Global Coin Research: How to create a sustainable Web3 game economy model

Creating a sustainable Web3 game economy model - Global Coin Research

Introducing limited-time seasonal skins in Web3 games is a great choice as it creates a sense of urgency for sales and stimulates secondary transactions as players seek early rare skins.

Players paid up to $150,000 for this AWP skin. Source: ggrecon.com

However, maintaining proper balance is crucial. Developers must carefully manage the release of new content to maintain player excitement and drive revenue while avoiding excessive content that could lead to depreciation of previously released items. Finding this delicate balance is challenging.

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Although Web2 games that allow players to trade in-game assets face similar issues, the key difference is that the impact of asset depreciation is limited to in-game currency rather than real currency. Nonetheless, “Counter-Strike” has proven that a healthy secondary market can develop when balance is well-maintained, with rare skins fetching astonishing prices.

By leveraging the appeal of premium/exclusive game props, Play-to-Own games can create incentives for players to spend money, driving revenue and nurturing a thriving secondary market.

Capturing the value generated by spending time in the game with NFTs

In games with progression systems like “World of Warcraft”, players invest a lot of time upgrading their characters. The highest-level characters with powerful equipment are of great value, just like trading “World of Warcraft” characters on platforms like eBay, even though Blizzard has a policy banning such behavior. This is because some players are unable or unwilling to invest a lot of time and would rather buy pre-upgraded characters to save time.

High-demand items like “Scarab Lord” make accounts highly valuable. Source: opwowaccount.com

With the emergence of Web3 technology, developers can leverage player behavior through a “player vs. player” economic model, where players can offer task farming as a service to others. Because the highest-level characters require additional payment compared to a level 1 character, the turnover rate of in-game assets mentioned earlier is greatly reduced. For example, in a Web3 game, the selling price for each basic character may be $10, but when the number of characters reaches its maximum, the trading price may be $100. Instead of 20 transactions, only 2 transactions can yield revenue equivalent to a single sale through transaction fees. If the character is traded for a third time, the developer’s revenue will significantly increase. This win-win situation is beneficial for developers, sellers, and buyers, with the seller earning money through effort and the buyer saving time as they do not need to farm tasks for a high-level character.

Furthermore, Web3 technology provides opportunities for value creation through the achievement of specific milestones and the acquisition of special skins. For example, in a card game, a card that has won 200 games can receive a Blocking skin, and after winning 400 games, it can become a diamond version. Although the card’s functionality remains unchanged, its novel and unique appearance increases the card’s value on the secondary market.

These examples highlight the potential of Web3 technology in creating value and incentivizing player stickiness by providing alternative paths to progression and customization. By adopting a player-to-player economy and introducing unique rewards tied to achievements, game developers can enhance the gaming experience, increase revenue, and provide players with more flexible gaming experiences and choices.

UGC Tokenization

Cultivating user-generated content is a major opportunity for Web3 gaming. Games like “Minecraft” allow players to freely build their virtual worlds, from intricate structures and landscapes to complex contraptions. Taking this creativity to a new level, vibrant mod communities have emerged, developing modifications (mods) that introduce fresh game features, visual enhancements, and custom content. This trend is not limited to “Minecraft”; games like “Skyrim,” “Civilization 5,” and “XCOM2” also have thriving mod communities. Additionally, in games like “Need for Speed” or “Forza,” players invest significant time in customizing the appearance of their cars, creating unique skins to make their cars more personalized. With Web3 technology, both developers and players can profit from promoting collaborative content creation.

1. NFT market for UGC: Game developers can create an NFT market that allows players to sell their UGC as NFTs. This can include in-game props, skins, artwork, music, and even custom levels or missions. Players can retain ownership of their creations and earn royalties when selling or trading NFTs. Developers can earn commissions from each transaction, forming a symbiotic relationship where both players and companies benefit from the UGC market.

2. Royalties for UGC contributions: Game developers can execute mechanisms that allow players to contribute UGC directly to the game, and creators can earn continuous royalties as long as other players use or access their content. This applies to in-game assets, character designs, or any other form of UGC. NFTs can serve as the basic mechanism for tracking ownership and automatically distributing royalties to creators.

3. Collaborative NFT Projects: Companies can involve participants in collaborative NFT projects where multiple contributors work together to create unique and valuable NFTs. This may involve collaborative design, game modification, or story initiatives. The resulting NFTs can be sold or auctioned off, with profits shared between contributing players and the company.”My World” is known for its modding community. Source: NintendoOverall, the combination of NFT technology and UGC monetization has the potential to reshape the relationship between players and game companies, foster a more collaborative and inclusive gaming ecosystem, and create additional revenue streams. It can engage players actively in the game economy and content creation process, increase overall player satisfaction, and prolong the lifespan of the game. By harnessing the power of UGC and Web3 technology, developers can build a thriving community, increase revenue, and blur the boundaries between players and creators.Stick to the Web2 Business ModelAlthough this may not align with the vision of Web3 enthusiasts, it is important for game studios to truly question whether their games really benefit from Web3 technology. In cases where Web3 provides limited benefits for developers and players, a traditional Web2 game business model may be more appropriate. It is crucial to objectively recognize that it may not be the best solution for every game when evaluating the feasibility and applicability of implementing Web3 in games.ConclusionThe emergence of the Play-to-Own economy undoubtedly enhances the gaming experience for players and brings the Web3 gaming industry closer to the gaming community. However, it also presents significant challenges for game developers. The ability for players to earn and trade in-game assets directly impacts a developer’s sales and revenue. To address these challenges, games must find natural ways to stimulate trading volume, ensure long-term value appreciation of NFTs, or harness the power of user-generated content. We must recognize that not all games can effectively adopt these approaches, and some games may achieve greater success by sticking to established Web2 business models. Nevertheless, an exciting new field awaits us for those games that can leverage these possibilities in an organic and mutually beneficial way. Web3 technology has enormous potential for the gaming industry’s development.

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