Every day we hear of more engagement from big industrial companies (e.g. Epic Games and Roblox) as we approach the Metaverse, a shared persistent virtual environment of connected digital experiences. The problem is, none of this matters until internet users are able to have truly digital assets. And it all starts with games.
Video games make us feel like we can do anything. These virtual worlds with limitless potential allow us to transcend the realities of everyday life and become heroes. They make us feel that we have our own destiny in our own hands.
Games and players
Games are good simulations of life: players earn rewards for gaining value, advancing ranks, and achieving status. These are the goals that gamers value, and each week gamers spend an average of 30 hours playing games, interacting on game forums, and participating in game streams. They also spend sizable amounts of money on in-app purchases, like weapons and armor, for a variety of purposes that enhance their gameplay or just look cool. You can even pay to speed up your progress and level up faster.
It could be argued that it is misleading to have “success” in these games. As a species, we spend a lot of time in simulated environments while giving up our economic substance and potential. Traditional video games are some of the most enclosed, restrained, and controlled worlds imaginable: beautiful walled gardens built for gamers to play in – and only in. Any sense of freedom or ownership that players experience is an illusion as the game publishers and platforms are actually in control of your gaming and metaverse experiences.
Valued at over $ 170 billion and growing, the global games industry is more expensive than movies and music combined. For game publishers who feel they need tight controls on games, a lot is at stake to protect their winnings.
Related: Science Fiction or Blockchain Reality? The OASIS “Ready Player One” can be built
Games vs. the Real World: A Conflict
One example is playing in front of Chinese courts. Tencent, the world’s largest video game publisher, is suing DD373.com for $ 6.2 million in damages for enabling Dungeon Fighter Online players to purchase virtual coins and other in-game items on the company’s website Trade DD737.com.
In court, Tencent underscored its terms and conditions, stating that all virtual items purchased by players have no real value and will forever remain the property of Tencent. Even the game’s virtual coin, which players buy from the platform to exchange for other in-game items, is “service charges,” according to Tencent. In short, players are not allowed to trade their in-game assets outside of the platform, since they never really owned those assets from the start.
This is not an isolated problem. Virtually every game publisher takes the same approach.
Currently, most traditional games only allow players to engage in a limited, pre-defined range of economic activities. Players are required to use in-game trading systems and can only trade certain in-game currencies such as coins, credits, gold and gems. Hence, in-game assets only have value within their native games.
Since games and assets are made available to users on a license basis, it means they are not owned by the player – they are rented. And that rent is meager at best: players can put years of effort into a game and spend tens of thousands of dollars amassing assets, but everything can be wiped out in the blink of an eye with no recourse.
This happens regularly in the gaming world. Delisted Games is a website that tracks dead games. A current example of a game facing a premature death is the China-exclusive version of Call of Duty, which is slated to end in August and accepted payments for in-game purchases through the end of June.
Unintended consequences can bring players to their knees, for example in the case of the closure of Ubisoft servers, which Might & Magic X: Legacy players have been blocking from their profitable content since the beginning of June.
Catastrophic failures like a fire or flood in a critical data center can wipe out advances, accounts, or even entire worlds. In March, survival game Rust players lost days of progress when the game’s servers literally caught fire. While the incident could have been a lot worse, in a game that was playing in real time, whether or not you could log in, it was still pretty serious.
Finally, changing regulations and licensing agreements can also deprive players of their games. For example, due to licensing restrictions, a European Star Trek Online player will no longer be able to access the game if they move to Hong Kong. It seems ridiculous to block access to and participation in online games based on territory, especially given the limitless and integrative nature of games and virtual worlds.
Basically, the gaming industry takes a very protective and restrictive approach.
Digital property rights in games
These various circumstances illustrate the lack of equitable digital property rights in games. So far, gamers haven’t given too much thought to digital rights, but thanks to the growing number of blockchain games, there will soon be a revolution where gamers will start claiming their property rights.
We already have the means for digital property rights in games: non-fungible tokens (NFTs) as in-game assets. Made possible by blockchains, NFTs are unique, indivisible tokens that give owners property rights and enable digital assets to have real value regardless of platform. The platform could be a game, publisher, mobile app store, or other exclusive host, but gaming is probably the best place to start as the 2.7 billion gamers out there already understand the concept of virtual goods.
Digital ownership rights to a blockchain are provided through open, permissionless protocols and guaranteed through the collective settlement of the community consensus. This allows NFT game assets to be traded between owners in a way that is unthinkable in most traditional games.
This is great for gamers, but many traditional game publishers fear that this new dynamic will have a negative impact on their bottom line.
NFTs are a game changer
An example of a tokenized game is F1 Delta Time, a Formula 1 licensed blockchain game from Animoca Brands. Every content present in this game can be owned by players. Cars, parts, tires, and even drivers and the tracks you race on are NFTs that can be used in-game or traded on a third-party marketplace, depending on the owner’s prerogative. As a result, some F1 Delta Time players have reported making thousands of dollars a month.
NFTs also enable interoperability and cross-platform functionality, which means that the digital assets themselves become the focus of the gaming experience – in essence, the content becomes the platform. Just as you can own a single set of chess pieces that can be played on many different boards, eventually you will be able to own NFT add-ons that can be used in different games or have access to different virtual worlds. The metaverse is near.
The more game content is tokenized to empower players and provide digital ownership, the more optimistic I am about the future of the gaming industry.
Put simply, the world is moving towards a more decentralized and fairer global internet. This is underpinned by blockchain technology as a transparent and immutable base infrastructure for accountability and driven by an incentive model that rewards the communities that bring, build and maintain their value. The new digital economy will bring the flows of money and power back into balance, reduce the influence of intermediaries on virtual worlds and finally free us from decades-old restrictions.
Connected: Is a new decentralized Internet or Web 3.0 possible?
History is full of examples of societies transitioning from autocratic to (more) democratic systems, but this could be the first time this has happened on such a large scale.
This article does not provide investment advice or recommendations. Every step of investing and trading involves risk, and readers should do their own research when making a decision.
The views, thoughts, and opinions expressed herein are those of the author alone and do not necessarily reflect the views and opinions of Cointelegraph.
Yat Siu, Chairman and Co-Founder of Animoca Brands, leads various NFT projects including F1 DeltaTime, The Sandbox, MotoGP Ignition, and the REVV token and ecosystem. Yat’s vision is to bring digital ownership and play-to-earn to 2.7 billion players and beyond. He is a supporter of various NGOs, a member of BAFTA and on the board of the Asian Youth Orchestra.