- In the third quarter of 2023, blockchain games garnered an estimated $600 million.
- Q3 2023 blockchain game funding decreased 38% from Q2, totaling around $2.3 billion for the year.
- The gaming industry faced job cuts with over 6,100 positions eliminated, affecting well-known companies and crypto-focused studios.
Despite ongoing difficulties in the wider cryptocurrency and gaming sectors, the emerging blockchain gaming industry is attracting significant venture capital funding. In the third quarter of 2023, blockchain games garnered an estimated $600 million, as indicated by a report from the crypto data company DappRadar.
This figure represents a 38% decrease from the $973 million in cryptocurrency gaming investments monitored by DappRadar during the second quarter of 2023. As of now, the total for this year stands at approximately $2.3 billion in funding. Although the year 2023 is not yet complete, this $2.3 billion in funding only constitutes 30% of the total raised throughout the entirety of the previous year.
Simultaneously, this year has posed significant challenges for game studios, whether they operate within or outside the realm of cryptocurrencies. According to a report by GamesIndustry.biz, the gaming industry, as a whole, has witnessed the elimination of over 6,100 jobs in the past year. In recent weeks, well-established companies like Epic Games, Telltale Games, and Team17 have carried out layoffs, and gaming-focused crypto entities such as Star Atlas studio ATMTA and Otherside developer Yuga Labs have also reduced their workforce during the course of this year.
DappRadar’s findings indicate that the bulk of funding in the crypto gaming sector for the previous quarter was directed towards investment firms with a focus on gaming. This trend suggests that venture capitalists, along with their accelerators and investment funds, will remain a central source of startup capital for emerging blockchain game development studios.
During the period spanning from July to the close of September this year, $262 million was earmarked for investment firms in this domain, while $213 million was directly invested in gaming and metaverse projects. Notably, an additional $125 million was allocated to the development of blockchain gaming infrastructure, as reported.
During the last quarter, Axie Infinity, a game that experienced approximately half a million unique active wallets in late 2021 before being affected by a $622 million hack in early 2022, emerged as the title with the highest NFT transaction volume. According to DappRadar, Axie Infinity recorded a total transaction volume of $90 million over the three-month period. Following closely, the NFT trading card game Gods Unchained secured the second position, with a transaction volume of $55 million in Q3.
Axie Infinity’s continued dominance in the blockchain gaming sector can be attributed in part to the fact that most highly-anticipated NFT games currently in development have not yet been fully released. Titles like Parallel, Shrapnel, Deadrop, and MapleStory Universe, for example, are still in the development stage.
The team at Sky Mavis, responsible for Axie, has also undertaken their own initiatives to maintain engagement within the game’s community. Despite the rapid rise and fall of the play-to-earn game’s hype cycle, which saw billions of dollars in NFT trades in 2021 before the game’s economy experienced a significant downturn in early 2022, the efforts of the Sky Mavis team have played a role in sustaining Axie’s player base.
In a recent interview, Sky Mavis co-founder Jeffrey Zirlin described Axie’s esports scene as being very vibrant. Zirlin revealed that Sky Mavis is distributing 112,000 AXS tokens, equivalent to roughly $472,000, to players every season, with each season spanning approximately six weeks. Additionally, the game continues to host weekly tournaments.
Zirlin also acknowledged a “consolidation” within the Web3 guild space, which is the cryptocurrency gaming equivalent of esports team organizations. Despite the challenges posed by the bear market, he sees certain advantages in such times. Zirlin stated, “Bear market hard times—that’s needed for evolution. You cannot evolve, actually, when you’re going through a really great boom. You will change in other ways, but in terms of figuring out the next thing—that’s what these times are for.”
