For most of us, the idea of playing games while earning money seems extremely appealing.
It’s hardly surprising, then, that In recent months, the play-to-earn (P2E) gaming industry has captured many peoples’ attention–including venture capital (VC) firms, which poured $2.5 billion into blockchain games in Q1 2022.
The metaverse is changing the way we use the internet and is set to make things possible that we never could have imagined only a few years ago. One of these things is known as ‘GameFi’ – a fusion of ‘gaming’ and ‘finance’ that refers to blockchain games offering financial incentives to players. Even though it is still in its early stages, GameFi has been growing rapidly over recent months. In February 2022, the total market cap of GameFi reached US $55.38B.
In this interview, InsiderMonkey chats with Digital Entertainment Asset (DEA) about why P2E is so appealing to people, and how the economics of P2E will play out as the industry matures. DEA also discusses the role of environmental, social, governance (ESG) standards within the blockchain industry, and its role in offsetting the environmental burdens of blockchain technology.
The company also shares its opinion on the role of creators within Web3 and the metaverse and discusses whether the value of NFT products in today’s economy is appropriate.
Finally, DEA discusses the future of P2E gaming, and whether it will overtake standard gaming as we know it today.
Do you think the “earn” or “play” aspect is the more enticing feature for newcomers at this stage of the P2E revolution?
Currently, the "earning" aspect is clearly more attractive to newcomers. However, we believe that this is an early stage of GameFi and is subject to change.
In GameFi 1.0, the emphasis is on "earning". The focus is on products that are gamified by FinTech. In GameFi 2.0, the emphasis is on "playing. The focus is on products in which games are converted into FinTech.
In addition to this, it is important to note that the concept of "playing" itself will be updated in GameFi. In GameFi, "earning" and "playing" are not opposites. Rather, they are mixed together to evolve into a "fun" experience that is more extended than the concept of "playing" as conceived in existing games.
It is like the difference between "playing with dolls" and "real parenting”. Mixing "playing" with "earning" creates an enhanced and enjoyable gaming experience. The "playing" part offered by GameFi 2.0 will be somewhat different to what we currently have in mind when we think of “playing”.
In terms of gameplay, do you think that tokenomics or game mechanics are more important for P2E success at this stage?
At this point, token economics have a significant impact. The volatility of token economics has made the current GameFi economic sphere possible. On the other hand, we have learned that gaming economics cannot be sustainable with too many aspects of token economics.
GameFi's successors “AxieInfinity” and “STEPN” are great examples. In PlayMining, we believe that it is important to clarify the relationship between the gaming and token economies, where token economies act as a supplement to the gaming economy.
A lot of gamers from the more traditional gaming universe complain extensively about the gameplay in the P2E universe, and more importantly, the load times. How is DEA appealing to these gamers who demand greater game performance?
The target audience that DEA (PlayMining) appeals to is not core gamers who are looking for high-spec games and rich experiences. It is said that there are 3 billion game players around the world today. DEA (PlayMining) is targeting the remaining 5 billion people who have never had an opportunity to play games before. This is because the "earn" factor is an incentive that works for everyone, and is a strategy that makes most of the advantages of the Play to Earn (P2E) system.
However, just because this is our long-term strategy, it does not mean that we will not work on products for existing core gamers at all. We will continue to develop rich content that makes the best use of GameFi's assets and reality and link them into the real world in a 4-5 year roadmap.
When we think of ESG in the context of companies and corporate social responsibility, we often hear most about the environmental narrative first, especially when discussing the drawbacks of blockchain technology. How is DEA focusing on the E and S in ESG, unlike other peers?
One of the environmental burdens of blockchain technology is the amount of electricity consumption caused by the “Proof of Work” (PoW) mechanism. DEA (PlayMining) believes that this is a major problem from both an environmental and usability perspective. To solve this, we have decided to build our system on a private chain. We will choose a chain with a smaller environmental impact by adopting the Proof of Stake (PoS) method.
In addition, we consider social contribution to be very important and we have made it one of the fundamental objectives of our business. Specifically, we will work to solve poverty issues and eliminate educational disparities. While existing initiatives are environmental, social, and governance (ESG) measures that are built separately based on the profits secured, PlayMining's social contribution is not.
PlayMining is an ESG initiative that is built separately from the profits it secures, whereas social contribution is "built in”. This is because PlayMining has created a mechanism that means more poverty and educational disparities are solved as the business continues to grow.
We have created a system in which guild owners are brought in at a controlled percentage of the game's economic zone, and P2E rewards are given back to the underprivileged through these guild owners. We also plan to actively address educational disparities through the Study to Earn (also called Learn to Earn) approach.
ESG has had its fair share of critics lately, do you think that there is a more positive way to frame P2E gaming beyond the ESG label and realm?
As described above,we believe that the reason for criticism regarding ESG is that the current system is essentially a “forced add-on”. Therefore, it is taken as a non-sustainable and temporary, which leads to criticism that it is an inadequate and irresponsible response.
PlayMining's approach that "ESG is included in the business model itself" is groundbreaking. It shows that it is possible to steadily implement ESG to ensure sustainability.
More importantly, this "inclusion of ESG" also leads to "updating the fun factor of the game," as mentioned earlier. When you make a donation, how do you feel? I believe that people feel excited to be a part of making the world a better place for even just a little bit. It gives you the feeling of, "I hope this money will help someone”.
Gamers and investors who participate in the PlayMining economy originally focus on economic incentives based on self-interest. However, by participating in gameplay in various roles in the gaming economy, they will experience an "automatic" ESG realization. This will be one of the major elements of the enhanced gaming experience.
There is a lot of talk of people earning reasonable incomes from P2E gaming. However, given the shaky tokenomics that have underpinned other projects (like Terra’s recent algorithmic fiasco), do you believe that P2E economies can be stable and sustainable over the long term?
It’s possible to make GameFi or P2E economies stable and sustainable over the long term, and that is what we believe PlayMining's mission is all about. Token economies are inherently volatile and unstable – this is why it is important to think of the gaming economy as the core of the relationship, rather than relying solely on token economics. This will be achieved by evolving to GameFi 2.0, a phase in which playing becomes more important than earning.
How important are creators as part of the P2E equation for the Web3 model to succeed over time?
Obviously, creators are one of the most important elements. The content needs to be appealing to attract a large number of people.
As PlayMining has already realized in its 2 years of operation, Web3 is able to provide a generous return of profits to creators. PlayMining has returned royalties totaling over 500 million yen to 100 creators in 2 years. Creators will be able to immerse themselves in their creative activities and produce great pieces of artworks in a more stable and hopeful environment than ever before.
Do you think NFT prices are slowly coming back to earth now that the speculative bubble has popped to an extent? Or do you think NFTs are fairly priced at current levels?
NFT is a basic technology, and the value or market price of NFTs does not exist independently. Please have in mind that each product utilizing NFTs has its own price and market price.
From this perspective, just as there are ups and downs in the market price that reflects the system of stock companies, each of the products that utilize NFTs have their own value and price depending on the time of the year.
It is natural that each of the products utilizing NFT will have various valuations and prices depending on the time of the year.
The simple answer to your question is that the current level is appropriate. The important point is that NFT utilities can be added later, and this can be done without necessarily having the operators that created them do additional work. This is the reason why the price is currently assessed. Therefore, NFT products that are not currently valued can reach a higher value in the future.
What do you think are the most appealing and exciting aspects of the metaverse at this stage, ignoring for a second the speculative nature of certain participants?
PlayMining defines the Metaverse as "a fully evolved GameFi”. The most exciting aspects of the Metaverse right now are:
1. The sense of ownership of digital assets
(e.g., game items, avatars, etc.)
2. The ability to play various roles in virtual content and receive realistic rewards
(e.g., NFT owners and scalars, etc.)
3. The ability to experience a sense of being a part of the world rather than a closed and personal experience
(e.g. Contribution to ESG realization, etc.)
This is the charm of GameFi. Isn't this the same as the metaverse that you think of?
The value provided by GameFi, which has evolved to the point where it can be called a metaverse, is the fulfillment of desirement. Everyone lives for the fulfillment of their own life, and for many people, blockchain and NFT happen to be the technologies that can make this real.
In the real world, it is difficult to fulfill this desire due to various constraints (physical distance, language barriers, time, race, gender, appearance, etc.), but in the digital world, it is highly feasible.
Do you think that P2E gaming will eventually overtake triple-A gaming titles in terms of interest, adoption, and competitiveness?
Yes. By the logic above, P2E games leading to open metaverses will outperform closed rich games in every respect. This is mentioned in Morgan Stanley's estimate of the economic size of the metaverse, which is said to be 900 trillion yen.
Starting in 2023, GameFi 2.0 products will be launched around the world and will shift towards the metaverse. It is said that entertainment contents which are not connected to the real economy will disappear in three years.
‘GameFi’ might not be a widely understood term just yet, but it’s becoming increasingly evident that this is changing. Over the next few months, there is little doubt that the blockchain gaming industry will continue to grow and develop even further.
In just a few years’ time, the online gaming landscape may look almost unrecognizable.
