Animoca Brands CEO Robby Yung said that investing in Web3 games requires a higher level of due diligence by testing the cryptocurrency bear market.
Yung, who is also co-founder of popular metaverse platform The Sandbox, spoke at the European Blockchain Conference in Barcelona and highlighted the need for stronger checkboxes when considering investments in Web3 games.
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The Animoca Brands CEO said the investment proposition includes finding passionate teams with specific skill sets who are building product ideas with clear market fit:
“Now that we’re in a crypto winter and an economic downturn, we can be very picky from an investor’s perspective because obviously capital is scarce.”
Yung added that the development stages of potential projects Animoca Brands is considering investing in are typically more mature than was the norm just a few years ago.
As a result, investors are becoming more demanding and demanding real progress on projects seeking financing:
“You have to have an alpha version. Ideally, when you first go out and find outside capital, you should do some kind of user testing. It’s very difficult to raise money just based on a business plan in this market.”
While investors may be more discerning, Yung also acknowledged that the company continues to raise capital, as evidenced by the number of deals it has completed in the second half of 2023:
“It has improved a lot, but the quality has declined.”
User acquisition continues to be a hurdle in the Web3 gaming space, which Yung attributes to challenges in game distribution. He noted that major gaming platforms are hesitant to list games with Web3 infrastructure:
“We have historically been unpopular on most traditional game distribution platforms, whether that’s mobile app stores, Steam or consoles.”
Yung believes that mainstream players are still unsure about the impact of incorporating Web3 infrastructure into their products, which initially led to a knee-jerk reaction:
“I think the idea of bringing in Web3 infrastructure would circumvent their business model, as would the distribution fees they charge.”
The Animoca Brands CEO added that the conclusions prevent players such as Steam, EA and Epic Games from learning more about the possibilities and engaging with the Web3 community to find solutions that cater to the broader gaming market.
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