Quick Take

• GameFi = Game + Finance. In addition to the quality of the game, the economic side also needs to be considered.

• Currently, there is no specific solution to the economy's situation and how to combine and balance the “Game" and “Fi" parts

• The upcoming wave of gaming can come from games with simple graphics than from AAA games.

Let's start from the basics! What is GameFi?

GameFi = Game + Finance. In addition to the quality of the game, the economic side also needs to be considered. This is not a 1+1=2 problem because besides considering the “Game" and the “Fi" separately, the project must find a way to combine and balance the two.

The gaming market has huge potential with the number of players and revenue increasing substantially every year. According to Statista, the number of players in 2023 could reach more than 3 billion people and the amount of revenue generated could exceed 200 billion USD annually.

The past few years have witnessed a substantial boom in mobile games. With smartphones' convenience and increasing quality of games, the mobile game market is currently the largest compared to PC or Console games. Mobile games account for more than half of the market share.

However, according to statistics from Google Play Store and Apple App Store, although the number of new games is increasing steadily, the mobile game segment's downloads and revenue currently show no sign of improving.

The current gaming market is gradually saturated, and users' standards are getting higher and higher. Different approaches are being explored to meet the shifting needs. That's why we see more and more resources focusing on VR/AR games, Cloud games, GameFi, etc.

We cannot guarantee GameFi will succeed. But GameFi has come up with a solution and brought something new to today's saturated gaming market.

Game

First, let's start with “Game." Learn from the traditional game, what type of game attracts the most players? Where are on-chain games now compared to traditional games?

Learn from the traditional game | Which genres are the most popular?

The story of game development
The origin of game development is based on Maslow's hierarchy of needs.

Whereby:
The needs for the first 2 levels are met by default

• Level 1 (Physiological): Healthy enough to be able to play game

• Level 2 (Safety): Playing games does not put yourself in danger from outside.

The development starts from level three of the tower.

• Level 3 (Love/belonging): Playing games help you participate in a particular community >> Especially online games where you can interact with each other.

• Level 4 (Esteem): Playing games creates a sense of accomplishment or having achieved something.

• Level 5 (Self-actualization): Playing well enough helps players solve financial problems or become famous.

Using Maslow's tower, we can understand the reasons for the growth and collapse of games in gaming history.

The first is Arcade games, these are simple games that focus on the 4th level but forget the 3rd. When completing the game, players often feel bored and quit the game.

No matter how good the game is, it is difficult to maintain if it only meets the 4th and 5th levels of the Maslow tower. Console games are similar; these games are cyclical, and the publishers need to release new games yearly. The reason console games have retained market share is that the quality of new games is also improving to meet the demand. There are “online modes” in game and live events that help connect the community like E3, eg.

The development of the Internet has led to the explosion of the PC and mobile gaming market. With the Online/PVP element, the 3rd floor of Maslow Tower is met to help the development of PC and mobile games.

Once the 3rd floor has been met, the game will focus on the 4th and 5th levels of the tower. That's why we often see in-game achievements (4th) and tournaments or leaderboards to rank players (5th).

The emergence of Esports recently, in essence, satisfied the 5th floor in Maslow's tower. Players can then express themselves and receive rewards for their efforts. The progression of Esports in recent years is because gaming nowadays has met the lower level too well. Focusing on the 5th level of Maslow's tower fits the current meta.

On the other hand, this means that the gaming market has hit the ceiling. VR/AR games Cloud Games and GameFi were born to break this barrier and bring a fresh breath to the market.

Which genres are the most popular?
Below we will analyze Mobile and PC games. These are the two genres with the largest market share. Mobile and PC games are also different from console games which are cyclical and highly dependent on hardware.

1/ PC
Analysis of PC games from 2010 - 2020

We can see that the most popular games often have the following characteristics:

• Focus on level 3 of Maslow's tower. Players can participate in a community and interact with each other.

• Encourage creativity and competition.

2/ Mobile
Analysis of mobile games from 2010 - 2020

Most popular mobile games:

• Focus on the 4th and 5th levels of Maslow's tower instead of the 3rd level.

• Have the “easy to play, easy to understand" approach

The competition between mobile games is much more intense than a PC games. A game rarely keeps its position at the top for a long time. This is understandable because, with a mobile phone, players can play games anywhere at any time, creating demand for simple games with short commit time.

Currently, PC and Mobile are the two most suitable places for applying on-chain components. However, there are still differences between developing mobile and PC games. GameFi projects need to understand this in the building process.

The state of on-chain games

According to DappRadar, the number of active players currently are 600K per day. This number is minimal compared to the market of 3 billion players today. GameFi still needs a lot of improvement to attract players, but on the positive side, we can see a very good growth potential for the on-chain game market.

The explosion of GameFi in 2021 has attracted many projects to join in the space. Currently, there are many ecosystems developed specifically for GameFi. Each ecosystem has different approaches and USP to attract developers.

Finance

Why did we fail in the “FI"?

Below is the performance of gaming tokens. Every token has down more than 90% from its peak.

Consider Axie Infinity, the game that started the Play To Earn trend and has the highest FDV. Axie's daily revenue once reached more than 16 million USD per day. At present, this figure ranges from 3,000-5,000 USD.

In short, GameFi still hasn't found a way to develop a sustained economy.

The most significant difference between GameFi and traditional games lies in the development motivation. With traditional games, revenue is distributed directly to publishers and investors. The publisher can therefore focus on creating a game with excellent gameplay to attract players and generate revenue.

As for GameFi, the main driving force for growth is to increase the value of assets (tokens and NFT). Besides creating a quality game to attract players, the project must create an economy to balance participants' benefits. That's why it is more complicated to create a good GameFi project than a traditional game.

The future of GameFi

According to research conducted with more than 80 gaming studios developing Web3 games. 80% of games have a release schedule in 2022-2023.

A game that wants to attract players doesn't need to meet the 3rd floor of Maslow Tower but can focus on the 4th and 5th floors. Although that game is difficult to sustain for a long time due to lack of sociality, if the game quality is good enough, it still can attract much attention similar to traditional games.

The average time to develop an AAA game falls between 18 and 36 months and will require a large amount of capital and resources to build. Therefore, we will not likely see a AAA game with beautiful graphics in a short time. A or AA games have more potential because they take less time to develop. The upcoming wave of gaming can come from games with simple graphics (Pixel, Chibi).

Besides game quality, we will continue to see many approaches to the in-game economy from projects to satisfy the participants. Fat protocol thesis has proven its success with strong growth of layer 1. If a chain has many games that develop and attract users, we will likely see this thesis continue to play out.

Conclusion

GameFi has come up with a solution and brought something new to today's saturated gaming market. Currently, there is no specific solution to the economy's situation and how to combine and balance the “Game" and “Fi" parts, but we can expect this problem to be solved in the future.

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