Animoca Brands and the potential of Blockchain Games

Yat Siu
4 min readMar 2, 2020
F1 Delta Time Blockchain Game

Two years ago we laid out a vision for Animoca Brands to become a leader in the gaming industry by developing the capability to deliver true digital ownership to gamers, which number approximately 2.5 billion.

Our progress has been notable. Animoca Brands’ strategy has gained it strong influence and opportunity in the space of blockchain gaming and recognition as one of the most innovative blockchain game companies in the world, having recently been ranked fifth on’s list of Top 50 blockchain companies 2020. The Sandbox, one of the world’s first decentralised games based on user generated content, ranked #13 in the same list (The Sandbox is developed and published by one of our subsidiaries). Various of our portfolio companies were also ranked, including Dapper Labs (#3), Sky Mavis (#6), WAX (#9), Experimental (#15), Decentraland (#18), and Lucid Sight (#23).

As we have reiterated many times, we believe that digital content, including and especially games, will become significantly more appealing if consumers can enjoy access to products that enable true digital ownership.

The opportunity of Virtual Asset Ownership (true digital ownership)

In 2019, the video gaming industry generated over US$150 billion in revenue (more than the music and film industries combined). Virtual goods were estimated to represent approximately US$50 billion of that total, and are projected to grow to US$189.76 billion within five years.

Almost everyone who plays video games today buys some form of virtual goods, including virtual cars, character equipment, and “skins”. And most of these players, quite reasonably, think that they own the virtual goods they purchased with their hard-earned money.

But they don’t. That ownership of the vast majority of virtual goods is merely an illusion that can evaporate in a moment — regardless of the amount of money invested.

That’s because virtual goods in almost every game are provided as a licensed service, and are subject to the restrictive terms of service that the game company has specified for the use of those assets (for example, you cannot truly own the assets, and are not allowed to use them outside of the game where they are provided).

In effect, the games industry is renting virtual goods to players. That’s not ownership.

We believe that this “rental” system — despite its tremendous growth — restricts the full potential of the games industry because it limits engagement. This is a factor contributing to the extremely low player conversion rates in gaming (the average conversion rate from free play to paying user is below 3%). Why would users want to pay for something that they never actually own, and that can be taken away in an instant when a game publisher decides to shut down the game or alter its terms of service?

In a previous post we outlined how we believe that digital goods that can deliver direct value and ownership will significantly increase user engagement and thereby drive conversions rates in games today .

Why is blockchain so relevant to virtual goods?

This question has become increasingly critical. Blockchain is a form of technology — very simply it is a digital distributed (decentralized) ledger made of various blocks of information linked by cryptography. Blockchain offers excellent security and transparency for the management of digital assets, which can be nearly anything that belongs to someone: cryptocurrency, medical records, cooking recipes, in-game items, financial reports, loyalty points, etc.

Why is that important? Because blockchain has the capability to provide true digital ownership.

We believe that the games industry is being held back by antiquated practices of “rental ownership” and that gamers prefer to have proper ownership and control over virtual goods — which translates to higher value for those goods. Such ownership can be delivered by adoption of non-fungible tokens (NFTs), a type of cryptographic token used to represent a distinctive digital asset on blockchain (e.g., a magic sword or a racing car).

Validation for our view is provided by the success of some of our activities over the past year, including our recent sale of LAND on The Sandbox, the continuing success of our Formula 1 NFT auctions and sales, and the Bayern Munich collectible cards issued via our subsidiary Stryking. Infact at the time of this post we have already sold well over a thousand F1 crates and our community is active and excited about the project.

F1 Blockchain Racing Sales
Crate Sale of F1 Deltatime

In communications to be issued in the near future, I will discuss how we will continue to advance our blockchain strategy and why M&A is such an important component of our approach. For now, I wish to extend my heartfelt gratitude to all of our shareholders, customers, and employees, whose dedication made it possible for Animoca Brands to become a globally recognised company in the exciting fields of gaming and blockchain.

Thank you!

Yat Siu

Chairman, Animoca Brands



Yat Siu

Entrepreneur and Founder of Outblaze, Animoca Brands, Dalton Learning Lab and others. Tech guy, Investor, geek and Father of 3 Fun Kids