What can Web3 gaming learn from the nightclub economy?

The information comes from Medium, with minor modifications, by the author Vader Research.

Last month, we were invited to a crypto party at NFT NYC. The event was top-notch in terms of quality, live performances, and venue. Everything was great, but there were some unusual aspects. Due to the lack of women in the industry, cryptocurrency events/parties are often known for their lack of female presence.

However, the gender ratio at this party was well-balanced. More surprisingly, the women attending the party seemed more attractive and better dressed compared to the average female participants at general cryptocurrency events.

Who are they? Why were they there? Most importantly, how would their presence affect the behavior of the average cryptocurrency event attendees?

Web2 Gaming Economy

Before the proliferation of smartphones and the mobile gaming industry, games were sold in retail stores in boxed sets at a fixed price. Whether you loved or hated it, whether you consumed all the content in a weekend or over several years, whether you were willing to pay more or could barely afford it, you had to spend $50 on the game.

The two main roles were game developers and players. Game developers created content and sold it at a fixed price, while players paid for the content to fund game development and distribution. This relationship was simple and straightforward. Game developers had economic motivations, while players had physiological motivations.

In addition, there are other roles such as retail distribution platforms and hardware manufacturers, but they are beyond the scope of this article, and we will ignore them.

F2P Gaming Economy

The proliferation of smartphones has driven the rise of the mobile free-to-play (F2P) gaming industry. Some content in these games is free, while some is paid. Smartphones allow game developers to collect, analyze, and test user behavior, thereby optimizing the ratio of free to paid content, as well as the pricing of paid content and user types.

The four main roles in free games are game developers, players, pay-to-win (P2W) users, and advertisers. Game developers create content, players play some content for free, watch ads or pay for some paid content, P2W users spend a lot of money to access paid content, and advertisers pay game developers to show ads to players. Game developers and advertisers have economic motivations, while players and P2W users have physiological motivations.

There are also intermediary platforms that facilitate distribution, trading, and payment, such as advertising platforms (Facebook, Unity), app stores (Apple, Google), and payment processors. However, since we are focusing on the interaction between players, we will ignore advertising platforms and app stores.

For some free games, +50% of the revenue comes from 0.15% of the players, and +95% of the revenue comes from 2% of the players. This data shows how important the retention and spending behavior of P2W users are to the economic viability of the game. In other words, P2W users subsidize the remaining 98% of users who do not spend money or spend relatively less. Independent advertising revenue is usually not enough to cover development and marketing costs.

Not all games have the same distribution of revenue, and some games may have the top 25% of players accounting for 50% of the revenue. There are also games that rely entirely on advertising revenue, such as hyper-casual games.

Nightclub Economy

The economic benefits of non-VIP nightclubs and bars are straightforward. There is a price list for every drink, and every customer must pay a fixed entrance fee, regardless of whether you are a billionaire or a homeless person, whether you are a 20-year-old supermodel or an 80-year-old grandmother, the price for any item on the menu is the same.

The two main roles in non-VIP nightclubs are club owners and participants. The club provides a venue for drinks, food, and music, while participants pay an entrance fee and for drinks/food to fund the club owner’s operations. The club owner has an economic motivation, while participants have physiological motivations.

Club owners do not directly create content but provide a platform for participants to create their own user-generated content, attracting/retaining other participants, similar to social media platforms like Instagram or Twitter. Here, we define content as any social interaction that leads to an increase in specific emotions and physiological chemicals in one or more participants.

A participant’s glance, dress, and the way they dance or drink are considered user-generated content and can affect the experience of other participants. It can influence the positive or negative emotions associated with the club, which in turn affects their participation, retention, and monetization.

VIP Nightclub Economy

On the other hand, the business model of VIP nightclubs is slightly different. VIP clubs allow those who want to pay more and enjoy premium services to fulfill their physiological desires. The three main roles in VIP nightclubs are club owners, participants, and VIPs.

The club owner provides a venue with drinks, food, music, and a set