Blockchain Gaming’s Evolving Landscape
The realm of blockchain gaming has experienced fluctuating phases of public sentiment. Notable periods include the emergence of CryptoKitties in 2017 and the rise of titles such as Axie Infinity, Gods Unchained, and Splinterlands in 2018. While some observers might perceive a downturn in crypto gaming currently, Bitkraft Ventures, a prominent venture capital firm, holds a different perspective. “It’s not only alive, but its future shines brighter than almost any other sector,” asserted Matt Halstead, a new partner at Bitkraft, during a recent conversation.
Investing in the Future of Gaming
Bitkraft Ventures boasts a diverse portfolio, encompassing over 100 companies in the gaming sector, including notable names like AMGI, Immutable, HyperPlay, and Yield Guild Games, as well as established non-crypto players like Discord and Epic Games. The firm is poised to gain from the prosperity of crypto gaming, but they are also strategically investing in their vision of what lies ahead. “I am confident that gaming will not only persist but will grow exponentially larger than its current state. It’s rare to find such conviction in many themes globally, and overlooking the gaming sector could lead to significant missed opportunities,” Halstead remarked.
The Shift from Play-to-Earn to Play-and-Earn
Following the decline of the play-to-earn model in early 2022—when tokens like Axie Infinity’s AXS experienced a staggering 91% drop in value within a mere six months—emerging crypto game developers began to advocate for a “play-and-earn” approach. Several studios conveyed that the industry needed to pivot away from financialized games focused on farming, emphasizing the importance of prioritizing enjoyable gameplay to create quality experiences. At that juncture, many developers and investors envisioned a future where in-game items would be interoperable, with NFTs playing a crucial role. However, the anticipated integration of interoperable in-game assets on the blockchain has yet to materialize, particularly as enthusiasm for the metaverse diminished throughout 2023.
Understanding the Challenges Ahead
Halstead expressed that the prevailing attitudes towards crypto gaming reflect broader issues within the cryptocurrency landscape: a rapid feedback loop often leads to a disconnect between expectations and reality. “There is a fundamental misunderstanding of games as a whole,” he noted. As for the integration of crypto in gaming, Halstead identifies the creator economy, cosmetic items, and the social dimensions of gaming as promising areas for blockchain adoption in the future. Additionally, there remains a significant opportunity for financial-oriented games—termed “GameFi”—which incorporate elements of betting or gambling alongside entertainment.
Emerging Trends in Game Development
Bitkraft’s General Partner, Carlos Pereira, anticipates that the current year will witness the launch of a noteworthy AI-driven crypto game. Furthermore, he highlighted the growing popularity of the “risk-to-earn” subgenre, citing Loot Labs as one of Bitkraft’s standout portfolio firms. Loot Labs provides users with mystery assets through NFT loot boxes, where participants spin a wheel for a chance at unknown rewards. “Acknowledging the concept of risk-to-earn is perfectly acceptable, as these types of games have existed for quite some time and align well with crypto,” Pereira explained. “There remains ample room for various game types.”
Strategic Approaches for Game Studios
Bitkraft advises its portfolio game developers against prematurely selling NFTs or launching tokens prior to their game releases. This strategy can create unrealistic expectations and place studios in challenging positions if they are unable to deliver on their promises or need to adjust their plans. “We firmly believe that, on balance, the best approach is to avoid monetizing your community too early, which is contrary to what many games have done,” Pereira stated. “While failures are part of our learning process, we strive to ensure that our successes are significant. However, we have steered clear of projects that raised substantial funds through launchpads or sold millions in NFTs before delivering a playable product.”
