Collapse of FTX has shaken investors’ interest in blockchain games

The fall of the market in 2022 hit the confidence of venture firms in the profitability of blockchain games, analysts found.

The decline of the market in 2022 significantly affected the sponsorship of blockchain games. This conclusion was reached by Blockdata analysts with reference to the CB Insights platform data. It turned out that in the first quarter of 2022, venture capital firms still showed interest in blockchain projects.

Then the number of transactions in the blockchain gaming market was 55. However, by the end of the year, as bankruptcies like FTX, BlockFi and Celsius became more frequent, investors changed their approach to Web3 games. As of the fourth quarter of 2022, the number of transactions collapsed by 75% to 14 units. Since the beginning of 2022, the volume of investments in decentralized games has completely collapsed by 90% from $400 million to just over $50 million.

Despite the falling market, the US remains the main destination for investors. The country accounted for 33% of all transactions on blockchain games in 2022. Singapore took the second place (26 deals), and India, Hong Kong and Vietnam shared the third place (6 deals in each country). Japan, Canada and the UK accounted for 5 transactions each.

It is noteworthy that investors are not very concerned about the blockchain games themselves. Most often and most of all money at an early stage of development is attracted by services that can quickly generate profit. For example, a gaming NFT marketplace called Fractal Wagimi raised $35 million. In second place in terms of investments in early startups is the blockchain developer Iskra ($ 34 million). Not a single Web3 game made it into the top three in terms of investment in 2022.

Blockdata predicts that a new model of blockchain video games will soon be formed on the market, which will focus on gaming experience rather than earning tokens. A paradigm shift may push investors to invest more actively in the industry, but the prospects for such projects are unclear.