Despite ongoing challenges in the broader crypto and gaming markets, the emerging blockchain gaming industry continues to attract significant venture capital investments with confidence. A recent report from crypto data firm DappRadar reveals that in Q3 2023, blockchain games secured approximately $600 million in funding.
While this figure represents a 38% decrease from the $973 million recorded in Q2 2023, it adds up to a substantial $2.3 billion in total funding for the year, even though 2023 isn’t yet concluded. Notably, this $2.3 billion already accounts for 30% of the total funds raised throughout the entirety of the previous year.
This year has indeed presented challenges for game studios across the board, with over 6,100 jobs eliminated in the gaming industry, including well-known companies like Epic Games, Telltale Games, and Team17. Notably, even gaming-focused crypto firms such as Star Atlas studio ATMTA and Otherside developer Yuga Labs have had to make staff reductions.
The report from DappRadar highlights that most of the recent crypto gaming funding was directed towards investment firms with a strong focus on gaming. This indicates that venture capitalists and their various accelerators and funds will continue to play a pivotal role in providing startup capital for burgeoning blockchain game studios.
Between July and September of this year, $262 million was allocated to investment firms in this sector, while $213 million was invested directly in game and metaverse projects. Another noteworthy aspect is the allocation of $125 million into blockchain gaming infrastructure, as outlined in the report.
One standout player in the blockchain gaming scene is Axie Infinity, which, despite experiencing a major hack in early 2022, maintained its dominance by recording the highest NFT transaction volume in the last quarter. Over this period, Axie Infinity saw a total volume of $90 million. Gods Unchained, the NFT trading card game, secured the second position with a transaction volume of $55 million in Q3.
Axie Infinity’s sustained success can be attributed, in part, to the fact that many highly-anticipated NFT games are still under development, such as Parallel, Shrapnel, Deadrop, and MapleStory Universe.
The team behind Axie Infinity, Sky Mavis, has been proactive in engaging the game’s community, even in the face of the rapid rise and subsequent decline of the play-to-earn game’s hype cycle. Sky Mavis co-founder Jeffrey Zirlin shared that the game rewards players with 112,000 AXS tokens (equivalent to approximately $472,000) every season, which typically spans about six weeks. Additionally, the game continues to host weekly tournaments.
Despite signs of consolidation in the Web3 guild space, which mirrors traditional esports team organizations, Zirlin sees opportunities in the current bear market. He believes that challenging times are essential for evolution, stating, “Bear market hard times—that’s needed for evolution. You cannot evolve, actually, when you’re going through a really great boom. You will change in other ways, but in terms of figuring out the next thing—that’s what these times are for.”