Decentralization Dilemma: Blockchain Games Require Data For User Acquisition

Web3 games continue to dominate on-chain activity. According to DappRadar’s recent Game Report, blockchain games accounted for 34% of decentralized application (Dapp) activity last year. 

The report also notes that Web3 games attracted 1.1 million active daily users in 2023. 

Source: DappRadar

While notable, blockchain games still struggle to attract traditional and Web3 gamers. This point is highlighted in the 2023 State of the Industry Report from the Blockchain Game Alliance (BGA).

BGA’s report notes that onboarding and accessibility for blockchain games was the biggest challenge in 2022, with 51% of survey respondents citing this as the top concern. This trend unfortunately continued last year, with 55.1% of surveyors noting onboarding as a main challenge. 

The much-anticipated BGA State of the Industry Report 2023 is LIVE!

The annual BGA Survey Report, in collaboration with @emfarsis & @DappRadar, takes the pulse of the industry in 2023 & looks to the year ahead!

Dive into the insights here https://t.co/zql9U7OT67 pic.twitter.com/WSE1oJb10Y

— Blockchain Game Alliance (@BGameAlliance) December 13, 2023

Web3 Games Face Unique Challenges

Dean Takahashi, Lead Writer for GamesBeat at VentureBeat, told Cryptonews that Web3 games indeed face much more friction in comparison to Web2 games. 

“Web2 games have the advantage of a decade of familiarity from gamers,” said Takahashi. “For instance, Web2 gamers know they can make purchases in-app inside the apps downloaded easily from the app stores.”

Takahashi pointed out that Web3 games are also limited in visibility due to app store restrictions. 

“Web3 games have only recently been able to make it into app stores under a hybrid Web2/Web3 model,” he said. “In this model, there are still restrictions based on the policies of the app stores, which prioritize getting paid first for a 30% royalty on in-app purchase transactions.”

This is important to note, as this model goes against the decentralized approach that Web3 games otherwise offer users. 

Takahashi further remarked that blockchain games face monetization barriers due to the restriction of cryptocurrency payments. This can create further challenges for Web3 players wanting to leverage mobile platforms.

“Setting up a crypto wallet can be a complicated and intimidating process. All of this adds up to friction that stops all but the most-techie gamers from proceeding,” he said. “Also, a game company cannot steer players to make purchases off-store on their own websites for crypto purchases.” 

Discoverability Helps Web3 Game Adoption 

Given these ongoing challenges, Takahashi believes that Web3 games will likely advance once they become more discoverable to a target audience. 

“Web3 games need to find Web3 gamers,” he said. 

BGA’s 2023 State of the Industry Report also highlights this notion. According to the document, user acquisition and retention are key metrics to enable the growth of games. 

Web2 games often ensure this by collecting personal data from their users. These platforms also tend to use advertising models across centralized social media outlets that collect personal user information. 

Yet this method can be complicated to incorporate within Web3 games since user data is kept anonymous. Blockchain games also operate on decentralized platforms, meaning data would have to be collected on-chain.  

Data Analytics For Web3 User Acquisition 

Although data analytics can be a challenge for Web3 games, Anton Umnov – CEO and Co-Founder of Helika – told Cryptonews that blockchain game adoption would only take off when studios create games people want to play.

In order to ensure this, Umnov noted that Helika – a data analytics and infrastructure provider for the gaming sector – recently launched Helika Accelerate. Umnov explained that Helika Accelerate will provide gaming studios with specialized engagement data.

“Helika Accelerate pairs high potential Web3 games with best in class analytics, coupled with artificial intelligence-based liveops solutions,” said Umnov. 

Umnov believes that data analytics generated by users will drive player engagement and can grow lifetime value (LTV) – one of the single most important revenue metrics for game developers.

“Traditional game studios use analytics to acquire the right users by leveraging data on player behavior and preferences to optimize marketing campaigns, target the most promising user segments, and develop personalized player experience through liveops,” he said. 

Umnov also mentioned that while many Web3 game studios excel at attracting initial interest, sustaining long-term growth is often hampered by the lack of data optimization.

A Decentralized Approach to User Acquisition

While this may be true, industry experts point out that blockchain technology can provide opportunities to collect data in a decentralized manner.

For example, the BGA report states that “on-chain targeting” allows gaming studios to leverage on-chain player data to help game developers create more engaging experiences. 

“Companies and developers can also get more concrete data on player behavior using the data tracked from their on-chain activity,” the report notes. “For example, it will display the player’s preference for play-to-earn games or RPGs.”.

Umnov commented that among other vast data sources, “Helika uses publicly available on-chain data and turns it into useful insights that studios can use to attract new users.”

Idan Zuckerman, Co-CEO and Co-founder of blockchain-based game Upland, told Cryptonews Upland collects in-game data for user acquisition. 

“This data is not about someone personally, but rather about their behavior in-game,” said Zuckerman. “Based on data from their interaction with the platform, we can segment different types of users who are interested in different aspects of the game.”

Zuckerman elaborated that Upland carefully considers how its users interact with the game to optimize player experience. 

“For example, this year we changed the NFL player association product we have in the platform based on data we had from the FIFA partnership and product we developed,” he said. “We saw a huge increase in ownership and engagement overall.” 

Other Ways To Improve User Acquisition for Web3 Games

While data analytics can improve user acquisition for games, it shouldn’t come as a surprise that most gamers want to keep their personal information private.

“Most consumers don’t want their data harvested, extracted and abused if they can avoid it, especially gamers,” said Gabi Musayev, Director of Marketing at Web3 gaming platform Galxe. 

Musayev added that incorporating zero-knowledge technology at the protocol layer could be integrated into Web3 games to ensure that user data is kept private, but still accessible. 

Additionally, the rise of artificial intelligence (AI) will likely play a role in user acquisition within the gaming sector. 

Straith Schreder, Chief Creative Officer of fan community platform Candy Digital, told Cryptonews that AI will certainly play a role in ensuring the growth of Web3 games. 

“AI will accelerate personalization for Web3 gaming experiences,” said Schreder. 

Specifically, Schreder noted that Procedural Content Generation (PCG) will allow for dynamic game content that keeps players more engaged. In other words, data generated by computers using AI-powered analytics will help gaming studios better understand user behavior in real time. 

“Enhanced personalization through AI means that digital identity can become more expressive, more diverse, more experimental, and more fluid,” remarked Schreder. 

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