Annual Review and Outlook of the Asian Web3 Market: The Gaming Sector Shows Leading Trends, Singapore is Expected to Become an Industry Hub

Written by: JAY JO, DANIEL KIM, RYAN YOON

Compiled by: Deep Tide TechFlow

With the continuous advancement of blockchain technology and the volatile changes in the cryptocurrency market, the Asian Web3 market experienced significant development and challenges in 2023. Tiger Research released a New Year report that not only reviewed the key dynamics of the blockchain market in Asia over the past year but also looked ahead to the development trends and potential opportunities for the market in 2024. The report provides a detailed analysis of policy changes, technological innovations, and market responses in various Asian countries within the Web3 field, revealing a diverse and vibrant Asian Web3 ecosystem.

Daniel Kim, 2023 Review and 2024 Outlook

Editor’s Note: Daniel Kim is the CEO and founder of Tiger Research.

2023 can be described as the low point of the so-called "third cryptocurrency winter." Cryptocurrency prices were highly volatile, venture capital entering the industry decreased, and there was a significant outflow of talent. The uncertainty of the global macro situation, along with the escalation of the Russia-Ukraine and Israel-Hamas wars, further exacerbated market conditions. Nevertheless, outstanding projects continued to develop and work hard, and several real-world applications of Web3 indicate that there is still hope for the blockchain industry.

The United States, Europe, and major Asian countries are working to reform their imperfect blockchain industry regulations, and countries are formulating regulatory policies. No one in the Web3 industry was able to navigate 2023 smoothly. However, for the few who still have confidence in the industry, 2024 is expected to be a year worth looking forward to.

With the Federal Reserve expected to maintain and cut interest rates in 2024, major economies recovering from a two-year global macro tightening, and the implementation of Web3 policies in places like Singapore, Japan, and the UAE, which have eliminated regulatory uncertainties hindering the development of the blockchain market, we believe 2024 will mark the end of the prolonged cryptocurrency bear market and the beginning of a new cycle.

In particular, three major factors are expected to drive the market upward this year:

• Stable inflow of global institutional investment funds through Bitcoin ETFs, adopting major protocol tokens as ETFs
• The launch of user-friendly and exciting AAA Web3 games and metaverses
• The development of legalized blockchain financial services within regulatory jurisdictions, such as STOs and RWAs

These factors are expected to provide new growth momentum for the blockchain market, which has yet to gain a large user base, and build public trust in the blockchain industry.

However, we believe this cycle will be different from the past. We will no longer see a market where "a rising tide lifts all boats," benefiting all projects and protocols from the influx of new liquidity. Educated investors and users will identify more validated and useful services, leading to a stronger trend towards a market without recognized winners.

Ryan Yoon, The Rise of the Asian Market

Editor’s Note: Ryan Yoon is an analyst at Tiger Research.

When studying the blockchain market in Asia in 2023, the region has never been as exciting as it is today. There have been many changes both internally and externally in Asia.

Regarding internal changes, the opening of the Web3 market led by the Japanese government, regulatory reforms in Singapore, the establishment of state-owned exchanges in Indonesia, and the spread of India's CBDC indicate that the blockchain market across Asia is being recognized for its clear utility rather than being deemed illegal. This regulatory clarity is important not only for users in Asian countries but also for the rest of the world, as it sets a precedent for other countries to reference.

It is also noteworthy that Asian companies are beginning to lead the industry. Large investments that previously took place mainly in North America can now be found in Asia. A recent example is the $140 million investment by Line Next, the developer of the Finschia platform.

Externally, as regulatory uncertainty increases in Europe and the United States, major global projects are beginning to turn their attention to Asia. In particular, Hong Kong and Singapore have become more open to blockchain companies, with Unstoppable Domains moving to Japan and global exchanges like Binance and OKX entering Taiwan.

This shift in focus is also reflected in the increased number of inquiries to Tiger Research. Most of these inquiries focus on the potential brought by high-tech applications and large populations in Asian countries, indicating that the potential of the Asian market is just beginning to be realized.

Looking back, 2023 was a year when Asia became the center of attention amid market downturns. There is no doubt that the region will play a key role on the global stage, and now is the time to launch practical use cases.

Jay Jo, 2024 Web3 Gaming Market Outlook

Editor’s Note: Jay Jo is an analyst at Tiger Research.

The most exciting area in 2024 seems to be "Web3 gaming." Despite many P2E and NFT games failing, it remains a vibrant market with continuous creative and innovative attempts. In particular, the ongoing development of Web3 games means we can expect AAA games to emerge starting in 2024. There is also growing interest in diverse genres and new narratives, such as user-generated content games (UGCG) and fully on-chain games (FOCG). According to data from the blockchain data analytics platform Footprint Analytics, the number of Web3 games is growing at a pace similar to that of the previous bull market.

Monthly cumulative number of Web3 games

Expectations for the Web3 gaming market are rising, with much attention focused on Asia, where large gaming companies in South Korea and Japan are leading in Web3 gaming, and this trend is expected to continue in 2024. Large gaming companies and small to medium-sized game studios in these regions are actively participating in the Web3 gaming market, and 2024 is anticipated to be an exciting year with the launch of games like Nexon's MapleStory Universe, WeMade's Legend of Ymir, Sega's Three Kingdoms War, and Krafton's Overdare.

There are many reasons why the Asian Web3 gaming market is exciting, the most important being that the region is home to several mainnets focused on gaming. Vietnam's Ronin, Australia's Immutable, South Korea's Klaytn and Finschia, as well as Japan's Oasys and Astar are all working to expand their respective ecosystems. Additionally, the Asian market is well-positioned for the development of the Web3 gaming market due to its large number of global content IPs and a vast pool of game developers. The number of game developers in Asia accounts for about 40% of the global total, surpassing that of the United States.

MapleStory x Las Vegas Sphere

The global strategy of Asian Web3 gaming projects is also noteworthy. This is influenced by the regulatory environment, particularly in South Korea and Vietnam, where P2E games are legally prohibited. As a result, Web3 gaming projects are adopting strategies to establish entities overseas and target international users. This approach contrasts sharply with the struggles of other Web3 projects in Asia regarding globalization, raising expectations for the development of a globally centered Web3 gaming market in Asia. The Web3 gaming market in 2024 is expected to be more active, driven by the upcoming number of Asian Web3 games.

Yoon, Choosing Between Technological Advancement and Mass Adoption

Editor’s Note: Yoon is the market manager at Tiger Research.

In 2023, the use cases for blockchain technology continued to expand. However, we have yet to see significant practical adoption or widespread use of this technology in areas such as STOs, RWAs, and NFTs, which still face regulatory and environmental challenges.

While 2023 was a year of significant advancements in blockchain technology, this does not equate to mass adoption. Considering the recent inscription craze, the technological and cultural trends within the Web3 ecosystem are rapidly evolving, but this is sufficient to illustrate the gap between Web3-native trends and public applications.

By 2024, we expect the performance gap between projects with strong technological foundations and those that only excel in business development and marketing to widen. So far, whether through mass adoption or the occasional emergence of meme coins, innovations solely for the sake of technology have had a significant impact on the market. This seems likely to change. Projects need to bridge the gap with the public and provide clear utility. Chasing short-term trends like Bitcoin halving may no longer be welcomed by the Web3 ecosystem or the public.

What makes 2024 so exciting is the increasing number of partnerships between Web3 and traditional companies. For example, collaborations between MapleStory and Polygon, SK and Avalanche, and Sony and Astar Network are expected to mark the beginning of bridging the gap between technological advancement and mass adoption. These collaborations are anticipated to develop in a way that brings tangible benefits to the public.

In 2023, Tiger Research published over 90 reports on the Asian Web3 market, including three thematic reports based on our field research and interviews. The unique and dynamic firsthand experiences of each region allowed us to conduct realistic and multifaceted analyses. Based on our findings, we identified the seven most promising Asian Web3 markets to watch in the coming years.

Tiger Research's Top 7 Asian Markets

Singapore

Under the continuous efforts of the government led by the Monetary Authority of Singapore, Singapore is solidifying its position as a financial hub in Asia. Additionally, Singapore positions itself as a model country in the global blockchain market, with experimental projects in ICOs, STOs, RWAs, and payments. Its policies are also noteworthy as they seek to leverage the advantages of blockchain technology while reducing risks for investors and the entire ecosystem. Low tax rates and a friendly business environment make Singapore more attractive. Even in 2024, Singapore is expected to become a Web3 hub for founders in the Asian market, including Greater China.

South Korea

South Korea is known for its corporate entry into the Web3 market, particularly in the blockchain gaming development sector. Despite the restrictions imposed by the Game Industry Promotion Act on the issuance and distribution of blockchain games in South Korea, the industry continues to thrive. Many large gaming companies and small to medium-sized game studios are preparing to launch blockchain games to international audiences using major content IPs. By 2024, South Korea is expected to release high-quality games that combine blockchain technology with engaging new game elements to meet gamers' expectations.

At the same time, South Korea has recently become one of the leading countries in the cryptocurrency bull market, with the country's enthusiasm for cryptocurrencies even coining the term "kimchi premium." With such high liquidity in South Korea, various global Web3 projects are expected to enter the country, and their participation is anticipated to make the South Korean Web3 market even hotter in 2024.

Japan

Japan is a country where the government actively promotes the Web3 industry. Regulatory requirements for virtual assets are gradually being relaxed, and local governments in Japan are actively adopting Web3 technologies such as NFTs and DAOs. The participation of corporate companies in the Web3 ecosystem is also noteworthy. Major companies in gaming, finance, and telecommunications are accelerating their entry into Web3. In particular, we expect to see more involvement from large gaming companies with global content IPs, such as Sony, Bandai Namco, Sega, and Square Enix in 2024. Additionally, local mainnets like Astar and Oasys have led Japan's Web3 market in 2023, and their active collaboration with corporate companies is worth noting. Many initiatives are expected to yield results in 2024, and we anticipate more opportunities in Japan's Web3 market in the future.

India

India's young population, large demographic, and high development potential make it a high-potential country for the Web3 market. In particular, it has the second-largest developer community after the United States, with about 13.2 million developers, which is an advantage in the Web3 market. India also has a thriving startup ecosystem and an English-speaking population, making it easier to access global markets.

India has successfully launched global Web3 infrastructure projects like Polygon, accelerating the influx of diverse talent into the Web3 market. Furthermore, the government's stance, which prohibited all crypto assets in 2021, has shifted to promoting innovation in 2023, further raising expectations.

Thailand

Thailand is a country to watch, as the government, traditional financial sector, and the public all show strong interest in the cryptocurrency market. In particular, Web3 initiatives led by traditional finance are prominent, with Thai commercial banks such as Siam Commercial Bank and Bangkok Bank participating. Recently, a pro-cryptocurrency figure was elected as Prime Minister, and the Thai government subsequently announced plans to provide basic income by distributing cryptocurrencies to all citizens, further raising expectations.

Vietnam

Vietnam is a country that adopts blockchain technology with a youth-oriented approach. In addition to a high level of technological acceptance, it is expected to become a Web3 giant in Asia, capable of hiring competitive blockchain developers at relatively low labor costs. By gaining successful experiences from global Web3 projects like Sky Mavis and Kyber Network, it is also expected to positively impact the development of the global blockchain ecosystem. However, one limitation is that regulatory uncertainty remains a significant challenge in Vietnam.

Indonesia

Indonesia's Web3 market is a giant in Southeast Asia with immense potential. As the fourth most populous country globally, with a vast market, a young and active population, and Web3-friendly policies, macro indicators are driving the growth of the Indonesian market, especially with the launch of state-owned cryptocurrency exchanges in 2023.

Indonesia is also a country where blockchain technology is expected to provide various opportunities due to the limitations of the existing financial system, and the Web3 ecosystem is anticipated to grow in the long term. However, the underdeveloped scale of the Web3 ecosystem, lack of public awareness, and a market system centered around major political and economic stakeholders remain major challenges.