The Web3 gaming sector is currently undergoing significant changes, as investors become more discerning and prioritize sustainability over hype-driven fundraising initiatives. This shift has been characterized by a growing reluctance to invest in projects merely touted as the next ‘Axie killers,’ a term that historically referred to games aiming to replicate the massive success of Axie Infinity.
According to industry insiders, this evolution is not unique to Web3 gaming, but also reflects the broader economic environment within the cryptocurrency market. Jeffrey Zirlin, co-founder of Sky Mavis, highlighted that while the atmosphere may seem grim, it is essential to note that capital is still available for the right projects. In fact, he pointed out the remarkable success of Fableborne, a mobile Web3 game that was oversubscribed by an astonishing 16,000% despite current market conditions.
As the financial landscape tightens, gaming professionals are recognizing that the previous wild influx of capital is being replaced by more calculated investments. Sebastien Borget, the co-founder of The Sandbox, expressed his belief that the ongoing uncertainty brought on by speculative cycles has subsided. This stabilization means that game developers are now required to adhere to traditional gaming metrics, focusing on delivering compelling content, fostering sustainable user acquisition, establishing a robust in-app economy, and cultivating a loyal user base.
Moreover, the days of projects raising millions simply by adding non-fungible tokens (NFTs) to their gaming titles appear to be behind us. Josh Gier, CMO of Coliseum, commented on this shift, explaining, “The speculative phase of blockchain gaming has cooled off. However, this doesn’t imply that capital has vanished; it has merely become more selective, with a clear preference for projects grounded in strong fundamentals and sustainable economic models.”
Investors are increasingly interested in games that thoughtfully integrate Web3 elements to enhance player experiences, moving beyond a primary focus on financial incentives. This transformation requires developers to not only create visually appealing games but also to demonstrate a sound understanding of distribution processes to attract potential funding.
In this context, investment firms that specialize in blockchain gaming, such as Animoca Brands, play a vital role in supporting promising projects that exhibit potential for growth over extended periods. Vineet Budki, CEO of Sigma Capital, stated that successful gaming enterprises take time to establish, which complicates the raising of capital in the current environment. To successfully navigate this new landscape, developers must be prepared to build exceptional gaming experiences that resonate with players and investors alike.
