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Thursday, February 29, 2024

Not Everyone Wants NFTs to Be the Future of Gaming

It’s hard to walk through your door without tripping over a new blockchain-based platform, and gaming is no exception. Game publisher Ubisoft has pounced on the trend with Quartz, a platform meant to facilitate NFTs in the company’s games, while startups like Forte and Mythical have burst onto the scene with funding in the hundreds of millions of dollars.

Numbers like that suggest enthusiasm, but the response from gamers has been mixed, to say the least. To find out why, I spoke with Tim Morten, the CEO and cofounder of Frost Giant Studios. Morten was previously production director for Blizzard’s StarCraft II, where he oversaw the game’s transition to free-to-play and the release of Legacy of the Void, the game’s final expansion.

Morten is not entirely dismissive of blockchain’s future in gaming—but he thinks there could be a few problems.

Play-to-Earn Is Not a Free Ride

The buzz surrounding blockchain games was boosted by the rise of “play-to-earn" titles like Axie Infinity. Like the popular Pokémon franchise, Axie lets players collect, trade, breed, and battle cute digital creatures. Players earn cryptocurrency by trading creatures or an item—“Smooth Love Potion”—required to breed new Axie. For a time, players were able to earn more than some countries' minimum wage, though that changed as the value of the game’s cryptocurrency tumbled.

Morten is uneasy about play-to-earn even when it might allow some players to earn a meaningful wage. “I’m not interested in building games to be a grind for someone in a third-world country to make a living,” he said in a video interview. “That sounds kind of dystopian to me, to have an economy where people who are struggling to make a living are playing a game just to get by.”

Play-to-earn also raises tough questions about a game’s economy. Balancing a virtual economy is difficult enough without tying it to a cryptocurrency that has volatile real-world value. “Maybe someone comes up with a way to make a great game that also throws off money for players, but I think that begs the question of where the money comes from,” says Morten.

So far, the answer to that question is usually the players. Most blockchain-based games ask players to buy in with the purchase of a creature or item, and the developer typically takes a small cut from each transaction.

Morten sees this model as “dangerously close to a pyramid scheme.” Blockchain games using this model are healthy when their popularity is increasing but run into trouble after it peaks. Less interest means a lower valuation for the game’s token, which leads to lower player earnings, which further sinks the game’s popularity. It’s a vicious cycle.

This problem is exacerbated by the fact that games naturally see a sharp burst in interest at release followed by an inevitable decline. “A game’s population is not constantly growing,” says Morten. “Game populations peak and then go down. So I have a lot of concerns about the long-term viability of play-to-earn.”

NFTs for Esports, Payments, and Bragging Rights

Of course, play-to-earn is only one fork of blockchain-based gaming. Publishers like Ubisoft want to explore the idea from a different angle, positioning NFTs like badges, skins, and cosmetic items as a way for players to tout their status.

In-game rewards are familiar territory for Morten. StarCraft II was a mainstay of the esports scene for years after its release, and players who won tournaments often received an in-game badge as a sign of their accomplishment. “I see trophies as bragging rights,” says Morten. “That’s a powerful thing. I certainly enjoy being able to demonstrate when I do something cool in the game.”

NFTs promise players a chance to own and trade trophies, badges, and other signs of achievement, but Morten is unsure players would be as eager to trade such accomplishments. “I currently think the value of that is in-game,” says Morten. “Maybe, someday, we can have our friends over to our virtual metaverse trophy room. But that day is not today.” Owning a tradable NFT of a tournament trophy strikes him as especially odd, since trophies are meant to be proof of a player’s achievement.

There is another, more direct way the blockchain might prove useful for gaming: payouts. Distributing cash to esports competitors is not a trivial task. A tournament’s organizer must find funding for the pool, obtain the funding, securely hold the cash, and then pay out the winnings while complying with local regulations.

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“The benefit is just the simplicity of the payout,” says Morten. “If we want to make a cash payment, there are regional tax laws we have to think about, and so on.” Morten thinks cryptocurrency could be especially useful for smaller tournaments. In concept, players might contribute to a prize pool with cryptocurrency and be paid out in the same.

But here, too, issues can arise, which is why Frost Giant Studios has no plans to use cryptocurrency for tournaments.

Transactions on the blockchain are (usually) immutable, leaving no room for error. If a tournament makes a payout to the wrong competitor or rewards the wrong NFT, the transaction can only be reversed by rolling back the entire blockchain ledger, a difficult solution that can have its own problems. A bug or hack could permanently change a game’s economy or esports scene forever. That’s enough to keep any game developer up at night.

What Does a Great Esports Platform Look Like?

Morten is clear: Frost Giant Studios will not be using the blockchain in its upcoming, untitled real-time strategy game. But if not the blockchain, what will a next-gen esports experience offer?

“There’s a disconnect historically between participating in esports and playing the game,” says Morten. StarCraft II, like most games that encourage an esports scene, tracks player performance and assigns each player a rank after a batch of test games. Ranking is used to match players of similar skill and gives the most competitive players a goal to chase.

Yet the connection between a game’s ranking system and its esports scene is usually thin. The ecosystem of tournaments, teams, and sponsors that grow around a successful competitive game exists outside the game itself.

A few titles have made efforts to bring events partially in-house: StarCraft II added an automated tournament system with its last expansion, Legacy of the Void, and League of Legends has a similar system called Clash. But these function more as a training ground for players looking to grow their skills and as an easy way for amateur players to gain tournament experience. Those looking for a “path to pro” must find that path outside the game itself.

“[We want to bring] all of this into the game client,” says Morten. “We want to give tournament organizers an opportunity to organize tournaments in the client, expose them to players, and for players to seamlessly go from playing the game to participating in those tournaments.”

Clearly, Frost Giant Studios has a vision for modern esports platforms. When asked, however, Morten says the studio’s esports efforts remain fixed on supporting the success of its upcoming RTS. The studio hasn’t announced plans to sell its esports platform to other developers.

This focus on the studio’s unannounced game reinforces its skepticism about blockchain. Morten sees how blockchain could have potential, at least in theory, but he believes its use is mostly driven by financial incentives, not entertainment.

“That’s a valid thing, but not our goal,” says Morten. “Our goal is to make our players happy.”


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