Micropayments are the future of Play-and-Earn gaming
Gamers might hate the idea of micropayments now, but Instant Leaderboard Payouts™ are changing that
A Background on Micropayments in Gaming
It's no secret, if you’re a gamer, you probably cringe when you hear the term “micropayment”. These small transactions started as a way for game developers to generate additional revenue by selling new skins, themes, or extended content within a game. But the invention of blockchain technology has given birth to new types of micropayment concepts that gamers are extremely skeptical of.
Play to Earn
“Play to Earn” is a term becoming more and more popular in the gaming industry. For example, triple-A studios, such as Ubisoft, are investing millions of dollars into blockchain technology and play to earn concepts that give gamers the ability to monetize their gameplay. At face value, this sounds appealing. Take the following four scenarios:
1) Gamers purchasing in-game enhancements that improve their character, thus giving them a better chance at beating the game/other players for a financial reward
2) Gamers earning tokens/NFTs native to the game, that can then be sold on an exchange for a cryptocurrency
3) Gamers buying or finding “loot boxes” that may contain rare NFTs that can be sold on an exchange for a cryptocurrency
4) Gamers winning lottery NFTs within a game, that can be sold on an exchange for a cryptocurrency
But there is a flaw with each of these play-to-earn concepts…
None of them allow the gamer to earn strictly based on their skill compared to the skill of all other gamers
For example, in scenario 1, a situation arises where the gamer with the most financial backing automatically has an advantage over the rest of the field. By purchasing in-game enhancements, the gamer’s character/team has an advantage over other gamers that has nothing to do with skill. This version of play-to-earn has since been dubbed, “Pay-to-Win”, by the gaming community.
In scenario 2, gamers earn tokens/NFTs from gameplay that can be exchanged for cryptocurrency on speculative markets. The problem with this model is that there must be demand for the tokens in order for the gamer to be able to sell them. What utility do the tokens have that would create demand?
Scenario 3 describes what is known as a “loot box” and can be very rewarding for gamers if the box contains a valuable NFT. If it doesn’t the player has spent money for no real value in return.
Scenario 4 is sometimes known as “NFT lotteries” where players are randomly awarded ownership of a rare NFT. While this NFT may be significantly more valuable than other NFTs within a game, this lottery dump style opens the door for gamers to cheat the system by creating multiple accounts, thus increasing their chances of winning a lottery.
So the problems are:
- Skill has nothing to do with earning
- Luck is the primary driving force of any type of monetary reward
- Micropayments are only going from the gamers to the game developers
But what if there was a way for gamers to earn based on their skill?
Rewarding Gamers Based on Skill
Haste Arcade has created a new way to utilize micropayments within games that reward both the game developer and the player. The concept is called Instant Leaderboard Payouts™, or ILP Gaming™.
To get an idea of how ILP Gaming™ works, imagine the following scenario:
You put a quarter in a Pac-Man machine and get the high score. For having the high score, you get a percentage of every subsequent quarter spent on that Pac-Man machine until your score is no longer on the leaderboard.
How blockchain enables micropayments
Among the core value propositions of blockchain technology, is the fact that payments do not require a trusted third party, aka a credit card company or a bank, to validate the transaction and prevent fraud.
For example, a standard digital payment has a transaction fee of 2.9% of the transaction amount plus a $0.30 constant. The transaction fees are paid to the credit card processor (typically a bank or credit card network like the Visa Network) because the processor has overhead that they need to pay — ie employees, electricity, office space, etc. These fees make it impractical to sell something online for less than a dollar.
Think about it, if you sold a $1 item online, you would be losing at least $0.33 of the revenue just to the credit card fees! This is why most games make gamers buy credits in amounts of $5, $10, $25, or more upfront, even though the items that are sold within the game cost $0.99.
Since a blockchain is simply an immutable timestamped public ledger, you no longer need a third party to oversee every transaction and protect against fraud. This means the third party can be eliminated, along with the third-party fees that are associated with a transaction, greatly reducing the floor amount that can be digitally transacted and the time it takes for a transaction to be validated.
What does this have to do with gaming?
Let’s go back to our PacMan example from earlier. A gamer still has to pay to play the game, but because of the peer-to-peer nature of blockchain technology, the cost to play a game can be less than a penny!
What’s even cooler is that the payment to play the game can be split up into even smaller amounts and instantly distributed to other wallets which is why Instant Leaderboard Payouts™ are possible. Here’s an example:
- $readyplayerone spends $0.01 to play Monster Bombs, a home run derby game in Haste Arcade
- Immediately upon the game starting, the $0.01 is split into 10 fractions of a cent — $0.001 each
- The 10 fractions are then instantly distributed directly to 10 wallets of gamers that are already on the Monster Bombs leaderboard
In this example, if $readyplayerone makes it onto the leaderboard, they only need to have a score that stays on the leaderboard for 10 other gameplays before they have recouped their initial $0.01, and anything after that is profit. If $readyplayerone didn’t make the leaderboard, well, it only cost $0.01 to have some fun!
Actual gameplay costs in Haste Arcade — Free, $0.01, $0.10, $1, $10, $100
Not play-to-earn or pay-to-win
One of the most important aspects of ILP games is that the games are skill-based. This means that chance is not a determining factor in the outcome. Therefore, ILPs reward players solely based on their skill at the game, in comparison to other players.
Additionally, there are no loot boxes or in-game enhancements that give a player an advantage over the field. The result is simple:
Incentivized competition that rewards the most talented players
Furthermore, ILP Gaming™ is not a play-to-earn model, but rather a play-and-earn model. The difference is that in play-to-earn games, the focus of the gameplay is on earning, with players taking actions solely to earn regardless of whether or not they are enjoying playing the game (ie purchasing a loot box), whereas the focus of gameplay in play-and-earn games is still on playing the game and improving a players skill at the game since there is no guarantee that anything will be earned. This allows the player to focus more on progressing and enjoying the game itself, with earning being a potential outcome, but not the key driving factor.
How much can gamers and/or game developers actually earn?
Unbounded Capital wrote an incredible article that goes into great detail on the power of ILPs. They use Flappy Birds as an example to demonstrate the revenue ILPs create for both gamers and game developers, and found that during the peak of Flappy Bird's virality, the game had about 50,000,000 downloads. During that time period, if the majority of people that downloaded the game were playing in ILP mode, and the cost to play a game was only half a penny, the gamer holding the #1 leaderboard position would have been earning over $200,000 daily in the form of micropayments! Game developers would have gone from generating about $50,000 daily from advertising revenue to over $2 million daily, strictly from gameplays.
So if you’re a gamer, next time you hear the term “micropayments”, don’t be scared!