Delphi Digital: The Current State and Future Outlook of Crypto Games

Author: Piers Kicks

Compiled by: DeFi Dao

Delphi Digital's gaming director Piers Kicks summarized the current state of Crypto gaming in "Navigating Crypto in 2023 | Gaming" and shared his views on the future of Crypto gaming.

In his opinion, there will be some truly exciting developments in the Crypto gaming industry in the next 1-2 years. Additionally, he predicts that Epic Games will launch some crypto-related initiatives and push Crypto gaming into the mainstream.

Question 1: What stage is Crypto gaming currently in?

Piers Kicks: In 2021, Crypto gaming experienced a massive speculative wave, primarily driven by the earlier rise of Axie Infinity (AXS), which fundamentally changed the mindset of traditional gaming industry stakeholders. Around November and December, and even into January of this year, over 50% of all crypto-related funding was related to gaming. So we clearly saw a huge wave of interest in Crypto gaming, where people were obsessed with the idea of 50-100x token returns, even when there was nothing playable yet. Then we saw many gaming projects entering this space, which is very encouraging, but they need time to build, and that’s one of the things we are tracking.

Piers Kicks: In terms of broader market perception, many people might feel that the Crypto gaming space is quite dull, but we’ve actually had conversations with many people in this field, which is very exciting. Some world-class developers have entered this space, and they are more patient. Some of them are already deeply invested in the battle, and we’ve talked to over 200 teams and learned everything we could from early Crypto games. I believe this knowledge will translate well into the next batch of games. I think we’ve attracted the attention of more mainstream operators; the large studios and game publishers you know are now paying attention, which has validated the idea of Crypto gaming.

Question 2: Which projects have stood out this year?

Piers Kicks: One project that has truly impressed me is Webaverse. I think these folks are building a game engine that is completely web-native and entirely built on open web standards, which is very exciting. They have some sort of native webxr support and are deeply integrated with Crypto, and the engine is open for broader use. Seeing the progress these guys have made, and the little money they raised about 12 months ago, I think when all this comes together, people will be very surprised.

Another project I want to highlight is called Vail VR, which looks like it will become a major contender in the VR shooter category. For now, Crypto doesn’t seem to be at the core of their game. They recently held a first-person VR shooter esports tournament, and over time, I’m very curious to see what they might do with wearable crypto digital collectibles.

Question 3: What would you like to say to Crypto gaming skeptics?

Piers Kicks: I don’t think their concerns are unfounded because Crypto is just a tool, like anything else. I believe it can bring benefits as well as harm. What I’m particularly focused on in 2023 is Gabriel Leydon’s company LimitBreak. You know, they raised hundreds of millions of dollars, and they also launched their first project DigiDaigaku. Gabriel’s previous company, Machine Zone, adopted a free-to-play mobile monetization model, which was very aggressive and predatory. So whether this will be a better path than "fun games" remains to be seen.

I certainly hope the answer is no. I think many of us are excited about Crypto gaming because of the potential for more elegant and fair coordination among all stakeholders in the ecosystem—investors, players, and developers. This is something I believe we need to validate and prove over a long period. Changing the mindset of mainstream players isn’t something that can be achieved just by writing blogs. As an industry, it depends on us, and it requires us to build and demonstrate some truly interesting games. So for the Crypto gaming skeptics of 2022, we are working hard to provide something in the next 1-2 years that can truly illustrate why we are so excited.

Yes, I think we are really not far off.

Question 4: What could attract millions of players in 2023?

Piers Kicks: Honestly, I’m not sure if 2023 will be the year to drive the next millions of players. I think many of the teams that excite me are heads down, building specialized teams. We’ve seen a lot of talent pouring in from the traditional gaming sector, including senior developers from companies like EA and Riot Games, who are all working hard to build high-quality games. They are catching the tail end of the 2021 Crypto gaming bull market, such as Ember Sword, Illuvium, and Guild Of Guardians. In about 6 months, they will have some publicly playable content, and I’ve been keeping an eye on these builders.

But whether they can attract mainstream players remains to be seen. So yes, I don’t want to say that 2023 will be a breakout year for Crypto gaming. I think some of the funded teams will still keep a low profile in 2023, and it will be very interesting to closely watch them.

Question 5: What is the best way to track Crypto gaming in 2023?

Piers Kicks: Given the massive influx of capital into Crypto gaming and the large number of projects entering the market in the coming years, it’s certainly challenging to keep track of everything. We’ve launched a monthly Delphi gaming newsletter, which is a great way to stay informed. Besides that, many gaming teams choose to remain under the radar, so you might see a lot of such projects in the second half of 2023.

Question 6: What will Crypto gaming look like in 10 years?

Piers Kicks: I think interoperability is an interesting concept, but we are many years away from this often-touted idea (unless a small group of games agrees to choose to do so). I believe some things will be unlocked over time, which will be very interesting, and crypto will thrive in that world because you can achieve amazing granularity in royalties. If I’m an asset designer, and the texture pack I create ends up being used in 1000 different games, crypto can basically track the flow of currency across all these games in some ways. I think that’s fascinating and exciting.

Question 7: What will make Crypto gaming truly mainstream?

Piers Kicks: I think seeing Epic Games launch some digital collectibles and some crypto-related initiatives would be very exciting. You know, Fortnite is still a massive game, generating billions of dollars in revenue each year. I think the start might not be selling things, but possibly allowing you to own skins or items you use. I feel this is a possible way to integrate digital ownership without selling something, which might again unsettle the player community.

Additionally, I think Tim Sweeney’s (CEO of Epic Games) speech in 2019 really showcased his depth of knowledge in decentralized system technology. He has a very impressive understanding of "decentralization" and proposed two paths: one is to truly obtain some cutting-edge chain that is fast and scalable enough to meet the demands of some of our economies, and the other is a consortium model made up of large game studios and publishers who all choose to maintain a blockchain that meets technical requirements but may sacrifice decentralization for it. I think that will be a very interesting development.

If one day Epic Games chooses to collaborate with Sony and some other game companies to establish a consortium, in my view, that would mark a significant step toward the mass adoption of Crypto gaming, though of course, that is still just a hope for now.