Finding the next Web3 traffic entry point: Casual Games

Written by: Jason, Puzzle Ventures(@0xjasonliu)

Some Thoughts on Web3 Traffic Entry Points

To date, Web3 has attracted a group of tech experts, financial players, venture capital firms, and a small number of speculators into this "wild west." Among them, some are busy trading for arbitrage, some are engaged in technical discussions, and some are focused on grabbing airdrops and free mints, but very few truly enjoy life and find joy in Web3. According to the latest data from tripleA (https://triple-a.io/crypto-ownership-data/), the number of users globally who own at least one cryptocurrency is 320 million, accounting for about 4.2% of the world's total population, a figure that has taken 13 years to reach since the birth of Bitcoin. In contrast, current tech hotspots like ChatGPT, which is also one of the future tech trends in the ABCD (A.I., Blockchain, Cloud computing, Big Data), gained 100 million users in just about two months. Of course, ChatGPT itself is a phenomenal application, but the speed at which it transitioned from professional use to mainstream adoption by ordinary enthusiasts is still astonishing.

Why can't Web3 quickly attract more traffic? There are many subjective and objective reasons. On the objective side, regulatory policies, security, and the complexity of traffic entry points add barriers to entry for Web3. On the subjective side, do current Web3 applications really possess attractiveness? The answer is: "a small part." Once, Stepn gained a cumulative user base of 4 million (wallets) and about 500,000 daily active users a year after its official launch; meanwhile, Opensea has reached 2.3 million active users since its official operation in 2020, becoming the dominant player in the NFT market (notably, Reddit's digital collectibles platform Avatar achieved 3 million active users in just four months).

These phenomenal applications in the Web3 space share a common characteristic: the breaking-the-circle effect. The definition of breaking the circle is the phenomenon where a certain (niche) culture or content flows and shares between different online communities, ultimately reaching mainstream culture. At this stage, the Web3 world is evidently an independent circle concentrated with tech people, finance people, investors, and speculators. Setting aside technical barriers like wallets and regulations, Web3 ultimately needs to resonate with mainstream culture and social activities to break the circle. Stepn deeply integrates with a certain lifestyle habit of the public, while the NFTs sold on Opensea align perfectly with the public's understanding of digital art, and ChatGPT is closely related to people's daily lives (chatting, learning, working). Capturing even one of these small points of resonance can lead to massive adoption, and capturing multiple points may give birth to phenomenal applications. So what are the general popular cultures and social activities? Is it financial trading, speculating on NFTs, or participating in DAO governance? The author believes that the most fundamental and basic social activity for the public is leisure and entertainment.

Therefore, the next traffic entry point for Web3 should be explored from the perspective of breaking the circle and finding resonance.

What are Web3 Casual Games?

From a broad perspective, casual games have developed dice games and board games since the ancient Persian and Egyptian civilizations, serving as an important means of daily leisure and entertainment for both royalty and the masses. From a narrow perspective, casual games refer to games that are easy to pick up, do not involve a large amount of repetitive mental activity in a short time, and have relatively simple rules, characterized by simple core gameplay, light game content, simple visual style, fragmented game time, and high instant entertainment value.

Figure 1

https://www.researchgate.net/publication/234781375Casualgames_discussion

As shown in Figure 1, academia has also discussed the definition of "casual games," suggesting that casual games should not only be defined by their simple gameplay design but also by the attitude of players when playing. In other words, when players of casual games do not play with a leisure attitude but rather with aggressive intentions like grinding for rewards or climbing leaderboards, their gameplay behavior is no longer in a "casual" state. In other words, when a casual game's play-to-earn elements are too heavy, or the rewards from leaderboard mechanisms are too high, it changes the nature of the game.

Thus, we define casual games from two aspects: first, the game's design meets the standards of being simple and easy to play; second, the game's mechanism is designed to guide most people to play with a casual mindset (with a small number of players engaging in leaderboard climbing and grinding within a reasonable range). Narrowing it down to the category of Web3 casual games, these are semi-on-chain or fully on-chain casual games created by integrating decentralized blockchain elements like smart contracts and NFTs. The Web3 casual games here are defined in contrast to the currently popular AAA games, open-world games, and play-to-earn narratives, and their standards cannot be accurately defined until a benchmark product emerges.

So why casual games? We can first look at the classification and status of Web2 casual games. From Figure 2, we can see that the types of casual games are very diverse and not limited to any specific gameplay or theme.

Figure 2

Source: gamerefinery

Among the various types, picking a few themes like trivia, gambling, and sandbox games, one can easily imagine their potential integration with Web3 elements. Notably, two points stand out: the first is that according to Statista (https://www.statista.com/outlook/dmo/app/games/casual-games/worldwide), casual games have the highest penetration rate among all game types, with a cumulative download of 20.78 billion globally as of February 2023, accounting for 78% of total game downloads. The average daily usage time reaches 24.3 minutes, second only to social applications at 55.5 minutes among all app categories. The subset of casual games—hyper-casual games—if analyzed as a separate type, also reaches an average of 7.4 minutes of daily usage. From the data in the Chinese market (Gamma Data), casual games had around 1.6 billion downloads in 2022, accounting for 60% of total game downloads, with an overall user base reaching 520 million. Although these figures may seem sparse in the Web2 realm, and even fall short compared to social media and short video data, they are already sufficient to surpass the million-level user counts of Stepn and Opensea, while Stepn and Opensea significantly outnumber other Web3 applications.

The Significance and Value of Web3 Casual Games

From the overall user volume and penetration rate of Web2, social applications rank highest, followed by general entertainment, with short videos leading in general entertainment and casual games following. So why not penetrate Web3 from the more popular fields of social and short videos? First, let's discuss the first logic—the traffic entry logic. What Web3 currently lacks is an opening to unlock traffic entry, while traffic retention and ecosystem formation are subsequent topics. Social applications emphasize network effects, meaning that once a portion of people use them, more people will be drawn in, forming a positive feedback loop. However, current Web3 social applications, whether Lens Protocol or the recently popular Nostr, have not yet formed a phenomenal traffic-driving effect, remaining largely confined to Web3 communities and the broader Web3 audience. Until these two groups themselves experience explosive growth, social applications will continue to spread only within small circles. Similarly, short videos rely on high-quality content for user retention, but their traffic-driving effect is not strong. Casual games, on the other hand, have the potential for explosive growth in any high-quality casual game, whether Web2 or Web3. In other words, the lifecycle of casual games is high at the beginning and low later, while social and short videos are low at the beginning and high later, making casual games a better traffic-driving tool.

The second logic is that playing casual games is straightforward—it's for leisure and relaxation, with no higher aspirations. In contrast, social and short video applications pursue more complex social activities, such as expanding social circles, monetizing through live streaming, and following celebrities, which fundamentally limits the audience's reach to these applications. In the current creator economy environment, Web3 social applications and short video applications have designed a complete economic model from creator incentives to consumer monetization, while also iterating on value-added features like privacy protection and decentralized data storage. However, all of this is predicated on first migrating traffic over. In the future, even through natural growth, I believe the number of Web3 users will continue to rise, but why not accelerate this process?

Finally, let's clarify the value of Web3 casual games relative to Web3 AAA games. The rapid technological development of Web3 in recent years has gradually gained recognition from capital and the public, but the Web3 AAA game sector still faces mixed reviews. An undeniable fact is that current Web2 AAA games (like Grand Theft Auto V, Cyberpunk 2077, Assassin's Creed, etc.) have been developed over several years based on extremely high computing power and efficient development platforms, while the current Web3 infrastructure needs at least one generation of technological upgrades to reach the same level. For AAA game developers, the current blockchain technology has not yet played a practical empowering role. As AR, VR, and 3D technologies continue to evolve, the thresholds for future game engines and development capabilities will also rise, and Web3 infrastructure needs to catch up more quickly. On the other hand, the AAA game industry is a resource-intensive industry, and in terms of key performance and low latency, Web3 is at a disadvantage. Indeed, the token economy and NFTs created by Web3 can bring higher interactivity and new gameplay to games, but the essence of playing games is fun, which requires stability in the key technical indicators of performance and low latency to provide users with a delightful visual, auditory, and sensory experience. Currently, most medium to large Web3 games seem to have fallen into the trap of play-to-earn or selling speculative NFT items and land, with few focusing on how to make the games more enjoyable. Casual games, however, can create high-quality works without needing efficient development engines, computing power, or rendering, which is why casual games can coexist with Web3 and empower each other, while AAA games still have a long way to go.

The Mechanism of Web3 Casual Games

According to Dappradar's Web3 game UAW (Unique Active Wallet) ranking, there are 7 applications in the top 20 that fall into the category of casual games summarized earlier in this article, with two simulation management games, Farmers World and Meta Apes, being relatively vaguely defined as casual games.

Table 1

Design Mechanism

Let's first look at the design mechanisms of casual games in Web2. Based on Gamerefinery's summary and the author's research, the design mechanisms of casual games often include 12 modules, as shown in Figure 3.

Figure 3

From the perspective of the psychology of addiction in casual games, establishing a path of psychological satisfaction-feedback-reinforcement is the design goal of most leading casual games. Simulation management/home building can provide sufficient psychological satisfaction and surface feedback, while skill upgrades through mini-games provide reinforcement. Therefore, leading Web2 casual games, such as Family Farm Adventure, Solitaire Home Design, and Royal Match, combine home building and mini-game upgrades to earn rewards. In contrast, current Web3 casual games have almost no successful cases in hyper-casual games, while simulation management/strategy games need to design a more complete worldview and addictive mechanisms. Iguverse, which designs personalized NFTs through AI and gains energy through mini-games, is already close to the previously mentioned psychological satisfaction-feedback-reinforcement model, combined with the two Web3 elements of NFTs and time management (walking pets to earn), showing great potential for explosion.

The addiction mechanism is the underlying logic of casual games, requiring both quality visual feedback and deep engagement in storytelling and playability, which do not inherently provide unique advantages in the Web3 space and depend on the skills of the creative team. In terms of social mechanisms, the established DiD ecosystem in Web3 can provide relatively complete empowerment. In terms of achievement mechanisms, utilizing the SBT concept (Soul-Bounded Token) and NFTs can transform achievements into capital that can be permanently stored and showcased, which is a feasible direction. Additionally, the integration of social and achievement aspects can gradually form publicly recognized leaderboards and valuable achievement NFT mechanisms. In terms of management and performance mechanisms, simple strategy models can be designed using smart contracts, combined with NFTs as resources, personalization, and decoration, but the principle is that the mechanisms should not be complex and costs should not be high. It has been proven that play-to-earn can no longer reach players' original intentions, and the premise for purchasing resource NFTs is that the addiction and social mechanisms have been well established, so these two popular gamefi mechanisms still have room for optimization. In terms of exploration mechanisms, Web3 has a natural advantage over Web2; decentralized open worlds and NFT-based treasure resources are key elements that naturally promote exploration psychology. Overall, Web3 has sufficient potential to transform and optimize the mechanisms of casual games, but it needs to find a logical and sequential design path.

User Lifecycle

The user lifecycle is an evaluation metric for casual games along the time axis. The user lifecycle determines the user value of a casual game during its main traffic growth period. According to data from Liftoff, as shown in Figure 4, mainstream Web2 game apps generally have 1-day retention, 7-day retention, and 30-day retention rates of about 30%, 10%, and 3%, respectively. Even the most addictive gambling games only achieve 12% and 5% in 7-day and 30-day retention, respectively. In other words, the typical user lifecycle of a casual game is about 1 to 5 weeks.

Figure 4

Source: https://info.liftoff.io/en/2022-casual-gaming-apps-report?_ga=2.12090998.319635041.1677775662-264042242.1677119078

At the same time, game apps generally have a user journey that includes Discovery, Adoption, Onboarding, Engagement, Loyalty, and Abandonment, and any flaw in any of these stages can lead to significant user loss. In contrast, Web3 casual games seem to have a longer lifecycle than Web2 casual games; for example, Iguverse maintained a relatively stable high point of traffic from its growth starting in December 2022 to February 2023. Overall, a good Web3 casual game can extend the user lifecycle if it can continuously innovate gameplay iterations and incentive mechanisms in its play-to-earn model.

Typical Projects of Web3 Casual Games

✦Benji Banana

Benji Banana is a parkour game under Animoca Brands, developed and launched by Tribeflame back in 2013. In 2022, Animoca Brands acquired the Benji Banana IP and gradually transformed it into a Web3 version of the play-to-earn model, with the ultimate goal of pushing blockchain games to a broader audience.

From some basic data, Benji Banana had around 150,000 UAW (Unique Active Wallets) in the past 30 days (January-February 2023), ranking first in the Web3 casual game category, but still relatively low compared to monthly active users of Web2 mobile games. From a download data perspective, with nearly 10 years of accumulated users, its total downloads exceed 50 million, and its Facebook following has reached 470,000, outperforming almost all Web3 native dapps.

Figure 5

As shown in Figure 5, from the game mechanism perspective, Benji Banana adopts a simple and understandable model where NFTs serve as membership passes to earn token rewards, and promotes various types of reward mechanisms through different tournaments and leaderboards. However, there are several aspects we can learn from Benji Banana: first, the game itself has high playability, as it has thrived in the competitive Web2 casual game market, and its gameplay has undergone optimization over generations rather than being created just for the sake of making a game. Second, the play-to-earn elements of Benji Banana are not the main selling point but are additional rewards added on top of the fun of the game, which is the optimization point mentioned earlier regarding sequence.

Overall, Benji Banana maintains a high standard in addiction mechanisms, achievement mechanisms, exploration mechanisms, etc., but if it needs to take its traffic to the next level, it may need to approach it from a social perspective, establishing more publicly recognized competition and ranking mechanisms in conjunction with some Web3 social platforms.

✦Play Mining

Play Mining is touted as the first Play to Earn platform launched in 2020, developed by a Japanese team led by Naohito Yoshida. As a game development platform, Play Mining has released six games to date, including the coin-flipping (light gambling) game Lucky Farmer, the management and task game Cookin' Burger, and the doodling and racing game Graffiti Racer. Additionally, Play Mining has a built-in NFT Marketplace for trading in-game items and a treasury for staking tokens, and plans to build a metaverse space linking creators and players in the future.

Through more than two years of accumulation, Play Mining's data reached a cumulative wallet count of 2.5 million and around 200,000 MAU in mid-2022, while its UAW in the past 30 days (January-February 2023) remains around 40,000, showing commendable performance in the casual game category. However, due to the nature of its platform, the main traffic source comes from a few top games within its ecosystem.

As a platform for developing casual games, Play Mining has the advantage of the "building block effect": tokens and NFTs circulate within the ecosystem, reducing the fatigue of playing a single game. Similar to a complete set of DeFi products, Play Mining allows players to meet their needs for different types of games and varying risk preferences for monetization within the ecosystem, thus increasing users' willingness to "stick" to the ecosystem. Additionally, designing the economic model for a single game is challenging, but leveraging the overall ecosystem's economic model can enhance the fault tolerance of a single game's economic model and provide more fertile ground for experimental economic model designs.

Figure 6

As shown in Figure 6, Play Mining's game design is mature and diverse, basically meeting the design mechanisms of various casual games, but the commonality between different types of games is relatively low, resulting in a lack of immersion and exploration. If a more interconnected and complete worldview could be designed through some storyline, it could elevate the entire ecosystem to a new level.

✦IguVerse

IguVerse stands out as an independent entity in casual games, creating a social and entertainment ecosystem based on pets, combining mechanisms from three casual games: Social to Earn, Move to Earn, and Play to Earn. At the same time, it provides personalized pet images through AI-generated NFTs, essentially meeting the needs for personalization and decoration. The Social to Earn mechanism primarily encourages users to share images and IDs of their virtual pets on Web2 social platforms to drive traffic, while the Move to Earn mechanism encourages users to exercise a certain amount of time and distance in reality by "walking pets," which can also involve real pets in actual "walking" activities. Play to Earn allows users to play mini-games to gain extra energy. In terms of token mechanisms, IguVerse adopts a dual-token model similar to Stepn, establishing a circular consumption mechanism with functional tokens and liquidity tokens.

From the data perspective, since its launch at the end of 2022, Iguverse has seen its UAW steadily rise over three months, currently reaching around 8,000, with transaction numbers and amounts also showing an overall upward trend, with an average daily trading volume of around $300,000. As shown in Figure 7, Iguverse's overall design is almost entirely based on the casual game design mechanisms listed earlier, with its sociality, topicality, personalization, and incentive mechanisms all integrated into the entire experience through different gameplay. The data performance since its launch and the speed of product iteration indicate that the team is moving towards the goal of becoming a phenomenal Web3 casual application.

Figure 7

However, IguVerse also has its own issues. First, the existing AI NFT generation engine can only meet simple style and type-based intelligent synthesis, which is not very appealing, and for pet lovers, the cuteness of pets (the artistic quality of NFTs) may be the biggest hook for maintaining freshness and retention. Second, the existing built-in mini-games are very crude, to the point where playing them feels like a chore with almost no fun. These two points suggest that the game's future retention may be very low, as the underlying experience is not compelling once the novelty wears off. Overall, this model of combining virtual pets with real-world behaviors is a promising direction, but Iguverse's current product level cannot support its goal of mass adoption.

✦Wild Cash/Hooked Protocol

Wild Cash is the first flagship product of Hooked Protocol, a casual game that combines Web3-related quiz questions with mining, sharing, and other modes. Users earn token rewards by answering Web3-related questions, then gain extra lives through sharing, ultimately converting tokens into stablecoins for withdrawal. Hooked Protocol itself provides infrastructure modules like DiD, wallets, and fiat exchange for casual games with social attributes, attempting to establish a community traffic flywheel based on the "attention economy."

Figure 8

After three months of release, Wild Cash reached an astonishing MAU of 3 million, briefly topping the download charts for quiz apps in Indonesia, and still maintains around 100,000 DAU today. Of course, this includes some support from Binance and Sequoia behind the scenes, but its gameplay essentially still adheres to the Web2 logic of "brushing volume for subsidies." Among the types of quiz games, choosing Web3-related questions seems to have educational significance, but this field can only attract users through two extremes: challenging high-difficulty questions that test IQ and purely entertaining lifestyle or interest-based questions. Web3 learning questions seem to fall short of both extremes, as evidenced by the significant drop in traffic indicating a waning user interest. Ultimately, a sustainable casual game must start from the users' genuine internal needs, rather than becoming a place for grinding for rewards. The model of combining quiz games with Web3 elements is worth referencing, but framing answering questions as a means to earn tokens is merely a tedious process that does not escape the logic of the previous generation of gamefi.

Future Development and Challenges

Web3 casual games have gradually begun to attract attention, and game developers have realized that casual games may be another viable direction after experimenting with mid to large-scale games. From the current development trends, several hot directions can be summarized:

1. Mini-game collection platforms.
By continuously developing new mini-games, user freshness can be maintained and user lifecycles extended, but currently, there is still a lack of a more complete unified tokenomics system. If each game in a mini-game collection platform can align with a unified storyline or worldview and establish connections through a unified tokenomics, it can significantly enhance user stickiness to the platform.

2. Virtual pets and nurturing.
CryptoKitties was actually the earliest concept of virtual pets, and over time, virtual pets have become a main concept in many casual games. These games can leverage the companionship role of pets in users' minds to enhance their intrinsic interest, while the gameplay of pets can also integrate with new concepts like NFTs and AIGC, forming a complex and interesting game ecosystem.

3. Quiz PvP types.
Quiz PvP or multiplayer games naturally have advantages in combining with Web3; on one hand, they do not require overly complex UI design and artistic rendering, and on the other hand, their intellectual competition and entertainment value can still resonate with users' interests. Furthermore, the entire process of question and answer can interact with smart contracts, forming a fair judgment mechanism and co-creation mechanism.

4. Light gambling types.
Light gambling games inherently possess stickiness, and leveraging smart contracts and on-chain gaming concepts can establish new mechanisms between games and finance.

Regardless, Web3 casual games will gradually become one of the important traffic entry points for onboarding Web2 users, and the rich variety of casual game tracks combined with different designs of Web3 mechanisms brings infinite imaginative space for the future of Web3 casual games.