Annual Web3 Gaming Revenue Predicted to Hit $22 Billion by 2025

Web3 gaming is projected to bring in an annual revenue of $22 billion by 2025, expanding at a compound annual growth rate (CAGR) of 70.3%, according to a recent Binance Research report. Unique active on-chain users have reached 1.33 million to date, capturing 25% of the decentralized application (dApp) market, according to data from DappRadar. And another report, from Fortune Business Insights predicts that the global blockchain gaming market could reach a staggering $614 billion value by 2030, a 300% increase on its current value of $154 billion.

The sector is expected to experience significant growth, with experts like Yat Siu of Animoca Brands predicting up to 100 million new players by 2024. This influx is linked to the impending launch of several blockchain games which have been in development over the last couple of years. The casual gaming sector, especially mobile games, is anticipated to be at the forefront of this expansion.

“Many of the gaming titles that are about to be released were in alpha or beta stages in 2022 and 2023 and are now all coming out to commercial launch in 2024.”

Despite such promising predictions, the industry still faces challenges, such as a reportedly high failure rate of on-chain games. A recent study by CoinGecko claimed that around 75.5% of the 2,817 Web3 games launched in the past five years have become inactive. This is based on a definition of 'inactive' being that the number of active users has fallen 99% from its peak.

GamesTX's Jon Jordan noted that this proportion of 'active' Web3 games seems reasonable given the industry's nature. Jordan also pointed out that using the number of active users as a metric might not be the best measure, as it would classify even popular games like Axie Infinity as inactive due to their significant drop in users from peak levels.

A report by DappRadar and The Blockchain Game Alliance (BGA) indicated a significant investment of $600 million in Web3 gaming projects during the third quarter of 2023, elevating the year's total investment to $2.3 billion. This investment surge occurred despite a slump in the broader blockchain market, as noted in a separate analysis by Game7. Investment in Web3 gaming has been resilient, with $19 billion invested since 2018. Despite a slower growth post-2022, funding in 2023 reached $1.5 billion, with the U.S. leading in funding, followed by France, Canada, Singapore, and Hong Kong.

Sebastien Borget, co-founder of The Sandbox, has spoken about the growing importance of user-generated content (UGC) in Web3 gaming. Already popular in traditional platforms like Roblox and Fortnite's Unreal Editor, it is expected to flourish in decentralized platforms, empowering creators and rewarding them for their efforts through Web3 technology.

Michael Powell from Immutable has identified a shift of Web3 companies moving away from play-to-earn models. Instead, they are focusing on creating gaming experiences that are sustainable in the long run. These experiences emphasize the real ownership of digital assets in games, which means players can genuinely own and potentially trade in-game items. This change aims to build games with lasting value and more meaningful player involvement.

We have also recently Observed the entry into the Web3 market of traditional gaming giants such as Ubisoft, further cementing the potential for the sector to hit the mainstream in the near future. Whether that translates to $22 billion in annual revenue within the next two years remains to be seen.