Saving GameFi: Key Moves to Turn Web3 Gaming Around
Actionable Insights to Reinvigorate the Industry and Achieve Growth
This report was written by Tiger Research, offering analysis of strategies for the resurgence of Web3 gaming and GameFi.
TL;DR
The Challenge of Web3 Games: Web3 games introduced new values such as decentralization and ownership. However, they have struggled to gain mainstream adoption. Unsustainable P2E models and complicated wallet usability remain key obstacles. Despite these challenges, Web3 games are still one of the strongest tools for bringing the general public into the Web3 ecosystem. It is time for a thorough reassessment.
A Strategic Approach to Success: Developers must prioritize gameplay above all else while naturally incorporating Web3 features. Proven Web2 strategies, such as user-generated content (UGC) and curated marketplaces, should be utilized. Improving wallet usability and focusing on the gaming experience instead of profitability are crucial to gaining mass appeal.
Validate the Market Through Iterative Development: Testing ideas through small-scale projects enables developers to quickly assess market demand. This approach helps filter out unproven directions and ensures resources are focused on projects with strong market potential. By adopting this strategy, businesses can efficiently align their efforts with market needs.
1. Introduction
Web3 gaming attracted global gamers with its vision of user ownership, open economies, and community-driven ecosystems. However, the industry faced challenges as excitement faded. GameFi's play-to-earn (P2E) model failed to sustain engagement, and poor user experience remains a barrier for mainstream gamers.
Despite these issues, Web3 gaming holds strong potential. GameFi remains the fastest way to onboard the public into the Web3 ecosystem. This report explores the challenges in GameFi and provides strategies to help developers achieve sustainable growth in a changing market.
2. Harmonizing Web2 and Web3 Gaming
2.1. Aligning Development Priorities
The most important part of developing a Web3 game is focusing on its core. Whether it's Web2 or Web3, the game must be fun. Decentralization and ownership, while key to Web3, should complement the game, not define it.
In 2021, GameFi dominated the market, and many developers rushed to release games. They prioritized short-term funding and monetization, which limited their ability to create enjoyable or AAA-quality games. Off The Grid, a Web3 game on the Avalanche subnet, took a different approach. It focused on gameplay first and added blockchain features to enhance fun and value. By staying true to the game's essence and using Web3 technology effectively, developers can deliver a rich player experience and gain public acceptance.
2.2. Capitalizing on User-Generated Content
User-generated content (UGC) has been a key factor in the success of Web2 games. It increases player engagement and extends the lifespan of game IPs. Many Web2 games still use this strategy. For example, Nexon's MapleStory provides a toolkit through MapleStory World. This allows users to create their own content and enrich the ecosystem.
In a Web3 environment, blockchain technology improves UGC by enabling users to own and monetize their creations. This motivates players to create and engage more actively. UGC helps Web3 developers build community-focused ecosystems and evolve games with player input. This approach extends the game's lifecycle and creates a sustainable ecosystem where players and developers earn revenue.
2.3. Reimagining Curated Marketplaces
The decentralized values of Web3 may appear to conflict with curated marketplaces, but combining them offers clear benefits. Platforms like Steam and the App Store use content curation and quality control to create trusted environments. This helps players easily discover and enjoy content.
In Web3, curated marketplaces can provide trust and convenience while keeping openness and scalability. A governance structure like a DAO can support decentralization, while curation ensures quality and safety. This hybrid model makes Web3 games more accessible and familiar to players. It helps drive user acquisition and grows the ecosystem.
3. Reducing Barriers in Web3 Gaming
3.1. Enhancing Wallet Usability and Account Abstraction
The biggest barrier for new players in Web3 gaming is the complicated user experience of Web3 wallets. Wallets are essential for accessing Web3 features, but their complexity often discourages users. GameFi is expected to be a key channel for onboarding the masses into the Web3 ecosystem. However, difficult wallet interfaces and poor user experiences can block immersion and initial entry.
Account abstraction technology is becoming popular for solving these issues. It lets users access blockchain features without dealing with technical details like private keys or gas fees. It also allows Web3 game developers to combine Web2 authentication methods, such as social logins, with Web3 wallets. This creates a smoother onboarding experience. Openfort is an example of this approach. Simple interfaces for transactions and asset management will also help new users understand and enjoy Web3 gaming. These improvements lower entry barriers and encourage broader public participation.
3.2. Shifting The Narratives
Terms such as “GameFi” and “P2E” discourage potential users. These terms emphasize monetization over fun and create a negative image. Many P2E games gained early attention but failed due to unsustainable structures. This failure has reinforced negative perceptions among players.
Therefore, Web3 games must focus on fun, unique community experiences, and the benefits of blockchain. Profitability should not take priority. This approach attracts players who value enjoyment over financial rewards. Game design should also follow this principle. The term “play-and-earn” better reflects this shift than “play-to-earn.”
4. Iterative Development and Market Validation
The Web3 games market faces uncertain demand and quickly changing trends. Game companies must focus on iterative validation and rapid improvement to find product-market fit (PMF). Testing ideas through small projects is more effective than developing large-scale AAA games.
Even AAA games do not guarantee market success. For example, Assassin's Creed: Valhalla and Forspoken received positive reviews from critics. However, they faced mixed reactions from players and failed to meet expectations. These cases show that large resource investments alone cannot ensure success.
Smaller projects are effective because they validate market responses quickly. For example, the Tap to Earn (T2E) game launched through a Telegram mini-app. It was developed with a simple structure and low barrier to entry, which attracted users. This approach tested the concept and served as a key validation case for game companies. Additionally, Kaia recently collaborated with Line Next to build a mini dApp portal within Line Messenger. This collaboration offers an opportunity to test in a more diverse environment and user base.
5. Closing Thoughts
For a Web3 game to succeed, it must retain its core essence as a fun game. Web3 technologies should serve as tools to enrich gameplay and offer new value to players. The key to success lies in understanding what gamers want and delivering it. Developers should avoid overfocusing on technical distinctions between Web2 and Web3. Achieving this will demand ongoing effort to balance innovation with practicality.
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