The game finance (GameFi) space has recorded a high failure rate since its emergence in 2017. More than 75% of all Web3 games launched are dead due to declining user interest.
According to a study by leading crypto data aggregator CoinGecko, three of every four Web3 games launched in the last five years have become inactive.
Over 75% of Web3 Games Are Dead
The CoinGecko study evaluated 2,817 web3 games launched between 2018 and 2023, identifying the active projects as of November 27, 2023, based on insights from blockchain data platform Footprint Analytics. GameFi projects were considered inactive if their 14-day moving average number of active users slumped by 99% or more.
The study found that roughly 2,127 Web3 games launched in the last five years have failed. The average annual failure rate for GameFi projects has been 80.8% since 2018.
The success of some early web3 games like CryptoKitties in late 2017 led to the launch of several others and the popularity of play-to-earn (P2E) gaming. Around 422 games were pushed into the market in 2018; however, 307 failed that same year, accounting for a failure rate of 72.7%.
Within the next two years, interest in GameFi reduced as the industry struggled with the crypto bear market. As a result, only 244 games were launched in 2019 and 2020, with 230 projects meeting their demise at respective failure rates of 94.3% and 94.2%.
A Sign of Stabilization
On the back of the crypto bull run in 2021, the failure rate of Web3 games declined to 45.9%, with 339 projects becoming inactive in the same year. 2021’s rate is the lowest despite having one of the largest failed games in all the years.
2022 recorded the highest failure rate of 107.1% as the number of dead Web3 games more than doubled, hitting a yearly high of 742. This uptick could be attributed to the bite of the bear market that triggered the collapse of many other crypto projects.
Meanwhile, around 509 GameFi projects have become inactive in 2023 at a failure rate of 70.7%. CoinGecko says the decline in failure rate could be a sign that the web3 space is stabilizing.
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