The results will be shocking if we look closely at the Axie Infinity yearly revenue from June 2021 to June 2022.
One of the most popular web3 games, the real flagman of the GameFi movement is now at the bottom.
The Decentaland volume has decreased by half since April 2022.
And the total GameFi volume has also reduced immensely during 2022.
But does it mean that the industry is dead? Or is it just temporary oblivion? We think that the second variant is correct.
Moreover, if you look closely at the graphics above, you’ll see that the main projects had bad times before, but this was just a long-lasting downturn.
The main benefit of web3 gaming has always been its decentralized structure. P2E games give their players ownership of their in-game digital items. Thus, all players own tokens and can create the in-game economy.
Games like STEPN, Axie Infinity or Illuvium have common distinctive benefits like:
- players can earn during the playtime
- players own the content
- future compatibility with AR/VR, metaverses
Seems like everything looks good. So what went wrong?
Why does GameFi suffer from a hangover this year?
“GameFi projects relying on marketing hype and speculative investment will not do well during this bear market.” Foo Wui Ngiap, CEO of Ethlas
Lack of excitement
The answer is partially in this picture.
The thing is that P2E developers often put money first.
But ask yourself. Why do you play games? We’re pretty sure most of you will answer that you LIKE TO PLAY, which means that the gameplay and the fun of the game itself are what you put in the first place.
And this is the main component that most P2E games lack. All in all, most P2E players simply treat game time as going to the office and earning money. They’re simply not interested. And just as with all other work, there comes total burnout as people are tired from fulfilling tasks just for the sake of money.
Big games lack big finances
“The recent crypto market downturn, caused by the FTX incident, has had a significant impact on small and medium-sized Web3 native game developers who lack the financial resources to weather the storm,” Daiki Moriyama, Director of Oasys.
Creating a cool game takes much time, effort, and finances, especially during the crypto winter. Besides, game development is much more difficult than software one due to the complexity of art components. And here comes the next obstacle.
P2E games’ complex structure may become an obstacle itself
When you add NFT game items and complex token mechanisms to the gameplay, the development time can be 100% doubled. To date, investing so much time and money in the game building is too hard.
Good tokenomics is the pawn of a web3 game’s ecosystem. If players don’t know how to spend their assets, the price of the game’s token will be at the bottom.
As a result, the market cap of main gaming tokens looks like this:
That was the reason why STEPN and AXS dropped in price considerably.
Good games lack a good blockchain basis
Suppose you have a good game idea, perfect gameplay and well-developed tokenomics as well. But what is it based on?
The house will be destroyed if it doesn’t have a good foundation. Game developers must have everything to create P2E experiences with cross-game items, decentralized in-game trading, and fully-on-chain components.
The blockchain providing such services must be both secure and speedy. To date, there are a couple of blockchains on the market, offering full-package decisions for P2E developers, like Velas blockchain with its 50,000+ TPS and full compatibility with EVM.
A trustable and powerful blockchain is the main condition of your P2E game success.
In a word
Web3 games are not developing separately from the rest of the market. The global gaming market reached $198.4 bln in 2021, which is more than the film and music industries combined ($99.7 bln and $26 bln, respectively). So P2E has good perspectives being a part of such a huge sector.
In fact, web3 games should definitely stick to the game design trilemma to succeed.
When the gaming experience merges with monetization opportunities, we’ll witness the brand new GameFi world full of excitement and new possibilities.