Many video game developers are reluctant about the arrival of the blockchain in the video game sector. Among the compatible technologies we find non-fungible tokens (NFT), these unique digital objects that can be purchased using a cryptocurrency and whose storage and authenticity are ensured by the blockchain.
Around these NFTs, there are several economic models, including one in particular, which interests the major video game publishers. Nevertheless, on the side of the creators or the players, this new economy is not always well seen. A look back at the aspects of the crypto revolution that divide the players in the gaming world: players, publishers, advertisers, and developers.
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The main novelty brought by the blockchain in video games: NFTs
If the blockchain tends to enter everyday language, it is in particular thanks to the appearance, in 2017, of the first NFTs. These non-fungible tokens are linked to a digital object or work of art, called a digital asset. The NFT is in itself a certificate of ownership of a unique digital asset: it is proof that you are the one who bought this asset and the one who owns it.
The digital asset can be an internet meme (video, image, text intended to be humorous and intended to spread quickly on the web), music videos, digital images, GIFs or even video game objects or customizations .
In 2021, the NFT market reached a milestone, surpassing $40 billion while it struggled to exceed $1 billion in 2020. the story sold as an NFT for $107,000, Jack Dorsey’s first tweet (which is also the first post in Twitter history) acquired for $2.9 million, and a collage made by Beeple, obtained for almost $70 million.
5,000 images or animations are present on the work of art produced by Beeple. Screenshot: Beeple/Christie’s.
At present, the NFT market is mainly focused on 32,000 wallets holding almost 80% of the market value. In all, 360,000 people hold the 2.7 million NFTs in circulation at the end of 2021. This number has probably already increased since the beginning of the year. According to Drake Star Partners, relayed by VentureBeat20% of the funds raised by the video game sector have been used to set up projects related to NFTs and the blockchain.
In the gaming world, virtual asset transactions have been around for a while without using NFTs and blockchain. games like Fortnite, Counter-Strike Where PUBG allow you to acquire skins or accessories to add to your character for a few euros, in order to personalize it. So why not ensure that these transactions are managed using the blockchain?
Why do video game publishers want to get into the NFT and blockchain bath?
In reality, using the blockchain to carry out these virtual asset transfers makes it possible to do so on marketplaces that are not dependent on the game in question. Admittedly, transactions existed before, but they were specific to the game.
Concretely, if you are a player of PUBGbut you like the skins of Fortnite and you want to get them, it is not possible because these virtual assets are specific to Fortnite and are not transferable. Theoretically, it would be possible to move from one game to another sporting the same NFT, even if it is not initially part of the universe of the second game.
In addition, it adds transparency: the publisher is no longer the sole master of the regulation of the trade in these assets. However, a truly brand-conscious publisher can put in place checks and balances on NFT trading. The most recent example is that of Ubisoft. By launching Quartz in December 2021, the French publisher allows its players to obtain NFTs according to their playing time, then resell them if they do not wish to keep them.
This marketplace was launched using the Tezos blockchain, in which Ubisoft plays a role. She is one of the “bakers” of this blockchain: this is the name used by Tezos to qualify its minors, those who validate the creation of a block confirming all the transactions carried out recently in the blockchain.
This is what Quartz, the market place developed by Ubisoft and exploiting the Tezos blockchain, looks like. Picture: Ubisoft.
Finally, the use of the blockchain makes it possible to associate dynamic metadata with NFTs: it will be possible to know the statistics of the players who have held the digital asset over the last few months.
Since the asset in question, linked to an NFT is unique, the objective is to make players interested in the NFT worn by others during a game so that they want to buy them back. Thus, a game studio can generate a revenue stream entirely based on the resale of its skins, accessories, rare and unique cards as NFTs on its own marketplace.
Besides Ubisoft, other studios and publishers have given their opinion and expressed their interest (or not) in blockchain and NFTs. This is the case of Electronic Arts (EA) which is for it, unlike Steam which does not wish to enter the bath. For its part, Epic Games remains divided.
A new business model: play-to-earn
The interest for the studios is also economic. With NFTs, video game publishers can start exploiting a new economic model: play-to-earn.
The principle of play-to-earn is to ensure that the player progresses in the game so that he can earn rewards. By completing missions, creating content for, setting up animations for the community, gamers can be rewarded in the form of cryptocurrencies or NFTs. It opposes pay-to-win where a player is often forced to buy resources to progress.
This new business model has become very popular in the Philippines. Axie Infinity, developed by Vietnamese studio Sky Mavis, has 40% Filipino players. . Offering a play-to-earn model, this game has become a real source of income for some, so much so that it is their daily job. According to the head of one of the main guilds (group of players) of the game, its members would earn 400 dollars per month while the average salary in the country is 320 dollars monthly.
Other games are based on this economic model: there are Roblox where 4.7 million people play gamer-made 3D games every month. The creators of these virtual worlds are not paid directly by the game publisher, but they generate money if players make purchases in their universe using a virtual currency called Robux.
The game Sorare is also a good example. Based on the Ethereum blockchain, it allows players to trade virtual football cards in order to collect them. Of course, some cards are published in limited numbers, and are sometimes unique. Since the object of the game is to have the strongest team, players are heavily involved in order to obtain the rarest cards.
Why are players and developers reluctant about the arrival of NFTs in video games?
Many players and specialists in the sector are clearly reluctant about the arrival of blockchain and NFTs in video games. This can be explained for several reasons.
First of all, the implementation of NFTs and blockchain technology are energy-intensive. Blockchains like Ethereum have announced their move from proof-of-work to proof-of-stake. These are two processes to validate the addition of a block in the blockchain, in particular authenticating the transactions carried out in the blockchain. If the first has a strong ecological impact, the second tends to be much less polluting.
Countries like China have already banned cryptocurrency mining and transactions. Other nations like Kazakhstan are realizing that blockchains are very power-hungry. Within the European Union, Sweden has called for a halt to Bitcoin mining. The EU is now looking into banning proof of work on the continent to preserve the climate. The proliferation of NFT via one of the most lucrative cultural sectors in the world could aggravate this situation.
Players also find it difficult to understand the principles allowing them to acquire these virtual goods. Even if chain analysisa specialist in blockchain analysis, says that many countries are adopting cryptocurrencies and that the adoption rate has increased by 881% between 2020 and 2021, the need to fully understand the entire buying and selling process can be a brake for NFT in video games.
Having to use a wallet, sending cryptos to an address, having to wait for the transaction to be validated in the blockchain (which can take several tens of minutes), are habits that video game players should adopt. have not acquired.
A wallet (or wallet) makes it possible to store cryptocurrencies in order to use them in the context of transactions. Their use can be practical, but when making a purchase, you have to make sure that the address to which the money is sent is the correct one because a transaction, once it is validated, is irreversible. Photography: David Shares / Unsplash.
Added to this are some players and developers who do not understand the point of buying NFTs to get with a virtual good that could turn out to be useless and worthless. They consider that speculation does not necessarily have a place in video games. Indeed, the whole principle of buying/reselling NFTs is based on the principle that the token increases in value due to its rarity and its potential media coverage within the gaming community. For these skeptics, acquiring a NFT brings nothing more in terms of gaming experience, the interest according to them being only lucrative.
Finally, the aspect of regulation must be taken into account. In the Philippines where the game Axie Infinity is popular, it has become mandatory to declare the income generated in order to pay taxes on the winnings. In South Korea, it has now been banned since 2019 for Apple and Google to distribute play-to-earn games through their stores, as they consider them gambling.
If NFTs were to become the norm in the video game market, the next step would obviously be to ensure that they are at the center of transactions in the metaverse: one or more virtual universes accessible in mixed reality or virtual reality where you can live different experiences, as in real life while being represented by a 3D avatar, a bit like a giant video game.
The NFTs would then be the equivalent of the title deeds of any virtual object, or even land present in the metaverse. Buying an NFT in this universe could thus allow access to a place or unique features in the metaverse.
But before that, should the NFT really democratize in the video game world. Even if the blockchain is full of promise, video game players are clearly divided. Publishers see a lucrative interest in integrating this technology into their creations, developers find that they will find it difficult to get involved in projects that do not improve the gaming experience, nor respond to a real problem, and players are clearly not used to these microtransactions which they can consider as gambling generating speculation.