Original Author: lesley@footprint.network
Data Source: Blockchain Game Annual Report
Key Points
This year, the market value of Bitcoin (BTC) has rebounded strongly from the previous year's low, while the growth of the blockchain gaming market has been relatively flat. However, it saw a significant increase towards the end of the year.
In this year's games, only 6% of games have more than 1,000 active wallets, a decrease from 10% last year.
In 2023, although the overall transaction volume has decreased from the peak in 2022, the number of transactions has remained relatively stable.
In 2023, the blockchain gaming industry is developing, and AI is profoundly changing the industry. Layer 2 blockchains are also developing rapidly, but established blockchains like BNB still dominate the market.
The market is anticipating the emergence of top blockchain games, and GambleFi may experience growth but still needs to face regulatory challenges.
In terms of user acquisition, it has become a trend to reach a large user base through social platforms such as Telegram and X (Twitter).
Blockchain games are an important catalyst for popularizing Web3, playing a crucial role in simplifying complex concepts and helping people understand blockchain technology. Unlike other fields, the concept of in-game currency and items, which has long existed in traditional games, makes blockchain games a more easily understood and accepted Web3 solution for the general public.
Despite a significant 83.8% decrease in the blockchain gaming market's transaction volume from $20 billion to $3.2 billion in 2023 compared to 2022, game developers are still actively preparing for the anticipated bull market, focusing on improving the security, scalability, and transaction processing capabilities of games and their infrastructure. Additionally, developers are actively exploring strategies to attract more players through collaborations and learning from traditional gaming giants.
According to a16z's predictions for 2024, blockchain games are transitioning from a pure play-to-earn model to a play-and-earn model that emphasizes game enjoyment. Furthermore, artificial intelligence not only enhances productivity but also brings new possibilities to blockchain games.
Given these significant developments, we expect explosive growth in the blockchain gaming industry in the coming years. Our report provides a detailed analysis of the performance of blockchain games in 2023 and offers forward-looking insights into the trends of 2024, aiming to provide important references for the market.
2023 Game Data: Decrease in Transaction Volume, but Stable Number of Transactions
Blockchain Game Market Value
This year, the market value of Bitcoin (BTC) has rebounded strongly from the previous year's low, reaching $828.35 billion, a staggering 159% increase. In comparison, the growth of the blockchain gaming market has been relatively flat, but it saw a significant increase towards the end of the year.
Number of Active Game Wallets
Despite the increasing number of games in the market, user engagement has significantly decreased. In 2023, the number of games in the market increased from 2,070 to 2,780. However, in this year's games, only 6% of games have more than 1,000 active wallets, a decrease from 10% last year. This reflects the challenges faced by blockchain games in attracting users, and the quality of games has declined compared to last year.
Monthly Transaction Volume & Number of Transactions
Major industry participants believe that the market downturn in 2023 is only temporary, so they are spending time optimizing game infrastructure and waiting for the bull market.
In 2023, although the overall transaction volume has decreased from the peak in 2022, the number of transactions has remained relatively stable. This trend highlights the determination of industry participants to improve on-chain infrastructure and enhance user experience. For example, through games like SUI 8192, SUI successfully addressed people's concerns about blockchain processing capabilities. In July 2023, the daily transaction volume of the SUI chain reached an astonishing 20 million.
It is evident that the blockchain gaming industry is strategically adjusting to seize opportunities when market sentiment improves.
2023 Market Review: Gaming Industry is Developing, but On-Chain Data is Not Optimistic
The gaming industry is developing, and AI is profoundly changing the industry
Play-to-earn is evolving into play-and-earn
More and more Web2 game studios are embracing Web3 technology
The combination of AI and the blockchain gaming industry has taken a crucial first step
Footprint Analytics data shows that despite a decrease in the number of active players in Web3 games in 2023, the industry as a whole is moving towards mass adoption and improving user experience. The entire industry is gradually shifting from focusing solely on native crypto players to a broader mainstream market.
2023 Annual Ranking of Game Token Price Increases
With expectations for the bull market, the development of the gaming industry has not stopped. In 2023, the prices of four game tokens increased by over 500%, with Nakamoto Games performing the best with a staggering 1931.55% increase.
Additionally, the tokens of gaming platforms such as HYTOPIA, Fabwelt, and Merit Circle also grew by over 500%. Even in challenging market conditions, projects with strong ecosystems have performed exceptionally well.
A significant trend in 2023 is the evolution of play-to-earn in blockchain games into play-and-earn. Many Web2 companies are increasing their focus and investment in blockchain games, injecting vitality into this emerging field with their capital and experience. HYTOPIA is a successful example, with its token growing by 1086.75% this year. This game originated from the sandbox game Minecraft by traditional gaming giant Mojang Studios.
Furthermore, the renowned AAA game Illuvium has collaborated with multiple mainstream entertainment companies in Web2. Web2 studios are highly interested in entering the blockchain field. Even traditional gaming giants like Ubisoft and Square Enix are exploring this new territory.
Looking ahead to 2024, the trend of integrating AI into games will become more prominent. AI is not only significantly increasing productivity, enabling small teams to efficiently create high-quality games, but also has the potential to quickly adjust game balance and mechanics in response to player needs through analyzing player data and real-time feedback.
Although AI is still in the early stages of development and its comprehensive impact on the gaming industry is yet to be fully explored, its potential is promising.
Rapid Development of Layer 2 Blockchains, but Established Blockchains like BNB Still Dominate the Market
Layer 2 blockchains are developing rapidly, attracting attention from the entire gaming industry
Established blockchains such as BNB, Polygon, and Ethereum still account for 80% of all active games in the market, dominating the current market
The significance of the development of Layer 2 blockchains in 2023 is substantial, with several major projects emerging. In July, SUI demonstrated remarkable performance, proving the powerful potential of Layer 2 blockchains in processing a large number of transactions. Following that, in August, Base launched friend.tech, combining social and entertainment elements, quickly becoming an industry hotspot. By November, due to the outstanding performance of Axie Infinity and the launch of Pixels on the Ronin chain, Ronin also quickly attracted industry attention.
Layer 2 Overview
As of December 31, 2023, Rollup technology has seen rapid development, with the combined total value locked (TVL) of Arbitrum and Optimism accounting for as much as 83% of the market share. Optimistic rollup is particularly popular in the DeFi field due to its user-friendliness. Layer 2 blockchains for gaming are still striving to find direction and compete for a larger market share.
Active Games on Various Chains in 2023
In 2023, established blockchains such as BNB, Polygon, and Ethereum still hold 80% of the active games in the market, indicating that established blockchains still dominate the market.
Investment Situation in 2023
Ranking of Major Financing Events in 2023
In 2023, due to the impact of the FTX incident and regulations, investment in the blockchain gaming industry experienced a rapid slowdown. Throughout 2023, the gaming sector completed a total of 131 financing deals, amounting to $983.9 million, a significant decrease from the previous year's $2.6 billion. In the market environment of 2023, investors became more cautious than before.
Annual Financing Amount in the Gaming Industry
One highlight of these investment events comes from the gaming giant Nexon, which is currently valued at $27 billion. Nexon invested $100 million to expand its Web3 intellectual property project, MapleStory Universe.
Outlook for 2024: Emergence of Top Games, More Web2 Users Entering Blockchain Games
The market is anticipating the emergence of top blockchain games
As the market's expectations for high-quality games such as AAA games continue to grow, the blockchain gaming industry is poised for significant growth.
The development cycle of games typically exceeds two years. Therefore, following the substantial injection of funds in 2022, it can be speculated that many games have made substantial progress in their development.
Web2 giants are gradually entering Web3, and they will have a profound impact on the blockchain gaming industry as the bull market arrives. These game studios with traditional game development experience can inject their expertise into Web3, creating superior blockchain games. Additionally, the integration of blockchain technology is expected to enhance the transparency of in-game assets and economic cycles, improve game security, and bring more opportunities.
GambleFi may experience growth, but still needs to face regulatory challenges
Rollbit
Against the backdrop of the presidential election year and the continuous development of the sports betting industry, platforms like Rollbit are expected to achieve significant success. It is reported that its revenue in 2023 reached approximately $300 million. The platform uses on-chain burning to track revenue, a practice that has attracted attention, but its accuracy is still to be verified.
Despite facing regulatory challenges, GambleFi has become one of the highest-earning applications in the crypto field, demonstrating the significant growth potential of blockchain-based gambling platforms.
Many are developing games based on encryption technology on traditional social platforms in an attempt to acquire users
Animoca Brands
The blockchain industry has always been seeking to onboard more users. This year, it has become a trend to reach a large user base through social platforms such as Telegram and X (Twitter). The collaboration between Animoca Brands and The Open Network (TON) blockchain is an important case in this field. As the largest validator of TON, Animoca Brands will help transition Telegram users to Web3. This collaboration not only expands the user base but also brings practical value and utility to Web3 applications.
The continuous development of blockchain games, leveraging the advantages of existing major platforms and combining them with the innovative capabilities of blockchain technology, will play a crucial role in driving the popularization of the blockchain industry and shaping its future development.
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