Integrating NFTs into Games Today

Web3 seems to be taking the world by storm with no intentions of slowing down. Despite the crypto market dip, there’s still a lot of activity going on in the web3 world; from inventions to discovering methods of integrating into our normal lives.

One of such discoveries is integrating Non-Fungible Tokens into games. Non-fungible tokens (NFTs) in the context of gaming are digital assets representing game content. These tokens are unique, rare, and indivisible, and the blockchain network underlying them facilitates player-ownership, provable scarcity, interoperability, and immutability. Taken together, these benefits have the potential to drive mainstream acceptance and fairer value models.

It’s not difficult to imagine what inspired this. The global gaming industry generates revenue in three submarkets: mobile, PC, and console gaming, which together are worth hundreds of billions of dollars and continue to grow. While established players in the industry are benefiting from this strong growth, these players are not creating lasting value for themselves. After purchasing an expensive console, PC or mobile device, players enter a gaming environment that provides a graded user experience. In these traditional games, money flows in one direction: players have to spend money to access game content and exclusive features.

By contrast, blockchain-based games — many of which are decentralized applications (dApps) — are more focused on creating value for players. This dynamic is creating a model shift that allows players to better harness the utility and value of assets acquired through in-game purchases, regular play or promotions. For example, if players buys an in-game item in a traditional game, their only benefit is improved gameplay in the context of that game. However, in gaming ecosystems that use cross-platform non-fungible tokens (NFTs), the same in-game item can be tokenized by converting in-game purchases into transferable assets that provide revenue for connected games, or can be redeemed for into cash or other digital assets.

Proposed Benefits of Integrating NFTs into Games

1. Cross-functionality of tokens: Games built on the blockchain would have tokens or in-game items that are interoperable across games hosted on said blockchain.
2. Investments: NFTs in games can function as an investment. A token purchased in a game could become valuable if the game popularity increases or the token type becomes scarce. In situations like that, they can be sold to earn a profit.
3. Sales outside the game: NFTs in games built on the blockchain can be sold separate from the game. This is because they use blockchain technology, and can therefore be sold in NFT markets on the blockchain.
4. Provable scarcity: Rarity of an item an be easily proven by the distributed public ledger that is the blockchain hosting these games. Collectors are interested in rarity and authenticity, and records of these can easily be accessed.
5. Ownership and Permanence: An integral feature of blockchain is that it grants people?ownership. The in-game items purchased by a gamer belongs to the gamer and not the game developers. As such, it can be traded by the gamer and in the event that the game shuts down, the NFTs remain. This is because a purchase of an NFT is registered on the blockchain and is almost immutable.

Arguments Raised by this Concept

1. Technical knowledge is needed: A regular Joe who loves games would need to have some crypto/wallets/basic NFT knowledge to enjoy the gaming experience.

Counter-argument: This doesn’t necessarily have to be a bad thing. Every new technology needs to be learned. In this case, it’s not necessary to become a NFT geek or savant. The basics can be easily understood by an average person.

2.?Speculative assets:?Another concern is that in-game items would be viewed as assets for trading, and won’t be used or enjoyed in the game as intended. By extension, there’s a risk that the games would be predominantly for investors and people with crypto interest and not gamers.

Counter-argument: While the former is a valid risk/concern, there is something we must remember.

The games industry has long created?digital assets and sold them inside games.”

This was said by Michael Pachter, a video game analyst with Wedbush Securities. “If the trend for such transactions moves toward the blockchain”,?Pachter said, “that’s where the big companies will go”.

The bone of contention here is if the gaming industry is ready to accept the integration of NFTs into games. Widely, there’s a lot of animosity towards the idea of NFT-ing video games. Gamers popularly speak up against it on?Reddit?and there’s a?game that became popular because it makes mockery of tech companies and their plans to take over.

To be fair, gamers have never liked the idea of needing to make purchases of in-game items. They’re perceived as obstacles in the way of enjoying the gaming experience. Developers have long?made money?off gamers by selling upgrades and other microtransactions. The concept of blockchain-hosted games with NFTs is paying to play. While the game developers claim that there are benefits after purchasing these tokens, it’s easy to understand why gamers view it as another capitalist movement.

It can also be observed that there is a dichotomy between how NFT gaming is perceived depending on if it’s a gaming powerhouse that’s leaning towards blockchain technology or web-3 projects leaning into gaming. The former is usually met with more?animosity?while the latter receives more?positive remarks. This phenomenon can be explained by understanding the?industries. The gaming industry is expected to come up with more games that are up-to-par with the overall gaming market. On the other hand, web3 is a new space being explored and every tiny step forward is celebrated.

The?industries?argument also explains why it’s been difficult for NFTs to be accepted by gamers. Mark Venturelli, a Brazilian game developer, summed it up when?he said?web3 game developers are outsiders that need “to buy their relevance because they have no actual influence over the future of our industry.” This is a discussion worth having because it can change the game entirely (pun intended). Blockchain companies know a lot about NFTs and they have no influence over the gaming industry while gaming companies know a lot about gaming but are frowned upon when taking steps into blockchain. The middle ground between them is what needs to be explored. There should exist more partnerships between both sides of the party. Collaboration should be encouraged, and maybe then, more headway would be made in this space.

There’s a number of NFT games available now. Some of them are free to use and play-to-earn (eg.?Decentraland) while some have more conscious purposes (eg.?Zeeds). While they already have gained some traction, there’s still a long way to go and it’ll take a lot of time and effort.

As I always say when ending these articles, the web3 space is fairly new technology. As it is with new technology, mass adoption takes time and there’s a lot of trial and error. We’re at the frontiers of a new dispensation, and we’re not sure yet how that looks like when it’s fully birthed. Will NFTs in games become the new norm? We can only wait to see.