New game model Free-2-Own
A NFT game with the new Play-2-Earn model has raised over $200 million from investors and has already earned over $600,000 in royalties with its NFT giveaways.
Binance's CEO, known by the initials CZ, recently criticized the creation of a new "Free-2-Own" business model in the GameFi space, writing: "If everything in the world is going to be free, why do we have to work so hard...". He went on to add that new Free-2-Own projects can be high-risk for early entrants.
CZ criticizes gaming startup Limit Break for its Free-2-Own model. The project has been popular so far thanks to a freely available NFT collection called DigiDaigaku. This startup has already raised $200 million from VC investors as of August 29.
A new Play-2-Earn model was developed in DigiDaigaku where the community starts without the need for an initial NFT deposit. In this Free-2-Own model, the need to withdraw the initial investment, which is a common investment practice, disappears. The mentioned free NFTs generate new gaming and cosmetic NFTs. This strategy is intended to maintain a playerbase that can be capitalized on in ways other than the initial sale of NFTs, as has been the case with all NFT games to date. Don't take this the wrong way, game developers have to make money from their work somehow, and the NFT field is still in the early experimental phase in the game industry.
Ryan Foo, a game economist at VC firm Delphi Digital, points out that the NFT element of the mint price is also disappearing from the player adoption process, so the price is all the more determined by the free market. In the case of a player minting an NFT that they will then play with, the ROI (Return on Investment) element also disappears. At the very least, that’s the case if the player was present at the minting process and did not come to buy the NFT second hand.
Ryan Foo further stated that the aforementioned gaming startup Limit Break charges 10% royalties (the marketplace transaction fee) for NFTs. Approximately 3,900 ETH were traded in the first three weeks after release, resulting in a royalty revenue of over $600,000.
Free-2-Own is said to lead to a new and more effective financial cycle for game development compared to the conventional Free-2-Play model from Web 2.0. This is because developers develop first and then figure out what players are doing and what they are willing to spend money on. In the Free-2-Own model, developers promise to develop together with the attention of players to help with the much more player-oriented development of the game.
Author's note: I, too, am a proponent of the view that NFT games will attract a community which will serve as alpha/beta testers whose interests help developers.
Ryan Foo also comments on the negative aspects of the GameFi industry. Looking at the economics in NFT games, he mentions that a lot of projects will attempt to maintain their NFT prices. These will be assets that can make the community of owners nervous when their prices drop. Apparently, a lot of people in the industry will get embarrassed over time when their projects fail to live up to their promises. In this new and experimental industry, it is a fact that if developers release a certain number of NFTs, then with each subsequent NFT release, the value of previously released NFTs can rapidly decrease. So it all depends a lot on the NFT strategy of the developers themselves.
In recent months, NFT game developers have faced harsh criticism from game industry veterans for their approach to making money instead of developing games for fun. For example, Mojang Studios, the creator of Minecraft, has said it will ban NFT integration because they believe speculation and investment thinking in games ruins the gaming experience.
However, according to industry developers, the blockchain has a place in games; for instance, they can change the business model of games or lead to the creation of entirely new types of gaming experiences with novel mechanics.
analyst opinion
Rocket Unit
A NFT game with the new Play-2-Earn model has raised over $200 million from investors and has already earned over $600,000 in royalties with its NFT giveaways.
Binance's CEO, known by the initials CZ, recently criticized the creation of a new "Free-2-Own" business model in the GameFi space, writing: "If everything in the world is going to be free, why do we have to work so hard...". He went on to add that new Free-2-Own projects can be high-risk for early entrants.
CZ criticizes gaming startup Limit Break for its Free-2-Own model. The project has been popular so far thanks to a freely available NFT collection called DigiDaigaku. This startup has already raised $200 million from VC investors as of August 29.
A new Play-2-Earn model was developed in DigiDaigaku where the community starts without the need for an initial NFT deposit. In this Free-2-Own model, the need to withdraw the initial investment, which is a common investment practice, disappears. The mentioned free NFTs generate new gaming and cosmetic NFTs. This strategy is intended to maintain a playerbase that can be capitalized on in ways other than the initial sale of NFTs, as has been the case with all NFT games to date. Don't take this the wrong way, game developers have to make money from their work somehow, and the NFT field is still in the early experimental phase in the game industry.
Ryan Foo, a game economist at VC firm Delphi Digital, points out that the NFT element of the mint price is also disappearing from the player adoption process, so the price is all the more determined by the free market. In the case of a player minting an NFT that they will then play with, the ROI (Return on Investment) element also disappears. At the very least, that’s the case if the player was present at the minting process and did not come to buy the NFT second hand.
Ryan Foo further stated that the aforementioned gaming startup Limit Break charges 10% royalties (the marketplace transaction fee) for NFTs. Approximately 3,900 ETH were traded in the first three weeks after release, resulting in a royalty revenue of over $600,000.
Free-2-Own is said to lead to a new and more effective financial cycle for game development compared to the conventional Free-2-Play model from Web 2.0. This is because developers develop first and then figure out what players are doing and what they are willing to spend money on. In the Free-2-Own model, developers promise to develop together with the attention of players to help with the much more player-oriented development of the game.
Author's note: I, too, am a proponent of the view that NFT games will attract a community which will serve as alpha/beta testers whose interests help developers.
Ryan Foo also comments on the negative aspects of the GameFi industry. Looking at the economics in NFT games, he mentions that a lot of projects will attempt to maintain their NFT prices. These will be assets that can make the community of owners nervous when their prices drop. Apparently, a lot of people in the industry will get embarrassed over time when their projects fail to live up to their promises. In this new and experimental industry, it is a fact that if developers release a certain number of NFTs, then with each subsequent NFT release, the value of previously released NFTs can rapidly decrease. So it all depends a lot on the NFT strategy of the developers themselves.
In recent months, NFT game developers have faced harsh criticism from game industry veterans for their approach to making money instead of developing games for fun. For example, Mojang Studios, the creator of Minecraft, has said it will ban NFT integration because they believe speculation and investment thinking in games ruins the gaming experience.
However, according to industry developers, the blockchain has a place in games; for instance, they can change the business model of games or lead to the creation of entirely new types of gaming experiences with novel mechanics.
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