NFTs have been one of the hottest trends in tech over the past two years. Media the world over has been awash with stories of cartoon JPEGs being snapped up by celebrities for seemingly insane sums of money, and of the young artists that created them becoming overnight millionaires.
While the commercial and social opportunities that NFTs can unlock are seemingly limitless, most people seem to dismiss NFTs as just a passing fad without really grasping their true potential. Perhaps most surprisingly, the one group of people that seems to have pushed back hardest against NFTs is the global gaming community.
For decades now, proud geeks (myself included) have been spending their pocket money and salaries on not only real world, “useless” collectibles from their favorite games and movies, but in-game digital items as well, such as CS:GO skins and Fortnite dance moves.
In fact, for 18 years, Second Life has had players exchanging its own digital currency, “Linden Dollars”, to change their character’s looks and clothing, or to upgrade the items they own and the places they live.
At the same time, Zuckerburg’s Meta vision is neither radical nor original - digital landlords renting out virtual land in the metaverse is nothing new.
In fact, the whole concept of owning and trading digital items has been a popular concept proposed by many visionaries since the earliest days of science fiction, and most notably during the cyberpunk explosion of the ‘80s and ‘90s.
If there was one group that was the perfect demographic to love NFTs, one would think it would be gamers, because the idea of ownable digital assets has already been such a large part of their lives for so long. So why now, when NFTs are all the rage, do so many gamers seem to be so against them?
An ongoing tug-of-war of profits vs fun has been ongoing within the gaming industry for many years now. While game development studios want to create the most enjoyable experiences, they are also incredibly expensive to run with thin margins, leading many studios to seek to maximize their profits.
The line between generating profits and becoming greedy is an incredibly fine one to walk. If you charge too much, you risk becoming a social pariah, enraging the online, pitchfork-wielding mob. But at the same time, a single unprofitable release has also been the death knell of many great studios.
As a result, we’ve seen too many studios pursue questionable money grabbing tactics, resulting in the wearing down of the average gamer’s resilience to bullshit. Gamers are increasingly fed up with what they see as greedy, manipulative behavior to extract even more money from their pockets for features and items that, more often than not, are underwhelming at best. As such, many likely see NFTs as just another money-grabbing tactic, especially the gaming veterans who have been weathering this storm for decades now.
One of the biggest gripes of gamers is the loot box/crate, which is an evolution of the baseball trading card packs of the ‘90s, booster packs for Magic: The Gathering, Yu-Gi-Oh, as well as the random loot drop system found in many MMOs.
The mechanism is tried and true: spend money to open an in-game pack, chest, crate, or container, virtual or physical, and you have a very low chance to receive a very rare item that is worth way more than the loot box cost to open, but a very high chance to receive a bunch of junk worth way less than the opening. The result: loot boxes pile up in your inventory, tempting you to spend money to open them by purchasing in-game tokens that often merely exist just to obfuscate their actual dollar worth.
In most games, it takes hundreds of opened loot boxes before one receives a rare item, and even then, unless you get really lucky, you will still likely have lost money, having spent far more than the value of the rare item itself.
Loot boxes, in other words, are akin to lottery tickets, which is gambling. And if it’s in a kid’s game, then it’s gambling aimed at kids.
Governments in Japan, China, UK, The Netherlands, and Belgium seem to agree, deeming some loot boxes to be forms of gambling and introducing legislation that regulates or bans the practice altogether.
Unfortunately, minting NFTs today often works in the exact same way. The most popular form of NFT PFPs today are generative art NFTs. Multiple attributes of varying rarity are randomly mixed together to form a unique character. These NFTs are deemed to be more or less valuable by the market for several reasons, but most notably for the overall rarity of the combined attributes as well as how visually appealing the resulting mix is. Minting these types of NFTs therefore has the exact same mechanic as loot boxes and gamers have seen it all before.
Many gamers are all too aware of economies of digital assets and how they can work too — not just from all the leveling up, acquiring gear, budgeting, planning cities, running farms, starting business and all the other financial decisions that may go into playing games themselves, but due to the participation in the trade of the in-game items too.
Team Fortress 2 created an entire economy around silly hats, and the top CS:GO skins can sell for over $100,000. However, the price of a rare or good looking skin for a weapon that is in the current game weapon loadout meta may crash in price the moment that weapon becomes less popular due to inevitable stat balancing.
Dropped skins from crates in the current campaign can also fall in price when the next campaign comes out months later and there’s a bunch of newer, more exciting skins to acquire. So too with NFTs: when the latest drop comes out it may be the hottest collection trending on OpenSea right now, but there’s always something cooler, newer, more exclusive and with better utility on the horizon and gamers understand this cycle because they’re likely to have already lost money to it.
In addition to the challenges that NFT drops bring with price and value volatility, we’ve seen no shortage of scandals involving game streamers and influencers. Every week there seems to be a new product being marketed to gamers that isn’t in their best interests.
In 2016 there was a massive scandal where two prominent streamers were promoting an unsanctioned marketplace for CS:GO skins without disclosing their own conflicts of interest, not to mention the questionable legality of the entire endeavor. Another time, a streamer was hawking a gamer skincare product with the questionable claims that it would protect gamers from “blue light pollution” emitted from their monitors.
And of course, there was the scandal where a streamer launched his own cryptocurrency, and then promptly sold his entire holdings, crashing the price with over $500k of his fans' money invested in it.
So when NFTs emerged as an offshoot of crypto, and multiple streamers and influencers started to promote them, it was only natural that gamers were already quite wary. One NFT project in particular drew the ire of some of the top Twitch streamers, as it used their faces without their prior permission. As such, the streamers in question were quick to distance themselves from the project and label the whole thing a scam.
And so it should come as no surprise that when the AAA gaming industry started getting involved, and major upcoming titles started announcing that they would be including NFTs in their new releases, gamers made it very clear they didn’t want them.
S.T.A.L.K.E.R. 2: Heart of Chernobyl announced a partnership with DMarket to include NFTs and then canceled it the next day due to the overwhelming backlash. Team17 took only one day to cancel their MetaWorms NFT project, and Discord only took two days to announce the cancellation of their MetaMask integration.
So far in the history of blockchains, for every financial success story, there are countless stories of terrible losses. Gamers have seen the rug-pulls, scams, bear markets, 90% single-day price drops, and the death spiral of many play-to-earn (P2E) games.
The price of NFTs have also experienced a similar roller coaster. There is always a risk that the NFT you buy today may be worth a lot less tomorrow. Many gamers understand this, but more importantly, many still don’t see the actual point in owning NFTs.
This is the clichéd criticism, and it shows that most people don’t really understand NFTs yet and their potential beyond ape profile pictures. We have yet to see mass adoption of NFTs and other web3 technologies, which can’t be blamed on the users, but rather the builders and developers who have failed to create real utility, education, and easy on-ramps for more mainstream audiences to get involved with web3.
Currently, we are at an impasse between NFT P2E games, the majority of which feel like 2005 era flash games with an unnecessary blockchain bolted on that are simply not that fun to play, and an AAA industry that is being held hostage by outraged fans not allowing them to join the NFT party.
Here at Myosin we believe this will change in due time but, for that to happen, web3 game developers need to make some serious changes and ask themselves this hard question:
Is the game actually fun to play, with a user experience that is genuinely enhanced by the inclusion of web3 technologies, or has it simply been made to make the studio lots of money?
Until P2E gameplay experiences are drastically improved, gamers will simply not be interested. Today, far too many web3 games have pointless gameplay, terrible graphics, and endless grinding, with the only reason to play being to try and get more money out than you risked putting in, before the whole thing implodes into a death spiral due to the poorly designed gaming tokenomics.
Pay-to-win (P2W) is an almost universally hated concept among gamers, but there’s a lot of room to create games where NFTs are included, but not as leveling boosters or higher stat weapons for example.
Team Fortress 2, CS:GO, Fortnite and others achieved a huge amount of success by only having purchasable cosmetic items and the ability to attain all weapons fairly through gameplay. Yet with some web3 games, forget P2W — you can’t even start playing without purchasing expensive NFTs first.
On top of all this, we also see onboarding as a major barrier to entry for many mainstream audiences, as setting up crypto wallets can be cumbersome and hard to learn for some. Until onboarding and first time experiences for users are as simple as downloading a new app for your phone and creating a new account with just a few clicks, then web3 gaming can never truly go mainstream.
Good AAA games take years to make and we are only just starting to see the possibilities of emerging web3 technologies. And with time we will no doubt see great games that do get this balance right.
Project Moon by Midnight Society for example is using the utility of NFTs as a founders pass to include its biggest fans and enabling them to contribute to the development process, shaping the game into what they want to play. Shrapnel is using NFTs as beta access passes whilst also planning an entire NFT economy of UGC skins and maps and rewarding the creators based on their popularity with the community.
We are also fortunate at Myosin to be working closely with Fashion League, which is a female-focused fashion eSim game backed by senior leadership at Unity, Animoca Brands, and YGG, which is free to play, but also incorporates NFTs and P2E elements to enhance and improve the game mechanics.
The future of web3-enabled games is coming, but we believe that to execute successfully, developers and builders need to focus on building top notch gaming experiences that are genuinely synergistically enhanced by web3 technologies rather than just cash grabs from the players.
If we can all do that, the future of web3 gaming, the metaverse, and NFTs will be a bright one and something gamers will start to truly embrace.