Author: Zen, PANews
The Web3 chain game (MapleStory N), adapted from the classic IP (MapleStory) by Korean gaming giant Nexon, was recently officially launched. With the strong performance of its NXPC token, the previously quiet Web3 gaming track has regained widespread attention. Many people are starting to fantasize about GameFi's revival.
However, one side is heaven, and the other side is hell.
Since 2025, the Web3 (blockchain) gaming sector has seen a large-scale halt of projects. Many projects that were once highly praised by the market have successively 'died'.
Including blockchain ARPG Tatsumeeko, NFT game Nyan Heroes, blockchain FPS Blast Royale, and NBA star Stephen Curry-backed Rumble Kong League, all have announced the termination of development. Even the highly anticipated MMORPG project Ember Sword suddenly shut down after raising over $200 million, shocking the player community.
Why are Web3 games difficult to sustain?
'We explored all possible paths forward. But in today's market environment, even some of the most promising projects have shut down, and we cannot find a way to continue development,' said Bright Star Studios, the developer of the social sandbox game Ember Sword, announcing the game's shutdown on May 21. Apart from public relations jargon, the clearest explanation was, 'We ultimately could not secure the funding required for continued development,' which is also the reason given by nearly all developers who have paused their games.
Ember Sword official homepage.
Among the recently announced game projects shutdown, the most surprising is undoubtedly the cat-themed shooting game Nyan Heroes. This well-known game in the Solana ecosystem attracted over one million players in four rounds of testing and had over 250,000 players adding it to their wishlists on Epic Games Store and Steam. 'Despite these achievements and discussions about release, new investment, grants, and acquisitions, we still failed to secure the funding needed to complete the game,' said the game's developer 9 Lives Interactive on X on May 17, expressing regret that Nyan Heroes would close due to the current tough industry conditions.
'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,' said Max Fu, CEO and creative director of 9 Lives, expressing some hope for the future of Nyan Heroes, but indicating that no results are likely in the short term.
Among the games that shut down this week, there is also the equally hopeful fantasy MMORPG Tatsumeeko: Lumina Fates, whose developer Tatsu Works completed $7.5 million in financing in 2022, with supporters including well-known investment institutions such as Binance Labs, BITKRAFT Ventures, Delphi Digital, and Animoca Brands.
The Tatsumeeko development team expressed their situation relatively mildly in an official announcement, claiming that the project became too complex during development, not meeting their internal sustainability standards, and thus they were forced to return to a lightweight, community-based experience. Tatsu Works hopes to shift its focus to a new project called 'Project: Wander', which can directly integrate gameplay into digital 'third spaces' like Discord servers, abandoning the large-scale game development of Tatsumeeko.
According to a report released by PANews (Overview of 17 Web3 games that shut down in 2025: The retreat of blockchain games faced with funding difficulties and confidence crises), 17 Web3 games have already shut down in 2025. Overall, apart from the funding shortages mentioned by project teams, factors like 'deteriorating market environment' and 'difficulty in maintaining operations due to player attrition' are also significant reasons that have crushed one blockchain game project after another.
High death rates have always been a chronic issue in the gaming industry.
The recent 'sudden deaths' of several well-known blockchain games make it seem as though Web3 games have entered a death cycle, but this is likely more due to the high visibility of these projects. In reality, the high death rate of Web3 games has never been an unusual phenomenon.
CoinGecko published a report on Web3 games in December 2023, which showed that since the emergence of GameFi in 2017, the failure rate in this field has remained high. CoinGecko's research evaluated 2,817 Web3 games launched between 2018 and 2023, determining the active projects as of November 27, 2023, based on observations and statistics from the blockchain data platform Footprint Analytics. The research found that approximately 2,127 Web3 games launched during this period failed, with an average annual failure rate of 80.8%.
A 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 token prices that dropped more than 90% from their historical highs and daily active users of less than 100 as 'dead'. According to this institution's statistics, 93% of Web3 games have already died, and it pointed out that GameFi projects can average only maintain for four months.
In fact, the gaming industry's project failure rate has always been extremely high, which is not unique to the blockchain gaming sector.
According to a study released by the independent research and consulting firm ICT Institute in 2022, after analyzing 100 successfully financed video game projects, they found that only 25% of the projects completed and delivered on time or within acceptable delays, while 40% of the projects failed to deliver any promised content.
The competitive mobile game arena also has a very high elimination rate. According to research released by the game-focused business analysis firm SuperScale in November 2023, the death rate of mobile games within three years can be as high as 83%. In a study of 500 game developers, SuperScale also found that 43% of games fail even during the development phase.
Regarding why game projects have such a high failure probability, an academic paper on the gaming industry published on DiVA Portal points out that the failure rate in the creative industries is higher than that of other software projects. The gaming industry, needing to continuously innovate and deliver high quality, faces more issues such as development delays and budget overruns, ultimately leading to project failures.
Staged financing model meets deteriorating external environment.
Game development usually adopts a 'staged financing' model, starting with seed or angel round financing in the early stages of the project, and continuously showcasing more game content as development progresses, followed by subsequent financing rounds such as Series A and Series B.
For example, the widely discussed (Black Myth: Wukong), which caught a lot of attention after releasing its first real demonstration video in August 2020, laid the foundation for subsequent financing and talent recruitment, leading to Tencent's strategic investment in 2021.
This model relies on the project's hard strength, requiring sufficient progress and potential to be demonstrated at each stage to attract new investments. However, in the blockchain gaming sector, this model has shown to be difficult to work at present: According to ChainPlay, the average token price of GameFi projects has dropped by 95% from its historical peak, and among the venture capital firms investing in GameFi, 58% of the losses fall between 2.5% and 99%.
In the current Web3 gaming field, airdrops and token incentives have become basic means of attracting users. Especially in the early stages of projects, by promising future incentives to players, project teams can quickly expand their user base and enhance community engagement. However, this strategy often struggles to maintain long-term user retention. Once tokens are issued and airdrops are completed, players leave in droves due to decreased expectations for future rewards, causing game activity to plummet, leading to sustainable development becoming the number one challenge. As users leave and token prices decline, a negative spiral ensues, leading to more skepticism regarding the sustainability of the related game's 'Play to Earn' model, further exacerbating token price volatility and undermining investor confidence.
For investment institutions with reduced risk appetite, slowed investment pace, and a watch-and-wait approach, underperforming blockchain game projects are not an ideal choice. According to a report by DappRadar, in the first quarter of 2025, Web3 game projects raised approximately $91 million, a 68% decrease compared to the same period in 2024 and a 71% decrease from the previous quarter. This decline indicates a waning enthusiasm from investors in this field, partly due to increased attention on artificial intelligence and real-world assets (RWA), which has diverted investment interest away from Web3 games.
The number of users and the attractiveness of a project directly affect its ability to secure funding and resource support. If user growth is sluggish or market response is tepid, even a capable development team may run out of time and funds before delivering the final product. This situation has likely occurred in many of the game projects that have shut down in recent years.
Profit-seeking, running away, and 'garbage' creators.
The abundance and efficiency of funds raised for failed projects is not simply a matter of 'lack of money' or 'too much money', but rather an issue of capital allocation and usage efficiency.
Among the many games shutting down, a few projects are particularly regrettable. Their developers at least showed sincerity in creating the game, and perhaps due to bad timing, they failed to deliver a complete and better product. However, there are also some development teams that entered the industry purely for hype and profit, and it is not surprising that they left after producing 'cyber garbage'.
Among them, Ember Sword stands out as particularly typical, with the level of indifference shown by its development team being staggering.
In 2021, Ember Sword, riding the wave of the metaverse craze, began to gain recognition. During this trend, Ember Sword attracted 35,000 players and sold them NFT virtual land worth a total of $203 million. At that time, Ember Sword also completed multiple rounds of financing, with investors including video game streamer Dr. Disrespect, The Sandbox co-founder Sebastien Borget, and Twitch co-founder Kevin Lin.
In July last year, Ember Sword announced it would enter a closed testing phase and showcased gameplay videos. However, the simplicity, roughness, and cheap feel of the visuals disappointed players, with some commenting, 'If this came out in 1995, 11-year-old me would be very excited.' Other players angrily accused the game of being a scam and claimed its visuals were even worse than the MMORPG (RuneScape) that was released back in 2001. The inevitable shutdown of Ember Sword had already been foreshadowed at that time.
Ember Sword gameplay testing screen.
With Ember Sword permanently shutting down and its servers offline, Discord access has been restricted. The game's EMBER token has also plummeted to nearly worthless, with a market value of only $80,000. The developers grandly stated, 'This is not the outcome any of us wanted'—which of course is not, many community members referred to Ember Sword as a 'scam'. The game's player YouTuber CAGYJAN claimed on X that he lost at least $30,000 on this project between 2021 and 2025, with many users sharing similar experiences in the comments below his post.
The disillusionment of player ownership promises.
With the shutdown of these Web3 games, the fantasy of truly owning game assets has also vanished.
Under the banner of the 'future of gaming', Web3 games often claimed in their promotional language that 'players would truly own game assets.' Theoretically, when characters, items, land, and other game assets adopt NFT technology, players become the true owners of these assets—these assets exist on the blockchain, independent of the game developer's servers. Even if the game stops operating, players can still retain and trade these assets.
But the reality is that the so-called 'decentralized assets' still rely heavily on centralized game servers and the support of developers. When a game project is terminated or a developer withdraws, the players' NFTs and tokens basically lose their practical use, and their value will immediately plummet. After Nyan Heroes announced it would close, its NYAN token plummeted by about 40% on the same day, with the circulating market value dropping below $900,000. As of May 23, the current trading price is $0.006, a 98.5% decrease from the historical high of $0.45 set in May 2024.
Regarding the issues brought by the centralization of game projects, many industry insiders believe that if players cannot use their digital assets across different platforms and games, then they do not truly own those assets. However, even if the Web3 gaming industry forms unified technical standards, the so-called 'interoperability' still faces a deeper structural challenge. The significant differences between game types make the cross-platform transfer of assets practically unfeasible.
Imagine a game player owning NFT characters, weapons, or mounts from a certain RPG game. What practical use could they have in an FPS shooting game, and how might their value be realized in a simulation management game? Game assets carry a set of abilities and attributes, and these systems are often independently designed for each game, with almost zero universality between games.
Moreover, for game developers, making NFT assets from other games 'compatible' with their own game worlds means exponentially increased development complexity and maintenance costs. They must design entirely new modeling, animations, and UI interactions while considering how to ensure these external assets do not disrupt the original game balance, which is an impossible fantasy. No commercial game developer would voluntarily take on this burden for the sake of player 'ownership'.
Therefore, when we explore the issue of player asset ownership again, we need to recognize that the core issue of asset attribution in Web3 games is not about so-called verification or on-chain verifiability, but fundamentally whether it can be compatible and bound to a living game ecosystem. From this perspective, current Web3 games are no different from traditional games.
Why do blockchain game investors feel a stronger pain in paying for games?
Providing financial support for the ongoing development of projects as game supporters is not unique to the blockchain industry; traditional crowdfunding game models have been operating for over a decade. Since the early 2010s, game crowdfunding platforms represented by Kickstarter have provided independent developers with channels for funding support. In this model, players typically participate by pre-purchasing the game, obtaining merchandise, or receiving updates from developers.
A survey conducted by the University of Cologne showed that players participating in crowdfunding mainly fall into three categories: supporters hoping to help specific developers create games without external constraints, buyers expecting to receive a finished game product, and influencers hoping to impact the gaming industry through crowdfunding. The study pointed out that the first two categories of supporters are more inclined to view their funding as support for developers rather than purely transactional behavior.
(Star Citizen), humorously referred to as the 'Church of Selling Ships', started crowdfunding on Kickstarter in October 2012. Over thirteen years, the game's developer Cloud Imperium Games raised over $800 million through various means, including paid alpha tests, subscriptions, merchandise, microtransactions, and selling spaceships worth hundreds of dollars to players. Although this game has also sparked some controversies, the community has rarely protested collectively against paying for game content.
When traditional game crowdfunding fails, the majority of players' investments usually amount only to the cost of purchasing a game copy or related merchandise, which is relatively small. Even if traditional game projects fail, players' financial losses are limited, and they often mentally prefer to see it as supporting developers rather than direct monetary investment. Even if a project fails to be completed as scheduled, supporters often view it as support for the idea 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 a project fails, they face real financial evaporation, and the feelings of loss and betrayal are even stronger.
Where should Web3 games go?
What are the best-designed, economically sustainable Web3 games? Currently, the answer to this question is very simple—almost none. Duncan Matthes, a researcher at Delphi Digital, points out that game development cycles are long and capital-intensive. Most high-quality games require 2 to 5 years of development time and a high level of expertise.
In addition, 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 game tokens to steadily grow under the primary drivers of attention and constantly changing narratives.
Against this backdrop, industry insiders generally believe that Web3 game developers must first ensure the quality and playability of the game itself. Carlos Pereira, a partner at Bitkraft Ventures, recently stated 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, as the latter sets overly high expectations. If the studio fails to meet these expectations through exits or adjustments to previous plans, it will find itself in trouble.
For many Web3 game developers, in the excessive pursuit of ownership and economic incentives brought by NFTs, they often overlook core elements of games such as characters, narrative, gaming experience, and community interaction. Shiti Manghani, COO of Find Satoshi Lab, stated that players care more about whether the game is fun rather than the ownership mechanism of in-game assets.
Returning to reality, the wave of shutdowns in Web3 game projects is due to the high failure rate of the gaming industry itself, the difficulty of player retention under the Web3 model, issues with capital allocation and financing models, and the deterioration of the macro investment environment, among other factors.
In the face of adversity, Web3 games need to return to value-driven and technological essence to break free from their predicament. They also need to return to their roots and make Web3 games fun again.
