How NFT turned a small gaming company into a billion-dollar powerhouse

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“The only place we’re not in is probably Antarctica,” says Yat Siuk, founder of Animoca Brands.

Yat Siu is exhausted. The 49-year-old Austrian-born Hong Kong executive doesn’t sleep more than a few hours a night these days, but he can’t help but feel euphoric when asked about his gaming business. block chain, Animoca Markak. Wearing a black hooded jacket and half-glasses, he makes wild gestures while revealing the glorious fate he sees in the face of decentralized gaming and digital property rights.

This future is ruled by non-fungal tokens (NFTs) and blockchain technology – was the salvation of Siu. Just over four years ago, Animoca Brands was fighting. In January 2014, in January 2014, the revenue of the small mobile gaming business, which was founded by David Kim, a former Softbank partner and former director of the Internet at Mail.com, fell by 25% to $ 5.2 billion, and its market share it was capitalization. Less than $ 6 million.

In 2017, Siuk discovered CryptoKitties, a market based on the first blockchain where users bought, sold and collected virtual pets. He caught the mistake and invested in a major Vancouver-based Dapper Labs company (then called Axiom Zen), a company now worth $ 7.6 billion. It was the beginning of a growth in more than 150 NFT-related investments. Animoca Brands is now involved in the world’s largest and most successful NFT businesses, including OpenSea (the largest NFT market with $ 375 million in 2021), Dapper Labs, which created the NBA’s Top Shot platform (nearly $ 1 billion). basketball “in the moments.” (sold out in November 2020) and Sky Mavis, founder of Axie Infinity, a successful NFT game last year (worth about $ 3 billion).

Games and blockchain

In mid-January, Animoca Brands raised nearly $ 360 billion in its $ 5.4 billion valuation, more than double the previous $ 2.2 billion mark from October. Forbes estimates that Siu has a 10% stake worth nearly $ 500 million. Investors include Liberty City Ventures, Soros Fund Management and Winklevoss Capital. Since the dark days of 2017, the company has grown from 57 employees to more than 600. In the first nine months of 2021, it earned $ 670 million in revenue, and about $ 530 million came from digital assets and investment gains. Its currency reserves were worth nearly $ 16 billion by the end of November.

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Personal archive

Axie Infinity has become one of the leading cryptocurrency games (Credit: Play)

Overall, NFT’s global market grew to $ 25 billion last year from $ 100 billion in 2020. A fifth of that comes from video games, according to the DappRadar NFT tracker. A lot of the action has taken place in places like the Philippines, where low-income players have adopted the “play to win” model, and can earn a steady income of a few dollars a day. Western players are less eager to take on this trend. Blockchain games are the future of the $ 200 billion video game industry, or just another bubble waiting to burst.

READ ALSO: Understand the opportunities offered by Axie Infinity and Crypto Games

The concepts behind blockchain games are long overdue, from the prosperous multiplayer online game economy of the early 2000s, especially World of Warcraft, and later the proto-metabre Second Life project, which had its own digital currency (Linden Dollar). and 2006 saw the first virtual real estate boom (and then collapse). Blockchain is a massive bet on the idea of ​​“real digital property” where players can’t buy and sell items (think exclusive or very powerful clothing). swords) within a game, but where those assets are (in the block chain) independently of that game. This is almost how a competitive game developer can guess in an industry where even the most basic standards can’t be agreed upon (there is no agreement on which direction to take “upwards”), but one NFT gaming app has already caught on: play. win.

Consider The Sandbox, a mobile game that Animoca Brands bought in 2018 and turned into a blockchain product. A player can buy virtual land for around $ 4,000, fill it with custom buildings, objects, or characters and sell it at a higher price, putting in the time. Animoca Brands pockets a fee each time you trade. Sandbox has its own game currency, Sand, which is in line with its real-world value – currently $ 4.5 billion, according to CoinMarketCap.com. Animoca Brands does not charge a fee for the token, but has accumulated a reserve that appears on its balance sheet.

crypto games

Hopefully, the world has not yet figured out how to regulate cryptocurrencies and NFTs. The controversial “win-win” model and the use of in-game currencies arouse fears of gambling, market manipulation, and labor exploitation in the underdeveloped world, often renting NFTs to players in more developed countries in exchange for your share. profits. Some Axie Infinity players, mostly living in the Philippines, play the digital monster game as their main source of income.

Last year, the U.S. Congress introduced 35 bills on cryptocurrency and blockchain policy. Only one has passed, although in Australia, ASX has announced plans to trade cryptocurrency and ETFs. Jack Dorsey’s Block (first Square) appeared there in January. “It’s too big to ignore,” says former ASX regulator Greg Medcraft.

READ ALSO: Cryptocurrencies, games and blockchain boost partnerships in Brazil

Not everyone shares Siur’s excitement. Samson Mow, the chief technologist at Blockstream, which creates products for storing and transferring Bitcoin, says that the economy of “Open Metaverse” or an interchangeable collection of virtual worlds works against gaming companies. “If Call of Duty sold you some weapons, Ubisoft doesn’t want to bring it to Rainbow Six, because that erodes the sale of items,” Mow says. “I can’t see how people are prophesying, for example [o romance] Ready Player One, where you can move without problems. ” Mow adds that blockchain technology is far from truly decentralized – Ethereum, a network that supports almost all NFT games, for example, is based on Amazon Web Services.

And it looks like a lot of fashion. Axie Infinity’s flagship token, AXS, has lost almost 60% of its value in the last three months, according to CoinMarketCap.com. Andrew Wilson, CEO of Electronic Arts, who had previously expressed interest in joining the NFT space, declined to comment on a recent earnings call. Valve, a well-known Steam gaming platform, banned blockchain games and NFTs in October. Microsoft Gaming CEO Phil Spencer said NFT games “feel more exploitative than entertainment.”

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