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I see the same issue pop up when people ask about applications for NFTs in video games or similar ideas. The idea is that you use NFTs to represent some kind of

I see the same issue pop up when people ask about applications for NFTs in video games or similar ideas. The idea is that you use NFTs to represent some kind of in-game capability--whether it's ownership of the game license, ownership of game content, or ownership of an in-game item. The main benefit I can think of that this gets you is the ability to trade the NFT itself on the blockchain, but most the other supposed advantages fall apart under any kind of scrutiny, at least from what I can tell. The key problem here is that the experience or capability that the NFT provides is likely going to be entirely mediated by the game software itself, not by any smart contracts on the blockchain or anything like that. The NFT would most likely be validated by connecting to a server and making an API call... because validating the NFT locally would require downloading the relevant blocks in the blockchain. Since any "promises" about what the NFT are ultimately mediated by the game software, which is entirely controlled by the game developers, there is no real "ownership" in any sense beyond what you could achieve without blockchain... except for the fact that you can trade the NFTs in blockchain transactions.

cwkoss 6y ago
If I could buy an NFT that gave the bearer a license to stream a particular movie from any host, and had the ability to resell or transfer it, I would find that significantly more valuable than the license Amazon offers with their "Buy" button. Could be fun to trade. Lots of interesting economic effects would come out of the ability to resell IP at the same market as the author: - if a movie came out, and nobody likes it, they may instantly resell it at a market price after viewing. If it's unpopular enough, perhaps the original creator would only be able to get hundreds of licenses on the market before price to consumer is forcibly reduced against the will of the creator. Bad creators have to compete in price against dissatisfied fans. - Great IP owners will want to carefully manage number of circulating licenses to maximize their overall earnings. A great film will not be resold after viewing, so owner may choose to gradually increase price until sales volume falls off. This invites speculators and enables IP owners to capture the lifetime value of their property more rapidly via effectively selling off future profits. Perhaps let IP owners could 'lock' or declare a frequency limit on license issuance to guarantee a level of scarcity to encourage investment. - Scalpers can try to corner properties, but the IP owner can always issue more licenses to break the corner. It'd be a risky bet. - If all of this lives on a blockchain, it'd make a bunch of cool publicly available metrics to economically quantify the value of IP over time.
- klodolph 6y ago
  Yes, but there’s a catch—the people selling games would rather give you a non-transferable license, if possible. I think someone at the publisher would do the math, and figure that they get more money by selling to two people, then selling a (possibly higher-priced) transferable license to one person. If you want transferable licenses, make it happen. It’s the law in the EU, so if you pass similar laws in the US, you’ll get the ability to resell your game license, NFTs or no.
  - cwkoss 6y ago
    Maybe... But conversely, maybe an indie game studio could monetize their game hugely by getting a lot of hype and carefully sizing license issuance with demand. If they said "We're only selling 10 copies per day" and the game was very popular, the price could shoot up very high as owning the game early becomes a status symbol, and developer would have a chance to do 'whale' sized monetization from initial customers. If a million people wanted to play a game, but only 1000 licenses were available (and there was a good chance you could resell the game at the same or greater value) demand could get huge. Other customers will complain, but there are definitely gamers that would pay 10x to be able to play a game before others - I think price discrimination that monetizes early hype around media is probably inevitable as there is demand currently left on the floor. Probably not great for society, but I bet it's coming.

cwkoss 6y ago

If I could buy an NFT that gave the bearer a license to stream a particular movie from any host, and had the ability to resell or transfer it, I would find that significantly more valuable than the license Amazon offers with their "Buy" button. Could be fun to trade. Lots of interesting economic effects would come out of the ability to resell IP at the same market as the author: - if a movie came out, and nobody likes it, they may instantly resell it at a market price after viewing. If it's unpopular enough, perhaps the original creator would only be able to get hundreds of licenses on the market before price to consumer is forcibly reduced against the will of the creator. Bad creators have to compete in price against dissatisfied fans. - Great IP owners will want to carefully manage number of circulating licenses to maximize their overall earnings. A great film will not be resold after viewing, so owner may choose to gradually increase price until sales volume falls off. This invites speculators and enables IP owners to capture the lifetime value of their property more rapidly via effectively selling off future profits. Perhaps let IP owners could 'lock' or declare a frequency limit on license issuance to guarantee a level of scarcity to encourage investment. - Scalpers can try to corner properties, but the IP owner can always issue more licenses to break the corner. It'd be a risky bet. - If all of this lives on a blockchain, it'd make a bunch of cool publicly available metrics to economically quantify the value of IP over time.

klodolph 6y ago
Yes, but there’s a catch—the people selling games would rather give you a non-transferable license, if possible. I think someone at the publisher would do the math, and figure that they get more money by selling to two people, then selling a (possibly higher-priced) transferable license to one person. If you want transferable licenses, make it happen. It’s the law in the EU, so if you pass similar laws in the US, you’ll get the ability to resell your game license, NFTs or no.
- cwkoss 6y ago
  Maybe... But conversely, maybe an indie game studio could monetize their game hugely by getting a lot of hype and carefully sizing license issuance with demand. If they said "We're only selling 10 copies per day" and the game was very popular, the price could shoot up very high as owning the game early becomes a status symbol, and developer would have a chance to do 'whale' sized monetization from initial customers. If a million people wanted to play a game, but only 1000 licenses were available (and there was a good chance you could resell the game at the same or greater value) demand could get huge. Other customers will complain, but there are definitely gamers that would pay 10x to be able to play a game before others - I think price discrimination that monetizes early hype around media is probably inevitable as there is demand currently left on the floor. Probably not great for society, but I bet it's coming.