It has been revealed that eight Web3 games have suspended operations, shut down, or switched to Web2 this year. The industry, which had pinned its hopes on blockchain-based games, is faltering in the face of a 'funding crunch' and sluggish demand.
According to Decrypt on the 13th, '77-Bit' and 'Pixel Heroes Adventure' recently announced the suspension of development and full-scale layoffs, respectively. Pixel Heroes Adventure laid off the entire team due to "unavoidable circumstances," while 77-Bit halted development, stating that "reckless choices made to buy time could not withstand the scale expansion."
On top of this, XOCIETY also announced on the 14th that it would temporarily suspend its live service NFT game and Web3 activities. Developer NDUS is even considering a sale or merger, citing profitability issues. @EduMock, Moku's social media manager, pointed out that Blocktopia, Pixieland, Forgotten Runeverse, Genso Online, and KTTY World have followed a similar path this year alone.
Web3 games refer to a form of gaming that incorporates blockchain elements, such as NFTs or token systems. However, contrary to expectations, user demand has failed to keep pace, and analysts suggest that the venture capital needed to support this sector is rapidly drying up. Industry insiders interviewed by The Crypt unanimously stated, "Funding is running dry."
Robbie Yung, CEO of Web3 game The Sandbox, said, “Venture capital funding in the gaming sector has been dry for years,” adding that “those that raised funds in 2022 were the ones that were able to hold out.” Theodore Agranat, Web3 Director at Gunzilla Games, echoed this sentiment, stating that there is an “open and widespread atmosphere” among investors regarding the lack of funding.
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View full Alpha Report →The problem is that this is not unique to Web3. Traditional game companies such as Fortnite developer Epic Games, Ubisoft, and EA have also continued large-scale layoffs, and Meta has decided to terminate the Horizon Worlds project, a symbol of the 'Metaverse,' this year. With overall market investment sentiment cooling, Web3 games are bearing the brunt of the impact first.
Ultimately, the successive suspensions in the Web3 game market this year demonstrate the reality that experiments with blockchain games have yet to prove a viable revenue model. With funding stalled and survival capabilities now put to the test, it is highly likely that industry restructuring will continue for the foreseeable future.
🔎 Market Analysis
The Web3 game market is rapidly entering a restructuring phase due to shrinking investment and a lack of demand. The failure to validate business models, rather than a simple downturn in the cycle, has been identified as the core cause.
💡 Strategic Points
- Need to shift from token/NFT-centric design to a 'gameplay'-centric design
Securing a sustainable revenue structure is more important than a short-term profit model.
- M&A and Web2 transition emerge as survival strategies
📘 Glossary
Web3 Games: A form of game that incorporates NFTs and token economies based on blockchain.
Web2 Games: Traditional game structures based on centralized servers
Pivot: A strategy to modify or change the direction of an existing business.
💡 Frequently Asked Questions (FAQ)
Q. Why are Web3 games being discontinued en masse recently?
Q. Is the trend for Web3 games to completely disappear?
Q. Is the general game industry in a similar situation?
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