Part 2: Micro — Collectibles, Value, and Game Design
(also on mirror.xyz)
Now that we’ve explored crypto gaming on a macro level to the ecosystem around our games, let’s take a closer look at how crypto assets differ from non-crypto assets in games, where their value comes from, and how that might change the way we design them.
Collectibles is an exciting new dimension enabled by way of NFTs.
Collectibles have existed in games before, but it is an entirely different beast when the underlying assets are tokenised. With higher utility and optionality, they are inherently more valuable than off-chain collectibles. Ex. One would pay less for a bar of gold that cannot be used as a collateral for a loan than a bar of gold that can.
NFTs are unique, so even when their representations in games are identical, they can be valued differently. With the same item, people place higher values on NFTs with an earlier serial / mint ID. This is similar to collectible toys where even with the same toy, the ones with lower serial numbers (produced earlier) are valued higher than the ones with a higher number.
Additionally, provenance can also become a factor in the value of collectibles. An NFT that was previously held by Snoop Dog will have a higher value than other ones from the same collection.
The in-game assets we create for games are no longer considered to have infinite supply. I believe this is one reason why we are seeing crypto assets with very high prices. In-game assets have gone from having infinite supply to having scarcity.
Therefore when we think about tokenising assets in games, we should consider designing them as collectibles. I am of the opinion that not all traditional “unlock-able” items should be tokenised.
Balancing NFT items in games
Thinking in ways of collectibles helped us answer a question related to game design for crypto games: what happens when we make an in-game item less powerful for balancing reasons? Ex. If we nerf a card in a collectible card game, will its value drop - angering people who own the card?
When a physical Pokemon card is nerfed and banned from competitive play, its value actually increases. Even though you can only use it in casual play, players value it more because it will no longer be reproduced - increasing its scarcity.
I also found an example of this in the crypto game Splinterlands - you can find my notes here. If anyone has more examples of this please let me know!)
When items can be collectibles, their value is no longer only from their utilities in games. This is a new frontier of player psychology for games.
Value of In-game Items
The value of an asset comes from Utility and Collectibility.
A retired Pokemon card is low in Utility but now high in Collectibility (you can no longer buy it from source).
- For someone who plays the game (Player), this asset has no (Utility) value as you can’t play with it as you used to.
- For someone who collects Pokemon cards (Collector), this asset now has a high value - other collectors can no longer buy it directly, only a limited number of them exist, and an even smaller number of them are available for secondary sale.
Crypto enables us to explore serving the second group of people (Collectors). The motivations for Collectors are very different from those of Players. Collectors of physical toys don’t take the toys out of the box. The utility value of these toys to them is 0 and they value toys purely based on their Collectibility value. I think this is relatively new to games - and it introduces a new persona for whom we’ll have to design for.
Play-to-Earn and Where the Money Comes From
Play-to-Earn (P2E) is a phenomenon hugely amplified by crypto. I believe a sustainable game economy will require a healthy in-flow of money from players who are paying for the experience itself* - a balance between Play-to-Earn participants and the traditional, Pay-for-Fun players.
Play-to-Earn players participate in the ecosystem through value-adding activities (ex. grinding for rare items), while Pay-for-Fun players spend money to enhance their experience in the game, purchasing better equipment, levelling up cards, or simply having one more go.
We can even think of ourselves (game developers) as Play-to-Earn participants in the ecosystem. We play the game of game development (which is incredibly fun if you ask me), and we earn a living out of it.
It’s incredibly intriguing to think about what types of systems we can build to create a healthy P2E economy — where does value come from, who is adding value, and how are they rewarded for it?
- there are other sustainable modals where the cash inflow isn’t from Pay-for-Fun players, particularly if the games have staking/rewards systems, eSports components, or sponsors/advertisers - the cash into the economy can be from any of the new categories of participants.
A crypto game designer needs to not only consider retention of and monetisation from players, but also juggle all the demands and motivations from all parties involved, maintaining a sustainable economy, and fostering a thriving community.
Additionally, when releasing new games (creating new economies), the impact of transitioning players/participants in and out of different games ecosystems needs to be carefully considered as well.
Game design is evolving from an understanding of psychology to now including a lot more social science - game theory, economics, organisational behaviour, political science…etc. It wouldn’t surprise me if this becomes its own field of study with unique thought leaders and experts, with some of the learnings applicable to other, IRL social issues.
This will be a HARD and highly sought after position.
Speculation is a concern for us. We are careful about how it could impact game design, the larger community, and long-term sustainability, especially considering players with less capital and free players who are contributing to the community in other ways.
The games and the community have to come first. Play-to-earn requires a sense of play (otherwise it’d just be work-to-earn). Both the community and the collectible aspects of crypto have the potential to change the fundamentals of games.
When we can monetise effectively from community engagement and collectibles (monetising the fandom), then games can potentially be designed with a strong focus on maximising fun, and away from F2P Skinner box mechanics and design.
On the other hand, speculation is also an opportunity. There’s a lot to consider here - regulation, audience, social responsibility, but speculation is a strong motivation, arguably one that has contributed hugely to the advancement of web3 technology, that we should not ignore or overlook how it can be leveraged.
Crypto gaming is still a relatively new field. Some of the things we are still exploring:
- How much of the game should be on-chain?
- What relationships should be built between developer and players, and among different groups of participants, across multiple games?
- Are oligarchs a problem? If so, how do we prevent it?
- How much control can we give to the community while protecting the community from exploitation?
No doubt there are a lot more questions to be answered.
Mobile and social games brought a huge number of people into gaming. I believe crypto gaming can do the same, bringing different categories of participants who might not consider themselves gamers to engage with our games.
It’s also a HUGE design challenge - all these different categories of people now need to be designed for. Managing their different motivations, designing emotions for these new participants, while juggling the economics of everything involved is no easy feat.
I am excited about what’s coming to this new frontier. We have a few projects in the works that incorporate some of these ideas, and I am excited to share more with you soon.
Special thanks to these wonderful people who’d given me great feedback on the draft (in no particular order): Laura Pepper, Tom Kail, Mike Cann, Robin Ji, Kabir Hemrajani, George Sequeira, Sam Barberie, Charlie Graham, Evgeny Pasenyants, Jon Walch, Brandon Martinez.