Opinion: Daryl Xu, co-founder and CEO of NPC Labs
Although games have been steadily declining since the end of the Covid-19 lockdown, 2024 has been a particularly strong hit in the industry, with layoffs and studio closures being hit by even the most prominent studios.
While unsustainable development costs and the innovation crisis seem like the main perpetrators behind the collapse, Web3 games have emerged as a potential solution that promises to return power to developers.
However, despite the continued adoption of cryptography, Web3 games have not been able to attract the attention of mainstream players or solve the fundamental problems of the game. why? Early blockchains were designed for financial applications. Game developers were forced to build on a blockchain that was not designed for use, or to create their own chains isolated from the blockchain ecosystem. Both choices have left Toconemics’ emphasis on poor player experience.
Many developers choose the latter and control connectivity. Incorrectly, this led to a walled garden that was not similar to what contributed to the collapse of the traditional game.
Solutions that have created more problems
A recent article in The New York Times revealed over the last 30 or 40 years that video game industry executives are betting on better graphics to bring players and profits, rather than relying on creativity. Traditional game development is expensive, with regular over $100 million per title. Indie developers struggle to compete with the large publishers who ultimately manage their funds and distribution.
Blockchain appears to be a promising solution for indie studios, providing a new pathway to raising funds and a new pathway to controlling distribution. However, the early Web3 gaming platforms ended up recreating the same enclosed system that blockchain is trying to fix. With high player acquisition costs and limited Web3 gamers, the Web3 gaming platform has deepened its momentum and prevented users from leaving. As development continued, Web3 Gaming introduced its own issues.
Impossible choices for game developers
The technology infrastructure of Layer-1 blockchains such as Ethereum and Solana is created for finance and does not meet the requirements of the game. Beyond transaction speeds, Layer 2 solutions are not designed to handle the unique needs of the game.
Game Developer – Enthralled by Web3’s funding model, ownership and promises of user engagement, forced to compromise gameplay based on existing blockchains or launch their own chain.
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While native Crypto players may find this a valuable trade-off, mainstream gamers want an engaging experience. A January Dappradar report showed that Web3 games reached 7.3 million unique active wallets, but when anecdotally talking to the community, about 10,000 of them represent actual gaming cohorts that are not involved in games that aren’t just farming rewards. This number can be high, but at most it is not above 50,000-100,000.
Inconsistency with gaming culture
What converts mainstream users’ Onchain is not inappropriate tokens (NFTs) or decentralized finance, which is meaningful ownership of the in-asset game. Mainstream gamers have spent decades on arcade games, Nintendo and mobile games. When combined with true ownership of in-game assets, its familiarity is powerful enough to create an engaging experience for developers and gamers.
Although they claim that Web3 games are revolutionizing games, most projects don’t listen to real gamers. In reality, they will compete for users from the same code. Rather than focusing on fun and engaging gameplay, most Web3 games are led by cryptographic technology and toconemics. In this bubble, the success of Web3 games meant taking crypto users together rather than on-chaining new players.
With rare exceptions, the industry has lost sight of what is important. It’s about creating fun games that people want to play.
This inconsistency also extends to game developers who want to enter Web3 to create a better player experience and a sustainable revenue model. Game studios understand the possibilities of Web3, but are hesitant to navigate Crypto’s complex systems. This requires technical skills to build a protocol with ample fluidity and user base while simultaneously providing seamless gameplay.
Make the game fun again
As major studios continue to struggle, Web3 has a chance to fulfill that promise. But this time we need to rethink how the games interact. Instead of creating a new walled garden, the focus should be on creating access for creators and players. This requires a Web3 gaming-specific infrastructure that provides both developer control and cross-ecosystem collaboration.
The path ahead is clear. You need to restore economic freedom to the creator and return control to the player’s hands. This means a revenue model that rewards collaboration rather than quarantine. Most importantly, it means returning to the roots of the game. It’s about making the game fun again.
The future of games is not about better graphics or token incentives. It’s about creating an industry where creativity and collaboration can flourish. Everyone wins when developers can focus on creating a engaging experience instead of creating a moat.
Opinion: Daryl Xu, co-founder and CEO of NPC Labs.
This article is for general informational purposes and is not intended to be considered legal or investment advice, and should not be done. The views, thoughts and opinions expressed here are the authors alone and do not necessarily reflect or express Cointregraph’s views and opinions.
