Image Credit: Naavik
The world of blockchain gaming is on the cusp of a significant transformation. While the past year saw the market experience turbulence, there’s a growing presence of established studios and high-quality games entering the fray, bringing much-needed maturity to this nascent sector. This concept resonates strongly with both gamers and the gaming industry. For developers, data-to-earn presents solutions to crucial challenges.
In this next wave of web3, gamers and games alike are placing significant emphasis on digital ownership. Players yearn to own their in-game identities and accomplishments, while developers seek better ways to connect with their audiences and understand their engaged players. This is where data-to-earn emerges, a concept that transcends play-to-earn by offering passive income opportunities for players who choose to share their data with brands. This represents a significant departure in how online identities can be monetized, and it’s worth exploring further.
Play-to-earn has been the dominant earning method in blockchain gaming until now. Players engage in activities like winning battles or progressing through levels, earning potentially valuable in-game assets and cryptocurrencies. This model gained traction after the COVID-19 pandemic, particularly in developing countries like the Philippines where individuals embraced it as a means of generating additional income. However, this segment is not without its flaws. Unbalanced or poorly designed in-game economies can lead to inflation, and as the name suggests, play-to-earn necessitates active engagement – no play, no earnings. This reliance on constant play can be unsustainable and detracts from what games are meant to be: fun and engaging experiences.
Data-to-earn offers a different approach. New web3 protocols and platforms enable users to link their gaming, social media, and various other accounts to the blockchain. This results in a twofold benefit. Firstly, users can consolidate their digital identities, showcasing their achievements, assets, and gaming history in a single, unified space. Secondly, they gain control over their data and can choose how it’s used. Opting in to share data with brands allows users to passively earn when these brands leverage their on-chain and off-chain data.
Users are no longer confined to siloed databases owned by corporations, leading to a fragmented user identity scattered across various platforms. Instead, data-to-earn empowers users to reclaim control of what’s theirs, allowing them to decide how to best aggregate and earn from their information.
Stringent regulations like Europe’s GDPR and California’s CPA, coupled with restrictive measures imposed by tech giants, make precise user targeting difficult, leading to revenue losses for ad networks. For instance, Unity experienced a $110 million revenue drop and a $5 billion market cap decline following the introduction of Apple’s IDFA.
By directly accessing user data with consent on the blockchain, the gaming ecosystem gains comprehensive and compliant information for better user targeting, attribution, and understanding – all in a trustless manner. Major web3 publishers and distributors are already facilitating this. Platforms like BNB Chain, Avalanche, and Ronin (the gaming blockchain from the creators of Axie Infinity and Pixels) are connecting studios with data toolkits that enhance their ability to identify potential users, retain existing players, and offer rewards for their data.
For years, gamers have seen their data misused and leaked. Data-to-earn not only restores privacy but also introduces new revenue opportunities. By sharing their preferences, ownership history, social connections, and past experiences directly with brands, users can earn passive income and enjoy personalized services. By authorizing and linking more accounts, and actively engaging with brand-user interactions, they can further boost their potential earnings.
As the world transitions from web2 to web3, consolidating on-chain identity and empowering users to control and monetize their data becomes increasingly important. This shift is particularly exciting for the gaming industry, where high-quality user data is crucial for informed decision-making and improved efficiency.
Play-to-earn will undoubtedly retain a significant role in blockchain gaming, and it will be interesting to see how gamers integrate both active and passive revenue models.
