CoinGecko’s recent study reveals that over 75% of Web3 games experienced failures, teetering on the edge of failure within the past five years. Despite being a powerful force in the industry, the blockchain gaming sector is struggling with sustainability issues. CoinGecko defines a game as “Failed” if its 14-day moving average number of active users drops by more than 99% from its peak.
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The Anticipation and the Struggle
Web3 gaming, once hailed as a revolutionary use case within the crypto industry, promised users the ability to earn rewards and extract tangible value from their gaming experiences. Over the years, this sector has attracted massive funding, injecting billions of dollars into crypto projects. Even in the current year, Web3 gaming initiatives have collectively secured over $2 billion in funding. However, despite the optimism and investments, the reality is that Web3 games experienced failures.
The Grim Statistics
The blockchain gaming sector has witnessed a consistent rise in daily active wallets, affirming its significance. However, CoinGecko’s report sheds light on the alarming reality — three of four gaming projects face failure. Approximately 2,800 Web3 games have entered the scene in the past five years, but a staggering 2,100 have already shut down. The average annual failure rate for Web3 games is daunting 80.8% from 2018 to 2023. Despite the promising growth in daily active wallets, the Web3 games experienced failures at an alarming rate.
Of the 2,817 games launched in this period, only 690 maintain a somewhat active player base. The early stages of the sector witnessed growth amid bullish macro conditions, but the tides turned during bear markets, resulting in a 95% failure rate in 2020 and 2019. Surprisingly, 2021 saw the lowest failure rate at 45%, offering a glimmer of hope.
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Years of Peaks and Valleys
CoinGecko’s analysis reveals a pattern — years of lower failure coincide with the tail end of bull markets, while higher failure rates emerge at the start of bear market cycles. 2022 was the worst year, with a staggering 107.1% failure rate, despite the influx of new Web3 games. However, 2023 showed a slowdown in the trend, with 507 failed projects as of November 27, constituting 70% of the Web3 games launched.
This lower failure rate hints at a potential industry stabilisation, especially with the recent market recovery and the onset of a bullish trend. Notable projects like CryptoKitties, Decentraland, The Sandbox, and Axie Infinity have weathered the storm and continue to be widely used, showcasing resilience. Despite the overall positive trend, it’s essential to acknowledge that the Web3 games experienced failures during this period, contributing to the broader narrative of the industry’s volatility.
Charting a Course for Stability
As we approach the end of 2023, the industry seems to be charting a course toward stability. The data from DappRadar indicates that blockchain gaming reached 1 million daily unique active wallets in October, commanding 33% of the industry’s activity. The lower failure rate in 2023 suggests that the industry might be finding its footing amidst market fluctuations.
However, this journey towards stability is not without its hurdles. The report indicates that Web3 Gaming projects were categorised as inactive when their 14-day moving average number of active users plummeted by 99% or more from the peak. This raises questions about the long-term viability of projects within the Web3 gaming space. Like any emerging technology, Web3 games experienced failures, but these failures can contribute to achieving sustained success in the long run.
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The Critical Role of Web3 Gaming
Web3 gaming is an important part of the crypto industry, attracting substantial investments and user engagement. However, the recent downturn in the market raises concerns that could erode investor confidence in the sector. As per CoinGecko’s report, Web3 Gaming projects were categorised as inactive when their 14-day moving average number of active users plummeted by 99% or more from the peak.
The Web3 gaming sector faces challenges, but the recent trends hint at a potential turnaround. The industry’s resilience and ongoing market recovery might pave the way for a more stable future. As stakeholders continue to navigate these turbulent waters, the evolution of Web3 gaming remains a story worth watching.
Related: 10 Cryptocurrencies Fuelling the Future of Gaming
Looking Ahead: A Call for Adaptation
While the statistics paint a challenging picture, there is room for optimism and adaptation. The crypto industry is known for its dynamic nature, and the Web3 gaming sector can leverage this characteristic to evolve and overcome its current struggles.
Web3 games experienced failures, but the challenges faced by the sector underscore the need for adaptability and strategic thinking. While the future may be uncertain, the crypto industry has a track record of resilience and innovation. By learning from past experiences, embracing change, and fostering community collaboration, the Web3 gaming sector can redefine its trajectory and contribute to the continued evolution of the broader crypto ecosystem.
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