Why gamers hate NFTs in games

I’ve been writing about the video game industry for almost 30 years, and I haven’t heard the kind of trash talk tossed at NFTs since millions of “E.T. the Extra-Terrestrial” cartridges were dumped into New Mexico landfills. Recently, NFTs have taken a beating akin to something out of the most gruesome Mortal Kombat scenes. The Wall Street Journal asked in a subhead if this was the beginning of the end of NFTs. A New York Times opinion piece called NFTs “grifts,” dissing Bored Ape by dubbing them “primate Pokemons,” which is insulting to a beloved game franchise that’s been around for over 25 years. (Plus, it’s spelled Pokémon; the plural doesn’t have an ‘s’.)

Yet the harsh words are nothing when compared to the disdain gamers have shown toward the prospect of NFTs in games. They’ve taken joy in watching inexperienced, young indulgers’ play-to-earn, game bounties nearly evaporate in “Axie Infinity.” Is it a deserved hate, or is it overkill? 

You have to go back in time to understand the vitriol. You have to look at the history of companies who’ve tried (and often succeeded) in making extra cash by hyping bad games or adding cheap content after fans had already purchased a game.

A bitter aftertaste  

When the “E.T. the Extra-Terrestrial” game flopped, Atari, which held 80 percent of the game market, didn’t make its quarterly numbers. Soon after, the video game industry fell into a deep recession. It wasn’t just that E.T. stunk like durian; there were too many Atari wannabees. Game fans grew wary of an oversaturated market. But by the mid-eighties, Nintendo swooped in and filled the creativity void with the NES console and franchises like “Super Mario Bros.” and “The Legend of Zelda.”

The key problem here is ignoring what fans want and giving them something they never asked for instead, especially when it’s an overly-hyped piece of interactive marketing. Game fans wanted new Atari consoles and, soon after, new Nintendo Entertainment System consoles. They never asked for an E.T. game, certainly one that wasn’t finished. Currently, fans pay a premium for the still-scarce PlayStation 5 and chomp at the bit for “Grand Theft Auto 6.” They didn’t ask for NFTs, which feels like cash grabs to many. In a LinkedIn post, Symbol Zero CEO Rafeal Brown angrily compared successful, artful games to current NFTs games, writing, “Entertainment brands are about PLAY, fantasy, escape, fun, discovery, challenge, and learning. They are NOT about work, exploitation, making money, losing money, loansharking, digital colonialism, nor virtual indentured servitude. Web(anynum) will never understand that as it rushes to monetize things that have no value.” Brown has been successful for decades because he still thinks like a gamer.

I remember one of the first times a company upset fans through a miserable, money hungry ad technique. Back in 2003, Sega Sports’ NBA 2K series began to add advertising, hyping NBA.com on its scoreboard and ESPN with every replay. ESPN was also a constant on the onscreen scoreboard overlay. By 2005, Gatorade ads were all over the team courts. Once ads were there, there was no turning back–they snowballed across the industry.

Fans began to think, We already paid $50 for this game. All we want to do is play a season of  unadulterated basketball. But now we have to sit through ads like it’s real life TV or a banner ad online. We want to escape real life. That’s why we play games. 

As the years turned into decades, game companies got greedier. Advertising in games spread to all sports franchises from Madden NFL to FIFA Soccer. Even mobile games had ads. You couldn’t escape them. And then, beaten down fans began to grudgingly accept branding in games (I still don’t). They collect Nike shoes as rewards in games as well as jerseys. Some are rarer than others, and they cost more. This year NBA 2K, as reported in a review by Kotaku, is said to be “one enormous shakedown, an ornate palace built of never-ending attempts to coax more and more money out of the player despite the full-price cost of admission, some of them crafty and subtle, most of them obnoxiously obvious and disgusting in their persistence.”

That’s the big fear with NFTs in games; you’ll be getting ripped off for not much value.  For instance “Axie Infinity” started with a good idea: cute Tomagotchi-like virtual pets, which are easy to love, and riffs on “Final Fantasy Tactics” and “Pokémon,” lauded classic series full of strategy and depth. Adding NFTs wasn’t a bad idea at all because the variety of blobby creatures (Axies) is vast. But the play-to-earn model felt like a pay-to-play-to-earn scam. Early on, the cost of entry was crazy, about $307. That’s more than the cost of a Nintendo Switch console. When a slice of real estate in the game went for over $2 million last year, it was clear that Axie was a gamble and a bubble ready to burst. After the NFT crash in March, that price of entry dropped to about $20. It may still be too much. 

There were issues about another core aspect: the specious community which loans out Axies to new players who can’t yet afford to pay for them. It’s a complex system that Vice explained in depth recently. The upshot is that gamers are working too hard for very little return right now. It reminds long-time video game writers of the farming system for items in games like “World of Warcraft” or “Runescape” in which poor people in Asia, sweatshop-style, were given pennies per hour to farm in-game gold which would be exchanged for cash money. It’s possible the money-making aspect in Axie will be more equitable in five years, but, for now, players indulge out of love for the game, pocket change, hopeless addiction, or all three. A YouTuber called Axie a “Ponzi scheme.” I almost think of it as indentured servitude.

NFTs, as far as art goes, are in essence creative endeavors. But it’s the in-game money making schemes that are uncool. With the way NFTs have so far been incorporated into games, you’re often asked to invest upfront, as if they’re some Kickstarter campaign peddling an often unplayable game or, worse, just an idea. You’re betting that the product gets better. It requires whole-hearted, abiding hope on the part of the gamer and that’s a big bet. To quote the classic Japanese rhythm-based game “Parappa the Rapper,” “You gotta believe.” 

The problem with what Web3 has meant for games so far is that it looks and feels like no more than an extension of the same old, ad campaign-wrapped snake oil gamers have been force-fed for decades under the banner of pay-to-play. It’s a model at odds with the original console or PC game model, which often offer extra in-game stuff for purchase on Day One, vinyl soundtracks, and a variety of graphically-rich, dramatic trailers to stoke intrigue and fascination prior to the game’s release. The enthusiast game press plays along with interviews and stories about meanings within trailers. Gamers know some of it’s hype, but it’s more tangible than NFT hype. NFT game hype is about making money: let’s make our pile of treasure while the getting’s good. To a gamer, play-to-earn game company owners and executives can feel like carpetbaggers.

Ultimately, it’s not the NFT game itself so much as the bloviating surrounding them. Recently, I watched a games conference panel on Zoom entitled “NFTs and Games: Fad or Opportunity?” The only person on the panel who espoused that NFTs could possibly be fads was the moderator, and he was quickly swayed by a grim combination of gobbledygook, umbrage-taking, and glittering, lowest-common-denominator generalities on the parts of the participants who are executives at companies creating blockchain games and NFTs. Nothing of substance was put forth, no new ideas, no new theories, no new ways of engaging players, nothing. Watching the proceedings, I couldn’t help but wonder if most of the beneficiaries of  venture capital money feel compelled to swagger around like characters from Tom Wolfe’s“The Bonfire of the Vanities”—even if they have nothing new to offer. One executive said the people who don’t like NFTs are part of a small contingent of gamers who don’t want their games to change. That’s one indication of the kind of snooty talk that went on for the better part of an hour.

Which is not to say there isn’t something potentially good here. As an old-school fighting game fan, I wouldn’t mind taking my burly Nightmare character from “SoulCalibur” to a game like “Street Fighter.” But moving from one cherished IP to another, from one rival in the space to another, invites legal armageddon. And besides, right now it’s hard to fathom that it would be easy to move a piece of code around in that way. Nintendo and Sony tried to partner secretly on the first PlayStation, and that deal caused a rift between the two companies that remains today. Doing the same with online blockchain fighting games that aren’t widely known might well prove games can work together. But will millions try it?

There’s no doubt that creating and selling virtual goods can be lucrative — for a few. Just like there are a dozen or so big personalities like Pew Dee Pie and DrLupo making big money in streaming, the people who’ve made millions selling virtual goods in “Roblox” can likely be counted on one hand. The “Blankos Block Party” game offers NFTs based on vinyl toys and the Mythical Games received $75 million in venture capital last year. Players will make their own games and items, trade virtual goods and get paid for them. It’s still in early access, though. To everyone who hasn’t made a mint – even though they’ve put in the work – attaining great levels of success seems as distant as Musk’s billions. Most folks make tens of dollars.

But what if you received an extraordinarily uncommon NFT for one-hundred percent completing something particularly hard to beat like the year’s most amazing game (“Elden Ring”)? Completing it without using a shield would be even more rare. Yes, there are medals and trophies in games already, part of the old gamification trend. But an NFT game prize would be something to show off, and if you could take it to other games, prance around and preen, that would be, I suppose, something. If you could rent it out by the day for play beyond “Elden Ring,” in the way you could rent a Bugatti Veyron at a fancy car rental establishment, that would be satisfying, too. And maybe many would yearn to rent it, so the owner could make some cash and the game fan could have bragging rights for a day. Yes, it’s a Thorstein Veblen mentality that says, you must keep up with the Joneses. But that’s worked for the last century plus, and not just in the world of games. 

And what if you could order a physical, action-figure-like representation of the NFT you rent? Actvision did something akin to this with the final Skylanders game, a wonderful, popular toys-to-life series melting the real and the virtual that was run into the ground because of too many yearly iterations. You could create your own Skylander, then order it online. Yes, that means fulfillment on the part of an individual or company, and that’s extra work. But when it arrives, it’s cooler than getting a bobblehead at a baseball game because you designed it.

We’re not there as far as awesomeness goes yet, and we may never be there. Gamers believe there’s a preponderance of scammers in the world of crypto and NFTs. So do journalists. When Jason Schreier from Bloomberg joined an NFT Discord for research purposes, he was pummeled with advertising. It happened to me, too, when I joined an NFT page on Twitter.

Some game employees are against adding NFTs to a game. When Paris-based Ubisoft suggested that the future of games is in NFTs, there was a revolt by a strong contingent of game company workers. Ubisoft has since backed off NFTs. In Los Angeles recently, I talked to a game designer friend at an Arts District bar. The CEO of her company is very pro NFTs. She is not; she feels it’s a rip off, and so do her colleagues.

Many game executives of note don’t yet see the value. Xbox head Phil Spencer told Axios that “there’s a lot of speculation and experimentation that’s happening, and that some of the creative that I see today feels more exploitive than about entertainment.” Former Nintendo of America president Reggie Fils-Aimé had been concerned about the environmental aspects because they’re often bought and sold with Ethereum. But, in a recent conversation with me about his “Disrupting The Game” book, Fils-Aimé noted that the environmental aspect could be changing for the better, and the future may indeed bring a killer product that proves NFTs in games will work for gamers. He noted that the environmental footprint will only get better when they move to a “Proof-of-Stake” algorithm versus traditional “mining.”  The question is, can they make the targeted September deadline to implement this? (Personally, I like Artnome’s bounty system for its ideas around improving energy efficiency.)

Even if the industry is on board, that doesn’t mean game fans would come along. Many never liked the free-to-play model, the one that made King’s “Candy Crush” so successful to casual game players. In free-to-play, you’re given an hour or so of time to play without plunking down cash, and then you need to buy tokens to proceed with alacrity. You also see advertising along the way. Yet free-to-play caught on. The free-to-play but buy skins to customize your character model has worked well for “Fortnite” and “League of Legends,” two decidedly different games that are wildly popular. 

There are other examples. “Peridot,” a cute game being created by the same company that developed the blockbuster augmented reality “Pokémon Go,” may have NFTs as a component. If you could collect NFTs outside on the street like you collected Pokémon, it might well work. But it doesn’t have the brand reputation Pokémon cultivated over decades. In June, Ryu hired Rick Ellis, a creator of Valve’s popular Steam service, in an effort to build a Steam for Web3. Having one place to go to select from a variety of games is a thoughtful idea. But will the games themselves be more compelling than they are today?

So while crypto may not fully rebound from its slump for a good long while, or ever, NFTs are probably here to stay as a niche in games – as long as there’s a killer piece of code that folks flock to play. And there are more ways to entice gamers, too. Could a portion of sales from gaming NFT go directly to improving energy efficiency? If 5% of a sale could be donated to a good cause like that, I believe it would go a long way in changing gamers’ minds, or, at least, the minds of executives like Fils-Aimé.

I have some hope for the Bored Ape NFT game because the trailer, featuring a very deftly animated, realistic cigar-smoking ape, looks so enticing. But all that dropped was the teaser trailer without an accompanying press release, very little postulating of what it could be by writers online and only a few thousand fan views. It’s time to see more video and read some more words to prove the game could have life beyond the hype.

If there is inherent value in a game, players don’t mind paying for it. Millions still play Blizzard’s “World of Warcraft” – even though you have to pay for the game upfront and pay a monthly subscription fee. Gamers are not cheap. They’ll also pay $200 – $300 for a collector’s edition of a game because it includes a limited edition action figure/statue. The creepy Baker house model from the “Resident Evil 7” collector’s edition goes for pretty much the original price of the whole collectors package, about $300 on eBay. And people buy them happily.

So what kind of gaming NFTs would be valuable to a gamer? They would have to offer something beyond beautiful art–or even one-of-a-kind art–and offer it in a way that seems assertive but not aggressive. I’m actually thinking of the tiers some of the better indie game companies have offered in Kickstarter. These randomly could include anything from winning t-shirts, to wristbands, to dinner with the creators, to a Zoom call with the artist, to making original NFTs. Or, a rare NFT could be exchanged for a one-of-a-kind physical model like the Baker House. If a company partnered with a well-known streamer for a NFT that would include meeting or hanging with that celebrity, that would be, well, a super rare digital thing that would bring in a great variety of players.

These ideas can even go beyond the NFT as art to place a gamer in the game as an NPC (non-playable character). Call it NFT as scavenger hunt. The NFT could be put in an obscure place within the game’s world, providing it’s within an expansive environment. A scavenger hunt like that might well induce more people to spend more time in an MMO kind of experience where the world is open and hiding places are almost infinite.

What I’m saying is that in recent and past history, the trends in casual games, free-to-play and virtual reality during the 2010s to the present, never really dominated the market. But they’ve had their time, created their niche and they’re still alive. That’s probably what’s going to happen to NFTs in games after the bear market. World domination? Unlikely. But a decent slice of the $175 billion video game market? That’s definitely possible – as long as the scammers slither away into their hellholes.