Ubisoft’s first wave of NFTs feature unique cosmetics in Ghost Recon Breakpoint.
Image: Ubisoft
Protocol Gaming

The NFT gaming backlash reaches a fever pitch

Ubisoft entered the NFT market last week, but fan backlash underlines the barriers blocking blockchain proponents from mainstream acceptance.

This week in Protocol Gaming, your weekly guide to the business of video games: Ubisoft’s official NFT launch kicked off a heated blockchain gaming debate, Epic stunned the industry with its Matrix demo for Unreal Engine 5, and Activision Blizzard employees stepped up their unionization efforts.

Fans say no way, but NFTs are here to stay

Non-fungible tokens, and the blockchain platforms that power them, are either the next big shift in video game monetization — akin to the free-to-play movement started in Asia nearly two decades ago — or they’re a scam repackaging the same exploitative business models that have plagued gaming for years. It all depends on who you ask, and probably whether they’re holding Ethereum or Solana.

Of course, there’s plenty of gray area in between those two extremes, but you wouldn't know it by looking at the reaction to Ubisoft’s launch of its Quartz platform. Ubisoft announced Quartz last week with a simple YouTube video and website detailing its first three NFTs, part of an in-game cosmetic drop it’s calling Digits, for the shooter Ghost Recon Breakpoint.

Reactions to Quartz were polarized. Those bullish on the prospects of blockchain gaming saw Quartz as a turning point; Ubisoft had officially become the first major game publisher to jump head first into the NFT space. But many, many others had an opposite and more visceral reaction.

  • The unlisted YouTube video announcing the platform was met with widespread denouncement, with more than 40,000 dislikes and counting and just a little over 1,600 likes. (Some reports said the backlash to the video led Ubisoft to de-list it. That is untrue; it was never listed publicly, the company confirmed to me.)
  • Scores of news headlines framed Quartz as a shameless cash grab trying to capitalize on an already morally bankrupt wave of crypto grifting sieging the worlds of traditional art and entertainment. Here’s Kotaku’s: “We Live In Hell And This Ubisoft NFT That Requires You To Play 600+ Hours Of Ghost Recon Is Proof.”
  • “Not only is this ethically dubious but there's no practical reason to implement NFTs into your game. Certainly not for buying/trading ‘unique’ loot,” wrote Harper Jay MacIntyre, community manager at Microsoft studio and Psychonauts creator Double Fine. “It's a scam. The more people in our industry who are willing to say so publicly, consequences be damned, the better.” Xbox chief Phil Spencer has also expressed skepticism of NFTs.

Quartz is not particularly remarkable or all that threatening. It’s easy to see how concepts like NFTs and cryptocurrency, when combined with the game industry’s penchant for wringing profits and player exploitation, can go terribly wrong. But Quartz is benign, and nothing more than Ubisoft staking a small claim to an industry that’s already producing multi-billion dollar startups.

  • “It's not enough to disregard what they’re saying. We have to respect what they’re saying. There’s real concern,” Nicolas Pouard, the vice president of Ubisoft’s Strategic Innovation Lab, told me. “For people who don’t believe in it, just start by trying it,” he added.
  • Pouard told me that Ubisoft doesn’t plan to build its own NFT marketplace or even take a cut of aftermarket sales of its Ghost Recon NFTs. Sure, it may do so down the line as any self-interested business would. But Ubisoft is treating this as an experiment, after spending the last four years as one of the few major gaming companies to invest in and explore the crypto space in earnest.
  • “For us, Quartz is really a test. We really want to understand what decentralization can bring to players,” Pouard said. “We want to build this value proposition with the community so we needed to start with something easy to understand and easy to build technically.”

Blockchain gaming is happening, regardless of its mainstream reputation. If the cryptocurrency boom of the last decade is any indication, NFTs and the communities creating, buying and selling them are here to stay. And blockchain gaming startups are attracting massive venture capitalist interest with the promise of explosive player and revenue growth.

  • It makes perfect sense. Gaming is one of the few applications for which NFTs don’t feel like a solution in search of a problem. The promise of legitimate in-game utility and player ownership of digital goods is, for once, a crypto concept that you can explain without diving down a white paper rabbit hole.
  • For instance, what if I could take my Fortnite Naruto skin into Call of Duty: Warzone? That would be neat, and maybe one day we’ll be able to do that, if video game licensing deals could ever make room for such interoperability.
  • "Everybody in gaming that I know, if they weren't working on an NFT game already, are thinking about how they'd do it or are pivoting hard to it right now," Twitch co-founder Justin Kan told me last week. Kan is getting in the game, too, with the launch of a gaming NFT marketplace called Fractal.

The backlash to gaming NFTs is representative of a much more consumer-minded and vocal gaming community that for years has watched some of the worst tendencies of free-to-play expand from bottom-of-the-barrel mobile games to big-budget blockbusters. The trepidation to unleash an unregulated and speculative market rife with scams and get-rich-quick schemes is not only understandable, but in many ways commendable.

But gaming companies have an obligation to pay attention, especially if such technologies pose an existential threat to their business. Pouard told me that he looks at decentralization a bit like Minecraft, a once-in-a-generation game that revolutionized how we think of gaming sandboxes and user-generated content. And game makers like Ubisoft cannot afford to be looking the other way when the next Minecraft arrives.

On the schedule

Big Tech and gaming platform wars

Big Tech is more interested than ever before in trying to own and define the platforms of tomorrow, but game companies have their own unique visions for how we’ll play and socialize in virtual spaces in the future. Join Nick Statt in conversation with Manticore Games CEO Frederic Descamps and Zynga CPO Scott Koenigsberg at 10 a.m. PT on Tuesday.

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A MESSAGE FROM ROBIN

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Overheard

“The current Super Smash Bros. has too much of my personality poured into it. In order for a long-time series to continue thriving today, we need to think about eliminating the series’ dependence on just one person’s vision.” ―Masahiro Sakurai reflected on his work on Nintendo’s long-running fighting game series in an interview with The Verge. The future of Super Smash Bros. remains uncertain after development on Ultimate has wrapped up.

“We should have known before and just been honest with ourselves. We were there not out of deception, but more out of ... hope. And I don’t think hope is a great development strategy.” ―Xbox chief Phil Spencer told Bloomberg about the thinking inside Microsoft and subsidiary 343 Industries leading up to the Halo Infinite delay. Ultimately, the extra year ended up saving the project and turning Infinite into a success.

Lootbox

On Protocol: Epic Games last week debuted The Matrix Awakens, a tech demo for Unreal Engine 5 featuring Keanu Reeves and Carrie-Anne Moss. It features stunningly photorealistic graphics and an open-world design, offering developers and players a peek at the possibilities of next-gen gaming in the years to come.

Pokémon Unite’s major milestone. TiMi Studios’ online Pokémon battler has reached 50 million downloads as of last week, just four months after release. The game, available on the Switch and mobile, is helping Nintendo tackle competitive free-to-play market.

Activision Blizzard employees get serious about organizing. After months of inaction from management and layoffs at subsidiary Raven Software, the employee activist group ABK Workers Alliance is now organizing ongoing strike efforts and a legitimate unionization campaign with help from the Communications Workers of America. A GoFundMe set up to support striking workers has also raised more than $300,000.

On Protocol: Twitch co-founder Justin Kan yesterday announced his return to the game industry with Fractal, an NFT marketplace for the buying and selling of gaming-related tokens. The platform hopes to be what OpenSea is to digital art, as well as a blockchain infrastructure provider to game studios that want to dive deeper into Web3.

Apple wins again. After what seemed like a resounding victory against Epic in the Fortnite antitrust trial, Apple found itself back on the defensive when it tried over the last two months to delay a court order over in-app payment alternatives, the one bright spot for Epic in the court’s verdict. Apple was finally granted its stay last week the day before the deadline.

Bowser slammed over Switch hacks. Gary Bowser, an aptly named Canadian hacker well known for building and selling Nintendo Switch jailbreaking and modding tools, agreed to a $10 million settlement for his involvement in hacking group Team Xecuter, The Verge reported. In total, Bowser is paying $14.5 million to Nintendo when including his piracy charges.

Sony’s acquisition spree continues. The PlayStation maker is ending 2021 with yet another acquisition, this time of Seattle-based developer Valkyrie Entertainment, Gamesindustry.biz reported last week. Valkyrie is known best as a support studio, having recently aided Sony’s Santa Monica Studio in God of War and God of War: Ragnarok development.

PUBG embraces free-to-play. The battle royale title that kickstarted the trend is embracing its future as a mobile-first, free-to-play game by removing the barrier to entry for its console and PC versions starting next month. Since 2017, the game has cost $30 on non-mobile platforms.

The $70 game rears its head

Square Enix had some unpleasant news for Final Fantasy fans this past weekend when it announced the retail price for the Epic Game Store version of Final Fantasy VII Remake would be $70.

To console gamers, that higher price tag has been a fixture since the launch of new consoles a year ago, but PC players have spared the $10 price increase for big releases like Call of Duty: Vanguard and Battlefield 2042. Now, game makers are becoming more comfortable slapping higher price tags on new products, even when those products are only higher-quality versions of older ones with a few extra perks thrown in.

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