Non-fungible tokens (NFTs) have entered the cultural mainstream – they are all over the media landscape, specially if we talk about NFTs in the gaming industry. This new tool for determining ownership of digital property using blockchain technology quickly became a hot topic. From art auctions to in-game cosmetics, in 2022 you cannot escape NFTs.
The gaming industry is no exception. NFTs are changing online gaming and the buying and selling of in-game assets. In this article, you will find out more about its history, the pros and cons of NFTs, the top games, and what the future may bring.
What are NFTs?
The distinction between NFTs and other micro-transactions needs to be clearly defined. Within the gaming space, NFTs are unique in-game items that can be owned and sold to other players – or even carried by players between games -, as well as being used to unlock characters or levels. The in-game item can exist beyond the lifespan of the game and retain value as long as there is demand.
With NFTs, the digital items inside video games, such as collectibles and weapons, become real-world assets. This is in contrast to today, where the games companies own these items and can take them away at any time. It also represents a far more equitable business model. Some even say it represents the next level of in-app purchases.
Although there are advantages of using NFTs in the gaming industry, there are also challenges. For example, NFTs will have to be more appealing and intuitive to general consumers, who aren’t necessarily tech-savvy.
How did everything start?
You might be wondering how it all began. The game considered by many as the first NFT game is Etheria. Back in 2015, it started to sell digital land as an NFT. In the beginning, Etheria offered land parcels for sale for one ETH, which was less than one USD at the time. But then, in 2021, the company sold a parcel for an astonishing amount, 70 ETH, equivalent to over $130,000 USD.
CryptoKitties, commonly regarded as the second NFT game ever created, came out in 2017. And they generated a lot of interest in NFTs in the general media. The game is centered around breedable, collectible figures, and these adorable creatures were a revolution in the industry.
NFTs and the rise of play-to-earn
Some adore NFTs and others believe it’s just a fever pitch. But the industry has long designed digital assets and sold them inside games. Indeed, the key distinction between an NFT and the downloadable content we’ve been buying for years is the blockchain. If the trend for such transactions moves toward the blockchain, that’s where the companies will go.
There is still some discussion how the value proposition of decentralization can be embraced by players. This new era would set new forms of player value in games, while also transforming how players interact with each other, by providing an integrated experience that enables players to become owners in their gaming journey.
Will the era of play-to-earn (P2E) games become a decisive evolution in video game history? Whether NFTs in the gaming industry become a lasting trend depends on the gamers. The decision is in their playing hands, and then the market will answer.
The big players enter the scene
A survey from Stratis revealed an overwhelming appetite for blockchain and NFTs. 47% of 197 video game developers surveyed in the US and UK have already incorporated NFTs in their games, and 72% said they would consider using them.
Companies such as EA Sports are eyeing NFTs as potential fresh revenue, and the overall interest in NFTs in the gaming industry doesn’t seem to be wavering. According to DappRadar, gaming-related NFTs generated $4.8 billion of revenue in 2021. They represented roughly 20% of all NFT sales during last year, which includes popular items such as NBA Top Shot and CryptoPunks.
Even major crypto exchanges like Binance or Coinbase are launching their NFT marketplaces. Chris Trew, CEO of Stratis, said that with platforms like Epic welcoming blockchain-based games and NFTs, it’s expected that AAA studios will launch titles in the coming years. However, many indie game developers will get there first.
Are NFTs like the Internet in the early 90s and digital music in the late 90s? Maybe. Once again, early adopters take some risks, but if history is our guide, they could be the ones profiting from this new digital ownership model.