Op-Ed: The sudden exodus from the P2E sensation exposes the critical flaw in Web3 gaming's current model.
Over the summer, P2E game Hamster Kombat was all the Web3 community could talk about. Every week, it seemed to cross a new milestone in terms of the number of players, onboarding more than 200 million users in less than three months. It contributed to the exponential growth of the TON ecosystem and truly was the darling of the market. But its success was short-lived.
In Hamster Kombat, players battle each other using digital hamsters. They can train them, complete daily challenges and unlock new abilities, all while earning the in-game HMSTR token. The game created a great deal of noise around the airdrop, which was touted as the biggest in history at 60 billion tokens as part of season one.
But when the cult game announced the details of its airdrop plans, the community was outraged: it turned out that just 43% qualified for its season one airdrop. Players began abandoning the game in droves, with 30 million fleeing when they realized there were no easy gains to be made, after all. The HMSTR token launch was also a flop, with the token plummeting 30% after listing on Binance. It hasn’t recovered those losses since.
P2E’s Retention Problem
And this, in a nutshell, is one of the main problems with P2E gaming. It comes down to this: players will play, as long as there is the prospect of getting rich in the foreseeable future.
When this prospect disappears, they leave for new pastures. With thousands of P2E games now on the market, and new ones being released all the time, gamers are spoilt for choice. So, even if you’ve developed an ultra-engaging and fun game, you have to keep your players incentivized to avoid losing them to the stiff competition.
This explains the sky-high failure rate of Web3 games. A whopping 75.5% of Web3 games launched between 2018 and 2023 – or 2,127 in total – have failed. Meanwhile, the number of active participating wallet addresses fell 58% between 2021 and 2023, from 1.9 million to just over 800,000. In short, it’s clear that P2E gaming has a major retention problem.
There’s another problem here, too. Games like Hamster Kombat are designed to be simple to play – a sort of tap-and-earn model. The problem with that model is that people get bored of tapping buttons pretty quickly. It is ironic that a game that capitalizes on the short attention spans of its players should ultimately lose them precisely because of this. There is nothing beyond the hype and the airdrop anticipation to keep users engaged, and this is because the P2E sector as a whole lacks use cases in the real world.
A Lack of Purpose
To date, I haven’t seen a P2E game that does anything other than keep people entertained at best, and allow them to procrastinate at worst. Many of them are just mindless button-mashing as you watch colorful characters jump around on the screen.
Is there any wonder people get bored? There is no higher purpose, no end goal to these games. No real-world utility. And games, like crypto itself, need some form of utility in the real world to gain longevity.
Don’t get me wrong, I’m not saying all games need to be useful, rather than simply entertaining. The global gaming industry overall is a nearly $300 billion behemoth and many people spend hours of their day playing video games. Some of them are simply that addictive, while others are just downright beautiful immersive journeys.
But when it comes to P2E gaming, the motivations are different. It’s not just about having some fun – it’s about the earnings potential. And if there’s nothing more than an airdrop to power interest, demand will last just as long as the rewards are rolling in.
Gaming for the Greater Good
To get around this problem, P2E gaming needs to stop being so disconnected from the real world. Players need to be incentivized not only with tokens but also with the knowledge that they are contributing to something tangible and useful. After all, we all need a sense of purpose. Why not combine entertainment with actually doing good?
For example, players in such a game could be collecting data to build a global database to solve real-world problems in industries like healthcare or telecoms. A game could contribute to optimizing traffic systems in a smart city by tracking traffic in real-time. Or it could harness the power of community and blockchain technology to track weather patterns more accurately than any meteorological station while keeping players engaged at the same time.
If there is a longer-term goal to the game - combined with earnings potential, of course - then players will stick with the game for the long term. Take away that purpose, and there is nothing left beyond the rewards and the hype, which simply cannot last forever. And it’s almost a guarantee that someone with deeper pockets will come along and announce an even bigger and more enticing airdrop.
It’s time to turn the existing P2E gaming model on its head because it’s clearly not working. The sector needs a new, more creative approach that injects some real-world utility into gaming, promoting longevity and helping to power the project’s token beyond just the airdrop hype.
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About the Author
Tim Kravchunovsky, founder and CEO of decentralized telecommunications company, Chirp
Tim Kravchunovsky has extensive experience as a telecommunications network engineer, having held positions at the World Bank. A passionate advocate of people power, Tim founded Chirp in October 2021 to connect the world through groundbreaking, accessible technology that has the potential to transform the way we connect, do business, and power a sustainable future.
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