GameFi Research: The Key to Success of a GameFi Project
Description of GameFi Research: The Key to Success of a GameFi Project
Research article on the topic of GameFi made by Haymodgame, thereby projecting the potential of this puzzle piece in the Crypto market.
The information provided in the article includes:
- Research on the traditional game market: What are the reasons for the success of the titles, the revenue model and the current landscape.
- Research on GameFi: What are the causes of failure of GameFi projects, the core criteria to evaluate a GameFi project.
- GameFi projection: Does GameFi have the potential, the development direction of the core elements in GameFi, which receives a lot of value as GameFi develops.
Traditional Game Market
overview
(1) Traditional games are now very developed.
(2) Players will join and stay in games that meet their needs pyramid.
(3) The most popular games usually have some of the following characteristics:
- Community in nature.
- Be creative.
- Competitive.
- Free to Play (but still generates a lot of revenue).
(4) PC and mobile games are occupying most of the market share. The Free-to-play, pay-for-convenience model has proven successful with PC/Mobile titles.
(5) The rational development strategy of PC/Mobile games is to create a game with good content, without barriers to entry to attract users. Players when participating can choose to pay to help themselves stand out. The key is good game quality to attract users.
(6) The console game market share is mainly focused on a few big names. Hardware (electronics, handles...) is their strong point and it is difficult for new names to compete. Console game sales are cyclical and heavily dependent on new titles.
(7) Games are gradually appearing in new branches such as VR/AR games and cloud games. Although still new, VR / AR and cloud games have their own unique selling points that other game branches do not have.
Game development trends
The origin for the development trend of games is based on Maslow's hierarchy of needs.
According to Maslow's tower, Gaming defaults to the first two tiers always being met:
- Level 1 (Biological Need): Health enough to play games.
- Level 2 (Need for Safety): Playing games does not put yourself in danger from the outside.
From there develop the elements of the upper layer:
- Level 3 (Social Needs): Playing games helps you to participate in a certain community, especially online games where you can interact with each other.
- Level 4 (Need for Respect): Playing the game creates a sense of accomplishment or having achieved something.
- Level 5 (Need for self-affirmation): Play enough games to help express yourself.
Using Maslow's tower to look at the chart of the formation and development of games in 50 years, we can understand the reasons for the growth and collapse of game types.
The first is Arcade games: These are mainly simple games that focus on the 4th floor but forget the 3rd floor. This makes players when completing the game will often quit and not stick with the next game.
Console games are similar, no matter how good the game is, if it only meets the 4th and 5th floors of the tower, it is difficult to maintain. Therefore console games are cyclical and new games need to change regularly every year.
The reason console games have not lost market share is because the source of new games is still attractive enough, there are online modes and big events that help connect the console game community like the E3 electronic entertainment fair.
The development of the Internet has led to the explosion of the PC and mobile gaming market with the Online/PVP element, the 3rd floor of Maslow Tower is met to help the development of games on these platforms.
Once the 3rd floor has been met, more prominent games will meet the 4th and 5th floors of the demand tower. That's why we often see in-game achievements (4th tier) and tournaments or leaderboards to rank players (5th tier).
Esports or e-sports has emerged recently, in essence, to satisfy the 5th floor in Maslow's tower. Players can then express themselves and receive additional rewards for their efforts. The reason Esports developed is because traditional games have met the lower tiers too well, the 5th tier is the top tier and fits the current meta.
On the other hand, the over-development of Maslow floors on Mobile and PC games may have caused the market to hit the ceiling and it is difficult to find new breakthroughs. VR/AR games and Cloud Games were born with the aim of breaking down this barrier and bringing a new breeze to the game market.
Factors that help a game develop and maintain
Analysis of game trends in the past 10 years:
From the table above, we analyze the 3 most prominent and long-lasting games Minecraft, Fortnite and World of Warcraft.
Case studies
1. Minecraft
Minecraft is a video game in the sandbox game genre, a branch of the open world. Minecraft allows players to create and build structures just by arranging cubes together. In addition, the game also has many activities to build buildings including searching, gathering resources, crafting and fighting.
Besides, Minecraft also has many game modes available including: survival, super hard, creative, adventure, audience, multiplayer.
The game is also famous for its third-party mods, which allow players to own new tools, diverse characters, and specific missions for players to perform.
Things Minecraft gives players:
- Minecraft is famous for its strong community, where players can consult experiences on forums, create teams to build architecture or participate in different game modes.
- Players can create whatever they want based on the tools that Minecraft provides. In Minecraft, it's not the publisher who creates the content, but the user who creates the content.
- Minecraft has a dedicated section on its website to showcase the most beautiful architectures created in its game. With visits of tens of millions of people per month this not only brings great honor to the works on display, it also brings opportunities and popularity.
As a free to play game, Minecraft still generates a steady stream of revenue every year with a gradually growing number of players.
2. World of warcraft
World of Warcraft (WoW) is a massively multiplayer online role-playing game (MMORPG). Players will play the characters in the game and explore the world, develop characters, create teams to fight bosses and many other interesting features.
Things World of Warcraft gives players:
- An online game where users can interact and do many activities together (exploration, boss hunting).
- There's a sense of accomplishment with the leveling, loot, and skill system.
- Players show their strength and skills to other players. World of Warcraft also has tournaments with valuable rewards to encourage players to participate.
- The cumulative revenue that World of Warcraft from its inception until 2016 is more than 9.23 billion USD. However, the management company did not update the data from the game after that. World of Warcraft is also a Free-to-play game.
3. Fortnite
Fortnite belongs to the genre of survival shooter combined with unique building elements.
Things Fortnite gives players:
- A survival game where players (or teams of players) have to compete with other players.
- Create the right architecture to create an advantage in the game.
- The feeling of accomplishment of being the last survivor.
- Great events and tournaments with valuable rewards.
As a free to play game, Fortnite's annual revenue reaches billions of dollars, a very large number. Fortnite's user base has also grown steadily over the years.
summary
(1) Traditional games are now very developed.
(2) Players will join and stay in games that meet their needs
(3) The most popular games have the following characteristics:
- Community
- Be creative
- Competitive
- Free to Play (but still generates a lot of revenue)
(4) PC and mobile games are occupying most of the market share.
(5) There are gradually appearing games in new branches such as VR/AR games and cloud games.
Revenue model of the Game market
The traditional game market is divided into many different segments, each of which will have its own revenue model. Here, we divide the game industry by current gaming vehicles, into 4 segments: Console, Mobile/PC, VR/AR, Cloud.
1. Console
Consoles are specialized handheld devices for playing games, similar to remotes and TVs. On the Console, there are full of specialized buttons for playing games, such as movement buttons, function buttons ... thereby bringing an interesting gaming feeling, practical experiences.
Console has been developed since the 1960s of the last century. Through the console, people began to know the concept of video games, which are different from folk games. The console was the first hardware device for video games.
When the entertainment needs of users are increasing, the console is also constantly evolving, from the "Gameboy" handheld device that we used to play when we were young, now it has become a big brand like Playstation 5, Xbox 4, Switch.
As a result, the game industry also went up, becoming one of the industries with strong growth rates, even accelerating during the recent Covid pandemic. Many large corporations also see this potential and have developed their own game segment and have achieved certain successes such as Microsoft, Sony, Google.
Types of games on Console
With more than 60 years of development history, tens of thousands of games have been developed on Console. Here is a summary of the most played games on the 3 main console types today: XBOX, Playstation, Switch.
The genre of favorite games on Playstation and XBOX is quite similar, favoring the "Battle Royal", "Survival" genre. In addition, TOP games on XBOX and Playstation are games that can be played on multiple platforms, in addition to Consoles that can be played on PC, Mobile, Tablet...
The most played game genre on Switch is "Adventure", with long-loved characters like Mario, Zelda, Pokemon. Games on Switch are 100% developed by Nintendo and are only played on Switch. Nintendo's Switch can be understood as creating a brand of its own and having a separate customer base compared to the XBOX and Playstation, although on the Switch it is still possible to play the games available on the XBOX and Playstation.
Why are console games so popular?
The ultimate purpose of the Game is to have fun, to help people have moments of relaxation. Game companies also focus on a single factor: "Fun". According to a study " MDA: A Formal Approach to Game Design and Game Research " from Northwestern University, there are 8 factors that make up the success of a game, helping the game attract players. That is:
- Sensation : Are elements in the game that have a direct impact on the senses. Role-playing games, sounds, images, in-game operations... help players have emotions of joy, sadness, discomfort, fear... In this case, "joy" is Finding the feeling you want through playing games.
- Fantasy : The "fictional", "unreal" elements in the game, helping players have completely new and unprecedented experiences in real life. Bring players into a whole new world. Role-playing games like warriors, becoming superheroes are typical examples of this. The "fun" here is that players get to be who they want to be, doing what they like in a virtual world.
- Narrative : This is the element of the "story" that the player participates in. Especially in the role-playing game (RPG) series, this element covers them all. Every RPG creates an interesting story to tell the player. The player's "joy" is to become a character participating in that story, depending on each person's personality, they will choose different characters, but together they join an attractive story created by the publisher. tell.
- Challenge : Set tough challenges to challenge the intellectual potential of game players. “Joy” here is the feeling of achieving a difficult goal.
- Fellowship : These are elements that require camaraderie. Nowadays, a lot of games are more social. Bringing together individuals, many different personalities to fight together, for a common goal is really fun. The "fun" here is to join the game with friends, regardless of the outcome. Role-playing games do quite well in this regard.
- Exploring : This is another element where the RPG series excels. Players are always excited by what is about to happen. "Joy" here is to satisfy curiosity.
- Expression : This is the need to express one's personality. “Joy” is being creative and leaving a mark in the game.
- Submission : Give simple tasks and ask the player to complete it. A typical example of this factor is the game genre "Farm", the user does the task and develops his farm every day. This is the "joy" of commitment at work, the basics will create great value.
The more elements mentioned above, the better the game. Most games will focus on certain elements.
Console gaming first comes to users with the “Sensation” element. Eye-catching design, bold gamer and still very cool. Just holding the console in hand, players have begun to feel the game world. That's why many games can be played on computers like FIFA 22, Fortnite, GTA V... but many people still use consoles to play.
In the above list of games, the games on XBOX and Playstation focus on “Expression”, in most games, players fight against each other for the first place.
The game on Switch focuses more on the "Narrative" element. people who are passionate about the stories that game publishers tell, and love those characters. From there, creating icons in the game industry such as Pokemon, Mario, Zelda ...
Creating a compelling story is not easy, but once successful, they can continue to tell those stories through selling new products.
Revenue model of games game companies sell consoles
To learn about the revenue model of the game company selling Console, the writer chooses to study the financial statements of the Nintendo company. Since Nintendo is a company with a pure gaming business, unaffected by other factors, the analysis is also easier.
The revenue model Nintendo is using is called "one-time-purchase fee", users only need to pay the initial one-time cost for hardware products, software ... to be able to use it forever. .
In 2017 Nintendo released a new console called "Switch", revenue quickly skyrocketed from $4.4 billion in 2016 to $16.5 billion in 2020. However, from 2017 to now, Nintendo has not released any more products. Console products, so from 2021 revenue has started to decline and revenue is expected to continue to decline in 2022.
This shows that Console is a cyclical product, every time a new Console is launched, revenue will skyrocket but only to a certain extent and will gradually decrease.
It is a difficult problem, requiring companies selling Consoles to continuously improve their hardware (hardware) to continuously develop in this market.
Going into Nintendo's revenue, Nintendo's revenue now comes from selling the following 4 products:
- Hardware
- Software
- Mobile, IP related
- Playing Cards
It is easy to see that hardware and software always account for a high percentage of total revenue. Revenue usually increases very strongly in the fourth quarter of each year, this is the year-end period with holidays such as Christmas, New Year...
Game products are chosen by people as gifts or as self-rewards, leading to a spike in demand. This shows that Game revenue is also a 1-year cyclical variable.
In terms of revenue share from 2017-2021, right after the Switch's launch, more than 60% of Nintendo's revenue came from hardware sales, software sales only accounted for 30% of revenue.
As time goes on, the share from selling hardware tends to decrease, only 53%, while the share from selling software increases, accounting for 45%. This is how Nintendo maintains revenue for a long time.
Comment
After studying Nintendo's revenue model, we can come to a rather subjective conclusion about Nintendo or other game companies, which is: The console game industry is a cyclical industry.
Every hardware, software or related product has a certain development cycle and is difficult to last forever. Therefore, game publishers are required to develop continuously.
Joy is like a dish. Eating a lot is also boring, but you can't eat it. Selling "fun" is completely learned and developed, as evidenced by Nintendo's continuous hot games over the past few decades.
For console companies, most of their revenue comes from selling "hardware", which requires them to keep improving the hardware over time. During the period when hardware product sales begin to mature, attractive software products will be launched to maintain revenue.
Besides, in order not to be left behind market trends, we see that current publishers often support online play in games and add in-game purchases to increase revenue.
2. Mobile/PC Games
With the development of information technology, games are not only produced in the form of hard disks, but also in the form of software on the Internet. Thus, players can play the game right on their computer or phone through downloading to the computer.
The reason for pooling games on Mobile and PC for analysis is because there are many similarities between games on these two types of devices, even many games have identical versions on PC and Mobile.
Types of games on Mobile/PC
Below is a list of games with the highest average number of players in April 2022.
According to the above statistics, it can be clearly seen that the most popular game series on PC are:
- Battle Royale: Competitive
- MOBA/MMORPG: Community
- Sandbox: Be creative
And especially, most of the games mentioned above are free.
Why are Mobile/PC games popular?
With the explosion of the Internet and the need to own a personal computer and phone became mandatory. PC and mobile games are also following that trend and are occupying the majority of the market share today.
Mobile/PC games introduce a new game concept “Freemium game”, allowing users to download and play the entire game completely for free. At the same time, the game still offers optional products that enhance the in-game experience better.
Compare Console and Mobile/PC Game about the 5 needs in Maslow's hierarchy of needs.
Through the above comparison, it can be seen that Mobile/PC games outperform Console games on the 1st and 3rd floors of Maslow's hierarchy of needs, thereby attracting significantly more players to participate.
Free-to-play revenue model
Unlike Console's rather rigid one-time-purchase fee revenue model, the free-to-play model offers many ways to generate revenue, which is to create "paid content" and sell it. in the game app itself.
Paid content includes 2 main types:
- Functional: Elements that affect the operation in the game.
- Decorative: Visual elements.
In the early stages of free-to-play games from 2000-2010, Functional content was growing in popularity. For example, in a role-playing game (MMORPG), functional content helps players increase the coefficients of the characters in the game such as experience, level, strength, speed... Types of games with models as above is often called a pay-to-win game, where the rich become the strongest and best in the game.
From 2010 to now, game publishers began to think about "fairness" and "ethicality" in games, functional content began to disappear, instead most games provide a lot. “decorative content”. These games quickly attracted a large number of players, such as League of Legends, Fortnite, CS: GO...
In short, the free-to-play model helps to increase the number of players in the system as much as possible, and in the process of playing the game provides paid content that enhances the gaming experience. Whether or not to buy "paid content" is entirely up to the player's decision, so players can control how much money they will accept to put into this game.
Free-to-play game developers also created a new way to monetize the game, which is to create in-game currency, thereby creating a small in-game economy and monetizing it.
3. VR/AR Game
VR stands for Virtual Reality, which means virtual reality games, requiring more specialized devices such as stereoscopic glasses, headsets and other handheld control devices, to help players feel. Very realistic simulation through VR virtual reality technology.
AR stands for Augmented Reality which means augmented reality game. For this game players do not need to use supporting devices. They can observe the outside world right in the game. Therefore, players will not feel dizzy or nauseous. The AR gaming space is also large and unrestricted. Pokemon Go is the most famous game when it comes to AR games.
The very name VR / AR game is also a game genre, providing a completely different experience compared to other games. VR/AR games offer the ability to interact between players and virtual space. Going deeper, the most popular games are in the genre: Action and Adventure.
Revenue model of VR/AR games
Similar to Console, VR/AR games require hardware devices. Nearly half of revenue comes from hardware sales.
4. Cloud Games
Cloud gaming, also known as a cloud service, allows players to play any game they want on any device such as phone, computer, console without downloading, as long as that game must be supported from the service to play on another platform.
Simply put, the Cloud gaming service is a place to run games, then transfer images to the user's device. The user device then only acted as a place to store images for playing games, so there was no need for too much strong configuration.
Instead, what players need to care about when using Cloud gaming is that the Internet connection must be smooth, with the fastest download speed as possible to avoid lag or disconnection during the game. .
Why are Cloud games so popular?
Good games, heavy on graphics and features in the game will of course have to have a large capacity. Therefore, the fact that players can play these games without spending too much is a great experience, saving a lot of money for game enthusiasts.
Cloud game revenue model
Normally, companies that provide Cloud gaming services will charge a fixed fee per month, ranging from $10 - $60.
Service providers can be mentioned as Shadow, GeForce Now, Vortex...
summary
(1) The Free-to-play, pay-for-convenience model has proven successful with PC/Mobile titles.
(2) The rational development strategy of PC/Mobile games is to create a game with good content, without barriers to entry to attract users. Players when participating can choose to pay to help themselves stand out. The key is good game quality to attract users.
(3) The console game market share is mainly focused on a few big names. Hardware (electronics, handles...) is their strong point and it is difficult for new names to compete. Console game sales are cyclical and heavily dependent on new titles.
(4) There are gradually appearing games in new branches such as VR/AR games and cloud games. Although still new, VR / AR games and cloud games have their own unique selling points that other game branches do not have.
GameFi Analysis
overview
(1) GameFi = Game + Finance. In order for a GameFi project to be successful, in addition to the quality of the game, the project needs to have a good economy. There is currently no project that does that.
(2) The driving force of traditional games is to generate revenue, and GameFi's driving force is to increase asset value. GameFi's weakness is insufficient demand to create value for the asset.
(3) With a game of good quality and attracting users, assets associated with the core value of the game will tend to develop better than other types of assets.
What is GameFi?
GameFi = Game + Finance. Besides the quality of the game, the game must also pay attention to the economy of the game. This is not a 1+1=2 problem, because besides considering the quality of the game and the economy of the game, we also have to find a way to combine and balance the two.
Below is the token performance table of hot games in the wave of 2021:
Most tokens have lost more than 95% of their value from the top, the games that have lost the least value (ranging around 90%) are top quality games that are still updated regularly. The small decrease in Aavegotchi is due to the tokenomics design that restricts both the increase and decrease in the price of the token.
Consider Axie Infinity, the game that started the Play To Earn trend and is the best FDV growth project. Axie's daily revenue sometimes reaches more than 16 million USD / day, at present this number ranges from 3,000 - 5,000 USD.
In short, no GameFi model has been successful and can develop stably like in the traditional market.
The cause of failure of the current GameFi model?
The biggest difference between GameFi and traditional games lies in the development motivation.
With traditional games, revenue is distributed directly to publishers and investors. The publisher can therefore focus on creating a game with great content to attract players and generate revenue.
As for GameFi, the main driving force for development is to increase the value of assets (in GameFi it is tokens and NFT). Besides having to create a quality game to attract players, the project must also create an economy to balance the interests of the parties. All make creating a good GameFi project many times more complicated.
Looking at GameFi's flyweel, we see that the biggest weakness is that assets backed by revenue must satisfy many components. If sales can't keep up to create demand for the asset, the asset's value will drop for sure
summary
(1) GameFi = Game + Finance. Besides the quality of the game, the game must also pay attention to the economy of the game.
(2) Currently, there is no successful and stable GameFi model like in the traditional market. The reason is that there is no suitable design to ensure the interests of the parties.
(3) The driving force of traditional games is to generate revenue, and the driving force of GameFi is to increase asset value. GameFi's weakness is insufficient demand to create value for the asset.
Game evaluation methods and case studies
The quality of GameFi can be compared to traditional games. Using Maslow's Hierarchy of Needs method, we can assess the level of player satisfaction and see if the game's content is considered good or not.
To evaluate whether an economy in the game is good or not, we apply the most basic law in determining asset value, the law of supply and demand.
According to the law of supply and demand, when the price of a good increases, the quantity demanded will decrease, and the supply will also increase with the price of the commodity. Conversely, when the price of a commodity decreases, the quantity demanded will increase, and the supply will also decrease according to the price of the commodity.
For example, the price of gasoline, in the first chart, when the price increases, people's demand for gasoline will decrease. The same example in the chart two increases gasoline prices stimulate manufacturers to increase the quantity to sell more gasoline.
Apply Maslow's tower and the law of supply and demand to consider examples of some hot GameFi projects in 2021.
Axie Infinity
Axie Infinity is a turn-based game, a turn-based tactical battle game genre. This is one of the most popular and developed game genres in the traditional game. Not only that, but Axie also developed Ronin chain, an infrastructure to meet great demand even in the most explosive time of Axie.
Axie Infinity meets all 3 upper floors of Maslow Tower:
- Level 3 (Social Demand): PvP Arena mode allows players to fight against each other. Guilds, groups are created so that players can join a certain community
- Level 4 (Need to be Respected): Axie players can collect and breed to create rare and unique Axies. When collecting enough will give players a sense of achievement.
- Level 5 (The need for self-actualization): Axie has a leaderboard system and regularly organizes tournaments. Good players have many opportunities to express themselves.
Basically, Axie's game quality is good. The main reason why the game is losing all players lies in the economic factor.
Reference from Axie Infinity after x100: Adjustment causes, solutions and development directions.
In the first design of Axie Infinity, players want to "play" to "earn", they must first "pay" first. Specifically, players are forced to buy a minimum of 3 Axies to play the game.
As shown below, the new supply of Axies is created by paying a fee in the form of SLP tokens and AXS tokens to breed 2 Axies together. During the period of strong expansion, the number of new players joining the network spiked, the demand for Axie increased sharply in the secondary market. The demand is greater than the total supply leading to an increase in the price of Axie in the secondary market.
The sharp increase in Axie prices makes the ROI of breeding Axies and then selling them on the NFT marketplace increase and stimulate players to be more active in breeding Axies. Breeding Axies again requires AXS tokens and SLP tokens, which indirectly increases the demand for AXS and SLP tokens in the secondary market and makes the minimum cost of creating a new Axie higher.
This is a positive feedback loop for Axie Infinity during the expansion phase. Roughly, the first phase (hyper-expansion phase) of the P2E 1.0 model is described by Phase 1 below: Supply, demand, price all go up.
In the next stage, the supply of Axie is too much and the reward token (SLP) inflation is still increasing strongly while the number of buyers is not much. The problem with Axie Infinity's model is that demand needs to grow exponentially because supply grows exponentially.
Even if user demand stays the same, because supply of Axie & SLP is increasing exponentially, the price will definitely decrease. Once prices continue to plummet and the market falls into saturation, the problems will worsen.
In short, the previous design of Axie Infinity helped the project grow very quickly in the expansion phase. However, when moving to the contraction phase, the project will also be strongly negatively affected because supply exceeds demand.
The Sandbox
The Sandbox is a sandbox game, a creative game genre that allows players to freely explore and build as they want in a virtual environment. The Sandbox is one of the first on-chain games to "Fork" MineCraft, the most successful game in the past 10 years.
In addition to the GameFi trend, The Sandbox also enjoys the narrative of the Metaverse trend and has grown strongly in 2021.
In terms of gameplay, Sandbox is quite similar to Minecraft. The highlight of The Sandbox is providing a toolkit so that users can create items themselves and release them as NFTs. The drawback is that the game is developed on Ethereum and users have to bear expensive transaction fees and long wait times.
Regarding the economic factor, the drawback of The SandBox lies in tokenomics. There is a large amount of tokens belonging to the team and investors. All of them have increased in price many times and are waiting to be unlocked.
Key Metric SAND
SAND Token Allocation
- Company Reserve: 25.82% ~ 774,722223 SAND tokens.
- Team: 19% ~ 570,000,000 SAND Tokens.
- Seed Sale: 17.18% ~ 515,277,777 SAND Token.
- Foundation: 12% ~ 360,000,000 SAND Tokens.
- Binance Launchpad Sale: 12% ~ 360,000,000 SAND Tokens.
- Advisors: 10% ~ 300,000,000 SAND Tokens.
- Strategic Sale: 4% ~ 120,000,000 SAND Token.
SAND Token sale
SAND Token Release Schedule
From July 2020, SAND will be unlocked about every 6 months for components, each time the number of tokens circulating in the market will increase by 10% or more of the total supply.
Consider another key asset class of The Sandbox, Land. Players must have a new land to be able to create their own architecture. Land in The Sandbox has been bought by many big brands and developed the above architectures. Samsung, Adidas, Gucci and the latest Time cooperate with Sandbox to build a times square in the project.
Below is the price of land at the time of sale.
*Note the above price is for a 1x1 piece. If the player buys a 3x3 piece of land, the total number of pieces to buy will be 9 and the final price will be the price of 1 x9 piece. The same applies to the land 9x9, 12x12 and the largest piece is 24x24.
Considering only the current floor price of 1.54 E (with 1 E equal to 1,200 USD) for the 1x1 piece, the price has been x38.5 times since the time of sale.
The Sandbox is a "Fork" of Minecraft, what makes Minecraft stand out and maintain is in allowing players to create worlds according to their own imagination. At Sandbox, buying land meets that core element. This creates demand from the players and increases the value of the land.
Thetan Arena
Thetan Arena is a game "fork" Brawl Stars, a multiplayer game in the form of survival with more than 100 million downloads of SuperCell. Players will compete to make themselves or their team the last survivor. With dramatic, accessible gameplay, Thetan received many compliments when it was first released and attracted many players.
However, in terms of economy, Thetan Arena has many shortcomings in the project model.
The first is about the short term tokennomics.
THG Token Allocation
- Team: 21% - 88,200,000.
- Staking Issuance: 21% - 88,200,000.
- Gaming Issuance: 19% - 79,800,000.
- Ecosystem Fund: 10% - 42,000,000.
- Strategic Sale: 10% - 42,000,000.
- Reserve Fund: 9% - 37,800,000.
- Advisors: 5% - 21,000,000.
- Liquidity: 5%.
THG Token Sale
THG Token Release Schedule
There is a large amount of tokens held by the team and investors. Most parties have a short-term locking schedule and are constantly paid tokens. With the token price x more than 250 times from the public price, the token will be dumped when unlocked is understandable.
Thetan's next negative factor is following the model of Axie Infinity. The project also uses a two-token model and a mechanism to help create heroes. Heroes have an infinite supply, but the demand for creating heroes comes mainly from playing games and receiving rewards tokens THC (Thetan's in-game token).
However, the total supply of THC is infinite and the supply gradually exceeds the demand. Besides, THG also has no demand because the strongest use case is just to create rare heroes.
The inevitable result is a constant drop in token prices and a gradual loss of motivation to play games and create heroes.
The case of Thetan Arena is an example of short term projects where there is no innovation and collecting from other parties. These projects can do well in the beginning when uptrend and true to the narrative, but most have plummeted and often can't bounce back.
Other games
Illuvium, Star Atlas, My Neighbor Alice and many other games have the common feature that they have not released games but have sold tokens. It all just stops at the level of gameplay teasers or being in beta.
This not only makes Maslow's tower unsatisfied (we can't be sure if a game is attractive when not directly played) but also makes the demand close to 0. The amount of demand at this time is mostly speculation or coming. from use cases will increase the supply later that is staking.
With the lack of a suitable economic model to be applied. Projects without games that have sold tokens are no different from buying leash.
summary
(1) The economic design of current games has many limitations.
(2) With a game of good quality and attracting users, assets associated with the core value of the game will tend to develop better than other types of assets.
Projection GameFi
Overview
(1) GameFi is a solution for the saturated gaming market.
(2) There will be many titles of many genres with simple graphics (Pixel, Chibi) appearing in 2022 - 2023.
(3) Many economic models will be applied. Sustainable development projects will find a balance between supply and demand.
(4) Fat Protocol thesis is also applicable to GameFi.
(5) DDS is a potential branch of Crypto in general and GameFi in particular.
Conviction | Does GameFi have growth potential?
The gaming market is a potential market with the number of players and revenue increasing steadily every year. According to statistics, the number of players in 2023 could reach more than 3 billion people and the amount of revenue generated could exceed 200 billion USD/year.
The past few years have witnessed a strong boom in mobile games. With the convenience of smartphones as well as improving game quality, the mobile game market is currently the largest compared to PC or Console games. The market share of mobile games is accounting for more than half while the market share of PC and Console games tends to decrease.
However, according to statistics from Google Play Store and Apple App Store currently, although the number of new games is still increasing steadily, the number of downloads and revenue of the mobile game segment currently shows no sign of increasing.
The current gaming market is gradually saturated, and the standards of users are getting higher and higher. New areas are being explored to meet the shifting user needs. That's why we see more and more resources focusing on VR/AR games, Cloud games and GameFi, etc.
As with all new developments, we cannot guarantee that GameFi will be successful and there will be many problems to solve. But GameFi has come up with a solution and brought something new to today's saturated gaming market.
Projection on game quality
The gaming fever in 2021 has been attracting a large number of projects to participate in the GameFi segment. The number of GameFi projects will continue to increase. Many game genres are developed with different content. The quality of the game will be increasingly improved to attract players.
According to a source interviewed more than 80 gaming studios are developing Web3 game projects . 80% of games have a release schedule in 2022-2023.
A game that wants to attract players does not necessarily have to meet the 3rd floor of Maslow Tower, but can focus on the 4th and 5th floors. Although that game is difficult to maintain for a long time due to lack of sociality. . But if the game quality is good enough, it can completely "storm" similar to traditional games such as: Call of Duty, Assassin's Creed, The Sim, ...
The average time to develop an AAA game is about 18 to 36 months and it will require a large amount of capital and resources to be able to deploy. Therefore, in a short time, it is very difficult to appear an AAA game with beautiful graphics and a large world. A or AA titles have more potential because they take less time to develop. The upcoming wave of gaming can come from the mass appearance of games with simple graphics (Pixel, Chibi, ...).
Projection of the in-game economy
At present, there is no successfully tested economic model. As described in the “GameFi” section, the main development driver of the project is to increase the value of the property.
The writer shares a few approaches to solving the above problem:
1. Starting from the quality of the game - the problem of the economy
This approach is similar to traditional games, publishers will focus on developing games and attracting players. Players generate revenue and that revenue will be distributed to those who hold the assets proportionally.
The problem of this approach is how to apply assets and distribute profits reasonably to balance the interests of the parties.
Advantages: Sustainable model, property value increases based on revenue.
Cons: There are too many components to satisfy in the economy. The project needs to continuously calculate and control the in-game economy.
2. Starting from the game economy - the problem of quality
This approach takes assets as the starting point. Assets will now play an essential role in all aspects of the game and will grow with the development of the game.
The problem of this approach is to create a game that really attracts players due to the high barriers to entry and the high speculative factor. Similar to Axie and games that use assets as an essential ingredient to play the game. If the game does not retain a large enough number of loyal players, then the decline will create a negative effect and have a fatal impact on the project.
Pros: Fast growth in an uptrend.
Cons: Large barrier to entry. The model is unsustainable, rapidly declining due to high speculative factors.
These two approaches will be used a lot in the future. There will be many economic models applied to the game and there will be projects that find the right model for their game.
The key to a stable and growing game economy lies in the fact that the project can create an equilibrium point ( Equilibrium ). This means that the project can generate as much demand as there is supply for the asset in the game.
Once an equilibrium is created, the project can shift the equilibrium in the short run to meet its needs. For example, increasing the supply of assets to encourage new players, increasing demand by creating more use cases, etc. This will help the project to develop stably in the long term and expand the network effect. .
3. Growing an Ecosystem - GameFi's Holy Grail?
Each line divides up many different tasks to create parts of the product. Each company is divided into many departments to focus on doing different jobs. Beyond the world there are many professions, each of which creates a different value. Combined they form the economy we live in.
Each component is an important link of the movement. And if all goes well, the movement will run fine. What if we applied this vision to GameFi? Instead of having to combine both Game and Finance elements into one, why don't we divide into small projects in an ecosystem?
Imagine a game with good quality and attracting many players. To buy in-game items, the player must have gems. This gem can only be generated from mining in other games. Gems and items can be traded in a common marketplace.
If this model works well then a project can focus on one element to develop. The ecosystem can now meet the needs of many components, assets will have a large demand, a new type of work will be born. GameFi can now overcome the shadow of the traditional game and really create a new breakthrough.
When the technology platform is strong enough (Cross-chain, scability,...) and the interoperability is good enough, we will be able to see approach 3 implemented. This probably won't take long because the gaming studios at that time already had a game ecosystem for themselves and a large number of players.
Projecting where the most value flows
Protocol
According to the Fat Protocol thesis , the protocol is the place to get more value in the Crypto market. In order for the protocol to grow, it is necessary to attract developers and users to participate in the ecosystem. Based on the Benefit-driven mentality, the parties will often participate in the ecosystem that is more beneficial to them.
From a developer perspective, the attractive environment to build products is:
- Blockchain best support: Gaming ecosystem fund, Hackathon, tools, platforms,...
- The most secure blockchain: There are many good projects running on it, a large number of players,...
From a user perspective, there are three main motivations for participation:
- Make money: Which game gives the best profit?
- Having fun: which game is the most fun to play?
- Ideal (Ideology).
It is highly likely that there will be a GameFi season similar to DeFi in the future. The blockchains with the most engaging games will stand out in this wave.
Decentralized Distribution Service (DDS)
Distribution Service (DS) or distribution channel is an intermediary that helps distribute products and content to users. DS plays a core role in life and is forming user habits.
For example:
When you want to look up information on Google, if you don't have a vehicle but want to move, grab grab. Similarly, there are many distribution channels in many areas of today's life such as:
- Youtube/Tiktok/… is a video content distribution channel
- Amazon/Lazada/Shopee is a physical distribution channel for goods
- AppStore/GooglePlay is a distribution channel for mobile apps
- Steam is a distribution channel for PC games
- And there are many other distribution channels
DS brings users:
- Safety (product is guaranteed by the name behind)
- Convenience (aggregate everything related to the supporting product branch)
- Efficiency (creating a common framework for users)
Advantages of DS:
- UGC (Users generate content): DC is just an intermediary connecting parties, the user is the creator of the content/product.
- Scale by network effect: The stronger the network, the more content is generated, the greater the revenue ⇒ Attract more users ⇒ The more content is created, the more revenue ⇒ …
That's why the market is currently dominated by a small amount of DC. The user himself is the moat that creates a positive feedback loop for the DC.
Applied to Crypto in general and GameFi in particular, currently there is no DC to help users easily access Dapps as well as games.
With GameFi, the models that can be referred to are Steam / App Store or Google Play Store. Their common feature is to allow publishers to post content according to a common standard. Users can access these applications to buy and download apps or games of their choice.
Currently, the founding company of Steam / App Store and Google Play Store are both charging a base fee of 30% with the revenue of the content. This means that the game publisher only receives 70% of the total revenue.
Although there is a slight change in the fee policy when a certain milestone is reached (e.g. Steam reduces the fee to 25% if the game sells $10 million, and 20% if the game sells $50 million). However, this fee is still too high and is a pain point for most developers.
There is a high possibility that when the number of games and users is large enough, there will be a Decentralized Distribution Service that allows publishers to post content more freely and receive more revenue.
Conclusion
GameFi is a fork that helps solve the existing problem of the traditional game market and has the potential for disruptive growth in the future. Currently there is no specific solution to the problem of the economy and how to combine the "Game" and "Finance" factors, but we can expect this problem to be solved at the current rate of development. now.
