👔 Of Game Economies and Business Models | Skill Tree #33
Designing Economic Resets in Games
Economic resets offer a broad design space and can add new gameplay layers, provide tools for economic sustainability, and leave room for economic experimentation. In the article, I give an overview of how to think about designing them and games that implement them.
Business Models of Esports Teams
esports teams have different revenue streams than traditional sports teams: sponsorships, merchandise (limited upside), little for media rights and gating (e.g. tickets for home games)
can build a broader audience → more potential that can be expanded upon at low-cost (influencer brands for energy drinks, peripherals e.g. 100 Thieves)
can build their brands across multiple games to leverage existing expertise but also have to in order to stabilize revenues as games often die/are more exposed to hype cycles than trad sports
trad sports teams are often a reputation project for billionaires while esports investors are looking for returns
Business Models for Onchain Games
Onchain games are similar to open-source software. Defensibility comes from ecosystem size, liquidity, complementary products built by 3rd-party devs etc. Very similar to how we evaluate DeFi business models. The main takeaway for me is that it means businesses need to scale fast or they'll die. That's where tokens come in. Either way, we'll see faster lifecycles.
Monetization works around premium features like customer support, better tooling, enterprise integration etc.
NFT Economic Control Levers
3 categories of control levers: Supply, Demand, Transferability
Supply: Sources, sinks
Sources can be divided into primary sales and asset production
Primary Markets
Asset Production
creates a higher affinity attached to the NFTs and fosters a more vibrant GDP-centric economy
it’s important to control total inflation and keep supply emissions demand-based
Sinks:
Burn mechanics e.g. upgrading, repairing, crafting, gacha rerolls
is the sink side to the asset production source. Therefore more of a converter than sink
Limit asset lifespan
Demand: Utility (access to game features), Affinity (emotional value)
Transferability: open/closed, tax (great for GDP-centric economies), trade incentives/penalties
Improving Web3 Monetization: Pricing through Supply Control
Closed F2P economies allow devs to set primary market prices with unlimited item supply, enabling them to capture a big part of player’s willigness-to-pay by having deep spending depth
Pricing should be different for different types of assets e.g. highly accessible items vs status items
Pricing in web3 is usually done by limiting NFT quantity. Different NFTs can have different supplies to allow for price discrimination between players → Studios set quantity, not price like in closed economies
Players may be inclined to spend more as reselling is possible. Trade-off: Secondary markets cannibalize primary markets
Supply can be increased based on demand as the player base grows. Preferred to introduce new assets with some distinctions to existing assets. Still, if assets are too similar, it dilutes existing holders
Studios can also directly control price/accessibility
Non-transferable assets
Always allow buying on the primary market with unlimited supply → reduces players’ opportunity to speculate on resell value
can also reduce the desire to resell by personalizing assets (endowment effect) e.g. stat tracking
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