crypto strategy

Why Magic Eden is betting on NFTs disrupting the gaming industry

In short

  • Jack Lu, CEO of NFT Marketplace Magic Eden, appeared on Decrypt’s gm podcast.
  • He talked about the potential of NFT-based games and why he expects the industry (and gamers) to embrace them.

For many crypto advocates, video games offer one of the clearest use cases for NFT. They enable a user-owned economy that allows players to resell and potentially profit from digital assets, and these tokenized interoperable assets can potentially be used across multiple games and online worlds.

But there is a big problem: many players absolutely hate NFTs.

Vocal fans in the traditional gaming space have pushed back on companies like Ubisoft and Team17 as they have explored the NFT space, and many see the industry as a hotbed of scams and speculation. The environmental impact of NFTs has also been a common complaint, although this argument is indeed dead following the recent Ethereum merger.

On top of all that, some believe that game publishers will simply use NFTs as another way to extract even more value from players. The backlash from NFTs is similar to that imposed on free-to-play games and downloadable add-on content when those respective business models were introduced, and now both are widely accepted industry standards.

Even amid vitriol, the NFT market magic eden still sees long-term potential in NFT games. Magic Eden, which launched a year ago and has been valued at $1.6 billion in Juneis the first market for Solana NFT and recently extended to Ethereum market.

On the last episode of Decryptthe gm podcastMagic Eden co-founder and CEO Jack Lu told co-hosts Daniel Roberts and Stephen Graves that despite player skepticism, he believes NFTs are “unlocking something completely new for game developers to build an economy and build a new business model. ”

Magic Eden has supported a wide range of NFT-based game projects through its launch pad function and secondary market, including upcoming titles such as SkateX, Mini Royale: Nationsand BR1: Battle Royale.

In July, the firm launched a gaming-focused venture capital investment arm in an effort to help attract game developers to Magic Eden. Part of the market approach is to create simple integrations so that developers can integrate the Magic Eden platform into their games. This way, users can buy and sell NFTs without leaving the game experience.

Lu admitted that there was “so much to unpack” around gamers’ perceptions of NFTs, including the presence of bad actors in the industry and the growing financialization of digital assets. Plus, as a nascent space built around decentralized technology, it’s no surprise that many early NFT-powered games were simplistic, falling short of some gamers’ expectations.

The Ethereum-based Axie Infinityfor example, is the greatest achievement in space with over $4 billion in NFT transaction volume, and millions of active players at its peak last year. But the monster-battling gameplay has also been criticized for its repetitive nature, and the game the economy of gambling to win has collapsed amid growing hype. Additionally, the game’s Ethereum bridge was hacked to over $600 million worth of crypto.

As more and more veteran game developers enter the Web3 space and start building, we could see richer NFT experiences to come, but it may take time. Large-scale video games often take years to build and are supported by large development teams.

Lu said his team is “waiting for a few diamonds to come, shine” — meaning great games that feature NFT functionality — to help spread adoption across the gaming industry.

“Great games take a long time to build – it takes vision, inspiration and a lot of development time to create so much content,” he explained. “We are effectively waiting for the most promising game studios to have time to develop their content and then figure out what the secret sauce is to using NFTs in this area.”

Lu suggested that once a few of these so-called diamonds hit the market and thrive, they will serve as a “case study” to push other developers into the NFT space. He described it as a potential “tidal wave that follows past paradigm shifts” in the gaming world, such as the shift to free-to-play games.

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