Are Crypto Games Still Viable in 2023?

What Are Crypto Games?

Crypto games are a genre of video games which allow users to earn cryptocurrency by playing the game. This is a new phenomenon in the context of blockchain-based currencies.

The concept of earning real life currency from video games however is not all that new. Examples being Second Life and EVE Online. While Second Life’s linden dollars and EVE’s ISK aren’t tradeable with real currency (in the case of EVE, it hasn’t stopped players from doing so even against the terms of service) players have been spending loads of real world currency on both of these games.

Second Life’s economy has grown to such a scale that it is perhaps the most well-known digital real estate market to date. EVE on the other hand is a space combat and sci-fi simulator. The Battle of B-R5RB, EVE’s most famous battle, ran up a cost of an estimated $300,000 USD and involved more than 6000 players.

What both of these games have in common is that they are experience focused, player-driven, and started off without monetization. It was only after players had invested a lot of time in-game to form communities and internet technology advanced enough that the financialization of these two games took hold and was successful in doing so.

CCP Games, the developers of EVE Online, report an estimated in-game GDP of about $7.4 million USD and Second Life developers report that the virtual world has an estimated GDP of $500 million USD.

Crypto Games in 2023

In recent years, many developers have attempted to startup blockchain-based games that allow players to earn cryptocurrencies or tokens which convert into cryptocurrency by playing the game. A number of these games started up during the NFT craze between 2020 and 2022 and have relied mostly on speculation and hype to generate investor confidence.

As well, a number of crypto and web3 based games aren’t considering the player experience of their games, which is how the tokens are supposed to be generated.

This has led to a number of projects failing or losing investment because of unclear roadmaps from development to launch. The crypto gaming market has been developing with the wrong kinds of incentives to bring players in, effectively focusing on game loops not that much different than slot machines, and speculation about in-game real estate which has yet to have a proven value system.

In better news, VCs are turning away from hype-based models, examining the successful projects, and planning around the developments found from successful studios.

VCs have spent millions in funding on studios such as Uncaged Studios, Revolving Games, and many more. These are long term investments based around deeper knowledge of the gaming industry, teams that have experience making games, and the failures of previous web3-based projects.

While crypto games might not hit it big in 2023, development of crypto games, which can attract both players and investors, might be in sight between 2026 and 2028.

Games which relied on their own tokens to attract investment aren’t making the cut and thus it is the studios attracting VC money that stand to gain the most from the future of the crypto gaming world.

The Models that Work in 2023

The successes in the crypto gaming market are mainly found in mobile games. The casual model of games offered on mobile devices lend themselves well to the current NFT technology.

Tradeable In-game

An example of such a model comes from Sorare, who have developed an NFT-based fantasy sports league game. Players can manage their virtual team using NFT cards, which are tradable in-game.

However, not all cards are tradeable. Some cards have identifiers such as limited edition which mark them as scarce and exchangeable making them a digital asset. This provides access to players who aren’t invested, as well as incentives to the players invested, in the experience to both play the game and take a shot at acquiring a digital asset that they can keep or trade for later.

Mobile Gaming

As the mobile market for crypto and web3 gaming expands, players and would-be investors can look to games like Genshin Impact for a guide on developments to come. Genshin’s model for monetization easily translates into the current state of the crypto and web3 gaming market.

The model that Genshin follows is known in Japan as the Gacha model (toy vending machine) which focuses on having players spend their real world currency on in-game items. This offers a chance at earning desired virtual items.

The most successful mobile games in Japan follow this model for the most part and this model might be how crypto games make their next big break in the field of mobile gaming.

Currently these models are based on scarcity and chance, and critics say that they resemble gambling. Free-to-play models present in non-crypto games have long been criticised as exclusionary and not player focused. If the VCs succeed in their investments, this may change the trend in what makes a successful crypto game.

The Growing Metaverse

In summary, what can be expected from crypto gaming in 2023 is a lot of building towards the future. Crypto and web3 gaming is still in its infancy and if you care to take the chance in betting on the future of crypto gaming, then follow the VC money.

Crypto games that have the most successful models in 2023 are to be found in the casual, mobile market. Crypto gaming has yet to flourish in the same way that regular gaming has, however, that may change after development has taken its time to bear fruit in a few years.