Blockchain Gaming Industry Sees Substantial Venture Capital Despite Market Challenges in Q3 2023

Blockchain Gaming Industry Sees Substantial Venture Capital Despite Market Challenges in Q3 2023

Crypto News – Despite persistent challenges in the broader cryptocurrency and gaming markets, the nascent blockchain gaming sector continues to attract substantial venture capital investment. According to a report by crypto data firm DappRadar, blockchain games garnered approximately $600 million in funding during Q3 2023.

However, this figure represents a 38% decrease from the $973 million of investment observed in the crypto gaming sector during Q2 2023. As of now, the total funding for this year amounts to approximately $2.3 billion, making up just 30% of the total funds raised in the preceding year.

The gaming industry, encompassing both traditional and crypto-focused studios, has faced significant challenges this year. GamesIndustry.biz reported over 6,100 job cuts across the entire gaming sector in the past year. Notable companies like Epic Games, Telltale Games, Team17, as well as crypto-focused firms like Star Atlas studio ATMTA and Otherside developer Yuga Labs, have all experienced layoffs in the course of this year.

DappRadar’s findings indicate that a significant portion of the funding in the crypto gaming sector during the last quarter was directed towards investment firms specializing in gaming. This suggests that venture capitalists, along with their accelerators and funds, will continue to be a primary source of startup capital for emerging blockchain game studios.

In the period between July and September of this year, approximately $262 million was allocated to investment firms in this space, while $213 million was directed towards game and metaverse projects directly. Notably, an additional $125 million was invested in blockchain gaming infrastructure, as outlined in the report.

Axie Infinity, which had about half a million unique active wallets in late 2021 before enduring a $622 million hack in early 2022, maintained its position as the title with the highest NFT transaction volume in the last quarter. Axie recorded $90 million in total volume over the three-month period, according to DappRadar. Following closely, the NFT trading card game Gods Unchained secured the second spot, amassing $55 million in transaction volume in Q3.

The continued dominance of Axie Infinity in the blockchain gaming sector can be attributed in part to the fact that many highly-anticipated NFT games are still in the development phase. Titles like Parallel, Shrapnel, Deadrop, and MapleStory Universe, for instance, have not yet seen a full release.

However, the team at Sky Mavis, the creators of Axie, has actively engaged the game’s community, countering the effects of Axie’s rapid hype cycle—a surge in 2021 marked by billions of dollars’ worth of NFT trades—followed by a significant downturn in early 2022, impacting Axie’s player base.

In a recent interview with Decrypt, Sky Mavis co-founder Jeffrey Zirlin highlighted the vibrant esports scene within Axie. Zirlin shared that Sky Mavis is distributing 112,000 AXS tokens (approximately $472,000) to players every season, lasting about six weeks. The game continues to host weekly tournaments as well.

Zirlin noted a “consolidation” occurring in the Web3 guild space, which is akin to esports team organizations in the crypto gaming realm. Despite the challenges posed by the bear market, he sees it as a necessary phase for evolution. According to Zirlin, these challenging times are crucial for innovation and discovering the next big advancements.