Axie Infinity cannot hold the peak, mistaking selling goods as a way out

Axie Infinity Falls Short of Peaking, Confusing Sales with an Escape Plan

Author: Wood Mu

After Pudgy Penguin, Doodles, and other blue-chip NFT pioneers ventured into peripheral businesses, the “pioneer” of Web3 gaming, Axie Infinity, has also started selling merchandise.

Recently, Axie launched an online store, commercializing 4877 NFTs from the game into merchandise such as dolls, t-shirts, hoodies, and cartoon stickers for sale. In order to boost sales, Axie even gifted a free Mystic Axie NFT to the first 5000 buyers.

One of the directions that Web3 brands are currently striving for is to explore incremental markets. The combination of NFTs and Web3 games that produce NFTs is becoming one of the ways to expand influence and generate economic benefits.

• Bitcoin developers spark a wave of controversy over the disabling of inscriptions, a multi-party game of interests.
• ETH rebounds to $2200, how do cryptocurrency practitioners view the future market trend?
• In-Depth Analysis How Tether is Used to Evade US Sanctions?

Unfortunately, after the release of Axie merchandise, there was no significant increase in the trading volume of in-game NFTs or the number of community members. This Web3 game IP seems to have not truly reached the Web2 audience. On the other hand, the return of Axie Classic, the classic version of the game, not only brought activity but also drove up the price of the game token AXS.

It is evident that for Web3 games to emerge from the slump, they need to return to the essence of the game itself.

Selling Stuffed Animals Instead of Non-Fungible Tokens (NFTs)

If you are familiar with the concepts of Web3 games or GameFi, then you must have heard of Axie Infinity, affectionately called “A-Xie” in the Chinese-speaking community.

This cute and adorable TGC (Trading Card Game) was used by millions of Filipinos during the pandemic to supplement their income. The “Play To Earn” model of playing games to make money also became the mainstream model of Web3 games because of Axie.

Axie Infinity, created by Sky Mavis, has two key features: players can purchase NFT characters in the game, complete tasks, battle, upgrade their NFT characters, or earn in-game tokens AXS by selling AXS or NFTs.

This model even gave rise to the business of renting game characters, and gaming communities dedicated to gold farming appeared. They specifically rent characters to players. The longer-tail derivative application is pledging game NFTs to borrow and lend cryptocurrencies such as USDT, BTC, ETH, and other encrypted assets.

As a result, Game has acquired the characteristics of Finance, and the concept of GameFi was born.

At its peak in 2021, Axie’s highest daily revenue reached an astounding $17.5 million, with over 1.5 million daily active users (DAU), and total revenue of $300 million in 30 days, surpassing the profitability of most traditional games.

However, Axie didn’t stay at the peak for too long, experiencing a lack of growth after just over six months. Any subsequent marketing activities failed to bring it back to its peak. According to Crypto Slam data, by the end of November 2023, Axie’s monthly sales revenue was only $28,000. DappRadar data also shows that the floor price and market value of Axie Infinity NFTs have plummeted as well.

Axie NFT's floor price and market value are no longer what they used to be.

Axie has proven that blockchain games can reach millions of daily active users (DAU), and the next challenge is how to break through to tens of millions of DAU. Some industry insiders believe that this requires Web3 games to influence players of traditional Web2 games.

In late November of this year, Axie started doing just that by launching an online store, selling badges with the project’s logo, shirts, hats, accessories for Axie characters, Squishmallow-style plush toys, and $300 figurines, all of which can be purchased with both cryptocurrencies and fiat currencies.

In addition to merchandise sales, Axie also encourages the UGC (User Generated Content) ecosystem by unlocking the licensing restrictions for 4,877 NFTs from the Mystic and Origin series. Users who own these NFTs can sell their own designed goods in the store. Furthermore, they can use their NFT characters to create Axie-themed businesses such as cafes, restaurants, and comics.

An even more powerful move is the collaboration between Axie Infinity and the Philippine ride-hailing app Grab, where they introduced a user points reward program to tap into the distribution channel of mainstream Web2 applications. Within the Grab app, users can access Axie’s online store to purchase merchandise.

Axie provides an online store entrance on Grab

In addition, Axie has partnered with game development studios such as Tribes Studio, Bali Games, Directive Games, and Bowled.io, allowing some games to utilize the Axie IP (Intellectual Property) to create their own games.

It is clear that Axie is actively expanding the boundaries of Web3 game IPs and strengthening its connection with the Web2 world in order to increase brand awareness and attract new traffic.

Improving Growth through IP Innovation

So, have these actions by Axie resulted in growth for the platform?

Data shows that since the launch of the online store, there hasn’t been a significant increase in the community’s size, indicating that it hasn’t attracted many Web2 users. In fact, out of the 11.9 million Axie character NFTs, less than 5,000 have had their commercial restrictions lifted. According to Axie’s market data, this accounts for only 0.04% of all Axie NFTs.

Looking at Axie’s recent dynamics over the past six months, it becomes clear that the real driver of daily active user growth is the game itself.

On November 22nd, right before Axie launched its online store, the game’s classic series, Axie Classic, made a comeback. It enhanced the gaming experience by allowing AXP characters to inherit traits, increasing the AXS reward pool, and introducing the ultimate prize, the “Mystic Axe.” Additionally, Axie reduced the entry barrier for the arena, removing the game’s “energy” requirement and allowing players to play endlessly.

Axie Classic Restart

The revamp of Axie Classic has ignited the enthusiasm of existing players and attracted the interest of new players. In just a few days, Axie Classic has reached 100,000 weekly active users, and the price of AXS has been continuously rising.

Compared to launching NFT physical goods, the actions focused on improving gameplay have had a more immediate impact on Axie’s data. Axie has tried this approach before and tasted the benefits.

On September 6th this year, the gold farming community Yield Guild Games (YGG) successfully completed the first super task event set up for Axie Infinity on the Ronin network, receiving a reward of 112,000 AXS tokens (approximately $472,000 USD). At that time, this wave of stimulation brought new vitality to Axie.

All of this indicates that Web3 game IPs have a long way to go before breaking through their own circles, and marketing activities are still stirring up the existing market. Acquiring new Web2 users is much harder than reaching out to existing Web3 users.

No one denies that IP peripherals can introduce more people to a brand, but you must first remove the “popular” crown from your field. For Web3 games, IP is not a lifeline, at best it is just icing on the cake, and timing is also crucial.

During the Golden Age of American animation, Mickey Mouse’s IP Club gained one million members in less than four years. This is because Disney first used animated stories to successfully enter the audience market with the Mickey Mouse IP, and then brought this IP into comics and video games. By 2010, 40% of Disney’s $1 billion in consumer product revenue came from Mickey Mouse merchandise.

The well-known NFT “Bored Ape” illustrates the importance of timing for an IP. Yuga Labs quickly promoted collaborations between the Bored Ape IP and traditional brands after seeing its exposure in the Web2 market, attracting marketing departments of companies including China’s Li Ning, further expanding the influence of the Bored Ape IP.

If Axie had launched a merchandise store during its initial popularity, expanding its brand influence, it could have truly become an IP that surpasses Web3 games.

Unfortunately, the timing is no longer there, and everything needs to start over. Nowadays, what really makes Web3 games sticky is the game’s quality, gameplay, and experience, and even the profitability. These factors are more critical than simply offering peripherals. The recently popular Web3 game, BigTime, is an example of this.

Crypto KOL @0xJamesXXX believes that, “Don’t spend all day thinking about IPification and various so-called empowerment rights.” He points out that the most important thing for any NFT community is “people.” A project that has community consensus and can generate value has already defeated 99% of NFT projects.

IP is not a universal formula, and it has also challenged the Web3 game: whether to build products that truly interest Web3 players or to cater to the brand new Web2 users in the traditional way of the internet.

Now, Axie chooses to consider both options, so this IP must wait for the next breakthrough of the game itself.

We will continue to update Blocking; if you have any questions or suggestions, please contact us!