When Ubisoft released a limited edition collection of non-fungible tokens (NFTs) in the military shooter game Ghost Recon Breakpoint in December it should have been a turning point. The French company behind popular franchises Assassin’s Creed and Far cry was the first major publisher to include NFTs in a title, which could have heralded a monumental change in usage Blockchain technology in gaming.
Instead of this was a dramatic mistake and the setback was quick. Players complained about the 600 hours of playtime (almost a month with 24 hours a day) needed to earn just one for free Item – a cosmetic helmet for in-game avatars. The attempts to increase sales were even more dire: it was in a report only 15 NFTs were purchased for a total of $ 400.
“It was a little bit halfway there,” says John Linden, CEO of blockchain platform developer Mythical Games. The key to success with NFTs is to fully integrate them into a game’s native economy so that users can get involved. “You just screwed it on. It’s not really a technology that can be screwed on. “
Welcome to the latest in video games. Companies from EA Sports to Zynga view blockchain as a potential pipeline of new revenue for global gambling, an industry valued at more than $ 200 billion in 2020, according to Fortune Business Insights. Gambling-related NFTs generated $ 4.8 billion in revenue in 2021, according to DappRadar data, representing roughly 20% of all NFT sales during the year, including popular items from NBA Top Shot, CryptoPunks and Board Ape Yacht Club.
Is it the early days of major changes such as free-to-play and mobile or just another stream of virtual assets with inflated – and unsustainable – values? While it’s too early to say, OpenSea, an industry leader, has just raised $ 300 million on a valuation of $ 13 billion. Until the future becomes clearer, here’s a quick guide to the world of blockchain gaming to get you up to speed:
What is blockchain gaming?
It’s an approach where the digital items in video games – things like collectibles, guns, and cosmetic skins – are real assets, much like stocks or bonds, in the form of non-fungible tokens (NFTs). Because NFTs are stored on the blockchain, a public and decentralized ledger, it gives the consumer the “right to transfer” and gives them control over their own virtual assets. Linden says, “Everyone has the opportunity to do business in these games.”
What’s the big difference?
Control. Publishers cannot finalize blockchain assets by shutting down a title or removing features from games. The NFT in-game items can exist beyond the lifespan of games and retain their value as long as there is demand. Blockchain gaming also introduces the notion of a “play-to-earn” model that “compensates” [players] for the time they spend in these games, ”says Nick Casares, product manager at the blockchain incubator Polyient Labs. This could take the form of taking a rare item off the platform to sell elsewhere, or accumulating in-game tokens that can be converted into cryptocurrencies like ether.
Where did the idea come from?
Online multiplayer games like Rune escape and World of Warcraft, both of which hit the market in the early 2000s, proved the usefulness of robust in-game economies and spawned gray markets that in some cases resulted in consumers spending real money to unofficially buy game accounts or items on third-party websites how to buy eBay. Second Life, a forerunner to today’s metaverse, popularized the use of digital currencies, which corresponded to real world assets, more than a decade ago. Although CryptoKitties, the virtual pet collecting platform released by Dapper Labs in 2017, is more of a “gamified market” than the game itself, Linden said it was an early success story and inspiration for many blockchain game pioneers.
How is it going?
The rules are still being written. Today’s blockchain games are “very simple and crude,” says Casares. In contrast to titles from big publishers like Epic Games (Fourteen days) or Activision (Call of Duty: Warzone) he notes that blockchain games are not as sophisticated as today’s offerings and are only interactive to a limited extent. Meanwhile, Ethereum, the most ubiquitous blockchain platform, is gearing up to roll out a more robust version of 2.0 as other platforms hit the market.
Despite the slow build, several games have caught on, especially those from Animoca Brand The sandpit and Sky Mavis’ Axie infinity. The sandpit, What some consider a prototype of a metaverse is a 3D open world mobile game that enables users to buy, sell, and develop digital real estate. Its proprietary in-game token, SAND, has a market capitalization of more than $ 5 billion, and in November Softbank launched a $ 93 million investment round in the platform. Axie infinity, which according to the founder of the NFT platform Hungry Wolves, Adam Hollander, “was a digital Pokémon for the blockchain in every way,” had sales of more than 2.3 billion US dollars in October 2021 and has 2.5 Millions of monthly active users, some of whom use the game as their main source of income.
What’s the downside here?
There are still a few things to clarify, says Linden. Some entire blockchains require more electricity than certain countries, which puts a strain on the environment and rewards in the form of “gas charges” or the money a user costs to connect to the grid. The play-to-earn model, where users win and lose assets, begs the question of whether gambling laws should be applied. Other applications where groups of users pool their money to buy a single expensive asset could one day run into conflict with global securities regulators. In addition, the use of in-game tokens and currencies that correspond to real assets also raises concerns about market manipulation and other possible violations of securities regulations. While future iterations of Ethereum or other potentially more efficient blockchains could offer a greener solution and cheaper fees, the regulatory concerns aren’t that easy to resolve. “Anytime you create systems that encourage behavior, you run the risk of creating an environment that encourages gambling-like activities,” says Casares. “I think once we have more clarity from regulators, we will have better frameworks and ideas and approaches to either get people to do the right thing or to actively prevent them from doing the wrong thing.”
It all depends on whether and how quickly the big game publishers fill the pipeline. So far the enthusiasm has been subdued. Linden sees hesitation as an echo of the early days of mobile gaming, when users mocked the new abbreviated versions of the published titles. (Mobile gaming has since exploded, with a record eight games generating more than $ 1 billion in revenue in 2021, according to the mobile app data company Sensor Tower.) Ukrainian game studio GSC recently canceled the NFT-related elements of its upcoming game STALKER 2 Game. Valve, the parent company of the video game platform Steam, banned blockchain applications last October. EA Sports and Epic Games have both expressed an interest in the technology, while Zynga recently announced a partnership with blockchain gaming platform Forte to develop NFT-based games.
The top? Interest in NFTs does not seem to fluctuate. DappRadar, which tracks global NFT sales, says transactions totaled around $ 25 billion last year, up from nearly $ 100 million in 2020, while major crypto exchanges like Coinbase held up more than 70 million Prepare users for the introduction of NFT marketplaces. Linden believes: he sees Ubisoft yet another attempt at the technology and big developers releasing titles that include NFTs earlier this year. Hollander is also a believer. “We’re going to start looking at the world in a pre- and post-Coinbase era,” he says. “A year ago, the vast majority of people who are heavily involved with NFTs today didn’t even know what an NFT was.”