Game studios and players still massively underestimate how big web3 gaming will be.
Game developers and studios must understand the massive potential of web3 gaming. The gaming industry sees $240 billion spent annually, with $150 billion on digital assets alone.
Now we stand at another inflection point, driven by web3’s new monetization and distribution models.
This shift represents a golden opportunity to innovate, engage players on a deeper level, and unlock new revenue streams.
A brief history lesson on the transformation from web2 to web3 gaming
The journey of game economies began with pay-to-play and subscription models, as seen in arcade games and early MMORPGs.
Then, games like Candy Crush and Fortnite popularized free-to-play.
Suddenly, players were allowed to enjoy games for free while developers monetized through in-game purchases and ads. This ‘traditional model’ has its limitations. Players only ‘own’’ their in-game items until they don’t.
Any number of reasons (e.g., getting banned, server shutdowns, government regulations, etc.) can leave a player with zero digital assets to their name (even after pouring hundreds of hours of their time into acquiring them!)
To understand the limitations of traditional models, let’s look at Magic: The Gathering. This popular trading card game has roughly $20 billion worth of physical cards circulating globally. However, the game developers can’t monetize the secondary trading of these cards.
To sustain their revenue, they are forced to issue $30-50 million worth of new cards each year, making the older cards less valuable by introducing more powerful ones, a phenomenon known as power creep.
In contrast, a web3 model allows developers to take a percentage of every transaction in perpetuity, regardless of where the cards are traded, enabling players to have true ownership of their digital assets. Game developers can now explore sustainable monetization models that benefit both players and creators.
When players have the option to sell their items, new monetization mechanisms such as secondary marketplaces and royalties emerge. This shift could expand the gaming industry from $150 billion to trillions of dollars.
Building the first web3 game economies
Trading card games (TCG) are also the most straightforward implementation of a Web3 model. Gods Unchained (GU), launched in 2018, is a prime example.
Unlike traditional TCGs, where players grind for hours to gain the best decks yet only ‘own’ their cards provided they have access to the game servers, GU lets players own their cards as NFTs. These cards can be earned through daily gameplay, traded on marketplaces for other cards, or sold as ETH. Unique gameplay mechanisms like crafting allow players to create exclusive, higher-rarity cards that further increase their intrinsic value, highlighting the new revenue opportunities unlocked by web3 technology.
And player sentiment towards the game is positive. With a typical TCG a monthly average revenue per user (ARPU) of $20-30 is considered high, and for newly released titles, it could go up to $80-120 in the initial months.
Our data from Gods Unchained shows that web3 gamers transact over $130 monthly, sustained over the years while playing 24% more daily than the top 25% of mobile games (indicating a higher level of player engagement and investment in the game, driven by the tangible ownership of digital assets.)
Pushing the boundaries of web3 economies
We can keep pushing the web3 model to be even more rewarding for players and game studios.
Guild of Guardians (GOG) takes a new approach to monetization by allowing players to start without touching web3 elements and gradually upgrade their Guardians to access web3 features as they become more comfortable.
This phased approach not only eases players into the new economy but also ensures that the game remains engaging and accessible. The introduction of Immutable Passport simplified onboarding, allowing players to sign up with an email instead of navigating the complexities of traditional wallet setups.
With game developers now able to quickly engage a player, and onboard them without hassle, players can enjoy the familiar environment of web2 before transitioning to the more complex web3 aspects.
Maintaining a stable and engaging game economy is critical for long-term success.
GoG’s economy balances the needs of producers and consumers, creating a dynamic and sustainable system. Upcoming features like guilds will enhance community dynamics, providing players more ways to interact and collaborate. Social dynamics play a crucial role in enhancing player engagement.
Using Web3 tools to incentivize behaviors through collaborative or competitive mechanics adds depth to the gaming experience. This includes implementing systems like bounty hunter versus collaboration dynamics, similar to those seen in farming sims like Stardew Valley, where social status and in-game achievements contribute to player retention and engagement.
For example, GoG’s Friends & Family demo launch saw 555 participants commit over 1.12 years of playtime to the week-long demo, with retention rates far exceeding traditional game benchmarks.
By focusing on quality and leveraging Immutable’s platform, developers can create engaging, secure, and scalable web3 games that offer true digital ownership and innovative monetization strategies.
The future of web3 game economies
Some of the most anticipated web3 games will launch in the coming months, potentially marking the inflection point for mainstream web3 gaming adoption.
Game developers and studios can gain valuable insights into the transformative potential of Web3, understand how to leverage Immutable’s tools to create engaging game economies, and discover new opportunities for monetization and player retention.
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