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Working in Web3, I hear a lot of animosity from traditional gaming fans toward NFTs and blockchain-based games. Simply mentioning that a gaming studio is experimenting with NFTs can cause social media feeds to become inundated with 140-character backlash.
Gaming fans are known for their passion and occasional emotional reactions to change, yet the source of this angst is worth exploring more deeply.
(For the purposes of this article, let’s 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 conjunction with a playable virtual ecosystem.)
Back in 2012, Electronic Arts (EA) was voted the most hated company in the world. They continued to win that award over and over again throughout the last 10 years, only recently losing to companies like Comcast and The Trump Organization. The primary reason behind the low public opinion of EA was also the key to EA CEO Andrew Wilson’s meteoric rise: loot boxes. Loot boxes are essentially virtual slot machines that randomly provide gameplay benefits and virtual items. In order to receive in-game bonuses, a player needs to redeem in-game tokens. (These are known as Gacha mechanics in Japan.)
At first, players receive comps and an abundance of loot boxes. However, once players are drawn deeper into the game, rewards become incredibly difficult to acquire without a serious commitment. That is, unless a player fast tracks the process by using real money to buy credits (and with them, a digitally-induced dopamine hit). Similar companies like King and Zynga structured their entire product lines around this psychological Skinner Box.
The community consensus is that gaming used to be a system where a gamer owned the entire experience of a particular game at purchase. Now, with downloadable content, loot boxes and microtransactions, the gaming landscape has shifted irrevocably. A game might be given away for free, but developers will have gated a huge majority of the game content behind paywalls. There have been a number of iterations of loot boxes and microtransactions in the last 10 years and some gamers have begrudgingly come to terms with the practice, but only when it’s deftly executed and doesn’t impact player experience.
Even before the gaming market started creating virtual slot machines, gamers have always flexed their wallets in virtual worlds as a form of status and identity. In World of Warcraft, the purchase of gold from third-party sellers was so rampant that Blizzard introduced a WoW Token that allowed players 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 news-grabbing headlines like the ones surrounding the $150K in-game heist.
This isn’t the first time companies have tried to incorporate hard currency into Massively Multiplayer Online Role-Playing Games (MMORPGs). Games like Entropia Universe and Habbo Hotel incorporated money into their models and became famous for devolving into neocapitalist scam hellscapes. Roblox, the most successful inspiration for the current NFT gaming landscape, has had multiple scandals related to the rampant abuse of its platform’s third-party game development.
How does this backstory relate to NFTs? The message is that NFTs in gaming are inevitable. NFTs are the culmination of the gamification of commerce and digital goods built upon an economic foundation constructed over the past decade.
The real question isn’t why NFTs exist in games, but how can NFTs add value to gaming (as opposed to an additional cash-grab)? Most NFT gaming companies lack actual gaming mechanics and, instead, serve speculators riding the crypto price and tokenized market cap waves connected to the platforms. The key rule for adding value to gaming with NFTs: the base game needs to be a truly engaging and collaborative experience where people are included freely, challenged and can 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 entice players to get hooked on playing their game. When players finally quit, World of Warcraft players would attempt to sell their accounts for real currency. When the fruit of a gamer’s labor can be correlated to real currency, it adds an element to the gaming experience rather than detracting from it.
NFTs are a tool for verifiable ownership, often fulfilling a primal need (and joy) for collecting and status, but like all tools, NFTs can be used for both good and bad purposes. The market needs to develop games that deliver authentic experiences for players while offering compelling opportunities for gamers to earn NFTs that reinforce and enhance the gaming experience. Emerging technologies like AR + VR open windows of possibilities for gamers to wear their NFT items in the physical or digital world. The interoperability of NFTs and metaverse avatars is rapidly developing, allowing users the freedom to experience gameplay across platforms.
The art of storytelling in gaming is morphing 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 turning the components of a game (the art, game mechanics and animations) into NFTs. The blockchain-based Sandbox game provides a decentralized gaming ecosystem that enriches extraordinary creators developing assets and worlds through a tokenized economy. (Non-NFT games like Hytale have a similar mission, but don’t have a way to monetize their creator marketplace.)
The endeavor to bridge games and NFTs is entirely possible. I remember playing the first iteration of DOTA on Battlenet, which has now expanded into a multibillion-dollar industry. How long will it be before the first mass-adopted AAA blockbuster NFT game is produced? When such a title and community arrives, will the company stay within the ecosystem that helped it exist, or, similar to Riot, will it branch off?
The next chapter of NFT-based gaming, just like the entire NFT industry, is currently being written, and the possibilities for creative disruption and responsible value creation are limitless.
Beaugart Gerber is the vice president of sales for Geenee, an augmented reality company that’s worked with Disney, Redbull and Warner Bros. and most recently deployed a project with The Sandbox.
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