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8 web3 gaming experts discuss hurdles and opportunities in the road to wider adoption

Jacquelyn Melinek 7 months

The web3 gaming world has been a work in progress for a handful of years now. Studios in the space have found it difficult to gain Web 2 gamers’ trust and get over the image issues resulting from the “play-to-earn” era, and traction has been slower than predicted. So, what will it take to spur more mainstream gamers to pick up and play web3 games?

Amid the ongoing crypto bear market, investors and startups alike are diving deeper into the emerging space to answer that very question (among others) as they look to web3 gaming to bring in the next wave of users to crypto and the wider web3 industry.

So to find out how the industry is thinking about the next phase of growth in web3 gaming, we spoke to eight people with strong track records in the industry about the future of the space, how they’re tackling challenges and more.

For Ed Chang, head of gaming at Ava Labs, the web3 industry is still arguably young, but he’s hopeful that there’s space for web3 elements to be complementary to the gaming experience and add value. “We believe that all games can leverage blockchain elements, whether it’s truly owning your items, earning rewards for playing, or building payment rails for microtransactions, creators and modders,” he said.

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However, several of these people noted that web3 gaming still has some pretty difficult hurdles to overcome before it can go mainstream.

“The biggest challenge is that we are still figuring out how to design web3 games and deciding as an industry if we would rather prioritize the “play” or the “earn” part,” Tiffany Dong, senior associate for gaming at Solana Foundation, said.

The very obvious UX (user experience) problem with web3 is also something that’s being worked on. Robbie Ferguson, co-founder and president of Immutable, said, “Most web3 services expect the user to set up a new wallet and connect it with their platform. This already includes multiple steps of inconvenience that open up the door to catastrophic loss if not done correctly. Then there’s the fact that this process usually has to be done repeatedly for each service.”

Still, the industry appears to be learning quickly. Dong pointed out a notable shift, where web3 game developers are focusing on building games that are engaging and fun for the community first, and complementing the experience with blockchain technology without using it to define it.

As for the play-to-earn model, it appears to be on the way out. Carlos Roldan, CEO and founder of Elixir Games, noted that the term was “widely misused,” especially in the context of Ponzi and pyramid schemes that capitalized on the trend.

“This misuse took advantage of the play-to-earn trend that was particularly hot during 2021–2022. Post-trend, the term has become almost obsolete, and the industry is shifting toward more accurate descriptors like ‘play to own,’ ‘play and earn,’ or ‘win to earn,’ which better align with the true gaming experience. I’ll stick with ‘play to enjoy’ if I have a choice,” he said.

Read on to find out which regions are leading in the race for adoption, how games could gain traction and stand out, as well as more interesting insights into the challenges and opportunities for web3 games in the near future.

We surveyed:

Chris Akhavan, chief gaming officer, Magic Eden

How big is the web3 gaming market today? And what metric do you think works best to track growth?

Web3 gaming is still in a nascent stage. The industry had an initial wave in 2021 with the play-to-earn model. That model, unsurprisingly, was not sustainable, but it did get game developers and investors excited about opportunities in web3 gaming.

We are now in a quiet period, as many studios that formed and raised funding back then are building games. I expect the market to remain largely quiet until some of these second-wave web3 games start to launch next year.

Metrics to track will be largely the same that any game tracks: installs, DAU, retention, LTV, etc. In addition to that, we’ll be tracking web3-specific KPIs such as wallet and marketplace metrics.

What is the one-liner you’d use to bring on board people who might be interested — or skeptical — about web3 gaming?

Hang tight. The pipeline of games in development is looking great — MapleStory, Eve Online, Limit Break, Azra, Shrapnel, Wildcard, Zynga, and many others are deep into development with awesome games.

What are the biggest challenges web3 gaming is facing in terms of adoption from both gamers and traditional gaming studios?

Right now, it’s the reality of the long time it takes to build a high-quality game. The industry needs to remain patient while studios build the next wave of web3 games.

What do you predict will happen to the play-to-earn model over time? What other web3 gaming elements will the industry shift toward?

Play-to-earn has faded away. You cannot have a functional economy where everyone expects to extract value. The industry has shifted to gameplay that’s enhanced by web3 ownership and economic alignment between gamers and developers.

What types of web3 games do you think will see the most adoption going forward? How have your expectations changed over time?

All the genres that work in traditional gaming can benefit from web3 ownership, but in particular, the core genres with deep economies [will benefit more]. That’s always been my expectation since getting into the web3 space a few years ago.

What advice would you give other gaming developers for gaining traction and standing out in this space?

The hype era of pre-selling NFTs and tokens for games that aren’t live yet is past. At this point, it’s imperative to focus on shipping an amazing game that people will want to play.

How could traditional and web3 gaming studios work together more closely?

Regardless of web2 or web3, game developers have always been good about sharing knowledge, data, and case studies with each other. I think that applies across these two segments as well.

Which regions or countries will be at the forefront of web3 gaming adoption in the next five years? Where will it take time to gain traction?

Asia looks to be leading the charge in web3 gaming investment. Game studios in Korea and Japan are particularly leaning into web3. Similar to free-to-play, I think Asia will be where web3 models are proven, and then they’ll eventually be adopted by western markets.

Tiffany Dong, senior associate for gaming, Solana Foundation

How big is the web3 gaming market today? What metric do you think works best to track growth?

Compared to the multi-billion-dollar games industry, the web3 gaming market is still new. However, the growth potential is quite high, and we’ve seen that crypto games can have explosive user and activity growth. As web3 gaming matures and games move past the classic “play-to-earn” model, we’re bullish on the future of the industry.

There are two important groups of metrics to track growth: number of players and the level of activity from those players. Daily, weekly, and monthly average users, the number of unique wallets and the number of on-chain transactions paint a clear picture of a game’s momentum and the level of excitement in the community.

What is a one-liner you’d use to bring on board people who might be interested — or skeptical — about web3 gaming?

You channel so much time, attention, and money into the games you play — web3 offers the chance for the fruits of your fun to be truly yours.

What are the biggest challenges web3 gaming is facing in terms of adoption from both gamers and traditional gaming studios?

The biggest challenge is that we are still figuring out how to design web3 games and deciding as an industry if we would rather prioritize the “play” or the “earn” part. Now we’re seeing a shift where web3 game developers are focusing on building a game that is engaging and fun for the community first, and complementing the experience with blockchain technology without using it to define it.

Web3 also faces a few key UX challenges, like wallet onboarding and fiat on-and-off-ramping. While gaming may be the path to onboarding the next billion users to web3, there is still some education that’s required to fully participate in the space. Players shouldn’t need to open an exchange account just to participate in an in-game economy.

What do you predict will happen to the play-to-earn model over time? What other web3 gaming elements will the industry shift toward?

Play-to-earn is fading away, as it’s a fundamentally unsustainable model. However, we expect other trends to take shape in its place. Concepts like “contribute to earn” and “play and own” seem much more viable in the long-term.

Contribute-to-earn incentivizes contributions to other players or the broader community. Roblox is a great example of this model in web2 gaming: If you contribute something of value, you should be compensated for it. The play-and-own model leverages blockchain technology and gives players more control of their in-game assets, achievements and progress, allowing them to truly own the memorable and valuable pieces of their gaming experience and identity.

What types of web3 games do you think will see the most adoption going forward? How have your expectations changed over time?

It’s hard to say exactly what type of web3 games will succeed, but the first breakout games will likely need to have a unique and compelling game function on-chain. These games can’t simply be World of Warcraft or Call of Duty with assets on-chain, but will have to be unique and captivating in a way that best leverages web3’s strengths. Additionally, the future of web3 gaming needs to have a streamlined onboarding UX to make it as easy and accessible as possible for gamers to participate.

What advice would you give other gaming developers for gaining traction and standing out in this space?

There is no rulebook on how to build a successful web3 game. Developers should think fundamentally about the experience you want to deliver and why your game uses web3.

Find the fun. This feels obvious, but you’re competing against not only other web3 games, but also all games and entertainment (League of Legends, Fortnite, Netflix, etc.). You need a unique fun factor to convince players to play your game over the endless other forms of entertainment available to them.

Have a distribution plan. No game, no matter how fun, sells itself. Think deeply about the best ways to get attention to your game.

How could traditional and web3 gaming studios work together more closely?

Game studios should learn from each other’s successes and missteps. Web3 game studios should take the best practices from Web 2 game development, story design, and engagement mechanisms, and find ways to leverage the advantages of blockchain technology.

We’ll also likely see Web 2 studios look to launch web3 games, or incorporate aspects of web3 into their titles. These studios should rely on existing web3 game devs to share their experience with the unique elements of the web3 world (e.g., blockchain technology itself, the nature of crypto communities, etc.).

Which regions or countries will be at the forefront of web3 gaming adoption in the next five years? Where will it take time to gain traction?

When we look at innovative trends in game models, you can notice the pattern. Free-to-play and mobile games first took off in Asia, then made their way around the globe to Europe, and lastly, took root in North America. We’re already seeing hints of a similar adoption pattern with web3 games. Korea and Japan, for example, are already moving rapidly into web3 games.

Ed Chang, head of gaming, Ava Labs

How big is the web3 gaming market today? What metric do you think works best to track growth?

The web3 gaming market is small! According to the latest Q2 report from DappRadar and BGA, it’s around 712,000 daily unique active wallets. But with the quality of teams building in the space and the upcoming slate of game launches, we strongly believe this number will significantly increase by the end of the year.

With the investment being poured into the space ($297 million in July 2023), blockchain gaming could potentially expand to include all of gaming. We believe that all games can leverage blockchain elements, whether it’s truly owning your items, earning rewards for playing or building payment rails for microtransactions, creators and modders.

We can continue to track a lot of on-chain metrics, like active wallets and transactions, but ultimately, we need to continue to measure web3 games the same way we measure Web 2 games: user LTV, retention, and MAUs are still the north star for game developers.

Aligning with industry standards helps us compare apples to apples and can encourage more outside investors to get comfortable participating in the web3 gaming space.

What are the biggest challenges web3 gaming is facing in terms of adoption from both gamers and traditional gaming studios?

Until recently, the web3 gaming UX has been poor. Given the crypto stigma that still exists, people tend to be turned off when they see digital wallets. Even if they have an open mind, blockchain elements can be seen as another obstacle to getting people to love your game.

In the next year, we’ll see that specific UX issue melt away. Wallet tech and infrastructure have improved dramatically. We’ll also likely see a change in mindset toward making web3 more of an added benefit rather than a game’s key focus.

This UX issue also includes gas fees. Asking users to buy a gas token off an exchange before moving into web3 is asking too much. Subnets are one way games can eliminate this friction. By making their in-game token the gas token of their network, they can more easily provide the necessary tokens through airdrop or via in-game earnings. On a general-use blockchain that lacks this capability, these fees add up too quickly for a game to fully subsidize.

Distribution is another obstacle. Most players buy and download games on existing launchers, and adding a new one isn’t interesting. Steam won’t let web3 games on its launcher, and they own the majority of the PC market share. For mobile, Apple’s App Store is still largely off-limits. In both cases, games are experimenting with workarounds by eliminating web3 elements in at least one version of their game and hoping to acquire a player base on Steam that they can later translate to web3.

This method hasn’t been fully proven, but it’s something we see games exploring. Ultimately, we think Steam and Apple will both come around to web3 games once they see major successes and economic opportunity.

What do you predict will happen to the play-to-earn model over time? What other web3 gaming elements will the industry shift toward?

Play-to-earn in its 2021 form isn’t sustainable. We’re seeing a lot of these teams follow the Web 2 playbook, where the games we work with today are focused on building fun experiences with low onboarding friction, and then looking to introduce blockchain elements (monetization) when they reach a critical mass of initial players. Games are also reimagining tokenomics models and player achievements.

Before we consider what web3 gaming models the industry will shift toward, we must walk before we run. We must bring a handful of these games successfully to market with millions of on-chain users, which will in turn encourage more experimentation and new narratives.

Token-gated access to games, whether through scarcity or cost, will also continue to change quickly. In the early cycle of web3 gaming adoption, consumers will still be most familiar with something that resembles Web 2 gaming. Experiences like free-to-play, DLCs, and progressive monetization through microtransactions are all important to consider if we want more gamers to participate in web3 gaming.

We’ve seen many projects limit access via mints and whitelists, and this generally flies in the face of mass adoption.

What types of web3 games do you think will see the most adoption going forward? How have your expectations changed over time?

Mobile has the greatest opportunity given development time, more clarity with App Store guidelines, and developer motivation due to IDFA changes. We’re also closely watching the UGC ecosystems (UEFN, Roblox, Minecraft), as they’re ripe for blockchain integration. The market has shifted away from a singular focus on AAA budgets and experiences, given how expensive and grueling it can be to get to market and reach a critical mass of players.

In mobile, we’re excited to be ahead of the curve. As mobile app stores open, we’ll see a lot more interest. In fact, Google recently updated its mobile software marketplace so that games can have digital assets. This change is an important step toward greater proliferation of web3 gaming.

What advice would you give other gaming developers for gaining traction and standing out in this space?

So many major games in development are only now starting to go to market and test varying strategies. We have a lot to learn in the next six months.

However, what we’re expecting to be successful is a heavy focus on attracting Web 2 gamers. We’re seeing a focus on more traditional marketing plans that show off gameplay, partner with streamers, and use paid ads for user acquisition.

Games should endeavor to use tokenomics and tokenized in-game assets as powerful retention and referral tools. Using them, you can get your gamers to grow your game for you. But it starts with getting in front of those gamers and not scaring them off with your token.

Crucially, web3 games are businesses. Studios must demonstrate to investors and participants that they know how to operate a gaming business, from building teams, shipping the product, and fundraising, to understanding the tech stack needed to operate and develop a game.

How could traditional and web3 gaming studios work together more closely?

We recommend simply networking and sharing insights. Our Arcad3 program does just this: We invite Web 2 publishers to connect with our web3 studios, and share ideas and tests. Encouraging more conversation and the sharing of metrics and best practices will help web3 games be more successful in the mainstream markets.

Which regions or countries will be at the forefront of web3 gaming adoption in the next five years? Where will it take time to gain traction?

Southeast Asia is a huge focus. In particular, Japan, South Korea, and Vietnam all show tons of promise, as players have open minds to web3 and their governments adopt favorable legislation.

Nearly every game publisher we speak with in those regions has a dedicated web3 team researching this space and identifying opportunities to test. The Western studios will likely lag their Asian counterparts as they wait to see what works and continue to struggle with being able to evaluate web3 possibilities due to limited or vague regulations.

We’ve been able to make strides in these regions by investing in our own teams there. Ava Labs expanded its teams in both Japan and Korea in 2023.

Carlos Roldan, CEO and founder, Elixir Games

How big is the web3 gaming market today? What metric do you think works best to track growth?

The best way to measure web3 players does not go hand in hand with wallet tracking or number of transactions. It is linked to the hours spent playing projects that use the blockchain.

If we have seen massive growth, this path is exponential, and we estimate that in approximately 3 years, the barrier between a traditional game and a web3 game will be so small that you will simply enter and play.

What is a one-liner you’d use to bring on board people who might be interested — or skeptical — about web3 gaming?

Imagine having all your memories, achievements, digital games, cosmetics and assets in your hands to give them away, share them, sell them or just display them. I remember the first time I got a platinum on a PS2 game and it wasn’t easy! Who knows, maybe if that achievement was in my wallet right now, the value would not be only emotional.

Become the owner of your time, your achievements and your purchases!

What are the biggest challenges web3 gaming is facing in terms of adoption from both gamers and traditional gaming studios?

The biggest challenge lies in tidying up certain terms and words, such as “web3 game or NFT game” so that users see that they are just being given more tools within the game. Ultimately, it is a technology that you can adopt or not, without that taking you away from enjoying the actual gaming experience.

The adoption of a technology can never be forced. Every day, there are more and more game developers with the most famous names in the industry that have jumped on board and are not willing to be left behind, but they need to be aware of how they position the web3 aspects of their games. It’s a massive opportunity, but one that needs to be calculated properly.

What do you predict will happen to the play-to-earn model over time? What other web3 gaming elements will the industry shift toward?

The term “play-to-earn” has been widely misused, especially in the context of Ponzi and pyramid schemes that have capitalized on the trend. Gaming is about fun and enjoyment, and adding a financial incentive fundamentally changes the psychological dynamics for players.

This misuse took advantage of the play-to-earn trend that was particularly hot during 2021–2022. Post-trend, the term has become almost obsolete, and the industry is shifting toward more accurate descriptors like “play-to-own,” “play and earn,” or “win to earn,” which better align with the true gaming experience. I’ll stick with “play to enjoy” if I have a choice.

It is also true that the presence of e-sports and their arrival in the web3 space turn almost any game into a great opportunity to make a profit. We organize tournaments every week with prizes, and although I would not call it “play-to-earn,” I would dare to call it “win-to-earn,” which may sound very logical, but it is a bridge terminology that reflects the evolution of the web3 ecosystem.

What types of web3 games do you think will see the most adoption going forward? How have your expectations changed over time?

There are two types of games or genres that, from the beginning, I’ve felt would know how to use web3 to their advantage, and above all, would help gain massive adoption: competitive and community-affiliated games.

First are the competitive games. Even though we all like to play games, when there is also an incentive to “be the best,” even if it is the best in your own house, things change. That competition drives adoption quite effectively.

Second, there are games with communities affiliated to the brand. This does not mean having a link with an NFT market, but having a real link, even emotional, with an IP. Collector’s editions are going to change a lot in the coming years, and this could be a focal point for legacy studios entering the space.

What advice would you give other gaming developers for gaining traction and standing out in this space?

Don’t force your community to understand something that no one has taught them. Invite them to try it and show them the options and opportunities that blockchain brings to video games. The best advice is to be ambitious, but know how to take it easy. Even if it seems contradictory, this is absolutely necessary.

How could traditional and web3 gaming studios work together more closely?

All the synergies we want to create and are willing to create are just one signature away from coming to light. Both camps share the most important thing, the players, and have the same focus, which is to provide an entertaining experience. When we did one of our last partnerships with Square Enix, many web 2.5 users were wondering if they were missing out on something unique.

This kind of collaboration shows how you can bring communities together in a native and organic way. In fact, every two or three months, I check Fortnite to see if they’ve put in a new skin of some funny-looking monkeys that few people know about in their target audience.

Which regions or countries will be at the forefront of web3 gaming adoption in the next five years? Where will it take time to gain traction?

Clearly, North America leads the way in terms of adoption, but in the launcher, we find more and more people from different regions. At the moment USA, Turkey, China and Latin America lead the list.

However, this may change. Japan, for example, is contributing ideas, solutions and projects nonstop for web3, so I do not think there is much left for Asia to become the top player. Regarding technology, they are the most advanced continent in terms of adoption and understanding of development, but we will surely have surprises.

As expected, these big adoptions will take time, but it is a matter of a few years before people realize that they missed the opportunity to be there first, and that feeling is one that no one enjoys.

Michael Wagner, co-founder and CEO, Automata

How big is the web3 gaming market today? What metric do you think works best to track growth?

It is hard to quantify precisely, but we estimate that there are around 750,000 daily unique wallets currently interacting with web3 games — about double the number of wallets that interact with DeFi protocols. Also, in the first quarter of 2023, around $350 million were in web3 virtual worlds.

The top metric is the number of active users playing web3 games based on wallet connections to the game systems. For us, a key metric is also the volume of transactions within a web3 game. The volume of transactions allows us to go beyond the number of users and understand to what extent blockchain is being utilized within the game logic itself, which, in our view, is a key unlocker of the true value web3 can bring to gaming.

Apart from that, we consider our game economy as being analogous to that of a sovereign country, and so GDP is another relevant key metric for project specific growth.

How much do you expect the market to grow in the next five years?

High-quality games will be the key unlocker of growth for web3 gaming and they will dispel some myths and misconceptions about the sector. Most games that exist today are not of that caliber, as such games usually take more than five years to develop.

When these games start coming online, we expect that web3 games will compete for the overall $200 billion gaming market. So we expect to see exponential growth in the number of users.

What is a one-liner you’d use to bring on board people who might be interested — or skeptical — about web3 gaming?

Web3 values your time and lets you retain all of it.

Web3 empowers your game community and gives you agency to safely improve your experience and increase your enjoyment.

What are the biggest challenges web3 gaming is facing in terms of adoption from both gamers and traditional gaming studios?

The biggest challenge is the misconception in the traditional gaming industry about the quality and security of web3 games.

There have been cases in which players have had bad experiences with web3 gaming, which has created a reputation that needs improving. It’s also given rise to the sentiment that web3 gaming studios are not motivated to put out high-quality products.

There is also an overall negative sentiment and lack of knowledge about blockchain technologies, how they work and why they matter.

What do you predict will happen to the play-to-earn model over time? What other web3 gaming elements will the industry shift toward?

Our thesis purports a strong case for play-to-earn going forward. Despite failures in sustainability across projects, the value proposition of income generation derived from time spent in-game is still an attractive one to a wide audience. The economic architecture and incentive mechanisms require tuning to remove hyperinflationary token rewards as the core growth driver, but it is reasonable to develop a system that connects producers and consumers within the game environment to accomplish objectives of play-to-earn, sustainability, and enjoyable gameplay.

Further, the ownership of real assets and the ability to safely trade these assets with no middleman are key value propositions that blockchain brings to gaming. These features attract a new set of users to gaming who look to supplement their income in these virtual worlds, and hence this segment will not disappear.

However, as the quality of the games and the integration of blockchain develops, other segments will also become more relevant. As high-quality games are developed, there will be players who are not economically motivated. As blockchain is further integrated into the game logic and game systems, this will spur developers to create new experiences and tools based on the composability that blockchain allows.

Web3 gaming will come to reflect that typical community of gamers, and also increase the attractiveness to users who have traditionally been left out of the gaming industry because the value proposition did not exist for them.

What types of web3 games do you think will see the most adoption going forward? How have your expectations changed over time?

MMOs are well suited to take most advantage of these features, given the economic complexity in this game format. This would also extend to various live service games. These games tend to have a long life cycle, particularly if they are successful, and therefore retain utility value the best.

Our expectations are higher than ever. As we innovate in the blockchain, we continue to discover new applications and value from the primitives we develop. Not only in the game itself, but also with technology that empowers guilds, and policies and governance structures that allow the community to become a significant contributor to the development of a game and ecosystem in a way that far surpasses what we see in gaming up to now.

How could traditional and web3 gaming studios work together more closely?

There are many examples of cooperation between Web 2 and web3 gaming studios cooperating. At Star Atlas, for example, we have partnerships with Sperasoft, Lost Pixels, and others who are actively co-developing the game with us.

At the end of the day, especially as the industry matures, a lot of the challenges that are faced are the same as well as the growth opportunities. Cooperating to face these challenges and understanding how web3 can benefit gaming will elevate the industry as a whole and provide a win-win-win opportunity for traditional and web3 gaming studios and players.

Which regions or countries will be at the forefront of web3 gaming adoption in the next five years? Where will it take time to gain traction?

Southeast Asia and Latin America have been traditional bastions of mass web3 gaming adoption, motivated in part by the economic opportunity provided by the play-to-earn model.

The landscape is changing as higher-quality products are released and general crypto adoption increases in North America and Europe. That gives users more confidence in engaging with web3 games. It will be the flourishing South Korean web3 game development market that will show both of these the way forward.

Urvit Goel, head of global business development, Polygon Labs

How big is the web3 gaming market today? What metric do you think works best to track growth?

Web3 gaming is still small today. It still has only hundreds of thousands of players, as tracked by active wallets.

Active wallets are the best metric to track the growth of a game. We are still in the early stages of web3 gaming, and 100x growth is achievable as hundreds of games are launched over the coming years.

What are the biggest challenges web3 gaming is facing in terms of adoption from both gamers and traditional gaming studios?

Thus far, we haven’t seen a mass-market game built, but that is changing quickly. As far as the barrier to entry is concerned, a low barrier means low to zero cost to get started and easy access. Web 2 distribution platforms such as Google Play, Epic, and Steam are now distributing some web3 games, and the barrier to entry is getting to be on par with Web 2 games.

Much of what blockchain technology offers is disruptive to traditional game studios’ current business models. In fact, they are massive beneficiaries of the status quo. Many of these large publishers generate billions of dollars a year from selling the same digital items over and over again, exploiting players. It’s very hard for them to walk away from their current monetization models.

What do you predict will happen to the play-to-earn model over time? What other web3 gaming elements will the industry shift toward?

Play-to-earn as the primary mechanism of monetization, as we saw with Axie, will unlikely be a model we’ll see replicated. That said, the concept of being able to earn digital assets via gameplay is not new. It’s a key game loop mechanic that works well in Web 2. The concept of earning will be tied to in-game progression, thus providing shared value with the most loyal of players.

Zero-knowledge (ZK) technology will be a major part of web3 gaming, as it unlocks the level of scalability and functionality required to put web3 gaming on an even playing field with traditional games while still enabling true digital ownership.

What types of web3 games do you think will see the most adoption going forward? How have your expectations changed over time?

Games that benefit the most from digital ownership will see the fastest adoption, particularly, free-to-play games that focus on monetization via cosmetics today.

What advice would you give other gaming developers for gaining traction and standing out in this space?

Don’t reinvent the wheel. There are many practices that you can take from what successful Web 2 developers have been doing. Web3 is about building on existing successes, not starting from scratch. Building a game is just the start, and teams will need marketing and user acquisition support that goes beyond Discord and Twitter.

How could traditional and web3 gaming studios work together more closely?

Traditional gaming studios have deep expertise in not just building games; they also know live operations. Web3 studios have the native knowledge of blockchain and unique ideas on how to leverage this technology to create better, more engaging player experiences. It actually seems like a natural synergy is emerging.

Which regions or countries will be at the forefront of web3 gaming adoption in the next five years? Where will it take time to gain traction?

It’s clear that the broader APAC region will be among the biggest first adopters, considering their history with embracing and developing both the games industry as well as technologies such as mobile devices and web3 in general. After that, just in terms of just numbers, LatAm will also drive user growth for web3 games.

Robbie Ferguson, co-founder and president, Immutable

How big is the web3 gaming market today? What metric do you think works best to track growth?

There’s huge promise given the size of the web3 gaming market — it’s one of the categories to get the most investment in the past decade, with more than $15 billion invested.

You can draw parallels with traditional gaming today: Gaming is bigger than music, movies and TV combined. There are more than 3.1 billion gamers globally, and more than $100 billion is already being spent on in-game assets annually.

Tracking growth is extremely simple: active players, active traders and volume. Games will span each of these: More casual, mobile-driven games might have more players with smaller spend per user, whereas games like CCP’s Eve Online could have a smaller user base with incredibly high average spend.

Most importantly, every dollar traded is a dollar that otherwise would have been locked in a centralized ecosystem with zero value for that player.

What are the biggest challenges web3 gaming is facing in terms of adoption from both gamers and traditional gaming studios?

Most web3 services expect the user to set up a new wallet and connect it to their platform. This already includes multiple steps of inconvenience that open up the door to catastrophic loss if not done correctly. Then there’s the fact that this process usually has to be done repeatedly for each service. There needs to be a single, intuitive point of access for all of web3, or else the average player simply will not take the time to get involved.

Studios don’t want to or need to take the time to become experts in smart contract programming. They need intuitive tools that allow them to leverage what web3 can offer while letting them build games that are fun and innovative.

What do you predict will happen to the play-to-earn model over time? What other web3 gaming elements will the industry shift toward?

We believe the play-to-earn model will shift toward a “play-and-earn” model, meaning that the actual player experience will be the top priority for developers, and the ability to generate value will exist to enhance this experience, not replace it.

New titles will focus on creating deeper value by curating worlds and challenges that gamers want to be a part of. The ability to truly own digital property is important, but the game being truly quality is required to even come to the table now. This is what we’re seeing in the quality of games being built today.

What types of web3 games do you think will see the most adoption going forward? How have your expectations changed over time?

The only fundamental requirement is that your game be multiplayer, where an economy is meaningful. We’re extremely bullish on mobile right now, particularly where the earliest hits will come from. Japan and Korea are going all in on web3 gaming, just like how they ushered in free-to-play and social gaming as the previous paradigm shifts.

User-generated content platforms that rely on creators will be supercharged by web3 economics, and they’ve been the most successful games of the last decade (Minecraft, Roblox, Fortnite Creative Mode). Ultimately, we’re most excited about all the genres that will spawn from the possibilities of open creator economics, asset ownership and third-party incentives. It’s certainly going to be a huge boon to modding communities.

What advice would you give other gaming developers for gaining traction and standing out in this space?

  • Build a great game, and make sure trading is a meaningful part of its core loop. Retention, acquisition costs and monetization still rule all, even in web3.
  • Make any web3 onboarding seamless and invisible. Web3 games should be no harder to play than traditional games, and should be accessible to everyone.
  • Never compromise on the underlying blockchain/platform’s security.
  • Make it scalable. if your game can’t handle millions of users — economically or through its platform — you’re cutting off the most important part of the growth curve.

How could traditional and web3 gaming studios work together more closely?

Both industries can partner and learn from each other to progress. Talented teams from Web 2 continue to stream into web3 gaming, and we’re particularly excited about those who are focused on building amazing, enjoyable experiences that are key to bringing web3 gaming to the mainstream.

Which regions or countries will be at the forefront of web3 gaming adoption in the next five years? Where will it take time to gain traction?

Asia is well poised to be a major leader in web3 gaming. Not only has the area proven to be a rich market for gaming, mobile gaming and web3 services, but also 55% of the gaming market comes from this region.

Major industry heavyweights from the region are also beginning to get involved. Sony has filed a patent to enable NFT transfers between different games and consoles, and Square Enix has announced the launch of their web3 project, Symbiogenesis, a gamified collectible experience.

Japanese prime minister Fumio Kishida is also committed to the cause, recently stating that “web3 is part of the new form of capitalism.” He has expressed that his government will actively explore and expand web3-native services. Hong Kong has opened up asset trades to retail and created a dedicated web3 marketing fund.

Asia has a rich pedigree for seeding new gaming technologies, just like how South Korea carried the flag for the rise of free-to-play adoption.

John Linden, CEO, Mythical Games

How big is the web3 gaming market today? What metric do you think works best to track growth?

I think 2023 is a major year for the next generation of web3 games. We like to see them as real games with web3 functionality instead of web3 gaming. These games are actually fun for gamers within the core loop, but while everyone can have ownership of assets, it is up to the gamer to decide to participate.

What is a one-liner you’d use to bring on board people who might be interested — or skeptical — about web3 gaming?

Gamers play to be entertained first and foremost. Web3 allows for compelling new play mechanics like digital ownership, but if your game isn’t fun, nobody is going to participate.

What are the biggest challenges web3 gaming is facing in terms of adoption from both gamers and traditional gaming studios?

Honestly, it’s the quality of the games themselves. The key to all of this is to have a game that is fun, engaging and incentivizing for players. For us, the crypto components to our games simply unlock further benefits, but at our core, we want to put out the best games possible.

Frankly, that can take a bit of time, but already this year, a number of exciting projects are poised for release. As the quality of games in this space rises, I think we’ll see mass adoption by both gamers and studios.

What do you predict will happen to the play-to-earn model over time? What other web3 gaming elements will the industry shift toward?

I think the space will grow steadily. Many market observers seem to be underestimating just how big an opportunity the play-to-earn model offers, particularly in blockchain. The ability to own gaming assets is a form of monetization that I believe is going to transform how players engage with games. We are just now scratching the surface of what blockchain-based play-to-earn gaming can be and achieve.

What types of web3 games do you think will see the most adoption going forward? How have your expectations changed over time?

I’m not sure there’s a necessary type per se in play style, but in terms of media, we’re doubling down on mobile and producing games that appeal not just to the hardcore gaming audience but casual gamers, too.

What advice would you give other gaming developers for gaining traction and standing out in this space?

Our guiding philosophy is to, first and foremost, create gaming experiences and games that are fun. Fun is the singular most important aspect. If the game is compelling and organically interesting, it’ll naturally gain traction.

Which regions or countries will be at the forefront of web3 gaming adoption in the next five years? Where will it take time to gain traction?

Top of mind is Japan and the UAE. Japan already has a pretty well-developed gaming industry — you’ve got entire genres that are played almost exclusively in that region, so I definitely see the potential for U.S.-based and backed games to grow our appeal there. The UAE has also ramped up their efforts on this front, with both public and private entities investing heavily in their e-sports and gaming sectors.