News | Digital Transformation - Digitalisierung und Demokratie Innovating the Fun out of Video Games

The rise of so-called “play-to-earn” games marks yet another step towards the commodification of everything



Eric Jannot,

Bitcoin cryptocurrency among casino chips CC BY 2.0, Photo: WordPress | wuestenigel

In early May, the latest sweeping change within the games industry was announced: the rights to the fictional action hero Lara Croft, in addition to a number of other important items of intellectual property (IP) and even entire game development studios, changed hands from the game manufacturer Square Enix to the Scandinavian Embracer Group.

Those familiar with the industry are used to hearing about surprising deals, yet this one in particular provoked widespread astonishment not only because it was made for the seemingly modest sum of 300 million dollars, but also because of the rationale provided: Square Enix’s new focus on “metaverse and play-to-earn environments”.

With the rise of cryptocurrencies and blockchain technology, as well as digital properties declared to be unique, i.e. so-called “non-fungible tokens” (NFTs), gaming industry giants have also proclaimed a paradigm shift within the world of gaming towards so-called “play-to-earn” models. This model allows players to use the hard-earned virtual goods they’ve acquired in games to generate real income. The transaction fees for the sale of these same virtual goods has also allowed game producers to generate a steady new source of income.

Eric Jannot is the founder of waza!Games and currently a guest professor at the Hamburg University of Applied Sciences. 

Translated by Hunter Bolin and Marc Hiatt for Gegensatz Translation Collective.

Anyone who takes a close look at the projected growth within the game industry will understand why big companies like Ubisoft, Activision Blizzard, or Square Enix are tempted to tap into this new source of income. With 180 billion US dollars of revenue in 2020, the games industry is the world’s leading entertainment medium, a trend that seems likely to continue: in 2025, revenue was forecast to grow to 268 billion. In comparison, in 2020, the film industry grossed 100 billion dollars worldwide, a figure far lower than that of the interactive gaming industry. On top of that, the NFT market is forecast to gross 130 billion for 2030.

It’s plain to see why large companies are succumbing to the allure of supposedly quick money in a new digital world dominated by blockchains, cryptocurrencies, and virtual objects. But taking a closer look at the technological basis of this trend and its attendant ideological underpinnings reveals that it is not a revolution, but rather a continuation of the concentration of capital and the consolidation of social elites under new labels.

What Are Blockchains? 

In contrast to traditional databases, which store data and make it available in a centralized manner via one or more servers, the blockchain stores data according to decentralized principles. All those participating in a blockchain network have a complete copy of the blockchain available at each local node, which means that the chain is protected against data loss even in the event of individual failures.

What is particularly interesting is how a blockchain protects itself against the manipulation of data. Data is divided into blocks, and these blocks are in turn linked in a chain. Any change that is made, such as the purchase or sale of a virtual object, generates a new block that is signed by an algorithm, which generates so-called hashes in such a way that it is possible to follow the chain back to the original block. In order for someone to manipulate data at any given point in the blockchain (also known as mining), the hashes would have to be reliably calculated not only for the individual block, but for all other blocks. This requires an enormous amount of computation depending on the length of the blockchain, and thus protects against external manipulation. 

However, the decisive factor for ensuring security is the use of so-called “consensus mechanisms”, which validate transactions according to either the proof-of-work or proof-of-stake principle. In the common proof-of-work model, blockchain participants, also called nodes, can add and validate a new block in the chain by solving complex calculations. In return, they receive a reward in the form of cryptocurrency units such as Bitcoin. This change is then sent to all other nodes. If a comparison of the copies of all nodes reveals a change in older blocks, the version held by the majority of the participants declares the change to be invalid.

NFTs and Games

For companies in the games industry, Web3 is, to begin with, another source of income. They can tokenize all aspects of their offerings, since any items within the game world can be made into NFTs including characters, weapons, and animals. These NFTs are unique and can only be used by the players who have acquired them via their capacity to play the games skilfully, by bartering with others, or by buying the items from the NFT provider. If Mario in Super Mario was an NFT, only one person could play Mario and everyone else would have to resort to other characters to adventure in Mushroom Land.

In addition, the Mario NFT would be able to be sold to other people at any time — regardless of whether they then wanted to use Mario for games or simply enjoy their possession in the way art collectors do. The original creators of the NFT do not walk away empty-handed, since they can use special programmes, so-called “smart contracts”, within a blockchain to ensure that they receive a share of the proceeds from every subsequent transaction the NFT is involved in.

According to this model, everyone is a winner, because everyone can earn money from the game. Especially “hard-working players” are given the opportunity to earn new NFTs instead of having to buy them. This makes them into shareholders of an infinite creation of value in the digital world in a new age of games, one in which play-to-earn is the dominant paradigm.

The Case of Axie Infinity

In 2021, this promise led to a real boom in crypto games with a play-to-earn focus, with Vietnamese game maker Sky Mavis grossing 364.4 million dollars in revenue with its game Axie Infinity in August 2021. Axie Infinity is a game about breeding fantastical creatures called “Axies”. These cartoon animals compete against other players’ Axies in Pokémon-style matches. The winner receives an amount of the in-game cryptocurrency, Smooth Love Potions (SLP), which can be used to improve or purchase Axies or exchanged directly for euro via corresponding platforms.

In the best of all worlds, everyone would play and get rich, but the real market economy favours those players who have one thing above all else: capital. The entry cost to play Axie Infinity is around 1,000 dollars. This amount is enough to purchase the three required Axies needed to play the game successfully.

Almost half of the players come from the Philippines, a country with an average monthly income of 250 dollars. Converted to German income levels, it would cost 11,000 euro to play the game. Anyone who invests such a considerable sum in this game clearly has one thing on their mind: earning money. With Axie Infinity, an average player could earn around 200 dollars in a 20-hour week — enough to count as a supplementary income that can be of vital importance, especially for low-income earners in poor countries during the coronavirus pandemic.

In order to overcome the financial barrier to entry in the working world of Axie Infinity, which is disguised as a game world, a sponsorship system has been established. This sponsorship system consists of rich investors from Western countries lending valuable Axies to players from poor countries, who in turn cede a share of the profits, around 20–30 percent, to the investors. In this way, they become free wage labourers in the double sense, since only the investors have the Axie as a means of production available to them.

NFTs and Cryptocurrencies

In principle, blockchains can contain any kind of data, but the most popular transactions are those consisting of cryptocurrencies such as Bitcoin or Ethereum and of virtual objects, or NFTs. Unlike cryptocurrencies, NFTs are unique and can be assigned to a person’s digital wallet. NFTs typically function as a certificate that grants the owner exclusive rights over a virtual object. This can be a digital image, an item in a game or even a piece of music. NFTs can be exchanged at will with others within the blockchain in which they were generated — without any compensation or for a fixed amount of a cryptocurrency that is valid in the blockchain. 

The cryptocurrency, in turn, can then be exchanged for currencies such as dollars or euro according to sometimes highly volatile exchange rates. Proponents of blockchains and cryptocurrencies claim that the central merit of these technologies lies in the fact that they are organized according to principles of decentralization. In addition to independence from states and institutions like banks, the blockchain guarantees a sufficient degree of transparency, since all transactions within a blockchain are made transparent at all times. These features make blockchains difficult to hack, which grants a considerable amount of security to the transactions. 

Because of these characteristics, proponents celebrate crypto technologies as a space free of state intervention and censorship that guarantees its participants the chance to develop freely. However, this ideological model is based on a libertarian concept of freedom, since property relations are not only reproduced in the blockchain, but extended to all areas of the digital. The resulting system enables not more justice, but the dominance of a small tech-savvy elite.

After overcoming the preliminary hurdles — entry price, setting up a wallet, buying cryptocurrencies — anyone who wants to play Axie Infinity for fun is met with a sobering gaming experience which consists of meeting people who play under time pressure and are watched over by their “sponsors”, who are there to ensure that their players make as much money as possible. A nice chat between like-minded people or rewarding moments of success are scarce amidst the fighting, breeding, and selling of creatures, all of which maximize profit in the game.

It is no wonder that most players and game journalists are harsh critics of cryptogames, since in most games, NFTs either have a purely cosmetic function or are an integral part of a clumsy game mechanics that boils down to having players complete tedious tasks in exchange for cryptocurrency.

As the gaming magazine Kotaku wrote, “NFTs have gained a reputation for being the most extraordinary invention of the 2020s. Obviously, that’s a load of nonsense. Companies are literally selling a line of code in a so-called blockchain to repackage the old idea of the ownership over digital assets as the next big investment that people should make while things are still going well.”

For their part, the big companies in the games industry are not in the slightest deterred by hostility from customers and the media. For example, in an interview for, Ubisoft crypto guru Nicholas Pouard responded to these issues by saying that cryptogaming only benefits the players and that “the critics just don’t get it yet”.

Artificial Hype

But even the promise of a nice supplementary income through play-to-earn currently stands on shaky ground. The value of the Axie Infinity cryptocurrency SLP, for example, fell from 40 cents in August 2021 to just 3 cents in May 2022. Ubisoft, despite what it calls its own visionary, pioneering work with NFTs, managed to sell a mere 67 units of Ghost Recon, its only NFT game to date, which has now been discontinued.

The core problem, apart from the lack of any interest from a solvent customer base, is of a straightforward economic nature. Put simply, the digital economy of these players is a zero-sum game.

For people to earn money by selling NFTs or cryptocurrencies, there must also be buyers. But there are hardly any buyers in these boring games, which means that more and more cryptocurrency is flowing into the gaming economy. This is met with stagnant demand for new NFTs, leading to hyperinflation. This ultimately leads the caravan of speculators and the “ludoprecariat” to move on to a new game which promises new quick profits for some and a liveable income for others. All the fun is currently being financed by venture capital firms betting on NFT games becoming the dominant business model in the gaming ecosystem.

Not only is the hype propped up by artificial means, on top of that, its biggest advocates deliberately turn a blind eye to these technologies’ numerous other faults. These include the excessive amount of energy they consume. One Bitcoin transaction burns the same amount of energy as a million Visa transactions.

Another misconception is that blockchain transactions are much more secure than conventional banking transactions. This ignores the fact that trojans, malware, and social engineering still make it easy for hackers to steal the keys to the digital wallets of unsuspecting users on poorly secured computers.

The Death of the Game

Even if we assume that the security features of these technologies will improve over time and that the energy consumption caused by crypto transactions will be reduced to a tolerable level, the one problem that can never be solved is that the play-to-earn model robs games of their meaningfulness and turns them into an extension of the world of work.

To be sure, computer games have always been designed according to the principle of profit maximization. Consider the emergence of free-to-play mobile games, which encourage the player to keep spending money to unlock both small and large benefits within the games. Yet despite all this, all business models centred gaming as an end in itself — a comforting place where the worries and troubles of everyday life could be left behind.

Pay-to-earn subjects all game-playing to a form of economic coercion: instead of the joy of trial and error, playing together with others, and the occasional failure, the model promotes a manner of playing which is thoroughly optimized and prioritizes the creation of value by executing the correct actions in a disciplined and efficient manner. Free time becomes work in disguise, sold to us by game developers as a fun pastime that costs money to play.

Looking back, the problem with the Chinese gold farmers in the game World of Warcraft, who were frowned upon in the 2000s, was not that they sold game money to rich Western players for real money. The crime was that the subscription-based model of online games at the time failed to provide for such transactions and the publishers received no share of the earnings.

The whole dreariness of this new world of work, in which the gamer is expected to spend the money earned, was expressed clearly by Edward Snowden in his rejection of play to earn:

If you think about the world that people are retreating from to their games, where they live in a cold bare box, if they’re lucky enough to even have a home in some overly expensive city where they spend all their time working, they get home exhausted. They make their cheap meal, and then they turn on their device to escape from all that and then in their digital world, where they’re on a beautiful island, they build a beautiful home, and they want to change the colour of the wall, and you got to pay $19.99 for the wall or for a token to let you roll for the potential to maybe recolour your wall. There is something horrible and heinous and tragic in that to me.

Play-to-earn is not a promising development in the world of gaming, but rather the inversion of the meaning of gaming — another hollow promise of innovation that merely adds another treadmill to our lives. For the powerful players in the gaming industry, it is not enough to sell us games as capitalist commodities — they also want to subordinate the very act of playing to the imperative to create of value.