It’s fair to say 2022 has dealt the markets plenty of surprises. Recent results of the Michigan Consumer Confidence Survey, which started in 1952, shows that so far 2022 is the worst year for consumer confidence on record. The disastrous cocktail of a global pandemic, the Russian invasion of Ukraine, money printing, and rising inflation has caused widespread uncertainty.
The Cryptocurrency market is having its own issues, as widely known as they are. Although whilst many are hurting, others see opportunity. Fortunately for us, one of the sectors in which we have the most conviction and are heavily involved in appears to be showing surprising resilience.
The gaming industry is bigger than the music and movie industries combined. The most successful games of today, such as Fortnite and Minecraft, host loyal, long-term communities and generate billions of dollars in revenue. The industry keeps growing, too. In fact, the $300 billion gaming industry has the potential to grow into a trillion dollar economy over the next decade. We believe blockchain gaming will play a key role in facilitating this growth. And we’re not alone.
Wall Street giant Morgan Stanley sees a potential $8 trillion market for blockchain gaming. An industry report by DappRadar, for May 2022, shows blockchain gaming activity is still up by 197% year on year. Objectively speaking, this makes crypto gaming the most resilient sector in crypto. Indeed, the number of unique active wallets (the crypto world’s equivalent of ‘users’), or those connected to wallets, in Q1 2022 was down just 2% from 2021’s Q4 average. The sector attracted almost 900,000 unique active wallets in June this year, and accounts for an impressive 52% of the crypto industry’s total activity.
The promise of blockchain gaming is not going unnoticed. This is perhaps best illustrated by a continuous influx of capital into blockchain games, plus the attention the space is garnering from some of the industry’s top investors. Blockchain games received $4 billion of investments over the whole of 2021. Comparatively, metaverse and blockchain gaming has already received over $6 billion of investments in 2022, and is on track to double last year’s efforts, market conditions notwithstanding.
The promise of future capital inflows can be highlighted by leading venture firm Andreesen Horowitz (a16z), with its recent launch of a $600 million Games Fund One, which is dedicated solely to blockchain gaming. A16z has extensive experience investing in the gaming industry, having backed multiple industry heavyweights including Epic Games, Riot Games and Oculus. Games Fund is even backed by numerous gaming veterans such as the founders of Roblox, Discord, Riot Games, Sky Mavis, Twitch, Zynga and King. The inclusion of some of the traditional gaming industry’s biggest names is testament to the potential of blockchain gaming. So, can we conclude that a16z earmarking so much capital to deploy exclusively in blockchain gaming a privilege which other blockchain sub-sectors have yet to receive? In June, Ethereum based layer 2 scaling solution Immutable X also announced a $500 million fund to invest in blockchain gaming within its ecosystem. Whilst highly anticipated Immutable X AAA game; Illuvium, managed to raise $72 million in its land sale in June, defying the wider bearish market sentiments.
More recently, Konvoy Ventures announced that they’re launching a $150 million web gaming fund, based on their belief that gaming will thrive in the next macroeconomic cycle. These three funds alone guarantee $1.25 billion of capital inflows into Immutable’s blockchain gaming ecosystem, over the next few years.
As well as capital inflows, crypto gaming can also expect to see an increase in user inflows, too. Epic Games recently announced support for P2E games, with the first P2E game; Grit, launching on their platform in the near future, in turn opening up P2E gaming to Epic Games’ 160 million users. Polium also just announced that they’re developing the world’s first crypto gaming console, which if successful could open up crypto gaming to the millions of console gamers world wide.
The expansion of AAA gaming into crypto is another highly anticipated development. AA games can be classified by their high budgets, costing tens of even hundreds of millions of dollars (think Call of Duty and Grand Theft Auto). Due to the cost requirements, they are typically produced by large, well-known publishers. Due to their complexity, AAA games take years to create. However, the good news is that whilst the rest of us spent 2020 and 2021 concerning ourselves searching for alpha and managing our cryptocurrency portfolios, scores of creatives, game developers, designers, crypto-natives and entrepreneurs have been grinding behind the scenes in bringing AAA gaming to the blockchain. These games like Sidus Heroes and Illuvium, will be playable in the near future and are likely to onboard waves of new users to Web3 due to their superior gameplay functionality in comparison to anything else currently on the market.
Crypto gaming’s traction continues in spite of events like the $650M Ronin Bridge hack in March (the biggest crypto hack ever), criticisms around P2E games not being fun, and current market conditions. This goes to show that users and investors are able to redefine their perspective and see the bigger picture. Current criticisms are just temporary noise.
Crypto gaming will change the gaming industry forever, for the better. The launch of numerous specialized gaming funds showcases how large investors believe that blockchain gaming will impact how we socialize, play and work over the next decade, and are already positioning themselves as early supporters and investors.
Kahraman E. (2021, October 18). Epic welcomes blockchain games, but don’t expect any Fortnite NFTs.
Chittum M. (2022, February 01). Morgan Stanley Sees $8 Trillion Metaverse Market — In China Alone.
Herrera P. (2022, April 20). DappRadar x BGA Games Report — Q1 2022.
Chen A. (2022, May 18). GAMES FUND ONE: Building the Future of Games.
Peterson. M. (2022, May 25). Andreessen Horowitz Launches Largest Crypto Fund Ever With $4.5B.
BBC News. (2022, May 31). What sanctions are being imposed on Russia over Ukraine invasion?. Retrieved from: https://www.bbc.com/news/world-europe-60125659
Dursun O. (2022, June 06).Epic Games First NFT Game, Grit, Released, But With a Trick.
Hernandez. O. (2022, June 07). Crypto Markets Have Tanked, but Not Blockchain-based Gaming.
Vold F. (2022, June 09). Blockchain Games Strongest Category Amid Crypto Market Downturn.
Rockeman O. (2022, June 10). US Inflation Quickens to 40-Year High, Pressuring Fed and Biden.
Melinek J. (2022, June 17). Immutable launches $500M fund to boost web3 gaming adoption.
Justine. (2022, June 20).Breaking Down The Events That Led To The Terra Luna Crash, And The Luna 2.0 Revival Plan.
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