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Working at Web3, I hear a lot of hostility from traditional gaming fans towards NFTs and blockchain-based games. Just the mention of a gaming studio experimenting with NFTs can cause social media feeds to be inundated with 140-character backlash.
Gaming fans are known for their passion and occasional emotional reactions to change, but the source of this fear is worth investigating.
(For the purposes of this article, we define an NFT as a digital asset that uses its association with a cryptocurrency to track provenance and is also listed on a marketplace or in connection with a playable virtual ecosystem.)
In 2012, Electronic Arts (EA) was voted the most hated company in the world. They’ve won this award consistently for the past 10 years, and most recently lost to companies like Comcast and The Trump Organization. The main reason for EA’s low public opinion was also the key to EA CEO Andrew Wilson’s meteoric rise: loot boxes. Loot boxes are essentially virtual slots that offer random gameplay perks and virtual items. In order to receive in-game bonuses, a player must redeem in-game tokens. (These are known as gacha mechanics in Japan.)
First of all, players get comps and a plethora of loot boxes. However, once players are drawn deeper into the game, rewards become incredibly difficult to acquire without serious commitment. That is, unless a player follows the process quickly by buying credits (and thus a digitally induced dopamine hit) with real money. Similar companies like King and Zynga have structured their entire product lines around this psychological skinner box.
The community consensus is that gaming used to be a system where a player owned the entire experience of a particular game upon purchase. Now, with downloadable content, loot boxes, and microtransactions, the gaming landscape has irrevocably changed. A game can be given away for free, but the developers have hidden much of the game content behind paywalls. There have been a number of iterations of loot boxes and microtransactions over the past 10 years, and some players have reluctantly put up with the practice, but only if it’s done skillfully and doesn’t detract from the gaming experience.
A few unspoken gamer community rules have emerged:
- The content that is available with the initial purchase must contain the bulk of the experience.
- Essential elements should not be hidden behind microtransactions.
- A Herculean grind or any boring and repetitive game mechanic shouldn’t be necessary to bypass microtransactions.
It’s about the money
Even before the gaming market started creating virtual slot machines, gamers have always stretched their wallets in virtual worlds as a form of status and identity. In World of Warcraft, buying third-party gold was so common that Blizzard introduced a WoW token that players could use to convert real money into in-game currency. Similarly, Eve Online has had Plex as an in-game currency since 2008. Plex can be redeemed for subscriptions to the game. This has led to Eve Online not only employing a full-time economist for their virtual world, but also headlines like the one surrounding the $150,000 heist in the game.
This isn’t the first time companies have tried to integrate hard currency into massively multiplayer online role-playing games (MMORPGs). Games like Entropia Universe and Habbo Hotel integrated money into their models and became famous for turning into neo-capitalist scam hellscapes. Roblox, the most successful inspiration for the current NFT gaming landscape, has had several scandals related to rampant third-party game development abuse of its platform.
Hope is not a strategy
How does this backstory relate to NFTs? The message is that NFTs are inevitable in gaming. NFTs are the culmination of gamification of commerce and digital goods, building on an economic foundation built over the past decade.
The real question is not why NFTs exist in gamesbut How can NFTs add value to games? (as opposed to an additional cash robbery)? Most NFT gaming companies lack actual game mechanics and instead cater to speculators riding the crypto price and tokenized market cap waves associated with the platforms. The key rule for the added value of playing with NFTs: The base game must be a truly engaging and collaborative experience where people can freely engage, challenge and create community.
With the exception of early indie open source games, gaming has never been a “pure” experience free from economics. World of Warcraft, for example, used numerous psychological tactics to lure players into becoming addicted to their game. When players finally quit, World of Warcraft players attempted to sell their accounts for real currency. When the fruits of a player’s labor can be correlated with real-world currency, it adds an element to the gaming experience rather than detracting from it.
How NFTs could be used to improve gameplay – and player status
NFTs are a tool for verifiable ownership that often fulfills a primal need (and pleasure) for collecting and status, but like all tools, NFTs can be used for both good and bad. The market needs to create games that offer players authentic experiences while providing compelling opportunities for players to earn NFTs that amplify and enhance the gaming experience. Emerging technologies like AR + VR are opening up opportunities for gamers to wear their NFT items in the physical or digital world. The interoperability of NFTs and Metaverse avatars is evolving rapidly, giving users the freedom to experience gameplay across platforms.
The art of storytelling in gaming is transformed into a more interactive and all-encompassing experience.
Currently, the Metaverse platform The Sandbox is creating an NFT ecosystem that will make it easier for people to build games and immersive worlds by converting a game’s components (the graphics, game mechanics, and animations) into NFTs. The blockchain-based sandbox game offers a decentralized gaming ecosystem that enriches exceptional creators who develop assets and worlds through a token economy. (Non-NFT games like Hytale have a similar mission but have no way to monetize their creator marketplace.)
The quest to bridge games and NFTs is entirely possible. I remember playing the first iteration of DOTA on Battlenet, which has now grown into a multi-billion dollar industry. How long will it take to produce the first mass-market AAA blockbuster NFT game? When a title and community like this comes to market, will the company stay within the ecosystem that made it exist, or, like Riot, will it fork?
The next chapter of NFT-based gaming is being written, as is the entire NFT industry, and the opportunities for creative disruption and responsible value creation are limitless.
Beaugart Gerber is vice president of sales at Geenee, an augmented reality company that has worked with Disney, Redbull, and Warner Bros. and most recently completed a project with The Sandbox.
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