June 2024 Blockchain Game Research Report: Pixels Causes DAU Fluctuations, Significant Differences in Industry User Retention Rates

Author: Stella L (stella@footprint.network)

Data Source: Blockchain Game Research Page

In June 2024, the cryptocurrency market experienced a significant pullback, with Bitcoin dropping by 7.3% and Ethereum falling by 9.8%. This volatility inevitably impacted the blockchain gaming sector, leading to a 28.1% decrease in the total market value of game tokens. Additionally, the daily transaction volume in blockchain games increased by 8.0%, but the daily active users (DAU) decreased by 8.8%, falling back to 3 million. Key industry dynamics included widespread discussions about the future of Web3 games, Ronin announcing the upcoming launch of its Layer 2, and significant changes in user engagement in games like Pixels and Matr1x FIRE. As the blockchain gaming industry continues to evolve, its core focus remains on leveraging blockchain technology to create sustainable and engaging gaming experiences.

The data for this report comes from Footprint Analytics' Blockchain Game Research Page. This user-friendly dashboard contains the most important statistics and metrics for understanding the blockchain gaming industry and is updated in real-time.

Macroeconomic Market Review

During June, the cryptocurrency market faced a pullback. The price of Bitcoin fell from $67,730 at the beginning of the month to $62,795 by the end, a decrease of 7.3%. Similarly, Ethereum's price dropped from $3,820 at the start of the month to $3,444 by the end, a decline of 9.8%.

Data Source: Bitcoin and Ethereum Price Trends

Ongoing selling pressure from multiple fronts has taken a heavy toll on Bitcoin. On June 24, the Mt. Gox bankruptcy trustee announced that repayments for Bitcoin and Bitcoin Cash (BCH) would begin in July 2024, triggering widespread uncertainty in the market regarding the timeline for creditors converting their assets into fiat currency. Meanwhile, the U.S. spot Bitcoin ETF saw net outflows in the latter half of June.

Government actions are also noteworthy. A German government agency began liquidating Bitcoin seized in 2013, transferring nearly 4,000 Bitcoins to exchanges in June. At the same time, the U.S. government transferred 3,940 Bitcoins seized from the wallet of a convicted drug dealer to Coinbase.

Despite the smooth progress of the U.S. spot Ethereum ETF, Bitcoin's weakness seems to have spread throughout the entire cryptocurrency market.

Blockchain Gaming Market Overview

In June, the total market value of blockchain game tokens shrank from $27.2 billion to $19.6 billion, a staggering decline of 28.1%. This significant drop directly reflects the widespread downward trend in game token prices, driven by the sluggish performance of Bitcoin and the overall cryptocurrency market.

Data Source: Blockchain Game Tokens and Bitcoin Market Value

The average daily transaction volume in blockchain games was 8.6 million, representing a month-on-month increase of 8.0%.

Data Source: Daily Transactions in Blockchain Games

The overall DAU (calculated by wallet count) in the industry dropped to 3 million, a month-on-month decrease of 8.8%. This unexpected decline was primarily driven by the Pixels game on the Ronin network, which is one of the largest Web3 games by DAU.

Data Source: Daily Active Users in Blockchain Games

After migrating from Polygon to the Ronin network in Q4 2023, Pixels saw a significant increase in DAU, peaking at 1 million on May 13. However, its DAU sharply decreased from 976,000 on June 11 to 252,000 on June 19, a drop of 74.2%. In comparison, the average DAU in May was 842,000, while in June it fell to 647,000, a decline of 23.2%.

Data Source: Pixels Daily Active Users

The second chapter of Pixels was officially launched on June 18, bringing gameplay improvements and aiming to enhance the game's long-term sustainability through optimized incentive designs and reward distribution strategies. The Pixels team stated on social media that they are actively implementing a series of systematic measures to effectively curb bot activity in the game, claiming that "Chapter Two has broken all bots."

Pixels' DAU began to recover on June 20, reaching 423,000 DAU by the end of the month. However, it remains unclear how many of these users may be evolving bots. Longer observation and data accumulation are needed.

For Pixels and many Web3 games, ensuring the economic unsustainability of bot activity is crucial.

Blockchain Game Public Chains

In June, there were a total of 1,580 active games across various chains. BNB Chain, Polygon, and Ethereum led the market with shares of 22.4%, 19.5%, and 16.1%, respectively.

Data Source: Active Game Distribution Across Public Chains

At the same time, among the 3 million DAU, Ronin, Polygon, and NEAR continued to lead but faced numerous challenges. Ronin's DAU share was affected by Pixels, dropping from 29.8% at the beginning of the month to 18.4% by the end. On the Polygon side, due to a 31.6% month-on-month decline in DAU for its largest DAU game Matr1x FIRE, its DAU share also shrank from 15.1% to 8.0%.

Oasys's Layer 2 Saakuru Verse saw significant growth in DAU during the last ten days of June. The successful launch of three games—Copycat Killer, Panic, and Parkour Battle—by Web3 game publisher PlayGround greatly boosted the DAU on Saakuru Verse, rising from 18,000 on June 21 to 464,000 on June 30, with an average DAU of 379,000 in the last week. If this growth momentum continues, Saakuru Verse is expected to quickly rank among the top three blockchain platforms by DAU.

On the other hand, opBNB also performed well in the last week of June, with an average DAU of 285,000, accounting for nearly 10% of all DAU.

Data Source: Daily Active Users Across Public Chains

Public chains are actively strengthening their gaming ecosystems, with specific measures including the launch of special grant programs for Web3 game developers. Additionally, building more chains has become a favored strategy. Ronin recently announced plans to build Layer 2 using the Polygon SDK, indicating that popular games like Axie Infinity and Pixels may run on their dedicated gaming chains in the future, aligning with strategies adopted by platforms like Avalanche, Oasys, and SKALE. Whether this strategy and similar approaches will succeed remains to be seen.

Overview of Blockchain Game Projects

In June, the blockchain gaming market had a total of 3,289 games, of which 1,319 remained active. Notably, 257 games successfully attracted over 1,000 monthly on-chain users, accounting for 7.8% of all games and 19.5% of active games.

Data Source: Monthly Active Blockchain Games

Such data has persisted for some time, sparking discussions about whether "blockchain games are dead?" While we do not agree with such exaggerated assertions, understanding the context is crucial. It is important to note that this data only reflects the number of on-chain users. In reality, many games offer ways to play without Web3 integration (such as not requiring a wallet connection), and their game data is primarily off-chain, making it difficult to accurately track this data at this stage. Therefore, the importance of blockchain technology and on-chain data is increasingly highlighted.

We have more chains (Layer 1, Layer 2, Layer 3, subnets, etc.), more games, and more DAU. However, we suggest that the focus should not be solely on the growth of DAU but also on the retention rates of each game. Retention rate, as a core metric for assessing game attractiveness and genuine user engagement, can more accurately reflect the health and long-term development potential of a game.

For example, despite a noticeable decline in Pixels' DAU in June, its monthly retention rate has performed strongly since migrating to the Ronin platform, reaching levels comparable to or even exceeding those of Web2 games. Specifically, Pixels' average retention rate in the second month exceeded 40%, and in the sixth month, it remained above 20%.

Data Source: Pixels Monthly User Retention Rate

In contrast, Matr1x FIRE faced significant challenges in user retention, with retention rates below 10% in the second and third months for new users acquired in April and May.

Data Source: Matr1x FIRE Monthly User Retention Rate

Blockchain games stand out from traditional games through unique elements like play-to-earn, play-and-earn, and play-to-airdrop, but the core driving force remains the inherent enjoyment of the game. We must be cautious not to let the excessive pursuit of potential profits overshadow the pure enjoyment of gaming. Building a long-term sustainable blockchain gaming ecosystem is crucial for the healthy development of the entire industry. As we emphasized on social media: "Web3 games are not dead; Web3 games are being built."

Blockchain Game Investment and Financing Situation

In June, the Web3 gaming sector raised a total of $43.05 million through 12 financing activities, of which the specific amounts for 4 financing activities were not disclosed. This total is not far off from the $44.95 million raised the previous month.

June 2024 Blockchain Game Investment and Financing Events (Source: crypto-fundraising.info)

The Sandbox successfully raised $20 million through convertible notes at a valuation of $1 billion, led by Kingsway Capital and Animoca Brands. Over the past year, The Sandbox team's main focus has been on enhancing the quality and quantity of user-generated content (UGC) globally.

On the other hand, Uniswap Labs announced the acquisition of an on-chain survival game called Crypto: The Game. This game quickly gained popularity on social media in its first season. In the game, players need to form tribes and determine the fate of tribe members through various challenges, with only the last survivor able to win. The team behind Crypto: The Game chose to join Uniswap Labs to leverage Uniswap's deep resources and experience in the blockchain and decentralized finance space to further drive the game's expansion and development.

This content is for industry research and communication purposes only and does not constitute any investment advice. The market carries risks, and investments should be made cautiously.