The video game industry has always been at the forefront, but blockchain games are still widely seen as an emerging technology.
In October 2021, Valve banned all blockchain-related games from its Steam platform. Meanwhile, in Axie Infinity, an NFT-based online game, new players are paying hundreds of dollars to acquire mythical pets and love potions.
There is still a fog of uncertainty surrounding blockchain gaming, so we reached out to a number of investors active in the space to get a clearer picture of where opportunities exist today and what they see on the horizon. We asked them to share the advice they are giving to their portfolio companies, along with their thoughts on how future regulation might affect the industry.
Interestingly, at least one investor noted that growth was not a major consideration: “We tell our companies to really think about the missing pieces, particularly the gaming infrastructure,” said Banafsheh Fathieh, head of investment, Americas at Prosus Ventures. “What are the pain points that we can alleviate for users and builders? Growth is less important now, utility is incredibly important at this stage.”
- Anton Backman, main is Kenrick Drijkoningen, general partner, Play Ventures
- Banafsheh Fathieh, head of investments, Americas, Prosus Ventures
- Josh Chapman, managing partner, Konvoy Ventures
- Eddie Thai, general partner, 500 startups and general partner, Ascend Vietnam Ventures
- Beryl Li, co-founder, Income Guild Games
- Rajul Garg, founder and managing partner, Lion Capital
Anton Backman, Director, and Kenrick Drijkoningen, General Partner, Play Ventures
What was your initial reaction upon hearing about Steam banning blockchain games?
It wasn’t a totally unexpected move by Steam. Incumbents tend to be more cautious in adapting to new business models and games are no different. As a fledgling space, NFTs are overwhelmed with projects of varying quality and we believe Steam wants to do some quality assurance and wait until the situation stabilizes before allowing massive blockchain gaming. Interestingly, at the time of writing (November 14), MIR4, an encryption-enabled MMORPG on Steam, is running on 88,000 concurrent users. It looks like there’s still a gray area in terms of how these games rank.
What advice have you given your portfolio companies to grow? What kind of guidance and assistance do blockchain gaming companies seek from you?
We usually act as a sparring partner for founders on matters related to strategy. With blockchain gaming companies, we primarily help teams navigate the technology stack, i.e. which blockchains and/or scaling solutions to consider, as well as the cost-effective design of the token. In our opinion, it’s critical to take a native encryption approach to building and experimenting with the product, while involving your community in the process.
How do you see the regulatory environment for blockchain games? Is uncertainty making you reconsider your strategy?
No. It’s not the first time that innovation has outpaced regulation and we see this as a natural reaction to new consumer behavior and ways of building companies. Likewise, Uber fought an uphill battle with regulators before finally democratizing the taxi medallion system and providing a massive improvement for end users of taxi services. This does not mean that companies and projects should build products that are against the law, but rather engage in healthy discussions with regulators as the adoption of their products increases.