It’s time for Ubisoft to give up on NFTs and crypto

NFT


Ubisoft is making drastic business decisions to reduce overall expenses and risks. Now is a great time to kill off one of the riskiest moves in gaming right now: NFTs and blockchain.

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Ubisoft was the first major publisher to adopt Quartz NFT. The risk-reward ratio was simply not favorable. Quartz was a significant failure in terms of sales revenue, and also damaged Ubisoft’s reputation in the process. This is a bug that probably shouldn’t continue even in the best of times, but one that goes double in today’s inflation-laden gaming industry environment.

Publishers are currently challenged by an uncertain global economy. Consumers spend less on games; according to Newzoo, overall industry spending was less than $8 billion in 2022. Ubisoft plans to combat these conditions by reducing risk and expense, and has laid out a business strategy for investors.

The plan, which caused Ubisoft’s shares to fall, includes the cancellation of 3 games, the delay of Skull and Bones and a loss of 500 million euros in non-IFRS operating income for the fiscal year ending March 2023.

Ubisoft is also prepared to “divest non-core assets” to reduce costs, which could mean that you can sell unwanted or unused video game IP.

Considering that Ubisoft’s traditional plan isn’t doing very well in this kind of economy, it’s not the right time to redouble efforts on speculative and risky business ventures like NFTs and cryptocurrencies.

I already border why I think Square Enix should reduce, or significantly reduce, its investment spend on blockchain-based games. I would make the same case regarding Ubisoft’s position. In a previous article, I argued that Quartz NFTs were just a bad deal.

The reality is that cryptocurrency is too volatile. The value of these currencies can fluctuate rapidly on a whim and reduce the overall value, or perceived value, of any digital asset. Ubisoft spends real money developing cosmetic items (armor, weapons, etc.) and the profits are simply not even remotely close to guaranteed.

Apart from investment losses, consumers have no guarantee that their NFTs or crypto-based products will survive. Most live games end at some point, and any in-game item loses all its value once the game is closed.

Another major risk is simple brand disruption and PR fiascos that Ubisoft will face (or marginally ignore).

As Ubisoft doubles down on core business practices like monetization, live services, and increasing pressure to innovate in new ways to stimulate player spending, the weight of NFTs, cryptocurrencies, and blockchain is too much to bear. The popular video game franchises that are already being stressed by the business practices mentioned above.

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