Why does crypto gaming feel stuck?
Is it a game/content problem, audience mismatch, are the builders at fault, or is the problem multifactorial?
Introduction
“True digital ownership.” “New monetization models.” “Decentralization.” “Player-owned economies.” “A new way of UA.”
These were the promises that initially excited both players and developers about Web3 gaming. After all, Web3 gaming is inevitable, right? Yet, the reality is that crypto gaming has yet to prove itself as a lasting success.
So, where’s the disconnect? Here are a few key issues:
Audience-product mismatch: While there are well-made games, the audience isn’t drawn to them for intrinsic reasons (e.g. playing for fun).
Game/content problem: Simply put, most crypto games just aren’t fun enough.
Market-builder fit problem: Many crypto founders are motivated more by extrinsic rewards (maximum profit) than by intrinsic ones (making a meaningful impact).
Let’s break these down further.
The Audience-Product Mismatch
Let’s start with the first issue: audience-product mismatch. This perspective is inspired by comments from Gabriel Leydon:
Leydon argues that while some crypto games are on par with highly successful mobile titles in terms of quality and fun, they still struggle to succeed. The core reason? Differences in platform and audience.
Platform: Crypto games face significant friction in onboarding, monetization, and distribution. Unlike traditional games, which benefit from established app stores and seamless payment systems, crypto games operate in ecosystems that still introduce barriers to entry.
Audience: The fundamental disconnect lies in player incentives:
Traditional gamers spend for fun and progression.
Crypto players are conditioned to expect a return on investment (ROI) from their spending
For games to appeal to crypto-native players, they often need to incorporate financialization through DeFi mechanics. Studios that prioritize gameplay over financial incentives frequently struggle to gain traction in the Web3 space.
In his article "A Fork in the Road (for Web3 Gaming)," Nick Metzler outlines two distinct directions crypto games can take:
Path 1: Blockchain-enabled games (with abstracted blockchain mechanics)
These games use mainstream distribution channels like app stores across PC, mobile, and console.
Examples: Off the Grid, NFL Rivals.
Path 2: Crypto-native games
These are fully on-chain, played in a browser, and require a custodial wallet.
Examples: Wolf Game, Onchain Heroes, Citadel.
Path2 definition: “a market that thrives on financial speculation, game theory, risk-taking, risk-mitigation, data analysis, game theory, deception, hidden movement, composability, optimization, and breaking the supposed rules where possible” - Metzler
The challenge? Path 1 games often rely too heavily on the audience of Path 2 games, focusing their marketing on Twitter and Discord rather than traditional channels where their ideal players are. This creates a disconnect between the product and the audience it aims to reach.
It’s a Game/Content Problem
The second issue is that most crypto games simply aren’t fun enough. Many of the most anticipated titles are still in development, while the majority of released games feel more like tech demos or proofs of concept rather than fully realized experiences. There are exceptions, but for the most part, crypto games struggle to compete with their Web2 counterparts.
A fair counterargument to this is that most games, whether in traditional or crypto gaming, aren’t great. In both industries, 90+% of titles are subpar. The difference? Web2 has a steady stream of polished, high-quality games that rise to the top, while Web3 is still waiting for its breakout hits.
There are, however, a handful of “good enough” crypto games that could succeed, if they weren’t weighed down by the unique challenges that come with the space. This sentiment is summed up well by a quote from one of the Wolves:
Our web2 peers - mobile in particular - are able to go straight for goal, and validate that pmf with a cleaner, better understood process. If they don't see signs of profitability or scalability, game gets scrapped and you move on to the next one (the harmless rug).
They can focus on proving a business case for that particular game. No need to get sucked into insanely broad discussions of market conditions or ALL the possible uses of blockchains in gaming or whatever.
On the other hand, one could argue that the “best shots on goal” have yet to happen. Most studios developing crypto games only started a few years ago, and many have yet to bring a fully mature product to market. The real test of crypto gaming’s potential is still ahead.
It’s a Market/Builder Fit Problem
The next argument shifts the industry’s challenges to the motivations of its builders.
The shiny quick money raise attracted majority of builders - both degen and mass market builders. Founders driven by max gain rather than a 'bigger than themselves' intrinsic driver.
For many builders, crypto gaming has been seen primarily as a fundraising opportunity. The tough funding climate in traditional gaming pushed several teams into Web3. Not because of a deep belief in its potential, but as a last resort after struggling to succeed as a Web2 game.
To create and sustain a high-quality game, founders need intrinsic motivation. A genuine drive to build a successful business rather than just launching a token. Yet, the number of teams truly committed to this long-term vision is surprisingly small.
There’s no Crypto Gaming Blueprint
The final argument, an accumulation of the previous three, is that the technology itself has yet to prove groundbreaking in key areas like monetization, distribution, user acquisition, and bringing novel game mechanics. While there have been some successes and promising use cases, nothing has been truly game-changing enough to spark a wave of new game builders entering the space.
People often compare early web3 games to early mobile, but I think a more apt comparison is VR or cloud gaming: cool tech that enable interesting iterations on "trad" games but that haven't really been fully figured out to an extent that tech, design, biz model, and audience are all in harmony
Conclusion
Opinions on this are divided, and the challenges behind crypto gaming’s struggles come from a mix of factors, some carrying more weight than others. But if you had to pinpoint the primary reason, what would it be?
Disclaimer
None of this is financial or legal advice.
Its hard to narrow it down to just one of those three options in your poll, therefore i didnt vote.
I think as long as web3 developers just contjnue to focus on building games and quietly building eith web3 and blockchain tech in the background then eventually the whole industry will make the switch.
Perhaps it will take something like AR or VR to step up a notch and really take take off as a primary method of gaming before crypto and web3 really finds a foothold.
The two could be perfect partners for a gaming paradigm shift.