People often ask me what I think of Web3 games. So I'd like to outline my current thoughts in writing.
Let me make something clear up front: I'm not an expert. This is not a comprehensive analysis that dives into the finer details of the gaming world like MAU or D14. Please consider this to be my opinion based on personal communication and research, and it reflects my focus in the gaming space.
Why choose games?
Recently, I have come to realize that gaming is one of the few game-changing areas in cryptocurrency.
What I mean by this is that within the next two years, games will attract 10 million to over 100 million daily active usersBlockchainUser. Games have the potential to do this because (1)They are inherently social — not just multiplayer games, but even games like Elden Ring and Single-player games like God of War also become social through online communities and content, and (2)they have a real propensity to spread (Remember Flappy Birds?) .
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The financial sector is undoubtedly critical - it will integrate with our financial infrastructure back-end and bring benefits to everyone - but most people are not interested in finance.
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Art has found a good product-market fit with NFTs. But art is ultimately a niche market, catering to a wealthy audience. Its market growth and path to wider acceptance will likely be a slow process.
And the games... are fun, engaging, and most importantly, enjoyed by everyone. Numbers don’t lie:
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In 2023, there were more than 3 billion active video game players worldwide. Mobile gaming is the most popular gaming platform with over 1.7 billion mobile gamers worldwide.
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The global gaming market is worth approximately $385 billion.
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Asia Pacific is the largest gaming market, accounting for nearly half of global gaming revenue, followed by the United States and China.
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In 2023, the average age of gamers is 36 years old, and most have been playing games for 15 years.
One killer Web3 game is enough to set the trend.
Building a Toyota Camry or building a spaceship?
I see two different approaches to Web3 gaming.
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Make a Toyota Camry – Make fun games first, then add blockchain and NFTs;
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Build a Spaceship - Full support for NFTs and blockchain from the beginning of the game design process.
I will elaborate on these metaphors in the explanation that follows.
Toyota Camry - Traditional Game Studio
Legendary venture capitalist Vinod Khosla once said: “Startups, not institutional incumbents, dominate the vast majority of innovation.”
But an observation from my good friend Kiet from thecoreloop, he said: Making good games is more of an art than a science. To succeed, you need a deep understanding of the complexities of this industry. This is a skill that traditional studios have honed over the years.
So, I pay attention to what the giants in the gaming industry are doing in the Web3 space, because they are already successfully making great games.
Building a car is a straightforward thing, we know how to do it and have done it many times. The Toyota Camry is engineered to stand out in a crowded automotive market with its reliability and performance. It debuted in 1980 and there have been eight generations of the Camry so far. Each new generation of Camry model takes approximately 3-5 years of research, design, testing and manufacturing coordination from start to finish. It is the fifth best-selling car in the United States, with more than 300,000 units sold annually.
Like making Camry, the gaming giants are focusing on what they've been good at for years — making engaging games — and then adding blockchain and NFTs as value-added features. Encryption isn't the main selling point here, but it's like adding a turbo to your Camry. It improves performance and provides boost.
Some major game studios are actively venturing into the world of Web3 games, often by adapting their existing successful titles. This approach makes sense: developing Web3 games requires studios to master two key elements at the same time. (1) They have to create an engaging and enjoyable gaming experience, and (2) they need to handle the in-game digital economy correctly.
By leveraging established IP that already has a strong player base and a track record of engaging gaming experiences, these studios effectively reduce the risk of (1). This allows them to focus primarily on (2), optimizing the economic gaming experience.
Let me give you 4 examples of traditional game studios moving into Web3:
- Take-Two/Zynga → Sugartown (this is the new IP);
- Square Enix → Symbiogenesis;
- Nexon → Maple Story N;
- CCP Games → EVE online.
Square Enix's Symbiogenesis foray into blockchain, by contrast, feels a bit stuck in the past, as if it was conceived during the NFT bull market when royalties were still important, and not much has changed since then. I've been a fan of Final Fantasy since I was a kid. Yeah, I bought a PS5 to play the recent FF16.
Maple Story N is an interesting example. It enhances ownership, where in-game items are NFTs, making them inherently scarce and composable. Additionally, they are promoting user-generated content, allowing players to make their own in-game items and bring them to market,
Introducing blockchain assets or lines into games that already have large active player bases, such as Maple Story N or CSGO, can add value through more meaningful player loops or additional revenue streams...
...NEXON is best-positioned to continue developing Maple Story Universe and set the standard for how to better leverage blockchain beyond just cash-in opportunities. --Delphi Digital/JACL, "Why Asia will lead Web3 gaming"
As more experiments unfold, the first studio to successfully find the right formula may find itself with a pot of gold.
Spaceship: Completely on-chain game
A friend who manages a large gaming guild once said to me: "If you only lightly integrate NFTs or tokens into Web3 games, you are not tapping into the full potential. You might as well make regular games. The people who succeed will be the ones who fully People who are invested in blockchain.”
So we have fully fully blockchain-based games, or “autonomous worlds” (AWs), which are to the gaming industry what SpaceX was to space travel in the early 2000s.
Building a rocket/spaceship is a complex undertaking that requires years of research, development, and testing. The Falcon 1 rocket took more than seven years to develop before it successfully launched, costing more than $100 million and nearly bankrupting SpaceX.
From fuel to life support systems, every element is critical to the journey, requiring complex engineering and precision. They need to be thoroughly tested and refined to withstand the harsh conditions of space. Developing the propulsion system is one of the most challenging aspects of the process. It requires innovative solutions to generate the necessary thrust to escape Earth's gravity.
Similarly, AWS is doing something we've never done before. It is entirely dedicated to the blockchain stack. It uses blockchain to store all data, and smart contracts execute game logic and rules in a client-agnostic manner.
Why are we putting these games on the blockchain? I can think of 3 reasons:
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Eliminate Platform Risk: A friend of mine used to be a top Overwatch player in China. She has been playing for 7 years and knows the entire game. However, her gaming career came to an abrupt end when Blizzard terminated its 14-year licensing agreement with NetEase. AWS can mitigate this risk. As long as the blockchain network functions properly, gaming will continue to exist, protected from the mischief of central authorities. That friend? She later switched careers and established her own full-scale blockchain gaming studio.
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Endless user-generated content: UGC is a hot word today, and for good reason. People like to be part of the creative process. The game also benefits from having new content all the time. In AWS, the community is not just a passive consumer; it is an active participant. Players can create tools and enhancements—modifications that don’t require permissions—effectively blurring the lines between players and developers. This collaborative ecosystem can enrich the gaming experience.
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Skyscraping (composability): The modular nature of AWs is another highlight. Developers can focus on building new things without having to reinvent the wheel, using modules that have been previously created and used in on-chain games (for example, on-chain upgrade modules or quest modules). Imagine the possibilities of integrating disparate universes—such as Marvel and DC Comics—into a single gaming environment. While there may be licensing issues, the technology itself won't be an obstacle.
Games still need to attract audiences through engaging gameplay. However, when these three elements are combined, it heralds a new original form of gaming with huge future potential.
apix seems to hold a similar view:
The potential market for this new form of gaming remains unknown (just as uncertain as the space market was for SpaceX in its early days). Does it only appeal to today’s crypto-native users, or does it have the potential to enter the mainstream market? Only time will tell. And it might take a while.
One thing is for sure: I love new and original forms of crypto. While the road ahead is uncertain, early adopters could capture a lot of value if the space flourishes.
Pro tip: I’m following Pirate Nation closely.
between the two
What about Illuvium, Parallel, and other crypto-native game studios? Making Web3 games is difficult. Two very different sets of skills are required:
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Crypto expertise: Requires not only technical knowledge of blockchain, but also understanding of crypto-native behavior, token economics, and economic design
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Game Design and Distribution: This field is largely dominated by Web2 practices. The complexities include designing engaging incentive loops, optimizing player spend, and mastering performance marketing.
Today, many Web3 native game teams are very strong in (1), but questionably competitive in (2). Especially considering they're up against powerful, well-capitalized Web2 studios with strong existing IP. A team with extensive experience in Web2 gaming and raising enough funding may be successful.
Crypto-native Web3 game studios often need to build new IP from scratch, which is a challenging task. Some of them have launched tokens with 8- to 9-figure market caps, which already includes massive user adoption.
In summary, Web3 gaming is at a critical crossroads. We have existing giants with proven IP and a deep understanding of game design and distribution. We also have a crypto-native team that is pushing the frontier of on-chain gaming. One thing is clear, those who can master the combination of old and new will be the ones who will be hugely successful in the future.