Venture capitalists’ interest to invest in the crypto gaming sector has recently increased drastically. This is because the nexus between cryptocurrency and gaming presents a singular opportunity for development and innovation. We’ll look at the motivations behind crypto VCs’ investing in the gaming sector.
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Why are VCs Investing in the Crypto Gaming Industry?
The following are some reasons:
#1. Lucrative Industry
First, the gaming sector is one of the most lucrative in the world and is expanding quickly. The worldwide gaming market is anticipated to earn more than $175 billion in sales in 2021, according to research from Newzoo. The crypto gaming sector is an obvious extension and represents a sizable market opportunity for VCs. This is a major reason why they invest in crypto gaming.
Cryptocurrency and gaming together present a rare chance for creativity. Decentralized gaming platforms and ecosystems can provide gamers with new and exciting experiences, thanks to blockchain technology and cryptocurrencies in the gaming industry. The true ownership of in-game assets and provably fair gameplay, for instance, are distinctive features that blockchain-based games can provide. These features can help to boost player retention and engagement.
#3. Adoption of Mainstream Cryptos
For VCs, the cryptocurrency gaming sector presents a special chance to invest in the acceptance and mainstreaming of cryptocurrencies. The gaming industry has a history of being one of the first to accept new technologies, and the inclusion of cryptocurrencies in gaming can encourage more people to use and adopt these technologies. This, in turn, may contribute to the expansion of the cryptocurrency market as a whole.
#4. New Monetization Models
As more and more games are being distributed online, monetization techniques have altered. The straightforward upfront one-time payment approach has been replaced by games as a service (GaaS) models. While some games still demand an initial payment for playing them, others are free to play but demand payments for in-game items like weapons, power-ups, and alternate skins.
Recent global hits have frequently been distributed via the “Games as a Service” approach, and we predict that this will soon become the norm for gaming. We will approach game design while creating upcoming titles with the intention of generating recurring revenue streams.
In-game advertisements are ubiquitous, especially in free-to-play or freemium games, and subscription and pay-to-play business models are still in use. Publishers of video games, however, increasingly rely on sustained, long-term user interaction. This gives VCs a big reason to invest in crypto gaming.
#5. Low Entry Barrier
Compared to other areas of the cryptocurrency market, like mining or trading, the crypto gaming industry has a comparatively low entry hurdle. This makes it a desirable choice for VCs looking to invest in the sector without requiring a lot of technical know-how or resources.
Last but not least, the cryptocurrency gaming sector presents VCs with the chance to finance creative and talented teams. A certain set of skills and knowledge are needed to create blockchain-based games, and venture capitalists can support and guide these teams to promote growth and innovation.
Overall, the crypto gaming business has become a desirable alternative for VCs due to the combination of the expanding gaming industry, the distinctive possibility for innovation, the potential for increased cryptocurrency acceptance, the low barrier to entry, and the chance to invest in strong teams.
What else is driving the force?
Additionally, the idea of cloud gaming is slowly catching the attention of investors and gamers alike. The ability to broadcast highly tailored games from a server to smartphones, laptops, and tablets while utilizing high-speed network connectivity would enable cloud gaming to drive the expansion of India’s online gaming business significantly. When it comes to playing games with high technical requirements, cloud gaming has practically rendered high-end computers or consoles obsolete.
Besides, cloud gaming platforms will be able to reach the largest possible audience of mobile phone users, thanks to the anticipated quick implementation of 5G internet services. Playing AAA games with the same minimum system requirements while using popular cloud gaming services has become the new norm.
Web 3.0 and the metaverse will also influence how online gaming develops in the future. Decentralization brought forth by Web 3.0 will not only democratize the gaming industry; it will also enable players to claim ownership of in-game assets using non-fungible tokens and conduct cryptocurrency transactions.
The transition to Web 3.0 will open the door for a more sophisticated play-to-earn (P2E) model, which will replace Web 2.0 games’ play-to-win (P2W) paradigm. This eventually leads more people to come forward to invest in crypto gaming.
For VCs, the bitcoin gaming business presents a rare chance to make investments in a fast-expanding market with the potential for considerable innovation and increased cryptocurrency adoption. Even while the industry is still in its infancy, there are already a number of prosperous businesses that have attracted substantial funding and are spurring development and innovation. We will likely see more investment and innovation in the crypto-gaming sector as the sector continues to develop. Going beyond VCs, the interest to invest in crypto gaming will streamline among commoners as well.