Ubisoft Entertainment SA (EPA: UBI) stock is up 3% in Paris on the back of the announcement of NFTs as part of the ingame experience on their new Tom Clancy title – to start with. Gamers are venting outrage about the decision, the crypto community are lauding it. It’s possible that the real effect will be to regularise the in and across game economy in earned items.
The announcement by Ubisoft about NFTs is here. Looking behind the rhetoric about non-fungible tokens that will be traded on the low-energy Tezos blockchain it’s possible to see two current sets of reactions.
A goodly part of the controversy is about the energy consumption of NFTs specifically and crypto more generally. Claims that Bitcoin uses more energy than Sweden – or other examples – are bandied about. So, does a world fighting climate change really want to have NFTs, based upon the same underlying technology of the blockchain and mathematical calculations to validate transactions, added into the mix as a major energy consumption point?
On the other hand crypto miners – those who perform the calculations to do the validation – are, as those major energy consumers, interested in low, low, energy prices. Much of this, therefore, comes from hydro, which is usually the cheapest uninterruptible power source.
Ubisoft also makes a significant issue of their use of the Tezos blockchain which is touted as in itself being a low energy product.
More generally the first objection is from gamers who don’t really see what the point is, even that it might degrade the ingame experience. They are the primary audience for the games themselves after all and the NFTs aren’t being added to advance the specific gameplay.
The NFTs will start with the one Tom Clancy title – Ghost Recon: Breakpoint! – and then be expanded across Ubisoft’s offerings. For the crypto community, the announcement has its excitement more in the way that NFTs from different games will trade across the new platform, Ubisoft Quartz. This platform launches in major markets on Dec 9 at 6 pm UTC. Having non-fungible tokens fungible across a platform seems odd but that’s just a trick of the language. It is exactly that fungibility that excites the crypto community for it breaks the wall of the one game experience. Trading across games even if from the one publisher and on the one platform is different.
An NFT is a non-fungible token, a unique and non-interchangeable unit of data stored on a digital ledger. Or, to put it more simply, it’s a something – a picture, piece of text, unit of that data – which is marked as being this particular one. It is different from others that might look the same and the difference is registered and stored on a blockchain.
The excitement from NFTs comes partly from their new value as collectibles – Beeple, the American digital artist, sold work for $69 million in this format. But there’s more to it than that, it’s possible that this is what the blockchain is really useful for. Registering, storing and proving ownership of an asset.
The gamers aren’t particularly interested in this, the crypto community is, thus the divergence of views in welcoming or not Ubisoft’s announcement of ingame NFTs. Cue outrage and shouting as each community puts forward its views.
The value to Ubisoft is more than just the adoption of currently fashionable technology like NFTs into games. There have long been ingame markets in the varied awards, upgrades, monies and so on that exist within the one game title. Expansion of those markets across titles that share the same platform is a possible game-changer. The market becomes much deeper, more liquid and thus more attractive to potential market participants. This could well increase cross-sales of titles among gamers. If you’re invested in NFTs on the platform wouldn’t you be more likely to buy another game that used that same platform and where the NFTs might have value?
The crypto and games communities might continue to shout past each other but it could be a very clever move by Ubisoft, the seller of the games and owner of the NFT trading platform.
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Tim Worstall is a freelance writer specialising in economics and the financial markets.