Following the global success of Wemade's Mir4 Global in the second half of last year, major companies in the Korean gaming industry fully embraced blockchain technology and Play to Earn systems, leading many to describe it as the era of Play to Earn. However, stock market volatility, rising interest rates, exchange rate fluctuations, and the collapse of the gaming related cryptocurrency market following the Luna crash, the FTX bankruptcy, and the delisting of WEMIX have fueled skepticism about the gaming industry's adoption of blockchain technology. Because the financial impact and cryptocurrency volatility are challenges that the traditional gaming industry has never faced before, many companies remain unprepared to respond effectively. Nevertheless, even during this crypto winter, major companies including Netmarble, Com2uS Group, and Wemade continue to expand their blockchain ecosystems and introduce new NFT-based titles in an effort to revive confidence in the digital asset market.

The immediate challenge for the gaming industry, which is continuously attempting to expand its blockchain ecosystem, is to overcome the issues with blockchain-based and, more specifically, P2E-based games that became clearly apparent this year. The biggest problem identified this year is that most users were drawn to these games for the profitability of the coins rather than the games themselves, and that the games were evaluated based on the value of their associated virtual assets rather than their gameplay. In the Philippines, in particular, many people have turned to P2E as a profession, while in Western markets, these games are shunned by gamers because they cannot generate income that keeps pace with the cost of living. Even when popular existing games transition to a P2E model, users often oppose it, fearing that gaming will turn from a source of “fun” into “labor.” For these reasons, the growth of the P2E game market has stagnated outside of Southeast Asia.

The recent delisting of WEMIX has dealt a major blow to the gaming industry and has fostered negative public sentiment toward the existing P2E system of issuing proprietary game coins and NFTs and listing them on exchanges. Meanwhile, the cautious approach taken by NCSoft and Nexon, which have introduced gradual plans for utilizing blockchain technology, is drawing attention. Moving away from the structure of creating games for mining and profit and listing coins like other P2E titles, they are focusing on maintaining the in-game economic systems of games that already have solid fan bases and gameplay while turning in-game items into NFTs to guarantee their value.

At the 'Adoption 2022' conference held during Korea Blockchain Week 2022 (KBW2022) on the 8th, a Nexon representative explained regarding MapleStory Universe: “The biggest reason Nexon decided to enter the blockchain space is the judgment that the Web 3.0 ecosystem will help the sustainability of our games,” adding that "the key is to incorporate blockchain and NFTs into creating a continuous cash flow."

The Future Direction for P2E Games

Current play-to-earn games operate on a system in which in game items are traded using coins issued by the game company and can then be exchanged for cash. However, as this year has clearly demonstrated, these systems are highly influenced by external factors, including economic conditions, making their ecosystems fragile. The process through which Play to Earn game ecosystems have deteriorated is outlined below.

First, after a game is released, a large amount of coins is distributed to users to attract early adopters. These coins increase the influx of new users while simultaneously lowering the currency value, causing in-game inflation. Of course, if the proportion of users who joined to play the game is high, the currency value can be maintained. However, the bigger problem arises when users playing for profit invest large amounts of coins into game items and guild building to monopolize mining rights; once they gain power, the game’s structure inevitably devolves into “Pay to Earn (P2E).” Even if the in-game ecosystem is well-maintained, the inherent vulnerability of coins to external factors continues to threaten the game.

To overcome this, major P2E companies, including WEMIX and TreasureDAO, attempted a “game platform” system. The idea was to integrate currencies across multiple game companies, with each company periodically buying and releasing large amounts of coins to maintain their value. However, maintaining coin value through this system proved extremely difficult; WEMIX failed due to external factors, and TreasureDAO failed due to internal platform issues and hacking incidents. Consequently, both platform coins saw their value plummet by approximately 90% from their peaks.

Amidst these persistent concerns about ecosystem sustainability, TreasureDAO’s $MAGIC coin recently rebounded, rising 300% from its low in just three weeks, reigniting a spark of hope in the P2E gaming industry.
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The factor behind TreasureDAO’s rebound was the launch of their new game, The Beacon. Within a week of its beta release, the game successfully attracted over 9,000 users and has been highly praised for its exceptional gameplay. Despite being in beta, users purchased approximately 2 billion KRW worth of NFTs, and thanks to this upward trend, the $MAGIC coin also gained recognition, successfully listing on Coinbase and Binance. The TreasureDAO case once again demonstrates that the success of a game ecosystem lies in the quality of the game itself and attracting gamers who seek “fun” rather than “labor.” It appears that for P2E games to maintain a sustainable blockchain ecosystem, users must be drawn in by the essence of the game—its gameplay—rather than the potential for profit.

The Future Direction for Blockchain-Based Games

For game companies that have not yet developed a P2E system, how can they adopt blockchain most safely and gain user support? Let’s look at the recent blockchain adoption cases of Nexon and NCSoft, which have been drawing attention. Despite the massive industry-wide boom last year, both companies did not announce direct P2E plans; in fact, they distanced themselves from P2E systems. Furthermore, this year, both companies announced plans to turn characters or items into NFTs through blockchain technology without issuing coins or listing on exchanges. By doing so, the game companies aim to add value to the items users own and operate games through decentralized revenue and ownership structures. Of course, in the case of Lineage, items have been traded for cash through various channels for a long time, leading to criticism that NCSoft’s NFT adoption is similar to P2E. However, the approach to blockchain adoption shown by Nexon and NCSoft is evaluated as providing a sustainable economic ecosystem for users while maintaining the essence of gaming: fun.

Bringing Game Items into Reality

Recently, NFTs have been used to recreate offline products online, such as Nike’s .SWOOSH and Gucci’s SUPER GUCCI. However, for gaming companies, NFTs hold even greater value: the ability to recreate the online in the offline world. Previously, no matter how valuable an item you obtained or how stylishly you customized your character within a game, everything remained the property of the game company and could vanish if the game service ended. Now, through blockchain technology, users can possess in-game items as real items that exist even outside the game, lasting as long as the blockchain itself exists.