In today’s blockchain gaming news, we bring you a year-end analysis of the funding trends. Additionally, we will also look up the current state of guilds and scholarships in the play-to-earn games. Previously, in the year-end series, we did a piece of in-depth news on the performance of blockchain and Web 3.0 gaming space. We covered blockchain gaming’s status in terms of going mainstream and achieving mass adoption. Moreover, in the second part of the series, we analyzed the "play to earn" model’s failure and the speculation element attached to it. And if the industry leaders learned anything from previous phases and the flawed model? You can check out our previous two articles by clicking part 1, and part 2.
According to the report on blockchain gaming, the guild scholarships and funding landscape have undergone crucial changes. The changes are apparent when the peak bullish trend is compared with the steep bearish trend.
Blockchain Gaming Records: Decline in Funding Trends in Q3 2022
Web 3.0 gaming saw exponential and explosive growth in 2021, in terms of growth in capital. The investment inflow peaked at over $1 billion in 2021. The blockchain projects working on constructing infrastructure and building platform layers were the ones reaping the benefits. Besides, the game developer studios also received funding, albeit a smaller portion. Game developers fall into two distinct categories: small budget, big dreams, and AAA. In the last quarter of 2021, the deal value and the total number of deals were both at highs, riding the bullish trend.
Q3 2022 shows a decline
The bullish trend continued in the first quarter of 2022, but it was short-lived. After slowly going down, the total value of all deals in Q3 2022 dropped by 19%, from $1.1 billion to $875 million. On the contrary, the total number of transactions increased by 2.6 times year over year. As for the seed round, 2021 did better with $12 million when compared to $7 million in 2022. Moreover, the report also shares that some 2021 seed round companies made it to Series A and some to Series B and B+. In terms of the biggest deals in 2022, Limit Breaks’ $200 million topped the industry, while Animoca Brands’ $110 million trailed in second.
Still, the market for blockchain gaming deals is getting better, and game studios are getting more investors and money. The funds are going toward those blockchain gaming developers that are working on introducing more fun and engaging content. The report also says that the bear market will eventually end and that business will return to normal in 2023.
Guilds, Scholarships, and Current Standing in 2022
The third quarter of 2022 saw guilds as the only sector that didn’t get any considerable funding. Guild companies were hurt a lot by the failure of the "play to earn" model of gaming. The majority of the guilds were made during the speculative bullish trend. Also, they only cared about Axie Infinity so that people could get scholarships to play the game and make money. In the last two years, Guilds have raised more than $200 million from well-known investors like Andreessen Horowitz. Guilds bore the brunt of the fall of Axie Infinity and the "play to earn" gaming model.
Yield Guild Gaming is one of the leading guilds in blockchain gaming. It is also one of those that have reported severe revenue declines. It is running its economic system with the help of the community of game scholars and game yields. YGG is still around, but it's hard for smaller guilds with 10–100 players to stay alive. Worryingly, 97% of the guild industry is made up of small guilds, while only 1% is made up of large guilds.
What can Guilds Do to Survive?
Guilds like YGG and Merit Circle have still got a better shot at turning the guild and scholarship model into a long-term, sustainable business. Take, for example, YGG, which is transitioning into an esports organization. Guild institutions can also grow their businesses by working on new NFT marketplaces or putting in place ways to track NFTs across multiple games using ID layering. Moreover, guilds can also utilize human capital by offering beta-testing services to game studios. New venues for income generation are aplenty, and guilds can offer these value-added services to open new revenue streams.
Stay with us for the last part of the series where we discuss the blockchain gaming industry's performance in 2022 and more. You can also head out to our website and YouTube channel to learn more about Web 3.0 games. Check out our review on Illuvium Overworld beta.