GameFi and Web2 Games: Comparable Market Forces Drive Success and Sustainability
Summary:
Despite the differences between Web2 games and GameFi, industry experts believe common market dynamics determine their success or failure. Essential factors like market demand, profitability, consumer expenditure, and developer competition are significant in shaping both sectors. Maintaining a solid player base, emphasizing engaging gameplay, graphics, and immersive experiences are also crucial. GameFi integrates elements of the Web2 game market with blockchain technology, providing ownership of in-game items and incentives in digital assets. In the interim, striking a balance between fulfilling investor expectations and ensuring a product's longevity is considered essential for the sustainability of blockchain and Web3 gaming. Monetization, user engagement, and the concept of "stickiness" or user return frequency are also considered critical for both web2 and Web3 games. While traditional gaming relies on direct sales and in-game purchases, GameFi projects incorporate decentralized finance mechanisms for revenue generation.
Although there are notable differences between Web2 Games and GameFi, several market dynamics that determine the success or failure remain the same, as highlighted by industry experts in a discussion with Cointelegraph. Major developers and producers dominating the larger games are often determined by market demands, profitability, consumer spending power, and developer competition in the Web2 market. All these elements are influential in a game's success or failure in the mainstream market. According to Andy Koh, the Head of GEMs, an esports aggregator platform, these same market dynamics are applicable in the GameFi realm, especially when it comes to sustaining a robust player base. He highlighted the importance of immersive gameplay, graphics, engaging experiences and an active community in both the Web2 and Web3 gaming spaces.
Koh noted that any game, whether traditional or blockchain-based, must maintain a committed player community to ensure sustained success with optimal token or nonfungible token (NFT) sales. GameFi combines parts of the web2 game market with blockchain technology, enabling ownership of in-game items and rewards in digital assets like NFTs. The key aim of GameFi titles is to create a sustainable environment based on digital assets of real-world value for long-term growth. However, many Web2 games are more focused on external forces, such as new releases replacing the original.
As per data from Statista, the renowned platform for traditional games, Steam, had over 73,000 available games by 2024. Last year alone witnessed an addition of 14,457 games to the library, up from 12,533 in the previous year, as per data from SteamDB's aggregation website.
Koh believes that for the long-term survival of web3 games and GameFi, a smaller, subtle shift is needed rather than an abrupt change toward traditional gaming market models of mass production. While many blockchain and web3 gaming founders recognize the fundamental factors for long-term success and sustainability, they often overly focus on pleasing investors, leading sometimes to the misallocation of considerable marketing budgets, impacting the actual game development.
Between 2021 and 2023, there has been a significant emphasis on token NFT games, often overshadowing the crucial aspect of attracting committed gamers. According to Koh, achieving a balance between satisfying investor expectations and ensuring the game's longevity is crucial.
Both Web2 and Web3 games are controlled by market forces such as profitability and "stickiness" or the frequency of user return, says Roy Kek, the co-founder and CEO of Emerge Group, a Singaporean gaming and esports company. Monetization is significantly important, with its role having grown enormously in recent years in the Web2 market through in-game purchases, premium paid downloads, and subscriptions.
Kek believes that Web3 games should leverage additional monetization possibilities unique to GameFi, including positioning the token as a valuable commodity within the game ecosystem and tokenizing unique in-game assets as NFTs, which players can own, trade, or sell.
However, in the GameFi, success isn't determined by "stickiness" or user return frequency alone. According to Mohsin Waqar, CEO of Web3 gaming platform Senet, other factors such as the viability of token economies, liquidity pools, and community engagement strategies are also important. Traditional games rely primarily on direct sales, in-game purchases, and microtransactions for revenue. In contrast, GameFi projects often involve decentralized finance mechanisms such as tokenomics, liquidity pools, and yield farming.
However, both industries are governed by the guiding principle that player enjoyment and engaging gameplay is the focus for a gamer's experience, as highlighted by Waqar.
Published At
3/11/2024 5:35:00 PM
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