An Overview of the Web3 Game Business Model

What Are Web3 Games?

Web3 games are a new genre built on blockchain technology, using NFTs (non-fungible tokens) to redefine digital ownership within gaming. Unlike traditional games, they grant players verifiable ownership over in-game assets such as items and characters, creating entirely new business models for the industry.

In conventional games, the game company retains ownership of all in-game items and characters, with players having only usage rights. Web3 games use blockchain to transfer true ownership of these digital assets to individual players. This enables players to buy and sell items earned in-game to other players, or trade them on external NFT marketplaces.

This innovation gave rise to the "Play to Earn" concept, drawing significant attention from the gaming, investment, and technology sectors. Since the early 2020s, major global game companies have aggressively entered the Web3 gaming space, accelerating the development of new entertainment economies.

Key Features of Web3 Games

Web3 games offer distinctive features not found in traditional gaming. The three most notable are:

True Ownership: By leveraging NFT technology, Web3 games grant players true property rights over digital assets. Ownership records are stored on the blockchain, making them transparent and immutable. As a result, players genuinely own the items they acquire, and these assets may retain value even after the game service ends.

Active In-Game Economy: Players can generate income by trading in-game items and characters. Skilled players can profit by acquiring and selling rare assets, and in some regions, this activity has become a legitimate means of livelihood. Connecting in-game and real-world economies also paves the way for new forms of employment and economic activity.

Global Accessibility: Web3 technologies and NFTs enable instant access to global markets at launch, allowing cross-border transactions without the barriers of regional regulations or payment systems. Blockchain establishes a unified economic environment for players worldwide.

From the early 2020s, major Japanese game companies like Square Enix have actively pursued Web3 gaming initiatives. With a wealth of globally recognized titles and intellectual property, Japan is well-positioned to lead in Web3 gaming, fueling expectations for new global industry growth.

Web3 Game Business Models

Web3 games employ fundamentally different revenue structures from traditional games, centered on NFT-based content and token economies.

In Web3 games, assets such as land, items, characters, and equipment are issued as NFTs. Players receive clear, transferable ownership of these assets, which are uniquely identifiable on the blockchain—guaranteeing rarity and attributes, and establishing real market value.

Operators typically run proprietary NFT marketplaces, earning revenue mainly from transaction fees. Each time an NFT is traded between players, a percentage of the transaction amount (typically 2–5%) is collected by the platform. This structure ensures continuous, sustainable revenue as long as the game remains active.

Many Web3 games also issue proprietary tokens, which serve as in-game currencies for item purchases, player-to-player transactions, and reward distribution. Players can earn tokens through gameplay, exchange them for items, sell to other players, or swap them for other cryptocurrencies on decentralized exchanges.

The sustainability of a Web3 game depends heavily on the design of its token economy. Well-balanced tokenomics carefully match issuance with consumption, curbing inflation while maintaining a vibrant economy. Operators generate income from initial token sales, transaction fees, and a share of staking rewards.

Top examples include Axie Infinity and The Sandbox, which have created large-scale token- and NFT-driven economies. Their main revenue sources are NFT trading fees and token transaction commissions, supplemented by land sales, limited NFT auctions, and brand collaborations.

Five Leading Web3 Games

The Web3 gaming market features projects across diverse genres and characteristics. Here are five of the most prominent and influential examples:

Leading Web3 Game #1: The Sandbox

The Sandbox, developed by Animoca Brands, merges Web3 gaming with the metaverse using blockchain technology. Players can own NFT-based land and items, trade freely, and earn income through gameplay.

The Sandbox is built around three core elements. First, "Game Maker" is an intuitive tool that enables anyone to create and share custom game experiences—no programming required. Next, the "Marketplace" allows trading of user-created NFT assets, including avatars, equipment, and buildings.

The most critical element is "LAND"—virtual territory owned by players, issued as NFTs for free trading. Each LAND plot has unique coordinates, and its value varies by location and surrounding environment. Owners can develop games, venues, or shops on their LAND, unlocking monetization opportunities.

Numerous major companies and brands have entered The Sandbox, purchasing LAND to operate virtual storefronts and event spaces. The platform’s economic ecosystem continues to grow, creating new business opportunities in the virtual world.

Leading Web3 Game #2: Axie Infinity

Axie Infinity is a Web3 game inspired by Japanese classics like Pokémon and Tamagotchi. It achieved explosive popularity in Southeast Asia and is widely credited with bringing Web3 gaming to a global audience.

Players control teams of three unique "Axie" creatures on adventures. Each Axie possesses individual abilities, appearances, and genetic traits, and can be bought and sold as an NFT. The game offers multiple modes, including PvP battles, PvE quests, and a breeding system.

Victories and quest completions earn players SLP, the in-game token used to breed new Axies and trade for other cryptocurrencies on exchanges. The governance token AXS provides voting rights on game policies and can be staked for rewards.

Axie Infinity has become a social phenomenon in Southeast Asia—especially in the Philippines, where many have relied on it for income during economic hardship. The success of this Play to Earn model has demonstrated the global potential of Web3 gaming.

Leading Web3 Game #3: STEPN

Launched in late 2021, STEPN is an innovative Web3 game based on the Move to Earn (M2E) concept. Players purchase NFT sneakers and earn in-game currencies GST and GMT through activities like walking, running, and jogging.

NFT sneakers are STEPN’s core, available in five rarity tiers—Common, Uncommon, Rare, Epic, Legendary—each with different stats and earning rates. Each sneaker has four attributes: Efficiency, Luck, Comfort, and Resilience, all affecting rewards from physical activity.

Players earn tokens by physically moving, tracked via GPS. Each sneaker type (Walker, Jogger, Runner, Trainer) has an optimal speed range for maximum efficiency. Tokens earned can be used for leveling up, repairs, and purchasing new sneakers, or exchanged for other cryptocurrencies externally.

STEPN gained worldwide popularity, becoming a major social trend in Japan. As a new lifestyle combining health and income, it attracted a broad user base. The development team continues to innovate, integrating with the metaverse and enhancing social features, pushing the boundaries of Web3 gaming.

Leading Web3 Game #4: XANA

XANA, developed by NOBORDERZ and led by a Japanese CEO, is a Web3.0 metaverse platform originating from Japan. It empowers anyone to easily create metaverse spaces, avatars, and games, and freely trade digital asset ownership.

XANA’s strength lies in diverse collaborations—partnering with the combat sports event "Breaking Down" for metaverse experiences and with major NFT projects like "CNP (CryptoNinja Partners)." These collaborations broaden mainstream reach and accelerate metaverse adoption.

On XANA, users build their own virtual spaces, host events, and sell NFT items. Proprietary AI avatar technology enables users to create personalized avatars for metaverse activities.

Yuuji Mizoguchi, CEO of BACKSTAGE Inc. and a leader in entertainment industry digital transformation, heads XANA JAPAN, forging strong entertainment sector ties. XANA’s vision—"Another Place and Another Self for Everyone"—aims to deliver new identities and communities through the metaverse.

Leading Web3 Game #5: Star Atlas

Star Atlas is a next-generation Web3 game with cinematic graphics powered by Unreal Engine 5. Set in a vast cosmos, players join factions—human, alien, or android—to expand territory, secure resources, and engage in large-scale battles.

The game is set in 2620, with three factions vying for dominance. Players can engage in third-person shooting, spaceship combat, and fleet warfare, with flexibility to focus on combat, exploration, or economic pursuits as they prefer.

Star Atlas uses a dual-token economy: ATLAS serves as the in-game currency for purchases and trades, while POLIS is the governance token, giving holders voting rights on development policies and economic parameters.

Players enjoy rich content—exploring space, mining resources, trading, manufacturing. All assets—ships, land, mining rights—are issued as NFTs for free trading. Rare ships and strategic land often command premium prices in the market.

Even in development, Star Atlas has drawn major attention for its advanced graphics and expansive world, establishing itself as a benchmark for technical innovation in Web3 gaming.

Key Considerations in Web3 Game Business

While Web3 games create new economic opportunities, participants must understand critical risks and potential pitfalls. Before investing or joining, carefully consider the following:

Consideration #1: NFT Price Volatility

Web3 games allow players to profit from NFT trading, but the NFT market is highly volatile and often illiquid. Prices can fluctuate dramatically, and assets bought at high prices may lose significant value—especially if game popularity wanes or new content reduces demand for certain items. Broader crypto market downturns also impact NFT values.

Liquidity is also a key concern—unpopular or ultra-rare NFTs may be hard to sell when needed. Always invest only surplus funds you can afford to lose, and diversify across multiple projects to mitigate risk.

Consideration #2: Beware of Unreliable Projects

The rapid growth of Web3 gaming has attracted unsustainable and fraudulent projects. Some promise high returns but invest little in actual game development, merely collecting funds from players.

Always conduct thorough due diligence before investing. Verify:

Development Team Transparency: Is the team experienced, are member backgrounds public, and is there a track record of past projects? Be wary of anonymous or unverifiable teams.

Clear Roadmap: Is there a detailed development plan and regular updates? Vague or shifting plans may signal low project viability.

Major Partnerships: Collaborations with recognized brands or companies can indicate reliability—but always confirm via official announcements.

Venture Capital Backing: Funding from reputable VCs suggests the project has passed professional screening.

Community Engagement: Is there a healthy, active community, and does the team communicate openly? Transparent projects engage regularly and report progress.

Token Economy Sustainability: Ensure token issuance, allocation, and spending mechanisms are balanced. Overly inflationary or operator-skewed models may not last long term.

Evaluating these factors and investing only in reputable, proven projects can greatly reduce your risk.

FAQ

What Are Web3 Games? How Do They Differ from Traditional Games?

Web3 games use blockchain technology to let players truly own in-game assets. Unlike traditional games, NFTs record assets independently of operators, enabling marketplace trading. Smart contracts guarantee transparency.

What Are the Main Business Models of Web3 Games?

Key business models include Play-to-Earn, NFT sales, token economies, staking rewards, and governance tokens. These models leverage decentralization to offer players real earning opportunities.

How Does the Play to Earn (P2E) Model Generate Revenue?

P2E models let players earn crypto tokens by playing games. Revenue comes from gameplay activities, completing quests, and selling NFT assets.

What Roles Do NFTs and Tokens Play in Web3 Game Business Models?

NFTs represent ownership of unique in-game items, while tokens drive the in-game economy. NFTs create tradable assets; tokens enable player rewards, transactions, and purchases—supporting a sustainable ecosystem.

What Risks and Challenges Are Involved in Web3 Game Business Models?

Risks include fraud, crime, privacy issues, and regulatory uncertainty. Handling crypto assets demands strong security measures.

How Are Web3 Games Expected to Evolve?

The Web3 gaming market is projected to reach $102 billion by 2032. Advances in blockchain, growing user bases, and maturing NFT and token economies will drive more major companies into Web3, rapidly expanding the industry.