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OKEx Research Institute: Report on the Game industry and GameFi

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With economic incentives, users' creation is stimulated, and we have seen the embryonic form of a new growth point of blockchain ecology.

OKEx Research: A Report on the Game Industry and GameFi

Original source: OKEx Research Institute

preface

The games industry has grown over the last two decades or so. The global gaming industry as a whole is expected to reach $175.8 billion by 2021, with about 3 billion gamers. Terminal games, page games, mobile games and the current hot chain games take turns to advance the market scale of the game industry. Of course, the game industry is also facing some difficulties, especially in China, where the government has introduced relevant policies, especially in terms of preventing minors from indulging in games; There are also challenges to the industry itself and the competitive environment: the emergence of other forms of entertainment has impacted the industry; The game itself has a short life cycle and fierce competition in the industry; In addition, the industry oligarchy concentration is high, small and medium-sized game manufacturers more difficult to survive and so on.

Since the birth of Bitcoin in 2008 and the creation of Ethereum by Vitalik Buterin in 2013, the blockchain industry has witnessed vigorous development. Ethereum introduced smart contracts, providing basic platform tools for the application ecosystem, and the specific application of blockchain has always been the direction explored by industry pioneers. In addition to using blockchain technology to revolutionize the financial and capital markets, the combination of blockchain and games is also a hot topic for discussion.

Blockchain game is to add the use of blockchain technology in online games, the use of blockchain technology in the decentralized, transparent security and other characteristics, to solve some pain points in traditional games. Currently, blockchain games are usually presented as Dapps. Was born to the. Axie Infinity As a representative of the popular chain game, a new economic model of Play To Earn has also emerged.

Overview of the Game Industry

1. Game industry chain

Figure 1 Overview of the game industry chain

Game IP Holder:Similar to raw material suppliers in traditional manufacturing, IP is one of the "raw materials" for making games. Any IP can be made into a game and "purchased" by game manufacturers, such as anime, movies, novels, etc.

Game Developer:It is the producer of the game, and the structure is generally made by studios. One studio corresponds to one game, and the team of small games usually has 30-50 people, while the team of medium and large games may have more than 100 people.

Game Publisher:Can be analogous to "sales agent", responsible for sales, operation, update, docking channels, market launch and other specific work. The core role of a publisher is to "sell" the game and maximize traffic. The current trend in the industry is towards integration of research and operation, which means doing both development and distribution yourself.

Distributors:The game's "sales/distribution platform" is the provider of traffic. All kinds of online official websites, online game stores, application stores in mobile phones, offline physical stores, Internet cafes, and even the old newsstands are all channel merchants, and there are many kinds of them. Channel business generally rely on water sharing and advertising to make profits, is the most stable in the industry chain "collect money" link.

2. Market conditions of the game industry

While engagement and spending surged in 2020 amid the COVID-19 pandemic, the second-order effects of the pandemic also became more pronounced in 2021. Telecommuting and supply chain disruptions will continue to challenge the industry, especially in the console and PC markets.

In July 2021, Newzoo released its "Global Games Market Report 2021". According to the report and related data, the global games market is expected to generate $175.8 billion in revenue in 2021, down 1.1% from the same period last year. The report provides detailed information on the revenue distribution by region and vertical market, as well as the projected growth trend of the global gaming market through 2024. The region and market overview is as follows:

- Mobile games are expected to generate $90.7 billion in revenue in 2021, up 4.4 percent year on year, accounting for more than half of global gaming revenue.

- Mobile games are less affected by the second-order effects of the pandemic than console and PC games and, similar to last year, emerging markets such as Asia-Pacific, the Middle East and Africa will continue to drive the majority of mobile game revenue growth.

Mobile games will continue to outpace console and PC games in revenue growth through 2024, driven by emerging markets, innovative mobile game commercialization solutions, and the continued migration of IP content to mobile devices by major console and PC game publishers.

- Apple's removal of IDFA will certainly limit the marketing space available on mobile platforms, as well as mobile games that rely on AD revenue (which is not included in Newzoo's metrics) and targeted user engagement, But that doesn't stop consumers from spending money on games.

The continued growth of mobile gaming also means PC gaming's market share will shrink slightly over the next few years. On the other hand, the maturing of a new generation of console content will accelerate the growth of console's share of global gaming revenue through 2024. A number of games originally scheduled for 2021 will be released in 2022 or in subsequent years.

-- The console market will shrink 8.9% in annual revenue to $49.2 billion in 2021, driven by the impact of the COVID-19 pandemic on triple-A console development. Triple-a console games require massive cross-departmental collaboration and are expensive to develop. A similar effect, albeit to a lesser extent, exists for PC games.

-- The global PC games market will generate $35.9 billion in revenue in 2021, down 2.8% year on year. The vast majority of that revenue ($33.3 billion) will come from boxed/digital PC games, with the remaining $2.6 billion coming from web-based PC games. As browser-based gamers continue to migrate to mobile devices, revenue from web games will shrink further by 2024.

-- Asia Pacific and North America will account for 50% and 24% of global annual revenue respectively in 2021. That share will shrink slightly by 2024, mainly because of more growth in Latin America, the Middle East and Africa.

Game Market Size by region, 2021

With a market size of $88.2 billion in 2021, the Asia-Pacific region has the largest share of global game revenue, accounting for 50.2 percent of global game revenue. With $45.6 billion in revenue, China is the largest contributor to game revenue in the Asia-Pacific region. As the asia-pacific gaming market is dominated by mobile games, it has been less affected by the COVID-19 pandemic. In contrast, North America, which is dominated by console gamers, has been hit hardest by the pandemic. Despite this, North America remained the second largest market in 2021, contributing $42.6 billion in revenue, mostly from the United States.

Figure 2. Game Market size by region in 2021 [6]

Global game segments in 2021

The COVID-19 pandemic has had a significant impact on both game development and release, leading to delays in the release of several games and affecting overall market revenue in 2021. Console games have suffered the most, but PC games have also been affected. Compared to mobile games, console and PC games rely more on large teams, are more expensive to develop, and require more cross-border collaboration.

The delayed release of next-generation console games for the PlayStation5 and Xbox Series XIS also poses significant challenges for the two consoles, particularly for the PlayStation, whose first-party games are sold at full price at the time of official launch. (By contrast, Xbox has adopted a subscription service strategy, charging as an Xbox Game Pass member.) Adding to the problem is a global supply shortage of semiconductors, negatively impacting the supply of consumer electronics, including next-generation console games and high-end PC gaming hardware.

Based on these factors, the console game segment revenue fell 8.9% to $49.2 billion in 2021. PC game segment revenue was $35.9 billion, down 2.8% year over year. Both segments will return to growth after this year.

The COVID-19 pandemic has had a much smaller impact on mobile games, as revenue from mobile games relies more on consumer spending within popular games and other games available. Revenue from this segment reached $90.7 billion in 2021, up a healthy 4.4% year on year. While hardcore mobile games and cross-platform games have boosted consumer demand for high-end mobile devices, the global semiconductor supply shortage has had a limited impact on the mobile gaming market because the hardware of the device is not as important to mobile gamers as consoles and PCS.

Figure 3. Global game industry segments in 2021 [6]

Game player structure for 2021

In 2021, the total number of global gamers will approach the 3 billion mark. This is an increase of 5.3% year on year compared to 2020, indicating that the strong growth momentum of the game industry in 2020 not only leads to the continued growth in the number of players, but also has more room to grow.

Similar to what has happened every year before, the growth in player numbers is being driven by a growing number of Internet users, better network infrastructure, and affordable smartphone and mobile data plans. The impact of these drivers is particularly evident in regions where growth is evident, such as the Middle East, Africa and Latin America, which are also the regions where player numbers are growing the fastest. The Asia-Pacific region, which includes emerging markets such as South and Central Asia and Southeast Asia, has the largest number of active gamers in the world, accounting for 55 percent of the global total, far higher than any other region.

Figure 4. Global gamer structure in 2021 [6]

3. Forecast of future growth of the game industry

The gaming market will quickly recover from a slight decline in 2021. The global gaming market will climb at a cagR of 8.7% (2019-2024), crossing the $200 billion mark in 2023 and reaching a total revenue of $218.7 billion in 2024.

Figure 5 revenue Forecast of global game market [6]

Looking ahead, the total number of global gamers will pass the 3 billion mark by 2022. The total number of global gamers will continue to grow at a cagR of 5.6%(2015-2024), reaching 3.3 billion by 2024. As more people around the world access the Web from mobile devices, growth in the total number of gamers will slow. Growth in total players will slow to "only" 3.2% by 2024. In terms of market segments, the majority of players are mobile gamers.

In 2021, about 2.8 billion of the world's 3 billion gamers will be mobile gamers. By 2024, we expect the total number of mobile gamers to grow to 3.1 billion, up from 3 billion last year. To put that in perspective, there will be 1.4 billion PC gamers in 2021, a figure that also includes web gamers who are slowly migrating to mobile games. In 2021, the total number of console gamers will reach 871 million.

The number of console gamers is expected to continue to grow through 2024, driven by a growing share of console games in two big markets like China and South Korea. Console games haven't been very strong in either market.

Figure 6 prediction of global game player size [6]

4. Game listed companies

In 2020, the top 100 publicly traded game companies generated $166.3 billion in revenue, a staggering 23% increase from the previous year, and accounted for 94% of the total game market revenue in 2020 (excluding advertising). The top 100 listed companies accounted for 93 percent of total gaming revenue compared to 2019, marking an even stronger year for big game companies in 2020.

Currently, the world's largest gaming company is Tencent, a Chinese tech giant. Tencent is the wholly owned parent of Riot Games and has stakes in a number of leading players in the market. Last year, Tencent earned a cumulative $27.4 billion in gaming revenue, up 34 percent from a year earlier and nearly $10 billion more than No. 2 SONY.

FIG. 7 Top 10 Listed game Companies [6]

Overview of blockchain games

In terms of blockchain games, the first thing that may come to mind is the collection-trading games represented by CryptoKitties in 2017, which combine the "transaction properties" and "unique private properties of assets" of blockchain with game play. On December 9, 2017, the number of active transactions in a single day was more than 14,000, causing a blockage of Ethereum transactions for a time. Since then, more and more chain games have appeared, and the game content is diversified.

As of September 27, 2021, from & NBSP; DappRadar Data on the website shows that a total of 836 game dApps have been deployed online in the whole network. On September 27, the number of game users reached 927,000 and the daily trading volume reached 15.62 million DOLLARS. Since July 2021, the data of online games has grown rapidly, from 80,000 players at the beginning of April to 928,000 in September, and daily transaction volume has increased from around $500,000 at the beginning of April to around $40 million on average, with the highest daily transaction volume exceeding $93 million.

Figure 8 Online chain game users and turnover [DappRadar]

Figure 9 Top 10 by volume in the last 30 days [DappRadar]

Figure 10 Top 10 users by volume in the last 30 days [DappRadar]

According to & have spent Nansen According to the release, the development of blockchain games can be roughly divided into four stages.

Figure 11. Development stages of blockchain games [2]

Stage 1: Innovative NFTs mini-games and nurturing-type mini-games dominate the market. The game attributes are not strong, but it opens the market of chain games.

The second stage: To Play the To Earn and NFTs as main window and properties of end and mobile game, this kind of chain have a certain game properties, compared with the traditional gameplay is insufficient, development difficulty and cycle is shorter, more important value of their assets and not pay attention To Play, because of its short development cycle, the good and bad are intermingled of many small game quickly seize market.

Stage 3: On the basis of the second stage, higher-quality game products started to be developed almost at the same time. Independent game teams with block chain as the main background also joined, but compared with the second stage, more solo game teams and members joined, and the overall game quality was greatly improved. A small number of traditional game players with a curious mentality are attracted by relatively high quality games and join the group of players who play chain games, and chain games are gradually coming into the public eye.

Stage 4: With the entry of aaa game manufacturers with higher quality, they will either develop new high-quality chain games or add blockchain technology or elements To their original ecological chains. NFTs and Play To Earn will become the normal attributes of games.

At present, the chain game market is between the second stage and the third stage, and many AAA manufacturers are also making attempts in this aspect. However, there are few mature products in the chain game market at present, and the main products are Play To Earn end games, and the game quality is uneven, and the overall quality is not ideal. At present, thousands of players have entered the chain game market, with the continuous participation of players, the quality of the game will be more and more high.

At the same time the original game players are willing to pay for the games and content, this part of the players are more likely to accept to swim P2E logic, in the future with the development of the block chain technology and popularization, the more traditional game companies to join, bring a variety of high quality games at the same time also can bring more market players focus on traditional block chain. From an optimistic perspective, the professional development of chain games and the entry of AAA game manufacturers will bring a large number of fresh blood to the blockchain, and we expect to see games become a bridge connecting centralization and decentralization.

GameFi mode

According to the public information on the network, MixMarvel Mary Ma, chief strategy officer, first proposed the concept of GameFi, namely Game Finance, in her speech at the Wuzhen Summit in the second half of 2019. Generally speaking, GameFi=DeFi+NFT+Game, that is, DeFi and NFT pledge are introduced in Game, and players' assets are converted into in-game assets or token assets to improve players' income through liquidity mining.

GameFi refers to the presentation of decentralized financial products in the form of games, gamification of DeFi rules and NFT of game item derivatives. One of the most obvious features is that the user's assets become equipment or tools in the DeFi game, and in turn, the user can earn revenue or rewards for playing the game. DeFi is still GameFi's core, NFT is a necessary means of decentralization, and games are GameFi's shell. With the popularity of Axie Infinity, GameFi's new economic model of Play To Earn was born.

The majority of DeFi gameplay currently consists of role-playing, virtual space, nurturance combat, and multiplayer construction. Compared with the previous mobile mining mode, GameFi project is more interactive, experiential and immersive with users, as well as more interesting. For example, many games use NFT pets for breeding, improve skills with NFT equipment, pawn NFT for profits, or introduce PK battle mode. Participate in battles, complete missions, and allow users to make money while playing.

1. Play To Earn mode

Play To Earn is essentially a business model powered by blockchain technology that allows players To recharge and Play games To gain in-game assets or token ownership. Compared To Free To Play, Play To Enjoy and other models, most of the revenue from Play To Earn games no longer goes To large, centralized game companies, but To good players. By participating in the in-game economy, players can create value for other players and developers. In turn, players are rewarded with in-game assets. These digital assets can be any crypto asset whose rights are validated on the blockchain. P2E is more focused on maximizing player engagement than profit.

In fact, P2E's business model has a long history in traditional games, some of which have a group of players making money by selling equipment or equipment. In blockchain games, this model is taken to the next level, where players can earn real money by playing games with cryptocurrency-based assets (NFTs). By actively participating in these virtual economies, players can earn rewards, such as in-game assets and tokens, which can then be traded or sold on the open market.

Blockchain technology, which gives players ownership of in-game assets and allows them to increase their value by actively playing the game, is a key component of the game's P2E model. Most of the revenue from P2E games no longer goes to the big, centralized game companies, but to the best players. By participating in the in-game economy, players are creating value for other players and developers. In turn, they are rewarded with in-game assets. These digital assets can be any crypto asset that has rights on the blockchain, which is why the P2E model is a good fit for blockchain games.

The Play To Earn model for linked games is an important shift in the gaming world, as traditional in-game asset transactions are confined To the game ecosystem, making it difficult for players To trade or sell their digital assets outside of the platform.

Some features of P2E mode:

-Partially solved the problem of early drainage by using DeFi Farming. Some players will be drawn to the game because of the revenue, or some people will be drawn to the game because of the revenue (which may or may not translate to players) who are not originally players.

- Gaming is not purely a financial gamble. NFT makes Farming itself not a liquidity problem, but the premise is that the games are playable and the mechanics attract a steady stream of players. NFT would be meaningless if players kept dropping off.

- Farming revenue helps increase player retention in games in an attempt to address the problem of over-squeezing players in F2P games.

- The ultimate goal of most P2E is to achieve DAO governance, allowing the community (player guilds) to participate in governance, voting and revenue distribution.

2. Game guild

Analysis of the popularity of Axie Infinity, the YGG game association behind it has contributed greatly, providing the possibility for Axie Infinity to capture more users. So what kind of role does the chain game association play and what kind of role does it play? Not only does it help players enter the chain game market, but the broader purpose of game guilds is to promote the development of DeFi and DAOs, which act as no-entry funds.

DeFi is known to offer financial services to people without bank accounts, but only if the user has money in hand. For example, a user needs to have money in his address to access the lending market and get a loan. Of course, Aave The unsecured loan can provide financial services for users who lack funds, but the complexity of credit authorization is easy for users to be discouraged, and some agreements need to provide credit endorsement in the centralized financial market.

Gaming unions, by contrast, offer the advantage of not only lowering barriers to entry into financial markets, but also acting as an open-ended fund for those without credit ratings or savings and who have lost their jobs to the pandemic. There is no need to go through anyone's approval before entering the fund, there is no investment threshold, and people can earn money just by investing their time. Arguably, the gaming equivalent of an open-end fund has introduced more people to cryptocurrencies and provided the first cash for them to enter the market.

The relationship between game guilds and linked game projects is complementary. Good guilds can drive new users into the linked game and cryptocurrency market, while innovative and profitable games can help increase guild membership and increase guild revenue. Based on this, the scale of the chain game market will gradually expand, and the assets in the game will also infiltrate the DeFi market, providing more collateral for the loan agreement, enriching the asset class and promoting the integration of NFT and DeFi.

In addition to the impact on DeFi and chain games, game associations will also affect the DAO, which has not made much waves in the cryptocurrency market, but can not be ignored. DAO allows like-minded individuals to allocate resources and make decisions in a secure way to pursue common goals. In simple terms, the DAO's rules are encoded on the blockchain and kept running through smart contracts that are not controlled by any centralized organization. The profit-making of game associations makes the development of DAO, a new social organization, more imaginative and makes the relationship between DAO members and DAO itself closer.

3. Economic model

FIG. 12 GameFi economic Model [7]

Typical cases and ecological data

As mentioned above, there are currently more than 800 dApps for chain games in the whole network, among which Axie Inifinity is a phenomenon-level chain game. The details of Axie Infinity are mainly introduced below, and other projects are only briefly introduced here.

1, Axie Infinity

Axie Infinity is a decentralized turn-based strategy game built on the Ethereum blockchain, with the development of its own Ethereum side chain Ronin. By moving the primary operation from Ethereum to the app chain, the cost of user usage is reduced by several orders of magnitude; Faster response speed; And Ronin's wallet integrates with a payment gateway, significantly lowering the barrier to entry.

In the third quarter of 2021, the product's revenue exceeded 780 million US dollars, ranking in the top tier of single game revenue globally. In August, the single-day revenue exceeded Tencent's Honor of Kings. The current gameplay is based on Ethereum. Players control the NFT elf "Axie" in the game to fight, breed and other activities. At the same time, they can make actual economic gains by trading SLP coins in the game or selling "Axie" in Ethereum. By building a complete "buy" Axie in Ethereum, start in-game activities, fight, etc., get SLP coins, use SLP coins in turn to upgrade "Axie" or sell SLP coins, and sell "Axie" players to enter and exit the game mode. Combined with off-game corporate tokens AXS coins, upcoming decentralized exchanges, and community mutual funds, Axie Infinity became the first game built on NFT to generate significant revenue.

Table 1 Axie Gameplay [7]

Axie Infinit was developed by Vietnamese team Sky Mavis, a blockchain gaming startup whose games are built on the Ethereum blockchain. As of September, Sky Mavis issued digital currency AXS worth more than $30 billion, and the company now owns 21% of total currency issuance. Its core game, Axie Infinity, made $334 million in revenue between July 25 and August 24, according to TokenTerminal and Sensortower. Topping Honor of Kings' $231 million in the same period.

Since Q1 2021, Axie Infinity's revenue figures and active players have grown rapidly. In February 2021, Axie's monthly revenue was $240,000, and between August 1 and August 26 it was $308 million, with a monthly compound growth rate of over 309% and 315,000 MAUs in August. The price of AXS, which represents Axie Infinity's equity, increased from $0.9 in February 2021 to $74.29 on September 30. According to Dappradar, Axie was the largest grossing blockchain game in July, beating out the second largest by $80 million. The total volume of transactions was nine times that of the second place, and the figures for August are expanding further.

FIG. 13 Axie historical data [DappRadar]

Axie ecological

The Axie ecosystem is mainly composed of Axie, AXS coins, SLP coins, game players and external investors.

FIG. 14 Axie ecology [8]

Digital assets in Axie

Table 2 Digital assets in Axie [7]

AXS is the digital currency issued by Sky Mavis, which represents the entire Axie Game Universe and constitutes the basic cargo of interaction between Axie players. The ecosystem represented by AXS coins consists of players (AXS holders), Axie games, and Axie community mutual funds. Players earn AXS coins by trading and playing Axie, and they also spend AXS coins by entering the game and raising pets. Outside of the game, players who own AXS coins can "buy into" mutual funds and, based on their shares, gain voting rights on game decisions, as well as the revenue provided by the game.

Figure 15 AXS use case [9]

Figure 16 price action of AXS [DappRadar]

Figure 17 SLP price trend [DappRadar]

Axie Infinity is a decentralized turn-based strategy game based on Ethereum. Players control THE NFT elf Axie to fight and reproduce. Most of the game process does not need to interact with blockchain, which ensures the most important gameplay for the game.

Figure 18 Axie game idea [8]

The Axie Infinity system is currently divided into four sections, namely, growth system, trading market, combat system and home system.

Growth system:

Players can pair up two Axie to create new ones, whose attributes are randomly determined by the genes of their parents. And there are only seven breeding opportunities per Axie, which can also be a factor in the sale price. Each Axie has four basic attributes, which determine its attributes in combat. In addition, each Axie is made up of six parts that determine which skill cards can be used.

These sites are controlled by three genes, namely dominant gene D, recessive gene R1 and subrecessive gene R2. In the spawn system, SLP tokens actually form a closed loop, SLP has output channels, consumption channels, and can be traded. This provides a channel for ordinary users to earn income, because the birth of any new Axie needs to consume SLP, and the more times of breeding, the greater the consumption. For Axie with good genes, the consumption in later reproduction will be considerable. The continuous birth of new Axie provides a rich selection of Axie for new players to enter, and Axie with good attributes are generally not cheap, which provides motivation for the continuous birth of new Axie, and also provides motivation for the continuous consumption of SLP.

Trading system:

Official statistics show that in August, the market of Axie Infinity was traded 1.7 million times within 30 days, with a total transaction volume of 1.04 billion DOLLARS, far exceeding all other similar games, and the average price of each Axie reached 611 dollars. Axie Infinity collects a 4.25% tax on the transaction, which is the game's second largest source of revenue. Game participants can directly purchase Axie in the official market. Currently, the total number of Axie for sale is 229,443. They can choose different types of Axie through the screening box on the left.

In comparison to other blockchain games, Axie Infinity's complete and balanced economy is his biggest highlight. How to use virtual currency to realize a complete virtual economy has always been one of the important problems on the way to the meta-universe. Axie Infinity offers an answer to this question through dynamic economic balancing and the introduction of community mutual funds to decentralize game sovereignty. According to statistics, the GROWTH rate of SLP in recent 3 months was 378%, far lower than the growth rate of gamers 674% year on year and transaction volume 1243% year on year. The current total SLP stock is 950 million pieces, valued at $150 million.

Combat system:

Axie Infinity combat system is the scene with the highest frequency for players, which is also the main source of revenue in the game. You need to download the client to participate, including desktop, l0S and Android. The Axie players own are the colorful pokemon in the game, each with a different kind of skill and can be changed through cultivation. The combat style emphasizes energy, circular card sets, highly coordinated Combo, and the common combination skills and Chain in card games, which are constantly updated with the types and contents of cards each season. The battle deck consists of three Axie's 12 skill cards * 2.

The starting hand has 6 cards and 3 energy, then each turn draws 3 cards and adds 2 energy. Compared with the current card games on the market, Axie is more similar to Netease's Baiwen brand. The difference lies in that it weakens the random elements in combat and endows more randomness to the development part. For the average player, the game's most important revenue comes from daily quests. Axie is rewarded with SLP tokens in combat. SLP is also a must for Axie reproduction. If you don't want to breed, you can sell it for dollars through Uniswap.

According to the New York Times, in Southeast Asian countries, some families can make ends meet with the SLP they earn. The process of earning SLP by fighting and then selling it in the market has spawned assembly line studios in places like the Philippines and Vietnam.

Home system:

Home systems are a must in many blockchain games, because the amount of land is basically bound to be finite, and in keeping with the basic logic of the chain, it's easy to label each piece of land in NFT form. By the end of 2020, proceeds from land sales were Axie Infinity's largest source of revenue in early 19-21. Each piece of home generates various resources, which are of great help to improve users' sense of acquisition in participating in the game and improve various attributes (such as Axie upgrade). Daily participation in home construction can also earn fixed SLP rebates, which is also the basic logic for users to purchase land.

Axie's economic model

FIG. 19 Axie economic model [7]

YGG Game Guild

YGG is a Philippine game association (also known as Gold Guild) founded in August 2020. Its founder Gabby is a veteran player of Axie Infinity and has nearly 18 years of experience in mobile game development. He founded mobile game development studio Attitude Games. Last year, Gabby saw how Axie Infinity was helping Filipino gamers earn their living expenses during the pandemic and economic downturn. She decided to start YGG, a gaming association, to help new users with no experience in online games enter the market.

Lending out the three Axies required to enter the game and training new players are the root causes of YGG's promotion of Axie Infinity. The former enables players to enter the game at almost zero cost, while the latter helps players reduce the learning threshold and time cost. These measures are called scholarship program by YGG. Under this system, the revenue generated by game revenue is held by the player, the community manager (who trains players), and the guild at 70%, 20%, and 10%, respectively.

According to statistics, Gamers in the Philippines can earn up to $500 a month from Axie Infinity, which is two to three times the local minimum wage, providing a financial boost to many unemployed and unemployed college students. The SLP can actually be exchanged for Philippine pesos, so people spend their time playing games and collecting game rewards, as well as converting them into cash.

July 28, 2021, YGG at & NBSP; MISO The platform issues native tokens, allowing holders to participate in the governance and decision-making of the guild in the future, marking the guild's transformation to DAO. After issuing the tokens, the game guild YGG became a for-profit DAO with global ownership, similar to an on-chain company. Community managers in guilds are corporate employees who benefit from training new players and generate revenue for guilds. As the number of guild members and players increases, the earning power of the entire guild increases, driving up the value of guild tokens. When guild tokens rise in value, token holders, including members and players, benefit.

2, Alien Worlds

Alien Worlds is an integrated chain game on WAX that combines pledge, mining, and combat with DeFi, NFT, and the metasverse. Alien Worlds creates a virtual world in 2055 where players can explore, mine, and battle through six planets, each of which is a decentralized autonomous organization (DAO) interstellar planet that players can colonize through combat. Earn Trilium (TLM) by mining in the game, and every time you mine, you get a chance to find NFT. After entering the game, players will first receive the system's own free mining tool, the token Trilium can be used to pledge the game's six planets.

In addition, you can sign up as a candidate for planet Trustee, and once successful, you can rule the planet. NFT cards will continue to offer more and more different ways of playing over time, including upgrading cards by "shining" and fighting in fighting games. Unlike the DeFi project's mobile mining, you don't need to pledge tokens to participate in Alien Worlds' mining, just sign up for an account.

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

Figure 20 Alien Worlds [https://alienworlds.io/]

Figure 21 History of Alien Worlds [Dappradar]

Game strategy:

1. Choose a character image

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

Figure 22 Avastar [https://alienworlds.io/]

The characters in the game are called avatars, and players can choose their favorite Avastar for NFT mining. Characters include humans, grey men, reptiles, little green men, Norsemen, and robots. After selecting Avatar, players can set the user name to participate in the game.

2. Choose land

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

Figure 23 Land [https://alienworlds.io/]

Land is an important part of Alien Worlds and the basis for its revenue. Players can choose which planet they want to camp on, and there are currently six to choose from. After selecting a planet, players can either mine their own land or go to another player's land. Thus, the player can be both a miner and a landlord. Owning land allows other players to mine their land, and by default the landowner gets 20% of the mining bonus. Landowners can increase this ratio if they think their land is valuable.

3. Select mining tools

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

FIG. 24 Mining tools [https://alienworlds.io/]

After selecting the land to mine, the player needs to choose the right mining tool. Mining rewards players with TLM tokens as well as NFT, so there are three factors to consider when choosing a tool: mining efficiency, charging time, and the chance of earning NFT.

4. Players vs. players

Thunderdome Battle is a feature being developed by Alien Worlds, where pawns and weapons from NFT items can be used. First, players need to choose pawns and weapons. Each pawns has different attack, defense and combat characteristics, and they need to be equipped with different weapons. Players need to pick the strongest character in their party to fight against other players. Once equipped, players need to choose the planets to fight on, and each planet has a different ability bonus for the battle. The player can also select items and give instructions. Instructions include: invade, defend, attack the strongest, attack the weakest.

Game tokens:

The TLM (Trilium) is Alien Worlds' native functional token, which can be used for planet governance, mortgage mining, in-game currency, in-game incentives, and NFT purchases. Players can earn TLM by mining, and there is a certain chance that they will find NFT each time they mine. Players can also convert NFT and TLM earned into legal tender. Alien Worlds' DAO, meanwhile, uses collateral and a wealth of features to dominate the planet.

FIG. 25 TLM historical data [CoinMarketCap]

3, Splinterlands

Splinterlands is a card + combat strategy game. As a chain game that has been running on Hive (a branch of the original Steem chain) for 3 years, its game mechanics, quality graphics, and variety of gameplay have won many loyal players, and there will be more room for imagination in the later supplemented NFT, land sales and other gameplay.

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

Figure 26 Splinterlands [https://splinterlands.com/]

FIG. 27 Splinterlands historical data [Dappradar]

Game strategy:

cardBefore starting the game, Splinterlands will lend you a set of entry cards that you can use in combat to learn the basics of cards. To get your own line of playable NFT cards, you need to pay $10 for the Summoner's spell book. This mode prevents the card from depreciating. There are two types of cards: summoners and monsters.

fighting: Challenge other players, accessed from the battle button at the top, in two modes: match or rank. Each battle contains special information about the opponent, mana, and other special information, ranging from limiting the team to a shard or flying monster combat, to selecting a formation for the team.

Economic model (play-to-earn) :

Ranking climb board.All players in Splinterlands belong to an alliance and have a level within it. The higher up you go, the more rewards you get. You get more rewards if you play against an opponent with a higher rating.

Season awards.Splinterlands runs seasonally and usually takes about 15 days. Get the most out of the top leagues, so use your time before distributing the rewards.

Earn revenue from marketing sales. Officials have established rules of sale: gold cards and higher rarity equal higher value. There are other nuances, though. Let's take a look at the analysis of market cards.

Asset types in the game:

The card. No extra notes here, choose some to enhance your card set, keep duplicates to upgrade and sell or convert the rest to DEC. It should be noted that the rewards cards are separate editions, so some of them may appreciate in value later.

potion. Use these to increase the drop rate of rare cards, get more loot boxes, or get mysterious prizes.

Dark Energy Crystal (DEC).Tradeable tokens are earned by winning ranked battles, unlocking loot boxes, and selling cards in the market. It mainly buys all kinds of card packs, land, items, and personal rankings in the game, with a total circulation of more than 1 trillion.

Governance token SPS. In order to promote the long-term sustainable development of the game, the authorities will invest a large number of SPS to reward players in the initial stage of the game. At the initial stage, 37.5 million SPS will be released per month. This part of the in-game reward will last for 65 months, decreasing by 1% per month, which means that players can earn a lot of SPS through the game.

FIG. 28 Historical data of SPS coin price [CoinMarketCap]

4, Illuvium

Illuvium: Ethereum-based RPG and NFT collector game. The core mechanic of the game is to capture beasts by leveling up and casting them into NFT, which are then sold on the market for profit. The game is not yet available and is expected to be released in late Q3 or Q4. Immutable Boot on X.

Background setting:

Illuvium sci-fi game for background, set all players are a survivors of the crash on the alien world of starship, the player's task is to travel to different parts of the world, looking for the beast (Illuvial) and the war, the winner can capture the beast, improve grades, and then into a more dangerous areas or to war with the other players, Win a rarer beast and cast it into NFT. However, if the player fails, he loses his beast or NFT.

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

Figure 29 Illuvium

Core mechanics:

The alien world Illuvium is home to more than 100 beasts of varying attack power and rarity. However, the attack power of each beast is related to its rarity, and the rarer the beast, the more powerful it is. Each beast has two basic attributes: affinity and class.

For anyone new to the game, you can get a few pieces for free through the game's missions, use them to capture beast cubs, and then upgrade your beast through constant combat. For those who don't want to take the time to join the battle, you can use ETH to purchase equipment in-game, which is sent directly to the Illuvium Vault.

Adventure: Players explore the various regions of the Illuvium game in an attempt to find and capture the beasts.

Competitive battles: Players can find other players to fight, and the system will randomly match them with opponents with similar skills. In addition, unrelated players can watch matches and place bets on winners and losers.

The game will launch an online marketplace called IlluviDEX where players can buy and sell all the NFT in the game. The higher the level, the more scarce the beast, the player needs to capture and mold it into NFT, which can be sold at a higher price in the market.

According to its current setup, the core appeal of the game is the beast's scarcity, its corresponding NFT scarcity and the market value behind it. The type and number of rare beasts in the game determine the rarity of the beast, and the market recognition behind the NFT generated by the beast is measured by the player's Fomo.

Illuvium's token is ILV:

FIG. 30 ILV price Trend [Nomics]

Figure 31 ILV distribution [Nomics]

5, Decentraland

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

Figure 32 Decentraland [https://twitter.com/decentraland]

Decentraland is the first Ethereum-based virtual world where users can create, experiment and make money from their content and/or applications.

Decentraland Decentraland allows users to explore Decentraland can also purchase land via the Ethereum blockchain platform, become the owner of the land, and determine the content published on the land, such as 3D scenes, game systems and so on, creating a unique usage experience.

By simply interacting with a digital wallet such as Metamask, users can enter the game, freely create a personal image on Decentraland, socialise with other users, participate in entertainment events such as concerts or art shows and build houses on digital land.

Economy: There are two main types of digital assets in the project: territories and MANA tokens. Territories are irreplaceable and transferable NFT stored in ethereum smart contracts, and territory ownership is an identity authentication system.

MANA is an ERC20 token that can be used to purchase land in the game as well as virtual game goods and services. A piece of land can be purchased for 1000 MANA (about $1000 at the time). Users can resell the land, and the price of the land will vary depending on the location and the degree of construction.

Similarly, users have complete control over their territory and can create unique user experience on the territory. They can also operate by developing platform content and program experience to obtain MANA for their content and create profits.

FIG. 33 Price trend of MANA [Nomics]

Figure 34 MANA release [Nomics]

6, the Sandbox

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

Figure 35 SandBox [https://twitter.com/thesandboxgame]

Main scene:The core mechanic of Sandbox is play-to-earn Sandbox games. Sandbox games are simply: the game itself has no storyline, no single end point, and the player experiences the fun of the game through exploration and construction. Like Roblox, Sandbox is focused on building games within games, making it a world of entertainment.

Economic system:In & have spent The Sandbox In this virtual world, there are three main categories of assets: LAND, token SAND, and NFT assets (characters, props, etc.), which constitute The economic system of The Sandbox.

LAND LAND:There are 166,464(408 * 408) pieces of LAND in The Sandbox, and each piece of LAND (1 * 1) is an ERC721 token. Players can purchase the land use tool Game Maker to develop and publish their own, or rent it to other Game developers for rent. Land prices around ESTATE in well-known IP are generally high. Players can play in the Sandbox's Market and Opensea Such trading platform to buy.

Third party developers must own the land (or buy or rent it) to develop games on it, entertain users or do tasks to earn money, and thus generate revenue. If the game really doesn't make money, third-party developers can sell or lease their land for other developers to use.

Platform token SAND:Sandbox's platform token is SAND, an ERC20 token, with a total supply of 3 billion and a current circulation of 705 million (circulation rate of around 23%). SAND's main functions include trading, governance and pledge. 5% of the transaction volume (transaction fee) carried out with SAND tokens will be allocated to the pledge pool as a reward for token holders who pledge SAND tokens, and 50% will be given to the foundation. The foundation provides grants to incentivize high-quality content and game production on the platform.

FIG. 36 Price Trend of SAND [Nomics]

FIG. 37 Issuance of SAND [Nomics]

7. BigTime (in development)

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

Figure 38 BigTime [https://bigtime.gg/]

Big Time is a multiplayer online action role-playing game that allows players to create their own characters, choose races and skills, explore the map, and engage in social interactions such as platoons, battles, production, and trading.

BigTime is a triple-A game developed by a team of developers from Fortnite, Call of Duty, Gears of War, Medal of Honor, God of War, Warcraft, etc. The CEO is the co-founder of Decentraland. At present, the way to participate in this game is the NFT of its internal test qualification.

Big Time will be using the Unreal engine, and according to the official Discord, Big Time's first open beta to players is expected to launch in the first quarter of 2022.

8, Ember Sword (Under development)

Ember Sword is a blockchain-based multiplayer online role-playing game (MMORPG) developed by Danish game developer Bright Star in 2018 to solve the problem of traditional MMORPGs not being able to monetilate rare items. We are committed to building a community driven gaming ecosystem that allows players to earn money through gaming activities.

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

Figure 39 Ember Sword [https://embersword.com/]

Game players can create a character and select a country, you can use the weapon of choice adventures into the mysterious world, by defeating monsters and other players to prove its value in the combat systems, or as a goods and precious goods looking, explore the game world of peace, or make yourself a refiner and craftsmen to participate in the games.

According to the insider, Ember Sword is currently in pre-beta and is testing the functionality of the game engine internally, as well as various network features, with plans for an alpha of the engine technology to open to the community later this year, with more gameplay focused alpha coming in 2022. In early 2022, Ember Sword will open Solarwood's capital, the first country it plans to release for alpha testing. For the rest of 2022, we will add the rest of Solarwood. Other countries will follow the same process, which is currently scheduled for release in 2023 and beyond.

9 Roblox.

Roblox is not a chain game, but it is introduced here mainly because it builds a new pattern, create-to-earn. Roblox is a sandbox gaming platform aimed at kids and teens that allows kids to create 3D worlds and games. At the heart of the platform is its simulation engine that showcases a virtual world similar to Lego.

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

Figure 40 Roblox [10]

According to the filing, the Roblox story began in 1989, when Roblox founders David Baszucki and Erik Cassel wrote a 2D simulation Physics lab called Interactive Physics, This lab will then influence the approach that underlies Roblox. Students around the world are using "interactive physics" to learn how two cars crash, or how to build destructible houses.

In Roblox's entirely user-generated 3D digital world, they play together, learn, communicate, explore and expand their friendships. Roblox calls this emerging category "human shared experience." The Roblox platform is powered by user-generated content, and from games, entertainment, social media and even toys. The underlying Roblox platform has three elements:

1. Roblox client-side 3D applications for users;

2. Roblox Studio toolset that allows developers and creators to build, publish, and run 3D content;

3. Roblox cloud services and infrastructure to power the platform. With these three elements, Roblox is essentially a platform for developers and users: providing developers with useful, easy-to-use authoring tools that help them create interesting content and scenarios that users can experience and, through word of mouth and publicity, attract more people to participate.

Roblox has a stable economy that covers the creation and consumption of content. Roblox's economy is built on a currency called Robux, which is available for purchase through Roblox customers and the Roblox website. Roblox works with a variety of payment methods and gift card issuers, including Amazon, Apple, ePay, PayPal, and more.

Figure 41. Roblox economic system [11]

Some of Roblox's best games include Adopt Me, Royale High, Welcome to Bloxburg, Work at a Pizza Place, and more. Roblox makes money from subscriptions, paid games and in-game virtual goods.

On March 10, 2021, Roblox made its debut on the New York Stock Exchange, skyrocketing as much as 65% on the day, with a market value of more than $40 billion on its first day of trading.

欧易 OKEx 研究院：全景式解读区块链游戏与 GameFi

Figure 42 Roblox stock price [Oriental Fortune]

Summary and Prospect

With the development of 3D digital content manufacturing technologies such as Unity and Unreal, as well as the maturity of VR and AR hardware and software technologies, games are expected to become one of the main forms of blockchain applications. Game industry in a more subtle visual effect, the construction of the virtual world, automatic generation, users' creation, the social mode and so on various aspects of positive attempt, and there are already Roblox user creation and social platforms, such as the industry is expected to open in the world, UGC platform, social games, to make continuous innovation and evolution on virtual currency such as the category, In the future, a large number of AAA level chain games will be born, and the game types will be further expanded to RPG, competitive and other fields to meet players' higher game experience.

The emergence of the game association with a new model brings new business changes to the chain game industry. Traditional game associations focus more on publicity and communication of game playing experience. New game associations promote the development of game ecology by providing necessary conditions for players who do not have the threshold of chain game, providing professional training for initial players, and sharing the final income from players.

The current Play To Earn model provides strong support for the development of chain games. Decentraland and Roblox can show how Play To Earn can go on. Create To Earn model that creates new services and economic benefits for players through virtual creation. The monetization effect is mainly achieved through creators providing value-added services To players, namely Create To Earn. By creating the game world, creating skins and props to sell to players, the creators can enhance the game experience of players. This allowed creators to create virtual games and make real money, and sandbox games began to move to UGC.

Under economic incentives, user creation is stimulated, and this player-led creation brings immersive experience and social scenes, which has already seen the embryonic form of new growth points in the subsequent blockchain ecology.

(Note: This article does not represent any investment advice)