Blockchain Gaming’s Evolution and Current Landscape
Blockchain gaming has experienced several shifts in public perception over the years, particularly noted during significant milestones like the rise of CryptoKitties in 2017 and the emergence of titles such as Axie Infinity, Gods Unchained, and Splinterlands in 2018. Although some observers argue that the crypto gaming sector is currently facing challenges, Bitkraft Ventures, a prominent venture capital firm, maintains a more optimistic outlook. According to Matt Halstead, a newly appointed partner at Bitkraft, the sector is far from dead and its prospects are as promising as any in the tech landscape.
Investment Portfolio and Future Outlook
Bitkraft Ventures boasts a portfolio of over 100 companies, which includes notable names in the crypto space like AMGI, Immutable, HyperPlay, and Yield Guild Games, as well as established non-crypto entities such as Discord and Epic Games. While Bitkraft has a vested interest in the success of cryptocurrency gaming, they are also strategically positioning themselves for what they believe the industry’s future will entail. Halstead expressed a strong conviction that gaming will not only persist but expand significantly, emphasizing that overlooking the gaming sector would be a grave error.
Shift from Play-to-Earn to Play-and-Earn Models
As the excitement surrounding play-to-earn games waned in early 2022—evidenced by Axie Infinity’s AXS token plummeting by approximately 91% in under six months—newer game developers began advocating for a “play-and-earn” approach. Several studios conveyed the necessity of moving away from games that prioritize financial mechanisms over gameplay, asserting that creating engaging experiences should take precedence. During this period, some industry stakeholders envisioned a future where in-game items would be interoperable and integrated with NFTs, yet the anticipated reality has not fully materialized, particularly as enthusiasm for the metaverse diminished in 2023.
Understanding the Disconnect in Expectations
Halstead pointed out that the current skepticism surrounding crypto gaming mirrors a broader issue within the cryptocurrency ecosystem: a rapid feedback loop often leads to discrepancies between expectations and reality. He further noted that there exists a general misunderstanding of gaming principles, which complicates the integration of crypto into gaming. Moving forward, Halstead identifies opportunities in the creator economy, cosmetic items, and the social aspects of gaming as potential avenues for successful blockchain integration.
Emerging Trends and Financial Gaming Models
Moreover, there remains a clear alignment with financial-centric gaming, often referred to as “GameFi,” which incorporates elements of betting or gambling alongside entertainment. Carlos Pereira, a General Partner at Bitkraft, anticipates the release of a notable AI-native crypto game this year, while also highlighting the growing popularity of the “risk-to-earn” subgenre. One of Bitkraft’s standout portfolio companies, Loot Labs, exemplifies this trend by offering NFT loot boxes that surprise buyers with mystery assets through a spin-the-wheel mechanic.
Best Practices for Game Studios
Bitkraft advises its portfolio game developers to refrain from selling NFTs or launching tokens prior to their games’ launch, as this strategy can create unrealistic expectations and pressure studios if they fail to deliver. Pereira stated that generally, the most prudent approach is to avoid monetizing the community too early, which has often not been the case with many games. He acknowledged that while mistakes are an inherent part of the industry, Bitkraft has not aligned itself with projects that heavily rely on early fundraising through launchpads or those that have generated significant revenue from NFT sales prematurely.
