Major Game Studios Still Aren’t Sold on NFTs

The proliferation of blockchain-based games including Alien Worlds, Splinterlands or Axie Infinity shows no signs of slowing down. However, the larger video gaming industry is conflicted when it comes to supporting play-and-earn crypto mechanics and NFTs.

Almost all major game publishers now have blockchain development teams, but they are struggling to reconcile their traditional business approach with blockchain and its role in the future of games.

Some studios such as Ubisoft and its QuartzDigits platform allows players to buy and sell items for games such as Ghost Recon Breakpoint. And Fortnite developer Epic Games recently listed its first NFT title, Mythical Games’ Blankos Block Party, on its game store.

Microsoft even offered blockchain-as-a-service within Azure for almost a decade before offloading their existing customers to ConsenSys Quorum last year.

But others are taking the opposite approach. Video game distributor Steam banned all games that allowed NFT and crypto trades last year. Gabe Newell, president and co-founder of Steam’s parent company Valve, cited crypto’s volatility and the bad actors existing in the NFT space as its motivations.

The latest studio to oppose GameFi is Take-Two Interactive, parent company to Grand Theft Auto (GTA) creator Rockstar Games.

Rockstar recently updated the user guidelines for its third-party or role-playing servers, effectively banning the buying and selling of crypto and NFTs.

The new measures affected unofficial Grand Theft Auto Online (GTAO) servers that may not have been supervised by Rockstar or approved to trade digital assets — for example, the Trenches server set up by a rapper named Lil Durk on GTA 5, which sold loot boxes, in-game properties and vehicles.

Following a cease-and-desist order from Rockstar, Trenches tweeted it “had no choice but to comply with their demands” and shut down.

Commenting on the case, a spokesperson from blockchain gaming platform Enjin told Blockworks that they are “disappointed that a cease and desist letter answered a transparent, good faith experiment with blockchain-based models.” Their hope is that “genuine dialogue” opens up with the goal of developing new user experiences.

In a similar move earlier this year, Minecraft developer Mojang banned NFT support inside Minecraft client and server applications. Minecraft is not a blockchain based platform, but some server owners were creating unofficial Minecraft NFTs and some NFT metaverse projects, such as NFT Worlds and TheUplift World, which were built on top of Minecraft.

Gamers will always find a way around restrictions, however, and the metaverse company MyMetaverse was able to re-implement playable NFTs not only on Minecraft game servers, but also on modified versions of GTAO for the past few months.

It used NFTs running on Efinity, a Polkadot parachain developed by gaming platform Enjin to give GTAO and Minecraft players a role-playing experience with gaming NFTs.

Microsoft had an early partnership with Enjin to enable NFTs for Minecraft, but aside from engaging players, Microsoft saw no direct benefit, according to Don Norbury, current chief technology officer at Neon, the publisher behind Shrapnel. So the decision to shut it down can be chalked up to optics.

Now that Take-Two Interactive has also officially enforced its ban, the fate of servers like these is unknown. Norbury, who has worked at both Take-Two Interactive and Microsoft for a combined decade, told Blockworks the companies may just not yet know what to do with the technology.

“Take-Two/Rockstar/GTA clearly doesn’t hate NFTs or crypto — nor does Microsoft/Minecraft,” he said. The primary issue, he suggested, is that Rockstar and Microsoft don’t make any direct revenue from NFTs.

“It’s akin to launching a game in the Apple App Store and circumventing their requirements for platform transaction fees,” Norbury said, adding that a formalized partnership with MyMetaverse might solve the revenue problem, but that the “secondary issue for these companies is optics, strategy and regulation.”

He is referring to the fact that Take-Two Interactive, Rockstar and Microsoft are all “enormous” publicly traded companies that “must appease consumers and shareholders alike.”

“Suddenly incorporating NFTs into their product risks alienating a large portion of their users,” Norbury said, referring to the apprehension shown by some gamers.

It comes down to “incompatible business strategies” and “internal dissonance.”

“[These companies] know blockchain is the future for games with interesting economies/trading/ownership, but they want to maintain their old approach to modeling project funding, design, economy, and marketing.” Norbury added.

Nevertheless, the money from venture capital being raised for blockchain games and metaverse projects isn’t slowing down. Over the October and November, the gaming market raised $534 million in funding, according to DappRadar.

In-game NFTs had a total trading volume of $55 million in the past two months, DappRadar said, with the Gods Unchained game generating 60% of the total trading volume for game assets. DappRadar calls the industry “resilient” despite the collapse of FTX and cites the impact on the NFT market.

Now it’s up to major game publishers to decide whether or not to go about adopting blockchain as a foundational technology and business model.

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