"2022 has been a monumental year for the blockchain gaming industry," said crypto tracker CoinMarketCap (CMC) in its 2023 Crypto Playbook.
According to CMC, there was a "strong bifurcation" in blockchain gaming, with once-major projects shedding more than 90% of their market capitalisation throughout 2022. CMC also noted that there was a similar downtrend across other "speculative game-related assets", specifically virtual land NFTs belonging to games that have not been launched.
"Overall, it seems like the blockchain gaming deal market continues to mature into its next stage, wherein the companies garnering most of the funding attention are no longer the ones building infrastructure, but rather the blockchain gaming studios that can produce engaging content that makes use of blockchain gaming infrastructure," it said.
In November, GameFi, a subset of blockchain-based gaming, saw its funding reach an all time low of US$60 million, down 69% MoM. Furthermore, 62% of GameFi investors lost more than 50% of their profits in 2022.
However, interest in web3 games as a whole actually saw a rise in 2022 despite crypto winter, according to Cronos.
"There was a 34% increase in Web3 games from January to December of 2022," Ken Timsit, head of layer 1 blockchain Cronos Chain and Cronos Labs, told Blockhead.
"Currently, only 31% of all GameFi projects are playable, whilst 64% remain under development, which indicates the overwhelming potential that the industry holds regardless of the prevailing market sentiments," he added.
Read more: Is It Game Over For GameFi In 2023?
Moving forward, CMC believes that there are a number of major driving forces for blockchain gaming in 2023, mainly infrastructure (user wallets), distribution, talent migration and regulation.
"While the probe (by the SEC into Yuga Labs) has not been completed, the result could affect all of Web3 as Yuga Labs is a pioneer in the space. But given the prevalence of rug-pulls and scams, clearer regulations are clearly desired, although the impact may negatively affect many innovators in the space," CMC explained.
CMC also spoke to Mo Patel, investor from metaverse-focused firm Sfermion, to provide a rundown of the NFT market’s performance in 2022 as well as the market’s prospects for 2023.
Patel believes that the drop-off in NFT trading volume as compared to the smaller drop-off in NFT transactions is an indication that people are still using NFTs, and that the decline is just a broader market trend.
"For example, the rapid adoption of layer-2 solutions like Arbitrum and Optimism meant growth in unique addresses holding NFTs, which showcases the amount of building activities supporting the L2 space," he explained.
For Patel, some of the emerging trends to look out for within NFTs include how web2 brands and intellectual property (IP) can enter the web3 space via NFTs, as well as the emergence of zero-knowledge (ZK) rollups, which will benefit the NFT market.
"ZK-rollups are expected to make NFT access and usage 10x to 100x easier, which should convert to an increase in builders building on these rails and using NFTs for social media experiences, with more users as a result," he said.