Among the most intriguing trends in the crypto market, and the stock market for that matter, is the metaverse. On the Jan. 5 episode of "The Crypto Show" on Backstage Pass, Fool.com contributor Chris MacDonald and The Motley Fool's Eric Bleeker discuss the outlook for metaverse-themed cryptocurrencies including Axie Infinity (AXS +0.00%).
Eric Bleeker: One other piece of news that really caught my eye. We've talked a lot about crypto and gaming, one of the largest storylines of 2021, I think it would be fair to say is crypto becoming a force in video games, especially via NFTs.
We had the rise of Axie Infinity, but also a ton of venture funding moving into concepts around crypto and video games. What we had the other week was some incredible, I would say validation of the trend, which is Square Enix (SQNXF 3.84%).
If you're not a gamer, just know this Square Enix, there's a lot of credibility behind this company. They're venerable is probably the right word. They own the franchise, Final Fantasy, which is an institution in video games. They said they are developing blockchain metaverse, and NFT initiatives, and that de-centralized blockchain games will become, "a major strategic theme starting in 2022." This is planting a flag and saying this is one of the key drivers that they see in their business for the long term.
Beyond Square Enix, Ubisoft (UBSFF +4.00%) recently launched an NFT platform, EA (EA +0.49%) and Epic Games have spoken positively of the technology, and I would not be surprised if you saw announcements from them in 2022 as well.
Given we talked about meme stocks a moment ago, Chris, GameStop (GME 1.06%) has talked about their own NFT platform. Everybody in the pool. Chris, when you see the Square Enix announcement, I don't know if you play much in the way of video games, but what does this say to you?
Chris MacDonald: Used to and not as much anymore. [laughs] But it is a very interesting trend.
With Square Enix is a big name in this space. You've got Ubisoft, EA, Epic Games. These are some big-time developers that are talking about this.
I think from an investor angle, one of the interesting things that many crypto investors might want to think about is, will these developers use an existing blockchain metaverse crypto technology, or will they develop their own? I think that's a little bit unclear right now, how some of these bigger players are going to step into the space.
You've got Decentraland (MANA +1.46%), The Sandbox (SAND +1.20%), Alien Worlds (CRYPTO: TLM), and pretty interesting projects already out there. The extent to which those projects maintain their first-mover advantage and are able to leverage some partnerships with these companies, or the extent to which these companies enter the market as new competitors, that remains to be seen.
But coming up with developing the actual blockchain technology that would support these games is difficult. There are some barriers to entry.
I'm leaning toward the idea that there are likely to be more partnerships coming. You've seen some of the news about Adidas (ADDYY +2.38%) and Nike (NKE +1.50%) creating partnerships and various institutional investors buying land on Decentraland, for example, as investments. These established players right now probably are going to maintain some level of market dominance. But that is an interesting question. To what extent will these big names become competitors in the space?
