Crypto-Based Games Struggling to Survive in GameFi Market
Over the past few months, the GameFi market category, which combines game theory and blockchain technology inside the decentralized finance ecosystem, has seen a noticeable downturn in crypto-based games.
Survival Metrics for Crypto-Based Games
According to a recent analysis by cryptocurrency pricing tracker Coingecko, 75% of GameFi ventures have failed. The analysis found that only 690 of the 2,817 games released between 2018 and 2023 have a reasonably active user base. A Web3 game is considered “failed” by CoinGecko if its 14-day moving average of active users falls by 99% or more from its peak. This highlights the challenges faced by initiatives attempting to integrate gaming and decentralized money within a single platform.
The Extinction of Web3 Games?
The Web3 gaming market has experienced a continuous decline since its inception five years ago. In 2021, the failure rate decreased to over 46% due to the bull market. However, the number of unsuccessful Web3 games increased to 339, exceeding the numbers from 2018. The market continued to fall in 2022, reaching a record-breaking failure rate of 107.1%. As of 2023, 71% of the games released this year have not succeeded, raising concerns about the future of Web3 games.
Business Models for Web3 Games
The concept of Play-to-Earn (P2E) gaming has gained popularity in the cryptocurrency narrative. Players are compensated for their time and labor through in-game cryptocurrency and non-fungible tokens that can be sold, exchanged, or used in other financial applications. Popular crypto-based games from 2018 that are still in use today include Axie Infinity, The Sandbox, and Decentraland.
The Challenge of Survival
Although the Web3 gaming market has experienced a downturn, a few projects have shown resilience. Alien Worlds, Planet IX, and Splinterlands have emerged as the most popular crypto-based games in 2023. However, the number of dying Web3 and crypto-based games increased to a record high of 742 last year, while the quantity of new Web3 games continued to rise. The mid-June 2022 onset of the cryptocurrency market recession was attributed as one of the causes of this ongoing trend.
As the dynamic and competitive landscape continues to pose challenges for crypto-based games, the survival of these projects remains uncertain. The coming months will likely be pivotal in determining which projects can withstand the challenges and avoid the looming threat of extinction that hovers over the crypto-based gaming industry.
The statistics and analysis around the difficulties faced by crypto-based games in the GameFi market highlight the need for further development and adaptation within this emerging sector. With the future of Web3 gaming hanging in the balance, the industry must grapple with the challenges to ensure its long-term survival.
