There’s an expression in gaming when a player is so thoroughly and utterly bested by another that there’s only one word equipped to describe the carnage that just took place—and yet, ironically, it’s as close as gamers ever get to truly “owning” anything in the digital world.
After buying an avatar from a digital store and spending countless hours customizing its every feature, it can start to feel like it belongs to you, but it doesn’t. That digital representation of your innermost gaming self can be removed at any time—players are at the mercy of centralized game providers and their servers.
But blockchain technology has the potential to change all that. Through the use of decentralized networks and non-fungible tokens, or NFTs—like the ERC-721-compliant tokens first created by Axiom Zen’s CryptoKitties—players can create characters, vehicles, weapons, and other digital manifestations that they own for life, not just the shelf life of a game. The technology opens the door for a player’s individualized and tokenized creations to move seamlessly from one game to another across the decentralized web—or even to be bought, sold, or traded on second-hand markets.
The potential is massive, and it’s the reason many believe the burgeoning blockchain gaming industry could produce the elusive “killer app” that finally brings this technology to the masses.
But is the market ready for such a radical shift in digitized gaming assets? A consortium of eight of the leading enterprises in this space—including representation from Ubisoft, one of the most successful game-publishing companies in the world—certainly thinks so. And their vision for the future of gaming and the $140 billion video game industry has the support of a growing number of gamers and game developers alike.
The nine founding members of the Blockchain Game Alliance (BGA) officially joined forces in late September, unveiling their coalition at the inaugural Blockchain Game Summit in Lyon, France. The group features some of the most prominent players in the nascent industry, including ConsenSys, Everdreamsoft, Enjin, and the French gaming titan Ubisoft.
The goal of the Blockchain Game Alliance is to rally stakeholders from both the blockchain and gaming industries and work together to develop solutions for the challenges that await these converging fields, according to Ubisoft’s Blockchain Initiative Manger Nicolas Pouard.
After all, if crypto and decentralized technologies are still in their infancy, then blockchain gaming might as well be just a glimmer in your Atari-loving pappy’s eye. Game developers, publishers, distributors and the like would be wise to band together to develop common standards and best practices if these big ideas are to ever take flight. And what better way than by “leveraging the expertise of some of the brightest minds and leaders” in the industry, says Nicolas Gilot, a founding member of the Alliance and co-CEO of Ultra—a blockchain-based “next-generation games distribution platform.”
Pouard says Ubisoft’s interest in the BGA is twofold: to learn as much as it can from other innovators in this field and provide its own expertise on technical integration, regulation, and—perhaps most importantly—the development of a “AAA title”—the sort of big budget, high-profile blockbuster of a game that only a major publisher can deliver.
And it’s that last piece of the puzzle—the potential for a breakthrough smash hit on the level of an “Assassin’s Creed” franchise—that fuels the vision for gaming as blockchain’s bridge to the mainstream. “Gaming will allow people to familiarize themselves with blockchain in an interactive environment, which is the first step to mass adoption,” Gilot says. Hurdles remain, but much of the promise that this technology brings rests in its ability to redefine antiquated notions of digital rights in a rapidly changing world.
“Blockchain’s value proposition for gaming strongly relies on what we call ‘true ownership,’” says Ubisoft’s Pouard. “Nowadays, in most cases, players that are done with a game in which they invested a lot are not able to pull any value out of the items or achievements they collected with much efforts.”
The issue has its roots in the complexities of ownership rights across the digital world. You can buy a song on iTunes, for example, but it isn’t really yours. There are limits to what you can do with that digital file—and you certainly can’t resell it (at least, not under current law).
Gaming assets are similarly restricted. On traditional gaming platforms, items that players purchase are stored on centralized servers. “If you stop playing, lose your account, or experience technical issues, you lose those digital goods,” explains Manon Burgel, CEO of the blockchain video game development studio B2Expand and the woman largely responsible for the creation of the Blockchain Game Alliance. In-game items are “tied to the studio that publishes them,” she says, and some publishers explicitly prohibit players from selling or even gifting these items to others as part of their End User License Agreement (EULA). The perceived unfairness of this among gamers is what’s driving the desire for blockchain to flip it on its head.
“A game that runs completely on the blockchain is an example of a decentralized platform that could be owned by everyone.”
Dan Biton, founder of Gimli
Last week, Worldwide Asset eXchange (WAX)—a blockchain e-commerce platform for virtual items—released a survey of 500 video game developers and 1,000 gamers in the U.S. that demonstrates strong support for the “true ownership” of gaming assets. The study found that 68 percent of the gamers polled believe they deserve to “truly own” the items they buy. What’s more, 62 percent would be more likely to spend real dollars on virtual items if they were able to transfer them between different games, and close to three-quarters of gamers said they would welcome features to sell or trade in-game items “regardless of the state of the game.”
Developers appear even more bullish with 86 percent saying they believe tradable in-game assets will become increasingly important in future games, and more than two-thirds agreeing that the value of these assets is being “suppressed by unnecessary publisher control.”
By tokenizing these items, players can decide for themselves what to do with them: give them away, trade them, or even sell them. It enables a “digital second-hand market,” Burgel explains, and “its decentralized nature ensures that games and items are not held by one company but by the network.”
But while a blockchain-driven “power to the players” movement may sound great to individual gamers, developers and publishing companies must also find a way to benefit for any of this to ever really get off the ground.
The Biz: NFTs and the SEC
Ultra and other companies are exploring new ways for distributed technology to help generate different streams of revenue for game developers, such as sharing in monthly content subscription plans and ad revenue. “Ultra aims to be fairer to developers by charging them a significantly lower commission fee, immediately allowing a wider scope for developers to engage with the platform,” says Gilot.
The idea is for Ultra’s custom EOS-based platform to provide a “fully transparent” bridge between gamers and developers—where purchases such as games, virtual items, and services are made through smart contracts using Ultra Coins (or UTA tokens)—and placing smaller developers on equal footing with big players.
At present, however, blockchain’s value in gaming largely remains limited to the tokenization and sale of digital assets. And given the regulatory climate in the United States with regard to tokenized assets, this complicates matters for a large, publicly traded company like Ubisoft.
Ultra’s CEO insists, however, that he sees “no issues with tokenized assets” from a legal perspective, so long as companies adhere to proper regulatory guidelines. “The goal of regulatory bodies such as the SEC is to protect the public from being subject to scams,” he says. “The blockchain and crypto industry is continuously evolving, therefore it is important to keep up-to-date with the latest regulatory decisions to avoid slowing down innovation.”
Gilot also notes that the tokenized assets that will be traded on the Ultra platform and throughout the blockchain-gaming space—NFTs—are distinct from the kind of tokens sold during an ICO or Security Token Offering (STO), which may include the sale of investment contracts and are therefore subject to securities laws and regulations. Meanwhile, a digital gaming asset, Gilot says, simply “guarantees ownership, as well as proves the scarcity of an item if created through a publicly available smart contract.”
NFTs, in other words, are digital representations of one-of-a-kind items—not unlike the collectible trading cards of yesteryear—which function as a tokenized “proof of purchase” for the owner. They are the basis for the vast majority of blockchain-based video games currently on the market, such as Everdreamsoft’s “Spells of Genesis”—a combination trading-card, arcade-battle style game that lays claim to being the first blockchain-based mobile game ever produced.
“Spells of Genesis” launched in April 2017, a full seven months before Axiom Zen released the Ethereum-based collectible trading game CryptoKitties, whose non-fungible felines famously crashed the Ethereum network one year ago. CryptoKitties remain responsible for some of the most expensive NFT-based, gaming collectibles ever sold—some even exceeding the six-figure mark.
Other games, like the highly anticipated “Gods Unchained” by Fuel Games—which just two weeks ago sold its 2 millionth digital trading card—likewise rely on the auction of rare, tokenized collectibles to generate revenue. Arcade Distillery’s “Plague Hunters”—a “free-to-play,” turn-based strategy RPG with a built-in, Ethereum-based marketplace for buying and selling in-game weapons and “hunters”—utilizes a similar on-chain/off-chain hybrid model: NFT transactions are processed on the blockchain while the core gameplay is not.
In mid-November, Arcade Distillery announced “Plague Hunters” had passed Sony’s review process and is now heading for a release on the PlayStation 4 in Q1 2019. When it lands, it will mark the first time a blockchain-enabled game brings NFT trading to a major console.
Beyond the Token
With Sony onboard the blockchain bandwagon, it begs the question: When will a major publisher release its first blockchain-based title? In July, the upstart blockchain gaming protocol MagnaChain announced it had signed a partnership deal with Epic Games, the creator of the smash hit “Fortnite,” spurring rumors of an imminent “Fortnite on the blockchain.” MagnaChain, however, has remained relatively quiet since its original announcement and neither company will comment on the precise details of their partnership or progress.
For Ubisoft, Pouard says the company—bound by a fiduciary duty to its shareholders—is still in a “test-and-learn” phase when it comes to blockchain. “True ownership” is still very new in the marketplace and relatively untested, and Pouard says it remains to be seen if the model is “something publishers can handle long term.”
Burgel’s B2Expand recently began putting this use case to the test, having released its first game, Beyond the Void, just over a month ago on Steam. The game utilizes the Ethereum blockchain for its “economic backbone,” allowing players to buy, sell, and trade “cosmetic in-game items” for the Multiplayer Online Battle Arena and Real-Time Strategy mashup using B2Expand’s native Nexium (NXC) token. But were it not for the very early launch of both the project and the company’s ICO in November 2016, Burgel says Beyond the Void would have explored implementing blockchain in its core gameplay.
Burgel agrees, however, that—beyond “true ownership” and the commerce created around the trading of NFTs—“the gaming industry has yet to find the right business models fitting these opportunities.” Nevertheless, she believes publishers could ultimately find value in any tools that allow gaming communities to “organically grow and feel involved,” such as by facilitating the creation and distribution of user-generated content. That’s only “one of many possibilities,” Burgel says, and “many companies are already exploring new ideas.”
Dan Biton, a Blockchain Game Alliance board member and co-founder of the blockchain-powered exports-betting platform Gimli, says we need to think beyond the current video-game landscape to envision what these possibilities might look like. “A game that runs completely on the blockchain is an example of a decentralized platform that could be owned by everyone, and we could think of something where every player has its share in a voting system to make the game rules evolve,” he says. This means that the game’s logic “or even the game itself” could change according to the desires of its players “in a completely decentralized way.”
It’s a radically different gaming experience from what is currently available, and one which Ubisoft is already putting its resources and industry clout in exploring. Ubisoft’s Strategic Innovation Lab—an internal think tank devoted to examining future industry trends—is already looking beyond the limited “crypto collectible” use cases available in the market today.
The lab has spent the last several months building a prototype—a Minecraft-inspired, treasure-hunting and island-exploration game called HashCraft. The game doesn’t use NFTs. In fact, it has very little to do with tokens at all. Instead, it incorporates blockchain in a way that pushes the boundaries of what was previously thought possible in gaming, positioning game publishers like Ubisoft as simply the creators of the “fantasy”—the characters and overarching storylines of the game—and the players as the builders of “experiences” they truly own.
It’s a bold new path, and Ubisoft is still very early on this journey. “There is still plenty that we need to discover, which can’t be done without continuing our exploration or collaboration within the ecosystem,” says Pouard. And collaboration is precisely what the Blockchain Game Alliance seeks. The young coalition of trailblazing gaming companies are in process now of formalizing a formal governance structure for their organization—one that seeks to accommodate the admittance of others within the industry who share the same vision and are eager to join. Says Pouard: “This is just the beginning of the adventure.”