NFT in Gaming: How New Technology is Transforming the Gaming Market

A new phenomenon is rapidly gaining traction in the gaming industry — NFT. Non-fungible tokens (NFT) allow for unique ownership rights to digital objects, and video games have become one of the primary areas of application for this technology. Publishers see new monetization opportunities in NFTs, while gamers debate the pros and cons. How are NFTs impacting the gaming market, and what could this lead to?

What NFTs Bring to Video Games

NFTs introduce the concept of unique digital objects owned by the players themselves within games. Any in-game item — whether a rare sword, an exclusive character skin, or a plot of virtual land — can be represented as an NFT token. This enables the verification of authenticity and ownership of items outside the game. In contrast to traditional gaming objects that exist solely on the publisher's servers, NFT items truly belong to the player and can be freely sold or exchanged on external marketplaces.

For the gaming market, the emergence of NFTs signifies a shift to a new economic model where the value of in-game achievements extends beyond the confines of the game. Previously, players were unable to legally sell their accounts or rare items; now, blockchain technology allows these items to become fully-fledged digital assets. This transforms the relationship between audiences and companies: studios gain new revenue channels, while users acquire ownership rights to the results of their efforts in the game.

New Monetization Models and "Play-to-Earn" Format

For game publishers, NFTs have become a kind of "second wind" in monetization. Developers can release limited series of game items as tokens and sell them directly to fans. Furthermore, there is now the ability to earn a percentage from each subsequent resale of an NFT, creating a consistent income stream even after initial sales. Traditional monetization methods — like the sale of DLC or in-game goods — are supplemented by a model where an item's value is supported by demand in the open player market.

NFT monetization opens several additional opportunities for developers:

• Direct Sale of Unique Items: releasing limited edition items and selling them directly to interested players.
• Royalty Income: earning a commission from each resale of the token on an external platform.
• Increased Engagement: amplifying audience interest through the real value of rewards and trophies earned in-game.

The "Play-to-Earn" model is also gaining popularity, where gamers receive rewards in cryptocurrency or NFTs for their accomplishments in the game. Essentially, part of the revenue from the project is distributed among the players themselves. A prime example is the game "Axie Infinity," where users during the height of interest in the project earned real money breeding and selling their virtual pets, represented as NFTs. Such games attract audiences by offering the potential for income alongside entertainment, turning a hobby into a source of earnings.

Investment Boom Around NFT Games

Witnessing the growing interest from audiences, significant capital has surged into the NFT gaming sector. Venture capital funds and major corporations are actively investing in projects at the intersection of gaming and blockchain. In recent years, several startups have attracted multimillion-dollar amounts: platforms for trading game NFTs are emerging, and studios are developing their own metaverses. According to industry analysts, the NFT market in gaming may see substantial growth in the coming years if the technology gains traction in mainstream titles.

Some large gaming corporations have also announced plans to integrate blockchain tokens into their products. For instance, Square Enix has stated that it intends to make NFTs a part of its games and is investing in relevant projects. Overall, there is a growing expectation in the video game industry that this technology will open new avenues for economy: the trading and collecting of gaming assets in real markets.

Disputes in the Industry: Bans and Support

Despite investor enthusiasm, the sentiment towards NFTs in gaming among key market players remains mixed. While some companies actively experiment with new technology, others impose restrictions. For example, Steam — the largest digital distribution service for games — banned blockchain games from its platform in 2021 and removed such projects. Valve cited the desire to keep items with real value off the platform, as well as legal uncertainties (in several regions, such games are classified as gambling).

Other industry leaders have taken the opposite stance. Competing Epic Games Store, for example, expressed readiness to welcome blockchain games after their removal from Steam. Epic Games CEO Tim Sweeney clarified that his company does not plan to use NFTs in its projects until the industry resolves issues related to reliability and fraud. Publisher Ubisoft attempted to integrate tokens into a game (the Quartz platform for "Ghost Recon: Breakpoint") at the end of 2021, expecting a novelty in experience. However, the experiment faced a wave of criticism from the audience, after which Ubisoft paused its NFT initiatives. Thus, a unified approach in the market has yet to emerge: from outright rejection to cautious participation.

Player Reactions: From Skepticism to Interest

Opinions among gamers regarding the integration of NFTs are divided, but many are skeptical. A significant portion of players perceives the introduction of tokens as an imposition of new monetization at the expense of gameplay. Announcements about NFT integration often receive sharp criticism; for instance, a video announcement from Ubisoft regarding Quartz garnered tens of thousands of dislikes on YouTube. Some project authors, sensing negative feedback, backed away from their plans to add tokens — notably, the developers of "S.T.A.L.K.E.R. 2" canceled their NFT initiative just days after fan protests on social media.

On the other hand, Play-to-Earn games have developed their own audience, who view the possibility of earning as part of the gaming experience. In several low-income countries, communities of gamers have emerged who regard participation in NFT games as a form of work. For example, in Southeast Asia, during the boom, some players of "Axie Infinity" made earnings comparable to salaries. However, the sustainability of such models raises questions: participants' earnings depend on the volatility of the crypto market and the continuous influx of new users. Consequently, part of the audience views NFT games more as financial attractions rather than genuine long-term hobbies.

Legal Grey Areas and Ethical Issues

The legal status of NFTs in video games has not yet been clearly defined. In most countries, there are no specific regulations governing the circulation of non-fungible tokens, creating uncertainty. For example, virtual items with value may fall under gambling legislation or financial oversight requirements. A case in point is South Korea, where gaming mechanics with NFTs are officially banned, as authorities perceive them as speculative elements. Even in jurisdictions where there are no outright bans, companies operate cautiously, fearing sudden restrictions or new tax regulations on such transactions.

Specific questions arise concerning digital ownership and security. Although NFTs confirm rights to an object, the game items themselves are still dependent on the existence of a specific game or server. If a project shuts down, token holders may be left with nothing but a record on the blockchain. Ethical dilemmas also arise: how appropriate is it to encourage gambling elements in games where virtual items acquire real value? How can minors and novices be protected from possible fraud involving gaming NFTs? Currently, neither the industry nor lawmakers have articulated clear answers to these challenges.

Risks and Challenges for the Industry

• Economic Volatility: the value of gaming tokens is unstable and dependent on the situation in cryptocurrency markets; therefore, an NFT-based in-game economy can sharply decline during market downturns.
• Fraud and Security: the NFT space attracts malicious actors: incidents of token thefts, wallet hacks, and the emergence of questionable projects undermine player trust.
• Regulatory Barriers: the lack of clear laws and regulations creates the risk of sudden bans or strict restrictions on the use of NFTs in games.
• Negative Community Reaction: attempts to actively implement tokens may alienate some players and damage the developer's reputation.

Prospects: Will NFTs Be the Next Chapter in the Gaming Industry?

Currently, NFTs in gaming remain a controversial trend, but their emergence has prompted the industry to rethink its approach to virtual values. Proponents of the technology believe that over time, gamers will become accustomed to the idea of digital ownership just as they once accepted the free-to-play model. As blockchain platforms continue to improve and gaming mechanics evolve, it is possible that NFTs will be integrated into projects subtly, offering new bonuses and conveniences, rather than solely financial benefits.

Skeptics argue that the excitement surrounding tokens could be temporary: after peak interest in 2021-2022, enthusiasm for crypto-games has waned, with only a few projects retaining their audience. For NFTs to achieve long-term success, initiatives must demonstrate their value in terms of gameplay rather than just revenue. Likely, the future lies in a compromise approach: the integration of tokens where they enhance the player experience, under reasonable regulation; the next few years will be telling — either NFTs will solidify their position as an integral part of the gaming market or will remain a niche experiment on the industry’s periphery.