# Challenges of Web3 Games

Web3 games have introduced new values of decentralization and ownership, but they face difficulties in mainstream adoption due to unsustainable play-to-earn (P2E) models and complex wallet usability. Nonetheless, Web3 games continue to be a potent tool for attracting the general public to the Web3 ecosystem, making it worth revisiting their potential.

# Strategic Approaches for Success

Developers must prioritize gameplay while seamlessly integrating Web3 features. By leveraging proven elements from Web2 games, such as user-generated content (UGC) and curated marketplaces, improving wallet usability, and focusing on the gaming experience over profitability, they can achieve widespread appeal.

# Iterative Development for Market Validation

A strategy of quickly testing ideas through small-scale projects and focusing investments on market-validated directions is essential. This approach filters out unproven directions, allowing efficient resource allocation to projects with demonstrated market potential.

# Introduction

Web3 games have garnered global attention from gamers and developers by proposing an innovative vision of enhanced user ownership, open economies, and community-centered ecosystems. However, initial excitement has waned as the industry faces harsh realities. GameFi, which aimed to pioneer new horizons in the gaming industry, has encountered numerous obstacles, with the once-praised play-to-earn (P2E) model failing to maintain prolonged player engagement. Furthermore, unresolved user experience issues act as barriers for mainstream gamers.

Despite these challenges, the potential of Web3 games remains intact. GameFi still stands as the fastest and most effective channel to bring the general public into the Web3 ecosystem. The industry is at a critical juncture where it needs cold, strategic innovation to overcome current challenges and realize the true value of Web3 technology. This report analyzes the challenges facing GameFi and proposes key strategies for sustainable growth in the Web3 game industry, aiming to offer practical solutions for Web3 game builders to achieve long-term success in a rapidly evolving market.

# Web3 Games: Back to Basics

## Re-establishing Development Priorities

The most crucial aspect of Web3 game development is redefining the essence of the game itself. Regardless of whether it is a Web2 or Web3 game, the primary principle is that the game must be fun. Decentralization and ownership, inherent to Web3, should be utilized as complementary means to enrich the gaming experience rather than as defining elements.

During the height of GameFi in 2021, many developers hurried to launch games, focusing largely on short-term fundraising and profitability. This approach had clear limitations in creating AAA-quality or even entertaining games. Conversely, recent Web3 games like ‘Off The Grid,’ based on the Avalanche subnet, have received player acclaim by prioritizing gameplay, with blockchain elements enhancing the game’s enjoyment and value. By staying true to the core of gaming while appropriately leveraging Web3 technology, developers can foster rich player experiences and widespread popularity.

## Leveraging User-Generated Content

User-generated content (UGC) has been a cornerstone of Web2 games’ success, significantly contributing to player engagement and the longevity of game IP. Current Web2 games actively incorporate this approach. For instance, Nexon’s “MapleStory” enriches its ecosystem by providing a toolkit for users to create game content through “MapleStory World.”

In a Web3 environment, blockchain technology further amplifies UGC possibilities by enabling users to own and monetize their creations. Content ownership boosts creative incentives and participation, driving long-term growth. Web3 game builders can expect to strengthen community-centered ecosystems and collaboratively advance games with players through UGC. This approach not only extends the game’s lifecycle but also establishes a sustainable ecosystem where both players and developers can generate revenue.

## Reconstructing Curated Marketplaces

Although Web3’s decentralization values might seem at odds with curated marketplaces, their combination can yield significant benefits. Platforms like Steam or the App Store provide trusted environments through content curation and quality control, making it easier for players to discover and enjoy desired content.

In the Web3 space, curated marketplaces can offer trust and convenience while maintaining openness and scalability. For example, governance structures like DAOs can enhance decentralization values while ensuring quality and safety through curation. This hybrid model is expected to increase Web3 game accessibility, familiarize players with traditional game discovery methods, and expand the ecosystem.

# Lowering Entry Barriers for Web3 Games

## Improving Wallet Usability and Account Abstraction

The most significant entry barrier for new players in Web3 games is the complex user experience of Web3 wallets. Although essential for utilizing Web3 functionalities, their complexity can impede game entry. GameFi, which is expected to drive mainstream adoption into the Web3 ecosystem, suffers as complex wallet interfaces hinder immersion and create initial entry barriers.

To address these issues, account abstraction technology is gaining attention. Account abstraction enables users to naturally utilize blockchain functionalities without dealing with technical details like private keys or gas fees. Web3 game builders can offer smoother onboarding by integrating familiar Web2 authentication methods, such as social logins, with Web3 wallets. Openfort exemplifies this approach well. Furthermore, intuitive interfaces for transactions and asset management should be provided to create an environment where new users can easily understand and enjoy Web3 games. These improvements are expected to lower Web3 game entry barriers and attract broader participation.

## Shifting Web3 Game Narratives

Terms such as “GameFi” or “play-to-earn (P2E),” frequently used in Web3 games, can alienate potential users. Overemphasizing monetary benefits creates negative perceptions among players seeking pure enjoyment. Though P2E drew initial attention, its unsustainable structure led to most ventures joining a cycle of failure, reinforcing negative perceptions among players.

Therefore, Web3 games should focus on the inherent fun of the game, unique community experiences, and the new possibilities offered by blockchain technology, rather than profitability. This approach is poised to attract general users interested in the pure enjoyment of games. Game designs should align with this direction. Adopting terms like “play-and-earn” instead of “play-to-earn” aligns with this philosophy.

# Iterative Development for Market Validation

The Web3 game market is characterized by uncertain demand and rapid trend changes. In this environment, achieving product-market fit requires iterative validation and rapid improvement. Rather than developing large-scale AAA games, an approach of testing ideas and systems through small but compelling projects is deemed more effective.

The example of AAA games like “Assassin’s Creed: Valhalla” and “Forspoken,” which received mixed reactions despite positive reviews from critics, underscores that extensive resource investment alone cannot guarantee market success.

Conversely, small-scale projects can quickly validate market reactions. For instance, the Telegram mini-app “Tap-to-Earn (T2E)” game attracted user interest with its simple structure and low entry barriers. This approach served as critical validation for game companies. Moreover, initiatives like the collaboration between Kaia and LINE NEXT to build a mini DApp portal within LINE Messenger provide an environment for validation across diverse settings and user bases.

# Conclusion

For Web3 games to succeed, retaining the core essence of “fun games” is paramount. Web3 technology should be a supplementary tool that enriches gameplay, offering new values and experiences to players. Moreover, understanding and implementing what gamers genuinely desire, without being confined by the technical distinctions between Web2 and Web3, is likely the key to success. Achieving this will require continuous efforts to balance innovative technology with practical utility.

*This article is provided by Tiger Research, a global Web3 specialist research institution partnered with BlockMedia. The report “2024 Asia Local Currency Stablecoin Trends” can be found on the official Tiger Research website.*