Game Tech Analysis: NFTs

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NFTs. One of those things that people either love or hate with almost no middle ground. What are they though? An NFT - or non-fungible token - is a digital identfier that is stored on a blockchain. In theory, they're are used to designate ownership and cannot be duplicated or transfered without the owners permission and required them to physical action to transfer ownership. This allows them to be collected and re-sold, creating a market for art, photos, video and other unique media. Some are also able to transfer between blockchains, giving them an incredible amount of flexibility and security. NFTs only certify ownership of the blockchain however, not necessarily the intelluctual property - leaving a grey area when it comes to copywrite law. While NFTs got popular in the 2020s, they were invented back in 2014 with limited use and a tiny market. By the late 2021 the market was valued around 17 Billion - a 20% growth from the previous year. However in 2022 the market crashed and at the time of writing, most NFTs have little to no value anymore. If you're interested in a deeper look at the techincal aspect or ponzi scheme accuisation, I encourage you to check out the NFT Wikipedia page. Today we're going to take at look at one specifc selling point that was heavily marketed - the potential impact NFTs had on the video game market.

NFTs are mostly used for creating tokens designating unique ownership of an asset - typically media - for the purpose of creating a digital asset market. There was success in this endevour, as mentioned above the market hit a high valuations of 17 billion before it's collapse. The most expensive NFT ever sold was for 91.8 million dollars! That's an absurd amout of money for a digital asset and there was a ton of interest in making money off/in this market. While this growth was incredible as with all capatilist endevours, the growth needed to be sustained so people started trying to innovate and stake their NFT claim to fame. Some of the more practical ideas included tickets for airlines, sports, concerts etc. This would be a super secure way to control the amout of tickets created and prevent multiple types of fraud, as well as giving the purchaser access to a sentimental asset they could come back to anytime. Another application was virtual property. Meta and a couple other companies explored selling - and actually sold - virtual realestate, using tthe blockchain as an identifier and way to track their virtual "lands". The consumer market seems largely uninterested in any sort of virtual world as of right now so this flopped as well, but it was an interesting application.

Gaming was another marketed applicaiton of NFTs, with a basic example as giving the players control of their game assets and not the developer. This would allow players to control their "property" and carry it to other games, modify it, and sell it for real dollars if they want. Sounds kinda cool right, like Ready Player 1. Imagine creating a character representing yourself, playing Cyberpunk and getting chromed the fuck out, then jumping into Titanfall and using quickhacks to take down all the Titans. After grabbing a grappling hook and learning how to wall run, then you jump into Star Citizen and fly around space stations stealing players credits with your hacks and fighting security with your Titan. EPIC gamer night right there. Right away though, there are problems. How in the fuck is all of that balanced?? Is that going to be fun for someone playing Star Citizen for the first time? Why even bother developing a game if someone is just going to take gear in and out of your crafted worlds? These questions were largely unansered by the wider NFT group, who instead wanted to focus on the flashy new NFT features and SeEMlesSS iNTeGrAtIon with the all powerful MArkEt argument, like that's all that matters and exactly what gamers wanted. I hope my saracasm came through there. The gaming population in general is resistant to what they deem as un-needed charges so it was really no suprise when the community at large was vocal about not wanting NFTs near them but as we know that doesn't mean studios will listen. Ubisoft was the first to try and break into the market by offering a market for players to buy and sell high value items (specific right) in exchange for cryptocurrency (virtual money on the blockchain). Their announcemt video had a massive dislike ration and they pretty much immeditaly backtrracked on their idea. After this disaster poll was given to studios and 70% had absolutly no interest in even working with NFTs. Let's take a deeper look at why.

There are two common ideas when pitching and concepting NFT based games: the "SuperGame" and NFT markets. The SuperGame is pitched as one big universe where players can create and/or own their own unique assets - wether it's a character, weapon, or misc inventory item - that only they have control over. They will be able to use it in any game connected to the SuperGame and only they will have access to it. The NFT game market is similar, with the main differnce being that there is unique gear that players can create or find that they can then sell for real money. Both of these concepts suond great, and hosting these assets on the blockchain would eliminate most security concerns. Why are developers hesitant to impliment these ideas then? When taking a deeper look at the Super Game concept, it's easy to pitch that to the players - seemless transition from one game to another, only one character, all your gear etc but it's much harder to impliment, even across only games owned by the developer. We won't even touch on cross-developer universes, PlayStation users can't even play with Xbox users, what makes you think they would build shared universes and let players take their owned assets from one platform to another. Indivual developers could build NFT univereses and maybe even update their old games to utilize this tech, but they haven't. One of the biggest reasons is that blockchain technology is extremely complicated and specific. To use an NFT marketplace or universe would in most cases require a code rewrite from the ground up. On a cost level alone, I doubt NFTs even at their peak would make enough money to justify the cost of re-writing every single single game from the ground up. In addition to the technical and cost implications of NFTs, the gaming market doesn't havea. favorable outlook on NFTs. There are several reasons for that which I listed above - lack of trust in NFTs and NFT creators, and gamers resistence to "unessacary" spending and pay to win mechanics in games. Which makes sense, NFTs and Crypto were advertised in a really weird way on social media. One being "finance bros" and the other with anti-government sentiment. NFTs were for some reason advertised as a get rich quick scheme, with artists, creatives and gamers able to use their unique skills to make money quickly. All smart consumers looked at this with skepticism - as they should do - and NFTs quickly became assiciated with cocky people who valued being part of this bigger cause rather than listening to the market and building something together. I personally think this was the biggest reason why the NFT movement died so quickly. Machismo and agressive selling isn't a marketing tactic younger people stand for, they want to be respected, heard and collaborate with where they are spending their money. Guess who makes up most of the game market? That's right, young people! That same sentiment is why anti-government and anti-regulation marketing didn't work either, as much as the governemtn sucks, one of the things they do right is guaranteeing safety in your money - something NTF owners couldn't do. Alot of the inital high spend NFT transactions were later discovered to be the creators of the particiual NFT selling to themselves, or an investor in their NFT market which can look like (and in some cases was) a ponzi scheme. So right away one of the main selling points came into question. Why would people want to trade being screwed by goverment regulation to being screwed by a private entity? What's the difference? At least the goverment sometimes helps the people, while a private company is just going to dissapear with your money. And guess what? That's exactly what happened with multiple NFT markets. Even though gamers were hesitant to buy into the NFT model, several game companies still pursued NFT options including Sega and Ubisoft, and the retailer GameStop announced a NFT market. Looking around, we don't see any of these visions realized. Why is that? It seems that the cost and market reaction to NFTs in general turned companies off to the idea and those that did impliment NFT games were mediocre at best.

So there's the history of NFTs and why they didn't do well in the game market while doing well in other sectors. I'm personally glad it didn't happen, NFTs in general need to be fleshed out more. The gaming market in general isn't mature enough to use NFTs in a non-exploitive and fun way. Maybe in the future when virtual universes become more mainstream there will be a better use-case for NFTs in games but for now, they should focus on the digital media and try branching into more realistic markets like plane and concert tickets while the game market evolves.