Author: Zen, PANews
Recently, the Web3 blockchain game MapleStory N, adapted from the classic IP (MapleStory) by South Korean gaming giant Nexon, officially launched, reigniting widespread attention on the previously quiet Web3 gaming track amid the strong performance of its NXPC token. Many are beginning to fantasize about a resurgence of GameFi.
However, one side is heaven, and the other side is hell.
Since 2025, the Web3 (blockchain) gaming field has experienced a massive halt in projects. Many once hotly favored projects have successively 'died'.
Games like blockchain ARPG Tatsumeeko, NFT game Nyan Heroes, blockchain FPS Blast Royale, and NBA star Stephen Curry-backed Rumble Kong League have all announced the termination of their development. Even the highly anticipated MMORPG project Ember Sword suddenly shut down after raising over $200 million, shocking the player community.
Why are Web3 games difficult to sustain?
'We have explored all possible paths forward. But in today's market environment, even some of the most promising projects have shut down, and we cannot find a way to continue development,' Bright Star Studios, the developer of the social sandbox game Ember Sword, announced its closure on May 21. Aside from public relations jargon, the clearest explanation given was, 'Ultimately, we could not secure the funding needed to continue development,' which is the reason almost all developers who have pressed pause on their games have provided.
Ember Sword official homepage
Among the recently announced game project shutdowns, the most surprising is undoubtedly the cat-themed shooting game Nyan Heroes. This well-known game in the Solana ecosystem attracted over a million players in four rounds of testing and had over 250,000 players adding it to their wish lists on Epic Games Store and Steam. 'Despite these achievements and discussions on release, new investments, grants, and acquisitions, we still failed to secure the funding needed to complete the game,' stated the game developer 9 Lives Interactive on X on May 17, expressing regret over the industry's tough situation leading to the closure of Nyan Heroes.
'The past few months have been tough; we are currently exploring studio and IP acquisitions. Some discussions are ongoing, but I estimate that the final decision may take some time,' said Max Fu, CEO and creative director of 9 Lives, expressing some hope for the future of Nyan Heroes, but noting that no significant results are likely in the short term.
Among the games shut down this week, there was also the once highly anticipated fantasy MMORPG Tatsumeeko: Lumina Fates, whose developer Tatsu Works had completed $7.5 million in funding in 2022, with supporters including well-known investment institutions such as Binance Labs, BITKRAFT Ventures, Delphi Digital, and Animoca Brands.
The development team of Tatsumeeko expressed relatively mild sentiments in their official announcement, stating that the project's scale became overly complex during development, not meeting their internal standards for sustainability, thus being forced to revert to a lightweight, community-based experience. Tatsu Works hopes to shift focus to a new project called 'Project: Wander', which can directly integrate gameplay into digital 'third spaces' like Discord servers, abandoning the large-scale game development of Tatsumeeko.
According to a PANews report titled (An Overview of 17 Web3 Games Shut Down in 2025: The Major Withdrawal of Blockchain Games Faces Funding Difficulties and Confidence Crisis), 17 Web3 games have already shut down in 2025. Overall, aside from the funding shortages mentioned by project parties, factors such as 'deteriorating market environment' and 'difficult player retention' have also played significant roles in collapsing these blockchain game projects.
High mortality rate has always been a chronic issue in the gaming industry
The sudden 'death' of several well-known blockchain games in recent times has led many to feel that Web3 games seem to have entered a death cycle, but this is likely due to the high visibility of these projects. In reality, the high mortality rate of Web3 games has never been a surprising issue.
CoinGecko published a report on Web3 games in December 2023, revealing that since the emergence of GameFi in 2017, the failure rate in this field has remained high. CoinGecko's research evaluated 2,817 Web3 games launched between 2018 and 2023, and based on observations from the blockchain data platform Footprint Analytics, it determined the active projects as of November 27, 2023. The research found that of the Web3 games launched during this period, approximately 2,127 failed, with an average annual failure rate reaching 80.8%.
A report released by ChainPlay at the end of 2024 is even more shocking. ChainPlay analyzed a total of 3,279 projects in its database and defined projects with token prices dropping over 90% from historical highs and daily active users below 100 as 'dead'. According to this agency's statistics, 93% of Web3 games are already dead, and it points out that GameFi projects can only sustain an average of four months.
In fact, the gaming industry's project failure rate has always been extremely high, which is not unique to the blockchain gaming sector.
According to a study released by the independent research and consulting agency ICT Institute in 2022, after analyzing 100 successful funded video game projects, they found that only 25% of projects were completed and delivered on time or within an acceptable delay, while 40% of projects failed to deliver any promised content.
The competitive mobile game sector also has an extremely high elimination rate. According to a study released by gaming-focused business analysis company SuperScale in November 2023, the death rate of mobile games within three years reaches up to 83%. In a study of 500 game developers, SuperScale also found that 43% of games even failed during the development stage.
Regarding why game projects have such a high failure probability, an academic paper on the gaming industry on the DiVA Portal pointed out that the failure rate in the creative industries is higher for games than for other software projects. The gaming industry requires continuous innovation and high-quality delivery, making it more prone to development delays, budget overruns, and ultimately project cancellations.
Stage financing model meets the deterioration of the environment
Game development typically adopts a 'staged financing' model, where seed or angel round financing is obtained in the early stages of the project, and as development progresses, more game content is continuously showcased, followed by subsequent rounds of financing, such as Series A and Series B.
For example, the hugely popular (Black Myth: Wukong) that caught fire last year quickly attracted a lot of attention after releasing its first gameplay demo video in August 2020, laying the foundation for subsequent financing and talent recruitment, leading to Tencent's strategic investment in 2021.
This model relies on the project's hard strength, requiring sufficient progress and potential to be showcased at each stage to attract new investment. However, in the blockchain gaming field, this model has proven difficult to implement: according to ChainPlay statistics, the average token price of GameFi projects has dropped by 95% compared to their historical peak, and among venture capital firms investing in GameFi, 58% have experienced losses between 2.5% and 99%.
In the current Web3 gaming field, airdrops and token incentives have become fundamental means to attract users. Especially in the early stages of projects, by promising players future incentives, project parties can quickly expand their user base and enhance community activity. However, this strategy often struggles to maintain long-term user retention. Once tokens are issued and airdrops are completed, players leave in droves due to reduced expectations for future rewards, causing game activity to plummet, making sustained development the top challenge. As user churn occurs and token prices drop, a negative spiral begins, leading to increased skepticism about the sustainability of the 'Play to Earn' model of related games, further exacerbating token price volatility and undermining investor confidence.
For investment institutions that have reduced their risk appetite, slowed their investment pace, and maintained a wait-and-see attitude, underperforming blockchain game projects are not an ideal choice. According to a report by DappRadar, in the first quarter of 2025, Web3 game projects raised approximately $91 million, a decrease of 68% compared to the same period in 2024, and a 71% drop compared to the previous quarter. This decline shows that investors' enthusiasm for this field has waned, partly due to increased attention to artificial intelligence and real-world assets (RWA), diverting investment interest from Web3 games.
The number of users and attractiveness of a project directly affect its ability to obtain funding and resource support. If user growth is weak or market response is lukewarm, even a capable development team may run out of time and funding before delivering the final product. In recent years, this situation has likely been common among several game projects that have shut down.
Money-grabbing, running away, and 'garbage' manufacturers
The abundance and efficiency of funds raised for failed projects is not simply a matter of 'lack of money' or 'too much money', but rather an issue of capital allocation and utilization efficiency.
Among the many game shutdowns, some projects are particularly regrettable. Their developers at least showed sincerity in creating the game but perhaps failed to complete a more polished product due to unfortunate timing. Meanwhile, some development teams entered the industry purely for hype and profit, making their departure after creating 'cyber garbage' unsurprising.
Among them, Ember Sword is particularly typical, as the level of indifference exhibited by its development team is astonishing.
In 2021, Ember Sword, riding the wave of the metaverse, began to gain more recognition, attracting 35,000 players and selling them NFT virtual land worth a total of $203 million. Ember Sword also completed multiple rounds of financing at that time, with investors including gaming streamer Dr. Disrespect, The Sandbox co-founder Sebastien Borget, and Twitch co-founder Kevin Lin.
In July last year, Ember Sword announced it was entering a closed testing phase and showcased gameplay videos. However, the simplicity, roughness, and cheap feel of its visuals disappointed players, with some commenting, 'If this had come out in 1995, I would have been very excited at 11 years old.' Other players angrily criticized the game as a scam, claiming its visuals were even worse than those of the MMORPG (RuneScape) that was released back in 2001. The inevitable closure of Ember Sword had already planted its seeds at that time.
Ember Sword game testing footage
With Ember Sword permanently shutting down, servers offline, and restricted access to Discord, the game's EMBER token has also plummeted to nearly worthless, with a market value of only $80,000. The developers grandly stated, 'This is not the ending any of us wanted'—of course, it isn’t; many community members have referred to Ember Sword as a 'scam'. The game's player YouTuber CAGYJAN claimed on X that he lost at least $30,000 on the project between 2021 and 2025, with many users sharing similar experiences below his post.
The disillusionment of player ownership promises
With the disappearance of these closed Web3 games also comes the illusion of truly owning game assets.
Promoting themselves under the banner of 'the future of gaming,' Web3 games often claimed in their promotional rhetoric that 'players will truly own game assets.' In theory, when characters, items, land, and other game assets adopt NFT technology, players become the true owners of these assets—these assets exist on the blockchain, independent of game developers' servers, and players can retain and trade these assets even if the game ceases operation.
But the reality is that so-called 'decentralized assets' still heavily rely on centralized game servers and developer support. When game projects are terminated or developers withdraw, players' NFTs and tokens lose their practical use, and their value immediately plummets. After Nyan Heroes announced it would shut down, its NYAN token plummeted by about 40% that day, with the circulating market cap dropping below $900,000. As of May 23, its current trading price is $0.006, down 98.5% from the historical high of $0.45 set in May 2024.
Regarding the problems brought about by the centralization of game projects, many industry insiders believe that if players cannot use their digital assets across different platforms and games, then they do not truly own these assets. However, even if the Web3 gaming industry reaches a unified standard technically, the so-called 'interoperability' still faces a deeper structural challenge. The vast differences between game types make inter-platform asset transfer practically unfeasible.
Imagine a game player owning an NFT character, weapon, or mount from a certain RPG game; what practical use could it have in an FPS shooting game, and how would its value manifest in a simulation management game? Game assets carry a set of abilities and attributes, and these systems are often designed independently for each game, leaving almost no interoperability between games.
Moreover, for game developers, making the NFT assets of other games 'compatible' with their own game world means exponentially increasing development complexity and maintenance costs. They not only have to design new models, animations, and UI interactions, but also consider how to integrate these external assets without disrupting the existing game balance, which is entirely unrealistic. No commercial game developer would voluntarily bear this burden for the sake of player 'ownership'.
Therefore, when we revisit the issue of players' ownership of assets, we must recognize that the core problem of asset ownership in Web3 games does not lie in so-called verification and chain-based proof, but fundamentally in whether it can be compatible and bound with a living game ecosystem. From this perspective, current Web3 games are no different from traditional games.
Why do blockchain game investors feel more pain than others?
Providing funding support for the ongoing development of projects as a game supporter is not unique to the blockchain industry; traditional crowdfunding game models have been operating for over a decade. Since the early 2010s, crowdfunding platforms like Kickstarter have provided avenues for independent developers to secure funding. In this model, players typically participate by pre-ordering games, obtaining merchandise, or receiving updates from developers.
According to a survey conducted by the University of Cologne, players participating in crowdfunding can be divided into three categories: supporters hoping to help specific developers make games without external constraints, buyers expecting to receive completed game products, and influencers hoping to impact the gaming industry through crowdfunding. The study indicates that the first two types of supporters are more inclined to view their funding投入 as support for the developer rather than a purely transactional act.
(Star Citizen), jokingly referred to as the 'Church of Selling Ships,' began crowdfunding on Kickstarter in October 2012. Over thirteen years, the game's developer Cloud Imperium Games has raised over $800 million through various means, including paid alpha testing, subscriptions, merchandise, microtransactions, and selling ships worth hundreds of dollars to players. Although this game has sparked some controversies, the community rarely collectively protested due to the paid purchase of game content.
When traditional game crowdfunding fails, the vast majority of players' investments typically amount to the cost of purchasing a game copy or related merchandise, which is relatively small. Even if traditional game projects fail, players' financial losses are relatively limited, and psychologically they are often willing to view it as support for the developers rather than a direct monetary投入. Even if the project does not complete as scheduled, supporters often regard it as backing for the idea rather than speculating on failure.
However, in the Web3 model, players and speculators directly spend more real money on in-game assets or tokens. When a project fails, they face the evaporation of real funds, resulting in a stronger sense of loss and betrayal.
Where should Web3 games go?
What are the best-designed, economically sustainable Web3 games? Currently, the answer to this question is very simple—almost none. Duncan Matthes, a researcher at Delphi Digital, pointed out that game development cycles are long and capital-intensive. Most high-quality games require 2 to 5 years of development time and a high level of expertise.
In addition, development budgets range from several million dollars for mobile games to hundreds of millions for console and PC games—far exceeding the average funding for Web3 games. These factors make it difficult for game tokens to grow steadily, primarily driven by attention and ever-changing narratives.
In this context, industry insiders generally believe that Web3 game developers must first ensure the quality and playability of the game itself. Carlos Pereira, a partner at Bitkraft Ventures, recently pointed out in an interview with Blockworks that Web3 game development should prioritize the quality of the game itself rather than prematurely introducing tokens or NFTs for monetization, as the latter sets overly high expectations. If studios fail to meet these expectations through exits or adjustments to their previous plans, they will fall into difficulties.
For many Web3 game developers, in the excessive pursuit of ownership and economic incentives brought by NFTs, they often overlook core elements of the game, such as character, narrative, gameplay experience, and community interaction. Shiti Manghani, COO of Find Satoshi Lab, has stated that players care more about whether a game is fun rather than the ownership mechanisms of in-game assets.
Returning to reality, the wave of shutdowns of Web3 game projects is due to a combination of factors, including the high failure rate of the gaming industry, the difficulty of player retention under the Web3 model, issues with capital allocation and financing models, and the deterioration of the macro investment environment.
In the face of adversity, Web3 games need to return to value-driven and technical essence to break free. They also need to return to their roots and make Web3 games fun again.