You would think that there could be no mass audience better primed to embrace non-fungible tokens (NFTs) than the world’s 3bn gamers. Outside of the small, frenzied community of cryptocurrency investors, these certificates of ownership, linked to a digital file and registered on a secure blockchain, can prove mystifying in their complexity and intangibility. But many of the conceptual hurdles to comprehending NFTs are already second nature to gamers, who are often fluent in the workings of in-game virtual currencies and the idea that digital assets have real financial value — see the booming trade in virtual items, a consumer market forecast to hit $50bn this year.So it’s no surprise that in recent months many of the gaming industry’s biggest players have announced plans to incorporate NFTs into their ecosystems, so players can become the sole owner of a unique piece of equipment or virtual land, for example. The first major developer was Ubisoft, which launched NFT items for military shooter Ghost Recon Breakpoint. The president of Square Enix spoke positively about blockchain gaming in a recent statement, as have EA, Konami and Zynga. Two legendary game designers, Will Wright and Peter Molyneux, have thrown their weight behind NFT gaming projects. Molyneux’s sold millions of dollars’ worth of NFTs before it even launched.What exactly do developers believe NFTs can offer the gaming world? One idea is that they can create scarcity in digital items, increasing their real-world value. Another is that they will be functional within games, unlike an NFT for a digital artwork, which can only be displayed in a virtual gallery. They also suggest that players could earn money from trading NFT items, already common in the dubious new world of “play-to-earn” games such as Axie Infinity. Certainly, the significant investment in gaming NFTs suggests that developers, who could take a cut of every transaction on a digital item, see them as a route to massive new revenues.
‘Axie Infinity’ has joined the market for ‘play-to-earn’ games
So if the worlds of gaming and crypto seem such natural companions, why is the gaming community in uproar? The Square Enix statement was roundly mocked, the Ubisoft NFTs have sold poorly and, in December, developer GSC Game World was forced to backtrack on its plan to incorporate NFTs into its upcoming release STALKER 2 because of a furious response from fans. It’s not just the gamers — developer Valve has banned NFT games from its popular Steam store, while several others have criticised such plans.
Gamers don’t want to pay big and be left holding worthless digital objects when the bubble bursts
A common critique is the environmental cost of using blockchains such as ethereum and bitcoin, and while eco-friendlier alternatives exist, they have not yet been adopted by the major players. Gamers have pointed out the irony in the case of Square Enix, whose biggest game, Final Fantasy VII, is an eco-fable about a nefarious corporation profiting from environmental destruction.Another reason is scamming across the NFT world. This has arisen from the crypto bubble, with speculation driving up prices and hyped NFTs rapidly losing value after the buzz dies down. Gamers don’t want to pay big and be left holding worthless digital objects when the bubble bursts. They also wonder whether NFTs will provide real value to players. There are already many in-game marketplaces, so why do they need to be attached to NFTs? What is the real value of digital scarcity apart from prestige? Isn’t the infinite replicability of digital objects one of their chief selling points, meaning that everyone can get a slice of the pie? Developers tout the allure of “interoperability”, meaning NFT items acquired in one game could be used in another, but there are myriad aesthetic, technical and legal barriers to implementation.At the root of gamers’ reluctance to embrace NFTs is trust. Players are sensitive to the behaviour of games companies because they commit a great deal of time, money and passion to their hobby. Over the past decade, the industry’s experimentation with new revenue models such as microtransactions, loot boxes and “pay-to-win” mechanics has come at the cost of players’ enjoyment. Gamers don’t want the best hairstyles in The Sims to be locked behind a paywall or to have to shell out to compete competitively in Fifa or NBA 2K, particularly when they already paid for the base game. When games companies say players can earn money from playing games, the response of many gamers is: I don’t play games to earn money, I play to have fun.Judging by the bullish statements accompanying them, NFTs in games are here to stay, but if developers want gamers to embrace them, they will have to come up with an implementation that makes games more interesting and fun, rather than just another way of filling the company coffers.
Video: Soaring NFT sales redraw the art market | FT Film
Weekly newsletterFor the latest news and views on fintech from the FT’s network of correspondents around the world, sign up to our weekly newsletter #fintechFTSign up here with one click