Blockchain and video games: a happy marriage?

What if blockchain tech­nol­o­gy were to pro­found­ly change the video game land­scape through an unprece­dent­ed trans­fer of own­er­ship in the form of non-fun­gi­ble tokens (NFTs)? The mar­ket for avatars and non-fun­gi­ble objects has already entered the vir­tu­al game world in a hap­haz­ard and often exper­i­men­tal way. Stu­dios and pub­lish­ers such as Ubisoft, through its Strate­gic Inno­va­tion Lab, are now look­ing at this new mod­el that the video game indus­try could pop­u­larise worldwide.

What is the mis­sion of Ubisoft’s Strate­gic Inno­va­tion Lab?

Nico­las Pouard. To antic­i­pate the future of the video game indus­try and help Ubisoft pre­pare for it. As such, we’ve cre­at­ed a fore­sight team that con­ducts fair­ly stan­dard stud­ies to project our­selves into the future based on trends and weak sig­nals. And we try to trans­late this prospec­tive research into con­crete and prac­ti­cal terms.

First­ly, we have a pro­to­typ­ing team that gets its hands dirty. For exam­ple, very ear­ly on we worked very ear­ly on sub­jects such as aug­ment­ed real­i­ty (AR) or machine learn­ing algo­rithms and, for the past four years, we have been work­ing on blockchain. At the time, it must be said that there were rel­a­tive­ly few appli­ca­tions, yet we were able to put togeth­er a small team and work on this sub­ject over a long period.

The sec­ond path cho­sen by the Ubisoft Lab is a start­up incu­ba­tor that allows us to work direct­ly with entre­pre­neurs and to help them under­stand the tech­no­log­i­cal chal­lenges they face. And of course, the new mar­kets they are try­ing to cre­ate. In 2019, we select­ed the start­up Sorare as part of Ubisoft’s Entre­pre­neurs Lab pro­gramme. A few days ago, Sorare announced that they had raised €580m of invest­ment, the biggest fundrais­ing project of the whole of French Tech. Indi­rect­ly, it’s quite flattering.

What link do you make between blockchain tech­nol­o­gy and video games?

Four years ago, it was the arrival of one of the most impor­tant blockchains, Ethereum, which real­ly put for­ward the con­cept of Smart Con­tract, or decen­tralised automa­tion. At the time, there was a lot of talk about a rev­o­lu­tion, all indus­tries includ­ed. Obvi­ous­ly, we won­dered what this meant for video games and for gamers in par­tic­u­lar. There was talk of more con­trol over game items for play­ers or sub­scribers, their vir­tu­al items, and skins, that it would give new pow­er to com­mu­ni­ties. We’ve been talk­ing about guilds or teams for a long time in video games. Again, there was a sense of a new era for these com­mu­ni­ties to move towards decen­tralised autonomous organ­i­sa­tions, enti­ties that would man­age them­selves through code, etc. To be hon­est, there was also a sense of a new era for these com­mu­ni­ties, yet there was also a lot of unknowns.

Then we met B2Expand in Lyon, which was one of the first star­tups in the world to work on the use of blockchain in video games. As we were set­ting up our incu­ba­tor at the time, we brought them in. We were able to see first-hand what it meant for video games, i.e. increased user con­trol over game objects. And here, NFTs, or non-fun­gi­ble tokens, are real­ly the heart of the pro­pos­al. These dig­i­tal assets are issued and exchange­able on a blockchain, but they are unique and non-divis­i­ble. One NFT will always be dif­fer­ent from anoth­er NFT. It is a proof of own­er­ship of sorts.

Today, if you buy a car in the video game The Crew or a skin in Rain­bow Six Extrac­tion, you pay for access. The exist­ing tech­no­log­i­cal lim­i­ta­tions mean that the pub­lish­er retains, by default, all con­trol over this con­tent. If there is no imme­di­ate need or demand from users for more con­trol, there has been a rare sit­u­a­tion where there is a sense of injus­tice that a pub­lish­er can change the rules of the game and alter the pow­er of an item for example.

Blockchain tech­nol­o­gy has a very exper­i­men­tal dimen­sion because, sud­den­ly, the econ­o­my of a video game can be shift­ed more to the play­ers’ side and not enclosed in the publisher’s ecosys­tem alone. We, as pub­lish­ers, are still won­der­ing how to make this acces­si­ble to go in the direc­tion of the play­er. The tech­nol­o­gy is quite imma­ture in some respects.

So, it’s all about reliability?

For Ubisoft, this reli­a­bil­i­ty require­ment is essen­tial, pri­mor­dial. And then, we must see to what extent this tech­nol­o­gy is dis­rup­tive or not in the pro­duc­tion process. If it does­n’t trans­form pro­duc­tion meth­ods, it can be inte­grat­ed quick­ly. If it trans­forms the rep­re­sen­ta­tions we have of how to make a game, that pos­es more prob­lems. And so, typ­i­cal­ly, blockchain is a point of fric­tion on projects already in pro­duc­tion. But if we start ear­ly, it allows us to have a whole phase of exper­i­men­ta­tion to check the reli­a­bil­i­ty of the tech­nol­o­gy to devel­op a dis­course which allows us to inte­grate these new ways of doing things into pro­duc­tion. First, how­ev­er, we must demon­strate the reli­a­bil­i­ty of the NFT and the ben­e­fits for the play­ers. Oth­er­wise, the pro­duc­tion teams will not adhere.

Can video games pop­u­larise NFT?

We are play­ers that peo­ple trust. We have this lev­el of rep­u­ta­tion which means that, if tomor­row we pro­pose to dis­trib­ute NFT in our games, peo­ple can come with con­fi­dence. In the long run, and if this move­ment is glob­al, it could make blockchain invis­i­ble in a way, reduc­ing it to an infra­struc­ture tech­nol­o­gy. It’s the use that will come first. And the pri­ma­ry use that we see today is indeed this trans­fer of own­er­ship for our play­ers. Our main chal­lenge remains the same, what­ev­er the tech­nol­o­gy: only imple­ment an inno­va­tion if it brings mean­ing and added val­ue to the play­ers and their gam­ing experience.