Web3 Gaming Had a Bad 2024

Game7 and Naavik have recently published the 2024 State of Web3 Gaming report, providing an in-depth analysis on key trends such as developer activity, fundraising, and ecosystem infrastructure between September 2023 and September 2024.

Despite notable progress, Web3 gaming has faced significant challenges competing with other parts of the gaming ecosystem. It struggles to capture players’ attention and loyalty especially with stiff competition from traditional games, airdrops, and even memecoin trading. As a participant in the gaming ecosystem, I write on a few key factors affecting the Web3 gaming industry and share my opinion on how progress can be made in the coming year.

Web3 Gaming Ecosystem

The number of new games announced decreased by 36% over the past year, alongside an 84% reduction in the number of teams leaving Web3 — showing that a stronger gaming ecosystem is being built globally despite tough economic challenges.

The most appealing gaming categories to Web3 gamers remains Role-Playing Games, Casual Games and Action Games. It indicates that teams are focusing on more popular and familiar genres so they can keep developing new ideas across Web3 Integration, Economic models and solve technical challenges before pivoting to more diverse games.

Play-2-Airdrop over Play-2-Earn

P2A (Play-2-Airdrop) became a popular new business model in 2024, pivoting from P2E (Play-2-Earn), which had caused inflation in the gaming market. Games like Pixels, Pirate Nation, and Nyan Heroes led this trend, rewarding players based on leaderboard activity.

While P2A seems to reduce the uncontrolled inflation associated with the P2E games, it rewards players based on leaderboards activity in game which leads to an increase in bot activity and doesn’t meet player expectations due to only a certain percentage of players being rewarded.

Mass Adoption through Telegram

Telegram made a surprising impact this year, accounting for 21% of all games announced. This success is mainly due to its huge user base and easy-to-use in-app gaming features.

Telegram’s infrastructure as a Web3 Gaming platform however faces severe limitations with weak game mechanics, authenticity of users due to the ease of creating sybil attacks through multiple accounts on Telegram and a lack of primary Web3 development tools.

While Telegram contributed significantly to the mass adoption of Web3 gaming, development teams should focus on enhancing user experiences. This approach could pave the way for traditional mobile distribution channels to embrace Web3 gaming, inspired by the progress Telegram has achieved as a platform.

BlockChain Activity

EVM continues to be the leading choice as a smart contract environment for gaming blockchains with 81% of gaming blockchains launched over the last year relying on EVM.

L2’s & L3’s also witnessed huge adoptions as gaming blockchains with 57% of games which launched in 2024 choosing either a L2 or L3 to launch on. This is likely due to their flexibility and easily customizable blockchain environments that meet the needs of game developers.

Network Competition and Migration

Over the last year, Immutable, Ronin & Arbitrum have experienced the most growth with these three networks collectively having 140 more games than where they stood in Q3 of 2023.

Chain migrations also hit a record high, with 105 games switching networks. Polygon saw the highest departures (42), with games favoring Immutable, Arbitrum, or Avalanche.

Key observations include:

• 48% of games left for a recently announced chain

• 61% of games that migrated joined either a L2 or L3

• Only 11% of games which migrated chose a non-EVM Destination

  
  

Despite significant progress in blockchain adoption, many games still face integration issues or remain unplayable.. This is something that needs to be critically addressed to drive growth in the coming year.

Funding Activity and Trends

The funding landscape in Web3 gaming shows a clear focus on building strong foundations like blockchains and community engagement platforms while areas like distribution and esports are getting less attention. Some important trends to notice include:

• There is a low focus on building proper gaming infrastructure.
• Action, RPG & Casual games were the genres that attracted the most investments
• Card & Board games got the least funding which is disappointing given the potential of promising board and card games such as Anichess and Valeria
• Token launches increased by 200% from 2023

Web3 gaming funding has shifted from its 2022 peak toward a more cautious approach. Both content and infrastructure investments have seen funding sizes stabilize or decline since 2021, with averages dropping below $10M by 2024. Investors are focusing more on sustainable projects and patiently waiting for the next breakthrough success.

Despite the decline, the consistent funding levels in recent years show that Web3 gaming still holds promise, especially for infrastructure-focused innovations. Investors seem to be focusing on the long-term potential of the space with a more strategic approach.

Personal Views as a Consumer

A critical challenge in Web3 gaming is the lack of engaging, long-lasting titles. Many games initially capture attention but struggle to sustain player interest in the long term.

Another notable issue would be how it appears that Web3 gaming teams haven’t placed enough focus on their communities because a lot of games clearly don’t reward users for the time and effort. To address this, I recommend strategies such as:

• Regular AMAs to foster transparency and connection.

• Community-Based NFTs as multipliers across gaming ecosystems.

• User-Generated Content Programs for creators.

• More games with cross-platform integrations.

• Milestone Rewards to recognize loyal and consistent players which serve as better incentives.

• Improved Tokenomics and Financial models.

  
  

To succeed, gaming teams must prioritize creating games that are genuinely playable, engaging, and enjoyable. Players should feel their time is valued and that they are an integral part of the community

In conclusion, I’m excited about the ongoing evolution of Web3 gaming and eager to see how it will continue to grow in the coming years.

What are your thoughts on the future of Web3 gaming? Feel free to share in the comments below!

A special shoutout goes to the Pirate Nation and G7 Eco teams for setting an outstanding benchmark for Web3 gaming excellence this year.