October Web3 Gaming Industry Report: User Acquisition Challenges Behind Market Cap Growth

Author: stella@footprint.network

In October, the Web3 gaming industry’s token market cap grew by 15.8%, driven by a surge in Bitcoin. The industry has been steadily expanding, with a total of 2,651 games currently available. However, the growth of active games and active users has not kept pace, with a whopping 73.1% of gaming active users having fewer than 10 active users in October, highlighting the ongoing challenges Web3 game developers face in user acquisition and retention.

The data for this report comes from Footprint Analytics’ Web3 Games research page. It’s an easy-to-use dashboard with the most important stats and metrics for understanding the Web3 gaming industry, updated in real-time. You can click here for the latest information on pricing, projects, financing, and more.

HIGHLIGHTS AT GLANCE

Crypto Market Overview

• Bitcoin started the day at $26,967 and rose a massive 27.9% over that time to close at $34,497.

Web3 Games Market Overview

• The Web3 gaming industry is growing steadily, with a total of 2,651 games in October.
• While the number of games in the Web3 gaming industry is increasing, the growth of active games and active users has not kept pace. Web3 game developers face ongoing challenges in user acquisition and retention.
• As many as 1,937 games (73.1% of the total) had fewer than 10 active users in October.

Web3 Game Public Chain Data

• Among the games on the Polygon chain, there are 38 games that attract more than 1,000 active users, accounting for 8.1% of the total number of games on the chain. The share is 5.4% on BNB Chain and 1.7% on Ethereum.
• The Web3 gaming industry is eager for other blockchains to evolve rapidly to challenge the dominance of these three blockchains.

Web3 Games Project Overview

• In October, the token prices of 17 projects soared significantly, increasing by more than 50%.
• In October, the price of AXS increased by 18.3%, while SLP saw a massive increase of 70.0%.
• In October, Ultimate Champions welcomed a large number of new users on Polygon and BNB Chain.

Web3 Game Investment and Financing

• Investment and funding in the Web3 gaming space continued to grow in October, with seven rounds of funding totaling $50.9 million.

Market Updates of the Month

• Animoca Brands launches a new game at Flow, Formula E: HighVoltage.
• Shuji Utsumi, co-COO of gaming giant Sega, changed his tune and said blockchain gaming is still an “unknown world” worth exploring.
• Immutable partners with AWS to drive global adoption of Web3 gaming.
• France’s National Assembly voted that NFT games should not be considered gambling.
• Neon Machine, a game studio, closed a $20 million Series A funding round led by Polychain.

Overview of the crypto market

In October, the price of Bitcoin soared, outperforming traditional assets and other cryptocurrencies. Bitcoin started the month at $26,967 and rose a massive 27.9% over the period to settle at $34,497.

Ether started the month at $1,671 and rose 8.3% for the month to settle at $1,810.

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Source: BTC Price & ETH Price

In October, tech stocks came under downward pressure, but Bitcoin bucked the trend. On October 16, the price of Bitcoin rose significantly, reaching nearly $30,000. The sudden rise was triggered by a false report from the cryptocurrency news site Cointelegraph. In a tweet, the site claimed that the U.S. Securities and Exchange Commission (SEC) had approved the first spot Bitcoin ETF. However, the post was subsequently deleted after BlackRock clarified to Bloomberg that their application was still under review. As a result, the Bitcoin price fell to around $28,000 by the end of the day.

In the wake of this event, Bitcoin has received continued support from the market for growth expectations for the launch of US spot ETFs. The SEC did not dispute the recent decision of the Court of Appeals for the Washington, D.C. Circuit in favor of Grayscale. Grayscale, as well as other spot bitcoin ETFs, are currently awaiting SEC review. The price of Bitcoin experienced a significant upward trajectory starting on October 23 and remained at the $35,000 level until the end of the month.

Web3 Games Market Overview

The Web3 gaming industry grew steadily, with a total of 2,651 games in October, up 1.7% from September and 13.9% from May.

While the number of games is increasing, the percentage of games with more than 1,000 monthly active users is still small, less than 10% of the total. In October, it was 8.8%, an increase of 5 games from September. Meanwhile, there were 282 games with more than 500 monthly active users, accounting for 10.6% of all 2,651 games, down three from September.

On the other hand, as many as 1,937 games (73.1% of the total) had fewer than 10 active users in October. This raises questions about the sustainability of the Web3 gaming industry – which is perceived as a “false boom”.

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Source: Monthly Active Games

In October, the number of daily active users of Web3 games remained relatively stable, remaining at around 1 million, roughly unchanged from September.

While the number of games in the Web3 gaming industry is increasing, the growth of active games and active users hasn’t kept pace. Web3 games face ongoing challenges in user acquisition and retention.

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Source: Active Users & Growth Rate DoD

The Web3 gaming industry is relatively new, but practitioners have the ability to learn quickly. In October, Sega co-COO Shuji Utsumi expressed optimism about the potential of blockchain games and NFTs in future video games. Previously, he called P2E games “boring” in an interview with Bloomberg. Sega has licensed the IP of its Sangokushi Taisen card game to Double Jump.Tokyo. Double Jump is a blockchain company that is working on a new card game called Battle of Three Kingdoms. Shuji Utsumi admits that blockchain gaming is still an unknown world for Sega, but they are collaborating on the development of the game, and Sega will provide the game assets for the project.

! [October Web3 Gaming Industry Report: User Acquisition Challenges Behind Market Cap Growth] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-685c0cb76c-dd1a6f-cd5cc0.webp)

Battle of Three Kingdoms

Web3 game public chain data

The distribution of games across different blockchains remained stable, with BNB Chain leading the way with 30.6%, followed by Ethereum with 24.5%, and Polygon in third place with 15.0%. These three blockchains make up the first tier, which gaps from the second tier such as Wax, EOS, and Avalanche, which are 5.3%, 2.1%, and 2.0%, respectively.

! [October Web3 Gaming Industry Report: User Acquisition Challenges Behind Market Cap Growth] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-67d5eb13a7-dd1a6f-cd5cc0.webp)

Source: Games Shared by Chain

The Web3 gaming industry is eager for other blockchains to evolve rapidly to challenge the dominance of these three blockchains.

! [October Web3 Gaming Industry Report: User Acquisition Challenges Behind Market Cap Growth] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-07fdc3df02-dd1a6f-cd5cc0.webp)

Source: Monthly Games by Chain

In October, there were 233 games with more than 1,000 monthly active users. Among them, BNB Chain accounted for the largest share with 22.3%, Polygon accounted for 16.3%, and Ethereum accounted for 5.6%. Among the games on the Polygon chain, there are 38 games that attract more than 1,000 active users, accounting for 8.1% of the total number of games on the chain. The share is 5.4% on BNB Chain and 1.7% on Ethereum.

This month, the public chain has some new developments in the game. Immutable recently partnered with AWS to develop infrastructure solutions specifically for the Web3 gaming industry. As part of the partnership, Immutable participates in AWS’s ISV Accelerate program, which supports companies using AWS services, enabling game developers on the ImmutableX chain to participate in the AWS Activate program. The program is dedicated to providing startups with technical support, up to $100,000 in AWS Credits, and a variety of other resources. However, the centralization of Web3 gaming and its reliance on Amazon has raised some concerns, as Amazon is the market leader in the cloud services industry, with about one-third of the market share.

Gas Hero is a highly anticipated Web3 game developed by Find Satoshi Lab that will be available between 2023 and 2024. StepN, a game developed by Find Satoshi Lab, was a huge success. Gas Hero, as its new title, will be available exclusively on Polygon. Unlike StepN, which focuses on rewarding players for physical activity without characters or a backstory, Gas Hero is a massively multiplayer online game set in a rich sci-fi world with an immersive backstory that extends into comic books. Recently, Find Satoshi Lab announced that Gas Hero will be in community beta from November 24 to December 8, further engaging the community in the game’s development process. Gas Hero will use StepN’s $GMT as a token at launch. Prior to its release, the game organized several community events. According to Footprint Analytics’ Gas Hero Dashboard, users had minted a total of 936 Gas Hero badges by the end of October.

! [October Web3 Gaming Industry Report: User Acquisition Challenges Behind Market Cap Growth] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-126509fabd-dd1a6f-cd5cc0.webp)

Source: GasHeroBadge Daily Minted

Web3 Gaming Project Overview

In October, the market capitalization of Web3 gaming tokens closely followed Bitcoin’s trend. Benefiting from Bitcoin’s surge, the Web3 gaming token market cap grew by 15.8%.

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Source: Market Cap: GameFi Tokens vs BTC

In October, the token prices of 17 projects soared significantly, increasing by more than 50%. Despite the general bear market in the cryptocurrency market, these projects still have the potential to attract users and investors.

! [October Web3 Gaming Industry Report: User Acquisition Challenges Behind Market Cap Growth] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-bc7ca474c3-dd1a6f-cd5cc0.webp)

Source: Game Token Price Changes in September

Flagship games continue to evolve. Axie Infinity’s economic tokens, Smooth Love Potions (SLP) and Axie Infinity Shards (AXS), have both experienced significant gains. In October, the price of AXS increased by 18.3%, while SLP saw a massive increase of 70.0%. These price spikes are closely linked to the recent uptrend in the cryptocurrency market and the sustainable Axie ecosystem, including Ronin Network and Axie Origins. In addition, to celebrate Halloween, Axie also organizes the Axie Spooktoberfest event, which allows players to participate in various activities and earn rewards. This festive event boosted user engagement throughout the month of October.

! [October Web3 Gaming Industry Report: User Acquisition Challenges Behind Market Cap Growth] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-d0be6db707-dd1a6f-cd5cc0.webp)

Axie Spooktoberfest

Ultimate Champions is a free-to-play fantasy football and basketball game that offers an innovative experience where players can use their knowledge of sports to build the strongest team every week. In October, the game welcomed a large number of new users on Polygon and BNB Chain. According to Footprint Analytics, Ultimate Champions managed to reach 21,068 new users on Polygon this month, while the game has 420,516 total users and 21,542 active users on the chain, followed by Planet Mojo and The Sandbox.

! [October Web3 Gaming Industry Report: User Acquisition Challenges Behind Market Cap Growth] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-d30586c36e-dd1a6f-cd5cc0.webp)

Source: Hot Games on Polygon

Meanwhile, Ultimate Champions gained 29,220 new users on the BNB Chain, with 169,040 total users and 53,302 active users on the chain. Carv and SecondLive also performed well in terms of new user acquisition for the chain.

! [October Web3 Gaming Industry Report: User Acquisition Challenges Behind Market Cap Growth] (https://img-cdn.gateio.im/webp-social/moments-69a80767fe-27ca6047c6-dd1a6f-cd5cc0.webp)

Source: Hot Games on BNB Chain

Web3 game investment and financing

In October, investment and funding in the Web3 gaming space continued to grow, with seven funding rounds totaling $50.9 million. These rounds attracted significant investments in different companies and projects, including NexGami ($2 million), Forge ($11 million), Upland ($7 million), Darewise Entertainment ($3.5 million in token presale), Third Time Entertainment ($2 million), Neon Machine ($20 million), and Moonveil Entertainment ($5.4 million).

Seattle-based game studio Neon Machine has successfully raised $20 million in Series A funding for its upcoming first-person shooter Shrapnel. The round was led by Polychain Capital, with participation from Griffin Gaming Partners, Brevan Howard Digital, Franklin Templeton, IOSG Ventures, and Tess Ventures. Set in a sci-fi battle-shooter universe, Shrapnel will offer important in-game content such as weapon parts, weapons, and cosmetics in the form of NFTs, which will be issued on the Avalanche subnet. In April of this year, Shrapnel also launched its own ERC-20 token, called SHRAP.

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Shrapnel

At the European Blockchain Conference in Barcelona, Robby Yung, CEO of Animoca Brands and co-founder of The Sandbox, emphasized the importance of careful consideration when it comes to investing in Web3 games. Despite this, many companies, including Animoca Brands, are still raising capital. Animoca Brands recently announced the signing of a Memorandum of Understanding (MoU) for a strategic collaboration with Saudi NEOM to drive regional Web3 development initiatives in line with Saudi Vision 2030 initiatives. In addition, the NEOM Investment Fund signed a letter of intent for convertible note financing to invest $50 million in Animoca Brands.