The truth about the NFT gaming market: Moving towards maturity rather than an end, with wealthy collectors taking the lead

The misconception that the NFT (Non-Fungible Token) market, including NFT games, has “died” is incorrect. Indeed, during the peak from 2021 to 2022, monthly sales reached $1 billion, but now they have settled at around $300 million per month. Looking at these figures alone might give the impression of decline, but industry insiders see a different picture. Yat Siu, co-founder of Web3 development company Animoca Brands, points out that the NFT market is not heading towards its end but is rather transitioning into a new phase.

Market Size Shrinks, but Trading Volume Remains Robust

During the crypto asset bubble of 2021 to 2022, the NFT market recorded monthly sales exceeding $1 billion. However, the current market size has shrunk to about one-third of that. Interpreting this significant decrease as the market’s end is a superficial view. According to Siu, it signifies that speculative entrants have been weeded out, and the market is now dominated by collectors who understand the true value.

“Five years ago, this market didn’t exist,” Siu states. “Therefore, everything is relative, and evaluations vary greatly depending on the perspective,” emphasizing the long-term growth potential of the market.

NFT Games and Digital Art: A Market Driven by Wealthy Collectors

The current NFT market is primarily supported by affluent digital art enthusiasts and collectors. They are not mere speculators but are engaging in long-term asset holding, similar to art collecting. Wealthy individuals like Adam Weitzman actively invest in projects such as “Otherdeed,” land NFTs from Yuga Labs’ metaverse “Otherside,” and famous collections like “Bored Apes” (NFT collection featuring bored-looking apes). Their proactive investments are driving the NFT market, including NFT games.

Siu himself is a large NFT collector and comments, “Just as Picasso collectors feel a sense of closeness to other Picasso enthusiasts, NFT collectors form a kind of community.” This mentality is fundamentally similar to that of high-end luxury collectors of brands like Ferrari or Rolex, with the industry consensus being that these are simply digital assets in a different form.

Blockchain Transparency: The Long-term Value of NFTs and NFT Games

One reason the NFT market persists is the complete transparency provided by blockchain technology. All transaction histories and ownership records are stored on the blockchain, allowing for tamper-proof proof of asset authenticity and history. This feature offers fundamental advantages not present in traditional art and collector markets.

Starting with “CryptoKitties,” a breeding-based NFT game launched on the Ethereum blockchain in late 2017, the NFT market initially experienced a speculative boom. However, today, the transparency of blockchain and the reliability of smart contract technology have become the support base for long-term collector support. Siu admits that his NFT portfolio has declined by about 80%, but explains that these are “not purchased for resale but as important long-term assets,” which is made possible by this transparency and trustworthiness.

Geopolitical Challenges and Security Concerns: Factors Hindering Market Expansion

On the other hand, there are factors that hinder the growth of the NFT market. The cancellation of the “NFT Paris” event scheduled for 2024, just one month before it was to be held, is not merely due to a lack of sponsorship. It is largely driven by France tightening regulations on cryptocurrencies and a series of kidnapping incidents targeting executives and investors in the crypto industry.

According to Siu, “France was once friendly toward cryptocurrencies, but has now completely shifted its stance. Projects like NFT games and fantasy football game ‘Sorare’ are also under the scrutiny of gambling regulators.” As anti-crypto sentiments spread across Europe, industry insiders are avoiding access to Paris due to security concerns.

Conclusion: The NFT Market, Including NFT Games, Is in a Phase of Transformation and Seeking a New Equilibrium

It is true that the NFT market has cooled from its initial speculative boom, with monthly sales decreasing to one-third. However, this process is not the death of the market but a maturation phase. Supported by wealthy collectors, the NFT ecosystem, including NFT games, is transitioning into a new value system. As blockchain transparency and recognition of long-term asset value deepen, the NFT game sector as a digital art market will continue to exist sustainably. Geopolitical issues and security concerns may restrict market expansion, but the fundamental value propositions of the industry have not been lost.