Robby Yung, CEO of Animoca Brands and co-founder of The Sandbox, emphasized that investing in Web3 gaming projects has become more selective and cautious during the ongoing crypto winter. Speaking at the European Blockchain Convention in Barcelona, Yung highlighted the need for rigorous due diligence, even as the cryptocurrency market faces challenges.
He mentioned that Web3 gaming investments now require a combination of passionate teams with specific skill sets and product ideas that clearly meet market demands. Yung pointed out that in the current economic downturn and crypto winter, investors have the luxury of being selective due to the scarcity of capital.
In comparison to a couple of years ago, prospective projects seeking investment are expected to be at a more advanced stage of development, and investors are more demanding, requiring tangible progress and often an alpha build. Raising capital based solely on a business plan has become challenging in the current market.
Yung acknowledged that while investors have become more discerning, companies are still managing to raise funds. The latter half of 2023 has seen several deals completed, indicating an improvement in the funding environment, albeit with a flight to quality.
One of the challenges facing the Web3 gaming sector is user acquisition, which Yung attributed to difficulties in distributing games. Mainstream gaming platforms have shown reluctance to list games with Web3 infrastructure, creating barriers for the broader adoption of the technology.
Yung suggested that mainstream players may be hesitant to incorporate Web3 infrastructure into their platforms due to concerns that it could disrupt their established business models, particularly in terms of distribution fees.
He noted that this hesitancy has prevented major players like Steam, EA, and Epic Games from exploring the potential of Web3 technology and engaging with the Web3 community to find solutions that cater to the broader gaming market.