A16z new fund 600 million dollars all in on the metaverse games, what will the future of Gamefi look like?
The games defined by a16z are no longer limited to our traditional understanding of games; they also include two major metaverse application scenarios: "social" and "work."Author: Overnight Porridge, Babbit
On the evening of May 18, Beijing time, top Silicon Valley VC a16z announced the launch of a $600 million metaverse gaming fund, dedicated to investing in the best founders in the gaming industry. To accompany the launch of this fund, a16z's official Twitter account changed its profile picture and banner to images featuring gaming elements, which seems to signal that they are ready to go all in.
In the context of a capital winter, the launch of such a heavyweight fund focused on a specific area by a16z speaks volumes.
In the official announcement, a16z stated:
"Games have also driven innovation across the entire consumer ecosystem, pioneering first-class user engagement, retention, and monetization mechanisms such as microtransactions, Battle Passes, and web3 tokens. In the long run, we believe that gaming infrastructure and technology will be key components of the metaverse, and this opportunity will dwarf the current $300 billion gaming industry."
As of now, a16z Games has invested in over 30 metaverse gaming projects, including Forte, Dapper Labs, Yuga Labs, Improbable, Sky Mavis, bonfirestudios, altavr, and more, all of which are presented in the official 1 minute and 15 seconds video.
A16z's Investment Theory on Metaverse Games
Regarding the investment direction of metaverse games, A16z wrote in its investment thesis:
"Over the past decade, games have transformed from packaged entertainment to online services similar to social networks, with a scale comparable to consumer tech companies. Today's games also drive innovation across the entire consumer ecosystem through new methods of engagement, retention, and monetization. We believe that in the next century, games will play a key role in defining how we socialize, play, and work."
It can be seen that the games defined by a16z are not limited to our traditional understanding of games; they also encompass the two major metaverse application scenarios of "social" and "work." In this article, we will focus primarily on the games themselves.
Six Fundamental Elements of Metaverse Games
In my view, for a metaverse game to achieve long-term success, it needs to meet many conditions, and the following are some of them:
1. Experience in Developing Large-Scale Games
Before a game is developed, investors and players can only judge the quality of the game based on images or trailers provided by the project team. However, relying solely on "PPT" is not enough; if a team lacks the relevant talent for game development, the game may remain a mere concept.
Teams with backgrounds from large gaming companies like Ubisoft, Blizzard, Epic Games, and Riot Games are more likely to create an engaging metaverse game.
In this regard, we can assess a team's development capabilities by investigating their LinkedIn profiles.
2. Supporting Investment Institutions and Gaming Guild DAOs
Compared to other Web3 projects, games may rely more on the support of investment institutions. Therefore, metaverse gaming projects backed by top VCs are more likely to succeed.
As of now, leading investment institutions in metaverse gaming include A16z, Paradigm, Three Arrows Capital, Binance Labs, FTX (Alameda Research), Animoca Brands, Sequoia Capital, Framework Ventures, and others.
In addition, "gaming guild DAOs" can provide significant assistance to a game. Currently, YGG, which gained popularity due to Axie Infinity, is widely regarded as the most influential gaming guild DAO in this field. Other gaming guild DAOs include MainDAO, PathDAO, GuildFi, Merit Circle, Avocado Guild, Good Games Guild, BlockchainSpace, GameFi Guild, paragonsdao, ReadyPlayerDao, and various others.
In my opinion, the competition among gaming guild DAOs has just begun, as a large number of metaverse games will emerge in the future, and these gaming guild DAOs will form a very close mutually beneficial relationship with the games they choose to support.
3. Playability and Balance of the Game
When a game enters a playable stage, players will judge its chances of success through their experience.
Here are some important factors:
- Game Graphics (Good graphics can provide a visual impact, making it easier for a game to become popular)
- Balance (Whether it's a shooting, strategy, or RPG game, balance is crucial for the sustainable development of the game)
- Innovation (A successful game must continually innovate to provide players with fresh experiences, incorporating new technologies like AR and VR in addition to conventional gameplay)
4. Can the Underlying Blockchain Infrastructure Support Large-Scale Applications?
As the underlying infrastructure for metaverse games, blockchain (whether L1, L2, or L3) must be scalable because when we find a fun game, it will naturally attract a large number of players to interact simultaneously. If the underlying blockchain is not scalable, then the game cannot achieve large-scale application.
Currently, game developers have various options, including developing their own Ethereum sidechains, Avalanche subnets, Cosmos Hub, Polkadot parachains, or migrating to Ethereum L2 or L3, Solana, Flow, and other public blockchain infrastructures.
In the case of Axie Infinity, I personally do not have high hopes for game developers creating their own underlying infrastructure. While this may help enhance the narrative, spreading the team's focus into areas they are not skilled in could be very unwise.
5. Game Economic Design (Including Token Economics)
For crypto players familiar with GameFi, game economic design is also a very important aspect, involving the design of various components such as game equipment, land, rare resources, and currency (tokens).
Currently, land and tokens are often designed as limited resources, and they are also the most common speculative targets in the gaming field.
Overall, good game economic design is crucial for the sustainability of the game.
6. Is There a Free To Play Mechanism?
Currently, most blockchain games require players to hold NFTs to experience the game. This may help boost NFT prices in the short term; however, it also raises a question: the potential player base is very limited (as few can afford the initial investment of thousands or even tens of thousands of dollars).
If the project team introduces a Free To Play mechanism, allowing players without NFTs to experience the game for free but without token rewards, or only minimal token rewards, then the game's community scalability will greatly increase, making it more likely to succeed.
How to View Metaverse Games
Regarding how to view metaverse games, if someone around you who plays games tells you:
"It's not interesting, I don't want to play."
Then you should understand that this is an opportunity; we are still in a very early stage.
