Sony has argued in court that players do not own the digital games they purchase—the latest flashpoint in a long-running dispute over what it means to own digital media. Because traditional property law protections against seizure do not extend to digital assets, platform operators remain free to revoke or alter content that users have already paid for. NFTs promise a verifiable, self-held record of ownership, but public metadata and reliance on centrally hosted files have limited that promise—shortcomings that encrypted NFTs are now being pitched to solve.

News that Sony is arguing in court that digital games cannot be owned by the players who bought them marks the newest front in the battle over digital ownership. That fight is "still in its early innings," according to Kostas Chalkias, Co-Founder and Chief Cryptographer at Mysten Labs. "With media, we're used to renting and streaming, and we're increasingly finding that the things we think we're buying don't actually belong to us," he told Decrypt. The stakes now touch nearly every modern player: with game sales having shifted predominantly to digital storefronts over the past decade, an entire library can live inside a single platform's account system, governed by the same revocable-license terms that apply across digital media.

The problem stretches across media far beyond video games. As far back as 2009, Amazon Kindle owners were startled to discover that their ebook copies of—of all things—George Orwell's "Nineteen Eighty-Four" had been remotely deleted as a result of a rights issue. Amazon apologized for the deletion at the time, but the episode has lingered as a cautionary tale for digital buyers. Amazon has continued to tinker with ebook content since, with works by Roald Dahl, Agatha Christie, and R.L. Stine among those remotely edited by publishers.

Film and TV titles have likewise been purged from digital libraries, as users come to terms with the fact that the content they've "bought" is merely a license that can be revoked. That content is malleable, too, with platforms remotely editing titles after their release. It can seem cute when it involves retroactively patching a plot hole in "Stranger Things"—less so when shows are being pulled from streaming platforms over politically sensitive content.

Streaming music platforms have "completely redefined music consumption by swapping ownership for unlimited access," Canoe founder Jess Zhang explained, eliminating the user's ability to build a permanent library. That has had knock-on effects for the artist-audience relationship, according to industry executive Sammy Andrews: because royalties are the same whether the streamer is a dedicated fan or a casual listener, the system "rewards share of volume, not depth of connection."

While many—including film directors Christopher Nolan and Guillermo del Toro—champion physical media as the solution, others argue that the problem with digital media ownership is simply one of centralized intermediaries.

"When you 'purchase' a digital asset from a digital platform, the platform ultimately retains control of the asset, and your 'ownership' title is nothing but a revocable entry on the platform's database," said Primavera De Filippi, Director of Research at CERSA. Because traditional property law protections against arbitrary seizure do not apply to digital assets, she added, "The platform operator can take property away via a simple line of code, without having to justify it any legal ground, or even modify the content of these digital assets, without the users' consent or knowledge."

Blockchain fixes this (no, really)

As in other industries where centralized intermediaries and gatekeepers have been the focus of consumer ire, blockchain and other decentralized technologies have been touted as a solution.

"Blockchain and Web3 gives consumers a clear path to owning a digital copy of a specific good, whether that is a game, a song or a movie," Zhang told Decrypt.

NFTs were initially touted as a catch-all solution, enabling digital objects to "have a public, verifiable record held directly by the user," said Tim Sun, Senior Researcher at Hashkey. But "excessive hype" and speculation during the NFT craze has tainted their public perception, he cautioned.

The tech stack underpinning NFTs also had limitations in its early iterations. "If the NFT points to a file hosted on a company's server, the dependency on the platform operator persists," De Filippi explained. For true digital ownership, she said, both the title and the content of a digital asset need to be hosted on fully decentralized infrastructure—something many NFTs fail to implement.

Another sticking point is that on most blockchains, NFT metadata is public, meaning anyone can "right-click-and-save" the content. "The main issue is that ownership of the NFT does not necessarily give you exclusive control over the asset behind it," Guy Itzhaki, CEO of privacy blockchain Fhenix, told Decrypt. "If an NFT represents a piece of art, a game item or access to private content, public metadata can expose that content or its attributes to everyone."

What users need, Itzhaki argued, is both "ownership of the NFT and the ability to control who can see the data behind it," with access control enabling NFTs to more closely mirror the ownership model for physical items. Until now, NFT holders were left tying themselves in knots arguing that true ownership of an NFT rests on holding the title and the content—and sometimes the IP rights—while naysayers pointed out that it was laughably easy to copy their $16,000 monkey picture.

There are already several ways to make NFTs private, Itzhaki explained, including conventional encryption, trusted execution environments (TEEs), and fully homomorphic encryption (FHE). Early examples of encrypted NFTs leveraging TEEs went on sale during the 2021-22 boom, including efforts from filmmakers Kevin Smith and Quentin Tarantino—but the technology fell by the wayside as the NFT market crashed.

Encrypted NFTs have been hamstrung by "integration rather than a lack of technology," Itzhaki said. Existing wallets and marketplaces have been built around public NFT metadata, while encrypted NFTs "add new requirements around permissions, key management, transfers and confidential computation," as well as being tied to specific infrastructures. "That worked well to prove technical feasibility, but made it harder to reach the broader NFT ecosystem," he added.

With privacy technology gaining traction across the blockchain space, Itzhaki said it will achieve deeper integration with wallets, marketplaces, and developer tooling. "As these capabilities become more widely adopted, they will naturally extend to NFTs as well," while "clear standards for private NFTs" will accelerate the transition to "NFTs with real utility and value"—allowing for true ownership of digital assets.

The debate's next phase will play out on two fronts: in the courtroom, where Sony's position on digital-game ownership is being tested, and among developers, where wallet and marketplace integration will show whether encrypted NFTs can graduate from proof of concept to the consumer products players actually use.

"At this point, there are no missing technical elements," Zhang said. "The missing element is culture and credibility for mainstream adoption." She added that NFTs are "the clear path forward for digital ownership and intellectual property distribution and licensing on the internet," with blockchain representing the "technical solution forward for a new world where digital ownership is clearly defined and made possible."