Web3 games have recently gained pace with several GameFi projects going live on daily basis. The ongoing situation is a good opportunity to observe and re-evaluate the essence of Web3 gaming. For quite some time, we’ve analyzed many well-established gaming companies launching fabulous projects on Web3, in parallel to new companies entering the Web3 ecosystem with their infant yet amazing projects, and unfortunately, we found one thing in common. Although almost all of their whitepapers included and highlighted sustainability as one of their main objectives, their workaround was primarily based on getting a massive return on their investment as early, after the game goes live, as possible.
Eventually, this way of thinking poses threat to the reliability of many good game prospects for the long and even mid-level term. The volatility of most cryptocurrencies on which GameFi depends creates a major obstacle to the sustainability of Web3 games. Due to the main driving force for engaging in Web3 games is to earn or trade in cryptocurrencies, there has been a lot of dependency on the volatile crypto market, which is uncontrollable for gamers.
As soon as the market dips, we observed a dip in user engagement in Web3 games. As a result, many companies who are self-funded or looking forward to upcoming funding round, face negative consequences. These instances also prove that long-term goals of designing a good game economy, may also not be worthy of putting effort, due to such an underlying system crumbling the sustainability of the game. The fact that the focus of a major section of players is on the value of their digital assets in a game puts up two concerns:
- If there is a sudden impact on the Web3 ecosystem, would that start a panic amongst those players and eventually initiates an exodus from the game?
- If the game’s digital assets can only be traded in a particular cryptocurrency, then what would keep those players engaged in the game if its value drops at a certain point?
These issues act as catalysts for speculation, and in time they give a higher but unsustainable, investment return to the players. Practically, you can’t eliminate them from any game because that will be a blow to the major attraction for the players to try a Web3 game and stay in its environment. Till the time this strategy is working well, only those games that compromise on sustainability against growth will flourish.
How can Web3 Games become sustainable?
Suppose the primary ground for gamers to be in the game is the speculative value of their digital assets. In that case, no matter how well-fabricated the in-game economy is, the game will not be sustainable. The establishment of sustainability in a gaming environment can only be achieved if the driving force of players changes from ‘this is a game where you play to make money’ to ‘this is a game with great gameplay experience, you play to have fun, and you *can* also earn or get rewarded through that for your time and efforts’. If players come to the game with such an objective, then they won’t flee the game in the case of a drop in their digital asset value. Certain ways could help achieve these objectives, and hence sustainability, however, they all have their own challenges.
Proper Utilization of Early Investment
What we need to understand is that early players in a game are not particularly aiming at the gameplay, they are actually looking to crowdfund the game developers for the growth of the game. Since the early players are actually the investors, they expect the game to be established to attract more players who will be spending money to supply profits to the early investors. Hence, most games have a framework to sell securities with utility elements, like virtual real estate that will provide passive income to the holders based on the activity performed on them by players; as well as Initial Coin Offerings and NFT presales where buyers expect to sell those assets later. This framework has some clear problems:
- Instead of actual investor ideology to commit towards the growth of the game, this thinking encourages malpractices like building false hype, rug pull schemes, etc. taking unfair advantage of the absence of governance.
- Since the target is increasing the profit on their digital assets, these early investors may leave the game if the value of their assets decreases or if the game economy crumbles.
- The in-game assets should be designed around utility and must maintain their value, which creates an obstacle to bringing in new content which is a mandate for long-term sustainability.
User Generated Content
There are parallel spaces of content creators (the Earners who actually create reasons to spend on the game) and content consumers (the Spenders who spend and generate revenue for the game) in the gaming world, and blockchain technology maintains a symbiosis of transactions between them. A healthy balance between the two components is extremely necessary to incorporate sustainability into the game.
Nowadays, a player can grind a digital asset in a game and trade it with any player in another game. This activity does not supply any value in the former game, because it does not give any motivation to the existing players to spend more in that game. All such grounds for players to spend in the game are already integrated by game developers in its design, however, the activities of grinding the resources and assets of a game degrade those grounds.
What is next for the Web3 gaming space?
As of now, the major disadvantage for all such strategies to implement sustainability in Web3 games is that the community which engages in these games mostly comprises players who are actually involved in the blockchain domain and not the prospects who can transition from Web2 to Web3 gaming. Web3 gaming currently fuels the motivation of earning and getting high returns on early investment for the players, due to which they would naturally give precedence to short-term accomplishments over the legitimate fundamentals of sustainable growth of the gaming environment.
Web3 games are stuck in a deadlock where, on one hand, players think that blockchain gaming is volatile in nature and it is best to hit the jackpot as soon as possible in a game and then move on to the next game, and on the other hand, this practice is maintaining the volatility of the blockchain gaming ecosystem.
Most of the Web3 games include the same defects; they grow on the same strategy and quickly wrap up after gaining profit, and successive games keep this cycle going on and on. In rare instances, some games tried to break this cycle through innovative measures for creating sustainability, however, they faced backlash and their efforts went in vain. One such example was Axie Infinity, once a crowned jewel of Web3 games, where the daily revenue sunk from approximately $8M to scarcely $10k, along with a nosedive of active accounts from 1M to 50k only. And the reason? It was a change in the strategy of its game economy to attain sustainability, that directly hit the game speculation and provoked mass abandonment of players.
Conclusion
We try to drop the veil for the global gaming community through our analysis and hope that players and investors will notice the negative experiences of Web3 games and dig down to find the reasons for their downfall that suddenly happened after the uprising. We expect them not to just focus on short-term growth and profits but evolve their strategies to stimulate sustainability in the Web3 games.
