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Whether traditional gamers like it or not, NFTs will affect major consoles and video game franchises. But how will your favorite developer or publisher participate in bringing them on board?
In a series of articles that examine where each AAA game developer, publisher and console manufacturer stands on NFTs and blockchain technology, we’ll answer these questions. Here, we’ll focus on Microsoft — a name that should be familiar to every one.
Few companies have as much influence on the video gaming landscape as Microsoft. Simply look at its market cap of US$2.3 trillion, the largest in the gaming space by no small margin. To compare, that figure is more than 16 times bigger than Sony’s market cap, which sits at US$140 billion.
The main reason being there’s the Windows operating system and everything that’s part of it, such as Office. But as a platform, Windows hosts the vast majority of the desktop gaming market. And let’s not forget, Microsoft manufactures the Xbox range of consoles, including the Xbox Series X and Xbox Series S.
The other part of the conversation around blockchain is Xbox Game Pass, a video games on-demand subscription service that surpassed 25 million users in early 2022. It’s a hit on both PC and Xbox, and is spreading to mobiles and smart TVs this year using xCloud.
In addition, Microsoft owns over 30 internal game development studios, including some of the biggest properties in the industry. Microsoft bought Minecraft developer Mojang, beloved publisher Bethesda (Elder Scrolls, Fallout, Doom, Quake, Wolfenstein, Dishonored, Starfield) and even mega publisher Activision-Blizzard (Skylanders, Call of Duty, Overwatch, World of Warcraft, Diablo, Crash Bandicoot, Guitar Hero), among others. These join the already-huge first-party franchises like Gears of War, Forza, Halo and Fable.
So, with all that in mind, one thing is for sure. Whatever Microsoft does in the NFT games, blockchain and P2E space will significantly impact gamers’ lives.
Microsoft using blockchain
Let’s cut right to the chase: Xbox Game Pass has been running on blockchain for years. Microsoft deployed blockchain technology as far back as 2015 on the Azure cloud network and has been running royalties, transactions, item ledgers and the services on the Xbox backend since 2018.
Considering an NFT is essentially a digital receipt for a virtual product stored on a blockchain, everything you buy through the Xbox Live Marketplace is already an NFT. Only it’s just contained within Microsoft’s closed system.
When Microsoft first started leveraging the power for blockchain on Xbox and PC, I heard how much better the blockchain had made life for those in the Xbox Live back-end’s ecosystem. Before blockchain, royalties to developers — most of them indies — were still calculated on excel spreadsheets. It would take at least a month to get word to developers on how much they earned, and even longer to process the payments through traditional cross-border banks.
This new system was called the Xbox Enterprise Blockchain Platform, and it provided instant information on royalties and quicker payments. For small indies working on the edge of financial ruin, this was a game-changer. And for Microsoft, the lack of manual labor resulted in a huge saving.
Microsoft Azure Confidential Ledger blockchain
The initial platform was scuttled in September 2021, but in its place came the Microsoft Azure Confidential Ledger blockchain. To get it off the ground, Microsoft invested in ConsenSys — the company behind Ethereum.
What’s not clear is how integrated the blockchain is into the general Azure back end licensed by companies all around the world. For example, we know that Sony uses Azure. And Sega — a company that’s been actively supporting NFT growth — is using Azure for its next run of AAA games, too.
Elsewhere, Microsoft is funding the creation of a carbon-neutral, eco-friendly blockchain with an outfit called Palm NFT Studio. It’s a move that should be music to the ears of gamers concerned about the environmental impact of NFTs.
Xbox NFTs
Despite being a leader in the use of blockchain in the gaming space and already effectively minting every Xbox Live purchase as an NFT in the background, to consumers, Microsoft has portrayed itself as wary. Microsoft’s executive vice president of gaming, Phil Spencer, said in November 2021:
“What I’d say today on NFT, all up, is that I think there’s a lot of speculation and experimentation happening, and that some of the creative that I see today feels more exploitive than about entertainment. I don’t think it necessitates that every NFT game is exploitive. I just think we’re kind of in that journey of people figuring it out. Anything we looked at in our storefront that we said is exploitive would be something we would act on. We don’t want that kind of content. They’re probably not things you want to have in your store.”
This quote drew curiosity from traditional games media. They saw it as Phil Spencer declaring he didn’t want or like NFTs. Certainly using words like “feels” and “probably” aren’t definitive. But if anything, Spencer’s point was it was still early on and Xbox wants to vet NFT games for exploitive mechanics before allowing them on the platform.
Put it this way; Ghost Recon: Breakpoint — a game now tied to NFTs — is still available on Xbox.
Xbox metaverse
In November 2021, a few weeks before Spencer revealed wariness around NFTs, Microsoft CEO Satya Nadella expressed excitement around a potential Xbox metaverse.
“Absolutely, you should expect to see [the metaverse] expand into gaming. The way I think of it, we’re a platform company. We always build the core intrinsics first and then build it into our first-party applications. So, you absolutely can expect us to do things in gaming. If you take Halo as a game, it’s a metaverse. Minecraft is a metaverse and so is Flight Sim. In some sense they are 2D today, but the question is ‘can you now take that to a full 3D world?’ We absolutely plan to do so.”
Nadella’s analogy suggests that he sees the move of games from single stars to blockchain connected galaxies as transformative as 2D to 3D gaming. The new Super Mario 64! The new Doom!
So, it’s a case of mixed messaging in many ways. Microsoft is being cagey, no doubt aware of the ferocity with which gamers can attack something they don’t approve of.
Even as recently as April 2022, the message out of Xbox was staying vague; “[We’re] aware and looking into NFTs, cryptocurrency and other emerging technologies, but don’t yet have anything to share.”
YouTube Channel For NFT Games
Chris Stead, Finder’s game expert here. I’ve been covering video games since the mid-90s, and I’ve turned all that experience towards providing honest feedback on NFT and P2E gameplay.
But the mixed messaging may be because of genuine division within the company’s ranks. The same day as the above statement, staff for Microsoft-owned developer Mojang — best known for mega-hit Minecraft — proposed that their peers sign an NFT games pledge. Signees will commit to ensuring studios under their watch are taught about the downsides of NFTs prior to any NFT game development.
The pledge talks about staying away from rigging scarcity, driving speculative markets, pay-to-win mechanics, mass energy consumption blockchains and more.
Mojang developer and pledge cowriter Cory Scheviak said at the time. “For us as game developers, NFTs change the meaning of what a game is, and that to us is quite worrying. People can make all of the side arguments they want about giving people jobs and the things they say are positives. But at the end, it’s never really been about players. It’s never really been about helping people. It’s always been about making as much money as possible.”
That may be true, but I’d argue Scheviak is naïve in the extreme if he doesn’t know that’s always been the case. Loot boxes anyone?
Other crypto games and NFT projects
Future of Xbox NFTs
Microsoft may be trying to sound neutral about its stance on blockchain, NFTs, the metaverse and P2E gaming — but Switzerland it is not. The company was one of the first to jump on the blockchain bandwagon. It’s been using the tech for years to drive the Game Pass economy and it’s heavily investing in players like Palm NFT Studio and ConsenSys.
In addition, it would seem enough has been said internally for its own developers to come forward with a public pledge on how NFTs should be integrated.
To be continued…
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Chris Stead is the innovations editor at Finder. He is a gaming, tech and sports journalist with more than 24 years of writing and editing experience. He has previously worked at Game Informer, GamePro, Maxim, MCV Pacific, Gameplayer, Grab It, the University of New South Wales, Krash, It Girl and Fortnite Magazine. He has contributed to IGN, GameSport, NBN, Rooster Teeth, Fandom, Sydney Morning Herald, FilmINK, Brag, Popular Science, Foxtel, PC World, Hyper and Red Bull. Chris has a Bachelor of Advanced Science in Biology from the University of Sydney. A father of three, Chris has a passion for travel, photography and surfing.
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