“Selective Investments in Web3 Gaming Projects Amid Crypto Winter,” Highlights Animoca Brands CEO Robby Yung
According to Animoca Brands CEO Robby Yung, investors have taken a more cautious approach when allocating capital to Web3 gaming projects during the cryptocurrency market downturn. Yung, who is also a co-founder of the popular Metaverse platform, The Sandbox, emphasized the need for increased due diligence in light of the challenging cryptocurrency bear market. Speaking at the European Blockchain Convention in Barcelona, he outlined the importance of specific criteria when evaluating Web3 gaming investments.
Yung noted that successful investment in Web3 gaming now requires a combination of passionate teams with specialized skill sets and product ideas that clearly address market demand. He also mentioned the current economic downturn and crypto winter, indicating that investors have become more discerning due to the scarcity of capital.
Furthermore, Yung explained that prospective projects considered for investment by Animoca Brands are typically at a more advanced stage of development compared to the standards from a few years ago. Investors now expect substantial progress from projects seeking capital, including having an alpha build and, ideally, user testing in place. Raising funds solely based on a business plan has become challenging in the current market.
Although investors are more selective, Yung acknowledged that companies have still been able to secure funding, especially in the second half of 2023, indicating an improvement in the market. However, there has been a notable “flight to quality” in the selection of projects to invest in.
Yung also pointed out that user acquisition remains a challenge in the Web3 gaming space, partly due to distribution issues. Mainstream gaming platforms have been hesitant to list games integrated with Web3 infrastructure. Yung explained that traditional gaming distribution platforms, such as mobile app stores, Steam, and console platforms, have historically been unwelcoming to Web3 gaming.
He suggested that mainstream gaming platforms may be concerned about the potential disruption of their business models, particularly regarding the fees they collect for distribution. Yung believes that these concerns have led to a lack of exploration and engagement with the Web3 community to find solutions that could benefit the broader gaming market.