How is Microsoft utilizing blockchain technology, play-to-earn, metaverse, and NFT games with its Xbox console?
Whether or not conventional gamers like it, NFTs will have an impact on popular systems and game series. However, how will your chosen publisher or developer take part in onboarding them?
We will respond to these inquiries in a series of papers that investigate the positions on NFTs and blockchain technology taken by each AAA game developer, publisher, and console manufacturer. We’ll concentrate on Microsoft in this section because that should be a household name by now.
How does Microsoft fit into the game industry?
Microsoft is one of the companies with the biggest impact on the video game industry. Just take a look at its market cap, which is by far the greatest in the gaming industry at US$2.3 trillion. Comparatively speaking, that sum is more than 16 times greater than Sony’s current market value of US$140 billion.
The Windows operating system and all of its components, including Office, are the primary causes. But the great bulk of PC gaming is run on the Windows platform. Not to mention, Microsoft makes the Xbox Series X and Xbox Series S consoles in addition to the rest of the Xbox lineup.
Xbox Game Pass, an on-demand subscription service for video games, is the other topic of discussion surrounding blockchain. As of early 2022, it had over 25 million subscribers. This year, using xCloud, it is becoming more popular on mobile devices and smart TVs as well as PC and Xbox.
More than 30 internal game development companies, including some of the greatest names in the business, are owned by Microsoft. Microsoft acquired several game companies, including Mojang, the creator of Minecraft, renowned publisher Bethesda (Elder Scrolls, Fallout, Doom, Quake, Wolfenstein, Dishonored, Starfield), and even giant publisher Activision-Blizzard (Skylanders, Call of Duty, Overwatch, World of Warcraft, Diablo, Crash Bandicoot, Guitar Hero). These expand upon the existing sizable first-party series like Gears of War, Forza, Halo, and Fable.
In light of all of this, one thing is certain. Gaming will be heavily impacted by whatever Microsoft does in the NFT gaming, blockchain, and P2E spaces.
Microsoft’s adoption of blockchain
Let’s get to the point quickly: Blockchain technology has been used for years by Xbox Game Pass. On the Azure cloud network, Microsoft first implemented blockchain technology in 2015, and since 2018, the Xbox backend has been running transactions, item ledgers, royalties, and other services.
Everything you purchase on the Xbox Live Marketplace already has an NFT since an NFT is effectively a digital receipt for a virtual good kept on a blockchain. Only the closed system of Microsoft is where it is kept.
I learned how much easier life had been for individuals in the Xbox Live back-end ecosystem when Microsoft first began utilizing the potential of blockchain on Xbox and PC. Before blockchain, the majority of independent developers’ royalties were still determined using spreadsheets in Excel. Informing developers of their earnings would take at least a month, and processing payments through conventional international institutions would take even longer.
The Xbox Enterprise Blockchain Platform, the new system’s name, offered real-time information on royalties and expedited payments. This was a game-changer for small indies working on the verge of bankruptcy. Additionally, Microsoft saved a ton of money by not using physical labor.
Blockchain with Microsoft Azure Confidential Ledger
In September 2021, the original platform was abandoned, but the Microsoft Azure Confidential Ledger blockchain quickly took its place. Microsoft invested in ConsenSys, the organization that created Ethereum, to help it get off the ground.
How the blockchain is linked into the regular Azure back end, which is licensed by businesses worldwide, is unclear. For instance, we are aware that Sony utilizes Azure. Additionally, Sega, a firm that has been aggressively promoting NFT growth, is utilizing Azure for its upcoming slate of AAA titles.
Additionally, Microsoft is working with a company called Palm NFT Studio to create a blockchain that is carbon-neutral and environmentally benign. It’s a step that should make gamers who are worried about the environmental effects of NFTs happy.
PS4 NFTs
Microsoft has a reputation for being cautious, despite being a pioneer in the use of blockchain in the gaming industry and already essentially minting an NFT for every Xbox Live purchase in the background. In November 2021, Phil Spencer, Microsoft’s executive vice president of gaming, said:
“Overall, I’d say that there’s a lot of experimenting and conjecture going on today on NFT, and some of the creativity that I see today feels more about exploitation than about enjoyment. I don’t believe that all NFT games must be exploitative. I simply believe that we are currently in the process of people figuring it out. We would take action if we found anything in our storefront that we believed to be exploitative. That sort of stuff is not what we desire. You probably don’t want to stock them in your store.
Traditional games media were intrigued by this comment. They saw it as Phil Spencer saying he disliked or didn’t want NFTs. Using phrases like “feels” and “probably” is undoubtedly not conclusive. However, Spencer’s main argument was that it was still early on and that Xbox needs to check NFT games for unfair gameplay before approving them for the platform.
In other words, the NFT-related video game Ghost Recon: Breakpoint is still playable on Xbox.
Console metaverse
Microsoft CEO Satya Nadella voiced excitement about a hypothetical Xbox metaverse in November 2021, a few weeks before Spencer said he was leery of NFTs.
Without a doubt, you should anticipate the metaverse’s expansion into the game industry. We are, in my opinion, a platform company. We always develop the basic intrinsics first, then incorporate them into our own applications. So you can definitely count on us to act in the gaming industry. Halo is a metaverse if you consider it to be a game. Both Flight Sim and Minecraft belong to a metaverse. They are currently 2D in a certain sense, but the question is: Can you now transfer that to a fully 3D world? We have that planned out for sure.
According to Nadella’s example, the transition of games from single stars to blockchain-connected galaxies will be just as revolutionary as the switch from 2D to 3D gaming. Super Mario 64, the latest! Brand-new Doom!
Therefore, there are numerous instances of mixed messaging. Microsoft is being cautious since it knows how fiercely gamers would criticize anything they don’t like.
The Xbox message remained evasive as recently as April 2022: “[We’re] aware and looking into NFTs, cryptocurrencies, and other developing technologies, but do not yet have anything to communicate.”
Multiple messages
The conflicting messages, though, might be the result of real discord among the company’s employees. On the same day as the aforementioned statement, employees of Mojang, a Microsoft-owned game developer best known for the smash hit Minecraft, suggested that their coworkers sign the NFT games pledge. Signees agree to make sure that any studios under their control are informed about the drawbacks of NFTs before any NFT games are developed.
The pledge covers avoiding rigging scarcity, pushing speculative markets, pay-to-win mechanisms, blockchains with high energy usage, and more.
Cory Scheviak, a developer for Mojang and co-author of the commitment, remarked at the time. “NFTs alter the definition of what a game is, which is pretty concerning to us as game producers. People are free to raise as many counterarguments as they choose, as long as what they say is true. However, the focus has never truly been on the players. Helping people has never really been the focus. It has always been about maximizing financial gain.
That may be the truth, but if Scheviak doesn’t realize that has always been the case, I would contend that he is incredibly naive. Boxes of loot, anyone?
Upcoming Xbox NFTs
Microsoft may be making an effort to appear impartial in regards to its views on blockchain, NFTs, the metaverse, and P2E gaming, but Switzerland is not one of those countries. The business was among the first to board the blockchain train. It has been leveraging technology to power the Game Pass economy for years, and it has made significant investments in companies like ConsenSys and Palm NFT Studio.
Additionally, it appears that enough has been spoken internally for the project’s developers to publicly commit to how NFTs should be implemented.
