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Gamers Have The Power to Kill the NFT Craze. (But They Won't)

Gamers, accustomed to micro-transactions and loot boxes within games, oppose NFTs which they see as a moneymaking scam.
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Video game publisher Ubisoft, one of the major players in the sector, launched Quartz, a platform that introduces NFTs in one of its popular video games: Ghost Recon Breakpoint on Dec. 7.

These NFTs (here called "Digits") come in the form of cosmetic items, such as virtual clothes, that the player can obtain by paying with cryptocurrencies and that the owners can then display. In less than 24 hours, a large majority of the reactions to the video accompanying the launch were so negative that the number of dislikes has been concealed on Youtube.

The reaction was just as violent on December 15 when GSC Game World tried to integrate NFTs into the S.T.A.L.K.E.R 2 franchise, which is scheduled for release on April 28. One after the other, the responses from players on social media were strongly negative.

"NFT's, really?" wondered for example this user on Twitter.

The studio immediately backtracked.

The backlash from Ghost Recon and Stalkers' players reflects the widespread rejection of NFTs, non-fungible tokens, in the gaming community.

NFTs are certificates of unique ownership for a digital file - piece of code, image, GIF, video, object or even video game character. In the game world, it can be unique faces and objects for the characters. The authenticity of NFTs is ensured by blockchain where these certificates of ownership are recorded. 

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How Do NFTs Appear in Video Games?

NFTs aren't that new to gaming: In 2017, the characters in the game CryptoKitties were NFTs. 

However, interest exploded with the success of NFTs devoted to the art market, notably the record sale of the digital work Everydays: the First 5,000 Days by the artist Beeple. Major studios see NFTs as a new source of potential revenue.

NFTs appear mainly in the form of accessories to equip your character or in the form of loot. Ubisoft notably offered numbered helmets, pants and guns for Tom Clancy in Ghost Recon Breakpoint.

Some games rely entirely on a blockchain. This is the case of Rumble Kong League, Gods Unchained or Axie Infinity. Their central characters and/or objects are associated with NFTs that the player can sell or buy. 

Some say these games are simply crypto variants of classic, basic games. Axie Infinity, one of the most popular games, is a role-playing game inspired by Pokemon.

In Decentraland and The Sandbox, metaverse video game platforms, plots of land and objects created by players are intended to be bought and sold in the form of NFTs.

Why Are Gamers So Opposed to NFTs?

The argument made by video game players against NFTs is that they have already seen experiments using new revenue models such as micro-transactions, loot boxes and pay-to-win done at the expense of the enjoyment of the gamer. 

Many gamers say when Electronic Arts  (EA) - Get Free Report released The Sims 3, a series of life simulation, in 2009, micro-transactions were a plague. Players constantly received a reminder about their SimPoints, a currency they could buy with real money, and any new items for their Sims they could spend it on. 

When they wanted to create a Sim, they saw all the hairstyles available and accessible with their SimsPoints on the Sims 3 Store. When they built a house, they were offered the furniture they could afford with their SimPoints to furnish it. Some of these items could only be obtained from the Sims 3 store, which meant that even if you bought all of the expansions there would still be more to buy.

The additional revenue streams were added to several games, including Diablo III, which allowed players to purchase high-level materials that could normally only be earned by grinding through difficult dungeons. Simply being able to buy these weapons ruined, according to some players, the game and ultimately it was removed.

Sports games in particular fall prey to micro-transactions. Players of the popular NBA 2K series and Fifa complain that it becomes impossible to be good without spending money. NBA 2K, they say, is now a vehicle for marketing sneakers.

Fortnite is the game that best exemplifies this concept of live service gaming, where micro-transactions and loot boxes are an important and controversial aspect. While micro-transactions have often been phased out, the idea of ​​encouraging gamers to spend more on their games after they've already purchased them lives on. 

Fortnite now has battle passes, loot boxes that can be purchased with real money, but they exist in an ecosystem where players are willing to weigh in how much it will cost to get the most out of a game.

Players are not against the principle of occasionally buying something in a game. This is the very principle of live service games like Fortnite and Apex Legends which are organized around a limited time "season" and offer a Free pass and a Battle pass that gives players rewards when they rank up. The key here is that while some of these rewards are paid there is at least the illusion that if you're not able to purchase the  Battle Pass, you can still get something out of it.

There is no need, gamers say, to go through the blockchain to offer desirable virtual objects in a video game, virtual objects likely to be exchanged/resold within the community itself. In the popular game Magic: The Gathering Online, users can easily trade cards, including with cryptocurrency. In Diabolo III, Blizzard Entertainment had introduced an auction house, with the principle of auctions, but it was subsequently abandoned.

Players also criticize NFTs for their environmental impact: blockchains consume a lot of energy.

Why Do Games Studios Want to Integrate NFTs?

The principle of NFTs in the video game is that it allows the transfer of ownership of an element of a game from the publisher to the player. The decentralized system of blockchains guarantees them the authentic ownership of a digital file. Once the player is an owner, they are guaranteed to remain so, even if the publisher decides otherwise or goes bankrupt.

In fact, this does not really change much compared to what already exists. The accessories are already sold separately with the only difference that the certification of the transactions is ensured by the publisher of the game.

The interest of NFTs lies in the fact that their holder can earn money by reselling them on external platforms. The idea is to allow certain fans to obtain cosmetic items available in very limited quantities. 

Studio say that from the moment the NFT is created on the blockchain, it is outside of their system. Other developers may decide to do something with it, and potentially the buyer can use it in more games. Basically a gold pistol limited to a few copies of Rainbox Six can also be used in Call of Duty.

NFTs also attracts people who want to make a living out of it by playing a blockchain game. This is the famous "Play to earn," basically playing to generate income, a model defended by the big players in the industry.

"People might play games for a living in the future - or they just might enjoy the ability to sell their trading cards after they've sunk 2,000 hours into a game - either way, it's a model that is fundamentally aligned with players' rights," says Robbie Ferguson, co-founder and President of Immutable X, an NFT-focused platform. "For three decades publishers and technology companies have sold consumers the lie that they don't own what they buy online: a movie, a song, a video game item. This is a constant attrition against ownership that true digital ownership (via NFTs) will reverse over the next decade. It may take time, but it's inevitable."

Video game creators and developers can use NFTs to raise money. This is the case of famous developer Peter Molyneux, who converted his latest project, Legacy, into a blockchain game.

Proponents of NFTs in games argue that they will allow the same item to be used across games: interoperability. It's a tempting prospect, but for an element from a Call of Duty game, for example, to be used in a Destiny 2 game, the creators of the latter would have to develop graphics, animations for each unique object and adapt its characteristics to the rules of their game.

Does This Mean That NFTs in Games Are Dead?

Not so fast, say industry experts.

"I believe time will show how NFTs best slot into gaming, the formats haven't solidified yet by any stretch and there will be many winners. The reality is fashion may end up driving demand for portability across games and it may necessitate gaming companies to react and move to be more open- some gamers will go and take their toys and go play in another sandbox," says Joe Conyers, Executive VP and Global Head of NFT at Crypto.com.

"Sometimes NFTs can be shady money grabs. Sometimes they're amazing and really empower players. I generally think the difference is really how much utility is built into the NFTs. But ultimately NFTs are just a tool, and like any tool can be used for good or bad," says Jesse “Aggroed” Reich, CEO & co-founder of Splinterlands, a play-to-earn card strategy game.

The business model needs to be adjusted with NFTs, explains Darius Kozlovskis, CEO of Drops, an NFT platform. "Players should be able to rent them, use outside of the game, have a good demand, liquidity on secondary markets. Supply of the items needs to be managed more carefully. Games still can charge royalties from secondary sales that can compensate lost revenue from primary sales."