The Intersection of 2 Eras: WEB2 & WEB3 Collision

The Era of Traditional Giants: Growth & Limitations of the WEB2 Game Industry

As of 2023, the Web2 gaming industry has grown into a massive $200 billion market, expanding rapidly across mobile, PC, and console platforms. Despite this growth, the industry faces numerous challenges.

Major issues include centralized control, a lack of true asset ownership, limited revenue opportunities, a closed development ecosystem, content censorship, and data privacy and security concerns. Players have little control over the assets they purchase and lack meaningful influence in the games they play. Game development is largely driven by centralized studios, stifling innovation due to limited community involvement.

Moreover, the Web2 gaming industry struggles with excessive competition, rising development and marketing costs, and platform fees of up to 30%, which place a heavy burden on developers. In response, many developers adopt aggressive monetization strategies, subjecting players to an overwhelming amount of ads and paid content, leading touser fatigue and a decline in engagement. As a result, more and more users are leaving games.

The Wave of Innovation: Growth & Challenges of the WEB3 Game Market

The Web3 gaming market reached a $7 billion valuation in 2023, driven by blockchain technology, NFT trading, and decentralized economic systems. However, for continued growth, improvements in user experience and bridging the gap between Web2 and Web3 are essential.

While Web3 games offer decentralization and player ownership, they often prioritize economic benefits over gameplay enjoyment. This has led to players participating primarily for profit rather than for the intrinsic fun of the game, which hampers long-term player retention. The volatility of cryptocurrencies and NFTs further exacerbates this issue, creating financial instability for players and weakening the economic systems of many Web3 games.Web3 games also present a steep learning curve for new players. The technical processes involved in setting up blockchain wallets, purchasing cryptocurrencies, and trading NFTs act as significant barriers to entry, particularly for players accustomed to Web2 games. There remains a significant gap between Web2 and Web3 gamers, and strategies are needed to close this gap.

Since 2021, many Web3 games have adopted the P2E (Play to Earn) model, emphasizing financial gain. However, as token prices fell, many Web3 game economies collapsed, resulting in mass user exodus. The requirement to purchase NFTs before starting the game created a major barrier for casual players, while poor UX further deterred Web2 gamers from transitioning to Web3.

For the Web3 gaming market to achieve further growth, these user experience issues must be addressed, and strategies must be developed to stabilize the economy.