The gamers getting behind crypto
Yosuke Matsuda, president of storied video game developer Square Enix, had a gift for crypto-land on New Year’s Day: a wholehearted endorsement of NFTs, the metaverse and the play-to-earn blockchain games, where playing can earn cryptocurrencies.
“From having fun, to earning, to contributing, a wide variety of motivations will inspire people to engage with games and connect with one another. It is blockchain-based tokens that will enable this.”
Square Enix is not the only gaming company hoping to get a slice of the crypto-hype. French publisher Ubisoft announced its NFT platform Quartz last year, allowing users to buy cosmetic options or “skins” for your avatar, while Electronic Arts chief executive Andrew Wilson said that “collectible digital content is going to play a meaningful part in our future”.
The games industry has long sought new ways to keep users paying for content. Loot boxes, which offer a random assortment of items for avatars, became endemic among mobile games in the mid-2000s and feature in popular franchises such as Team Fortress 2 and Fifa. NFT proponents argue that blockchain items could be transferable across games and further stimulate virtual economies — markets for resales of skins exist, but they are unauthorised.
Blockchain games, such as Axie Infinity, have an even better pitch: they allow players to earn in-game assets which they can convert into hard cash. Square Enix’s Matsuda differentiated between consumers who “play to have fun” and those who “play to contribute”, creating new content for the game world — and also making more money for games companies.
But when it comes to what gamers are willing to pay for, they are discerning. Loot boxes have been an ongoing source of controversy, with opponents likening the mechanics to gambling. And monetising user-generated content (UCG), which is traditionally viewed more as a passion project than corporate handiwork, has been a thorny business. PC storefront Steam’s experiment with adding premium options to its UCG workshop in April 2015 provoked a mass backlash and a u-turn by the gaming giant later that month.
While Ubisoft and others are piling in, other gaming companies have drawn a line in the sand. Steam’s owner Valve announced in October a ban on NFTs from its expansive store. The new policy appears to align with Steam’s stance prohibiting items that have real-world value on the platform. In December, GSC Game World, the developer of upcoming survival shooter game S.T.A.L.K.E.R. 2, reversed plans to offer NFTs after a vociferous backlash from fans. “The interests of our fans and players are the top priority for the team,” the developer said.
As for blockchain games, there are questions around the sustainability of their economic model. Analysts argue that they rely on new player growth to remain viable. Equally fundamental is how much entertainment they offer, says Edward Castronova, professor of media at Indiana University and one of the most respected voices on the study of virtual economies.
“If it’s not something more fun than other things, people are not going to do it,” he said, emphasising that companies cannot simply rely on telling users about how great their blockchain technology is. “You can’t just say ‘we’re excited’ and expect people to buy in.”
Castronova is not a dyed in the wool crypto-critic, adding that he sees possibilities for blockchain-based gaming to offer a genuine economic incentive — so long as they are not too onerous.
Turning games into yet more gig economy work is not as much of an innovation — see the long and dubious history of “gold mining” in games like World of Warcraft. Simply tacking “blockchain” onto that may not be the winning pitch crypto’s true believers think it is