Inverse Codex
“There’s no question people value digital goods. It’s digital, rare, and collectible.”
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NFTs invaded the gaming lexicon at the end of 2021 and will no doubt become one of the hottest topics across a multitude of industries in 2022. If you’re still confused as to why gaming is riding on the blockchain or whether this is a good or a bad thing for games and gamers, the jury is still out. But it’s a good idea to get a firm grasp now about what the industry’s most perplexing new trend means. We’ll unpack what NFTs are, how they might become present in games, and what publishers like EA, Ubisoft, Square Enix, and others have said about featuring them in their design portfolios.
Regardless of whether it’s used in gaming or elsewhere, the acronym NFT refers to a “Non-Fungible Token” for a digital item. It sounds a bit complicated in name, but the idea is actually fairly simple. An NFT is a certificate of ownership of a digital good that’s supposed to be made in a limited quantity. They can be attached to digital pictures or memes, video clips, or even something as abstract as the original source code for the World Wide Web. If something is “fungible” then it is a mutually interchangeable commodity — like a dollar bill.
No matter what form it takes, when you have an NFT for a specific digital item, you own the certified token for it on a digital ledger or blockchain. Simply put, you get a specialized link that proves your connection to that digital asset. Just like someone can own a highly valuable car in the real world, NFTs offer an opportunity to claim a small slice of the digital landscape.
It’s like owning the deed to something that exists purely on the internet.
Especially when it comes to gaming, large corporations see NFTs as an avenue to make a continuous revenue stream out of digital content. For example, if a rare Fortnite skin were offered as an NFT, a player could be the first to unlock the skin in-game and then take ownership of it. Once they do, the token for that skin can then be resold to the highest bidder, potentially for a lot of money. Regardless of how much the skin sells for, its original makers at Epic Games would still take a cut of that payout, and it can be resold by the new owner to additional owners in perpetuity with Epic hypothetically taking a cut every single time.
Aside from attaching NFTs to any game that sells cosmetic skins, it’s equally easy to see how NFT principles might be applied to card-collecting games like the Ultimate Team modes featured across EA Sports titles. Essentially every card in the mode could be its own NFT, and then you could sell ownership of any card in your deck to other players, with Electronic Arts taking a cut of auctioned sales.
So, in addition to getting paid for a gamer purchasing the pack from which rare cards originally came, EA could theoretically open up an entirely new revenue stream based entirely on resales of those rare cards for as long as NFTs are viable. While there has long been a “black market” of sorts for folks selling Ultimate Team accounts that feature rare cards for real money, NFTs serve as the publisher’s opportunity to take their own slice of that profitable pie.
None of the above-listed examples exist yet, but those with a passing interest in the games industry can likely see where this train goes. Big game publishers love the idea of NFTs because they unlock the possibility of making lots of money on items that are scarce. We’ve already seen recent trends like time-limited cosmetics become the norm, but what if publishers could get away with only selling so many of a certain skin or card? The demand for those items would skyrocket, creating an active marketplace.
NFTs are poised to be the next evolution of in-game microtransactions. We’ve seen this concept progress from loot boxes to battle passes, and, now that the latter trend has become a bit stale, bean counters see NFTs as the next best way to siphon money from FOMO-suffering fans.
Could a game publisher technically make its own auction house without necessarily relying on the blockchain to do it? Absolutely. But NFTs are a special beast because they combine ongoing cash flow with investors’ recent interest in blockchain initiatives. If corporations can please investors and make money at the same time, they’ll be okay with taking the NFT route to do it.
Given how much potential cash is on the table, it’s no secret that some of the industry’s largest publishers have talked a lot about NFTs in recent days. Here are some positive and negative quotes about NFTs that are worth remembering.
9. Ubisoft: Speaking of its own NFT initiative called Quartz, which currently only sells NFTs for Ghost Recon Breakpoint, the Assassin’s Creed and Far Cry stewards told Decrypt:
8. Electronic Arts: CEO Andrew Wilson said this during a November 2021 earnings call:
7. Square Enix: In a January 1, 2022 letter from Square Enix President Yosuke Matsuda, he took aim at the large group of players who “play to have fun” that dislike the use of NFTs.
6. Hazelight Studios: Speaking from the perspective of a smaller indie developer, Hazelight Studios founder Josef Fares told The Washington Post he’d “rather be shot in the knee” than force NFTs into award-winning titles like It Takes Two.
5. Zynga: In November of 2021 Zynga VP of Blockchain Gaming Matt Wolf spoke at length about the possibilities of NFTs in the company’s future. Zynga is now under the Take-Two Interactive umbrella.
4. Take-Two Interactive: The publisher behind the Grand Theft Auto, Red Dead Redemption, and NBA 2K franchises was equally bullish about NFTs in its own right. Speaking at the Gamesbeat Summit in November 2021, CEO Strauss Zelnick explained why he thinks NFTs are a great fit for his properties.
3. Xbox: In November 2021, Xbox Executive VP of Gaming Phil Spencer offered Axios a more cautionary statement on the future of NFTs in games.
2. Sega: At a December 2021 management meeting, Sega CEO Haruki Satomi was equally cautious about the future of NFTs, saying he would pull out of the venture if its audience disliked it.
1. Epic Games: Despite being used as an example above, Epic Games CEO Tim Sweeney tweeted in September 2021 that his company won’t feature NFTs in its games. However, Epic is “open to games that support cryptocurrency or blockchain-based assets” on the Epic Games Store platform if they’re made by other developers.
