What if I told you that the next revolution in gaming is happening under our noses and the revolution is being led by Asia (again). It’s a trillion-dollar business in the making and it is just at starting out. I have written before about Axie infinity which is now a $4.5bln ARR game and one of the fastest-growing in history.
The gaming industry has gone through multiple moments of evolution
Evolution of Gaming
1.0 - Coin Operating Machines - Pay per play (Namco machines)
2.0 - Offline games sold as units (cartridges, CDs etc) - Pay to own (Consoles)
3.0 - Online games as sold as units with periodic upgrades - Pay to access (World of Warcraft)
4.0 - Casual / Mobile first - Pay for Time - Where you pay the developer for your time i.e. speed up gameplay by buying coins for example (Farmville)
5.0 - Free to play - Pay for skins (Fornite)
6.0 - Play to earn - get paid for your time (Axies)
In gaming 6.0 - suddenly, by playing a computer game, your “work” no longer has zero value. You can sell your time to other people that want to enter the game or want to skip ahead in the game. They are paying for your time, they are not paying the developer.
In the podcast above Gabby talks about a world where people are heading to work to earn money. Except they are doing this in the metaverse and playing what looks like a game but that play has value. Is this niche? Nope! There are 100k people in Philippines right now that are playing Axies and earning 3-4x more than the average wage. This is changing lives at a scale we have never seen before. Surely that is weird? Logging into a digital world and moving digital things around to make money? Ummm….are we still talking about Axies or the life of a banker or VC who spend their day on Zoom and Excel?
It really isn’t that weird.
If you haven’t listened to the Gabby Dizon podcast on Play to Earn Gaming you must do so listen or read the show notes here
YGG is a gaming guild that Gabby runs that acts as a fund and rental marketplace. They buy gaming NFTs and rent them out on a revenue share basis to people that have time but no money. This creates a yield for YGG that at the moment is ~50-66% ROIC. What I love about YGG is that it isn’t a company or a fund in the traditional sense. It’s a DAO (decentralized autonomous organization). Something I have written about before on Linkedin. In the DAO, the decisions are taken by the owners of the DAO. The more you use YGG, the more shares you get of the DAO and it is the members that get to not only share in the upside of the company but also vote on its future. Would be like early users of Starbucks getting Starbucks equity and then having a vote on the future of the company. As I look back on companies like WeWork, Uber etc. I wonder if their owners were the employees and users, would they have made the same decisions that they made? Would this form of governance improve companies? It feels like it should, it feels like a better model for all startups.