The Web3 Gaming Landscape
The world of blockchain gaming is growing by day and what follows is the increasing quality of games released to the market. Despite web3 gaming being a new niche, it has caught a lot of attention in early 2021 due to the fact it bridged the gap between the two industries that hold immense potential for the future - Gaming and Blockchain.
However, 2023 wasn’t the best year for on-chain gaming, or GameFi world if you prefer, as it was the first year after all the enthusiasm towards web3 gaming mostly evaporated, driven by changes in the broader economy and cool-off in the blockchain industry after being overheated with emotions.
How did blockchain gaming manage the year of obstacles and has it grown to be stronger? Let’s find out.
The Web3 Gaming Ecosystem
Network Stack: Bridging the Virtual Realms
Diving into the intricate network stack, game developers predominantly build on general-use Layer 1 (L1) networks. Ethereum Virtual Machine (EVM) sidechains, a prevalent subtype, showcase the industry's reliance on Ethereum's robust smart contract execution. However, the rising popularity of L2/L3 solutions signals a broader horizon for the future of Web3 gaming networks that will expand to create vast gaming ecosystems in the near future.
The Playground
The Polygon ecosystem emerges as the primary host for Web3 games, closely followed by BNB and the Ethereum Mainnet. Immutable and Arbitrum lead the pack in Layer 2 (L2) gaming ecosystems, while Solana stands tall as the largest non-EVM ecosystem - also being Layer 1 blockchain. The OP Stack reigns supreme among blockchain frameworks for new gaming networks, painting a vivid picture of a diversified and expanding ecosystem with new ecosystems deciding to build with the help of Optimism technology.
Migration Trends
In 2023, a record number of Web3 games embarked on a migration journey to different networks. Polygon, Immutable, and Arbitrum emerged as favored destinations, underscoring the industry's adaptability and the quest for optimal technological landscapes. This in turn shows that building games on blockchain is not as static as one may think, therefore introducing possibilities of high adaptability and shifting from one blockchain to another in case of its failure.
Indie Spirit Prevails
The heart of the Web3 gaming sector beats with the rhythm of indie-level and early-stage projects as those account for 42% of all on chain-games being created. While AA & AAA titles remain sparse - only 6% of all games, genres such as RPG, Action, Strategy, and Casual games emerge as the top picks. Platform-specific preferences add nuance, revealing RPG and Action as PC favorites, a balanced mix on mobile, and Casual games leading in the browser-based gaming arena.
The Spectrum of On-chain Integration
Blockchain gaming is a world of adaptability and optionality, features introduced by the nature of blockchain technology stack. This is the reason why building an on-chain game is not a binary decision, but rather a decision of choosing a place on the spectrum. Let’s see what type of games we can create with blockchain technology.
Games with On-chain Assets
Some games choose to leverage blockchain solely for tokenizing assets, maintaining game state and logic off-chain. This approach provides users with a familiar gaming experience while introducing the ability to trade in-game assets through an on-chain ledger. This option is often said to be the first one to be adopted by the mainstream gaming world as it does not introduce groundbreaking changes to the game itself, but rather changes rails on which in-game items are moved and stored.
Hybrid On-chain Games
Going beyond in-game assets, hybrid on-chain games integrate elements of the game state on-chain, empowering community-led economies to utilize decentralization mechanisms. Even more, transparent environments reduce the trust assumption to game developers, fostering a more inclusive and collaborative gaming experience.
Fully On-chain Games
At the forefront of innovation, Fully On-chain Games (FOCG) embrace blockchain for the complete gaming backend. From assets to game state and logic, all operations are either hosted or provable on-chain. This trustless gaming experience unlocks new possibilities for composable, autonomous, and ownerless digital worlds where ownership of items and in-game reputation is in player’s hands.
Crafting Game Types
Let’s conclude this part with some numbers. The majority of Web3 games thrive on the tokenization of assets (83%), followed by hybrid on-chain games (12%) and fully on-chain games (5%). This diverse array shows current player preferences and engagement levels that will probably change over time as blockchain gaming becomes more mainstream.
Navigating Web3 Game Statistics
Games Halted vs. Games Released
Even during the most heated interest in on-chain gaming there were projects that didn’t manage to meet the deadlines and were abandoned. Analyzing the industry's pulse, the number of games released and halted presents a nuanced perspective suggesting that even during the year of cooldown - 2023, web3 gaming has seen an incredible number of games being released - 223, compared to years of euphoria, i.e 2021 - 811, and 2022 - 640 games. The surge in Web3 game releases is accompanied by a growing understanding of the challenges, as seen in the decline of halted games from 2021/22 to 2023, 11/157 and only 43 games halted respectively.
Developers Across Regions
A global perspective reveals North America is not the leader, but the follow-up with 30% while the first place is taken by the APAC region, with 40% of developers’ power. To paint the broader picture it’s worth mentioning Europe as an EMEA region with 28% and Latin America with only 2%. This regional diversity perfectly depicts where gaming is found most interesting as an industry that has a bright future ahead.
Proliferation of Networks
The emergence of new blockchain gaming networks reflects a vibrant industry. Gaming-focused networks are on the rise, signaling a commitment to tailored infrastructures for an evolving gaming landscape with 7 Gaming-focused networks and 21 General-focused networks in 2021 compared to 53 Gaming-focused and 28 General-focused networks in 2023.
Platform Preferences Unveiled
As platforms evolve, so do preferences. The surge in mobile gaming from 28% in 2021 to 40% in 2023 is striking, contrasting with the diminishing relevance of PC gaming, losing its 31% share to hold only 23% as of the time of writing the report. The Epic Games store mirrors this evolution, listing 69 Web3 games as of October 15th, 2023.
Exploring platform preferences a bit deeper, we can see that platform-specific game preferences offer insights into player behavior and its changes over time. PC leans towards RPG and Action titles, mobile gaming enjoys a mix of Strategy, RPG, and Casual games, and browsers find their niche in Casual and RPG titles. Adding this information on top of platforms varying market share we can try guessing which gaming genres will be most sought after in coming months.
Financial Landscape
Analyzing game funding unveils a remarkable finding. From $98 million in 2020 to a staggering $8 billion in 2021 and $9.5 billion in 2022, the industry witnessed a downturn to $1.5 billion in 2023. Yet, this dip signifies sustained interest compared to previous years, underscoring a robust foundation for future growth, especially if we compare it to the year 2020 and its $98 million in funding. The blockchain gaming industry seems to be stronger than ever and the capital invested in times of financial downturn is often spent more efficiently. Having said that, it’s interesting to see how high those numbers will go in 2024.
Web3 Gaming's Uncharted Horizons
As we navigate the dynamic landscape of Web3 gaming in 2023, the industry stands at the crossroads of innovation and adaptation. The surge in mobile gaming, migration to diverse networks - in most cases called Appchains, and the evolving quality spectrum paint a vivid picture of an industry poised for unparalleled growth in coming years. With a foundation rooted in blockchain, Web3 gaming pioneers the future of immersive, decentralized, and community-driven gaming experiences. As we bid adieu to 2023, the horizons of Web3 gaming remain uncharted, promising an exhilarating journey for players, developers, and stakeholders alike.
If you’d like to dive deeper into the numbers, you can do so by exploring the Game 7 “State of Web3 Gaming” report on your own by clicking the link below.
State of Web3 Gaming Report - https://research.game7.io/state-of-web3-gaming-2023
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