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Newsletter #19: Free-to-Own – P2E gets a new challenger

October 27, 2022
6 min read

From the Editor

GM, fellow tigers,

This is the Web3 Gaming Weekly by Tegro. The only newsletter you’ll need to stay informed about the latest updates in Web3 Gaming.


  • Web2-gaming veteran Gabriel Leydon raised $200 million last month for his new project, LimitBreak.
  • The company recently launched an anime-themed NFT collection called DigiDaiGaku. The team is apparently building a game in stealth mode based on this collection.
  • Leydon’s new project features a novel economic model: Free-to-Own.
  • The idea is to not place a value on an NFT(mint price) at launch and let the community gradually decide its worth.
  • This approach takes away the initial motivation to dump the NFT once its price appreciates and turns the holders into the biggest advocates for the project.
  • Since their stealth release in August, the average floor price of DigiDaiGaku’s Waifu NFTs has gone from 0 to 9.6 ETH ($15K).

Now let’s dive a little deeper.

Web3 game publishers are now looking for new economic models for their games, as P2E, the dominant model for early titles in the space, has proved to be unsustainable.

The latest addition to the growing list of web3 gaming business models is Free-to-Own(F2O). This new innovation is brought to us by Web2 gaming veteran Gabriel Leydon.

Leydon is known in the industry for pioneering the "free-to-play" or the "freemium" business model with his last company, Machine Zone.

One of the best games from Machine Zone, a 2013 title titled "Game of War’ generated over $2.8 billion in revenue. This tells us that the man knows what he’s doing and has experience playing with new business models for gaming. In 2020, Leydon sold Machine Zone for $300 million, and after spending some time studying crypto, he’s back with a new project—Limit Break.

The new company is reportedly building its first game in stealth mode. However, the things that they did execute in the open are interesting, to say the least. LimitBreak did a stealth release of its first NFT collection called DigiDaiGaku. What’s different about this particular project is that, unlike other NFT collections that put a hefty price tag on their collectibles, LimitBreak allowed their community to mint them for free.

Leydon calls this new model Free-to-Own. According to Standard Crypto’s Alok Vasudev, F2O is the next logical step from Web2’s Free to Play(F2P) model. Let us explain,

In the early days of gaming, players had to pay every time they played an arcade game. Later, with console-based games, players paid a hefty one-time price of $60 to buy a game. Then mobile games emerged with a similar business model to console games at a significantly lower price ($1–10). Eventually, developers pivoted to a free-to-play model that allowed players to enjoy a game for free, while the creators sought other monetisation options such as selling in-game items or upgrades. The Free to Own model goes even further, wherein the developers give away some of the game's intellectual property for free that they would have otherwise sold.

Here’s a breakdown of the model

  • Limit Break gives away IP(NFTs) for free.
  • The NFTs give players true ownership in the virtual economy of the game.
  • Developers make money through the creator royalty program encoded in the NFT.

As of now, LimitBreak has generated over $600k in revenue, despite giving away their IP for free in the beginning. This sort of approach is widely different from many other projects we have seen in the past, where the game primarily relies on selling NFTs to generate revenue.

Let me point out another key distinction between web2 and web3 gaming based on the models we just discussed. In web2 gaming, the so-called free-to-play games were anything but free. According to reports, developers of successful F2P games made 6 times more money than if they had charged a one-time price. For the first time in gaming history, web3 allows developers to share the potential value of games with their community.

Another noteworthy detail to know about the project is that it’s being backed by some of the biggest investors in crypto, including FTX, Coinbase, Paradigm Capital, and Standard Crypto. The investors valued LimitBreak at $1.2 billion, despite the fact that the company is still in its pre-launch stage.

Only time will tell if Leydon’s new model will be a game changer for Web3 gaming or not. In the meantime, here are some facts that suggest that it will be:

  • Leydon has reassembled his old Machine Zone team for the project. Note that these guys know how to make incredibly successful titles. The combined revenue of their games was more than $4.5 billion.
  • They have experience in building games with complex economic structures.
  • In some of his recent interviews, Leydon talked about how games are affected by whales and how most web3 games have failed to align the incentives of these incredibly valuable stakeholders with the project. In DigiDaiGaku, players only make money when the game does. This turns the stakeholders into the biggest promoters of the project.

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