There’s not a lot of love lost between gamers and video game companies when it comes to NFTs–and Strauss Zelnick, CEO of Take-Two Interactive Software, says he gets that.
However, as CEO of a company that has made billions of dollars in microtransactions on Grand Theft Auto alone, he’s quick to add: don’t expect Take-Two to ignore them forever.
“We’re a leader in the [digital goods] space,” Zelnick tells Fast Company. “So naturally, we’re interested in where NFTs might fit in one or more of our titles moving forward. That said, there’s this overlay right now of speculation in the NFT market—and that causes concern.”
The problem, says Zelnick, is the NFT market is purely speculative now. Someone will buy an NFT, only to turn around and sell it to someone else and make a profit. That second person will sell it to someone else. Wash. Rinse. Repeat.
The problem is, eventually someone is going to be disappointed. And businesses, especially those in the entertainment industry, never want their customers to be disappointed.
“We’ll stay away from the speculative economy,” says Zelnick. “We’re in the entertainment business. When there is a reset, and NFTs take their proper place as part of the entertainment economy, that’s when they become really interesting for what we do.”
When will that be? He’s not willing to make any precise predictions, but he does note “there have been some cracks in the armor of the NFT economy of late. So, I don’t think we’re looking at 10 years. We’re probably not looking at tomorrow, either.”
Zelnick is similarly cautious about the play-to-earn game mechanic that harnesses cryptocurrency to reward players, noting that the current crop of titles is generally not that fun to play—and right now, they’re more akin to gambling than they are to video games.
“They’re not really entertainment experiences,” he says. “People don’t go there to be entertained. They go because they’re speculating. They’re not really gambling experiences because they’re not transparent and they’re not regulated. So that causes concern.”
He points to the rapid rise (and fall) of Axie Infinity as an example. Last July, the Pokémon-style game created by the Vietnamese developer Sky Mavis was one of the hottest play-to-earn games out there, boasting roughly 350,000 daily active users. Nearly 40% of those were in the Philippines. Venezuela and the U.S. were the next two biggest markets.
By December, though, the number of active users had dropped 70% from the game’s peak. And token prices for the game are down nearly 60% from their peak, set in November of last year.
“The run up is fine for people, but the run down isn’t,” says Zelnick. “We want to make sure that the consumers who trust us are always entertained and always receive more value than what they paid for it and are always happy with the experience. We can’t participate in an economy that is at risk of a speculative experience.”
That said, just as with NFTs, he’s willing to wait for the early stumbles of the mechanic to settle out. And Zelnick says he can definitely see a future where play-to-earn has its place in the video game world.
“Do I think there are some really interesting mechanics being explored as part of Web3.0? I do,” he says. “Do I think they will apply to either to the gambling or the interactive entertainment industry or both? I do.”