Explaining the Business Models of Web3 Games

What Are Web3 Games?

Web3 games are a fundamentally new form of gaming that differs from conventional games. Built on blockchain technology and utilizing NFTs (non-fungible tokens), these games implement an innovative system that grants clear ownership of in-game digital assets. This technological breakthrough has created new business models in the gaming industry.

In traditional games, ownership of items or characters acquired in-game belongs to the game operator, and players were limited to usage rights. In Web3 games, blockchain technology ensures that players have verifiable ownership of digital assets. As a result, players can freely buy and sell in-game items with each other or trade them on NFT marketplaces.

This new "Play to Earn" concept has drawn significant attention not only from the gaming sector but also from the financial and entertainment industries. Players now have the opportunity to earn real income through their gameplay, making gaming a recognized new way to work or a source of income.

Key Features of Web3 Games

Web3 games have several unique features not found in traditional games. Below, we detail the three most important characteristics.

Clear Ownership Rights

With NFT technology, players truly own their in-game digital assets. In the past, regardless of how much time or money players invested to obtain rare items, those assets were simply data on the game company's servers. In Web3 games, assets are managed as NFTs recorded on the blockchain, ensuring players have full ownership. Even if a game ends its service, these assets can potentially retain value.

Active In-Game Economies

Players can earn real income by trading in-game items and characters. In some developing countries, people now make a living from Web3 games. For instance, in some Southeast Asian regions, Web3 gaming has become a major source of income and influences local economies. The emergence of in-game economies has stimulated player-to-player trading and enabled more complex and engaging gameplay.

Global Reach

Web3 technology and NFTs make cross-border transactions simple. Traditional games required region-specific servers and payment systems, but blockchain allows players worldwide to trade on a unified platform. This enables instant access to the global market at launch and helps games attract a broader customer base.

In recent years, major Japanese gaming companies—including Square Enix—have proactively entered the Web3 gaming space. Japan owns many globally recognized game titles and intellectual properties. By combining these assets with Web3 technology, there is significant potential for the industry to grow as a new global sector.

Web3 Game Business Models

The defining feature of Web3 games is the NFT-ization of in-game content and the use of proprietary token economies. This groundbreaking business model has the potential to dramatically reshape the revenue structure of the gaming industry.

In Web3 games, digital assets such as land, items, characters, buildings, and equipment are all issued as NFTs. Players gain clear ownership of these assets and can use or trade them freely. For example, a player who acquires a rare character can sell it for profit or rent it out to earn income.

Many Web3 game companies operate their own NFT marketplaces where players can freely trade NFT items. The game company collects transaction fees, which serve as a key revenue stream. Typically, fees range from 2.5% to 10% of the transaction value, so as trading volume grows, so do company revenues.

Most Web3 games also issue their own cryptocurrencies (tokens) for in-game use. Players can use these tokens to purchase in-game items or earn them as rewards. Tokens can be saved to exchange for in-game assets, sold to other players, or traded for other cryptocurrencies on major exchanges.

Token economies enable complex in-game economic systems. For example, adjusting token supply can control inflation or deflation and incentivize specific behaviors. The design of these systems is critical to a game's long-term success, so many Web3 game companies work with economists and game designers to build sustainable token economies.

Flagship Web3 games such as Axie Infinity and The Sandbox have created massive economic ecosystems with tokens and NFTs. These titles attract millions of players, generating tens of millions of dollars in daily transactions. Fees from NFT and token trading are a primary source of revenue for Web3 game companies.

Five Leading Web3 Games

The Web3 game market features a variety of games, each with distinctive appeal. Here are five of the most prominent Web3 games gaining attention.

Leading Web3 Game 1: The Sandbox

The Sandbox, developed by Animoca Brands, blends blockchain-powered Web3 gaming with the metaverse. Players can own NFTs representing virtual land and items, freely trade them, and earn income through gameplay.

The Sandbox consists of three primary components. The Game Maker is a tool that enables anyone, even without coding skills, to easily create games using an intuitive interface. The Marketplace lets players buy and sell user-created NFT items, allowing creators to monetize their work. LAND are virtual plots players can own as NFTs and trade freely.

The Sandbox has already attracted major companies and brands. Leading fashion brands and music artists have acquired LAND to operate virtual stores and event spaces. These initiatives aim to provide innovative customer experiences and enhance brand value within The Sandbox. As the in-game economy grows, we can expect greater integration with real-world economic activity.

Leading Web3 Game 2: Axie Infinity

Axie Infinity is a Web3 game inspired by popular Japanese titles like Pokémon and Tamagotchi. It has achieved explosive popularity in Southeast Asia and is widely regarded as the flagship title that brought Web3 gaming to the world stage.

Players command teams of three unique creatures called Axies, each with its own abilities and appearance, which can be owned and traded as NFTs. Players battle others and complete quests to earn experience, items, and in-game tokens.

Axie Infinity became a social phenomenon in Southeast Asia. In the Philippines, many people make a living by playing the game, and some players earn more than the average local salary. The success of this "Play to Earn" model has made Axie Infinity a global case study for new work opportunities.

The economic system in Axie Infinity is powered by two primary tokens (AXS and SLP). Players earn these tokens through gameplay, spend them to develop and breed Axies, or sell them on external markets.

Leading Web3 Game 3: STEPN

STEPN is an innovative Web3 game based on the Move to Earn (M2E) concept. Players buy NFT sneakers and earn in-game currencies—GMT and GST—by walking, running, or jogging.

STEPN’s core feature is its NFT sneakers, each with different performance based on rarity, attributes, and level. These characteristics directly affect the amount of exercise and tokens earned. High-performance sneakers can yield greater token rewards and command high prices on the marketplace.

STEPN has gained global popularity by combining health promotion with Web3 technology. In Japan, health-conscious users have embraced it, and it has received frequent media coverage. Players can maintain healthy habits while earning, allowing for both physical and financial benefits.

Future plans include integration with the metaverse and supporting diverse exercise types. As a pioneer in Web3-based health management, STEPN is expected to continue garnering attention.

Leading Web3 Game 4: XANA

XANA is a Japanese Web3 game platform developed by NOBORDERZ, led by a Japanese CEO. The platform allows anyone to build metaverse spaces, avatars, and games, and freely trade digital item ownership.

XANA is aggressively expanding, collaborating with Japanese companies and influencers to offer virtual concerts by famous artists and virtual stores by major brands. These efforts have made XANA Japan’s first metaverse company and a focus of both domestic and international attention.

Yuji Mizoguchi, CEO of XANA JAPAN and president of BACKSTAGE, drives digital transformation in entertainment—fostering a strong partnership with the entertainment sector. XANA’s vision is "A New Place and Another Self for Everyone," with the goal of enabling experiences and creative expressions in the metaverse that are difficult to achieve in the real world.

The XANA platform enables users to create original NFT items and sell them on its marketplace. No-code tools make content creation accessible to those without programming knowledge.

Leading Web3 Game 5: Star Atlas

Star Atlas is a next-generation Web3 game developed with Unreal Engine 5, featuring cinematic-quality graphics. Set in a vast universe, players ally or compete with various species and factions to expand their territories in a sci-fi strategy setting.

Star Atlas offers diverse gameplay, including third-person shooting, spaceship combat, and fleet battles. Players can explore space, mine resources, and trade, enjoying freedom and opportunities to mine rare materials or trade with other players and organizations.

Star Atlas employs an advanced game economy using NFTs. Players can own and trade spaceships, land, equipment, and even space stations as NFTs. Rare ships and strategically important land are expected to fetch high market values.

Even in its development phase, Star Atlas has captured global attention among gamers and Web3 enthusiasts for its graphics and innovative design. The game aims to build a massive player community and realize a true virtual universe with complex economic and political systems.

Cautions for the Web3 Game Business

Web3 games have enormous potential, but also pose significant risks. Understanding and managing these risks is essential to safe participation.

Caution 1: Beware of NFT Price Volatility

While players can earn income from trading NFT items in Web3 games, the NFT market is still new and relatively illiquid, leading to significant price swings.

For instance, an NFT item may fetch a high price temporarily, but its value can quickly plummet if the game loses popularity or stronger items are introduced. There have been cases in which NFTs purchased at high prices lost over 90% of their value within months.

NFT values are also influenced by overall market trends and cryptocurrency fluctuations. During market downturns, NFT demand and prices fall; during booms, NFT prices rise.

To manage this risk, always invest only surplus funds and play within your risk threshold. Never use essential living or emergency funds for Web3 game investments. Diversifying investments across multiple games and items can help mitigate risk.

Before purchasing NFTs, research their utility, rarity, and in-game demand. Do not buy simply because prices are rising—focus on long-term value.

Caution 2: Do Not Invest in Unreliable Web3 Games

The rapid growth of the Web3 game market has unfortunately led to more fraudulent projects. Such games promise unrealistic rewards or high returns, but are designed to extract money from players.

Warning signs include promises of extraordinary returns, such as "tenfold investment in a month," and projects with anonymous or unverified development teams.

Projects with vague or frequently changing roadmaps are also less credible. Serious projects maintain clear, achievable plans and deliver on them.

Avoid these risks by conducting thorough due diligence. Consider the following:

Development Team: Check for experienced developers and designers, and review their records. Professional networks like LinkedIn can provide background information.

Roadmap: Look for a transparent, realistic roadmap that is regularly updated. Verify if previous milestones have been met.

Partnerships: Confirm ties with prominent companies and brands. Partnerships with reputable organizations are a strong trust signal.

Funding: Check for backing from well-known venture capital firms, which conduct rigorous due diligence before investing.

Community Activity: Ensure there is a vibrant, healthy community. Review interaction on official Discord or Telegram channels.

Audit Reports: Verify that smart contracts are audited by third parties. Public audit reports indicate technical reliability.

By carefully evaluating these factors and only investing in trustworthy projects, you can greatly reduce the risk of fraud.

Conclusion: Web3 Game Business Models Will Continue to Gain Traction

This article has provided a detailed look at Web3 game business models. Web3 games leverage blockchain technology and NFTs to offer players true digital asset ownership and innovative gameplay.

The key characteristic is the introduction of the new Play to Earn concept. Players can generate real income through NFT trading or gameplay, and earn rewards for contributing to the game. This groundbreaking model is driving major global game companies to enter the Web3 space.

Games like The Sandbox, Axie Infinity, STEPN, XANA, and Star Atlas each have unique ecosystems and offer experiences and income opportunities that were not possible in conventional games. Even more diverse Web3 games are expected to emerge.

At the same time, risks such as NFT price volatility and fraudulent projects exist. Understanding and managing these risks is essential for safe participation. Only invest surplus funds, and always research the reliability of each project before getting involved.

The Web3 gaming market is growing rapidly alongside technological advancement. Blockchain improvements are boosting transaction speeds and reducing gas fees, making Web3 games more accessible. As major game companies enter the market, content quality and overall maturity are increasing.

Japan, with its world-famous game titles and intellectual property, enjoys a significant advantage in this market. Japanese gaming companies actively adopting Web3 technology are well positioned to drive global industry growth.

If you are considering entering the Web3 gaming space, use the insights from this article to plan your approach strategically and carefully. With the right knowledge and preparation, Web3 games offer new entertainment experiences and income opportunities.

FAQ

What Are Web3 Games? How Are They Different from Traditional Games?

Web3 games use blockchain technology, enabling players to acquire and own cryptocurrencies and NFTs. Unlike conventional games, these assets come with clear ownership and can be freely traded both in and outside the game.

How Do Web3 Game Business Models Work? What Are the Main Revenue Sources?

Main revenue sources for Web3 games include NFT sales, secondary market royalties, and transaction fees. Sustainable models focus on user experience and real value delivery. Adoption of Layer 2 technology and UX improvements are key to achieving profitability.

What Role Do NFTs and Tokens Play in Web3 Game Economies?

NFTs represent unique in-game items that players can own and trade. Tokens are used for transactions, rewards, and governance, providing liquidity for the game economy. Together, they enable a player-driven economic system.

Can You Actually Make Money with Web3 Games? What Are the Investment Risks?

It is possible to earn money in Web3 games, but returns are not guaranteed. Main risks include token price volatility, uncertainty about the game's long-term viability, and difficulty recovering initial investments. Success requires market knowledge, skill, and sufficient capital.

What Is the Current Status and Future Outlook of the Web3 Game Industry?

The Web3 game market is expected to grow from about $800 million in 2023 to $65 billion by 2030. Ongoing blockchain innovation and growing player interest are driving rapid industry expansion.