Blockchain games have gained popularity with so many new games popping up this year. Its promise of earning a significant income while playing video games have become quite appealing to a lot of people in the world. So appealing in fact, that venture capital firms (or VCs), known for providing financing to the promising start-ups and industries, are being bombarded with pitches for blockchain games.
Blockchain games gained mainstream popularity, at the tail of of last year due to rise of Axie Infinity. The Play-to-Earn card battler helped thousands of players earn a significant income, especially during the lockdown period. Earlier in the year, Axie Infinity was responsible for 19% of all NFT transactions. Additionally, in the first quarter alone, blockchain gaming saw a 2000% growth with a total of $2.5 billion in investments for Q1 2022.
It is no surprise that gaming venture capital (VC) and game investment companies are being inundated with pitches for games that have some form of blockchain technology integrated into it. This is a huge departure from last year when there were hardly any game pitches with blockchain technology.
According to investment bank Drake Star Partners, blockchain games received a third of all funding for games. 128 game companies working on blockchain games received $1.2 billion in investment funding this year alone that are coming from game VCs and investment firms.
This is a good thing for those in the blockchain game industry. It means blockchain games are quite hot and that there is a good outlook for these games. This is also likely to allay some fears that people have for the future of blockchain games.
As many will attest, blockchain games have been seen by many negatively. Many consider blockchain game a scam or another way for developers to make money off gamers like microtransactions and expensive DLC packs. Despite big studios such as Sega, Square Enix, and Ubisoft talking about integrating blockchain, gamers, in general, have thrown some harsh feedback against these companies.
Perhaps due to the volatility and the newness of blockchain games, the mainstream gaming VCs aren’t particularly excited about the prospect of backing blockchain games either. However, VentureBeat reported that in their own GamesBeat 2022 conference, one investor indicated that up to 90% of game pitches they’ve had are connected to the blockchain with just one that was focused on traditional gaming.
In addition to new blockchain games being born, the current trend right now is that many game developers are now suddenly adjusting their pitches to include Web 3 elements. Some are being hastily done while other pitches focus so much on the Web 3 technology that it doesn’t talk about the game anymore and the world they are building. This is seen by many gaming VCs as developers trying to catch the trend without really thinking about the games they are trying to develop.
Other VCs on the other hand see it as the reality of where the industry is heading. Many of these VCs are concerned that they are compromising quality of their game development and are bending backwards just to simply adapt to the emerging trend.
Ed Fries, the founder of 1Up Ventures, through GamesBeat states, “I don’t mind receiving web 3 game pitches, but they need to meet the same requirements we’d like to see in any game pitch, which is to say a great new idea from an experienced team of game developers,”
His statement is indicative that just because a game pitch includes this fancy new trend it will be given a grant. Blockchain games still have to pass the same standards as you would see in traditional games.
The issue seems that many game developers are just pitching things they think that VCs want to hear. Nexon CEO Owen Mahoney says that instead, they would love to hear developers and studios pitch the games they dream of making rather than focus on just the numbers and what they think the VC will want to hear.
The increase in the number of blockchain game pitches does show the hot new trend right now in gaming and shows how lucrative the business opportunity is right now. However, this shouldn’t compromise the quality of the games being made and should still meet the same standards that traditional game companies are held before they are granted funding.
As of now, there doesn’t seem to be a disproportionate amount of funding going to blockchain gaming versus traditional gaming so only time will tell if these trends change by next quarter or by the end of this year.