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2022 has been a huge year for play-to-earn (P2E) game scene. An influx of capital and users was followed by a sharp decline in blockchain gaming token prices and a dwindling number of players – and the market is still reeling. And, with the fallout from the FTX disaster reaching every corner of the industry, the prospects of playing to win look bleak at first glance. But looking under the hood, the numbers tell a different story: strong funding this year has paved the way for some serious “building” in 2023.

A steady stream of big raises for Web3 game studios has been quietly infusing the market with funding for months. In August, UnCaged Studios raised $24 million, contributing to nearly $750 million raised by Web3 game studios in that month alone. The momentum continued through September when Revolving Games raised $25 million, and October when Odyssey Interactive, Stardust, and SkyWeaver raised $19 million, $30 million, and $40 million, respectively. Thirdverse raised $15 million for Web3 and virtual reality (VR) games in November;

These numbers directly contradict falling asset prices and gamer enthusiasm for the Web3 gaming space. But even as players and tokens falter, venture capitalists are betting big on the future of blockchain gaming. Which studios will prevail in the coming year? And why?

Instead of betting on speculation, VCs bet on experience

One notable thing throughout the increases that have taken place in recent months is that the majority of studios that have received funding are not doing seed or pre-seed tours. Instead, they hold Series As.

Of course, there are exceptions to this rule. Some studios have successfully completed seed or pre-seed rounds. But even then, their founding teams have serious gaming experience. For example, Ruckus Games, which recently raised $5.5 million in seed funding, is a game studio started by former developers from Gearbox and Riot Games. This indicates that VCs are focusing on studios with gaming experience – a departure from the early days of Web3 gaming.

How investments in blockchain games were allocated in 2022. Source: DappRadar

During this early period, many Web3 game projects received solid funding without having a clear roadmap for launching their products or building teams with the proven track record to get there. Indeed, the YOLO days of late 2021 and early 2022 are long gone. Today, studios that receive funding already have a proven level of success in creating Web3 games. VCs are now thinking further into the future, even five to ten years from now.

Related: 2023 will see the death of the play-to-earn game

Although this period may seem to span several lifetimes in the crypto world, this horizon is normal for studios in the traditional gaming sphere. The shift to longer-term thinking also shows that studios are beginning to understand that individual games have a lifespan – and that investing in the studios that build the games is a more efficient approach.

How will the crypto game change?

Looking at these increases combined with long-term trends in Web3 games, we are beginning to see certain patterns are beginning to shape the future of the industry.

What will be the impact of all these increases in a few years?

Related: Feds are coming for the Metaverse, from Axie Infinity to Bored Apes

We can certainly expect a strong focus on mobile games. In September, DappRadar reported that hyper-casual mobile blockchain games have attracted over 1.7 million users from Web2 to Web3 game in a single week.

With these changes underway, it seems likely that Web3 games will enter the “mainstream” and within the next five years, the Global Top 100 Game Studios Index will contain studios that have strong blockchain elements.

Here comes the long game

We probably haven’t seen the last of the large-scale increases that have occurred in the Web3 gaming space in recent months. The Web3 game hype cycle has officially passed and the space is in “build” mode. And this time around, investors are interested in studios that play the long game (pun intended).

This shift in focus, combined with significant fluctuations in the broader blockchain technology industry, will create new dynamics and opportunities for builders in the P2E market in 2023. Heightened expectations from players and funders will separate the good grain of the chaff. Priorities in 2023 and beyond will focus on quality over quantity. In the end, those who can create the most outstanding games will win. So game on.

Corey Wilton is the co-founder and CEO of Mirai Labs, the international game studio behind Pegaxy. A renowned speaker and Play-to-Win thought leader, he launched his first crypto venture in 2018, a customer support service designed to help cryptocurrency businesses with their customer service.

This article is for general informational purposes and is not intended to be and should not be considered legal or investment advice. The views, thoughts and opinions expressed herein are those of the author alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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