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Japanese gaming behemoth Sega delivered a health bar-depleting blow to the blockchain world this week. In comments to Bloomberg, the company’s COO revealed it was backing away from developing its own blockchain, Web3, and “play-to-earn” games. It would also cease licensing its content and characters to third-party developers in this realm. The reason Sega gave? Blockchain and play-to-earn games just aren’t fun. Is this a valid reason, or just an excuse?

One quote in Bloomberg’s article stood out where Co-Chief Operating Officer Shuji Utsumi said:

“The action in play-to-earn games is boring. What’s the point if games are no fun?”

Utsumi may be correct, but using it as an excuse to back out of a market segment sounds odd. Sure, he’s probably seen some awful examples, but that’s hardly a reason for Sega to abandon its own blockchain and Web3 projects. After all, Sega should know something about designing non-boring games, so if the competition is boring, can’t their team just make better ones? Is there something inherently boring about blockchain, play-to-earn, or Web3 that ruins an otherwise-fun game?

I would say there isn’t; it’s mainly back-end tech, anyway. Adding a play-to-earn element is much the same as having a leaderboard, and if leaderboards were enough to bring players back for another game, then the chance to earn some real money should be too.

Utsumi has likely seen many examples of play-to-earn games where far more of the development budget went into the “earn” component than the “play” one. That’s probably a fair call—think of the software and gameplay built for Vegas-style slot machines. They’re heavy on provoking dopamine rushes and compelling in a cheaply addictive way, the gaming equivalent of a soda can or candy bar wrapper. Players couldn’t care less which game they’re playing as they’re mainly interested in winning some money.

When Sega creates a game, playability is its raison d’etre. A game should exist for the game’s own sake first rather than as something rushed out and bolted onto an existing phenomenon. Not even a massive marketing budget or popular characters can save a game that’s poor in the playability department (as a Gen Xer, I can’t help recalling the Atari 2600’s legendary and console-killing “E.T.” debacle of the mid-80s). And you get the feeling most play-to-earn games got their gambling models sorted before they even considered what sort of games should be built around them.

You could make similar arguments for not licensing established content to external parties or outsourcing game development. Gaming’s five-decade road is littered with burned-out wrecks of examples, so I do empathize with Utsumi on this point.

It’s also true that many play-to-earn games created so far serve more as proofs-of-concept; games built to prove blockchain and play-to-earn have something to offer the industry. It’s not always necessary for games to be complex or rich in lore to be compelling/fun. Angry Birds was both fun and addictive, even for non-gamers. It was also pretty basic and wasn’t trying to sell its players anything (at least, not initially).

There’s no reason a play-to-earn game can’t be exciting and no reason blockchain elements can’t be built into established games. Most likely, there are also examples of fun play-to-earn games that Utsumi hasn’t seen yet (I won’t try to list my opinions here since it’d only create a tangent about my taste in games, which I admit is unsophisticated).

Market forces and speculative fads

Anyway, let’s get back to Sega deciding to back away from blockchain, Web3, and play-to-earn. Utsumi did note that blockchain does offer some potentially useful features, like characters and items that players can move between games. These features will undoubtedly remain in the backs of game developers’ minds, even at Sega, and Utsumi hinted they’ll make a comeback when the time is right.

“We’re looking into whether this technology is really going to take off in this industry, after all,” he said.

Right now, what makes the time not right is probably conditions on the speculative digital asset-trading market rather than the technology itself. Over the past decade, investors have taken a “shut up and take my money” approach to due diligence when a blockchain bull market is roaring—and have lost all interest just as quickly in the downturns. In terms of hype (and money wasted), there was very little difference between the NFT craze of the early 2020s and IPOs in 2017-18. (“They’re totally not the same thing,” NFTers tried to tell me when I got too cynical.)

So Sega and other large corporations are probably like that friend we all have: the one who becomes “super-interested in learning all about Bitcoin” when prices are rising fast, goes through the motions of discovering half a dozen other blockchains “like Bitcoin, only much better”… before deciding “it’s all bullshit and scams anyway” as they sell off their portfolios for plummeting prices during the inevitable downturn. The super-interest then returns with the next bull run.

That’s just the way humans are. And it’s just the way corporations are, too, since, as we’re always told, corporations are people too. We chase fads like cats chase laser dots. And whenever you hear someone say blockchain isn’t useful or compelling, it’s more a product of fad-chasing than any in-depth research into the tech or attempts to discover a new use case.

Or maybe Sega, like many of us, simply gets turned off by the hype factor blockchain and blockchain assets frequently suffer from. They’d prefer to steer clear of anything too obviously faddish. Once memories of celebrity-backed NFT series and stadium sponsorships fade away, someone at the company will take another look and make a boring-sounding but paradigm-shifting comment like “this stuff could actually be useful for something after all.”

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