Blockchain Gaming Overview: Looking Back to 2023 and Looking Ahead to 2024

Author: [email protected] Data source: Blockchain Game Annual Report

Key Points

• 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, There was also a significant upward trend towards the end of the year.

• Only 6% of this year’s games have more than 1,000 active wallets, down from 10% last year.

• In 2023, although overall transaction volume declined from the highs in 2022, the number of transactions remained relatively stable.

• In 2023, the blockchain game industry is developing, and AI is also profoundly changing this industry. Layer 2 blockchains are also developing rapidly, but established blockchains such as BNB chain still dominate the market.

• The market is looking forward to the emergence of top blockchain games. GambleFi may usher in growth, but it still needs to face regulatory challenges.

• In terms of user acquisition, it has become a trend to use social platforms such as Telegram and X (Twitter) to reach large user groups

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Blockchain games are an important catalyst for the popularization of the Web3 field and play an important role in simplifying complex concepts and allowing people to understand blockchain technology. Different from other fields, the concepts of game currencies and props that already exist 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 will drop sharply by 83.8% compared with 2022 (from US$20 billion to US$3.2 billion), developers in the game field are still actively preparing for the expected bull market. Prepare to improve the security, scalability, and transaction processing capabilities of your game and its infrastructure. In addition, developers are actively exploring strategies to attract more players through cooperation and learning from game giants in traditional fields.

According to a16z’s prediction for 2024, blockchain games are shifting from a pure play-to-earn form to a play-and-earn model that focuses more on game fun. 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 this area in the coming years. Our report provides a detailed analysis of the performance of blockchain games in 2023 and a forward-looking discussion of trends in 2024, hoping to provide an important reference for the market.

2023 game data: Transaction volume decreased, but the number of transactions did not drop significantly



Blockchain game market capitalization

This year, Bitcoin (BTC) market capitalization has rebounded strongly from the trough of the previous year, 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, user engagement has declined significantly. 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 transaction volume & number of transactions

Major industry players believe that the market downturn in 2023 is only temporary, so they will spend time optimizing game infrastructure. Waiting for the bull market to come.

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 efforts of industry players in improving on-chain infrastructure and optimizing user experience. determination. Take SUI, for example, which has successfully addressed concerns about blockchain processing power through games like SUI 8192. 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 game industry is developing, but the data on the chain is not optimistic

The game industry is developing, and AI is also profoundly changing this industry

• Play-to-earn is evolving into Play-and-earn

• More and more Web2 game studios More and more people are beginning to embrace Web3 technology

• The combination of AI and blockchain gaming industry has taken a critical first step

Footprint Analytics data shows that although the number of active players of Web3 games has decreased in 2023, the industry as a whole is still moving towards large-scale adoption and improved user experience. The entire industry is gradually moving away from focusing solely on crypto-native players and towards the broader mass market.



Ranking of gaming token gains throughout 2023

With expectations for the coming bull market, the development of the gaming industry has not stopped. Four gaming tokens achieved over 500% price growth in 2023, with the best performer being Nakamoto Games, whose token grew by a staggering 1931.55%.

In addition, gaming platforms such as HYTOPIA, Fabwelt and Merit Circle also saw token growth exceeding 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. The game originated in the traditional gaming world with Mojang Studios’ sandbox game Minecraft.

In addition, the well-known AAA game Illuvium has also cooperated with many Web2 mainstream entertainment companies. Web2 Studios has a strong interest in entering the blockchain space. Even traditional gaming giants like Ubisoft and Square Enix are exploring this new territory.

Looking forward to 2024, the trend of integrating AI into games will become even more obvious. Not only is AI significantly improving productivity, allowing small teams to efficiently create high-quality games, it also has the potential to quickly adjust game balance and mechanics to better respond to player needs by analyzing player data and real-time feedback.

Although AI is still in its early stages of development and its full impact on the gaming industry has yet to be further explored, its potential is exciting.

Layer 2 blockchain is developing rapidly, but old blockchains such as BNB chain still occupy the market

• Layer 2 area The rapid development of blockchain has attracted 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. Dominating the current market

2023 is of great significance to the development of Layer 2 blockchain, with multiple major projects emerging. In July, SUI demonstrated impressive results, proving to the world the powerful potential of Layer 2 blockchains to handle large volumes of transactions. Then in August, Base combined social and entertainment elements and launched friend.tech, which quickly became a hot spot in the industry. By November, Ronin quickly attracted the attention of the industry due to the outstanding performance of Axie Infinity and the launch of Pixels on the Ronin chain.



Layer 2 Overview

On December 31, 2023, Rollup technology has achieved rapid development, and the total lock-up value (TVL) of Arbitrum and Optimism has been added together. Occupying a market share of up to 83%. Optimistic rollups are particularly popular in the DeFi space due to their user-friendliness. Layer 2 blockchains for games are still trying to find their way and strive for a larger market share.



Active games on each chain in 2023

In 2023, established blockchains such as BNB chain, Polygon and Ethereum still have 80% of active games on the market. It shows that the old blockchain still dominates the market.

Investment and Financing in 2023



Ranking of large-scale financing events in 2023

In terms of investment in the blockchain game industry in 2023, Affected by the FTX incident and regulation, industry investment has slowed down sharply. Throughout 2023, a total of 131 financing rounds were completed in the gaming sector, totaling 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 annual amount of financing in the gaming industry

Among these investment events, a highlight comes from gaming giant Nexon, which is currently valued at US$27 billion. Nexon invests $100 million to expand its Web3 intellectual property project, MapleStory Universe.

2024 Outlook: The rise of top games, more Web2 users enter blockchain games

• The market is looking forward to top The Emergence of Blockchain Games

As the market’s expectations for high-quality games such as AAA games grow, the blockchain game industry is poised for development.

The development cycle of games usually exceeds two years. So following the significant infusion of funds in 2022, it can be speculated that the development of many games should have made substantial progress.

Web2 giants are gradually entering Web3. When the bull market comes, they will have a profound impact on the blockchain game industry. These game studios with traditional game development experience 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 the game, and bring more opportunities.

• GambleFi may see growth, but still needs to face regulatory challenges



Rollbit

In the context of a presidential election year, as the sports betting industry continues to develop, platforms like Rollbit will achieve significant results. Its 2023 revenue is reported to be around $300 million. The platform uses on-chain burning to track revenue, which has attracted attention but its accuracy has yet to be verified.

Despite regulatory challenges, GambleFi has become one of the most profitable applications in the crypto space, demonstrating the huge development potential of blockchain-based gambling platforms.

Many people develop games based on encryption technology on traditional social platforms in an attempt to gain users



Animoca Brands

The blockchain industry has always been are looking to include more users. This year, it has become a trend to use social platform platforms such as Telegram and X (Twitter) to reach a large user base. Animoca Brands’ partnership with The Open Network (TON) blockchain is an important example in this space. As the largest validator of TON, Animoca Brands will help Telegram users switch to Web3. This collaboration will not only reach more users, but will 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 promote the popularization of the blockchain industry and have a positive impact on the future development of the industry. play a key role.