Blockchain games and NFTs in video games were a hot topic toward the end of 2021, and they continue to be so, spurred by the early success of Axie Infinity’s play-to-earn (P2E) model. After all, it’s hard to ignore a sector that’s playing with billions of dollars.
The potential of Axie’s P2E model, which gives players ownership of collectible in-game items (tokens) that they can sell for actual money, was immediately apparent. Its success showed the potential economic rewards of combining blockchain technology and gaming, and spurred a slew of smaller developers to put out similar offerings. More notably, it also led to established video game studios trying to elbow their way in.
And they tried hard indeed. Between November and February, video game giants, from Ubisoft and Sega to Square Enix, all signaled their intention to cash in on the NFT craze.
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Their fans didn’t like it. But despite overwhelmingly negative feedback from gamers as well as the industry, companies said they’d incorporate NFTs into future releases (or even shoehorn them into updates for existing titles). And the backlash only seemed to worsen with every announcement about NFTs.
When there’s money to be made, feedback can, and often does, go unheard. Still, a few major gaming companies did backtrack on their plans. So, what happened?
Blockchain gaming unfazed by crypto volatility as gamers ‘seek out entertainment’
It seems that the lackluster performance of a few companies’ gaming NFT implementations may have caused some to reconsider their crypto efforts. From Ubisoft’s embarrassing attempt with Ubisoft Quartz, to Axie Infinity falling off the edge of the world, it’s easy to assume that the gaming-blockchain party ended before it really even began.
Well, it hasn’t. Pandora’s Box is now open, and the attempts to legitimize a potentially predatory monetization model aren’t going to stop any time soon.
But that’s still a while away. For now, let’s set the doom and gloom aside and take a look at where some of video games’ premier players stand:
Ubisoft
Ubisoft may not have put all its eggs in the NFT basket, but it is betting very heavily on the crypto space.
It certainly started down this path much before its rivals did. Ubisoft indicated its interest in the larger crypto space as one of the founding members of the Blockchain Gaming Alliance all the way back in 2018. And despite its intended audience fighting the company’s crypto plans every step of the way, it hasn’t slowed down.
The company launched a beta of Ubisoft Quartz last December, in what it said was a bid to demonstrate the value NFTs could bring to video games. But it appears to have done the exact opposite.
Ubisoft’s Quartz experiment started with its 2019 title Tom Clancy’s Ghost Recon: Breakpoint. Players who signed up for Quartz could access unique in-game cosmetic items, dubbed Digits, which they could show off, or as Ubisoft wanted them to do, trade or resell them on approved platforms.
But barely anyone actually used Digits. In part due to a very limited geographical release and in part due to general audience apathy, only around 3,500 players ever traded Digits, and in the four months from December 2021 to March 2022, not even 100 sales were completed. Moreover, Ubisoft cut future support for the game just three months after it added Digits to the game, bringing an end to the rather underwhelming experiment.
Ubisoft’s implementation of blockchain in its games has been puzzling to say the least. Video games have had an aftermarket for in-game items for a very long time now. All Ubisoft’s offering managed was a retread of an already niche service with additional steps added in and an extra sprinkling of potential pricing volatility.
But setbacks or no, Ubisoft seems certain that NFTs have a role to play in the future of video games. Earlier this year in an interview with Finder, Nicolas Pouard, VP at Ubisoft’s Strategic Innovations Lab, and Didier Genevois, its Blockchain technical director, spoke about what went wrong and what was in store for the future. Here’s Pouard explaining their logic:
Well, it was a reaction we were expecting. We know it’s not an easy concept to grasp. But Quartz is really just a first step that should lead to something bigger. Something that will be more easily understood by our players.
That’s the way we think about it and why we will keep experimenting. We will keep releasing features and services around this first initiative. And our belief is that, piece by piece, the puzzle will be revealed and understood by our players. We hope they will better understand the value we offer them.
Sega
Sega, much like Ubisoft, seems fully on board with the idea of adding NFTs to its games. News of the company’s interest first dropped in an earnings call with investors on November 11, 2021, where the company said it was “considering M&A and investment in new fields such as NFT.”
However, a very quick and vehement backlash from fans led the company to make another statement in a management meeting a month later:
In terms of NFT, we would like to try out various experiments and we have already started many different studies and considerations but nothing is decided at this point regarding P2E.
There have been many announcement about this already including at overseas but there are users who show negative reactions at this point. We need to carefully assess many things such as how we can mitigate the negative elements, how much we can introduce this within the Japanese regulation, what will be accepted and what will not be by the users.
Sega also said that any efforts made toward NFTs would be “let go” if it’s seen as a “move to simply make money.”
Though something may have been lost in translation (the original statements were in Japanese), you would be forgiven after reading that bit for thinking this meant Sega isn’t yet completely on board the crypto train.
But just a couple of weeks later, the company registered a trademark for Sega NFT. It also soon clarified its position with an update to the transcript of the management meeting, outright stating that Sega “has not temporarily put any NFT-related activities on hold.”
Sega didn’t say exactly how it plans to implement NFTs, but it has hinted that NFTs may see some use in a “super game” it is planning. Whether this is just an attempt at monetization or a novel implementation remains to be seen.
Square Enix
Square Enix, of Final Fantasy fame, looked set to ride the NFT train early this year. A letter posted on its website on January 1 featured its president Yosuke Matsuda raving about 2021 being “NFTs: Year One.”
The company even sold off a few long-standing franchises along with accomplished studios, including Tomb Raider and Deus Ex this May to fund its efforts in blockchain, AI and the cloud.
By all accounts, it looked like Square Enix was ready to begin working on its NFT plans. But barely two weeks later, its president Yosuke Matsuda said in its annual earnings results call that the company will not be investing any of the divestiture-related returns into NFTs or blockchain tech. Though this does not mean that Square Enix has outright abandoned NFTs, it does show that its interest has likely waned.
Square Enix’s flip-floppy stance on NFTs could be linked to growing resentment in its primary user base, especially after it sold beloved franchises to fund the efforts.
Electronic Arts
Given EA’s track record, it’s fair to assume that the company would throw all its weight behind NFTs. After all, this is the company that pioneered loot boxes in mainstream video games, a method of monetization that continues to rake in massive profits despite attracting ample negative feedback over the years.
But EA has kept any talk of NFTs at arm’s length. There’s been the odd comment on NFTs and play-to-earn being the future, but there’s nothing indicating EA is doing anything in the space.
While the company did list NFTs in job descriptions for a hot minute, it has since backtracked. In an investor call in February, its CEO Andrew Wilson cooled off the idea of EA being involved with NFTs in the near future. It would be surprising if EA kept their fingers out of the pie for too long, but all that’s been said is that this isn’t the right time.
Microsoft/Xbox
Microsoft has interests in the NFT space, but, Xbox head Phil Spencer has outright stated that in their present form, NFTs probably shouldn’t be in games. Speaking with Axios, he said, “What I’d say today on NFT, all up, is I think there’s a lot of speculation and experimentation that’s happening, and that some of the creative that I see today feels more exploitive than about entertainment.”
That’s not to say the door is closed. He elaborated, “I don’t think it necessitates that every NFT game is exploitative. I just think we’re kind of in that journey of people figuring it out.”
Valve
Unlike the others we’ve talked about here, Valve seems to have no time for dissembling: When everyone was going agog over blockchain gaming last year, the company took the rather bold step of outright banning blockchain games from Steam, its digital game distribution platform.
With over 25 million daily users on Steam, the ban undoubtedly made it harder for blockchain-based games to reach as wide an audience as their traditional counterparts.
Though the ban was announced last October, it wasn’t till early 2022 that Gabe Newell, president of Valve, shed some light on the reasoning behind the decision. “The things that were being done were super sketchy. And there was some illegal shit that was going on behind the scenes, and you’re just like, yeah, this is bad. Blockchains as a technology are a great technology, but the ways in which it has been utilized are currently all pretty sketchy. And you sort of want to stay away from that,” he told Eurogamer.
Some have suggested Valve’s ban has more to do with preempting competition. A lot of experiments with NFTs in games involve setting up an aftermarket to buy, sell and trade NFTs, and this is almost identical to Steam’s Community Marketplace, which also allows players to buy and sell in-game items.
However, considering that there are a lot of other experiments involving blockchain gaming, it’s unlikely that fighting off competition was at the core of Valve’s decision.
Are NFTs going to be the way to play?
With even staff at Ubisoft unconvinced, the future of NFTs in mainstream games looks bleak. That said, companies are continuing with their plans undeterred.
There are likely valid and innovative implementations of NFT and blockchain technology in video games, but it’s clear we have not yet reached a stage where mainstream acceptance isn’t tainted with the shadow of reluctance. We should, however, expect more attempts to make NFTs a permanent fixture in video games.
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