In today’s play-to-earn (P2E) gaming industry, most of us spend a lot of time thinking about who’s actually playing the games. In other words, who the target audience is today, and who we should be trying to bring into the fold to grow gaming ecosystems in the future.
But to really understand who’s currently playing these games, it’s helpful to look at how various trends have formed and evolved in the crypto industry in the past – and how the growth of P2E mirrors them.
The Stages of the P2E Industry Currently: Examining Digital Asset Trends
Whether it was Bitcoin, the dApp ecosystem, NFTs, or any of crypto’s other major pieces of technology, each of them seemed to have undergone a five-phase cycle.
First is the birth of a niche community – a small group of super-passionate individuals who build and experiment with emergent technologies. These kinds of communities formed around Bitcoin in cryptography groups and then later on forums like BitcoinTalk; similar groups have formed around other new cryptocurrencies and decentralized platforms.
When the niche community gets large enough, the passion that they have for the technology they’re interested in starts to spread through word of mouth. This leads to a sort of “snowball effect” as community members start to bring their friends, colleagues, and online followers into the fold. After enough time has passed in the word of mouth stage, the technology enters into what I’d like to call the “next best thing” phase. This is when hype takes root on a large scale, and the technology transforms from a niche interest into something that will “change everything.” This is typically when user counts, asset prices, and news coverage start to explode.
Of course, what goes up must come down. And after a technology has had its moment as the “next best thing,” the hype does inevitably subside. This leads to a moment of realization – the tech’s community and the general public start to understand that they’re not going to get rich overnight, and that real innovation is going to take longer than expected.
After these four initial stages have passed, the technology finally reaches a moment of maturity. It’s no longer the new kid on the block, or the flavor of the week. Rather, the tech becomes an established part of the Web3 landscape. And while this is the last of these five stages, I believe that this is where the real audience of the technology starts to form – this is the point at which it starts to become more visible to the general public, and has real potential to grow beyond the cryptosphere.
P2E’s Hype Cycle
Where does P2E currently fit into this cycle? In my opinion, we’re sitting halfway between the “next best thing” and the “realization” stages.
At this moment in 2022, we’re coming off of a lot of hype that took place around P2E in 2021, when Axie Infinity suddenly garnered a huge amount of new users and new capital. However, widespread criticism of the game, combined with crashing token prices and large-scale technical failures, led to a bit of disillusionment within the space. This has created healthy skepticism – enough to give us the momentum needed to move toward realization.
So the next question is this: what does P2E’s current trajectory mean in terms of who’s actually playing and investing in the game?
Looking deeper into the five-stage hype cycle, it’s clear that the users who participate in a certain technology during the first four phases are generally the same type of people. These are the “true believers” – crypto natives who are willing to invest their time and money in a technology while it’s emerging. They’re willing to ride along with the bumps in the road, and experience the bad along with the good.
In Web3, Maturity Can Feel Like Stagnation
In Web3, entrance into the maturity phase – which frequently involves a massive market downturn – can cause many of these people to panic. Maturing technology stage does not behave in the hyperbolic way that Web3 tech is typically known for. It doesn’t “go to the moon” in the way that people with “Web3 brain” typically use to define success. In fact, the reality is that skyrocketing token prices aren’t a marker of real, long-term value. Instead, they are simply a sign that a particular segment of the market is getting a lot of attention at a particular moment in time; in some cases, skyrocketing prices can even be a harbinger of future problems.
But the over-fixation on high token prices that’s present in much of Web3 culture means that the prolonged period of relative stability that follows the maturation stage can feel like the end of innovation; thus, the early adopters may feel inclined to leave. But in reality, maturity isn’t the end of innovation. It’s just the beginning. The projects that are going to succeed understand that this “maturity” phase is where they really need to start focusing their efforts on building ecosystems that will last well into the future. After all, Web3 isn’t a charity – and without a good product, not even the most exaggerated hype will ultimately save you.
Looking to the Future
Right now, there are no completed games within the Web3 space. That’s why Web3 games only attract Web3, crypto-native players – the “true believers” who are willing to roll with the punches while this technology is developing. They’re here for the opportunity to make money. But when the games are actually finished, non-crypto natives will start to join the fun.
As we move further and further toward maturity, the wheat will be separated from the chaff. In 24 months the real studios will still be creating; the rest will go the way of the dinosaur. User acquisition strategies and business fundamentals will eventually expose the real from the fake. In the meantime, we just need to put our heads down and keep building.
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*All investment/financial opinions expressed by NFT Plazas are from the personal research and experience of our site moderators and are intended as educational material only. Individuals are required to fully research any product prior to making any kind of investment.
Corey Wilton is the co-founder of Pegaxy, a play-to-earn racing game with futuristic mythological styling.