Selling goods did not bring Axie Infinity back to its peak

Written by: Mu Mu, Metaverse Daily Explosion

After blue-chip NFTs like Pudgy Penguin and Doodles expanded into merchandise, the "pioneer" of Web3 play-to-earn games, Axie Infinity, has also started selling products.

Recently, Axie launched an online store, commercializing 4,877 NFTs from the game into merchandise such as dolls, T-shirts, hoodies, and cartoon stickers. To boost sales, Axie is also giving away a Mystic Axie-themed NFT for free to the first 5,000 buyers.

How to expand the incremental market is currently a direction that Web3 brands are striving for. The combination of NFTs and Web3 games with physical products is becoming one of the ways to expand influence and generate economic benefits.

Unfortunately, after the release of Axie merchandise, there has not been a significant increase in the trading volume of in-game NFTs or the number of community members. This Web3 game IP seems to have yet to truly reach the Web2 audience. Instead, the return of Axie Classic not only brought back activity but also boosted the price of the game token AXS.

It is evident that for Web3 games to emerge from their low points, they must return to the essence of gaming itself.

Unsold NFTs Turned into Dolls

If you know about Web3 games or the GameFi concept, you must have heard of Axie Infinity, which is affectionately called "Axi" in the Chinese-speaking world.

This cute TGC (Trading Card Game) has been used by millions of Filipinos during the pandemic to supplement their income, and the "Play To Earn" model popularized by Axie has become the mainstream model for Web3 games.

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

This model has even spawned a business of renting game characters, leading to the emergence of gold farming communities that specialize in renting characters to players; a longer-tail application is the staking of game NFTs to borrow crypto assets like USDT, BTC, and ETH.

Thus, games have acquired financial characteristics, giving birth to the concept of GameFi.

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

However, Axie did not stay at its peak for long; within just over six months, it began to show signs of stagnation, and subsequent marketing efforts failed to bring it back to its former glory. According to Crypto Slam data, by the end of November 2023, Axie's monthly sales were only $28,000. DappRader data also showed that the floor price and market value of Axie Infinity NFTs had both plummeted.

The floor price and market value of Axie NFTs have fallen from their former glory

Axie has proven that blockchain games can reach millions of DAU, and the next question is how to break through to tens of millions of DAU. Some industry practitioners believe that this requires Web3 games to penetrate the influence into traditional Web2 game players.

At the end of November this year, Axie began to do just that by launching an online store selling badges with the project logo, shirts, hats, accessories featuring Axie characters, Squishmallow-style plush toys, and $300 figurines, supporting both cryptocurrency and fiat payments.

In addition to selling merchandise, Axie also encourages a UGC ecosystem by unlocking copyright restrictions on 4,877 NFTs from the Mystic and Origin series, allowing users who own these NFTs to sell their own designed products in the store. Furthermore, they can use their NFT characters to start Axie-themed businesses, such as cafes, restaurants, and comics.

A more aggressive move is Axie Infinity's collaboration with the Philippine ride-hailing app Grab to launch a user rewards program, thereby opening distribution channels from mainstream Web2 applications. In the Grab app, users can access Axie's online store to purchase merchandise.

Axie provides an online store entry on Grab

Additionally, Axie has partnered with game development studios such as Tribes Studio, Bali Games, Directive Games, and Bowled.io, allowing some games to use Axie IP to create games.

It is clear that Axie is working hard to open the boundaries of Web3 game IP, aiming to strengthen connections with the Web2 world in more areas to expand brand awareness and attract new traffic.

IP Not Effective, Game Improvements Drive Growth

So, have these series of actions brought new growth to Axie?

Data shows that since launching the online store, there has been no significant increase in community members, and its appeal to incremental Web2 users is limited. In fact, among the 11.9 million Axie character NFTs, fewer than 5,000 have had their commercial restrictions lifted. According to Axie market data, this portion of NFTs accounts for only 0.04% of all Axie NFTs.

Looking at Axie's dynamics over the past six months, it is not difficult to find that the real increase in daily active users comes from the game itself.

On November 22, just before Axie launched its online store, the classic series Axie Classic made a comeback, upgrading the gaming experience, including allowing AXP characters to inherit, increasing the AXS reward pool, and setting up the ultimate prize "Mystic Axe." In addition, Axie lowered the entry barrier to the arena by removing the game's "energy" requirement, allowing players to play without restrictions.

Axie Classic Restarted

The revamp of Axie Classic reignited the enthusiasm of old players and attracted the interest of new players. In just a few days, Axie Classic's weekly active users reached 100,000, and the price of AXS continued to rise.

Compared to launching NFT physical products, actions focused on improving gameplay have had a more immediate impact on Axie's data. Axie has experienced the benefits of this approach before.

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

All of this indicates that the Web3 game IP has not yet reached the point of breaking out of its niche; marketing activities are still stirring the existing market, and reaching new Web2 users is far more challenging than engaging existing Web3 users.

No one denies that IP merchandise can help more people recognize the brand, but you must first earn the "popular" title through your core business. For Web3 games, IP is not a lifeline; it can at most be a bonus, and timing is particularly important.

During the golden age of American animation, Mickey Mouse's IP club gained 1 million members in less than four years because Disney first successfully penetrated the audience market with animated stories featuring Mickey Mouse, and then brought this IP into comics and video games. By 2010, 40% of Disney's $1 billion in consumer products revenue came from Mickey merchandise.

The well-known NFT "Bored Ape" illustrates the importance of timing for IP. Yuga Labs quickly pushed for IP collaborations with traditional brands after seeing "Bored Ape" gain exposure in the Web2 market, attracting marketing departments from companies including China's Li Ning, further promoting the breakout of the "Bored Ape" IP.

If Axie had launched its merchandise store at the height of its popularity to expand brand influence, it could have potentially become an IP that transcends Web3 games.

Unfortunately, the timing has passed, and everything needs to start over. Now, what can truly create stickiness for Web3 games is the quality, gameplay, and experience of the game, even the yield; these are more critical than just launching merchandise. The recently popular Web3 Game BigTime is a case in point.

Crypto KOL @0xJamesXXX believes that "we shouldn't be thinking all day about IP development and various so-called rights empowerment." 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 presents a challenge to Web3 games: should they build products that truly interest Web3 players, or cater to new Web2 users in a traditional internet way?

Now, Axie chooses to balance both, so this IP must wait for the next breakout of the game itself.