Web3 Games Need to Return to the Game Itself
Author: Mu Mu
After blue-chip NFT pioneers like Pudgy Penguin and Doodles expanded into peripheral sales, the "originator" of Web3 gold-making games, Axie Infinity, has also started selling merchandise.
Recently, Axie launched an online store, commercializing 4877 in-game NFTs and producing merchandise such as dolls, T-shirts, hoodies, cartoon stickers, and more for sale. To boost sales, Axie also offered a free Mystic Axie NFT to the first 5000 buyers.
Expanding the incremental market is currently a focus for Web3 brands. The combination of NFTs and physical products in Web3 games that produce NFTs is becoming one of the ways to increase influence and generate economic benefits.
Unfortunately, after the release of Axie merchandise, there was no significant increase in the trading volume of in-game NFTs or the size of the community. It seems that this Web3 game IP has not truly reached the Web2 audience. On the contrary, the return of the classic game Axie Classic not only brought activity but also boosted the price of the game token AXS.
It is clear that for Web3 games to emerge from the slump, they need to return to the game itself.
Unable to Sell NFTs, Turn to Selling Merchandise
If you are familiar with the concept of Web3 games or GameFi, you must have heard of Axie Infinity, often referred to as "A Xie" in the Chinese-speaking community.
This cute TGC (trading card game) was used by millions of Filipinos to supplement their income during the pandemic. The "Play To Earn" model of playing games to earn money has also become the mainstream model of Web3 games, largely due to Axie Infinity.
Created by Sky Mavis, Axie Infinity has two key features: players purchase NFT characters to complete tasks, battle, upgrade NFT characters, or earn the in-game token AXS. They can then earn profits by selling AXS or NFTs.
This model has even led to a business of renting game characters, and gaming communities have emerged that specialize in renting characters to players. A more extended application is the pledging of game NFTs to borrow encrypted assets such as USDT, BTC, and ETH.
As a result, games have acquired financial characteristics, giving rise to the concept of GameFi.
At its peak in 2021, Axie's highest daily revenue reached an astonishing $17.5 million, with a daily active user (DAU) count exceeding 1.5 million, and a total revenue of $300 million in 30 days, surpassing the profit-making ability of most traditional games.
However, Axie's peak did not last long. After just over six months, growth began to stagnate, and subsequent marketing activities failed to bring it back to its peak. According to Crypto Slam data, by the end of November 2023, Axie's monthly sales were only $28,000. DappRader data also showed that the floor price and market value of Axie Infinity NFTs had plummeted.
The decline in the floor price and market value of Axie NFTs
Axie has proven that blockchain games can reach millions of DAUs, and the next challenge is how to break through to tens of millions of DAUs. Some industry insiders believe that Web3 games need to penetrate the player base of traditional Web2 games to achieve this.
At the end of November this year, Axie began to do just that by launching an online store, selling badges with the project's logo, shirts, hats, accessories featuring Axie characters, Squishmallow-style plush toys, and a $300 figurine, all available for purchase with both cryptocurrency and fiat currency.
In addition to selling merchandise, Axie also encourages the UGC ecosystem by unlocking the licensing rights of 4877 NFTs from the Mystic and Origin series, allowing users who own these NFTs to sell their own designed products in the store. Furthermore, they can use the NFT characters they own to create Axie-themed businesses such as cafes, restaurants, and comics.
A more aggressive move is Axie Infinity's collaboration with the Philippine ride-hailing app Grab to launch a user points reward program, opening distribution channels from mainstream Web2 applications. In the Grab app, users can access Axie's online store to purchase merchandise.
Axie providing an online store entrance on Grab
Furthermore, Axie has also partnered with game development studios such as Tribes Studio, Bali Games, Directive Games, and Bowled.io, allowing some games to use the Axie IP to create games.
It is evident that Axie is making efforts to expand the boundaries of Web3 game IP and strengthen its connection with the Web2 world in more areas to increase brand awareness and attract new traffic.
IP Ineffectiveness, Game Improvement Drives Growth
So, have these actions by Axie brought about new growth?
Data shows that since the launch of the online store, there has been no significant increase in the community size, and it has not been very attractive to Web2 incremental users. In fact, out of the 11.9 million Axie character NFTs, fewer than 5000 have had their commercial restrictions lifted. According to Axie market data, these NFTs account for only 0.04% of all Axie NFTs.
A review of Axie's recent activities over the past six months reveals that the real increase in daily activity has come from improvements to the game itself.
On November 22, just before the launch of the online store, the classic series of Axie Classic was reintroduced with an upgraded game experience, including allowing AXP characters to inherit, increasing the AXS reward pool, and introducing the ultimate prize "Mystic Axe." In addition, Axie lowered the barrier to entry into the arena and removed the game's "energy" requirement, allowing players to play without restrictions.
Axie Classic reboot
The revamp of Axie Classic reignited the enthusiasm of old players and attracted the interest of new players. In just a few days, the weekly active users of Axie Classic reached 100,000, and the price of AXS continued to rise.
Compared to the introduction of NFT physical goods, the actions focused on improving gameplay had a more immediate impact on Axie's data. Axie has experienced the benefits of this approach before.
On September 6 this year, the gold-making community Yield Guild Games (YGG) successfully completed the first super mission event set by Axie Infinity on the Ronin network, receiving a reward of 112,000 AXS tokens (approximately $472,000). This stimulus also brought new activity to Axie at the time.
All of this indicates that Web3 game IP has yet to break through to a wider audience. Marketing activities are still stirring up the existing market, and reaching new Web2 users is much more challenging than reaching old Web3 users.
No one denies that IP peripherals can help more people become familiar with a brand, but you must first remove the "hot" crown through your core business. For Web3 games, IP is not a panacea; at most, it can be considered a bonus, and timing is also crucial.
During the golden age of American animation, Mickey Mouse's IP club gained 1 million members in less than 4 years. This was because Disney first successfully introduced the Mickey Mouse IP to the audience market through animated stories, and then expanded the IP into comics and video games. By 2010, 40% of Disney's $1 billion in consumer product revenue came from Mickey Mouse merchandise.
The well-known NFT "Bored Ape" illustrates the importance of timing for IP. Yuga Labs quickly leveraged the IP and collaborated with traditional brands after seeing the exposure of "Bored Ape" in the Web2 market, attracting marketing departments of companies including China's Li-Ning, further propelling the "Bored Ape" IP into the mainstream.
If Axie had launched a peripheral store during its peak popularity, expanding its brand influence, it could have potentially become an IP that surpasses Web3 games.
Unfortunately, the timing is no longer right, and everything needs to start over. Today, what truly creates stickiness for Web3 games is the game quality, gameplay, and experience, and even the profitability. These are more crucial than releasing peripheral products. The recent popular Web3 game BigTime is a testament to this.
Crypto KOL @0xJamesXXX believes, "Don't always think about IP and various so-called equity empowerment." He points out that the most important thing for any NFT community is "people." A project that has community consensus and can generate value has already surpassed 99% of NFT projects.
IP is not a universal formula, and it presents a challenge to Web3 games: whether to build products that truly interest Web3 players or to cater to entirely new Web2 users in the traditional internet way.
Now, Axie is choosing to cater to both, so this IP will have to wait for the next time the game itself breaks into the mainstream.
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