Thou shalt play. Thou shalt own. Thou shalt be happy.
- The Play to Own Manifesto
Introduction
Letâs get one thing straight â Web 3 is âread, write, ownâ. Itâs not âread, write, earn.â So why are we still hung up on âPlay to Earnâ and âPlay & Earnâ Web3 games? Itâs time to move on. Itâs time to embrace Play to Own (âP2Oâ).
But what IS Play to Own? We can define P2O as a game through which players collect and take possession of digital assets by completing in-game quests and accomplishments. These digital assets are NFTs that, once claimed, can be used, sold, or traded by the holder at their leisure.  Â
At this point youâre probably saying, woah Seb â P2O sounds pretty cool. How do we get there? Itâs simple, really â we build fun games. We donât focus on building token distribution networks.
Are tokens evil? Hell no. Eventually, everythingâs going to be tokenized. If you put tokens first, though, thereâs a good chance that youâll be limiting your gameâs ability to scale and sustain.Â
So why is P2O so great, how do we implement it, and why is it better than what weâve already got? Iâm so happy you asked. Letâs dig in.
P2O Vs The World
Before we chat about the solution, we should probably define the problem. We can split these issues into two categories:
The problems with Web2 games; and
The problems with P2E/P&E.
The Problem with Web2 Gaming
Iâll be the first to admit that more often than not, NFTs and blockchain et al muddy the waters and overcomplicate a game's development and a gamerâs experience. If executed poorly, Web3 games limit accessibility, reduce a gameâs longevity, and undercut developer profits. Itâs a messy business.Â
But Web3 lets you own your assets. Web2 doesnât. This is a huge unlock.Â
So the legend goes, Vitalik Buterin used to be an avid World of Warcraft player. Who knows how much time he spent behind the screen exploring, raiding, and enjoying life with his beloved warlock. And then Blizard removed the damage component from the wizardâs Siphon Life spell. He quit the game shortly thereafter.
Yeah yeah yeah, Vitalik rage quit WOW because his warlock got nerfed. Big deal. Actually⌠yes. It is a big deal. Players around the world spend countless dollars and hours playing games, only to be left in the cold if developers decide to sunset the product or, in Vitalikâs case, nerf something theyâve spent hours and benjamins refining. Thereâs no alignment here. None at all.
And then there was Sorority Life. Created by Playdom and later acquired by Disney, Sorority Life was an MMORPG open to any Facebook or Myspace user. Players paid obscene amounts of money to buy credits, dress their avatars, and personalize their in-game houses. Disney decided to end the game in 2016 citing a shift in âdevelopment focus towards other online and mobile play experiences, and a growing selection of Disney Mobile apps.â Fans did everything they could to keep the game alive, even offering to acquire it from Disney for an undisclosed sum, but were ultimately unsuccessful. Game over. Assets go poof.
When Vitalik quit WOW and when Sorority Life players were forced to say goodbye to their digital lives, there was no recourse. Vitalik couldnât recoup any value for the hours heâd spent playing (he could have sold his account to someone else, but that violated Blizzardâs T&Cs) and the Sorority Life players were straight up SOL. Down horrendous.Â
If only there was a way for you to sell your characters when you were done with the game or maintain ownership over them, even after the game went underâŚ.
The Problem with P2E/P&E
When P2E first hit the scene, it was explosive. It was viral. It was revolutionary. Category leaders started raising money at a breakneck pace, finding themselves on the cover of almost every crypto-centric news outlet and twitter account for months on end as transaction volume ballooned, and token price skyrocketed. And then the music stopped.
P2E wasnât fun - it was a job. Once the market realized P2E wasnât going to cut it, the moniker was abandoned and P&E made its debut. Under the marketing and rebranding, P&E was still the same old system. It was still a broken model that only benefited early entrants, those who bought assets first and who were able to siphon value from the ecosystem as later entrants joined and new money flooded in. These games didnât put fun first - it was all about the tokens.
Games that put tokens first suffer(ed) from a little problem called inflation. You may have heard of it and contrary to popular 2021 belief, itâs not transitory. Inflation is, in fact, an unforgiving scourge that lays waste to in-game economies like a raccoon in your trashcan. Â
The most popular P2E token model utilizes a two-token system; it generally looks a little like this:
Token 1: Utility Token
Supply: uncapped
Distribution: in-game rewards
Uses: purchase in-game assets; breeding
Burned: yes
Token 2: Governance Token
Supply: capped
Distribution: TGE; in-game rewards
Uses: staking; governance
Burned: no
This model creates a few problems:
The games arenât really fun, so players are focussed on one thing - earning revenue. They dump the reward tokens either immediately or over time. This creates constant downward pressure on price.
As players sell rewards and token price drops, players donât âenjoyâ the experience. Eventually, the juice just isnât worth the squeeze (especially after gas fees). Players can and will leave the game if they arenât enjoying the experience.Â
To help combat the constant selling, most developers employ token burning mechanisms. On paper, these burn mechanisms look like theyâll be sufficient to combat inflation and asset debasement. In practice, thoughâŚ. not so much. Most P2E/P&E games employed a basic breeding-fee burn mechanism to help keep economies in check. But hereâs the thing about breeding - unless you have a constant stream of new players who can absorb the in-game asset population boom, breeders stop breeding. Breeding only makes sense if the breeder is able to sell the new asset for more than it cost him to breed it in the first place. No buyer, no sale. No sale, no more breeding. No more breeding⌠you get the point.
The entire systemâs business model has depended on continuous growth and a steady stream of fresh money entering the system to prop up the value of tokens and in-game assets. Not only have these gameâs depend on constant growth, theyâve depended on constant, RAPID growth. A slowdown in growth results in a decline in player revenue and declining player revenue leads to player attrition. Itâs a vicious cycle. Â
Token inflation and number-go-down sucks, but it hasnât even the biggest hurdle standing in P2E/P&Eâs way. The financial barrier to entry has been far worse. To take advantage of a gameâs earning potential, players have been forced to spend significant sums to purchase their initial NFTs. People hate paywalls, and this one is a biggy.Â
In the end, it all boils down to a fundamental flaw in thesis and founding logic - people canât earn just by playing a game. Thereâs no such thing as a free lunch and those rewards have to come from somewhere. Can P&E be fixed if developers implement more nuanced token economies with sufficient burn mechanisms and heightened utility token utility? Of course. But only if the games are fun too.
A Word on Taxes
AHH, RUN. HE SAID THE EVIL T WORD. Yes, yes I did. Youâre going to want to sit down for this.
We donât talk about it enough, but every transaction in a P2E/P&E game is taxable. Claiming a reward? Taxable. Selling a reward? Taxable. Breeding your NFTs? Taxable. Selling your NFTs? You know itâs taxable too.
Thereâs a simple acronym most of us learn in school - KISS. It means âkeep it simple, stupid.â You know what isnât simple? Taxes. Especially crypto taxes. While it doesnât need to be priority numero uno, Web3 games should really start considering tax implications and either 1) reduce taxable events or 2) provide players with tools that help them simplify and streamline their accounting. If this issue isnât addressed, itâs unlikely that we see mass adoption any time in the foreseeable future.Â
Why P2O Sets Us Up for Mass Adoption
At this point, weâve identified the core issues present with existing gaming options:
Web2 games can be fun as hell, but they seek rent from gamers without giving them an out. Studios can nerf characters, sunset games, and make decisions that ultimately displace the loyal gamer and leave them without recourse.
P2E/P&A games, with a few exceptions, arenât fun, put tokens first, and have a very high cost-of-entry. The in-game economies are short lived and only succeed if new money constantly comes in to keep the system afloat.Â
Taxes. Gross.
So how does P2O fix this? Letâs take this step by step.
Web2 games can be fun as hell, but they seek rent from gamers without giving them an out. Studios can nerf characters, sunset games, and make decisions that ultimately displace the loyal gamer and leave them without recourse.
In a P2O game, players own their characters. Every in-game asset is an NFT that can be outright owned, sold, traded between players or through secondary exchanges. If the game goes under, the player retains ownership of the assets and can do with them what they wish.Â
P2E/P&A games, with a few exceptions, arenât fun, put tokens first, and have a very high cost-of-entry. The in-game economies are short lived and only succeed if new money constantly comes in to keep the system afloat.Â
P2O puts gameplay first and NFTs, not tokens, are the star digital assets of the show. Furthermore, NFTs are a tool that enables the P2O experience⌠they arenât the product. Because they arenât using financial incentives to pull new players in, P2O games will need to be fun to stand a chance of succeeding. This means that theyâll be exciting enough to be sustainable beyond any financial incentive offered and it also means that players wonât be joining the ecosystem as speculators.
Taxes. Gross.
P2O games wonât be governed by a string of on-chain transactions that result in taxable events. Players will choose when and how they dispose of their NFTs, thereby easing the tax burden and vastly reducing the number of events theyâll be responsible for reporting at the end of the year.
Now that weâve gotten the âP2O fixes thisâ out of the way, letâs move on to potential frameworks and applications. Letâs move on to The WOW Principles.Â
The WOW Principles
If youâre reading this, youâre probably pretty familiar with World of Warcraft (âWOW''). Youâve probably also seen snippets on how it inspired Vitalik to create Ethereum and influenced his theories around soulbound NFTs. Plus, it led to arguably the greatest SouthPark saga of all time (hats off to you, Make Love, Not Warcraft). Itâs kind of a big deal. Itâs also a key part of this manifesto.
WOW is chock full of important lessons and case studies for anyone who wants to create a fun, engaging, community driven gaming ecosystem. It also has/had a fascinating out-of-game economy. This out-of-game economy operated pursuant to the following actions and transactions (the âWOW Principlesâ):
Players created profiles and spent countless hours leveling teams â these profiles were then sold to other players. Players were willing to pay others real money to spend the time needed to create and develop advanced teams.
Players spent time âgrindingâ in the game to collect gold. This gold was sold to other players who didnât want to spend the time âgrindingâ to earn the rewards. Players were willing to pay others real money to avoid grinding for hours to get the gold they needed to upgrade their characters and items.
Players âwhite knightedâ lower-level players during incredibly difficult quests â the lower-level players were able to âhyper levelâ by joining these advanced quests and raids. Players were willing to pay higher level players for access to hyper leveling.
All in all, the WOW Principles can be distilled into four (4) key factors:
People will pay to level their characters and items faster
In-game assets must be fungible
Games need a sanctioned marketplace through which player to player transactions can be processed and value can be captured
Principles 1, 2, and 3 donât matter if the game isnât fun
These principles can be used to create a basic framework upon which we can build P2O games. Hereâs what that framework might look like:
Hereâs a more detailed breakdown:
Devs build an RPG style game
Players can start playing for free and can play for free for as long as they want to. Itâll be difficult for players to top leaderboards if theyâre free-to-play (âF2Pâ), but it wonât be impossible.
Players will need to summon characters to play the game â these characters will be NFTs. Characters can be leveled up and can learn special skills. These NFTs can be bought, sold, or traded through a native or secondary exchange at any point after theyâve been summoned. Alternatively, players will summon characters that can be minted into NFTs on demand.Â
Players will earn summoning âcharmsâ through gameplay â these charms can be bought, sold, or traded through a native or secondary exchange. The characters summoned by a charm will be random.
Players will earn and collect âmaterialâ during gameplay. This âmaterialâ can be fused to create items and weapons. These items and weapons will be NFTs or will be mintable into NFTs on demand. These items and weapons can be leveled up. Items and weapons can be bought, sold, or traded through a native or secondary exchange at any point after they have been minted into NFTs.
Devs build a robust marketplace
The marketplace will operate like a traditional NFT marketplace with the developer collecting a royalty fee for each transaction.
Players can buy, sell, or trade Character NFTs, Item NFTs, Weapon NFTs, or summoning âcharmsâ through the marketplace.
The marketplace will feature specials from week to week, month to month. During these specials, players will be able to purchase rare NFTs of all categories. All purchases will be made in either crypto or via a credit card.
The marketplace will sell âsummoning charm bundlesâ â players will be able to buy packs of 5, 10, 15, 20 etc summoning âcharmsâ at once. All purchases will be made in either crypto or via a credit card.
Scarcity tables will be published
There will be either a % chance to summon a certain character/champion or there will only be a certain # of each character/champion that can ever be minted. These rarity/scarcity tables will need to be published and easily accessible.
New characters, items, and weapons will need to be released every few months. New quests will go live when these characters, items, and weapons go live â while it will be possible to complete these events without the new NFTs in the playerâs party, these new NFTs will make it much easier to succeed.Â
Games are cross-platform
The game is cross-platform, available and accessible both on mobile and desktop.Â
The above P2O framework creates an environment through which both studios and players can thrive. Studio revenue stems from in-app purchases and royalty fees, players get a fun, immersive gaming experience that empowers them to own and transact at their leisure. Alignment at its best.Â
What Comes NextÂ
P2O and NFT-driven in-game economies open the door to incredible new innovations based on traditional Web2 gaming functionality. Have you noticed how often Web2 games force players to collect raw materials and ingredients that can be used to craft or summon rare, powerful items? Now imagine what this looks like with NFTs.
Letâs say a game studio develops a new game using our P2O framework. When a player joins the game, theyâre given three summoning charms - they use these charms and summon two common characters and one rare character. After looking at the rarity table, the player sees that only 10K of each common character will ever be summoned and only 2.5K of the rare character will ever be summoned.Â
If the player wants to level up his characters, heâll need to collect copies. To acquire copies, heâll need to either summon them using summoning charms or collect them as rewards for completing in-game quests and accomplishments. Needless to say, these characters and their copies will start to become scarce, valuable resources over time.Â
Closing Thoughts
If youâre reading this manifesto, youâre early. The cycles of development turn, and frameworks come and go, leaving lessons that shape the standards of tomorrow. P2E/P&E was the beginning, P2O the natural evolution of a concept driven by dissatisfaction with what came before. Will P2O be gamingâs final form? Probably not. But itâs one hell of a place for the next age to start.Â
Players will play. Players will own. Players will be happy. This is the Play to Own Manifesto.