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Electronic Arts cools on NFTs as gaming pushback escalates

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In an earnings call on Tuesday, Electronic Arts (EA) CEO Andrew Wilson dialed back enthusiasm related to non-fungible tokens (NFT). Since the last earnings call in November, Ubisoft unveiled a major game with NFTs, which received considerable negative feedback. And this week, Indie game publisher Team 17 dropped plans to introduce NFTs that were entirely unrelated to gameplay.

Before diving into Wilson’s comments, it’s worth noting that there are two potential avenues for blockchain games. On the one hand, it’s possible to incorporate NFTs, making in-game items more easily tradable. But additionally, Play-to-Earn games use gameplay design and fungible tokens to incentivize users both to play games and create user-generated content. In-game NFTs are the first step.

EA’s position on NFTs

In the latest earnings call, EA’s Wilson said, “I believe that collectability will continue to be an important part of our industry and the games and experiences that we offer our players. Whether that’s as part of NFT and the blockchain, well, that remains to be seen.”

This contrasts with more upbeat comments in November when he stated, “is there an opportunity, particularly as we think about NFTs and other digital ecosystems, to expand that value over time? I think the short answer to that is yes.”

However, his previous comments added a caveat, “I mean the slightly longer answer to that is we need to work and make sure we continue to appropriately tune and balance the experience for our players, and we’re always looking to give our players more value in the experiences they enjoy.” 

Before the November earnings call, EA had already started recruiting blockchain and NFT skills. As we noted in that article, EA is perhaps the single most important games company for NFTs because a huge proportion of its income is already tied to collectibles, particularly for sports. In its 2021 financial year, its Ultimate Team mode yielded net revenues of $1.6 billion, or 29% of total revenues.

The games pushback

Before the 2021 NFT buzz gathered momentum, major games publications such as already voiced skepticism. Ubisoft, the games company that has been the most involved in exploring NFTs for years, decided to roll out some carefully considered NFTs in its Ghost Recon game. It went out of its way to discourage traders and target genuine gamers. Nonetheless, it encountered considerable negative feedback.

More recently, indie publisher Team 17 was planning a generative NFT art project, Meta Worms. These were not in-game NFTs. They were just NFTs related to a game theme that was licensed to an NFT company. Within a day, on Twitter multiple Team17 game developer partners announced they had no plans ever to use NFTs, and Team 17 officially dropped the idea.

Despite backlash, some games will adopt blockchain

The question remains, what happens when the NFT bubble bursts? Several blockchain games companies have had huge funding rounds. Tooling company Forte raised a whopping $725 million. Developer and investor Animoca Brands attracted funding of more than $570 million in the last year, on top of another $93 million invested in its Sandbox title. 

The Sandbox is one of three titles where the cryptocurrency market capitalization is above $3 billion. The others are Axie Infinity and Decentraland. All three token prices are considerably down on their November peaks. It remains to be seen how the play to earn experience holds up in the medium term. And doubtless, it needs to become more sophisticated, a little less money focused, and more integrated with conventional gameplay.

There appear to be two distinct audiences – for mainstream games and blockchain games. So there’s a chance there could be fragmentation within the sector. Will the crypto crowd use its deep pockets to persuade the best developers to jump ship? It might take years, but if that happens, the audience is likely to follow the quality games.

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