Animoca Brands Case: how a bet on blockchain and NFT made a "gaming unicorn" out of a Hong Kong company
In a little more than a year, the valuation of Hong Kong-based Animoca Brands has grown tenfold to $1 billion. The co-founder of the company Yat Siu (Yat Siu) told in an interview with the South China Morning Post how the development in the field of blockchain and NFT helped to achieve explosive growth.
The SandboxA year ago
In March 2020, the Australian Stock Exchange (ASE) issued an ultimatum to Animoca Brands: either the company abandons its plans for NFT, or it will not be allowed to list.
Back then, almost no one had heard of NFT (non-interchangeable tokens that are used to confirm the authenticity of virtual items). Siu was betting on this technology, although he guessed that he risked scaring investors and authorities.
ASE also warned Animoca Brands that the company may have difficulties with the government, employees and meeting the necessary standards. Animoca Brands tried to defend its point of view, but to no avail — soon it was banned from trading shares on the Australian Stock Exchange.
“[Removal from the stock exchange in Australia] was one of the sacrifices we had to make… But now it can be called a hidden blessing,” Siu commented, smiling.
How it all started
Siu was born and raised in Vienna in a family of musicians who came to the Austrian capital from Hong Kong and Taiwan. He said that he has always been interested in programming and games. While still at school, he was able to get a job at the legendary Atari gaming company.
However, before opening his own video game business, Siu tried himself in another field. In the 90s, he emigrated to Hong Kong and founded Outblaze, one of the most successful technology companies in the region. The company was engaged in communication services and at some point provided 30-40% of e-mail traffic in the United States. But in 2009, Siu sold Outblaze to IBM.
Five years later, Siu opened Animoca Brands.
At first, nothing connected Animoca Brands with blockchain in games. The company developed and published ordinary mobile titles. But already in 2017, Animoca Brands began investing in blockchain. Then she bought 60% of the Fuel Powered developer and launched a beta version of Cryptokitties in China. A year later, The Sandbox, a blockchain analogue of Roblox, joined the company, whose users can create their own games and items (but note that the original The Sandbox was not about blockchain).
As Siu explained, he noticed that games began to switch to the so-called “play to earn” model. They turned into huge social platforms on which gamers wanted to trade in-game things: for example, skins or weapons. Virtual items have become a valuable and highly sought-after asset.
That’s why Siu made Animoca Brands a platform that can charge a commission for in-game transactions. In his opinion, this business model is much more profitable than most free-play games that rely solely on aggressive monetization.
Today
In 2021, a new round of interest in blockchain appeared around the world. Since March, the network has been actively discussing NFT, and by April, the NFT market reached an estimate of $ 1 billion.
It is not surprising that non-interchangeable tokens began to appear in games.
“People spend most of their lives on the Internet, so soon they will start claiming ownership of their digital things, just like they do with physical things today,” said Leah Callon—Butler, director of blockchain consulting firm Emfarsis.
Although the blockchain still has enough problems (NFT is compared to a soap bubble, companies lack experienced blockchain specialists, and players often consider all this fraud) Animoca Brands continues to believe in the technology. Siu said that the difficulties of recent years have only strengthened his determination to move forward.
“If you remember, in 2018, cryptocurrency and blockchain faced a lot of problems. [People said], “Don’t tell me about blockchain. Don’t tell me about cryptocurrency. And, of course, don’t tell me about NFT,” Siu said.
In mid-May, Animoca Brands conducted a successful funding round. The company has attracted $88,888,888 from investors, which it is going to spend on the development of NFT in games and the creation of blockchain titles. After this investment, the capitalization of Animoca Brands rose to $ 1 billion.
