This article is based on our Weekly News Digest #48 from 28.11.2022. If you want to receive such analyses first, be sure to subscribe to our weekly newsletter. There, we analyze the largest deals, elaborating on the financials and strategy behind, while also covering the smaller transactions of the week.
Web3 games publisher Fenix Games raises $150m
UAE-headquartered Web3 games publisher Fenix Games has closed a $150m investment from Phoenix Group and Cypher Capital.
Fenix Games announced its establishment on the day of receiving the investment. The studio is co-founded by three former C-level executives of Mythical Games: Chris Ko (CEO), Matt Nutt (COO), and Rudy Koch (CBO). Founded in 2018, US-based Mythical Games is best known for its Blankos Block Party blockchain-powered game, which became the first everWeb3 game released on Epic Games Store.
In his interview for GamesBeat, CEO and co-founder of the company Chris Ko revealed their plans not only to publish and operate Web3 games, but also to make investments and acquisitions. For this, Fenix Games has ‘a few hundred million’, which will also be used to acquire some of the existing Web2 games.
Overall, the company’s global aim is broader than just building a strong publishing division for the Web3 gaming industry. We might say that the long-term goal of such M&A activity is to build a large ecosystem of studios like that of Embracer, or Stillfront. This, in turn, might help the company to become one of the key pioneers, creating infrastructure for the future Web3 gaming industry.
However, we cannot but highlight the current state of the blockchain gaming market here. Since Q2’22, we have observed a decline in blockchain-related investment activity. Both VC and Strategic Investors are becoming more careful with their investments, which resulted in a continuous decrease in both the total sum and the deal count. The recent collapse of FTX, which was not only a large cryptocurrency exchange, but also one of the most active investors in the Web3 gaming space (see p. 23 of our latest Report). We might fairly assume that the FTX story will make investors even more cautious now, which will result in the further decline of a recently flourishing and record-breaking market.
Source: Global Gaming Deals Activity Report Q1-Q3 2022 by InvestGame
However, there is still lots of capital ready to be deployed in Web3 gaming studios, including Andreessen Horowitz’s $4.5B Crypto Fund Four, the largest crypto fund today, which is bigger than the total sum invested in blockchain gaming in 2021. As for Strategic Investors, we already saw Animoca making 51 investments in blockchain gaming studios in Q1-Q3’22, and with ‘a few hundred million’ of dry powder Fenix Games may also get into the same league someday. So, even though the market might clearly lose some Web2 and non-core investors, there will still be some capital present to make this crypto winter a little bit warmer.
