Robby Yung, the CEO of Animoca Brands and co-founder of The Sandbox, a popular Metaverse platform, has emphasized the need for more rigorous due diligence when considering investments in Web3 games, particularly given the cryptocurrency bear market.
Speaking at the European Blockchain Conference in Barcelona, Yung stressed that the investment proposition in the Web3 gaming sector should involve identifying passionate teams with specific skill sets that are developing product ideas with a clear market fit. He noted that with the current crypto winter and economic downturn, investors have the luxury of being more selective as capital becomes scarcer.
Yung pointed out that the development stages of potential projects in which Animoca Brands is considering investing are typically more advanced than what was common a few years ago. This growing maturity of projects has led investors to become more demanding, expecting concrete progress from projects seeking funding. Yung highlighted the importance of having an alpha version and conducting user testing as crucial steps for raising capital in the current market, as raising funds based solely on a business plan has become challenging.
While investors may be more discerning, Yung acknowledged that Animoca Brands continues to secure capital, evidenced by the number of deals they have completed in the second half of 2023. He commented that although there is more capital available, the overall quality of projects seeking funding has declined.
User acquisition remains a significant challenge in the Web3 gaming space, primarily due to difficulties in game distribution. Yung attributed this issue to the reluctance of major gaming platforms to list games that incorporate Web3 infrastructure. He noted that traditional game distribution platforms, including mobile app stores, Steam, and console platforms, have historically been hesitant to support Web3 games.
Yung believes that mainstream gaming companies are uncertain about how integrating Web3 infrastructure will affect their business models and distribution fees, leading to initial resistance. He suggested that the hesitation among major players like Steam, EA, and Epic Games prevents them from exploring the potential and engaging with the Web3 community to find solutions that can benefit the broader gaming market.
