The Rollercoaster Ride of Blockchain Gaming 2017 – 2024

Blockchain gaming is an exciting phenomenon that has emerged in the past few years, combining the worlds of gaming and cryptocurrency. Decentralized gaming refers to games that use distributed ledger technology to create, store, and trade digital assets, such as characters, items, and currencies. These assets are often represented by NFTs, which are unique and indivisible tokens that can be verified and owned by gamers.

According to Marketsandmarkets report, in 2022, the revenue of the worldwide blockchain gaming market surpassed $4.6 billion. Projections indicate a remarkable growth, with expectations reaching approximately $65.7 billion by the conclusion of 2027, reflecting an impressive Compound Annual Growth Rate (CAGR) of 70.3% for the anticipated period spanning 2022 to 2027.

In this article, we will explore the rollercoaster ride of Blockchain gaming from 2017 to 2024, highlighting the key trends, opportunities, and challenges that shape this emerging and dynamic market. As a game development outsourcing company we will also provide some insights and recommendations for gamers, developers, investors, and regulators who are interested in or involved in on-chain gaming.

Early Days (2017 – 2018)

The early days of on-chain gaming were marked by experimentation, innovation, and excitement, as well as challenges, limitations, and setbacks. The first decentralized game to capture the attention of the gaming community and the mainstream media was CryptoKitties, launched by Axiom Zen in November 2017.

CryptoKitties inspired many other developers to blockchain game development, exploring different genres, platforms, and devices. Some notable decentralized games that emerged in 2017 and 2018 include:

• Axie Infinity, a fantasy game where gamers could battle and trade creatures called Axies, earning cryptocurrency through gameplay.
• Gods Unchained, a trading card game where gamers could own and sell their cards, using a distributed ledger to ensure their authenticity and rarity.
• Splinterlands, an online collectible card game that uses distributed ledger technology to allow gamers to own, trade, and earn from their cards as NFTs.

The early days of on-chain gaming laid the foundation for what was to come. The successes and failures of these initial projects provided valuable lessons and paved the way for the future of blockchain gaming. As we moved into 2019 and beyond, the rollercoaster ride of on-chain gaming was only just beginning. The stage was set for the next wave of innovation, bringing us closer to the dream of a truly decentralized gaming ecosystem.

Rapid Growth and Expansion (2019 – 2021)

The period from 2019 to 2021 marked a significant phase in the evolution of on-chain gaming, characterized by rapid growth and expansion. This era witnessed the release of several key projects, technological advancements, and a surge in investor interest.

Key game releases during this period further propelled the popularity of on-chain gaming. Projects like Gods Unchained, NBA Top Shot, Sorare, Alien Worlds, and Axie Infinity emerged, offering gamers an immersive gaming journey coupled with the benefits of blockchain gaming. These projects not only achieved commercial success but also played a crucial role in demonstrating the potential of integrating gaming with distributed ledger.

Technological advancements during this period addressed some initial challenges faced by on-chain gaming. Innovations in Layer-2 solutions and sidechains significantly improved transaction speeds and reduced costs, making on-chain games more accessible to the average gamer. The development and adoption of NFTs also skyrocketed during this period, adding a new dimension to in-game asset ownership and trading. Just as important is the emergence of the cross-chain interoperability, which is the ability of different blockchains to communicate and exchange data and value with each other. It enables on-chain projects to leverage the strengths and features of distributed ledger, and to offer more options and flexibility to gamers.

The market has attracted several high-profile investors, including Mark Cuban, who invested in the on-chain gaming platform, Axie Infinity. The increasing investor interest in the on-chain gaming market has led to a surge in funding for on-chain gaming startups. The success of early on-chain projects and the potential of the technology attracted significant investments from both institutional and individual investors. This influx of capital enabled further research and development in the field, leading to the creation of more sophisticated and engaging on-chain projects.

The Market Crash of 2022

The year 2022 was a tumultuous period for the blockchain in gaming industry, marked by a significant market crash. This downturn was the result of a confluence of factors, including market saturation, regulatory challenges, and player skepticism.

Market saturation played a crucial role in the crash. The rapid growth and expansion of on-chain gaming in the preceding years led to an influx of new projects. However, the market struggled to sustain this pace. Many projects failed to differentiate themselves, leading to a saturated market with too many similar offerings and not enough unique value propositions.

Regulatory challenges also contributed to the market decline. As blockchain in gaming grew, it attracted the attention of regulatory bodies worldwide. Unclear and often restrictive regulations created a challenging environment for game developers and gamers alike. These regulatory hurdles stifled innovation and deterred potential gamers, negatively impacting the market.

Player skepticism was another significant factor. While the concept of on-chain gaming was revolutionary, it was also new and complex. Many gamers were skeptical about the benefits of distributed ledger in gaming, particularly given the high transaction fees and the volatile nature of cryptocurrencies. This skepticism was exacerbated by the lack of user-friendly interfaces in many on-chain projects, making them inaccessible to the average gamer.

Signs of Recovery (2023)

As we move into 2023, the on-chain gaming market is showing signs of recovery. According to GlobeNewswire report, the market is expected to reach $301.53 billion by 2030, growing at a CAGR of 68.3% from 2023 to 2030. This growth can be attributed to the growing shift from traditional games to on-chain projects, driven by the demand for actual possession and authority of in-game assets, transparency, and new monetization opportunities.

Game developers are adopting new strategies to cater to this demand. They are focusing on creating on-chain projects that provide gamers with full possession and authority over their in-game assets. This is a significant shift from traditional projects, where gamers do not truly own their in-game assets and are subject to the rules and decisions of the game developer. Moreover, many campaigns offering blockchain game development services have started to appear.

Gamers’ attitudes are also shifting. They are increasingly looking for projects that provide them with a sense of possession and authority over their in-game assets. On-chain projects provide this sense of possession and authority, which is driving their popularity.

Emerging trends in the on-chain gaming market include gaming metaverses, which are virtual worlds built on distributed ledger technology. These virtual worlds provide a fully immersive and decentralized gaming thrill, allowing gamers to explore, interact, and participate in various activities within the virtual world.

Future Outlook (2024 Predictions)

As we look ahead to 2024, the on-chain gaming market is expected to continue its upward trajectory. According to a report by IMARC Group, the global on-chain gaming market size is projected to reach $854.4 billion by 2032, exhibiting a growth rate (CAGR) of 65.2% during 2024-2032. The integration of NFTs is expected to play a significant role in the growth of the on-chain gaming market. NFTs provide gamers with true ownership of in-game assets, which is a significant shift from traditional games where gamers do not truly own their in-game assets.

Another emerging trend in the on-chain gaming market is the rise of gaming metaverses. These virtual worlds built on distributed ledger technology provide a fully immersive and decentralized gaming entertainment, allowing gamers to explore, interact, and participate in various activities within the virtual world.

Technological advancements such as 5G, cloud gaming, and edge computing are also expected to drive the growth of the on-chain gaming market. These advancements will enable faster and more seamless gameplay, higher-quality graphics, and more immersive experiences.

Key Drivers and Challenges

As the crossover between blockchain and gaming industry continues its dynamic expansion, a tapestry of novel prospects and hurdles unfurls before developers and gamers. Tasks of crafting and stewarding digital assets, bestowing due rewards for user involvement, and upholding the principles of equitable and delightful gameplay emerge as focal points in this evolving landscape.

Key Drivers

• Technological Advancements. The use of blockchain technology in gaming stands poised to fortify the safety and openness of the entertainment sector. Leveraging the power of immutable ledger, this innovation acts as a bulwark against potential threats of fraud, cheating, and hacking. The capacity to forge decentralized, transparent, and secure entertainment ecosystems ushers in a realm of fresh prospects for both game developers and enthusiasts alike.
• Market Acceptance. The increasing acceptance and understanding of cryptographic technology among the public has also played a crucial role. As more people become comfortable using digital currencies and interacting with distributed ledger platforms, the potential user base for on-chain games has expanded significantly.
• P2E Model.The introduction of the P2E system, where gamers can make real money for their in-game activities, has been a game-changer. This system has attracted numerous gamers to on-chain games, driving the growth of the market.

Challenges

• Technological Barriers. Despite the advances, cryptographic ledger technology is still complex and can be difficult for the average game developer to understand and utilize. To develop a blockchain based game, developers need to have a solid understanding of cryptographic ledger technology, smart contracts, and on-chain applications.
• Market Volatility. The volatility of the cryptocurrency market is another major challenge. The value of in-game assets, which are often tied to digital currencies, can fluctuate wildly, creating uncertainty for gamers and creators.
• Competition. The on-chain gaming market faces intense competition, not just from other on-chain games, but also from traditional video games. To succeed, on-chain games need to offer compelling gameplay and unique features that set them apart from their competitors.

Impact on the Wider Gaming Industry

The potential of blockchain for the gaming industry is monumental, ushering in innovative avenues for monetization, reward systems, and player engagement, involving not just players but developers and publishers alike. The burgeoning realm of on-chain gaming is exerting a profound influence on the broader entertainment landscape. A pivotal transformation is evident as gamers now enjoy authentic ownership and authoritative control over their in-game assets, a departure from the conventional paradigm where such ownership is nominal, subject to the dictates of the game developer.

Simultaneously, on-chain gaming is reshaping the industry by presenting novel monetization vistas for game developers. Through on-chain games, developers can forge new revenue streams, allowing players to accrue real-world earnings through in-game assets.

On-chain gaming stands at the vanguard of catalyzing innovation in game engineering. Developers are actively pioneering fresh approaches to crafting on-chain games that offer players an entirely immersive and on-chain gaming milieu. This momentum has given rise to gamified metaverses, virtual realms meticulously constructed on cryptographic ledger technology. These metaverses furnish players with an immersive and on-chain gaming panorama, affording them the liberty to explore, engage, and partake in diverse activities within these virtual domains.

Conclusion

The blockchain gaming industry has undergone a remarkable evolution since its inception in 2017. From the initial hype and excitement of introducing cryptographic ledger technology in gaming, to the rapid growth and expansion of the market between 2019 and 2021, to the market crash of 2022, and the signs of recovery in 2023, the on-chain gaming market has experienced a rollercoaster ride of highs and lows.

Despite the challenges and uncertainties, the on-chain entertainment market has also demonstrated its resilience and adaptability, as well as its potential to transform the industry and create new value for gamers and developers. With the future outlook of the market being optimistic and promising, on-chain gaming is poised to become among the major forces and trends in the industry in 2024 and beyond.