How Gaming Changed From Web2 to Web3
For decades, Web2 dominated the gaming industry. Titles like World of Warcraft, Fortnite, and League of Legends captured trillions of hours of player time. They operated on closed systems where developers maintained complete control over game assets and player data.
These games generate revenue through initial purchase prices, subscriptions, or microtransactions. The free-to-play model with in-app purchases became increasingly prevalent, with games like Candy Crush and Pokémon GO generating billions in revenue.
But blockchain has created a new era of gaming. Web3 games introduce concepts like true digital asset ownership, play-to-earn models, and decentralized economies that are changing the player-developer relationship for good.
This shift is attracting significant investment. In April 2024, investments in blockchain gaming reached $988 million, the highest amount since January 2021. This surge comes at a critical time for the gaming industry, which has faced turbulence with tens of thousands of layoffs over the past 18 months.
Ownership and new economic models
Web3 gaming introduced the controversial "play-to-earn" model. Games like Axie Infinity demonstrated its potential, attracting over 1 million monthly active users and generating $364 million in revenue at its peak in August 2021. Some players in countries like the Philippines reportedly earned over $1,000 a month playing the game.
However, Axie's decline highlighted the challenges of sustaining such models. The game struggled with thin gameplay mechanics and inflated speculation on asset values. As the barrier to entry rose to hundreds of dollars, users sought out less financially risky gaming options.
Recent Web3 games are attempting to address these early challenges. Wanderers, a sci-fi action game with rogue-lite elements and strategic deck building, showcased stunning visuals and dynamic gameplay in its second closed beta event in June 2024. The Beacon, a rogue-lite action RPG, launched a play-to-airdrop campaign that month, setting the stage for its global debut.
Moonfrost, a cozy life simulation farming RPG, attracted over 30,000 players to its second alpha release. Shardbound, a tactical collectible card game, held a playtest featuring new cards, units, and rewards, with over 25,000 matches played by 3,000 participants.
Pirate Nation, a fully on-chain RPG, achieved impressive milestones, including 1.4 million transactions in a single day and over 8 million completed quests in June 2024.
The growing Web3 ecosystem
The decentralized application (dapp) industry has reached new heights, with 10.6 million daily unique active wallets engaging with blockchain applications. Gaming dapps lead the charge, accounting for 28% of all active wallets and seeing a 17% increase from the previous month to 2.9 million daily unique active wallets.
Pixels maintains dominance with 20 million monthly unique active wallets, while Sweat Economy and StarryNift trail with 5.4 million and 5 million respectively.
The metaverse sector within Web3 gaming is also growing. Mocaverse led metaverse-related NFT collections with over $8 million in trading volume, outpacing competitors like Farmland by Pixels and Otherdeed by Otherside.
Despite this growth, Web3 gaming faces significant challenges. Many current offerings struggle to match the gameplay quality of traditional games, often focusing more on economic mechanisms than engaging content. The complexity of blockchain interactions and the volatility of crypto markets pose barriers to mainstream adoption.
As the technology matures and developers gain more experience with these new models, we may see a convergence of Web2 and Web3 gaming elements. The success of Web3 gaming will likely depend on striking a balance between innovative economic models and compelling gameplay.
The gaming industry stands at a crossroads, with Web3 technologies offering new possibilities for player ownership, value creation, and economic participation. The coming years will determine whether Web3 gaming can fully realize its potential and reshape the broader gaming landscape, or if it will remain a niche within the larger industry.