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Southeast Asian Movement at Yale

Event Blog

March 08, 2022

Can you play-to-earn in Southeast Asia?

Reporting by Chloe Young and Adriel Yong

What exactly is play-to-earn gaming (P2E) and what are its implications for Southeast Asian gamers? In a spirited discussion hosted by the Southeast Asian Movement at Yale, three speakers were invited to address the topic of play-to-earn gaming, specifically play-to-earn crypto gaming. They were Kelvin Lam, Managing Director at digital assets platform Zipmex Group, Justin Banusing, Co-Founder and Chief Operating Officer at AcadArena, a leading campus gaming platform in Southeast Asia, and Lucaz Lee, the founder and CEO of Affyn, a blockchain-powered metaverse project based in Singapore.

What is play-to-earn crypto gaming?

The basic premise of play-to-earn crypto games is that by playing a game, one can earn in-game cryptocurrency. This can be converted into regular money. One of the most successful examples of a play-to-earn game is Axie Infinity, which has over 5 million active players. However, to begin playing these games, one often needs to make an upfront purchase. In the case of Axie Infinity, one needs to purchase 3 Axies (which are monsters similar to Pokémon) which are used to battle other players and win in-game currency. The price of these Axies vary but at their peak, the cheapest Axies cost US$100 each. Therefore, one would need to pay US$300 to even start playing the game.

This is a huge barrier to players who do not have enough money to commit to playing the game. This is where guilds come in. Guilds are companies that purchase Axies and rent these Axies out to players while taking a cut of the player’s earnings. This allows players who do not have money to buy Axies to still play these play-to-earn games.

Play-to-earn games took off in Southeast Asian countries such as the Philippines and Thailand during the COVID-19 pandemic as many people lost their jobs and struggled to find employment. The play-to-earn model became especially appealing as these individuals often had no other source of income and had the time to spare. When accounting for conversion rates, the money that one could earn from such games in USD provided substantial purchasing power in their home countries. Contributing to the popularity of play-to-earn games in Southeast Asia was its allowing players to store currency without needing a traditional bank account. With more than 60% of people in the Philippines unbanked, play-to-earn games allow many to enjoy the benefits of having a digital wallet without having to qualify for a bank account.

Is this too good to be true?

As it stands today, most play-to-earn games are in fact too good to be true. In regular games, players obtain in-game points but are unable to convert these points to real currency. In play-to-earn games, players can. Currently, the reason money enters the play-to-earn game system is that many people are trying to enter Axie Infinity as players. These people have to spend real-world money to buy in-game currency, which is then used to buy Axies.

The problem emerges when more people participate in the games to earn money and not to have fun. The pay-to-earn economy only works when people continue wanting to join a game. If a game currency’s value was suddenly to drop, there would be a mass exodus of players, leading the in-game economy to collapse. Since people only play games to earn money, they have no incentive to stay once a game currency is worthless. Hence, the current model of play-to-earn is not sustainable.

What is the future of P2E?

The challenges faced by current models of play-to-earn crypto gaming mean that present ecosystems are unsustainable. However, as suggested by our speakers, there are ways to make play-to-earn games work.

First, play-to-earn games need to be fun. If the games are fun, people will not enter the game just to cash out as soon as they can. If a game has a stable base of these players, there is less risk of the value of an in-game currency collapsing. Banusing explained this well, expressing that the future of the play-to-earn game industry is “Not Play-To-Earn but Play-and-Earn”. The focus needs to shift from purely earning money to enjoying playing a game that happens to allow players to earn money.

Second, play-to-earn games need to find ways to generate revenue. For example, game companies may rely on revenue from advertisements. Lee suggested that a game similar to Pokémon Go could help bring foot traffic to malls and businesses, generating revenue that supports the value of in-game currency.

Lastly, play-to-earn games need to partner with the right guilds. Guilds are inherently in tension with attempts to create a sustainable game economy since they are structured mainly around the idea of profiting from a game. Some guilds are infamous for directing players to new games and maximizing yield farming before dumping their assets to refocus on more profitable games. These toxic guilds are a huge challenge for developers trying to make a sustainable game economy. Lam suggested that a more sustainable model for guilds would be to serve as stepping stones for players to try out games without having to make a huge purchase upfront. These guilds could provide guidance to players, help talent, and even help to organize in-game e-sports competitions.

If the fundamental challenges faced by play-to-earn games can be addressed, these games may become huge competitors for traditional computer and mobile games. At present, there are already many Southeast Asian countries like Thailand and the Philippines where the number of play-to-earn games has skyrocketed and there has been a huge uptake, especially among younger players. Will play-to-earn games create a sustainable new way for people to generate income, fundamentally altering these Southeast Asian economies? How will incumbent game companies react to developments in the play-to-earn space? These will be vital questions to consider as the play-to-earn crypto gaming industry continues to evolve and mature in Southeast Asia. ︎

Questions? Email the authors:

Chloe Young

Adriel Yong