Three out of every four Web3 games launched in the past five years have met their demise, presenting a bleak outlook for GameFi industry.
In a recent report, CoinGecko analyzed the launch and success rates of 2,817 games between 2018 and 2023.
Shockingly, only 690 games managed to maintain a somewhat active player base, while a staggering 2,100 games have ceased operations, which translates to an alarming annual failure rate of 80.8% for Web3 games during this period.
The failure rate was calculated by comparing the number of failed games to the total number of games launched.
CoinGecko defines a failed Web3 game as one that experiences a 99% drop in active users based on a 14-day moving average from its peak.
The discouraging outlook is surprising considering the initial acclaim Web3 gaming received within the crypto community, offering users the ability to earn substantial rewards and tangible value from their gaming experiences.
The sector has also attracted significant interest and investments in the crypto space.
Even in the current year, Web3 gaming projects have secured over $2 billion in funding. However, the CoinGecko report casts doubt on the sustainability of the industry.
2022 Saw Highest Failure Rate in GameFi
In 2021, the highest number of blockchain games were launched in a single year, totaling 738.
However, during the 2022 bear market, Web3 gaming faced challenging circumstances, resuling in the highest failure rate, with 742 games unable to sustain themselves.
More specifically, the failure rate for Web3 games reached 107% last year as a record-high 742 games shut down.
The failure rates for Web3 games in 2019 and 2020 were at a staggering 95%, while 2021 experienced the lowest failure rate at 45%.
The report noted the impact of the bear market on GameFi development and interest, with only 244 Web3 games launched between 2019 and 2020.
During this period, the failure rate rose to 94.3% in 2019 and remained at 94.2% in 2020.
Surprisingly, despite the number of failed games increasing to 339 in 2021, it recorded the lowest failure rate due to the crypto bull run.
509 Web3 Games Have Ceased Operations in 2023
So far this year, 509 Web3 games have already ceased operations, resulting in a 70% failure rate.
Although this marks a lower failure rate compared to 2022, it suggests a potential stabilization in the GameFi and Web3 gaming industry, potentially attributed to the recent market recovery and signs of a bullish trend.
It is worth noting that some of the more prominent Web3 games have also suffered a major setback.
While CryptoKitties, launched in 2017, initially generated significant interest as the first Web3 game, its adoption has since slowed.
On the other hand, prominent Web3 games like Decentraland, The Sandbox, and Axie Infinity have emerged and solidified their position in the market.