Testnets provide a safe environment for the testing of Web3 features, without the hurdle of creating core technology required to conduct the test. This liberates teams to experiment with different blockchain methods, refine those methods with real-world data, and then deploy at scale, with more confidence.

A good existing example of this in action is Kusama, which defines itself as "an experimental development environment for teams who want to move fast and innovate on Kusama, or prepare for deployment on Polkadot." One of the largest blockers in gameFi for mainstream adoption are the hurdles studios must overcome to go live with a Web3 game, which makes testing and learning cost prohibive as described in the pervious section.

Web2 game studios entering gameFi face meaningful uncertainty pertaining to testing, deploying, refining, and scaling Web3 economics. The present state of gameFi requires Web2 companies to adpot material risk at the outset, in terms of complexity, capital requirements, and reputational hits related to Web3 initatives that mis-align with existing Web2 player community sentiment. Potential risks include:

• Over estimating the need for a purpose-built utility token associated to the game. In the absence of a testbed for web3 economic loops, the true necessity for a game token rests on conjecture, rather than disciplined real-world gaming data from players.

• Underestimating the complexity of issuing a utility token, in compliance with global regulations. Poorly executed token issuances create material downside risk for the parent company, in terms of potential shareholder litigation, money laundering and KYC regulations that can shift with minimal notice, and a chronic shortage of "seller side" law firms able to confidently guide the newbie issuer through the token generation process.

• A general "investor fatigue" at the cookie-cutter oversupply of vertically integrated, single-purpose gameFi utility tokens. Ultimate, these devolve into a simple equation for the seasoned investor: "Are we in the hit-driven game business?" Meaning the success or failure of token economy associated to the game is largely to correlated to non-crytpographic risks, notably- "Is this game super fun and going to be a mega hit?" Few, if any, investors like those risks.

• Player cynicism that - to date- Web3 "play to earn" mechanics appear to be devoid of fun, and exist as financial "schemes" masquerading as games.

• Underestimating the technical integration required for live operations on-chain by the game studio. Most game studios are not staffed with "core tech" engineers, let alone seasoned blockchain engineers. The capital expenditure to recruit a core tech crypto team, diligence the right partner set (layer1, layer2 solutions, smart contract methods, and more), and then crisply execute the concordant engineering strategy without errors, technical debt accumulation, and security risks- all prior to even validating the cost/benefit of web3 gaming in the conext of the studio's existing web2 games portfolio- presents a material go-to-market risk.

For the reasons above, Web2 gaming companies have largely taken an appropriately skeptical "wait and see" approach to Web3 gaming. Until "best practices" are fully developed, and player sentiment becomes more aligned with the "fun" and "play" possible in a Web3 gaming context, the "first mover" risks are material.

At the same time, with some adoption of risk comes the potential for reward. Thus some Web2 gaming studios are open to entering a Web3 gaming ecosystem- but would prefer to test, iterate, learn, and refine their strategy first.

For Web2 gaming studios, PLAY offers an effcient lower-risk path to testing and learning. Studios can use PLAY's live operations infrastructure and $PLAY tokenomics as a method to quickly standup a Web3 gaming test, generate real-world data, and reach a de-risked, qualified opinion on how best to integrate Web3 gaming into a studio's gaming portfolio, by answering these questions:

• Should studios adapt existing Web2 games to Web3 mechanics?

• Should studios release new "purpose built" Web3 titles from scratch?

• Should studios create their own live operations stack to manage Web3 gaming, if so with what features?

• Should studios issue their own utility and governance token to support their games? If so, how would their tokenomics work? What evidence can be shown to investors and players that these tokenomics effectively align all stakeholder interests for the long term?

• How can studios evangelize the Web3 opportunity and build goodwill with their existing Web2 player communities.

Working inside the PLAY ecosystem as a testnet enables Web2 studios to answer these questions (and more) with direct, hands-on data, generated in a safe, scalable, and accessible environment.

Post learning, the studio may conclude that using PLAY's live operations infrastructure, an the shared tokenomics of $PLAY are powerful de-risking factors, with material operating and financial upside. Or they may conclude that they have a robust empirical rationale to build their own game-affiliated ecosystem.

Whichever the path the studio may opt to pursue - within the PLAY ecosystem or in their own (or another) ecosystem- PLAY serves as their initial native guide towards reaching an informed decision.

Gaming is well understood to be the largest entertainment category globally. Across all categories of global spending, gaming constitutes a $317 billion industry. This sizing includes several key segments outside of gaming content and virtual goods purchases: other forms of content and IP sales, sales of any gaming hardware and equipment (including consoles) as well as gaming software such as streaming services (e.g., Twitch), gamer communication (e.g., Discord), game engines (e.g., Unity), and other items.[1]

Market categories, from hardware sales to in-game sales, include:

Several categories are germane to Web 3 economics, ripe for disruption:

Blockchain gaming, a category that is “only” $1.5bn is growing exponentially, at an estimated 100% CAGR. The potential market in 2025 for blockchain could reach $50bn.

However, this blockchain gaming growth estimate could be an understatement. As noted by BITKRAFT in their market research:

“First, it is important to recognize that blockchain gaming is still in its relative infancy. According to DappRadar, there are just over 1,000 games on public blockchains compared to the tens of thousands seen in the early days of Apple’s App Store. As more games are introduced and adoption barriers are lowered for users, the blockchain game market has the potential to grow meaningfully. On the other hand, there is always a possibility that blockchain gaming may enter the “Trough of Disillusionment” phase of the Gartner Hype Cycle, failing to gain traction among gamers and resulting in a pullback of revenues.”

NFTs as an entry point for mainstream players

While blockchain-specific games are seeing success with early adopters, mainstream adopters - highly engaged players that can fuel game adoption and virality - are gravitating towards NFT-powered games and play-to-earn games. These types of games appeal to a consumer-driven 18-35 demographic, looking to invest in virtual identities and curate collections of objects they own, while being rewarded for their time and effort in-game.

In Q3 2021, trading volume for NFTs showed the rise of gaming in the NFT market: in-game collectibles backed by NFTs grew to 22% of overall NFT trading volume, representing $2.3bn in sales.

What sets PLAY apart is that it enables developers to power their games with NFTs and reward players with simple “play-to-earn” components. Features in PLAY appeal to a more consumer, contemporary, social-media inclined demographic. By creating an infrastructure that at its core is mobile-first, developers have the ability to connect their games to a wide audience of players.

Web3 developer adoption

Developers are rapidly exploring Web3 technologies (across gaming and other sectors). According to Electric Capital’s 2021 developer report, they “fingerprinted nearly 500K code repositories and 160 million code commits across Web3” to generate a growth analysis of the Web3 developer ecosystem:

The note of caution regarding wider blockchain gaming, as known as “gameFi” adoption, is a macroeconomic risk and potentially a regulatory (both via government regulation and private platform regulation, such as the Apple App Store). It can be partly de-risked by addressing what PLAY believes to be the key hurdle to wider gameFi adoption- the developer, creator, and player experience in entering blockchain-backed gaming.

This is reflected in a recent survey conducted by the Blockchain Gaming Alliance in 2021. They surveyed game studios, and asked “What are the pain points for blockchain gaming?”

Several of the top “pain points” reported above are resolvable with PLAY’s technical ecosystem:

• Technology limitations.

• Poor user experience.

• Lack of technical experts.

• Difficult to implement.

• Too niche.

• Lack of on/off ramps.

• Lack of interoperability.

PLAY believes that key to broad adoption of blockchain-based gaming, is a simplification of each step in the pipeline. This, in turn, broadens the addressable market for each constituent group. PLAY has largely achieved these aims:

• Developers: A simple SDK (initially in Unity 3D, the dominant mobile game engine) that provides access to an equally simple set of API methods. Real-time dashboards providing the developer with game analytics, and “live operations”, including control of blockchain elements.

• Creators: In-game authoring tools, currently deployed, that allow for the creation of avatar cosmetics, with the ability to trigger a minting process to bind the item to an NFT, all within the mobile experience. The creation modules are available to developers as well, in the SDK.

• Players: The shift from a “wallet” metaphor to a “verified profile.” Profile verification is a cryptographic step, where the profile is bound to an NFT, and inherits functions associated with a wallet. Going forward, this enables transactions to appear inside metaphors like “my inventory” or “my purchases”.

"Crossing the Chasm" from early adopters to the majority

Each of these steps work to move blockchain gaming from a set of “innovators” and “early adopters” to the next tier- the “early majority.” This is known as crossing the chasm:

PLAY is mono-focused, market-making solutions to encourage mainstream market adoption of blockchain gaming. By targeting mobile-first development, widening the player ecosystem, and encouraging more developers and creators to join blockchain, PLAY is penetrating into an untapped market - crossing the chasm to wider adoption.

Investors in the $PLAY token will be joining PLAY in achieving this aim, contributing to the creation of a broad-based distributed, accessible, gaming ecosystem.