The gaming industry is worth over $180 billion—and this behemoth is rapidly growing, with no signs of slowing down. As the gaming industry grows, it’s also an early adopter of many hot new technologies, from VR and AR to curved screens and the latest GPUs. The gaming industry is also an early adopter of NFTs, or non-fungible tokens.
NFTs are unique digital assets that represent things like collectibles, metaverse assets, skins, art, and so much more. These are all items that are common in games, which is why NFTs have recently taken off in gaming as “in-game assets.” These assets can have real value, provide digital property rights, be used to build “play-and-earn” economies, and help developers earn more money, ultimately resulting in better and more equitable games.
Better pay for creators
The gaming industry is a hotbed for experimentation.
Game developers are early adopters of new tech, and they’re always experimenting with new game mechanics, user interfaces, and ways to monetize their games. Developers are especially eager to test out gameplay mechanics that can be built on top of NFTs.
These in-game assets can serve as premium virtual goods or currencies, like skins in Fortnite. Developers can build non-fungible tokens that represent unique in-game items that can be collected, traded, or auctioned off for real money. These in-game NFTs have been sold for millions of dollars, such as the Formula 1 track NFT selling for an incredible $3 million.
NFTs have the potential to radically improve the gaming experience by giving gamers more control over their digital assets, making it easier to buy and sell those assets with other players, and giving developers an additional source of revenue through in-game transactions.
In the past few years, we’ve seen the emergence of “play-and-earn” games. These games are designed around a player economy where gamers earn tokens by completing activities.
These NFTs can then be used within the game’s ecosystem as currency or premium virtual goods. The value of these currencies has been driven up by demand from gamers seeking rarer items and opportunities to make money from trading these in-game assets.
These in-game assets could include rare skins for your avatars, special items in an RPG game, tokens that you earn from completing quests in an MMO, or even full parcels of virtual land that you can purchase and manage within our platform. The possibilities for monetizing games through NFTs are practically limitless.
There are already at least 20 of these kinds of games, built primarily on the Ethereum blockchain. For example, Axie Infinity is an NFT-based video game developed by the Vietnamese studio Sky Mavis, with over $40 million in sales. In this digital pet universe, players can battle, raise, and trade fantasy creatures called Axies.
While the cute digital creatures are reminiscent of Cryptokitties, Axie Infinity comes with the advantage of having real gameplay, including daily quests and other interactive features.
Power to the players
Another way that NFTs will impact gaming is by giving players more control over their digital assets. If a gamer has an NFT of a virtual item that they designed, or even if they bought a skin for a game, they can be confident that this asset is theirs forever.
This is something that the industry has seen with the emergence of NFTs like CryptoKitties, where players have complete control over their virtual assets, as they’re immutable and forever stored on the blockchain. In Next Earth, users can buy virtual land NFTs directly corresponding to a map of the Earth. Unlike with physical property, the user’s digital property rights become immutable and decentralized.
In the 2010s, loot boxes took off as premium virtual goods in online games. Loot boxes are essentially randomized virtual items that can be purchased with real money and contain rare or exclusive items.
Regulators are pushing against loot boxes, and US Senators have tried to ban them. Further, loot boxes are banned entirely in Belgium, with regulators in Australia, Brazil, the UK, and many other countries hoping to follow suit.
Imagine spending money on a game you love, to support the developers and the community, only for a centralized authority to take it all away. This is what’s at risk with traditional virtual assets.
As a result, the gaming industry could be a key early adopter of NFTs, and many are eager to see how this plays out. These implementations of in-game economies are still very much experimental—and it will take more time for us to fully understand their impact on gameplay. However, if successful, we could see more developers adopt NFTs in their own games.