For many crypto advocates, video games offer one of the clearest use cases for NFTs. They enable a user-owned economy that allows players to resell and potentially profit from digital assets, plus such tokenized, interoperable assets can potentially be used across multiple games and online worlds.
But there is one big problem: a lot of gamers absolutely hate NFTs.
Vocal fans from the traditional gaming world have backed off against companies like Ubisoft and Team17 as they have explored the NFT space, and many see the industry as a hotbed for scams and speculation. The environmental impact of NFTs is also a common complaint, although that argument is basically dead following the recent Merge Ethereum.
In addition, some believe that game publishers will simply use NFTs as another way to extract even more value from players. The impact on NFTs is similar to that against free-to-play games and downloadable add-on content when those respective business models were introduced, and now both are widely accepted industry standards.
Even amid the vitriol, NFT marketplace Magical Eden still sees long-term potential in gaming NFTs. Magic Eden, which was launched a year ago and was valued at $1.6 billion in Juneis the leading marketplace for Solana NFTs and recently expanded to the Ethereum market.
On the last episode of decode‘s gm podcastMagic Eden co-founder and CEO Jack Lu told co-hosts Daniel Roberts and Stephen Graves that, despite player skepticism, he believes NFTs “unlock something completely new for game developers to build an economy.” and build a new business model.”
Magic Eden has supported a wide variety of NFT-based gaming projects through both the launchpad feature and the secondary market, including upcoming titles such as SkateX, Mini Royale: Nationsand BR1: Battle Royale.
In July, the company launched a gaming-focused venture investment arm with the aim of luring game developers to Magic Eden. Part of the market’s approach is to build simple integrations so developers can put the Magic Eden platform into their games. That way, users can buy and sell NFTs without leaving the in-game experience.
Lu admitted that there is “so much to unpack” around gamers’ perceptions of NFTs, including the presence of bad players in the industry and the increasing financialization of digital assets. As a burgeoning space built around decentralized technology, it’s also no surprise that many early NFT-powered games were simplistic and fell short of some players’ expectations.
The Ethereum-based Axie Infinityis, for example, the biggest success story in space with over $4 billion in NFT trading volume, and millions of active players at their peak last year. But the monster fighting gameplay was also criticized for its repetitive nature, and the games economy to earn collapsed amid the growing hype. Also, the game’s Ethereum bridge has been hacked for over $600 million in crypto.
As more and more experienced game developers enter the Web3 space and start building, we may see richer NFT-powered experiences in the offing, but it may take some time. Large-scale video games often take years to build and are supported by large development teams.
Lu said his team is “waiting for a few diamonds, to shine” — that is, great games that showcase NFT functionality — to help spread adoption in the gaming industry.
“It takes a lot of time to build great games – it takes vision, inspiration and a lot of development time to build so much content,” he explains. “We’re basically waiting for the most promising game studios to have time to build out their content, and then figure out the secret sauce of how NFTs can be used in it.”
Lu suggested that once a few of those so-called diamonds hit the market and thrive, they’ll serve as a “case study” to push other developers into the NFT space. He described it as a potential “tidal wave following past paradigm shifts” in the gaming world, such as the shift to free-to-play games.
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