Blockchain technology has witnessed a surge in popularity over the last decade, especially within web3 games, constituting 49% of blockchain activity, closely followed by DeFi (Decentralized Finance). These web3 games offer potential beyond the dominance of ‘big tech’ in web2, attracting attention from both investors and gamers due to their promising prospects.

Recent studies on Global Blockchain Games indicate an astounding compound annual growth rate of 70.3% for the blockchain games market, projected to soar from $4.6 billion in 2022 to $65.7 billion in 2027. However, despite these impressive growth projections, similar to other blockchain-based ventures, many web3 companies grapple with challenges in user acquisition and retention.

While experimenting with the play-to-earn model to engage the general public, there’s a belief that the key to drawing large audiences into blockchain gaming could potentially lie in embracing esports.

Will esports popularize Web3 gaming?

While the play-to-earn gaming model faces criticism for being inflated and flawed, the esports market has showcased remarkable growth, reaching a value of over $1.44 billion in 2022 and projected to surge to $5.48 billion by 2029, with a solid compound annual growth rate of 21%. However, breaking into professional esports leagues remains challenging for most retail players. Aspiring participants encounter stringent requirements such as rigorous training, sponsorships, team strength, and an element of luck, among other prerequisites.

Despite these challenges, the financial aspect remains a significant consideration for gamers. According to a joint study by Crypto.com and Newzoo, the primary reason web2 users venture into blockchain games is to ‘earn extra income’. While entry into professional esports leagues might be improbable for retail players, competitive gaming serves as a pathway to attract new players.

The burgeoning demand for esports offers an opportunity for web3 games to cater to this market by organizing community-driven tournaments with substantial prize pools, embracing decentralization. This approach differs from offering inflated cryptocurrency rewards for mere screen time, aligning with the ethos of genuine competition and rewards within the gaming community.

Key benefits of blockchain technology for esports

Blockchain and Web3 technologies offer several compelling benefits to the realm of esports, transforming the industry in numerous ways:

• Transparency and Security: Blockchain’s immutable nature ensures transparent and secure record-keeping. In esports, this transparency can be applied to tournament results, player statistics, and prize distributions, eliminating doubts about data authenticity and fair play.

• Decentralization and Governance: Web3’s decentralized nature decentralizes control, minimizing the influence of central authorities. This could result in community-driven governance models for esports tournaments, giving stakeholders a voice in decision-making processes, rules, and operations. This way, players and teams could even host their own esports gigs.

• Smart Contracts and Prize Distribution: Smart contracts automate processes in esports, ensuring transparent and efficient prize distribution based on predefined conditions, enhancing trust among players, sponsors, and organizers.

• Global Accessibility: Blockchain’s borderless nature allows for greater accessibility to esports tournaments and events worldwide. It provides an opportunity for players from diverse regions to participate and compete on a global scale, fostering inclusivity.

• Monetization Opportunities: Web3 introduces new revenue streams for players, teams, and organizers through tokenization, enabling monetization of content, sponsorships, merchandise sales, and participation in decentralized finance (DeFi) protocols.

• Anti-cheat Mechanisms: Blockchain-based solutions can potentially tackle cheating and fraud in esports by offering transparent and tamper-proof systems, ensuring fair play and maintaining the integrity of competitive gaming.

• Data Privacy: Utilizing decentralized storage and authentication mechanisms, blockchain enhances data privacy and security, safeguarding sensitive player information and preventing unauthorized access or breaches.

A future glimpse

Despite facing challenges, Web3 games hold immense growth potential. Research by Levan Kvirkvelia indicates that while Web3 games haven’t achieved the anticipated year-on-year growth, their user retention rates surpass those of Web2 games significantly. Over several months, Web3 games have maintained an average user retention rate ranging from 10% to 30%, showcasing a 3 to 7 times higher retention rate than their Web2 counterparts.

This positions games as the standout performer among Web3 products. The potential for millions of Web2 users to transition to blockchain technology suggests that Web3 gaming not only stands to compete with the mainstream gaming industry but could also pioneer the forthcoming paradigm shift. Several ambitious blockchain games are on the horizon, poised to lead this revolution and appeal to both Web2 and Web3 users, shaping the future of gaming.