Video Gaming / E-Gaming Law Update – September 2021

Main Quest - ‘Mint’ Conditions: NFTs and Video Games -

Over the course of the past year, nonfungible tokens (NFTs) have transformed from a relatively niche product for those in the cryptocurrency sector to an increasingly common way for creators and rights holders to market digital goods. Between high-profile NFT-related projects and a slew of entertainment companies, sports leagues, music labels and video game developers getting involved, 2021 has seen a massive rise in the popularity of the burgeoning industry.

An NFT is a digital certificate of certain rights — typically ownership rights — associated with an asset that is made secure and immutable through blockchain technology. Although NFTs can be associated with any type of good, they are particularly useful in the digital context, as ownership over digital assets typically cannot be demonstrated merely through possession.

Given these characteristics, it would seem that NFTs were almost custom made for the video game industry. From the auction houses of World of Warcraft to real estate developers in Second Life, transactions in digital goods have been a part of video games since technology allowed for it. Accordingly, one would expect that the video game community — both publishers and players — would welcome any technological developments that help to make such in-game transactions safer, easier and more lucrative. Indeed, some of the earliest use cases for NFTs were in the video game industry and, recently, many companies have begun incorporating NFTs into their games, with some going so far as to build games on the blockchain network itself.

However, as with any new technology, there are a number of potential issues raised by NFTs, particularly regarding their use in the video games industry, which should be kept in mind by anyone looking to get involved with this emerging trend.

Please see full publication below for more information.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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Skadden, Arps, Slate, Meagher & Flom LLP

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