The Metaverse is Dead. Long Live the Metaverse.
Happy Tuesday! A good way to start the week is to look back on the one that past, reflect, and digest. We hope to do just that in this weekly newsletter as we comb through relevant gaming and web3 news and rumors and try to make sense of what it all means.
Last week gave people a short respite, as those who attended GDC got a chance to recover before they have to prepare for NFT NYC. San Francisco saw many exciting announcements, including the Immutable x Polygon partnership, and the expo also coincided with the latest Otherside testrun, which led to a relatively quiet period last week.
Settlement of the metaverse proceeds with mixed results
Yuga Labs kept up their momentum and announced a new game, Legends of Mara. The 2D strategy game appears to be an extension of the Otherside ecosystem, and gives Otherdeed holders more things to do while the virtual world is being built out.
Source: https://lotm.otherside.xyz/
This approach seems to be consistent with the multi-game ecosystem strategies employed by some of the other web3 gaming giants. Sky Mavis has encouraged the development of games surrounding Axie Infinity through its builder program, while Splinterlands has been working on its Tower Defense game.
The idea is to offer gamers a variety of experiences as well as increase the utility of their gaming assets. It is likely that omniportability, will be implemented for games that live under the same umbrella first, which makes Legends of Mara particularly exciting.
However, the fun did not stop there, as Gucci announced its partnership with Yuga Labs. The fashion industry has made numerous forays into the metaverse, with limited success. Nevertheless, digital fashion continues to be a growing sector, and one where the concept of digital ownership makes intuitive sense. The engagement of a major brand has to be considered a win here.
Source: https://thewaltdisneycompany.com/bob-igers-2023-annual-shareholder-meeting-remarks/
The metaverse also suffered losses. Most notable was the shuttering of Disney’s metaverse project. Virtual world experiences, especially those implementing web3, are still in their early stages. It appears as though difficult economic conditions are forcing big companies to back off of their plans to focus on the bottom line. Given the challenging economic times, it would not be surprising to see more traditional players pause their metaverse settlement plans.
There is not going to be an E3 this year
Belts are being tightened across the board, and the pain is real. E3, one of the biggest gaming events of the year, has been canceled due to a lack of support from publishers. There appears to be a noticeable capital crunch on the traditional gaming side, but that can actually be somewhat of an opportunity for web3. With many traditional sponsors forced to cut marketing budgets, event organizers started looking to web3 companies for support.
Source: https://twitter.com/E3/status/1641546610218811393
This was particularly evident at GDC. Despite all of the supposed apprehension the traditional gaming space has about web3, web3 gaming companies were very prominently displayed at the expo venue. Talk around the telegram water-coolers has been that E3 was not looking too fondly on potential web3 participants. It’s unclear if web3 capital could have saved the event, but it definitely provides some food for thought.
With E3 being canceled, the focus shifts to 3XP as one of the prime events of the summer. Notably, this will be a web3 focused gaming expo, something that has been sorely missing in the space.
Smaller gaming ecosystems try to keep pace
It has become evident over the past year that many L1 and L2 ecosystems have shifted their focus from DeFi to gaming in the hopes of finding a catalyst for adoption. Even at GDC, besides the major players like Polygon and ImmutableX, smaller ecosystems such as Arbitrum and Skale Network had a notable presence.
Game developers are looking for stability and scalability as some of the key factors when selecting a blockchain, which has shined the spotlight on L2s of late. Tezos Mumbai upgrade brings an old Ethereum alternative into the conversation. Tezos already has a small but passionate gaming ecosystem.
Source: https://tezos.com/
However, there appears to be a more concerted effort, of late, to recruit gaming studios and elevate Tezos as an option for game developers. The new rollups approach along with some of the other improvements in the update could make Tezos a more appealing option for gaming teams.
Bracket Madness
Those suffering from March Madness withdrawal may head over to IGN to follow their IGN’s Best Sports Video Games Showdown. Perhaps the only thing as exciting as arguing about what game is the best of all time is arguing about which game has been unfairly left off of the matchups roster.
The showdown has come to the Elite 8, so still plenty of arguing left to do.
Source: https://bestsportsgame.ign.com/
This wraps it up for this entry. If you are working on something exciting in the web3 gaming space, or are a traditional gaming team looking to explore the possibilities, don’t hesitate to reach out to any of us at Sanctor Capital.
Have a great rest of your week!
Ilya Abugov
Disclaimer: This commentary is not investment advice. It does not purport to include any recommendation as to any particular investment, transaction, or investment strategy or any recommendation to buy or sell any investment. It does not reflect any attempt to effect any transactions or render any investment advice.
This post is solely for informational and entertainment purposes. It is inherently limited and does not purport to be a complete discussion of the issues presented or the risks involved. Readers should seek their own independent legal, tax, accounting, and investment advice from professional advisors. The views reflected in this commentary are subject to change at any time without notice.
The authors or their affiliates have ownership or other economic interests or intend to have interests in Axie Infinity NFTs, ETH, BTC, and may have ownership or other economic interests or intend to have interests in other organizations and/or crypto assets discussed as well as other crypto assets not referenced.
