2023 Web3 Gaming Trends from Yoda Labs

by BSC News

January 31, 2023


A Comprehensive Overview

🎮 Gaming Trends in 2023

• Leading gaming Dapps launching their alpha or beta phases 
• Major tech & traditional gaming studios moving into Web3
• Increased VC funding into Gaming & Metaverse verticals
• Improved and easy-to-use UX for players
• Web3 gaming evolving into mobile platforms
• Adoption of higher standards for Web3 Games 
• Rise of AI and Metaverse applications

Yoda Labs & Blockchain Gaming Alliance unveil their top analysis of 2023 gaming trends. Despite the crypto market downturn in 2022, gaming remains a driving force for the Web3 industry, accounting for ~50% of all blockchain activity.

Web3 gaming and metaverse projects raised US$7.6 billion in 2022, 59% more than in 2021. Out of the $7.6 billion moving into the blockchain gaming space in 2022, blockchain gaming infrastructure made up 33.5% of the total invested. Individual gaming projects or metaverse worlds received 27.3%, while guilds and incubator programs got 19.1%.

The leading gaming and metaverse projects continued to build despite the crypto winter. Projects behind the leading metaverse gaming dapps launched their alpha or beta phases, including Illuvium, The Sandbox, Big Time, Axie Infinity Homeland, The Fabled, Phantom Galaxies, Star Atlas, My Neighbor Alice, Treeverse, Mirandus and many more.

The Blockchain Game Alliance (BGA) 2022 Member Survey and Report has found that blockchain gaming industry professionals are predicting that gameplay improvements will be the single most important factor driving adoption in 2023, with web3 developers working to make blockchain games more fun and immersive.

After gameplay improvements, the next two factors most commonly believed to propel the industry forward over the coming year are traditional gaming studios and existing gaming franchises moving into Web3.

💰Significance of Funding

According to the BGA report, funding was the biggest factor positively impacting blockchain gaming in 2022, with over 21.3% of respondents agreeing. With increased funding and support through incubation programs, the growth and development of projects in this sector can be accelerated, leading to exponential advancements in innovation.

Attracted by the rise of Web3 gaming, major VCs are investing in the space, seeking to capitalize on the trend. Web3 gaming It is becoming a distinct industry, apart from the broader cryptocurrency landscape, serving as a key gateway for institutions entering the Web3, alongside Web2 gaming studios. E.g. SquareEnix's partnership with Oasys blockhain, Epic Games' Blankos, and Mythical Games enlisting Ubisoft as a publisher.

🔗Growth of Blockchain Gaming

1. WAX protocol remained the most popular blockchain for web3 games, attracting almost 350,000 daily UAW on average in 2022. Hive and BNB Chain came next with 235,000 UAW and 167,000 UAW respectively.

2. Polygon consolidated as a chain for games after attracting 97,000 daily UAW on average in 2022, 340% higher than the previous year. Arc8 by GAMEE, Benji Bananas, Crazy Defense Heroes, and Pegaxy were among those game dapps that drove the growth.

3. ImmutableX generated $87 million in NFT trading volume, 250% higher than last year. Gods Unchained finished among the top 25 most traded collections across all blockchains.

4. Axie Infinity generated $325 million in NFT trading volume behind the launch of Axie Infinity: Origins and the first appearance of Lunacia in Axie Infinity Homeland.

5. Yuga Labs’ Otherside became the most traded virtual world project after launching on April 30, surpassing Decentraland and The Sandbox. Otherside generated over $1 billion in trades.

6. Gala Games finished 2022 with 18 games in its portfolio, including two on Steam and one in the Epic Games Store.

7. Alien Worlds was the most played dapp of 2022 with almost 200,000 daily UAW on average and 4.8 billion on-chain transactions encompassing gameplay, trading and DAO activity.

8. Splinterlands was the second most popular game based on wallet activity, consolidating its player base at 160,000 daily UAW during the second half of the year. The Hive-based trading card game also achieved relevant roadmap milestones as the team launched node validator licenses and dropped the Runi NFT and Land Deeds.

9. STEPN kickstarted the move-to-earn paradigm behind a gamified reward model for physical activities. While STEPN’s growth stalled in Q4, dapps like Genopets, Step App, Dotmoovs, and Dustland are also following.

💎Game Developers Continue to Show Maturity

The solid backing of investor capital and technological advancements in the industry will empower game developers. Traditional players and game designers criticize blockchain games for being less visually appealing and more transaction-focused. This is set to change.

AI-Generated Image for Yoda Labs

Game7 introduced a $100M grant initiative in November to hasten the creation of Web3 games. They also disclosed information regarding a new Web3 Github plugin for Unreal Engine, Epic Games' iconic 3D creation tool and game engine.

In 2023, Game7's new Unreal Engine plugin will enable developers to seamlessly integrate Unreal features into blockchain games. Scalable immersive environments and improved aesthetics will be conceivable. It could start a revolution in Web3 gaming!

While the battle between traditional and blockchain gamers is still in progress, it is evident that in 2023 there will be a plethora of options for all game producers interested in the Web3 domain.

📱 Web3 Games Enter Mobile Gaming

Mobile gaming has become the dominant segment in the gaming industry, accounting for 60% of the market share and generating more revenue than PC and console gaming combined. It has come a long way since 2005 when it was seen as a temporary hobby for casual players with poor graphics and control issues.

Mobile gaming is the fastest-growing segment in the gaming industry, with 60% market share and higher revenue compared to PC and console gaming. The simplicity, convenience, and affordability of mobile gaming have made it more accessible to a wider audience, despite the challenges in terms of graphics and control. Today, popular games like Fortnite and COD have been successfully adapted for mobile devices and have become popular among dedicated players.

Web3 gaming is expected to experience a similar evolution as mobile gaming did in the past. Despite the current challenges faced by Web3 gaming, such as a lack of accessibility, it's believed that in 2023, Web3 games will be coexisting with their desktop and mobile counterparts. The technology that will make Web3 gaming more accessible is still uncertain, but the industry is optimistic about its future.

🤖 AI Paves the Way for Web3 Game Development

The integration of AI into Web3 gaming is opening up new opportunities for game developers to create sophisticated, engaging, and immersive experiences for players. Web3 games have the potential to become even more captivating with the integration of AI, leading to dedicated players who are more likely to enjoy and become absorbed in the games. 

The team at Immutable is excited about the potential of technology to create more engaging counter-play for opponents in games like trading card games and RPGs. They aim to develop a deep and immersive AI that is tailored to the players' needs and creates a learning curve that matches their progress in the game. They are starting to experiment with ChatGPT and developing a narrator who will tell stories based on the card game using the GPT-3 software.

Web3 studios are leading the way in embracing AI technology to enhance their games, as large traditional game studios are constrained by the "innovation dilemma" that makes it more expensive for them to integrate AI features. Delysium, one of the earliest Web3 open-world player-owned games, builds its own metaverse with AI-generated characters and content. The characters, AI-powered MetaBeings, have a neural brain system that controls their life in the virtual world, and are capable of holding assets, participating in game types, and generating cryptocurrency income.

As AI continues to advance, it will bring substantial changes to the gaming industry, enabling the exploration of new possibilities such as autonomous character growth, learning, and adaptation. In the near future, more games, both traditional and Web3, will incorporate AI into their development.

➡️Who Leads the AI Charge?

One of the earliest Web3 open-world, player-owned games, Delysium builds its own metaverse atop AI-generated characters and content. Characters that are AI-powered MetaBeings in the video game Delysium have a neural brain system that controls their life in the virtual world. These MetaBeings are capable of holding their own assets, participating in game types automatically, and generating cryptocurrency income.

Compared to other studios, Web3 studios are the most passionate about embracing this new technology. Although every developer wants to employ OpenAI to enhance their games, large studios are constrained by an "innovation dilemma" that makes it more expensive for them to take the chance of integrating AI features. Web3 and NFT games will therefore lead the way in the use of these technologies in the future.

AI is ushering forth a new era. It presents substantial advancements and changes to the gaming industry. Soon, we will be able to explore new possibilities like autonomous character growth, learning, and adaptation. In 2023, more games—traditional and Web3 games—will incorporate AI.

2023 is shaping up to be the year of releases, as we see more games moving into alpha and beta phases and increasing integration from Web2 to Web3.

Web2 gaming companies are starting to pivot towards Web3, as the industry continues to evolve and blockchain technology becomes more mainstream. Traditional gaming companies are recognizing the potential of blockchain-based games and the opportunities they present, and are beginning to explore ways to integrate these new technologies into their existing ecosystems. Polygon is predicted to become the main platform for gaming, due to its global partnerships.

The strong funding into Web3 infrastructure highlights that the industry will build a strong foundation. Blockchain gaming will need to onboard millions of players through user-friendly experiences. And of course, gamers will want high-quality games that aren’t lesser versions of what they already play on their PC, PlayStation or mobile phones.

All in all, these significant investments demonstrate that blockchain gaming is becoming an increasingly popular area for investment and the industry is showing strong signs of growth. With major players in the venture capital and blockchain industries investing in blockchain gaming, it’s clear that the industry has a lot of potential for future growth.

However, it’s important to note that the blockchain gaming industry is still in its infancy and it will take time for it to fully mature and for its potential to be fully realized. This is a new and rapidly evolving industry that is still trying to find its footing and establish itself.

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