The Steep Price of Chasing NFT Trends

Identifying the most successful licensing agreements in the gaming industry is relatively straightforward, with individual successes like Rare's GoldenEye and franchises such as Lord of the Rings or Star Wars standing out. However, for a consistently successful story, one often has to look at sports licenses, with EA's long-standing partnership with FIFA being a prime example, spanning nearly 30 years and hundreds of millions of games sold. Another notable example is the Mario & Sonic at the Olympic Games series, which, despite being a challenging license to work with due to the Olympics' complexity and infrequent occurrence, managed to achieve significant commercial success and critical acclaim over its six-game run. The series, developed and published by the unlikely partnership of Sega and Nintendo, sold well and was well-received, given the difficulties of adapting the Olympics into engaging video games. However, for the upcoming Paris Olympic Games, there will not be a new Mario & Sonic title. Instead, there's an under-promoted mobile and PC game, Olympics Go Paris 2024, a free-to-play title with in-app transactions, which initially focused on unlocking Olympics NFTs. This shift in focus was confirmed by a report, indicating the IOC's loss of interest in its partnership with Sega and Nintendo in favor of pursuing NFTs and esports, despite ultimately not achieving success in these areas. The decision to abandon a 12-year, six-game partnership that yielded remarkably successful games from a challenging license, all for the sake of a fleeting trend like NFTs, highlights the significant opportunity costs involved. While it's easy to criticize the IOC's decision, especially given the timeline and the industry's susceptibility to hype around NFTs a few years ago, the real concern is the genuine, long-lasting costs and damage such fads impose. The point is not to criticize NFTs further but to emphasize the real costs of chasing trends, which can lead to the allocation of finite resources like investment capital, development time, skills, and licenses to dead-end projects, causing other potential projects to stall. This is not just a theoretical business concept; it has tangible repercussions that can be felt for years. The case of the IOC and its NFT pursuit serves as a clear example, where a proven, valuable product was neglected due to the allure of something new and trendy. Furthermore, tens of millions of dollars in venture capital were invested in clearly ill-advised NFT projects during the height of the trend, while developers with more grounded ideas struggled to secure funding. Many of these projects continue to receive financial support from investors reluctant to admit their losses. The video game industry, inherently high-risk, is driven by calculations of opportunity cost. However, the trade-off between established, successful business models and new, unproven ones seems particularly challenging for many to grasp. After years of significant layoffs and downsizing, which continue to this day, it's clear the industry needs to reassess its balance of risks and rewards. Unfortunately, it often isn't those who miscalculate these risks who face the consequences; rather, it's the employees and the industry as a whole. The lesson to not underestimate or under-resource proven products and approaches in pursuit of untested, flashy ideas seems straightforward but may require many more examples of clear opportunity costs for it to truly resonate.