Back to the Basics : Blockchain Games 101
#1 Blockchain game types
TL;DR
The recent expansion of the blockchain gaming market has led to increased diversity in the types of games available.
In today's landscape, we actively categorize blockchain games into three main segments based on the level of integration and application of blockchain technology: (1) Web 2.5 games, (2) Web 3.0 games, and (3) On-chain games.
Moving forward, we anticipate the continuous advancement of blockchain technology will drive the emergence of additional on-chain gaming examples, as well as an even broader range of blockchain games across the industry.
Introduction
According to the recently published Market & Market's "Blockchain Gaming Market, Global Forecast to 2027" report, the global blockchain gaming market is projected to experience a significant growth of about 1,400%, reaching a value of $65.7 billion by 2027. This optimistic outlook is further supported by a16z's "2023 State of Crypto Report: Introducing the State of Crypto Index," which highlights the launch of approximately 717 new blockchain games last year alone, generating 23 times more on-chain transactions than DeFi. As evidenced by these and numerous other reports, the anticipation and potential for blockchain games within the Web 3.0 ecosystem are indeed valid.
However, before diving deep into the projections for the blockchain gaming market, we recognize the need for simpler and more intuitive explanations to enhance the general public's understanding of blockchain games. In reality, I receive questions about what blockchain games are almost daily, and even those who claim to understand them often provide different answers. Therefore, in this article, we aim to present a general framework for current blockchain games, including (1) the types of games and (2) the composition of game participants. To achieve this, we will draw upon the research conducted by Bankless and Naavik to provide easy-to-understand explanations.
How are blockchain games categorized?
“Web 2.5 Game = Game UI + Game Play (Frontend) + Blockchain (Backend)”
Web 2.5 games generally have a frontend that directly interacts with gamers, similar to traditional games. However, on the backend, they utilize blockchain technology to create the game infrastructure, positioning them in an intermediate stage between Web 2.0 and Web 3.0. In fact, gamers can play these games without even realizing that they are interacting with blockchain technology (and they don't need to worry about it). For instance, when accessing a Web 2.5 game, players can input their ID and password like a conventional game. In the backend, the system can automatically link a Web 3.0 wallet to their account.
Web 2.5 games are a blend of the advantages of both Web 2.0 and Web 3.0, primarily utilized by Web 2.0 game developers as a way to test Web 3.0 technology with minimal resources and without burdening their existing game divisions. Moreover, Web 2.5 games can appeal to traditional players who may be skeptical about adopting blockchain technology or users who are not yet familiar with Web 3.0, as they can play these games with little resistance. However, some blockchain enthusiasts still criticize Web 2.5 games for not fully embracing the decentralized values of blockchain technology.
Examples of this game category include the FPS game Deadrop developed by Midnight Society, the auto-battler game Illuvium based on ImmutableX, and the strategy card game Castle Crush, which is built on the Avalanche platform.
Web 3 Game = Game UI + Blockchain (Frontend) + Blockchain (Backend)
Moving on to Web 3.0 games, these are games that actively incorporate blockchain technology in both the frontend and backend, targeting crypto-native players rather than general game players. Furthermore, the Total Addressable Market (TAM) for difficult and inconvenient blockchain games beyond the crypto-native audience is considered very limited. For example, to access a game, players may need to log in directly through a Web 3.0 wallet instead of using an ID/password-based system, and they often need to purchase tokens (FT/NFT) to play the game.
Some Web 3.0 games initially gained temporary popularity by introducing tokenomics models like P2E (Play-to-Earn), P2W (Play-to-Win), and M2E (Move-to-Earn). However, they no longer receive the public's expectations and trust due to (a) country-specific regulations, (b) price declines resulting from token inflation, and (c) numerous rug pull incidents. In a recent interview, the CEO of a Vietnamese blockchain company shared, "P2E is totally dead in Vietnam."
Additionally, since there are relatively few crypto-native game players and the barrier to entry for general game players is high, it may take a considerable amount of time for Web 3.0 games to gain widespread popularity. Also, as not all game elements are stored on-chain and only some aspects are saved, it's difficult to view these games as fully decentralized, similar to Web 2.5 games.
Examples of this game category include Axie Infinity by Sky Mavis, the MMORPG game Worldwide Webb, and the RPG game The Beacon.
On-Chain Game(👏Applauding the Concept)
On-chain games are a category of blockchain games where all game elements and interactions are stored and executed directly on the blockchain. This approach ensures a high level of decentralization and transparency, giving players full ownership and control over their in-game assets, actions, and progress. While on-chain games are a promising concept, they may face challenges such as scalability, high transaction costs, and slower gameplay due to the limitations of blockchain technology. However, as blockchain technology continues to advance, we can expect the emergence of more on-chain games that overcome these challenges and offer a truly decentralized gaming experience.
Examples of this game category include Nine Chronicles by Planetarium, the sandbox-style game OPCraft, and the real-time strategy game Dark Forest.
Conclusion
In conclusion, we have examined three different types of blockchain games based on their level of blockchain technology adoption. However, this classification is only based on the current state of technology. As blockchain technology advances, we are confident that the types of games will become even more diverse and evolved. Just as blockchain games, which began in the early 2010s, have evolved into various forms and reached their current level, we are excited to see all the progress and people who are not losing faith in this industry.
In the next part, we will explore the composition of users who play blockchain games and the motivations behind their gameplay.