🥧 No pie for you

Hey frends. Good news: We’ve all made it to Friday. Phew!

We’ve got another takeover for you today. This time, Empire’s Katherine Ross took a look at venture capital spending in Web3 gaming. 

Let’s dive in.

Venture capital spending may be bouncing back — with an estimated $4.5B spent last quarter — but it doesn’t look like gaming’s getting a piece of that pie. 

Earlier this week, Empire noted that VC interest may be going toward projects with real-world value. This is a symptom of a broader change across the landscape, thanks to institutional interest in the space. 

Unfortunately, even with the potential for more raises across the board — from mega deals ($100M+) to emerging deals (meaning seed or pre-seed) — it doesn’t look like gaming is getting the love. Not yet, anyway. 

I asked PitchBook’s Eric Bellomo — senior analyst on emerging technology — about gaming raises, but he wasn’t too optimistic. 

“While deal value increased substantially YoY, outsized deals like the Disney/Epic Games round inflated top-line figures. Deal volume continued to slide, falling 9.5% to 649 deals, in-line with 2018-2019 figures. Further, the number of investors actively investing in content developers continued its step deceleration since 2021. Capital is still available, but we view the current environment as a new steady state, rather than a resurgence,” he told me. 

Part of this is fairly obvious, right? A lot of money came into this gaming subsector — but not a whole lot of successes came out.

“Enthusiasm has waned in the market broadly as many well-funded startups have yet to produce breakout hits or venture-scale outcomes. A game's underlying technology is far removed from the most important factor: is the game fun and retentive,” Bellomo said. 

“Online shoppers don't care if a merchant uses Shopify or a MACH-based service, they care about value and speed. They don't care if a game was built in Unity or Unreal. The same holds in video games: Players only care if a game is fun and if their friends play. A discussion of tech stacks and architecture misses this point.”

He added that he doesn’t think we’ll see a resurgence in VC activity for “quite some time.” Mostly because, last cycle, gaming clearly benefited from a number of tailwinds from the attention that Web3 overall received with the focus on NFTs. 

But, hey, while games centered on gambling aren’t going to be the focus of big VC spending at this point, at least they’ve found some footing in terms of adoption.

Infecteddotfun is making moves. 

After building on ETH for four years, the team said on X that it was moving itself and “all of [its] upcoming games” to Solana.

TLDR: EVM chains, not just Base (where it was previously), have “fundamental scaling issues,” according to the post.

“Last year, we narrowed our focus to one concept: speculative simulation games. We think speculation has huge potential beyond just memecoins, and in the next 1-2 years, most memecoins will evolve into something completely different from today's format,” the team wrote.

Part of the move is simply because Solana has so many users — it makes sense for a team to want to capture the interest there. And another reason, according to Infecteddotfun’s X post, is because Solana’s “shipping real products for the real world.”

But while the team had an optimistic note in its post, Base’s own Jesse Pollak responded with a screenshot of a DM from the Infecteddotfun team itself breaking down what went wrong on Infecteddotfun’s launch day back on Base. 

“We’re truly sorry for letting you down,” the DM said. 

Based on the replies, it’s not clear why the team is blaming gas fees spiking, but perhaps they’ll have a better time on Solana.

• Anthropic’s Claud AI will break down Ordinals and Runes info for you if you install the Ordiscan MCP server.

• Market cap of all gaming tokens is at $10.59B today, with trading volume at $2.01B, according to CoinMarketCap.