The gaming industry is undergoing a transformative shift with the advent of Web3 technologies. This evolution is not merely about the introduction of blockchain into gaming but represents a fundamental change in how players interact with games, how games are developed, and the very nature of game ownership and community involvement. At the heart of this transformation is the concept of Player Experience (PX), a critical factor that could determine the success or failure of Web3 gaming in its quest to reach mainstream adoption.

The Golden Era and Its Challenges

The initial surge of interest in Web3 gaming was largely driven by the play-to-earn model, exemplified by games like Axie Infinity. These games offered players not just entertainment but also a means of earning, which was particularly impactful in countries with lower average incomes. However, the sustainability of this model has been challenged by high entry costs, declining rewards due to market downturns, and gameplay that often fails to meet the standards set by traditional (Web2) games in terms of graphics, storytelling, and overall engagement.

70% of Crypto Games Failed in 2023

The landscape of blockchain gaming has seen significant fluctuations, with a notable number of games being discontinued, especially in the latter half of 2023. According to a CoinGecko research, data reveal insights into the challenges and trends within the blockchain gaming industry, particularly in terms of game discontinuation rates and the factors influencing these outcomes.

Overview of Discontinued Games 

In the second half of 2023, the blockchain gaming sector witnessed the discontinuation of 162 games, which represents 15% of the total games tracked. This figure is broken down into games that were already live (31%) and those still in development (69%). This period saw a decrease in discontinuations compared to the first half of 2023, where 248 games were noted as discontinued. However, it’s important to contextualize that the earlier figure encompassed all-time discontinuations since the inception of the tracking list in 2021, as opposed to just a six-month snapshot.

Looking at the broader picture, out of 1,322 blockchain games ever listed, 407 (31%) have been marked as discontinued. This cumulative data highlights the volatile nature of the blockchain gaming industry, with a significant portion of projects failing to sustain operations.

Discontinuation by Blockchain

The analysis of discontinued games by blockchain platform reveals interesting trends. The largest group among the discontinued games were those listed as multichain, accounting for 17% of the total. This was followed by games on unknown platforms (13%), indicating a lack of clarity or commitment to a specific blockchain could be a factor in their discontinuation.

Single-chain integrations saw BNB leading with 18 games discontinued (11%), closely followed by Polygon with 17 games (10%), and Ethereum with 10 games (6%). Both Sui and Solana had 9 games each discontinued, also making up 6% of the total. This distribution suggests that while blockchain selection impacts game viability, challenges are widespread across various platforms.

Notable Discontinuations

Among the discontinued projects, Blankos Block Party by Mythical Games was a significant loss, given its previous success and recognition. The decision to halt the PC version and redevelop for mobile in 2024 indicates a strategic pivot rather than a complete withdrawal from the market. Another high-profile discontinuation was Goals, which, despite substantial funding, opted to move away from blockchain integration, reflecting the complex dynamics between funding, market conditions, and blockchain technology adoption.

Reasons for the increased failure rate in crypto games

The primary reasons cited for game discontinuations include funding issues and adverse market conditions. However, a large number of projects did not formally announce their cancellation, with estimations of their discontinuation based on prolonged inactivity. This suggests that beyond financial and market challenges, operational and developmental hurdles also play significant roles in the sustainability of blockchain games.

The research from CoinGecko provides a comprehensive overview of the Web3 gaming landscape from 2018 to 2023, highlighting a significant failure rate among these blockchain-based games. While the research does not specify the reasons for the high failure rate, we can infer several potential factors contributing to the challenges faced by Web3 games based on the data and the context of the blockchain and gaming industries. Here are some reasons why most Web3 games may fail:

• Market Saturation and Competition: The surge in the number of Web3 games, especially following the success of early pioneers like CryptoKitties, has led to a crowded market. With 2,817 games launched in a span of five years, the competition is fierce, making it difficult for new entrants to capture and retain a significant user base.

• Technical Challenges: Blockchain technology, while innovative, presents various technical challenges, including scalability issues, high transaction fees (especially on networks like Ethereum), and the complexity of creating a seamless user experience. These technical hurdles can detract from the gameplay experience, leading to player dissatisfaction and abandonment.

• Economic Viability: Many Web3 games rely on tokenomics and the sale of in-game assets as a revenue model. However, maintaining the economic balance within a game is complex. Issues such as inflation of in-game assets, speculative trading, and the overall volatility of the crypto market can undermine the game’s economic foundation, leading to failure.

• User Adoption and Retention: The adoption of Web3 games requires users to be somewhat familiar with cryptocurrencies and blockchain technology, which may limit the potential audience. Furthermore, retaining players in a highly competitive and rapidly evolving market is challenging, especially if the gameplay does not meet players’ expectations or if the novelty of blockchain integration wears off.

• Quality and Innovation: With the rush to capitalize on the popularity of blockchain and NFTs, some Web3 games may prioritize technological gimmicks over gameplay quality and innovation. Games that fail to offer engaging, fun, and meaningful experiences are likely to struggle, regardless of their blockchain integration.

After all, research conducted jointly by Crypto.com and Newzoo has revealed that the primary incentive for Web2 players to explore crypto gaming is the opportunity to earn additional income, although the quality of gameplay also emerges as a significant factor. The allure of earning while playing is a compelling motivator for both existing and potential players. However, concerns about financial risks, a lack of understanding, and issues with game accessibility are major deterrents.

What potential players of Web3 games are looking for are engaging gameplay, appealing visuals, and a more streamlined entry process. Regrettably, a number of crypto games currently available do not meet these expectations. Many suffer from outdated graphics, awkward gameplay mechanics, and complex setup requirements, which are often glossed over by the allure of rapid financial returns.

The Importance of Player Experience in Web3 Gaming

The future of Web3 gaming lies in prioritizing the player experience (PX) over the simplistic play-to-earn models. PX in gaming encompasses several key elements:

• Motivation and Engagement: Players need reasons to return to a game, driven by intrinsic interests such as exploration, competition, and the satisfaction of mastering game mechanics.
• Meaningful Choices: Agency, strategy, and tactics should be core to gameplay, allowing players to influence the game world, plan their progress, and make decisions that have immediate and long-term consequences.
• Balance: Games should be accessible yet challenging, offering a learning curve that is rewarding for both new and experienced players.
• Usability and Accessibility: The onboarding process, in-game interfaces, and overall user journey should be smooth and intuitive, minimizing barriers to entry for players unfamiliar with Web3 technologies.
• Aesthetics and Immersion: High-quality graphics, sound, and overall design are crucial for creating immersive worlds that players want to spend time in.
• Fun and Engagement: Ultimately, games need to be enjoyable, providing a mix of challenges, social interaction, and rewards that keep players engaged.

Overcoming Web3 Gaming Challenges

The challenges faced by Web3 games, particularly in attracting newcomers, stem largely from the complexities of setting up digital wallets, acquiring digital assets, and navigating decentralized platforms. These hurdles can make the onboarding process seem daunting, deterring potential players.

To address this, game developers must prioritize user-friendly onboarding experiences. This involves simplifying the initial setup with clear tutorials and easy-to-follow instructions, as well as ensuring seamless integration with popular wallets and platforms. Such efforts are crucial in making Web3 games more accessible to a broader audience.

Moreover, for Web3 gaming companies to regain the interest and trust of potential users, a narrative shift is essential. With widespread skepticism towards Web3 and reluctance to embrace new technologies, the focus should shift towards creating captivating games that rival the production quality of Web2 offerings.

The incorporation of blockchain technology should serve to enhance the gaming experience, offering a transparent and thoughtfully designed economy, rather than being the focal point. Key strategies for making Web3 gaming more appealing to Web2 users include:

• Adhering to Web2 registration norms
• Integrating wallets with user-friendly interfaces
• Simplifying asset management through drag-and-drop functionality
• Prioritizing educational content
• Placing a greater emphasis on engaging gameplay rather than earning incentives

“Ensuring an intuitive and seamless user experience is vital, reflecting the standards set in Web2. This focus on ease of use should permeate every aspect of the game or platform, from logging in to every user interaction. Creating a welcoming environment for those less familiar with Web3 is key to providing a pleasant and straightforward experience. Without this, attracting Web2 users will be highly unlikely,” says Rastislav Bakala, CEO & Founder of QORPO Game Studio.

The Future of Web3 Gaming

The path forward for Web3 gaming is to leverage blockchain technology to enhance the gaming experience rather than letting it dominate. This means creating games where blockchain adds value through true ownership of assets, decentralized governance, and new forms of player interaction and reward systems, without compromising on the quality of the game itself.

InTo open Web3 gaming to mainstream players, game developers need to come up with truly thought-out player experience models. Their efforts need to reach beyond just engaging game designs but also bear in mind complex user onboarding and purchase processes. Only through games and products that prioritize users, can Web3 become a place of mainstream mass adoption.