A visitor takes a photo in front of digital work “Untitled (Self-Portrait)” by Andy Warhol and digital artist Mike Winkelmann, known as Beeple, at the Digital Art Fair, in Hong Kong, China September 30, 2021. REUTERS/Tyrone Siu Since NBA Top Shots and artist Beeple’s digital collage that sold from Christie’s for $69 million this year, the NFT investing craze has only gotten hotter.
Artists from Snoop Dog to singer-songwriter Grimes and rock band Kings of Leon made huge profits minting these unique digital collectibles. Even big brands like Budweiser , Coca-Cola, Dolce & Gabbana, Taco Bell , and Nike are now tinkering with the technology. Soon, Twitter will even grant special badges of authentication to users who want to flaunt NFTs as profile pictures.
One telling sign that NFTs are more than just a fad is the accelerating pace venture capitalists are backing companies in crypto gaming, betting that NFTs and other digital assets can redefine how and why we play video games.
On Wednesday the crypto gaming investor and publisher Animoca Brands raised $65 million at a $2.2 billion valuation from backers like Ubisoft. On Oct. 19, Galaxy Digital Holdings, whose CEO is Michael Novogratz , announced an additional $325 million raise with a significant portion of funds – like Animoca – going to crypto gaming businesses.
Galaxy partner Sam Englebardt told Yahoo Finance the shift to crypto games has been tossed around for years, but 2021’s NFT boom – along with breakout gaming successes like Axie Infinity – are accelerating the pace of investments. VC investment in crypto gaming in October surges
Crypto or blockchain gaming is a niche segment that implements NFTs and other digital assets at some level of gameplay. It could be creating digital collectibles or building more robust in-game economies, features that enhance how players and the games themselves progress.
The worldwide video game industry is valued at roughly $175 billion, getting a big boost from more time spent at home during the pandemic. It’s also the largest and fastest-growing form of media in the world, according to Newzoo . A similar narrative is playing out in the crypto sector. In the last quarter, user growth and engagement in crypto-related gaming projects has exceeded other NFT and DeFi applications, according to analytics platform DappRadar .
Blockchain gaming investments were valued at $476 million for the first half of 2021; investments in October alone are double that number.
Currently, the most common business strategy explored by larger video game publishers is selling collectible NFTs using legacy brand value. For example, Animoca Brands is now giving diehard fans the chance to trade and collect Atari games as digital boxes . Animoca Brands, Crazy Defense Heroes Digital boxes may not sound revolutionary, but Piers Kicks, senior associate at gaming and esports VC firm BitKraft, anticipates many gaming publishers will follow the trend.
This month BitKraft, with $540 million assets under management, opened its own fund to invest $75 million in NFTs and other tokens for gaming projects. Like Animoca Brands and Galaxy Digital, BitKraft’s investments show how much further ahead venture firms are thinking about crypto gaming, while larger game studios and publishers are still deciding whether to dip their toes into the space.
These funds are thinking of how the futuristic ” metaverse ” will play out and whether it’s content or intellectual property, they’re betting video games take a leading role.
“The stuff that really excites me is a lot more crypto native, things that are built from the ground up rather than bolting on NFT strategies to [existing] games,” Kicks said. A leading indicator
As Kicks and Galaxy’s Englebardt pointed out, the bellwether for built-from-the-ground-up crypto gaming came earlier this year in the form of the Sky Mavis game, Axie Infinity. Axie Infinity is a “play-to-earn” (P2E) mobile game likened to the Pokemon franchise. In it players can battle, breed and trade digital monsters also called Axie. Thanks to the success of Axie Infinity, Sky Mavis raised an additional $152 million in a series B funding round led by Andreessen Horowitz (a16z), the same week Kicks’ BitKraft launched its fund. Visitors are seen at the Digital Art Fair Asia in Hong Kong, China, on October 08, 2021. The fair showcases NFT Crypto Art, non-fungible tokens, as part of the the new trend in modern art. (Photo by Miguel Candela/Anadolu Agency via Getty Images) Axie’s user growth over the last year is staggering. Since its inception, the game has generated more than $2.4 billion in total transaction volume, making it the […]
source VCs like Galaxy Digital nearly doubled their bets on crypto gaming this month