“It’s a tough sell” – games are incompatible with NFTs, lawyer says

by James · December 22, 2022

CRYPTOCURRENCY and NFTs are becoming more mainstream, but players are pushing back against what they see as the new name for microtransactions.

The online-only coins or items are meant to provide a sense of security away from the volatile nature of centralized banks.

Will Charlesworth is about NFT law.Credit: Saunders Law

What we have seen, however, is instability everywhere. FTX, the second largest crypto exchange, recently crashed, wiping $30 billion with it.

Big-name developers like Square Enix and Ubisoft seem intent on incorporating NFTs into games, but have seen little success.

To find out the issues of incorporating the two different technologies, we sat down with Will Charlesworth, Deputy Head of Commercial Litigation and Dispute Resolution at London law firm Saunders Law, to talk about the challenges.

His title may be long, but what it basically boils down to is that Charlesworth is a lawyer who does NFT cases.

FIFA releases four NFT games for World Cup after split with EA

FIFA's metaverse reveals how FIFA is investing in the blockchain

There are benefits for businesses, he says: “NFTs can offer significant benefits for brands, to establish a commercial presence”.

But what it all seems to boil down to, as it always does with business, is money and developing new ways to make it.

Charlesworth moved to NFT-related law in 2017, which is recent for most types of law, but ancient when it comes to cryptocurrency.

Protection must be put in place to prevent interference from people winning and losing in the market.

Charlesworth shared his concerns for companies like Ubisoft, which have failed to implement NFTs in games like Ghost Recon.

He explained: “There are definitely challenges to overcome and it has to be more than NFTs for NFTs sake.

“It has to be something that adds real value, and compliments and adds value to the gaming space. They need to move away from being a hype investment and a passing fad.”

Players see this trend as just that. When someone can create value with Sims furniture, why would they move to the blockchain?

He continues: “It’s a challenging sell to push NFTs at the moment.

“The example of Ghost Recon in particular shows that players are smart about this, and the hype around NFTs I don’t think necessarily translates into the gaming world.”

There are also technological hurdles to overcome, explains Charlesworth: “Trying to get NFTs and technology that works outside of a gaming environment, which is truly decentralized, to be able to work on different platforms at the same time is really a unicorn.

“It’s just incredibly difficult. I can also see a cross-platform licensing headache.”

We’ve seen gaming companies gain the trust of players, despite taking risks on new technology.

While Stadia was not a crypto asset, faith in the company was restored when Google refunded all of its users.

Charlesworth admits offering refunds “could be a selling point for the company”, but he doesn’t see many following through.

He believes crypto and games are at a crossroads until something gives.

He says: “Unless players are willing to accept [that their NFT dies with the game] then I think it’s always going to be a problem.

“But if they accept it, there is no advantage over having an NFT [rather than an in-game item] in that room.

“I think we’re a little bit away from figuring out how that might actually work.”

Things are changing in the UK, the courts have ruled that crypto assets are a form of property and therefore protected under consumer rights.

This does not mean you are protected. As Charlesworth explains: “It always comes down to the terms and conditions of whether you want to be compensated.”

The consumer rights issue poses a significant problem when it comes to selling NFTs on a global scale. Companies must modify their games to comply with local law.

He said: “When a UK consumer acquires an NFT in a game, they gain consumer rights and these rights apply regardless of whether the seller is a UK resident or not.

“You need to be fully informed about exactly where you are directing your sales.

“And they can’t rely on obscure terms and conditions to protect themselves.”

So are NFTs the future of gaming? Charlesworth thinks: “I don’t want to be quoted as saying ‘no’ because at some point in the future something might happen.

“The problems that need to be overcome with NFTs and games are the cultural side where people don’t want to add another layer of microtransactions to games, and that the blockchain is not fully compatible with games.

“Blockchains are decentralized, games are centralized.”