Forget Play-to-earn – The future of Web3 is data-to-earn

Blockchain gaming is getting closer to the mainstream. Despite last year’s turbulent market, bigger studios and better games are entering the fray, bringing much-needed maturity to the nascent sector. The result is not only more innovative gaming experiences, but a greater move towards setting-based and user-centric applications.

Games and gamers are paying particular attention to digital ownership in this next wave of web3. For players, they want to own their identity and achievements. For games, it wants better ways to connect with audiences and understand who is engaging.

Enter data to earn. This concept, an evolution beyond play to earn, unlocks passive income opportunities for players who choose to share their data with brands, representing a significant departure in how online identity can be monetized. Let’s explore.

Gaming and the blockchain, today

Until now, play-to-earn has been the dominant earning method in blockchain games. Players earn potentially valuable in-game assets and cryptocurrencies for completing tasks, such as winning battles or progressing through levels. The type of game gained traction after the COVID-19 pandemic with developing countries like the Philippines embracing play-to-earn to generate additional income.

But this gaming segment is far from perfect. If the in-game economy is unbalanced or poorly designed, it can lead to problems like inflation. And as the name suggests, play-to-earn mandates player engagement. If they don’t play, they don’t earn. Forcing play is not sustainable and removes the sense of what games are supposed to be: fun.

Data-to-earn takes a different approach. New web3 protocols and platforms allow users to tie their games, social media and various other accounts to the blockchain. The result is twofold. First, users can unify their digital identities and show their achievements, assets and history in one place. Second, they can choose how their data is used. By opting in and sharing this data with brands, users can passively earn when brands leverage their on- and off-chain data.

This reverses the power dynamics of data ownership. Rather than personal information being trapped in hacked databases, resulting in a fragmented user identity spread across multiple corporate-owned platforms, users are taking back control of what is theirs. The data-to-earn era lets them decide how best to aggregate and earn from their information.

What’s in it for games and gamers?

Games and players fully support this concept. For the wildlife industry, data-to-earn solves important challenges. Regulations like Europe’s GDPR and California’s CPA, along with restrictive measures from tech giants, make precise user targeting difficult. This has led to revenue losses for ad networks in recent years. For example, Unity lost $110 million in revenue and a market cap of $5 billion after the introduction of Apple’s IDFA.

By directly accessing permissioned user data on the blockchain, the gaming ecosystem gets comprehensive and compliant information for better user targeting, attribution and understanding – all in a trustless way. Major web3 publishers and distributors already make this possible. For example, BNB Chain, Avalanche and Ronin, the gaming blockchain from the brains behind Axie Infinity and Pixels, connect studios with data toolkits to better identify potential users, retain existing players and offer rewards for their data.

For gamers, their data has been misused and leaked for years. Data-to-earn not only restores privacy, but also introduces new revenue opportunities. By sharing preferences, ownership, social relationships and past experiences directly with brands, users can earn passive income as well as personalized services. Authorizing and linking more accounts, and actively engaging in brand-user interactions, can increase potential revenue even further.

A paradigm shift in Web3

The things users do online – from social media to online shopping and of course gaming – are key parts of their identity. So why not make it an integrated element of their digital identity as well? Big tech has shown time and time again that it is not an appropriate custodian of this information. Now, as the world evolves from web2 to web3, it is time to consolidate the identity of the chain and return this data to its rightful owner.

This is the most exciting in gaming as there is a use case for the industry to join the revolution. It needs high-quality data on its user base to inform decision-making and improve efficiency. Working directly with players circumvents restrictive regulations and cuts out third-party data brokers. And unifying digital identity allows players to showcase their achievements and assets – an important part of player culture that then increases ecosystem engagement.

Play-to-earn will of course still have an important place in blockchain gaming, and it will be interesting to see how gamers mix and match the active and passive income styles. But data-to-earn promises a revenue and cultural paradigm shift as web3 goes mainstream. Watch this space.