How Ads Can Pay in Play-to-Earn Games

person playing game on phone

By Ozgur Taskaya, CMO, 2.7 billion gamers globally in 2020, a figure that is expected to rise to over 3 billion by 2023; currently, there are over 46 million gamers in the UK alone.

In such a booming market, a game’s popularity can soar overnight. Take the hugely popular Wordle game, which went from 90 daily players to 2 million in just two months, prompting the New York Times to purchase it for a seven-figure sum in a bid to attract more digital subscribers. Clearly, with their enormous reach, games are increasingly becoming a medium for audience expansion.

The breadth of the industry and its overall growth can disguise some of the even-faster growing but more specialised, genres of gaming. A relatively new form of gaming called ‘play-to-earn’ is one such area that is taking off.

It Pays to Learn About Play-to-Earn

In play-to-earn gaming, that combines DeFi and gaming, players are rewarded for their gameplay with non-fungible tokens (NFTs) and/or cryptocurrency through blockchain technology. Often, players complete in-game quests and earn digital items such as weapons that will bolster their progress.

Created by Sky Mavis, Axie Infinity is by far the most popular play-to-earn game, in which players purchase cute monsters, or “Axies”, to deploy in battles. Users are rewarded with SLPs (“smooth love potions”), which they can sell to other players to make money or to breed more Axies. Users can also earn AXS (Axie Infinity Shards) tokens that allow them to buy digital goods and assets.

However, players must make an upfront purchase of three Axies to begin their journey, which is the case in a number of other similar play-to-earn games. They must also trade their earned tokens with new users so that those players can create their own NFTs, meaning the play-to-earn business model relies on a constant influx of new players to maintain it.

This isn’t sustainable long-term, therefore game providers must find ways of diversifying their revenue streams if they are to continue with this innovative format. The  answer in these  play-to-earn games could be to utilize ads and share the revenue with the players.

Advertisers Must Branch Out

It’s not just play-to-earn game companies that need to switch things up. Brands are in a challenging position when it comes to advertising, thanks to the tech giants’ privacy updates. Google’s replacement of FloC with Topics and the subsequent removal of cross-app tracking on Android will significantly impact ad targeting and campaign insights. Meta has already estimated that Apple’s App Tracking Transparency (ATT) will negatively impact its sales by $10 billion this year due to ad targeting limitations.

The unreliability of tech giants is being compounded by the diminishing audience numbers on these platforms. Meta lost users for the first time in its history in the final months of 2021, causing its shares to plummet 20%. Gaming offers brands fresh inventory that will help them to stay relevant and connect with key and fast-growing audiences. In the UK, 92% of young people played video games in 2021, so brands hoping to engage this coveted cohort should look no further.

A Win-Win for Both Sides

Gaming companies have the vast addressable audiences that brands need and they themselves can benefit from the monetization opportunities advertisers offer. Especially blockchain gaming companies which need to reward its users with tokens that can be converted into real cash. Brands should take advantage of the huge player base of play-to-earn games: Axie Infinity boasts over one million players daily.

Demonstrating the huge marketing potential within play-to-earn gaming, Warner Music Group recently partnered with blockchain gaming developer Splinterlands, which operates the eponymous trading card game. The partnership will see Warner’s artists create their own play-to-earn games, allowing them to promote their personal brands and music to the vast audiences within this rapidly expanding market. This deal is the first of its kind but it shows the unmissable opportunities within this field and other big brands are sure to follow suit.

As the play-to-earn market continues to thrive, the inventory opportunities for marketers will continue to grow; those most ready to seize them could reap huge rewards. Brands may even take this further and, like Warner, decide to build their own games to fully harness the enormous reach potential of play-to-earn. Despite the challenges posed by privacy regulations and tech giants’ becoming less viable, it certainly isn’t game over for marketers seeking scale.