Author: lesley@footprint.network
Data source: Blockchain Game Annual Report
Key Takeaways
This year, the market value of Bitcoin (BTC) has rebounded strongly from the trough of the previous year. In comparison, although the growth of the blockchain game market has been relatively flat, it also ushered in a significant upward trend at the end of the year.
Only 6% of games this year have more than 1,000 active wallets, down from 10% last year.
In 2023, while overall deal volume has declined from 2022’s highs, the number of deals 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 old blockchains such as BNB Chain still dominate the market.
The market is looking forward to the emergence of top blockchain games, and GambleFi may usher in growth, but it still faces regulatory challenges.
In terms of user acquisition, it has become a trend to use social platforms such as Telegram and X (Twitter) to reach a large user base.
Blockchain games are an important catalyst for the popularization of Web3, and play an important role in simplifying complex concepts and making people understand blockchain technology. Unlike other fields, the concepts of game currency and props that have long existed in traditional games make blockchain games a Web3 popularization solution that is easier for the general public to understand and accept.
Although the transaction volume of the blockchain game market in 2023 has dropped by 83.8% compared with 2022 (from $20 billion to $3.2 billion), game developers are still actively preparing for the expected bull market, focusing on improving the security, scalability and transaction processing capabilities of games and their infrastructure. In addition, developers are also actively exploring strategies to attract more players by cooperating and learning with game giants in traditional fields.
According to a16z’s forecast for 2024, blockchain games are shifting from a simple play-to-earn format to a play-and-earn model that focuses more on the fun of the game. At the same time, artificial intelligence not only improves productivity, but also brings new possibilities to blockchain games.
Given these significant developments, we expect blockchain gaming to see explosive growth in the coming years. Our report provides a detailed analysis of the performance of blockchain gaming in 2023 and a forward-looking discussion of trends in 2024, hoping to provide important reference for the market.
2023 Game Data: Transaction volume decreased, but the number of transactions did not drop significantly
Blockchain game market value
This year, Bitcoin (BTC) market capitalization has rebounded strongly from the previous year’s trough, reaching $828.35 billion, an increase of 159%. In comparison, although the growth of the blockchain game market was relatively flat, it also ushered in a significant upward trend at the end of the year.
Number of active game wallets
Despite the increasing number of games on the market, there has been a significant decline in user engagement. The number of games on the market will increase from 2,070 to 2,780 in 2023, but only 6% of this year’s games have more than 1,000 active wallets, down from 10% last year. This reflects the challenges blockchain games face in attracting users and the quality of games has declined compared to last year.
Monthly Trading Volume & Number of Transactions
Major industry players believe that the market downturn in 2023 is only temporary, so they will take the time to optimize the gaming infrastructure and wait for the bull market to arrive.
In 2023, although the overall transaction volume has declined from the high point in 2022, the number of transactions has remained relatively stable. This trend highlights the determination of industry participants in improving on-chain infrastructure and optimizing user experience. Take SUI as an example. Through games such as SUI 8192, it has successfully addressed people's concerns about blockchain processing capacity. In July 2023, the daily transaction volume of the SUI chain reached an astonishing 20 million.
We can see that the blockchain gaming industry is making strategic adjustments to seize opportunities when market sentiment improves.
2023 Market Review: The gaming industry is developing, but the on-chain data is not optimistic
The gaming industry is growing, and AI is profoundly changing it
Play-to-earn is evolving into Play-and-earn
Web2 game studios are increasingly embracing Web3 technology
The combination of AI and blockchain gaming industry has taken a critical first step
Data from Footprint Analytics shows that despite a decrease in the number of active players of Web3 games in 2023, the industry as a whole is still moving towards mass adoption and improved user experience. The entire industry is gradually shifting from focusing only on crypto-native players to a broader mass market.
Ranking of game token price increases in 2023
With the anticipation of the bull run, the development of the gaming industry has not stopped. In 2023, the prices of four gaming tokens achieved a growth of more than 500%, among which the best performer was Nakamoto Games, whose token grew by an astonishing 1931.55%.
In addition, tokens of gaming platforms such as HYTOPIA, Fabwelt, and Merit Circle have also grown by more than 500%. Even in difficult market times, projects with strong ecosystems continue to outperform.
A significant trend in 2023 is that the Play-to-earn of blockchain games is developing into Play-and-earn. Many Web2 companies have begun to increase their attention and investment in blockchain games, using their capital and experience to inject vitality into this emerging field. HYTOPIA is a successful example, with its token growing by 1086.75% this year. This game originated from the traditional gaming field Mojang Studios' sandbox game Minecraft.
In addition, the well-known AAA game Illuvium has also cooperated with several Web2 mainstream entertainment companies. Web2 studios are very interested in entering the blockchain field. Even traditional game giants like Ubisoft and Square Enix are exploring this new field.
Looking ahead to 2024, the trend of AI integration into games will become more obvious. AI is not only greatly improving productivity, enabling small teams to efficiently create high-quality games, but also has the potential to quickly adjust game balance and mechanisms by analyzing player data and real-time feedback to better respond to player needs.
Although AI is still in its early stages of development and its full impact on the gaming industry remains to be further explored, its potential is exciting.
Layer 2 blockchains are developing rapidly, but old blockchains such as BNB Chain still dominate the market
Layer2 blockchain is developing rapidly, attracting the attention of the entire gaming industry
Games on established blockchains such as BNB Chain, Polygon, and Ethereum still account for 80% of all active games and dominate the current market.
2023 is of great significance to the development of Layer2 blockchain, with several major projects emerging. In July, SUI showed amazing results, proving to the world the strong potential of Layer 2 blockchain to handle a large number of transactions. Then in August, Base combined social and entertainment elements to launch friend.tech, which quickly became a hot spot in the industry. In November, due to the outstanding performance of Axie Infinity and the launch of Pixels on the Ronin chain, Ronin also quickly attracted the attention of the industry.
Layer 2 Overview
As of December 31, 2023, Rollup technology has made rapid progress, with Arbitrum and Optimism accounting for a combined 83% of the market share in terms of total locked value (TVL). Optimistic rollup is particularly popular in the DeFi space due to its user-friendliness. Game-oriented Layer 2 blockchains are still struggling to find their way and gain a larger market share.
Active games by chain in 2023
In 2023, old blockchains such as BNB Chain, Polygon and Ethereum still have 80% of active games on the market, showing that old blockchains still dominate the market.
Investment and Financing in 2023
Ranking of large financing events in 2023
In 2023, due to the FTX incident and regulation, the investment in the blockchain game industry slowed down rapidly. In 2023, the game industry completed 131 financings with a total of US$983.9 million, a significant decrease from US$2.6 billion in the previous year. In the market environment of 2023, investors have become more cautious than before.
The amount of funding raised by the gaming industry each year
Among these investment events, a highlight came from 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: Top games emerge, more Web2 users enter blockchain games
The market is looking forward to the emergence of top blockchain games
As the market's expectations for high-quality games such as AAA games grow, the blockchain gaming industry is poised to take off.
The development cycle of a game usually takes more than two years. So following the massive infusion of funds in 2022, it can be inferred that the development of many games should have made substantial progress.
Web2 giants are gradually entering Web3, and they will have a profound impact on the blockchain game industry as the bull market arrives. These game studios with experience in traditional game development can inject their expertise into Web3 to create better blockchain games. At the same time, the integration of blockchain technology is expected to improve the transparency of in-game assets and economic cycles, the security of games, and bring more opportunities.
GambleFi may be poised for growth, but regulatory challenges remain
Rollbit
In the context of a presidential election year, and with the sports betting industry continuing to grow, platforms like Rollbit will have significant success, with revenue reportedly reaching around $300 million in 2023. The platform uses an on-chain burn method to track revenue, which has attracted attention, but its accuracy remains to be verified.
Despite regulatory challenges, GambleFi has become one of the highest-earning applications in the crypto space, demonstrating the huge potential for blockchain-based gambling platforms.
Many people develop crypto-based games on traditional social platforms in an attempt to gain users.
Animoca Brands
The blockchain industry has always been looking to include more users. This year, it has become a trend to use social platforms such as Telegram and X (Twitter) to reach a large user base. Animoca Brands’ collaboration with The Open Network (TON) blockchain is an important case in this area. As the largest validator of TON, Animoca Brands will help Telegram users switch to Web3. This collaboration will not only reach more users, but also bring real value and use to Web3 applications.
The continued development of blockchain games, making full use of the advantages of existing large platforms and combining them with the innovative capabilities of blockchain technology, will play a key role in promoting the popularization of the blockchain industry and the future development of the industry.
Footprint Analytics is a blockchain data solutions provider. With cutting-edge artificial intelligence technology, we provide the first code-free data analysis platform and unified data API in the Crypto field, allowing users to quickly retrieve NFT, Game and wallet address fund flow tracking data from more than 30 public chain ecosystems.
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