Until recently, games could be categorized into two main monetization models: pay-to-play and free-to-play. However, a new model, known as 'play-to-earn,' has emerged. Here's a brief overview of how the economics of gaming have changed over the years.

Paid Games/Pay-to-Play (P2P): The Origins of Video Games

It all began with arcade games in the early 1970s. Arcade video games operated on a pay-per-play basis, where players paid a small fee to enjoy a few rounds of a game. This was incredibly profitable.

When home consoles arrived in 1972, game developers introduced a new revenue model: single payment. Players could now pay a one-time fee to gain full access to a game. Examples include FIFA and Super Mario Brothers.

In the late 1990s, subscription models were introduced, where players had to pay a regular fee to maintain access to all parts of a game. This model became popular, especially with MMORPGs like Tibia, Runescape, and World of Warcraft.

Free-to-Play Games (F2P)/Freemium: The Next Era of Gaming

Free-to-play games allowed players to access the core features of a game for free. However, they were encouraged to spend money on enhancements such as additional playing time or an ad-free experience.

Initially, most mobile games on the Apple App Store followed the traditional premium model, requiring an upfront payment. But in October 2009, in-app purchases were introduced, allowing players to buy digital items to enhance their gaming experience.

Soon after, popular mobile apps like Angry Birds, Temple Run, and Plant vs. Zombies transitioned to the freemium model. Similarly, video games like DOTA 2 and Team Fortress 2 adopted the free-to-play model while offering purchasable cosmetic items.

Play-to-Earn (P2E) and the Emergence of GameFi

In 2017, CryptoKitties became the first widely recognized blockchain game, launching the concept of play-to-earn. Several decentralized blockchain games followed, including Ether Shrimp Farm, Ether Cartel, and Pepe Farm. These games allow players to monetize their time spent playing.

In play-to-earn games, in-game assets are represented as NFTs, obtained through gameplay and advancement. Unlike traditional video games, players in play-to-earn games have ownership and control over their digital assets. They can even contribute to game decisions and shape the game's future through token accumulation.

For instance, Fairy Cat Gamefi, a popular blockchain game in 2022, allows players to collect, breed, and train creatures called 'Fairy Cats.' Unique to this game, each Fairy Cat and item can be traded on the in-game marketplace for real money. Players earn USDT, the game's native cryptocurrency, by playing.

However, it's important to note that games like Fairy Cat may come with an entry cost. To start playing, users must adopt one pet character, which could cost around US$30 to build an average team in the initial stages.

This initial cost remains a significant barrier for many players, particularly those from developing countries. As a result, gaming guilds and platforms have emerged to provide support and opportunities for players within the blockchain gaming ecosystem.