Tuesday, May 10, 2022
Blockchain games up to now have been a complete failure. The most successful one, Axie Infinity, is basically a pyramid scheme preying on people in less developed countries. Ubisoft's venture into this area has been a PR disaster. And Square Enix has been widely ridiculed for selling of valuable intellectual property to invest in blockchain gaming. I always find it astonishing how quickly people forget about rather recent history, and are unable to learn lessons from it. Because what I learned from years of MMO gaming is that yes, blockchain games *could* be a massive hit, if certain conditions were met.
If you go through the now nearly 20 years of archives on this blog, you will find numerous blog posts about people spending real money on virtual items in MMORPGs. For years this was a kind of a war, where developers would try to prevent players from trading virtual goods, and players would try to do it anyway. The prevention of trade is the reason why your raid epics are "bound" to the character that picked them up. There is strong historical evidence that if players care very much for a game, and there are items in that game that make your character stronger, these players will be willing to pay real money for those items.
With blockchain technology, each item in the game can be a non-fungible token NFT that can be freely and safely traded between players using the crypto currency used on that blockchain. With the devs now in on it, the game can be designed to be real-money trade friendly.
So what about the examples of the failed NFT games? Well, any such game need to answer the question where all that money is coming from. If *everybody* in the game is just in it for the money, because the game itself just sucks, this can't work. You need some players who want to sell virtual goods, because they like money, and some players who want to buy virtual goods, because they want those goods for their characters. And that is where the Ubisoft Digits went wrong: They were just cosmetic items in a game with just a 58 Metacritic rating.
But if you apply the technology to a more popular game, and you make all items in the game NFT, not only the cosmetic ones, there will be demand, and there will be trade. There was demand, and trade, in games that tried to restrict RMT, so if you remove those restrictions, the trade will flourish. Of course, strictly speaking, if you buy the Sword of Uberness from another player instead of getting it from a lootbox, this is still Pay2Win. But I have a sneaking suspicion that the hardcore gamers will be surprisingly quiet about that, because they will be earning good money from that.
Have blockchain games up to now been horribly bad? Yes! Is that an inherent feature? No! As soon as somebody makes an actually good game that allows players to trade virtual items via the blockchain, that could become quite popular and profitable. Maybe Square Enix is onto something. Or it will be somebody else who makes the first actually good blockchain game. But the idea isn't unworkable: There is a lot more intrinsic demand for powerful items in virtual worlds than there is intrinsic demand for pictures of bored apes. Analysts found that only a very small number of people actually trades NFTs, and most of those trades are "wash trades", faked to make an NFT appear more profitable. Virtual items in games will certainly not be worth millions, but there could be actual demand from a much broader base for them.