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Venture capital firm Andreessen Horowitz led a $40 million funding round on March 21 for CCP Games, a developer of blockchain-based, massively multiplayer (MM) online games.
CCP will use the funding to produce a high-budget and thrilling game title with blockchain technology. The company will enable smart contracts to build a closer relationship between players within the game. CCP Games is introducing its planned game within the popular Eve Online gaming universe.
Marc Andreessen and Ben Horowitz run Andreessen Horowitz, which invests in early-stage startups and established firms. It invests in various verticals, including cryptocurrency, financial technology (fintech), various information technology (IT) solutions and healthcare.
The investment from Andreessen Horowitz reinforces the growing interest in blockchain gaming and a shift in the ways players engage with games and each other.
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Microtransactions On The Blockchain
Microtransactions in video gaming occur when a player pays money for a virtual item such as a new skin, upgraded weapon or a “loot box” filled with various items. These transactions are common in free games that function under a “freemium” model but also appear in premium games with a traditional fee to purchase or play.
Microtransactions bring developers considerable revenue, with many free-to-play games earning more revenue than traditional games. A 2022 report from research firm Mercator Advisory Group found the market for global online microtransactions was approximately $33.4 billion. It also noted some games bring in massive sums, with League of Legends taking roughly $1.75 billion annually from the game’s loyal 115 global player base.
Blockchain-based networks and games create a new pay-to-earn gaming model instead of the pay-to-play structure that’s enabled with traditional microtransactions. In the new blockchain-based model, called GameFi, users can invest in virtual assets such as non-fungible tokens (NFTs), use them within games or hold them as investments and resell the digital assets for profit. GameFi describes an intersection between gaming and finance, where users can invest in digital assets and turn game-specific tokens into cryptocurrencies and dollars.
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Blockchain-Based Virtual Item Marketplace
A startup company poised to capitalize on microtransaction growth, GameFi models and movement toward pay to earn is Gameflip. The company lets gamers flip the virtual items they’ve purchased through microtransactions. It recognizes the frustrations of gamers who might spend hundreds of dollars on in-game purchases but will see that expense vanish when they stop playing the related game.
Gameflip unlocks the value of these digital assets from a particular game by providing gamers a blockchain-based platform to buy, sell and trade digital gaming assets. By using blockchain, the company can provide transparency, authenticity and simple operation to millions of gamers. The company is looking toward the player-owned gaming future made possible by blockchain, NFTs and other digital assets and technologies. Its model already attracts the attention of gamers, with the company reporting lifetime sales of more than $160 million in its community of over 6 million gamers. Revenue comes from its marketplace business model, including seller commissions and buyer purchasing fees.
Gameflip is seeking equity crowdfunding investment through StartEngine. The minimum investment is $250 minimum. The company’s valuation on StartEngine is $34.78 million.
The shift to blockchain gaming reflects growing interest in blockchain technology as the basis for next-gen applications. For example, Amazon.com Inc. recently announced a partnership between Amazon Web Services and Ava Labs, creator of the popular Avalanche blockchain platform, which will enable NFTs, Web3 gaming and custom-built blockchains.
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