Any developer considering an Initial Coin Offering or token sale as a means of funding their next project might want to look into other sources of finance.
That's according to Tony Pearce, co-founder of Reality Gaming Group - the studio behind the cryptocurrency-funded mobile AR shooter Reality Clash. While his own company managed to raise $3.5 million last year through an ICO, he warns that the chances of achieving similar success today are minimal without sufficient capital already behind you.
Initial Coin Offerings work in a similar way to Initial Public Offerings - but instead of shares in the company, investors are purchasing tokens of the firm's chosen (or created) cryptocurrency, often for later use in the finished product or service.
There have been a spate of them in the past twelve months as awareness has risen around the potential of blockchain and cryptocurrency, with numerous games firms running ICOs of their own - ranging from new streaming platforms to the Nolan Bushnell movie.
However, a report in February revealed that 46% of 2017 ICOs had already failed. While video game ICOs had a considerably higher success rate - potentially as high as 91% - Pearce believes the landscape has changed too much for smaller studios to risk pouring time and resources into such a gambit.
"It's amazing what's happened in the last year - I can't believe how much has changed," he told GamesIndustry.biz during the latest episode of our podcast.
"We spent hardly anything when we did our ICO because we were an interesting project. At the time, the only ICOs that were happening were big blockchain enterprise projects and big tech stuff. We came along with this cool, sexy game and actually stood out from the crowd."
The dearth of other games-related projects meant ICO listing sites and other destinations ICO investors use to discover new opportunities were keen to get Reality Clash on board, if only to show that blockchain and cryptocurrencies have broader potential. But such sites are now less interested in games ICOs.
"Twelve months on, if we were to do the same thing again, it would cost us £200,000 to £300,000. The cost of just being listed on the bigger ICO listing sites, the cost of marketing through those sites, has just gone through the roof. If you were a brand new ICO, the cost of launching right now... I've heard rumours that it's around the £500,000 mark by the time you've got lawyers in, sorted the marketing campaign out - it's not for start-ups anymore.
"We were a total start-up, but if we were to do this now, I don't think we could have afforded to."
ICOs also face the added challenge that major platforms Twitter, Facebook and Google have all banned companies from using their sites to advertise the sale of cryptocurrencies - especially if related to an ICO - for fear of more people being manipulated by scams or doomed projects.
Last month, Juniper Research warned the cryptocurrency industry was "on the brink of an implosion."
You can hear more about the state of cryptocurrencies today, as well as Pearce's advice for anyone looking to build their game around such currencies or the blockchain, in our latest podcast.