Why Play-2-Earn Games Die

We’re going to explain some models how games generate revenue and why almost all play-to-earn games die.


Let’s start with the first and most obvious problem. Sustainability. The money, that players are earning must come from somewhere when it comes to play-to-earn games.

The idea behind this is pretty simple. You play the game and you earn money. Well where does that money come from to keep players playing?

One of the most used sources and also the first model are new players. Many play-to-earn games follow this model whereby money is pumped into the system by new players. They need to buy an item to participate in the game. For example to play Axie Infinity you must buy an Axie, which is a character used in the game. When someone buys an Axie, they are putting money into the game that is then through a series of transactions possibly cashed out by another player.

This is not sustainable because there is no case where every player has made money. If one player makes money it is made from the money that another player has invested or injected into the game.

Almost all play-to-earn games work this way. Aavegotchi, STEPN or ZED RUN. All of these work by taking money from new players and giving it to older loyal players.

So this just isn’t a good idea and definitely not sustainable.

Membership Models

A membership model is another way these games can raise money. In this case they charge all players a set fee to participate and play the game.

This is a much better model than the previous one because it means the fee is equal for all players. In the first example someone with thousand dollars to play the game automatically has an advantage over someone who only has a hundred dollars. The “richer” player can just buy items, that are more powerful or useful, than the ones for only a few dollars. Giving wealthier players an unfair advantage can lead to frustration and a membership model could solve this problem.

Models like a seasonal membership fee, that is the same for all players, where the skillful players will win the money, that the skill-less players paid in is a much more fair model but it also leaves a ton of money on the table, which is probably why many protocols don’t even consider it.

It’s also much easier to market, that when you pay a hundred dollars to buy an Axie you get to keep that Axie as something that you own. Compared to a $30 seasonal fee to play the game, that expires once the season is over.


The next model is called pay-to-win. Another revenue option is the pay-to-win round. Now this one’s pretty obvious and we see it in some games like FIFA or Fortnite. In these games you can spend a few hundred dollars to jump start your way to hard-earned tools and items. Because this is also seen as giving rich players an unfair advantage, some games raise revenue this way but instead of giving items, that are useful like weapons or tools they instead give other useless things like a different skin or the option to change your username.

Until now these three models that we explained aren’t real really good options for the users. This brings us to model number four.


The fourth model and the best option that we can think of is an advertisement model. Similar to how SAP advertises at large football stadiums Microsoft or Logitech could pay a game to advertise in their PvP Arenas. Now this is outside money coming into a game and it’s not from lower skilled players and also not from the hope of speculative investors making money. In fact it’s an actual business model.

The play-to-earn game could have a few advertisements throughout the game, that raises monthly revenue of which some could be portioned off for skillful players to reward them for playing and the rest could go to the developers to continue to develop the game. Thus the development team has an incentive to build a game that attracts a lot of users, the players have a sustainable way to actually earn money while they play — at least if they’re good — and most importantly without taking it from the skill-less players. Additionally these advertisers get a new paid advertising route that may be really effective for their goals.

For a play-to-earn game to actually be sustainable and to succeed 10 years from now the money that the players are earning must also be sustainable and if you pay players with money that is received from new players the game will die over time. It’s very much like a Ponzi scheme and it will not make it to 10 years because the players will quickly be divided into those who made money and those who lost money and you will eventually run out of new players.

Anyway that’s problem number one. Play-to-earn games just keep running out of money to pay their play-to-earn players.

Lack Of Fun

The next big problem is that play-to-earn games aren’t really fun.

Let’s think about some of the world-class well-known games, that have lasted years and years of being played.

World of Warcraft, League of Legends, Minecraft, Call of Duty, Skyrim, Candy Crush, Pokemon or Clash of Clans. These games have stood the test of time because they are literally fun to play.

Now let’s take a look at some of the GameFi games Axie Infinity, Avagachi or DeFi Kingdoms. These games lack functionality and a certain psychological edge to make these games fun. Once you take away the earning part even more. So think about it like this, would you pay Axie Infinity money to play their game? What about DeFi Kingdoms? Would you pay them to play that game? The answer is probably no. That’s because these games are not fun. They don’t create an experience. Now how do we know those traditional games that we listed are fun? It’s because people pay those companies millions of dollars every year to keep playing. And more important, they don’t even expect a monetary return. So this is a fundamental difference between a lot of play-to-earn games and sustainable traditional games.

Play-to-earn games right now simply aren’t fun. A ton of play-to-earn games are basically just financial ideas where the marketers have tried to add in a game aspect to attract users. We won’t see great GameFi adoption until this is reversed and not until we have fun games, that then add in aspects of a blockchain where needed.

If games are not able to pay out a constant and sustainable amount of money they shouldn’t pay their players anyway.

You can explain this problem using a story.

There’s a bus corner where the school picks up a group of kids for school and on that same corner is an older man who waits for the bus to go to work. One morning while these kids are waiting on the bus they started making fun of that man who was just waiting there. A whole week goes by and the man eventually gets tired of these jokes so he comes up with a plan. He waits until the next school day and he tells these kids: For every joke that you tell about me I’m gonna give each one of you a dollar. Now these kids were absolutely delighted. They were doing this for free and now they’ll get paid for insulting the man. So the next day rolls around and they come up with a clever joke and the old man gives each one of them a dollar. A few days goes on and the old man says this is getting too expensive. So from now on I’m only going to be giving you 50 cents per joke. Now the kids obviously weren’t happy about it but they agree and continue making fun of the man. More days go by and the man once again reduces the joke payout to 25 cents then to 10 cents. Then finally the kids approached the man with a joke and the tells them he can only give them one penny. The kids are frustrated. They yell at the man: No way we’re doing this. We used to do this for a whole dollar and from that day on the kids never joked about the man again. Even though they used to do it for free.

Can you see how this story applies to crypto games? Some games are fun to play just for free. Then you add a financial incentive to them and you suddenly have a secondary motive. Now imagine if you were paid $100 per month to play a game and then $50 and then it kept going down until you made only one dollar per month. Just to play the game is not going to seem as much fun because you would compare your earnings back to when you earned a hundred dollars a month. Therefore game developers should be very thoughtful when designing incentive mechanisms involving money.

Necessity Of Blockchain Technology

The last reason why almost all play-to-earn games die or rather why most crypto games go extinct is because they have no need to be on the blockchain.

In many cases the users want the game to be on the blockchain or the developers want it to be on the blockchain but in reality they don’t need to be on the blockchain.

To summarize this problem we’re going to use an analogy. First you should know that blockchain technology solves a few very specific problems. However just because blockchain solves some problems well doesn’t mean it solves all problems well.

Think about a wheel. A wheel works great on a car because it allows the car to travel much faster with less resistance, than if the car had square wheels or if the car had no wheels at all. Wheels are also pretty good on trucks because they’re pretty similar to cars and wheels are even great on lawn mowers for much of the same reason.

However to continue our analogy wheels are not that good on ships even though they are a type of vehicle. They don’t really need wheels to function and it’s also useless on a computer or even creates more problems. Just because wheels are great at solving some problems doesn’t mean they’re great at solving every problem or that we should use them all the time and it’s the same with blockchain technology.

Blockchains offer very specific solutions to a few certain problems. The best games out there are already working fine without blockchain technology and the players who are playing those games aren’t really crying out for the need of blockchain technology. Therefore blockchain games could be seen as adding wheels to a phone.

Maybe they’re just not needed.

Well this is not a 100% true. There are two places where blockchains may help to solve specific problems in games. One place where they may fit well is in allowing users to own their own skins or in-game items. However many development companies make money by continuing to sell certain things to game users over and over again. If you need more money you just make a new weapon and then you sell it again. Some say that if you actually give users the ability to sell their in-game items and create a secondary marketplace you’re actually reducing the total number of customers for the game. For example why would you buy a $20 in-game skin from a game when you could instead buy a used one from another player for eight dollars?

The second place blockchain could be useful would be an in-game marketplace. But this is just a single feature of a game and doesn’t mean the entire game should be operated using blockchain technology. In both of these cases the blockchain technology could be sprinkled but bot used on the whole game.


To wrap this article up, the reason a ton of play-to-earn games die is because of four things.

Number one they don’t have a sustainable way to keep paying their players. Number two the games aren’t fun whenever you take away the earn part. Number three human motivation is volatile when it’s paired with fluctuating rewards. And number four many games just don’t need blockchain technology.



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Moonrock Capital

Moonrock Capital is a Blockchain Advisory and Investment Firm, incubating and accelerating early stage startups since 2019. https://www.moonrockcapital.io