It's fantastic for things like game characters and cosmetics - it would be awesome if, say, clearing or 100%-ing a game let you use assets from that game in compatible games... like an open protocol for gamertags.

Imagine how much more people would be into events if you got to use the unlocks in other games. It could provide a safe and easy copyright framework for developers using such assets in other games (since only the owner could issue an nft), and encourage compatibility which would drastically increase the ability to reuse character models

There would even be room for monetization later on - if this system grew to any size, artists could sell assets, and could even make money by charging in coin for transfers (like it happens now)

Instead, they over monetized it from the start. Integration never became popular for developers (because why would it? Without good libraries, free default assets, and a copyright framework, it's just a niche feature that might make it in as an afterthought).

What they needed was basically anyone to champion this kind of system in exchange for a payoff down the line. Any publisher could have released some libraries and given away old assets, and they could have become an exchange for assets...a few groups independently did this, but they focused on making money immediately without offering anything for developer adoption

Instead, it started to be used for money laundering, artists and collectors saw dollar signs, and it exploded without anyone building the foundation