Crypto games have been causing a stir ever since their rough-landing introduction to the global market. From Axie Infinity’s immense rise in popularity to Web3 gaming’s strict regulation and fraud accusations, blockchain-based games are talk of the town and despite the hurdles, mainstream is left with no other option but to consider adoption. Lately, quite a few influential tech companies have been reassessing their stance towards crypto games. 

Rise and fall of crypto games

Crypto games, which integrate blockchain technology into gaming, gained significant traction in 2021, fueled by the hype surrounding cryptocurrencies like Bitcoin and Ethereum. The concept of earning real-world value through gameplay, known as play-to-earn (P2E), appealed to many gamers, particularly in developing countries where traditional employment opportunities were scarce. In June 2021, players had the potential to earn a daily income ranging from $10 to $50 while actively participating in the game. The game has evolved into a significant source of revenue for numerous players, particularly in the Philippines.

Notably, Axie Infinity, a blockchain-based game where players collect, raise, and battle digital creatures called Axies, became the poster child of the crypto gaming boom. The game’s popularity soared, attracting millions of players and driving up the value of its in-game currency, Smooth Love Potion (SLP). Many players earned substantial profits by playing Axie Infinity and selling their Axies and SLP on decentralized exchanges.

The success of Axie Infinity inspired a wave of other crypto games, and the industry as a whole experienced rapid growth. Venture capitalists poured money into crypto gaming startups, and traditional gaming companies began to explore the potential of blockchain technology. The crypto gaming market was estimated to be worth over $10 billion in 2021.

However, the crypto gaming bubble began to burst in 2022. The prices of cryptocurrencies, including SLP, plummeted, leading to significant losses for many players. The gameplay of many crypto games was criticized for being repetitive and lacking depth. Additionally, concerns about scams, fraud, and environmental impact raised doubts about the long-term viability of the industry.

The hype surrounding P2E faded, and many players abandoned crypto games. The number of active players of popular Ethereum-based games, such as Decentraland, The Sandbox, Axie Infinity declined by over 90% in 2022. Several crypto gaming companies shut down or scaled back their operations. With several active game studios still venturing into the waters of crypto games, the industry may witness the change, however, mainstream adoption is vital.

Mainstream opens the gates for crypto games 

Understandably, crypto games have been facing a backlash due to concerns about the play-to-earn (P2E) mechanics and speculative nature. The lack of gameplay quality, unsustainable economies, and difficult user onboarding has marginalized these once promising games; major tech companies have banned blockchain games from their platforms and advertising networks. 

Most notably, Steam banned NFT-based games, which escalated as 29 blockchain game studios issued an open letter requiring Valve to revert its restrictive policies. Yet still, some Web3 gaming titles have proved relevant despite the hiccups, attracting new users beyond the Web3 frontiers. Predictions have been made that 2024’s bullrun will be driven by GameFi; this sudden popularity surge could not be ignored by the legacy ‘Big Tech’ segment.  

An overview of the Web3 games’ adoption

Although the fences are still narrow, mainstream is opening up for NFT games’ adoption, with leading companies in the forefront. Epice Games Store inclusion of crypto games, Google’s recent advertising policy update along with Microsoft’s and Sony’s ventures into blockchain space foretell the first steps toward crypto games’ mass adoption. 

NFT games on game distribution platforms

From the perspective of game distribution, unlike its peers Steam and Microsoft Store, Epic Games Store keeps the door open for the NFT-driven games. Following certain criteria, since 2021, Epic Games allows crypto games to be listed on their platform according to their policy. In the mobile gaming realm, Google Play and Apple’s App Store are another app distribution platforms that have allowed NFT-powered games to their premises. 

Next ones, industry giants Sony and Microsoft are making substantial strides into blockchain technology. Sony has recently filed a patent outlining a system that utilizes blockchain for transferring digital assets between different PlayStation titles. This innovation aims to establish a unified progression and asset ownership system across various games, allowing players to break free from the constraints of individual game silos. 

Moreover, Sony has explored the concept of tokenizing in-game assets, opening the door for players to sell and trade them on secondary markets. On the other hand, leaked documents reveal Microsoft’s plans to integrate crypto wallets into Xbox, enabling secure asset trading across different platforms. Microsoft’s strategic goals, including the potential acquisition of Activision Blizzard and Savage Game Studios for mobile gaming, underscore their commitment to expanding their gaming presence, with blockchain technology emerging as a crucial component in this trajectory.

Crypto games and online advertising 

Crypto games faced advertising restrictions on major platforms. Google Ads, Meta Ads, Amazon Ads, and Bing Ads all frowned upon games using NFTs and cryptocurrencies. However, less-known networks like Brave Ads were more accepting, yet their social outreach proved meager. Recently, there has been a shift in attitude, with some major players starting to reconsider their stance on crypto-powered games.

Notably, Google’s advertising platform recently announced a significant policy change regarding cryptocurrency-powered games. Previously, Google Ads had prohibited the advertising of games that involved in-app purchases of cryptocurrency or digital goods with real-world value. However, in a recent update, Google Ads has lifted this restriction, allowing developers of crypto games to run ads.

The second largest ads network, Meta Ads, claims a more strict stance toward cryptocurrencies. Facebook initially banned crypto-related advertisements in 2018, yet its position has changed since. Crypto-related products are not entirely banned, their crypto regulation is tough and many advertisers don’t meet the criteria: 

“Ads may not promote cryptocurrency trading platforms, software and related services and products that enable monetisation, reselling, swapping or staking of cryptocurrencies without prior written permission.”

X.com (formerly Twitter), however, allows paid promotion of cryptocurrency-based products, including NFT games. According to their Financial products and services policy, X.com is overtly welcoming:

“X allows the promotion of financial products and services with restrictions. This includes financial entities, products and services, cryptocurrency products and services, non-fungible tokens (NFTs) and related products.”

Crypto games expect future growth

The gaming industry’s increasing embrace of blockchain technology reflects a significant opportunity, with estimates projecting the market’s value in 2025 to surpass that of 2022 by up to 10%. Key drivers of this growth include the rising popularity of play-to-earn games, a surging demand for more immersive gaming experiences, and a growing acceptance of blockchain technology by game developers and publishers. 

As major technological companies position themselves at the forefront of this transformative trend, the integration of blockchain into gaming ecosystems could not only redefine how players engage with digital assets but also pave the way for broader adoption of blockchain technologies in mainstream applications beyond the gaming realm.