Crypto Gaming Sector Sees 71% Q1 Investment Drop, 35% Deal Increase

In the first quarter of 2025, the crypto gaming sector experienced a mixed performance, with a notable increase in the number of deals but a significant decrease in total investment. According to DappRadar, Web3 gaming projects raised $91 million, marking a 71% decrease from the previous quarter and a 68% drop compared to the same period last year. This decline in investment totals suggests growing pressure on early-stage startups and hints at potential challenges for the sector in 2025, unless broader market conditions improve.

One of the key factors contributing to the drop in investments is the shifting focus of investors towards real-world assets and artificial intelligence. Despite this, the number of blockchain gaming-related deals that closed increased by 35% quarter-over-quarter. This indicates that while investors are writing smaller checks, they are still actively engaging with a broader range of projects, showing continued interest but with more cautious allocation.

The lion’s share of funding for Web3 gaming in the first quarter went to infrastructure-focused projects. This focus on infrastructure signals that investor confidence in the long-term potential of Web3 gaming remains intact. Notable projects in this quarter included MARBLEX, the blockchain gaming division of South Korean game developer Netmarble, which has plans for a Semi-Publishing Model to support a wider variety of Web3 games. This project is backed by a joint fund exceeding $20 million with Immutable. Additionally, Dubai-based startup The Game Company, focused on blockchain-based cloud gaming, received $10 million in funding to develop a platform that allows users to play any game on any device.

As the Web gaming industry matures, there is a clear push toward quality, innovation, and interoperability. This is evident in the focus on upgraded gameplay, new identity layers, and AI-enhanced mechanics. The increase in deals and the focus on infrastructure-building projects are positive signs for the industry, indicating a commitment to creating a robust foundation for future growth. However, the decrease in investment totals may raise concerns about the sector's ability to attract sufficient funding to support its ambitions. Overall, the mixed performance of the crypto gaming sector in Q1 2025 highlights the challenges and opportunities facing the industry as it continues to evolve.