In 1996, when the Nintendo 64 was released in the United States, it sold 1.6 million units (worth $200 each) in its first quarter. Its closest competitor for the holiday season was a $30 Tickle Me Elmo doll, which sold about a million units in the same window. More than 20 years later, when the $300 Nintendo Switch sold 1.5 million units in its first week, there was a lot more competition, and not just for the holiday season.
The gaming business has changed drastically since its inception. From basic monetization through the sale of physical and digital copies of games to in-game monetization through microtransactions, the widespread adoption of the Internet has brought about a pronounced change in the gaming landscape. While video game studios of the previous millennium relied on revenue from the sale of games and gaming hardware, today’s goliaths don’t expect you to buy their games at all.
the game business
Nintendo is a relatively rare example of a major video game studio that hasn’t ventured too far into the microtransaction waters. Fortnite reports to you to Epic Games about 5,000 million dollars a year, and with figures like this, surely most video game companies are investigating at least the free-to-play model. However, this shift in consumer mindset from deep rejection to moderate acceptance of microtransactions has been a long and arduous process.
Fortnite was by no means the first game to introduce microtransactions, but it was one of the first mainstream examples of a live service game that relied solely on in-game purchases. This came at a time when the concept of microtransactions invoked images of toxic loot box economies and luck-based purchases turning games into pay-to-win ecosystems and consumers becoming increasingly frustrated with game publishers.
Fortnite flipped the script, promoting microtransactions as a way to distinguish yourself in the game while supporting developers. They didn’t affect gameplay, preventing richer pockets from dominating games, and they served as a great way to show money and appreciation, a kind of vanity-fueled charity. Does it ring a bell?
Will it mix?
Non-Fungible Tokens (NFTs) were destined to find their way into gaming ecosystems. From early implementations like CryptoKitties to the current Axie Infinity, digital property tokens seem destined to be coupled with gaming.
Some of the biggest names in the gaming industry are embracing NFTs, and it’s no surprise. Gaming has never been more accessible as it has gone from being a niche consumer base to setting global pop culture trends. For decades, gaming collectibles have sold for obscene prices, so why should their digital cousins be any different?
From Ubisoft to Square Enix, what’s really intriguing the industry is figuring out what the best approach is. Some have simply started selling digital items as NFTs, allowing buyers to resell them to more eager enthusiasts. Others try to adopt the “play to win” (P2E) model used by Axie Infinity.
Earlier this year, US video game retailer GameStop announced plans to partner with an Australian cryptocurrency company to develop a $100 million fund for NFT, content and technology creators. In his New Year’s letter, Square Enix president Yosuke Matsuda indicated that the company would like to incorporate blockchain/NFT into its future releases, but did not mention any concrete details.
Ubisoft recently attempted to release a limited edition NFT collection alongside its Ghost Recon Breakpoint game. In a perfect world, this would have been a time for celebration: one of the world’s biggest and most highly rated gaming mammoths had heralded the adoption of blockchain technology. As you may already know, this announcement did not go well at all.
Introducing Ubisoft Quartz
We’re bringing the first energIntroducing Ubisoft Quartzy efficient NFTs playable in a AAA game to Ghost Recon: Breakpoint!Try it in the beta from December 9 with three free cosmetic drops and learn more here: https://t.co/ysEoYUI4HY pic.twitter.com/owSFE2ALuS
— Ubisoft (@Ubisoft) December 7, 2021
capital raising
According to a report by DappRadar, gaming-related NFTs generated revenues worth nearly $5 billion last year and accounted for about a fifth of all NFT sales in 2021. Ubisoft unveiled an NFT project on December 7 — a move that was met with 96% dislike. in their YouTube announcement video – and two weeks later, reportedly, there was only sold out 15 NFT, with a collective value of less than $1,800.
“The traditional gaming industry is not going to embrace NFTs in its current state,” Wade Rosen, the CEO of legendary video game corporation Atari, told Cointelegraph. According to Rosen, while blockchain gaming will continue to evolve, there is currently not enough tangible utility for gamers to consider adoption yet.
“NFTs – how they are produced, what value they bring to individual gamers, and the gaming communities that form around individual titles – will have to evolve quite significantly before you can expect to see widespread adoption within the game. industry [del juego tradicional]. We see a lot of potential for NFTs and blockchain technology within video games, but not until the definition of an NFT evolves significantly beyond where it is now.”
It’s not that gamers don’t like the idea of buying NFTs, it’s that they’ve been marketed as a blatant money grab. To boost NFT sales, Ubisoft has made it absurdly difficult to earn free in-game items. Still, some of the biggest players, from Zynga to EA Sports, are keeping a close eye on blockchain and how it could impact the gaming business, an industry valued at some $80 billion.
“The reaction to the issue within the industry is binary and visceral, and unfortunately that’s just not a good environment for exploration,” Rosen added. “We expect most of the related innovation in the next 12 to 18 months to happen within the narrower playing space of the blockchain.”
American gamers, with an average age of 35, have seen the medium go from text-based to 2D to 3D to multiplayer virtual reality, all in about two decades. During this time, the gaming industry has mainly benefited from the sale of entertainment products that offer nothing more than a game. But as soon as money is allowed to flow in and out of a game, it effectively turns its economy into a stock market.
This has led many gamers to feel that – with NFTs and the blockchain – game studios and publishers are more focused on creating markets than engaging, unique, and above all, fun gaming experiences.
Make gaming fun again
There is a middle ground for gaming NFTs, one where publishers do not outright steal money and the tokens themselves have no impact on the financial incentives of the game. There are myriad factors to consider when investigating why adoption rates have been slow, but many are convinced that solving the case is just a matter of time.
Elliot Hill, director of communications at Verasity, a blockchain-based ad technology company, told Cointelegraph that while NFTs are clearly innovative and useful, they lack the proper infrastructure.
“With these hurdles in the rearview mirror, it is my opinion that widespread adoption of NFT technology is now much more likely by major game companies,” he said.
At first glance, game studios are like software companies: Both hire developers, designers, managers, and executives, along with sales and marketing teams, to build and sell a product. However, they serve a totally different clientele.
The video game industry works some of the longest hours among software-based companies, filling a strange gap between the flamboyance of Hollywood and the fabric of Big Tech. However, with NFTs practically adding optional financial services side quests to video games, the line between work and play is starting to blur.
Gaming NFTs sit at the intersection of some of the world’s fastest, most highly skilled, highest value environments: technology, finance, and entertainment. Each of these sectors adapts to all kinds of market conditions and consumer behaviors, and it will take time for them to understand the ins and outs of the others.
Sarah Austin, co-founder of metaverse and NFT gaming launch platform QGlobe, told Cointelegraph that NFT gaming is in its early stages and has not evolved much beyond simple GameFi and P2E models.
“Going from AAA games to NFT games can be disappointing. However, if the player’s motivation is to earn rewards, then they are less concerned with the quality of the gameplay.”
According to a Nielsen study, consumers they spent over $90 billion in microtransactions in 2021. The gaming consumer market is happy to spend money on the game, but not at the expense of the game itself. The more utility and impact an NFT has within the game, the less important the game itself becomes.
“The GameFi/P2E realm is the starting point of the industry, not the end,” says Atari’s Rosen. “Personally, I’m intrigued by the potential for NFTs to enable greater collaboration and interaction between games and between virtual worlds. Over time, NFTs can become building blocks that allow players and developers to create new shared experiences.”
However, there are also cultural elements at play. While micro-transaction payment economies are shunned in the West, gamers in the East seem to have embraced them enthusiastically. Chinese developer miHoYo’s worldwide hit Genshin Impact essentially runs on a luck-based loot box economy, but it managed to collect more than 2,000 million dollars in its first year.
Just like declared Square Enix president Yosuke Matsuda not everyone plays just for fun. Some want to contribute to the games they play, and so far, traditional games don’t have incentive models that cater to these consumers.
There is certainly a large enough market to justify the effort, but it seems that NFT games, in their current form, are more geared towards attracting casino players than the average player. There is no doubt that NFTs will find their way into the gaming mainstream; It’s just a matter of who manages to find the right balance between game finance and gamification of finance.
