The gaming industry is far past its infancy — today, pro gamers are proper athletes, and many people make their livelihoods by playing games. However, there are limited earning opportunities:

1. Streaming — The rise of streaming services and YouTube channels led to massive capital inflow, mostly following advertisements and sponsorships.

2. Marketplace — The old-school gamers remember buying/selling of Counter Strike accounts. Today, many games offer structured ways of trading in-game assets.

3. Tournaments — Largely reserved for pros, there are big winning pools if you are good at it.

While there is money to be made here, all these have one fundamental flaw — the gamer is just an executor, and the developer captures most value. Enter Play-to-Earn (P2E). A whole article can be written about P2E, its benefits, and shortcomings, but the truth is that so far, it has failed. Why? Two reasons: (i) terrible user experience, and (ii) fun was lost in translation. We play games because they are fun, not because you can earn money to replace your 9-to-5. However, there is a paradigm shift. Games are no longer either Web2 or Web3 — games are games — and Web3 is becoming a functional layer to enable P2E without compromising the quality and the fun. Most of the recent popular titles can be played without any crypto interaction. You download the game from Epic/Steam or even the App Store, register via email, and you’re good to go. It is no coincidence that a recent study found that 75% of the biggest gaming studios are venturing into Web3 games, with most directly developing on-chain games¹. It is clear there is a new wave — game development is business as usual, with Web3 enabling true player ownership.

The challenge is how to onboard the users in an environment prone to exploitation, scams, and Sybil. P2E’s most recent modification is Play-2-Airdrop, which allows onboarding users early and puts project interaction at the core. While initially effective, today, even the most sophisticated P2A campaigns fall victim to bots and attract farmers. They function similarly to general ads without any segmentation — target everyone and get attention but at the cost of low efficiency, with 90% of users churning after just 12 months². The best option is to go to external, gated communities focused on onboarding highly active and engaged players. While this can be effective in some cases, you blindly trust that most communities are exclusive enough that it fends off speculators.

Web3 is plagued with ‘how to fend off farmers’ while we must reach Web2’s ‘how do I target my desired segment.’

Three areas need to be addressed:

Gamer Identity

Every time a player starts a new game, they are starting from a blank page. This inability to prove your credentials diminishes prior achievements and puts everyone in the same bucket. De facto, this puts actual gamers at a disadvantage. While you were playing games and contributing to the ecosystem, the farmers were training to get airdrops and maximize their payout.

Privacy is paramount, but there needs to be a better way of carrying your gamer identity with you and, most importantly, building it over time. Currently, the available solutions are limited in their actual utility or scope.

CARV does a great job binding multiple Web2 and Web3 identities into one Soulbound NFT, but it never really goes beyond socials. Most of the badges that can be obtained are simply replicas of Zealy, Galxe, etc. Follow Nyan Heroes on Twitter and you are a better gamer? For social engagement, you use your socials, not the Token.

On the other hand, ImmutableX Passport addresses gamer onboarding more directly via SSO and integrations. The long-term vision of the Passport is stated to be a single user identity, but currently, it is at the early stages and is limited to StarkEx (IMX layer 2), so developers need to stay confined to IMX ecosystem.

Profiling

Data dependency was never crypto’s strong suit. This is slowly changing. More must be done to leverage on/off-chain information, especially given its public nature. Web2 needs a centralized entity like Facebook to gather the data points on users and allow them to generate user personas. In Web3, instead of Facebook accounts, we have on-chain data. Wallets are the ultimate history books, and the information must be put to better use. Abstraction is what makes or breaks Product-Market Fit — 99% of users do not care about how Google knows where the end consumer is located; I do not want my barbershop ad to be shown to someone in another country. The data is there; we just need to abstract from it.

Infrastructure

To be taken for granted is the ultimate testament of achievement. Groundbreaking tech has become so ubiquitous that in just 1–2 decades, it is taken for granted. “When I started Amazon, I didn’t have to develop a payment system. It already existed. It was called the credit card.”³ Web3 gaming needs to move away from every game developer crafting their own user acquisition/airdrop system from scratch. User acquisition infrastructure needs to be a commodity so that developers can focus on building their game and simply use airdrops as an available tool to target the right players without having to first re-invent the credit cards.

Final Remarks

Those who have been around for a while can clearly see that this second wave of Web3 gaming is different. Before, almost all games were built by crypto natives who were first-time game developers. This time around, we have experienced game-natives who are first-time Web3. At this pivotal moment, the industry needs to step up to the challenge. By designing good user experience and developing projects with product market-fit we can decisively reject the dogma that everyone is here for the money and not the technology.

It’s time to bring Web3 gaming to everyday people.

¹ Immutable. (2024, February 13). Why 70% of top gaming studios are investing in web3 gaming. Immutable. Retrieved March 30, 2024, from https://www.immutable.com/blog/why-70-of-top-gaming-studios-are-investing-in-web3-gaming?

² Wang, J. (2023, September 19). Airdrop & Liquidity Mining 01 — Retention. Sixdegree Blog. Retrieved from https://blog.sixdegree.xyz/ret-en-si-o-nairdrop-and-liquidity-mining/

³ Fridman, L. (2023, December 14). Transcript for Jeff Bezos: Amazon and Blue Origin | Lex Fridman Podcast #405. Lex Fridman Podcast. Retrieved March 30, 2024, from https://lexfridman.com/jeff-bezos-transcript/