Crypto Gaming November 2021 - Observations and Thoughts
In early September I wrote this post below, starting my journey in researching the crypto gaming market, as I believe play-to-earn will be a big major trend.
It is crazy to watch how things have changed in a couple of months. In this post, I will share my observations and learnings, and some thoughts.
Observation 1. Many many many crypto games
The entire GameFi space is getting extremely hot, with new games getting added onto the gaming list on CoinMarketCap every day. As of today, there are 268 projects listed, while there are 150 at the end of August, almost doubled in 3 months. And honestly it’s really time consuming to keep track of things.
Observation 2. Games are either too simple or not released
Most of the games released now, are extremely simple web based games, similar to candy crush or some turn-based mobile games, but with poor quality and anime.
There are bigger games that people are anticipating, but they are far from releases. Among these I’m anticipating Illuvium and Star Atlas the most.
Observation 3. Game studios are integrating with crypto
Game studios are integrating crypto. And because they have already built games before, they can launch an engaging crypto game much more quickly.
For example, Thetan Arena was already a mobile game on iOS with a decent user base, and they are adding an NFT layer on top of their game. I downloaded the iOS game and played it for two hours, it was fun!
Overall, we are going to see “crypto companies trying to make a game, and gaming companies trying to introduce crypto” and SBF thinks gaming companies will win as the interview below. I cannot agree more.
Observation 4. Opportunities to support gaming studios
With more gaming studios integrating with crypto, we are going to see some big businesses being built out to help these gaming studios transition into crypto.
Recently, Forte raised an astonishing $725M (Wow!) just for this purpose.
There are other platforms such as Enjin and Wax, but I have not got the time to look into these.
Observation 5. Game publishing platforms are being built
In the traditional gaming world, we have Steam as a gaming platform. On crypto, Gala seems to be building the steam for Crypto games. Also, Gala has a really great founding team - co-founder of Zynga.
Observation 6. Open world games still need more work
There are a few projects trying to build an open world Metaverse, including Sandbox, Decentraland, CryptoVoxels.
Among these I’m most bullish on Sandbox, tho its games have not been released at all… I have got to play Decentraland before in April and I have to say the graphics quality is really subpar back then. And CryptoVoxels is more like a museum rather than open world.
Observation 7. Crazy valuations
Almost every game I mentioned in this post, has a booming and crazy valuation, especially after Facebook’s recent name change to Meta.
As of today 11/22/2021, their fully diluted market cap are respectfully
Illuvium: $10.6B (2x since September)
Star Atlas: $5.7B
Thetan Arena: $5.8B (10x since September)
Gala: $13.5B (15x since September)
Sandbox: $15B (5x since September)
Decentraland: $8.8B (4x since September)
As a benchmark, Electronic Arts, is only valued at $35B. And a lot of these crypto games have not even released, not to mention a large user base.
Closing Thought 1 - Act faster
Even though I studied looking into Crypto Gaming in early September, I did not initiate any position in these except a small position in Illuvium. I was often times scared by the crazy valuation - but it only got crazier :)
The learning here is often times the valuation does not matter that much, but understanding where you are in the market cycle, is important. Act fast and buy a good project when not enough people are paying attention.
Closing Thought 2 - Building games takes years and we are still early
Building great games is extremely hard and takes years to complete. Recently I finished reading Blood, Sweat, and Pixels - it tells great stories about how hard it is to build a game and I highly recommend it.
Considering most games only started building in late 2020 or 2021, it is unrealistic to expect great games released this year. It is more realistic to expect some big releases in 2022 or 2023. With this in mind, I expect there will be more potential in large games in crypto gaming next, and among those I’m most bullish in Illuvium, but that deserves its own post.
One caveat about these large crypto games tho, is whether their long development cycle can survive a sudden crypto market down turn - what if crypto market becomes bear again? You never know.
This post is not financial advice. Please do your own research :)
#crypto #gaming