Video games are expensive. They have been expensive for a very long time, and they keep getting more expensive. To an extent, it makes sense: Game developers need to eat! But after a certain point, it gets excessive. Loot boxes, gacha, and now NFTs are signs of that excess. On this week’s Splitscreen, we talk about all of the above and the many, many other ways video games try to take our money.
To kick off the episode, Ash Parrish, Mike Fahey, and I—alongside special guest Luke Plunkett, who called in from the Australian future—talk about gaming’s early dalliances with microtransactions. Remember when people absolutely despised Elder Scrolls IV: Oblivion’s horse armor? That feels like it happened at least 433 years of Akatosh ago. After that, we move into a discussion of the hot new moneymaking scheme in the art, sports, and video game worlds: NFTs, or non-fungible tokens. We talk about how they’re an ethical and environmental disaster—not to mention a questionable investment—but they’re probably here to stay.
Then, for our final segment, we discuss how all these various moneymaking systems and markets in and around video games intersect in ways that are, to put it lightly, not great for regular people. Also, we discuss recent monetization developments, including Activision-Blizzard’s hiring of a Bush-era counter-terrorism appointee to deal with loot boxes and emotional manipulation in games like League of Legends and, more debatably, Genshin Impact.
Get the MP3 here, and check out an excerpt below.
Ash: I didn’t know what this whole NFT thing was three weeks ago, but now it’s all anybody can talk about. I know it’s been a thing for a while, but what happened to bring it into the zeitgeist?
Luke: The art sales are astronomical. The art sales have gone from $60,000 to $2 million to $6 million to, like, $69 million in the space of two months. I’ve seen some reports throwing some doubts on some of the stuff behind that sale, because hey, another thing everyone warned about is that this is a giant scam. But this other stuff, like NBA Top Shots, became big news in sports circles. So everywhere that NFTs have come up at the same time, they’ve come up in different communities, and so it’s also coalescing—which then leads to bigger outlets like the BBC saying, “Oh, what are NFTs? Let’s write about them.”
Ash: So is this, like, the one guy behind NFTs just astroturfing the shit out of this stuff?
Luke: Maybe not the one guy, but the people involved, there is that possibility. Because that’s the other question: Who’s behind these marketplaces and who are these people? Where’s the regulation and legitimacy in this market? If I buy something on eBay, there are varying levels of protection and legitimacy afforded to that. If I’m buying a token from some store I never knew existed a month ago, do I have that same peace of mind with my ownership and the legality and all the other stuff behind this? I don’t know that. I’m not saying it’s not legal. I’m just saying these are more of the questions people should be asking instead of just blindly jumping into this marketplace. This is a marketplace the planet’s never seen before, and people are just taking it for granted that it works. Maybe it doesn’t.
People that are into this crypto stuff will say, “Oh, but what about real money? What about those transactions? What about the stock market?” And it’s like, well, yes, but also a lot of real-world transactions are backed by real guarantees, and many of those real guarantees are related to real things. They’re related to property, they’re related to buildings, they’re related to businesses that employ people. It’s a completely different set of rules.
Nathan: And there are real consequences, right? I was reading a piece on Gizmodo yesterday about alleged NFT theft and second-hand sales, and while the platform that carried out the transaction returned money to the victim, the people running it were like, “Well, it would be unfair for us to take back the art from its new owners.” So basically, they decided the theft wasn’t their problem.
Luke: It’s a deeply Silicon Valley way of looking at consumer rights.
Nathan: And lest you be concerned that this hasn’t directly bled into video games, it has. There have been a lot of video games rooted in NFTs, and they’ve existed for about as long as NFTs have existed. Cryptokitties, which Luke mentioned earlier, was one of the first big ones. There’s another called Axie Infinity. There’s Gods Unchained, which is a card game. They all hinge around the same idea, that whatever the main thing you’re interacting with in the game—be that cards or capturable monsters or whatever—is an NFT. So whatever you get is a completely unique object that only you own. It was the same for Cryptokitties.
Fahey: I saw one recently that had you make your own unique character, level up that character, and then sell that character.
Nathan: There’s also property. In a game called Mirandus, somebody spent $800,000 for a citadel. There’s another game I saw mentioned in the newsletter of Dean Takahashi from VentureBeat. It’s called The Sandbox, and it’s basically Roblox, but with NFTs, so people own their creations as NFTs. It all sounds vaguely compelling if you’re really into ownership, but there are so many other mechanisms for these features built into games already. Like there was this bit in that newsletter where he said, “In a game, I could buy an NFT that memorializes my completion of Red Dead Redemption 2, or captures everything I did in the game and follows my unique path through. I could show that to people maybe sometime in the future and recount it with pride. I would pay for that.”
I read that sentence and thought, “I wouldn’t pay for that!” Because it’s something you can already do with Nvidia Shadowplay or the share button on your PlayStation controller.
Luke: You can imagine how many people at EA, Activision, and Ubisoft are hard at work finding ways to strongarm this into FIFA and Call of Duty. It just makes me exhale deeply every day.
Nathan: One of the big standout events in video game monetization more recently is that Activision-Blizzard has brought on a former Bush-era torture apologist to basically work in the space of loot boxes and consumer privacy. Her name is Frances F. Townsend, and in his wonderful article about all of this, Ethan described her as a “George W. Bush-era counterterrorism appointee and torture apologist.” She is Activision-Blizzard’s new head of compliance, which means she is in charge of making sure the company doesn’t run afoul of various rules and regulations throughout all countries with regards to things like player privacy and loot boxes and other issues like that.
That’s the thing about all of this: Even though companies won’t admit it, in making decisions like that, in having these sorts of positions in the first place, what they’re saying is that they’re often skirting the edge of what is allowed or legal. They know it. I think they especially see the way the wind is blowing with loot boxes, and they’re like “Well, if we want to keep doing this, we need somebody in our company who keeps close tabs on this and contorts what we’re doing so that it’s still technically legal.”
That especially seems relevant to me given the explosion of NFTs and what Luke was saying—that there are probably people at major video game companies coming up with schemes to take advantage of NFTs. In the same sense, I’m sure compliance officers are like “How do we do this so that we don’t immediately bring down the fury of lawmakers and regulators, so that we can make as much money as we possibly can?”
That’s kind of the crux of all of this, right? Whether we’re talking about a hat and cosmetic item-driven marketplace on Steam that now makes Valve tons of money and operates entirely within their platform, or NFTs, or loot boxes or whatever, what they all have in common is that they are new economic systems and markets that can skirt regulations for years simply by virtue of being new and outside traditional regulation. And by the time regulators and lawmakers notice them, they’re already entrenched, or a bunch of rich people have already gotten richer, and they can just move onto the next thing. That’s the grift, right? It’s cyclical. It happens over and over and over.
For all that and more, check out the episode. New episodes drop every Friday, and don’t forget to like and subscribe on Apple Podcasts, Spotify, or Stitcher. Also, if you feel so inclined, leave a review, and you can always drop us a line at email@example.com if you have questions or suggest a topic. If you want to yell at us directly, you can reach us on Twitter: Ash is @adashtra, Fahey is @UncleFahey, and Nathan is @Vahn16. See you next week!