Over the past five years, the Web3 gaming industry has been faced with a daunting reality – three out of every four games launched have met their demise. This alarming statistic paints a bleak picture for the GameFi sector, as highlighted in a recent report by CoinGecko.
According to the report, out of the 2,817 games analyzed between 2018 and 2023, only 690 managed to maintain an active player base. This leaves a staggering 2,100 games that have ceased operations, resulting in an annual failure rate of 80.8% for Web3 games during this period.
The Failure Epidemic
The failure rate, calculated by comparing the number of failed games to the total number of games launched, is a cause of concern for the industry. CoinGecko defines a failed Web3 game as one that experiences a 99% drop in active users based on a 14-day moving average from its peak.
These findings come as a surprise, considering the initial hype and enthusiasm surrounding Web3 gaming within the crypto community. The promise of earning substantial rewards and tangible value from gaming experiences attracted significant interest and investments in the crypto space. In fact, Web3 gaming projects have secured over $2 billion in funding this year alone.
However, the CoinGecko report raises doubts about the long-term sustainability of the industry. Despite the record-breaking number of blockchain games launched in 2021 (738 in total), the subsequent bear market in 2022 posed significant challenges for Web3 gaming.
The Impact of the Bear Market
During the bear market, Web3 gaming saw its highest failure rate, with 742 games unable to sustain themselves. This translated to a failure rate of 107%, marking a crucial setback for the industry.
Looking back, the failure rates for Web3 games in 2019 and 2020 were equally astonishing at 95%. The year 2021, despite experiencing the lowest failure rate of 45%, recorded a total of 339 failed games. The report attributes this to the impact of the bear market on GameFi development and interest.
Surprisingly, despite the challenges faced in recent years, 2023 has shown signs of stabilization. So far, 509 Web3 games have ceased operations, resulting in a 70% failure rate. While still high, it indicates a potential recovery and a shift towards a more bullish trend in the GameFi and Web3 gaming industry.
Notable Setbacks and Successes
It’s worth noting that even some of the more prominent Web3 games have faced setbacks. CryptoKitties, launched in 2017 as the first Web3 game, initially attracted significant interest but has since seen a decline in adoption.
On the other hand, Web3 games like Decentraland, The Sandbox, and Axie Infinity have emerged as industry leaders and solidified their position in the market. These games have managed to navigate the challenges and thrive despite the overall struggles faced by the GameFi industry.
