Rebirth: The TON chain is saving domestic small and medium-sized game developers that have been overlooked

Author: Jaleel Jia Liu, BlockBeats

Before meeting me, Xiao Ze had just finished a meeting with a client, discussing the sale of the source code for a small game he developed. Compared to last year, Xiao Ze's demeanor was completely different; he no longer showed any signs of frustration and instead appeared ambitious, like a teenager returning to his youth.

Last year, he confided in me about his confusion and helplessness while working on a large blockchain game project, "After three years in blockchain gaming, I haven't produced anything. This is very different from the ideals I had when I entered the industry; it might also be a midlife crisis. I realized that I'm already in my thirties and haven't created anything, which feels like a failure."

More than half a year has passed, and he has finally regained his state, chatting with me throughout the meeting with a smile. It is said that many game development platforms on the TON blockchain have recently contacted them, wanting to buy their small game source code, with the highest offer reaching $100,000. The TON blockchain is a project developed by Telegram. Although the Telegram team withdrew from the project's development midway, the TON Foundation has continued to develop it. Since the trading bot last year, the TON blockchain has gradually prospered, providing more opportunities and possibilities for today's small game bots.

Traditional Gamers Who Experienced Two Winters Have Stumbled in Blockchain Gaming

"Jia Liu, you might not know, but the traditional gaming industry has been in a winter since 2018; it’s just that no one realized it back then." Xiao Ze has been involved in game development for nearly ten years, starting his career at a small traditional game company.

Since the issuance policy for game licenses began in 2018, the number of domestic game licenses has continued to decline, hitting the "pause button" twice, leading to two winters for game practitioners.

"At that time, everyone said that the higher you stand, the harder you fall. By the end of 2018, Tencent's stock plummeted, with a market value evaporating by over $80 billion." Lao Si, a former Tencent employee, vividly remembers that time.

"From the third month of the suspension, people gradually became pessimistic and negative. The frightening thing was that no one knew how long it would last." Xiao Ze recalled, showing me his negative social media posts from that year.

At the beginning of the suspension, no one expected it to last for eight months, nor did anyone realize the magnitude of its impact, but the dominoes had already begun to fall silently.

The suspension of game licenses in 2018 directly or indirectly led to the loss of at least 1,000 new games in the industry, with over 600 game companies going bankrupt that year. According to data from Qichacha, by the second half of 2021, 14,000 domestic game-related companies had been deregistered.

"This impact lasted for many years. The game company I worked for kept laying off employees, and eventually, it couldn't hold on anymore. That was also my first experience with unemployment." In 2021, Xiao Ze became one of the hundreds of thousands of laid-off game workers.

"That should have been five or six years ago, but I remember it clearly; it was the lowest point in my life. I thought I might never be able to make games again, and I hadn't achieved anything. I cried a lot." He said he cried for two whole weeks, "During those two weeks, I cried every day. I did nothing; I was very anxious and didn't know what to do."

Blockchain Games: A "Sanctuary" for "Game Refugees"

In the policy winter, game manufacturers began to explore new paths. At that time, there were only two options for all game manufacturers: one was to focus on quality.

Faced with license restrictions and intensified market competition, game companies realized that only by improving product quality and creating high-quality games could they establish themselves in the market. Quality improvement is not just about enhancing the graphics and gameplay of games; it also requires excellence in game design, user experience, content creativity, and more to meet players' high demands.

However, for most small and medium-sized manufacturers, focusing on quality is not an easy path. It means needing more and better resources concentrated on a few games, which also means that competition in the domestic game market will become increasingly fierce.

Therefore, going overseas became the only remaining solution and the choice for more manufacturers.

"Maybe it was a second chance given to me by fate. After being laid off, I was brought to a game company with resources for overseas markets because of my good English." Xiao Ze was able to continue making games.

"Tencent has also done a lot of overseas business, shifting a significant portion of its focus and resources, including creating overseas versions of games, establishing offices abroad, and directly acquiring and investing in overseas game companies," Lao Si analyzed. He believes that because Tencent controls most of the industry resources, Tencent's stock price rebounded to a peak in 2021.

During that time, Tencent's acquisition deals set records, with Timi Studio establishing offices in Los Angeles, Seattle, and Montreal, owning Riot Games, Funcom, and Sharkmob, and holding shares ranging from 4% to 84% in companies like Remedy, Epic Games, Activision Blizzard, Ubisoft, Krafton, and Supercell.

Unlike gaming giants like Tencent, small and medium-sized manufacturers do not have a smooth sailing experience when going overseas. In terms of channels, promotion, and revenue sharing, game manufacturers need to invest a lot of resources, which are precisely what small and medium-sized manufacturers lack.

Even so, some small and medium-sized manufacturers still attempted to venture overseas. However, they faced numerous challenges and hardships. Due to a lack of experience and resources in overseas markets, they encountered various obstacles when entering new markets, such as cultural differences, differing laws and regulations, and difficulties in localized operations.

Three Years Later, the Ceiling for Blockchain Games Remains Axie from Back Then

It was also at this time that "blockchain games" broke into the mainstream.

This concept, which seemed unfamiliar at the time, not only attracted the attention of many major game companies but also unexpectedly became a "sanctuary" for these "homeless" game practitioners.

After two years of accumulation, the most popular blockchain game on Ethereum, Axie Infinity, exploded starting in May 2021, with daily revenue growth showing exponential development. By August, its monthly revenue exceeded $334 million, far surpassing the $231 million revenue of Honor of Kings in July.

Axie Game Interface

"Actually, Tencent also had plans to develop Web3 games at that time, and many domestic game companies, like Zhongqingbao, were working on metaverse concept games," Lao Si told BlockBeats.

There are many ways to go overseas, but blockchain games might have been the best choice at that time. This emerging form of gaming attracted a large influx of capital and allowed some practitioners to continue developing in the gaming field.

"It seems that we chose blockchain games at that time, but in fact, blockchain games chose us." In Xiao Ze's recollection, blockchain games attracted many practitioners who had been hit hard by the traditional gaming industry, hoping to regain new life through blockchain games.

"However, three years later, nothing has happened; the ceiling for blockchain games remains Axie from back then." What seemed like a choice for rebirth now leaves Xiao Ze with complex feelings; he feels he has taken a detour for three years.

Most blockchain game players are speculators, with a strong purpose primarily focused on making money, lacking interest in the games themselves, and showing little concern for the long-term development of the games. Therefore, for speculative Web3 players, the initial investment in blockchain games is high, including time and transaction costs. Traditional gamers, due to high learning costs, find it difficult to integrate into blockchain games.

For these reasons, according to a report by CoinGecko, from 2018 to 2023, the average annual failure rate of Web3 games reached 80.8%, which is not surprising.

Finally, It's Time for Blockchain Games to "Turn the Tide"

Xiao Ze hasn't opened his social media for over half a year because his classmates, relatives, and friends are doing better than him, which makes him uncomfortable.

"I was thinking, when I was laid off back then, should I have just given up on making games?" "Large blockchain games are the second pit that game practitioners have stumbled into, while the first pit was becoming a game practitioner," Xiao Ze said that when he couldn't hold it in anymore, he would go drink to vent, but every time he drank, these thoughts filled his mind.

When he was laid off five or six years ago, Xiao Ze was still relatively young, but now it's different; as a family man, he has many things to consider, including the misunderstanding from family members and the "contempt" from former colleagues. His state of game development can be described as being surrounded by difficulties.

Unlike the anxiety and confusion he felt when he was abandoned by traditional gaming, Xiao Ze now feels more despair in blockchain gaming…

He is not the only one feeling despair. According to Xiao Ze, most people around him have already left blockchain gaming ahead of him, including Tencent, with the rest being half out the door.

At the beginning of 2022, most blockchain game developers hoped and dreamed of a world without dominant platforms like Apple or Steam. They envisioned a decentralized world where anonymous community members could influence the development of their favorite games. Of course, this dream was somewhat naive and lacked a solid foundation.

Having the right distribution method is crucial for a game's success. Developing an outstanding game does not guarantee success; you need to find a large number of users who are interested in playing your game and are ultimately willing to pay for it.

In traditional gaming, platforms like Steam and Epic are gold mines for distributing PC and console games, while the App Store and Play Store are gold mines for mobile games.

"Not having a centralized review platform is a good thing, but from another perspective, blockchain games have never had a suitable platform to reach users," Xiao Ze participated in the construction of five or six blockchain game projects over the past three years, but they all turned out differently from what he initially imagined. Now, Xiao Ze has become disillusioned with blockchain games; he does not believe that blockchain games can produce a game that people will play, at least not in the next five years.

Until this year, after visiting Mount Wutai with his family, Xiao Ze's miserable life finally began to turn around.

Because at the beginning of this year, a click game on the TON blockchain called Notcoin became popular.

Notcoin Game Interface

With simple click operations, players can earn tokens. The game is easy to operate, quick to pick up, and spreads rapidly, making it suitable for playing during fragmented time. The gameplay of Notcoin is even simpler than Snake; you just need to keep clicking. This low-threshold game design allows users to quickly get started with almost no learning costs.

Notcoin quickly attracted a large number of users after its launch. Statistics show that Notcoin's daily active user count has exceeded 5 million, with monthly revenue surpassing $300,000. Such achievements have rapidly accumulated a large user base in a short time and have opened up more possibilities for Xiao Ze.

"It feels like I have been swimming in the sea for a long time, and just when I was about to run out of strength to keep swimming, the TON blockchain pulled me ashore." After connecting with some friends who are making games on the TON blockchain, Xiao Ze finally discovered that there is a huge business opportunity here.

Catizen Game Interface

Starting with Notcoin, more Tap to Earn games have launched, and the gameplay has gradually diversified. For example, the currently popular blockchain game project Catizen allows players to operate through a Telegram bot, merging two low-level cats into a higher-level cat to attract more customers to earn money.

By the end of June, Catizen announced that its total user count had surpassed 20 million, with daily active players exceeding 250,000, and it has ranked first in The Open League leaderboard for three consecutive seasons. Monthly revenue has also exceeded $500,000. These games are not only simple and easy to understand but also utilize fragmented time for operation, greatly increasing user stickiness.

Although everyone knows that the data published by projects may be inflated, the increasing number of players and games on the TON blockchain is an undeniable fact.

More importantly, blockchain gamers have finally found their gold mine. The user base of Telegram also brings a huge potential user base to the TON blockchain. Compared to WeChat's 1.1 billion active users, Telegram's 900 million users are slightly fewer. However, due to Telegram's global reach and high activity levels, games on the TON blockchain are easier to spread and promote.

Not only small and medium-sized developers like Xiao Ze, but the small game market on the TON blockchain has also attracted more traditional game companies, reviving previously shelved domestic small games.

Traditional Game Manufacturers Entering TON

After working on several Web3 projects, Sunny is now focusing on TON games. She has several small game projects in progress, including a shooting mini-game.

"I recently talked with various traditional game companies, and they are all very interested in the current small game market on the TON blockchain, including Shengda Games," Sunny revealed to me.

As we all know, Shengda Games is invested by Tencent. According to Lao Si, one of Shengda's data centers is primarily focused on mining.

At the same time, Lao Si also indirectly confirmed what Sunny said, noting that not only Shengda but also companies like Ice Age, Weiyou, and 37 Interactive have already started projects in the TON ecosystem. It is evident that these traditional game manufacturers find it relatively easy to enter the market since they have been observing and seeking opportunities in the crypto space.

"As for Tencent, I think the likelihood of them directly entering the market is low. Tencent might let its subsidiaries or invested companies do it, like Shengda." In Lao Si's view, Tencent may also allocate some resources to provide support, including resources from those mini-game developers on WeChat.

"If Tencent really wants to do it, no one can do it better than Tencent. But the problem is, if Tencent does it, wouldn't that just be giving Telegram traffic as a gift?" Lao Si believes that supporting Shengda to develop TON games is already Tencent's biggest compromise.

"They are all eager to push mini-games onto the TON blockchain, including those that were previously shelved or developed but never launched." Recalling the previous cycle, Sunny said traditional game companies were considering participating in GameFi, but due to the lengthy cycle of GameFi, they were hesitant to invest easily.

"But these mini-games, a single company can have hundreds or thousands of them, and everyone wants to rush in."

Returning to the earlier point, the process of obtaining licenses for games in China is very "grueling," with various review processes taking a long time. However, the TON blockchain has no such restrictions, and backed by Telegram's 900 million active users, it represents a huge traffic gold mine.

"The larger GameFi cycle logic in Web3 cannot operate in this round, but mini-games can; mini-apps can." Like Xiao Ze, Sunny also believes that large blockchain games will not have opportunities in this cycle. "If the focus is on massive adoption, then GameFi is a false proposition; the timing is not right, let's wait for the next round."

"Blockchain games might have been the best choice at that time, but the timing for large blockchain games hasn't arrived yet. I don't think it's anyone's fault; it's just the choice of the industry and the market." Lao Si also revealed to BlockBeats that some large blockchain games that have burned through most of their funding are considering tweaking their code to launch a TON mini-game for preheating or to generate some data and results to secure another round of funding for larger games.

Let's Make Something Small First, Don't Think About Changing the World

As more and more people play games on the TON blockchain, Xiao Ze has started to secrete dopamine again, regaining his former passion and motivation.

"In the past, everyone wanted to create something big, something great that could change the world, which is why mini-games were always looked down upon until NOTCOIN became popular on TON."

Indeed, the mini-game market seems simple; in essence, it is about retracing the paths that PC and mobile games have taken, reviving previously popular genres. Web3 mini-games are even simpler, retracing the paths of WeChat mini-program games, reviving games that were once popular on WeChat mini-programs.

TON Games Being Mocked

Although most TON games on the market still lack playability, with more developers and major companies joining in, we believe we will soon see previously bestselling games from WeChat on the TON blockchain, such as "Seeking Dao Immortal," "King of Salted Fish," "Sheep Goats," "Happy Elimination," "Plants vs. Zombies," and even "Arknights."

"When I sold my first mini-game last month, I immediately started calling my former colleagues and friends who were working on large blockchain games to confirm that my idea of making games on TON was correct. Now, I am very happy, super excited."

At this point, Xiao Ze received a call from his development colleague to confirm some code details. Before leaving in a hurry, I told him, "Your state is completely different from last year; it's like you've been reborn."

Xiao Ze waved his hand and said, "I'm just not pretending anymore. Whether in the gaming industry or the blockchain industry, it doesn't have to be about making big things to be impressive; starting with some small things is great, so just to hell with huge games."