On July 3rd, we published an article on IGN JAPAN titled “Why Do Gamers Hate NFTs?” by our freelance writer Nobuaki Shibuya. It became the second most read article on our site this month.
As Shibuya writes in his article, Japan has not yet seen a large influx of NFT related content in video games. But the trend is growing in the West, and the strong response from IGN Japan readers suggests that the Japanese gaming community is following these developments with interest.
But why to do gamers hate NFTs? Which Japanese companies do they use? And what to be NFTs right?
What exactly are NFTs?
NFT stands for “non-fungible token”, in this case used to denote a digital code that proves ownership of a digital product.
These digital NFT codes have been particularly associated with the art world, with video games following closely. At first glance, the concept provides a way to sell and resell completely unique digital items with a clear line of ownership captured in the blockchain, much like you would trade the deeds of a house.
The main intended benefits are that creators can create and sell one-time creations with unique value and be paid accordingly. And the second benefit is that speculators can buy one-time digital items that may or may not increase in value — and that are salable.
As a common example, you’ve probably seen JPEG images of a monkey in a hat, available in hundreds of minor variations and sold at a higher price because they’re “unique.”
Buyer pay attention
Except, of course, in the case of a work of art or an in-game item, a digital thing is inherently copyable. Haters of NFTs – and there are many – are quick to exclaim that a JPEG image ownership certificate isn’t worth the binary it’s printed on, because anyone can copy a JPEG with the right mouse button. Unlike a home, where the title deeds prove ownership of a single physical building, NFTs are more like buying a receipt, not the product itself.
As our writer Shibuya points out in his article, ownership of such tokens does not currently indicate legal ownership of the data to which it relates in any country on Earth. Buyer beware, indeed.
In gaming, the introduction of NFTs generally meant infinitesimal custom in-game items sold by the game publishers as a means for players to show their individuality. But while these items may be technically unique, they are such minor variations and offer so little meaningful gameplay terms that players have largely mocked them.
Ubisoft proved this with its disastrously received Ghost Recon Breakpoint NFTs, where players could purchase digital pants and other items for their game character, decorated with a unique serial number. And other games have had a similar fate.
The situation is soured by the fact that many, many of those pushing NFTs are simply out to make a quick profit, in the same general Web 3.0 bucket as cryptocurrency miners and vague proponents of the metaverse.
The level of trust in these emerging technologies is understandably very low. There’s something very…icky about it.
Bypassing the ‘Lootbox’ and ‘Gacha’ Systems
The opposition among gamers has not been subtle. When GSC Game World announced that its game STALKER 2: Heart of Chornobyl would support in-game NFTs, there was such a frenzy on social media that it rolled back and canceled plans within 24 hours.
The same has happened to Team 17 and its plans for an NFT art series based on the classic Worms game franchise. And others too.
So why to do gamers hate NFTs? First of all, our writer argues that this is because gamers are naturally tech-savvy.
In gaming, the sale of digital items itself is nothing new – from the games themselves to the in-game items sold by publishers and even members of the community, we’re constantly buying ethereal digital stuff.
We happily spend money on a skin that makes our Fortnite character look like Captain America, or we buy additional content for our favorite games. We understand the pros and cons of freemium and free-to-play, and we know which games do it in a way that benefits players (Fortnite, Apex Legends, Fall Guys, and many more) and which are a scam.
Because of this, we’ve seen the controversies over and over: loot box and “gacha” systems encouraging players to spend real money on randomized items, with countries across Europe advocating regulation to prevent looting:
- Additional purchases that simply unlock content already on the disc randomly remained unavailable to the player until they paid for it.
- Digital game purchases that come with licenses that do not give the player legal ownership of their copy of the game.
And so on. We can smell a digital scam, and NFTs definitely stink of it.
Smart gamers vs crypto greed
Shibuya also gives other reasons, from how crypto mining has caused global shortages of PC components (it’s complicated) to concerns about the impact of energy-intensive blockchain technology on global warming.
I would say another reason is that despite all this negativity from the gaming public, the gaming companies still continue to invest in NFTs.
Game companies have tried several inventive ways to implement NFTs, but none of them benefit the players – they don’t make the games more fun or interesting. They only serve to make the publishers more money. And the only people they want are the publishers and the NFT speculators.
Gamers say “No F-ing Thanks!” to NFTs, but they force them down our throats anyway. So of course we’re going to hate them even more.
Opposite to gaming
The article from IGN Japan includes a quote from Gabe Newell, the founder of leading PC gaming platform Steam, in an interview with Rock Paper Shotgun. In it, he says his company Valve discovered that in games with NFTs “half of all transactions turn out to be fraudulent transactions”.
Newell cites this as one of the reasons Steam has introduced an outright ban on NFTs in games on its platform.
“Half of all transactions turn out to be fraudulent transactions”
Xbox has hinted at similar policies against NFTs. And while Nintendo and PlayStation haven’t commented yet, Shibuya points out that the existence of a decentralized blockchain system contradicts the extremely centralized operations of a gaming platform.
Square Enix still interested
As far as Japanese game companies go, Square Enix – the massive publisher and developer behind Final Fantasy and Dragon Quest – has shown great interest in NFTs and related technology.
Yosuke Matsuda, president of Square Enix, told investors in a New Year’s greeting that he expects NFTs to “become as trusted as transactions in physical goods.” Indeed, the company has already tested NFTs with its own Million Arthur series as a proof of concept. The company is now preparing to sell physical and digital figurine sets of its flagship Final Fantasy characters with an NFT in addition to a real action figure.
Earlier this year, Square Enix sold its Western development studios Crystal Dynamics, Eidos-Montréal and Square Enix Montréal to Swedish publisher Embracer Group for a shockingly low $300 million. By parting ways with IP like the legendary Tomb Raider franchise, Square Enix announced it would use the money to invest in blockchain (the digital ledgers in which NFTs are recorded), as well as AI and cloud technology.
Game companies are, of course, technology companies, and it makes sense that a major game company like Square Enix would want to explore these emerging technologies. But the idea that investing in NFTs is more valuable to this giant publisher than nurturing a beloved series like Tomb Raider has alarmed many.
Konami’s move
Meanwhile, Konami – the publisher behind Metal Gear Solid – auctioned off $160,000 worth of NFT items in 2021 to mark the 35th anniversary of its classic Castlevania series.
The publisher hasn’t made a new Castlevania game in years, so to see it instead celebrate the anniversary of the series by hitting NFTs, many fans were disappointed. The move was even criticized by outspoken PlatinumGames developer Hideki Kamiya, who noted that NFTs “have no benefit to users at the moment,” before quipped, “If it smells like money, Konami will be there!”
Legal clouds, but money talks
Sega, who had considered entering the NFT realm, now appears to be reassessing its plans after observing the negative public reaction surrounding NFTs. The company’s official statement says it is considering “what will and will not be accepted by users” before going ahead with its original plans.
Indeed, there is still some debate about the legality in Japan of games that use NFTs in conjunction with “gacha” mechanics, where games offer a random prize payout. If the prizes in question are NFTs and thus have monetary value, they may violate Japan’s strict gambling laws.
That said, our writer points out that programs like those from Square Enix and Konami are much more Western-oriented. He writes, “Japanese game companies do not openly advertise NFTs to Japanese users, and Japanese gamers are still indifferent to NFTs.”
But winter is coming. I think it’s inevitable that these Web 3.0 trends will continue to grow and spread to Japan, just like everywhere else. Trends like these are partly driven by the market, yes, but also by the investors in the market.
Money talks, and if game publishers feel they have an interest in making NFTs work, they will eventually. Whether they can also make it beneficial for gamers is another matter. But as the interest in our article suggests, Japanese gamers will have to pay attention soon enough.
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Daniel Robson is editor-in-chief of the video game news site IGN Japan. Read his series Gamers World on JAPAN Forward, and find it at Twitter here.
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