Let’s get a glimpse into the news about NFTs in 2022:
(NBA star Stephen Curry bought a digital artwork for $180,000, which might just be the beginning of the NFT boom)
1. On 7 January 2022, GameStop Corp announced the launch of a division to develop a marketplace for nonfungible tokens (NFTs), boosting the video game retailer’s shares by 27% in extended trading on Thursday.
2. On 19 January 2022, NFT marketplace OpenSea announced it was putting some of its freshly raised funds to good use, buying up the crypto wallet startup Dharma Labs for between $110 million and $130 million.
3. On 21 January 2022, Twitter debuted a feature that allows subscribers to its paid Twitter Blue service to use an NFT as a profile picture, a way of encouraging more users to display digital art and more people to subscribe to its Twitter Blue.
4. On 19th January 2022, Mobile Legends: Bang Bang, a mobile MOBA game developed and published by Moonton, released its first-ever collection of NFTs, consisting of 25,000 NFTs which were sold out within 2 minutes.
After a chaotic year in 2021, the market for NFTs is still not showing any signs of slowing, instead, it continues to attract more and more public attention worldwide. However, there are still many people who believe that the market is driven by hype and speculation. Critics call it a market with no rules or regulations, an overblown speculative bubble inflated by scams and market manipulation.
However, it’s obvious to all that NFTs can attract large sums of money. For example, OpenSea, the world’s largest NFT marketplace. In the middle of 2021, the company raised $100 million in funding and hit a valuation of only $1.5 billion. In January 2022, the company raised $300 million in another funding round that boosted its valuation to $13.0 billion, up 800% within only half a year.
(Opensea is an online NFT marketplace founded by Devin Finzer who graduated from Brown University and Alex Atallah who graduated from Stanford University.)
What exactly is an NFT?
An NFT, short for a non-fungible token, is a new form of digital ledger that is verified and stored using blockchain technology. The value of an NFT is unique unto itself and is not exchangeable for another NFT of the same value, which is different from fungible tokens like Bitcoin (Bitcoins of the same value are the same in nature). An NFT is indivisible. Unlike Bitcoin or any physical currencies, it cannot be broken down into small values and only exists.
Currently, NFTs in the form of digital art are the most popular in the market, followed by game items, virtual real estate, and digital music which have also made an important contribution to the revenue of the entire NFT industry. According to the market tracker DappRadar, sales of NFTs reached some $25 billion in 2021, increased by hundreds of times compared with 2020.
Ali the Fox, a well known animated cartoon character in China, also entered the NFT market, with a floor price of nearly $500 per NFT.
Many well-known game companies considered NFTs as the key industry for their future development.
South Korean online gaming giant Netmarble announced plans to launch about a dozen new games that use blockchain and metaverse technologies. Bang Jun-hyuk, the founder and chairman of Netmarble, said in a press conference that Netmarble is preparing to launch 20 new games, of which about 70% will use blockchain technology.
There’re other companies in South Korea that explored blockchain before Netmarble. In December 2021, Com2Us (South Korea’s oldest company of mobile games) launched an official website for its C2X blockchain platform which links NFT exchanges and various games to support transactions.
In November 2021, Matthew Wolf, a former Coca-Cola Games exec, began a new job at Zynga where he established a new studio to develop NFT games. Wolf said in an interview that the new game will be developed based on Web 3.0 with the famous NFT Internet celebrities on Twitter like crypto speculator and crypto whale, and other huge fans.
(Summary of NFT game investment in Jan-Sept 2021)
Only 50% hardcore players are interested in NFT
Though many companies are making plans to venture into the NFT market, there are also quite a few famous companies and game developers who chose to give up their NFT plans halfway due to high market pressure or personal reasons. For example, Troy Baker, a prominent voice actor perhaps best known for playing Joel in The Last of Us, announced his partnership with Voiceverse NFT on Twitter on 31 January, causing a massive outcry among his fans, and had to step away from the NFT plan; Team17, the developer of Worms, announced an end to its NFT project on 2 February this year after suffering backlash from its employees, partner studios, and fans.
According to the Game Developers Conference (“GDC”), only 30% of studios had an interest in NFT games. Many quotes directly from developers were scathing. “How this hasn’t been identified as a pyramid scheme is beyond me.”
A study of 1,500 console and PC gamers found that only 56% of hardcore gamers were interested in earning NFTs through gaming, according to market research firm Interpret.
Gamers remain concerned that game companies will use NFTs to nickel-and-dime them through NFT transactions rather than make fun games. Gamers are also concerned about scams, money laundering, too much weight placed on P2E (Play To Earn) to affect the environment in NFT games.
Source: A survey on NFT gamers by Interpret.
Booming NFT purchases that have begun to emerge
The combination of games and blockchain has not yet begun, and it is facing a lot of pressure. Major game platforms have successively announced “bans” on games containing blockchain, NFT and other elements. For example, Steam added the latest Article 13 to the “Getting Started Guide” as early as last year, that is, “Any mention or Applications based on blockchain technology that allow cryptocurrency or NFT transactions”.
However, this status quo seems to have turned a corner on some platforms. From the mobile game purchase volume list released by SocialPeta, the world’s leading advertising and marketing platform, in March and April, it can be found that some NFT products have begun to appear on the purchase volume list.
The new game [Ragnarok Labyrinth NFT] is the second NFT game to hit the launch list after [Trivia Blitz] in March. There are also many hashtags on the game. In addition to the new NFT tour, an RPG chain game created by a Korean company based on the Korean IP “Ragnarok”, its main distribution area is concentrated in Southeast Asia.
Popular NFT games available on the market
Thetan Arena, released on 27 November 2021, is a MOBA & Battle Royale game based on blockchain technology. The game exploded in popularity upon its release and appeared on the list of top 10 games by downloads on iOS in a couple of countries in December 2021.
The game was one of the few NFT games that were advertised massively on the Internet. Thetan Arena had over 300 deduplicated ad creatives, with the most popular piece of creative receiving 2.5 million impressions, according to SocialPeta, the world’s leading advertising and marketing platform.
Axie Infinity was the most popular blockchain-based game in 2021 that allows players to raise and battle creatures known as “Axies”. The game resembles very much Pokémon and other strategy games and Hearthstone and other turn-based card games.
At the peak of its popularity, the game recorded a revenue of over $40 million in a single day, 3 times more than that of Tencent’s magnum opus Honor of Kings.
To learning more about NFT games, I played almost all the games mentioned above. From the perspective of a gamer, I’d like to say that I had an awful experience playing most of them:
1. Most NFT games require players to be linked to a wallet before playing the game, which somewhat discourages players from trying the game.
2. Many NFT games set too high a bar for players to play them after entering their later stage. For example, Axie Infinity, the big hit of last year. If you are a newbie and want to play Axie Infinity now, you will need to buy 3 pets, each cost $400-$1000. Plus, the GAS fees on the platform, you will need to spend $1500 to start your journey of P2E.
3. Most NFT games available on market are truly dull, with most of their gameplays going around P2E to lose all the fun as a game.
I understand that some gamers are concerned about NFT games. However, NFTs do provide a possibility for mobile games in the future. SocialPeta will keep watching and see how this NFT market will be going.
Nothing contained in this article should be construed as investment advice.