Forward the Original Title： Thoughts on the Web2/3 game revenue model｜Prophet Weekly #254

TL;DR

During this Spring Festival holiday, I specifically took 2 days off to play an old MMO game, which reminded me of the times when I used to spend my breakfast money to play games overnight. Here are some thoughts I had before getting back to work.

Before looking at the revenue model of blockchain games, let’s first look at the mainstream web2 game revenue models. There are currently four main types:

• Buyout: This mainly occurs on console game platforms like PlayStation, Xbox, Nintendo, and single-player game platforms like Steam, where users directly pay for the game content.
• Subscription/Time-based payment: This model is actually very classical. World of Warcraft and Fantasy Westward Journey are typical examples. Players purchase play time, and there are no in-game purchases. The current time-based point-card billing model has gradually transformed into a subscription model. Unlike before, you cannot buy an hour at a time but have to buy a whole month. This is not mainstream.
• Pay for items: This is currently the most mainstream business model. Players enter the game for free, but at key growth nodes (boss, levels, player versus player ladder) they will find that without recharging, they can hardly experience the subsequent game content and need to purchase items to continue playing.
• Advertising: The business model of most casual games is this business model. It is also free for players to play. Key nodes will require users to watch advertisements at different times to unlock subsequent content.

Of course, these business models do not exist in isolation. Many game developers choose a hybrid model to generate revenue. Different choices will be made at different stages of the game’s life cycle. For example, when PUBG (PlayerUnknown’s Battlegrounds) was launched, it was a buyout game. Later, it started selling skin items, and now it’s a free game that charges for skin items.

Overall, free-to-play means the largest player base, buyouts and subscriptions mean a higher-quality player community. There is no distinction of superiority or inferiority between the two.

After knowing the income models of traditional games, here are a few types of revenue models for blockchain games:

• Taxation: Every time player items are traded, a transaction fee is charged. The most typical ones are Axie Infinity and StepN at their peak.
• NFT sale: Players need to purchase NFTs to enter, similar to the item payment in Web2 games. However, in the current blockchain games, the payment curve is not smooth. The consumer experience is like a buyout, but the gameplay is very similar to traditional item payment games.
• Token/Coin sales: No further explanation is needed here. All blockchain game developers say they don’t sell tokens/coins, but…
• Financing: Due to the immaturity of the market, financing is an important source of income for some developers. VC readers should have a deep understanding. . . Taxation is considered by many to be a good revenue model, and it should also be an important revenue method for blockchain games. After all, the assets are all on-chain, and collecting taxes on users’ item transactions is very positive and the story is also easily understandable.

However, the business efficiency is very low. Here, we’ll do some simple math to understand it. In the traditional web2 business model, whether it’s item payment or buyout, the income brought to developers is very direct. If a player is willing to spend 100 dollars, the developer gets 100 dollars.

But in the tax-based business model, if a player is willing to spend 100 dollars, the developer can only get a 5% transaction fee, which is 5 dollars. This income is very considerable during the FOMO period, but when the number of players decreases, the income is reduced greatly.

Low commercial efficiency is also reflected in NFT sales. Due to the attributes of players, web3 users are not able to accept the sale of unlimited issued items. Therefore, most game developers can only sell NFT a few times. The first and second generations are basically the end. If they sell the third generation, they will be scolded for fleecing.

In addition to low commercial efficiency, the revenue model of blockchain games has a very strong debt attribute. Selling NFT/coins/financing, the purpose of the buyers of these assets is not to buy content, not to become stronger in the game but to become stronger in the real world. They buy with the expectation of making money. Without the Ponzi model, blockchain games are almost impossible to succeed under the current environment.

Despise ponzi, join ponzi, and create ponzi. I believe that most blockchain game developers will go through this process. It’s not that game development cannot be afforded, but that ponzi is more cost-effective.

Therefore, how to extend the life cycle of ponzi games and create positive externality income for ponzi is very critical. Here are two ideas about these two points:

Yield2Play, this is inspired by Blast and Xpet. The former creates a public chain that automatically generates interest, and the latter uses staking to create a game mechanism with no loss of principal. What would happen if the ETH staking income + the interest generated by restaking are invested in ponzi?

How about using your 4% ETH Staking Yield Earning to bet on the next Shiba Inu?

Or to be more concrete, what would a Lido with game functions look like?

Do you still remember the Defi Kingdoms on Harmony?

A DeFi core wrapped in a game skin. Just this time it can be a dual-core defi+game.

The shell of a game, and the core of a casino. After Betdice on EOS, I haven’t seen a good blockchain casino. Perhaps in the web3 world, although everyone is a gambler, everyone wants to disguise themselves as an investor, because throwing dice directly just seems too low-end. Frankly, winning or losing is all about luck. It’s better to gamble on a 100x contract. After all, if you win, it’s because of your abilities.

Changing the skin of the game may be different. This reminds me of how a large number of web2 games are played. The core gameplay is actually betting on size, but it’s wrapped in the skin of equipment forging and recycling, and it suddenly becomes different. Winning means I understand the gaming mechanism.

Readers who do not understand what this is can search for the keywords “Fighting the Nian Beast & Losing Everything”. The market maker in this mechanism is actually much simpler than Web3.

Games like moba/fps have various blockchain versions. There is no reason not to do this type that is closest to money.

Finally, I hope everyone can find their own ponzi game in the new year.

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