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At the height of the cryptocurrency boom several years ago, play-to-earn games were all the hype.
But as the tech industry continues to witness a number of hurdles, with over 400,000 people losing their jobs in the tech industry in 2023, where does the future of blockchain-based crypto games stand?
With the popularity of crypto games seemingly fading, we explore what factors could drive the development of the play-to-earn market further and mark the new beginning for blockchain-based GameFi projects to invest in.
Key Takeaways
- The play-to-earn crypto gaming space has encountered a number of obstacles, with over 30% of announced blockchain-based games being either cancelled or discontinued in 2023.
- Community engagement, asset ownership, and hybrid approaches that bridge the Web2 and Web3 gaming worlds could dictate potential future success.
- Ongoing development efforts by major players like Ubisoft and Square Enix, along with a pipeline of promising projects, underscore the industry’s commitment to innovation and growth.
Are Play-to-Earn Crypto Games Dying? It’s Not All Doom and Gloom
In 2023, over 30% of announced blockchain-based games were either cancelled or discontinued, according to the data provided by the Big Blockchain Game List. The majority of games that were discontinued in 2023 were being built on BNB (11%), followed by Polygon (10%) and Ethereum (6%).
“While many of these discontinued projects came from first-time developers, which had initially put them at a higher risk of failing, Web3 gaming start-ups also oftentimes have only one singular means of long-term monetization – the secondary trading market of their non-fungible tokens (NFTs),” the co-founder and CEO of Mirai Labs, Corey Wilton, told Techopedia.
When trading volume died down during the bear market, the possibility for revenue for Web3 game studios also declined, forcing them to shut down.
In addition, the development cycle for crypto games is much longer than with decentralized finance (DeFi) and NFT applications, and many blockchain-based crypto developer teams are finding it challenging to continue building if they do not have sufficient funding or existing revenue, the managing director at Cronos Labs, Ken Timsit, said.
“All Web3 builders have been affected by the bear market last year, and gaming projects disproportionately so. Many Web3 game developers have continued to build by focusing on monetization within their core user community. They have reduced their focus on free users and big marketing investments, which has contributed to the perception of slowdown by mainstream users and the media,” Timsit told Techopedia.
However, not everyone is as bearish on the Web3 gaming market.
Sebastien Borget, the co-founder of The Sandbox and the president of the Blockchain Game Alliance (BGA) told Techopedia that while 2023 was a challenging year for the tech, crypto, and gaming industries, the blockchain gaming ecosystem continues to build and develop products with users in mind.
“There are many promising Web3 games in development, with many projects due to launch in 2024. The BGA State of the Industry report also highlights a slightly different perspective, with nearly 80% of respondents indicating that they will continue working in the industry over the next year. This is a positive outlook for the future of the blockchain gaming industry,” Borget said.
Web3 Gaming Success Lies in the “Future Picture”
Mirai Labs’ Wilton noted that the success of Web3 gaming heavily depends on the “future picture” most of these applications can paint.
That being said, one of the most important things that GameFi companies must remember is to show their target communities the features their games possess that will allow them to reach global audiences and translate into sustainability and success.
Cronos Labs’ Timsit added that the characteristics of successful Web3 games are often well-known but hard to execute. They include compelling entertainment value, significant reward expectations for players, great community engagement, and sustainable economics.
“The top 10 Web3 games have managed to deliver against all four dimensions rigorously, and they are bringing in between 300,000 and 5 million monthly active users as a result. On the Cronos blockchain, top games like Mane City, which is part of the Loaded Lions universe, and Ryoshi Games are following this recipe as well,” Timsit said.
Another key aspect that often identifies the success of blockchain-based games is true asset ownership, which is very evident in games such as The Sandbox.
“Once you discover the benefits of tokenization in games, it’s hard to go back to the way you made things before. For us, when we first started to discover the idea of having true ownership of content in games, how can you go back to not owning your in-game items,” the CEO of Animoca Brands, Robbie Yung, explained.
Moreover, the CEO of Senet Mohsin Waqar noted that from a developer’s perspective, successful blockchain games typically prioritize community engagement, fostering a strong and passionate player community.
Hybridity Could Drive Crypto Games
The play-to-earn gaming industry continues to evolve, with new developments rapidly entering the space.
In 2023, DappRadar saw a surge in investments into Web3 and metaverse crypto projects with a higher merge between the Web2 and Web3 worlds.
“We are seeing Web2 publishers launching blockchain games, Web3 games are becoming more seamless due to the advancements in infrastructure and tooling, and more immersive and fun experiences than ever before. It is a strong use case for blockchain technology and has the potential to empower creators across the globe,” The Sandbox’s Borget explained.
Moreover, Cronos Labs’ Timsit said that the emergence of multiple gaming-focused layer-2 and layer-3 chains has showcased innovative blockchain developments designed for higher scalability and extremely low gas fees, which are highly important factors for both developers and gamers when it comes to building and playing blockchain-based games.
An example of this would be the newly emerged ERC-404 token which was launched in February 2024 and combined ERC-20 tokens with NFTs.
“ERC-404 is giving us a glimpse of the potential that innovative token models can create new on-chain gaming use cases and pivoting attention back to blockchain-based games. The combination of improved UX, lower fees, and innovative in-game token models could propel blockchain-based games back into the limelight in 2024,” Timsit told Techopedia.
Additionally, move-to-earn blockchain-based games could set the industry apart as the linking between fitness tracking and verifiable blockchain records drives a new array of users into the space, Oleg Fomenko, the co-founder of Sweat Economy, noted.
Play-to-Earn Games Could Face Bull Market
Experts in the GameFi industry are predicting that blockchain-based games are due to face a bull market sometime between mid-2024 and early 2025, Cronos Labs’ Timsit said.
“On the Cronos network, we are expecting that Web3 games will start expanding from their core community of early adopters and start acquiring mainstream users this year.”
Mirai Labs’ Wilton added that the crypto gaming industry could face an “extremely unique game mechanism that could change the gaming industry forever” in the years to come. Statistically speaking, the gaming industry grows year-over-year, and a similar trend could take over within the Web3 space too.
The Sandbox’s Borget added that many interesting projects are still in development, and a number of Web2 studios have been experimenting with blockchain technology, including Ubisoft and Square Enix.
“2024 is set to be an exciting year for the web3 gaming industry. With rapid advancements in infrastructure and great games in development, we are looking forward to innovative gaming models and experiences as the web3 gaming ecosystem continues to evolve,”? Borget said.
The Bottom Line
While the play-to-earn gaming industry has faced a number of challenges, experts in the industry remain highly optimistic for its future.
Success in Web3 gaming hinges on factors like community engagement, asset ownership, and hybrid approaches bridging the Web2 and Web3 worlds.
In addition, innovations such as ERC-404 tokens and move-to-earn games indicate a potential resurgence in the sector may soon follow.
FAQs
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References
- The Tech Layoff Tracker (TrueUp)
- Discontinued games: H2 2023 (Big Blockchain Game List)
- Mirai Labs (Mirai Labs)
- Cronos Labs (Cronos Labs)
- Connect in extraordinary ways (Sandbox)
- Blockchain Game Alliance (Blockchain Game Alliance)
- Driving digital property rights via NFTs and gaming to build the open metaverse (Animoca Brands)
- Free to Play. Skill to Earn. (Senet)
- DappRadar Games Report – 2023 Overview (DappRadar)
- The movement economy150,000,000users in Web2 & Web3, and counting (Sweat Economy)
