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GGP Gaming Weekly – A Year in Review (2021)

Griffin Gaming Partners: A Year in Review

As a tradition, we want to reflect at the beginning of 2022 and provide some perspectives on our expectations for the future of the gaming market. We hope these perspectives help our LPs, portfolio companies, and friends make the most of the abundant opportunity ahead.

We are now the largest venture investor focused exclusively on the Gaming sector, having invested over $400M in the category in the past two years.

Griffin Gaming Partners’ Fund I is currently the top-performing fund of its vintage according to Pitchbook data(1). Of the 13 investments of scale from Fund I, we have had multiple exits and 10 mark-ups, including ForteDiscord, and Overwolf. Our final close for Fund I was just 13 months ago, and we believe our results are a testament to our differentiated approach to investing in this category.

Each year, we evaluate north of 1,200 Gaming investments with the support of a unique collection of strategic and financial Limited Partners in Griffin. Our thesis is simple: with our dedicated focus, we will have sharp perspectives in assessing risk-reward while also possessing the critical ability to go to work for our portfolio companies. This allows us to unlock value through business development and aligned advice on navigating these highly dynamic market conditions.


The teams we back work tirelessly to bring their visions of the future to life, and we are proud to be of service to them along the way.  Last year, we continued to invest to support the growth of our incredible portfolio companies, including:

Forte‘s blockchain technology enables community economics, systems where the interests of game developers and players are aligned.  Forte has secured 40 game developer partners, with 15M+ players across partner games, and created 10M+ wallets for users, with 100M+ users per month now trading token assets.

  • We led Forte’s $185M Series A in May 2021, which preceded the Company’s $725M Series B just six months later in November 2021
  • In December, Zynga and Forte announced a strategic alliance to promote and pursue opportunities in the blockchain games market, including leveraging Zynga’s IP. We anticipate additional interest from leading gaming companies, as the ability for users to truly own virtual goods in-game becomes table stakes for the success of gaming companies in the future

WinZO is a mobile eSports social gaming platform that offers cash prizes to players, with over 80 games available in 12+ languages for its 70M+ registered users conducting over 2.5B microtransactions/month.

  • We led WinZO’s $65M Series C in July 2021
  • In November, WinZO partnered with Gameloft to support its portfolio of 150 game titles with 1.2B global downloads

Spyke is a mobile game developer based in Turkey, founded by former co-founders and senior team members at Peak Games and whose success building Toy Blast and Toon Blast garnered enough industry credibility to command a $1.8B valuation when acquired by Zynga in 2019.

  • We led Spyke’s $5.0M Series Seed in November 2020 and its $50M Series A in October 2021
  • The company’s title, Royal Riches, a casual social slots game, demonstrates materially higher retention than the category leader, the latter of which has generated $2B in lifetime revenue

Hadi is a mobile game developer based in Turkey working on casual puzzle games. The founding team popularized the casual merge genre through Merge Dragons!, which amassed $505M in lifetime IAP revenue from 49M downloads, and whose developer was acquired by Zynga for $250M.

  • We led Hadi’s $5.2M Series Seed in November 2021
  • As of December 2021, the team had made sizeable progress on their debut title codenamed Project Sparkjoy; Hadi is targeting a global release by February

Neon Machine is a game studio that is developing Shrapnel, a AAA first-person shooter (FPS) with user-generated content and blockchain technology.  Neon’s CEO is a 27-year game industry veteran who has produced over 27 titles including Spec Ops, the first military FPs, in 1997.

  • We led Neon’s $10.5M raise in November 2021, alongside Forte and Polychain Capital
  • In early December, the team launched Shrapnel’s website to provide fans with information on the upcoming title, develop the Shrapnel community on social media (Twitter, Discord), provide background on company management, and recruit new hires

One More Game is a studio pioneering a new game genre, headed by former Blizzard leadership.  The company’s leadership previously built and reinvigorated the RTS and MMORPG genres through some of Blizzard’s most successful games, including StarCraft and World of Warcraft.

  • We co-led OMG’s $22M round in July 2021
  • OMG is continuing to develop its debut title Spellcraft, a cross-platform title pioneering that combines elements of collectible card games (“CCGs”), auto-battlers, and real-time strategy (“RTS”) games

Million Victories is an independent game studio in France that developed Million Lords, a mobile 4X (Explore, Expand, Exploit, Exterminate) strategy game.  Million Lords has already exceeded 400K downloads, with player spend and retention above category averages, with limited funding.

  • We led Million Victories’ $3.0M Series Seed in November 2021
  • In early January 2022, Million Lords announced its “New Horizons” update, including major UI changes based on player feedback and a new single-player “Expeditions” mode. The teaser trailer can be found here

SuperTeam Games is a studio developing fully-licensed competitive sports games built for eSports.  SuperTeam’s games will have robust in-game economics driven by NFTs, powered by Forte.

  • We led SuperTeam’s $5.5M Series Seed in October 2021
  • SuperTeam launched its website in mid-2021 to provide details on its upcoming blockchain-integrated sports game, provide background on company management, and recruit new hires

Palm NFT Studio is a technology platform built for the Ethereum ecosystem, enabling creators and enterprises to create and deploy large-scale, regulatory-compliant, and environmentally-friendly NFT projects.

  • We participated in Palm’s $27M Series B in December 2021
  • M12, Microsoft’s Venture Fund, led the round
  • Palm NFT Studio has shipped successful products with leading IP such as DC Comics

Alethea AI is a protocol to create intelligent, interactive NFTs powered by GPT-3.

  • We participated in a $3M private token sale in October 2021
  • In December, Alethea AI, beingAI, and Binance NFT launched a limited-edition selection of 100 intelligent NFT characters, with the capability to interact in gamified environments with people in real-time

In December, we also announced that we will co-invest $150M in blockchain games, alongside Forte and Solana Ventures. Our vision is to invest in Web 3 developers who are building decentralized games on the Solana blockchain, which supports 65,000 transactions per second at average transaction costs of $0.00025. Solana currently boasts the fifth largest fully-diluted token market cap in the world. We are incredibly excited to partner with Solana Ventures and Forte to help catalyze and define the blockchain gaming ecosystem going forward.

View our entire portfolio here.


Our advisory business continues to grow, in terms of our dedicated team and as measured by our public- and private-market transactions. Over the past 12 months, we’ve closed or announced 14 transactions, an accelerated pace from 2020.

Highlighting a few of these transactions, fortuitously including the largest transaction of all time in Gaming, we served as:

  • Financial advisor to Take-Two on its $13B acquisition of Zynga. This transaction brings together best-in-class intellectual properties and a market-leading, diversified Mobile publishing platform, to enhance Take-Two’s positioning as a global leader in interactive entertainment (press release)

  • Exclusive advisor to N3TWORK on its blockchain transformation strategy, including N3TWORK’s sale of its Scale Platform business to Forte, N3TWORK’s spinout of its first-party games into N3TWORK Studios, and N3TWORK’s sale of the exclusive rights to the Tetris franchise to PLAYSTUDIOS. Both N3TWORK and Forte are Griffin Gaming Partners portfolio companies, and we expect the transaction to be fruitful on both sides (press release)

  • Exclusive advisor on Playdemic’s sale to Electronic Arts for $1.4B, representing one of the highest multiples achieved for a studio with a single game. We believe Golf Clash will be one of the enduring franchises in mobile Sports and that this transaction strengthens EA’s positioning in this critical market segment (press release)

  • Exclusive advisor on Forte’s $725M financing, which brought together strategic gaming companies, including Garena, Animoca, Huuuge, Overwolf, PLAYSTUDIOS, Warner Music Group, Razer, and blockchain partners Cosmos, Polygon, and Solana. We’ve been hard at work evangelizing on behalf of Forte, as we believe its emphasis on compliance and technological architecture position it to lead in one of the most significant transformations that the gaming industry has witnessed (press release)

Following the $3.5B Skillz SPAC merger in the year prior, we advised PLAYSTUDIOS on its $1.1B SPAC merger with Acies Acquisition Corp. and Kismet on its $1.9B merger with Nexters, which comprise all of the SPAC transactions consummated in the Gaming market to date. We supported Skillz as a newly public company, exclusively advising on its acquisition of demand-side Ad Tech platform Aarki and strategic investment in Exit Games, whose networking technology enables games like Playdemic’s Golf Clash to put two players in real-time head-to-head competition. We supported AppLovin’s IPO and first follow-on as a co-manager.

Lastly, we advised Roblox on its pre-IPO investment from Warner Music Group, advancing its strategy around bringing music to virtual worlds.

As incredibly busy as this past year was, we move into 2022 expecting even more to come.


As investors and advisors, we define our roles not just by providing capital, but by the creation of value and the chemical reactions to create deals where otherwise they may not have existed. We work to leverage our relationships, insights, and creative instincts to uncover hidden gems, find synergistic partnerships, and structure complex deals that will go on to have an impact on the broader ecosystem.

We hope to learn from everything we do in this category, improving our pattern recognition and ability to connect the right parties at the right times, while holding ourselves to the highest standards of integrity. We hope to earn our partners’ trust in our advice and continue to take nothing for granted, working as hard as we can to unlock transformational opportunities for our LPs, portfolio companies, and friends.

While we celebrate how fortunate we have been over the past year to participate in this ecosystem, it was a challenging year in many respects as well. We remain hopeful that in 2022 we will return to spending more time together in person.



It is with the benefit of our deep focus and passion for this market that we draw a handful of observations about where things go from here.


Public markets have long put the “burden of proof” on the Gaming industry when it comes to valuations, with even great companies trading at modest multiples and building value by increasing revenues and earnings. As discussed at length in last year’s letter (see here), the industry has executed, first with the shift to higher-margin digital game downloads and consistency of successful title releases, and more recently with publishers finding paths to sustain growth in Mobile. As expected, Gaming infrastructure and platform technology companies continue to enjoy extraordinary valuations in the public markets, with companies like Unity, Roblox, and AppLovin expecting 21-35% growth and trading at 35x, 20x, and 12x revenue(2), respectively, relative to the rather anemic 2-6x average revenue multiples across the rest of the industry(3).

For content companies, the industry continues to grow and consumers have never spent more in games – with global consumer spending in Mobile growing nearly 20% in 2021. Multiples for the industry leaders have compressed by 5x to a median of 12x EV / NTM EBITDA(4).

As we anticipated, the first few quarters set many Gaming companies up for very challenging comps, given the results from the year prior were buoyed by anomalously high engagement levels associated with shelter-in-place orders in the first quarters of the pandemic. However, there is now evidence that many developers and publishers see that a proportion of those users attracted especially to the more engaging games have stuck with those products. Up to 75% of the consumer playtime spike experienced by Mobile games during the pandemic will remain after COVID-19 subsides, according to IDC Research.

Despite the industry’s long-term track record of delivering on growth and margin expansion, and opportunities and acceleration of the shift to gaming from other forms of leisure activities, public investors have demonstrated a propensity to focus on the short-term when it comes to ascribing valuations.

Let’s look at Playtika to unpack this phenomenon. Playtika is a business that has grown its top line at a CAGR of 47% over a decade, all while holding EBITDA margins close to 40%(5). Playtika engages 35M users monthly and has scale, data, and expertise that are incredibly difficult to replicate. Over a decade, Playtika had increased its enterprise value from $93M in 2011 to $11B in November 2021(6).

Then, on one day in November, the markets erased $3B of Playtika’s market cap(7), with a 23% share price drop caused by a single quarter’s results.

What fatal error cost Playtika $3B? The markets weren’t punishing the Company for a reversal of revenue growth or a sharp decline in margin. Instead, investors lost billions of dollars in faith because Playtika released fewer new product features in Slotomania and Bingo Blitz. These game-related shortcomings, coupled with reduced revenue guidance by $30M and EBITDA guidance by $18M, drove the sell-off.

While it’s possible the lowered guidance was a harbinger of things to come, we would venture to guess otherwise. However, rather than factor in Playtika’s herculean decade of growth and the significant underlying benefits of scale, public markets wiped out 23% of the company’s market cap, which has only continued to drop another 26% to an all-time low since then.

Against this backdrop, acquisition multiples have continued to increase(8)

Although acquisitions of private companies are clearing at sometimes lofty multiples today, in most cases, we do not see a detachment from defensible views on value. Perhaps more so than is the case in other sectors, smart acquirers in Gaming frequently see value where public investors do not – a function of being able to make sense of the enormous amounts of data on the retention and monetization of cohorts of players and to extrapolate to a point of view on the trajectory of these businesses. With an orientation focused on the long-term, acquirers of public companies have the potential to capitalize on this myopia.


As one of the factors contributing to our views on valuation more generally, we believe the public markets are specifically undervaluing the potential opportunity for Gaming developers to take advantage of direct payments, effectively circumventing 3rd party platforms’ (e.g., Apple and Google app store) fees.

Let’s rewind a bit. In September, Epic won an injunction against Apple, requiring Apple to permit links or calls to action to outside payment options for in-app transactions. Apple filed an appeal and in December, the court ruled that Apple wouldn’t have to make changes to the App Store until after the appeal is settled.

While the jury is out on the legal merits of Apple’s appeal, we believe the discussion shines a light on a buried source of potential for the Gaming industry, as direct payment options could add billions of dollars to the market caps of the industry’s largest mobile players.

Let’s put the spotlight back on Playtika – this time, from another angle. Playtika is unique, in that the Company has successfully driven revenue from 3rd party platforms to its proprietary platforms for years. Through a concentrated effort, Playtika has managed to increase the proportion of its revenues from its proprietary platforms to 22%, as of Q3 2021. What this means is that, for every $1 of revenue driven through its proprietary platforms, Playtika pays $0.03 to $0.04 to payment processors, as opposed to the $0.30 platform fee to 3rd party platforms. 

Now, assuming 22% of Playtika’s 2022 revenue is driven through its proprietary platforms, Playtika’s market cap is approximately $2B higher than it would be if all revenue came through 3rd party platforms, based on our estimates and current trading(9). If Epic is ultimately successful in the matter, companies like Playtika will be in a position to much more aggressively drive users to proprietary platforms by directly communicating with them through the games.

If the lifetime value, or LTV, of a player (measured after platform fees) increases dramatically through direct payments, games that weren’t previously viable may find a positive LTV to Customer Acquisition Cost ratio, allowing the games to grow through paid user acquisition marketing. Many existing games will find another leg of growth, as incremental marketing expenditures now make sense – a material boon for the industry.

In expected value terms, market valuations should embed a probability-weighted distribution of outcomes around Epic v. Apple resolution, and yet we do not see much by way of evidence of that beyond the small increase in share price of some mobile publishers the day of announcement of the initial ruling. Direct payments are one example of the significant economic opportunity that can be captured by games businesses providing enormous entertainment value to consumers over time.


Since Apple introduced the App Store in 2008, the mobile gaming market has grown tremendously, at a CAGR of 49%, to $91B TAM in 202110. In the same time frame, the market for PC and Console has grown as well — at 35% and 7% CAGRs, respectively(11)– more modestly, but at healthy rates nonetheless. While there were early questions of potential platform cannibalization, for most players, Mobile hasn’t served as a substitute for PC and Consoles’ more immersive gameplay.

To date, the emergence of a new Mobile hit might have come at the partial expense of an existing Mobile franchise, but there has been very little encroachment into other gaming domains. Such was the dynamic for Call of Duty: Mobile, now one of the largest games on the planet. When CoD Mobile was first introduced in 2019, CoD’s premium Console/PC product actually hit an inflection point, accelerating from its 2015-19 CAGR of 5% to a 2019-21 CAGR of 15%. We see this as an example of the potential of Mobile free-to-play to broaden the funnel of players in a premium franchise and work symbiotically with PC and Console. 

Today, consumer leisure time is close to zero-sum. The average American multitasks to an effective 32-hour day, with 13 hours spent on technology and media(12). In order to spend time playing a new game, the consumer must give something up.

In this context, PUBG Mobile, another top-grossing global title, serves as an example of the more likely dynamic to play out between Mobile and PC/Console. In the case of PUBG, the rise in Mobile engagement has coincided with a precipitous decline in engagement on other platforms. In Q3 2021, Krafton’s Mobile revenue grew 31% year-over-year and its Console revenue declined 22% year-over-year(13). In 2021, analysts expect PUBG Mobile to be almost 4 times the size of its PC/Console business. While the traditional PUBG title had grown rather long in the tooth, making this decision somewhat easier, we do anticipate publishers with the capability of executing across platforms will increasingly prioritize Mobile even if it comes at the expense of other platforms.

While most mobile games remain much less immersive in terms of the type of gameplay, PUBG Mobile is a poignant example that this needn’t be so — the graphics, latency, and user interface in mobile are evolving rapidly to meet the exceptional opportunity to serve up deeply immersive gameplay on the devices that almost every consumer already has with her throughout the day. It is a rare and increasingly strategic capability to be able to do so. Both CoD Mobile and PUBG Mobile were developed by a third party: Tencent. 

So, in this zero-sum attention economy, how do Mobile developers and publishers retain players and grow engagement and monetization?

In the world of Gaming, data is the oil that keeps the engine running smoothly. Over time, companies that have the greatest scale across games and platforms amass the most data points to feed into proprietary systems that work to increasingly automate the maximization of player engagement. Maximizing LTV will eventually become algorithmic, with historical player behavior serving as the inputs into a machine learning equation that informs successful variations on game mechanics to keep players engaged and spending. Companies develop the ability to make optimized offers to purchase at discounts or to obtain special virtual goods across their games. The data-driven predictions on player responses are mission-critical to achieving balance in an in-game virtual economy.

Data-centric systems are also critical in user acquisition to find high-potential value players in the sea of three billion total players. In Mobile, the top 5% of players contribute significantly all of revenues. It is common for so-called “whales” to spend many thousands of dollars or more in individual games. With this dynamic in mind, publishers are laser-focused on leveraging data on historical marketing efficacy across other games to target high-value players. Given this focus, it is fascinating that Apple’s decision to deprecate an important targeting and measurement tool – the Identifier for Advertisers, or IDFA – has, thus far, had a muted effect on the Gaming industry. In fact, Unity, with its large, embedded advertisements business, actually raised guidance by 5% and grew revenue by 48% and 43% year-over-year in Q2 and Q3, respectively, following Apple’s policy implementation.

While time will tell the future impact on developers’ ability to target high-value users, we expect the predominant impact to be limited for game publishers. This stands to reason: it would certainly behoove Apple to target a new profit pool that currently sits outside of its walled garden, in such a way that would allow publishers to spend to acquire users on Apple with greater efficacy than on Facebook and Google, but not ultimately to inhibit game publishers from reaching the users that spend most. The observed impact on market shares shows a remarkable acceleration in growth for Apple Search Ads since the change was implemented(14):

We expect the data advantage associated with operating at scale to be a catalyst for strategic combinations. Take-Two, in its rationale for the acquisition of Zynga, highlights the potential for “cross-marketing through a larger, shared customer database and improving game economies through more effective data analytics and machine learning models.”

In terms of implications for start-ups, it is still exceptionally difficult to create breakthrough hits, and while we are quite bullish that some of the best creative teams will find their footing with new products, it will become more difficult over time to make the utmost of the economic opportunity from those products as an independent company.

Until recently, public acquirers tended to trade at a premium given their scale and diversification relative to transaction multiples, but those multiples have inverted. We expect premium transaction multiples to be driven by an assessment of potential synergies – opportunities to optimize games with enhanced live operations and user acquisition. Scale and platform capabilities will beget a very significant competitive advantage in finding value-accretive acquisitions going forward.


The concept of the metaverse has vaulted to the forefront of public (and investor) imagination of late.

Definitionally, we see a metaverse as a persistent digital world in which users have digital identities, can socialize, and engage in commerce. It’s a place for self-expression and social connection – a virtual environment where immersion and engagement are high.

Sound familiar? If it talks like a game and walks like a game…

While a metaverse may contain different parts of content, commerce, and socialization, it bears observing that online games have contained, for decades, all the ingredients that metaverses bake together. Some “metaverse strategies” contemplate a higher concentration of socialization to alleviate pressure on new content to sustain engagement, but if that comes with a VR headset required, at least in the near term, it leaves billions of consumers outside.

Games are a natural foundation for metaverses, and in the race to build these virtual worlds, user interface will be the key differentiator. Roblox innovated tremendously in this regard, engaging a massive daily audience of 47M users whose average playtime is ~3 hours per day. The number of creators on Roblox has exploded to 10M(15), with an obvious network effect: more content attracts more users, and more users attracts more creators looking to reach that audience.

We’re already beginning to see creators make significant investments in building immersive experiences on platforms like Roblox. When Lil Nas X performed on Roblox, they reached a remarkable 33M viewers(16). When Justin Bieber performed on Wave, a Griffin portfolio company, he reached an impressive 2.4M live viewers and posted the rebroadcast to his 67M YouTube subscribers. Numbers like these push traditional physical concerts into the shadows in terms of reach and aggregate engagement. It not only is possible for artists to reach new fans but, importantly for the platform, to engage existing audiences in new ways and fuel new user growth. While monetization of these experiences has some way still to go, given the value creation on both sides of the equation, we see tremendous potential ahead.

In a similar vein, companies like Overwolf, are investing deeply in bringing creators the necessary technology to build “Mods” and applications on established Gaming franchises, growing rapidly to over 25M users and 90,000 white-listed creators(17). It’s a smaller community of creators that is most appropriate to work with third-party intellectual properties, but the potential to deepen player engagement, create new communities of fans, and grow these existing game franchises is uncapped.

In the long run, IP owners are likely to prefer owning their own “digital theme parks”, rather than simply participating in a third party’s. There is meaningful strategic value in their dedicated fan bases to activate an all-encompassing content and commerce machine that delivers entertainment from multiple vectors. However, these investments require time, technical expertise, and continuous innovation – no easy feat.


Let’s begin with a primer on blockchain gaming. At its core, blockchain gaming is a technical framework for digital asset ownership in games. In free-to-play games, in which consumers purchase durable and consumable virtual goods, we estimate players spend well north of $100B per year. The value derived from these purchases only persists so long as players continue to play the game in which they’ve made a purchase. Knowing this, a player’s propensity to spend is limited to ephemeral entertainment value. Game developers know this and calibrate the prices of digital assets accordingly.

Blockchain enables a world in which players can buy assets in games like they can buy collectible cards. In this framework, players own the assets they buy – assets that not only have utility and confer status in the games themselves, but also have the potential to appreciate in financial value. Players can trade or sell these assets down the road to attempt to make money or at least recoup some of their initial investments.

While much of this is possible with a traditional gaming database architecture, the use of blockchain technology in games communicates what those games stand for in one fell swoop: decentralization, transferability of digital assets, and immutability associated with rules of the road.

There is extensive academic literature on the impact on economies of the “rule of law”, defined as “a legal order consisting of predictable, enforceable and efficient rules required for a market economy to flourish”.

The World Bank ranks countries’ legal systems on their effectiveness in protecting rule of law and property rights. In 2012, the three countries with the lowest rankings – Afghanistan, the Central African Republic, and Zimbabwe – had extremely low GDP per capita of $600 to $1,00023. These three countries are cited as demonstrating lack of adherence to the rule of law, weak government structure, disruptive land redistribution, and price controls, political corruption, and low standards of living, among other attributes. Academic sources cite a lack of clear property rights and rule of law as main contributors to these countries’ poor economic growth.

And yet, almost no game economies provide for a virtual equivalent to the “rule of law” today. It is a fascinating origin story that the founder of Ethereum, Vitalik Buterin, did so out of frustration with World of Warcraft “nerfing” (i.e., reducing the in-game power) his character, capriciously removing the damage component of his beloved warlock’s Siphon Life spell. Such are the “horrors of centralized services” for some players.

Decades ago, a tabletop collectible card game called Magic: The Gathering emerged and skyrocketed in popularity. In MTG, there is a level of play for all levels of investment: if cash is a constraint, players can stick to buying starter packs and making strategic trades to bolster their decks; with more financial investment, they can purchase booster packs with guaranteed rare cards; or, they can simply shell out cash to stores or other players to purchase more expensive rares that they have their eyes on. However, capital advantage could only take a player so far. Everyone at the professional tournament level had access to the best cards, and thus, serious competitors required high skill to build the best decks and experiment with strategic combinations of land, creatures, and spells to outwit their opponents.

In blockchain gaming, there are many clear parallels among those with well-defined product visions. There should be an entry point for a diversity of levels of capital investment: players should be able to buy and trade assets on the primary and secondary markets to their hearts (and wallets’) content; they also should be able to invest minimal capital to partake in a casual level of play or maximize their financial investment to play at the highest level. Alternatively, they also should be able to purchase assets and wait on the sidelines for appreciation in value. We believe that the blockchain games that succeed and endure in the long run will need to ensure that, as with MTG, players cannot simply pay to win. Game economies are incredibly delicate to manage, and developers must ensure that the price and quantity of available rare assets are balanced in a sustainable way for all players. In the same way that the Black Lotus, the most powerful card in MTG, is banned from play in many tournaments, blockchain games should ensure that no asset becomes so dominant that it throws the game out of balance. It certainly requires enormous work to achieve this sort of balance, but when it happens, it’s (excuse the pun) simply magic for players.

Speaking of the devil, the Black Lotus card itself has unknowingly served as a premonition for the power of NFTs and a precursor for things to come. Similar to many NFTs, MTG cards were known for their artwork, which leveraged several artists from across the globe. In 1993, a rare Black Lotus card cost tens of dollars — a relatively large investment for teenage players perhaps. Fast forward to the present day — in January of last year, a rare Black Lotus, in mint condition and signed by the artist, sold for $511,100. If you’re getting déjà vu from the gratuitous, meteoric rise in value of Bitcoin or even Bored Apes, the latter of which sold an individual NFT for $3.4M last year, you’re not alone.

These parallels between MTG and blockchain games, most notably the shift to an in-app purchase ownership and trading model, are only the start of what blockchain enables for the Gaming industry. With Web3 models becoming established outside of Gaming, we are excited by the prospect of rewarding the most engaged players for their contributions to game communities. Digital property ownership incentivizes creation on top of creation, with the bait of pre-defined rights and economics. Each investment that a player makes into the economy serves as a psychological vote for that player to feel even more emotionally invested in the game. In a market that is so heavily dependent on user acquisition, this prospect of longer play times and higher LTVs is an unprecedented unlock. Blockchain opens up a new way for developers to identify these top users, a gold mine that the industry has been working to excavate for decades.

In the history of Gaming, never before have we seen such a gravitational pull for brilliant and accomplished teams as we’re seeing now with blockchain gaming. Teams are flooding to break in, with high hopes that the odds of success are finally stacked in their favor.

As new as this space is, the results are already surfacing. As Neil Young, CEO of N3TWORK puts it:

“The pace of innovation is blistering and sometimes it’s easy to dismiss because so much of the innovation is happening in and around things that seem simplistic by the standards of game makers today – but it’s the inversion of game-making in Loot!, the governance models in Nouns DAO, the CC0 creativity platform of Gremplin’s Cryptoadz, the advent of YGG’s PlayerDAO or the incredible ambition and scope of PixelVault’s MetaHero Universe that show us hints of what’s possible for games, our community of players and our industry as a whole.”

So where do blockchain games valuations stand today? Many of these nascent businesses have begun to issue tokens, the market caps of which are staggering(18).

To date, Axie Infinity is the largest blockchain game by revenue, generating $2.1B in 2021(19). It’s worth observing that Axie’s virality hasn’t come at the expense of any traditional game. Games like Axie create an incredible opportunity to pull in both gamers and crypto enthusiasts alike; may actually lower the bar in the short term for how engaging the games need to be by non-blockchain gaming standards. However, in the long run, we believe it will be critical for developers to prioritize the integrity of their game ecosystems, as the fun of the game itself will likely be the best path to franchise longevity.

Given the potential for regulation and nascency of the industry, larger publishers will be inclined to take their time firming up comprehensive blockchain strategies before making any sudden moves. Right now, all lights are green, but long-standing companies are keeping their most prized franchises on the sidelines at the risk of a destabilizing effect that could injure decades-long payers as well as fans more generally.

In the meantime, there is a massive swim lane for innovative companies to venture into unknown waters without any sort of innovator’s dilemma. Sorare, a fantasy soccer platform, has built a $4B business(20), centered around collectible NFT trading cards. Last year, in just nine months, users traded over $150M worth of cards on its platform with over 600K registered users on its platform(21). FIFA’s Ultimate Team is the closest traditional comparable and now faces significant risk of consumer engagement shifting, given Sorare’s first-mover advantage and skyrocketing demand from players for NFT experiences. While large incumbents plot their chess moves, we see abundant opportunity for innovative companies to capitalize on this blue ocean.

We sit on the precipice of the global Gaming market reaching $200B of annual spend(22), and this is a world in which players own virtually nothing that they purchase in games today. While there is much to be worked through in terms of regulation and content, blockchain may very well be the greatest market unlock in the history of Gaming.


2021 was a year full of twists and turns in the gaming market – from public market sentiment swings to SPAC mergers and IPOs, to a flood of private market investment activity surrounding blockchain and the metaverse, to Apple’s IDFA deprecation, to the Epic vs. Apple case, among other industry changes. In the midst of this rapid evolution, we continue to believe that the time has yet to come for markets to truly appreciate certain fundamentals of the gaming industry. Though recent events are beginning to shine a light on the resilience of the industry and the boundlessness of its potential, we continue to see, today, both growth and value in a category that captures more and more consumer time in every year that passes. We hope to work with you to make the most of it.


Thank you to our LPs, portfolio companies, and friends for all of your continued support. We learn from you every day and, in return, hope to provide you with value in the form of market insights and creative ideas to contribute to your growth. Please reach out directly at any time if we can offer advice or if even just to bounce around ideas. We’re looking forward to another exciting year of growing together!


Nick Tuosto, Managing Director
Peter Levin, Managing Director
Phil Sanderson, Managing Director
[email protected]



(1) Source: Pitchbook. Data as of 9/11/21. Internal analysis reflects pro forma adjustments. Vintage is defined as a fund close date/year of first investment. Funds represented include all VC funds of 2019 vintage and $50M-$2B AUM, excluding those with healthcare/biotech industry preferences
(2) Source: FactSet. Market data as of 1/7/22. Bookings multiples are on an EV / 2021E EBITDA basis
(3) General range of all gaming comparables, excluding Embracer, CD Projekt, and SEA, which all fall outside of this range
(4) Source: SensorTower, FactSet. Market data as of 1/7/22
(5) Source: Public news, company filings, FactSet. CAGR calculated between 2011 and 2021. 2021 revenue calculated as LTM revenue as of 9/30/21
(6) Source: PitchBook, FactSet. Data as of 1/7/22
(7) Source: FactSet. Market data as of 1/7/22
(8) Source: Press releases, company filings
(9) Source: FactSet. Market data as of 1/7/22. Based on internal analysis using consensus estimates for FY22 revenue and net income. Assumptions include 4% proprietary platform fees, 30% third-party platform fees, 21% effective tax rate, 15.7x Price / FY22 Earnings, and 22% of Playtika’s revenue flowing through proprietary platforms (consistent with FQ3 2021)
(10) CAGR calculated between 2008 and 2021. 2009 figure implied based on eMarketer 2010 figure and reported YoY growth rate. 2021 figure from Newzoo
(11) Source: NPD research 2008 figure for PC games. Newzoo 2021 Downloaded/Boxed PC Games + Browser PC Games. NPD research 2008 figure for video games hardware + software + accessories. Newzoo 2021 Console Games figure of $49 billion
(12) Source: Activate Consulting 2022 Outlook
(13) Source: Krafton FQ3 2021 earnings release
(14) Source: Financial Times
(15) Source: Roblox FQ3 2021 10-Q public filing, Roblox website. Calculated estimateS
(16) Source: The Verge
(17) Source: Overwolf website
(18) Source: CoinMarketCap.com. Market data as of 1/9/22, 3:10 PM PDT
(19) Source: VentureBeat
(20) Source: PitchBook
(21) Source: TechCrunch
(22) Source: NewZoo Global Games Report
(23) Source: Lumen Learning

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