In December, game developer Ubisoft announced “Digits,” an NFT initiative for its popular Ghost Recon franchise. It was a new collection of in-game items that could be traded on the Tezos blockchain, chosen over the Ethereum blockchain and others for its lower environmental impact.
The initiative was widely rejected by gamers reacting on YouTube and Reddit, and Ubisoft has shelved it for now. It was a minor news cycle in the gaming world during an especially frothy time, but it represents a growing problem for gaming companies, game design, and billions of gamers around the world. To understand why, you have to understand the history of how video game publishers make money. Let’s start with Grimes, the award-winning music artist.
Grimes and Playing to Earn
“A few months ago I said I was interested in radical wealth redistribution through gaming, and everyone made fun of me and said I was insane, but I would like to explain myself,” was how Grimes started a TikTok video from late November on her idea for the world’s poorest people to play video games for money instead of “working in the fields, picking strawberries.”
How in the heck do you make money just playing video games? In fairness to Grimes, who shares a reputation with her former partner Elon Musk for their boundary-pushing, utopian visions, her idea isn’t as far-fetched as it first seems. There’s a new breed of game where items and currency can be earned for playing and then traded on the blockchain. One of the most popular is Axie Infinity, a Pokemon-like battling game where users train and trade “Axies” to fight. According to the company, the most expensive Axie to be traded went for 300 ETH, about $1.1 million at today’s exchange rate.
Has Axie publisher Sky Mavis discovered how to use the blockchain to get more of the world’s three billion gamers to engage with the economics of in-game purchases, thereby making game developers more money?
People in countries with less developed economies than the U.S. started playing the game to earn SLP and AXS, the in-game currency that can be used to breed and raise Axies. These players sold them to other (likely wealthier) players who wanted to pay to skip the need to spend the time it took to earn the currency. In the Philippines, farm workers were reportedly making two-days’ income with just one hour of play-time as of August.
Back to Grimes: If tilling the fields can be automated, why shouldn’t those who were otherwise doing hard labor swap to playing video games instead?
There’s a long tradition of “gold farming” in massively multiplayer online games (MMOs). The way it works: To advance in the game, players must typically spend a certain amount of time doing basic in-game tasks, earning in-game currency. It didn’t take long for people to figure out ways to buy and sell that in-game currency outside of the gaming platform, leading to some strange, unintended outcomes. Most infamously, this took the form of “gold farming” in World of Warcraft.
Unintended Consequences
A few years ago, the popular MMO RuneScape saw a massive influx of new players. As NPR’s Planet Money tells it, the Venezuelan economy was collapsing and the local currency, the bolivar, was facing hyperinflation. Venezuelans took to RunScape to earn in-game currency, which was much more stable than the bolivar. RuneScape gold farmers were making more money than local doctors, who were paid in the rapidly devaluing bolivar. According to one estimate, up to 1.8 million Venezuelans were playing the game, making up to $10 a day.
Then, an in-game clan called Reign of Terror started extorting the Venezuelan players, charging them for access to the best mining spots in the game. The Venezuelans then formed their own gang, the Venezuelan Mafia, which battled Reign of Terror for control of the mouth of the Revenant Caves, for weeks, 24 hours a day. This was not what the game developer Jagex intended, and so the company tweaked the game until gold farming was no longer lucrative.
More importantly to Ubisoft and Ghost Recon, game developers saw what was happening in RuneScape, World of Warcraft, and others and thought, why are we letting random people make that money when we can make it ourselves? In 2020, 74% of all game publisher revenue came from in-game purchases, according to a report from NewZoo. That number is expected to hit 77% by 2023; it was 0% just a few decades ago. In digital stores, users buy items and currency; publishers also sell “loot boxes,” a mystery item that players get if they pay, making the transaction also a gamble. Loot boxes can cost up to $7 each, and the industry refers to players who spend the most on them as “whales,” the same terminology used by casinos to describe their biggest-spending clients.
Gamers Hate This
In December, when Ubisoft announced Digits, some NFT enthusiasts praised the move as a way for players to reap some of the financial benefit of in-game items.
“Would people rather see Ubisoft make all the money or the general public make all the money?,” Pinder Van Arman told Intent. He’s an artist who builds robots with artificial intelligence that make physical art that he sells as NFTs. He has also dabbled in gaming.
Hardcore gamers didn’t see it that way. Yung Yea, a gaming commentator and actor, ranted on his YouTube channel that publishers should stop trying to extract as much revenue out of gamers as possible by making elaborate in-game economies, and should instead focus on making better games that aren’t warped by real-world money.
“I don’t want to be a stakeholder of your game,” he said “I don’t want real-life economic elements sneaking into my games. I just want games to be games. I want to escape from all that stuff.”
There was also an element of distrust in his rant. Rather than make games for players, he warned his viewers that publishers would just follow the NFT money.
“You just wait until you see how games evolve for the worse as game publishers make games around trying to sell NFTs, rather than just make games that are just games,” he said.
Gamers have long been suspicious of publishers, especially as it relates to monetization.
“You have to look at any monetization decision they make with the highest level of cynicism,” said Stefan Mancevski, director of product marketing at Betterment, and an active gamer. “It’s because this is the reputation that the publishers have developed for themselves -- and this is the reputation they deserve.”
According to Mancevski, publishers have a long history of rolling out sweeping changes -- like loot boxes -- that further commercialize games, and then after gamers reject the changes, roll out a half-measure version that still makes the games more lucrative and less fun to play.
“It changes game design significantly,” he said. “There are games that are designed to make you always look at the store, to drive you to things to buy.” Of Digits, Mancevski added, “My first reaction was that this was another way for them to get me to look at their shop, not that it was a way for me to own a piece of gaming history.”
For now, it’s neither, as Ubisoft has delisted Digits from Tezos and there are no public plans to try it again.
Meanwhile, things haven’t worked out so well for Axie Infinity and Grimes’ idea of wealth redistribution through gaming. Mining in-game currency is no longer even as lucrative as a minimum wage job in the Philippines. Even though Ubisoft went a different route for its games, the collapse of Axie was a loss for the company, too, as it partnered with Sky Mavis to validate Axie’s blockchain transactions. So don’t blame Grimes for getting it wrong -- even the professionals at Ubisoft haven’t been able to figure it out.
With Ubisoft retreating, and gamers tired of being “manipulated, using behavioral tactics” into gambling on loot boxes, per Mancevski, what should game publishers do? Their ultimate mission is to make more money, yet they can only watch in envy as other sectors of media cash in on NFTs.
When Intent asked Mancevski what he would advise game publishers do, Mancevski said, “It’s not my job as a consumer to tell companies how to build their products in order to make the most money for shareholders. It is my job to tell them when it’s not something for me.”
