5 Criteria to Take Into Account When Creating a Web3 Game

  • Web3 games, powered by blockchain, introduce new business models that promise to share in-game ownership with the players;
  • Play-to-earn (P2E), pioneered by Axie Infinity, has emerged as the default model that, despite being very appealing in theory, raises some practical and ethical concerns. As of today, it’s difficult to predict how sustainable it is in the long-run;
  • After benchmarking 40+ web3 games, we came up with 5 ingredients of a successful game, which we’ll illustrate through a case study focused on The Sandbox that appears to have all the ingredients for long-term success;
  • While it’s too early to be certain of anything yet, we believe that successful web3 games will be the ones that manage to combine AAA-quality graphics with sustainable models, backed by solid tokenomics, synergetic partnerships and creator-focused gameplay. The future for mass adoption of web3 games is not in play-to-earn, but rather in play-and-earn.

Context: web3 gaming revolution.

P2E has emerged as a default business model of blockchain gaming — and it’s pretty exciting for players.

P2E is an umbrella term that actually encompasses a range of diversified revenue streams.

Startup capital

Native tokens

  • Game characters, like pets (ex. Dogami, DNAxCAT), or cute monsters (Axie Infinity), which are bred, used in battles, and decorated with NFTs.
  • Cards are ultimate collectibles, these have exploded in the context like fantasy football (Sorare) and competitive battle games (Splinterlands).
  • Virtual real estate (land, planets) in games like The Sandbox and Decentraland, where players can acquire plots of land, develop (buildings, flora, fauna, etc) and/or rent them. In Alien Worlds, players can even earn passive income for letting others mine their plots of land.
  • Natural resources are often linked to land ownership, like in Star Atlas, where players will build spaceships and weapons with the mined resources.
  • Tools and accessories (weapons, skins, etc): Harmonia Goya’s Land features NFTs ranging from animals, to trees and mounts, to clothing and even pens.

Other more ‘classical’ revenue streams:

  • Partnerships can provide additional features like new NFT skins for avatars, be used for events like virtual concerts, or improve the gaming infrastructure in other ways.
  • ‘Battle pass’, where a player accumulates points to attain reward tiers, ex. The Party Pass in Blankos Block Party that allows players to unlock ‘hype points’ to obtain accessories.
  • Advertising, ranging from Admix-style billboards; to kiosks in Decentraland, to art galleries in The Sandbox.

Here are the 5 criteria we propose to assess the long-term potential of web3 games.

#1 Nature of the gaming universe

  • How rich is the gaming universe? Quality of graphics and animations, as well as the storyline’s level of engagement
  • Would this game be fun / enjoyable if the gamer didn’t make money playing? While subjective, it’s important to ask about ‘fun’ — which applies to gameplay or strategizing how to make money.
  • Can players participate in the co-creation of the ecosystem (UGC), e.g. through user-generated NFTs? Not an absolute prerequisite but definitely a plus when it comes to user retention.
  • How accessible is the game? There are various ways of initiating newcomers into the web3 game mechanics. Defi Kingdoms, for instance, has been applauded for using gamification to simplify difficult crypto concepts.

#2 Business models

  • Is there a F2P component? Can anyone buy this game now? This directly impacts the mass market potential of the game.
  • Revenue streams: does the game combine multiple revenue streams? Rule of thumb: the more the merrier, for that minimizes the risk for the model as a whole.
  • Tokens: does the game have really smart tokenomics that are interoperable in the real world and in other games? How has the value of tokens evolved so far? Are there gorgeous NFTs that are collectibles and usable in the game, or are they derivative jpgs? How much utility do they have? All of this will affect user retention and token appreciation over time.
  • Partnerships: high-profile partnerships maximize visibility and brand appeal, and can boost the native tokens valuation.
  • Merchandise (physical / digital): does the studio collaborate with amazing brands and design, particularly on their merchandise?
  • Advertising: if present, is it integrated tastefully into the game, or likely to cause annoyance for players?
  • Marketplace: is there a marketplace to purchase assets from within or outside of the game?
  • Value retention of digital assets purchased / earned based on game mechanics: how much does a player stand to lose?

# 3 Team quality

  • Is the team public (doxxed)? Not always a given in the crypto space.
  • How big is the team? The size of the team needs to be proportional to the scope of its ambition and roadmap (see more in #4).
  • Do the key members have a relevant background? We want to see top talent from several fields of expertise: product development, gaming (particularly from top-tier studios), finance and crypto / tokenomics experts, marketing and community-building.

#4 Financing and roadmap

  • Volume of funding to date: did they raise significant $$$ / crypto in venture funding (or otherwise) to make the dream come true?
  • Quality of venture investors: are they backed by Sequoia, a16z, etc.? Or Joe Schmoe angel investor or parent?
  • Financial stability: related to the business model — is the game profitable with multiple revenue streams and minimal risk? Or does it have no money coming in and no venture-backing?
  • Ambitious + realistic roadmap: are they visionary and ambitious, or is the roadmap non-existent? How detailed is their action plan?
  • Frequency of shipping updates: does the project communicate regularly and transparently about all of the above?

#5 Community

  • Social media following and engagement: are there seizable, active, organically grown Telegram / Discord / Twitter communities? Are they sketchy? Do they exist? What’s their Town Hall attendance like?
  • Project DAO: if there is a DAO, is it an active, smart DAO? If so, does it allow for progress on its roadmap? Or will it be slowed down and distracted?

The Sandbox case study

Source: animocabrands.com

#1 Nature of the gaming universe

#2 Business model

#3 Team

#4 Financing and roadmap

#5 Community




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