After a turbulent past few years, its clear that many in the videogame industry continue to ask, ‘What are the benefits of NFTs in gaming?’ While some web3 games - such as Alien Worlds or Splinterlands - have established a cult following, the web3 gaming industry as a whole is in its infancy. Risk-averse triple-A studies are, perhaps understandingly, hesitant to deploy technology they don’t yet fully understand.
In late July of 2022, Minecraft developer Mojang Studios updated their rules regarding the use of blockchain technology by players of their game. Of their own initiative, players had already begun to take advantage of NFT technology in designing custom in-game assets and modifications. Minecraft’s basic premise - a shared virtual sandbox world for creators to build whatever their imagination could conjure - seemed a natural fit for blockchain technology, which empowers creators in a variety of ways.
Yet, the studio did not see things that way. To the disappointment of many, they announced that blockchain technologies and NFT creations would not be permitted to be integrated with Minecraft.
Mojang’s article listed the potential uses of NFTs in their game as “to create NFTs associated with any in-game content, including worlds, skins, persona items, or other mods,” and, “creating Minecraft collectibles… allowing players to earn… through activities performed on a [Minecraft] server, or earning Minecraft rewards for activities outside the game.”
Even though some of their players were already experimenting with the above NFT-enabled functionality, Mojang remained firm in their decision to ban all blockchain integration. At the end of their article announcing the ban, the studio wrote that they would be “paying close attention to how blockchain technology evolves over time,” suggesting that they might perhaps be open to reconsidering the issue at a later date.
It’s been almost a year since Mojang’s decision, and NFTs have come a long way. So what were Mojang’s concerns, and are they still legitimate?
Are NFTs reliable?
One of the studio’s concerns was that “some third-party NFTs may not be reliable and may end up costing players who buy them.” While it’s not clear what exactly is meant by ‘reliable,’ it is certainly true that the still-nascent web3 industry has had issues with security. But as the industry has matured, more and more web3 companies are taking security seriously. Things are now much better than they were, and will only continue to improve as the industry grows.
More than that, though, web3 developers are also doing more to streamline and simplify user experiences. Having to navigate multiple, complex interfaces and remember long passwords leaves mainstream users open to making mistakes and exposing themselves to scams or shoddy products. The key here is to build systems that are smooth, seamless and easy-to-use, something that is being more and more understood by web3 developers.
Do NFTs boost community?
Another of Mojang’s concerns was that “NFTs are not inclusive of all our community and create a scenario of the haves and the have-nots… the speculative pricing and investment mentality around NFTs takes the focus away from playing the game and encourages profiteering, which we think is inconsistent with the long-term joy and success of our players.”
Looking back at the first wave of NFT games that arrived on the scene from 2018-2020, it’s not hard to see how Mojang came to the conclusion they did. While some gems have persisted, there was a flood of poor-quality games intended as easy cash grabs.
The situation is improving in this regard, as well. Better funded, more experienced studios are taking their time to thoughtfully design games that are enhanced by NFTs, not burdened by them.
Besides this improvement in the quality of web3 gaming, however, there’s another point to ponder. Mojang says that NFTs “encourage profiteering,” but there are already plenty of ways to profit from their game.
Making money with Minecraft
For as long as there have been games, people have been making money off them. That’s ALSO true of Minecraft.
A quick Google search reveals plenty of recommendations for how to make money using Minecraft. They range from selling your accounts or access to your private server to hiring out your skills as a world builder on freelancer websites. Sites like MCTrades provide platforms for players to buy and sell accounts, facilitating the transfer of skins, graphics and various in-game items to other players.
Much of this behavior violates Minecraft’s End-user License Agreement (EULA) which stipulates that players “must not try to make money from … [or] make commercial use of… anything we’ve made.” Mojang reserves the right to suspend user accounts found to have engaged in such trading.
Minecraft Partner Program
That is, of course, unless you join Minecraft’s official marketplace, where you can buy and sell in-game assets as much as you like!
“We recognize that creation inside our game has intrinsic value,” says the Mojang team, “and we strive to provide a marketplace where those values can be recognized.”
In order to sell your creations on the official marketplace, however, you must first apply to join the Minecraft Partner Program. Then, you’ll be able to upload your custom in-game assets for other players to purchase, using the in-game currency, Minecoins. The bar to join the program is high, however. “Your portfolio should be filled with high-quality, original content,” states the website. “As an official partner, you’ll be expected to operate like a business and submit key art, screenshots, trailers, and descriptions of your work.”
To operate like a business? That sounds suspiciously like the ‘making commercial use of’ Minecraft that was explicitly forbidden in the EULA. The program’s webpage even teases that “you might even turn your crafting hobby into a creative career!”
Cornering the market
If you’re wondering why the discrepancy, consider the numbers. In 2022, out of a total global gaming market of approximately $225 billion, in-app purchases comprised $145 billion, or about 65% of total revenue.
Zooming into Minecraft, we find that the more than 1.7 billion pieces of player-created content brought in $350 million in revenue in just Q3 2021 alone. Of that revenue, content creator partners on the Minecraft Market take a 50% cut, according to terms dictated by Microsoft, the game’s publisher.
Clearly, controlling the market of player-generated content is extremely profitable for the powers-that-be. They have little apparent incentive to give players full control over their own creations.
Who really owns your in-game creations?
The Minecraft EULA states that “any mods you [the user] create for the game from scratch belong to you... You can do whatever you want with them, as long as you don’t sell them for money or try to make money from them.”
By contrast, when it comes to the studio’s rights, “you [the user] give us permission to use, copy, modify, adapt, distribute, and publicly display that content. This permission is irrevocable… you are not giving up your ownership rights in your content, just giving us and others permission to use it.”
Though creators are said to own what they create, this clearly comes with caveats that create an imbalance between player and game-maker.
It also mean the the end for at least one devoted Minecraft Web3 project. Following the announcement, a group of player-developers was forced to suspend their initiative to integrate into the game “a blockchain layer that connected Minecraft servers, provided a cross-server game currency, and enabled player rewards and content access through digital collectibles.”
Undeterred, the group decided to create their own rival to Minecraft, updated with the latest in Web3 technology. Now rebranded as TOPIA, the team declared that they were engaged in a “web2 vs web3 battle… between two different visions of the future of the web,” and a “technological struggle over who will have ownership of digital assets.” Using blockchain technology, the team set about championing “the spirit of innovation through independent creators,” in the face of corporate monolith Microsoft, which would “always act in the interest of their shareholders and balance sheet, to the detriment of innovation, player experience and creators.”
With a stated goal of becoming “the next Minecraft,” TOPIA aspires to be “a game and developer platform… encourag[ing] innovation and collaboration among a community of enthusiastic players, driven content creators, and helpful contributors.”
“When [the original project cancelled by Minecraft] was thriving, we had nearly 100,000 players, over a million in-game transactions, over 40 of the top Minecraft development teams building content, and support from major brands and projects building on top of [it]. There was undeniable demand from both creators and players.”
The endless possibilities of NFTs
According to Mojang, usage of NFTs “creates digital ownership based on scarcity and exclusion, which does not align with Minecraft values of creative inclusion and playing together.” The TOPIA developers, however, see a different possibility. They are “incorporating blockchain elements for decentralized game economies and open systems governed by our community.”
One of the four core pillars of the TOPIA project is to support creators - to “empower content creators by offering them flexible monetization policies, state-of-the-art tools, and a unifed player ecosystem. All of which is governed and directed for decision and feature development though creator-led governance.” As is the case for all such sandbox creation games, “creators form the foundation of the TOPIA ecosystem.”
Proving this is the TOPIA monetization policy, which sees player-creators “retain over 95% of their content revenue,” while the platform takes a mere 5%. “This split revenue structure,” explain the developers, “is made possible thanks to a level of business model innovation we can only enable with blockchain.”
A corporate conundrum
This drives at the core of the problem. Mojang speaks of “scarcity and exclusion” not aligning with “Minecraft values of creative inclusion and playing together” when, in the same moment, Microsoft is extracting 50% of player-owned revenue to generate massive corporate profits. Such an outdated business model, resting on top of outdated technology, only serves to alienate and exploit players who have given so much to the game.
TOPIA’s answer is to provide “a haven for creators [that] outshin[es] competing platforms.” Still in development, it remains to be seen whether or not they will realize their vision. But, beyond TOPIA, it’s clear that the emergence of blockchain technology marks the beginning of a new conversation about monetization and player ownership in gaming.
TOPIA would do well to look to the example of early successes in the web3 gaming industry. Another player-creator driven virtual platform, The Sandbox, has quickly become the darling of the web3 gaming scene. Heavily inspired by Minecraft, virtually anything in the game can be bought and sold by players on the platform’s own NFT marketplace, or any other marketplace where NFTs can be bought and sold. This can even include a Shopify storefront which, through the use of a Venly plugin, can be used to sell NFTs directly to customers’ emails.
Herein lies a critical advantage of embracing blockchain in gaming. Developers can spend an enormous amount of time and resources building web2 marketplaces and in-game currency systems from scratch. Or, they can take advantage of the ready-made systems designed by web3 developers like Venly to deploy in their games for a fraction of the cost. The Gaming APIs and SDKs for engines including Unreal and Unity mean that experimenting with web3 features is an easy, painless endeavour.
Even if you were uncertain about the implications for gameplay, all of the tools are highly customisable, meaning that you could build a closed, web2 system in the vein of the Minecraft Partner Program, and then slowly experiment with the novel features that blockchain provides.
While some industries, notably fashion and luxury, have rushed to embrace web3 technology as a way of better engaging their fans and followers, the gaming sector as a whole is still in the midst of a discussion. Certainly, a good-faith discussion can be had over how blockchain technology can improve and how specifically it can serve specific industries, and that discussion is being had.
It should also be recognised, though, that the ‘business model innovation’ made possible by blockchain can be perceived as a threat by large, vested interests looking to continue doing things the old way, to the benefit of their bottom lines but ultimately at the expense of their players.
While we’ll have to wait and see just what becomes of TOPIA’s tilt at the title of virtual sandbox king, early successes such as The Sandbox indicate that, regardless of how this particular game plays out, there will be plenty more players to come.
Venly is a blockchain technology provider creating tools and products to help companies benefit from blockchain technology. We provide a complete technology stack to bring brands, apps, games and platforms into Web3. We help businesses integrate Web3 technology & onboard users seamlessly. We are making blockchain accessible for everyone.
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