Web3 Gaming is Failing - Is There a Way Out?

Out of the estimated 3.07 billion gamers worldwide, Web3 gamers consist of only 800,000 unique active wallets.

The development of the gaming industry has been a remarkable progression. From the 8-bit console era to present-day high-end graphics, gaming has greatly improved. With the advent of the internet, gaming has undergone a transformation, shifting from Web2 to Web3.

Web2 gaming, which encompasses traditional online or offline gaming, has been in existence for over two decades. On the other hand, Web3 gaming is a fresh idea that holds the potential to add a new layer to the gaming industry.

Web3 gaming is a type of gaming that utilizes blockchain technology to offer players a decentralized platform where they can possess and transact digital assets, in-game currency, and other virtual items.

This creates a novel gaming experience that combines the entertainment of gaming with the opportunity to acquire real-world monetary returns. The Web3 gaming model presents three primary play options: pay-to-play, free-to-play, and play-to-earn.

Among these options, free-to-play appears to offer a valid solution to the challenges that the Web3 gaming industry currently faces.

Pay-to-play games are a type of gaming that necessitates players to make monetary payments to access the game. These games typically offer a comprehensive gaming experience with high-quality graphics and engaging content.

Free-to-play games, as their name suggests, are available for free download and play, yet they commonly include in-game purchases or advertisements as a revenue-generating mechanism.

Finally, play-to-earn games provide players with the opportunity to earn real-world money through participation in the in-game economy.

A prominent example of a pay-to-play game is "Call of Duty'', a widely acclaimed first-person shooter game. A representative instance of a free-to-play game is "Candy Crush", which allows players to play without cost, but offers the possibility of in-game purchases.

An illustration of a play-to-earn game is "Axie Infinity'', a blockchain-based game that enables players to cultivate, engage in battles, and trade creatures referred to as Axies.

Despite the promising potential of Web3 gaming, the ecosystem currently faces several obstacles.

The alluring value proposition of "earning money through gaming" saw a surge in popularity in 2021, however, it also elicited negative reactions from institutional gamers and media outlets. To date, Web3 gaming has yet to attain substantial adoption among gamers.

The significant fall of FTX and events such as the Russo-Ukrainian conflict have significantly impacted valuations and user activities, contributing to downtime and a decrease in valuations.

However, the most notable challenge arises from popular Web3 games such as Axie Infinity, which are reportedly struggling to maintain even 5% of their active user base, according to a report by DappRadar.

One of the predominant challenges in the adoption of Web3 gaming is low accessibility. Due to the technical nature of blockchain technology, playing Web3 games requires a certain level of technical understanding and knowledge.

Despite accounting for 60% of Web3 on-chain activity, the number of unique active wallets remains low, at 800,000, which is less than 1% of the total population. This presents a significant challenge for players who are not familiar with the technology.

The process of setting up a digital wallet and purchasing cryptocurrencies can be confusing and intimidating, leading to discouragement among many gamers.

Furthermore, the frequent media coverage of hacks, scams, and exploits that result in asset loss contributes to skepticism towards Web3 games.

However, Gaming Studio Games For A Living (G4AL) is taking proactive measures to make Web3 games more accessible, allowing users to participate in its free-to-play titles with a simple username, password, and 2FA system, under the leadership of CEO Manel Sort.

Another challenge faced by the Web3 gaming ecosystem is the quality of the games available.

Although the decentralization of gaming offers exciting prospects, the majority of Web3 games are lacking in terms of graphics and overall polish, which have become hallmarks of traditional gaming experiences.

A report by McKinsey indicates that the Web3 gaming industry has received over $177 billion in investment since the beginning of 2021.

The high level of computing power required to render graphics in real-time presents a challenge for Web3 games, particularly when it comes to high-quality graphics, as it requires fast internet speeds that may not be available to all players.

Additionally, many users may find the experience less enjoyable due to the limitations of graphics cards and broadband connection speeds.

Despite these challenges, major companies such as Meta are taking steps to improve the quality of Web3 games, and studios such as Rockstar, King, and Blizzard are putting effort into enhancing the quality of their games.

“The goal has been to bring the Web2.0 traditional gamers to Web3, and the only way to do that is to remove as many artificial barriers as possible”, says the team at G4AL studios.

G4AL aims to remove artificial barriers and bring traditional Web 2.0 gamers to the Web3 gaming ecosystem. Despite efforts to improve quality and accessibility, the limited reach of Web3 games remains a challenge.

Many players are still unaware of the benefits of Web3 and blockchain, making it difficult for them to gain a substantial player base.

In an effort to address this, G4AL recently launched Elemental Raiders, a free-to-play game on the Steam marketplace. Steam is one of the largest gaming marketplaces in the world with over 132 million active monthly users.

Elemental Raiders has been designed to appeal to RPG fans, with significant improvements made to the game to make it more accessible and enjoyable.

The poor in-game economy also remains to be a significant issue.

A report by Delphi's The Year Ahead for Gaming found that the top 10 blockchain gaming projects by market capitalization fell as much as 95% in 2022 due to an inability to maintain sustainable in-game economies and player bases.

The value of in-game items and currency is often volatile, making it difficult for players to invest in the game. This has resulted in a less stable and less attractive in-game economy, which has negatively impacted the overall player experience.

G4AL and its Elemental Raiders game aim to tackle this problem by creating a creative in-game economy that monetizes the amount of time spent in the game rather than relying on a traditional play-to-earn business model.

This makes the game completely free to play and provides players with a more stable and attractive in-game economy.

While the market for player-owned in-game tradable items is one of the central aspects of this ecosystem, the question remains whether blockchain will continue addressing challenges such as in-game economies, accessibilities, reach, and the overall game-play experience effectively.