In the first week of GameStop’s recently launched NFT marketplace, the NiFTy Arcade collection stood out from the pack. Instead of offering basic JPEGs, the collection provided “interactive NFTs” linked to HTML5 games that were fully playable from an owner’s crypto wallet (or from the GameStop Marketplace page itself).
There was only one problem: Many of those NFT games were being minted and sold without their creators’ permission, much less any arrangement for the creators to share in any crypto profits.
While the man behind NiFTy Arcade has since been suspended from GameStop’s NFT marketplace, he’s still holding on to the tens of thousands of dollars in cryptocurrency he made by selling those NFTs before the suspension. And while the NFTs in question are no longer listed on the GameStop NFT marketplace, the unlicensed games themselves can still be accessed on GameStop’s servers and across a blockchain-based file storage system, where they may now be functionally impossible to remove.
What if an arcade, but with NFTs?
NiFTy Arcade creator Nathan Ello told Ars his collection grew out of a desire “to highlight potential use cases for NFTs beyond static images.” But Ello got a bit abstract when asked to explain the utility of freshly minted NFT versions of games that were already freely playable elsewhere on the web.
“If people find value in these NFTs, that’s a bonus, but my intent is to create and showcase games that are playable within NFT marketplaces and within NFT wallets,” he told Ars. “Should someone want the convenience of playing the game directly from their wallet or their own profile page on the marketplace without having to navigate to mine, then they’re welcome to buy a copy.”
Ello ended up selling hundreds of NFTs based on the NiFTy Arcade collection’s first three games, making at least 46.7 ETH (worth about $55,000 at the time) from those sales as of July 15. But for at least two of those games—Worm Nom Nom and Galactic Wars—Ello admitted he never sought the necessary permission from the original creators before selling them. There’s also evidence that Ello minted and distributed a number of other games through NFT marketplaces without the creators’ permission, including Breakout Hero, Super Disc Box, and Invader Overload, according to Joseph “Lexaloffle” White, the creator of the PICO-8 pixel game engine.
Whose license is it, anyway?
Ello told Ars that he tried to set up his NiFTy Arcade by “find[ing] open source game repositories approved for commercial use.” But it seems that he wasn’t very careful about this approval process. Worm Nom Nom, for instance, is clearly listed on itch.io with a Creative Commons asset license that prohibits commercial usage. Super Disc Box is likewise listed on the Lexaloffle website with a similar noncommercial license.
Then there are the licensing issues with the PICO-8 engine, which powers all of the games mentioned so far (and many more). “PICO-8’s license agreement does not allow use when author permission is not granted,” White told Ars.
Attorney Jonathan Loiterman, who said he is representing at least one affected PICO-8 developer, told Ars that “discussions with [Ello]’s legal counsel are ongoing. I’m cautiously optimistic we can reach a mutually satisfactory understanding.”
For customers who bought unauthorized game NFTs that can no longer be traded on GameStop’s marketplace, Ello said he’s “considering” either offering a buy-back program for the NFTs’ original “initial primary market sale price” or air-dropping new, authorized game NFTs into affected customers’ wallets.
A matter of principle
For some of the developers unknowingly caught up in Ello’s NFT project, it’s the principle of their games being distributed without permission that matters more than any financial upside they might have missed out on.
“I’ve been working on video games for years, but VolcanoBytes is not something I do for money,” de Tena told Ars. “It’s my personal project… something I do mainly for love, my income is not that of a real business. But that’s my work, and [it] shouldn’t be exploited by anyone without my permission.”
This is where the real maliciousness of NFT projects like this lies. It’s all ‘exploit first, ask questions later.’Breakout Hero developer Krystian Majewski
“I am a small developer doing noncommercial projects to teach people how to make their own games,” Majewski added. “NFTs are a net loss for me even if I don’t participate. It’s just another tax on my time and energy.”
And while developers told me that Ello deserves blame for using their content without permission, they also point to GameStop for “creat[ing] a platform and incentive structures for this kind of predatory practice,” as Majewski put it. “Empowerment of the creators was never the goal because, as we can see, no thought was given to any effective protection mechanisms or support services.”
“The platform should assume their responsibility, too,” de Tena said. “They could have any verification process, but they just want their money and commissions or revenue shares, I guess… ‘Power to the creators’ is fake.”
“It’s a disgrace, obviously. But at the same time, it is par for the course for NFT projects, isn’t it?” Majewski continued. “That’s what the tech is for: to defer and eschew responsibility. This is where the real maliciousness of NFT projects like this lies. It’s all ‘exploit first, ask questions later.'”