Will Web3 gaming become China's next big thing?
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Will Web3 gaming become China's next big thing?
Exclusive interview with Johnson Yeh, Founder & CEO of Ambrus Studio.
Navigating Web3 tides with focused insights2021 was a year of rapid advancement for Web3, as a constant stream of new projects and novel concepts—alongside soaring valuations and record-breaking returns—fueled rapid market growth. The transition to the next generation of the internet seemed within reach. However, as we approach the end of 2022, it's clear that Web3 has not continued its upward trajectory. In fact, it appears to have reversed course entirely. According to Statista, the total market capitalization of the cryptocurrency market reached $2.3 trillion at the end of 2021. By the end of August 2022, that figure had shrunk to $1 trillion—a decline of 56.5%. Is Web3 a revolutionary opportunity, or merely another overhyped promise?
In 2022, despite a rapidly cooling market, PE/VC investment in Web3 did not decrease—in fact, it increased. Total investment by PE/VC into Web3 reached $30.2 billion in 2021, and McKinsey estimates that this number will rise to $36 billion for the full year of 2022. For both project teams and investors, the bear market presents not only challenges but also a rare opportunity to build. If we draw parallels with the internet bubble of the 1990s, it’s foreseeable that when market noise fades and the tide recedes, those projects that move beyond excessive financial narratives and persistently focus on product development will ultimately become the driving force behind Web3’s mainstream adoption.
As the first layer of user interaction with Web3, Web3 applications serve as the frontline bridge for user acquisition and conversion during Web3’s push into the mainstream. Therefore, the "mainstreaming" of Web3 cannot happen without the emergence of a killer application. Among potential candidates, games are seen as a naturally suitable category for Web3 and thus carry high expectations. Yet after the viral success of Axie Infinity and StepN, we have yet to see another Web3 gaming project achieve comparable user scale and public attention—especially within China. Despite having the largest player base and some of the highest-revenue game companies globally, China has not maintained a leading position in the Web3 gaming space.
Current State: Web3 Gaming Under China’s Macro Environment
Obstacles to the emergence and growth of Web3 gaming remain under China’s current macro environment. The Chinese gaming industry continues steady growth, especially over the past two years. During the pandemic, games became more widely consumed across demographics, peaking at 667 million users during the 2021 Spring Festival. Full-year game revenue in 2021 reached 296.5 billion RMB. However, since the implementation of the game licensing policy, launching new titles has become increasingly uncertain. Within this nearly 300-billion-RMB market, the vast majority of revenue comes from established titles such as League of Legends and Honor of Kings.
The development of Web3 in China is even more uncertain. Undeniably, Web3 has begun to sprout domestically, with both startups and large enterprises exploring related applications. However, compared to the fast-evolving international Web3 landscape, the domestic Web3 market is developing relatively slowly and has formed its own unique ecosystem—one largely disconnected from global markets—such as the concept of “digital collectibles.”
Strictly defined Web3 games currently do not exist in the domestic market, nor may they be suitable for user acquisition and operation within China. In the long term, overseas expansion may become the prevailing trend for Web3 gaming projects.
Current State: Web3/Metaverse = Narrative Hype?
For most Web3/metaverse projects, marketing narratives far outweigh actual product innovation. While many people’s understanding of Web3 remains limited to vague terms like “metaverse” or “the next-generation internet,” project teams and brands often treat these as buzzwords to capitalize on trends rather than focusing on deep technological development. Admittedly, such hype can have positive macro-level effects—for example, attracting more favorable government policies or higher valuations. But from a project perspective, when we examine today’s many Web3 initiatives, there is a strong sense of “same old, different packaging.” If Web3 applications remain stuck at the stage of conceptual炒作 (hype), truly killer applications will remain out of reach.
Future: What Is Web3 Gaming? And What Should It Be?
Globally, Web3 gaming has already undergone two major iterations. The most recent update was the “X-to-earn” model exemplified by StepN—yet market validation has shown this model to be unsustainable. At its core, Web3 gaming must still adhere to the fundamental nature of games. The next evolution should return to the essence of what makes games compelling: fun.
Users are discerning, and their behavior is remarkably straightforward. The sole reason players continue playing a game is because it’s enjoyable and provides them with fun. From the user’s perspective, the use of typical Web3 mechanisms—token issuance, early community building, on-chain asset integration—should all serve the purpose of enhancing enjoyment and growing the user base. Investment in these aspects should never surpass that dedicated to building the core product itself.
Future: Web3’s User Value Lies in Interoperability, Ownership, and Decentralization
The Product-Market-Fit logic applies equally to Web3 gaming. The primary marketing message of Web3 games to players should be “fun.” When players are drawn in by fun gameplay, and simultaneously benefit from the interoperability, true player ownership, and decentralized storage offered by the Web3 ecosystem, they will have stronger incentives to stay within this ecosystem. They will form deep emotional bonds with the game IP, which NFT technology can then concretize as immutable on-chain data—this becomes the greatest value proposition of Web3 gaming.
Simply put, we should leverage Web3 to build better games—not use games to package Web3. Returning to the context of China’s macro environment, blockchain and NFT technologies have already been developed and applied domestically, albeit asynchronously with global trends. Domestically emerging use cases—such as digital memberships and user loyalty programs—are actually converging toward similar goals as the current global momentum behind NFT utility.
Historically, our discussion has centered on “how to get the public to accept Web3 gaming”—a mindset that fails to prioritize players. Today’s Web3 gaming space is largely driven by those who don’t even enjoy playing games. But when we shift perspectives and ask “how to build Web3 games that the public will accept,” we realize this is a snowball effect driven by players: first, create a genuinely fun game; second, integrate highly usable Web3 features. When players discover that a few taps on the screen can grant them unique, verifiable digital assets, they will naturally evolve into “Web3 players.” And once this user snowball begins rolling, true mainstream adoption of Web3 will finally begin.
These insights come from Johnson Yeh, former CEO of Riot Games’ Asia-Pacific region and founder & CEO of Web3 gaming company Ambrus Studio.
Known as the “Godfather of Chinese Esports,” Johnson previously led League of Legends esports to become China’s most-watched sport and the highest-earning esports league globally, amassing over 4 billion hours of annual viewership.
Ambrus Studio is a Web3 gaming startup whose team members hail from Riot Games, ByteDance, Xiaohongshu (Little Red Book), Tencent, and others. Its vision is to build enduring, vibrant communities through the development and publishing of high-quality games, positioning itself as a pioneer in shaping a transformative Web3 esports metaverse. E4C: Final Salvation, currently in development, aims to deliver a fresh gaming experience through top-tier production quality, diverse NFT design, and a sustainable token economy.
While building its first high-DAU Web3 game, Johnson hopes Ambrus Studio will become a mission-driven studio, proving that games can generate positive externalities for society. The studio’s games will carry a distinct environmental mission, set in a near-future world shaped by scientific data from the IPCC’s *Climate Change 2014 Synthesis Report*. By 2100, average global temperatures are projected to rise by 4°C, and the resulting climate disasters, conflicts, and human responses will form the backdrop of the game’s narrative. Through subtle education and in-game mission systems, Johnson aims to help players deeply understand the consequences of environmental change—and how each individual can start making a difference through small actions. This educational impact and shift in mindset demonstrate how games can positively influence the world and bring meaningful change to individuals.
In September 2022, Ambrus Studio released a brawler game, E4C: Fallen Arena, as a gift to the community. The game recently launched on Steam, where users can experience its gameplay early. On January 9, 2023, Ambrus Studio will launch the third NFT character, Thorn (the Wasp Warrior), via Freemint (free minting). This initiative is also intended to reward community members for their ongoing support. The previous two NFT drops—Ultimate version NFTs (starting bid 6.5 ETH), Gold version NFTs (price 0.49 ETH), and Rangers version NFTs (price 0.19 ETH)—sold out completely within 24 hours of release on PublicMint.
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