‘There is strong reaction against the P2E gaming genre’: BITKRAFT Asia Partner Jin Oh

BITKRAFT Ventures, a global investment platform for gaming and Web3, has just announced its expansion into Asia Pacific, the largest gaming market in the world.

The firm has also appointed Jin Oh, former Riot Games President and former CEO of Garena, as its Partner, based in Seoul. Jin Oh will use extensive experience to help BITKRAFT identify and invest in promising gaming and interactive entertainment startups across Web2 and Web3 in Asia.

“Asia-Pacific is the largest gaming market in the world, accounting for 48 per cent of the global gaming revenue in 2022. The companies founded here have long led innovation and trend-setting in the video games and interactive entertainment industry, and continue to do so today,” says Jin Oh.

In this interview with e27, Jin Oh discusses the VC firm’s vision and plans in the region and the regional gaming industry.

Excerpts:

BITKRAFT is already a global investor with many investments in Asia. What motivated it to expand into the Asian gaming market?

The Asian market is one of the largest and fastest-growing markets for video gaming, with a diverse and heterogeneous complexion of varying consumption styles and preferences. As a global and long-term investor in gaming, we wanted to ensure we had the right local talent who would enable us to better serve our existing portfolio companies and gaming entrepreneurs in Asia.

What advantages does BITKRAFT see in investing in both Web2 and Web3 startups in the gaming industry?

Fundamentally we see ourselves as gaming investors and do not label ourselves as Web2 or Web3 investors. These labels are semantic in nature as we fundamentally believe that they are video games at heart.

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We, however, have a dedicated fund and team specialised in companies with a strong focus on Web3 as well as tokens as an asset class. As we continue to invest in both Web2 and Web3 startups. The cross-pollination of best practices and innovations from each segment will allow us not only to better identify future opportunities in both but also provide better support to our portfolio companies through a more holistic understanding of the space.

Web3 gaming witnessed a boom during the COVID-19 pandemic. However, the euphoria and investor enthusiasm seem to have waned. Why this downward trend?

Yes, investor enthusiasm is down, but that is primarily from “tourist” funds that had no background in gaming and let euphoria either make them forget the nuances of underwriting content. They entered a market not prepared to make fundamental — non-vaporware — investments in.

We’re now seeing a strong reaction against the play-to-earn ‘genre’, which to us was never a genre, to begin with. Instead, it was just a potential element of the business model of a successful game that engages a passionate (and large) audience.

We think these hype cycles are normal across sectors and remain focused on our approach to Web3 investing backed by extensive Web2 investing experience.

Nonetheless, we also observe a groundswell of institutional interest in Web3 gaming that results in the foray of eminent Web2 investors. We see gaming and non-gaming firms entering the Web3 space with a more patient and longer-term approach to figuring out the right application and use case of gaming.

This first-principles and fundamentals-based approach is driving innovation led by expert gaming teams; for example, CCP Games. But now the participants are people who understand the importance of patience and deep product iteration before financialisation.

How did the recent events in the Web3 and crypto space (such as the FTX collapse) impact the overall industry?

These events serve as valuable learning experiences. As the space continues to evolve and mature, it will be important for developers, investors, and regulators to work together to ensure its long-term success. Every major new technological disruption has seen painful early bust cycles and not simply straight exponential lines to mass adoption. Crypto is no different.

What trends do you see emerging in the Asian gaming market in the next five years?

Asia sits at the confluence of some of the most powerful socioeconomic trends, including the demographic dividends of having a young and digitally-savvy population that has grown up on video gaming as the dominant form of entertainment.

The region, therefore, has a vastly different complexion as compared to the West and we are excited to see how these dynamics will bootstrap emergent models of video gaming consumption that have either not worked previously in the West or are completely novel channels of consumption.

How does the Asian gaming market fundamentally differ from the Western market? What learnings can Asian developers make from their Western peers?

One key difference between the two markets is how each market was first introduced to video gaming and how that has shaped each market’s consumption norms and preferences.

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Western markets first experienced video gaming through PCs and consoles while Asia has a mobile-first experience with gaming. The implications of how these different markets were onboarded into gaming are too numerous to be discussed in detail. However, one clear manifestation of the above is how Asia gaming markets are far more receptive to mobile monetisation mechanics, such as ‘gacha’ style Lootboxes, which drew opposite reactions in the West.

It’s not that Asian developers need to learn from Western developers or vice versa, more critically it’s having a deep understanding of the end-user market one is selling into and therefore building a product that will provide the highest perceived value to users from respective markets.

Interestingly, we have seen best practices from Asian products and companies finding their way to the West as well as Asian audiences growing into PC and console-based platforms — a trend we certainly expect to continue.

What will be the future of the gaming industry? Do you think it will keep on evolving? How do you look at the negative side of gaming (the psychological impacts), especially on children?

Historically, we have delineated two worlds: the physical and the digital. As people spend an increasing amount of time digitally, we at BITKRAFT believe that the already blurred lines between these two worlds will disintegrate and give way to what we have termed a “synthetic reality.”

Similar to how gaming has historically been a catalyst for technological innovation (think consoles to cartridges to PC roms and GPUs), we expect gaming to stand at the forefront of this next evolution and drive us into the new paradigm of synthetic reality.

Gaming itself is not inherently harmful, and many games can have positive impacts on players like problem-solving, critical thinking, and social interaction can be beneficial for players of all ages. There are many studies on this from various organizations, see NPR, PocketGamer.biz, and NIH.

In the current times, we see a lot of major factors driving games upward in the next years including Crypto/Web3, AI, VR/AR, and new emerging markets growth in particular MENA and Africa. It’s a very exciting time in games. If it weren’t for that and our strong passion and belief in it, BITKRAFT would not be pushing forward this way.

Does BITKRAFT plan to raise a separate fund to invest in the region? Are there any specific countries or regions in Asia that BITKRAFT is particularly interested in?

We can’t disclose the fund’s details at this time, but we will be sure to notify you when we have Asia-specific news to share.

BITKRAFT is country-agnostic and will deploy capital where we see the value and great entrepreneurship. We look forward to working with the best companies and founders which Asia has to offer.

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