According to Atari, they are known as “GFTs” or giftable NFTs appearing as gift-wrapped digital boxes. In celebration of the video game company’s 50th anniversary, Atari teamed up with NFT developer Republic  Realm for the GFT collection. The GFTs will automatically unwrap at a later date to reveal what’s inside, essentially combining loot box mechanics with NFTs.

Loot boxes are no strangers to scrutiny as they have been the subject of regulatory attention and litigation since they became wildly popular in video games. In general, loot boxes have been criticized based on comparisons to illegal gambling. And many parents have raised concerns that loot boxes may encourage gambling-like habits. In response to the criticism, the gaming industry has largely adopted self-regulatory practices. Industry practice includes disclosing drop rates and loot box odds in addition to providing meaningful disclosures and ESRB labeling for games that include purchases with randomized elements.

Similarly, NFTs are an increasingly popular trend in blockchain technology that have seen their own fair share of controversy. Some of the major concerns with NFTs and the blockchain include the potential for abuse in a burgeoning market with inexperienced consumers and brands alike, as well as costs to the environment due to the amount of energy the blockchain uses. To learn more about the legal and practical risks to consider with NFTs and digital products on the blockchain, see our blog posts here, here, and here.

The GFT website hints at token-gated experiences, game competitions, and more to come in the metaverse, but it’s unclear what the NFT contents will entail. While mixing video games and the newest technology would normally seem like a perfect combination, game developers who have experimented with implementing NFTs in their games have received a resounding negative response. Backlash from the gaming community typically points to environmental harm and arguments that NFTs are another means to the controversial play-to-earn business model. For example, ‘MetaWorms’ NFT developer canceled plans for its project after community backlash, and Sega listened to and acknowledged fan reactions in reassessing its NFT plans.

Though blockchain technology will likely evolve in striving to correct the energy consumption issues, it remains to be seen whether the gaming community will warm up to the idea of NFTs in games.