The Web3 gaming industry is facing tighter investment conditions as capital flows become more selective, with investors prioritizing sustainable projects over hype-driven fundraising.
In February, Gunzilla Games Web3 director Theodore Agranat described blockchain gaming as a “game of musical chairs” in which the same capital cycles through different projects and “no new money” comes in. The executive also said users go from project to project to extract value. After that, they leave and search for the next project.
In the same month, the much-anticipated Web3 game Illuvium announced a 40% layoff, demonstrating the need for teams to go “super lean” in today’s market. Sky Mavis co-founder and CEO Trung Nguyen announced a similar move in October 2024, cutting 21% of its staff to optimize its budget for upcoming projects.
Despite these events, Web3 gaming professionals said that capital still exists, and explained some of the factors contributing to the industry-wide trend.
Investors no longer blindly throw their money at projects
Sky Mavis co-founder Jeffrey Zirlin told Cointelegraph that Web3 gaming is not uniquely struggling but rather experiencing the same capital constraints affecting the broader crypto industry.
The executive said Web3 gaming is not facing a unique challenge as the landscape is “tight across the board.”
Still, Zirlin pointed out exceptions. He cited Fableborne, a mobile Web3 game that was oversubscribed by 16,000% despite the market downturn, as demonstrating that “fresh capital was indeed flowing into Ronin,” the Sky Mavis blockchain network. He added:
“It’s not that investment has dried up entirely. It’s just that investors are no longer blindly throwing money at projects like they did with so-called ‘Axie killers’ that failed to deliver.”
“Axie killers” was a term used to describe gaming projects that claimed to be the next big Web3 game that would surpass Axie Infinity, Sky Mavis’ flagship Web3 game.
Meanwhile, The Sandbox co-founder and chief…
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