Unlocking the Potential: Why Metaverse Gaming and Gamefi Should Be on Investors Radar The metaverse provides a new economic moat in the gaming arena and hence, looks lucrative to VCs. With lesser phone asset space being utilized, gamers can meet new users in the metaverse and create a parallel existence.
By Priya Kapoor •
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Of 254 metverse gaming companies globally (including India), nearly one-third of them are funded, according to Tracxn, a market intelligence platform. No doubt, Metaverse gaming holds huge potential. By 2028, the global metaverse gaming market is estimated to reach $ 119.2 billion from $ 22.7 billion in 2023, at a Compound Annual Growth Rate (CAGR) of 39.3%, accord ing to a new report by Markets and Markets. India is also mimicking the trend worldover and has seen investors putting in their money in this space.
In February 2022, Atirath, a game devel-opment company raised an undisclosed amount from Bengaluru-based Kalaari Capital for strengthening products, expanding its team and preparing for the metaverse. Similarly, another company League of Kingdoms Arena (LOKA) raised $3 million in seed funding for the metaverse expansion.
There are 250+ Gaming Companies Globally
The metaverse provides a new economic moat in the gaming arena and hence, looks lucrative to VCs. With lesser phone asset space being utilized, gamers can meet new users in the metaverse and create a parallel existence. With better real time experience, the metaverse is expected to generate greater engagement. Augmented and virtual reality in the sphere of metaverse gaming draws both dollars and eyeballs. The lure for venture capitalists today also lies in the use of non fungible tokens or NFTs which become the currency for play-to earn games.
Says Neha Khanna, Director, ValPro and Enablers: "Gaming today has one of the largest screen time from Gen Z. As the gaming industry is growing in the realm of real money gaming and now in casual gaming, the next step for expansion is viewed in metaverse gaming. With the option to create alternate avatars and engage in social gaming in a different universe, there is growing curiosity and interest arising among users."
"The utility being built around such NFTs will draw a larger market and engagement. Another monetization channel becomes inbuilt experiences as well as commerce on the digital real estate of such games. With a global play to the industry, this also addresses the question of a wide addressable market of users for such gaming companies, thereby, making it attractive even at a nascent stage for venture capitalists." adds Khanna.
There was an 83% increase in GameFi Fundings in 2022 Compared to 2021
VARIOUS MONETIZATION AVENUES
Says Soham Avlani, Partner, 9Unicorns Fund, "The convergence of gaming and the metaverse is an exciting space for investors, developers, and gamers alike. Monetization avenues such as virtual real estate, in-game purchases, digital assets, advertising, and virtual events offer lucrative opportunities for companies operating in the metaverse gaming industry.
Much like Metaverse gaming, GameFi has also become prominent among users. Play-to-earn or GameFi has emerged as the most funded use case in the blockchain industry. It is defined as an intersection between traditional gaming and decentralized finance. Reportedly, GameFi fundraising jumped 83 percent in 2022 from 2021.
1/3rd of the companies are funded
Investors say that the future of GameFi lies in robust economic models, where games are increasingly adopting "free to play" combined with "play and earn" models, creating a dynamic ecosystem for players and investors alike.
MORE ENGAGING USER EXPERIENCE
What makes the metaverse gaming indus- try quite attractive to VCs compared to putting their money in other industries is the engagement provided. Says Ramkumar Subramaniam, CEO and Co-Founder at Guardianlink, "The quotient of engagement in gaming has been tried and tested across multiple decades, and there is no question on the fact that gaming will at- tract a lot of active users. Technology that enables the longevity of gaming assets and a rewarding experience for gamers is bound to increase the intensity of attrac- tion and engagement. It is, therefore, very safe to say that gaming is looking at one of its most crucial revolutions right now, thanks to the introduction of blockchain, NFTs, and the metaverse."
The Metaverse Gaming is estimated to be valued at $119.2 Billion by 2028
EVALUATION AND POTENTIAL
So how do VCs evaluate companies in this space, "It is crucial to consider the founding team's technical expertise and industry knowledge, as well as the poten- tial for monetization and diverse revenue streams. Strong user adoption and reten- tion rates are early indicators of success. Additionally, interoperability across gaming platforms, including seamless integration and interaction across different styles and technology stacks, plays a vital role in assessing companies," adds Avlani.
According to Kumar Gaurav, Founder & CEO, Cashaa, the metaverse industry is at the same stage and has much larger po- tential than what e-commerce was in the pre-Amazon days. "While the full scope of its application is yet to be comprehended, it is already one of the, if not the fastest growing multi-billion dollar industry. The ROI that an early mover with funding and patience can make is incalculable at the moment."
Considering the fact that investors have always sought to invest in avenues that attract people, engagement, and monetary involvement, metaverse gaming & GameFi has all the credentials to be a lucrative platform for attracting investors and investments.
