I've put countless hours into video games throughout my life. Ruining friendships playing Mario Party 5, clearing dungeons in TERA, 1v1ing my friends on COD4, memorizing combos in SFV, clawing my way out of the depths of elo hell in League of Legends, I've done it all. Thousands of hours in, sometimes some money as well, but I really haven't gained anything for my time spent.
"Of course you haven't. They are just darn video games, pixels on a screen. You can't expect people to reward you. Get off your behind and go do something productive with your time!" the figurative old man says as he tunes into the Super Bowl LVI.
I perform a frame perfect parry, "Professional esports players and streamers get paid for playing games."
"Well that's because they are the best at what they do. You won't get paid a single dollar with your skill level. Git gud kid," he snaps back.
I feel a sharp sting where my ego is located but I won't back down, "Well that's even better. I don't want any of that worthless fiat anyway."
Back In Black starts playing, I leave the house, and put on my sunglasses as I walk away from the explosion behind me that somehow forms the characters "Web 3.0 Gaming".
The Current Careers in Gaming: Streaming and Esports
The old man is right, only the most entertaining or the best gamers can make a decent living out of playing games, either through streaming or being part of esports. However, I believe that this won't be true for long and that we are only in the infancy of careers in gaming.
Not too long ago, video game streaming and professional esports weren't all too common, not because our once golden society has devolved into a horde of zombies being brainwashed by video games, but simply because our digital networks didn't have the capability to stream high quality videos for extended periods of time. In other words, there were people who wanted to watch live, high-caliber gameplay since the advent of Pong, but our internet speed didn't allow for it. Thanks to the advancements in data throughput we've experienced in the past decade, we've seen huge multiples of growth in online gaming and game streaming.
Twitch, the largest gaming streaming platform right now, went from an average of 102K concurrent viewers in 2012 to 2.91M in 2022 with the vast majority coming from video gaming streams, according to TwitchTracker. In conjunction, we have seen significant growth in the esports scene. With large esports organizations such as TSM, Cloud9, and Team Liquid, players in the LCS had an average salary of $410,000 in 2020, up from $105,000 in 2017.
In this current system, gamers play in a virtual world and are rewarded in the real world. If TL Bjergsen does well during the season, he may be rewarded a bonus. If Tyler1 makes it to Challenger and continues to entertain his audience, he will get more donations. Of course, these rewards and donations are in "real world" currency, i.e. USD, otherwise they wouldn't be able to cover their living expenses. They are rewarded in USD because the in-game currency they make can only be used within the specific game they are playing. It can't be transferred, exchanged, or used to buy anything outside of the game's ecosystem.
But what if you were rewarded with in-game currency that was usable in the real world too?
The Future of Gaming as a Career: Play-to-Earn
The current status of in-game purchases is one way and only benefits the game developers. You work a job, you get your pay, you spend a portion of it to buy VBucks on Fortnite, and you then use those VBucks to purchase the skins and cosmetics you want. Epic Games, who owns Fornite, gets your USD and that's the end of the story. What if two weeks later you decide that you are dropping Fortnite because you are tired of getting absolutely skill-gapped by 12 year olds? You can't sell your items on any market and you can't back get any of the USD you spent. Kiss both your USD and your VBucks goodbye. There are fringe cases where people sell their accounts to other players (which is often against policy for most games), but this is a risky transaction and requires trust between the seller and buyer.
With the breakthroughs in blockchain and cryptocurrency technologies, in-game purchases are both two-way transactions and are trustless. I can use USD to buy in-game currencies to then buy in-game assets, and I can then sell those in-game assets back into the in-game currency, and finally back into USD. We are already seeing players do this in "play-to-earn" games like Axie Infinity and Decentraland where players can earn and sell rare digital assets for an in-game currency such as Decentraland's MANA, which can then be directly exchanged for USD.
Why would anyone buy an Axie or convert their USD into AXS? For the same reason we'd make any investment. Either because of the aesthetic value (I like how it looks), the practical value (I like what it allows me to do), or because of the perceived future value (I like how valuable it will be in the future).
Aesthetic Value: I think the Axie looks cute. I want them in my collection.
Practical Value: The Axie will allow me to breed stronger Axies.
Perceived Future Value: The Axie will be a classic in 2 years time, meaning I can sell it at a premium and make profit.
With these three value propositions, there is potential to make money. I can sell an Axie to someone else for any of those three or a combination of those three value propositions. The longer I play the game, and the better I am at the game, the more rewards I will receive. The more rewards I receive, the more Axies I can breed. The more Axies I can breed, the more I can sell to other players in AXS. The more AXS I can make, the more I can exchange it into USD. In short, playing the game will increase both my in-game wealth and/or my real-life wealth (in theory).
Fun fact: an old family friend sold an Axie for ETH 50, roughly $200,000 at the time of sale. He posted the sale on Facebook and his father wrote "Well, that covers your daughter's tuition." There is real money being made (as long as you aren't the sucker who buys these Axies for their perceived future value whenever there is no one else willing to buy them).
Web 3.0 Games Are Boring, and Are Kind of Pyramid Schemes (For Now)
My biggest gripe with Web 3.0 games right now is that they are incredibly grindy and boring. The primary purpose of playing these games right now are to flip the in-game assets for a higher price. I cannot imagine people playing Decentraland for fun, especially with the most popular "game" within Decentraland being WonderMine. In WonderMine is a mind-numbing crafting experience where people mine resources from different rocks and use those resources to then craft items. The more you mine and craft (I now realize it's just a degenerative version of Minecraft), the more rare the items you can make. Within Decentraland as a whole, these crafted items enable you do absolutely nothing new. You sell the crafted items to someone else in WonderMine so that they can craft even rarer items to sell to someone else. At the top of the crafting hierarchy? Nothing. You've crafted the rarest item there is, and you sell it to someone who wants to buy it. That's it. That's the game.
You can make money this way and climb your way up to higher and higher sales, but there is no playing nor fun involved. It feels more like an office job than it does like a game. And God forbid you are near the top of the corporate ladder when people inevitably leave WonderMine for a more time-efficient grind, rendering your items and resources worthless.
However, if we look past what we have, and look at what these could become, I think there is a lot of potential for the gaming industry. Once developers and communities (perhaps game development becomes a decentralized, task-based process with distributed ownership) start building authentic and genuinely fun games, I think we'll enter a golden age of gaming. An era where we can actually own the items we find or craft, the land we purchase, the armor we wear, and the economy in general. Prices and costs of goods are determined by the player base, and markets have real scarcity. What's the most exciting aspect in my opinion is that these digital worlds, nations, and guilds will become as real as the ones we currently live in. With USD flowing into these economies built on cryptocurrencies and digital assets in the form of NFTs, these empires will grow into sprawling communities with real output and measurable GDPs. Perhaps we will one day see a digital empire entering trade agreements with a physical one.
I don't imagine games will tend toward hyper-realism, because who wants to play a game we're already playing? I imagine worlds that have rules and structure (because these are necessary for games), but allow freedom and imagination to be expressed at greater magnitudes. If we are to put our trust in decentralized networks, both to make great games and to live civilly in these worlds, then we are putting our trust in humanity. Otherwise, all we have is a money-sucking deathly-boring grind, which we are all already playing.
The Opportunity Cost of Crafting A Sword Is Your Rent
Imagine an insanely popular game called World Ending Blasphemy 3.0 (WEB 3.0 for short) that functions exactly how MMORPGs do now: start as a newbie, complete quests, kill monsters, collect items, craft rare weapons, gain XP, join guilds etc. WEB 3.0 is so popular that retailers are beginning to accept its in-game currency, WEBCoin, as a payment option.
Let's say you are an avid WEB 3.0 player who spends most of their waking hours playing the game and earning WEBCoin. You aren't necessarily good at the game so you can't go pro, and you aren't entertaining enough to be a streamer. You put in the work though. This is technically your job, you are just an average Joe in WEB 3.0. You just finished a quest that took you a couple hours to finish, earning you 5 WEBCoin that goes directly to your digital wallet. You are feeling a little hungry so you go downstairs and use your digital wallet's public address to spend 5 WEBCoin at your nearest 7-Eleven to buy a slice of pizza.
This is an interesting situation because that is 5 WEBCoin you could've used in-game. Perhaps with 5 WEBCoin you could have bought a few more health potions to defeat a more rewarding raid boss that would yield you 15 WEBCoin. Because you've made a 5 WEBCoin investment on real-life pizza, you've lost the opportunity to invest that 5 WEBCoin in-game.
Suppose you didn't have enough money to pay real-life rent due in the next two weeks? Do you take the risk and use your WEBCoin to try to craft a rare sword that has a 33% success rate? You can succeed and sell it to another player to be able to pay for multiple months of rent, or you can fail the crafting and be evicted from your apartment. Will games of the future make you choose between virtual and physical investments?
On the flip side, will 7-Eleven's WEBCoin proceeds from customer purchases give them power in-game? Would they be able to monopolize the potion market in WEB 3.0? We'd begin to see real world and in-game economies affecting each other.
It's going to be interesting to see how this all plays out. How will regulation play its part? Do we even have the language to regulate these things? Are we going to continue using "real life" and "in-game"? Or will distinctions no longer be needed and they just blur together? How large will our digital empires grow? Will players still act as good Samaritans even behind the veil of virtual anonymity? Could we actually have fun in these games? All good questions to ask, we'll just have to wait for the answers. I feel like we'll need those answers faster than we expect.
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