The crypto and gaming meme has been a potent one for enthusiasts of both realms. Adding digital scarcity through an amalgam of in-game tokens and blockchain technology appears ripe for online games. This thesis already holds true for the viral collectible sensation CryptoKitties, which at its peak sold a furry digital critter for over $100,000. So, why not Fortnite?
Breaking down Gaming with Tony Sheng
Enthusiasm alone, however, isn’t enough to convince Epic Games to adopt an ERC721 token for the platform’s booming in-game purchases model.
Tony Sheng is likely the best resource for anyone interested in learning about how cryptographic tokens would fit into the world of online gaming. He is aware of the appeal and the seemingly perfect technical fit considering the capacities of digital scarcity. Yet, he astutely points out that the business model for games like Fortnite and Diablo would likely crumble if deviated from.
To make this argument clearer, consider how Blizzard Entertainment, the creators of Diablo, Starcraft, and World of Warcraft, approached an in-game economy. In 2011, the company launched an auction house for Diablo III where players could buy and sell highly-coveted pieces of weaponry and armor that they would have otherwise spent hours of gameplay collecting. The reasoning behind the auction house was to curb the growing gray market that was popping up within and outside of the game.
In a Wired article on the subject, a Blizzard spokesperson said:
“Many of these methods were inconvenient and either tedious (for example, repeatedly advertising for a desired trade in Battle.net chat channels and waiting for responses) or unsafe (e.g., giving credit card information to third-party trading sites).”
More importantly, the auction house also provided Blizzard with a steady flow of income as the gaming company took a small percentage of every trade.
Payouts were conducted with in-game gold (i.e. unreal money) and real cash. Upon its launch, however, the game quickly degraded into a Wolf of Wall Street pursuit for the best loot in the game. Instead of slashing and killing their way to Legendary items, players would instead hang out at the auction house waiting for the same items to come to market. Some players reported making thousands of dollars from this model.
This degradation ultimately led to a “less rewarding” gaming experience according to former game director Jay Wilson and ultimately saw the auction house close for good.
Enter Digital Scarcity Stage Left
This issue appears like a prime target for sound digital goods à la ERC20 and ERC721 tokens. In rendering the same weaponry from Diablo or the purely aesthetic collectibles found in games like Fortnite, an immutable, trackable, and wholly digital accounting solution could resolve issues like the auction house above. Unfortunately, this assumption flies directly in the face of the business model upon which Fortnite, for instance, turns so much profit.
In Fornite, users can buy and sell outfits and dance moves with the in-game currency V-bucks. This currency is bought with real cash and is one of many revenue streams the game generates. The supply of goods on sale are also in complete control of the creators of Fortnite, meaning that if the demand was greater for an item than expected they can just create more and maximize their revenue. The same goes for simply raising prices on certain high-demand goods too.
In any case, the centralized control of supply and demand runs counter to a technology that looks resolve this entirely; and although secondary markets have formed around the game, Fortnite has been quick to ban accounts that participate in them. After all, selling a valuable emote outside of the game means lost revenue for Epic Games.
Concluding, Sheng sums up the following:
“There’s no reason for Epic or any other incumbent game company to replace their game items with cryptogoods or their game currency with cryptocurrencies. If the ‘next Fortnite’ has similar business incentives, they will not want to use cryptogoods or cryptocurrencies either. So if games bring crypto to the masses, they will have different business models.”
The Next Fornite
New business models are the bread and butter of cryptocurrencies and blockchain technologies. It has sparked the narrative around finance 2.0 as well as the rise of unforeseen black markets. The rise of Sheng’s crypto gaming concoctions is also up for grabs. A Norwegian startup, SoCouch, is taking this problem on with their upcoming game Ember Swords.
In an interview with BTCManager, the CEO of Ember Swords and ex-professional gamer, Mark Laursen, explained that “the idea for Ember Sword comes from [massively multiplayer online role-playing games], and less browser gaming.”
That being said, the team behind the project also boasts a wealth of experience in both the browser gaming genre and beyond. The firm’s CMO, Sune Thorsen, helped develop a developer tool called Unity Game Engine, and SoCouch’s Creative Director, Sage Durain, is the owner and founder of the social media platform Starcade.io.
Although Ember Swords appears straightforward, it does add some twists that qualify it for Sheng’s crypto-gaming thesis. Users begin by first creating an account and designing their avatars’ hair color, gender, and similar attributes. Once inside, Thorsen explained that the game operates much like Runescape or Albion Online in which players level up different skills in pursuit of various objectives. One could, for instance, gather wood to craft bows and fight bad guys, or, alternatively, use that same wood to make fishing poles and improve cooking skills.
Users can also gather resources to build weapons and armor which can be sold in the game for non-crypto “gold.” Alternatively, items can be dropped in player-versus-player (PVP) or player-versus-environment (PVE) combat. All of it appears quite familiar, but Laursen and co. have taken bits and pieces of the conventional scheme and turned them on their head using Ethereum’s blockchain.
“The game isn’t meant for crypto-enthusiasts,” reports Thorsen. “But it does use blockchain technology to improve digital scarcity that comes along with these types of games.”
Ember Swords leverages an ERC20 token called Pixel (PIXEL), which will be sold in a type of Kickstarter fundraiser later in Q4 of 2020. The token, like Fortnite, is only used to buy purely aesthetic items to adjust the appearance of one’s character. These skins are created by artists within the Ember Swords community, released into the game, and then move between players following PVP matches or selling the item during gameplay. Importantly, Pixel tokens can also be sold for ether (ETH) and bitcoin (BTC), giving them genuine monetary value.
(Source: Ember Swords)
Outside of aesthetic items, users can also use Pixel tokens to purchase plots of Land. Landowners can then turn these parcels into whatever they like thus adding a unique, ever-changing in-game terrain. This could mean that a user turns their land into a farm for materials or a trading hub. Other players who arrive to leverage these services would pay in Pixel tokens.
From here, one can see a rich gaming economy that, before the arrival of blockchain technologies, appeared impossible or flawed.
Minimum Viable Tokenization
Although the game has yet to launch, the cool-headed appreciation for what a digital token can do is refreshing. As Sheng mentioned in various case studies, there is indeed a place for cryptocurrencies in the thriving gaming industry. But as many have also realized, it will also mean a serious upending of how gamers have come to understand gameplay.
Ember Swords puts the game first in their sandbox-style MMORPG but leaves room for experimentation with tokenization. The inclusion of land ownership on a blockchain also cuts past the hype to offer intriguing utility and adds a generous facet yet unseen. Until release, however, whether this addition is indeed valuable for a more rewarding experience is still to be decided.
Whatsmore, in including real monetary value in this way, will Ember Swords be reduced to the speculative degradation of Diablo’s auction house?
Likely not, but the depth of gameplay, of which economics only makes up a portion, make Ember Swords worthy of enthusiasts’ attention.