Metaverse Struggles for Growth as User base Falls Behind market Expectations
Based on its remarkable performance last year, expectations were high that the Non-Fungible Token or NFT market was going to come into full maturity in 2022, but the early indications from the market analysis do not seem to support such optimism.
The top metaverse tokens have seen some drop in their user base and this has had an adverse effect on price. Tokens for the three major metaverse protocols, Decentraland, Axie Infinity and The Sandbox are all down year-to-date, and significantly underperforming bitcoin.
The metaverse exploded in value in 2021 as its market size reached $209billion according to globenewswire, as a result of significant investments from venture capitalists, who allocated hundreds of millions and investments from major brands.
Some experts have expressed concern that the number of daily active users on the metaverse does not reflect the level of investment.
“There is currently no organic engagement that retains players in the game — unlike traditional games like Fortnite, GTA, Candy Crush — where players are willing to pay to keep playing,” Web 3 analyst DeFi Vader wrote in an August 2021 note about Axie Infinity. “If one or a few of those games create organic engagement, then DAU growth may stop being mostly dependent on daily earnings.”
Market analysis indicates that in the past 30 days, the number of Axie Infinity’s average daily users has declined 30% from the previous period to about 107,240, The Sandbox’s has fallen 29% to 1,180 and Decentraland has lost 15% to 978 users a day on average, according to DappRadar data.
On the other hand, mainstream games ( like Counter-Strike, Dota 2, and PUBG) on Steam — a digital gaming store — have recorded steady traffic. This is a concern for advocates of the metaverse because it could discourage investment.
For Axie Infinity, it’s impossible to determine how many of these players are there just for fun, rather than as employees of guilds playing the game to earn yield for investors. The team behind Axie Infinity seems to understand this and acknowledges that gameplay needs to improve for the game to grow organically.
Interestingly, Gamers appear not to be completely receptive to the concept of GameFi, Recall that Gaming giant Ubisoft’s NFT efforts failed and then a survey carried out during the Game Developers Conference expressly showed that most studios are averse to the ideas of crypto and NFTs.
“First, the ability to purchase NFTs or in-game currency effectively creates pay-to-win game mechanics, a quality that most major franchises and successful games avoid,” Messari’s Mason Nystrom wrote in a March report. “The most successful games often share an element of skill, opting to create a competitive multiplayer gaming experience and avoiding a ‘spam the credit card until you win’ option.”
Still, there are those in the industry who say quality gameplay can go hand in hand with GameFi and the metaverse. In an interview with CoinDesk earlier this year, Red Door Digital’s See Wan Toong sees the crypto funding model as a way to ween games off reliance on being bankrolled by major studios.
The question remains whether this view will become mainstream.
