Web3 gaming needs to focus on sustainable economies, Immutable co-founder says


3d animated cityscape
Image Credits: Unity

Although the crypto gaming industry remains below its 2021 peaks, it still pulled in substantial venture funding last year. But looking to the future, the subsector may look outside of tokenomics to grow and sustain itself for the long haul.

“Tokens are a fantastic way to share ownership of economies. I’m very supportive of tokens and think they’re a brilliant invention and have done a lot,” Robbie Ferguson, co-founder and president at Immutable, said to TechCrunch. “But we will definitely see increased retail skepticism and diligence where they want to see traction on these games.”

For Immutable, which raised $200 million at a $2.5 billion valuation last year, the most important element is “to build a fantastic experience for players — the economy has to be sustainable and user experience has to be fantastic,” Ferguson said. “From there, everything will flow.”

Since the beginning of 2022, the top 10 blockchain gaming projects by market capitalization fell as much as 95% due to the inability to maintain sustainable in-game economies and player bases, according to Delphi’s The Year Ahead for Gaming report.

For example, the token price for Axie Infinity, one of the biggest web3 games to gain traction, hit all-time highs of $160 in November 2021 but has since declined 92% to less than $12, according to CoinMarketCap data.

“We believe that most projects shouldn’t have live tokens in the market until the bulk of their core game loops are established, which can immunize them against speculation and inflated expectations,” the Delphi report stated.

There will be a much higher standard for how effectively and efficiently a foundation uses its tokens and the direct return on tokens spent, Ferguson said. “I think a lot of tokens are spent poorly at the moment.”

There were fewer than 700 blockchain games as of November 2022, and 143 of them have announced over $1 million in funding, the Delphi report said. “Game development usually happens on multiyear timelines, and diminished downstream financing prospects could place projects that failed to raise sufficient runway in the bull market at risk,” it added.

But there are a number of massive web3 gaming-focused grants circulating through the crypto ecosystem that are deploying capital to support the space. In December 2022, Polygon collaborated with Game7, a web3 gaming DAO, to pledge $100 million in grants over the next five years to gaming teams. Separately, in June 2022, Immutable launched a $500 million fund to boost web3 gaming adoption.

“We want to support any excellent teams with sufficient funding that are focused on building excellent trading experiences but more importantly gaming experiences,” Ferguson said. “We are less interested in exploitative primary sales or cash grabs but we’re more interested in how people build long-term economies and games where a percentage of players are trading in the economy every day.”

The real volume that’s going to emerge this year won’t be hundreds of millions of dollars in a week, Ferguson said. “It’s going to be sustained volume where we see players spending on average $5 or $20 or $50 in trading volume a week.”

Looking to the future, web3 or blockchain-based games also need to expand incentive alignments between publishers and games to grow the industry, Ferguson said. “We can’t just be selling NFTs; we have to sell a fun game. What will differentiate games in the future has to be a sustainable, valuable economy.”

But the true winners will be games that use blockchain technology to “create real value,” Ferguson noted. The winners are going to be incumbents who realize this is a better model for players and still have a healthy business while doing so, he added.

Many traditional gaming studios aren’t interested in implementing web3 elements — and it makes sense, Ferguson said. “Did we need the cab industry’s permission to create Uber? No. Any form of disruption has winners and losers.

“Equally, there isn’t a massive incentive for a company earning tens of billions of dollars in profit off exploiting players with zero redeemable value to switch to web3 right now,” Ferguson said. “They’ll experiment, build small teams to stay ahead with trends, but the biggest winners are going to be midsized studios that fully commit to leveraging web3 to grow their player base and create more value, which ultimately makes multibillion-dollar games.”

In order for web3 gaming to go mainstream, there has to be a tipping point — perhaps a high-quality game with 50 million players that leverages web3, Ferguson said.

“That will be a Schelling point for the industry — to see you can make incredibly viable games and for players to see this is the value they’re getting rather than being told it,” Ferguson added. “The future isn’t shouting to gamers why they should love NFTs; it’s showing them with a product they want to play.”

More TechCrunch

The European venture capital firm raised its fourth fund as fund as climate tech “comes of age.”

ETF Partners raises €284M for climate startups that will be effective quickly—not 20 years down the road

Copilot, Microsoft’s brand of generative AI, will soon be far more deeply integrated into the Windows 11 experience.

Microsoft wants to make Windows an AI operating system, launches Copilot+ PCs

“When I heard the released demo, I was shocked, angered and in disbelief that Mr. Altman would pursue a voice that sounded so eerily similar to mine.”

Scarlett Johansson says that OpenAI approached her to use her voice

Hello and welcome back to TechCrunch Space. For those who haven’t heard, the first crewed launch of Boeing’s Starliner capsule has been pushed back yet again to no earlier than…

TechCrunch Space: Star(side)liner

When I attended Automate in Chicago a few weeks back, multiple people thanked me for TechCrunch’s semi-regular robotics job report. It’s always edifying to get that feedback in person. While…

These 81 robotics companies are hiring

The top vehicle safety regulator in the U.S. has launched a formal probe into an April crash involving the all-electric VinFast VF8 SUV that claimed the lives of a family…

VinFast crash that killed family of four now under federal investigation

When putting a video portal in a public park in the middle of New York City, some inappropriate behavior will likely occur. The Portal, the vision of Lithuanian artist and…

NYC-Dublin real-time video portal reopens with some fixes to prevent inappropriate behavior

Longtime New York-based seed investor, Contour Venture Partners, is making progress on its latest flagship fund after lowering its target. The firm closed on $42 million, raised from 64 backers,…

Contour Venture Partners, an early investor in Datadog and Movable Ink, lowers the target for its fifth fund

Meta’s Oversight Board has now extended its scope to include the company’s newest platform, Instagram Threads, and has begun hearing cases from Threads.

Meta’s Oversight Board takes its first Threads case

The company says it’s refocusing and prioritizing fewer initiatives that will have the biggest impact on customers and add value to the business.

SeekOut, a recruiting startup last valued at $1.2 billion, lays off 30% of its workforce

The U.K.’s self-proclaimed “world-leading” regulations for self-driving cars are now official, after the Automated Vehicles (AV) Act received royal assent — the final rubber stamp any legislation must go through…

UK’s autonomous vehicle legislation becomes law, paving the way for first driverless cars by 2026

ChatGPT, OpenAI’s text-generating AI chatbot, has taken the world by storm. What started as a tool to hyper-charge productivity through writing essays and code with short text prompts has evolved…

ChatGPT: Everything you need to know about the AI-powered chatbot

SoLo Funds CEO Travis Holoway: “Regulators seem driven by press releases when they should be motivated by true consumer protection and empowering equitable solutions.”

Fintech lender SoLo Funds is being sued again by the government over its lending practices

Hard tech startups generate a lot of buzz, but there’s a growing cohort of companies building digital tools squarely focused on making hard tech development faster, more efficient and —…

Rollup wants to be the hardware engineer’s workhorse

TechCrunch Disrupt 2024 is not just about groundbreaking innovations, insightful panels, and visionary speakers — it’s also about listening to YOU, the audience, and what you feel is top of…

Disrupt Audience Choice vote closes Friday

Google says the new SDK would help Google expand on its core mission of connecting the right audience to the right content at the right time.

Google is launching a new Android feature to drive users back into their installed apps

Jolla has taken the official wraps off the first version of its personal server-based AI assistant in the making. The reborn startup is building a privacy-focused AI device — aka…

Jolla debuts privacy-focused AI hardware

The ChatGPT mobile app’s net revenue first jumped 22% on the day of the GPT-4o launch and continued to grow in the following days.

ChatGPT’s mobile app revenue saw its biggest spike yet following GPT-4o launch

Dating app maker Bumble has acquired Geneva, an online platform built around forming real-world groups and clubs. The company said that the deal is designed to help it expand its…

Bumble buys community building app Geneva to expand further into friendships

CyberArk — one of the army of larger security companies founded out of Israel — is acquiring Venafi, a specialist in machine identity, for $1.54 billion. 

CyberArk snaps up Venafi for $1.54B to ramp up in machine-to-machine security

Founder-market fit is one of the most crucial factors in a startup’s success, and operators (someone involved in the day-to-day operations of a startup) turned founders have an almost unfair advantage…

OpenseedVC, which backs operators in Africa and Europe starting their companies, reaches first close of $10M fund

A Singapore High Court has effectively approved Pine Labs’ request to shift its operations to India.

Pine Labs gets Singapore court approval to shift base to India

The AI Safety Institute, a U.K. body that aims to assess and address risks in AI platforms, has said it will open a second location in San Francisco. 

UK opens office in San Francisco to tackle AI risk

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

1 day ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back