Blockchain gaming funding dips 56% in Q3

Investment in blockchain games halved in the third quarter despite the sector accounting for over 25% of all on-chain activity.

According to a report by Blockchain Gamer, blockchain games raised $128 million in Q3, a 56% drop from the $296 million the sector raised in the second quarter. The average size of the funding rounds has also dropped significantly; NPC Labs had the biggest round in Q3, raising $18 million in seed funding for its B3 scaling network for gaming applications.

With $324 million raised in Q1, this year’s total funding stands at $748 million, a 31% dip from the same period last year. It’s also on track to be the slowest year for Web3 gaming investment since the $88 million raised in 2020. Last year, the sector raised $1.7 billion, while the two years prior brought in $5.3 billion and $4 billion, respectively.

A separate report by DappRadar paints a worse picture, revealing that Q3 funding for Web3 games dipped 90% quarter-on-quarter. It claims that Q2 had brought in $1.1 billion, with Q3 only managing $110 million. 

The fourth quarter is off to a good start and could salvage this year’s poor run. Azra Games announced last week that it had raised $43 million for its upcoming “fourth-generation mobile RPG” Project Legends. It’s the biggest funding round this year, edging out the $35 million raised by Parallel Studios in March.

However, the decline in funding was across the board. A report by ‘crypto’ investor Galaxy Digital revealed that venture capitalists invested $2.4 billion in the blockchain sector, a 20% decline quarter-on-quarter.

While the funding is drying up, Web3 gaming is still a critical part of the blockchain industry. According to the DappRadar report, the sector accounted for 26% of all activity from decentralized applications in Q3. Additionally, it recorded 4.4 million daily unique active wallets, a 21% rise from the previous quarter. 

Blockchain gaming was projected to enjoy a stellar year. One report by the Blockchain Game Alliance estimated that at least 20% of the gaming industry would integrate blockchain this year, leading to a $70 billion opportunity.

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