In 2023, the emerging blockchain gaming industry continued to grow, creating more sophisticated experiences, but the pace of progress was slower than in 2022.
According to Pitchbook data, investment in blockchain games reached $1.4 billion between May and November 2023 alone, while the gaming industry as a whole continues to experience a decline in investment volume and deal value.
According to the Game7 report, the overwhelming majority of blockchain games are indie or mid-sized projects, with AA and AAA funding levels making up just 6% of the market. Half of all new blockchain games are based in Asia this year, and the total number of gaming-specific blockchains grew 84% year-over-year, Game7 found.
This year, Pitchbook called blockchain games “forgotten but not gone” in its Q3 games report, arguing that while the initial hype cycle for these games has faded, several “significant titles” remain in development.
But what will happen in 2024?
If it’s a fun game, it will be successful.
Chris Akhavan, chief gaming officer at NFT marketplace Magic Eden, predicts that the three Web3 games being released in 2024 will be successful and popular enough that larger, traditional game studios will take notice and try to replicate their success.
“Non-Web3 game companies [will] “We will see Web3 R&D activity restart and investors will resume investing heavily in Web3 games,” Akhavan told Decrypt.
Alec M. Wantock, head of product at HyperPlay, a web3-native game launcher and game store aggregator, also predicts that 2024 will be the year many blockchain games finally get released. 2023 will see even more exciting games, many of which are unfinished or released in early access, but are still getting closer to completion.
“I think a lot of the industry is realizing that these games need to be optimized for fun. We’re seeing a lot of new and innovative games coming out that really embrace the fun aspect, which is a good thing,” Wantock told Decrypt.
“I believe gaming will continue to be popular in the Philippines and other Asian countries,” he continued. “There is already a lot of interest in blockchain-based gaming in Asia. The technology is becoming smoother and gameplay will become more immersive and interesting for users in 2024 and beyond.”
Josh Jones, co-founder and co-CEO of open-world blockchain game Cornucopias, predicts that crypto game developers will prioritize user experience and try to remove blockchain jargon from their games that may alienate users.
“Crypto games haven’t found product-market fit yet,” Jones told Decrypt, adding that mainstream gamers expect a level of quality that has yet to be seen in the crypto gaming market.
“Next year, a big theme will be games that focus on improving the user experience — games that are fun, easy to use, and have compelling storylines. I also think a lot of blockchain-based games will try to simplify their terminology to make it easier to understand for both crypto-native and non-crypto users. So instead of saying ‘NFTs,’ you’ll see the terms ‘in-game assets’ or ‘player-owned assets.'”
Jones believes crypto jargon is a barrier to entry into Web3 gaming, and that the crypto gaming landscape will remain the same until it goes away. Cornucopia’s co-CEO also highlighted that next year will see improved games with generative AI, allowing for more customization based on player choices.
“In 2024, we expect to see continued increased adoption of Web3 gaming,” said Oliver Maloney, head of games partnerships at OpenSea.
“My prediction would be that some of these titles will reach a wider range of creators (and audiences), which will lead to an increase in the player base for these games and the ecosystem they are a part of,” Maloney said. “As we’ve seen with Fortnite and many of the biggest titles, content creators streaming and showcasing their games really piques interest from the average gamer.”
Maloney also believes that 2024 could see more Web2 players entering blockchain gaming through existing games that use cryptography.
“We also believe we will see a couple of large Web2 native IPs and games consolidate or switch to the Web3 infrastructure layer,” Maloney added. “These will be catalysts for this space.”
Fully on-chain games will evolve
Fred Lee, research analyst at Ryze Labs, told Decrypt that on-chain gaming will move towards open-world games where players can set the rules.
“We foresee the emergence of autonomous worlds reminiscent of Minecraft,” Li said. “People are no longer satisfied with being consumers of PGR (Professional Generated Rules) games. There is a growing need for them to become creators of UGR (User Generated Rules) games. Fully on-chain games will enable people to create autonomous worlds.”
Li also predicted continued improvements to fully on-chain gaming infrastructure beyond 2024, but warned that fully on-chain games may struggle to meet the expectations set by incumbent traditional games.
“We expect competition to intensify in the Web3 gaming space,” Li added.
Despite the platform limitations, the game will find an audience
Sy Lee, CEO and co-founder of crypto IP company Story Protocol, predicts that blockchain games will make up the majority of wallet activity in 2024, currently accounting for around 30-40% of all decentralized app (dapp) transactions. Lee also believes we will see more and more game developers supporting user-generated content and mods. Games such as Deadrop and Shrapnel are already focused on enabling community-created game content.
Urvit Goel, head of business development at Polygon Labs, predicts that this year’s relatively small funding rounds won’t prevent some great games from launching in 2024.
“Fundraising for 2023 is significantly lower compared to 2022 and 2021, and is down about 70% year-over-year,” Goel said. “It’s a tough year to fund anything new or for existing teams to continue operating. Funding has been tight.”
“If we look at what the rest of 2024 holds, we will see actual games using blockchain,” Goel added.
A number of blockchain games have appeared on the Epic Games Store in 2023, but one of them, Gods Unchained, was removed from the list shortly after being added to Epic after the ESRB Video Game Rating Board rated it “mature” due to its play-and-earn elements. According to the ESRB, games that offer players items with “real-world value,” such as NFTs and crypto tokens, may be given such a rating and removed from consoles and other platforms.
Gods Unchained was relisted following a Decrypt investigation into its removal from the Epic Store, and while Epic has stated that it will no longer block “AO” rated games purely due to their blockchain integration, incidents like this serve as a reminder that distribution on third-party platforms is not guaranteed.
“That’s a next-order problem,” Goel said of the crypto game distribution issue, adding that a Web3-native game launcher could be one potential solution.
“If you have a great game, you can usually find a way to get it,” he said, suggesting that if a blockchain game is appealing enough to players, it will find an audience regardless of other potential constraints.
Editor: Andrew Hayward