Australian startups make waves in the booming world of gaming NFT - By Dominic Powell
November 9, 2021

Robbie and James Ferguson, founders of Immutable, a platform for trading non-fungible tokens. CREDIT: DOMINIC LORRIMER

By Dominic Powell

Two days before New Zealand mare Verry Elleegant made her memorable Melbourne Cup run, another mare, by the name of Figured It Out, had just clinched the title of a separate show-stopping race, albeit under slightly different circumstances.

Figured It Out’s historic run was entirely virtual, held online in a knockout tournament against 576 other digital horses. And while its owner didn’t take home the millions in prize money paid out by the Cup, they still pocketed a respectable $51,000.

The race marked the first major tournament held by Sydney-founded and blockchain-powered digital horse racing startup Zed Run. Launched in 2018, players can buy, sell and breed their virtual horses, which are each unique and linked to the Ethereum blockchain. The company has sold over 11,000 digital equines, with each new horse ‘drop’ netting the business millions of dollars.

It’s one of an increasing number of Australian companies looking to democratise the world of gaming through cryptocurrencies and non-fungible tokens, or NFTs, a rapidly growing industry worldwide which has a surprising amount of local players.

These include, but not limited to, Zed Run; Illuvium, an open-world adventure RPG created by the multi-millionaire Warwick brothers; Immutable X, an NFT trading platform and marketplace behind trading card game Gods Unchained and mobile RPG Guild of Guardians; and Crypto Gaming United, which lends NFTs to blockchain gamers to help them level up their skills.

Each one of these businesses boasts valuations in the millions, if not billions, and have thousands of players globally, tapping into gamers’ existing love for collectables and skins and allowing them to actually own them on the blockchain.

James Ferguson, the co-founder of Immutable X, believes the gaming space is likely to be one of the biggest use cases for NFT technology in the immediate future.

“I think gaming will evolve to be one of the biggest use cases for NFTs over the midterm,” he told The Age and The Sydney Morning Herald. “The current business models that exist in free to play gaming, in particular, are so exploitative to users and give away so little value that it is ripe for disruption.“

It becomes easy to see the potential for gaming-focused NFTs when comparing the space to existing collectable card games such as Magic: The Gathering, where the most valuable card (an Alpha Black Lotus) is worth upwards of $700,000 and hundreds of other cards can attract prices of between $1,000 and $50,000. There’s no reason why this can’t be the case for virtual collectables, Ferguson says.

And increasingly, big-name investors are starting to agree. In July, Zed Run raised $20 million from a swathe of major venture capitalists, including prominent Silicon Valley firm Andreessen Horowitz. Immutable closed an $82 million Series B in September, which counted local VC house AirTree as a participant.

AirTree partner and NFT nut John Henderson agrees with Ferguson over the potential for NFT gaming startups in the medium term. However, he believes the potential for NFTs can stretch far beyond in-game collectables.

“It just makes no sense that in games like Roblox and Fortnite, their whole monetisation engine is people buying skins and digital items, yet you can’t port those items out of the game,” he says.“If I’m crazy enough to spend $3,000 on an outfit in a game, I want to take that thing and play with it elsewhere too!”

“But the big idea here is that we now have a way of representing digital property and applying scarcity to that. And the kind of innovations that will come out of that are going to be huge.”

However, when it comes to why Australia specifically has such a significant number of successful startups in this new and emerging area, Henderson has no specific insight. “I don’t know why we’re disproportionately well-represented in NFTs and gaming, but it’s certainly true that we are.”

Ferguson believes the local success is less about Australia and more about the inherent benefits of the blockchain space. Standard businesses may struggle to scale in Australia due to our relatively small market and geographical remoteness - two things businesses like Immutable don’t have to worry about.

“If you want to go create a company that’s used around the world, you can either start a company that is based in Australia that starts with an Australian market and then goes global, or you can tap into the world of blockchain and immediately access the global stage from right here.”

“In that case, being in Australia is no longer a disadvantage,” he said.

(The Sydney Morning Herald)