Opinion: Will NFTs be in your favorite video game soon?

When the Nintendo 64 was first released in the US in 1996, it sold 1.6 million units (worth $200 each) in the first quarter. Its closest competitor for the holiday season was the $30 Tickle Me Elmo doll, which sold about 1 million in the same window. More than 20 years later, when the $300 Nintendo Switch sold 1.5 million units in its first week of release, the competition was tougher, and not just during the holiday season.

The gaming business has changed dramatically since its early days. From basic monetization through the sale of physical games and copies of digital games, to in-game monetization through microtransactions, the widespread adoption of the internet has changed the gaming landscape significantly. In the last century, the income of video game studios was mainly from the sales of games and game hardware, while today's game giants don't expect you to buy their games at all.

game business

Nintendo is a rare example of a major game studio that hasn't explored the realm of microtransactions in depth. Based on numbers like Fortnite, which brings in roughly $5 billion a year for Epic Games, you can bet most gaming companies are at least looking into free-to-play models. However, the shift in consumer mindset from extreme aversion to microtransactions to moderate acceptance has been a long and arduous process.

Fortnite was far from the first game to introduce microtransactions, but it was one of the first mainstream examples of a live service game that relied entirely on in-game purchases. At the time, the concept of microtransactions conjured up toxic loot box economics and luck-based purchases, which turned gaming into a pay-to-win ecosystem, and consumers grew increasingly frustrated with game publishers.

Fortnite flips that model on its head, using microtransactions as a way to differentiate itself within the game while also supporting the developer. They don't affect gameplay, prevent those with more money from dominating the game, and serve as an excellent way for those with money and discernment to show it off - a vanity-driven charity. Sound familiar?

Will it be combined?

Non-fungible tokens (NFTs) are bound to find their way into gaming ecosystems. From the early days of CryptoKitties to today's aAxie Infinity, digitally held tokens seem destined to be integrated with games.

It should come as no surprise that some of the biggest names in the video game industry are embracing NFTs. Gaming has never been more accessible than it is today, growing from a niche consumer group to establishing a global pop culture trend. Gaming collectibles have fetched staggering prices for decades — why should their digital cousins be any different?

What's really captivating the industry, from Ubisoft to Square Enix, is figuring out the best way to do it. Some companies are starting to sell digital items as NFTs that buyers can resell to other more enthusiastic enthusiasts. Others are experimenting with the play-to-earn (P2E) model used by Axie Infinity.

Earlier this year, American video game retailer GameStop announced plans to partner with an Australian crypto firm to develop a $100 million fund for NFT creators, content and technology. Square Enix President Yosuke Matsuda stated in his New Year’s letter that the company hopes to incorporate blockchain/NFTs into its future releases, but he did not mention any details.

Most recently, Ubisoft attempted to release a limited-edition collection of NFTs related to the Ghost Recon Breakpoint game. In a perfect world, this would have been a moment of celebration - the announcement of one of the world's largest and most valuable gaming powerhouses adopting blockchain technology. As you probably already know, the announcement didn't go exactly as planned.

risk capitalism

According to a report by DappRadar, gaming-related NFTs generated nearly $5 billion in revenue last year, accounting for about one-fifth of total NFT sales in 2021. Ubisoft unveiled an NFT project on Dec. 7 — a move that got a 96% disapproval rating in an announcement video on YouTube — and two weeks later, it reportedly sold just 15 NFTs worth a total of $100,000. to $1800.

Wade Rosen, CEO of legendary video game company Atari (Atari), told Cointelegraph: "In its current state, the traditional gaming industry will not adopt NFT." According to Rosen, although blockchain games will continue to develop, There is not yet enough practical utility for players to consider adopting.

"NFTs - how they are created, what value they provide to the individual player and the community of players that form around a single game - will require considerable development before you can expect to see any widespread adoption within the (traditional gaming) industry .We do see great potential for NFTs and blockchain technology in video games, but that will have to wait until the definition of NFTs goes well beyond what it currently is.”

That's not to say players don't like the idea of buying NFTs, but it's been advertised as a blatant money grab. In order to promote NFT sales, Ubisoft has made it extremely difficult to obtain free in-game items. Still, some of the biggest names in the business, from Zynga to EA Sports, are paying close attention to blockchain and how it will impact the roughly $80 billion gaming industry.

Rosen added: “We expect that over the next 12 to 18 months, most of the relevant innovation will occur in the narrower blockchain gaming space.”

The average age of U.S. gamers is 35, and they've seen the shift from text-based to 2D to 3D to virtual reality multiplayer games, all in about 20 years.

During this period, the gaming industry primarily made money by selling entertainment products that offered nothing more than a game. But as long as you allow money to flow in and out of the game, you can effectively turn its economy into a stock market.

This has led many players to feel that with NFTs and blockchain, studios and game publishers are more focused on creating a market than engaging, unique, and most importantly, fun, gaming experiences.

Make games fun again

For game NFTs, there's a middle ground where publishers aren't blatantly grabbing cash, and the tokens themselves have no effect on the game's economic incentives. There are countless factors to consider when investigating why adoption has been so slow, but many believe it is only a matter of time before the case is solved.

Elliot Hill, director of communications at blockchain ad tech firm Verasity, told Cointelegraph that while NFTs are clearly innovative and useful, they lack adequate infrastructure.

"With these hurdles coming up, I think NFT technology is more likely to be widely adopted by large game companies," he said.

On the surface, video game studios are like software companies: They both employ developers, designers, managers and executives, as well as sales and marketing teams to develop and sell products. However, the customer base they serve is completely different.

The video game industry has the longest working hours among software-based companies, filling an odd space between the luxury of Hollywood and the structure of Big Tech. However, with NFTs actually attaching optional financial services side-tasks to video games, the lines between work and play are starting to blur.

Gaming NFTs exist at the intersection between some of the fastest-paced, high-skill, high-value environments in the world: technology, finance, and entertainment. Each of these areas accommodates a wide variety of market conditions and consumer behavior, and it will take time for them to understand the complexities of the other industries.

Sarah Austin, co-founder of NFT and metaverse game launchpad QGlobe, told Cointelegraph that NFT games are still in their early stages and there hasn’t been much development beyond simple GameFi and P2E models.

“Moving from AAA games to NFT games can be disappointing. However, if the player’s motivation is to earn rewards, then they are less concerned about the quality of the gameplay.”

According to Nielsen research, consumers will spend more than $90 billion on microtransactions in 2021. The game consumer market is happy to spend money on games, but not at the expense of the game itself. The greater the utility and influence of NFTs in games, the less important the actual games will be.

Atari's Rosen said: "The GameFi/P2E arena is the starting point for the industry, not the end state. Personally, I'm excited about the potential of NFTs to allow for more collaboration and interaction between games and between virtual worlds." Interest. Ultimately, NFTs may become the cornerstone for players and developers to create new shared experiences."

However, there are also cultural factors at play. While the pay-to-win microtransaction economy is not popular in the west, players in the east seem to have fully embraced the model. Chinese game developer miHoYo's global hit Genshin Impact is essentially based on a luck-based loot box economy, but it grossed more than $2 billion in its first year of release.

Like Square Enix president Yosuke Matsuda said before, not everyone plays games just for fun. There are people who want to contribute to the game they're playing, and so far, traditional games haven't introduced incentives to cater to these users.

There is certainly a large enough market to warrant such an effort, but in their current form, gaming NFTs seem more geared toward appealing to casino gamblers than casual gamers. NFTs are definitely coming to mainstream gaming - the question is who can find the right balance between game finance and financial gamification.

Cointelegraph Chinese is a blockchain news information platform, and the information provided only represents the author's personal opinion, has nothing to do with the position of the Cointelegraph Chinese platform, and does not constitute any investment and financial advice. Readers are requested to establish correct currency concepts and investment concepts, and earnestly raise risk awareness.