As web3 games continue their search for a defining genre or hit, trading card games (TCGs) have been one of the more promising categories over the last two years. TCGs, with their collectible and modular nature, are a natural fit for web3's value-add to gaming.
Unlike most games, TCGs have had a functioning secondary market in the physical realm since their inception. However, replicating this success digitally has proven challenging. There is a lot of potential for success in this genre, with Hearthstone and Yu-Gi-Oh! mobile games pulling in an estimated (according to data.ai) $1M to $2M in monthly revenue, and Marvel Snap double that. With this in mind, let’s examine the genre's past and future to assess its current viability and potential.
Noteworthy Web3 TCGs
Splinterlands, an early standout on the Hive blockchain, centered its gameplay around blockchain's transactional nature. Players rapidly assemble a small deck from their collection each match, which then auto-plays against opponents. This format enables quick, accessible matches as blockchain transactions, setting a precedent for early blockchain TCG experiences.
The game saw a significant upswing during the bull run, especially following the introduction of its governance token, Splintershards (SPS). Over time, however, bot infestation became rampant. The developers' attempts to integrate bots into the economy, rather than eliminate them, failed to strike a solid balance. Economic missteps and stagnant gameplay began impacting the game by mid-2022, leading to a steady decline in both player and bot numbers. According to Peakmonsters, a third-party data site, DAU has fallen to under 40K, down from 300K-400K in 2021-2022.
While the game still retains a core player base and continues to develop new expansions, including a long-delayed Land system, its developer has faced major cutbacks and layoffs. The Spinterlands’ team’s efforts to diversify gameplay built on its existing technology into new genres and to include real-time interaction, like the Genesis League Sports series, are slowly developing. The series' inaugural soccer game, Genesis League Goals (GLG), recently launched, but it's too early to gauge real interest. Unfortunately, despite the improvements to the Splinterlands formula, GLG is most likely too little too late to attract a sustainable audience.
Gods Unchained, which takes many gameplay cues from Hearthstone, initially launched on the Ethereum blockchain in 2018. High transaction costs led to the creation of Immutable X, a new blockchain using Starkware technology, which now ranks among the most popular gaming blockchains.
The game gained moderate traction during the 2021 bull run but saw a decline in Q2 of 2022. Recognizing missed opportunities, the team revamped the game amid Immutable’s rapid expansion and investments. This overhaul led to a resurgence in secondary market card sales, of which royalties are enforced, starting in Q3 of 2022. The game sells a large but unknown number of booster packs directly to players for over $2 a set. Combined with the enforced royalties, this game is easily the largest and most successful web3 TCG to date.
2023 has been promising for Gods Unchained, marked by the release of new card sets and increased market volume, indicating the game's strong performance. Despite data limitations due to its presence on the Immutable X blockchain, secondary market activity suggests success for the game at the moment.
Recently, however, Gods Unchained received an “Adults Only” rating from the ESRB, leading to its removal from the Epic Games Store. This was due to the game's model of paid play with a random deck for a chance at rewards with real money value, something that smelled too much like gambling to the ESRB. The issue was resolved quickly but the effect on web3 games in general could be chilling on other platforms – and it hints at why alternative distribution may be requisite to web3 gaming’s future.
The long-awaited mobile version has not emerged either, with a release now doubtful by year's end, despite Immutable's leadership promoting a 2023 launch. Those hurdles aside, if the game is able to continue improving and releases successful card sets, there’s a solid future ahead as the overhead is lower and the profit potential much higher than many traditional TCGs.
Skyweaver, which dates all the way back to a June 2019 private beta, initially stood out for its high-quality art, polish, and gameplay. Developed on the Polygon blockchain, the game keeps the actual gameplay off the blockchain, reserving it for card trading. Its stable but low-profit economic model, which includes the use of the USDC stablecoin, has kept the economy from exposure to serious downturns, but also from speculative upswings.
Early mobile betas demonstrated the game’s capability to deliver a solid experience across web and mobile platforms. While Skyweaver introduces some unique twists to the genre around spells attached to cards, it’s unclear if players found this engaging enough to pull them from other F2P TCGs.
However, Skyweaver has struggled to gain traction. Despite its polish and gameplay, it lacks strong retention and progression mechanisms. Efforts to address these issues, including revamps and new features like a battle pass, have had limited success. According to data.ai, the game peaked at around 192K active users in early August on Android, but quickly declined, struggling to retain over 10K active users. According to Skyweaver data, the game currently has approximately 4,700 players online, though this number may be inflated by idle web users. Developer Horizon sometimes seems to have shifted focus to its Sequence wallet and Nifty Swap marketplace technologies, potentially detracting from Skyweaver's promotion.
While there is a lot more competition in the space now, Sequence has developed as one of the easiest-to-use wallet systems. Horizon, seeing the potential, has been doubling down on this technology to support partners and games.
Since 2021, Parallel has largely been unplayable, except in limited alpha and beta tests. Potential players have historically been investing in card NFTs based more on faith that the gameplay will be good and appreciation for the art as the cards themselves have had no gameplay information text or stats, along with no public rules or game information.
Now that there is much more public information through the alpha and beta phases, the increased confidence that there is actually a game to play has reignited spending and trade volumes. Though still actively in development, progress has been slower than competitors. Currently in a playable closed beta, it recently launched season 5 of its monthly seasons with season passes.
Despite the slow pace and the cryptocurrency winter, Parallel has resonated with collectors and NFT buyers. According to Cryptoslam, secondary market volumes have been fluctuating between $300K and $1M monthly since Q3 2023, and on the more expensive Ethereum network, no less. Based on increasing ownership of season pass premium cards, the game has also been successfully increasing monetization month-over-month even while in closed beta.
Community enthusiasm, despite the slow development and closed beta status, is a positive sign. However, the game’s appeal to a broader audience upon full release in 2024 remains uncertain, despite ongoing UI/UX improvements. It is difficult, given its closed status, to determine if Parallel’s player-driven economy design and aesthetic will appeal to a wider audience on full release in 2024, but it wouldn’t be a surprise if the game at least supported a core fanbase.
Cross the Ages
Launched in mid-2022, Cross the Ages differentiates itself with grid-based gameplay. Early investment by Ubisoft and its French developer has contributed to a specific regional appeal in France.
Secondary market transactions have shown some decent numbers throughout 2023, mostly running between $500K to $1M a month, with $4.4M in August. Mobile estimates from data.ai haven’t been very good for revenue, but iOS seems to be bouncing between 6K-26K DAU from French players since launch on October 1st. The game is likely to struggle financially, however, if it can’t find broader appeal outside of France.
Those Left Behind
It’s also worth mentioning several TCGs that failed to gain significant traction among many smaller and quickly forgotten attempts:
Dark Country, a gothic horror TCG, saw decent sales in mid-2021, but it never fully caught on.
Deviants’ Factions is a decent cyberpunk-themed game with a slightly amateurish feel that managed to survive the Terra meltdown and moved over to Immutable X, but it hasn’t found success.
Zoids Wild Arena is based on a popular Japanese kids brand involving robotic animals and just never saw much interest, despite the IP.
New Entries for 2024
New web3 TCGs have drastically slowed, reflecting a need for more innovative experiences beyond replicating physical card games. A glut of poorly made and bandwagoning TCGs during all the NFT hype also contributed to a reduction in announcements, often until there was substance to show. The market probably isn’t saturated, but demand seems difficult to manage at the moment for the web3 angle despite the obvious benefit of card trading.
One game that will try to offer something different in 2024 is Shardbound, a TCG combined with a hex-grid-based tactical game. There is definitely some risk in this particular style, as this concept has been attempted multiple times in the past, including by Shardbound itself, which failed to take off originally in 2017.
Immutable stepped in as a publisher recently, with faith in the potential of the game as a web3 project, and is helping fund and improve the game from its previous form as one of the early entries on the newer Immutable zkEVM blockchain. Given Immutable’s success and experience with Gods Unchained, there is some potential to give the game a new life with a fresh coat of paint and NFT-centric improvements.
We do expect to see a trickle of web3 TCG attempts with twists in 2024, simply due to the desire from game developers to keep trying. No matter how many TCGs have failed since Magic: The Gathering’s inception, it's a genre that continues to see attempts from both new and experienced developers.
COVID-19 not only overlapped with the web3 bull run, but also with a massive but temporary growth in physical trading card games that recently has shown some signs of waning. As game developers look for a way to get players on board for new TCG projects, without dealing with the now-overly saturated physical space, digital offers more variety of platforms to target. Unlike physical TCGs, web3 offers the opportunity to monetize the secondary trade market during the time between big set releases when sales typically slow down. The tricky part is making sure it doesn’t cannibalize sales of players chasing after specific high rarity cards.
Despite the ability to better monetize the secondary market, there is still the historical difficulty of marketing and driving success in digital TCGs in web2 that the blockchain doesn’t necessarily solve. Early movers in the space who’ve stuck around and have kept working at it have sometimes found success, even in this crypto winter, as Gods Unchained, Parallel, and Cross the Ages show (though Splinterlands and Skyweaver haven’t). Due to sunk cost and network effects, there is a tendency for only a few big winners to survive that can hit critical mass.
Hearthstone is an example of a digital TCG that managed to cater the experience to the digital space in a way that the previous entries hadn’t managed, and it ended up dominating the market for a long time. As time went on, that advantage lessened, and even the physical big three TCGs (Magic: The Gathering, Yu-Gi-Oh! and Pokémon) have managed to take some market share of the digital space.
An important takeaway from the graveyard of failed web3 TCGs is that making cards tradeable isn’t enough on its own; the game must work from a gameplay or marketing standpoint. Physical trading card games have gone through boom and bust cycles, and digital versions will as well.
An unfortunate truth that many trading card game developers have had to grapple with is that it’s difficult to succeed without attaching to a strong IP, and even that never guarantees success. While NFTs introduced a window to build some new IP, we expect that almost all future successes will be built on some existing title, whether first party like Hearthstone or licensed like Marvel Snap. That could make things difficult as many IP holders may not be interested in NFTs at this time.
In the long term, Gods Unchained could be a winner if it can find an audience outside of web3 native players, but the game’s theme and mechanics don’t make that likely. Parallel also could have some success in the short term, but is unlikely to reach out of its niche, and it will have to rely on monetizing its smaller fanbase to survive. The most likely positive scenario for the web3 TCGs we’ve discussed is to leverage the experience gained and apply that to an IP with broad appeal that overlaps with the niche that TCG players occupy.
Ultimately, prospects are simply better for large IPs, like those owned by Disney. The “House of Mouse” has even stormed up to the fourth biggest physical TCG in less than a year with its Lorcana game, showing the brute strength of IP to draw interest. We don’t necessarily expect the next big web3 TCG to come from Disney, but it’s worth acknowledging it is still launching new NFT trading focused projects around its IP such as Disney Pinnacle.
In the digital world though, it should be noted that cards are no different from any other form of collectible, like heroes or equipment, and it's not necessary to keep the skeuomorphic metaphor of playing cards to embrace NFT collectibility.
Unless trying to appeal specifically to the somewhat niche trading card audience, there is probably more opportunity for success in other types of games that draw on collectible assets such as gacha-based team battle RPGs that have had long-running games like Star Wars: Galaxy of Heroes and Marvel Strike Force.
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