NFTs are a controversial topic. Everyone should accept the importance and use of the underlying technology, but that does not mean there is great value in jpegs or low effort collectible games. Like with most anything, it is helped and hindered by how it is used.

As non-fungible tokens and the concept of "true digital ownership" permeated gaming circles, developers raced to hop on the web3 bandwagon. A new gold rush, or renaissance, there was both hope and ambition. The promise of play-to-earn mechanics and player-controlled economies seemed destined to revolutionize the industry. However, the landscape remains littered with forgotten NFT games that stalled after their initial hype cycles. This begs the question - why do ambitious blockchain gaming projects keep falling short?

On paper, it is a great idea. Many successful games already allow for player managed markets, and some play host to profitable businesses. Eve Online is a great example of a game where people make money with digital trades, all done without a blockchain. Being able to provide a universal marketplace, and merge the fanaticism of the gaming community with that of the crypto community should have been the next organic evolution. Yet, it would seem to not be the case.

Flawed Incentives

One clear misstep involves overly focusing on money-making schemes over gameplay quality. Indeed, this may be the main issue, and you could almost stop reading right here.

Numerous developers push complex in-game NFT marketplaces and liquidity mining to enrich themselves rather than crafting fun experiences. A product is sold as a money making opportunity, with funds often raised during a pre-sale without any working demo, developed community, or prospect of sustainability. The problem? Established gamers feel little motivation to endure a disappointing product solely for speculative profit. Attempts to exploit players rather than delight them often backfire. If someone wanted to waste $70 they would pre-order the next AAA must-have title from EA. They wouldn't bother with bunny-card-captor battle angels.

It is further complicated. Most projects tempt players with staking, or ownership rewards, which invariably inflate the economy and are designed to encourage holding assets while developers offload their bags. Players earn their 40% APY on locked egg tokens while the prices for the project's NFTs collapse.

Indeed, the incentives are a failure because they have little to do with the game. There is no strategy, or interesting aspect to them. They are tacked on, and fail to reward capable players for excelling at the game.

Lack of Resources

Indie studios hoping to quickly capitalize on the NFT gaming gold rush frequently lack the expertise or funding to build fully featured titles. Deploying a minimally viable product to sell NFTs without core gameplay exposes the profit motivations while alienating fans drawn to rich gameplay universes they love immersing in for entertainment. Going from proof-of-concept demo to polished game demands assets like talent and venture backing.

Some projects have managed to develop a viable product, and have carved out a niche. But they are still mostly successful based on the dedication of the crypto community hoping to make them work. Even stable projects like Splinterlands show numerous issues, and are frequently criticized for their poor to average art, unpolished combat, and poor optimization.

No True Differentiation

Most of these games are bland clones, often lacking features, and without and reason to play them outside the promise they are Play2Earn.

Mycopic NFT integration without inventive hooks rarely captivates audiences. For example, item upgrades via NFTs bring nothing new to the table. To stand out in a crowded gaming market, blockchain or not, often necessitates bold ideas tailored to the medium's unique capabilities. Failing at this distinction while lacking the brand recognition of major studios keeps games obscure.

Unbalanced Ecosystems

Botched tokenomics frequently plague web3 titles, from faulty reward loops to frequent price crashes burning users. Without thoughtful modeling of growth, sustainability, and community ownership, projects battle to build lasting traction and game economies collapse. Success requires aligning incentives between developers, players, and networks.

A common issue stems from a failure to understand their own products. Where many projects offer a system of progression, there is no inherent value of low-tier NFTs. Common items, cards, consumables are plentiful, but without value. This fundamentally erases the need for a sizeable chunk of the market, and is actually a problem that is seen in many failed MMOs. Often, when players advance through a game, they can skip over chunks of content by getting superior equipment, which eliminates the need to play. In the case of NFTs, it eliminates the need to own.

Oversaturation

As many studious rushed to produce an NFT based game, the market was flooded. Countless card games, auto-battlers, 4x sims came to market. Few managed to attract a sufficient playerbase to establish a community or ensure sustainability. And with each game that failed, there was more evidence that all of the games would follow.

Failed Promise

An early idea for NFTs in games was universality. Imagine having the Triforce in Super Mario. Imagine riding Shadowfax in Grand Theft Auto. It was sold as owning an commodity that could be used across platforms. The reality is far more difficult and likely prohibitive. I don't even want to think of the licensing problems, or figuring out all the game assets. But even without having universal NFTs, there are few if any projects which demonstrate use of NFTs anywhere near their full potential.

Where are the mobile games which allow you to mine resources for your MMO? Where is a simple FPS game that uses the same card NFTs to populate a procedurally generated dungeon? Only a few companies have tried to create such interoperability, but they have not gone far in that regards.

My Final Thoughts

While NFT gaming holds revolutionary promise, achieving product-market fit proves challenging, even for well-funded endeavors. Preventable errors like poor incentive structures continue thwarting its outlook. Until studios recognize blockchain as just an underlying technology and not the product itself, gamers will continue rejecting experiences lacking that special spark only true innovation and understanding of audience needs can deliver. The keys remain strong partnerships, creativity, and a laser focus on enjoyment over crypto riches to capture hearts and minds. Games forgetting this universal truth risk fading into obscurity when players lose interest upon realizing the real incentives aimed primarily at their wallets.