unsustainable as currently presented.
So before investing there, perhaps it's worth thinking about it a bit, same way that I examined NFTs.
1/🧵
The excitement of PtE, the way it's being introduced as a concept, is all about the idea that "instead of paying to play (either upfront or to buy gems and powerups), gamers can now be paid for gaming".
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
2/N
Much is being made of examples like @AxieInfinity 's "Scholarships" which are enabling some people in the Philippines to pay their bills just by playing the game. Good for them, I guess, though I wouldn't count on that lasting too long.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
3/N
To see why, we can just simply draw a diagram with the money flows for a PtE game, as we did for NFTs, remembering that the game won't be able to just create money out of thin air. Money in = Money out.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
4/N
Games usually take a lot of resources to build, and so most games that I've seen take off tend to have investors. So the diagram might look like this:
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
5/N pic.twitter.com/DIwuXNsKav
It's a bit more confusing, because the investors, like in a regular business, are now separate from the "users", or in this case "players", the people to whom the product is being pitched.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
6/N
PtE games have also successfully obfuscated the diagram further by having NFT investors, which are sort of like a different sub-class of investors, but, as we'll see, not really.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
7/N pic.twitter.com/A5jXvf0TBH
Yet more obfuscation is possible by adding things like "scholarships programs", like Axie has, which makes it even more confusing. It really looks like someone is going to be earning their daily wages playing a pokemon game all day!
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
8/N pic.twitter.com/Ifxh2Ez25y
So let's simplify back a bit. First of all, the Scholars are just a type of sponsored player, so they get merged in with "players". They're just players who only take and don't actually put anything in via M2.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
9/N
Then the regular investors, VCs, etc... should they be in there at all? Well, there's a couple of options.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
Most likely is they've invested the traditional way, by buying shares in the company. If so, they will be getting their money out upon a liquidity event.
10/N
In that case, their only input to the diagram is to provide an initial pile of cash, most of which is likely to be spent on the team and various costs of getting the project up to speed.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
11/N
Much worse for the project, imho, is if they put in investment by buying tokens like AXS or whatever, because then they will be getting their money out much sooner, and instead of being paid off by stock market investors, it's players who will foot the bill.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
12/N
But I'm getting ahead of myself. Either way, VC/Angel investors don't add to the long term money flows on this diagram. So let's take them out.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
13/N pic.twitter.com/zNbSMkCcOz
What about those NFT investors? Well, taking examples like Axie and Illuvium, and many others, they're basically people looking to grow their money by... you guessed it, selling to later investors.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
This is starting to get quite dubious, right?
14/N
I think the best thing to do with the NFT investors there, given that for most of these games, players have to buy NFTs to play anyway, is to lump them in with the players. So we get this simplified diagram.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
Folks, welcome to the PlayToEarn model.
Do you see the problem?
15/N pic.twitter.com/IsXNQr1kEw
On average, because maths, most players *must* lose money. At best, if the team costs absolutely nothing at all, and the project has no costs whatsoever, the players will break even on average. But games cost money to run.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
16/N
There's a very familiar setting where you might have encountered games of chance and skill where, on average, players tend to lose the money they put at stake.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
Gambling.
17/N
Now I'm not here to judge gambling as a gaming model. In a way, everything we do in life is gambling - doing stuff that has a cost in expectation of a payoff that exceeds that cost.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
But I like to call a cat a cat.
18/N
PtE/Gambling is not new. It's the oldest thing in the world! For fun, here's a video of Yudishtira gambling his kingdom and freedom away thousands of years ago in Peter Brook's excellent production of the Mahabharata. I time-tagged it for you.https://t.co/q7SSN2Vhfi
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
19/N
I'm a long-time gamer. I started playing on a C64. The first game I bought was Civilization (the first of the series!). I've gamed all my life. I love games. I think they're great.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
And I love web3, I think it has huge potential to transform everything.
20/N
So when all these people on youtube and whatever claim that *this* is the "future of gaming"...
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
I'm not buying it.
This is the ancient past, reheated and served up again.
21/N pic.twitter.com/ax0jLdOWJ7
Gambling has proven quite resilient as an industry and I'm sure it has a place in our future much as it has in our past. And investing in gambling companies might well be quite profitable. Many poker companies out there make huge profits.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
22/N
And casinos, despite the fact that everyone knows that "the house always wins", still attract huge crowds all the time.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
It's a pretty solid business. But don't tell me it's the "future of gaming".
23/N
If gambling/PtE is not the future of gaming, then what is? What impact will web3 have on gaming? Where's the real stuff, not these microwaved fumes of addictive pastimes?
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
I have a couple thoughts about it. And I could be totally wrong, but I have a hunch.
24/N
To me, any "web3 gaming" has to start with a fundamental shift in what we're looking at as the primary actor.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
In the previous vision, the commercial entity is the apex predator, so it's in the middle. Web3 gaming has to start differently.
25/N pic.twitter.com/ABr9J5U4H1
A simplistic extrapolation that is at least sustainable is that maybe games now will start providing NFT items as well as value in the form of entertainment.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
Like, when you find a Stone of Jordan in web3-Diablo, it's now an NFT in your wallet.
26/N
That's interesting but not super exciting to me. Yes, it does unlock collectible value for items that have for the last 20 years been locked inside digital fortresses owned by large gaming companies.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
27/N
So in an alternate timeline where NFTs appeared long ago, maybe I'd have a Corruptor set, collected back when it was fresh off the WoW presses, and I'd be able to resell it in 10 years to a collector who just wants it.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
mild yawn, though there's lots of $$$ in that.
28/N
This model would also mean that players get to participate in the value exchanges in games. It's something @cdixon pointed out in one of his excellent threads. NFTs reduce the take rate, enable ppl to participate. https://t.co/gOONq6D8pY
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
29/N pic.twitter.com/n7md9m5S17
All good, but I have a different angle to suggest. For that, I want to go back to the earlier days of gaming.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
Most gamers will have heard of the seminal game "Doom". If you were into gaming and alive at that time, you probably played Doom and Doom 2 to the bone.
30/N
If you had some sort of internet connection, or even just access to those magazines that came with CDs that had cool stuff on them, you might also recall an explosion of user content for Doom. Mods, re-skins, everything.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
31/N
Doom definitely triggered the kind of creativity explosion I've talked about before ( https://t.co/b0pfAa315U ). They helped it by making level editors available and I guess they encouraged it in many ways.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
But those creators had no economic stake in the game.
32/N
I don't blame id software for this. This was the economic model at the time. If anything, they were ahead of things by distributing as shareware and being so permissive of mods and so on. They did good. Thanks for Doom!
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
33/N
What I see NFTs enabling, though, is a more deliberate and more effective blurring of boundaries between creators, players, and games (and the companies that make them).
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
34/N pic.twitter.com/XKDkMloibt
And not only between a single game and its players and creative superfans, but between games and other games too. The ecosystem gets much more powerfully linked up, with economic ties merged in with the rest.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
35/N
This becomes possible with web3 because it creates economic incentives for everyone to do this. Because it makes creative explosions more likely. And any game should want that.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
Smart and visionary game creators must be thinking about this already.
36/N
The poster-child for web3 gaming, at the moment, is not AxieInfinity.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
It's Loot.
37/N
Game designers that want to pioneer the future of gaming would do well, imho, to take lessons from that humble project, and make openness, composability, and a deliberate relinquishment of control, become part of their game design vocabulary.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
38/N
Personally, I'm excited to see this unfold over the next decade. Let a million composable Doom flowers bloom.
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
And if it creates enormous entertainment value for millions, as surely it will, the money will follow, don't worry about that.
39/N
Thank you for your time and attention. If you found this thread instructive, please don't just "like" it, also retweet it :-)
— Daniel Tenner (swombat.eth) (@swombat) November 7, 2021
gm and gl
40/40