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According to a recent report by CoinGecko, over three-quarters of all blockchain games launched in the past five years are struggling to stay afloat.
Despite Web3 gaming being highly acclaimed and GameFi being a powerhouse sector in crypto, the CoinGecko report has predicted a worrying outlook for the industry.
A Bleak Outlook
According to the CoinGecko report, 2817 games were launched between 2018 and 2023. Of these, only 690 had a somewhat active player base, while 2100 have shut down operations. The report put the annual failure rate for Web3 games at a staggering 80.8% between 2018 and 2023. This figure was calculated based on the number of games that failed compared to the number of games that were launched.
CoinGecko has defined a failed Web3 game as one in which the 14-day moving average number of active users drops 99% from its peak. This outlook comes despite the fact that crypto community members have highly acclaimed Web3 gaming, which has allowed users to earn significant rewards and tangible value from their gaming experiences. The sector has also brought considerable interest and investments into crypto.
Even during the ongoing year, Web3 gaming projects have attracted funding of over $2 billion. Against this backdrop, the CoinGecko report paints a worrying outlook.
The Current Scenario
The early stages of the GameFi sector saw very different dynamics. Thanks to a highly bullish outlook that fueled growth, Web3 gaming struggled during the bear market. 2021 saw the highest number of blockchain games launched in a single year, with 738 games. However, 2022, a year peppered with major companies in crypto collapsing, saw the highest failure rate when it came to blockchain games, with 742 games failing. Web3 games had a 95% failure rate in 2019 and 2020, while 2021 had the lowest failure rate at 45%.
“GameFi development and interest slowed amid the 2019 to 2020 bear market. Only 244 web3 games were launched during these two years. At the same time, the failure rate of web3 games rose to 94.3% in 2019 and maintained at 94.2% in 2020. 2021 recorded the lowest web3 games’ failure rate of 45.9% on the back of the crypto bull run. This was despite the number of failed web3 games jumping to 339 in 2021, surpassing 2018.”
The CoinGecko report stated that 2022 was the worst year for Web3 gaming, with a failure rate of 107%, despite a huge increase in Web3 games.
“The annual number of dead web3 games more than doubled in 2022, reaching a record yearly high of 742. This also marked the highest failure rate of 107.1%, even as the number of new web3 games remained high.”
In 2023, 509 Web3 games have shut down so far. This puts the failure rate of Web3 games for the current year at 70%, signaling a lower failure rate than in 2022. Interestingly, a lower failure rate suggests that the GameFi and Web3 gaming industry could be stabilizing, given the recent market recovery and signs of a bullish trend in the market.
“In 2023 to date, 509 web3 games have failed, which is equivalent to 70.7% of the web3 games launched this year. The lower failure rate could perhaps indicate a stabilization in the state of web3 gaming.”
CryptoKitties was the first Web3 game that generated considerable interest, launching in 2017. However, the game’s adoption has since slowed considerably. Meanwhile, other prominent Web3 games, such as Decentraland, The Sandbox, and Axie Infinity, are other prominent Web3 games that have launched since and established themselves in the market.
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