A Struggling Blockchain Gaming Industry
A recent report by CoinGecko reveals that the majority of blockchain games launched in the past five years are facing difficulties. Despite the popularity of Web3 gaming and the success of the GameFi sector in crypto, the report paints a bleak outlook for the industry.
An Alarming Failure Rate
The CoinGecko report states that out of 2,817 games launched between 2018 and 2023, only 690 have a somewhat active player base, while 2,100 have shut down. The annual failure rate for Web3 games during this period stands at a staggering 80.8%. These figures are based on games that failed compared to the total number of games launched.
According to CoinGecko, a failed Web3 game is defined as one that experiences a 99% drop in active users compared to its peak. This is surprising considering the high praise from the crypto community for Web3 gaming, which allows users to earn rewards and tangible value. The sector has also attracted significant interest and investment in crypto.
The Current State of Affairs
The early stages of the GameFi sector faced different dynamics, with Web3 gaming struggling during the bear market. In 2021, the highest number of blockchain games – 738 – were launched in a single year. However, 2022 saw the highest failure rate, with 742 games failing, coinciding with major collapses in the crypto industry.
“GameFi development and interest slowed amid the 2019 to 2020 bear market. Only 244 web3 games were launched during these two years. At the same time, the failure rate of web3 games rose to 94.3% in 2019 and maintained at 94.2% in 2020. 2021 recorded the lowest web3 games’ failure rate of 45.9% on the back of the crypto bull run. This was despite the number of failed web3 games jumping to 339 in 2021, surpassing 2018.”
The CoinGecko report states that 2022 was the worst year for Web3 gaming, with a failure rate of 107% despite an increase in the number of games. In 2023, 509 Web3 games have already shut down, indicating a failure rate of 70%, which suggests a potential stabilization in the GameFi industry.
“In 2023 to date, 509 web3 games have failed, which is equivalent to 70.7% of the web3 games launched this year. The lower failure rate could perhaps indicate a stabilization in the state of web3 gaming.”
While the adoption of the first Web3 game, CryptoKitties, has slowed since its launch in 2017, other notable games like Decentraland, The Sandbox, and Axie Infinity have established themselves in the market.
Hot Take: A Challenging Road Ahead for Web3 Gaming
The CoinGecko report raises concerns about the struggling state of the blockchain gaming industry. Despite the acclaim and potential of Web3 gaming, the high failure rates and shutdowns suggest challenges that need to be overcome. However, with recent signs of stabilization and market recovery, there might be hope for the GameFi sector. As the industry evolves, the focus will be on finding sustainable models that ensure the success and longevity of Web3 games.
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