Summary of investment work
- Double tailgates: Gaming as a market has matured considerably over the past 20 years and developed into a $ 200 billion market worldwide. At the same time, blockchain technologies are now obsolete and allow new uses to emerge. Community Gaming benefits from the pace of progress of both of these trends, which is most easily seen in its original automated tournament product.
- Agnostic to hits: Predicting where and when the game will be popular is incredibly difficult, similar to judging the success of box office receipts (when people went to the movies). We love that the vision of community gaming is independent of a single hit game, studio, or even hardware platform, and it also bypasses the temporary problem of lower-level and lower-quality encryption (so far).
- An experienced and dedicated team: Chris ’background at ConsenSys, but also as the host of the Esports scene in New York, blends well with COO Evany’s direct competition experience to help manage the DOTA 2 team. More importantly, the team is passionate and convinced of the structural trends we have been through, and the role of community play can and will be.
We are pleased to announce that CoinFund is leading the seed cycle of Community Gaming. It’s time for blockchain technologies to further elevate many aspects of the gaming experience matured from a small niche into a universally attractive $ 200 billion + year industry in just two short decades. We are particularly excited about the DNA of the Community Gaming hybrid team, which encrypts and esports, and their product plan to organize and empower all gaming communities (not just the original games in blockchain). All of this while raising the risk of an individual game investing in a particular game or studio.
As a long-time player, I feel qualified to share my views on this vertical. My interest in gaming, especially PC games, even precedes the Bitcoin created by Satosh. I know it’s a lifelong passion that started Diablo II, Blizzard’s hit RPG in the early 2000s. I soon graduated with Half Life 2 and a related game family and even spent time on popular MMO games like World of Warcraft and EVE Online. Since then, my experiences have extended to genres and hardware platforms to this day, where I still enjoy my free time playing Call of Duty: Warzone to look for distant friends or making a more serious effort Escape from Tarkov, a very realistic shooter, or Magic the Gathering: Arena where I am has been a globally ranked player on the seasonal Mythic ladder. This background underscores my extreme belief that blockchain technology is on a collision course with gaming and that incredible opportunities for value creation are finally within reach. Community Gaming’s product is fully in line with the clear trend at the intersection of the blockchain and gaming. Now is the right time, CoinFund is now expanding its exposure to the secular theme of blockchain-based gaming with measured but intentional.
The first part of the community gaming opportunity we value is the unique combination of gaming and encryption experience on the founding team; Chris, Evany and Hayder. Chris is from ConsenSys, where he worked in the investment and strategy teams, with a particular focus on the intersection of the blockchain and gaming – while also being an angel investor and organizer in the New York-based esport and gaming business. Evany contributed to the early success of OG Esports as a founder and vice president, winning a crowd-funded Dota 2 International event in consecutive years and earning a total of ~ $ 27 million. Eventually, Hayder overlapped with Chris at Consensys, where he was a full-stack developer. Not all the teams we talk to can claim to have the combined experience, passion and network that contribute to this – and we are particularly confident that the vision of what CG can become is compelling to both the founders personally and professionally, and probably a source of inspiration from which they can obtain all market environments. We also note a growing list of both formal and informal partnerships where big players are part of the community’s gaming in the universe, whether they are competitive, live directors (think sports commentators) and tournament participants. The interaction between these people, formally and informally and for the sake of community gaming, will only further accelerate the platform’s move towards more general and huge user-targeted markets.
Another aspect of our thesis is the broad potential future of the product and platform. As part of the first due diligence event, I signed up and participated in several tournaments myself. I’m amazed at the evolution of the interface and backend system in recent months, not to mention the ever-increasing prize pool, the attention of game content creators, and the sponsoring partners that are starting to gather on the platform. The original tournament organization technology (including creating square brackets, tournament progress reporting, and post-tournament prize-giving and payment) was already very attractive and differentiated, but we are also excited about future opportunities to participate and commercialize, opening up a once bigger flywheel and accelerating participation. In particular, we will coordinate with Chris and the team’s embraced multi-chain and multi-tiered future, with the recently announced Polygon partnership, but will soon expand to others like BSC and FLOW to improve the boarding and payment experience in a way that feels seamless to users. Ultimately, we believe that the early changers of blockchain gaming mode, who create a sticky user experience, are best able to get their fair share or more of the market growth that is yet to come. Community Gaming’s unique value effort to activate and engage historically less-served non-professional players with some competitive desire is just the beginning of a much broader platform potential.
A third major appeal to community gaming is the agnosticism of the platform, for which games are popular, ignoring the risk of concentrating studio funding as well as the timing of when crypto games can catch up on how fun and interesting web2 games are at the moment. Currently, there is a deep gap between what mainstream players demand in terms of quality and what cryptic startups can offer due to limited resources. Think of the contrast of any 2020 quality best selling games such as Black Ops: Cold War or The Last of Us: Part II, compared to even the most popular encryption game such as Axie Infinity for tuned gameplay and multiplayer balancing, plot and story quality, visual loyalty, back-end server infrastructure, anticheat integration, art and animation resources. The difference also extends to the number of players ~100,000 active marketplaces at Axiella (leading encryption game) and a ~ 100 million MAU for a multiplayer base station, including Activision CoD: Warzone, with relative differences in the relative power of network effects. We believe this gap is ready to close in the years to come as cryptographic games become more fun (Skyweaver, Chain monsters, Mirandus, Illuvium etc. all have ambitious goals) and traditional studios are based on early success through blockchain integrations, but in the meantime we are more on the rise in agnostic, platform-based plays like Community Gaming.
As with any investment, there are risks, but we felt that market opportunities weighed them. An important challenge for Chris and the team in the near future is the need to grow the user base quickly, but this risk is offset by platform growth, grassroots acceleration and content provider-driven growth, as well as the opportunity for brand-sponsored sponsorship to run high visibility tournaments to attract the next user wave. Similarly, the likelihood and payment emissions of users routing around the Community Gaming platform are reduced by a dedicated technology stack that reduces charge, branching and other operational friction – just as web2 services like Uber, AirBNB and Rover provide enough extra convenience and network effects to offset the charges they charge. After all, similar to the recent success and appeal of the NFT as a magnet for mainstream acceptance, blockchain gaming will soon have its own flavor in the limelight, allowing a new ownership and economic paradigm to support an industry that shows no signs of slowing down. While Community Gaming is our first serious collaboration with this exciting vertical industry, we look forward to opportunities in the future to explore teams that will also address other related challenges!