Crypto gaming is growing, but can it reach people outside of the web3 world?

Last year was big for the play-to-earn gaming scene, which goes hand-in-hand with the crypto world, but as the games become more advanced and provide more opportunities for users, what’s next for the industry?

Perhaps it’s building out the gaming experience or creating new openings for non-crypto-native players to enter the space, but there’s a range of opportunities and challenges for builders and gamers.

“The goal is to bring the Web 2.0 traditional gaming masses to web3,” Alex Paley, co-founder of Solana-based blockchain gaming studio Faraway, said to TechCrunch. “The only way you do that is by removing as many artificial barriers as possible.”

The blockchain gaming industry grew 2,000% in the past year, according to a DappRadar and Blockchain Game Alliance report from Q1 2022. The report added there were $2.5 billion in investments for the blockchain gaming space last quarter, compared to the $4 billion raised for the sector across all of 2021, showing a significant acceleration in money pouring into this space.

While the web3 gaming world is known for play-to-earn economies, a number of crypto gaming studios are offering free-to-play options for new users who want to experiment but might not want to fully commit.

About 10 years ago, amid the height of mobile gaming’s free-to-play era, the free games market was huge. From Angry Birds to Candy Crush, there were myriad ways for non-gamers (and seasoned gamers) to pick up their phones, download an app and play within minutes.

Candy Crush has existed in both a free and premium way for 10 years and, in turn, generated billions in total revenue and over $1 billion in revenue in 2020 alone, according to a report by Business of Apps.

“That was the beauty of free-to-play; it greatly expanded the audience of people who can try your game, and it’s equally as important to do that in web3,” Paley said.

Now, some crypto games are considering the free-to-play model as a way to help new gamers enter the often gated crypto gaming market, which is known for having a play-to-earn model.

“We see a great future for web3 gaming, and in many ways I see the introduction of blockchain into gaming as transformative as free-to-play gaming was to mobile,” Phil Sanderson, managing director and co-founder of Griffin Gaming, said to TechCrunch.

But there need to be more accessible games through easier onboarding for the non-crypto-native audiences, and the fun factor will drive their success at the end of the day, Sanderson noted.

Last month, Axie Infinity launched the Origin version of the game, which allows people to try it out and get up to three free characters, known as Axies, without paying for them.

“I think having free starter Axies is an important moment for NFTs, because people can fall in love with the IP and universe and try it out and see if it’s for them before making huge economic decisions,” Jeff “Jiho” Zirlin, Axie Infinity co-founder, previously told TechCrunch.

In order to expand the web3 gaming world, these blockchain-based games have to prove to players that their games are fun, then figure out a way to get them to work and contribute to the economy by playing the game, Paley said.

And what’s most important is creating something enjoyable, aside from the financial incentives that crypto play-to-earn games provide.

“The number one priority is ensuring we’re creating a fun product,” said Michael Wagner, creator of Star Atlas. “It doesn’t matter how good the financial incentives are. Our focus is on building a cool, high-quality experience that will attract people in. Of course we have the financial incentives as well, but that’s just an enhancement to the gameplay.”

Right now, the “highest quality” gaming experiences don’t exist in the crypto ecosystem, Wagner said. However, it’s going to take time to build because there are tradeoffs between studios coming in that know how to build games, but don’t know anything about crypto or tokenomics or how to design tokenomics — and vice versa, Wagner added.

“We’ve gone through this wave of play-to-earn where a lot of the attention-attracting games have hyperinflationary styles of rewards that create an unsustainable frenzy,” Richard Kim, general partner at Galaxy Interactive, said to TechCrunch. “What we’re seeing is that traditional game publishers are best positioned to evolve the gaming ecosystem with crypto because they have a track record of knowing how to build a balanced in-game economy.”

While there is optimism that web3 elements might find play in Triple-A gaming titles in time, some traditional gaming companies have faced extensive backlash from their communities to the point that they backtracked on plans to implement crypto. Gaming giant EA and smaller studios have received sharp blowback from gamers regarding their own NFT efforts, or those of their publishers, for example, according to a report by Fast Company.

Media coverage in the past has displayed gamer displeasure at the addition of web3 features like NFTs to existing titles and franchises, indicating that the melding of the decentralized economy and the gaming industry could be somewhat distant today.

Ultimately, what can drive sustainability is player conversion and retention, and great game publishers are best placed to do that, Kim said.

“We have line of sight into titles being developed mostly out of Asia since they’re moving faster than the West and understand long-term sustainability. The ultimate goal is to get to a point where more tokens are coming in than going out as a result of payer conversion and retention, and we aren’t there yet.”

While it may take years for traditional gaming studios to fully come around — Wagner predicts anywhere from five to 10 years – it’s important for current crypto-focused games to enhance the fun factor today.

“This type of disruptive transformation doesn’t happen overnight, and [because of] the comprehension of how crypto works and games work, there’s a steep learning curve and it won’t happen super quickly,” Wagner said.

The goal right now is to get people exposed to the games and make them approachable, Paley said. “You don’t need to know anything about crypto, but if you want to and want to go deeper into the economy then you can by installing a wallet, join a guild and go from there.”