The crypto winter has not deterred investors from pouring capital into blockchain and NFT gaming companies in the Web3 space. In Q3 2022, blockchain gaming and metaverse projects raised $1.3bn, and blockchain gaming projects raised $156m through investments and partnerships in September 2022 alone.

Blockchain gaming has a visible impact on the NFT market as game assets backed by NFT technology are traded on the markets. From October to November of last year, in-game NFTs had a total transaction volume of $55 million.

As investors continue to show strong interest in the blockchain gaming industry, Singapore-based global entertainment company Digital Asset Entertainment (DEA) recently raised $10 million in funding from LDA Capital, headquartered in Los Angeles.

DEA operates PlayMining, which includes a GameFi platform, the NFT marketplace, the PlayMining Verse metaverse currently under development, and the DEAPcoin ($DEP) token, the first play-and-win token officially approved by the Japan Financial Services Agency. Despite the broader crypto market downturn, PlayMining managed to increase its activity by 33%, reaching an average of 22,466 unique daily active wallets in November, driven mainly by the announcement of its new Web3 game, Graffiti Racer.

Coming off a strong close to 2022 for DEA, we’ve got the company’s chief strategy officer, Tatsuya Kohrogi, to tell us what it takes to operate a profitable GameFi platform and NFT marketplace in the midst of the bear market.

Tell us about yourself and the story behind Digital Asset Entertainment.
My name is Tatsuya Kohrogi, also known as Tats. I am the Chief Strategy Officer and Head of Global Business at Digital Entertainment Asset (DEA). DEA was founded in Singapore by two Japanese co-founders, Naohito Yoshida and Kozo Yamada, in 2018.

What sparked your interest in the Web3 space and where did you first hear about it?
Before joining DEA, I worked at Facebook/Meta. I joined Facebook because I was inspired by the potential that social media offered for the creator economy. I saw firsthand how friends made a living doing what they love by sharing content and building communities on social media.

I first heard about Web3 from DEA Co-CEO Naohito “Goro” Yoshida in early 2020 when he mentioned creating a game where players can own digital assets and earn cryptocurrency by playing. Fast forward almost two years and Facebook changed its name to Meta, which is when I started to get actively involved in the Web3 space. The more I thought about the trajectory of innovation, the potential to empower creators and create new forms of value through ownership of digital assets made sense.

What sparked the idea for PlayMining?
In 2016, former Sony Corporation Chairman Nobuyuki Idei told our co-founder Goro to study blockchain as he predicted it would be the next breakthrough technology. After two years of observation, Goro noticed how blockchain technology was mostly used for finance/cryptocurrency and thought how cool it would be if the in-game currencies that players earn in games could be real money. That was the initial spark that led to the creation of our company Digital Entertainment Asset Pte. Ltd. (DEA) in 2018 and the DEAPcoin (DEP) token. DEA’s first Play-to-Earn game, JobTribes, launched in May 2020, becoming the world’s first play-and-earn game that distributed a listed cryptocurrency. The name of the PlayMining platform comes from “playing” games and, figuratively speaking, “mining” our DEAPcoin.

Since PlayMining aims to end creator exploitation like Apple, Facebook and Instagram have done, how much does the platform charge third-party creators and developers who build their IP on Playmining?
Our platform is not open to all creators at this time, so we do not charge any creator fees. In fact, we pay creators upfront for production costs and also pay royalties to NFT creators – over $6.8 million in royalties have been paid out over the past 2 years. For third-party developers, we build a revenue sharing model.

Compared to other Web3 platforms, our NFTs are utility NFTs built specifically for PlayMining games, and owners or renters of these NFTs can use them to play games and earn DEAPcoin.

DEA recently raised $10 million from Los Angeles-based LDA Capital. How did that happen? LDA Capital valued the revenue model and the attraction of users of our project. PlayMining makes continuous profits through sales on its NFT marketplace and GameFi platform, with more than $56.6 million in revenue recorded in 2022. We were identified as a market leader by LDA Capital for our ability to maintain a highly profitable GameFi platform during the crypto bear market and committed to investing in us supporting the future of creator and community empowerment through decentralization of the content creation process.

What makes PlayMining profitable and what does it take to run a profitable GameFi platform and NFT market in the midst of the bear market?
Our revenue breakdown takes into account NFT sales, in-game item sales, and token sales.

We continue to build our platform, creating original content and releasing new features. And most importantly, we engage with our community as much as possible so that we always have enough information to better serve our customers. We also co-create content with our community, so we believe that working closely with the community is key.

What were the fundraising challenges the DEA faced in the midst of the bear market? How did the DEA get past that?
At the macro level, venture capital investment was hard to secure. Negative events like the FTX implosion increase volatility and reduce confidence in the cryptocurrency space. Having income during this bear market definitely helped earn the trust of investors. We keep building!

Why is DEA established in Singapore instead of Japan?
DEA was established in Singapore instead of Japan because we were early on the crypto gaming scene. Token tax regulation hurdles in 2018 made it almost impossible to launch a token project in Japan at that time. However, the regulations changed in Japan last month!

With the high-impact collapse of Terra and FTX this year, several countries are taking a closer look at regulatory compliance on Web3. What is Japan like, especially when it comes to P2E and P&E?
Japan is beginning to lead the way in Web3 by adopting more agile regulations towards token project taxation and listing regulations. We expect to see many more games launch in 2023. Big game companies like Square Enix have announced in highlights of the year that blockchain gaming will be one of their focus areas. Oasys and DJT will also have more game titles coming soon.

What are the most challenging aspects of your role at the DEA, and how do you overcome these challenges?
Running a GameFi company is difficult because you need to manage both the business side and the tokenomics side. It’s like running a company and a nation at the same time, and you need to make sure that both are successful. In my opinion, frequently communicating with all internal teams, external partners, and community members, and constantly testing initiatives, sharing ideas, and aligning direction are the ways to overcome these challenges.

What’s in the pipeline for the DEA this year?
We will focus on the development of the upcoming titles Hero Spiral and Soul Fusers. We will also be collaborating with large Japanese game companies and expanding our IP collaborations. Our first metaverse project, KamuiVerse, will expand further, with the PlayMining community co-creating both KamuiVerse and Soul Fusers. We also have the buyback program for our $DEP token (DEAPcoin) launching this month.

What do you think about the current state of the Web3 space? What kind of role is the DEA playing in this?
The Web3 space is definitely still in its early stages and we are all in the construction phase. DEA will help non-gamers get into Web3 gaming by creating more and more ways for people to earn digital assets in a fun way. Play and Earn is a great incentive for anyone to join the Web3 gaming space, especially in places like South East Asia where access to safe and easy supplementary income can be a great book for many people. DEA is also working hard to support NFT game artists and developers through our site, to lead the way in creator empowerment.

Where do you think we might see Web3 in the near future?
The near future of Web3 will see us capture value for things that are hard to quantify, such as emotions, memories, experiences, and feelings. Things with sentimental value can be very personal and capturing that in data, or putting a form of value on something intangible, is not something that was possible in the past. Blockchain technology and tokenization are the future, and they will be implemented in all sectors in a similar way to how the web affected all industries. Regarding the gaming industry, big gaming corporations are entering the space and more AAA game titles will be released which will become another gateway for mass adoption.

Any other Web3-related industry topics you’d like to talk about?
The creation of more and more Web3 games will eventually lead to mass adoption. Non-gamers will enter the Web3 space through the games.

When we look at the historical progression of games from Web1 to Web2 to Web3, we can see that not all Web2 players were originally Web1 players. Many new players started playing in the Web2 era. We believe that Web3 players will be different from Web1 and Web2 players, as the ability to earn digital assets with real value will incentivize more people to try blockchain gaming.

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