Why Web3 Gaming Struggles to Retain Players: The Pitfalls of Pay-to-Earn and Pay-to-Win Models
Initially, Web3 games were sold with a promise to merge the thrill of competitive gaming with the tangible rewards of cryptocurrency and NFTs.
This meant gamers—you—would no longer play just for the hobby or as an escape, but now gamers can play and earn tangible rewards.
But what began as a dream come true for gamers quickly turned into a grind—a battle not for fun or skill but for economic survival.
As quoted by Terrence Gatsby, play-to-earn (P2E) games are not sustainable because they face issues related to economic imbalance, such as inflation or deflation of in-game assets.
Here’s why these games were unsustainable: As more players earned tokens, the supply increased, and the value of those tokens rapidly plummeted.
In Axie Infinity’s case, the price of its in-game token, Smooth Love Potion (SLP), dropped by 99% within a year, leaving many players holding virtually worthless assets.
As quoted by Gian Carlo McGlay—a gamer who played Axie Infinity—”
My Axie Infinity assets became worthless. So I just gave them away.”
What started as a possible income stream quickly turned into a financial burden after initial investments, leading to widespread player burnout.
On the other side of the coin, pay-to-win (P2W) game models allowed players to pay for advantages, but they also alienated a large portion of the player base.
In games like Diablo Immortal, players could spend real money to gain in-game advantages like powerful gear and upgrades. According to multiple estimates, fully maxing out a character in the game could cost a staggering $100,000.
For many players, this undermines the entire purpose of gaming—enjoyment, challenge, and fair competition.
Raph Koster, an industry expert game designer and author of A Theory of Fun for Game Design, quotes:
“Pay-to-win inherently destroys game fairness. It turns skill-based games into economic contests.”
In essence, the emphasis on financial gain, without what gamers truly value—immersive, skill-based, and fun experiences—means web3 games struggled to retain players, especially as the economic systems underpinning these games crumble.
In this article, we will explore why Web3 games don’t retain players and how brands can strike a balance between monetization and gameplay.
Why Web3 Games Don’t Retain Players.
At the height of Web3 gaming, the industry felt like it was on the verge of a revolution.
Blockchain technology, with its transparent and decentralized systems, promised gamers more than just entertainment. This idea wasn’t just compelling; it was revolutionary.
In 2022, almost half of all blockchain transactions were attributed to gaming, making it the fastest-growing sector in the blockchain space, outpacing even DeFi and NFTs, as reported by DappRadar.
Based on a
Axie Infinity was one game that With its vibrant ecosystem of collectible creatures, players earned cryptocurrency and NFTs through gameplay, attracting millions of users globally.
At its peak, the game boasted over 2.7 million daily active players and generated billions in revenue. In regions like Southeast Asia, people began to treat the game as a legitimate income source, relying on their in-game earnings for daily expenses.
It was the poster child for the Play-to-Earn revolution.
But in the rush to capitalize on the Web3 gaming boom, many developers made a critical mistake: they prioritized earning potential over enjoyable and engaging gameplay.
Instead of creating games that focused on fun, creativity, and skill, they built systems designed to extract maximum financial value, with leaderboard systems created to incentivize player activity.
The result? Games became more about grinding for rewards than the actual game experience.
Oasys Games director Daiki Moriyama acknowledged the significance of P2E but emphasized its overemphasis in the current landscape:
P2E games are meant to challenge, entertain, and connect us with others. But when the emphasis shifts to grinding for tokens or buying advantages, the joy gets lost. And when joy disappears, so do the players.
The Web3 Gaming’s Retention Problem
Let’s take a moment to contrast the allure of Web3 games with what makes traditional games like Fortnite and GTA V timeless successes.
What’s the secret sauce that keeps players coming back to these traditional games? Replayability.
Fortnite is a masterclass in replayability with its constantly evolving seasons, skins, and immersive world-building that captivates players.
The game isn’t about grinding for monetary rewards; it’s about the thrill of battle royale, community events, and the continuous stream of new content.
GTA V pulls off a similar feat, offering rich storytelling, open-world exploration, and a multiplayer mode (GTA Online) that keeps players engaged for years.
Now, let’s hold that up against Web3 games. Many Web3 titles, especially in the Play-to-Earn (P2E) model, miss the mark when it comes to replayability and engaging mechanics.
Instead of focusing on crafting compelling gameplay loops, these games put earning crypto at the forefront.
The allure of earning NFTs and tokens pulls players in, but once the financial incentive fades, so does the desire to play.
The replayability factor is essentially sacrificed for quick rewards, leading to rapid churn and hence low retention. For web3 brands to scale replayability, they will have to strike a balance between monetization and gameplay.
The Bridge Between Traditional and Blockchain Gaming
Web2.5 games are a hybrid model that combines elements of traditional (Web2) and blockchain-based (Web3) gaming. The primary focus remains on creating engaging, fun gameplay experiences while introducing abstracted blockchain technology such as tokenized assets or digital ownership.
The idea of Web2.5 isn’t in the name alone but in the balance between both web2 and web3. So if a game does incorporate this balance, it’s still a web3 game that’s incorporated traditional game elements into its gameplay and content.
This approach addresses a significant challenge faced by many Web3 games: alienating traditional gamers who may be hesitant to navigate complex blockchain ecosystems and bringing the focus back to the gameplay. Web2.5 games solve this by blending familiar game mechanics with blockchain features in a non-intrusive way. Here are some features of Web2.5 games:
- Fun-First Approach: The core gameplay experience is designed to be enjoyable without any requirement to engage with blockchain elements.
- Optional Blockchain Integration: Features like NFT-based in-game items or token rewards are available but not essential to the main gaming experience.
- Accessibility: Traditional gamers can enjoy the game without dealing with wallets, gas fees, or tokens.
- Blockchain Opportunities: Crypto enthusiasts can explore digital asset ownership and trading if they choose.
- Wider Appeal: By catering to both traditional and blockchain-savvy gamers, Web2.5 games can attract a larger audience.
- Increased Retention: Players can engage with the game at their comfort level, leading to stronger community building.
- Gradual Blockchain Adoption: It provides an easy on-ramp for traditional gamers to explore blockchain features at their own pace.
QORPO for example, is a leading game studio in web3 and we have shown the potential of this mode a balanced model can have our game Citizen Conflict. This fast-paced hero shooter game prioritizes skill-based gameplay while offering optional blockchain features.
The core game focuses on player skill and strategy, with the In-game assets like weapons and skins can be owned as NFTs, but purchasing them is optional. Players can enjoy the game fully without engaging with blockchain elements. And rather than a game token, $QORPO is a studio token to be used across all games developed by QORPO.
By offering a middle ground between traditional gaming experiences and the innovative possibilities of blockchain technology. Prioritizing fun, engaging gameplay while providing optional avenues for blockchain enthusiasts, this model has the potential to drive wider adoption of blockchain in gaming without boring players.
Fun First, Web3 Second
The pitfalls of Pay-to-Earn (P2E) and Pay-to-Win (P2W) models are clear. These models, designed with financial incentives at their core, have led to a dangerous imbalance in player experience.
The result? Players who can’t or won’t spend money lose interest, feeling frustrated by a system that rewards dollars over dedication. This imbalance drives players away, damaging the very communities that these games need to thrive.
Web3 mechanics should serve as complementary features, not the main attraction. Because the gameplay must come first.
As Can Azizoglu, CEO of Web3 startup incubator Coinoxs, stated, “The Web3 gaming landscape is diversifying. Players are seeking varied gaming experiences, not just P2E.”
By focusing on gameplay first and introducing Web3 features as optional extras—such as tokenized in-game assets that don’t affect the core experience—developers can attract a broad audience without alienating anyone.
The future of Web3 gaming will belong to those who understand that building a great game is about crafting a world that players want to return to—not just because they can earn, but because they can enjoy it.