Over in the gaming vertical, micro-transactions are behind a huge fintech movement that has led to the in-game trading platform, DMarket, to close a $6.5m funding round led by VC fund Almaz Capital.
Other high-profile deals made by the fund include Yandex (IPO NASDAQ), QIK (sold to Skype), and Sensity Systems (sold to Verizon Communications).
DMarket focuses on the micro-transaction of skins, which allow characters to change how they look and feel without affecting gameplay. This market has fast-been increasing in size as game developers move more towards free-to-play modes such as the hugely successful Fortnite, with experts agreeing that the skins market is set to be worth billions more over the next few years.
The biggest change in these types of transactions comes from the concept of who owns the data and where will it be stored. Using distributed ledger technology, DMarket facilitates the secure buying, selling and trading of in-game items. Now, it seems even developers want in.
Skins are being designed to work across gameplay, not just in one arena. It means that players are more likely to spend cash if they can take their characters across various games – and with the current support for eSport teams, they provide a new vehicle for sponsorship, with duels between the top players live-streamed across continents to millions of viewers.
This view is something that Almaz Capital had been tracking for a while, visiting the company numerous times over the past few years. Based in Silicon Valley and Europe, Almaz Capital focuses on disruptive deep tech companies in the B2B software space with investors including Cisco and International Finance Corporation (IFC), a member of the World Bank Group.
Speaking on the funding agreement, Daniil Stolyarov, Partner at Almaz Capital said, “Today gamers don’t really own the virtual goods they pay real money for. It inhibits the adoption of virtual game worlds and economies. DMarket enables innovative game developers to change that. In-game virtual items are perfect 100% digital goods for distributed ledger trading, which enables true ownership of virtual assets.”
DMarket, which had already successfully raised $19 million from the global gaming community in 2017, is understandably keen to outpace rivals in the space, such as Steam, by working with gaming developers themselves to both integrate their skins into DMarket’s trading platform but also create their own white-label version. A potential lucrative market as demand for free-to-play games with in-app items grows.
According to Tamara Slanova, co-founder and CFO of DMarket, the potential growth of the game economy market is estimated to be around $300bn in just a few years which means that a transparent and friendly ecosystem is necessary to attract a variety of game players. She said, “We are building a technology that will connect players, game developers, content creators, brands and influencers. The gaming virtual economy will create jobs for millions of people not only in the gaming space but also in connected industries, like fashion, design, trading, music, movies, etc.”
With these sorts of figures in mind, it’s no surprise that DMarket recently announced a new high-profile board member, Trip Hawkins the founder and CEO of Electronic Arts, previously of EA (worth over $30bn today), and also known as the “King of the Nerds” by The Economist.
Upon joining the board earlier this month he said, “I love that DMarket is at the intersection of five growth trends in the game industry: advanced social games, virtual goods trading, fashion, eSports, and blockchain. DMarket has a big opportunity to be a new kind of leader in the game industry.”
Back to micro-transactions, with billions of gamers choosing to customize their in-game equipment, DMarket has also managed to raise investment from industry engine, Xsolla. Operating as a merchant and seller for major gambling entities such as Valve, Twitch, Ubisoft and Epic Games, proving that financial technology within the gaming vertical is the next big thing to watch.