- There has been a gold rush for play-to-earn games involving blockchain and NFT technology.
- These involve gamers buying and using or trading in-game NFTs.
- One venture capitalist, EQT’s Lars Jörnow is skeptical as NFT sales crash.
Investors and entrepreneurs betting their money on blockchain gaming as the future of the industry are promising gamers a world where they not only play for fun, but play to earn. But for one VC, the verdict is still out.
Lars Jörnow, founding partner at EQT Ventures and former head of mobile games at Candy Crush developer KIng, told Insider that his firm was not „super bullish“ on NFTs, the tokens used to reward gamers in blockchain games with decentralized ownership of unique items.
„There’s not really been a problem with centralized ownership, so from that perspective I’m not sure how much better decentralized ownership of in-game items is,“ he said.
Backers of NFTs have looked to the idea as a means of giving gamers full control over collectible items in games by taking authority away from a centralized authority such as a game studio and empowering users with full control over tokens they can collect or spend in-game.
One example is Axie Infinity, a play-to-earn game which approximately 2.8 million users, where players collect NFTs that represent small creatures that can be used to battle or hunt for treasure. The game, which has attracted partners such as Samsung and Ubisoft, was subject to a hack in March that saw it lose around $600 million worth of cryptocurrency.
For Jörnow, who spent his early days at King playing thousands of flash games, decentralized ownership of items offered by NFTs seems „irrelevant“, with NFTs in themselves not seeming to make a game more fun or offering anything further except for enabling „speculation so you can buy and sell stuff“.
„When you talk about why an NFT game is more fun than a traditional game, when you have those arguments, you eventually come to the end [conclusion] that the users can make money on it buying and selling, so it’s almost like a financial instrument than a game in itself,“ he said.
„It enables speculation so you can buy and sell stuff and, in theory, it enables the ability for decentralized ownership of items in the game, but without a game company operating the game the decentralized ownership of an item is irrelevant.“
Play-to-earn games have faced similar criticism from other corners of the industry.
Valve, the developer of game distribution platform Steam, announced in October 2021 that it would block crypto-based games. In February, Valve president Gabe Newell told Eurogamer the move was made because he felt a lot of what was involved with such games „were super sketchy“ and even „illegal“.
But venture capitalists and entrepreneurs see dollar signs, amid broader interest in tokens.
On July 6, US VC firm Konvoy Ventures announced a new $150 million fund dedicated to gaming, with plans to spend around 20-30% of its new fund on blockchain gaming.
Meanwhile earlier this month, Jason Fung, former boss of TikTok’s gaming unit, told Reuters that he was preparing to launch a blockchain gaming startup after quitting the viral video app in June.
Some of gaming’s biggest names such as Epic Games are looking to get in on the action too, with the Fortnite developer planning to release Grit, an NFT-based battle royale game developed by Web3 company Gala Games, on its online store later this year.
Jörnow’s comments coincide with a collapse in NFT sales, amid rising interest rates and turbulent markets.
Figures from Chainalysis, a blockchain data firm, indicate NFT sales fell from $12.6 billion in January to around $1 billion last month.
EQT has previously made investments into the blockchain space, with Jörnow noting that the firm was looking more the underlying infrastructure of the sector at present, rather than consumer-facing tech.
Find more: Says them it to blockchain games – Krypto-NFTs