On the last couple of years, NFTs (Non-Fungible Tokens) have surged, creating large markets and new fairer playing fields for gamers. NFTs in gaming can unlock and add value to gameplay already experienced. The idea that players can earn money from a game is not new, but NFTs are more secure and flexible. Gamers are used to buying in-game items through microtransactions and season passes. NFTs place more power in players hands, and will enable them to sell items, and even earn a percentage from future resales. NFT gaming can also embrace the ownership players could bring. Speaking about interoperability, a NFT collectible can be used across many or all games. The NFT is held on a blockchain, its data and ownership tracked and is above corruption, which means it can easily be transferred across games sharing the same blockchain. Besides, it’s all about building connections. NFT games will mix real and virtual worlds, with clothes and goods extracted from games to make them physical. Games will be one part of the metaverse, and NFTs will be the glue that links them to other parts of our connected, digital future. Video games could be the heart of the metaverse, linking fashion, music, art and events. Brands are already racing to enter current ‘metaverse’ games. The metaverse is already happening, and NFTs will make it easier and faster. But let’s analyze this from the beginning to better understand how NFTs can be inserted into gaming.
WHAT’S AN NFT?
A non-fungible token (NFT) is a unit of cryptographic data that is stored on a blockchain. NFTs can be transferred, sold, and traded, and each one is unique and individually identifiable. These tokens can be associated with real-world items, digital goods, images, audio, art, and more. Enthusiasts believe that NFTs give rights and ownership to creators and holders, allowing them to profit from creating or owning the asset.
For example, creators can easily enforce the Digital Millennium Copyright Act, since it’s very easy to prove ownership of an NFT. They can also earn an income by taking a percentage from every sale of their NFTs on the secondary market. When it comes to owners, they can receive commercial and ownership rights if they purchase an NFT. If an NFT collection becomes popular, they can profit from licensing their NFT to others for commercial purposes or create a merchandise collection based on their NFT.
HOW NFTS ARE CURRENTLY BEING USED IN GAMES?
In December 2021, Ubisoft debuted the Quartz NFT platform, which allows players in the game Ghost Recon Breakpoint to buy (or acquire) unique gear in the form of NFTs (called Digits). Another example is Axie Infinity (the most successful NFT game, with 3 million players and in-game items valued at USD 2.26 billion), a Play-to-Earn game where players can own, trade, breed, and battle Axies, which are NFTs on the Ethereum blockchain. In this case, players use their Axies to battle against the AI in Player-vs-Environment (PvE) or against other players in Player-vs-Player (PvP) combat. In return for winning battles, they earn the crypto token Smooth Love Potion (SLP), which can be traded and is needed to breed new Axies. The Sandbox is another game where NFTs have already been implemented. In this game, players can use NFTs on the Ethereum blockchain to build their own virtual world. The Sandbox and Axie Infinity are two of the most popular NFT games in the crypto space.
THE RIGHT WAY TO IMPLEMENT NFTS INTO GAMING
If developers plan on implementing NFTs into traditional gaming, they should be looking at past examples of how digital goods were traded between players. A good example may be CS:GO skins. Skins, often known as finishes, are a Counter-Strike: Global Offensive (CS:GO) feature that was introduced in the Arms Deal update. They are in-game weapons with various textures that can be equipped. They are purely decorative and have no purpose in the game. These skins can be obtained in a variety of ways, including winning them via random drops, trading with other players, and purchasing them on the Steam Market. CS:GO has millions of monthly active players, thanks in large part to the game’s Esports prominence. Although the skins are virtual cosmetic items, they have a very real monetary worth that is decided by the CS:GO economy. Why are these skins so popular? One reason is Esports gambling. Spectators like betting on games in Esports, just as they do in conventional sports. A slew of companies have cropped up around CS:GO, utilizing the Steam API to allow players to wager on Esports contests using the in-game skins. When players place bets, the skins are transferred to a bot-controlled Steam account owned by the third-party service the player is using when they place a wager with them. If the player wins, they get their skins back, as well as the skins wagered by the losing players. The winning player can then resell those skins for a profit, either on the Steam Market or on a third-party website. Another major reason is item rarity and high demand, with “Legendary Skins” going for over USD 1,000 due to their very low drop rates.
So what do CS:GO skins have in common with NFTs? Some skins are very scarce with a limited supply. They’re easily tradable between players. In this sense, game developers can tap into the Esports industry to drive engagement, possibly by offering NFT skins as a reward. They could build a marketplace for players to trade their NFT skins. Monetization is possible by charging a small trading fee for trades on the marketplace. Developers can also have special tournaments where players can stake their NFTs, with the winner taking the staked NFTs.
HOW NFTS SHOULD BE USED IN TRADITIONAL GAMING?
Game developers should always take a gameplay-first approach when it comes to NFT gaming. Due to its massive popularity, many corporations have been scrambling to make “metaverse” and “NFT” games, focusing more on flashy buzzwords and poorly implemented, blockchain-based gameplay elements. Some corporations are creating NFTs and trying to build a game around it, instead of creating a game and adding NFT functionality.
There are better ways to implement NFTs into gaming and this includes the following five ideas:
a) Use a Free-to-Play model. Free-to-play gaming models reduce the barrier to entry drastically for gamers. At the very least, they don’t make it a requirement for players to own expensive NFTs in order to play the game. In fact, cosmetic items might be the best use case for in-game NFTs. That’s how the popular Battle Royale game Fortnite makes money, with players spending USD 50 million on only one set of Fortnite Players shouldn’t feel restricted when trying to play a game. That’s why sticking to cosmetics is one of the best ways to add NFTs into traditional gaming, since cosmetics serve no purpose apart from allowing players to stand out visually.
b) Airdrop NFTs to players. Game developers can airdrop NFTs of varying rarity to players. These can be a reward for reaching a certain level, completing certain objectives, or as part of an event (Christmas, Halloween, etc.). These airdrops could increase player engagement and loyalty, plus if players get their hands on some rare drops, game studios can make some bank when those rare NFTs are traded (due to trading fees or built-in royalty fees).
c) Use tournaments to drive engagement. Esports is one of the biggest gaming industries, with over 474 million people tuning in to watch gamers compete. Game developers can create tournaments with rare NFT skin prizes. Tournaments can also have a wagering aspect to them; for example, with players staking their NFTs to enter a particular tournament or battle, with the winner taking all of the staked NFTs from the losers.
d) Build a marketplace. Game developers can build a marketplace for players to easily trade their NFT skins, again helping to drive engagement. This can also act as an additional revenue stream due to trading fees and exclusive NFT releases.
e) Create a wallet or integrations for popular wallets. Finally, a good idea is having built-in integrations for popular NFT wallets or an in-house wallet to make it easier for players to manage, trade, buy and sell their NFTs.