Investors and entrepreneurs are betting their money on blockchain games as the future of the industry promises gamers a world where they don’t just play for fun, but play to win. But for a VC, the verdict is still in.
Lars Jörnow, founding partner of EQT Ventures and former head of mobile games at Candy Crush developer KIng, told Insider that his company isn’t “super bullish” on NFTs, the tokens used to reward players in games. blockchain games with decentralized ownership of unique objects.
“There hasn’t really been a problem with centralized ownership, so from that perspective, I don’t know how much better decentralized ownership of game assets is,” he said.
Proponents of NFTs have seen the idea as a way to give players complete control over collectibles in games by removing authority from a centralized authority such as a game studio and giving users control total on tokens they can collect or spend in-game.
An example is Axie Infinity, a play-to-earn game with around 2.8 million users, where players collect NFTs that represent small creatures that can be used for battle or to hunt for treasure. The game, which has attracted partners such as Samsung and Ubisoft, was hacked in March that lost around $600 million worth of cryptocurrency.
For Jörnow, who spent his early days at King playing thousands of flash games, the decentralized ownership of items offered by NFTs seems “irrelevant”, with NFTs on their own not seeming to make a game more fun or offer other than allowing “speculation so you can buy and sell things”.
“When you explain why an NFT game is more fun than a traditional game, when you have those arguments, you end up being done. [conclusion] that users can earn money by buying and selling, so it’s almost like a financial instrument rather than a game in itself,” he said.
“It allows speculation so you can buy and sell things and in theory it allows decentralized ownership of in-game items, but without a game company operating the game, decentralized ownership of an item is not irrelevant.”
Play-to-Earn games have faced similar criticism from other sectors of the industry.
Valve, the developer of game distribution platform Steam, announced in October 2021 that it would block crypto-based games. In February, Valve President Gabe Newell said Eurogamer the move was made because he felt a lot of what was involved in such games “was super sketchy” and even “illegal”.
But venture capitalists and entrepreneurs are seeing dollar signs, amid broader interest in tokens.
On July 6, US venture capital firm Konvoy Ventures announced a new $150 million fund dedicated to games, with plans to spend around 20-30% of its new fund on on-chain games.
Meanwhile, earlier this month, former TikTok gaming unit boss Jason Fung said Reuters that he was preparing to launch a blockchain gaming startup after quitting the viral video app in June.
Some of the biggest names in gaming such as
creakan NFT-based Battle Royale game developed by Web3 company Gala Games, hitting its online store later this year.are also looking to get in on the action, with the Fortnite developer planning to release
Jörnow’s comments coincide with a slump in NFT sales, amid rising interest rates and market turmoil.
Figures from Chainalysis, a blockchain data firm, indicate that NFT sales fell from $12.6 billion in January to around $1 billion last month.
EQT has previously invested in the blockchain space, with Jörnow noting that the company is more interested in the industry’s underlying infrastructure at present, rather than consumer-facing technology.