From GameFi to Global Gaming: Web3, Digital Ownership, and RWA Opportunities

Authors: Xinyue, Tony Fu Rao Editor: Avrum

Introduction

Gaming has been one of the earliest industries to experiment with blockchain technology and digital ownership at scale. While many Real-World Asset (RWA) initiatives originate from financial markets, gaming presents a fundamentally different environment.

Digital assets already exist within game ecosystems. Players have long been accustomed to buying, selling, and trading virtual goods. In-game economies often function as self-contained economic systems, complete with their own currencies, marketplaces, and supply-demand dynamics. At the same time, users consistently demonstrate a willingness to spend real money on intangible assets and digital experiences. These characteristics made gaming one of the most natural sectors for early Web3 adoption.

However, the industry’s path has been far from straightforward. Over the past several years, Web3 gaming has experienced multiple cycles of innovation, speculation, correction, and reinvention. From the Play-to-Earn boom led by Axie Infinity, to metaverse platforms such as The Sandbox, and later infrastructure ecosystems built by projects such as Immutable, each phase has reshaped how developers, investors, and players view the role of blockchain in gaming.

More importantly, the industry’s understanding of value creation has evolved. The dominant narrative is no longer: “Use financial incentives to drive gameplay.” Instead, the market is increasingly converging around a different idea:

“Build great games first. Use Web3 to provide ownership and economic infrastructure.”

This shift reflects a broader transition from speculative GameFi models toward sustainable gaming ecosystems built around content, community, and long-term user engagement. Understanding this evolution is essential not only for evaluating the future of Web3 gaming but also for understanding how digital ownership, cross-border commerce, and RWA infrastructure may support the next generation of global gaming ecosystems.

The Evolution of Web3 Gaming

Phase One: Play-to-Earn (P2E)

The first major wave of Web3 gaming revolved around a simple proposition: players could earn token-based rewards directly through gameplay.

Under the Play-to-Earn (P2E) model, users typically purchase NFT characters, equipment, or other in-game assets before participating in activities such as quests, battles, resource gathering, or breeding systems. In return, players received token rewards that could be traded on secondary markets for economic gain.

At its core, the P2E model transformed gameplay into a financialised activity, creating a direct relationship between player participation and economic rewards.

Axie Infinity became one of the defining projects of this era. Through a combination of NFT ownership, token incentives, and breeding mechanics, Axie established one of the earliest large-scale blockchain gaming economies. At its peak in 2021, the game became a meaningful source of digital income for many users across Southeast Asia, particularly in the Philippines. Scholarship guilds emerged as a unique model in which organisations purchased NFTs and assigned them to players in exchange for a share of future earnings.

For the first time, the industry witnessed how gaming assets and player behaviour could be financialised at scale.

STEPN later expanded this concept through its Move-to-Earn model. By rewarding users for walking and running, STEPN demonstrated that token incentives could extend beyond traditional gaming environments and into real-world activities. Although structurally different from blockchain games, the underlying principle remained the same: converting user participation into on-chain economic activity.

The rapid success of these projects significantly increased market interest in broader “X-to-Earn” models.

However, the P2E era also exposed a fundamental structural weakness.

Most projects lacked sustainable external revenue sources. Economic activity relied heavily on new user participation, NFT sales, and token appreciation rather than gameplay consumption, advertising revenue, or long-term intellectual property value.

As user growth slowed, token supply continued expanding while demand weakened. This ultimately created a negative cycle of declining rewards, player attrition, and ecosystem contraction. At the same time, many early blockchain games functioned more like financial products with gaming interfaces than genuinely compelling entertainment experiences. For many users, the primary motivation was earning income rather than enjoying the game itself. As a result, gameplay quality often became secondary to economic incentives.

The most important lesson from this phase was clear:

Long-term sustainability requires strong gameplay, not simply strong tokenomics.

As the market matured, a broad industry consensus emerged that successful Web3 games must be built around engaging game experiences, with blockchain serving as an enhancement rather than the primary attraction.

Phase Two: The Metaverse Economy

The second phase of Web3 gaming was centred on the tokenisation of virtual land, avatars, digital spaces, and cosmetic assets, with the broader goal of building self-sustaining metaverse economies around these digital properties.

At the time, many market participants believed that virtual spaces could appreciate in value much like physical real estate. Brands were expected to establish long-term digital presences, while metaverse platforms were widely viewed as potential gateways to the next generation of the internet. As a result, significant capital and development resources flowed into projects focused on virtual worlds, digital social interaction, and online commercial ecosystems.

The Sandbox emerged as one of the most recognisable projects of this era. Users could purchase virtual land, build interactive experiences, host events, develop mini-games, and engage in digital brand marketing. At the height of metaverse enthusiasm, The Sandbox attracted major brands and entertainment figures, including Adidas and Snoop Dogg, leading many observers to view it as a Web3 equivalent of virtual commercial real estate.

Decentraland pursued a similar vision but placed greater emphasis on decentralised governance, virtual commerce, and community-driven participation. Through initiatives such as virtual fashion weeks and digital social events, Decentraland positioned itself as a decentralised social environment where users could interact, create, and govern collectively. While The Sandbox focused more heavily on entertainment and brand partnerships, Decentraland emphasised open communities and virtual social experiences.

Despite the excitement surrounding the sector, the metaverse model faced several structural challenges.

Unlike physical real estate, virtual land lacks true natural scarcity, limiting its long-term economic foundation. At the same time, expectations surrounding the metaverse proved difficult to achieve. Many investors anticipated tens of millions of active users, large-scale virtual workplaces, and thriving digital commercial ecosystems. In practice, user adoption, engagement levels, and commercial activity fell well short of those expectations, making it difficult for asset valuations to sustain themselves over time.

Although the broader metaverse bubble has largely subsided, several concepts introduced during this period continue to retain value. Web3 brand engagement, virtual event spaces, digital social experiences, and NFT-based asset systems remain relevant components of the broader blockchain ecosystem. Rather than disappearing entirely, the metaverse narrative has gradually evolved away from speculative virtual land ownership and toward digital experiences, community building, and ecosystem engagement.

Phase Three: Web3 Gaming Infrastructure

As the industry matured, a significant shift in priorities emerged. Market participants increasingly realised that financial incentives alone were insufficient to build sustainable gaming ecosystems. As a result, industry focus gradually moved away from “earning tokens” and toward infrastructure development.

Rather than targeting players directly, this phase centred on providing Web3 tools and services for game developers and studios. Key areas of development included:

• Gaming-specific blockchains

• NFT infrastructure

• Wallet systems

• Marketplaces

• Software development kits (SDKs)

• zkEVM solutions

In many ways, this phase resembled the traditional gaming industry’s ecosystem of development tools, middleware, and distribution platforms rather than consumer-facing gaming products.

Immutable emerged as one of the most prominent examples of this trend. The platform provides services, including NFT minting, game asset trading, Layer 2 infrastructure, zkEVM solutions, and development tools, designed to help traditional game studios integrate Web3 functionality at lower cost and with fewer technical barriers.

From a strategic perspective, Immutable’s objective extends beyond any individual game. Instead, it seeks to build a comprehensive ecosystem for game development, asset ownership, and digital asset circulation.

Ronin followed a similar evolution. Originally developed as a dedicated blockchain for Axie Infinity, Ronin gradually expanded beyond a single game, evolving into a broader gaming-focused blockchain ecosystem. Its success demonstrated that game developers have a genuine demand for networks optimised around low transaction fees, high throughput, and gaming-specific requirements.

Today, Web3 gaming infrastructure is one of the most widely supported sectors among investors in the broader blockchain gaming industry.

Unlike early Play-to-Earn projects, which often depended on token speculation and continuous user growth, infrastructure projects address more fundamental industry needs. These include digital asset ownership, global payments, asset trading, open marketplaces, and development efficiency.

The value proposition of infrastructure is ultimately utility-driven rather than speculation-driven. Instead of relying on high yields, play-to-earn incentives, or continuous token issuance, infrastructure providers serve developers, studios, publishers, and large gaming ecosystems.

For this reason, infrastructure businesses are generally viewed as more sustainable and are often better positioned to attract long-term capital support than earlier generations of GameFi projects.

Phase Four: Game First

Phase Four marked a major turning point for the Web3 gaming industry.

Following the boom-and-bust cycles of both Play-to-Earn economies and metaverse speculation, the industry gradually recognised that financialisation alone could not replace genuinely compelling game content. At the same time, blockchain technology itself was no longer viewed as a sufficient selling point. As a result, the market began shifting from “Crypto Games” to “Games + Web3,” with the underlying philosophy evolving from “Earn First” to “Game First.”

The defining characteristic of this phase is a renewed focus on gameplay quality, world-building, and user experience. Rather than placing blockchain at the centre of the product, developers increasingly treat Web3 as a supporting economic and ownership layer embedded beneath a high-quality gaming experience.

One representative project is Illuvium, which seeks to combine high-production-value visuals, open-world exploration, and NFT-based character ownership to create an experience closer to traditional AAA games. Shrapnel places greater emphasis on competitive shooter gameplay and user-generated content (UGC), allowing players not only to participate in the game but also to create assets and content that can be traded within an open ecosystem. Meanwhile, Off The Grid, developed by veterans from the traditional AAA gaming industry, is widely regarded as one of the Web3 projects most aligned with mainstream game development standards. Its focus on console and PC audiences, rather than exclusively on crypto-native users, reflects a broader industry trend away from purely blockchain-centric gaming models.

The long-term appeal of this segment extends beyond simply refocusing on gameplay. More importantly, it redefines the relationship between players and digital assets.

In traditional games, skins, equipment, and accounts ultimately exist as permissions within a publisher-controlled database. Players may spend significant time and money acquiring these assets, yet they rarely possess true ownership. Under a Web3 framework, players can hold digital assets directly and trade them through open marketplaces. At the same time, blockchain-based transactions and stablecoin payments enable global asset mobility and more accessible cross-border participation.

However, this direction also presents significantly greater execution challenges than earlier generations of blockchain games. High-quality games require substantial development budgets, longer production cycles, and stronger content capabilities. The addition of Web3 elements further increases complexity by introducing new considerations around economic design, digital asset management, and community governance.

A Potential Fifth Phase: Gaming Revenue Rights and Industry RWA

Beyond the development paths discussed above, another emerging direction is to bring real-world gaming industry cash flows and economic rights on-chain.

Potential applications may include:

• Game revenue-sharing mechanisms

• Esports-related economic rights

• Virtual idol and entertainment IP revenues

• Gaming-related asset securitisation

Under such models, developers, players, investors, and even gaming communities could participate in distributing the real economic value generated by gaming ecosystems through blockchain-based assets.

This represents a significant expansion of digital ownership beyond in-game items and virtual assets, extending participation into the underlying cash flows of the gaming industry itself.

However, the stronger financial characteristics of these structures also introduce greater regulatory complexity, compliance requirements, and legal uncertainty. As a result, while gaming-related RWA may represent a potential future direction, its development is likely to face substantially higher barriers than those faced by traditional digital asset ownership models.

China’s Gaming Industry and Global Expansion

The Ongoing Battle Between Content and Distribution

The struggle for influence between content creators and distribution platforms has shaped the gaming industry for decades.

During the early arcade era, games were distributed through highly fragmented channels, allowing intellectual property (IP) to accumulate value directly with players. As the industry transitioned into the console era, the balance of power shifted dramatically.

Following the video game market crash caused in part by an oversupply of low-quality titles, Nintendo implemented strict controls over game publishing and cartridge manufacturing. While these measures helped improve overall game quality, they also gave Nintendo significant control over distribution. Third-party developers were required to pay licensing fees, effectively establishing one of the earliest large-scale examples of a “platform tax” in the gaming industry.

Under this model, platform operators controlled access to consumers, while content creators assumed most development risks and distribution costs.

One of the most significant turning points during this period was the split between Square and Nintendo. Because Final Fantasy VII required greater storage capacity than Nintendo’s cartridge format could provide, Square ultimately chose to release the game on Sony’s PlayStation platform. The decision reshaped the Japanese gaming market. Consumers increasingly purchased consoles for flagship content rather than the platform itself, helping Sony rapidly gain market share and demonstrating the growing influence of intellectual property on hardware adoption.

The next major transformation arrived with the rise of PC gaming and digital distribution.

Steam fundamentally changed how games reached consumers by allowing developers to distribute titles directly to global audiences through digital downloads. Features such as automatic updates, cloud saves, and integrated community systems gradually replaced traditional retail channels. Lower distribution costs enabled independent developers to reach international markets more easily, contributing to the growth of the modern indie game industry.

Yet over time, Steam itself evolved into a new form of platform dominance. As platform fees remained close to 30%, tensions between content creators and distribution platforms re-emerged. Epic Games attempted to challenge Steam through its 12% platform fee structure, exclusive publishing agreements, and large-scale user acquisition campaigns. While Epic successfully attracted significant attention, Steam’s extensive community ecosystem and network effects proved difficult to displace.

At the same time, Microsoft’s Game Pass introduced a new platform model built around subscription ecosystems, first-party content, and strategic acquisitions, further reinforcing platform influence over distribution and user access.

The rise of mobile gaming further concentrated platform power.

Control over application distribution, payment infrastructure, user accounts, and traffic allocation became increasingly centralised within mobile operating systems. As a result, Apple’s App Store and Google Play gained influence that extended beyond game distribution itself.

Unlike traditional console platforms, which primarily generate revenue through game sales, mobile platforms also collect fees from in-app purchases, subscriptions, and virtual currency transactions. This expanded platform tax has become one of the defining characteristics of the mobile gaming era.

In 2020, Epic Games challenged Apple’s payment system by introducing a direct payment option within Fortnite, allowing users to bypass Apple’s in-app purchase mechanism and avoid the associated platform fee. Apple subsequently removed the game from the App Store, triggering a prolonged legal dispute between the two companies.

The controversy became a broader symbol of the ongoing debate surrounding platform control, digital commerce, and revenue sharing. More recently, regulatory initiatives such as the European Union’s Digital Markets Act (DMA) have begun to allow alternative app stores and third-party payment solutions, further reshaping the relationship among platforms, developers, and consumers.

Source: IGN, CGames, BOC International, and RWA.LTD Research Department

China’s Gaming Market and Global Markets

The differences between China’s gaming market and international markets extend far beyond language, culture, or game genres. In many respects, they represent two fundamentally different commercial ecosystems that developed under distinct market conditions.

China’s gaming industry grew primarily alongside the rise of mobile internet adoption. As a result, mobile gaming dominates overall market share, while PC gaming remains an important secondary segment, and console gaming penetration remains relatively limited. By contrast, international markets evolved through multiple stages of industry development, producing a more diversified competitive landscape in which major players exist across console, PC, mobile, content development, publishing, and platform distribution.

Market structure also differs significantly. China’s gaming industry is characterised by the dominant positions of Tencent and NetEase alongside a smaller group of highly successful studios and flagship titles. In recent years, the top ten games have consistently accounted for more than 40% of total industry revenue. International markets, meanwhile, are generally more fragmented, with competitive leaders distributed across multiple platforms and genres.

Monetisation models further highlight these differences. China’s market is largely built around free-to-play experiences supported by in-game purchases, with a relatively small group of high-spending users contributing a significant share of revenue. This model has produced highly sophisticated systems for user retention, monetisation, and long-term engagement. In contrast, many Western markets continue to maintain a meaningful mix of premium purchases, subscriptions, PC gaming, and console gaming, resulting in a more diversified distribution of consumer spending.

Despite these differences, both the Chinese and international gaming markets are converging on a common trend: the growing importance of intellectual property and long-term game operations.

Established titles continue to capture a larger share of industry revenue and player engagement. In China’s mobile gaming market, legacy titles are projected to account for approximately 94.8% of revenue among the Top 100 games in 2025. Similar patterns can be observed over the past several years, during which mature titles have consistently maintained a dominant share of market revenue.

The same trend is visible within PC gaming. According to Steam user activity data, games released in 2025 accounted for only 14% of total playtime on the platform, while titles released in the previous 1 to 7 years accounted for 44%. Games that have been on the market for more than eight years still accounted for approximately 40% of total player time.

The rise of long-lived gaming franchises is not driven solely by brand recognition or established intellectual property. It also reflects changing player behaviour. Research suggests that as users transition from student life into the workforce, their willingness to invest time in learning entirely new games tends to decline, while their willingness to spend money on familiar experiences increases. This behavioural shift naturally favours established franchises with mature content ecosystems and long operating histories.

As a result, long-term operation and intellectual property development have become increasingly important strategic priorities for gaming companies worldwide. For Chinese developers pursuing international expansion, building sustainable gaming ecosystems may prove just as important as acquiring new users.

Source: GPC, UBS, and RWA.LTD Research Department

Source: CNG, Steam, GF Securities, and RWA.LTD Research Department

How RWA Can Support China’s Global Gaming Expansion

The value of RWA for Chinese gaming companies expanding internationally does not lie in solving every challenge associated with global growth. Rather, its potential comes from addressing several of the industry’s most persistent structural pain points.

The first relates to digital asset ownership and trust. Many Chinese gaming companies operating overseas rely heavily on in-app purchases (IAPs) as a primary monetisation model. Players often invest significant amounts of time and money into skins, equipment, collectables, achievements, and other digital assets. Under traditional gaming models, however, these assets ultimately remain under the control of the platform or publisher. If a server shuts down or an account is suspended, players may lose access to assets they have spent years acquiring.

By introducing blockchain-based ownership structures, digital assets can be transferred from platform-controlled databases to player-controlled wallets. This significantly strengthens ownership rights and reduces concerns that purchased assets may ultimately become worthless. Players gain the ability not only to hold assets, but also to trade them within open marketplaces. For publishers, blockchain-based transactions conducted outside traditional app store ecosystems may also reduce dependence on platform-controlled payment channels and associated revenue-sharing fees.

At the same time, it is important to recognise the trade-offs involved. While bypassing platform fees may appear attractive, developers also lose some of the frictionless user experiences provided by major ecosystems. Features such as Apple Face ID and one-click payments simplify purchasing behaviour and can meaningfully improve conversion rates. Moving transactions outside these ecosystems may introduce additional user friction and potentially reduce willingness to spend. As infrastructure matures, however, more seamless RWA purchasing and trading experiences may gradually narrow this gap.

Projects such as Off The Grid and MapleStory Universe suggest that when blockchain-based assets are integrated into gameplay in a way that feels natural and largely invisible to users, acceptance of digital ownership increases. In such cases, stronger retention and monetisation outcomes may follow as players place greater value on assets they truly own.

The second area involves cross-border payment efficiency. For gaming companies operating internationally, multi-currency settlement, transaction costs, and foreign exchange restrictions often create significant operational complexity. Blockchain-based payment networks, particularly those utilising stablecoins, offer the possibility of near-continuous global settlement while reducing reliance on fragmented banking systems. These advantages may be especially relevant in emerging markets across Southeast Asia and the Middle East, where financial infrastructure can be less efficient or less accessible.

The third area concerns compliance and transparency. Blockchain networks create transparent and verifiable records of asset ownership and transactions. These records may serve as useful technical foundations for future compliance frameworks, audit requirements, and cross-border regulatory engagement.

That said, RWA should not be viewed as a universal solution. Challenges related to cultural localisation, content adaptation, market understanding, and operational execution remain outside the scope of blockchain technology. These factors continue to play a critical role in determining whether a game succeeds internationally.

For Chinese gaming companies pursuing long-term global expansion, RWA is best understood not as a shortcut to international success but as a toolset that can strengthen digital ownership, improve payment efficiency, and enhance transparency within gaming ecosystems. Ultimately, successful global gaming businesses will still be built around compelling content, strong user experiences, and sustainable community engagement. Blockchain’s role is to support these foundations — not replace them.

Disclaimer

This article is intended solely for industry research, educational, and informational purposes. It does not constitute investment advice, a solicitation, or recommendation to buy or sell any securities, digital assets, or financial products, nor should it be construed as legal, financial, tax, or other professional advice.

The information, data, examples, analyses, and opinions presented in this article are derived from publicly available sources and the authors’ own research and judgment. While reasonable efforts have been made to ensure accuracy, no representation or warranty is made regarding the completeness, accuracy, or timeliness of the information provided.

The views expressed herein are those of the authors and do not necessarily reflect the official position of RWA.LTD or any affiliated organisations. Readers should conduct their own independent research and exercise their own judgment before making any decisions based on the information contained in this article.

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