Author: Zen, PANews

The Web3 blockchain game "MapleStory N", adapted by the Korean gaming giant Nexon from its classic IP "MapleStory", was officially launched recently. With the strong trend of its NXPC token, the long-dormant Web3 gaming track has regained widespread attention. Many people have begun to imagine that GameFi's award will usher in a revival.

However, on one side is heaven and on the other side is hell.

Since 2025, a large number of projects in the Web3 (blockchain) gaming field have been suspended. Many projects that were once popular in the market have "died" one after another.

Blockchain ARPG Tatsumeeko, NFT game Nyan Heroes, blockchain FPS Blast Royale, and NBA star Stephen Curry's Rumble Kong League have all announced the termination of development. Even the once highly anticipated MMORPG project Ember Sword suddenly closed after raising more than $200 million, shocking the player community.

Why is Web3 gaming so difficult to sustain?

"We explored all possible paths forward. But in today's market environment, even some of the most promising projects have been shut down, and we can't find a way to continue development." On May 21, Bright Star Studios, the developer of the social sandbox game Ember Sword, announced the closure of the game. In addition to the PR jargon, the clearest explanation was that "we ultimately could not get the funds needed to continue development," which is also the reason given by almost all developers who pressed the pause button on the game.

Among the game projects that have recently announced their closure, the most surprising one is the cat-themed shooting game Nyan Heroes. This well-known game in the Solana ecosystem has attracted more than one million players in four game tests, and more than 250,000 players have added the game to their wish lists on the Epic Games Store and Steam. "Despite these achievements and discussions about distribution, new investments, grants, and acquisitions, we have not been able to obtain the funds needed to complete the game," said 9 Lives Interactive, the game developer of Nyan Heroes, in a post on X on May 17, stating that due to the current difficult situation in the industry, Nyan Heroes is regretfully closing down.

"The past few months have been tough, and we are currently exploring studio and IP acquisitions. Some discussions are ongoing, but I estimate that a final decision may take some time." Max Fu, CEO and creative director of 9 Lives, said he has some hope for the future of Nyan Heroes, but it is unlikely to bear any fruit in the short term.

Among the games shut down this week is the fantasy MMORPG Tatsumeeko: Lumina Fates, which was also highly anticipated. Its developer Tatsu Works completed US$7.5 million in financing in 2022. Its supporters include well-known investment institutions such as Binance Labs, BITKRAFT Ventures, Delphi Digital and Animoca Brands.

Tatsumeeko's development team expressed it relatively tactfully in the official announcement, claiming that the project became too complex in development and did not meet its internal standards for sustainable development, so it was forced to return to a lightweight, community-based experience. Tatsu Works hopes to turn its attention to a new project called "Project: Wander", which can integrate gameplay directly into digital "third spaces" such as Discord servers, abandoning Tatsumeeko's large-scale game development.

According to the article "A List of 17 Web3 Games That Will Be Discontinued in 2025: The Financial Difficulties and Confidence Crisis Behind the Decline of Blockchain Games" published by PANews, 17 Web3 games have been discontinued in 2025. On the whole, in addition to the reasons of insufficient funds mentioned by the project parties, factors such as "deteriorating market environment" and "difficulty in maintaining operations due to player loss" are also important reasons for the collapse of one blockchain game project after another.

High mortality rate has always been a chronic problem in the gaming industry

The recent "sudden death" of several well-known blockchain games makes people feel that Web3 games seem to have entered a death cycle, but this is more likely due to the impressive high visibility of these projects. In fact, the high mortality rate of Web3 games has never been a rare thing.

CoinGecko published a report on Web3 games in December 2023, and the research showed that the failure rate in this field has been high since the emergence of GameFi in 2017. CoinGecko's research evaluated 2,817 web3 games launched between 2018 and 2023, and identified active projects as of November 27, 2023 based on observations and statistics from the blockchain data platform Footprint Analytics. The study found that approximately 2,127 Web3 games launched during this period failed, with an average annual failure rate of 80.8%.

The research report released by ChainPlay at the end of 2024 is even more shocking. ChainPlay analyzed a total of 3,279 projects in its database and defined projects with a token price drop of more than 90% from the historical high and less than 100 daily active users as "dead". According to the agency's statistics, 93% of Web3 games are dead, and pointed out that the GameFi project can only last for four months on average.

In fact, the failure rate of projects in the gaming industry has always been extremely high, and this is not a phenomenon or problem unique to the blockchain gaming sector.

According to a study released in 2022 by independent research and consulting firm ICT Institute, after analyzing 100 successfully funded video game projects, they found that only 25% of the projects were completed and delivered on time or within acceptable delays, while 40% of the projects failed to deliver any promised content.

The competitive mobile game market also has a high elimination rate. According to a study released in November 2023 by SuperScale, a business analysis company focused on games, the mortality rate of mobile games within three years is as high as 83%. In a study of 500 game developers, SuperScale also found that 43% of games died even during the development stage.

As to why game projects have such a high failure rate, an academic paper on the game industry on the DiVA Portal points out that in the creative industry, the failure rate of games is higher than other software projects. Because the game industry requires continuous innovation and high-quality delivery, it is more prone to problems such as development delays and budget overruns, which ultimately lead to project failure.

The stage financing model encounters a deteriorating environment

The development of games usually adopts a "phased financing" model, that is, obtaining seed round or angel round financing in the early stages of the project. As the development progresses, more game content is continuously revealed, and then subsequent financing such as rounds A and B is carried out.

For example, "Black Myth: Wukong", which was very popular last year, quickly attracted a lot of attention after the release of the first actual machine demonstration video in August 2020, laying the foundation for subsequent financing and talent recruitment. Only then did Tencent invest in the game as a strategic investor in 2021.

This model relies on the hard power of the project, which needs to show enough progress and potential at each stage to attract new investment. However, in the field of blockchain games, this model is difficult to work at present: according to ChainPlay statistics, the token price of the GameFi project has fallen by an average of 95% from its historical high, and among the venture capital firms that invested in GameFi, 58% of them have lost between 2.5% and 99%.

In the current Web3 gaming sector, airdrops and token incentives have become the basic means of attracting users. Especially in the early stages of a project, by promising future incentives to players, the project party can quickly expand the user base and increase community activity. However, this strategy is often difficult to maintain long-term user retention. Once the tokens are issued and airdrops are completed, players will leave in large numbers due to reduced expectations for future rewards, and game activity will decline rapidly, and continued development will become the number one problem. As users churn and token prices fall, it will enter a negative spiral, and the market will have more doubts about the sustainability of the "Play to Earn" model of related games, further exacerbating token price fluctuations and weakening investor confidence.

For investment institutions with reduced risk appetite, slower pace of investment and waiting, poorly performing blockchain games are not an ideal choice. According to a report by DappRadar, Web3 game projects raised a total of approximately US$91 million in the first quarter of 2025, down 68% from the same period in 2024 and 71% from the previous quarter. This decline shows that investors' enthusiasm for the field has waned, partly due to the increased focus on artificial intelligence and real-world assets (RWA), which has distracted investment interest in Web3 games.

The number of users and attractiveness of a project directly affect its ability to obtain funding and resource support. If user growth is weak or the market response is mediocre, even a capable development team may run out of time and money before the final product is delivered. Judging from the many game projects that have been shut down in recent years, this situation may not be uncommon.

Money-making, running away and "garbage" makers

The adequacy and efficiency of the funds raised for failed projects is not simply a matter of “lack of money” or “too much money”, but rather a question of capital allocation and efficiency.

Among the large number of shut-down games, some projects are regrettable. Because their developers at least showed sincerity in creating the game, but perhaps due to bad luck, they were unable to create a complete and better product. And some development teams entered the industry with the purpose of hype and making money, so it is not surprising that they ran away after creating "cyber garbage".

Ember Sword is the most typical example, as the level of perfunctory attitude of its development team is shocking.

In 2021, Ember Sword, which caught up with the metaverse trend, began to be known by more people. During this craze, Ember Sword attracted 35,000 players and sold them NFT virtual land with a total value of US$203 million. Ember Sword also completed multiple rounds of financing at that time, and investors included video game anchor Dr. Disrespect, The Sandbox co-founder Sebastien Borget, and Twitch co-founder Kevin Lin.

Last July, Ember Sword announced that it had entered the closed beta phase and showed a trial video of the game. However, the crude, rough and cheap graphics disappointed players. Some people commented: "If this thing came out in 1995, I, an 11-year-old, would be very excited." Other players denounced the game as a scam and said that its graphics were not even as good as the MMORPG "RuneScape" that came out as early as 2001. The inevitable closure of Ember Sword this time was at least foreshadowed at that time.

With Ember Sword permanently shut down, servers offline, and limited Discord access. The game's EMBER token has also fallen to almost worthless, with a market value of only $80,000. The developer said in a high-sounding manner: "This is not the ending that any of us wanted" - this is certainly not the case, and many community members call Ember Sword a "scam." The game's player YouTuber CAGYJAN claimed on X that he lost at least $30,000 on the project between 2021 and 2025, and many users under his post also shared similar experiences.

The disillusionment of the promise of player ownership

With the closure of these Web3 games, the fantasy of actually owning game assets has also disappeared.

Web3 games, which are marketed as "the future of gaming", have often claimed in their promotional language that "players will truly own game assets". In theory, when game assets such as characters, props, and land use NFT technology, players will become the real owners of these assets - these assets exist on the blockchain, independent of the game developer's server, and even if the game stops operating, players can still keep and trade these assets.

But the reality is that the so-called "decentralized assets" are still highly dependent on centralized game servers and developer support. When a game project is terminated or the developer withdraws, the player's NFT and tokens basically lose their practical use, and their value will immediately shrink significantly. When Nyan Heroes announced that it would be shutting down, its NYAN token plummeted by about 40% that day, and its circulating market value fell below $900,000. As of May 23, it is currently trading at $0.006, down 98.5% from its all-time high of $0.45 in May 2024.

Regarding the problems caused by the centralization of game projects, many industry insiders believe that if players cannot use their digital assets on different platforms and games, then they do not really own these assets. However, even if the Web3 game industry forms a unified standard at the technical level, the so-called "interoperability" still faces a deeper structural problem. That is, the huge differences between game types make the cross-platform transfer of assets not feasible in practice.

Imagine, what practical use can an NFT character, weapon or mount owned by a gamer in an RPG game have in an FPS shooting game, and how can its value be reflected in a business simulation game? Game assets carry a set of capabilities and attributes, and these systems are often designed independently for each game, and the commonality between games is almost zero.

Moreover, for game developers, integrating other games’ NFT assets into their own game world means exponentially increased development complexity and maintenance costs. Not only do they have to design new modeling, animations, and UI interactions, but they also have to consider how to keep these external assets from destroying the original game balance, which is a completely impossible fantasy. No commercial game developer would voluntarily bear this burden out of consideration for player “ownership”.

Therefore, when we discuss the issue of player asset ownership, we must realize that the core issue of Web3 game asset ownership is not the so-called confirmation of ownership and on-chain verifiability, but fundamentally whether it can be compatible with a living game ecosystem. In this respect, current Web3 games are no different from traditional games.

Why do blockchain game investors feel more pain when they both pay for games?

Providing financial support for the continued development of the project as a game supporter is not unique to the blockchain industry. The traditional crowdfunding game model has been in operation for more than a decade. Since the early 2010s, game crowdfunding platforms represented by Kickstarter have provided independent developers with a channel for financial support. In this model, players usually participate in the form of pre-ordering games, obtaining peripherals, or obtaining developer updates.

According to a survey by the University of Cologne, crowdfunding participants are mainly divided into three categories: supporters who want to help specific developers make games without external constraints, buyers who expect to obtain completed game products, and influencers who hope to influence the game industry through crowdfunding. The study pointed out that the first two types of supporters are more inclined to regard financial investment as support for developers rather than pure transaction behavior.

Star Citizen, nicknamed the "ship-selling cult", has been crowdfunding on Kickstarter since October 2012. Over the past 13 years, Cloud Imperium Games, the game's developer, has raised more than $800 million through various means, including paid Alpha testing, subscriptions, peripherals, microtransactions, and selling players ships worth hundreds of dollars. Although the game has also caused some controversy, the community has rarely protested collectively because of paying to purchase game content.

When traditional game crowdfunding fails, most players usually only invest in game copies or related peripherals, which is a relatively small amount. Even if a traditional game project fails, the financial loss of players is relatively limited, and psychologically they are often willing to view it as supporting the developer rather than direct financial investment. Even if the project fails to be completed on schedule, supporters often view it as support for creativity rather than a speculative failure.

However, in the Web3 model, players and speculators directly use more real money to purchase in-game assets or tokens. When the project fails, they face the evaporation of real funds, and the sense of loss and betrayal is stronger.

Where should Web3 games go?

"What are the best-designed, economically sustainable Web3 games? Currently, the answer to this question is simple - almost none." Duncan Matthes, a researcher at Delphi Digital, pointed out that the game development cycle is long and capital-intensive. Most high-quality games take more than 2 to 5 years to develop and require a high degree of expertise.

Add to that the fact that development budgets range from millions of dollars for mobile games to hundreds of millions for console and PC games — far exceeding the average funding for Web3 games. These factors make it difficult for gaming tokens to grow steadily driven primarily by attention and shifting narratives.

In this context, industry insiders generally believe that Web3 game developers must first ensure the quality and playability of the game itself. Carlos Pereira, partner of Bitkraft Ventures, pointed out in an interview with Blockworks that Web3 game development should prioritize the quality of the game itself rather than prematurely introducing tokens or NFTs for monetization, because the latter will set too high expectations, and if the studio fails to meet these expectations by exiting or adjusting previous plans, it will be in trouble.

For many Web3 game developers, in the process of excessive pursuit of ownership and economic incentives brought by NFT, they often ignore the core elements of the game, such as characters, narratives, game experience and community interaction. Shiti Manghani, COO of Find Satoshi Lab, once said that players care more about whether the game is fun rather than the ownership mechanism of in-game assets.

Back to reality, the closure of Web3 game projects is due to multiple factors, including the high failure rate of the game industry itself, the difficulty in retaining players under the Web3 model, problems with fund allocation and financing models, and the deterioration of the macro investment environment.

Faced with difficulties, Web3 games need to return to value-driven and technical essence to get out of trouble. They also need to return to the origin and make Web3 games fun first.