Are NFTs the next big thing in online gaming?

NFTs, or non-fungible tokens, have taken the financial world by storm. For many observers, these digital tokens are the future of art, music, and the very definition of “ownership”. (If you still don’t know what NFTs are, read our explanation here.)

Now blockchain technology is making a foray into the gaming industry – and fueling a divisive debate in the process.

Blockchain games have been around since at least 2017, when a video game called CryptoKitties allowed players to purchase NFTs for digital chats.

However, the trend took off strongly in December, when French video game company Ubisoft became the first AAA studio to enter space. He launched his own NFT Marketplace – Quartz – where gamers could purchase various gaming accessories for the game. Ghost Recon Breakpoint.

Ubisoft isn’t the only games company jumping on the NFT bandwagon. Vietnamese studio Sky Mavis has developed Infinite Axis, a blockchain-based game that allows users to collect and breed creatures named Axies (“much like” Pokémon “, but with NFTs”). Mobile games studio Zynga announced a pivot to space in November. Even GameStop is try to cash. And player communities even offer player guilds to help new players in exchange for reduced future income.

Plus, judging by comments from industry bigwigs, this trend is likely to explode in 2022. EA’s CEO called NFTs “an important part of the future of our industry.” Ubisoft’s CEO called them a “revolution” in online games.

Game-related NFTs generated $ 4.8 billion in revenue in 2021. NFTs themselves appear to be here to stay: OpenSea just raised $ 300 million for a valuation of $ 13 billion and sales of these tokens reached $ 25 billion last year, compared to $ 100 million in 2020.

However, the hype is also dividing the gaming community. Simply put, not everyone is gaga over blockchain games.

Video game distribution platform Steam banned blockchain games and NFTs in October. Ukrainian developer GSC Game World was forced to abandon its attempt to integrate NFTs into Tracker 2 following the decline of fans. Ubisoft itself appears to be less enthusiastic about blockchain than before – instead describing it as a “major change that will take time” – after backlash of its own employees.

Why does the online gambling industry have two minds about NFTs?

To understand this, we first need to understand how disruptive digital tokens can be in this space. Around two decades ago, video games generally followed a premium model where you bought the entire game from a store (usually in DVD form) and had full access.

The advent of online gaming changed that model to largely free or paid one, with developers making money through the sale of merchandise, in-game purchases, or subscription fees. A temporary offshoot (pejoratively described as “pay to win”) involved players being able to pay to unlock advanced characters, but this was a short lived phenomenon.

NFTs offer a radically different model that has been dubbed “play-to-earn”, which incentivizes users with financial advantages over digital assets. Players can either pay to earn these assets or pay to buy them and then trade them outside of the gaming ecosystem as well. The idea is to increase the value of the games themselves while giving users a chance. to earn money while doing what they love.

Sounds good, right? What’s the controversy, then?

The first concern is the technology itself – it’s still nascent, and so far gamers aren’t convinced. Take Ubisoft’s Quartz platform – users had to play for over 600 hours just to earn an NFT. But some NFTs sell at atmospheric prices, so it might not just be work and no pay, right? Good, a report suggests that 15 Ghost recognition DTVs were purchased for a total of only $ 400.

But let’s say Ubisoft and its players needed to fill in the gaps and hone the technology tomorrow. The problem of environmental implications would persist. Blockchain technologies are known for their environmental impacts, with some of them consuming more electricity than entire countries. NFTs are guilty of millions of tons of carbon emissions from the energy consumption associated with crypto mining. For Perspective: The Nyan Cat NFT (a blurry cartoon meme of a cat with a rainbow behind it) had a carbon footprint tied with the electricity consumption of someone in two month.

Why Are Online Gaming Companies Adopting NFTs and Blockchain Games?There is also the fear that the developers will treat NFTs as a cash grab to dry up gaming ecosystems while paying less attention to the games themselves – such as graphics, music, storyline, characters. , etc. And it’s not just gamers who are feeling this: Xbox chief Phil Spencer has said some of the NFT-related developments seem “exploitative.” Video game journalist Geoff Keighley echoed his views.

Needless to say, NFTs and crypto in general continue to operate in a regulatory gray area in most countries, so these aren’t exactly solid investment bets given that a growing list of countries are banning cryptocurrencies outright and governments in India, US and Europe are still wondering. how to regulate space. Additionally, trading NFT while playing video games may attract the attention of regulators and technology aggregators as a form of online gambling, which may arise. a whole different set of questions.

That said, the blockchain gaming trend is set to expand this year as more studios flirt with the concept. The gaming industry – valued at $ 200 billion – has undergone tectonic shifts in technology and business models over the past decade. Courting new reinventions is quite in its back alley.

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